10-Q 1 a2037651z10-q.htm 10-Q Prepared by MERRILL CORPORATION www.edgaradvantage.com
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

For Quarter Ended December 30, 2000 Commission file number 0-4063

G&K SERVICES, INC.
(Exact name of registrant as specified in its charter)

MINNESOTA   41-0449530
(State or other jurisdiction of
incorporation or organization)		   (I.R.S. Employer
Identification No.)

5995 OPUS PARKWAY, SUITE 500
MINNETONKA, MINNESOTA 55343
(Address of principal executive offices and zip code)

(952) 912-5500
(Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES /x/   NO / /

    Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date.

CLASS A
   Outstanding February 8, 2001
Common Stock, par value $.50 per share   19,063,983
CLASS B
   Outstanding February 8, 2001
Common Stock, par value $.50 per share   1,474,996


PART I

FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS

G&K Services, Inc. and Subsidiaries

(In thousands, except share data)
   December 30,
2000
   July 1,
2000
  
 
   (Unaudited)

    
  
ASSETS              
Current Assets              
  Cash and cash equivalents   $ 4,100   $ 6,420  
  Accounts receivable, less allowance for doubtful accounts of $3,459 and $3,138     70,191     63,970  
  Inventories     92,398     89,975  
  Prepaid expenses     14,063     15,496  
  Prepaid income taxes     —     441  
   
 
 
    Total current assets     180,752     176,302  
   
 
 
Property, Plant and Equipment              
  Land     25,984     25,845  
  Buildings and improvements     108,543     101,636  
  Machinery and equipment     212,655     206,033  
  Automobiles and trucks     38,910     39,208  
  Less accumulated depreciation     (165,692 )   (156,288 )
   
 
 
    Total property, plant and equipment     220,400     216,434  
   
 
 
Other Assets              
  Goodwill, net     147,589     144,229  
  Restrictive covenants and customer lists, net     41,210     40,911  
  Other, principally retirement plan assets     16,836     17,076  
   
 
 
    Total other assets     205,635     202,216  
   
 
 
    $ 606,787   $ 594,952  
   
 
 

 
 
 
 
 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY              
Current Liabilities              
  Accounts payable   $ 15,762   $ 15,892  
  Accrued expenses              
    Salaries and employee benefits     22,058     19,678  
    Other     21,216     18,300  
  Deferred income taxes     14,361     14,406  
  Current maturities of long-term debt     45,812     58,355  
   
 
 
    Total current liabilities     119,209     126,631  
   
 
 
Long-Term Debt     172,248     167,345  
Deferred Income Taxes     14,770     15,243  
Other Noncurrent Liabilities     14,101     14,211  
   
 
 
Stockholders' Equity              
  Common stock, $.50 par              
    Class A, 50,000,000 shares authorized, 19,063,550
and 19,061,299 shares issued and outstanding		     9,532     9,531  
    Class B, 10,000,000 shares authorized, 1,474,996
and 1,474,996 shares issued and outstanding		     738     738  
  Additional paid-in capital     26,702     26,679  
  Retained earnings     263,723     246,629  
  Deferred compensation     (2,243 )   (2,464 )
  Accumulated other comprehensive income     (11,993 )   (9,591 )
   
 
 
    Total stockholders' equity     286,459     271,522  
   
 
 
    $ 606,787   $ 594,952  
   
 
 

The accompanying notes are an integral part of these consolidated financial statements.

2

CONSOLIDATED STATEMENTS OF INCOME

G&K Services, Inc. and Subsidiaries
(Unaudited)

 
   For the Three Months Ended
   For the Six Months Ended
  
(In thousands, except per share data)
   Dec. 30,
2000
   Dec. 25,
1999
   Dec. 30,
2000
   Dec. 25,
1999
  
Revenues                          
  Rental operations   $ 144,728   $ 135,879   $ 286,626   $ 266,415  
  Direct sales     5,928     6,476     9,971     10,900  
   
 
 
 
 
    Total revenues     150,656     142,355     296,597     277,315  
   
 
 
 
 
Operating Expenses                          
  Cost of rental operations     85,947     77,571     167,110     150,752  
  Cost of direct sales     4,261     5,106     7,576     8,819  
  Selling and administrative     33,384     31,564     65,216     61,280  
  Depreciation     7,203     7,060     14,203     14,064  
  Amortization of intangibles     2,537     2,237     4,962     4,377  
   
 
 
 
 
    Total operating expenses     133,332     123,538     259,067     239,292  
   
 
 
 
 
Income from Operations     17,324     18,817     37,530     38,023  
  Interest expense     4,396     4,167     8,795     8,053  
  Other (income) expense, net     (420 )   242     (1,001 )   (331 )
   
 
 
 
 
Income before Income Taxes     13,348     14,408     29,736     30,301  
  Provision for income taxes     5,353     5,777     11,924     12,087  
   
 
 
 
 
Net Income   $ 7,995   $ 8,631   $ 17,812   $ 18,214  
   
 
 
 
 
  Basic weighted average number of shares outstanding     20,480     20,357     20,479     20,458  
Basic Earnings Per Common Share   $ 0.39   $ 0.42   $ 0.87   $ 0.89  
   
 
 
 
 
  Diluted weighted average number
of shares outstanding		     20,495     20,400     20,499     20,517  
Diluted Earnings Per Common Share   $ 0.39   $ 0.42   $ 0.87   $ 0.89  
   
 
 
 
 

The accompanying notes are an integral part of these consolidated financial statements.

3

CONSOLIDATED STATEMENTS OF CASH FLOWS

G & K Services, Inc. and Subsidiaries
(Unaudited)

 
   For the Six Months Ended
  
(In thousands)
   December 30,
2000
   December 25,
1999
  
Operating Activities:              
  Net income   $ 17,812   $ 18,214  
  Adjustments to reconcile net income to net cash
provided by operating activities—		              
    Depreciation and amortization     19,165     18,441  
    Deferred income taxes     (462 )   (139 )
    Changes in current operating items, exclusive of acquisitions—              
      Accounts receivable and prepaid expenses     (4,298 )   (6,529 )
      Inventories     (1,211 )   (3,481 )
      Accounts payable and other accrued expenses     5,220     16,987  
  Other, net     466     1,475  
   
 
 
Net cash provided by operating activities     36,692     44,968  
   
 
 
Investing Activities:              
  Property, plant and equipment additions, net     (16,553 )   (22,206 )
  Acquisition of business assets     (12,459 )   (34,783 )
  Purchase of investments, net     (519 )   (2,086 )
   
 
 
Net cash used for investing activities     (29,531 )   (59,075 )
   
 
 
Financing Activities:              
  Proceeds from debt financing     64,100     42,527  
  Repayments of debt financing     (72,819 )   (31,256 )
  Cash dividends paid     (718 )   (717 )
  Sale of common stock     1     207  
   
 
 
Net cash provided by (used for) financing activities     (9,436 )   10,761  
   
 
 
Decrease in Cash and Cash Equivalents     (2,275 )   (3,346 )
Effect of Exchange Rates on Cash     (45 )   5  
Cash and Cash Equivalents:              
  Beginning of period     6,420     6,297  
   
 
 
  End of period   $ 4,100   $ 2,956  
   
 
 
Supplemental Cash Flow Information:              
  Cash paid for—              
    Interest   $ 6,863   $ 7,450  
   
 
 
    Income taxes   $ 8,963   $ 6,935  
   
 
 

The accompanying notes are an integral part of these consolidated financial statements.

4


G&K SERVICES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands)
Three and six month periods ended December 30, 2000 and December 25, 1999
(Unaudited)

    The consolidated financial statements included herein, except for the July 1, 2000 balance sheet which was extracted from the audited consolidated financial statements for the fiscal year ended July 1, 2000, have been prepared by G&K Services, Inc. (the Company), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of the Company, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position of the Company as of December 30, 2000, and the results of its operations and its cash flows for the three and six month periods ended December 30, 2000 and December 25, 1999. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures herein are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements be read in conjunction with the financial statements and the notes thereto included in the Company's latest annual report.

    The results of operations for the three and six month periods ended December 30, 2000, and December 25, 1999, are not necessarily indicative of the results to be expected for the full year.

1. Summary of Significant Accounting Policies

    Accounting policies followed by the Company are set forth in Note 1 to the Company's Annual Consolidated Financial Statements.

    Nature of Business

    G&K Services, Inc. is a full-service uniform rental provider, including the rental of cleanroom garments. The Company also provides rental of nonuniform items such as floormats, dustmops and cloths, wiping towels and selected linen items. In addition, the Company manufactures uniforms for customers as well as uniforms for direct sale.

    Principles of Consolidation

    The accompanying consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned. Significant intercompany balances and transactions have been eliminated in consolidation.

    Derivative Financial Instruments

    Derivative financial instruments are used by the Company in the management of its interest rate exposure. Amounts to be paid or received under interest rate swap agreements are accrued as interest rates change and are recognized over the life of the swap agreements as an adjustment to interest expense. The related amounts payable to, or receivable from, the counterparties are included in other accrued expenses.

5

    Per Share Data

    Basic earnings per common share was computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share was computed similar to the computation of basic earnings per share, except that the denominator is increased for the assumed exercise of dilutive options and other dilutive securities (including nonvested restricted stock) using the treasury stock method.

 
   Three Months Ended
   Six Months Ended
 
   Dec. 30,
2000
   Dec. 25,
1999
   Dec. 30,
2000
   Dec. 25,
1999
Weighted average number of common
shares outstanding		   20,480   20,357   20,479   20,458
   
 
 
 
Shares used in computation of
basic earnings per share		   20,480   20,357   20,479   20,458

Weighted average effect of non-vested
restricted stock grants
 
—
 
1
 
—
 
4

Weighted average common shares
issuable upon the exercise of
stock options
 
15
 
42
 
20
 
55
   
 
 
 
Shares used in computation of
diluted earnings per share		   20,495   20,400   20,499   20,517
   
 
 
 

2. Comprehensive Income

    For the three and six month periods ended December 30, 2000 and December 25, 1999, the components of comprehensive income were as follows:

 
   Three Months Ended
   Six Months Ended
  
 
   Dec. 30,
2000
   Dec. 25,
1999
   Dec. 30,
2000
   Dec. 25,
1999
  
Net income   $ 7,995   $ 8,631   $ 17,812   $ 18,214  
Other comprehensive income                          
  Foreign currency translation adjustments, net of tax     (75 )   358     (1,313 )   (92 )
  Unrealized gain on investments held for sale, net of tax     —     322     —     109  
  Net unrealized derivative loss     (656 )   —     (1,089 )   —  
   
 
 
 
 
Comprehensive income   $ 7,264   $ 9,311   $ 15,410   $ 18,231  
   
 
 
 
 

3. Long-Term Debt

    During the first quarter of fiscal 2001, the Company completed a $50,000, 8.40% private placement debt transaction with certain institutional investors. The 10-year notes have a seven-year average life. According to the note purchase agreement, an initial take-down of $20,000 was completed on July 20, 2000, a second take-down of $15,000 was completed on September 15, 2000 and a final take-down of

6

$15,000 was completed on December 15, 2000. Each take-down bears the same coupon of 8.40%. The Company has used the net proceeds from the sale of the notes to repay existing indebtedness under its term loan and revolving credit facility and for general corporate purposes.

4. Segment Information

    The Company has two operating segments under the guidelines of SFAS No. 131: United States and Canada. Each operating segment derives revenues from the uniform rental business which includes garment rental and nonuniform items such as floormats, dust mops and cloths, wiping towels and selected linen items. No one customer's transactions account for 10% or more of the Company's revenues.

    The accounting policies of the segments are the same as those described in the summary of significant accounting policies (see Note 1). Financial information by geographic location for the three and six month periods ended December 30, 2000 and December 25, 1999 is as follows:

For the Three Months Ended
Dec. 30, 2000 and Dec. 25, 1999
   United
States
   Canada
   Total
Fiscal Year 2001:                  
  Revenues   $ 131,477   $ 19,179   $ 150,656
  Income from operations     11,941     5,383     17,324
  Capital expenditures     7,779     555     8,334
  Depreciation and amortization expense     8,606     1,134     9,740
Fiscal Year 2000:                  
  Revenues   $ 124,263   $ 18,092   $ 142,355
  Income from operations     13,584     5,233     18,817
  Capital expenditures     8,844     331     9,175
  Depreciation and amortization expense     8,213     1,084     9,297
For the Six Months Ended
Dec. 30, 2000 and Dec. 25, 1999
   United
States
   Canada
   Total
Fiscal Year 2001:                  
  Revenues   $ 258,537   $ 38,060   $ 296,597
  Income from operations     26,991     10,539     37,530
  Capital expenditures     15,455     1,098     16,553
  Depreciation and amortization expense     16,869     2,296     19,165
Fiscal Year 2000:                  
  Revenues   $ 242,604   $ 34,711   $ 277,315
  Income from operations     27,959     10,064     38,023
  Capital expenditures     21,015     1,191     22,206
  Depreciation and amortization expense     16,297     2,144     18,441

7

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Unaudited)

    The percentage relationships to net sales of certain income and expense items for the three and six month periods ended December 30, 2000 and December 25, 1999, and the percentage changes in these income and expense items between periods are presented in the following table:

 
   Three Months
Ended
   Six Months
Ended
   Percentage
Change
  
 
   Dec. 30,
2000
   Dec. 25,
1999
   Dec. 30,
2000
   Dec. 25,
1999
   Three Months
FY 2001
vs. FY 2000
   Six Months
FY 2001
vs. FY 2000
  
Revenues:                          
  Rental   96.1 % 95.5 % 96.6 % 96.1 % 6.5 % 7.6 %
  Direct   3.9   4.5   3.4   3.9   (8.5 ) (8.5 )
   
 
 
 
         
    Total Revenues   100.0   100.0   100.0   100.0   5.8   7.0  
Expenses:                          
  Cost of Rental Sales   59.4   57.1   58.3   56.6   10.8   10.9  
  Cost of Direct Sales   71.9   78.8   76.0   80.9   (16.5 ) (14.1 )
   
 
 
 
         
    Total Cost of Sales   59.9   58.1   58.9   57.5   9.1   9.5  
  Selling and Administrative   22.2   22.2   22.0   22.1   5.8   6.4  
  Depreciation   4.8   4.9   4.8   5.1   2.0   1.0  
  Amortization of Intangibles   1.6   1.6   1.6   1.6   13.4   13.4  
   
 
 
 
         
Income from Operations   11.5   13.2   12.7   13.7   (7.9 ) (1.3 )
Interest Expense   2.9   2.9   3.0   2.9   5.5   9.2  
Other (Income) Expense, net   (0.3 ) 0.2   (0.3 ) (0.1 ) 273.6   202.4  
   
 
 
 
         
Income Before Income Taxes   8.9   10.1   10.0   10.9   (7.4 ) (1.9 )
Provision for Income Taxes   3.6   4.0   4.0   4.3   (7.3 ) (1.3 )
   
 
 
 
         
Net Income   5.3 % 6.1 % 6.0 % 6.6 % (7.4 )% (2.2 )%
   
 
 
 
         

    Total revenues for the second quarter of fiscal 2001 increased 5.8% to $150.7 million from $142.4 million in the second quarter of fiscal 2000 and increased 7.0% to $296.6 million for the first six months of fiscal 2001 from $277.3 million in the same period of fiscal 2000. Rental revenue growth for the second quarter accounted for $8.8 million, or a 6.5% increase and for the first six months of fiscal 2001 it accounted for $20.2 million, or a 7.6% increase. In addition to the growth in local and regional accounts, the Company has continued to aggressively build its presence in the national account market through both new sales and further penetration of existing national accounts.

    Total direct sales decreased 8.5% to $5.9 million for the second quarter of fiscal 2001 compared to $6.5 million in the same period of fiscal 2000 and decreased 8.5% to $10.0 million for the first six months of fiscal 2001 from $10.9 million in the same period of fiscal 2000. Direct sale revenue is down as the Company continues to focus on improving efficiency and productivity of its direct sale operation. Cost of direct sales, as a percentage of direct sales, decreased to 71.9% for the second quarter of fiscal 2001 from 78.8% in the same period of fiscal 2000 and decreased to 76.0% for the first six months of fiscal 2001 from 80.9% in the same period of fiscal 2000. The improvement in gross margin was driven by the progress made in the fulfillment operation.

    Cost of rental operations increased 10.8% to $85.9 million for the second quarter of fiscal 2001 from $77.6 million in the same period of fiscal 2000 and increased 10.9% to $167.1 million for the first

8

six months of fiscal 2001 from $150.8 million in the same period of fiscal 2000. As a percentage of rental revenues, these costs increased to 59.4% for the second quarter of fiscal 2001 from 57.1% in the same period of fiscal 2000 and increased to 58.3% for the first six months of fiscal 2001 from 56.6% in the same period of fiscal 2000. The increase reflects higher gasoline prices, higher natural gas prices, increased employee benefit costs and lower operating performance from one region in the United States.

    Selling and administrative expenses increased 5.8% to $33.4 million in the second quarter of fiscal 2001 from $31.6 million in the same period of fiscal 2000 and increased 6.4% to $65.2 million for the first six months of fiscal 2001 from $61.3 million in the same period of fiscal 2000. As a percentage of revenues, selling and administrative expenses remained constant at 22.2% in the second quarter of fiscal 2001, unchanged from the same period of fiscal 2000 and decreased to 22.0% in the six month period of fiscal 2001 from 22.1% in the same period of fiscal 2000.

    Depreciation expense increased 2.0% to $7.2 million in the second quarter of fiscal 2001 from $7.1 million in the same period of fiscal 2000 and increased 1.0% to $14.2 million for the first six months of fiscal 2001 from $14.1 million in the same period of fiscal 2000. As a percentage of revenues, depreciation expense decreased to 4.8% in the second quarter of fiscal 2001 from 4.9% in the same period of fiscal 2000 and decreased to 4.8% in the six month period of fiscal 2001 from 5.1% in the same period of fiscal 2000. Additional depreciation on fixed asset additions supporting revenue growth were largely offset by the equipment purchased in fiscal 1998 from the National Linen Service acquisition that is now fully depreciated and equipment leasing programs used for fleet and computer equipment. Capital expenditures, excluding acquisition of businesses, were $8.3 million in the second quarter of fiscal 2001 compared to $9.2 million in the prior year's quarter and for the six month period they were $16.6 million compared to $22.2 million in the prior year. The decrease in capital expenditures is due to lower new plant construction in the current year.

    Amortization expense increased 13.4% to $2.5 million in the second quarter of fiscal 2001 from $2.2 million in the second quarter of fiscal 2000 and increased 13.4% to $5.0 million in the first six months of fiscal 2001 from $4.4 million in the same period of fiscal 2000. The increase in amortization expense is due to the goodwill associated with acquisitions made during fiscal years 2000 and 2001.

    Income from operations decreased 7.9% to $17.3 million in the second quarter of fiscal 2001 from $18.8 million in the same period of fiscal 2000 and decreased 1.3% to $37.5 million for the first six months of fiscal 2001 from $38.0 million in the same period of fiscal 2000. Operating margins decreased to 11.5% for the second quarter of fiscal 2001 from 13.2% in the same period of fiscal 2000 and decreased to 12.7% for the six month period of fiscal 2001 from 13.7% in the same period of fiscal 2000.

    Interest expense was $4.4 million for the second quarter of fiscal 2001, up from $4.2 million in the same period of fiscal 2000 and was $8.8 million for the first six months of fiscal 2001, up from $8.1 million in the same period of fiscal 2000. The increase in interest expense is due primarily to rising interest rates during the past year. The Company's effective tax rate was 40.1% in the second quarter of fiscal 2001, unchanged from the same period of fiscal 2000 and it increased to 40.1% in the six month period of fiscal 2001 from 39.9% in the same period of fiscal 2000.

    Net income decreased 7.4% to $8.0 million in the second quarter of fiscal 2001 from $8.6 million in the same period of fiscal 2000 and decreased 2.2% to $17.8 million in the first six months of fiscal 2001 from $18.2 million in the first six months of fiscal 2000. Basic and diluted earnings per share for the second quarter of fiscal 2001 were $0.39 per share, compared to $0.42 per share for the prior year quarter. Basic and diluted earnings per share for the first six months of fiscal 2001 decreased to $0.87 per share from $0.89 per share. Net income margins decreased to 5.3% for the second quarter of fiscal 2001 compared with 6.1% in the second quarter of fiscal 2000 and decreased to 6.0% for the six month period of fiscal 2001 compared with 6.6% in the six month period of fiscal 2000.

9

LIQUIDITY AND FINANCIAL RESOURCES

    Cash flow from operating activities was $36.7 million in the six month period of fiscal 2001 and $45.0 million in the same period of fiscal 2000. The greater cash flow in fiscal 2000 was partially due to increases in accounts payable and other accrued expenses in connection with acquired operations. Working capital at December 30, 2000 was $61.5 million, up 23.9% from $49.7 million at July 1, 2000. The increase in working capital is largely due to the issuance of $50 million of senior long-term debt replacing amounts outstanding under other credit facilities that were classified as current maturities of long-term debt at year end.

    Cash used in investing activities was $29.5 million in the six month period of fiscal 2001 and $59.1 million in the same period of fiscal 2000. The decrease is related to the activity of acquiring business assets in these periods.

    Cash used for financing activities was $9.4 million in the six month period of fiscal 2001 and cash provided by financing activities was $10.8 million in the same period of fiscal 2000. The change is partially related to the activity of acquiring business assets. The long-term debt, including current maturities, decreased to $218.1 million at December 30, 2000 from $225.7 million at July 1, 2000. The Company paid dividends of $0.4 million during the quarter. The Company's ratio of debt to total capitalization decreased to 43.2% at the end of the second quarter of fiscal 2001 from 45.4% at July 1, 2000.

    Stockholders' equity grew 5.5% to $286.5 million at December 30, 2000, compared with $271.5 million at the end of fiscal 2000. G&K's return on average equity decreased to 6.4% for the six month period of fiscal 2001 compared with 7.4% for the same period of fiscal 2000.

    Management believes that cash flows generated from operations and its credit facilities should provide adequate funding for its current businesses and planned expansion of operations or any future acquisitions.

MARKET RISK SENSITIVITY

    The Company uses financial instruments, including fixed and variable rate debt, as well as interest rate swaps, to finance operations and to hedge interest rate exposures. The swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company does not enter into contracts for speculative purposes, nor is it a party to any leveraged instrument. There has been no material change in the Company's market risks associated with debt and interest rate swap obligations during the quarter ended December 30, 2000.

    Statements in this document regarding ongoing trends and expectations constitute "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve known and unknown risks, which may cause the Company's actual results in the future to differ materially from expected results. These risks and uncertainties include, but are not limited to, unforeseen operating risks; the availability of capital to finance planned growth; competition within the uniform leasing industry; and the effects of economic conditions.

10


PART II

OTHER INFORMATION

ITEM 4. Submission of Matters to a Vote of Security Holders

    a.
    The Company held its Annual Meeting of Stockholders on October 26, 2000.

    b.
    The following eight persons were elected directors: Paul Baszucki, Richard Fink, Wayne M. Fortun, Donald W. Goldfus, William Hope, Thomas Moberly, Bernard Sweet and D.R. Verdoorn.

    c.
    1.  Each director nominee received the following votes:

 
   Shares
 
   In Favor
   Withhold Authority
Baszucki   30,761,834   329,836
Fink   30,762,933   328,737
Fortun   30,761,830   329,840
Goldfus   30,762,815   328,855
Hope   30,693,782   397,888
Moberly   30,763,485   328,185
Sweet   30,759,328   332,342
Verdoorn   30,752,611   339,059
      2.
      Stockholders ratified the appointment of Arthur Andersen LLP, Certified Public Accountants, as independent auditors of the Company for 2001: 31,025,405 shares in favor, 48,014 shares voting against and 18,251 shares abstaining.

ITEM 6. Exhibits and Reports on Form 8-K

    a.
    Exhibits

        None

    b.
    Reports on Form 8-K

        None

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SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

    G&K SERVICES, INC.
(Registrant)

 
 
 
 
 
Date: February 13, 2001   By:   /s/ JEFFREY L. WRIGHT   
Jeffrey L. Wright
 Chief Financial Officer,
Treasurer and Secretary
(Principal Financial Officer)

 
 
By:
 
/s/ MICHAEL F. WOODARD   
Michael F. Woodard
 Controller
(Principal Accounting Officer)

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QuickLinks

PART I FINANCIAL INFORMATION
G&K SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PART II OTHER INFORMATION
SIGNATURES