##### Table of Contents



(G&K SERVICES LOGO)
    
    UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549FORM 10-Q
 QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) 
OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 27, 2010
 Commission file number 0-4063
 G&K SERVICES, INC.
  MINNESOTA
    
    41-0449530(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)
 
 (952) 912-5500
  þ o
  o o
  Large accelerated filer o
Accelerated filer þ
Non-accelerated filer o
(do not check if a smaller reporting company)
Smaller reporting company o  o þ




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##### 



G&K Services, Inc.
Form 10-Q
 Table of Contents
 PAGEPART IItem 1.
    
    Financial StatementsConsolidated Condensed Balance Sheets as of
March 27, 2010 and June 27, 2009
    
    
    3Consolidated Condensed Statements of Operations for the three and nine
months ended March 27, 2010 and March 28, 2009
    
    
    4Consolidated Condensed Statements of Cash Flows for the nine
months ended March 27, 2010 and March 28, 2009
    
    
    5Notes to Consolidated Condensed Financial Statements
    
    
    6Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosure About Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    28PART IIItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 6.
    
    Exhibits
    
    
    30Signatures
    
    
    31EX-31.1EX-31.2EX-32.1EX-32.2
  2




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##### Table of Contents



PART I
FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 CONSOLIDATED CONDENSED BALANCE SHEETS  G&K Services, Inc. and Subsidiaries
 March 27,2010
    
    
    June 27,(In thousands)
    
    (Unaudited)
    
    
    2009ASSETSCurrent AssetsCash and cash equivalents
    
    $
    10,461
    
    
    $
    13,136Accounts receivable, less allowance for doubtful
accounts of $4,482 and $3,848
    
    
    80,311
    
    
    
    85,209Inventories, net
    
    
    121,308
    
    
    
    135,492Other current assets
    
    
    19,075
    
    
    
    21,241Total current assets
    
    
    231,155
    
    
    
    255,078Property, Plant and Equipment, net
    
    
    199,530
    
    
    
    216,736Goodwill
    
    
    325,268
    
    
    
    319,942Other Assets
    
    
    57,833
    
    
    
    59,412Total assets
    
    $
    813,786
    
    
    $
    851,168LIABILITIES AND STOCKHOLDERS EQUITYCurrent LiabilitiesAccounts payable
    
    $
    25,742
    
    
    $
    29,134Accrued expenses
    
    
    75,240
    
    
    
    79,010Deferred income taxes
    
    
    3,614
    
    
    
    3,414Current maturities of long-term debt
    
    
    412
    
    
    
    7,744Total current liabilities
    
    
    105,008
    
    
    
    119,302Long-Term Debt, net of Current Maturities
    
    
    174,243
    
    
    
    224,781Deferred Income Taxes
    
    
    1,077
    
    
    
    1,893Accrued Income Taxes  Long Term
    
    
    9,533
    
    
    
    12,016Other Noncurrent Liabilities
    
    
    55,826
    
    
    
    55,820Stockholders Equity
    
    
    468,099
    
    
    
    437,356Total liabilities and stockholders equity
    
    $
    813,786
    
    
    $
    851,168
  3




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CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
 G&K Services, Inc. and Subsidiaries
 For the Three Months Ended
    
    
    For the Nine Months EndedMarch 27,
    
    
    March 28,
    
    
    March 27,
    
    
    March 28,(In thousands, except per share data)
    
    2010
    
    
    2009
    
    
    2010
    
    
    2009RevenuesRental operations
    
    $
    185,606
    
    
    $
    209,872
    
    
    $
    572,585
    
    
    $
    660,211Direct sales
    
    
    13,339
    
    
    
    21,120
    
    
    
    40,851
    
    
    
    57,770Total revenues
    
    
    198,945
    
    
    
    230,992
    
    
    
    613,436
    
    
    
    717,981Operating ExpensesCost of rental operations
    
    
    130,038
    
    
    
    147,041
    
    
    
    402,906
    
    
    
    460,912Cost of direct sales
    
    
    9,664
    
    
    
    15,521
    
    
    
    30,255
    
    
    
    42,822Selling and administrative
    
    
    45,289
    
    
    
    53,980
    
    
    
    142,197
    
    
    
    170,860Goodwill and other impairment charges
    
    
    
    
    
    
    126,719
    
    
    
    
    
    
    
    126,719Total operating expenses
    
    
    184,991
    
    
    
    343,261
    
    
    
    575,358
    
    
    
    801,313Income/(Loss) from Operations
    
    
    13,954
    
    
    
    (112,269
    )
    
    
    38,078
    
    
    
    (83,332
    )Interest expense
    
    
    3,275
    
    
    
    3,263
    
    
    
    10,675
    
    
    
    10,681Income/(Loss) before Income Taxes
    
    
    10,679
    
    
    
    (115,532
    )
    
    
    27,403
    
    
    
    (94,013
    )Provision/(Benefit) for income taxes
    
    
    3,642
    
    
    
    (29,229
    )
    
    
    9,932
    
    
    
    (18,706
    )Net Income/(Loss)
    
    $
    7,037
    
    
    $
    (86,303
    )
    
    $
    17,471
    
    
    $
    (75,307
    )Basic weighted average number
of shares outstanding
    
    
    18,305
    
    
    
    18,222
    
    
    
    18,300
    
    
    
    18,450Basic Earnings per Common Share
    
    $
    0.38
    
    
    $
    (4.74
    )
    
    $
    0.95
    
    
    $
    (4.08
    )Diluted weighted average number
of shares outstanding
    
    
    18,361
    
    
    
    18,222
    
    
    
    18,339
    
    
    
    18,450Diluted Earnings per Common Share
    
    $
    0.38
    
    
    $
    (4.74
    )
    
    $
    0.95
    
    
    $
    (4.08
    )Dividends per share
    
    $
    0.075
    
    
    $
    0.070
    
    
    $
    0.225
    
    
    $
    0.210
  4




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




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1. Basis of Presentation for Interim Financial Statements
    Impairments of Long-Lived Assets
   Goodwill and Intangible Assets
  6




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2. Contingent Liabilities
 Environmental Matters
   3. Adoption of New Accounting Pronouncements
    7




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
    
    The amounts of significant transfers between level 1 and level 2
of the hierarchy and the reasons for the transfer.
    
    The reason for any transfer in or out of level 3.
    
    Information in the reconciliation of recurring level 3
measurements about purchases, sales, issuance and settlements on a gross basis.
    
    Additional information about both the valuation techniques and
inputs used in estimating level 2 and level 3 fair value measurements.
   4. Fair Value Measurements
  Level 1
 Level 2
 
    
    Quoted prices for similar assets or liabilities in active markets;
    
    Quoted prices for identical or similar assets in non-active markets;
    
    Inputs other than quoted prices that are observable for the asset or liability; and
    
    Inputs that are derived principally from or corroborated by other observable market data.
 Level 3
  8




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As of March 27, 2010Fair Value Measurements Using Inputs Considered asLevel 1
    
    Level 2
    
    TotalOther current assets:Derivative financial instruments
    
    $
    
    
    
    $
    0.1
    
    
    $
    0.1Other assets:Non-qualified, non-contributory retirement
plan assets
    
    
    
    
    
    
    9.7
    
    
    
    9.7Non-qualified deferred compensation plan assets
    
    
    17.4
    
    
    
    
    
    
    
    17.4Total assets
    
    $
    17.4
    
    
    $
    9.8
    
    
    $
    27.2Accrued expenses:Derivative financial instruments
    
    $
    
    
    
    $
    7.0
    
    
    $
    7.0Total liabilities
    
    $
    
    
    
    $
    7.0
    
    
    $
    7.0
  5. Derivative Financial Instruments
       9




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Asset Derivatives Fair ValueRelationship:
    
    Balance Sheet Classification:
    
    March 27, 2010
    
    
    June 27, 2009Fuel commodity futures contracts
    
    Other current assets
    
    $
    0.1
    
    
    $
    0.3Total derivatives designated as cash flow hedging instruments
    
    $
    0.1
    
    
    $
    0.3
 Liability Derivatives Fair ValueRelationship:
    
    Balance Sheet Classification:
    
    March 27, 2010
    
    
    June 27, 2009Interest rate swap contracts
    
    Accrued expenses
    
    $
    6.3
    
    
    $
    9.3Fuel commodity futures contracts
    
    Accrued expenses
    
    
    0.1
    
    
    
    0.2Total derivatives designated as cash flow hedging instruments
    
    $
    6.4
    
    
    $
    9.5
      10




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Amount of Gain or (Loss) Recognized in Accumulated Other Comprehensive Income (Loss)Three Months Ended
    
    Nine Months EndedRelationship:
    
    March 27, 2010
    
    
    March 28, 2009
    
    
    March 27, 2010
    
    
    March 28, 2009Interest rate swap contracts
    
    $
    (0.6
    )
    
    $
    (0.3
    )
    
    $
    (1.8
    )
    
    $
    (6.7
    )Fuel commodity futures contracts
    
    
    
    
    
    
    (0.2
    )
    
    
    (0.1
    )
    
    
    (2.3
    )Total derivatives designated as cash flow hedging instruments
    
    $
    (0.6
    )
    
    $
    (0.5
    )
    
    $
    (1.9
    )
    
    $
    (9.0
    )
 Amount of Gain or (Loss) Reclassified FromAccumulated Other Comprehensive Income (Loss) to Consolidated Statements of OperationsThree Months Ended
    
    Nine Months EndedRelationship:
    
    Statement of OperationsClassification:
    
    March 27, 2010
    
    
    March 28, 2009
    
    
    March 27, 2010
    
    
    March 28, 2009Interest rate swap contracts
    
    Interest Expense
    
    $
    (0.9
    )
    
    $
    (0.8
    )
    
    $
    (2.7
    )
    
    $
    (1.3
    )Interest rate swap contracts
    
    Selling and Administrative
    
    
    (0.1
    )
    
    
    
    
    
    
    (0.1
    )
    
    
    Fuel commodity futures
contracts
    
    Cost of Rental Operations
    
    
    
    
    
    
    (0.5
    )
    
    
    
    
    
    
    (0.5
    )Total derivatives
designated as cash flow hedging
instruments
    
    
    
    
    
    $
    (1.0
    )
    
    $
    (1.3
    )
    
    $
    (2.8
    )
    
    $
    (1.8
    )
  Amount of Gain or (Loss)Recognized in Consolidated Statement of OperationsThree Months Ended
    
    Nine Months EndedRelationship:
    
    Statement of OperationsClassification:
    
    March 27, 2010
    
    
    March 28, 2009
    
    
    March 27, 2010
    
    
    March 28, 2009Interest rate swap
contracts
    
    Selling and Administrative
    
    $
    (0.3
    )
    
    $
    
    
    
    $
    (0.3
    )
    
    $
    
 11




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6. Exit, Disposal and Related Activities
       7. Income Taxes
  12




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8. Per Share Data
  Three Months Ended
    
    Nine Months EndedMarch 27,
    
    
    March 28,
    
    
    March 27,
    
    
    March 28,2010
    
    
    2009
    
    
    2010
    
    
    2009Weighted average number of common shares outstanding used in computation of basic earnings per share
    
    
    18.3
    
    
    
    18.2
    
    
    
    18.3
    
    
    
    18.5Weighted average effect of non-vested restricted stock grants and assumed exercise of options
    
    
    0.1
    
    
    
    
    
    
    
    
    
    
    
    Shares used in computation of diluted earnings per share
    
    
    18.4
    
    
    
    18.2
    
    
    
    18.3
    
    
    
    18.5
  9. Comprehensive Income
  Three Months Ended
    
    Nine Months EndedMarch 27,
    
    
    March 28,
    
    
    March 27,
    
    
    March 28,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income/(loss)
    
    $
    7.0
    
    
    $
    (86.3
    )
    
    $
    17.5
    
    
    $
    (75.3
    )Other comprehensive income/(loss):Foreign currency translation
adjustments, net of tax
    
    
    1.7
    
    
    
    (1.8
    )
    
    
    13.4
    
    
    
    (27.6
    )Derivative financial
instruments (loss)
recognized, net of tax
    
    
    (0.6
    )
    
    
    (0.5
    )
    
    
    (1.9
    )
    
    
    (9.0
    )Derivative financial
instruments (loss)
reclassified,
net of tax
    
    
    1.0
    
    
    
    1.3
    
    
    
    2.8
    
    
    
    1.8Total comprehensive income/(loss)
    
    $
    9.1
    
    
    $
    (87.3
    )
    
    $
    31.8
    
    
    $
    (110.1
    )
 10. Inventories
  March 27,
    
    
    June 27,2010
    
    
    2009Raw Materials
    
    $
    8.2
    
    
    $
    9.2Work in Process
    
    
    0.8
    
    
    
    3.6Finished Goods
    
    
    52.1
    
    
    
    55.1New Goods
    
    $
    61.1
    
    
    $
    67.9Merchandise in Service
    
    $
    60.2
    
    
    $
    67.6Total Inventories
    
    $
    121.3
    
    
    $
    135.5
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11. Goodwill and Other Impairment Charges
  Goodwill
    
    $
    107.0Computer software
    
    
    7.6Property, plant and equipment
    
    
    7.2Customer contracts
    
    
    3.5Assets held for sale
    
    
    1.4Goodwill and other impairment charges
    
    $
    126.7
 Goodwill
    14




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Long-Lived Assets
     12. Goodwill and Intangible Assets
  United States
    
    
    Canada
    
    
    TotalBalance as of June 27, 2009
    
    $
    260.2
    
    
    $
    59.7
    
    
    $
    319.9Acquisitions, net of purchase
accounting adjustments
    
    
    0.2
    
    
    
    
    
    
    
    0.2Divestitures
    
    
    (0.5
    )
    
    
    (1.0
    )
    
    
    (1.5
    )Foreign currency translation and other
    
    
    
    
    
    
    6.7
    
    
    
    6.7Balance as of March 27, 2010
    
    $
    259.9
    
    
    $
    65.4
    
    
    $
    325.3
  March 27,
    
    
    June 27,2010
    
    
    2009Other Intangible Assets:Customer Contracts
    
    $
    116.1
    
    
    $
    113.8Divestitures
    
    
    (2.1
    )
    
    
    Accumulated Amortization
    
    
    (90.6
    )
    
    
    (85.0
    )Net
    
    $
    23.4
    
    
    $
    28.8Non-Competition Agreements
    
    $
    11.1
    
    
    $
    11.0Accumulated Amortization
    
    
    (10.7
    )
    
    
    (10.3
    )Net
    
    $
    0.4
    
    
    $
    0.7
 15




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2010 remaining
    
    $
    1.62011
    
    
    5.12012
    
    
    4.02013
    
    
    2.82014
    
    
    1.82015
    
    
    1.3
 13. Long-Term Debt
   Required
    
    ActualMaximum Leverage Ratio (Debt/Adjusted EBITDA)
    
    
    3.50
    
    
    
    2.17Minimum Interest Coverage Ratio (Adjusted
EBITDA/Interest Expense)
    
    
    3.00
    
    
    
    6.52Minimum Net Worth (In Millions)
    
    $
    314.5
    
    
    $
    468.1
  16




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14. Share-Based Compensation
  15. Employee Benefit Plans
  17




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16. Segment Information
 .
   UnitedFor the Three Months Ended
    
    States
    
    
    Canada
    
    
    Elimination
    
    
    TotalThird Quarter Fiscal Year 2010:Revenues
    
    $
    163.0
    
    
    $
    35.9
    
    
    $
    
    
    
    $
    198.9Income from operations
    
    
    7.9
    
    
    
    6.1
    
    
    
    
    
    
    
    14.0Total assets
    
    
    755.2
    
    
    
    137.4
    
    
    
    (78.8
    )
    
    
    813.8Depreciation and amortization
expense
    
    
    8.3
    
    
    
    1.4
    
    
    
    
    
    
    
    9.7Third Quarter Fiscal Year 2009:Revenues
    
    $
    197.0
    
    
    $
    34.0
    
    
    $
    
    
    
    $
    231.0(Loss)/Income from operations
    
    
    (114.4
    )
    
    
    2.1
    
    
    
    
    
    
    
    (112.3
    )Total assets
    
    
    822.1
    
    
    
    131.5
    
    
    
    (94.0
    )
    
    
    859.6Depreciation and amortization
expense
    
    
    9.8
    
    
    
    1.4
    
    
    
    
    
    
    
    11.2
 UnitedFor the Nine Months Ended
    
    States
    
    
    Canada
    
    
    Elimination
    
    
    TotalFiscal Year 2010:Revenues
    
    $
    505.5
    
    
    $
    107.9
    
    
    $
    
    
    
    $
    613.4Income from operations
    
    
    26.4
    
    
    
    11.7
    
    
    
    
    
    
    
    38.1Total assets
    
    
    755.2
    
    
    
    137.4
    
    
    
    (78.8
    )
    
    
    813.8Depreciation and amortization
expense
    
    
    25.7
    
    
    
    4.3
    
    
    
    
    
    
    
    30.0Fiscal Year 2009:Revenues
    
    $
    605.8
    
    
    $
    112.2
    
    
    $
    
    
    
    $
    718.0(Loss)/Income from operations
    
    
    (93.4
    )
    
    
    10.1
    
    
    
    
    
    
    
    (83.3
    )Total assets
    
    
    822.1
    
    
    
    131.5
    
    
    
    (94.0
    )
    
    
    859.6Depreciation and amortization
expense
    
    
    29.6
    
    
    
    4.3
    
    
    
    
    
    
    
    33.9
  18




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17. Stock Repurchase
  18. Restricted Stock Unit Withholdings
  
 ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  Overview
    Critical Accounting Policies
   19




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Results of Operations
  PercentageThree Months
    
    Nine Months
    
    ChangeEnded
    
    Ended
    
    Three Months
    
    Nine MonthsMarch 27,
    
    March 28,
    
    March 27,
    
    March 28,
    
    FY 2010
    
    FY 20102010
    
    2009
    
    2010
    
    2009
    
    vs. FY 2009
    
    vs. FY 2009Revenues:Rental operations
    
    
    93.3
    %
    
    
    90.9
    %
    
    
    93.3
    %
    
    
    92.0
    %
    
    
    (11.6
    )%
    
    
    (13.3
    )%Direct sales
    
    
    6.7
    
    
    
    9.1
    
    
    
    6.7
    
    
    
    8.0
    
    
    
    (36.8
    )
    
    
    (29.3
    )Total revenues
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    100.0
    
    
    
    (13.9
    )
    
    
    (14.6
    )Expenses:Cost of rental operations
    
    
    70.1
    
    
    
    70.1
    
    
    
    70.4
    
    
    
    69.8
    
    
    
    (11.6
    )
    
    
    (12.6
    )Cost of direct sales
    
    
    72.4
    
    
    
    73.5
    
    
    
    74.1
    
    
    
    74.1
    
    
    
    (37.7
    )
    
    
    (29.3
    )Total cost of sales
    
    
    70.2
    
    
    
    70.4
    
    
    
    70.6
    
    
    
    70.2
    
    
    
    (14.1
    )
    
    
    (14.0
    )Selling and administrative
    
    
    22.8
    
    
    
    23.4
    
    
    
    23.2
    
    
    
    23.8
    
    
    
    (16.1
    )
    
    
    (16.8
    )Goodwill and other impairment charges
    
    
    
    
    
    
    54.9
    
    
    
    
    
    
    
    17.6
    
    
    
    (100.0
    )
    
    
    (100.0
    )Income/(Loss) from operations
    
    
    7.0
    
    
    
    (48.6
    )
    
    
    6.2
    
    
    
    (11.6
    )
    
    
    112.4
    
    
    
    145.7Interest expense
    
    
    1.6
    
    
    
    1.4
    
    
    
    1.7
    
    
    
    1.5
    
    
    
    0.4
    
    
    
    (0.1
    )Income/(Loss) before income taxes
    
    
    5.4
    
    
    
    (50.0
    )
    
    
    4.5
    
    
    
    (13.1
    )
    
    
    109.2
    
    
    
    129.1Provision for income taxes
    
    
    1.8
    
    
    
    (12.7
    )
    
    
    1.6
    
    
    
    (2.6
    )
    
    
    112.5
    
    
    
    153.1Net income/(loss)
    
    
    3.5
    %
    
    
    (37.4
    )%
    
    
    2.8
    %
    
    
    (10.5
    )%
    
    
    108.2
    %
    
    
    123.2
    %
 20




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##### Table of Contents



Three months ended March 27, 2010 compared to three months ended March 28, 2009
 Revenues
   Cost of Rental
 Cost of Direct Sales
 Selling and Administrative
 Impairment Charges
 Interest Expense
 Provision for Income Taxes
 21




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##### Table of Contents



Nine months ended March 27, 2010 compared to nine months ended March 28, 2009
 Revenues
   Cost of Rental.
 Cost of Direct Sales.
 Selling and Administrative
 Impairment Charges
 22




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##### Table of Contents



Interest Expense
 Provision for Income Taxes
 Liquidity, Capital Resources and Financial Condition
   Operating Activities.
 Investing Activities.
 Financing Activities.
   23




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##### Table of Contents



Required
    
    ActualMaximum Leverage Ratio (Debt/Adjusted EBITDA)
    
    
    3.50
    
    
    
    2.17Minimum Interest Coverage Ratio (Adjusted
EBITDA/Interest Expense)
    
    
    3.00
    
    
    
    6.52Minimum Net Worth (In Millions)
    
    $
    314.5
    
    
    $
    468.1
       Cash Obligations.
   24




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##### Table of Contents



Off Balance Sheet Arrangements
  Pension Obligations
     Union Pension Plans
   25




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##### Table of Contents



Exit, Disposal and Related Activities
       Litigation
  Environmental Matters
   26




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##### Table of Contents



Share-Based Compensation
  Adoption of New Accounting Pronouncements
    
    
    The amounts of significant transfers between level 1 and level 2 of the hierarchy and the reasons for the transfer.
    
    The reason for any transfer in or out of level 3.
    
    Information in the reconciliation of recurring level 3 measurements about purchases,
sales, issuance and settlements on a gross basis.
    
    Additional information about both the valuation techniques and inputs used in
estimating level 2 and level 3 fair value measurements.
   Cautionary Statements Regarding Forward-Looking Statements
  27




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##### Table of Contents



ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
 Interest Rate Risk
   Energy Cost Risk
    28




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##### Table of Contents



Foreign Currency Exchange Risk
  
 ITEM 4. CONTROLS AND PROCEDURES
   29




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##### Table of Contents



PART II
OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
      
 ITEM 1A. RISK FACTORS
  30




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##### Table of Contents



ITEM 6. EXHIBITS
  31.1
    
    Certification of Chief Executive Officer pursuant to Securities Exchange Act Rule
13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.31.2
    
    Certification of Chief Financial Officer pursuant to Securities Exchange Act Rule
13a-14(a)/15d-14(a) as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.32.1
    
    Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.32.2
    
    Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 31




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##### Table of Contents



G&K SERVICES, INC.
(Registrant)Date: April 28, 2010
    By:
    /s/ Jeffrey L. WrightJeffrey L. WrightExecutive Vice President, Chief Financial
Officer and Director
(Principal Financial Officer)By:
    /s/ Thomas J. DietzThomas J. DietzVice President and Controller
(Principal Accounting Officer) 32