Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements

Audited Consolidated Financial Statements for the Fiscal Years Ended May 31, 2010, 2009 and 2008


		Management's Report on Internal Control over Financial Reporting		32
		Reports of Ernst & Young LLP, Independent Registered Public Accounting Firm		33
		Consolidated Statements of Income		35
		Consolidated Balance Sheets		36
		Consolidated Statements of Shareholders' Equity		37
		Consolidated Statements of Cash Flows		38
		Notes to Consolidated Financial Statements		39

**Management's Report on Internal Control over Financial Reporting

To the Shareholders of Cintas Corporation:

Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) and 15(d)-15(f) under the Securities Exchange Act of 1934) to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States. Internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Accordingly, even an effective system of internal control over financial reporting will provide only reasonable assurance with respect to financial statement preparation.

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, 2010. Management based its assessment on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management's assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies and our overall control environment. This assessment is supported by testing and monitoring performed by our internal audit function.

Based on our assessment, management has concluded that our internal control over financial reporting was effective as of May 31, 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 reviewed the results of management's assessment with the Audit Committee of our Board of Directors. Additionally, our independent registered public accounting firm, Ernst & Young LLP, independently assessed the effectiveness of Cintas Corporation's internal control over financial reporting. Ernst & Young LLP has issued an attestation report, which is included in this Annual Report.


		/s/ Scott D. Farmer Scott D. Farmer Chief Executive Officer
		/s/ William C. Gale William C. Gale Senior Vice President and Chief Financial Officer

**Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Cintas Corporation:

We have audited Cintas Corporation's internal control over financial reporting as of May 31, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Cintas Corporation's management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the effectiveness of the company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

In our opinion, Cintas Corporation maintained, in all material respects, effective internal control over financial reporting as of May 31, 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, 2010 and 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, 2010, of Cintas Corporation, and our report dated July 30, 2010, expressed an unqualified opinion thereon.


		/s/ Ernst & Young LLP
Cincinnati, Ohio July 30, 2010

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Cintas Corporation:

We have audited the accompanying consolidated balance sheets of Cintas Corporation as of May 31, 2010 and 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, 2010. Our audits also included the consolidated financial statement schedule listed in the Index at Item 15(a). These consolidated financial statements and schedule are the responsibility of Cintas Corporation's management. Our responsibility is to express an opinion on these consolidated financial statements and schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

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, 2010 and 2009, and the consolidated results of its operations and its cash flows for each of the three years in the period ended May 31, 2010, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

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, 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 30, 2010, expressed an unqualified opinion thereon.


		/s/ Ernst & Young LLP

Cincinnati, Ohio July 30, 2010


Consolidated Statements of Income
			Fiscal Years Ended May 31,

(In thousands except per share data)			2010			2009			2008

Revenue:
	Rental uniforms and ancillary products	$	2,569,357		$	2,755,015		$	2,834,568
	Other services		977,982			1,019,670			1,103,332

			3,547,339			3,774,685			3,937,900
Costs and expenses:
	Cost of rental uniforms and ancillary products		1,449,576			1,562,230			1,581,618
	Cost of other services		599,946			661,584			674,682
	Selling and administrative expenses		1,086,359			1,082,709			1,104,145
	Legal settlements, net of insurance proceeds		23,529			—			—
	Restructuring charges		(2,880	)		10,209			—
	Impairment of long-lived assets		—			48,888			—

Operating income			390,809			409,065			577,455
	Interest income		(1,695	)		(2,764	)		(6,072	)
	Interest expense		48,612			50,236			52,823

Income before income taxes			343,892			361,593			530,704
Income taxes			128,272			135,236			195,299

Net income		$	215,620		$	226,357		$	335,405

Basic earnings per share		$	1.40		$	1.48		$	2.15

Diluted earnings per share		$	1.40		$	1.48		$	2.15

Dividends declared and paid per share		$	0.48		$	0.47		$	0.46

See accompanying notes.


Consolidated Balance Sheets
		As of May 31,

(In thousands except share data)		2010			2009

Assets
Current assets:
Cash and cash equivalents	$	411,281		$	129,745
Marketable securities		154,806			120,393
Accounts receivable, principally trade, less allowance of $14,297 and $19,532, respectively		366,301			357,678
Inventories, net		169,484			202,351
Uniforms and other rental items in service		332,106			335,447
Income taxes, current		15,691			25,512
Deferred tax asset		52,415			66,368
Prepaid expenses		13,423			17,035
Assets held for sale		9,437			15,744

Total current assets		1,524,944			1,270,273
Property and equipment, at cost, net		894,522			914,627
Goodwill		1,356,925			1,331,388
Service contracts, net		103,445			124,330
Other assets, net		89,900			80,333

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

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	71,747		$	69,965
Accrued compensation and related liabilities		66,924			48,414
Accrued liabilities		244,402			181,892
Long-term debt due within one year		609			598

Total current liabilities		383,682			300,869
Long-term liabilities:
Long-term debt due after one year		785,444			786,058
Deferred income taxes		150,560			149,032
Accrued liabilities		116,021			117,583

Total long-term liabilities		1,052,025			1,052,673
Shareholders' equity:
Preferred stock, no par value:
100,000 shares authorized, none outstanding		—			—
Common stock, no par value:
425,000,000 shares authorized
2010: 173,207,493 shares issued and 152,869,848 shares outstanding
2009: 173,085,926 shares issued and 152,790,170 shares outstanding		132,058			129,215
Paid-in capital		84,616			72,364
Retained earnings		3,080,079			2,938,419
Treasury stock:
2010: 20,337,645 shares
2009: 20,295,756 shares		(798,857	)		(797,888	)
Other accumulated comprehensive income (loss):
Foreign currency translation		42,870			33,505
Unrealized loss on derivatives		(6,997	)		(8,207	)
Other		287			—
Unrealized (loss) gain on available-for-sale securities		(27	)		1

Total shareholders' equity		2,534,029			2,367,409

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

See accompanying notes.

Consolidated Statements of Shareholders' Equity


		Common Stock					Paid-In			Retained			Other Accumulated Comprehensive		Treasury Stock							Total Shareholders'
(In thousands)			Shares		Amount		Capital			Earnings			Income (Loss)			Shares			Amount			Equity

Balance at June 1, 2007			172,874	$	120,811	$	56,909		$	2,533,459		$	37,121			(14,197	)	$	(580,562	)	$	2,167,738
	Net income		—		—		—			335,405			—			—			—			335,405
	Equity adjustment for foreign currency translation		—		—		—			—			19,391			—			—			19,391
	Change in fair value of derivatives, net of $2,924 of tax		—		—		—			—			(4,915	)		—			—			(4,915	)
	Amortization of interest rate lock agreements		—		—		—			—			521			—			—			521
	Change in fair value of available-for-sale securities, net of $98 of tax		—		—		—			—			162			—			—			162

	Comprehensive income, net of tax																					350,564
	FIN 48 adjustment		—		—		—			(13,731	)		—			—			—			(13,731	)
	Dividends		—		—		—			(70,831	)		—			—			—			(70,831	)
	Stock-based compensation		—		—		7,456			—			—			—			—			7,456
	Stock options exercised, net of shares surrendered		209		8,371		(3,957	)		—			—			—			—			4,414
	Repurchase of common stock		—		—		—			—			—			(5,195	)		(191,479	)		(191,479	)

Balance at May 31, 2008			173,083		129,182		60,408			2,784,302			52,280			(19,392	)		(772,041	)		2,254,131

	Net income		—		—		—			226,357			—			—			—			226,357
	Equity adjustment for foreign currency translation		—		—		—			—			(27,701	)		—			—			(27,701	)
	Change in fair value of derivatives, net of $94 of tax		—		—		—			—			(159	)		—			—			(159	)
	Amortization of interest rate lock agreements		—		—		—			—			767			—			—			767
	Change in fair value of available-for-sale securities, net of $50 of tax		—		—		—			—			112			—			—			112

	Comprehensive income, net of tax																					199,376
	Dividends		—		—		—			(72,207	)		—			—			—			(72,207	)
	Stock-based compensation		—		—		11,953			—			—			—			—			11,953
	Stock options exercised, net of shares surrendered		3		—		—			—			—			—			—			—
	Other		—		33		3			(33	)		—			—			—			3
	Repurchase of common stock		—		—		—			—			—			(904	)		(25,847	)		(25,847	)

Balance at May 31, 2009			173,086		129,215		72,364			2,938,419			25,299			(20,296	)		(797,888	)		2,367,409

	Net income		—		—		—			215,620			—			—			—			215,620
	Equity adjustment for foreign currency translation		—		—		—			—			9,365			—			—			9,365
	Change in fair value of derivatives, net of $260 of tax		—		—		—			—			443			—			—			443
	Amortization of interest rate lock agreements		—		—		—			—			767			—			—			767
	Change in fair value of available-for-sale securities, net of ($14) of tax benefit		—		—		—			—			(28	)		—			—			(28	)

	Comprehensive income, net of tax																					226,167
	Dividends		—		—		—			(73,960	)		—			—			—			(73,960	)
	Stock-based compensation		—		—		15,349			—			—			—			—			15,349
	Vesting of stock-based compensation awards		121		2,843		(2,843	)		—			—			—			—			—
	Other		—		—		(254	)		—			287			—			—			33
	Repurchase of common stock		—		—		—			—			—			(42	)		(969	)		(969	)

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

See accompanying notes.


Consolidated Statements of Cash Flows
		Fiscal Years Ended May 31,

(In thousands)		2010			2009			2008

Cash flows from operating activities:
Net income	$	215,620		$	226,357		$	335,405
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		152,059			157,572			148,566
Amortization of deferred charges		41,082			42,534			43,337
Impairment of long-lived assets		—			48,888			—
Stock-based compensation		15,349			11,953			7,456
Deferred income taxes		13,295			(1,174	)		1,663
Change in current assets and liabilities, net of acquisitions of businesses:
Accounts receivable, net		1,140			71,149			(14,939	)
Inventories, net		30,293			35,136			(6,100	)
Uniforms and other rental items in service		4,164			29,661			(23,854	)
Prepaid expenses		3,715			(4,949	)		3,830
Accounts payable		8,939			(24,560	)		30,567
Accrued compensation and related liabilities		18,393			(2,012	)		(12,430	)
Accrued liabilities and other		47,528			(28,991	)		20,398
Income taxes payable (receivable)		9,995			(38,042	)		8,841

Net cash provided by operating activities		561,572			523,522			542,740
Cash flows from investing activities:
Capital expenditures		(111,078	)		(160,092	)		(190,333	)
Proceeds from sale or redemption of marketable securities		34,712			116,433			45,791
Purchase of marketable securities and investments		(81,269	)		(128,402	)		(54,498	)
Acquisitions of businesses, net of cash acquired		(50,444	)		(30,909	)		(111,535	)
Other		4,579			(251	)		(400	)

Net cash used in investing activities		(203,500	)		(203,221	)		(310,975	)
Cash flows from financing activities:
Proceeds from issuance of debt		—			7,500			295,000
Repayment of debt		(603	)		(164,649	)		(232,409	)
Stock options exercised		—			—			8,371
Dividends paid		(73,960	)		(72,207	)		(70,831	)
Repurchase of common stock		(969	)		(25,847	)		(191,479	)
Other		(977	)		855			(11,356	)

Net cash used in financing activities		(76,509	)		(254,348	)		(202,704	)
Effect of exchange rate changes on cash and cash equivalents		(27	)		(2,432	)		1,803

Net increase in cash and cash equivalents		281,536			63,521			30,864
Cash and cash equivalents at beginning of year		129,745			66,224			35,360

Cash and cash equivalents at end of year	$	411,281		$	129,745		$	66,224

See accompanying notes.

**Notes to Consolidated Financial Statements

**(Amounts in thousands except per share and share data)

1. Significant Accounting Policies

Business description. Cintas Corporation (Cintas) provides highly specialized products and services to businesses of all types primarily throughout North America and Latin America, Europe and Asia. Cintas is 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 cleaning services and supplies, carpet and tile cleaning services, first aid, safety and fire protection products and services, document management services and branded promotional products. Our products and services are designed to enhance our customers' images and to provide additional safety and protection in the workplace.

Cintas classifies its businesses into four operating segments. The Rental Uniforms and Ancillary Products operating segment 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 cleaning services and supplies and carpet and tile cleaning services are also provided within this operating segment. The Uniform Direct Sales operating segment consists of the direct sale of uniforms and related items and branded promotional products. The First Aid, Safety and Fire Protection Services operating segment consists of first aid, safety and fire protection products and services. The Document Management Services operating segment consists of document destruction, document imaging and document retention services.

Principles of consolidation. The consolidated financial statements include the accounts of Cintas controlled majority-owned subsidiaries and any entities over which Cintas has control (collectively, Cintas). Intercompany balances and transactions have been eliminated as appropriate.

Use of estimates. The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.

Revenue recognition. Rental revenue, which is recorded in the Rental Uniforms and Ancillary Products operating segment, is recognized when services are performed. Other Services revenue, which is recorded in the Uniform Direct Sales, First Aid, Safety and Fire Protection Services and Document Management Services operating segments, is recognized when either services are performed or when products are shipped and the title and risks of ownership pass to the customer.

Cost of rental uniforms and ancillary products. Cost of rental uniforms and ancillary products consists primarily of production expenses, delivery expenses and the amortization of in service inventory, including uniforms, mats, mops, shop towels and other ancillary items. The Rental Uniforms and Ancillary Products operating segment inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs and other costs of distribution are included in the cost of rental uniforms and ancillary products.

Cost of other services. Cost of other services consists primarily of cost of goods sold (predominantly uniforms and first aid products), delivery expenses and distribution expenses. Cost of other services includes inbound freight charges, purchasing and receiving costs, inspection costs, warehousing costs and other costs of distribution.

Selling and administrative expenses. Selling and administrative expenses consist primarily of sales labor and commissions, management and administrative labor, payroll taxes, medical expense, insurance expense, legal and professional costs and amortization of finite-lived intangible assets.

Cash and cash equivalents. Cintas considers all highly liquid investments with a maturity of three months or less, at date of purchase, to be cash equivalents.

Marketable securities. Marketable securities are comprised of fixed income securities and are classified as available-for-sale.

Accounts receivable. Accounts receivable is comprised of amounts owed through product shipments and services provided and is presented net of an allowance for doubtful accounts. The allowance is an estimate based on historical rates of collectability and allowances for specific accounts identified as uncollectible. The allowance that is an estimate based on historical rates of collectability is recorded for overdue amounts, beginning with a nominal percentage and increasing substantially as the account ages. The amount provided as the account ages will differ slightly between the Rental Uniforms and Ancillary Products operating segment and the three other operating segments because of differences in customers served and the nature of each operating segment. When an account is considered uncollectible, it is written off against the allowance.

Inventories. Inventories are valued at the lower of cost (first-in, first-out) or market. 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

Inventories are recorded net of reserves for obsolete inventory of $32,466 and $48,353 as of May 31, 2010 and 2009, respectively.

Uniforms and other rental items in service. These items are valued at cost less amortization, calculated using the straight-line method. Uniforms in service (other than cleanroom and flame resistant clothing) are amortized over their useful life of 18 months. Other rental items, including shop towels, mats, mops, cleanroom garments, flame resistant clothing, linens and restroom dispensers, are amortized over their useful lives which range from 8 to 48 months.

Property and equipment. Property and equipment is stated at cost, less accumulated depreciation. Depreciation is calculated using the straight-line method primarily over the following estimated useful lives, in years:


	Buildings			30 to 40
	Building improvements			5 to 20
	Equipment			3 to 10
	Leasehold improvements			2 to 15

Long-lived assets. When events or circumstances indicate that the carrying amount of long-lived assets may not be recoverable, the estimated undiscounted future cash flows are compared to the carrying amount of the assets. If the estimated undiscounted future cash flows are less than the carrying amount of the assets, an impairment loss is

recorded based on the excess of the carrying amount of the assets over their respective fair values. Fair value is generally determined by discounted cash flows or based on prices of similar assets, as appropriate. Long-lived assets that are held for sale are reported at the lower of the carrying amount or the fair value, less estimated costs to sell.

Goodwill. Goodwill is separately disclosed from other intangible assets on the consolidated balance sheet and not amortized. 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. Based on the results of the annual impairment test, Cintas was not required to recognize an impairment of goodwill for the fiscal years ended May 31, 2010, 2009 or 2008. Cintas will continue to perform future impairment tests as of March 1 in future years or when indicators of impairment are noted.

Service contracts and other assets. Service contracts and other assets, which consist primarily of noncompete and consulting agreements obtained through acquisitions of businesses, are amortized by use of the straight-line method over the estimated lives of the agreements, which are generally 5 to 10 years.

Accrued liabilities. Current accrued liabilities are recorded when it is probable that a liability has occurred and the amount of the liability can be reasonably estimated. 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

Long-term accrued liabilities consists primarily of reserves associated with unrecognized tax benefits, which are described in more detail in Note 8 entitled Income Taxes, and retirement obligations.

Stock-based compensation. Compensation expense is recognized for all share-based payments to employees, including stock options, in the consolidated statements of income based on the fair value of the awards that are granted. The fair value of stock options is estimated at the date of grant using the Black-Scholes option-pricing model. Measured compensation cost, net of estimated forfeitures, is recognized on a straight-line basis over the vesting period of the related share-based compensation award.

Derivatives and hedging activities. Cintas formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. Derivatives are recorded at fair value on the consolidated balance sheet, and gains and losses are recorded as adjustments to earnings or other comprehensive income, as appropriate.

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. The ASC is an aggregation of previously issued authoritative GAAP in one comprehensive set of guidance organized by subject area. In accordance with the ASC, references to previously issued accounting standards have been removed. Subsequent revisions to GAAP will be incorporated into the ASC through Accounting Standards Updates (ASU). The following is a list of recent pronouncements issued by the FASB impacting Cintas.

Effective June 1, 2009, Cintas adopted fair value measurements guidance for all nonfinancial assets and nonfinancial liabilities recognized or disclosed at fair value on a nonrecurring basis. The guidance defines fair value, establishes guidance for measuring fair value and expands disclosures regarding fair value measurements. The adoption did not have a material impact on our consolidated financial statements.

Effective June 1, 2009, Cintas adopted new guidance on business combinations, in which an entity is required to recognize assets acquired, liabilities assumed, contractual contingencies and contingent consideration at fair value on the acquisition date. It further requires that acquisition-related costs are recognized separately from the acquisition and expensed as incurred, restructuring costs generally are expensed in periods subsequent to the acquisition date, and changes in accounting for deferred tax asset valuation allowances and acquired income tax uncertainties after the measurement period impact income tax expense. This adoption did not have a material impact on Cintas' results of operations or financial condition. Any future effects will depend upon the terms and size of future acquisitions.

Effective June 1, 2009, Cintas adopted new guidance for determining whether instruments granted in share-based payment transactions are participating securities. This guidance provides that unvested share-based payment awards that contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities and shall be included in the computation of earnings per share pursuant to the two-class method of determining earnings per share. The adoption did not have a material impact on basic or diluted earnings per share.

Effective June 1, 2009, Cintas adopted new guidance on subsequent events. The objective of this guidance is to establish general standards of accounting for and disclosure of events that occur after the consolidated balance sheet date but before the consolidated financial statements are issued or are available to be issued. This adoption did not have a material impact on Cintas' results of operations or financial condition.

2. Restructuring and Related Activity

Due to the declining economic conditions which negatively impacted the North American economy and Cintas' businesses, during the fourth quarter of fiscal 2009, management initiated certain restructuring activities to eliminate excess capacity and reduce our cost structure. These activities included closing or converting to branches 16 of our rental processing plants and reducing our workforce by 1,200 employees. We have substantially completed these restructuring activities as of May 31, 2010.

During the fourth quarter of fiscal 2009, Cintas recorded charges of $48,888 in long-lived asset impairment costs, $7,937 in employee termination costs and $2,272 in other exit costs for a total of $59,097 incurred as a result of this restructuring. These charges by operating segment are detailed in Note 14 entitled Operating Segment Information.

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


		Employee Termination Costs			Other Exit Costs			Total

Balance as of June 1, 2009	$	5,915		$	2,272		$	8,187
Cash paid — fiscal 2010		(3,785	)		(297	)		(4,082	)
Change in estimate		(1,380	)		(1,500	)		(2,880	)

Balance as of May 31, 2010	$	750		$	475		$	1,225

The change in estimate represents the difference between severance and other exit costs estimated based on the information available in fiscal 2009 and severance and other exit costs actually paid in fiscal 2010.

The fiscal 2009 charge of $48,888 in long-lived asset impairment costs included $25,849 in land and buildings of which $10,930 related to assets held for sale, $18,221 in equipment and $4,818 in long-lived other assets. The fair value was determined primarily by using market quoted prices and other prices quoted for similar assets and discounted cash flow models.

Certain assets totaling $9,437 and $15,744 are categorized at May 31, 2010 and 2009, respectively, as assets held for sale at the lower of their carrying value or fair value less cost to sell. These assets are in the Rental Uniform and Ancillary Products operating segment and are comprised of $3,077 and $6,268 of land at May 31, 2010 and 2009, respectively and $6,360 and $9,476 of buildings and improvements at May 31, 2010 and 2009, respectively.

3. Fair Value Measurements

FASB ASC defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants at the measurement date. It also establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:


	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.

In instances where the determination of the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. Cintas' assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability.

All financial instruments that are measured at fair value on a recurring basis (at least annually) have been segregated into the most appropriate level within the fair value hierarchy based on the inputs used to determine the fair value at the consolidated balance sheet date. These financial instruments measured at fair value on a recurring basis are summarized below:


			As of May 31, 2010

			Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents		$	411,281	$	—	$	—	$	411,281
Marketable securities:
	U.S. municipal bonds		—		21,954		—		21,954
	Canadian treasury securities		97,791		35,061		—		132,852
Accounts receivable, net			—		450		—		450

Total assets at fair value		$	509,072	$	57,465	$	—	$	566,537

Current accrued liabilities		$	—	$	64	$	—	$	64

Total liabilities at fair value		$	—	$	64	$	—	$	64


			As of May 31, 2009

			Level 1		Level 2		Level 3		Fair Value

Cash and cash equivalents		$	129,745	$	—	$	—	$	129,745
Marketable securities:
	Canadian treasury securities		120,393		—		—		120,393
Accounts receivable, net			—		78		—		78

Total assets at fair value		$	250,138	$	78	$	—	$	250,216

Current accrued liabilities		$	—	$	253	$	—	$	253

Total liabilities at fair value		$	—	$	253	$	—	$	253

Cintas' cash and cash equivalents and marketable securities are generally classified within Level 1 or Level 2 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations or alternative pricing sources with reasonable levels of price transparency. Cintas does not adjust the quoted market price for such financial instruments.

The funds invested in Canadian marketable securities are not expected to be repatriated, but instead are expected to be invested indefinitely in foreign subsidiaries. Interest, realized gains and losses and declines in value determined to be other than temporary on available-for-sale securities are included in interest income or expense. The cost of the securities sold is based on the specific identification method. The amortized cost basis of the marketable securities as of May 31, 2010 and 2009, is $154,857 and $120,403, respectively. Purchases of marketable securities were $64,416, $122,652 and $43,750 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively. All contractual maturities are due within one year.

Accounts receivable, net and current accrued liabilities include foreign currency average rate options. The fair value of Cintas' foreign currency average rate options are based on similar exchange traded derivatives and are, therefore, included within Level 2 of the fair value hierarchy.

The methods described above may produce a fair value that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while Cintas believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the consolidated balance sheet date.

4. Property and Equipment


		2010		2009

Land	$	101,374	$	77,210
Buildings and improvements		471,592		444,683
Equipment		1,178,181		1,088,809
Leasehold improvements		17,176		15,269
Construction in progress		88,769		93,834

		1,857,092		1,719,805
Less: accumulated depreciation		962,570		805,178

	$	894,522	$	914,627

Interest expense is net of capitalized interest of $2,182, $2,259 and $1,090 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

5. Goodwill, Service Contracts and Other Assets

Changes in the carrying amount of goodwill and service contracts for the fiscal years ended May 31, 2010 and 2009, by operating segment, are as follows:


Goodwill		Rental Uniforms & Ancillary Products			Uniform Direct Sales			First Aid, Safety & Fire Protection		Document Management			Total

Balance as of June 1, 2008	$	863,581		$	23,956		$	165,544	$	262,488		$	1,315,569
Goodwill acquired		—			—			1,328		17,340			18,668
Foreign currency translation		(1,702	)		(65	)		—		(1,082	)		(2,849	)

Balance as of May 31, 2009	$	861,879		$	23,891		$	166,872	$	278,746		$	1,331,388
Goodwill (adj.) acquired		(1,401	)		—			15,095		12,528			26,222
Foreign currency translation		639			37			—		(1,361	)		(685	)

Balance as of May 31, 2010	$	861,117		$	23,928		$	181,967	$	289,913		$	1,356,925



Service Contracts		Rental Uniforms & Ancillary Products			Uniform Direct Sales			First Aid, Safety & Fire Protection			Document Management			Total

Balance as of June 1, 2008	$	84,574		$	328		$	41,944		$	25,911		$	152,757
Service contracts acquired		—			—			264			4,252			4,516
Service contracts amortization		(16,289	)		(289	)		(6,166	)		(7,613	)		(30,357	)
Foreign currency translation		(2,388	)		(39	)		—			(159	)		(2,586	)

Balance as of May 31, 2009	$	65,897		$	—		$	36,042		$	22,391		$	124,330
Service contracts acquired		—			—			5,897			4,500			10,397
Service contracts amortization		(18,081	)		—			(6,340	)		(7,545	)		(31,966	)
Foreign currency translation		895			—			—			(211	)		684

Balance as of May 31, 2010	$	48,711		$	—		$	35,599		$	19,135		$	103,445

Information regarding Cintas' service contracts and other assets is as follows:


As of May 31, 2010		Carrying Amount		Accumulated Amortization		Net

Service contracts	$	346,569	$	243,124	$	103,445

Noncompete and consulting agreements	$	68,435	$	53,425	$	15,010
Investments (1)		68,616		—		68,616
Other		10,516		4,242		6,274

Total	$	147,567	$	57,667	$	89,900


As of May 31, 2009		Carrying Amount		Accumulated Amortization		Net

Service contracts	$	335,473	$	211,143	$	124,330

Noncompete and consulting agreements	$	65,683	$	44,320	$	21,363
Investments (1)		51,762		—		51,762
Other		10,675		3,467		7,208

Total	$	128,120	$	47,787	$	80,333

(1)

Investments at May 31, 2010, include the cash surrender value of insurance policies of $34,294, equity method investments of $30,036 and cost method investments of $4,286. Investments at May 31, 2009, include the cash surrender value of insurance policies of $18,006, equity method investments of $28,742 and cost method investments of $5,014.

Amortization expense was $41,082, $42,534 and $43,337 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively. Estimated amortization expense, excluding any future acquisitions, for each of the next five years is $37,869, $31,462, $15,398, $12,282 and $9,509, respectively.

6. Long-Term Debt and Derivatives


		2010		2009

Unsecured term notes due through 2036 at an average rate of 6.07%	$	786,053	$	786,627
Other		—		29

		786,053		786,656
Less: amounts due within one year		609		598

	$	785,444	$	786,058

Letters of credit outstanding were $95,878 and $68,640 for the fiscal years ended May 31, 2010 and 2009, respectively. Maturities of long-term debt during each of the next five years are $609, $642, $225,636, $8,187 and $503, respectively.

Interest paid was $48,592, $49,857 and $49,707 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

Cintas has a commercial paper program supported by a $600,000 long-term credit facility. There was no commercial paper outstanding for the fiscal years ended May 31, 2010 or 2009.

Cintas used interest rate lock agreements to hedge against movements in the treasury rates at the time Cintas issued its senior notes in fiscal 2002, fiscal 2007 and fiscal 2008. The amortization of the cash flow hedges resulted in a credit to other comprehensive income of $767, $767 and $521 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

To hedge the exposure of movements in the foreign currency rates, Cintas uses foreign currency hedges. These hedges 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. Cintas had average rate options included in accounts receivable, net of $450 and $78 for the fiscal years ended May 31, 2010 and 2009, respectively. Cintas also had average rate options included in current accrued liabilities of $64 and $253 for the fiscal years ended May 31, 2010 and 2009, respectively. These instruments increased foreign currency exchange loss by $520 during fiscal 2010 and reduced foreign currency exchange loss by $1,095 during fiscal 2009.

Cintas has certain covenants related to debt agreements. These covenants limit Cintas' ability to incur certain liens, to engage in sale-leaseback transactions and to merge, consolidate or sell all or substantially all of Cintas' assets. These covenants also require Cintas to maintain certain debt to capitalization and interest coverage ratios. Cross default provisions exist between certain debt instruments. Cintas is in compliance with all of the significant debt covenants for all periods presented. If a default of a significant covenant were to occur, the default could result in an acceleration of the maturity of the indebtedness, impair liquidity and limit the ability to raise future capital.

7. Leases

Cintas conducts certain operations from leased facilities and leases certain equipment. Most leases contain renewal options for periods from 1 to 10 years. The lease agreements provide for increases in rent expense if the options are exercised based on increases in certain price level factors or other prearranged factors. Step rent provisions, escalation clauses, capital improvements funding and other lease concessions are taken into account in computing minimum lease payments. Minimum lease payments are recognized on a straight-line basis over the minimum lease

term. Lease payments are not dependent on an existing index or rate and are not included in minimum lease payments. It is anticipated that expiring leases will be renewed or replaced.

The minimum rental payments under noncancelable lease arrangements for each of the next five years and thereafter are $27,766, $22,017, $15,331, $9,587, $5,885 and $8,455, respectively. Rent expense under operating leases during the fiscal years ended May 31, 2010, 2009 and 2008, was $38,046, $37,897 and $34,996, respectively.

8. Income Taxes

Income before income taxes consist of the following components:


		2010		2009		2008

U.S. operations	$	315,717	$	332,863	$	476,279
Foreign operations		28,175		28,730		54,425

	$	343,892	$	361,593	$	530,704

Income taxes consist of the following components:


		2010		2009			2008

Current:
Federal	$	106,389	$	135,909		$	171,927
State and local		12,909		18,962			17,225

		119,298		154,871			189,152
Deferred		8,974		(19,635	)		6,147

	$	128,272	$	135,236		$	195,299

Reconciliation of income tax expense using the statutory rate and actual income tax expense is as follows:


		2010			2009			2008

Income taxes at the U.S. federal statutory rate	$	120,362		$	126,558		$	185,746
State and local income taxes, net of federal benefit		8,631			9,062			12,832
Other		(721	)		(384	)		(3,279	)

	$	128,272		$	135,236		$	195,299

The components of deferred income taxes included on the consolidated balance sheets are as follows:


			2010		2009

Deferred tax assets:
	Allowance for doubtful accounts	$	4,890	$	6,211
	Inventory obsolescence		12,381		17,877
	Insurance and contingencies		16,148		15,492
	Stock-based compensation		9,954		7,000
	Other		20,622		16,294

			63,995		62,874
Deferred tax liabilities:
	In service inventory		8,416		7,743
	Property		81,634		76,482
	Intangibles		65,868		58,538
	State taxes and other		6,222		2,775

			162,140		145,538

Net deferred tax liability		$	98,145	$	82,664

Income taxes paid were $103,762, $187,150 and $180,634 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

Undistributed earnings of foreign subsidiaries were approximately $198,273, $181,556 and $184,551 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively, for which deferred taxes have not been provided. Such earnings are considered indefinitely invested in the foreign subsidiaries. If such earnings were repatriated, additional tax expense may result. The current calculation of such additional taxes is not practicable.

Accounting for uncertain tax positions requires the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Companies may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

As of May 31, 2010 and May 31, 2009, there was $27,777 and $26,261, respectively, in total unrecognized tax benefits, which if recognized, would favorably impact Cintas' effective tax rate. Cintas recognizes interest accrued related to unrecognized tax benefits and penalties in income tax expense in the consolidated statements of income, which is consistent with the recognition of these items in prior reporting periods. The total amount accrued for interest and penalties as of May 31, 2010 and May 31, 2009, was $15,693 and $15,739, respectively. Cintas records this tax liability in both current and long-term accrued liabilities on the consolidated balance sheets.

In the normal course of business, Cintas provides for uncertain tax positions and the related interest, and adjusts its unrecognized tax benefits and accrued interest accordingly. Unrecognized tax benefits related to continuing operations increased by $879 in fiscal 2010, decreased by $18,682 in fiscal 2009 and increased by $2,770 in fiscal 2008. Accrued interest decreased by $46 in fiscal 2010, decreased by $565 in fiscal 2009 and increased by $487 in fiscal 2008.

A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:



Balance at June 1, 2008	$	115,329
Additions based on tax positions related to the current year		1,525
Additions for tax positions of prior years		1,989
Settlements		(3,120	)
Statute expirations		(20,558	)

Balance at May 31, 2009	$	95,165
Additions based on tax positions related to the current year		1,528
Additions for tax positions of prior years		3,760
Settlements		(605	)
Statute expirations		(3,991	)

Balance at May 31, 2010	$	95,857

The majority of Cintas' operations are in North America. Cintas is required to file federal income tax returns as well as state income tax returns in a majority of the domestic states and also in certain Canadian provinces. At times, Cintas is subject to audits in these jurisdictions. The audits, by nature, are sometimes complex and can require several years to resolve. The final resolution of any such tax audit could result in either a reduction in Cintas' accruals or an increase in its income tax provision, either of which could have an impact on the consolidated results of operation in any given period.

All U.S. federal income tax returns are closed to audit through fiscal 2006. Cintas is currently in advanced stages of various audits in certain foreign jurisdictions and certain domestic states. The years under audit cover fiscal years back to 2000. Based on the resolution of the various audits, it is reasonably possible that the balance of unrecognized tax benefits could decrease by approximately $15,000 for the fiscal year ended May 31, 2011.

9. Acquisitions

The purchase price paid for each acquisition has been allocated to the fair value of the assets acquired and liabilities assumed. During fiscal 2010, Cintas acquired three First Aid, Safety and Fire Protection Services operating segment businesses and four Document Management Services operating segment businesses. During fiscal 2009, Cintas acquired three First Aid, Safety and Fire Protection Services operating segment businesses and twelve Document Management Services operating segment businesses. The following summarizes the aggregate purchase price for all businesses acquired:


		2010		2009

Fair value of tangible assets acquired	$	23,006	$	6,546
Fair value of goodwill acquired		26,978		19,024
Fair value of service contracts acquired		9,018		4,085
Fair value of other intangibles acquired		3,828		2,288

Total fair value of assets acquired		62,830		31,943
Fair value of liabilities assumed and incurred		11,870		574

Total cash paid for acquisitions	$	50,960	$	31,369

The results of operation for the acquired businesses are included in the consolidated statements of income from the dates of acquisition. The pro forma revenue, net income and earnings per share information relating to acquired businesses are not presented because they are not significant to Cintas.

10. Defined Contribution Plans

Cintas' Partners' Plan (the Plan) is a non-contributory profit sharing plan and Employee Stock Ownership Plan (ESOP) for the benefit of substantially all U.S. Cintas employees who have completed one year of service. The Plan also includes a 401(k) savings feature covering substantially all U.S. employees. The amounts of contributions to the Plan and ESOP, as well as the matching contribution to the 401(k), are made at the discretion of Cintas. Total contributions, including Cintas' matching contributions, which approximate cost, were $19,849, $23,400 and $28,700 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

Cintas has a non-contributory deferred profit sharing plan (DPSP), which covers substantially all Canadian employees. In addition, a registered retirement savings plan (RRSP) is offered to those employees. The amounts of contributions to the DPSP, as well as the matching contribution to the RRSP, are made at the discretion of Cintas. Total contributions, which approximate cost, were $921, $1,086 and $1,500 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

Cintas has a supplemental executive retirement plan (SERP) subject to Section 409A of the Internal Revenue Code for the benefit of certain highly compensated Cintas employees. The SERP allows participants to defer the receipt of compensation which would otherwise become payable to them. Matching contributions are made at the discretion of Cintas. Total matching contributions were $5,014, $5,498 and $5,915 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

11. Earnings per Share

Cintas adopted new guidance for determining whether instruments granted in share-based payment transactions are participating securities on June 1, 2009, using the retrospective method. The retrospective application had no impact on the basic and diluted earnings per share for the fiscal years ended May 31, 2009 and 2008, respectively. The following table sets forth the computation of basic and diluted earnings per share using the two-class method for amounts attributable to Cintas' common shares:


			2010		2009		2008

Basic Earnings per Share
Net income		$	215,620	$	226,357	$	335,405
Less dividends to:
	Common shares	$	73,377	$	71,811	$	70,692
	Unvested shares		583		396		139

Total dividends		$	73,960	$	72,207	$	70,831
Undistributed net income		$	141,660	$	154,150	$	264,574
Less: net income allocated to participating unvested securities			661		427		315

Net income available to common shareholders		$	140,999	$	153,723	$	264,259

Basic weighted average common shares outstanding			152,858		152,942		155,678

Basic earnings per share:
Common shares — distributed earnings		$	0.48	$	0.47	$	0.46
Common shares — undistributed earnings			0.92		1.01		1.69

	Total common shares	$	1.40	$	1.48	$	2.15

Unvested shares — distributed earnings		$	0.48	$	0.47	$	0.46
Unvested shares — undistributed earnings			0.92		1.01		1.69

	Total unvested shares	$	1.40	$	1.48	$	2.15


			2010		2009		2008

Diluted Earnings per Share
Net income		$	215,620	$	226,357	$	335,405
Less dividends to:
	Common shares	$	73,377	$	71,811	$	70,692
	Unvested shares		583		396		139

Total dividends		$	73,960	$	72,207	$	70,831
Undistributed net income		$	141,660	$	154,150	$	264,574
Less: net income allocated to participating unvested securities			661		427		315

Net income available to common shareholders		$	140,999	$	153,723	$	264,259

Basic weighted average common shares outstanding			152,858		152,942		155,678

Effect of dilutive securities — employee stock options			—		—		—
Diluted weighted average common shares outstanding			152,858		152,942		155,678

Diluted earnings per share:
Common shares — distributed earnings		$	0.48	$	0.47	$	0.46
Common shares — undistributed earnings			0.92		1.01		1.69

	Total common shares	$	1.40	$	1.48	$	2.15

Unvested shares — distributed earnings		$	0.48	$	0.47	$	0.46
Unvested shares — undistributed earnings			0.92		1.01		1.69

	Total unvested shares	$	1.40	$	1.48	$	2.15

For the fiscal years ended May 31, 2010, 2009 and 2008, 4,451, 5,474 and 3,060 options granted to purchase shares of Cintas common stock, respectively, were excluded from the computation of diluted earnings per share. The exercise prices of these options were greater than the average market price of the common shares (anti-dilutive).

12. Stock-Based Compensation

Under the 2005 Equity Compensation Plan adopted by Cintas in fiscal 2006, Cintas may grant officers and key employees equity compensation in the form of stock options, stock appreciation rights, restricted and unrestricted stock awards, performance awards and other stock unit awards up to an aggregate of 14,000,000 shares of Cintas' common stock. At May 31, 2010, 10,914,768 shares of common stock are reserved for future issuance under the 2005 Equity Compensation Plan. The compensation cost was $15,349, $11,953 and $7,456 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively. The total income tax benefit recognized in the consolidated income statement for share-based compensation arrangements was $3,912, $2,809 and $2,022 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

Stock Options

Stock options are granted at the fair market value of the underlying common stock on the date of grant. The option terms are determined by the Compensation Committee of the Board of Directors, but no stock option may be exercised later than 10 years after the date of the grant. The option awards generally have 10-year terms with graded vesting in years 3 through 10 based on continuous service during that period. Cintas recognizes compensation expense for these options using the straight-line recognition method over the vesting period.

The fair value of these options was estimated at the date of grant using a Black-Scholes option-pricing model with the following assumptions:


	2010		2009		2008

Risk-free interest rate	3.9	%	4.5	%	4.5	%
Dividend yield	1.3	%	1.0	%	0.8	%
Expected volatility of Cintas' common stock	30.0	%	30.0	%	30.0	%
Expected life of the option in years	7.5		7.5		8.5

The risk-free interest rate is based on U.S. government issues with a remaining term equal to the expected life of the stock options. The determination of expected volatility is based on historical volatility of Cintas' common stock over the period commensurate with the expected term of stock options, as well as other relevant factors. The weighted average expected term was determined based on the historical employee exercise behavior of the options. The weighted-average fair value of stock options granted during fiscal 2010, 2009 and 2008 was $10.16, $10.17 and $15.89, respectively.

The information presented in the following table relates primarily to stock options granted and outstanding under either the 2005 Equity Compensation Plan or under previously adopted plans:


	Shares			Weighted Average Exercise Price

Outstanding, May 31, 2007 (2,316,157 shares exercisable)	6,648,604		$	40.60
Granted	1,005,200			30.99
Canceled	(745,197	)		40.15
Exercised	(259,839	)		24.07

Outstanding, May 31, 2008 (2,041,837 shares exercisable)	6,648,768			39.85
Granted	539,039			23.62
Canceled	(828,383	)		36.47
Exercised	—			—

Outstanding, May 31, 2009 (1,914,710 shares exercisable)	6,359,424			38.91
Granted	1,070,798			28.52
Canceled	(963,016	)		35.98
Exercised	—			—

Outstanding, May 31, 2010 (1,838,530 shares exercisable)	6,467,206		$	37.63

There were no stock options exercised during the years ended May 31, 2010 or 2009. The total cash received from employees as a result of employee stock option exercises for the fiscal year ended May 31, 2008, was $4,430.

The fair value of stock options vested was $6,808, $3,458 and $2,069 for the fiscal years ended May 31, 2010, 2009 and 2008, respectively.

The following table summarizes the information related to stock options outstanding at May 31, 2010:


		Outstanding Options			Exercisable Options

Range of Exercise Prices	Number Outstanding	Average Remaining Option Life		Weighted Average Exercise Price	Number Exercisable		Weighted Average Exercise Price

$ 20.29 – $ 36.08	2,316,163	8.36	$	28.94	122,340	$	33.30
36.10 – 41.65	1,652,693	3.98		39.99	715,590		40.73
41.72 – 44.33	1,344,650	3.24		42.34	562,700		42.53
44.43 – 53.19	1,153,700	3.70		45.67	437,900		47.67

$ 20.29 – $ 53.19	6,467,206	5.34	$	37.63	1,838,530	$	42.44

At May 31, 2010, the aggregate intrinsic value of stock options outstanding and exercisable was $971 and $23, respectively.

The weighted-average remaining contractual term of stock options exercisable is 2.2 years.

Restricted Stock Awards

Restricted stock awards consist of Cintas' common stock which is subject to such conditions, restrictions and limitations as the Compensation Committee of the Board of Directors determines to be appropriate. The vesting period is generally three years after the grant date. The recipient of restricted stock awards will have all rights of a shareholder of Cintas, including the right to vote and the right to receive cash dividends, during the vesting period.

The information presented in the following table relates to restricted stock awards granted and outstanding under the plan adopted in fiscal 2006:


	Shares			Weighted Average Grant Price

Outstanding, unvested grants at May 31, 2007	329,424		$	37.35
Granted	240,086			30.05
Canceled	(35,879	)		38.16
Vested	—			—

Outstanding, unvested grants at May 31, 2008	533,631			34.01
Granted	502,821			26.66
Canceled	(52,583	)		32.99
Vested	(2,500	)		36.08

Outstanding, unvested grants at May 31, 2009	981,369			30.29
Granted	597,514			24.63
Canceled	(53,278	)		27.85
Vested	(118,254	)		36.57

Outstanding, unvested grants at May 31, 2010	1,407,351		$	27.45

The remaining unrecognized compensation cost related to unvested stock options and restricted stock at May 31, 2010, was $50,614, and the weighted-average period of time over which this cost will be recognized is 3.1 years.

13. Litigation and Other Contingencies

Cintas is subject to legal proceedings, insurance receipts, legal settlements and claims arising from the ordinary course of its business, including personal injury, customer contract, environmental and employment claims. In the opinion of management, the aggregate liability, if any, with respect to such ordinary course of business actions will not have a material adverse effect on the financial position or results of operation of Cintas. Cintas is party to additional litigation not considered in the ordinary course of business, including the litigation discussed below.

Cintas is a defendant in a purported class action lawsuit, Mirna E. Serrano, et al. v. Cintas Corporation (Serrano), filed on May 10, 2004, and pending in the United States District Court, Eastern District of Michigan, Southern Division. The Serrano plaintiffs alleged that Cintas discriminated against women in hiring into various service sales representative positions across all divisions of Cintas. On November 15, 2005, the Equal Employment Opportunity Commission (EEOC) intervened in the Serrano lawsuit. The Serrano plaintiffs seek injunctive relief, compensatory damages, punitive damages, attorneys' fees and other remedies. On October 27, 2008, the United States District Court in the Eastern District of Michigan granted summary judgment in favor of Cintas limiting the scope of the putative class in the Serrano 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 the Serrano lawsuit. Cintas is a defendant in another purported class action lawsuit, Blanca Nelly Avalos, et al. v. Cintas Corporation (Avalos), which was filed in the United States District Court, Eastern District of Michigan, Southern Division. The Avalos plaintiffs alleged that Cintas discriminated against women, African-Americans and Hispanics in hiring into various service sales representative positions in Cintas' Rental division only throughout the United States. The Avalos plaintiffs sought injunctive relief, compensatory damages, punitive damages, attorneys' fees and other remedies. The claims in Avalos originally were brought in the lawsuit captioned Robert Ramirez, et al. v. Cintas Corporation (Ramirez), filed on January 20, 2004, in the United States District Court, Northern District of California, San Francisco Division. On May 11, 2006, the Ramirez and Avalos African-American, Hispanic and female failure to hire into service sales representative positions claims and the EEOC's intervention were consolidated for pretrial purposes with the Serrano case and transferred to the United States District Court for the Eastern District of Michigan, Southern Division. The consolidated case was known as Mirna E. Serrano/Blanca Nelly Avalos, et al. v. Cintas Corporation (Serrano/Avalos). On March 31, 2009, the United States District Court, Eastern District of Michigan, Southern Division entered an order denying class certification to all plaintiffs in the Serrano/Avalos lawsuits. Following denial of class certification, the Judge permitted the individual Avalos and Serrano plaintiffs to proceed separately. In the Serrano case, all private individual claims have been dismissed with prejudice and the EEOC is continuing to pursue individual claims on behalf of 13 claimants. On April 15, 2010, the United States District Court, Eastern Division of Michigan, Southern Division entered an order granting summary judgment against all individual plaintiffs in the Avalos lawsuit. On May 11, 2010, Plaintiff Tanesha Davis, on behalf of all similarly situated plaintiffs, filed a notice of appeal of the District Court's summary judgment order in the United States Court of Appeals for the Sixth Circuit. The Appellate Court has made no determination regarding the merits of Davis' appeal.

The litigation discussed above, if decided or settled adversely to Cintas, may, individually or in the aggregate, result in liability material to Cintas' consolidated financial condition or results of operation and could increase costs of operations on an ongoing basis. Any estimated liability relating to these proceedings is not determinable at this

time. Cintas may enter into discussions regarding settlement of these and other lawsuits, and may enter into settlement agreements if it believes such settlement is in the best interest of Cintas' shareholders.

Cintas is a defendant in a purported class action lawsuit, Paul Veliz, et al. v. Cintas Corporation (Veliz), filed on March 19, 2003, in the United States District Court, Northern District of California, Oakland Division, alleging that Cintas violated certain federal and state wage and hour laws applicable to its service sales representatives, whom Cintas considers exempt employees, and asserting additional related ERISA claims. On April 5, 2004 and February 14, 2006, the Court stayed the claims of all plaintiffs with valid arbitration agreements pending arbitration of those claims. Claims made in the Veliz action, therefore, are pending before the United States District Court, Northern District of California and Judge Bruce Meyerson (Ret.), an Arbitrator selected by the parties. On August 5, 2009, the parties in the Veliz action reached a settlement in principle. When the settlement is fully documented and approved by the Court, the settlement will resolve all claims now pending or that could have been brought relating to the subject matter of the case before the Court and the Arbitrator. Cintas expects that the approval process will take several months. The principal terms of the settlement provide for an aggregate cash payment of approximately $23,950 which is accrued in current accrued liabilities at May 31, 2010. The pre-tax impact, net of insurance proceeds, was $19,477.

During fiscal 2010, Cintas had other legal settlements that totaled $4,052, net of insurance proceeds. None of these settlements were significant individually. These settlements included litigation related to multiple subjects including employment practices and insurance coverage.

14. Operating Segment Information

As described more fully in Note 2 entitled Restructuring and Related Activity, Cintas recorded a charge of $59,097 related to restructuring activities and impairment of long-lived assets in the fiscal year ended May 31, 2009. The total charges due to the restructuring activities and impairment of long-lived assets for the Rental Uniforms and Ancillary Products, Uniform Direct Sales, First Aid, Safety and Fire Protection Services and Document Management Services operating segments is $52,986, $4,682, $1,107 and $322, respectively.

Cintas evaluates the performance of each operating segment based on several factors of which the primary financial measures are operating segment revenue and income before income taxes. The accounting policies of the operating segments are the same as those described in Note 1 entitled Significant Accounting Policies. Information related to the operations of Cintas' operating segments is set forth below:


		Rental Uniforms & Ancillary Products			Uniform Direct Sales		First Aid, Safety & Fire Protection		Document Management		Corporate			Total

May 31, 2010
Revenue	$	2,569,357		$	386,370	$	338,651	$	252,961	$	—		$	3,547,339

Gross margin	$	1,119,781		$	116,336	$	131,726	$	129,974	$	—		$	1,497,817
Selling and admin. expenses		786,145			76,232		118,284		105,698		—			1,086,359
Legal settlements, net of insurance proceeds		—			—		—		—		23,529			23,529
Restructuring charges		(2,880	)		—		—		—		—			(2,880	)
Interest income		—			—		—		—		(1,695	)		(1,695	)
Interest expense		—			—		—		—		48,612			48,612

Income before income taxes	$	336,516		$	40,104	$	13,442	$	24,276	$	(70,446	)	$	343,892

Depreciation and amortization	$	131,714		$	7,582	$	16,178	$	37,667	$	—		$	193,141

Capital expenditures	$	68,224		$	6,791	$	8,155	$	27,908	$	—		$	111,078

Total assets	$	2,375,208		$	198,955	$	329,569	$	499,917	$	566,087		$	3,969,736

May 31, 2009
Revenue	$	2,755,015		$	428,369	$	378,097	$	213,204	$	—		$	3,774,685

Gross margin	$	1,192,785		$	106,033	$	144,180	$	107,873	$	—		$	1,550,871
Selling and admin. expenses		769,275			98,131		127,126		88,177		—			1,082,709
Restructuring charges		8,782			547		564		316		—			10,209
Impairment of long-lived assets		44,204			4,135		543		6		—			48,888
Interest income		—			—		—		—		(2,764	)		(2,764	)
Interest expense		—			—		—		—		50,236			50,236

Income before income taxes	$	370,524		$	3,220	$	15,947	$	19,374	$	(47,472	)	$	361,593

Depreciation and amortization	$	140,448		$	6,950	$	18,282	$	34,426	$	—		$	200,106

Capital expenditures	$	114,423		$	14,582	$	8,312	$	22,775	$	—		$	160,092

Total assets	$	2,533,406		$	140,826	$	324,158	$	472,423	$	250,138		$	3,720,951

May 31, 2008
Revenue	$	2,834,568		$	517,490	$	403,552	$	182,290	$	—		$	3,937,900

Gross margin	$	1,252,951		$	168,210	$	160,823	$	99,616	$	—		$	1,681,600
Selling and admin. expenses		801,691			103,444		125,185		73,825		—			1,104,145
Interest income		—			—		—		—		(6,072	)		(6,072	)
Interest expense		—			—		—		—		52,823			52,823

Income before income taxes	$	451,260		$	64,766	$	35,638	$	25,791	$	(46,751	)	$	530,704

Depreciation and amortization	$	139,781		$	7,072	$	17,483	$	27,567	$	—		$	191,903

Capital expenditures	$	140,838		$	6,454	$	12,043	$	30,998	$	—		$	190,333

Total assets	$	2,620,138		$	205,638	$	345,479	$	445,651	$	191,695		$	3,808,601

15. Quarterly Financial Data (Unaudited)

The following is a summary of the results of operation for each of the quarters within the fiscal years ended May 31, 2010 and 2009:


May 31, 2010		First Quarter		Second Quarter		Third Quarter		Fourth Quarter

Revenue	$	891,569	$	884,509	$	861,812	$	909,449
Gross margin	$	382,795	$	369,847	$	359,607	$	385,568
Net income	$	53,984	$	57,176	$	48,982	$	55,478
Basic earnings per share	$	0.35	$	0.37	$	0.32	$	0.36
Diluted earnings per share	$	0.35	$	0.37	$	0.32	$	0.36
Weighted average number of shares outstanding (000's)		152,828		152,866		152,869		152,870


May 31, 2009		First Quarter		Second Quarter		Third Quarter		Fourth Quarter

Revenue	$	1,002,179	$	985,184	$	908,639	$	878,683
Gross margin	$	425,083	$	415,000	$	376,437	$	334,351
Net income	$	78,636	$	71,838	$	71,811	$	4,072
Basic earnings per share	$	0.51	$	0.47	$	0.47	$	0.03
Diluted earnings per share	$	0.51	$	0.47	$	0.47	$	0.03
Weighted average number of shares outstanding (000's)		153,394		152,788		152,993		152,790

As described more fully in Note 2 entitled Restructuring and Related Activity, we recorded a charge of $59,097 related to restructuring activities and impairment of long-lived assets in the quarter ended May 31, 2009.

16. Supplemental Guarantor Information

Cintas Corporation No. 2 (Corp. 2) is the indirectly, wholly-owned principal operating subsidiary of Cintas. Corp. 2 is the issuer of the $775,000 of long-term senior notes, which are unconditionally guaranteed, jointly and severally, by Cintas Corporation and its wholly-owned, direct and indirect domestic subsidiaries.

As allowed by SEC rules, the following condensed consolidating financial statements are provided as an alternative to filing separate financial statements of the guarantors. Each of the subsidiaries presented in the condensed consolidating financial statements has been fully consolidated in 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.

Condensed consolidating financial statements for Cintas, Corp. 2, the subsidiary guarantors and non-guarantors are presented on the following pages:

Condensed Consolidating Income Statement


Year Ended May 31, 2010		Cintas Corporation		Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Revenue:
Rental uniforms and ancillary products	$	—	$	1,970,303		$	518,254		$	180,847		$	(100,047	)	$	2,569,357
Other services		—		1,216,779			351,368			66,229			(656,394	)		977,982
Equity in net income of affiliates		215,620		—			—			—			(215,620	)		—

		215,620		3,187,082			869,622			247,076			(972,061	)		3,547,339
Costs and expenses (income):
Cost of rental uniforms and ancillary products		—		1,226,076			332,935			111,340			(220,775	)		1,449,576
Cost of other services		—		798,841			297,890			41,316			(538,101	)		599,946
Selling and administrative expenses		—		1,037,945			(20,140	)		67,669			885			1,086,359
Legal settlements, net of insurance proceeds		—		—			23,529			—			—			23,529
Restructuring charges		—		(1,080	)		(1,800	)		—			—			(2,880	)

Operating income		215,620		125,300			237,208			26,751			(214,070	)		390,809
Interest income		—		(268	)		(1,130	)		(297	)		—			(1,695	)
Interest expense (income)		—		51,486			(2,897	)		23			—			48,612

Income before income taxes		215,620		74,082			241,235			27,025			(214,070	)		343,892
Income taxes		—		27,936			91,239			9,123			(26	)		128,272

Net income	$	215,620	$	46,146		$	149,996		$	17,902		$	(214,044	)	$	215,620

Condensed Consolidating Income Statement


Year Ended May 31, 2009		Cintas Corporation		Corp. 2		Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Revenue:
Rental uniforms and ancillary products	$	—	$	2,101,857	$	569,780		$	175,711		$	(92,333	)	$	2,755,015
Other services		—		1,295,603		397,426			60,414			(733,773	)		1,019,670
Equity in net income of affiliates		226,357		—		—			—			(226,357	)		—

		226,357		3,397,460		967,206			236,125			(1,052,463	)		3,774,685
Costs and expenses (income):
Cost of rental uniforms and ancillary products		—		1,242,048		368,125			106,856			(154,799	)		1,562,230
Cost of other services		—		958,634		348,159			38,449			(683,658	)		661,584
Selling and administrative expenses		—		1,051,221		(27,889	)		57,953			1,424			1,082,709
Restructuring charges		—		6,575		3,531			103			—			10,209
Impairment of long-lived assets		—		25,713		17,328			5,847			—			48,888

Operating income		226,357		113,269		257,952			26,917			(215,430	)		409,065
Interest income		—		—		(930	)		(1,834	)		—			(2,764	)
Interest expense (income)		—		53,197		(2,982	)		21			—			50,236

Income before income taxes		226,357		60,072		261,864			28,730			(215,430	)		361,593
Income taxes		—		17,152		110,001			8,083			—			135,236

Net income	$	226,357	$	42,920	$	151,863		$	20,647		$	(215,430	)	$	226,357

Condensed Consolidating Income Statement


Year Ended May 31, 2008		Cintas Corporation		Corp. 2		Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Revenue:
Rental uniforms and ancillary products	$	—	$	2,059,920	$	578,426		$	197,333		$	(1,111	)	$	2,834,568
Other services		—		1,418,749		536,881			66,873			(919,171	)		1,103,332
Equity in net income of affiliates		335,405		—		—			—			(335,405	)		—

		335,405		3,478,669		1,115,307			264,206			(1,255,687	)		3,937,900
Costs and expenses (income):
Cost of rental uniforms and ancillary products		—		1,262,373		372,225			115,822			(168,802	)		1,581,618
Cost of other services		—		928,838		456,759			41,750			(752,665	)		674,682
Selling and administrative expenses		—		1,078,984		(27,702	)		57,239			(4,376	)		1,104,145

Operating income		335,405		208,474		314,025			49,395			(329,844	)		577,455
Interest income		—		—		(1,450	)		(4,622	)		—			(6,072	)
Interest expense (income)		—		54,153		(7,107	)		5,777			—			52,823

Income before income taxes		335,405		154,321		322,582			48,240			(329,844	)		530,704
Income taxes		—		57,779		120,776			16,744			—			195,299

Net income	$	335,405	$	96,542	$	201,806		$	31,496		$	(329,844	)	$	335,405

Condensed Consolidating Balance Sheet


As of May 31, 2010		Cintas Corporation			Corp. 2		Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Assets
Current assets:
Cash and cash equivalents	$	—		$	34,905	$	339,702		$	36,674		$	—		$	411,281
Marketable securities		—			—		21,954			132,852			—			154,806
Accounts receivable, net		—			265,594		74,256			26,451			—			366,301
Inventories, net		—			144,826		16,857			9,420			(1,619	)		169,484
Uniforms and other rental items in service		—			256,398		70,489			25,514			(20,295	)		332,106
Income taxes, current		—			5,306		(591	)		10,976			—			15,691
Deferred tax asset (liability)		—			—		54,474			(2,059	)		—			52,415
Prepaid expenses		—			5,565		6,371			1,487			—			13,423
Assets held for sale		—			—		9,437			—			—			9,437

Total current assets		—			712,594		592,949			241,315			(21,914	)		1,524,944
Property and equipment, at cost, net		—			591,040		240,462			63,020			—			894,522
Goodwill		—			—		1,310,675			46,250			—			1,356,925
Service contracts, net		—			98,335		880			4,230			—			103,445
Other assets, net		2,032,649			1,608,188		814,657			322,707			(4,688,301	)		89,900

	$	2,032,649		$	3,010,157	$	2,959,623		$	677,522		$	(4,710,215	)	$	3,969,736

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	(465,247	)	$	164,131	$	343,454		$	(8,614	)	$	38,023		$	71,747
Accrued compensation and related liabilities		—			42,181		21,730			3,013			—			66,924
Accrued liabilities		—			53,432		178,698			13,092			(820	)		244,402
Long-term debt due within one year		—			805		(196	)		—			—			609

Total current liabilities		(465,247	)		260,549		543,686			7,491			37,203			383,682
Long-term liabilities:
Long-term debt due after one year		—			795,541		(10,917	)		—			820			785,444
Deferred income taxes		—			—		145,563			4,997			—			150,560
Accrued liabilities		—			—		115,549			472			—			116,021

Total long-term liabilities		—			795,541		250,195			5,469			820			1,052,025
Total shareholders' equity		2,497,896			1,954,067		2,165,742			664,562			(4,748,238	)		2,534,029

	$	2,032,649		$	3,010,157	$	2,959,623		$	677,522		$	(4,710,215	)	$	3,969,736

Condensed Consolidating Balance Sheet


As of May 31, 2009		Cintas Corporation			Corp. 2		Subsidiary Guarantors		Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Assets
Current assets:
Cash and cash equivalents	$	—		$	39,397	$	76,979	$	13,369		$	—		$	129,745
Marketable securities		—			—		—		120,393			—			120,393
Accounts receivable, net		—			275,878		88,158		21,944			(28,302	)		357,678
Inventories, net		—			194,604		2,505		8,248			(3,006	)		202,351
Uniforms and other rental items in service		—			258,766		76,167		20,998			(20,484	)		335,447
Income taxes, current		—			3,172		15,865		6,475			—			25,512
Deferred tax asset (liability)		—			—		67,298		(930	)		—			66,368
Prepaid expenses		—			6,178		9,473		1,384			—			17,035
Assets held for sale		—			—		15,744		—			—			15,744

Total current assets		—			777,995		352,189		191,881			(51,792	)		1,270,273
Property and equipment, at cost, net		—			636,348		227,325		50,954			—			914,627
Goodwill		—			—		1,293,559		37,829			—			1,331,388
Service contracts, net		—			118,459		1,658		4,213			—			124,330
Other assets, net		1,876,863			1,598,027		1,782,517		336,264			(5,513,338	)		80,333

	$	1,876,863		$	3,130,829	$	3,657,248	$	621,141		$	(5,565,130	)	$	3,720,951

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	(465,247	)	$	162,162	$	371,731	$	(20,013	)	$	21,332		$	69,965
Accrued compensation and related liabilities		—			32,119		14,296		1,999			—			48,414
Accrued liabilities		—			43,066		131,618		8,066			(858	)		181,892
Long-term debt due within one year		—			749		68		—			(219	)		598

Total current liabilities		(465,247	)		238,096		517,713		(9,948	)		20,255			300,869
Long-term liabilities:
Long-term debt due after one year		—			796,351		241		24,511			(35,045	)		786,058
Deferred income taxes		—			—		145,444		3,588			—			149,032
Accrued liabilities		—			—		117,210		373			—			117,583

Total long-term liabilities		—			796,351		262,895		28,472			(35,045	)		1,052,673
Total shareholders' equity		2,342,110			2,096,382		2,876,640		602,617			(5,550,340	)		2,367,409

	$	1,876,863		$	3,130,829	$	3,657,248	$	621,141		$	(5,565,130	)	$	3,720,951

Condensed Consolidating Statement of Cash Flows


Year Ended May 31, 2010					Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Cash flows from operating activities:
	Net income			$	215,620		$	46,146		$	149,996		$	17,902		$	(214,044	)	$	215,620
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation			—			105,981			37,149			8,929			—			152,059
		Amortization			—			37,723			879			2,480			—			41,082
		Stock-based compensation			15,349			—			—			—			—			15,349
		Deferred income taxes			—			(1,745	)		12,668			2,372			—			13,295
		Changes in current assets and liabilities, net of acquisitions of businesses:
			Accounts receivable, net		—			17,360			14,594			(2,512	)		(28,302	)		1,140
			Inventories, net		—			49,396			(16,803	)		(913	)		(1,387	)		30,293
			Uniforms and other rental items in service		—			2,379			5,655			(3,681	)		(189	)		4,164
			Prepaid expenses		—			667			3,101			(53	)		—			3,715
			Accounts payable		—			19,707			(70,957	)		43,498			16,691			8,939
			Accrued compensation and related liabilities		—			10,022			7,435			936			—			18,393
			Accrued liabilities		—			2,489			45,418			(417	)		38			47,528
			Income taxes payable (receivable)		—			(2,134	)		16,455			(4,326	)		—			9,995

Net cash provided by (used in) operating activities					230,969			287,991			205,590			64,215			(227,193	)		561,572
Cash flows from investing activities:
	Capital expenditures				—			(62,236	)		(42,422	)		(6,420	)		—			(111,078	)
	Proceeds from sale or redemption of marketable securities				—			—			8,361			26,351			—			34,712
	Purchase of marketable securities and investments				—			(24,826	)		161,621			(34,137	)		(183,927	)		(81,269	)
	Acquisitions of businesses, net of cash acquired				—			(25,686	)		—			(24,758	)		—			(50,444	)
	Other, net				(156,082	)		(179,965	)		(34,494	)		84			375,036			4,579

Net cash (used in) provided by investing activities					(156,082	)		(292,713	)		93,066			(38,880	)		191,109			(203,500	)
Cash flows from financing activities:
	Repayment of debt				—			(754	)		(35,933	)		—			36,084			(603	)
	Dividends paid				(73,950	)		—			—			(10	)		—			(73,960	)
	Repurchase of common stock				(969	)		—			—			—			—			(969	)
	Other				32			767			—			(1,776	)		—			(977	)

Net cash (used in) provided by financing activities					(74,887	)		13			(35,933	)		(1,786	)		36,084			(76,509	)
Effect of exchange rate changes on cash and cash equivalents					—			217			—			(244	)		—			(27	)

Net (decrease) increase in cash and cash equivalents					—			(4,492	)		262,723			23,305			—			281,536
Cash and cash equivalents at beginning of period					—			39,397			76,979			13,369			—			129,745

Cash and cash equivalents at end of period				$	—		$	34,905		$	339,702		$	36,674		$	—		$	411,281

Condensed Consolidating Statement of Cash Flows


Year Ended May 31, 2009					Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Cash flows from operating activities:
	Net income			$	226,357		$	42,920		$	151,863		$	20,647		$	(215,430	)	$	226,357
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation			—			111,242			38,289			8,041			—			157,572
		Amortization			—			39,637			1,115			1,782			—			42,534
		Impairment of long-lived assets			—			25,713			18,222			4,953			—			48,888
		Stock-based compensation			11,953			—			—			—			—			11,953
		Deferred income taxes			—			—			1,429			(2,603	)		—			(1,174	)
		Changes in current assets and liabilities, net of acquisitions of businesses:
			Accounts receivable, net		—			37,582			31,432			5,100			(2,965	)		71,149
			Inventories, net		—			23,521			15,843			(517	)		(3,711	)		35,136
			Uniforms and other rental items in service		—			29,220			7,859			(149	)		(7,269	)		29,661
			Prepaid expenses		—			(1,131	)		(3,597	)		(221	)		—			(4,949	)
			Accounts payable		—			(115,841	)		101,999			(13,474	)		2,756			(24,560	)
			Accrued compensation and related liabilities		—			2,141			(3,917	)		(236	)		—			(2,012	)
			Accrued liabilities		—			(11,594	)		(19,038	)		1,579			62			(28,991	)
			Income taxes receivable		—			(3,461	)		(28,551	)		(6,030	)		—			(38,042	)

Net cash provided by (used in) operating activities					238,310			179,949			312,948			18,872			(226,557	)		523,522
Cash flows from investing activities:
	Capital expenditures				—			(91,914	)		(59,925	)		(8,253	)		—			(160,092	)
	Proceeds from sale or redemption of marketable securities				—			—			—			116,433			—			116,433
	Purchase of marketable securities and investments				—			1,912			13,691			(122,652	)		(21,353	)		(128,402	)
	Acquisitions of businesses, net of cash acquired				—			(21,561	)		—			(9,348	)		—			(30,909	)
	Other, net				(140,259	)		88,792			(193,727	)		(64	)		245,007			(251	)

Net cash (used in) provided by investing activities					(140,259	)		(22,771	)		(239,961	)		(23,884	)		223,654			(203,221	)
Cash flows from financing activities:
	Proceeds from issuance of debt				—			7,500			—			—			—			7,500
	Repayment of debt				—			(163,693	)		(3,859	)		—			2,903			(164,649	)
	Dividends paid				(72,207	)		—			—			—			—			(72,207	)
	Repurchase of common stock				(25,847	)		—			—			—			—			(25,847	)
	Other				3			767			—			85			—			855

Net cash (used in) provided by financing activities					(98,051	)		(155,426	)		(3,859	)		85			2,903			(254,348	)
Effect of exchange rate changes on cash and cash equivalents					—			173			—			(2,605	)		—			(2,432	)

Net increase (decrease) in cash and cash equivalents					—			1,925			69,128			(7,532	)		—			63,521
Cash and cash equivalents at beginning of period					—			37,472			7,851			20,901			—			66,224

Cash and cash equivalents at end of period				$	—		$	39,397		$	76,979		$	13,369		$	—		$	129,745

Condensed Consolidating Statement of Cash Flows


Year Ended May 31, 2008					Cintas Corporation			Corp. 2			Subsidiary Guarantors			Non- Guarantors			Eliminations			Cintas Corporation Consolidated

Cash flows from operating activities:
	Net income			$	335,405		$	96,542		$	201,806		$	31,496		$	(329,844	)	$	335,405
	Adjustments to reconcile net income to net cash provided by (used in) operating activities:
		Depreciation			—			97,366			42,730			8,470			—			148,566
		Amortization			—			39,762			1,303			2,272			—			43,337
		Stock-based compensation			7,456			—			—			—			—			7,456
		Deferred income taxes			—			—			1,380			283			—			1,663
		Changes in current assets and liabilities, net of acquisitions of businesses:
			Accounts receivable, net		—			(9,760	)		(10,217	)		(2,630	)		7,668			(14,939	)
			Inventories, net		—			(9,703	)		5,053			(587	)		(863	)		(6,100	)
			Uniforms and other rental items in service		—			(14,890	)		(3,183	)		(1,083	)		(4,698	)		(23,854	)
			Prepaid expenses		—			318			3,630			(118	)		—			3,830
			Accounts payable		—			2,149,538			(2,139,010	)		27,909			(7,870	)		30,567
			Accrued compensation and related liabilities		—			(17,793	)		6,022			(659	)		—			(12,430	)
			Accrued liabilities		—			20,651			(753	)		486			14			20,398
			Income taxes (receivable) payable		—			(386	)		11,123			(1,896	)		—			8,841

Net cash provided by (used in) operating activities					342,861			2,351,645			(1,880,116	)		63,943			(335,593	)		542,740
Cash flows from investing activities:
	Capital expenditures				—			(121,909	)		(60,818	)		(7,606	)		—			(190,333	)
	Proceeds from sale or redemption of marketable securities				—			—			37,663			8,128			—			45,791
	Purchase of marketable securities and investments				—			(1,530,460	)		(371,128	)		(42,921	)		1,890,011			(54,498	)
	Acquisitions of businesses, net of cash acquired				—			(93,773	)		(41	)		(17,721	)		—			(111,535	)
	Other, net				(84,965	)		(671,455	)		2,308,662			(6	)		(1,552,636	)		(400	)

Net cash (used in) provided by investing activities					(84,965	)		(2,417,597	)		1,914,338			(60,126	)		337,375			(310,975	)
Cash flows from financing activities:
	Proceeds from issuance of debt				—			295,000			—			—			—			295,000
	Repayment of debt				—			(229,090	)		(1,537	)		—			(1,782	)		(232,409	)
	Stock options exercised				8,371			—			—			—			—			8,371
	Dividends paid				(70,831	)		—			—			—			—			(70,831	)
	Repurchase of common stock				(191,479	)		—			—			—			—			(191,479	)
	Other				(3,957	)		(7,319	)		—			(80	)		—			(11,356	)

Net cash (used in) provided by financing activities					(257,896	)		58,591			(1,537	)		(80	)		(1,782	)		(202,704	)
Effect of exchange rate changes on cash and cash equivalents					—			578			—			1,225			—			1,803

Net (decrease) increase in cash and cash equivalents					—			(6,783	)		32,685			4,962			—			30,864
Cash and cash equivalents at beginning of period					—			44,255			(24,834	)		15,939			—			35,360

Cash and cash equivalents at end of period				$	—		$	37,472		$	7,851		$	20,901		$	—		$	66,224

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