EX-99.2 3 gk8-kexx9921282014.htm EXHIBIT GK 8-K Ex-99.2 1.28.2014


Exhibit 99.2
G&K Services, Inc. and Subsidiaries
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share data)
 Quarter 1 F2013
 
 Quarter 2 F2013
 
 Quarter 3 F2013
 
 Quarter 4 F2013
 
 Fiscal 2013
 
 Quarter 1 F2014
 
 Quarter 2 F2014
 
 YTD Quarter 2 F2013
 
 YTD Quarter 2 F2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rental and direct sales revenue
$
210,594

 
 
$
218,270

 
 
$
217,743

 
 
$
219,411

 
 
$
866,018

 
 
$
220,223

 
 
$
225,919

 
 
$
428,864

 
 
$
446,142

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of rental and direct sales
143,754

68.3
%
 
148,892

68.2
%
 
148,095

68.0
%
 
144,970

66.1
 %
 
585,711

67.6
 %
 
144,505

65.6
%
 
148,320

65.7
 %
 
292,646

68.2
%
 
292,825

65.6
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross Profit
66,840

31.7
%
 
69,378

31.8
%
 
69,648

32.0
%
 
74,441

33.9
 %
 
280,307

32.4
 %
 
75,718

34.4
%
 
77,599

34.3
 %
 
136,218

31.8
%
 
153,317

34.4
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling & Administrative
47,908

22.7
%
 
47,097

21.6
%
 
48,296

22.2
%
 
53,001

24.2
 %
 
196,302

22.7
 %
 
52,149

23.7
%
 
49,903

22.1
 %
 
95,005

22.2
%
 
102,052

22.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from Operations
18,932

9.0
%
 
22,281

10.2
%
 
21,352

9.8
%
 
21,440

9.8
 %
 
84,005

9.7
 %
 
23,569

10.7
%
 
27,696

12.3
 %
 
41,213

9.6
%
 
51,265

11.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
1,029

0.5
%
 
1,107

0.5
%
 
1,127

0.5
%
 
1,590

0.7
 %
 
4,853

0.6
 %
 
1,581

0.7
%
 
1,566

0.7
 %
 
2,136

0.5
%
 
3,147

0.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income from Continuing Operations before Income Taxes
17,903

8.5
%
 
21,174

9.7
%
 
20,225

9.3
%
 
19,850

9.0
 %
 
79,152

9.1
 %
 
21,988

10.0
%
 
26,130

11.6
 %
 
39,077

9.1
%
 
48,118

10.8
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax expense
6,398

3.0
%
 
8,307

3.8
%
 
6,620

3.0
%
 
7,321

3.3
 %
 
28,646

3.3
 %
 
8,378

3.8
%
 
9,787

4.3
 %
 
14,705

3.4
%
 
18,165

4.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income from Continuing Operations
$
11,505

5.5
%
 
$
12,867

5.9
%
 
$
13,605

6.2
%
 
$
12,529

5.7
 %
 
$
50,506

5.8
 %
 
$
13,610

6.2
%
 
$
16,343

7.2
 %
 
$
24,372

5.7
%
 
$
29,953

6.7
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) from discontinued operations
389

0.2
%
 
354

0.2
%
 
(23
)
—
%
 
(4,506
)
(2.1
)%
 
(3,786
)
(0.4
)%
 
211

0.1
%
 
(8,423
)
(3.7
)%
 
743

0.2
%
 
(8,212
)
(1.8
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income
$
11,894

5.6
%
 
$
13,221

6.1
%
 
$
13,582

6.2
%
 
$
8,023

3.7
 %
 
$
46,720

5.4
 %
 
$
13,821

6.3
%
 
$
7,920

3.5
 %
 
$
25,115

5.9
%
 
$
21,741

4.9
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic Earnings per Common Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
From continuing operations
$
0.61

 
 
$
0.67

 
 
$
0.70

 
 
$
0.64

 
 
$
2.62

 
 
$
0.69

 
 
$
0.82

 
 
$
1.28

 
 
$
1.52

 
From discontinued operations
0.02

 
 
0.02

 
 
—

 
 
(0.23
)
 
 
(0.20
)
 
 
0.01

 
 
(0.43
)
 
 
0.04

 
 
(0.42
)
 
Basic earnings per share
$
0.63

 
 
$
0.69

 
 
$
0.70

 
 
$
0.41

 
 
$
2.43

 
 
$
0.70

 
 
$
0.39

 
 
$
1.32

 
 
$
1.09

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted Earnings per Common Share:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
From continuing operations
$
0.60

 
 
$
0.66

 
 
$
0.69

 
 
$
0.63

 
 
$
2.58

 
 
$
0.68

 
 
$
0.81

 
 
$
1.26

 
 
$
1.49

 
From discontinued operations
0.02

 
 
0.02

 
 
—

 
 
(0.23
)
 
 
(0.20
)
 
 
0.01

 
 
(0.42
)
 
 
0.04

 
 
(0.41
)
 
Diluted earnings per share
$
0.62

 
 
$
0.68

 
 
$
0.69

 
 
$
0.40

 
 
$
2.38

 
 
$
0.69

 
 
$
0.39

 
 
$
1.30

 
 
$
1.07

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic shares outstanding
18,681

 
 
18,841

 
 
19,053

 
 
19,306

 
 
18,970

 
 
19,429

 
 
19,547

 
 
18,761

 
 
19,488

 
Diluted shares outstanding
18,949

 
 
19,099

 
 
19,430

 
 
19,689

 
 
19,292

 
 
19,836

 
 
19,940

 
 
19,024

 
 
19,888

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Allocable to Participating Securities
$
(175
)
 
 
$
(205
)
 
 
$
(210
)
 
 
$
(120
)
 
 
$
(710
)
 
 
$
(181
)
 
 
$
(237
)
 
 
$
(380
)
 
 
$
(418
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income from Continuing Operations Available to Common Stockholders
$
11,330

 
 
$
12,662

 
 
$
13,395

 
 
$
12,409

 
 
$
49,796

 
 
$
13,429

 
 
$
16,106

 
 
$
23,992

 
 
$
29,535

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Income Available to Common Stockholders
$
11,719

 
 
$
13,016

 
 
$
13,372

 
 
$
7,903

 
 
$
46,010

 
 
$
13,640

 
 
$
7,683

 
 
$
24,735

 
 
$
21,323

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Income from Operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP income from operations
$
18,932

9.0
%
 
$
22,281

10.2
%
 
$
21,352

9.8
%
 
$
21,440

9.8
 %
 
$
84,005

9.7
 %
 
$
23,569

10.7
%
 
$
27,696

12.3
 %
 
$
41,213

9.6
%
 
$
51,265

11.5
 %
Change in merchandise amortization lives
—

 
 
—

 
 
—

 
 
(2,605
)
 
 
(2,605
)
 
 
(2,273
)
 
 
(1,803
)
 
 
—

 
 
(4,076
)
 
Impact of pension withdrawal and associated expenses
—

 
 
—

 
 
—

 
 
1,000

 
 
1,000

 
 
1,687

 
 
—

 
 
—

 
 
1,687

 
Restructuring and impairment charges
—

 
 
—

 
 
—

 
 
3,161

*
 
3,161

*
 
—

 
 
—

 
 
—

 
 
—

 
Non-GAAP income from operations
$
18,932

9.0
%
 
$
22,281

10.2
%
 
$
21,352

9.8
%
 
$
22,996

10.5
 %
 
85,561

9.9
 %
 
$
22,983

10.4
%
 
$
25,893

11.5
 %
 
$
41,213

9.6
%
 
$
48,876

11.0
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP Net Income from Continuing Operations:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP net income from continuing operations
$
11,505

 
 
$
12,867

 
 
$
13,605

 
 
$
12,529

 
 
$
50,506

 
 
$
13,610

 
 
$
16,343

 
 
$
24,372

 
 
$
29,953

 
Change in merchandise amortization lives
—

 
 
—

 
 
—

 
 
(2,605
)
 
 
(2,605
)
 
 
(2,273
)
 
 
(1,803
)
 
 
—

 
 
(4,076
)
 
Impact of pension withdrawal and associated expenses
—

 
 
—

 
 
—

 
 
1,000

 
 
1,000

 
 
1,687

 
 
—

 
 
—

 
 
1,687

 
Restructuring and impairment charges
—

 
 
—

 
 
—

 
 
3,161

*
 
3,161

*
 
—

 
 
—

 
 
—

 
 
—

 
Tax impact of above items
—

 
 
—

 
 
—

 
 
(542
)
 
 
(542
)
 
 
199

 
 
678

 
 
—

 
 
877

 
Non-GAAP net income from continuing operations
$
11,505

 
 
$
12,867

 
 
$
13,605

 
 
$
13,543

 
 
51,520

 
 
$
13,223

 
 
$
15,218

 
 
$
24,372

 
 
$
28,441

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-GAAP net income from continuing operations available to common shareholders
$
11,330

 
 
$
12,662

 
 
$
13,395

 
 
$
13,423

 
 
$
50,810

 
 
$
13,042

 
 
$
14,981

 
 
$
23,992

 
 
$
28,023

 
Non-GAAP net income from continuing operations per diluted share
$
0.60

 
 
$
0.66

 
 
$
0.69

 
 
$
0.68

 
 
$
2.63

 
 
$
0.66

 
 
$
0.75

 
 
$
1.26

 
 
$
1.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Notes:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Restructuring charges totaling $6,672 that were previously reported as a non-GAAP adjustment related to our GKDirect Program group and have been reclassified as Discontinued Operations.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Purpose of Schedule:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The purpose of the above schedule is to restate the condensed consolidated statement of operations to reflect the effects of the discontinued operations for each quarter of fiscal 2013 and fiscal 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of GAAP to Non-GAAP Financial Measures
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The company reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that certain non-GAAP operating results provide a more meaningful measure on which to compare the
 company’s results of operations between periods. The company believes these non-GAAP results provide useful information to both management and investors by excluding certain amounts that impact comparability of the results. A reconciliation of operating income and net income from continuing
operations on a GAAP to non-GAAP basis is presented in the table above. These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, GAAP and may be different from non-GAAP measures used by other companies. Investors should consider
non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.