-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, M9JoKvzOkTz5VdCJaLgQlLuNSBHTUYPC9rRbAUQ6hVDsBPK7DKdutclO20PhE++F Rjk/l5YTeVCvSs5y3tn/zQ== 0000912057-97-031120.txt : 19970927 0000912057-97-031120.hdr.sgml : 19970927 ACCESSION NUMBER: 0000912057-97-031120 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970714 ITEM INFORMATION: FILED AS OF DATE: 19970919 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: G&K SERVICES INC CENTRAL INDEX KEY: 0000039648 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PERSONAL SERVICES [7200] IRS NUMBER: 410449530 STATE OF INCORPORATION: MN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-04063 FILM NUMBER: 97682672 BUSINESS ADDRESS: STREET 1: 505 WATERFORD PARK STREET 2: STE 455 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 BUSINESS PHONE: 6125467440 MAIL ADDRESS: STREET 1: 505 WATERFORD PARK STREET 2: STE 455 CITY: MINNEAPOLIS STATE: MN ZIP: 55441 FORMER COMPANY: FORMER CONFORMED NAME: NORTHWEST LINEN CO DATE OF NAME CHANGE: 19681227 8-K/A 1 8-K/A SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K/A Current Report Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934 Date of Report (Date of earliest event reported)........ July 14, 1997 G&K Services, Inc. ------------------ (Exact name of registrant as specified in its charter) Minnesota 0-4063 41-0449530 - ---------------------------- ------------------------ ---------------------- (State or other jurisdiction (Commission File Number) (I.R.S. Employer of incorporation) Identification Number) 5995 Opus Parkway, Suite 500 Minnetonka, MN 55343 (Address of principal executive offices) Registrant's telephone number, including area code ...... (612) 912-5500 ------------------------------------------------ (Former name or former address, if changed since last report) ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS. PAGE (a) Index to National Linen Service Financial Statements of Certain Branches Statements of Net Assets to be Sold, as of August 31, 1995 and 1996 and April 30, 1997 (unaudited)............................ 3 Statements of Revenue and Operating Expenses for Years Ended August 31, 1994, 1995 and 1996 and the Eight Month Periods ended April 30, 1996 and 1997 (unaudited)....................... 4 Notes to Financial Statements..................................... 5 Report of Independent Public Accountants ......................... 9 (b) Index to Pro Forma Financial Statements Pro Forma Financial Information - General ........................ 10 Pro Forma Unaudited Condensed Balance Sheet as of June 28, 1997 .. 11 Pro Forma Unaudited Condensed Statement of Operations for the Fiscal Year ended June 28, 1997 ................................ 12 Notes to Pro Forma Unaudited Condensed Financial Statements ...... 13 (c) Exhibits - The following is filed as an exhibit to this Form 8K/A and is incorporated herein by reference: Exhibit No. Description ----------- ----------- 23 Consent of Independent Public Accountants 2 NATIONAL LINEN SERVICE STATEMENTS OF NET ASSETS TO BE SOLD (AS DEFINED IN NOTE 1) AUGUST 31, 1995 AND 1996 AND APRIL 30, 1997 (IN THOUSANDS) August 31 --------------------- April 30, 1995 1996 1997 --------- --------- ----------- --------- --------- ----------- (Unaudited) CURRENT ASSETS: Accounts receivable, less allowance for doubtful accounts of $120, $238, and $260 in 1995, 1996, and 1997, respectively $ 18,076 $ 20,148 $ 17,423 Inventories 2,661 2,581 2,302 Linens in service 33,706 36,134 35,157 --------- --------- --------- Prepaid expenses 1,078 1,029 980 Total current assets 55,521 59,892 55,862 --------- --------- --------- PROPERTY, PLANT, AND EQUIPMENT: Buildings and improvements 50,270 51,346 50,681 Machinery and equipment 64,380 65,699 64,213 Automobiles and trucks 18,522 19,562 18,607 Less accumulated depreciation (39,950) (45,744) (47,155) --------- --------- --------- Net property, plant, and equipment 93,222 90,863 86,346 --------- --------- --------- INTANGIBLES, NET 43,262 37,576 33,399 --------- --------- --------- Total assets to be sold 192,005 188,331 175,607 LESS EMPLOYEE-RELATED ACCRUED LIABILITIES TO BE ASSUMED BY PURCHASER 4,070 3,108 3,638 --------- --------- --------- NET ASSETS TO BE SOLD $187,935 $185,223 $171,969 --------- --------- --------- --------- --------- --------- The accompanying notes are an integral part of these statements. 3 NATIONAL LINEN SERVICE STATEMENTS OF REVENUE AND OPERATING EXPENSES (AS DEFINED IN NOTE 1) FOR THE YEARS ENDED AUGUST 31, 1994, 1995, AND 1996 AND THE EIGHT MONTHS ENDED APRIL 30, 1996 AND 1997 (IN THOUSANDS) For the Eight Months For the Year Ended August 31 Ended April 30 ---------------------------- ------------------ 1994 1995 1996 1996 1997 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- (Unaudited) NET REVENUE $203,745 $213,134 $210,528 $139,749 $136,709 OPERATING EXPENSES: Cost of operations 140,670 147,109 150,545 99,338 99,034 Selling and administrative 32,829 33,690 33,301 23,391 21,818 Depreciation and amortization 13,760 13,961 14,120 9,420 8,770 -------- -------- -------- -------- -------- OPERATING PROFIT $ 16,486 $ 18,374 $ 12,562 $ 7,600 $ 7,087 -------- -------- -------- -------- -------- -------- -------- -------- -------- -------- The accompanying notes are an integral part of these statements. 4 NATIONAL LINEN SERVICE NOTES TO FINANCIAL STATEMENTS AUGUST 31, 1995 AND 1996 AND APRIL 30, 1997 (DOLLAR AMOUNTS IN THOUSANDS) 1. SIGNIFICANT ACCOUNTING POLICIES BASIS OF PRESENTATION On May 30, 1997, National Service Industries, Inc. ("NSI") and G&K Services, Inc. ("G&K") entered into an asset purchase agreement (the "Agreement") whereby G&K agreed to purchase from NSI certain assets of National Linen Service ("NLS"), a division of NSI, and to assume certain liabilities of 29 of NLS's branch operations (the "Business"). The accompanying statements of net assets to be sold present the assets of the Business to be sold to G&K and the liabilities of the Business to be assumed by G&K pursuant to the Agreement. The assets to be sold consist primarily of customer accounts receivable; inventories; linens in service; property, plant, and equipment; and other intangibles. The liabilities to be assumed consist primarily of employee-related accrued liabilities. Cash, income tax benefits and liabilities, accounts payable, certain accrued expenses, and liabilities related to the Business will be retained by NSI and are not included herein. The statements of revenue and operating expenses represent those revenues and expenses that are specifically identifiable to the Business and also include certain allocated expenses, as described in Note 2. As a result, the accompanying financial statements are not intended to be a complete presentation of the Business's assets and liabilities and results of operations as if it had been operated as a stand-alone entity (Note 2). Rather, these financial statements were prepared for the purpose of complying with Rule 3-05 of Regulation S-X of the Securities and Exchange Commission. Full financial statements have not been provided as required by Rule 3-05, as certain assets and liabilities associated with the Business were components of a larger business unit and cannot be separately identified, including the Business's participation in a centralized cash management system. UNAUDITED INTERIM FINANCIAL INFORMATION The accompanying financial statements and footnote data as of April 30, 1997 and for the eight-month periods ended April 30, 1996 and 1997 are unaudited. In the opinion of the management of NLS, these financial statements reflect all adjustments, consisting only of normal and recurring adjustments, necessary for a fair presentation of the financial statements. The results of operations for the eight-month period ended April 30, 1997 are not necessarily indicative of the results that may be expected for the full year. 5 LONG-LIVED ASSETS The values assigned to long-lived assets, such as property and equipment and intangibles, are periodically reviewed to determine whether any impairments are other than temporary. Management believes that the long-lived assets in the accompanying statements of net assets to be sold are appropriately valued. DEPRECIATION Depreciation is determined principally on a straight-line basis using estimated useful lives of plant and equipment (33 years for buildings, 4 to 16 years for machinery and equipment, and 3 to 7 years for automobiles and trucks). Leasehold improvements are amortized over the life of the lease or the useful life of the improvement, whichever is shorter. INTANGIBLES Intangible assets were recognized in connection with prior business combinations by NLS and are being amortized on a straight-line basis over various periods up to 40 years. USE OF ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 2. OPERATING EXPENSES The operating expenses of the Business include costs associated with direct customer support to produce revenues. Also included in operating expenses are certain selling, general, and administrative expenses (including certain allocations) directly related to the operations of the Business. In addition, an allocation of indirect corporate expenses incurred by NLS, primarily relating to officer and corporate administration salaries and benefits and occupancy expense for corporate headquarters, has been included as a component of selling and administrative expense. Because specific identification of such expenses was not practicable, a proportionate cost allocation was utilized to allocate these expenses to the Business based on its total revenue in relation to NLS's consolidated total revenue. These allocated costs aggregated approximately $8,413, $9,751, and $8,794 for 1994, 1995, and 1996, respectively, and $6,960 and $5,944 for the eight months ended April 30, 1996 and 1997, respectively. In the opinion of management, these allocations of expenses were made on a reasonable basis. However, they are not necessarily indicative of the level of expenses which may have been experienced on a stand-alone basis. The amounts that would have been incurred on a stand-alone basis could differ significantly from the allocated amounts due to economies of scale, differences in management and operational practices, or other factors. Certain other expenses, such as interest expense and provision for income taxes, have not been included in these financial statements since these costs have historically been included in the consolidated statements of operations of 6 NSI and have not been allocated to the Business. Accordingly, as also indicated in Note 1, the accompanying financial statements are not intended to be a complete presentation of the Business's assets and liabilities and results of operations as if it had been operated as a stand-alone entity. 3. CASH FLOW INFORMATION The following cash flow information presents cash flow information derived from the accompanying financial statements. The information is not intended to be a complete presentation of the Business's operating and investing cash flows. Actual cash flows may have been significantly different had the Business been operated as a stand-alone entity.
For the Eight Months For the Year Ended August 31 Ended April 30 ------------------------------------------ --------------------------- 1994 1995 1996 1996 1997 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ (Unaudited) Cash flows from operating activities: Operating income $ 16,486 $ 18,374 $ 12,562 $ 7,600 $ 7,087 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 7,516 7,703 7,893 5,210 5,248 Amortization 6,244 6,258 6,227 4,210 3,522 Changes in assets and liabilities: Accounts receivable (3,853) 7,535 (2,072) (559) 2,725 Inventories (605) 226 80 (183) 279 Linens in service (17,764) 3,327 (2,428) (929) 977 Prepaid expenses (331) (137) 50 (24) 49 Employee-related accrued liabilities 45 723 (962) (570) 530 ------------ ------------ ------------ ------------ ------------ Net cash provided by operating activities before changes in excluded assets and liabilities $ 7,738 $ 44,009 $ 21,350 $ 14,755 $ 20,417 ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Cash flows from investing activities: Capital expenditures $ (8,758) $ (10,020) $ (7,018) $ (4,614) $ (2,194) Proceeds from sale of property, plant, and equipment 595 1,162 785 66 1,078 ------------ ------------ ------------ ------------ ------------ Net cash used in investing activities before changes in excluded assets and liabilities $ (8,163) $ (8,858) $ (6,233) $ (4,548) $ (1,116) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ Noncash investing activities: Property transferred from (to) NLS branches retained by NSI $ 71 $ 4,357 $ (584) $ (6) $ (322) ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------ ------------
7 4. COMMITMENTS AND CONTINGENCIES The Business leases certain of its buildings and equipment under noncancelable lease agreements. Minimum lease payments under noncancelable leases for years subsequent to August 31, 1996 are as follows: Year ending August 31: 1997 $ 895 1998 657 1999 355 2000 155 2001 99 Thereafter 259 ------ Total minimum lease payments $2,420 ------ ------ Total rental expense was $1,279, $1,097, and $1,127 in 1994, 1995, and 1996, respectively and $748 and $1,013 for the eight months ended April 30, 1996 and 1997, respectively. 8 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS To National Service Industries, Inc.: We have audited the accompanying statements of net assets to be sold (as defined in Note 1) of NATIONAL LINEN SERVICE (a division of National Service Industries, Inc.) as of August 31, 1995 and 1996 and the related statements of revenue and operating expenses (as defined in Note 1) for each of the three years in the period ended August 31, 1996. These financial statements are the responsibility of National Linen Service's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. As described in Note 1, the accompanying financial statements were prepared for the purpose of complying with Rule 3-05 of Regulation S-X of the Securities and Exchange Commission and are not intended to be a complete presentation of assets and liabilities and results of operations on a stand-alone basis. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets to be sold (as defined in Note 1) of National Linen Service as of August 31, 1995 and 1996 and their revenue and operating expenses (as defined in Note 1) for each of the three years in the period ended August 31, 1996 in conformity with generally accepted accounting principles. ARTHUR ANDERSEN LLP Atlanta, Georgia June 20, 1997 9 Pro Forma Financial Information - General On July 14, 1997, G&K Services, Inc. directly, and through certain wholly owned subsidiaries, acquired the uniform rental assets, plus selected linen rental assets of National Linen Service, a division of National Service Industries, Inc. ("NLS"). NLS is, among other things, engaged in the business of supplying and cleaning linen wares and uniforms at various locations in the United States. G&K intends to continue the uniform rental business at certain facilities and is holding for sale the linen rental assets. The accompanying pro forma unaudited condensed balance sheet as of June 28, 1997 and the pro forma unaudited condensed statement of operations for the fiscal year ended June 28, 1997 are presented to illustrate the estimated effects of the acquisition of certain assets and assumption of certain liabilities of NLS by G&K Services, Inc. and its affiliates. The pro forma unaudited condensed balance sheet has been prepared as if the purchase and related financing occurred on June 28, 1997. The pro forma unaudited condensed statement of operations has been prepared as if the transaction occurred on June 30, 1996. These financial statements do not purport to present results which would actually have been obtained if the asset acquisition had been in effect on June 28, 1997 and June 30, 1996 or any future results which may in fact be realized. These financial statements should be read in conjunction with the accompanying notes and with the separate historical financial statements and notes thereto of NLS. 10 G&K SERVICES, INC. AND SUBSIDIARIES PRO FORMA UNAUDITED CONDENSED BALANCE SHEET AS OF JUNE 28, 1997 (Amounts in thousands) G&K Acquisition G&K Services of NLS Services Historical Net Assets Pro Forma ASSETS ---------- ----------- --------- CURRENT ASSETS Cash and cash equivalents $ 6,986 $ - $ 6,986 Accounts receivable, net 41,831 9,695 51,526 Inventories 59,799 14,444 74,243 Prepaid expenses 4,512 340 4,852 ---------- ----------- --------- Total current assets 113,128 24,479 137,607 ---------- ----------- --------- PROPERTY, PLANT AND EQUIPMENT Land 19,676 3,443 23,119 Buildings and improvements 68,683 11,335 80,018 Machinery and equipment 143,475 15,152 158,627 Automobiles and trucks 27,434 4,292 31,726 Less accumulated depreciation (109,547) - (109,547) ---------- ----------- --------- Net property, plant and equipment 149,721 34,222 183,943 ---------- ----------- --------- OTHER ASSETS Goodwill, net 33,856 110,518 144,374 Restrictive covenants and customer lists 6,016 42,726 48,742 Other 9,244 3,088 12,332 Assets held for sale - 70,978 70,978 ---------- ----------- --------- Total other assets 49,116 227,310 276,426 ---------- ----------- --------- $ 311,965 $286,011 $ 597,976 ---------- ----------- --------- ---------- ----------- --------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 13,304 $ - $ 13,304 Accrued expenses 23,689 1,131 24,820 Deferred income taxes 10,268 - 10,268 Current maturity of long-term debt 25,000 (15,000) 10,000 ---------- ----------- --------- Total current liabilities 72,261 (13,869) 58,392 LONG-TERM DEBT 54,284 299,880 354,164 DEFERRED INCOME TAXES 9,504 - 9,504 OTHER NONCURRENT LIABILITIES 6,929 - 6,929 STOCKHOLDERS' EQUITY 168,987 - 168,987 ---------- ----------- --------- $ 311,965 $286,011 $ 597,976 ---------- ----------- --------- ---------- ----------- --------- See accompanying notes to pro forma unaudited condensed financial statements. 11 G&K SERVICES, INC. AND SUBSIDIARIES PRO FORMA UNAUDITED CONDENSED STATEMENT OF OPERATIONS FOR THE FISCAL YEAR ENDED JUNE 28, 1997
(Amounts in thousands, except per share) Historical Assets Held Pro Forma G&K G&K for Sale Adjustments Services Services NLS (Note 4) (Note 2) Pro Forma ---------------------------------------------------------------------------------------------- REVENUE $ 350,914 $ 207,488 $ (85,909) $ - $ 472,493 ---------- ---------- ---------- ---------- ---------- EXPENSES Cost of operations 196,009 150,241 (69,061) - 277,189 Selling and administration 80,235 31,728 (13,205) - 98,758 Depreciation 19,734 8,078 (3,688) (191) 23,933 Amortization of intangibles 2,225 5,392 (2,510) 4,348 9,455 ---------- ---------- ---------- ---------- ---------- Total operating expenses 298,203 195,439 (88,464) 4,157 409,335 ---------- ---------- ---------- ---------- ---------- INCOME FROM OPERATIONS 52,711 12,049 2,555 (4,157) 63,158 Interest expense 6,846 - - 13,657 20,503 Other (income) expense, net (2,034) - - - (2,034) ---------- ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES 47,899 12,049 2,555 (17,814) 44,689 Provision for income taxes 18,897 4,579 971 (6,770) 17,677 ---------- ---------- ---------- ---------- ---------- NET INCOME $ 29,002 $ 7,470 $ 1,584 $ (11,044) $ 27,012 ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- Weighted Average Number of Shares Outstanding 20,447 20,447 ---------- ---------- ---------- ---------- Net income per share $1.42 $1.32 ---------- ---------- ---------- ----------
See accompanying notes to pro forma unaudited condensed financial statements. 12 G&K SERVICES, INC. AND SUBSIDIARIES NOTES TO PRO FORMA UNAUDITED CONDENSED FINANCIAL STATEMENTS (AMOUNTS IN THOUSANDS) 1. BASIS OF PREPARATION On July 14, 1997, G&K Services, Inc. directly and through certain of its wholly owned subsidiaries (the "Company"), acquired certain uniform rental assets and selected linen rental assets, and assumed certain liabilities, of National Linen Service, a division of National Service Industries, Inc. ("NLS"). NLS is, among other things, engaged in the business of supplying and cleaning linen wares and uniforms at various locations in the United States. The Company's acquisition of rental operations was accounted for by using the purchase method. The purchase price was allocated to the acquired assets and assumed liabilities based on a preliminary determination of the fair values of the assets purchased and liabilities assumed. The purchase price and related acquisition costs exceeded the preliminary fair values assigned by approximately $153.2 million, which excess may be amortized over periods ranging from five to thirty-five years on a straight-line basis. The pro forma acquisition amounts included for NLS are preliminary and subject to change. Management is in the process of gathering information to value certain property and equipment. Accordingly, the preliminary purchase price allocation is subject to change as the final purchase price changes and when additional valuation information is obtained. The NLS condensed statement of operations information for the fiscal year ended June 28, 1997 was derived from unaudited interim financial data for the eight month periods ended April 30, 1996 and 1997 and the audited financial statements for the year ended August 31, 1996. 13 2. PRO FORMA ADJUSTMENTS The accompanying pro forma balance sheet and statement of operations reflect adjustments for the items described in Notes 1 and 3 and the following adjustments: Fiscal Year Ended June 28, 1997 To reflect the amortization of the restrictive covenant over the contract life of five years, amortization of the purchased customer lists over eleven years and amortization of the amount by which the purchase price and related acquisition costs exceed the net assets acquired (goodwill) over thirty-five years ............................... $ 4,348 To reflect the change in depreciation as a result of recording building and improvements, machinery and equipment, and automobiles and trucks at estimated fair values ................................ $ (191) To reflect the increased interest expense resulting from G&K Services financing the acquisition with cash and bank borrowings ............................. $ 13,657 To reflect the effect on income taxes resulting from the above adjustments at the statutory federal and state income tax rates ............................... $ (6,770) 3. DEBT G&K Services funded the purchase price through a new $425 million credit facility which replaced its existing revolving credit facility. The new credit facility included (a) a $300 million term loan with maturity for each of the five years subsequent to June 28, 1997 of $10,000, $15,000, $35,000, $55,000, $60,000, and $125,000 thereafter, with final maturity on June 30, 2004, and (b) a $125 million revolving credit facility expiring on June 30, 2002. The initial net proceeds of the credit facility were used to refinance existing bank indebtedness of the Company, finance the acquisition and pay related fees and expenses. The unused portion of the revolver may be used for working capital and to provide up to $10,000 in letters of credit. 14 Borrowings under the term loan and revolving credit facility bear interest at 0.5% to 1.125% over the rate offered to major banks in the London Interbank Eurodollar market ("Eurodollar Rate"), based on a leverage ratio calculated on a quarterly basis. Advances through December 31, 1997 will bear interest at the Eurodollar Rate plus 1.125%. The Company also pays a fee of 0.15% to 0.35% on the unused daily balance of the revolver based on a leverage ratio calculated on a quarterly basis. The fee through December 31, 1997 will be 0.35%. The new credit facility contains various restrictive covenants which among other matters, require the Company to maintain a minimum EBITDA, minimum debt service coverage ratio, minimum stockholder equity and maximum leverage ratio, all as defined. The credit agreement also limits additional indebtedness, investments, capital expenditures and cash dividends. The Company's obligations under the credit facility are secured by an interest in the Company's personal property, 100% of the stock of G&K Services, Co. and domestic subsidiaries and 65% of the stock of the Company's Canadian subsidiaries. 4. ASSETS HELD FOR SALE In connection with the asset purchase from National Linen, it is G&K's intent to hold for sale nine linen rental facilities. As such, the net cash flows from (a) operations of these facilities from the date of acquisition until the date of sale (holding period, not to exceed one year), (b) interest on incremental debt incurred during the holding period to finance the purchase of these facilities, and (c) proceeds from the sale will be considered in the allocation of the purchase price to the assets and liabilities. These nine facilities will not affect the earnings or losses reported in G&K Services, Inc. consolidated financial statements. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Dated: September 19, 1997 G&K SERVCES, INC. (Registrant) By: s/Richard M. Fink -------------------- Richard M. Fink Chairman of the Board 16 EX-23 2 EXHIBIT 23 EXHIBIT 23 CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS As independent public accountants, we hereby consent to the incorporation of our report included in this Form 8-K/A into the Company's previously filed Registration Statement File No. 33-63359. s/Arthur Andersen LLP --------------------- ARTHUR ANDERSEN LLP Atlanta, Georgia September 19, 1997 17 -----END PRIVACY-ENHANCED MESSAGE-----