<PAGE>
 
                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington D.C.  20549

                                   FORM 10-Q

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

For the quarterly period ended October 25, 1998.

                                       OR

[_]       TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
          EXCHANGE ACT OF 1934

For the transition period from ____________________  to _____________________
Commission file number: 0-6643

 
                                UNITOG COMPANY
----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

 
                 
           Delaware                                  44-0529828
-------------------------------------   -------------------------------------
  (State or other jurisdiction of                 (I.R.S. Employer
   incorporation or organization)                Identification No.)

   
   1300 Washington Street, Kansas City, MO                64105
--------------------------------------------   ------------------------------
  (Address of principal executive offices)              (Zip Code)


                              (816) 474-7000                          
------------------------------------------------------------------------------
             (Registrant's telephone number, including area code)

 
                                     
                               Not applicable                       
------------------------------------------------------------------------------
      (Former name, former address and former fiscal year, if changed since
                                 last report)

     Indicate by check mark whether the registrant (1) has filed all reports
     required to be filed by Sections 12, 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 practical date.

          As of October 25, 1998, the registrant had 9,398,896 shares of
          common stock, par value $.01 per share, outstanding.
<PAGE>
 
                               TABLE OF CONTENTS
<TABLE> 
<CAPTION> 
PART I.  FINANCIAL INFORMATION                                             PAGE NUMBER

<S>     <C>                                                                <C> 
ITEM 1. Financial Statements

        (1) Condensed Consolidated Financial Statements (unaudited):
 
            Condensed Consolidated Balance Sheets as of October 25, 1998
            and January 25, 1998.                                             3
            
            Condensed Consolidated Statements of Earnings for the Three
            Months ended October 25, 1998 and October 26, 1997.               4
 
            Condensed Consolidated Statements of Earnings for the Nine
            Months ended October 25, 1998 and October 26, 1997.               5
 
            Condensed Consolidated Statements of Cash Flows for the Nine
            Months ended October 25, 1998 and October 26, 1997.               6
 
        (2) Notes to Condensed Consolidated Financial Statements.             7
 
ITEM 2. Management's Discussion and Analysis of Financial Condition and
        Results of Operations.                                               10
 

PART II.-OTHER INFORMATION

ITEM I.  Legal Proceedings                                                   13

ITEM 6.  Exhibits and Reports on Form 8-K                                    13
</TABLE> 

                                       2
<PAGE>

PART 1 - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

                        UNITOG COMPANY AND SUBSIDIARIES

                     CONDENSED CONSOLIDATED BALANCE SHEETS
                     OCTOBER 25, 1998 AND JANUARY 25, 1998

<TABLE> 
<CAPTION>                          
                                               (unaudited)   
     ASSETS                                 October 25, 1998   January 25, 1998
                                            ----------------   ----------------
<S>                                         <C>                <C>   
Current assets:                                             
 Cash and cash equivalents                    $     25,153        $  1,492,720
 Accounts receivable, less allowance                         
  for doubtful receivables of $1,174,000                         
  and $1,009,000, respectively                  29,158,134          29,631,566
 Inventories (note 2)                           21,278,796          18,508,958  
 Rental garments in service, net                40,582,087          41,862,753
 Prepaid expenses                                1,732,678           1,102,585
                                              -------------       -------------
   Total current assets                         92,776,848          92,598,582
                                              -------------       -------------
                                                             
Property, plant and equipment, at cost         180,663,473         189,231,058  
 Less accumulated depreciation                  66,149,804          71,920,005
                                              -------------       -------------
   Net property, plant and equipment           114,513,669         117,311,053  
                                              -------------       -------------
                                                             
Other assets, net                               25,589,744          29,592,025
Excess cost over net assets of businesses                    
 acquired, net                                  37,321,247          36,806,869 
                                              -------------       -------------
                                              $270,201,508        $276,308,529
                                              =============       ============= 
                                                             
LIABILITIES AND STOCKHOLDERS' EQUITY                         
                                                             
Current liabilities:                                         
 Current installments of long-term debt       $  3,611,317        $  3,502,885
 Accounts payable                                9,464,843          18,591,196
 Accrued expenses                               12,598,306          12,144,680
 Accrued and deferred income taxes payable      13,406,748          12,262,867
                                              -------------       ------------- 
  Total current liabilities                     39,081,214          46,501,628  
                                              -------------       ------------- 
Long-term debt, less current installments      102,129,650         110,268,916
Deferred income taxes and other liabilities     15,904,011          15,340,392
                                                             
Stockholder's equity:                                        
 Common stock of $.01 par value. Authorized                  
 30,000,000 shares; issued 9,659,305 shares                  
 at October 25, 1998 and 9,657,909 shares at                   
 January 25, 1998                                   96,593              96,579
Treasury stock, 260,409 common shares at                     
 October 25, 1998 and 289,425 shares at                      
 January 25, 1998, at cost                      (5,659,844)         (6,295,337)
Additional paid-in capital                      41,308,439          41,470,281 
Retained earnings                               77,341,445          68,926,070
                                              -------------       -------------
   Total stockholder's equity                  113,086,633         104,197,593
                                              -------------       -------------
                                              $270,201,508        $276,308,529
                                              =============       =============
</TABLE> 

See accompanying notes to condensed consolidated financial statements.

                                       3

<PAGE>
 
                        UNITOG COMPANY AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
            THREE MONTHS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997
                                  (UNAUDITED)
<TABLE>
<CAPTION>                                       
                                                          October 25, 1998            October 26, 1997 
                                                      ---------------------      ---------------------
Revenues:                                         
<S>                                                   <C>                        <C>  
   Rental operations                                  $         56,772,345       $         56,082,575      
   Direct sales                                                 12,398,343                 14,005,264      
                                                      ---------------------      ---------------------
        Total revenues                                          69,170,688                 70,087,839      
                                                      ---------------------      ---------------------
                                                  
Operating costs and expenses:                     
   Cost of rental operations                                    44,880,835                 44,991,869       
   Cost of direct sales                                         10,742,171                 11,664,583       
   Depreciation and amortization                                 4,729,891                  4,483,717       
   General and administrative                                    2,028,059                  2,149,381       
   Special items (notes 7 and 8)                                (2,071,052)                (1,000,000)      
                                                      ---------------------      ---------------------  
         Total costs and expenses                               60,309,904                 62,289,550       
                                                      ---------------------      ---------------------
                                                  
         Operating income                                        8,860,784                  7,798,289     
                                                                                                          
Interest expense                                                 1,945,269                  1,546,704     
Other income, net                                                  (54,840)                   (17,015)     
                                                      ---------------------      ---------------------                         
         Earnings before income taxes                            6,970,355                  6,268,600     
Income taxes                                                     2,650,000                  2,382,000      
                                                      ---------------------      --------------------- 
         Net earnings                                 $          4,320,355       $          3,886,600     
                                                      ---------------------      --------------------- 
 
Net earnings per common share, basic                  $                .46       $                .40
                                                      =====================      =====================
                                                  
Net earnings per common share, assuming dilution      $                .46       $                .40
                                                      =====================      =====================
</TABLE>


  See accompanying notes to condensed consolidated financial statements.

                                       

                                       4
<PAGE>
 
                        UNITOG COMPANY AND SUBSIDIARIES

                 CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
            NINE MONTHS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997
                                  (UNAUDITED)
<TABLE>
<CAPTION>
                                                                             October 25, 1998          October 26, 1997
                                                                           ------------------         -----------------
<S>                                                                        <C>                       <C> 
Revenues:
   Rental operations                                                        $     173,430,093         $      164,788,068
   Direct sales                                                                    38,161,980                 42,880,394
                                                                           ------------------        -------------------
        Total revenues                                                            211,592,073                207,668,462
                                                                           ------------------        -------------------
 
Operating costs and expenses:
   Cost of rental operations                                                      139,521,137                132,817,294
   Cost of direct sales                                                            32,859,709                 35,590,825
   Depreciation and amortization                                                   14,454,078                 12,989,761
   General and administrative                                                       6,211,385                  6,671,254
   Special items (notes 7 and 8)                                                   (2,071,052)                (1,000,000)
                                                                           ------------------        -------------------
         Total costs and expenses                                                 190,975,257                187,069,134
                                                                           ------------------        -------------------
 
         Operating income                                                          20,616,816                 20,599,328
 
Interest expense                                                                    5,877,627                  4,627,368
Other income, net                                                                    (118,027)                   (89,529)
                                                                           ------------------        -------------------    
         Earnings before income taxes                                              14,857,216                 16,061,489
Income taxes                                                                        5,645,000                  6,103,000
                                                                           ------------------        -------------------    
         Net earnings                                                       $       9,212,216         $        9,958,489
                                                                           ==================        ===================
 
Net earnings per common share, basic                                        $             .98         $             1.03
                                                                           ==================        ===================
 
Net earnings per common share, assuming dilution                            $             .98         $             1.02
                                                                           ==================        ===================
</TABLE>



  See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>
 

                        UNITOG COMPANY AND SUBSIDIARIES

                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
            NINE MONTHS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997
                                  (UNAUDITED)

<TABLE> 
<CAPTION>
                                                                                  October 25, 1998             October 26, 1997
                                                                                  ----------------             ----------------
<S>                                                                               <C>                          <C> 
Cash flows from operating activities:
 Net earnings                                                                     $      9,212,216             $      9,958,489
 Adjustments to reconcile net earnings to net
      cash provided by operating activities:
        Depreciation and amortization                                                   14,454,078                   12,989,761
        Provision for deferred income taxes                                                264,000                      600,000
        Gain on disposal of equipment                                                   (2,109,549)                     (48,797)
        Changes in assets and liabilities:                                                                           
             Accounts receivable                                                           473,432                   (6,127,675)
             Inventories                                                                (2,687,272)                  (1,628,702)
             Rental garments in service                                                    406,388                     (334,968)
             Prepaid expenses                                                             (705,854)                     137,082
             Other noncurrent assets                                                       424,386                    1,277,716
             Accounts payable                                                           (9,126,353                    1,693,364
             Accrued expenses                                                           (1,649,658)                   2,384,151
             Income taxes payable                                                        1,028,881                    2,334,863
             Other noncurrent liabilities                                                  414,619                      191,270
                                                                                  ----------------             ----------------
                Net cash provided  by operating activities                              10,399,314                   23,426,554
                                                                                  ----------------             ----------------
 
Cash flows from investing activities:
 Acquisition of rental operations                                                      (13,028,369)                  (3,102,392)
 Purchase of property, plant and equipment                                             (10,688,343)                 (21,957,806)
 Proceeds from disposal of equipment and rental operations                              20,203,841                      182,930
                                                                                  ----------------             ----------------
                Net cash used by investing activities                                   (3,512,871)                 (24,877,268)
                                                                                  ----------------             ----------------
 
Cash flows from financing activities:
 Proceeds from stock issuance                                                              582,221                      232,020
 Dividends paid                                                                           (845,766)                    (723,583)
 Increases (decreases) in long-term debt                                                (8,030,834)                   1,928,400
 Purchase of treasury stock                                                                (59,631)                          --
                                                                                  ----------------             ----------------
                Net cash provided (used) by financing activities                        (8,354,010)                   1,436,837
                                                                                  ----------------             ----------------
 
                Net increase (decrease) in cash and cash equivalents                    (1,467,567)                     (13,877)
Cash and cash equivalents at beginning of period                                         1,492,720                       31,307
                                                                                  ----------------             ----------------
 
Cash and cash equivalents at end of period                                        $         25,153             $         17,430
                                                                                  ================             ================
 
Supplemental disclosure of cash flow information:
 Cash paid during the period for:
   Interest                                                                       $      6,237,000             $      5,028,000
                                                                                  ================             ================ 
   Income taxes                                                                   $      4,231,825             $      3,119,000
                                                                                  ================             ================ 
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       6
<PAGE>
 
                        UNITOG COMPANY AND SUBSIDIARIES

             NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
            NINE MONTHS ENDED OCTOBER 25, 1998 AND OCTOBER 26, 1997
                                        
Note 1
------

In the opinion of the Company, the accompanying unaudited condensed consolidated
financial statements reflect adjustments (consisting of normal recurring
accruals) necessary to present fairly the financial position of the Company as
of October 25, 1998, and the results of its operations and its cash flows for
the nine months ended October 25, 1998 and October 26, 1997 and the results of
its operations for the three months ended October 25, 1998 and October 26, 1997.
The results of operations for the nine months ended October 25, 1998 are not
necessarily indicative of the results to be expected for the full year. Certian
reclassifications have been made to prior years' financial statements to confrom
to the current year's presentation.


Note 2  Inventories
-------------------

The following is a summary of inventories at October 25, 1998 and January 25,
1998:

<TABLE>
<CAPTION>
                                October 25, 1998   January 25, 1998
                                -----------------  -----------------
         <S>                    <C>                <C>
         Raw materials               $ 3,837,358        $ 3,977,563
         Work in progress              3,889,395          2,683,273
         Finished goods               18,093,836         16,250,295
                                     -----------        -----------
                                      25,820,589         22,911,131
 
         Less LIFO allowance          (4,541,793)        (4,402,173)
                                     -----------        -----------
                                     $21,278,796        $18,508,958
                                     ===========        ===========
</TABLE>

Note 3 Cash Dividend
--------------------

In November 1998, the Board of Directors declared a $.09 per share cash dividend
payable on December 18, 1998 to stockholders of record on December 4, 1998.  The
$.09 per share dividend was a 20% increase over the semi-annual dividend paid
the prior year.


Note 4 Acquisitions
-------------------

During the first quarter of fiscal 1999, the Company acquired certain uniform
rental operations for approximately $13 million in cash.  The assets acquired
were primarily industrial uniform routes in Minnesota and Omaha, Nebraska and
industrial uniform and linen routes and production facilities in Bethlehem and
Harrisburg, Pennsylvania.  These acquisitions are expected to add over $10.5
million in annual rental revenues with an insignificant effect on net earnings.
These acquisitions were accounted for using the purchase method.

                                       7
<PAGE>
 
Note 5 Other Comprehensive Income
---------------------------------

During the first quarter of fiscal 1999 the Company adopted Financial Accounting
Standard No. 130, Reporting Comprehensive Income (FAS 130).  FAS 130 establishes
                  ------------------------------                                
standards for the reporting and display of items that affect stockholders'
equity but are not components of reported net earnings.  The Company's only
component of comprehensive income was foreign currency translation adjustments.
For the quarters ended October 25, 1998 and October 26, 1997 comprehensive
income differed from net earnings as follows:

<TABLE>
<CAPTION>
                                                 October 25, 1998              October 26, 1997   
                                              ----------------------        ---------------------
<S>                                           <C>                           <C>                                          
Net earnings                                  $           4,320,355         $           3,886,600     
Other comprehensive income, net of tax:                                                                                     
    Foreign currency translation adjustments                 26,383                         4,077    
                                              ---------------------         ---------------------
Comprehensive income                          $           4,346,738         $           3,890,677
                                              =====================         =====================          
</TABLE>

For the nine months ended October 25, 1998 and October 26, 1997 comprehensive
income differed from net earnings as follows:

<TABLE>
<CAPTION>
                                                October 25, 1998             October 26, 1997   
                                             ---------------------        ---------------------
<S>                                          <C>                          <C>
Net earnings                                 $         9,212,216          $         9,958,489
Other comprehensive income, net of tax:                              
    Foreign currency translation adjustments              52,789                       15,606
                                             -------------------          -------------------   
Comprehensive income                         $         9,265,005          $         9,974,095   
                                             ===================          ===================   
</TABLE>

Accumulated other comprehensive income consisted entirely of foreign currency
translation adjustments at October 25, 1998 and January 25, 1998.  Accumulated
other comprehensive income of $105,000 and $52,000 was included in retained
earnings at October 25, 1998 and January 25, 1998, respectively.

Note 6 Net Earnings Per Common Share
------------------------------------

Net earnings per common share and net earnings per common share assuming
dilution have been computed in accordance with FASB No. 128, Earnings Per Share.
                                                             ------------------
For the quarters ended October 25, 1998 and October 26, 1997 weighted average
common shares outstanding and weighted average common shares outstanding,
assuming dilution, were as follows:

<TABLE>
<CAPTION>
                                                                   October 25, 1998      October 26, 1997
                                                                   ----------------      ----------------
      <S>                                                          <C>                   <C> 
      Weighted average common                                                                
       shares outstanding                                               9,392,166             9,652,814
      Dilutive effect of in-the-money
       employee stock options                                              51,557                85,065
                                                                   --------------        --------------   
      Weighted average common shares                                                                      
       outstanding, assuming dilution                                   9,443,723             9,737,879   
                                                                   ==============        ==============   
</TABLE>

                                       8
<PAGE>
 
For the nine month periods ended October 25, 1998 and October 26, 1997 weighted
average common shares outstanding and weighted average common shares
outstanding, assuming dilution, were as follows:

<TABLE>
<CAPTION>
                                                  October 25, 1998      October 26, 1997                    
                                                  ----------------      ----------------                    
      <S>                                         <C>                   <C>                                 
      Weighted average common                                                                               
       shares outstanding                                9,388,801            9,648,093                    
      Dilutive effect of in-the-money                                                                       
       employee stock options                               56,368               72,847                    
                                                  ----------------      ----------------                    
      Weighted average common shares                                                                        
       outstanding, assuming dilution                    9,445,169            9,720,940                    
                                                  ================      ================                    
</TABLE>

For the quarters and nine month periods ended October 25, 1998 and October 26,
1997, stock options were the Company's only potentially dilutive securities.


Note 7 Sale of Linen Plants
---------------------------

In September 1998, the Company sold three rental laundry facilities to NuCentury
Textile Services, Inc., a privately held organization.  These principally linen
rental facilities were located in Long Beach, California, Duluth, Minnesota and
Toledo, Ohio.  Estimated annual revenues for these operations are approximately
$20 million.  These linen facilities were acquired in conjunction with prior
acquisitions that expanded geographically our industrial uniform rental network.
Some linen business we had acquired in Michigan was also sold with the
transaction.  The Company retained its industrial uniform rental business in
Toledo and will process it from existing facilities in Detroit.  The proceeds
from the sale of approximately $20 million were used to repay bank debt.  A
pretax gain on the sale of the linen business of approximately $2.1 million was
included as a special item in operating income during the third quarter of
fiscal 1999.

Included in rental revenues were $2.6 million and $5.0 million of sold linen
revenues for the quarter ended October 25, 1998 and October 26, 1997,
respectively.  Included in rental revenues were $12.4 million and $14.7 million
of sold linen revenues for the nine month periods ended October 25, 1998 and
October 26, 1997, respectively.  The operating results of the sold linen
operations, exclusive of the gain on the sale of the linen business, had an
insignificant effect on net earnings for both the quarter and nine month periods
ended October 25, 1998 and October 26, 1997, respectively.


Note 8 Legal Settlement and Environmental Charge
------------------------------------------------

During the third quarter of fiscal 1998, the Company reached a $2 million breach
of contract settlement with a former customer.  Also during the third quarter of
fiscal 1998, the Company charged $1 million to operations for additional costs
related to potential environmental and other matters.  The combined $1 million
gain from the legal recovery and the potential environmental costs was included
as a special item in operating income.

                                       9
<PAGE>
 
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

LIQUIDITY AND CAPITAL RESOURCES

Cash provided by operating activities was $10.4 million for the nine month
period ended October 25, 1998, a decrease of $13.0 million compared to last
year.  The decrease was due to reductions in accounts payable related to the
timing of payments for our fiscal 1998 capital expenditures and higher
inventories.  At October 25, 1998, the Company had $36.6 million available under
its foreign and domestic bank credit facilities.  The Company's capitalization
ratio was 47.5% at October 25, 1998 compared to 51.4% at January 25, 1998.

Working capital was $53.7 million at October 25, 1998 compared to $46.1 million
at January 25, 1998.  The decrease in accounts payable combined with higher
inventory levels to produce the $7.6 million increase in working capital.
Capital expenditures were $10.7 million through October 25, 1998, $11.3 million
less than the comparable period last year.  Capital expenditures for fiscal 1999
are expected to approximate $17 million.

During the first quarter of fiscal 1999, the Company acquired certain uniform
rental operations for approximately $13 million in cash.  The assets acquired
were primarily industrial uniform routes in Minnesota and Omaha, Nebraska and
industrial uniform and linen routes and production facilities in Bethlehem and
Harrisburg, Pennsylvania.  These acquisitions are expected to add over $10.5
million in annual rental revenues.  These acquisitions were accounted for using
the purchase method.

In September 1998, the Company sold three rental laundry facilities to NuCentury
Textile Services, Inc., a privately held organization.  These principally linen
rental facilities were located in Long Beach, California, Duluth, Minnesota and
Toledo, Ohio.  Estimated annual revenues for these operations were approximately
$20 million.  These linen facilities were acquired in conjunction with prior
acquisitions that expanded geographically our industrial uniform rental network.
Some linen business we had acquired in Michigan was also sold with the
transaction.  The Company retained its industrial uniform rental business in
Toledo and will process it from existing facilities in Detroit.  The proceeds
from the sale of approximately $20 million were used to repay bank debt.  A
pretax gain on the sale of the linen business of approximately $2.1 million was
included as a special item in operating income during the third quarter of
fiscal 1999.

In November 1998, the Board of Directors declared a $.09 per share cash dividend
payable on December 18, 1998 to stockholders of record on December 4, 1998. The 
$.09 per share dividend was a 20% increase over the semi-annual dividend paid 
the prior year.

Management believes that cash generated from operations and its bank credit
facilities will be sufficient to meet its cash requirements for acquisitions and
capital expenditures in the foreseeable future.

                                       10
<PAGE>
 
RESULTS OF OPERATIONS

Third quarter fiscal 1999 compared to third quarter fiscal 1998
---------------------------------------------------------------

Revenues for the third quarter of fiscal 1999 were $69 million, about the same
as the $70 million last year.  In September 1998 Unitog sold three linen
facilities consistent with its strategic focus on the industrial rental
business.  Excluding revenues from the sold linen operations in both periods,
third quarter rental revenues of $54 million in the quarter increased by $3.1
million or 6% over the prior year.  The increase in rental revenues was created
by a combination of internal growth and acquired operations.  Direct sales for
the third quarter of fiscal 1999 were $12 million, a decrease of $1.6 million or
12% below the comparable period last year.  The decrease in Direct sales was
principally due to volume declines in four national account programs and fewer
implementations of new image programs with national accounts.

Operating income for the third quarter of fiscal 1999 was $8.9 million, an
increase of $1.1 million or 14% greater than the comparable period last year.
Operating income for both fiscal 1999 and fiscal 1998 were affected by special
items.  A gain on the sale of the linen business of approximately $2.1 million
was included as a special item in operating income during the third quarter of
fiscal 1999.  During the third quarter of fiscal 1998 the Company recorded as a
special item a combination of a legal recovery and a potential environmental
charge which increased operating income by $1.0 million.  Excluding the effect
of these special items from both years, operating income was approximately the
same as last year.

Net earnings for the third quarter of fiscal 1999 were $4.3 million, an increase
of $434,000 or 11% above the comparable period last year.  Excluding the effect
of special items from both fiscal periods, net earnings were $3.0 million during
the third quarter compared to $3.3 million last year, a decrease of $300,000 or
9%. Higher interest expense created the decrease in net earnings. Net earnings
for the third quarter of fiscal 1999 were $.46 per diluted share, an increase of
$.06 per diluted share or 15% greater than the comparable period last year.
Excluding the effect of special items from both fiscal 1999 and fiscal 1998, net
earnings were $.32 per diluted share compared to $.34 per diluted share,
respectively. Weighted average shares outstanding, assuming dilution, decreased
by 3% due to stock repurchases initiated under the Company's stock repurchase
program.

Nine months fiscal 1999 compared to nine months fiscal 1998
-----------------------------------------------------------

Revenues for the nine months ended October 25, 1998 were $212 million, an
increase of $4 million or 2% over the comparable period last year.  Excluding
revenues from the sold linen operations in both periods, rental revenues were
$161 million, an increase of $11 million or 7% over last year.  The increase in
rental revenues was created by a combination of internal growth and acquired
operations.  Direct sales for the first nine months of fiscal 1999 were $38
million, a decrease of $5 million or 11% less than the comparable period last
year.  The decrease in Direct sales was due to volume losses within four
national account programs and fewer implementations of new image programs.

Operating income for the nine months ended October 25, 1998 was $20.6 million
approximately the same as last year. Operating income for both fiscal 1999 and
fiscal 1998 were affected by special items.  A gain on the sale of the linen
business of approximately $2.1 million was included as a special item in
operating income during the third quarter of fiscal 1999.  During the third
quarter of fiscal 1998 the Company recorded as a special item a combination of a
legal recovery and a potential environmental charge which increased operating
income by approximately $1.0 million.  Excluding the effect of these special
items from both fiscal periods, operating income for the nine months ended
October 25, 1998 decreased $1.1 

                                      11

<PAGE>
 
million or 5% below the comparable period last year. Lower profitability of the
Direct sales business created the decrease in operating income.

Net earnings for the nine months ended October 25, 1998 were $9.2 million, a
decrease of $750,000 or 8% below the comparable period last year.  Net earnings
per diluted share were $.98 for the nine months ended October 25, 1998, a
decrease of $.04 per diluted share below the comparable period last year.
Excluding the effect of special items from both fiscal 1999 and fiscal 1998, net
earnings were $7.9 million or $.84 per diluted share for the first nine months
of fiscal 1999 compared to $9.3 million or $.96 per diluted share for the
comparable period last year.  Lower operating profitability of the Direct sales
business created the decrease in net earnings and net earnings per diluted
share.

                                     OTHER
                                     -----

In November 1998, the Company announced that it retained investment banking
counsel to advise on future strategies for enhancing shareholder value.
Goldsmith, Agio, Helms & Company and George K. Baum & Company were retained to
advise on strategic alternatives including the sale of the Company, a strategic
merger, or other changes in business strategy. Information regarding the Company
has been provided to a number of companies under confidentiality agreements and
detailed discussions are currently underway with a select group of parties.


                                   YEAR 2000
                                   ---------

The Year 2000 issue involves computer programs and embedded logic devices that
utilize two digits rather than four digits to define the applicable year and the
possible failure of those programs and devices to properly recognize date-
sensitive information when the year changes to 2000.  Systems that do not
properly recognize date-sensitive information could generate erroneous data or
could cause a system failure. The Company is conducting reviews of its computer
systems and those of its significant business relationships to identify those
that could be affected by the Year 2000 issue. The Company has proactively
changed some of its mission critical systems including its data processing
equipment, its communication equipment, and its core business software
applications to respond to increased customer service opportunities with its
present customers and vendors and to develop new opportunities with future
prospective customers and vendors. The Company is currently testing the systems
referenced above, along with other mission critical and non-mission critical
systems to determine Year 2000 compliance. The Company intends to complete this
testing by March 31, 1999. The Company plans to develop formal contingency plans
for any mission critical systems not expected to be compliant prior to the
beginning of Year 2000. The Company believes its contingency plans will be
completed by May 31, 1999. The Company believes it will complete the remediation
of Year 2000 issues on its mission critical systems by June 30, 1999. Future
costs relating to mitigation of Year 2000 risks are not expected to be material.
There can be no assurance that the Company's key information technology systems,
as well as those of its significant business relationships, will be compliant or
that any such failure would not have an adverse effect on the Company's systems
and operations.


                          FORWARD LOOKING STATEMENTS
                          --------------------------

The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
certain forward-looking statements.  This Form 10-Q contains forward-looking
statements that reflect the Company's current views with respect to future
events and financial performance.  These forward-looking statements are subject
to certain risks and uncertainties that could cause actual results to differ
materially from historical results or those anticipated.  The words "should,"
"believe," "expect," "anticipate," "intend," "estimate," and other expressions
that indicate future events and trends identify forward-looking statements.
Actual future results and trends may differ materially from historical results
or those anticipated depending on a variety of factors, including, but not
limited to, performance of acquisitions; economic and business changes;
fluctuations in the cost of materials; strikes and unemployment levels; demand
and price for the Company's products and services; successfully addressing Year
2000 issues; and the outcome of pending and future litigation and environmental
matters.

                                       12
<PAGE>
 
                          PART II - OTHER INFORMATION
                          ---------------------------

Item 1.  Legal Proceedings
         -----------------

The Company has been named as a potentially responsible party, and thus faces
joint and several liability, under the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA") as a result of alleged environmental
contamination in Tempe, Arizona.  Unitog's facility in Tempe is located within
the South Indian Bend Wash Federal Superfund ("SIBW") site.  The SIBW site is
several square miles in size and is designated for action because of the
presence of volatile organic compounds in soil and groundwater there.  Soil
testing at the Company's facility detected volatile organic compounds in the
soil and the Company is now in the process of remediating the soil at its
facility.  The Company's estimate of the expense related to soil remediation at
its facility has been accrued and charged to operating expense.  Groundwater
testing at the Company's property has detected what the Company believes are
very low levels of volatile organic compound contamination on site.  The United
States Environmental Protection Agency ("EPA") has made a preliminary
determination that groundwater contamination in the vicinity of the Company's
plant does not warrant remediation at this time and will be appropriate for
monitored natural attenuation.  It is possible that the EPA will attempt to
collect from the potentially responsible parties the costs it has incurred with
respect to the SIBW site.  It is not possible at this time to determine the
amount of costs incurred by the EPA or to determine the Company's share of such
costs or when the EPA may seek to collect such costs.  The Company does not
believe that its liability, if any, with respect to the SIBW site will be
material to the consolidated financial position of the Company.  The charge, if
any, to net earnings during any future quarterly period for costs should the EPA
seek reimbursement from the Company of its costs could have a material adverse
effect on net earnings of that quarterly period.

Item 5.  Other Information
         -----------------

In November 1998, the Company announced that it retained investment banking
counsel to advise on future strategies for enhancing shareholder value.
Goldsmith, Agio, Helms & Company and George K. Baum & Company were retained to
advise on strategic alternatives including the sale of the Company, a strategic
merger, or other changes in business strategy. Information regarding the Company
has been provided to a number of companies under confidentiality agreements and
detailed discussions are currently underway with a select group of parties.

 
Item 6.  Exhibits and Reports on Form 8-K
         --------------------------------
 
      (a)  Exhibits.

      4(a) Amendment No. 6 to Loan and letter of Credit Reimbursement Agreement,
           dated June 29, 1998, between Unitog Company, Unitog Rental Services,
           Inc., UMB Bank, Harris Trust and Savings Bank and The First National
           Bank of Chicago.

     10(a) Severance and Noncompetition Agreement dated November 2, 1998,
           between Unitog Company and G. Jay Arrowsmith.

     10(b) Severance and Noncompetition Agreement dated October 15, 1998,
           between Unitog Company and Robert M. Barnes.

     10(c) Severance and Noncompetition Agreement dated December 1, 1998,
           between Unitog Company and Ronald J. Harden.

                                       13
<PAGE>
 
     10(d) Severance and Noncompetition Agreement dated October 15, 1998,
           between Unitog Company and J. Craig Peterson.

     10(e) Severance and Noncompetition Agreement dated October 15, 1998,
           between Unitog Company and Randolph K. Rolf

     10(f) Severance and Noncompetition Agreement dated October 15, 1998,
           between Unitog Company and Terence C. Shoreman.
  
     10(g) Severance and Noncompetition Agreement dated October 29, 1998,
           between Unitog Company and Robert L. Wilhelm.

     10(h) Retention Agreement with G. Jay Arrowsmith.

     10(i) Retention Agreement with Ronald J. Harden.

     10(j) Retention Agreement with Robert L. Wilhelm

     27    Financial Data Schedule for the quarter ended October 25, 1998.

     99    Press Release dated November 30, 1998.

       (b) Reports on Form 8-K.

           Unitog Company did not file any reports on Form 8-K during the
           quarter ended October 25, 1998.

                                       14
<PAGE>
 
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.

                                  Unitog Company

 
Dated :  December 7, 1998         By: /s/ J. Craig Peterson
                                      ----------------------
                                      J. Craig Peterson
                                      Executive Vice President
                                      Chief Administrative and Financial Officer
                                      (Duly Authorized Officer)
 

                                       15