Stockholders' Equity

We issue Class A shares of our stock, and each share is entitled to one vote and is freely transferable.

As of June 27, 2015, we have a $175,000 share repurchase program which was originally authorized by our Board of Directors in May 2007 for $100,000 and increased to $175,000 in May 2008. Under this repurchase program, we repurchased 266.426 and 204,819 shares in open market transactions totaling $17,597 and $11,672 in fiscal years 2015 and 2014, respectively. We did not repurchase any shares in fiscal year 2013. As of June 27, 2015, we had approximately $28,567 remaining under this authorization. In August 2015, our Board of Directors authorized an additional $100,000 for the share repurchase program.

Share-Based Payment Plans

On November 6, 2013, our shareholders approved the G&K Services, Inc. Restated Equity Incentive Plan (2013) ("Restated Plan"). This plan restates our 2006 Equity Incentive Plan ("2006 Plan") approved by shareholders at our November 16, 2006 annual meeting and our Restated Equity Incentive Plan (2010) ("2010 Plan") approved by our shareholders on November 4, 2010. The total number of authorized shares under the Restated Plan is 4,000,000 (2,000,000 under the 2006 Plan, 1,000,000 under the 2010 Plan and an additional 1,000,000 under the Restated Plan). Only 1,600,000 of the awards granted under the Restated Plan can be stock appreciation rights, restricted stock, restricted stock units, deferred stock units or stock. As of June 27, 2015, 1,419,781 equity awards were available for grant.

The Restated Plan allows us to grant share-based awards, including restricted stock and options to purchase our common stock, to our key employees and non-employee directors. Stock options are granted for a fixed number of shares with an exercise price equal to the fair market value of the shares at the date of grant. Exercise periods for the stock options are generally limited to a maximum of 10 years and a minimum of one year and generally vest over three years. Restricted stock grants to employees generally vest over five years. We issue new shares upon the grant of restricted stock or exercise of stock options.

Compensation cost for share-based compensation plans is recognized on a straight-line basis over the requisite service period of the award. The share-based compensation reflects estimated forfeitures adjusted for actual forfeiture experience. The amount of compensation cost, including the additional amounts related to the amendment of the plans noted above, that has been recognized in the Consolidated Statements of Operations was $6,219, $6,318 and $5,001 for fiscal years 2015, 2014 and 2013, respectively. As share-based compensation expense is recognized, a deferred tax asset is recorded that represents an estimate of the future tax deduction from the exercise of stock options or release of restrictions on the restricted stock. At the time share-based awards are exercised, cancelled, expire or restrictions lapse, we recognize adjustments to additional paid-in capital or income tax expense. The total net income tax benefit recognized in the Consolidated Statements of Operations for share-based compensation arrangements was $2,333, $2,243 and $1,709 for fiscal years 2015, 2014 and 2013, respectively. No amount of share-based compensation expense was capitalized during the periods presented.

On August 23, 2012, our Chairman and Chief Executive Officer was granted a performance based restricted stock award (the "Performance Award"). The Performance Award has both a financial performance component and a service component. The Performance Award has a target level of 100,000 restricted shares, a maximum award of 150,000 restricted shares and a minimum award of 50,000 restricted shares, subject to attainment of financial performance goals and service conditions. Based on fiscal year 2015 results,126,000 restricted shares will be issued under the performance award.

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model using the assumptions noted in the following table. Expected volatility is based on the historic volatility of our stock, as we believe that is the best estimate of volatility over the term of the options. We use historical data to estimate option exercises and employee terminations within the valuation model. The expected term of the options granted is derived from historical data and represents the period of time that options granted are expected to be outstanding. The risk free interest rate for each option is the interpolated market yield on a U.S. Treasury bill with a term comparable to the expected term of the granted stock option.



	For the Fiscal Years
	2015	2014	2013
Expected share price volatility	27.57% - 28.65%	27.40% - 27.65%	27.49% - 28.99%
Weighted average volatility	28.21%	27.52%	28.34%
Expected dividend yield	1.75% - 2.39%	1.98% - 2.03%	2.43% - 2.44%
Expected term (in years)	5	5 - 6	5 - 6
Risk free rate	1.33% - 1.66%	1.63% - 2.03%	0.62% - 0.92%

A summary of stock option activity under our plans as of June 27, 2015, and changes during the year then ended is presented below:



	Shares		Weighted Average Exercise Prices		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding at June 28, 2014	858,502		$	24.86
Granted	142,050		55.52
Exercised	(313,484	)	20.05
Forfeited or expired	(54,781	)	45.91
Outstanding at June 27, 2015	632,287		$	32.31	6.72	$	24,063
Exercisable at June 27, 2015	371,584		$	21.63	5.51	$	18,107

The weighted-average fair value of stock options on the date of grant during fiscal years 2015, 2014 and 2013 was $11.74, $12.16 and $6.35, respectively. The total intrinsic value of stock options exercised was $14,874, $12,093 and $7,643 for fiscal years 2015, 2014 and 2013, respectively.

We received proceeds from the exercise of stock options of $6,113, $8,748 and $20,401 in fiscal years 2015, 2014 and 2013, respectively.

A summary of the status of our non-vested shares of restricted stock as of June 27, 2015 and changes during the fiscal year ended June 27, 2015, is presented below:



	Shares		Weighted-Average Grant-Date Fair Value
Non-vested at June 28, 2014	304,803		$	37.48
Granted	83,271		58.85
Vested	(109,792	)	33.62
Forfeited	(54,161	)	39.08
Non-vested at June 27, 2015	224,121		$	47.45

The table above does not include the shares assumed under the Performance Award, as they have not been granted.

As of June 27, 2015, there was $9,429 of total unrecognized compensation expense related to non-vested share-based compensation arrangements. That expense is expected to be recognized over a weighted-average period of 3.0 years. The total fair value of restricted shares vested during the fiscal years ended 2015, 2014 and 2013 was $3,691, $2,757 and $2,911, respectively.

Accumulated Other Comprehensive (Loss) Income

The components of accumulated other comprehensive income, net of tax, were as follows:



	For the Fiscal Years
	2015			2014			2013
Foreign currency translation	$	7,914		$	22,682		$	24,093
Pension benefit liabilities	(21,272		)	(19,748		)	(15,650		)
Derivative financial instruments	4,414			1,053			946
Accumulated other comprehensive (loss) income	$	(8,944	)	$	3,987		$	9,389

Changes in accumulated other comprehensive (loss) income were as follows:



	For the Fiscal Year Ended June 27, 2015
	Foreign currency translation adjustment			Pension benefit liabilities			Derivative financial instruments		Total
Accumulated other comprehensive income (loss) as of June 28, 2014	$	22,682		$	(19,748	)	$	1,053	$	3,987
Other comprehensive income (loss) before reclassifications	(14,768		)	(2,983		)	3,027		(14,724		)
Reclassifications from net accumulated other comprehensive income	—			1,459			334		1,793
Net current period other comprehensive income (loss)	(14,768		)	(1,524		)	3,361		(12,931		)
Accumulated other comprehensive income (loss) at June 27, 2015	$	7,914		$	(21,272	)	$	4,414	$	(8,944	)

Amounts reclassified from accumulated other comprehensive income for fiscal year 2015 were as follows:



	For the Fiscal Year
	2015
Losses on derivative financial instruments:
Interest rate swap contracts	$	532		(a)
Tax benefit	(198		)
Total, net of tax	334
Pension benefit liabilities:
Amortization of net loss	2,373			(b)
Tax benefit	(914		)
Total, net of tax	1,459
Total amounts reclassified, net of tax	$	1,793

(a) Included in interest expense.
(b) Included in the computation of net periodic pension cost, which is included in cost of rental and direct sale revenue and selling and administrative. This amount includes a pension plan which is not included in the net periodic pension cost in Note 13, "Employee Benefit Plans" because it is immaterial. See Note 13 for details regarding the pension plans.

Income tax expense (benefit) for each component of other comprehensive income were as follows:



	For the Fiscal Years
	2015			2014			2013
Foreign currency translation adjustments	$	3,861		$	386		$	2,257
Change in pension benefit liabilities recognized	891			2,474			(7,297		)
Derivative financial instruments unrecognized gain (loss)	(1,804		)	138			(870		)
Derivative financial instruments loss reclassified	(198		)	(202		)	(227		)
Income tax expense (benefit)	$	2,750		$	2,796		$	(6,137	)