William C. Gale - Chief Financial Officer, Principal Accounting Officer and Senior Vice President J. Michael Hansen - Vice President and Treasurer

Sara Gubins - BofA Merrill Lynch, Research Division Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division Vishnu Lekraj - Morningstar Inc., Research Division Thomas Allen - Morgan Stanley, Research Division Nathan Brochmann - William Blair & Company L.L.C., Research Division Andrew C. Steinerman - JP Morgan Chase & Co, Research Division Joe Box - KeyBanc Capital Markets Inc., Research Division James Samford - Citigroup Inc, Research Division Steven Gregory Gregory W. Halter - LJR Great Lakes Review Gary E. Bisbee - Barclays Capital, Research Division John M. Healy - Northcoast Research

Good day, everyone and welcome to the Cintas Quarterly Earnings Results Conference call. Today's call is being recorded. At this time, I would like to turn the call over to Mr. Bill Gale, Senior Vice President of Finance and Chief Financial Officer. Please go ahead, sir. William C. Gale: Good evening, and thank you for joining us to report our Second Quarter Results for Fiscal 2012. With me is Mike Hansen, Cintas' Vice President and Treasurer. After some commentary on the results, we will be happy to answer questions. We are pleased to report that our second quarter revenue grew 8.8% from last year's second quarter to a record revenue of $1,019,000,000. Net income increased by 33.1% to $74.4 million, and earnings per share were $0.57, a 50% increase over last year. Our operating margin continued to expand as our second quarter operating margin of 13% was an improvement over both last year's second quarter operating margin of 10.9% and this year's first quarter operating margin of 12.6%. This improvement came despite significantly lower recycled paper prices. This margin expansion continues to be driven by better capacity utilization, our focus on selling profitable business and controlling our cost, particularly in our general and administrative area. At our last earnings call in mid-September, we spoke of our cautiousness toward the U.S. economy. Only about 100,000 jobs have been created during our first fiscal quarter, and 2011 and 2012 economic forecast were worsening while the stock market was declining. Despite our strong first quarter results, we were uncertain about how our business would be affected by the macro environment. Obviously, given this backdrop heading into our second quarter, we have been very pleased to see that our business continued to be strong throughout this quarter. While we continue to be cautious regarding the U.S. economy, we do have more confidence about our ability to execute in this less than robust environment. As a result, we are updating our guidance for fiscal 2012. We now expect fiscal 2012 revenues to be in the range of $4.075 billion to $4.125 billion, and we expect earnings per diluted share in the range of $2.16 to $2.20. This guidance assumes no significant changes in the U.S. economy and effective tax rate of 37% for the entire 2012 fiscal year, assumes recycled paper prices to be approximately $150 per ton, which is our price for November and December, and energy-related cost to be approximately 3.5% of revenue. The Private Securities Litigation Reform Act of 1995 provides a Safe Harbor from civil litigation for forward-looking statements. This conference call contains forward-looking statements that reflect the company's current views as to future events and financial performance. These forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those we may discuss. I refer you to the discussion on these points contained in our most recent filings with the SEC. Now I would like to turn the call over to Mike for more details on our second quarter. J. Michael Hansen: Thank you, Bill. As Bill mentioned, total revenue increased 8.8% from the second quarter of last year while total company organic growth was 7%. Total company gross margin for the second quarter was 42.2%, which is up from last year's second quarter gross margin of 41.7% despite a 20 basis-point increase in energy-related costs and a steep drop in recycled paper prices. I will discuss these items in more detail by segment. Before doing so, let me remind you that there were 65 workdays in our second quarter, which is the same as last year. As a planning note for the remainder of fiscal 2012, we will have 65 workdays in the third quarter and 66 in the fourth quarter. The total workdays in fiscal 2012 are 262. We have 4 reportable operating segments: Rental Uniforms and Ancillary Products, Uniform Direct Sales, First Aid, Safety and Fire Protection Services and Document Management Services. Uniform Direct Sales, First Aid, Safety and Fire Protection Services and Document Management Services are combined and presented as Other Services on the face of the income statement. The Rental Uniforms and Ancillary Products operating segment consists of the rental and servicing of uniforms, masks, towels [ph] and other related items. This segment also includes restroom supplies and other facility products and services. Rental Uniforms and Ancillary Products revenue accounted for 71% of company revenue in the second quarter. Momentum continued for our rental business. Second quarter rental revenue was $722.8 million, which is up 9.9% compared to last year's second quarter, and up 7.9% organically over last year. The organic growth rate of 7.9% for the second quarter is an improvement from last quarter's organic growth rate of 7.3% and a very good improvement over last year's second quarter organic growth rate of 1.9%. All areas of our Rental business grew in the second quarter. The less-aggressive pricing environment that we saw in the first quarter continued into the second quarter. Our rental segment gross margin was 43.2% for the second quarter, an improvement of 60 basis points over last year's second quarter gross margin of 42.6%. Energy-related costs, as a percent of revenue, were consistent with last year's second quarter. Capacity utilization from higher volumes was the main driver of the improvement. The second quarter gross margin of 43.2% was slightly lower than the first quarter gross margin of 43.9%, but keep in mind that our second quarter had 1 one less work day than the first quarter. As a result, we have 1 less revenue day to cover costs that are expensed on a monthly schedule such as material cost, depreciation and amortization. One last comment on the rental gross margin, the impact of cotton on material costs equaled our expectation. Our Uniform Direct Sales operating segment includes the direct sale of uniforms, branded promotional products and other related products to national and regional customers. Uniforms and other related products are also sold to local customers, including products sold to rental customers through our direct sale catalog. Uniform Direct Sales revenue accounted for 11% of company revenue in the second quarter. Second quarter revenue of $111.9 million represent an increase of 2.9% compared to last year's second quarter. Organic growth was also 2.9%. The revenue from this segment tends to be a bit choppy based on the timing of new product rollouts, refresh programs and customer openings. Uniform Direct Sales gross margin was 29.6% for the quarter, which is down from last year's second quarter gross margin of 29.9%. The decrease is mainly due to the expected cotton impacts. The gross margin of 29.6% was an improvement over the first quarter gross margin of 28.6%, mainly due to higher volumes in the second quarter. Our First Aid, Safety and Fire Protection Services operating segment includes revenue from the sale and servicing of First Aid products, Safety Products and Training and Fire Protection products. First Aid, Safety and Fire Protection revenue accounted for 10% of company revenue in the second quarter. Momentum continued in this operating segment as we had another good quarter. Revenues were $101.7 million, an increase of 9% versus last year's second quarter. And organic growth was 7.8%. This segment's gross margin was 43.1% in the second quarter, compared to 41.1% in last year's second quarter. Energy-related expenses were 20 basis points higher this year compared to last year. Improved capacity utilization from the higher volumes in both our facilities and on routes continue to drive the gross margin expansion. The second quarter's gross margin of 43.1% was roughly consistent with the first quarter gross margin of 43.2%. Our Document Management Services operating segment includes document destruction, storage and imaging services, and it accounted for 8% of second quarter total company revenue. Document Management revenue increased 7.9% over last year's second quarter with organic growth of 4.6%. As we mentioned in the press release, our second quarter Document Management business was adversely affected by 2 things: First, there was a steep decrease in recycled paper prices after experiencing a fairly long stretch of prices in excess of $200 per ton, the prices quickly dropped to $150 per ton during the quarter. Although the average paper price for the quarter was relatively consistent with last year's second quarter, it was 15% below the first quarter average. As a result, growth of Document Management revenue and operating income slowed when comparing sequentially. While it is difficult to predict this price for the second half of our fiscal year, our updated guidance assumes that prices will stay at $150 per ton. The second item that adversely affected our Document Management results was the difficult economic environment in Europe. We experienced weakness in all locations of our European business. As a result, we turned the focus of our European business to rightsizing the organizations and improving operating margins. This resulted in added cost to this quarter, which should provide benefit moving forward. Our European businesses revenue run rate continues to be about $40 million annually, and in this quarter, we operated at a loss. To give more perspective on the North American Document Management business, its organic growth for the second quarter was 7%. Its operating margin was 9.9%, which was a 70 basis-point improvement over last year's second quarter. The North American operating margin is lower than the first quarter operating margin, due to the drop in the recycled paper prices. Moving to selling and administrative expenses. We are very pleased to see second quarter consolidated selling and administrative expenses decrease to 29.2% of revenue. This is a decrease of 160 basis points from last year's second quarter of 30.8%. Selling expenses continued to be lower as a percent of total revenue due to higher revenue levels and continued rep productivity improvements. Administrative expenses as a percent of total revenue also decreased, due to ongoing cost control initiatives. Our efforts of controlling costs have allowed us to increase revenue by 8.8% while only increasing SG&A by 3.1%. Our effective tax rate was 35.5% for the quarter compared to 38.3% last year. This year's second quarter rate was positively impacted by the resolution of several tax audits. The effective rate can fluctuate from quarter to quarter based on tax reserve builds and releases relating to specific discrete items. As noted in our press release, we expect the effective tax rate for the entire 2012 fiscal year to be 37%. Turning now to the balance sheet. Our cash and marketable securities were $338 million at November 30, up $61 million from the $277 million at August 31. While our Board of Directors approved a new $500 million share buyback authorization in October, we did not make any purchases under the program during the second quarter. Keep in mind that in early December, we made our annual dividend payment of $71 million and a semiannual bond interest payment of $25 million. Accounts receivable increased by $8 million since August 31, primarily because of the higher revenue levels. DSOs on accounts receivable was 40, which is the same as at August 31. New goods inventory at November 30 was $288 million, up $8 million from August 31. This increase is mainly due to continued high-demand levels in our Carhartt program, our flame-resistant clothing line, healthcare items and some build-for-winter seasonal wear. We continue to expect to see inventory levels decrease during the remainder of fiscal 2012. Accrued liabilities increased $94 million compared to August 31, primarily due to the $71 million accrual of the annual dividend and accrual of bond interest payments. Long-term debt at November 30 was $1.3 billion, of which $226 million was in current liabilities. We have $225 million maturing on June 1, 2012. We intend to pay off this amount with a combination of cash on hand and short-term borrowings under our commercial paper program. However, if longer-term borrowing rates remain at the attractive low levels they are currently, we may reevaluate and decide to refinance the amount. The average rate on the outstanding debt is 5.1%. Total debt to EBITDA is 2x. Moving onto cash flow. Cash provided by operating activities in the second quarter was $119.4 million, which is up from last year's second quarter amount of $73.9 million. In addition to higher net income, the rate of growth for working capital needs came down as we expected. CapEx for the second quarter was $35.4 million. Our CapEx by operating segment was as follows: $21 million in Rental; less than $1 million in Uniform Direct Sales; $4.3 million in First Aid, Safety and Fire Protection; and $9.5 million in Document Management. We continue to expect CapEx for fiscal 2012 to be in the range of $180 million to $200 million. That concludes our prepared remarks, and we will now take any of your questions.

[Operator Instructions] We'll go first to Vishnu Lekraj with Morningstar. Vishnu Lekraj - Morningstar Inc., Research Division: Question here on your margin and your margin expansion. Looks like you expanded pretty good over the second quarter here. How should we think about this moving past 2012 and to 2013? And is this mainly because of cost restructuring? Or is this partly because of pricing increases or a combination of the both? William C. Gale: It's a combination of both, Vishnu, as well as the additional revenue that we're obtaining. So we're getting the revenue growth. And obviously, we're not having to add as much capacity. And so, I would say, based on our expectations, we continue to expect margin improvement going forward. We've been saying that for some time. And I think, as you've seen this year, we've been able to accomplish that. And so, therefore, I continue to expect margin expansion going forward, assuming kind of economic environment that we're currently in and the rate of energy costs and other large costs that we're seeing at this time. Vishnu Lekraj - Morningstar Inc., Research Division: Has there been a significant change in terms of the mix of customers in your current or in your core business? William C. Gale: Not really. Our core business continues to be spread among businesses of all types. As we’ve talked about in last quarter or so, many of our new customers are coming from companies who had never used the programs before, and that continues. But it really crosses the traditional type of customers that we've always had, a lot of service sector type customers. We have a small amount of manufacturing, but it reall,y pretty much standardized than what we've seen in the past. Vishnu Lekraj - Morningstar Inc., Research Division: Right. One more question here on your Doc Management business. How much would you say the headwinds there this quarter were related to the European worries? And how much was that attributable towards lower prices for recycled paper? J. Michael Hansen: Vishnu, more of the impact in the second quarter, especially when compared to last year is due to our European business. The paper prices fell quite dramatically during the quarter, but primarily was towards the end of the quarter. The recycled paper price impact going forward will be larger than what we saw this quarter. And that is considered in our guidance.

We'll go next to John Healy with Northcoast Research. John M. Healy - Northcoast Research: I wanted to ask a little bit about the organic growth in the Rental business. Continue to be quite impressive. I know you don't drill down to the components, but can you talk qualitatively in terms of maybe what are the sources of upside maybe relative to what you would expect in this type of economy or maybe coming from? Any color you can give in terms of the bright spots, in terms of the component of organic growth will be appreciated. William C. Gale: Well, John, the bright spots are some of the things that we’ve talk about, the Carhartt program has been very successful, the fire-resistant clothing line has been very successful, and a lot of our new facility services programs have been very successful, our tile and carpet, our chemicals are growing well. And so, we've had some real good experience there. And I think the positive is that we've done this in a period of time where there hasn't been a lot of customer hiring. And so, if we can see some pickup in the hiring from our customers, we should see even more improvement. John M. Healy - Northcoast Research: Helpful. And when I think about the SG&A level in the business, I think this is the fourth quarter where you've seen revenue significantly outpass SG&A growth. As we start to cycle against that building of leverage, what sort of relationship should we expect in terms of SG&A growth relative to revenue? And are we now at a point in terms of your investment into emerging business lines where the revenue should continue to outpace that? And how shall we think about those 2? William C. Gale: Well, we still have -- in emerging businesses lines, we still have a lot of investment being made in the sales end as well as establishing appropriate levels of management in markets that don't have a lot of revenue yet, because we know we're going to grow into them. So that's going to continue for a while. I would say that we have done an excellent job with controlling our cost in the overhead areas. All of the management in the company have put a lot of effort into making sure that we don't add headcount unless absolutely necessary. We continue to see excellent productivity at the part of our sales force. I think a lot of that is attributable to the tenure, as well as the vast amount of products that we're offering and the quality of the products that we're offering. So I'd say we are -- the company continues to be committed toward letting SG&A increase at a slower rate than revenue to the extent we can. And I expect that to continue for the foreseeable future. John M. Healy - Northcoast Research: Helpful. And then lastly, Bill, I think I ask this question every quarter but any thoughts on the M&A environment, buyer-seller expectations? Are they more aligned to what your appetite is as we start the new year? William C. Gale: Well, I think as you can see, we really didn't do any appreciable acquisitions during the quarter nor we've done any for the year. I am not sensing there is a lot of activity out there. There's chatter and discussions, but nothing really seems to be happening on that front. And yet, as you see, we're continuing to grow very nicely. So we don't really need to make the acquisitions, but if they become available, we will certainly look at them, and do so at the appropriate profit values and to enhance our shareholder value for our shareholders. But right now, there doesn't seem to be a lot going on.

We'll take our next question from Andrew Steinerman from JP Morgan. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: My question is about add/stops. Could you make a comment sequentially year-over-year? And also, remind us how Cintas calculates its add/stops. I think we include kind of additional services to same customer, like cross-over [ph] mat to a uniform customer as an add. And if that's the formula, I wanted to know exactly -- not exactly but I wanted to know directionally how the core uniform business was doing without core sales. William C. Gale: Well, the add/stops, as we I think said last quarter, continue to be slightly positive. The second quarter, they were a little bit more positive than the first quarter, but not appreciably so yet. There are some pockets of add of uniform wears, but by and large, the majority of the adds are coming from additional products and services into our existing customers. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: Sure, that's good. And when you say a little more positive, you mean it's up year-over-year and the second quarter up a little bit more than it was in the year-over-year in the first quarter, right? William C. Gale: Correct.

We'll go next to Gary Bisbee with Barclays Capital. Gary E. Bisbee - Barclays Capital, Research Division: I guess let me follow-up on a couple of questions that have already been asked. On that last one, I know you've talked over the last year or so about having built out a broader customer base in the core uniform business than you've had historically. And you've talked about hospitality being one area that's grown. How do we contrast somewhat better jobs momentum overall in the U.S. with just not seeing any growth of uniform wears that exist in customers? Does that point that this is still goods producing and manufacturing heavy and given that we have not seen job growth there? Or is there some other reason? Are like customers not adding more and having people -- more employees, but not wearing uniforms? Why are we not seeing that? Do you have a view? William C. Gale: I think the view is, is if you look at where the add/stop -- the employment growth is coming from, a lot of that is healthcare. And there's really -- we're not doing a lot of healthcare yet. Some of it's in the hospitality arena, which is more kind of a direct sale program, but it's like a lot of it's focused on fast food. We don't do a lot of fast food. So I think what you have to do, Gary, is you really have to look at where the job growth is at, and I think that you're going to find that there wasn't a lot that impacts our area, our traditional customers. Now we do not have a lot of manufacturing-type customers, it's less than 15%. Most of our customers are more in the service area, but we're not seeing a lot of job growth there. Gary E. Bisbee - Barclays Capital, Research Division: Okay. And then following up on the question on SG&A. That continues to be a really good story. Does it get -- you're comping what had been double-digit SG&A growth for a year, I guess, with this quarter. And now, it would appear to be more difficult comps, just in terms of the growth rate of spend has slowed a lot. Can you continue to generate this type of revenue growth with a much more modest SG&A investment? Or should we think that because you've now lapped that and the comps would appear to be a little bit more difficult that the actual year-to-year growth in that spend might accelerate a little bit? William C. Gale: Well, it's difficult to say. Obviously, we are up against a little bit more difficult comps, but I think we've -- we believe we will be able to continue to grow. And while maybe the rate of SG&A improvement won't be as great, we continue to expect there to be improved SG&A leverage as we go forward. Gary E. Bisbee - Barclays Capital, Research Division: And then I just want to drill down a little bit in the First Aid Fire Safety business. The margin gains there have been terrific over, I guess, 1.5 year or so now. And you mentioned both factory utilization, both the facilities and in the routes. Can you give a little more color on both of those? I guess, I'm trying to understand where the facility is. Is that just driving more sales out of a distribution center for one of these? Or is there some other part of the facility where there's a real opportunity to get that kind of increased capacity utilization? And on the routes, is that just selling more customers? Or is it also more products on the truck? J. Michael Hansen: Gary, in our first facilities, for example, our First Aid facilities, generally, they are warehouse with inventory. And we've got very, very much capacity. So in others words, there certainly is a specific investment in the warehouse. But as we continue to grow, we'll get more and more sales on top of that warehouse, as well as turn the inventory more. From a fire perspective, fire protection perspective, in our production facilities, we recharge portable fire extinguishers and do some other work, so that as we continue to add revenue on the fire side, we will continue to get leverage from those facilities. From a route standpoint, going back again to First Aid, we are adding more revenue to every customer because we are expanding product lines. We're adding training services. And as jobs get added, that, it results in more hands in the cabinet. So our routes are certainly becoming more efficient by more sales at each customer. We're also selling new business and adding new customers, but we're also expanding each customer. And from a fire standpoint, we're doing a lot of the same things. We're expanding our services and making each customer more valuable. Andrew C. Steinerman - JP Morgan Chase & Co, Research Division: And so, you made good progress there certainly in the gross margin. Is there a point where that gets more difficult to come by? It seems like you should still have on the pretax margin, some room to scale the business. Or is this a business that could well have gross margins nicely above Uniforms over time? William C. Gale: I think it can have gross margins equal to the Uniform business overtime. I think we still have a lot of operations around the country that have not gotten to the stage where they're producing those margins, because they're just not large enough. So they have that ability going forward. So there certainly is room for improvement going down, over the next course of the next few years.

We'll go next to Andrew Wittmann from Robert W. Baird. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Mike, I just want to dig in a little bit more into the Uniform segment numbers a little bit more, and try to, really just try to understand. Can you break out the growth rates that you saw maybe the quarter for Core Uniform, maybe that versus Hygiene and some of the other things? Can you just give us a sense as to what was kind of maybe really driving that segment versus maybe what's holding back a little bit? J. Michael Hansen: Andy, we don't get into that level of detail. We will typically give the breakout in our fourth quarter, but we don't typically get into that level of detail. But I'll tell you, we had nice growth and improved growth rate in all of our business lines, in the Garments, Garment Rental, in the Facility Services. So it was a broad improvement during the quarter. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: And just as it relates to the chemicals, we're probably a quarter or so in now to the new product line that you're selling there. Has that been -- is it fair to say that, that's maybe one of the drivers of the Hygiene segment? William C. Gale: It's still a really small element of the overall revenue growth, I mean on the overall revenue, Andy. It is a -- it did grow nicely in the quarter, met our expectations. But it is relatively small. So it doesn't have that big an impact yet. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Okay, great. And then, just on the guidance. I just want to understand what's really implied here. Is the view for the rest of the year improved because you're feeling better about the second half of your fiscal year? Or is this just passing through outperformance from what's already occurred? I just kind of want to understand how you're looking at it from here. And is it fair to assume that given the reduction in paper prices, the guidance, all else equal, would have been higher if you didn't have this reduction in paper prices? William C. Gale: We have adjusted the guidance based on both the performance year-to-date, where we have significantly beat expectations. As well as, as we look to the rest of the year, we feel more comparable, as Mike said, of being able to perform even in this lackluster economic environment. And you're right, had it not been for the paper price drop, we would have been able to report or to provide guidance that was even better than this. So we still continue to believe that we're going to be in a very sluggish economy, and we've taken into account this very dramatic drop in paper prices into those numbers. And yet, I think we are signaling a pretty nice improvement this year over the prior year, based on our results to date and our expectations. Andrew J. Wittmann - Robert W. Baird & Co. Incorporated, Research Division: Yes. Then just on the buyback, clearly, you had a partial quarter where potentially you could have been buying, you elected not to or perhaps you were blacked out. With the M&A market not being overly conducive today, can you just talk about, was there something going on there that maybe prevented you from going in the market? Or was that really a just decision at this point? William C. Gale: Well, I think we have to manage our cash flow. We have obviously just received that authorization in late October. As Mike said, we paid our dividend in early December. We paid a lot of interest. And we continue to stay in close touch with the board and look at the market situation, and we will report each quarter what we decide to do on that authorization.

We'll go next to Scott Schneeberger with Oppenheimer. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: I guess going across all of the segments, but starting with Rental. Bill, I think you made a comment that you're seeing less aggressiveness in pricing. Could you just address that in rental and then talk across the segment? William C. Gale: Mike said that in his comments, we saw this last quarter where our competitors finally faced the music with the rise in commodity costs that they were seeing, and they became more rational in pricing. And while we had continued to be very disciplined on our pricing, with the competitive environment improving, which continued into this quarter, we saw a little bit of more pricing power. So that pricing has not returned to where it was, but it certainly has become more of a possibility of getting better pricing to what we were seeing a year or so ago. And I would say that's most pronounced in the Rental business, and especially in the Garment business because that was who -- our garment competitors were who were really driving prices down for a while. J. Michael Hansen: In our Document Management business, as we've seen high paper prices for the last year or so, we've seen some pressure on the service side of the pricing. And while the paper prices came down dramatically towards the end of the quarter, it may take a little bit of time to get those service prices back up. But we certainly have seen aggressive pricing in that business. Scott A. Schneeberger - Oppenheimer & Co. Inc., Research Division: On the pricing thing, theme, I'm curious. In looking at the chart of cotton and after that huge spike throughout the past fiscal year, looks like it's been almost fairly flattish in this quarter. It was obviously a big issue for your company last year. Have you made any significant changes? I heard you mention that the performance with regard to that was in line for the quarter, to your expectation. Did you make any big changes? How did you treat pricing? Any change into the makeup of your uniform, synthetic versus cotton? William C. Gale: There's been really no changes of any insignificance at our uniforms with the mix. I mean we're continuing to work with various fabric suppliers and looking at alternatives, but nothing has really entered the chain yet. Keep in mind that the cotton prices, while they have come down this year, are still above historical levels. And while they are significantly below where they were last fall, all of that cotton that came into the supply chain last fall really didn't get into the garments and the distribution centers until the spring and now are really starting to be injected into the rental programs, both for our competitors as well as ourselves. And as we said, you have those high cotton prices remain with you for a while because of the amortization and the period of time it takes from the cotton at the farm until it gets into the garment. The lower prices, if they are sustained, will certainly help lessen the impact of cotton into the future. But we are kind of stuck with those higher prices, at least through this fiscal year and into part of fiscal '13. And then, as I said, even the prices today are still above historical level. So they don't seem to be coming down as quickly as they did from the fall to the first of the summer.

Two more quick ones, I'll ask them both the same time. We just heard some questions about how you're thinking about M&A. You had done some in Document Management in Europe, and Europe does not look too healthy. Just curious, are you still committed there or you maybe going to back up that for a while? And then the second question is, with regard to not being active with share repurchases, and I heard your very valid answer for that, but if you are considering a refinancing, is there any thought to holding a large cash balance in front of that to look attractive to the banks? Just curious how that works. William C. Gale: The European -- I think I mentioned this in the last couple of quarters. We had pretty much decided to focus on the acquisitions we had made in Europe, and then to determine how well we could grow those businesses, what we could do with improving the profitability. And so, the strategy that we had was that we were really not going to be very aggressive for a period of time in Europe. We're going to work with what we have, and that is what we are doing. We have not lost interest in Europe. We still think it's a very good market for the Document Management business. They have obviously have their economic issues over there. And we are taking appropriate action on those businesses to make sure that they will regain profitability and then we can position ourselves for growth. Regarding your question on maintaining a cash balance, I don't think that would have anything to do with that for what it would look like for purposes of appealing to a bank or to the financing. Most of our financing will be public financings anyway. I think the whole use of cash, whether we use it for share purchases, whether we use it for M&A, whether we do pay off of our debt, is all going to be taken into consideration based on the environment, looking out what happens with our share price, what happens with our business. And we'll continue to assess that month-by-month as the conditions warrant. So I would not make a big deal why we didn't execute anything under that authorization because of the short timeframe we've had since then. But we will continue to monitor that. And given our guidance, we're going to continue to generate a lot of nice cash flow.

We'll go next to James Samford with Citigroup. James Samford - Citigroup Inc, Research Division: Just a couple really quick ones here. Obviously, you’re at record revenues here. How much more capacity utilization is there available to you? And where are you relative to sort of prior key peaks in terms of utilization of your facilities? J. Michael Hansen: Well, James, the good news is our guidance gets us higher than our previous high in revenue. But we've used a lot less capacity in getting there. And by that, I mean we've grown our Facility Services business, which includes our Hygiene business, tile and carpet, some chemical business that don't use production capacity in our rental facilities. And so, we still got a fair amount of capacity, generally speaking. Now capacity is a local thing and there may be pockets where we are closer to capacity levels. But generally speaking, we've got a lot of capacity in our infrastructure. And as we continue to grow, especially in non-processed revenue, we should continue to get more leverage. James Samford - Citigroup Inc, Research Division: And what is the mix at this point of uniform versus nonuniform-related product or revenue? William C. Gale: Well, it was about 50-50 in our Rental segment, as of our fourth quarter last year. James Samford - Citigroup Inc, Research Division: And I assume that hasn't changed much in the last couple of quarters then. William C. Gale: Not appreciably. We'll update that at the end of the year. But not appreciably, James. James Samford - Citigroup Inc, Research Division: And just a quick -- sorry if I missed it, but did you provide any cash flow expectations for the year? William C. Gale: No. We don't really provide cash flow expectations.

We'll go next to Sara Gubins with BofA Merrill Lynch. Sara Gubins - BofA Merrill Lynch, Research Division: Are there particular industries where you're seeing either strength or weakness in the Uniform Rental business? William C. Gale: I'd say FRC, the flame-resistant garments, continue to be one of the stars, and that's primarily in oil, the energy fields, energy processing, chemical processing, et cetera. That continues to be very, very strong. Healthcare is picking up some momentum, as we look at opportunities to provide a rental product in the healthcare industry. And then, we are starting to make some headway in rental programs in the hospitality sector, but those are relatively small at this point. Sara Gubins - BofA Merrill Lynch, Research Division: And then any areas of particular weakness? William C. Gale: I would not know, I don't think so. We're not seeing that. Sara Gubins - BofA Merrill Lynch, Research Division: Could you give us an update on how new sales trended this quarter? J. Michael Hansen: New sales was generally very good. It improved from our first quarter. So sequentially, we saw a little bit better results. Our productivity still remains very good, and we're very pleased with that. Sara Gubins - BofA Merrill Lynch, Research Division: And then, just last question for conceptual. But how much visibility do you get from your clients if they're thinking about adding new programs? William C. Gale: Very little, Sara. Our clients don't really tell us what they're going to do. We continue to have our salespeople and our service people trying to penetrate that with additional products and services. But we don't get a lot of visibility from them as to what their plans are.

We'll go next to Nate Brochmann with William Blair. Nathan Brochmann - William Blair & Company L.L.C., Research Division: I wanted to talk a little bit I mean, we talked a lot about some of the newer services. But clearly, they're seeing a lot more new momentum and I think I applaud you for the efforts that you've put in over the years to build that. Strategically, how do you think about the balance of investment in some of the newer developing services versus some of the traditional ones? And where do you feel you are in terms of scaling those businesses and the opportunity for continued growth? William C. Gale: As Mike said, let's take the different businesses. In the Rental business, while we'll have to continue to invest in the capacity on the Route side, from the Production side, we don't have the need for a lot of additional investment other than for replacement and improvement-type capital. So we're not anticipating having to build a lot of rental facilities in the near future because of the available capacity in the different mix of the business. But on the Emerging business side, we will continue to invest in the expansion capital for additional trucks, additional facilities as we fill out the footprint across the country. And we’re continue to be very excited about the opportunities there. Nathan Brochmann - William Blair & Company L.L.C., Research Division: And Bill, just along that, could you talk about your customer base in some of those developing services, whether it's really for the moment penetrating current customers or existing customers with other services? Are these completely kind of new customers and in these new categories that then creates a broader opportunity to eventually cross sell? William C. Gale: Well, it really it’s quite complicated. If you take each business -- for example, all of our uniform rental customers and all of our uniform, our facility services customers are candidates for some of our other products and services. Now a 2- or 3-person auto repair shop is not a good candidate for Document Management, nor are they a good candidate probably for the First Aid and Safety business. But we have a lot of -- let's take a car dealership. A car dealership has the need for uniform rental, facility services, document management, first aid and safety, fire services. So it depends on the size of the customer and the specific business they're in. Now if you go to the emerging businesses, document management has primarily been used in financial institution and healthcare facilities. They are outstanding candidates for a lot of our Facility Services business and our First Aid Safety and Fire Services business. So we look at every customer that we have in each of the different businesses and the sales teams work together to determine are they good candidates for some of the other products and services? And if so, then we begin to work on selling those products and services into that customer. Nathan Brochmann - William Blair & Company L.L.C., Research Division: And then in terms of your current customer base buying more than one service, I would assume that's kind of still on its infancy? William C. Gale: It's always more than in its infancy, let's put it. But there's a lot of opportunity yet to be had.

We'll go next to Greg Halter with Great Lakes Review. Gregory W. Halter - LJR Great Lakes Review: On the M&A side, it looks like there was about $8 million in the quarter. Can you provide any indication on what specific segments those may have occurred in? William C. Gale: They really were primarily in -- there was some fire -- I'm sorry, there were some Document Management and some Rental Facility Services acquisitions there. Nothing significant. Gregory W. Halter - LJR Great Lakes Review: And one last one for you, regarding the programmer/nonprogrammer, I guess related to new business. What kind of metrics can you share there? J. Michael Hansen: Our second quarter, experience was roughly the same as the first quarter, which was an improvement over what we saw during the downturn where we did not see quite as many -- no programmers. But we're back to levels that we've seen prerecession, and feeling very good about that. And it’s led certainly by some of our newer products and services, like the Carhartt program and FRC.

We'll go next to Joe Box with KeyBanc Capital Markets. Joe Box - KeyBanc Capital Markets Inc., Research Division: Bill, I have a follow-up on your prior point that you'll probably have to make some route-based investments before plant-level investments. Can you just talk about maybe where you're at on the capacity standpoint for trucks and drivers among your different businesses? William C. Gale: I really can't, Joe. Obviously, I have thousands and thousands of routes out there. I can tell you that generally speaking, when we hit the recession, our management teams did a lot to right-size the routes and do rerouting to keep the capacity relatively full there. So as we see volume coming back, especially as it relates to new customers, we tend to need to add back that capacity by putting a truck back to the service, putting the driver back in the service. Now if the volume comes back from an existing customer, normally that can be handled on the route that, that customer is currently being serviced. So it really depends on the mix that's happening with where the revenue's coming from. Joe Box - KeyBanc Capital Markets Inc., Research Division: That's helpful, thanks. My follow-up question for you is on incremental margins. I guess with comparisons getting much more difficult in 3Q, how should we think about the incremental operating margins over the next few quarters? William C. Gale: We're still comfortable that we'll continue to be able to expand operating margins. The degree of that expansion depends on where the business comes from. Obviously, increased volume at existing customers is more profitable than new customers in the short term. It also will depend on what happens with the level of cost, and we're making that assumption that generally, there'll be no significant change in our cost structure, like in energy and medical and that sort of thing over the next several quarters. With given that, then we expect there to be margin expansion.

We'll go next to Thomas Allen with Morgan Stanley. Thomas Allen - Morgan Stanley, Research Division: I know you don't try to hold yourselves out as economists, but just trying to gauge how optimistic versus cautious your guidance is, taking into account recent current trends. I don't think many of you will believe that 8.6% unemployment will flatline going forward. I know our economists believe GDP is growing above 3% quarter to date and so expect 2% GDP growth going forward. So basically we’re in a very choppy macro environment. Just trying to understand. Is your guidance just factoring in recent, as in like the past few months trends? Or slightly longer-term trends? William C. Gale: I think it's taking into account kind of what we have seen over the last few quarters. We don't really base our view on what the GDP growth is because that doesn't necessarily drive our growth. But I would say, we continue to look at the future cautiously, but I feel obviously better now than I did a year ago. But it's still a tough environment, and if we could see some real job growth in the economy, you would see some very nice growth with our company's revenues, significantly even more than what we have so far. So we've been able to perform in this economy. And as I said, I don't think we really foresee a changing much over the next several quarters.

We'll take a follow-up question from Gary Bisbee with Barclays. Gary E. Bisbee - Barclays Capital, Research Division: One quick one. I wondered if you could give us a sense what the year-to-year hit of the gross margin rentals was from the cotton prices. And if you don't want to give that number, can you just give a sense as to how that should change in the back half of the year? So you'd given us previously, the less than $15 million in dollar terms growth in the cost. Does that get much worse in the next 2 quarters relative to what it just was? William C. Gale: Gary, I think it's a ratable increase from the first quarter through the fourth quarter. So if you think about that $15 million or so, it is a relatively minor amount in Q1 growing with each quarter. And then, as you may have heard the last couple of calls, we've said it will continue to grow to the tune of an extra $5 million next fiscal year. So it wasn't significant in the first quarter. It's growing a little bit, it will grow a little bit more, but we still expect it to be in the $15 million or lower range. William C. Gale: For the total year. J. Michael Hansen: For the year. Gary E. Bisbee - Barclays Capital, Research Division: So it's a modest headwind to gross margin, sequentially in the back half of the year. J. Michael Hansen: Yes.

And we have no further questions from the phone audience. I'll turn the conference back to our speakers for any additional or closing comments. William C. Gale: The only thing I'd like to say is thank you, all for joining us this evening, and best wishes to you and your families for a very happy holiday.

Thank you. Ladies and gentlemen, that does conclude today's conference call. We'd like to thank you all for your participation