-----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, GENro4VSmDz1XsJ/TbdN3WXNHi9x79jcxV70BfwbXqkJl4YMnu0OKLgqfw0PPnpd 7nZA9+cs5Wovb3r3pyzt8w== 0001047469-97-003760.txt : 19971114 0001047469-97-003760.hdr.sgml : 19971114 ACCESSION NUMBER: 0001047469-97-003760 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970927 FILED AS OF DATE: 19971112 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: 10-Q SEC ACT: SEC FILE NUMBER: 000-04063 FILM NUMBER: 97712873 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 10-Q 1 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 -------------------- F O R M 10 - Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended September 27, 1997 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 (I.R.S. Employer incorporation or organization) Identification No.) 5995 OPUS PARKWAY, SUITE. 500 MINNETONKA, MINNESOTA 55343 (Address of principal executive offices and zip code) (612) 912-5500 (Registrant's telephone number, including zip 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 November 7, 1997 Common Stock, par value $.50 per share 18,990,629 CLASS B Outstanding November 7, 1997 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 September 27, June 28, 1997 1997 ASSETS (In thousands, except share data) (Unaudited) - -------------------------------------------------------------------------------- CURRENT ASSETS Cash and cash equivalents $3,415 $6,986 Accounts receivable, less allowance for doubtful accounts of $1,532 and $1,324 55,976 41,831 Inventories 75,831 59,799 Prepaid expenses 8,484 4,512 - -------------------------------------------------------------------------------- Total current assets 143,706 113,128 - -------------------------------------------------------------------------------- PROPERTY, PLANT AND EQUIPMENT Land 23,484 19,676 Buildings and improvements 81,343 68,683 Machinery and equipment 167,288 143,475 Automobiles and trucks 31,702 27,434 Less accumulated depreciation (114,986) (109,547) - -------------------------------------------------------------------------------- Total property, plant and equipment 188,831 149,721 - -------------------------------------------------------------------------------- OTHER ASSETS Goodwill, net 139,618 33,856 Restrictive covenants and customer lists, net 47,628 6,016 Other, principally retirement plan assets 9,014 9,244 Assets held for sale 68,471 - - -------------------------------------------------------------------------------- Total other assets 264,731 49,116 - -------------------------------------------------------------------------------- $597,268 $311,965 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $17,589 $13,304 Accrued expenses - Salaries and employee benefits 14,517 11,556 Other 12,872 12,133 Deferred income taxes 10,243 10,268 Current maturities of long-term debt 13,750 25,000 - -------------------------------------------------------------------------------- Total current liabilities 68,971 72,261 LONG-TERM DEBT, LESS CURRENT MATURITIES 335,333 54,284 DEFERRED INCOME TAXES 9,566 9,504 OTHER NONCURRENT LIABILITIES 7,268 6,929 - -------------------------------------------------------------------------------- STOCKHOLDERS' EQUITY Common stock, $.50 par Class A, 50,000,000 shares authorized, 18,990,629 and 18,986,629 shares issued and outstanding 9,495 9,493 Class B, 10,000,000 shares authorized, 1,474,996 and 1,474,996 shares issued and outstanding 738 738 Additional paid-in capital 22,092 22,684 Retained earnings 151,714 144,036 Deferred compensation (1,904) (2,029) Unrealized gain on investments held for sale 591 306 Cumulative translation adjustment (6,596) (6,241) - -------------------------------------------------------------------------------- Total stockholders' equity 176,130 168,987 - -------------------------------------------------------------------------------- $597,268 $311,965 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these statements. 2 CONSOLIDATED STATEMENTS OF INCOME G & K SERVICES, INC. AND SUBSIDIARIES (Unaudited) For the Three Months Ended ---------------------------- September 27, September 28, (In thousands, except per share data) 1997 1996 - -------------------------------------------------------------------------------- REVENUES Rental operations $115,497 $80,013 Direct sales 2,929 3,297 - -------------------------------------------------------------------------------- Total revenues 118,426 83,310 - -------------------------------------------------------------------------------- EXPENSES Cost of rental operations 66,068 43,482 Cost of direct sales 2,314 2,581 Selling and administrative 24,896 19,407 Depreciation 5,860 4,596 Amortization of intangibles 2,473 563 - -------------------------------------------------------------------------------- Total operating expenses 101,611 70,269 - -------------------------------------------------------------------------------- INCOME FROM OPERATIONS 16,815 12,681 Interest expense 4,767 1,723 Other income, net (209) (446) - -------------------------------------------------------------------------------- INCOME BEFORE INCOME TAXES 12,257 11,404 Provision for income taxes 4,812 4,453 - -------------------------------------------------------------------------------- NET INCOME $7,445 $6,951 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- Weighted Average Number of Shares Outstanding 20,463 20,439 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- NET INCOME PER SHARE $0.36 $0.34 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these statements. 3 CONSOLIDATED STATEMENTS OF CASH FLOWS G & K SERVICES, INC. AND SUBSIDIARIES (Unaudited) For the Three Months Ended ---------------------------- September 27, September 28, (In thousands) 1997 1996 - -------------------------------------------------------------------------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net Income $7,445 $6,951 Adjustments to reconcile net income to net cash provided by operating activities- Gain on sale of investments (45) - Depreciation and amortization 8,333 5,158 Deferred income taxes (37) (108) Changes in current operating items- Inventories (1,778) (1,574) Accounts receivable and prepaid expenses (8,995) (3,396) Accounts payable and other current liabilities 10,858 2,641 Other, net (778) 484 - -------------------------------------------------------------------------------- Net cash provided by operating activities 15,003 10,156 - -------------------------------------------------------------------------------- CASH FLOWS FROM INVESTING ACTIVITIES: Property, plant and equipment additions, net (8,323) (9,079) Business acquisitions (279,738) (1,948) - -------------------------------------------------------------------------------- Net cash used for investing activities (288,061) (11,027) - -------------------------------------------------------------------------------- CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from debt financing 355,843 7,190 Repayments on line of credit and other long-term debt, net (86,000) (11,565) Cash dividends paid (358) - Sale of common stock 2 2 - -------------------------------------------------------------------------------- Net cash provided by (used for) financing activities 269,487 (4,373) - -------------------------------------------------------------------------------- DECREASE IN CASH AND CASH EQUIVALENTS (3,571) (5,244) CASH AND CASH EQUIVALENTS: Beginning of year 6,986 6,882 - -------------------------------------------------------------------------------- End of year $3,415 $1,638 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SUPPLEMENTAL CASH FLOW INFORMATION: Cash paid for - Interest $4,250 $2,201 - -------------------------------------------------------------------------------- Income Taxes $7,245 $3,758 - -------------------------------------------------------------------------------- The accompanying notes are an integral part of these statements. 4 G&K SERVICES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Three month period ended September 27, 1997 and September 28, 1996 (Unaudited) The consolidated financial statements included herein, except for the June 28, 1997, balance sheet which was extracted from the audited financial statements of June 28, 1997, have been prepared by 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 as of September 27, 1997, and June 28, 1997, and the results of operations and the changes in financial position for the three months ended September 27, 1997 and September 28, 1996. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles 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 month period ended September 27, 1997, and September 28, 1996, 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. (the Company) is a full service uniform rental provider, including the rental of cleanroom garments. The Company also provides rental of non-uniform items such as floormats, dustmops and cloths, wiping towels and selected linen items. In addition, the Company manufactures uniforms for rental 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 5 swap agreements as an adjustment to interest expense. The related amounts payable to, or receivable from, the counter-parties are included in other accrued expenses. The fair value of the swap agreements is not recognized in the Consolidated Financial Statements, since they are accounted for as hedges. PER SHARE DATA Net income per share is based on the weighted average number of shares of both Class A and B common stock outstanding during each year. The effect of common stock equivalents was not significant. RECENT ACCOUNTING PRONOUNCEMENTS Financial Accounting Standards Board Statement No. 128, "Earnings per Share" (Statement No. 128), issued in February 1997 and effective for interim periods ending after December 15, 1997, establishes and simplifies standards for computing and presenting earnings per share (EPS). Implementation of Statement No. 128 is not expected to have a material impact on the Company's computation or presentation of EPS. Financial Accounting Standards Board Statement No. 130, "Reporting Comprehensive Income" (Statement No. 130), issued in June 1997 and effective for fiscal years beginning after December 15, 1997, requires the Company to report and display comprehensive income and its components. Comprehensive income is defined as changes in equity of a business enterprise during a period except those resulting from investments by owners and distributions to owners. 2. ACQUISITION OF CERTAIN NATIONAL LINEN SERVICE ASSETS On July 14, 1997 the Company purchased the uniform rental assets and selected linen rental assets of National Linen Service for approximately $280 million in cash, subject to certain post-closing purchase price adjustments. 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 the preliminary determination of the fair values of the assets purchased and the liabilities assumed. The purchase price and related acquisition costs exceeded the preliminary fair values assigned to tangible assets by approximately $153.2 million, which excess may be amortized for the restrictive covenant over the contract life of five years, for the purchased customer lists over eleven years and for goodwill over thirty-five years. The preliminary purchase price allocation is subject to change as the final purchase price changes and when additional valuation information is obtained. 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. Accordingly, earnings or losses from these nine facilities are excluded from the earnings reported for the Company. For the period ended September 27, 1997, earnings excluded from the Company's Statement of Income totaled $447,000, including allocated interest expense of $976,000. The following unaudited pro forma condensed results of operations for the periods ended September 27, 1997 and September 28, 1996 have been prepared as if the transaction occurred on June 29, 1997 and June 30, 1996, respectively, 6 Three Months Ended (In thousands) ------------------------------ September 27, September 28, 1997 1996 ------------- ------------- Revenues $123,603 $113,705 Income from Operations 17,270 15,293 Net Income 7,402 6,453 Net Income Per Share $0.36 $0.32 This financial information does not purport to represent results which would actually have been obtained if the asset acquisition had been in effect on June 29, 1997 and June 30, 1996 or any future results which may in fact be realized. 3. DEBT G&K Services funded the acquisition of certain National Linen Service assets 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 years subsequent to June 28, 1997 of $10,000,000, $15,000,000, $35,000,000, $55,000,000, $60,000,000, and $125,000,000 thereafter, with final maturity on June 30, 2004, and (b) a $125 million revolving credit facility expiring on June 30, 2002. As of September 27, 1997, borrowings outstanding under the term loan were $300 million and under the revolving credit facility were $49,083,000. The unused portion of the revolver may be used for working capital and to provide up to $10,000,000 in letters of credit. 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%. As of September 27, 1997, the Company had entered into interest rate swap agreements with certain lenders providing bank financing. The Company entered into an agreement for the notional principal amount of $100 million through September 12, 2000 that effectively fixed the interest rate on floating rate debt at a rate of 6.24%. The Company also entered into an agreement for the notional principal amount of $50 million through September 12, 1999 that effectively fixed the interest rate on floating rate debt at a rate of 6.065%, unless the Eurodollar Rate increases by more than 25 basis points within any one quarter, in which the Company retains the risk in any increase in rates over 25 basis points. 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 collateralized 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. 7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The percentage relationships to net sales of certain income and expense items for the three month periods ended September 27, 1997 and September 28, 1996, and the percentage changes in these income and expense items between periods are contained in the following table: PERCENTAGE OF NET SALES PERCENTAGE THREE MONTHS ENDED CHANGE -------------------------------------- ---------- FY Q1 1998 vs. September 27, 1997 September 28, 1996 FY Q1 1997 -------------------------------------- ---------- Net Revenues 100.0% 100.0% 42.2% Expenses: Cost of Rental and Direct Sales 57.7 55.3 48.5 Selling and Administrative 21.0 23.3 28.3 Depreciation 5.0 5.5 27.5 Amortization of Intangibles 2.1 0.7 339.3 -------------------------------------- Income from Operations 14.2 15.2 32.6 Interest Expense 4.0 2.0 176.7 Other (Income) Expense, net (0.2) (0.5) (53.1) -------------------------------------- Income Before Income Taxes 10.4 13.7 7.5 Provision for Income Taxes 4.1 5.4 8.1 -------------------------------------- Net Income 6.3% 8.3% 7.1 -------------------------------------- -------------------------------------- Total revenues for the first quarter of fiscal 1998 rose 42.2% to $118.4 million from $83.3 million in the first quarter of fiscal 1997. Revenue attributable to the acquisition of certain assets of National Linen Service (NLS) was $25.5 million. Excluding this increase and restating prior year Canadian revenues to exclude the Toronto Linen operations which were sold in fiscal 1997, the revenue growth was 12.7%. Rental revenue growth accounted for $35.5 million, or a 44.3% increase. U.S. and Canadian annual rental revenues increased 13.8% and 12.9%, respectively (excluding revenues from assets acquired from NLS and revenues from Toronto Linen). The improvement is primarily attributable to increased new account sales, expansion of existing accounts, strong retention rates and new market entries. Cost of rental operations increased 51.9% to $66.1 million for the first quarter of fiscal 1998 from $43.5 million in the same period of fiscal 1997. As a percentage of rental revenues, these costs increased to 57.2% for the first quarter of fiscal 1998 compared to 54.3% for the same period in fiscal 1997. The Company attributes the increase primarily to merchandise costs at the new locations acquired in the NLS transaction. Total direct sales to outside customers decreased 11.2% to $2.9 million for the first quarter of fiscal 1998 from $3.3 million in the same period of fiscal 1997 primarily as a result of shifting garment manufacturing capacity from sales to external customers to internal use by the 8 Company for rental customers. The Company anticipates this trend to continue through the fiscal year. Cost of direct sales, as a percentage of direct sales, increased to 79.0% compared to 78.3% last year. Selling and administrative expenses increased 28.3% to $24.9 million in the first quarter of fiscal 1998 from $19.4 million in the same period in fiscal 1997. As a percentage of revenues, selling and administrative expenses decreased to 21.0% in the first quarter of fiscal 1998 from 23.3% in the same period in fiscal 1997. The decline as a percent of sales is due to several factors, including lower selling expenses in the newly acquired NLS locations, and further leveraging of corporate costs from the NLS transaction and growth in G&K's existing business. Depreciation expense increased 27.5% to $5.9 million in the first quarter of fiscal 1998 from $4.6 million in the same period of fiscal 1997. As a percentage of consolidated revenue, depreciation expense decreased to 4.9% from 5.5% for the same period in 1997. This decrease is caused by timing of anticipated current year capital expenditures, maturing of startup operations and depreciation on acquired NLS assets based on fair market valuations. Capital expenditures for the quarter, excluding acquisition of businesses, was $8,446 compared to $9,079 in the prior year's quarter. Amortization expense increased 339.3% to $2.9 million in the first quarter of fiscal 1998 from $0.6 million in the first quarter of fiscal 1997. This increase is attributable to the acquisition of NLS assets. Operating income increased 32.6% to $16.8 million in the first quarter of fiscal 1998 from $12.7 million in the same period of fiscal 1997. Operating margins decreased to 14.2% in fiscal 1998 from 15.2% in fiscal 1997. U.S. operating margins declined to 12.7% in fiscal 1998 from 14.6% in fiscal 1997. Net income rose 7.1% to $7.4 million in the first quarter of fiscal 1998, or $.36 per share, from $7.0 million, or $.34 per share, in the first quarter of fiscal 1997. Net income margins decreased to 6.3% for the first quarter of fiscal 1998 compared with 8.3% in the first quarter of fiscal 1997. Interest expense was $4.8 million, up from $1.7 million in the prior year, as a result of additional borrowings to finance the acquisition of selected assets from National Linen Service. The Company's effective tax rate increased to 39.3% in fiscal 1998 from 39.0% in fiscal 1997, largely driven by additional profits and higher corporate tax rates in Canada. LIQUIDITY AND FINANCIAL RESOURCES Cash flow from operating activities was $15.0 million in the first quarter of fiscal 1998 and $10.2 million in the same period of fiscal 1997. The fiscal 1998 increase resulted from increases in net income, accounts payable and other current liabilities, and depreciation and amortization when compared to the first quarter of 1997. Working capital at September 27, 1997 was $74.7 million, up 82.9% from $40.9 million at September 28, 1996. The increase reflects the acquisition of NLS assets. Cash provided by financing activities was $269.5 million in the first quarter of fiscal 1998 and cash used for financing activities was $4.4 million in the same period of fiscal 1997. $355.8 million of cash was obtained by issuing debt primarily for the acquisition of selected assets of 9 NLS. The Company's ratio of debt to total capitalization increased from 31.9 % at June 28, 1997 to 66.7 % at the end of September 1997. Cash used in investing activities was $288.1 million in the first quarter of fiscal 1998 and $11.0 million in the first quarter of fiscal 1997. The increase is primarily due to the acquisition of the NLS assets. The Company utilizes software and related technologies throughout its businesses that will be affected by the date change in the year 2000. An internal study is currently under way to determine the full scope and related costs to insure that the Company's systems continue to meet its internal needs and those of its customers. The Company has begun to incur expenses in fiscal 1998 to resolve this issue. These expenses may be significant and continue through the year 1999. Maintenance or modification costs will be expensed as incurred, while the costs of new software will be capitalized and amortized over the software's useful life. In connection with G&K's acquisition of selected assets of NLS in July 1997, the Company entered into a new $425 million credit facility to fund the purchase price of the assets and refinance existing indebtedness. The unused portion of the revolver may be used for working capital and to provide letters of credit. 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 agreement also limits additional indebtedness, investments, capital expenditures and cash dividends. G&K'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, Inc. and domestic subsidiaries and 65% of the stock of Canadian subsidiaries. Stockholders' equity grew 4.2% to $176 million at September 27, 1997, compared with $169 million at the end of the first quarter of 1997. G&K's return on average equity decreased to 4.3% in the first quarter of fiscal 1998 compared with 4.8% for the same period of fiscal 1997. 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. 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, those expectations related to the recent acquisition of assets from National Linen Service; 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 6. Exhibits and Reports on Form 8-K a. EXHIBITS Exhibit 27 - Financial Data Schedule (for SEC use only) b. Reports on Form 8-K. A Form 8-K, Item 2. Acquisition or Disposition of Assets, was filed on July 14, 1997. A Form 8-K/A, Item 7. Financial Statements, Pro Forma Financial Information and Exhibits, was filed on September 19, 1997. 11 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. G&K SERVICES, INC. (Registrant) Date: November 10, 1997 s/Timothy W. Kuck ----------------------- ------------------------------- Timothy W. Kuck Chief Financial Officer (Principal Financial Officer) s/Michael F. Woodard ------------------------------- Michael F. Woodard Controller (Principal Accounting Officer) 12 EX-27 2 FDS
5 1,000 3-MOS JUN-28-1997 JUN-29-1997 SEP-27-1997 3,415,000 0 55,976,000 1,532,000 75,831,000 143,706,000 188,831,000 114,986,000 597,268,000 68,971,000 0 0 0 10,233,000 165,897,000 597,268,000 0 118,426,000 68,382,000 101,611,000 4,558,000 0 4,767,000 12,257,000 4,812,000 7,445,000 0 0 0 7,445,000 0.36 0
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