8-K

UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549


FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): April 27, 2010

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

Minnesota	0-4063	41-0449530
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

5995 Opus Parkway, Minnetonka, Minnesota	55343
(Address of principal executive offices)	(Zip Code)

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

NOT APPLICABLE
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13d-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02 Results of Operations and Financial Condition

On April 27, 2010, G&K Services, Inc. issued a press release announcing its financial results for the fiscal third quarter ended March 27, 2010.  A copy of the press release is furnished as Exhibit 99.1 to this report.  The press release contains non-GAAP financial measures which are rental organic growth rate, free cash flow and certain non-GAAP operating results which are reconciled to the third quarter and year to date GAAP operating results.  The organic growth rate is calculated using industrial rental revenues adjusted for foreign currency exchange rate differences and revenues from newly acquired locations.  The free cash flow result is calculated as cash flow from operations less capital expenditures.  Management believes that organic growth and free cash flow are useful in analyzing the company’s overall financial condition and the results of its operations.  Management believes that certain non-GAAP operating results, which exclude non-cash impairment and certain other non-recurring charges, provide a more meaningful measure on which to compare the company’s overall results of operations between periods.  

The information in this Item 2.02 and Exhibit 99.1 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference into any filing under the Securities Act of 1933, as amended.

Item 9.01	Financial Statements and Exhibits.
	(c)	Exhibits.
		99.1         Press Release dated April 27, 2010 (furnished)

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SIGNATURE

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:	April 27, 2010	By:	/s/ Jeffrey L. Wright
			Name: Jeffrey L. Wright
			Title: Executive Vice President, Director and Chief Financial Officer

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EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release dated April 27, 2010

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EX-99.1

Exhibit 99.1

G&K Services Reports Fiscal 2010 Third Quarter Results

Company Continues to Drive New Game Plan; Generating Strong Free Cash Flow and Paying Down Debt

MINNEAPOLIS, Minn.--(BUSINESS WIRE)--April 27, 2010--G&K Services, Inc. (NASDAQ: GKSR), today reported third quarter fiscal 2010 revenue of $198.9 million, which compares to revenue of $231.0 million in the prior-year period. The lower level of revenue resulted from continued difficult economic conditions and divestiture activity, partially offset by a stronger Canadian dollar. The company’s rental revenue, after adjusting for divestiture activity and foreign currency translation, continued to stabilize for the third consecutive quarter.

The company reported third quarter net earnings of $0.38 per diluted share. This compares to a prior-year period net loss of $4.74 per diluted share. The company’s current year third quarter included a net gain from divestiture activity and asset sales, which totaled $0.10 per diluted share. The prior year period included a $5.18 per diluted share loss from goodwill impairment, fixed asset write-downs and other non-cash charges. Current year third quarter earnings benefited from lower merchandise expense, reduced employee benefit costs and gains from specific location profit improvement actions. These benefits were offset by the reduction in fixed cost absorption due to lower revenue and a higher effective tax rate.

“Our business continues to strengthen,” said Douglas A. Milroy, G&K’s chief executive officer. “We are driving our new game plan, consisting of redoubling our focus on customer satisfaction, improving execution, increasing cost management and addressing underperforming locations. Our efforts continue to show positive progress and are solidifying key elements of our business.”

Income Statement Review

Third quarter revenue from rental operations was $185.6 million, down from $209.9 million in the prior-year period. The company’s rental organic growth rate was negative 10.5 percent, driven by lower customer employment levels, continued customer financial difficulties and lower pricing. This level of rental organic growth improved from negative 14.0 percent in the company’s second quarter. Third quarter revenue from direct sales was $13.3 million, compared to $21.1 million in the prior-year period which included the successful launch of a new uniform program to a major customer.

Third quarter operating margin was 7.0 percent, compared to negative 48.6 percent in the prior-year period. The current year third quarter adjusted operating margin was 5.8 percent when excluding the net gains from divestiture activity and asset sales. The prior year period adjusted operating margin was 6.3 percent when excluding the loss from goodwill and other impairment charges. Current year adjusted operating margin benefited from the efficient utilization of merchandise, lower staffing and employee-related benefit costs and the continued profit improvement in the company’s underperforming locations. These benefits were offset by the reduction in fixed cost absorption due to lower revenue.

During the quarter, the company divested a non-core linen business. As a result of this divestiture and other asset sales, the company recorded a net gain of $0.10 per diluted share.

Financial Strength

The company’s balance sheet remains strong. As of March 27, 2010, the company had total borrowings of $174.7 million and a debt to capitalization ratio of 27.2 percent. Total shareholders’ equity at the end of the third quarter was $468.1 million.

The company continued to generate strong cash flow from operations and has reduced its debt, net of cash, by $77.9 million in the last 12 months. Cash provided by operating activities for the nine months ended March 27, 2010 was $54.2 million, driven by continued strong working capital management. During the fiscal year, the company has generated $21.7 million from the divestiture of business assets. For the nine month period, free cash flow, defined as cash flow from operations less capital expenditures, was $42.0 million.

Outlook

The company expects fourth quarter revenue to be generally consistent with the third quarter, after adjusting for divestitures and the 53^rd week of fiscal 2010. Fourth quarter operating income margin is expected to improve slightly from the third quarter adjusted operating income margin.

Conference Call Information

The company will host a conference call today at 10:00 a.m. (CDT) to discuss its financial results and outlook. The call will be webcast and is available on the Investor Relations section of the company’s website at www.gkservices.com (click on webcast icon and follow the instructions). A replay of the call will be available on the company’s website through May 27, 2010.

Safe Harbor for Forward-Looking Statements

Statements made in this press release concerning the company’s intentions, expectations or predictions about future results or events are “forward-looking statements” within the meaning of The Private Securities Litigation Reform Act of 1995. These statements reflect the company’s current expectations or beliefs, and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which could be material and adverse. You are cautioned not to place undue reliance on these statements, and the company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Information concerning potential factors that could affect future financial results is included in the company’s Annual Report on Form 10-K for the fiscal year ended June 27, 2009.

About G&K Services, Inc.

G&K Services, Inc. is a market leader in branded identity apparel programs and facility services in the United States, and is the largest such provider in Canada. Headquartered in Minneapolis, Minnesota, G&K Services employs nearly 7,500 employees serving approximately 170,000 customers from over 160 facilities in North America and Europe. G&K Services is a publicly held company traded over the NASDAQ Global Select Market under the symbol GKSR and is a component of the Standard & Poor’s SmallCap 600 Index. For more information on G&K Services, visit the company’s website at www.gkservices.com.

Comparison of GAAP to Non-GAAP Financial Measures

The company reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that certain non-GAAP operating results, which exclude non-cash impairment and certain other charges, may provide a more meaningful measure on which to compare the company’s results of operations between periods. The company believes these non-GAAP results provide useful information to both management and investors by excluding certain costs that impact comparability of the results. A reconciliation of operating income, net income and earnings per diluted share on a GAAP basis to adjusted earnings per diluted share on a non-GAAP basis is presented in the table below:

	Three Months Ended March 27, 2010									Three Months Ended March 28, 2009
(U.S. Dollars, in thousands, except per share data)	Operating Income			Net Income			Earnings Per Share			Operating Income			Net Income			Earnings Per Share
As reported	$	13,954		$	7,037		$	0.38		$	(112,269	)	$	(86,303	)	$	(4.74	)
Less: Goodwill and other impairment charges		-			-			-			126,719			94,358			5.18
Less: Divestitures of business assets		(2,465	)		(1,918	)		(0.10	)		-			-			-
As Adjusted	$	11,489		$	5,119		$	0.28		$	14,450		$	8,055		$	0.44
	Nine Months Ended March 27, 2010									Nine Months Ended March 28, 2009
(U.S. Dollars, in thousands, except per share data)	Operating Income			Net Income			Earnings Per Share			Operating Income			Net Income			Earnings Per Share
As reported	$	38,078		$	17,471		$	0.95		$	(83,332	)	$	(75,307	)	$	(4.08	)
Less: Goodwill and other impairment charges		-			-			-			126,719			94,358			5.11
Less: Divestitures of business assets		(4,508	)		(3,459	)		(0.19	)		-			-			-
Add: Cost reduction activities and reserves for certain matters		1,082			668			0.04			10,358			7,838			0.43
As Adjusted	$	34,652		$	14,680		$	0.80		$	53,745		$	26,889		$	1.46

These non-GAAP measures are not in accordance with, or an alternative for measures prepared in accordance with, generally accepted accounting principles and may be different from non-GAAP measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.

Financial tables follow….

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
G&K Services, Inc. and Subsidiaries
(Subject to Reclassification)
		For the Three Months Ended					For the Nine Months Ended
		March 27,		March 28,			March 27,		March 28,
(U.S. Dollars, in thousands, except per share data)		2010		2009			2010		2009
Revenues
	Rental operations	$	185,606	$	209,872		$	572,585	$	660,211
	Direct sales		13,339		21,120			40,851		57,770
	Total revenues		198,945		230,992			613,436		717,981
Operating Expenses
	Cost of rental operations		130,038		147,041			402,906		460,912
	Cost of direct sales		9,664		15,521			30,255		42,822
	Selling and administrative		45,289		53,980			142,197		170,860
	Goodwill and other impairment charges		-		126,719			-		126,719
	Total operating expenses		184,991		343,261			575,358		801,313
Income/(Loss) from Operations			13,954		(112,269	)		38,078		(83,332	)
	Interest expense		3,275		3,263			10,675		10,681
Income/(Loss) before Income Taxes			10,679		(115,532	)		27,403		(94,013	)
	Provision/(Benefit) for income taxes		3,642		(29,229	)		9,932		(18,706	)
Net Income/(Loss)		$	7,037	$	(86,303	)	$	17,471	$	(75,307	)
	Basic weighted average number of shares outstanding		18,305		18,222			18,300		18,450
Basic Earnings per Common Share		$	0.38	$	(4.74	)	$	0.95	$	(4.08	)
	Diluted weighted average number of shares outstanding		18,361		18,222			18,339		18,450
Diluted Earnings per Common Share		$	0.38	$	(4.74	)	$	0.95	$	(4.08	)
Dividends per share		$	0.075	$	0.070		$	0.225	$	0.210

CONSOLIDATED CONDENSED BALANCE SHEETS
G&K Services, Inc. and Subsidiaries
(Subject to Reclassification)
		March 27,		June 27,
(U.S. dollars, in thousands)		2010		2009
ASSETS
Current Assets
	Cash and cash equivalents	$	10,461	$	13,136
	Accounts receivable, net		80,311		85,209
	Inventories, net		121,308		135,492
	Other current assets		19,075		21,241
Total current assets			231,155		255,078
Property, Plant and Equipment, net			199,530		216,736
Goodwill			325,268		319,942
Other Assets			57,833		59,412
Total assets		$	813,786	$	851,168
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
	Accounts payable	$	25,742	$	29,134
	Accrued expenses		75,240		79,010
	Deferred income taxes		3,614		3,414
	Current maturities of long-term debt		412		7,744
Total current liabilities			105,008		119,302
Long-Term Debt, net of Current Maturities			174,243		224,781
Deferred Income Taxes			1,077		1,893
Accrued Income Taxes – Long Term			9,533		12,016
Other Noncurrent Liabilities			55,826		55,820
Stockholders' Equity			468,099		437,356
Total liabilities and stockholders’ equity		$	813,786	$	851,168

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
G&K Services, Inc. and Subsidiaries
(Subject to Reclassification)
		For the Nine Months Ended
		March 27,			March 28,
(U.S. dollars, in thousands)		2010			2009
Operating Activities:
	Net income/(loss)	$	17,471		$	(75,307	)
	Adjustments to reconcile net income/(loss) to net cash provided by operating activities -
	Depreciation and amortization		30,014			33,871
	Goodwill and other impairment charges		-			126,719
	Deferred income taxes		(1,737	)		(34,298	)
	Other adjustments		(1,613	)		5,731
	Changes in current operating items		9,319			13,192
	Other assets and liabilities		754			3,942
Net cash provided by operating activities			54,208			73,850
Investing Activities:
	Property, plant and equipment additions, net		(12,249	)		(18,422	)
	Divestitures of business assets, net		21,670			20
Net cash provided by/(used for) investing activities			9,421			(18,402	)
Financing Activities:
	Payments of long-term debt		(7,434	)		(7,540	)
	Payments of revolving credit facilities, net		(54,210	)		(23,425	)
	Cash dividends paid		(4,185	)		(3,920	)
	Net issuance of common stock, primarily under stock option plans		7			209
	Purchase of common stock		(388	)		(16,775	)
Net cash used for financing activities			(66,210	)		(51,451	)
(Decrease)/Increase in Cash and Cash Equivalents			(2,581	)		3,997
Effect of Exchange Rates on Cash			(94	)		(1,359	)
Cash and Cash Equivalents:
	Beginning of period		13,136			12,651
	End of period	$	10,461		$	15,289

CONTACT:
G&K Services, Inc.
Jeffrey L. Wright, 952-912-5500
Executive Vice President and Chief Financial Officer
Shayn R. Carlson, 952-912-5500
Director of Investor Relations