<PAGE>

                         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 March 28, 1998 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 May 7, 1998
Common Stock, par value $.50 per share                   19,013,152

          CLASS B                                 Outstanding May 7, 1998
Common Stock, par value $.50 per share                    1,474,996


<PAGE>

                                      PART I.
                               FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS

G & K SERVICES, INC. AND SUBSIDIARIES



<TABLE>
<CAPTION>
                                                                   March 28,
                                                                     1998          June 28,
ASSETS                       (In thousands, except share data)   (Unaudited)        1997
---------------------------------------------------------------------------------------------
<S>                                                              <C>            <C>
CURRENT ASSETS
     Cash and cash equivalents                                    $   9,155      $   6,986
     Accounts receivable, less allowance for doubtful
       accounts of $2,262 and $1,324                                 56,814         41,831
     Inventories                                                     78,656         59,799
     Prepaid expenses                                                 5,561          4,512
---------------------------------------------------------------------------------------------
Total current assets                                                150,186        113,128
---------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
     Land                                                            25,192         19,676
     Buildings and improvements                                      84,109         68,683
     Machinery and equipment                                        178,158        143,475
     Automobiles and trucks                                          34,140         27,434
     Less accumulated depreciation                                 (127,541)      (109,547)
---------------------------------------------------------------------------------------------
Total property, plant and equipment                                 194,058        149,721
---------------------------------------------------------------------------------------------
OTHER ASSETS
     Goodwill, net                                                  141,388         33,856
     Restrictive covenants and customer lists, net                   45,843          6,016
     Other, principally retirement plan assets                       13,393          9,244
     Assets held for sale                                            60,367              -
---------------------------------------------------------------------------------------------
Total other assets                                                  260,991         49,116
---------------------------------------------------------------------------------------------
                                                                  $ 605,235      $ 311,965
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
     Accounts payable                                             $  15,655      $  13,304
     Accrued expenses -
       Salaries and employee benefits                                17,206         11,556
       Other                                                         20,393         12,133
     Deferred income taxes                                           10,170         10,268
     Current maturities of long-term debt                            14,583         25,000
---------------------------------------------------------------------------------------------
Total current liabilities                                            78,007         72,261
LONG-TERM DEBT, LESS CURRENT MATURITIES                             318,901         54,284
DEFERRED INCOME TAXES                                                 9,205          9,504
OTHER NONCURRENT LIABILITIES                                          8,858          6,929
---------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
     Common stock, $.50 par
       Class A, 50,000,000 shares authorized, 19,013,152
         and 18,986,629 shares issued and outstanding                 9,507          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                                      23,463         22,684
     Retained earnings                                              166,164        144,036
     Deferred compensation                                           (2,329)        (2,029)
     Unrealized gain on investments held for sale                       399            306
     Cumulative translation adjustment                               (7,678)        (6,241)
---------------------------------------------------------------------------------------------
Total stockholders' equity                                          190,264        168,987
---------------------------------------------------------------------------------------------
                                                                  $ 605,235      $ 311,965
---------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              2

<PAGE>



CONSOLIDATED STATEMENTS OF INCOME

G & K SERVICES, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                  For the Three Months Ended     For the Nine Months Ended
                                                  -----------------------------------------------------------
                                                    March 28,      March 29,      March 28,      March 29,
             (In thousands, except per share data)    1998           1997           1998           1997
-------------------------------------------------------------------------------------------------------------
<S>                                                <C>            <C>            <C>           <C>
REVENUES
     Rental operations                              $123,015       $ 84,427       $360,309       $246,662
     Direct sales                                      4,456          4,038         13,849         12,551
-------------------------------------------------------------------------------------------------------------
       Total revenues                                127,471         88,465        374,158        259,213
-------------------------------------------------------------------------------------------------------------
EXPENSES
     Cost of rental operations                        71,882         45,826        209,059        134,195
     Cost of direct sales                              3,224          3,030          9,934          9,473
     Selling and administrative                       25,145         20,753         75,530         60,178
     Depreciation                                      6,871          5,118         19,308         14,559
     Amortization of intangibles                       2,305            619          7,104          1,679
-------------------------------------------------------------------------------------------------------------
       Total operating expenses                      109,427         75,346        320,935        220,084
-------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS                                18,044         13,119         53,223         39,129
     Interest expense                                  5,418          1,560         16,299          4,828
     Other income, net                                  (500)          (491)        (1,292)          (994)
-------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                            13,126         12,050         38,216         35,295
     Provision for income taxes                        5,155          4,681         15,013         13,789
-------------------------------------------------------------------------------------------------------------
NET INCOME                                          $  7,971       $  7,369       $ 23,203       $ 21,506
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
     Basic Weighted Average Number
     of Shares Outstanding                            20,367         20,327         20,367         20,327
BASIC EARNINGS PER COMMON SHARE                     $   0.39       $   0.36       $   1.14       $   1.06
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
     Diluted Weighted Average Number
     of Shares Outstanding                            20,446         20,410         20,439         20,405
DILUTED EARNINGS PER COMMON SHARE                   $   0.39       $   0.36       $   1.14       $   1.05
-------------------------------------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these statements.


                                                                              3

<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS
G&K SERVICES, INC. AND SUBSIDIARIES


<TABLE>
<CAPTION>
                                                       For the Three Months Ended     For the Nine Months Ended
                                                       -----------------------------------------------------------
                                                         March 28,       March 29       March 28       March 29,
                   (In thousands, except per share data)    1998           1997           1998           1997
------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>            <C>            <C>            <C>
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net Income                                         $   7,971      $   7,369      $  23,203      $  21,506
     Adjustments to reconcile net income to net cash
       provided by operating activities:
       Depreciation and amortization                        9,176          5,737         26,412         16,238
       Deferred income taxes                                  463           (107)          (320)          (332)
       Changes in current operating items:
         Inventories                                          (74)        (1,178)        (4,687)        (5,916)
         Accounts receivable and prepaid expenses           9,789          2,813         (6,067)        (3,767)
         Accounts payable and other current
           liabilities                                     (2,359)        (5,645)        15,841         (2,969)
       Other, net                                          (1,332)        (1,137)           989            358
------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                  23,634          7,852         55,371         25,118
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
     Property, plant and equipment additions, net         (11,065)        (7,623)       (28,996)       (25,587)
     Business acquisitions                                 (1,285)             -       (281,842)        (1,948)
     Change in assets held for sale                         1,742              -          5,543              -
     Sale of business assets                                2,433              -          2,433              -
     (Purchase) sales of investments                            9           (207)          (403)          (479)
------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                     (8,166)        (7,830)      (303,265)       (28,014)
------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from debt financing                           9,583            565        366,931         13,335
     Repayments on line of credit and other
       long-term debt, net                                (25,479)        (1,187)      (115,893)       (14,980)
     Cash dividends paid                                     (359)          (359)        (1,075)        (1,074)
     Sale of common stock                                      98              8            100             12
------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities      (16,157)          (973)       250,063         (2,707)
------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS             (689)          (951)         2,169         (5,603)

CASH AND CASH EQUIVALENTS:
     Beginning of period                                    9,844          2,230          6,986          6,882
------------------------------------------------------------------------------------------------------------------
     End of period                                      $   9,155      $   1,279      $   9,155      $   1,279
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION:

     Cash paid for -
       Interest                                         $   7,030      $   1,614      $  16,907      $   4,757
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
       Income taxes                                     $   3,474      $   3,682      $  12,349      $  12,524
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
</TABLE>



The accompanying notes are an integral part of these statements.


                                                                              4

<PAGE>

                        G&K SERVICES, INC. AND SUBSIDIARIES

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

        Three and nine month periods ended March 28, 1998 and March 29, 1997
                                    (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 March 28, 1998 and June 28, 1997, and the results of
     operations and the changes in financial position for the three and nine
     months ended March 28, 1998 and March 29, 1997.  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 and nine month periods ended
     March 28, 1998, and March 29, 1997, 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 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
          In the second quarter of fiscal 1998, the Company adopted SFAS No.
     128, "Earnings per Share," which is effective for interim periods ending
     after December 15, 1997.  As a result, all prior period earnings per share
     data has been restated.  The adoption of SFAS No. 128 did not have a
     significant impact on previously reported earnings per share.  Basic
     earnings per common share was computed by


                                                                              5

<PAGE>

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



<TABLE>
<CAPTION>
                                                        Three Months Ended           Nine Months Ended
                                                    ---------------------------------------------------------
                                                    March 28,      March 29,      March 28,      March 29,
                                                      1998           1997           1998           1997
                                                    ---------------------------------------------------------
<S>                                                <C>            <C>            <C>           <C>
Weighted average number of common
shares outstanding                                    20,367         20,327         20,367         20,327
                                                    ---------------------------------------------------------

Shares used in computation of
basic earnings per share                              20,367         20,327         20,367         20,327

Weighted average effect of non-vested
restricted stock grants                                   48             40             41             35

Weighted average common shares
issuable upon the exercise of
options & other                                           31             43             31             43

Shares used in computation of                       ---------------------------------------------------------
diluted earnings per share                            20,446         20,410         20,439         20,405
                                                    ---------------------------------------------------------
                                                    ---------------------------------------------------------
</TABLE>


     RECLASSIFICATIONS
          Certain prior period amounts have been reclassified to conform to the
     1998 presentation.  These reclassifications have no effect on net income or
     total stockholders' equity as previously reported.

     RECENT ACCOUNTING PRONOUNCEMENTS
          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.  The Company will adopt this statement
     in fiscal 1999.

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, Inc. (NLS) for
     approximately $279 million in cash.

          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
     exceed the tentative fair values assigned to tangible assets by
     approximately $153.6 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.

          In connection with the asset purchase from NLS, 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,


                                                                              6

<PAGE>

     earnings or losses from these nine facilities are excluded from the
     earnings reported for the Company.  For the three month period ended March
     28, 1998, losses excluded from the Company's Statement of Income totaled
     $412,000, including allocated interest expense of $1,103,000.  For the nine
     month period ended March 28, 1998, losses excluded from the Company's
     Statement of Income totaled $169,000, including allocated interest expense
     of $3,134,000.


          The following unaudited pro forma condensed results of operations for
     the three and nine month periods ended March 28, 1998 and March 29, 1997
     have been prepared as if the NLS transaction occurred on June 29, 1997 and
     June 30, 1996, respectively (in thousands, except per share amounts),

<TABLE>
<CAPTION>
                                                  Nine Months Ended
                                            March 28, 1998    March 29, 1997
                                            --------------    --------------
<S>                                        <C>               <C>
Revenues                                       $379,332            $350,398

Income from Operations                           53,678              46,965

Net Income                                       23,160              20,012

Basic Earnings per common share                $   1.14            $   0.98

Diluted Earnings per common share              $   1.13            $   0.98
</TABLE>

          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

          The Company maintains a $425 million credit facility.  The credit
     facility includes (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 March 28, 1998, borrowings outstanding under the
     term loan were $290,901,000 and under the revolving credit facility were
     $42,584,000.  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"), or Canadian Prime
     for Canadian borrowings, based on a leverage ratio calculated on a
     quarterly basis.  Advances outstanding as of March 28, 1998 bear interest
     at the Eurodollar Rate or Canadian Prime Rate plus 0.95%.  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 as of
     March 28, 1998 was 0.30%.

          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


                                                                              7

<PAGE>

     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 other domestic
     subsidiaries and 65% of the stock of the Company's Canadian subsidiaries.
     As of March 28, 1998, the Company was in compliance with all debt
     covenants.


4.   ASSETS HELD FOR SALE

               On January 16, 1998, the Company sold selected linen assets
     classified as Assets Held for Sale on the balance sheet for approximately
     $2.4 million in cash.  These assets, including original purchase goodwill,
     had a book value of approximately $2.4 million.

               On May 1, 1998, the Company sold selected linen assets and
     uniform rental assets for approximately $75.0 million in cash, subject to
     certain post-closing purchase price adjustments.  This sale included assets
     classified as Assets Held for Sale on the balance sheet having a book value
     of approximately $53.7 million and other operating assets having a book
     value of approximately $21.3 million.  Proceeds from the sale will be used
     to reduce the Company's outstanding bank debt.  This transaction completes
     the sale of eight of the nine linen facilities acquired from NLS that were
     held for sale.


                                                                              8

<PAGE>

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

     The percentage relationships to total revenues of certain income and
expense items for the three and nine month periods ended March 28, 1998 and
March 29, 1997, and the percentage changes in these income and expense items
between periods are contained in the following table:



<TABLE>
<CAPTION>
                                                      PERCENTAGE OF NET SALES
                                              THREE MONTHS                  NINE MONTHS                   PERCENTAGE
                                                 ENDED                         ENDED                        CHANGE
                                      ------------------------------------------------------     ----------------------------
                                                                                                 Three Months     Nine Months
                                        March 28,      March 29,      March 28,      March 29,    FY 1998         FY 1998
                                         1998           1997           1998            1997       vs. FY 1997    vs. FY 1997
                                      ------------------------------------------------------     ----------------------------
<S>                                  <C>              <C>            <C>           <C>           <C>            <C>
Revenues:
   Rental                                96.5%          95.4%          96.3%          95.2%          45.7%          46.1%
   Direct                                 3.5            4.6            3.7            4.8           10.4           10.3
                                      ------------------------------------------------------
       Total Revenues                   100.0          100.0          100.0          100.0           44.1           44.3
Expenses:
   Cost of Rental Sales                  58.4           54.3           58.0           54.4           56.9           55.8
   Cost of Direct Sales                  72.4           75.0           71.7           75.5            6.4            4.9
                                      ------------------------------------------------------
       Total Cost of Sales               58.9           55.2           58.5           55.4           53.7           52.4

   Selling and Administrative            19.7           23.5           20.2           23.2           21.2           25.5
   Depreciation                           5.4            5.8            5.2            5.6           34.3           32.6
   Amortization of Intangibles            1.8            0.7            1.9            0.7          272.4          323.1
                                      ------------------------------------------------------
Income from Operations                   14.2           14.8           14.2           15.1           37.5           36.0

Interest Expense                          4.3            1.8            4.3            1.9          247.3          237.6
Other (Income) Expense, net              (0.4 )         (0.6 )         (0.3 )         (0.4 )          1.8           30.0
                                      ------------------------------------------------------
Income Before Income Taxes               10.3           13.6           10.2           13.6            8.9            8.3
Provision for Income Taxes                4.0            5.3            4.0            5.3           10.1            8.9
                                      ------------------------------------------------------
Net Income                                6.3%           8.3%           6.2%           8.3%           8.2%           7.9%
                                      ------------------------------------------------------
                                      ------------------------------------------------------
</TABLE>

     Total revenues for the third quarter of fiscal 1998 increased 44.1% to
$127.5 million from $88.5 million in the third quarter of fiscal 1997 and
increased 44.3% to $374.2 million for the first nine months of fiscal 1998 from
$259.2 million in the same period of fiscal 1997.  Revenue attributable to the
acquisition of certain assets of National Linen Service (NLS) was $30.4 million
for the quarter and $87.4 million for the nine month period.  Excluding this
increase and excluding prior year Toronto Linen operations which were sold in
fiscal 1997, the revenue growth was 10.7% for the quarter and 11.7% for the
first nine months of fiscal 1998.

     Rental revenue growth for the third quarter accounted for $38.6 million, or
a 45.7% increase and for the first nine months accounted for $113.6 million, or
a 46.1% increase.  U.S. and Canadian annual rental revenues increased 11.3% and
10.0%, respectively for the third quarter and increased 12.3% and 11.2%
respectively, for the first nine months (excluding revenues from assets acquired
from NLS and revenues from Toronto Linen).  The improvement is primarily
attributable to cleanroom and national account sales as well as steady growth in
the Company's traditional garment leasing operations.

     Total direct sales to outside customers increased 10.4% to $4.5 million for
the third quarter of fiscal 1998 compared to $4.0 million in the same period of
fiscal 1997.  Total direct sales to outside customers increased 10.3% to $13.8
million for the first nine months of fiscal 1998 from $12.6 million in the same
period of fiscal 1997.  This increase is largely attributable to the success of
a seasonal promotion and increases in catalog sales.  Cost of direct sales, as a
percentage of direct sales, decreased to 72.4% for the third quarter of fiscal
1998 from 75.0% for the same period of fiscal 1997 and decreased to 71.7% for
the first nine months of fiscal 1998 from 75.5% for the same period of fiscal
1997.


                                                                              9

<PAGE>

     Cost of rental operations increased 56.9% to $71.9 million for the third
quarter of fiscal 1998 from $45.8 million in the same period of fiscal 1997 and
rose 55.8% to $209.1 million for the first nine months of fiscal 1998 from
$134.2 million in the same period of fiscal 1997.  As a percentage of rental
revenues, these costs increased to 58.4% for the third quarter of fiscal 1998
compared to 54.3% for the same period in fiscal 1997 and increased to 58.0% for
the first nine months of fiscal 1998 from 54.4% in the same period of fiscal
1997.  The Company attributes the increase primarily to merchandise and
production costs at the new locations acquired in the NLS transaction.

     Selling and administrative expenses increased 21.2% to $25.1 million in the
third quarter of fiscal 1998 from $20.8 million in the same period in fiscal
1997 and increased 25.5% to $75.5 million for the first nine months of fiscal
1998 from $60.2 million in the same period in fiscal 1997.  As a percentage of
revenues, selling and administrative expenses decreased to 19.7% in the third
quarter of fiscal 1998 from 23.5% in the same period in fiscal 1997 and
decreased to 20.2% in the nine month period of fiscal 1998 from 23.2% 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 leveraging of corporate costs following the NLS transaction.

     Depreciation expense increased 34.3% to $6.9 million in the third quarter
of fiscal 1998 from $5.1 million in the same period of fiscal 1997 and increased
32.6% to $19.3 million for the first nine months of fiscal 1998 from $14.6
million in the same period of fiscal 1997.  As a percentage of consolidated
revenue, depreciation expense decreased to 5.4% in the third quarter of fiscal
1998 from 5.8% for the same period in fiscal 1997 and decreased to 5.2% for the
nine month period of fiscal 1998 from 5.6% for the same period in fiscal 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 $11.1 million compared to $7.6 million
in the prior year's quarter, and for the nine month period they were $29.0
million compared to $25.6 million in the prior year.

     Amortization expense increased to $2.3 million in the third quarter of
fiscal 1998 from $.6 million in the second quarter of fiscal 1997 and increased
to $7.1 million in the first nine months of fiscal 1998 from $1.7 million in the
same period of fiscal 1997.  This increase is attributable to the acquisition of
NLS assets.

     Operating income increased 37.5% to $18.0 million in the third quarter of
fiscal 1998 from $13.1 million in the same period of fiscal 1997 and increased
36.0% to $53.2 million for the first nine months of fiscal 1998 from $39.1
million in the same period of fiscal 1997.  Operating margins decreased to 14.2%
for the third quarter of fiscal 1998 from 14.8% in the same period of fiscal
1997 and decreased to 14.2% for the nine month period of fiscal 1998 from 15.1%
in the same period of fiscal 1997.  U.S. operating margins declined to 12.7% for
the third quarter of  fiscal 1998 from 13.7% in the same period of fiscal 1997
and declined to 12.7% for the nine month period of fiscal 1998 from 14.1% in the
same period of fiscal 1997.

     Interest expense was $5.4 million for the third quarter of fiscal 1998, up
from $1.6 million in the same period of fiscal 1997 and was $16.3 million for
the first nine months of fiscal 1998, up from $4.8 million in the same period of
fiscal 1997.  This was largely due to additional borrowings to finance the NLS
acquisition.  The Company's effective tax rate increased to 39.3% in the third
quarter of fiscal 1998 from 38.8% in the same period of fiscal 1997 and it
increased to 39.3% in the nine month period of fiscal 1998 from 39.1% in the
same period of fiscal 1997.

     Net income rose 8.2% to $8.0 million in the third quarter of fiscal 1998
from $7.4 million in the same period of fiscal 1997 and rose 7.9% to $23.2
million in the first nine months of fiscal 1998 from $21.5 million in the same
period of fiscal 1997.  Basic and diluted earnings per share for the third
quarter were $.39 per share compared with $.36 for the prior year quarter.
Basic and diluted earnings per share for the first nine months of fiscal 1998
increased to $1.14 from basic earnings per share of $1.06 and diluted earnings
per share of $1.05 in the same period of fiscal 1997.  Net income margins
decreased to 6.3% for the third quarter of fiscal 1998 compared with 8.3% in the
third quarter of fiscal 1997 and decreased to 6.2% for the nine month period of
fiscal 1998 compared with 8.3% in the nine month period of fiscal 1997.


                                                                             10

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     Cash flow from operating activities increased to $23.6 million in the third
quarter of fiscal 1998 from $7.9 million in the same period of fiscal 1997 and
increased to $55.4 million in the first nine months of fiscal 1998 from $25.1
million in fiscal 1997.  The fiscal 1998 increase resulted from increases in net
income and depreciation and amortization while the decrease in accounts
receivable and prepaid expenses was greater in the third quarter of fiscal 1998
when compared to the third quarter of 1997. Working capital at March 28, 1998
was $72.2 million, up 92.3% from $37.5 million at March 29, 1997.  The increase
reflects the acquisition of NLS assets.

     Cash used in financing activities was $16.2 million in the third quarter of
fiscal 1998 and $1.0 million in the same period of fiscal 1997. Cash provided by
financing activities was $250.1 million in the nine month period of fiscal 1998
and cash used for financing activities was $2.7 million in the same period of
fiscal 1997.  $355.8 million of cash was obtained by issuing debt in the first
quarter of fiscal 1998 primarily for the acquisition of selected assets of NLS.
The Company's ratio of debt to total capitalization increased from 31.9% at June
28, 1997 to 63.7% at the end of March 1998.

     Cash used in investing activities was $8.2 million in the third quarter of
fiscal 1998 and $7.8 million in the same period of fiscal 1997.  Cash used in
investing activities was $303.3 million in the nine  month period of fiscal 1998
and $28.0 million in the same period 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.  G&K is
completing an extensive review of its business to determine whether or not its
software and related technologies are year 2000 compliant, as well as the
remedial action and related costs associated with required modifications or
replacements.  A significant amount of information has been collected and
analyzed as a part of this review;  however, the process will not be completed
until the end of the first quarter of fiscal year 1999.  The Company has begun
to implement solutions and 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 any new software will be capitalized over the software's useful life.  G&K is
also contacting critical suppliers of products and services to determine that
the suppliers' operations and the products and services they provide are year
2000 capable or to monitor their progress toward year 2000 capability.  There
can be no assurance that another company's failure to ensure year 2000
capability would not have an adverse effect on the Company.

     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 then 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, Co. and other
domestic subsidiaries and 65% of the stock of Canadian subsidiaries.

     Stockholders' equity grew 18.4% to $190.3 million at March 28, 1998,
compared with $160.7 million at the end of the third quarter of 1997.  G&K's
return on average equity decreased to 12.9% in the nine month period of fiscal
1998 compared with 14.3% 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


                                                                             11

<PAGE>

the acquisition of assets from NLS; unforeseen operating risks; the availability
of capital to finance planned growth; competition within the uniform leasing
industry; and the effects of economic conditions.


                                                                             12
<PAGE>

                                      PART II

                                 OTHER INFORMATION


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

     None.


ITEM 6.  Exhibits and Reports on Form 8-K


     a.   EXHIBITS

               Exhibit 27.1 - Financial Data Schedule, (for SEC use only)

               Exhibit 27.2 - Financial Data Schedule, Fiscal year ends 1995,
                              1996 and 1997, All Restated (for SEC use only)

               Exhibit 27.3 - Financial Data Schedule, Quarter 1 and 2 of Fiscal
                              year 1998, Quarters 1, 2 and 3 of
                              Fiscal year 1997, All Restated (for SEC use only)

               Exhibit 27.4 - Financial Data Schedule, Quarters 1, 2 and 3 of
                              Fiscal year 1996, All Restated (for SEC
                              use only)


     b.   Reports on Form 8-K.

              None.


                                                                             13

<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.




                                        G&K SERVICES, INC.
                                        (Registrant)


























Date:              May 12, 1998                     s/Timothy W. Kuck
         --------------------------------         ------------------------------

                                                      Timothy W. Kuck
                                                      Chief Financial Officer
                                                      (Principal Financial 
                                                      Officer)



                                                    s/Michael F. Woodard
                                                  ------------------------------
                                                      Michael F. Woodard
                                                      Controller
                                                      (Principal Accounting 
                                                      Officer)


                                                                             14