<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 December 26, 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 February 4, 1998
Common Stock, par value $.50 per share                       19,021,363

             CLASS B                               Outstanding February 4, 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>
                                                                                               December 26,
                                                                                                  1998                 June 27,
ASSETS                                               (In thousands, except share data)         (Unaudited)               1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                           <C>                     <C>
CURRENT ASSETS
      Cash and cash equivalents                                                                  $10,063                $11,975
      Accounts receivable, less allowance for doubtful
         accounts of $3,920 and $2,392                                                            60,484                 56,933
      Inventories                                                                                 79,949                 77,210
      Prepaid expenses                                                                             7,047                  7,295
------------------------------------------------------------------------------------------------------------------------------------
         Total current assets                                                                    157,543                153,413
------------------------------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT
      Land                                                                                        25,625                 25,801
      Buildings and improvements                                                                  89,565                 89,683
      Machinery and equipment                                                                    173,291                154,048
      Automobiles and trucks                                                                      36,232                 36,531
      Less accumulated depreciation                                                             (129,131)              (118,378)
------------------------------------------------------------------------------------------------------------------------------------
         Total property, plant and equipment                                                     195,582                187,685
------------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS
      Goodwill, net                                                                              129,348                131,899
      Restrictive covenants and customer lists, net                                               39,988                 42,310
      Other, principally retirement plan assets                                                   13,745                 16,535
------------------------------------------------------------------------------------------------------------------------------------
         Total other assets                                                                      183,081                190,744
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                $536,206               $531,842
------------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
      Accounts payable                                                                           $19,648                $16,103
      Accrued expenses
         Salaries and employee benefits                                                           18,734                 18,077
         Other                                                                                    15,653                 17,849
      Deferred income taxes                                                                       12,878                 13,036
      Current maturities of long-term debt                                                        25,000                 15,000
------------------------------------------------------------------------------------------------------------------------------------
         Total current liabilities                                                                91,913                 80,065
LONG-TERM DEBT, LESS CURRENT MATURITIES                                                          212,043                234,843
DEFERRED INCOME TAXES                                                                              9,351                  9,483
OTHER NONCURRENT LIABILITIES                                                                      10,345                  9,331
------------------------------------------------------------------------------------------------------------------------------------
STOCKHOLDERS' EQUITY
      Common stock, $.50 par
          Class A, 50,000,000 shares authorized, 19,019,583
            and 19,011,952 shares issued and outstanding                                           9,510                  9,506
          Class B, 10,000,000 shares authorized, 1,474,996
             and 1,474,996 shares issued and outstanding                                             738                    738
      Additional paid-in capital                                                                  23,659                 23,644
      Retained earnings                                                                          191,867                174,660
      Deferred compensation                                                                       (1,686)                (1,973)
      Accumulated other comprehensive income                                                     (11,534)                (8,455)
------------------------------------------------------------------------------------------------------------------------------------
         Total stockholders' equity                                                              212,554                198,120
------------------------------------------------------------------------------------------------------------------------------------
                                                                                                $536,206               $531,842
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.
                                                                              2

<PAGE>

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

<TABLE>
<CAPTION>
                                                       For the Three Months Ended                   For the Six Months Ended
                                            -----------------------------------------------------------------------------------
                                                       Dec 26,               Dec 27,               Dec 26,              Dec 27,
     (In thousands, except per share data)              1998                  1997                 1998                  1997
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                 <C>                 <C>                   <C>                  <C>
REVENUES
     Rental operations                              $  125,006           $  122,566            $  247,820           $  237,294
     Direct sales                                        4,858                5,695                 8,167                9,393
-------------------------------------------------------------------------------------------------------------------------------
        Total revenues                                 129,864              128,261               255,987              246,687
-------------------------------------------------------------------------------------------------------------------------------
EXPENSES
     Cost of rental operations                          70,246               71,472               139,302              137,177
     Cost of direct sales                                3,352                4,033                 5,574                6,710
     Selling and administrative                         27,771               25,489                55,107               50,385
     Depreciation                                        6,482                6,577                13,041               12,437
     Amortization of intangibles                         2,139                2,326                 4,282                4,799
-------------------------------------------------------------------------------------------------------------------------------
        Total operating expenses                       109,990              109,897               217,306              211,508
-------------------------------------------------------------------------------------------------------------------------------
INCOME FROM OPERATIONS                                  19,874               18,364                38,681               35,179
     Interest expense                                    4,291                6,114                 9,021               10,881
     Other income, net                                     381                 (583)                   60                 (792)
-------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES                              15,202               12,833                29,600               25,090
     Provision for income taxes                          5,967                5,046                11,675                9,858
-------------------------------------------------------------------------------------------------------------------------------
NET INCOME                                          $    9,235           $    7,787            $   17,925           $   15,232
-------------------------------------------------------------------------------------------------------------------------------
     Basic Weighted Average Number
     of Shares Outstanding                              20,401               20,369                20,399               20,367
BASIC EARNINGS PER COMMON SHARE                     $      .45           $      .38            $     0.88           $     0.75
-------------------------------------------------------------------------------------------------------------------------------
     Diluted Weighted Average Number
     of Shares Outstanding                              20,521               20,454                20,521               20,449
DILUTED EARNINGS PER COMMON SHARE                   $     0.45           $     0.38            $     0.87           $     0.74
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                                                              3

<PAGE>

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

<TABLE>
<CAPTION>
                                                              For the Three Months Ended             For the Six Months Ended
                                                           --------------------------------     -----------------------------------
                                                                Dec 26,         Dec 27,             Dec 26,           Dec 27,
                                                                 1998            1997                1998              1997
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>              <C>                 <C>               <C>
OPERATING ACTIVITIES:
       Net Income                                             $  9,235      $    7,787          $    17,925        $   15,232
       Adjustments to reconcile net income to net cash
          provided by operating activities-
          Depreciation and amortization                          8,620           8,903               17,323            17,236
          Deferred income taxes                                     91            (746)                (290)             (783)
          Changes in current operating items-
            Inventories                                         (2,094)         (2,835)              (2,972)           (4,613)
            Accounts receivable and prepaid expenses            (3,147)        (10,356)              (3,554)          (19,351)
            Accounts payable and other current liabilities      (6,954)          7,327                2,964            18,200
       Other, net                                                1,199           4,976                1,104             6,122
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities                        6,950          15,056               32,500            32,043
-----------------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
       Property, plant and equipment additions, net             (8,602)         (9,608)             (21,066)          (17,931)
       Business acquisitions                                         -             971                 (155)         (280,557)
       Purchase of investments                                    (200)           (218)                (359)             (412)
-----------------------------------------------------------------------------------------------------------------------------------
Net cash used for investing activities                          (8,802)         (8,855)             (21,580)         (298,900)
-----------------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
       Proceeds from debt financing                              1,946           5,000                3,928           360,843
       Repayments of debt financing                             (6,993)         (4,414)             (16,047)          (90,414)
       Cash dividends paid                                        (358)           (358)                (717)             (716)
       Sale of common stock                                          4               -                    4                 2
-----------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used for) financing activities            (5,401)            228              (12,832)          269,715
-----------------------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                (7,253)          6,429               (1,912)            2,858

CASH AND CASH EQUIVALENTS:
       Beginning of period                                      17,316           3,415               11,975             6,986
-----------------------------------------------------------------------------------------------------------------------------------
       End of period                                          $ 10,063      $    9,844          $    10,063        $    9,844
-----------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL CASH FLOW INFORMATION:
       Cash paid for -
           Interest                                           $  4,069      $    5,627          $     8,330        $    9,877
-----------------------------------------------------------------------------------------------------------------------------------
           Income taxes                                       $  9,676      $    1,629          $    15,708        $    8,875
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The accompanying notes are an integral part of these consolidated financial
statements.


                                                                              4

<PAGE>

                        G&K SERVICES, INC. AND SUBSIDIARIES

                      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   (Amounts in thousands, except per share data.)
     Three and six month periods ended December 26, 1998 and December 27, 1997
                                    (Unaudited)

          The consolidated financial statements included herein, except for the
     June 27, 1998, balance sheet which was extracted from the audited financial
     statements of June 27, 1998, have been prepared by G&K Services, Inc. (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 December 26, 1998, and June 27,
     1998, and the results of operations and the changes in financial position
     for the three and six month periods ended December 26, 1998 and December
     27, 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 consolidated financial statements and the notes
     thereto included in the Company's latest annual report.

          The results of operations for the three and six month periods ended
     December 26, 1998, and December 27, 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. 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

          Basic earnings per common share was computed by dividing net income by
     the weighted average number of shares of common stock outstanding during
     the period.  Diluted earnings per common share was computed similar to the
     computation of basic earnings per share, except that the denominator is
     increased 


                                                                              5

<PAGE>

     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                  Six Months Ended
                                                              ---------------------------------  --------------------------------
                                                                  Dec. 26,         Dec. 27,          Dec. 26,         Dec. 27,
                                                                    1998             1997              1998             1997
                                                              ----------------  ---------------  ---------------  ---------------
         <S>                                                  <C>               <C>              <C>              <C>
         Weighted average number of common
         shares outstanding                                        20,401            20,369           20,399            20,367
                                                              -------------------------------------------------------------------

         Shares used in computation of
         basic earnings per share                                  20,401            20,369           20,399            20,367

         Weighted average effect of non-vested
         restricted stock grants                                       57                48               58                45

         Weighted average common shares
         issuable upon the exercise of
         stock options                                                 63                37               64                37
                                                              -------------------------------------------------------------------
         Shares used in computation of
         diluted earnings per share                                20,521            20,454           20,521            20,449
                                                              -------------------------------------------------------------------
</TABLE>

     RECENT ACCOUNTING PRONOUNCEMENTS

          SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
     Information," will be effective for fiscal years beginning after December
     15, 1997.  SFAS No. 131 requires disclosure of business and geographic
     segments in the consolidated financial statements of the Company.  The
     Company will adopt SFAS No. 131 in fiscal 1999 and is currently analyzing
     the impact it will have on the disclosures in its financial statements.
     
     RECLASSIFICATIONS

          Certain prior period amounts have been reclassified to conform to the
     1999 presentation.  These reclassifications have no effect on net income or
     total stockholders' equity as previously reported.
     
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 (NLS) for
     approximately $283,400 in cash.  The acquisition was accounted for using
     the purchase method and the purchase price was allocated to the acquired
     assets and assumed liabilities based on the fair values of the assets
     purchased and the liabilities assumed.  The purchase price and related
     acquisition costs exceeded the fair values assigned to tangible assets by
     approximately $160,600, which was assigned to restrictive covenants
     ($1,100) to be amortized over the contract life of five years, purchased
     customer list ($41,600) to be amortized over eleven years and goodwill
     ($117,900) to be amortized over thirty-five years.
     
          In connection with the asset purchase from NLS, nine of the purchased
     linen rental facilities  were identified as assets held for sale.  The net
     cash flows from (i) operations of these facilities from the date of
     acquisition until the date of sale (holding period, not to exceed one
     year), (ii) interest on incremental debt incurred during the holding period
     to finance the purchase of these facilities, and (iii) proceeds from the
     sale were considered in the allocation of the purchase price to the
     acquired assets and liabilities. Accordingly, earnings or losses from these
     nine facilities have been excluded from the consolidated statement of
     income.  For the three month period ended December 26, 1997, losses
     excluded from the Company's consolidated statement of income totaled $7,
     including allocated interest 


                                                                              6

<PAGE>

     expense of $1,055.  For the six month period ended December 27, 1997, 
     earnings excluded from the Company's consolidated statement of income 
     totaled $243, including allocated interest expense of $2,031.

          The pro forma results of operations for the three and six month
     periods ended December 26, 1998 and December 27, 1997 are not materially
     different from the actual results of operations.

3.   COMPREHENSIVE INCOME
     
          In the first quarter of fiscal 1999, the Company adopted SFAS No. 130,
     "Reporting Comprehensive Income."  SFAS No. 130 requires the Company to
     report and display comprehensive income and its components.  For the three
     and six month periods ended December 26, 1998 and December 27, 1997, the
     components of comprehensive income were as follows:

<TABLE>
<CAPTION>

                                                         Three Months Ended             Six Months Ended
                                                           (In thousands)                (In thousands)
                                                 ------------------------------------------------------------
                                                      Dec. 26,       Dec. 27,       Dec. 26,       Dec. 27,
                                                        1998           1997           1998           1997
                                                 ------------------------------------------------------------
     <S>                                         <C>              <C>             <C>           <C>
     Net income                                        $9,235         $7,787        $17,925        $15,232
     Other comprehensive income, net of tax
          Foreign currency translation
            adjustments                                (1,364)        (1,737)        (3,282)        (2,092)
          Unrealized gain (loss) on  
            investments held for sale                     467           (321)           203            (36)

                                                 ------------------------------------------------------------
     Comprehensive income                              $8,338         $5,729        $14,846        $13,104
                                                 ------------------------------------------------------------
</TABLE>


                                                                              7

<PAGE>

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

     The percentage relationships to net sales of certain income and expense 
items for the three and six month periods ended December 26, 1998 and 
December 27, 1997, and the percentage changes in these income and expense 
items between periods are contained in the following table:

<TABLE>
<CAPTION>
                                         THREE MONTHS                SIX MONTHS        
                                             ENDED                      ENDED                PERCENTAGE CHANGE
                                   --------------------------------------------------- ----------------------------
                                                                                         Three Months   Six Months
                                     Dec. 26,     Dec. 27,     Dec. 26,     Dec. 27,        FY 1999       FY 1999
                                       1998         1997         1998         1997        vs. FY 1998   vs. FY 1998
                                   --------------------------------------------------- ----------------------------
<S>                                <C>          <C>          <C>          <C>          <C>             <C>
Revenues:
   Rental                             96.3%        95.6%        96.8%        96.2%           2.0%          4.4%
   Direct                              3.7          4.4          3.2          3.8          (14.7)        (13.1)
                                   ---------------------------------------------------
      Total Revenues                 100.0        100.0        100.0       100.0             1.2           3.8

Expenses:
   Cost of Rental Sales               56.2         58.3         56.2         57.8           (1.7)          1.5
   Cost of Direct Sales               69.0         70.8         68.3         71.4          (16.9)        (16.9)
                                   ---------------------------------------------------
      Total Cost of Sales             56.7         58.9         56.6         58.3           (2.5)          0.7

      Selling and      
         Administrative               21.4         19.9         21.5         20.4            9.0           9.4
      Depreciation                     5.0          5.1          5.1          5.0           (1.4)          4.9
      Amortization of
         Intangibles                   1.6          1.8          1.7          1.9           (8.0)        (10.8)
                                   ---------------------------------------------------
Income from Operations                15.3         14.3         15.1         14.3            8.2          10.0

Interest Expense                       3.3          4.8          3.5          4.4          (29.8)        (17.1)
Other (Income) Expense, net            0.3         (0.5)         0.0         (0.3)        (165.4)       (107.6)
                                   ---------------------------------------------------
Income Before Income Taxes            11.7         10.0         11.6         10.2           18.5          18.0
Provision for Income Taxes             4.6          3.9          4.6          4.0           18.3          18.4
                                   ---------------------------------------------------

Net Income                             7.1%         6.1%         7.0%         6.2%          18.6%         17.7%
                                   ---------------------------------------------------
</TABLE>

     Total revenues for the second quarter of fiscal 1999 increased 1.2% to 
$129.9 million from $128.3 million in the second quarter of fiscal 1998 and 
increased 3.8% to $256.0 million for the first six months of fiscal 1999 from 
$246.7 million in the same period of fiscal 1998.  The first quarter of 
fiscal 1998 included only eleven weeks of revenues from assets acquired from 
NLS on July 14, 1997, including three industrial locations that were later 
sold in the fourth quarter of fiscal 1998.  Adjusting for these two 
transactions, total revenue growth for the second quarter of fiscal 1999 was 
3.8% and 4.4% for the first six months of fiscal 1999.

     Rental revenue growth for the second quarter accounted for $2.4 million, 
or a 2.0% increase and for the first six months it accounted for $10.5 
million, or a 4.4% increase.  U.S. rental revenues increased 5.3% (adjusted 
for the timing of the NLS asset purchase and the sale of three industrial 
locations) and Canadian rental revenues in U.S. dollars decreased .2% for the 
second quarter and increased 5.6% and .9% resepectively, for the first six 
months.  The growth in rental revenue, which is below historical growth 
patterns, was influenced by several factors, including lower growth rates in 
the southeastern part of the U.S. that were impacted by continuing NLS 
acquisition integration activities, a sharp downturn in the semi-conductor 
industry and a decline in the value of the Canadian dollar.

     Total direct sales to outside customers decreased 14.7% to $4.9 million 
for the second quarter of fiscal 1999 compared to $5.7 million in the same 
period of fiscal 1998 and decreased 13.1% to $8.2 million for the first six 
months of fiscal 1999 from $9.4 million in the same period of fiscal 1998.  
This decrease is primarily the result of shifting garment manufacturing 
capacity from sales to external customers to internal use by the Company for 
rental customers.  Cost of direct sales, as a percentage of direct sales, 
decreased to 69.0% for the second quarter of 


                                                                              8

<PAGE>

fiscal 1999 from 70.8% in the same period of fiscal 1998 and decreased to 
68.3% for the first six months of fiscal 1999 from 71.4% for the same period 
of fiscal 1998.

     Cost of rental operations decreased 1.7% to $70.2 million for the second 
quarter of fiscal 1999 from $71.5 million in the same period of fiscal 1998 
and rose 1.5% to $139.3 million for the first six months of fiscal 1999 from 
$137.2 million in the same period of fiscal 1998.  As a percentage of rental 
revenues, these costs decreased to 56.2% for the second quarter of fiscal 
1999 from 58.3% in the same period of fiscal 1998 and decreased to 56.2% for 
the first six months of fiscal 1999 from 57.8% in the same period of fiscal 
1998.  The Company attributes this decrease as a percent of revenue to 
improvements in all components of rental operations (merchandise, production 
and delivery costs), primarily at locations acquired in the NLS transaction.

     Selling and administrative expenses increased 9.0% to $27.8 million in 
the second quarter of fiscal 1999 from $25.5 million in the same period of 
fiscal 1998 and increased 9.4% to $55.1 million for the first six months of 
fiscal 1999 from $50.4 million in the same period of fiscal 1998.  As a 
percentage of revenues, selling and administrative expenses increased to 
21.4% in the second quarter of fiscal 1999 from 19.9% in the same period of 
fiscal 1998 and increased to 21.5% in the six month period of fiscal 1999 
from 20.4% in the same period of fiscal 1998.  The increase as a percent of 
revenue is due to several factors, including higher selling expenses in the 
locations acquired in fiscal 1998, increased information technology costs, 
expenses associated with Year 2000 readiness and other corporate initiatives.
     
     Depreciation expense decreased 1.4% to $6.5 million in the second 
quarter of fiscal 1999 from $6.6 million in the same period of fiscal 1998 
and increased 4.9% to $13.0 million for the first six months of fiscal 1999 
from $12.4 million in the same period of fiscal 1998.  As a percentage of 
revenues, depreciation expense decreased to 5.0% in the second quarter of 
fiscal 1999 from 5.1% in the same period of fiscal 1998 and increased to 5.1% 
for the six month period of fiscal 1999 from 5.0% for the same period in 
fiscal 1998.  Capital expenditures, excluding acquisition of businesses, was 
$8.6 million in the second quarter of fiscal 1999 compared to $9.6 million in 
the prior year's quarter, and for the six month period they were $21.1 
million compared to $17.9 million in the prior year.

     Amortization expense decreased 8.0% to $2.1 million in the second 
quarter of fiscal 1999 from $2.3 million in the second quarter of fiscal 1998 
and decreased 10.8% to $4.3 million in the first six months of fiscal  1999 
from $4.8 million in the same period of fiscal 1998.  This decrease is 
attributable to the sale of acquired  industrial facilities and the related 
intangible assets during the third and fourth quarters of fiscal 1998.

     Income from operations increased 8.2% to $19.9 million in the second 
quarter of fiscal 1999 from $18.4 million in the same period of fiscal 1998 
and increased 10.0% to $38.7 million for the first six months of fiscal 1999 
from $35.2 million in the same period of fiscal 1998.  Operating margins 
increased to 15.3% for the second quarter of fiscal 1999 from 14.3% in the 
same period of fiscal 1998 and increased to 15.1% for the six month period of 
fiscal 1999 from 14.3% in the same period of fiscal 1998.  U.S. operating 
margins increased to 13.5% for the second quarter of fiscal 1999 from 12.6% 
in the same period of fiscal 1998 and increased to 13.4% for the six month 
period of fiscal 1999 from 12.6% in the same period of fiscal 1998.

     Interest expense was $4.3 million for the second quarter of fiscal 1999, 
down from $6.1 million in the same period of fiscal 1998 and was $9.0 million 
for the first six months of fiscal 1999, down from $10.9 million in the same 
period of fiscal 1998.  The Company's effective tax rate was 39.3% in the 
second quarter of fiscal 1999, unchanged from the same period of fiscal 1998 
and it increased to 39.4% in the six month period of fiscal 1999 from 39.3% 
in the same period of fiscal 1998.

     Net income rose 18.6% to $9.2 million in the second quarter of fiscal 
1999 from $7.8 million in the same period of fiscal 1998 and rose 17.7% to 
$17.9 million in the first six months of fiscal 1999 from $15.2 million in 
the first six months of fiscal 1998.  Basic and diluted earnings per share 
for the second quarter of fiscal 1999 were $.45 per share compared with $.38 
for the prior year quarter.  Basic and diluted earnings per share for the 
first six months of 1999 increased to $.88 and $.87 from $.75 and $.74, 
respectively.  Net income margins increased to 7.1% for the second quarter of 
fiscal 1999 compared with 6.1% in the second quarter of fiscal 1998 and 
increased to 7.0% for the six month period of fiscal 1999 compared with 6.2% 
in the six month period of fiscal 1998.


                                                                              9

<PAGE>

LIQUIDITY AND FINANCIAL RESOURCES
     
     Cash flow from operating activities was $7.0 million in the second 
quarter of fiscal 1999 and $15.1 million in the same period of fiscal 1998.  
Cash flow from operating activities was $32.5 million in the six month period 
of fiscal 1999 and $32.0 million in the same period of fiscal 1998.  The 
fiscal 1999 increase resulted from decreases in accounts payable, partially 
offset by increases in net income and accounts receivable when compared to 
the second quarter of 1998.  Working capital at December 26, 1998 was $65.6 
million, down 10.5% from $73.3 million at June 27, 1998.

     Cash used in investing activities was $8.8 million in the second quarter 
of fiscal 1999 and $8.9 million in the second quarter of fiscal 1998. Cash 
used in investing activities was $21.6 million in the six month period of 
fiscal 1999 and $298.9 million in the same period of fiscal 1998.  The 
decrease is primarily due to the acquisition of the NLS assets in the first 
quarter of fiscal 1998.
     
     Cash used for financing activities was $5.4 million in the second 
quarter of fiscal 1999 and cash provided by financing activities was $0.2 
million in the same period of fiscal 1998. Cash used for financing activities 
was $12.8 million in the six month period of fiscal 1999 and cash provided by 
financing activities was $269.7 million in the same period of fiscal 1998.  
$355.8 million of cash was obtained by issuing debt primarily for the 
acquisition of selected assets of NLS in the first quarter of fiscal 1998.   
The Company's ratio of debt to total capitalization decreased to 52.7% at the 
end of the second quarter of fiscal 1999 from 55.8% at June 27, 1998. 
     
     Stockholders' equity grew 7.3% to $212.6 million at December 26, 1998, 
compared with $198.1 million at the end of fiscal 1998.  G&K's return on 
average equity remained at 8.7% for the second quarters of both fiscal 1999 
and fiscal 1998.
     
     Management believes that cash flows generated from operations and 
borrowing capability under its credit facilities should provide adequate 
funding for its current businesses and planned expansion of operations or any 
future acquisitions.
     
YEAR 2000 READINESS DISCLOSURE STATEMENT

     The Company utilizes both information technology ("IT") and non-IT 
systems and assets throughout its U.S. and Canadian operations that will be 
affected by the date change in the year 2000.  The Company began an extensive 
review of its business in January, 1998, to determine whether or not its IT 
and non-IT systems and assets were year 2000 compliant, as well as the 
remedial action and related costs associated with required modifications or 
replacements.  The Company's goal is to ensure current business operations 
will continue to function accurately with minimal disruption through the 
millennium change.  The Company is continuing discussions with its 
significant suppliers to determine the readiness of those suppliers to 
correct year 2000 issues where their systems and products interface with the 
Company's systems or otherwise impact its operations.  The Company is 
assessing the extent to which its operations are vulnerable should those 
suppliers not succeed to properly remedy their systems. The Company believes 
that its actions with key suppliers will minimize these risks.  The scope of 
the year 2000 readiness effort includes (i) information technology such as 
software and hardware, (ii) non-information systems or embedded technology 
such as micro controllers contained in various equipment, safety systems, 
facilities and utilities and (iii) readiness of key third-party suppliers.  
If needed modifications and conversions are not made on a timely basis, the 
year 2000 issue could have a material adverse effect on the Company's 
business, financial condition and results of operations.  The Company hopes 
to achieve these objectives by committing resources and leveraging previous 
investments in existing technologies.

     The Company has a documented process through which all IT and non-IT 
systems and assets are being reviewed with reference to year 2000 date 
issues. This methodology takes each system and asset through the following 
lifecycle:

          -     Awareness - Educate employees about year 2000 issues.
          -     Assessment - Conduct an inventory and impact analysis of the
                 business, operations, and systems. Identify priorities and 
                 plan.
          -     Analysis - Analyze the asset(s) to determine the tasks,
                 resources and duration required to ensure compliance.


                                                                             10

<PAGE>

          -     Contingency Planning - Identify alternative solutions to the
                 recommended solution.
          -     Conversion - Renovation plan is finalized, approved and
                 implemented.
          -     Testing - Approved validation plans are implemented and testing
                 occurs.
          -     Rollout - Implementation plan is approved, and tested compliance
                 solution is fully implemented into production.

     The Company's key systems and assets are as follows:
          -     Financial systems software - SAP financial systems were
                 implemented and operational as of June 28, 1998. The Company 
                 will be completing  year 2000 testing of this system by 
                 March 31, 1999.
          -     Revenue recognition system - Renovation of this internally
                 developed system is completed.  Testing is in process and 
                 rollout will be completed by March 31, 1999.
          -     Other IT software, hardware and communications - Other vendor
                 software and G&K applications have been assessed and are
                 currently being renovated and tested.  Expected completion date
                 is March 31, 1999, for all IT systems and assets, except three
                 vendor supplied solutions, which have an anticipated completion
                 date of July 1, 1999.   
          -     Non-IT plant and related equipment - The Company has completed
                 the assessment phase.  Anticipated completion date for all 
                 non-IT systems and assets is March 31, 1999. 
          -     Business processes and procedures - All process flows are being
                 analyzed for risk with appropriate contingency plans put into
                 place.  The anticipated completion date is March 31, 1999.
                 Ongoing monitoring throughout the remainder of the calendar 
                 year will be taking place to ensure contingency plans are 
                 implemented as appropriate on a timely basis.
          -     Third parties - The Company's supply chain is being assessed to
                 ensure all significant vendors will have the ability to meet 
                 the Company's needs.  This assessment was completed December 
                 31, 1998.  No disclosures of non-compliant suppliers were 
                 discovered. All contingency plans will be put in place by 
                 March 31, 1999.  
            
     The Company will not be deferring any other significant IT projects to 
address the year 2000 issues.  Because the year 2000 issue is of short 
duration, the Company has retained experts and advisors to evaluate year 2000 
readiness; assist in analysis, renovation, and contingency planning; and 
complete independent testing when renovations are completed.  The Company's 
core IT staff will continue to stay focused on the Company's business needs, 
as well as assist with year 2000 analysis and renovation.
     
     The Company is implementing proposed solutions and began to incur 
expenses during fiscal 1998 to resolve the year 2000 issue.  These expenses 
will continue through the year 2000. Maintenance or modification costs are 
expensed as incurred, while costs of any new software and equipment are being 
capitalized over the asset's useful life, consistent with the Company's 
financial policies. The Company has spent approximately $3.1 million related 
to the year 2000 analysis; $1.9 million of these costs were capitalized.  The 
Company has budgeted $7.3 million of total expenditures for the year 2000 
compliance activities, of which $4.1 million will be capitalized, although 
there can be no assurance that year 2000 related expenditures will not be 
materially higher. The Company's current estimates of the amount of time and 
costs necessary to modify and test its computer systems are based upon 
assumptions regarding future events, including the continued availability of 
certain resources, year 2000 modification plans and other factors.  New 
developments may occur that could affect the Company's estimates of the 
amount of time and costs necessary to modify and test its systems for year 
2000 compliance.  These developments include, but are not limited to (i) the 
availability and cost of personnel trained in this area, (ii) the ability to 
locate and correct all relevant computer codes and equipment and (iii) the 
year 2000 compliance success that key suppliers attain.  
     
     Contingency plans are being developed and implemented where the level of 
risk has been determined to be unsatisfactory.  The Company is using a 
weighted system to evaluate and determine this level of risk in each of five 
areas: Operational, Facility Safety, Financial Management, Legal Implication 
and Organizational Implication.  Where necessary, the Company is implementing 
various contingency plans that will include, but are not limited to, the 
following: 

          -     Secondary vendors for garments and other significant non-uniform
                 inventories 
          -     Stockpiling of certain other inventories, soap, thread, etc.
          -     Manual work-arounds for less critical computerized systems 


                                                                             11

<PAGE>

          -     Staffing crisis management teams during critical date changes,
                 such as our fiscal year change on June 27, 1999 and the 
                 calendar year change on January 1, 2000.

     While the Company has exercised its best efforts to identify and remedy 
any potential year 2000 exposures within its control, the largest risks are 
expected with utilities in the form of water and power which, to a 
significant extent, are beyond the immediate control of the Company.  To 
date, the Company has not identified any suppliers who will not be year 2000 
compliant; however, this analysis is still in process.  If non-compliant 
vendors are identified, the Company intends to develop appropriate 
contingency plans. 
     
     While the Company believes its planning efforts are adequate to address 
its year 2000 concerns, the year 2000 readiness of the Company's suppliers 
and business partners may lag behind the Company's efforts.  Although the 
Company does not believe that the year 2000 matters discussed above will have 
a material impact on its business, financial condition and results of 
operations, it is uncertain as to what extent the Company may be affected by 
such matters. 

MARKET RISK SENSITIVITY

     The Company uses financial instruments, including fixed and variable 
rate debt, as well as swaps, to finance operations and to hedge interest rate 
exposures.  The swap contracts are entered into for periods consistent with 
related underlying exposures and do not constitute positions independent of 
those exposures.  The Company does not enter into contracts for speculative 
purposes, nor is it a party to any leveraged instrument.  There has been no 
material change in the Company's market risks associated with debt and 
interest rate swap obligations during the quarter ended December 26, 1998.

     Statements in this document regarding ongoing trends and expectations 
constitute "forward-looking statements" as defined in the Private Securities 
Litigation Reform Act of 1995.  Forward-looking statements involve known and 
unknown risks, which may cause the Company's actual results in the future to 
differ materially from expected results.  These risks and uncertainties 
include, but are not limited to, those expectations related to the 
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

     a.   The Company held its Annual Meeting of Stockholders on October 29,
          1998.
     
     b.   The following eight persons were elected directors: Bruce G.
          Allbright, Paul Baszucki, Richard Fink,  Wayne M. Fortun, Donald W.
          Goldfus, William Hope, Thomas Moberly and Bernard Sweet.
     
     c.   1.   Each director nominee received the following votes:
<TABLE>
<CAPTION>
                                                            SHARES
                                   ----------------------------------------------------------
                                             IN FAVOR                 WITHHOLD AUTHORITY
                                   ------------------------------ ---------------------------
                   <S>             <C>                            <C>
                   Allbright                29,642,499                      45,763
                   Baszucki                 29,641,911                      46,351
                   Fink                     29,642,495                      45,767
                   Fortun                   29,642,310                      45,952
                   Goldfus                  29,641,923                      46,339
                   Hope                     29,642,695                      45,567
                   Moberly                  29,643,053                      45,209
                   Sweet                    29,640,296                      47,966
</TABLE>

          2.   Stockholders ratified the appointment of Arthur Andersen LLP,
               Certified Public Accountants, as independent auditors of the
               Company for 1999: 29,636,939 shares in favor, 39,143 shares
               voting against and 12,180 shares abstaining.

          3.   Stockholders approved the Company's 1998 Stock Option and
               Compensation Plan: 20,788,691 shares in favor, 5,584,951 shares
               against, 112,511 shares abstaining and 3,202,109 shares broker
               non-vote.

ITEM 6.  Exhibits and Reports on Form 8-K

     a.  Exhibits

          27       Financial Data Schedule (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:   February 9, 1999           /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