baird september 2012 facility services report

Notably weaker survey results leave us cautious of uniform rental stocks in F2013 ,

particularly when balanced against premium valuations (above five-year averages), high

expectations (estimates at the high end of guidance ranges), and less opportunity for

subsequent positive earnings revisions (slowing employment growth, increasing price

competition). While we still see modest opportunity at GKSR for longer-term investors, we

are downgrading to Neutral, citing fewer catalysts, a more balanced risk/reward, and strong

YTD alpha performance.

■ Survey suggests noticeable deterioration. Survey results turned decidedly negative in

September, paralleling recent BLS data trends and other macroeconomic softness.

■ Add/Stop Index turns negative - first time since September 2009. Our Baird Add/Stop

survey diffusion index – a measure of uniform-wearer expansion/contraction at existing

accounts – turned negative in 3Q12, its first negative print since September 2009.

Importantly, we note that the last time our Index turned positive-to-negative (neutral=50.0)

was March 2008, portending cautious sector positioning.

■ New customer (no-programmer) index declines, now flat. New customer ("no

programmer") interest held essentially flat at 48.6 (a slight decline), but well below 55.1 in

June and several quarters above 60 throughout 2011-1H12. No-programmer interest has

been an important component of the current cycle's recovery, with public uniform

companies citing no programmers driving ~50% of new business wins. Slowing new

business momentum likely reflects more difficult comparisons and economic slowdown.

■ Pricing deteriorates. Pricing deteriorated in 3Q12 with our diffusion index well below a

neutral rating at 37.5, its lowest reading since December 2009 and its fifth consecutive

reading below 50 (following slight gains in 2011). Slowing fundamentals could reinvigorate

competitive pricing, in our view, with participants also citing risk from rising fuel costs.

■ Growth expectations move lower but generally consistent with our outlook.

Forecasted 12-month growth rates have declined to +4.8% (from +5.4% in June),

generally consistent with historical mid-late cycle growth. Our estimates contemplate

3.9%, 6.2%, and 4.2% FTM organic growth rates at CTAS, UNF, and GKSR, respectively,

paralleling industry expectations.

■ Downgrading GKSR to Neutral; Neutral-rated across sector. Citing slowing industry

fundamentals, high expectations, strong YTD performance, and a fair multiple, we are

downgrading GKSR to Neutral, leaving us Neutral-rated across our uniform coverage.

Separately, we are incrementally cautious on CTAS, citing somewhat elevated

expectations and paper price risk though believe guidance is likely maintained on the

company's earnings report, this week. Finally, UNF may offer the next opportunity should

expectations reset lower post-initial F2013 guidance (October) given potential balance

sheet catalysts.

Prices as of 09/14/12 Rating TargetTicker Price Mkt Cap

(mil)Current

PriorCurrent

Prior

CTAS $41.72 $5,278 N/A $41

.

GKSR $33.71 $637 N/A $37

.O/A $36

UNF $68.30 $1,339 N/A $73

.

Sources: Bloomberg and Baird Data

September 17, 2012 Baird Equity ResearchBusiness Services

Facility ServicesUniform Survey Shows Deterioration; Downgrading GKSR to Neutral

Andrew J. Wittmann, CFA

[email protected]

414.298.1898

Justin P. Hauke

[email protected]

314.445.6519

[Please refer to Appendix- Important Disclosuresand Analyst Certification]

2

Prices as of 09/14/12 Market Cap (mil) Rating Target F2012 F2013 F2014

COMPANYTICKER - PRICE

CurrentPrior

CurrentPrior

CurrentPrior

CurrentPrior

CurrentPrior

Cintas Corporation $5,278 N/A 41 2.27 2.57 2.78

CTAS - $41.72 2.59

G&K Services, Inc. $637 N/A 37 2.07 2.39 2.73

GKSR - $33.71 O/A 36 2.38 2.71

UniFirst Corporation $1,339 N/A 73 4.48 4.92 -

UNF - $68.30 -

Details

Industry Perspective and Outlook

■ Survey results suggest noticeable deterioration. Survey results turned decidedly negative in

September, paralleling recent BLS data trends and other macroeconomic softness.

- While our sense is that trends remain more supportive than a high-level review of our survey results

would otherwise suggest, we are cautious of uniform rental stocks, particularly when balanced

against fair valuations (above five-year averages), high expectations (estimates at the high-end or

above company guidance ranges), and less opportunity for subsequent positive earnings revisions

(slowing employment growth, increasing price compression, and fewer opportunities for fixed cost

leverage, with revenue at or above prior peaks).

■ Valuation levels fair levels relative to history; estimates at high-end of guidance. With uniform

stocks riding recent market gains, valuation -- previously in line with five-year historical levels -- has

now moved to a modest premium relative to historical levels, despite slowing fundamentals. Balanced

with Street estimate expectations at the high end (or above) company guidance ranges, we're a bit

cautious of additional opportunities for alpha, at least near term. The sector is now trading at a

forward 12-month EV/EBITDA multiple of 7.6x (6.8x average) and 14.9x earnings (14.8x average) --

see chart.

Uniform Industry Valuation

Company Ticker Price Price Target Rating MktCap ($M) FTM AVG FTM AVG

Cintas CTAS $41.72 $41 N $5,384 8.3x 7.5x 16.3x 15.7x

G&K Services GKSR $33.71 $37 N $638 8.0x 7.2x 14.1x 15.7x

UniFirst UNF $68.30 $73 N $1,342 6.4x 5.7x 14.4x 12.9x

Average: 7.6x 6.8x 14.9x 14.8x

FY1 Avg.

S&P 500: 14.2x 16.4x

As of 09/14/2012; AVG = 5-year average

Source: FactSet Research Systems and Baird estimates

EV/EBITDA, ftm P/E, ftm

■ Earnings expectations are relatively high. We note that consensus estimates across our coverage

list are at the high end of company guidance ranges (see chart below). Furthermore, we note that

"whisper" expectations are likely a bit higher, highlighting the sector's recent track record of beating

consensus earnings expectations (see charts below). High expectations warrant some caution, in our

view.

September 17, 2012 | Facility Services

Robert W. Baird & Co.

3

Uniform Rental Guidance and Estimates

CTAS GKSR UNF

F2013 F2013 F2012

Guidance $4.25-4.35 billion $890-910 million $1.252-1.257 billion

Consensus $4.29 billion $906.3 million $1.26 billion

Guidance $2.47-2.55 $2.20-2.40 $4.39-4.49

Consensus $2.52 $2.36 $4.45

Source: Company reports; FactSet Research

Revenue

EPS

Cintas Corp. Quarterly EPS vs. Consensus

Source: Company reports

$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12 F2Q12 F3Q12 F4Q12

Consensus

Actual Average EPS beat = +6.5%

G&K Services Quarterly EPS vs. Consensus (since initiation of company "Game Plan")


$0.00

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12 F2Q12 F3Q12 F4Q12

Consensus

ActualAverage EPS beat = +11%



4

UniFirst Quarterly EPS vs. Consensus


$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

F1Q09 F2Q09 F3Q09 F4Q09 F1Q10 F2Q10 F3Q10 F4Q10 F1Q11 F2Q11 F3Q11 F4Q11 F1Q12 F2Q12 F3Q12

Consensus

Actual

Average EPS beat = +20%

■ Recent fuel cost increases suggest incremental caution. While natural gas prices remain low,

keeping facility (electricity) costs contained, the recent rise in fuel (gasoline/diesel) costs creates an

incremental headwind relative to previous guidance expectations (and potentially exacerbated

following last week's Federal Reserve actions). Gasoline/diesel costs have now increased ~12%

since the end of June and are up ~6% on a YOY basis. (We note energy typically represents 3-5% of

revenue.) While fuel prices remain volatile (last quarter, fuel prices were a net YOY benefit), we're

cautious of subsequent margin gains for the sector (which are now, increasingly, led by gross margin

improvement), particularly amidst renewed price compression -- an area of concern anecdotally

highlighted in our survey response pool.

- Separately, we highlight recent paper price declines as an area of incremental caution for CTAS

(we estimate a ~$0.02/share headwind to current guidance at current price levels, reflected in our

reduced estimates -- see below).

U.S. Retail Fuel Prices

Source: Energy Information Administration

300

320

340

360

380

400

420

440

Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12

U.S. Retail Gasoline Prices (cents/gallon)

U.S. Retail Diesel Fuel Prices (cents/gallon)

■ Recent stock performance has been pretty good, potentially limiting further upside. The

uniform stocks have been very strong alpha generators since 2011. Previously this strength was

based on cyclical momentum as employment recovered and the uniform rental companies posted

meaningful operating leverage. We believe this strength was also supported by previously low

expectations. Return of capital initiatives have also been an important component of total returns

(particularly at GKSR and, to a lesser extent, CTAS). Today, with estimates more reasonably set,



https://baird.bluematrix.com/docs/pdf/4469e7d0-37e4-431a-ab64-2da511407b9e.pdf?

5

valuation at a premium, and fundamentals deteriorating, we see less opportunity for additional gains.

- In addition, we believe investor appetite may move away from the uniform rental companies,

at least near term, as QE-induced equity inflows are more likely to chase higher-beta

sectors, at least initially. The chart below shows the stocks' recent performance.

Uniform Stock Performance

Note: Dividend reinvested compound returns

Source: FactSet Research Systems

One-Month Percentage Price Change YTD Percentage Price Change

Three-Month Percentage Price Change Trailing 12 Months Percentage Price Change

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0%

S&P 500

UniFirst

Cintas

Uniform Index

G&K Services

0.0% 10.0% 20.0% 30.0% 40.0% 50.0%

S&P 500

Cintas

UniFirst

Uniform Index

G&K Services

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0%

Uniform Index

Cintas

S&P 500

UniFirst

G&K Services

0.0% 5.0% 10.0% 15.0% 20.0% 25.0%

S&P 500

Uniform Index

Cintas

G&K Services

UniFirst

■ Stock performance at the uniform rental companies has historically paralleled our survey

results, suggesting caution. Correlation between our Add/Stop Diffusion Index (which is computed

from directional commentary from our survey respondents) and uniform stock performance has

historically been quite high, particularly at CTAS/GKSR (see charts below), suggesting caution given

the sector's recent decoupling.

Uniform Stock Index vs. Add/Stop Diffusion Index (Baird survey data)

Note: Uniform index is a capitalization-weighted index of uniform stock performance

Source: Baird Research; FactSet

100

120

140

160

180

200

220

0

10

20

30

40

50

60

70

80

90

100

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12

Baird Add/Stop Diffusion Index (left)

Uniform Index Stock Performance (1Q03 = 100), right



6

Cintas Stock Performance vs. Add/Stop Diffusion Index (Baird survey data)

Source: Baird Research; FactSet

70

80

90

100

110

120

130

140

150

160

0

10

20

30

40

50

60

70

80

90

100

2Q03 4Q03 2Q04 4Q04 2Q05 4Q05 2Q06 4Q06 2Q07 4Q07 2Q08 4Q08 2Q09 4Q09 2Q10 4Q10 2Q11 4Q11 2Q12

Baird Add/Stop Diffusion Index (left)

CTAS Stock Performance (1Q03 = 100), right

■ Downgrading GKSR to Neutral. Citing the above industry factors, fewer operating catalysts, high

expectations (consensus estimates now assume achievement of management's 10% EBIT margin

goal), significant YTD outperformance (~20% alpha versus the S&P 500 which it's $6/share special

dividend is included) and a more balanced risk/reward (premium valuation), we are downgrading

GKSR from Outperform to Neutral.

- That said, a very strong F4Q12 earnings report last month continues to lend credibility to the

company's multi-year turnaround efforts and we believe GKSR still offers the best risk-adjusted

opportunity for investors among the public uniform companies. Net, while the stock may offer fewer

immediate catalysts, we believe GKSR may offer longer-term opportunity and modest upside from

current levels.



7

Baird Uniform Industry Survey: 3Q12

SURVEY BACKGROUND. The Baird uniform industry survey, conducted quarterly since June 2003, is

meant to gauge the sentiment of industry participants and the key industry drivers affecting the uniform

market. The participants are senior executives from private uniform rental companies located throughout

the United States and Canada. The collection of companies is intended to mimic the national coverage

and size of the public uniform rental companies and offers anecdotal insight into emerging industry

trends.

We survey ~100 independent uniform rental and linen companies. Our 3Q12 survey generated

responses from 36 companies, representing an annual revenue pool and geographic distribution roughly

equal to that of the national uniform rental companies.

■ Add/Stop Index turns negative - first time since September 2009. Our Baird Add/Stop survey

diffusion index – a measure of uniform-wearer expansion/contraction at existing accounts – turned

negative in 3Q12, its first negative print since September 2009. Importantly, we note that the last time

our Index turned positive-to-negative (neutral=50.0) was March 2008, portending cautious sector

positioning.

- Recall that a diffusion index is calculated by adding the percentage of respondents reporting

improvement in add/stops to one-half of the percentage of respondents reporting no change. Thus,

a reading above 50 indicates sequential add/stop improvement, while a reading below 50 indicates

sequential deterioration.

- Our diffusion index has historically exhibited strong correlation (~0.9) with BLS employment

data within uniform-wearing industries (which we refer to as our Add/Stop Employment Index).

Baird Add/Stop Diffusion Index: During the past 90 days add/stop rates at existing accounts have been

Source: Bureau of Labor Statistics and Baird Research

-250

-200

-150

-100

-50

0

50

100

150

200

250

0

10

20

30

40

50

60

70

80

90

100

Ju

n0

3

Se

p0

3

De

c0

3

Ma

r04

Ju

n0

4

Se

p0

4

De

c0

4

Ma

r05

Ju

n0

5

Se

p0

5

De

c0

5

Ma

r06

Ju

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6

Se

p0

6

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6

Ma

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7

Se

p0

7

De

c0

7

Ma

r08

Ju

n0

8

Se

p0

8

De

c0

8

Ma

r09

Ju

n0

9

Se

p0

9

De

c0

9

Ma

r10

Ju

n1

0

Se

p1

0

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0

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r11

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1

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n1

2

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p1

2

De

teri

ora

tin

g

<

----

-|--

--->

Im

pro

vin

g Add/Stop Employment Index (000s), right

Add/Stop Diffusion Index (Survey data)

Correlation = 0.90

■ Revenue continues to fall modestly below expectations, reflecting (in our view) relatively high

expectations. 19% of respondents cited results below expectations in September, similar to 21% last

quarter. That said, nearly half of respondents met internal expectations. We note that this is a distinct

change from previous response rates last year, in which results exceeded internal expectations. We

believe this is consistent with our expectation that consensus estimates for the public uniform

companies likely similarly have more limited upside. See chart below.



8

Survey Revenue Trends: September 2012 vs. June 2012

Source: Baird Research

21% 19%

46% 47%

26%31%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

June '12 Survey Sep '12 Survey

Well above expectations

Slightly above expectations

Near expectations

Slightly below expectations

Well below expectations

8% 4%

3% 0%

■ Pricing deteriorates further. Pricing deteriorated in 3Q12 with our diffusion index well below a

neutral rating at 37.5, its lowest reading since December 2009 and its fifth consecutive reading below

50 (following industry pricing gains in 2011). Slowing fundamentals could reinvigorate competitive

pricing, in our view, with participants also citing risk from rising fuel costs.

- We note that pricing has historically been a source of modest pressure within the industry

though has been additive to growth rates over the past ~12 months. Prior pricing initiatives

followed the rise in commodity prices (particularly cotton) but appears to have lost momentum in

recent quarters.

Baird Price Index: "During the past 90 days the base price quoted for new accounts has


10

20

30

40

50

60

70

80

90

Ju

n0

3

Se

p0

3

De

c0

3

Ma

r04

Ju

n0

4

Se

p0

4

De

c0

4

Ma

r05

Ju

n0

5

Se

p0

5

De

c0

5

Ma

r06

Ju

n0

6

Se

p0

6

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6

Ma

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p0

7

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c0

7

Ma

r08

Ju

n0

8

Se

p0

8

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c0

8

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r09

Ju

n0

9

Se

p0

9

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c0

9

Ma

r10

Ju

n1

0

Se

p1

0

De

c1

0

Ma

r11

Ju

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1

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p1

1

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1

Ma

r12

Ju

n1

2

Se

p1

2

De

teri

ora

ted

<--

---|

----

->

Imp

rove

d

Long-term secular compression Economic compression Recovery Today??

■ New customer (no-programmer) index declines, now flat. New customer ("no programmer")

interest remains held essentially flat at 48.6 (a slightly decline), but well below 55.1 in June and

several quarters above 60 throughout 2011-1H12. No-programmer interest has been an important

component of the current cycle's recovery, with public uniform companies citing no programmers

driving as much as 50% of new business wins. Slowing new business momentum likely reflects more

difficult comparisons and economic slowdown.



9

Baird No-Programmer Diffusion Index (Survey Data)


20

30

40

50

60

70

80

Ju

n0

3

Se

p0

3

De

c0

3

Ma

r04

Ju

n0

4

Se

p0

4

De

c0

4

Ma

r05

Ju

n0

5

Se

p0

5

De

c0

5

Ma

r06

Ju

n0

6

Se

p0

6

De

c0

6

Ma

r07

Ju

n0

7

Se

p0

7

De

c0

7

Ma

r08

Ju

n0

8

Se

p0

8

De

c0

8

Ma

r09

Ju

n0

9

Se

p0

9

De

c0

9

Ma

r10

Ju

n1

0

Se

p1

0

De

c1

0

Ma

r11

Ju

n1

1

Se

p1

1

De

c1

1

Ma

r12

Ju

n1

2

Se

p1

2

De

teri

ora

tin

g

<

----

-|--

--->

Im

pro

vin

g

■ Growth expectations move lower but generally consistent with our outlook. Forecasted

12-month growth rates have declined to +4.8% (from +5.4% in June), generally consistent with

historical mid-late cycle growth. Our revised estimates contemplate 3.9%, 6.2%, and 4.2% FTM

organic growth rates at CTAS, UNF, and GKSR, respectively, paralleling industry expectations.

At what rate do you expect your revenue to grow excluding acquisitions in the next 12 months?"

Note: Growth rates reflect average responses of survey participants


5.7%5.4%

5.7%

5.3%

5.8%5.9%

4.7%5.0%5.0%

3.8%

1.5%

0.3%0.0%

2.7%

2.3%

2.9%

3.3%

4.3%4.6%

5.4%

4.5%

5.1%

5.6%5.4%

4.8%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

■ Most respondents are expecting growth rates of roughly +3% to +5% in 2012 (unchanged).

Mean growth rates continue to be skewed by several outliers of 9%+ organic growth, mostly reflecting

company-specific or localized-gains.



10

Organic Rental Growth Expectations (FTM)


14%

3%

19%

36%

17%

11%

0%0%0%0%0%

0%

5%

10%

15%

20%

25%

30%

35%

40%

mo

re t

ha

n

9%

7%

to

9%

5%

to

7%

3%

to

5%

1%

to

3%

-1%

to

1%

-3%

to

-1

%

-5%

to

-3

%

-7%

to

-5

%

-9%

to

-7

%

Le

ss

th

an

-

9%

Pe

rce

nta

ge

of R

es

po

nd

en

ts

FTM Organic Revenue Growth Expectations



11

Investment Perspective, Valuation and Estimate Changes

UNIFIRST (UNF)

■ We rate UniFirst (UNF; $73 price target) at Neutral. With shares trading at a modest premium to

5-year averages, we believe shares more properly value the company's franchise, recognizing recent

execution success and share gains. Moreover, it is our sense that a continuation of recent strong

trends of solid execution both on the top line and on margins are increasingly priced into the shares,

heightening risk and justifying a Neutral position.

- That said, should expectations be sufficiently tempered post-initial F2013 guidance

(expected in conjunction with the company's October earnings report), we believe the stock

could find a potential entry point as we continue to note the potential for a major positive catalyst

in UNF's overcapitalized balance sheet which has ~$15/share ($300 million) excess capital

available for acquisitions or dividend/buyback, by our estimates.

■ Valuation. Our estimates are unchanged and our $73 price target assumes a 6.0x EBITDA multiple

on our FTM estimates one year from today. The multiple is above the company's five-year historical

average of 6.0x recognizing the lower risk profile offered by the debt-free balance sheet today as well

as the company's long track record of above-average execution. On a PE basis our price target

assumes 14.0x FTM estimates one year from today also a premium to historical (five-year) levels of

12.9x, but when adjusted for excess cash, is more likely in line with historical averages. We believe

these multiples are justified in a decelerating operating environment.

UniFirst Valuation Chart

F3Q12 Multiples Forward P/E Forward EV/EBITDA

Current 14.4x 6.4x

Historical Range (5-Year) 6x-17x 3x-7x

Historical Average (5-Year) 12.9x 5.7x

$73 Price Target Assumes: 14.0x 6.0x


■ Risks. Risks to our price target include a highly competitive market/pricing, employment trends,

energy and other commodity price fluctuations and a 10:1 super-voting dual-class insider share

structure.

G&K SERVICES (GKSR)

■ We rate G&K Services (GKSR; $37 price target) at Neutral. With fewer operating catalysts, high

expectations (consensus estimates now assume achievement of management's 10% EBIT margin

goal by the end of F2014), significant YTD outperformance and a more balanced risk/reward

(premium valuation), we are downgrading GKSR from Outperform to Neutral.

■ Estimate changes. Despite our downgrade, we took our F2012-F2013 estimates modestly higher (by

$0.01/$0.02, respectively), though largely unchanged, reflecting confidence in the company's margin

trajectory. We also moved our EBITDA estimates modestly higher, adjusting for the company's recent

(and planned) uptick in growth-oriented capital expenditures (higher depreciation expense).



12

G&K Services Estimate Changes ($M)

F2012A

New Old New Old

Revenue $869.9 $906.4 $904.4 $934.6 $931.6

Consensus

Guidance

EBIT $68.2 $78.6 $78.5 $89.2 $88.9

Margin 7.8% 8.7% 8.7% 9.5% 9.5%

Adjusted EPS $2.07 $2.39 $2.38 $2.73 $2.71

Consensus

Guidance

Source: Baird estimates; Thompson FirstCall

$2.20-2.40

F2013E F2014E

$906.4 $962.9

$2.36 $2.72

$890-910

■ Valuation. Our revised $37 price target (from $36) assumes a relatively constant 7.6x EBITDA

multiple (a modest premium to its historical average of 7.2x) and 13.7x earnings (a modest discount

to its historical average of 15.7x), both of which we believe are supported by continued good

execution and stronger earnings growth (from a lower base) relative to peers. Assuming little change

in the direction of the economy, we see the stock as likely to trend modestly higher

G&K Services Valuation Chart

F4Q12 Multiples FTM P/E FTM EV/EBITDA

Current 13.7x 7.9x

Historical Range (5-Year) 8x-23x 5x-9x

Historical Average (5-Year) 15.7x 7.2x

$37 Price Target Assumes: 13.7x 7.6x

Source: Baird estimates

■ Risks. Risks to our price target include a highly competitive industry/pricing, employment trends, and

energy and other commodity price fluctuations.

CINTAS (CTAS)

■ We rate Cintas (CTAS; $41 price target) at Neutral. With valuation now above CTAS' five-year

average and fewer immediate catalysts ahead, we remain on the side lines until employment trends

reignite sector interest. We'd look to turn more constructive in the low-mid $30s or on lower

expectations (management has also demonstrated share repurchase appetite in this range). Indeed,

our estimates (while lower) remain modestly above guidance.

■ Estimate Changes. We lowered our F2013 EPS estimate by $0.02 entirely due to lower gross

margin assumptions in the Document Management business as scrap paper prices have recently

moved lower and are below management's guidance of ~$175/ton for the fiscal year (currently at

$163.66 through September). Our operating assumptions remain unchanged at this time.



https://baird.bluematrix.com/docs/pdf/4469e7d0-37e4-431a-ab64-2da511407b9e.pdf?

13

Cintas Estimate Changes ($M)

2012A

New Old New Old

Revenue $4,102 $4,263 $4,263 $4,421 $4,421

Consensus

Guidance

EBIT $534.9 $575.8 $581.5 $618.2 $618.2

Margin 13.0% 13.5% 13.6% 14.0% 14.0%

EPS $2.27 $2.57 $2.59 $2.78 $2.78

Consensus

Guidance

Source: Baird Research; Thompson FirstCall

$2.52 $2.79

$2.47-$2.55 N/A

2013E 2014E

$4,288 $4,499

$4,250-$4,350 N/A

■ Valuation. Our 12-month, $41 price target assumes 7.3x FTM EBITDA one year from today and

14.7x earnings, a discount to current levels but generally consistent with the stock's five-year average

of 7.5x and 15.7x, respectively. We believe our estimates reflect the company's continued good

execution, modest top-line growth opportunity for modest margin expansion and balance sheet

opportunities, but balanced by a slowing employment environment and a difficult macroeconomic

backdrop.

Cintas Valuation Chart

F4Q12 Multiples P/E EV/EBITDA P/FCF

Current 16.3x 8.3x 13.9x

Historical Range (5-Year) 10x-24x 5x-10x 5x-26x

Historical Average (5-Year) 15.7x 7.5x 15.2x

$41 Price Target Assumes: 14.7x 7.3x 14.7x


Valuation (FTM)

■ Risks. Risks to our price target include a highly competitive industry/pricing, employment trends,

energy and scrap paper price fluctuations and acquisition integration.



14

Andrew J. Wittmann, CFA (414) 298-1898

Justin P. Hauke (314) 445-6519

Date Printed: 9/14/2012

Year End: May

Income Statement 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E

Rental Uniforms and Ancillary Products 2,201,405 2,363,397 2,568,776 2,734,629 2,834,568 2,755,015 2,569,357 2,692,248 2,912,261 3,036,094 3,142,357

Uniform Direct Sale 612,654 703,886 834,832 501,443 517,490 428,369 386,370 419,222 433,994 442,674 455,954

First Aid, Safety and Fire Protection - - - 362,417 403,552 378,097 338,651 377,663 415,703 434,310 451,683

Document Management - - - 108,411 182,290 213,204 252,961 321,251 340,042 350,269 371,285

Total Revenue 2,814,059 3,067,283 3,403,608 3,706,900 3,937,900 3,774,685 3,547,339 3,810,384 4,102,000 4,263,347 4,421,279

Cost of Sales and Service 1,627,567 1,762,524 1,948,816 2,125,545 2,256,300 2,196,314 2,049,522 2,201,097 2,363,392 2,446,746 2,519,707

Rental Uniforms and Ancillary Products 1,222,638 1,295,992 1,406,829 1,515,185 1,581,617 1,553,830 1,449,576 1,530,456 1,648,551 1,707,994 1,761,489




Gross Income

Rental Uniforms and Ancillary Products 978,767 1,067,405 1,161,947 1,219,444 1,252,951 1,201,185 1,119,781 1,161,792 1,263,710 1,328,100 1,380,868




Gross Income 1,186,492 1,304,759 1,454,792 1,581,355 1,681,600 1,578,371 1,497,817 1,609,287 1,738,608 1,816,601 1,901,572

Selling, general and administrative 727,618 810,232 907,954 1,010,163 1,104,145 1,082,709 1,086,359 1,168,944 1,198,981 1,240,814 1,283,352

Rental Uniforms and Ancillary Products 581,380 633,488 690,707 757,039 801,692 769,275 786,145 822,230 834,210 860,633 888,398




Operating Income

Rental Uniforms and Ancillary Products 397,387 433,917 471,240 462,405 451,259 431,910 333,636 339,562 429,500 467,467 492,470




Adjustments - - - (6,254) - - - - - - -

Total Operating Income 458,874 494,527 546,838 577,446 577,455 495,662 411,458 440,343 534,894 575,787 618,220

Interest Income 2,650 6,914 6,759 6,480 6,072 2,764 1,695 2,030 1,942 2,574 3,835

Interest Expense 25,101 24,448 31,782 50,324 52,823 50,236 48,612 49,704 70,625 59,923 59,403

Other Expense (Income) - - - - - - - - - - -

Pretax Income 436,423 476,993 521,815 533,602 530,704 448,190 364,541 392,669 466,211 518,438 562,652

Taxes 161,482 176,475 194,637 199,016 195,299 167,618 136,258 145,680 173,307 193,377 209,869

Net Income 274,941 300,518 327,178 334,586 335,405 280,572 228,283 246,989 297,637 325,061 352,783

Adjusted EPS $1.60 $1.74 $1.94 $2.09 $2.15 $1.83 $1.49 $1.68 $2.27 $2.57 $2.78

Restructuring / Merger charges - - - - - (54,215) (12,663) - - - -

Asset Write-offs - - - - - - - - - - -

Other One-time Items & Discontinued Operations - - - (6,254) - - - - - - -

GAAP EPS $1.60 $1.74 $1.94 $2.05 $2.15 $1.48 $1.41 $1.69 $2.27 $2.57 $2.78

Diluted Shares 172,371 172,651 169,005 160,141 155,897 153,287 152,859 146,585 130,013 126,670 127,070

Basic Shares 170,961 171,679 167,952 159,774 155,675 152,844 152,858 146,574 129,893 126,670 127,070

Dividend 0.29 0.32 0.35 0.39 0.46 0.47 0.48 0.49 0.54 0.72 0.78

Dividend payout 18.2% 18.4% 18.1% 19.0% 21.4% 32.1% 34.0% 29.0% 23.8% 28.0% 28.0%

EBITDA 602,133 642,702 707,491 753,719 769,358 695,768 604,599 633,810 733,792 774,418 822,921

Change YOY 6.2% 6.7% 10.1% 6.5% 2.1% -9.6% -13.1% 4.8% 15.8% 5.5% 6.3%

% of Sales 21.4% 21.0% 20.8% 20.3% 19.5% 18.4% 17.0% 16.6% 17.9% 18.2% 18.6%

Margin Analysis 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E

Gross Margin 42.2% 42.5% 42.7% 42.7% 42.7% 41.8% 42.2% 42.2% 42.4% 42.6% 43.0%

Incremental GM% 52.8% 46.7% 44.6% 41.7% 43.4% 63.2% 35.4% 42.4% 44.3% 48.3% 53.8%

Rental Uniforms and Ancillary Products 44.5% 45.2% 45.2% 44.6% 44.2% 43.6% 43.6% 43.2% 43.4% 43.7% 43.9%

Uniform Direct Sale 33.9% 33.7% 35.1% 32.0% 32.5% 28.5% 30.1% 30.2% 29.9% 30.0% 30.2%

First Aid, Safety and Fire Protection 39.9% 39.9% 38.9% 38.9% 41.3% 42.9% 43.0% 43.2%

Document Management 52.4% 54.6% 50.6% 51.4% 51.3% 49.1% 48.1% 50.5%

SG&A Margin 25.9% 26.4% 26.7% 27.3% 28.0% 28.7% 30.6% 30.7% 29.2% 29.1% 29.0%




Document Management 45.7% 40.5% 41.4% 41.8% 41.7% 41.4% 42.2% 42.0%

Operating Margin 16.3% 16.1% 16.1% 15.6% 14.7% 13.1% 11.6% 11.6% 13.0% 13.5% 14.0%

Incremental OM% 27.5% 14.1% 15.6% 10.1% 0.0% 50.1% 37.0% 11.0% 32.4% 25.3% 26.9%




Document Management 4.1% 6.6% 14.1% 9.2% 9.6% 9.7% 6.2% 6.0% 8.5%

Pretax Margin 15.5% 15.6% 15.3% 14.4% 13.5% 11.9% 10.3% 10.3% 11.4% 12.2% 12.7%

Tax Rate 37.0% 37.0% 37.3% 37.3% 36.8% 37.4% 37.4% 37.1% 37.2% 37.3% 37.3%

Net Margin 9.8% 9.8% 9.6% 9.0% 8.5% 7.4% 6.4% 6.5% 7.3% 7.6% 8.0%

Changes YOY 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E

Total Revenue 4.7% 9.0% 11.0% 8.9% 6.2% -4.1% -6.0% 7.4% 7.7% 3.9% 3.7%

Total Internal Revenue 3.0% 6.3% 7.8% 5.3% 4.7% -4.4% -6.5% 5.2% 6.1% 4.3% 4.1%

Rental Uniforms and Ancillary Products 4.7% 7.4% 8.7% 6.5% 3.7% -2.8% -6.7% 4.8% 8.2% 4.3% 3.5%

Internal 4.3% 6.8% 7.3% 4.2% 3.4% -2.4% -6.4% 3.3% 6.6% 4.7% 3.9%

Uniform Direct Sale 4.8% 14.9% 18.6% 6.5% 3.2% -17.2% -9.8% 8.5% 3.5% 2.0% 3.0%

Internal 4.4% 14.9% 18.6% 4.2% 3.2% -16.9% -10.1% 8.5% 3.5% 2.4% 3.4%

First Aid, Safety and Fire Protection 11.4% -6.3% -10.4% 11.5% 10.1% 4.5% 4.0%

Internal 6.2% -7.7% -10.8% 7.3% 8.5% 4.9% 4.4%

Document Management 68.1% 17.0% 18.6% 27.0% 5.8% 3.0% 6.0%

Internal 40.4% 9.2% 15.9% 15.3% 2.2% 3.4% 6.4%

Organic, ex-paper 6.0% 12.7% 8.2% 4.4% 3.4% 6.4%

Gross Income 6.0% 10.0% 11.5% 8.7% 6.3% -6.1% -5.1% 7.4% 8.0% 4.5% 4.7%

Operating Expenses 4.6% 11.4% 12.1% 11.3% 9.3% -1.9% 0.3% 7.6% 2.6% 3.5% 3.4%

Operating Income 8.3% 7.8% 10.6% 5.6% 0.0% -14.2% -17.0% 7.0% 21.5% 7.6% 7.4%

Rental Uniforms and Ancillary Products 6.7% 9.2% 8.6% -1.9% -2.4% -4.3% -22.8% 1.8% 26.5% 8.8% 5.3%

Uniform Direct Sale 19.6% -1.4% 24.7% -16.2% 2.3% -62.9% 67.1% 20.3% 1.6% 2.1% 6.6%

First Aid, Safety and Fire Protection -6.9% -43.7% -33.0% 59.6% 63.7% 6.3% 8.8%

Document Management 258.0% -23.6% 23.3% 28.0% -31.7% -1.4% 51.6%

Pretax Income 10.3% 9.3% 9.4% 2.3% -0.5% -15.5% -18.7% 7.7% 18.7% 11.2% 8.5%

Net Income 10.3% 9.3% 8.9% 2.3% 0.2% -16.3% -18.6% 8.2% 20.5% 9.2% 8.5%

EPS 10.1% 9.1% 11.2% 7.9% 3.0% -14.9% -18.4% 12.8% 34.7% 13.0% 8.2%

Source: Company reports and Robert W. Baird & Co. analysis

Cintas Corporation

Annual Model

15




Year End: May

Income Statement 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Rental Uniforms and Ancillary Products 719,423 722,789 721,012 749,037 751,797 751,701 749,852 782,744 778,110 778,010 776,097 810,140

Uniform Direct Sale 101,702 111,946 109,114 111,232 103,736 114,185 111,296 113,457 106,848 117,610 114,635 116,860

First Aid, Safety and Fire Protection 103,743 101,687 101,378 108,895 108,930 106,771 106,447 112,162 113,287 111,042 110,705 116,648

Document Management 92,312 82,704 80,608 84,418 87,696 86,839 86,251 89,483 92,958 92,050 91,426 94,852

Total Revenue 1,017,180 1,019,126 1,012,112 1,053,582 1,052,160 1,059,496 1,053,846 1,097,845 1,091,204 1,098,712 1,092,863 1,138,500

Cost of Sales and Service 578,140 589,329 586,209 609,714 600,586 610,400 605,798 629,962 617,463 628,481 624,194 649,570





Gross Income





Gross Income 439,040 429,797 425,903 443,868 451,573 449,096 448,048 467,883 473,741 470,232 468,669 488,930

Selling, general and administrative 310,466 297,112 288,367 303,036 313,449 311,629 301,183 314,553 324,221 322,300 311,523 325,308





Operating Income





Adjustments - - - - - - - - - - - -

Total Operating Income 128,574 132,685 137,536 140,832 138,124 137,468 146,865 153,330 149,520 147,932 157,146 163,622

Interest Income 365 403 373 801 567 650 650 707 874 968 965 1,028

Interest Expense 17,334 17,728 17,219 18,344 15,370 14,851 14,851 14,851 14,851 14,851 14,851 14,851

Other Expense (Income) - - - - - - - - - - - -

Pretax Income 111,605 115,360 120,690 123,289 123,321 123,267 132,664 139,186 135,543 134,049 143,260 149,800

Taxes 42,967 41,010 44,655 44,675 45,999 45,979 49,484 51,916 50,558 50,000 53,436 55,875

Net Income 68,638 74,350 76,035 78,614 77,322 77,288 83,180 87,270 84,985 84,049 89,824 93,924

Adjusted EPS $0.52 $0.57 $0.58 $0.60 $0.61 $0.61 $0.66 $0.69 $0.67 $0.66 $0.71 $0.74

Restructuring / Merger charges - - - - - - - - - - - -

Asset Write-offs - - - - - - - - - - - -

Other One-time Items & Discontinued Operations - - - - - - - - - - - -

GAAP EPS $0.52 $0.57 $0.58 $0.60 $0.61 $0.61 $0.66 $0.69 $0.67 $0.66 $0.71 $0.74

Diluted Shares 131,338 129,727 129,945 129,040 126,520 126,620 126,720 126,820 126,920 127,020 127,120 127,220

Basic Shares 131,309 129,740 129,735 128,788 126,520 126,620 126,720 126,820 126,920 127,020 127,120 127,220

Dividend - - 0.54 - - - 0.72 - - - 0.78 -

EBITDA 177,084 181,201 185,596 189,911 187,218 186,907 196,084 204,209 200,159 198,855 207,843 216,064

Change YOY 19.6% 20.6% 17.9% 6.7% 5.7% 3.1% 5.7% 7.5% 6.9% 6.4% 6.0% 5.8%

% of Sales 17.4% 17.8% 18.3% 18.0% 17.8% 17.6% 18.6% 18.6% 18.3% 18.1% 19.0% 19.0%

Margin Analysis 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Gross Margin 43.2% 42.2% 42.1% 42.1% 42.9% 42.4% 42.5% 42.6% 43.4% 42.8% 42.9% 42.9%

Incremental GM% 48.6% 47.4% 45.7% 26.1% 35.8% 47.8% 53.1% 54.3% 56.8% 53.9% 52.9% 51.8%

Rental Uniforms and Ancillary Products 43.9% 43.2% 43.1% 43.3% 44.2% 43.5% 43.5% 43.7% 44.4% 43.7% 43.7% 43.9%

Uniform Direct Sale 28.6% 29.6% 30.5% 30.7% 29.6% 29.8% 30.3% 30.5% 29.8% 30.0% 30.5% 30.7%

First Aid, Safety and Fire Protection 43.2% 43.1% 43.2% 42.4% 43.3% 43.2% 43.3% 42.5% 43.5% 43.4% 43.5% 42.7%

Document Management 53.2% 48.8% 47.0% 46.8% 47.0% 48.0% 48.5% 49.0% 50.5% 50.5% 50.5% 50.5%

Operating Margin 12.6% 13.0% 13.6% 13.4% 13.1% 13.0% 13.9% 14.0% 13.7% 13.5% 14.4% 14.4%

Incremental OM% 30.4% 36.8% 38.6% 28.8% 27.3% 11.8% 22.4% 28.2% 29.2% 26.7% 26.4% 25.3%




Document Management 13.4% 7.3% 3.5% 5.6% 5.0% 6.0% 5.6% 7.3% 8.7% 8.7% 7.8% 9.0%

SG&A Margin 30.5% 29.2% 28.5% 28.8% 29.8% 29.4% 28.6% 28.7% 29.7% 29.3% 28.5% 28.6%

Pretax Margin 11.0% 11.3% 11.9% 11.7% 11.7% 11.6% 12.6% 12.7% 12.4% 12.2% 13.1% 13.2%

Tax Rate 38.5% 35.5% 37.0% 36.2% 37.3% 37.3% 37.3% 37.3% 37.3% 37.3% 37.3% 37.3%

Net Margin 6.7% 7.3% 7.5% 7.5% 7.3% 7.3% 7.9% 7.9% 7.8% 7.6% 8.2% 8.2%

Changes YOY 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Total Revenue 10.1% 8.8% 7.9% 4.1% 3.4% 4.0% 4.1% 4.2% 3.7% 3.7% 3.7% 3.7%

Total Internal Revenue 7.6% 7.0% 6.0% 4.0% 3.4% 4.0% 4.1% 4.2% 3.7% 3.7% 3.7% 3.7%


Internal 7.3% 7.9% 6.4% 5.0% 4.5% 4.0% 4.0% 4.5% 3.5% 3.5% 3.5% 3.5%


Internal 3.0% 2.9% 6.3% 2.0% 2.0% 2.0% 2.0% 2.0% 3.0% 3.0% 3.0% 3.0%


Internal 7.9% 7.8% 9.1% 9.3% 5.0% 5.0% 5.0% 3.0% 4.0% 4.0% 4.0% 4.0%

Document Management 24.7% 7.9% 2.0% -7.8% -5.0% 5.0% 7.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Internal 15.9% 4.6% -1.3% -8.2% -5.0% 5.0% 7.0% 6.0% 6.0% 6.0% 6.0% 6.0%

Gross Income 11.5% 10.0% 8.7% 2.5% 2.9% 4.5% 5.2% 5.4% 4.9% 4.7% 4.6% 4.5%

Operating Expenses 5.8% 3.1% 1.9% -0.4% 1.0% 4.9% 4.4% 3.8% 3.4% 3.4% 3.4% 3.4%

Operating Income 28.3% 29.6% 26.3% 5.6% 7.4% 3.6% 6.8% 8.9% 8.2% 7.6% 7.0% 6.7%


Uniform Direct Sale -14.6% -0.3% 16.9% 1.3% 29.1% -6.6% -5.7% 2.0% 6.9% 6.8% 6.4% 6.6%


Document Management 47.2% 2.7% -54.7% -100.0% -64.7% -13.3% 68.1% 38.3% 84.8% 53.7% 47.8% 30.6%

Pretax Income 26.0% 27.4% 24.9% 1.4% 10.5% 6.9% 9.9% 12.9% 9.9% 8.7% 8.0% 7.6%

Net Income 12.0% 33.1% 28.7% 11.1% 12.7% 4.0% 9.4% 11.0% 9.9% 8.7% 8.0% 7.6%

EPS 29.8% 49.3% 42.7% 21.5% 16.9% 6.5% 13.2% 14.7% 9.6% 8.4% 7.6% 7.3%


Please refer to "Appendix - Important Disclosures" and Analyst Certification

Cintas Corporation

Quarterly Model

16




Year End: May

Assets 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Cash 87,357 43,196 38,914 35,360 66,224 129,745 411,281 438,106 339,825 565,396 822,476 438,106 339,825

Marketable Securities 166,964 266,232 202,539 120,053 125,471 120,393 154,806 87,220 - - - 87,220 -

Accounts Receivable 285,592 326,896 389,905 408,870 430,078 357,678 366,301 429,131 450,861 474,020 479,097 429,131 450,861

Inventory 185,585 216,412 198,000 231,741 238,669 202,351 169,484 249,658 251,205 259,547 260,507 249,658 251,205

Uniforms & Other Rental Items in Service 301,350 305,450 337,487 344,931 370,416 335,447 332,106 393,826 452,785 462,212 474,677 393,826 452,785

Other Current Assets 7,395 8,358 11,163 15,781 51,478 99,147 90,966 102,836 46,892 46,892 46,892 102,836 46,892

Total Current Assets 1,034,243 1,166,544 1,178,008 1,156,736 1,282,336 1,244,761 1,524,944 1,700,777 1,541,568 1,808,067 2,083,649 1,700,777 1,541,568

Net PP & E 785,310 817,198 863,783 920,243 974,575 914,627 894,522 946,218 944,305 981,675 1,027,645 946,218 944,305

Goodwill 805,441 889,538 1,136,175 1,245,877 1,315,569 1,331,388 1,356,925 1,487,882 1,485,375 1,485,375 1,485,375 1,487,882 1,485,375

Service Contracts 144,664 146,596 179,965 171,361 152,757 124,330 103,445 102,312 76,822 40,822 4,822 102,312 76,822

Other Assets 40,639 39,868 67,306 76,263 83,364 80,333 89,900 114,751 112,836 112,836 112,836 114,751 112,836

Total Assets 2,810,297 3,059,744 3,425,237 3,570,480 3,808,601 3,695,439 3,969,736 4,351,940 4,160,906 4,428,775 4,714,327 4,351,940 4,160,906

Liabilities & Equity

Current Portion of LTD 10,523 7,300 4,288 4,141 1,070 598 609 1,335 225,636 225,636 225,636 1,335 225,636

Accounts Payable 53,451 69,296 71,635 64,622 94,755 69,965 71,747 110,279 94,840 109,042 119,554 110,279 94,840

Deferred Taxes 83,682 41,883 51,669 52,179 - - - - 2,559 2,559 2,559 - 2,559

Other Liabilities 178,030 238,002 282,755 282,096 271,417 221,390 311,326 322,525 347,856 350,647 353,461 322,525 347,856

Total Current Liabilities 325,686 356,481 410,347 403,038 367,242 291,953 383,682 434,139 670,891 687,884 701,210 434,139 670,891

Long term Debt 473,685 465,291 794,454 877,074 942,736 786,058 785,444 1,284,790 1,059,166 1,059,166 1,059,170 1,284,790 1,059,166

Deferred Taxes 122,957 133,837 130,244 122,630 124,184 149,032 150,560 196,321 204,581 221,445 239,699 196,321 204,581

Other Noncurrent/Accrued Liabs - - - - 120,308 100,987 116,021 134,041 87,133 87,133 87,133 134,041 87,133

Stockholder's Equity 1,887,969 2,104,135 2,090,192 2,167,738 2,254,131 2,367,409 2,534,029 2,302,649 2,139,135 2,373,147 2,627,115 2,302,649 2,139,135

Total Liabs & SE 2,810,297 3,059,744 3,425,237 3,570,480 3,808,601 3,695,439 3,969,736 4,351,940 4,160,906 4,428,775 4,714,327 4,351,940 4,160,906

Balance Sheet Statistics 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Net Total Debt to Capital 10% 6% 19% 24% 24% 17% 7% 21% 28% 20% 12% 21% 28%

Current Ratio 3.2 3.3 2.9 2.9 3.5 4.3 4.0 3.9 2.3 2.6 3.0 3.9 2.3

EBITDA / Gross Interest Expense 24.0 26.3 22.3 15.0 14.6 13.8 12.4 12.8 10.4 12.9 13.9 12.8 10.4

Debt/EBITDA (TTM) 0.8 0.7 1.1 1.2 1.2 1.1 1.3 2.0 1.8 1.7 1.6 2.0 1.8

Book Value $10.93 $12.20 $12.49 $13.63 $14.65 $15.45 $16.58 $16.06 $16.58 $18.71 $20.65 $16.06 $16.58

Tangible Book Value $6.27 $7.04 $5.70 $5.80 $6.10 $6.76 $7.70 $5.68 $5.07 $7.00 $8.97 $5.68 $5.07

Ending working capital / Annualized Sales 16% 16% 15% 16% 18% 20% 16% 18% 18% 18% 17% 18% 18%

Ending Working Capital / TTM Sales 16.5% 16.6% 15.6% 16.3% 18.4% 18.6% 16.2% 19.5% 18.4% 18.3% 17.8% 19.5% 18.4%

Inventory Turnover 7.9 8.8 9.4 9.9 9.6 10.0 11.0 10.5 9.4 9.6 9.7 10.5 9.4

Cash & Equivs. / Annualized Sales 9% 10% 7% 4% 5% 7% 16% 13% 8% 13% 18% 13% 8%

Receivable Days (Ending) 35 37 39 39 39 37 37 39 39 39 38 39 39

Inventory Days (Ending) 40 43 35 38 38 36 30 39 38 38 37 39 38

Accounts Payable Days (Ending) 11 14 13 11 15 12 12 17 14 16 17 17 14

Rental Items in Service Days (Ending) 87 82 81 80 83 84 82 89 99 96 95 89 99

Cash Cycle Days (Ending) 63 66 62 66 62 61 54 61 62 61 58 61 62

Return on Average Equity 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 4Q11 4Q12

Net Margin 9.8% 9.8% 9.6% 9.0% 8.5% 7.4% 6.4% 6.5% 7.3% 7.6% 8.0% 6.5% 7.3%

Asset Turnover (S/A) 1.0 1.0 1.0 1.1 1.1 1.0 0.9 0.9 1.0 1.0 1.0 0.9 1.0

Leverage (A/E) 1.5 1.5 1.6 1.6 1.7 1.6 1.6 1.7 1.9 1.9 1.8 1.7 1.9

Return on Average Equity 15.6% 15.1% 15.7% 15.7% 15.2% 12.1% 9.3% 10.2% 13.4% 14.4% 14.1% 10.2% 13.4%



Cintas Corporation

Balance Sheet

17




Year End: May

Quarterly Statement of Cash Flows 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Cash Flow from Operating Activities

Net Income 274,941 300,518 327,178 334,586 335,405 280,572 228,283 246,989 297,637 325,061 352,783 70,776 78,614

Adj. to reconcile net income to Cash Flows - -

Deferred tax benefit 56,609 (30,919) 6,193 (7,104) 1,663 (1,174) 13,295 47,908 56,727 16,864 18,254 25,384 57,722

Depreciation 117,285 119,813 127,117 135,672 148,566 157,572 152,059 150,886 155,831 162,630 168,701 38,760 40,265

Amortization 25,974 28,362 33,536 40,601 43,337 42,534 41,082 42,581 38,334 36,000 36,000 10,415 8,814

Impairment of long-lived assets - - - - - 48,888 - - - - - - -

Charges - - - (6,254) - (54,215) (12,663) - - - - - -

Changes in working capital

Accounts receivable (7,445) (41,304) (62,182) (11,733) (16,189) 71,149 5,222 (48,986) (24,261) (23,159) (5,077) (16,142) (12,501)

Inventories 42,825 (30,827) 18,872 (29,723) (4,140) 35,136 30,293 (78,824) (2,330) (8,342) (960) (17,204) 24,628

Uniforms and Other Items in Service 4,371 (4,100) (30,567) 5,413 (16,562) 29,661 4,164 (58,180) (60,279) (9,427) (12,465) (19,747) (19,844)

Other Current Assets 212 (963) (2,805) (4,618) (35,697) (4,949) 3,715 360 (1,496) - - 2,778 4,481

Accounts payable (458) 15,845 2,339 (7,013) 30,133 (24,560) 8,939 29,215 (12,557) 14,202 10,513 2,241 (18,929)

Other Current Liabilities (41,265) 5,004 44,753 (659) (10,679) (69,045) 75,916 (6,266) 1,944 2,791 2,814 30,280 (6,391)

Other 36,660 52,784 (2,548) (5,982) 68,706 11,953 15,349 15,203 20,312 - - 5,390 5,289

Net Cash Flow from Operations 509,709 414,213 461,886 443,185 544,543 523,522 565,654 340,886 469,862 516,620 570,562 132,931 162,148

Cash Flow used in Investing Activities

Capital Expenditures (112,888) (140,727) (156,632) (180,824) (190,333) (160,092) (111,078) (182,592) (160,802) (200,000) (214,672) (40,294) (43,086)

Cash Paid for Acquisitions / Cash Received for Divestitures (101,654) (109,076) (346,363) (160,707) (111,535) (30,909) (50,444) (171,552) (24,864) - - (13,035) (3,982)

Purchase of Investments - - - - - - - - - - - - -

Change in Short-Term Investments, net (141,544) (99,268) 61,864 69,659 (8,707) (11,969) (46,557) 60,749 79,361 - - (53,956) 135,810

Other 12,282 (1,663) 1,085 (1,836) (400) (251) 497 (5,198) 2,011 - - (2,353) 158

Net Cash Flow from Investing (343,804) (350,734) (440,046) (273,708) (310,975) (203,221) (207,582) (298,593) (104,294) (200,000) (214,672) (109,638) 88,900

Cash Flow from Financing Activities

Issuance of Common Stock - 4,621 7,680 10,907 8,371 - - - - - - - -

Purchase of Common Stock - (58,204) (323,409) (198,949) (191,479) (25,847) (969) (443,690) (388,432) - - (240,476) (125,750)

Payment of Dividends (49,634) (54,968) (58,823) (61,996) (70,831) (72,207) (73,960) (71,812) (70,820) (91,049) (98,815) - -

Net Borrowings from (payments to) Banks (61,153) 911 348,430 70,801 51,235 (156,294) (1,580) 495,464 (1,323) (0) 4 472,508 (1,853)

Net Cash Flow from Financing Activities (110,787) (107,640) (26,122) (179,237) (202,704) (254,348) (76,509) (20,038) (460,575) (91,049) (98,811) 232,032 (127,603)

- -

Effects of Foreign Exchange - - - - - (2,432) (27) 4,570 (3,274) - - (1,950) (1,603)

Cash from (used for) Discontinued Operations - - - - - - - - - - - - -

Net Increase (decrease) in Cash 55,118 (44,161) (4,282) (9,760) 30,864 63,521 281,536 26,825 (98,281) 225,571 257,080 253,375 121,842

Cash & Equivalents, Beg. Of Year 32,239 87,357 43,196 38,914 35,360 66,224 129,745 411,281 438,106 339,825 565,396 184,731 217,983

Cash & Equivalents, End Of Year 209,306 41,682 39,312 29,106 66,224 129,745 411,281 438,106 339,825 565,396 822,476 438,106 339,825

Free Cash Flow (before dividends) 396,821 273,486 305,254 262,361 354,210 363,430 454,576 158,294 309,060 316,620 355,890 92,637 119,062

% of Sales 14.1% 8.9% 9.0% 7.1% 9.0% 9.6% 12.8% 4.2% 7.5% 7.4% 8.0% 9.2% 11.3%

% of Net Income 144.3% 91.0% 93.3% 78.4% 105.6% 129.5% 199.1% 64.1% 103.8% 97.4% 100.9% 130.9% 151.5%

Per share $2.30 $1.58 $1.81 $1.64 $2.28 $2.37 $2.97 $1.10 $2.38 $2.50 $2.80 $0.65 $0.92

Excess Cash Flow (after dividends) 347,187 218,518 246,431 200,365 283,379 291,223 380,616 86,482 238,240 225,571 257,076 92,637 119,062

% of Net Income 126.3% 72.7% 75.3% 59.9% 84.5% 103.8% 166.7% 35.0% 80.0% 69.4% 72.9% 130.9% 151.5%



Cintas Corporation

Cash Flow Model

18




Year End: June

Income Statement 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E

Revenue 733,447 788,775 880,843 929,542 1,002,395 935,965 826,940 822,932 869,937 906,394 934,600

Rental Operations 708,708 740,708 801,240 847,401 925,767 860,921 769,446 754,375 795,199 825,955 851,747

Direct Sale 24,739 48,067 79,603 82,141 76,628 75,044 57,494 68,557 74,738 80,439 82,852

Cost of Sales and Service 467,030 505,946 576,065 609,671 681,885 654,756 582,266 567,410 607,558 627,365 641,341


Direct Sale 18,899 35,830 57,522 59,472 55,615 55,650 42,555 50,779 57,936 61,462 63,303

Gross Income 266,417 282,829 304,778 295,000 320,510 281,209 244,674 255,522 262,379 279,029 293,259


Direct Sale 5,840 12,237 22,081 22,669 21,013 19,394 14,939 17,778 16,802 18,977 19,550

Selling, general and administrative 158,034 165,815 186,652 215,600 230,017 216,907 195,743 194,413 194,223 200,384 204,054

Depreciation and Amortization 39,346 41,543 43,263 - - - - - - - -

Total Operating Income 69,037 75,471 74,863 79,400 90,493 64,302 48,931 61,109 68,156 78,645 89,205

Gross Interest Expense (Income) 11,966 11,338 13,226 13,901 15,543 13,996 13,849 10,240 6,082 4,783 4,092

Other Expense (Income) - - - - - - - - - - -

Pretax Income 57,071 64,133 61,637 65,499 74,950 50,306 35,082 50,869 62,074 73,862 85,113

Taxes 21,687 24,206 19,786 22,271 28,901 18,380 13,710 19,842 23,450 28,348 32,667

Net Income 35,384 39,927 41,851 43,228 46,049 31,926 21,372 31,027 38,624 45,514 52,446

EPS $1.69 $1.88 $1.97 $2.02 $2.27 $1.73 $1.17 $1.68 $2.07 $2.39 $2.73

Restructuring / Merger charges - - - - - - - - - - -

Asset Write-offs - - - - - - - - - - -

Other One-time Items & Discontinued Operations - - - - - (128,738) 7,240 2,133 (14,477) - -

GAAP EPS $1.69 $1.88 $1.97 $2.02 $2.27 ($5.25) $1.56 $1.80 $1.29 $2.39 $2.73

Diluted Shares 20,899 21,199 21,253 21,424 20,274 18,430 18,339 18,472 18,676 19,050 19,241

Basic Shares 20,709 20,942 21,093 21,231 20,374 18,398 18,290 18,355 18,494 19,050 19,241

Dividend 0.07 0.07 0.07 0.16 0.22 0.28 0.30 0.38 6.55 0.78 0.82

Payout Ratio 4.1% 3.7% 3.6% 7.9% 9.7% 16.2% 25.7% 22.6% 316.9% 32.6% 30.0%

EBITDA 108,383 117,014 118,126 124,995 138,897 108,554 89,119 98,709 102,139 114,151 126,853

Change YOY 1.7% 8.0% 1.0% 5.8% 11.1% -21.8% -17.9% 10.8% 3.5% 11.8% 11.1%

% of Sales 14.8% 14.8% 13.4% 13.4% 13.9% 11.6% 10.8% 12.0% 11.7% 12.6% 13.6%

Margin Analysis 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E

Gross Margin 36.3% 35.9% 34.6% 31.7% 32.0% 30.0% 29.6% 31.1% 30.2% 30.8% 31.4%

Incremental GM% 19.1% 29.7% 23.8% -20.1% 35.0% 59.2% 33.5% -270.7% 14.6% 45.7% 50.5%

Rental Operations 36.8% 36.5% 35.3% 35.1% 32.4% 30.4% 29.9% 31.5% 30.9% 31.5% 32.1%

Incremental GM% 20.2% 31.3% 20.0% 31.4% 2.9% 58.1% 35.1% -53.1% 19.2% 47.1% 53.0%

Direct Sale 23.6% 25.5% 27.7% 27.6% 27.4% 25.8% 26.0% 25.9% 22.5% 23.6% 23.6%

Incremental GM% -13.7% 27.4% 31.2% 23.2% 30.0% 102.2% 25.4% 25.7% -15.8% 38.2% 23.7%

SG&A Margin 26.9% 26.3% 26.1% 23.2% 22.9% 23.2% 23.7% 23.6% 22.3% 22.1% 21.8%

Operating Margin 9.4% 9.6% 8.5% 8.5% 9.0% 6.9% 5.9% 7.4% 7.8% 8.7% 9.5%

Incremental OM% 0.4% 11.6% -0.7% 9.3% 15.2% 39.4% 14.1% -303.8% 15.0% 28.8% 37.4%

Pretax Margin 7.8% 8.1% 7.0% 7.0% 7.5% 5.4% 4.2% 6.2% 7.1% 8.1% 9.1%

Tax Rate 38.0% 37.7% 32.1% 34.0% 38.6% 36.5% 39.1% 39.0% 37.8% 38.4% 38.4%

Net Margin 4.8% 5.1% 4.8% 4.7% 4.6% 3.4% 2.6% 3.8% 4.4% 5.0% 5.6%

Changes YOY 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E

Total Revenue 3.9% 7.5% 11.7% 5.5% 7.8% -6.6% -11.6% -0.5% 5.7% 4.2% 3.1%

Total Internal Revenue -0.6% 2.4% 6.7% 4.5% 4.2% -7.3% -11.1% 3.2% 5.6% 4.2% 3.1%

Total Organic Revenue Growth -2.1% 1.2% 5.5% 4.1% 2.3% -5.3% -11.5% 2.3% 5.8% 4.2% 3.1%

Rental Operations 4.0% 4.5% 8.2% 5.8% 9.2% -7.0% -10.6% -2.0% 5.4% 3.9% 3.1%

Internal -0.7% -0.1% 2.8% 4.8% 5.3% -7.7% -9.9% 2.7% 5.4% 3.9% 3.1%

Organic (yoy) -2.3% 0.2% 3.5% 4.2% 3.2% -5.4% -11.3% 0.8% 5.5% 3.9% 3.1%

Direct Sale 3.5% 94.3% 65.6% 3.2% -6.7% -2.1% -23.4% 19.2% 9.0% 7.6% 3.0%

Internal 3.5% 94.3% 65.6% 3.2% -6.7% -2.1% -23.4% 19.2% 9.0% 7.6% 3.0%

Organic 1.6% 30.1% 35.9% 3.2% -6.7% -2.1% -28.3% 11.5% 9.1% 7.6% 3.0%

Gross Income 2.0% 6.2% 7.8% -3.2% 8.6% -12.3% -13.0% 4.4% 2.7% 6.3% 5.1%

Rental Operations 2.1% 3.8% 4.5% 5.1% 0.8% -12.6% -12.3% 3.5% 3.3% 5.9% 5.3%

Direct Sale -1.9% 109.5% 80.4% 2.7% -7.3% -7.7% -23.0% 19.0% -5.5% 12.9% 3.0%

Operating Expenses 2.3% 4.9% 12.6% 15.5% 6.7% -5.7% -9.8% -0.7% -0.1% 3.2% 1.8%

Operating Income 0.2% 9.3% -0.8% 6.1% 14.0% -28.9% -23.9% 24.9% 11.5% 15.4% 13.4%

Pretax Income 3.3% 12.4% -3.9% 6.3% 14.4% -32.9% -30.3% 45.0% 22.0% 19.0% 15.2%

Net Income 5.2% 12.8% 4.8% 3.3% 6.5% -30.7% -33.1% 45.2% 24.5% 17.8% 15.2%

EPS 4.1% 11.2% 4.6% 2.5% 12.6% -23.7% -32.7% 44.1% 23.1% 15.5% 14.1%



G&K Services

Annual Model

19




Year End: June

Income Statement 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Rental Operations 194,001 196,832 200,238 204,128 202,731 204,705 207,246 211,272 209,827 210,846 213,464 217,611

Direct Sale 15,722 20,232 18,571 20,213 19,653 20,839 19,128 20,819 20,242 21,464 19,702 21,444

Revenue 209,723 217,064 218,809 224,341 222,384 225,544 226,374 232,092 230,069 232,311 233,166 239,055

Cost of Sales and Service 145,502 152,602 154,097 155,357 153,723 156,622 157,604 159,416 157,748 159,845 160,885 162,863


Direct Sale 11,915 16,252 14,794 14,975 14,936 16,046 14,669 15,811 15,466 16,422 15,050 16,364

Gross Income


Direct Sale 3,807 3,980 3,777 5,238 4,717 4,793 4,459 5,008 4,776 5,042 4,652 5,080

Gross Income 64,221 64,462 64,712 68,984 68,660 68,922 68,771 72,676 72,321 72,466 72,280 76,191

Selling, general and administrative 48,746 47,508 48,409 49,560 50,466 49,251 49,743 50,924 51,519 50,264 50,536 51,735

Depreciation and Amortization - - - - - - - - - - - -

Total Operating Income 15,475 16,954 16,303 19,424 18,195 19,671 19,027 21,752 20,802 22,202 21,744 24,457

Gross Interest Expense (Income) 1,653 1,607 1,524 1,298 1,245 1,218 1,174 1,146 1,086 1,047 1,000 959

Other Expense (Income) - - - - - - - - - - - -

Pretax Income 13,822 15,347 14,779 18,126 16,950 18,453 17,853 20,605 19,716 21,155 20,745 23,498

Taxes 5,529 5,881 5,102 6,938 6,780 7,071 6,610 7,887 7,887 8,106 7,680 8,994

Net Income 8,293 9,466 9,677 11,188 10,170 11,382 11,244 12,718 11,829 13,048 13,065 14,504

EPS $0.45 $0.51 $0.52 $0.59 $0.54 $0.60 $0.59 $0.67 $0.62 $0.68 $0.68 $0.75

Restructuring / Merger charges - - - - - - - - - - - -

Asset Write-offs - - - - - - - - - - - -

Other One-time Items & Discontinued Operations - - (14,477) - - - - - - - - -

GAAP EPS $0.45 $0.51 -$0.26 $0.59 $0.54 $0.60 $0.59 $0.67 $0.62 $0.68 $0.68 $0.75

Diluted Shares 18,610 18,660 18,502 18,931 18,978 19,026 19,073 19,121 19,169 19,217 19,265 19,313

Basic Shares 18,430 18,493 18,502 18,552 18,978 19,026 19,073 19,121 19,169 19,217 19,265 19,313

Dividend 0.13 0.13 0.13 6.16 0.20 0.20 0.20 0.20 0.20 0.20 0.20 0.20

EBITDA 24,251 25,331 24,769 27,788 26,486 28,418 28,146 31,101 30,069 31,560 31,137 34,087

Change YOY 3.4% 5.0% -2.4% 7.9% 9.2% 12.2% 13.6% 11.9% 13.5% 11.1% 10.6% 9.6%

% of Sales 11.6% 11.7% 11.3% 12.4% 11.9% 12.6% 12.4% 13.4% 13.1% 13.6% 13.4% 14.3%

Margin Analysis 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Gross Margin 30.6% 29.7% 29.6% 30.7% 30.9% 30.6% 30.4% 31.3% 31.4% 31.2% 31.0% 31.9%

Incremental GM% 25.8% 17.3% -19.0% 23.8% 35.1% 52.6% 53.6% 47.6% 47.6% 52.4% 51.7% 50.5%

Rental Operations 31.1% 30.7% 30.4% 31.2% 31.5% 31.3% 31.0% 32.0% 32.2% 32.0% 31.7% 32.7%

Incremental GM% 26.4% 23.6% -14.0% 30.1% 40.4% 46.3% 48.2% 54.9% 50.8% 53.6% 53.3% 54.3%

Direct Sale 24.2% 19.7% 20.3% 25.9% 24.0% 23.0% 23.3% 24.1% 23.6% 23.5% 23.6% 23.7%

Incremental GM% 21.1% -5.3% -53.9% -308.3% 23.1% 133.9% 122.5% -37.9% 10.0% 39.8% 33.6% 11.4%

SG&A Margin 23.2% 21.9% 22.1% 22.1% 22.7% 21.8% 22.0% 21.9% 22.4% 21.6% 21.7% 21.6%

D&A Margin 4.2% 3.9% 3.9% 3.7% 3.7% 3.9% 4.0% 4.0% 4.0% 4.0% 4.0% 4.0%

Operating Margin 7.4% 7.8% 7.5% 8.7% 8.2% 8.7% 8.4% 9.4% 9.0% 9.6% 9.3% 10.2%

Incremental OM% 10.6% 15.1% 4.1% 29.5% 21.5% 32.0% 36.0% 30.0% 33.9% 37.4% 40.0% 38.9%

Pretax Margin 6.6% 7.1% 6.8% 8.1% 7.6% 8.2% 7.9% 8.9% 8.6% 9.1% 8.9% 9.8%

Tax Rate 40.0% 38.3% 34.5% 38.3% 40.0% 38.3% 37.0% 38.3% 40.0% 38.3% 37.0% 38.3%

Net Margin 4.0% 4.4% 4.4% 5.0% 4.6% 5.0% 5.0% 5.5% 5.1% 5.6% 5.6% 6.1%

Changes YOY 1Q12 2Q12 3Q12 4Q12 1Q13E 2Q13E 3Q13E 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E

Total Revenue 6.8% 7.4% 4.0% 4.8% 6.0% 3.9% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Total Internal Revenue 5.7% 7.1% 4.9% 5.4% 6.0% 3.9% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Total Organic Revenue Growth 5.7% 7.1% 4.9% 5.4% 6.0% 3.9% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Rental Operations 6.4% 6.3% 3.8% 5.2% 4.5% 4.0% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Internal 6.4% 6.3% 3.8% 5.2% 4.5% 4.0% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Organic (yoy) 5.2% 6.0% 4.8% 5.8% 4.5% 4.0% 3.5% 3.5% 3.5% 3.0% 3.0% 3.0%

Direct Sale 12.1% 19.0% 6.0% 1.0% 25.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Internal 12.1% 19.0% 6.0% 1.0% 25.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Organic 12.1% 19.0% 6.0% 1.0% 25.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

Gross Income 5.7% 4.2% -2.4% 3.7% 6.9% 6.9% 6.3% 5.4% 5.3% 5.1% 5.1% 4.8%

Rental Operations 5.4% 4.7% -1.7% 5.0% 5.8% 6.0% 5.5% 6.2% 5.6% 5.1% 5.2% 5.1%

Direct Sale 10.4% -4.1% -13.1% -10.2% 23.9% 20.4% 18.1% -4.4% 1.3% 5.2% 4.3% 1.4%

Operating Expenses 4.3% 0.7% -3.9% -1.2% 3.5% 3.7% 2.8% 2.8% 2.1% 2.1% 1.6% 1.6%

Operating Income 10.1% 15.2% 2.2% 18.5% 17.6% 16.0% 16.7% 12.0% 14.3% 12.9% 14.3% 12.4%

Pretax Income 21.2% 24.7% 13.7% 28.0% 22.6% 20.2% 20.8% 13.7% 16.3% 14.6% 16.2% 14.0%

Net Income 29.5% 25.6% 21.5% 22.7% 22.6% 20.2% 16.2% 13.7% 16.3% 14.6% 16.2% 14.0%

EPS 27.7% 24.3% 21.1% 20.6% 20.2% 17.9% 12.7% 12.5% 15.2% 13.5% 15.0% 12.9%



G&K Services

Quarterly Model

20




Year End: June

Assets 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Cash and cash equivalents 26,931 15,345 19,690 22,759 12,651 13,136 8,774 22,974 19,604 19,604 19,604 22,974 19,604

Accounts Receivable 71,058 83,459 94,964 98,276 111,307 85,209 82,754 90,522 93,064 96,279 99,168 90,522 93,064

Inventory 94,476 121,120 141,031 140,780 142,318 135,492 126,325 163,050 178,226 177,642 181,483 163,050 178,226

Other Current Assets 14,902 16,587 15,552 14,912 26,181 21,241 21,279 21,614 12,239 12,736 13,253 21,614 12,239

Total Current Assets 207,367 236,511 271,237 276,727 292,457 255,078 239,132 298,160 303,133 306,261 313,507 298,160 303,133

Net PP & E 240,609 243,307 249,001 255,996 253,041 216,736 194,988 185,521 187,840 197,622 203,262 185,521 187,840

Goodwill 285,892 338,701 349,469 380,070 434,900 319,942 323,055 328,219 325,336 325,336 325,336 328,219 325,336

Other Intangible Assets 44,960 57,790 50,712 44,928 40,996 29,539 22,300 18,200 12,435 7,147 1,858 18,200 12,435

Investments/Held for Sale - - - - - - - - - - - - -

Other Assets 23,919 26,860 30,673 34,093 31,780 29,873 34,393 35,820 44,987 44,987 44,987 35,820 44,987

Total Assets 802,747 903,169 951,092 991,814 1,053,174 851,168 813,868 865,920 873,731 881,352 888,951 865,920 873,731

Liabilities & Equity

Current Portion of LTD 24,018 26,537 18,199 65,838 7,891 7,744 1,023 40,710 206 206 206 40,710 206

Accounts Payable 20,511 25,695 27,404 21,911 30,873 29,134 25,944 38,067 41,358 42,439 43,356 38,067 41,358

Deferred Taxes 7,395 8,971 10,419 6,568 6,154 3,414 3,557 7,626 8,439 8,439 8,439 7,626 8,439

Other Liabilities 76,470 71,483 72,999 68,927 78,282 79,010 71,478 72,395 69,902 71,311 72,748 72,395 69,902

Total Current Liabilities 128,394 132,686 129,021 163,244 123,200 119,302 102,002 158,798 119,905 122,394 124,749 158,798 119,905

Long term Debt 184,305 210,462 195,355 149,005 280,428 224,781 160,398 95,188 218,018 192,495 161,052 95,188 218,018

Deferred and Accrued Income Taxes 38,256 32,580 34,343 34,298 35,190 1,893 11,355 22,388 16,812 16,812 16,812 22,388 16,812

Pension Withdrawal Liability - - - - - - - - 23,562 23,562 23,562 - 23,562

Other Noncurrent Liabs 26,369 47,691 44,985 53,279 56,880 67,836 73,217 74,640 92,375 92,375 92,375 74,640 92,375

Stockholder's Equity 425,423 479,750 547,388 591,988 557,476 437,356 466,896 514,906 403,059 433,714 470,401 514,906 403,059

Total Liabs & SE 802,747 903,169 951,092 991,814 1,053,174 851,168 813,868 865,920 873,731 881,352 888,951 865,920 873,731

Balance Sheet Statistics 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Net Total Debt to Capital 29% 31% 25% 24% 33% 33% 24% 17% 32% 28% 22% 17% 32%

Current Ratio 1.6 1.8 2.1 1.7 2.4 2.1 2.3 1.9 2.5 2.5 2.5 1.9 2.5

EBITDA / Gross Interest Expense 9.1 10.3 8.9 9.0 8.9 7.8 6.4 9.6 16.8 23.9 31.0 9.6 16.8

Debt/EBITDA (TTM) 1.9 2.0 1.8 1.7 2.1 2.1 1.8 1.4 2.1 1.7 1.3 1.4 2.1

Book Value $20.22 $22.59 $25.66 $27.53 $28.96 $24.01 $25.39 $27.67 $21.29 $22.68 $24.36 $27.67 $21.29

Tangible Book Value $4.49 $3.92 $6.90 $7.77 $4.24 $4.82 $6.61 $9.06 $3.45 $5.29 $7.42 $9.06 $3.45

Ending working capital / Annualized Sales 10% 14% 15% 16% 16% 15% 15% 18% 18% 18% 18% 18% 18%

Ending Working Capital / TTM Sales 10.4% 14.6% 16.0% 16.8% 16.4% 13.9% 15.6% 19.1% 18.8% 18.1% 18.1% 19.1% 18.8%

Inventory Turnover 4.5 4.3 4.1 4.0 4.5 4.4 4.1 3.7 3.4 3.3 3.4 3.7 3.4

Cash & Equivs. / Annualized Sales 3% 2% 2% 2% 1% 2% 1% 3% 2% 2% 2% 3% 2%

Receivable Days (Ending) 34 37 38 37 40 36 35 39 38 38 38 39 38

Inventory Days (Ending) 71 82 86 79 75 80 77 101 105 102 102 101 105

Accounts Payable Days (Ending) 15 17 17 12 16 17 16 24 24 24 24 24 24

Cash Cycle Days (Ending) 89 102 107 104 99 98 97 116 118 115 115 116 118

Receivable Days (Average) 35 36 37 38 38 38 37 38 39 38 38 38 39

Inventory Days (Average) 74 78 83 84 76 77 82 93 103 104 102 93 103

Payable Days (Average) 16 17 17 15 14 17 17 21 24 24 24 21 24

Cash Cycle Days (Average) 94 97 103 108 100 99 102 111 117 117 116 111 117

Return on Average Equity 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Net Margin 4.8% 5.1% 4.8% 4.7% 4.6% 3.4% 2.6% 3.8% 4.4% 5.0% 5.6% 3.8% 4.4%

Asset Turnover (S/A) 0.9 0.9 0.9 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.1 1.0 1.0

Leverage (A/E) 2.0 1.9 1.7 1.7 1.8 1.9 1.8 1.7 1.9 2.1 2.0 1.7 1.9

Return on Average Equity 8.8% 8.8% 7.6% 7.6% 8.0% 6.4% 4.7% 6.3% 8.4% 10.9% 11.6% 6.3% 8.4%

ROIC Calculation 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12ROIC, Annualized 6.8% 6.5% 6.1% 6.1% 6.5% 5.9% 4.7% 5.8% 6.8% 7.8% 8.7% 6.3% 7.7%



G&K Services

Balance Sheet

21




Year End: June

Quarterly Statement of Cash Flows 2004 2005 2006 2007R 2008R 2009 2010 2011 2012 2013E 2014E 4Q11 4Q12

Cash Flow from Operating Activities

Net Income 35,384 39,927 41,851 43,228 46,049 (62,432) 21,372 31,027 38,624 45,514 52,446 9,117 11,188

Adj. to reconcile net income to Cash Flows - -

Deferred tax benefit 3,525 (4,100) 3,211 (3,896) 478 (34,999) (1,824) 982 2,775 - - (2,752) 4,278

Depreciation 31,417 31,981 32,479 34,789 37,304 37,052 33,788 31,200 28,983 30,218 32,360 7,768 7,042

Amortization 7,929 9,562 10,784 10,806 11,100 7,200 6,400 6,400 5,000 5,288 5,288 1,600 1,322

Allowance for uncollectible accounts - - - - - - - - - - - - -

Reserve for Inventory - - - - - - - - - - - - -

Asset sales (gains/losses) - - - - - - - - - - - - -

Charges - - - - - 124,700 7,240 2,133 (14,477) - - (1,566) -

Changes in working capital

Accounts receivable (1,219) (12,401) (11,505) (3,312) (13,031) 22,155 2,455 (7,768) (2,542) (3,215) (2,888) 779 957

Inventories 1,377 (26,644) (19,911) 251 1,470 6,762 (1,643) (36,725) (14,633) 584 (3,841) (17,253) (506)

Other Current Assets (54) (1,685) 1,035 640 2,963 8,874 (38) (335) 9,375 (497) (517) (5,912) 801

Accounts payable 283 5,184 1,709 (5,493) 8,962 3,485 (3,190) 12,123 3,291 1,081 918 3,288 7,529

Other Current Liabilities 14,143 (4,987) 1,516 (4,072) (7,986) 5,405 (7,532) 917 (2,493) 1,409 1,437 889 1,188

Other 3,482 26,697 8,352 7,486 15,719 (15,022) 15,682 27,050 19,070 - - 22,029 (202)

Net Cash Flow from Operations 96,267 63,534 69,521 80,427 103,028 103,180 72,710 67,004 72,973 80,381 85,202 17,987 33,598

- -

Cash Flow used in Investing Activities

Capital Expenditures (17,349) (19,408) (31,968) (31,515) (27,057) (23,363) (16,710) (20,670) (34,026) (40,000) (38,000) (5,205) (8,105)

Cash Paid for Acquisitions / Cash Received for Divestitures (26,527) (76,466) (13,422) (49,654) (63,820) 33 21,620 - (1,087) - - - (1,087)

Purchase of Investments - - - - (3,223) - - - - - - - -

Increase in Short-Term Investments, net - - - - - - - - - - - - -

Other - - - - - - - - - - - - -

Net Cash Flow from Investing (43,876) (95,874) (45,390) (81,169) (94,100) (23,330) 4,910 (20,670) (35,113) (40,000) (38,000) (5,205) (9,192)

Cash Flow from Financing Activities

Issuance of Common Stock 5,218 5,952 2,958 3,279 4,357 210 384 695 2,858 - - 436 1,989

Purchase of Common Stock - - - (7,883) (93,142) (17,047) (395) (352) (817) - - (10) (200)

Payment of Dividends (1,459) (1,467) (1,493) (3,436) (4,041) (5,213) (5,579) (7,105) (123,921) (14,859) (15,758) (1,778) (116,581)

Net Borrowings from (payments to) Banks (80,786) 14,671 (22,063) 11,757 73,467 (56,240) (76,245) (25,525) 81,215 (25,523) (31,443) (10,262) 92,841

Net Cash Flow from Financing Activities (77,027) 19,156 (20,598) 3,717 (19,359) (78,290) (81,835) (32,287) (40,665) (40,381) (47,202) (11,614) (21,951)

- -

Effects of Foreign Exchange 306 1,598 812 142 293 (1,075) (147) 153 (565) - - (138) (442)

Net Increase (decrease) in Cash (24,330) (11,586) 4,345 3,117 (10,138) 485 (4,362) 14,200 (3,370) - - 1,030 2,013

Cash & Equivalents, Beg. Of Year 11,504 26,931 15,345 19,690 22,759 12,651 13,136 8,774 22,974 19,604 19,604 21,838 17,249

Cash & Equivalents, End Of Year 6,052 15,345 19,690 22,290 12,874 13,136 8,774 22,868 19,262 19,604 19,604 22,868 19,262

Free Cash Flow (before dividends) 78,918 44,126 37,553 48,912 75,971 79,817 56,000 46,334 38,947 40,381 47,202 12,782 25,493

% of Sales 10.8% 5.6% 4.3% 5.3% 7.6% 8.5% 6.8% 5.6% 4.5% 4.5% 5.1% 6.0% 11.4%

% of Net Income 223.0% 110.5% 89.7% 113.1% 165.0% -127.8% 262.0% 149.3% 100.8% 88.7% 90.0% 140.2% 227.9%

FCF / share $3.78 $2.08 $1.77 $2.28 $3.75 $4.33 $3.05 $2.51 $2.09 $2.12 $2.45 $0.69 $1.35

Excess Cash Flow (after dividends) 77,459 42,659 36,060 45,476 71,930 74,604 50,421 39,229 (84,974) 25,523 31,443 11,004 (91,088)

% of Sales 10.6% 5.4% 4.1% 4.9% 7.2% 8.0% 6.1% 4.8% -9.8% 2.8% 3.4% 5.1% -40.6%



G&K Services

Cash Flow Model

22

Appendix - Important Disclosures and Analyst Certification

Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q316

24

32

40

48

2010 2011 2012

09/23/09U:$28

12/23/09U:$26

02/17/10U:$22

07/21/10N:$28

09/22/10N:$30

12/22/10N:$32

03/14/11O:$34

03/23/11O:$35

07/20/11O:$36

09/12/11O:$34

12/21/11O:$38

02/21/12O:$42

03/21/12N:$45

06/15/12N:$41

Rating and Price Target History for: Cintas Corporation (CTAS) as of 09-14-2012

Created by BlueMatrix

Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q315

20

25

30

35

40

2010 2011 2012

09/23/09U:$21

10/28/09N:$23

01/27/10N:$26

04/28/10N:$28

06/15/10N:$23

08/18/10N:$24

11/02/10N:$30

01/19/11O:$37

02/02/11O:$38

05/03/11O:$40

08/17/11O:$37

01/31/12O:$38

04/09/12O:$43

05/02/12O:$39

06/15/12O:$36

Rating and Price Target History for: G&K Services, Inc. (GKSR) as of 09-14-2012




23

Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q3 Q1 Q2 Q330

40

50

60

70

2010 2011 2012

09/23/09U:$42

10/29/09U:$43

01/07/10O:$59

04/01/10O:$60

07/01/10O:$51

10/20/10O:$54

01/05/11O:$57

01/19/11N:$58

03/30/11N:$60

06/30/11N:$61

09/12/11N:$57

10/19/11O:$60

01/05/12O:$68

03/29/12O:$70

06/15/12O:$68

06/28/12O:$72

07/17/12N:$73

Rating and Price Target History for: UniFirst Corporation (UNF) as of 09-14-2012


1 Robert W. Baird & Co. Incorporated makes a market in the securities of CTAS, GKSR and UNF.

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