# SECURITIES AND
EXCHANGE COMMISSION

Washington, D.C. 20549
_________________

# Form 10-K

# ANNUAL REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Fiscal Year Ended January 25, 2003

Commission File Number 1-5674
_________________

# ANGELICA CORPORATION

(Exact name of registrant as specified in its charter)

|                                         | 
|---------------------------------------- | 
|Missouri                                 | 
|(State or other jurisdiction of          | 
|incorporation or organization)           | 
|424 South Woods Mill Road                | 
|Chesterfield, Missouri                   | 
|(Address of principal executive offices) | 

(314) 854-3800
(Registrants telephone number, including area code)
_________________

Securities registered pursuant to Section 12(b) of the Act:

|                                                     | 
|---------------------------------------------------- | 
|                                                     | 
|Title of each class                                  | 
|Common Stock, $1.00 Par Value                        | 
|Preferred Stock Purchase Rights issuable pursuant to | 
|Registrants Shareholder Rights Plan                 | 

Securities
registered pursuant to Section 12(g) of the Act:
NONE

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. YesX   No____

Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by reference in Part
III of this Form 10-K or any amendment to this Form 10-K. X

Indicate
by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of
the Act) Yes X    No___

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State
the aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was last
sold, or the average bid and asked price of such common equity, as of the last business
day of the registrants most recently completed second fiscal quarter.

$141,641,393 based on the average of
the high/low transaction price of the common stock on July 26, 2002.

Indicate the number of shares
outstanding of each of the Registrants classes of common stock, as of April 15,
2003.

Common
Stock, $1.00 par value, 8,800,472 shares outstanding.
DOCUMENTS INCORPORATED BY REFERENCE

Portions
of the Registrants Proxy Statement dated April 23, 2003 are incorporated by
reference in Parts II and III.

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# TABLE OF CONTENTS

PART I

|         |  | Page                                             
|-------- |  | -------------------------------------------------
|Item 1.  |  | Business                                         
|Item 2.  |  | Properties                                       
|Item 3.  |  | Legal Proceedings                                
|Item 4.  |  | Submission of Matters to Vote of Security Holders
|Item 4A. |  | Executive Officers of the Registrant             

PART II

|         |  |                                                                                      
|-------- |  | -------------------------------------------------------------------------------------
|Item 5.  |  | Market for Registrants Common Equity and Related Stockholder Matters                
|Item 6.  |  | Selected Financial Data (Unaudited)                                                  
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of Operations
|Item 7A. |  | Quantitative and Qualitative Disclosures About Market Risk                           
|Item 8.  |  | Financial Statements and Supplementary Data                                          
|Item 9.  |  | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 

PART III

|         |  |                                                               
|-------- |  | --------------------------------------------------------------
|Item 10. |  | Directors and Executive Officers of the Registrant            
|Item 11. |  | Executive Compensation                                        
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management
|Item 13. |  | Certain Relationships and Related Transactions                
|Item 14. |  | Controls and Procedures                                       

PART IV

|         |  |                                                                
|-------- |  | ---------------------------------------------------------------
|Item 15. |  | Exhibits, Financial Statement Schedules and Reports on Form 8-K

i

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# PART I

# Item 1. Business

# General Development of
Business

Angelica Corporation (the
Company) and its subsidiaries provide products and services to a wide variety
of institutions and individuals, primarily serving the healthcare industry. The Company
was founded in 1878 and was incorporated as Angelica Corporation in 1968. The
Companys principal executive offices are located in Chesterfield, Missouri.

The Companys businesses have
historically been reported in three industry segments: Textile Services, Manufacturing and
Marketing and Life Uniform. In January 2002, the Companys Board of Directors
approved a plan to discontinue the Manufacturing and Marketing segment. The sale of
certain assets of the non-healthcare business of the Manufacturing and Marketing segment
to Cintas Corporation closed on April 19, 2002, and the sale of certain assets of the
healthcare business to Medline Industries, Inc. closed on May 17, 2002. The
Manufacturing and Marketing segment has been treated as a discontinued operation for all
periods presented in this report. Information about the Companys industry segments
appears in Note 15 of the Notes to Consolidated Financial Statements included in response
to Item 15 of this Form 10-K and is incorporated herein by reference. This information
includes, for each segment, sales and revenues, income from continuing operations before
income taxes, assets, depreciation and amortization and capital additions for each of the
three years in the period ended January 25, 2003. The Companys continuing
business segments are described below.

# Textile Services

As of January 25, 2003, the
Textile Services segment had 25 laundry plants generally in or near various major
metropolitan areas in the United States, principally providing textile rental and linen
management services to healthcare institutions. This segment also provides a limited
amount of general linen services in selected areas, principally to hotels, motels and
restaurants.

The markets in which the Textile
Services segment operates are very competitive, being characterized generally by a large
number of independent, privately-owned competitors. Industry statistics are not available,
but the Company believes that its Textile Services segment constitutes the largest
supplier of textile rental and linen management services to healthcare institutions in the
United States. Competition is on the basis of quality, reliability and price.

# Life Uniform

The Life Uniform segment is a
specialty retailer offering uniforms and shoes primarily for nurses and other healthcare
professionals through a nationwide chain of 249 retail stores as of January 25, 2003, under the name of Life Uniform
and Shoe Shops, located primarily in malls and strip shopping centers and, to a limited
extent, inside hospitals. The segment also offers merchandise by means of catalogues and
e-commerce to complement its retail stores, as well as by means of on-the-job
shopping events where merchandise is taken to a particular healthcare location for
sale.

The Company believes there are
approximately 1,500 specialty retail stores and approximately ten catalogue operations in
the United States, all primarily privately-owned, offering merchandise comparable to that
offered by the Companys Life Uniform segment. In addition, this type of merchandise
is also offered by others, including some large chain retailers. The Company believes that
approximately 30 percent of all uniforms sold to healthcare professionals are sold through
catalogues. Retail operations are conducted under highly competitive conditions in the
local area where each of the Companys stores is located, with the Company competing
on the basis of store location, merchandise selection and value. Industry statistics are
not available, but the Company believes its Life Uniform segment is the nations
largest specialty retailer offering uniforms and shoes to nurses and other healthcare
professionals and the only provider through all four distribution channels of retail
stores, catalogues, e-commerce and on-the-job shopping events.

1

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# Additional Information

The Company does not hold any
material patents, licenses, franchises or concessions. It does not consider its business
to be seasonal to any significant extent. The Company has no unusual working capital
requirements. No segment of the Companys business is dependent on a single customer.
No portion of the Companys business is subject to renegotiation of profits under a
government contract.

# Environmental
Considerations

The operations of the Company are
subject to various laws and regulations relating to public health, worker safety and the
environment. The Company is not presently engaged in any material issues or controversies
related to such matters. Compliance with laws regulating the discharge of materials into
the environment or otherwise relating to the protection of the environment has not had a
material effect on the Companys capital expenditures, earnings or competitive
position. The Company does not expect any material expenditures will be required in order
to comply with any federal, state or local environmental regulations.

# Employees

As of January 25, 2003, the
Company employed approximately 5,400 persons (including approximately 600 part-time
employees).

# Financial Information
about Geographic Areas

Export sales are not significant.

# Available Information

Since November 15, 2002, the
Company has made available free of charge on or through its web site, its annual report on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports, as soon as reasonably practicable after they are electronically filed with
or furnished to the SEC. The Companys web site is www.angelica.com.

In addition, the Company has adopted
a Code of Conduct and Ethics that applies to the Companys senior executive and
financial officers pursuant to Section 406 of the Sarbanes-Oxley Act of 2002. This Code,
as well as charters relating to the Companys audit committee, compensation committee
and corporate governance and nominating committee, will be available free of charge on or
through its web site prior to January 2004. In the event of any amendments to or waivers
from provisions of the Code, the Company will satisfy its disclosure requirement under the
Securities and Exchange Act of 1934, as amended, by posting the amendments or waivers on
its web site in lieu of filing a report of such events on Form 8-K.

# Item 2. Properties

A list of the Companys
principal facilities as of January 25, 2003 follows. Unless otherwise indicated, each of
the facilities is owned by the Company. There is no individual parcel of real estate owned
or leased which is of material significance to the Companys total assets. No
difficulty in renewing leases which expire in the near future is anticipated by the
Company. In the opinion of the Company, all such facilities are maintained in good
condition and are adequate and suitable for the purposes for which they are used.

Textile Services
Segment Laundries

Antioch, CA
Ballston Spa, NY
Batavia, NY
Chicago, IL
Colton, CA
Columbia, IL
Dallas, TX (leased)
Daytona Beach, FL

2

---

Edison, NJ
Fresno, CA
Holly Hill, FL
Houston, TX
Long Beach, CA
Lorain, OH
Los Angeles, CA
Ooltewah, TN
Orange, CA
Pawtucket, RI
Philadelphia, PA (leased) (subleased to third party; exchanged in January, 2003 for leased facility in Vallejo, CA)
Pomona, CA
Rio Vista, CA
Rockmart, GA
San Diego, CA
San Fernando, CA
Stockton, CA

As of January 25, 2003, 25 laundries,
both owned and leased, plus warehouse facilities and depots located in 11 states, were
used in the Textile Services segment. Laundry facilities generally are not fully utilized,
although some of them operate on a multi-shift basis. The Company estimates that, assuming
the availability of labor, output of these facilities could be increased by 20 percent
with existing equipment by working longer hours, and by an additional 25 percent (for a
total of 45 percent) with the installation of additional equipment.

Life Uniform Stores

As of January 25, 2003, there were
249 specialty retail stores, located in 36 states, used in the Life Uniform segment. All
retail store premises are leased.

Miscellaneous

Angelica Corporation
Corporate headquarters
St. Louis County, MO (leased)
Angelica Textile Services
Principal executive offices
Norcross, GA (leased)
Divisional Administrative Offices
City of St. Louis, MO (leased)

# Item 3. Legal Proceedings

The Company is not a party to any material
pending legal proceeding other than ordinary routine litigation incidental to the
business. Management believes that liabilities, if any, resulting from pending routine
litigation in the ordinary course of the Companys business should not materially
affect the financial condition or results of operations of the Company.

# Item 4. Submission of
Matters to Vote of Security Holders

No matters were submitted to a vote
of shareholders during the fourth quarter of the Companys year ended
January 25, 2003.

3

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# Item 4A. Executive
Officers of the Registrant

|Name                  |  | Present Position(1)(2)                                                       |  | Year FirstElected asan Officer |  | Age
|--------------------- |  | ---------------------------------------------------------------------------- |  | ------------------------------ |  | ---
|                     
|Paul R. Anderegg(3)   |  | Vice President; President,Textile ServicesBusiness Segment of Angelica       |  | 2001                           |  | 52 
|                     
|Theodore M. Armstrong |  | Senior Vice President -Finance and Administrationand Chief Financial Officer |  | 1986                           |  | 63 
|                     
|Steven L. Frey(4)     |  | Vice President, General Counseland Secretary                                 |  | 1999                           |  | 53 
|                     
|Don W. Hubble(5)      |  | Chairman, President and ChiefExecutive Officer                               |  | 1998                           |  | 63 
|                     
|Denis R. Raab(6)      |  | Vice President; President,Life Uniform BusinessSegment of Angelica           |  | 1999                           |  | 53 
|                     
|James W. Shaffer(7)   |  | Vice President and Treasurer                                                 |  | 1999                           |  | 50 
|                     

|(1) |  | Except as set forth below, the principal occupations of the officers throughout
          the past five years have been the performance of the functions of the offices
          shown above.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | All officers serve at the pleasure of the Board of Directors.
|--- |  | -------------------------------------------------------------

|(3) |  | Paul R. Anderegg has been a Vice President of the Company and President of the
          Textile Services Business Segment since February 1, 2001. Prior to that
          time, he served in the following capacities with The TruGreen Companies, a
          residential and commercial landscape and lawn care business: Vice President,
          Sales & Marketing from July 2000 to February 2001; President/Chief Operating
          Officer of TruGreen Landcare from July 1999 to July 2000; Executive Vice
          President/Chief Operating Officer of TruGreen Landscape Division from January
          1999 to July 1999; and Senior Vice President-Operations of TruGreen Chemlawn
          from 1996 to 1999.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(4) |  | Steven L. Frey has been Vice President, General Counsel and Secretary of the
          Company since March 1, 1999. Prior to that time, he was in private practice
          from 1996 to 1999 with the law firm of Helfrey, Simon & Jones, P.C. He also
          served as Director of Legal and Regulatory Affairs for Sigma Chemical Company, a
          producer of chemical products, from 1993 to 1996.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(5) |  | Don W.
Hubble joined the Company as Chairman, President and Chief Executive
Officer on January 1, 1998. Mr. Hubble was President and a Director of
National Service Industries, Inc., from 1994 to 1996 when that company
manufactured lighting fixtures and commercial and custom envelopes, rented
textiles and produced specialty chemicals. After Mr. Hubbles
departure from National Service Industries, Inc., its lighting fixture and
specialty chemical businesses were later spun-off to form Acuity Brands, Inc. He
also served as Chief Operating Officer of National Service Industries, Inc. from
1993 to 1996 and Executive Vice President from 1988 to 1994. From 1996 to 1997,
Mr. Hubble served on the Board of Directors of eShare Communications, Inc.
(formerly eShare Technologies, Inc.) and was active in business
consulting.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(6) |  | Denis R. Raab has been a Vice President of the Company and President of the Life
          Uniform Business Segment since August 1999. Prior to that time, he was
          Vice President of Operations/Logistics of Highland Raab LLC, an e-commerce
          startup company, from 1998 to 1999, Vice President-Director of
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

4

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| |  | Stores for
          Maurices, Inc., a specialty womens and young mens retailer, from
          1997 to 1998 and General Manager of the St. Louis/Central Illinois region of
          Sears, Roebuck & Company, a department store chain, from 1993 to 1997.
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(7) |  | James W. Shaffer has been Vice President and Treasurer of the Company since
          September 1999. He also served as Corporate Controller of the Company from May
          1999 to September 1999. Prior to that time, he was Director of Financial
          Reporting and Tax for Edison Brothers Stores, Inc., a shoe and apparel retailer,
          from October 1995 to April 1999.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

None of the executive officers of the
Company are related to any director or other executive officer of the Company.

There are no arrangements or
understandings between any executive officer of the Company or any other person pursuant
to which such officer was selected.

5

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# PART II

# Item 5. Market for
Registrants Common Equity and Related Stockholder Matters

The Companys common stock
trades on the New York Stock Exchange under the symbol AGL. Set forth below
are the high and low sale prices of the common stock and the dividends per share paid
during each of the quarterly periods in the two-year period ended January 25, 2003.

|               | Year Ended January 25, 2003 |        | Year Ended January 26, 2002
|-------------- | --------------------------- | ------ | ---------------------------
|               | High                        | Low    | Dividend                   
|              
|First quarter  | $17.48                      | $11.10 | $0.08                      
|Second quarter | 17.62                       | 14.95  | 0.08                       
|Third quarter  | 23.50                       | 15.97  | 0.08                       
|Fourth quarter | 24.31                       | 18.80  | 0.10                       
|              

There were 1,188 shareholders of
record as of March 31, 2003. The Companys Board of Directors regularly reviews the
dividends paid. There can be no assurance that dividends will be paid in the future
because they are dependent on earnings, the financial condition of the Company and other
factors.

# Item 6. Selected
Financial Data (Unaudited)

The following selected financial data
is derived from the audited consolidated financial statements of the Company. The
information set forth below should be read in conjunction with Managements
Discussion and Analysis of Financial Condition and Results of Operations and the
Consolidated Financial Statements and Notes thereto of the Company included elsewhere in
the Form 10-K.

6

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|For Years Ended
(Dollars in thousands, except per share amounts) | January 25,
2003 | January 26,
2002 | January 27,
2001 | January 29,
2000 | January 30,
1999 | January 31,
1998 |               
|---------------------------------------------------------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | ---------------- | --------------
|                                                                
|OPERATIONS                                                       |                  |                  |                  |                  |                  |                  |               
|Combined sales and revenues                                      |                  |                  | $    363,419     |                  | $    350,063     |                  | $    335,298  
|Gross profit                                                     |                  |                  | 102,368          |                  | 91,299           |                  | 86,953        
|Operating expenses and other, net,                               |                 
|excluding interest expense                                       |                  |                  | 84,788           |                  | 79,137           |                  | 74,320        
|Restructuring charge, net                                        |                  |                  | (269             | )                | 2,982            | (a)              |              
|Interest expense                                                 |                  |                  | 2,563            |                  | 7,390            |                  | 8,085         
|Income (loss) from continuing operations                         |                 
|before income taxes                                              |                  |                  | 15,286           |                  | 1,790            |                  | 4,548         
|Provision (benefit) for income taxes                             |                  |                  | 4,280            |                  | 161              |                  | 1,501         
|Income (loss) from continuing operations                         |                 
|before extraordinary item                                        |                  |                  | 11,006           |                  | 1,629            |                  | 3,047         
|Extraordinary loss, net of tax                                   |                  |                  | (4,409           | )                |                 |                  |              
|Income (loss) from continuing operations                         |                  |                  | 6,597            |                  | 1,629            |                  | 3,047         
|(Loss) income from operations of                                 |                 
|discontinued segment, net of tax                                 |                  |                  |                 |                  | (340             | )                | 3,539         
|Loss on disposal of discontinued segment,                        |                 
|net of tax                                                       |                  |                  | (6,662           | )                | (23,998          | )                |              
|Net (loss) income                                                |                  |                  | $           (65  | )                | $     (22,709    | )                | $      6,586  
|                                                                
|PER SHARE DATA                                                   |                 
|Diluted income (loss) from continuing                            |                 
|operations before extraordinary item                             |                  |                  | $         1.25   |                  | $          0.19  | (a)              | $         0.35
|Diluted income (loss) from                                       |                 
|continuing operations                                            |                  |                  | 0.75             |                  | 0.19             | (a)              | 0.35          
|Diluted (loss) income from discontinued                          |                 
|operations                                                       |                  |                  | (0.76            | )                | (2.81            | )                | 0.41          
|Diluted net (loss) income                                        |                  |                  | (0.01            | )                | (2.62            | )(a)             | 0.76          
|Cash dividends paid                                              |                  |                  | 0.34             |                  | 0.32             |                  | 0.48          
|Common shareholders equity                                      |                  |                  | $        16.00   |                  | $       16.44    |                  | $      19.24  
|                                                                
|RATIOS AND PERCENTAGES                                           |                 
|Current ratio                                                    |                 
|(current assets to current liabilities)                          |                  |                  | 2.2 to 1         |                  | 1.4 to 1         |                  | 2.5 to 1      
|Total debt to total debt and equity                              |                  |                  | 13.0%            |                  | 33.9%            |                  | 35.1%         
|Gross profit margin                                              |                  |                  | 28.2%            |                  | 26.1%            |                  | 25.9%         
|Effective tax rate (continuing operations)                       |                  |                  | 28.0%            |                  | 9.0%             |                  | 33.0%         
|Return on average shareholders equity                           |                  |                  | (0)%             |                  | (14.9)%          |                  | 4.0%          
|Return on average total assets                                   |                  |                  | (0)%             |                  | (7.3)%           |                  | 2.0%          
|                                                                
|OTHER SELECTED DATA                                              |                 
|Working capital                                                  |                  |                  | $     61,297     |                  | $     46,960     |                  | $   124,449   
|Additions to property and equipment, net                         |                  |                  | 14,651           |                  | 13,873           |                  | 10,595        
|Depreciation and amortization                                    |                  |                  | 13,217           |                  | 13,074           |                  | 13,502        
|Cash flow from operating activities of                           |                 
|continuing operations                                            |                  |                  | 23,887           |                  | 13,798           |                  | 25,734        
|Long-term debt, including current maturities                     |                  |                  | 20,811           |                  | 72,414           |                  | 88,804        
|Total assets                                                     |                  |                  | $   228,284      |                  | $   290,865      |                  | $   330,255   
|Average number of shares of Common                               |                 
|Stock outstanding                                                |                  |                  | 8,822,785        |                  | 8,663,586        |                  | 8,681,417     
|Approximate number of associates                                 |                  |                  | 5,400            |                  | 7,100            |                  | 7,600         
|                                                                
|                                                                 |                 

|(a) |  | Portion of $4,180 restructuring and other charges taken in fourth quarter of
                    fiscal 2002. Effect on net income per share is a reduction of $.44.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | Portion of $23,247 restructuring and other charges taken in third quarter of
                    fiscal 1998. Effect on net income per share is a reduction of $1.57.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

This information should be read in
conjunction with the consolidated financial statements and notes thereto appearing
elsewhere in this report.

7

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# Item 7.
Managements Discussion and Analysis of Financial Condition and Results of Operations

# ANALYSIS OF FISCAL 2003
CONTINUING OPERATIONS COMPARED TO 2002

Income from continuing operations
before extraordinary item in fiscal 2003 of $11.0 million increased 575.6 percent from the
prior year, on a 3.8 percent increase in combined sales and revenues to $363.4 million. On
a per share basis, income from continuing operations before extraordinary item amounted to
$1.27 ($1.25 diluted) in fiscal 2003 versus $.19 in fiscal 2002, an increase of 568.4
percent. Fiscal 2002 results included restructuring and other charges of $3.8 million
after-tax or $.44 per share, discussed below and in Note 2. In fiscal 2003, both of the
Companys continuing business segments, Textile Services and Life Uniform, posted
growth in sales and revenues as well as operating earnings increases.

As discussed in Note 3, the Company
incurred an extraordinary loss of $4.4 million net of tax in the second quarter of fiscal
2003 as a result of a prepayment penalty paid in connection with the complete refinancing
of the Companys debt following the sale of the Manufacturing and Marketing segment.
Including this extraordinary loss of $.51 per share ($.50 diluted), per share earnings
from continuing operations were $.76 ($.75 diluted) compared with $.19 in fiscal 2002, an
increase of 300.0 percent.

As discussed below and in Note 4, the
Company recorded an after-tax loss of $6.7 million in fiscal 2003 on the disposal of the
discontinued Manufacturing and Marketing segment, in addition to the $24.0 million loss on
disposal in fiscal 2002. Combining continuing and discontinued operations and the
extraordinary loss, the Company had a net loss of $.01 per share in fiscal 2003 compared
with a net loss of $2.64 per share ($2.62 diluted) in fiscal 2002.

Revenues of the Textile Services
segment in fiscal 2003 were $271.3 million, an increase of $12.2 million or 4.7 percent
from the prior year. Net new business additions (new business installed less lost
business) remained strong in fiscal 2003, although slightly below the record level in
fiscal 2002. The sale of the Denver, Colorado plant in fiscal 2003 negatively affected
revenues by $2.2 million, offset in part by an acquisition of selected assets and textile
linen management services of a hospital-owned laundry in Macon, Georgia. Sales at Life
Uniform increased 1.3 percent to $92.2 million from $91.0 million a year ago. Same-store
sales increased 3.8 percent in fiscal 2003 compared with a 4.3 percent decrease in fiscal
2002, although the increase in the fourth quarter of fiscal 2003 was the smallest of the
year at 1.9 percent amid softening retail demand. Sales from this segments catalogue
and e-commerce distribution channels contributed an increase of 62.9 percent to $5.2
million. Life Uniforms sales were negatively affected by approximately $5.0 million
resulting from having 38 fewer stores in operation at the end of this year compared with
last year.

Gross profit percentage of combined
sales to revenues of 28.2 percent in fiscal 2003 was improved over the 26.1 percent in the
prior year. In the Textile Services segment, gross margins benefited from excellent
control of linen expense and other production costs, offset to some extent by
significantly higher workers compensation costs. As a result of the gross margin and
revenue improvements, operating earnings of this segment increased 16.9 percent in fiscal
2003. Fiscal 2003 earnings also included a gain on the sale of the Denver, Colorado plant
of $.5 million reported in net other operating income. At Life Uniform, gross margins
improved in both the stores and the catalogue/e-commerce operation. Operating earnings of
this segment were $2.9 million in fiscal 2003 compared with an operating loss of $.8
million in fiscal 2002 (excluding restructuring and other charges), the result of the
improved gross margins, closing of restructured and other unprofitable stores as well as
the higher sales levels.

Selling, general and administrative
expenses increased 8.7 percent in fiscal 2003, representing 23.3 percent of combined sales
and revenues compared with 22.3 percent in fiscal 2002. The increase was due mainly to
filling several new sales and administrative positions at Textile Services, higher
incentive compensation as a result of improved operating results, and increased employee
healthcare costs. Interest expense decreased $4.8 million in fiscal 2003 to $2.6 million
resulting from the lower debt level and lower interest rates following the aforementioned
debt refinancing. The effective tax rate on income from continuing operations of 28.0
percent in fiscal 2003 is higher than the 9.0 percent tax rate last year due to the impact
of permanent differences on the relatively low level of income in fiscal 2002.

8

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# ANALYSIS OF FISCAL 2002
CONTINUING OPERATIONS COMPARED TO 2001

Combined sales and revenues in fiscal
2002 were $350.1 million, an increase of $14.8 million or 4.4 percent from the prior year.
Textile Services segment revenues increased 6.8 percent, from $242.6 million to $259.1
million. For the second consecutive year, this segment generated a record amount of net
new business additions. Sales at Life Uniform declined 1.8 percent, from $92.7 million to
$91.0 million. Same-store sales in fiscal 2002 decreased by 4.3 percent, the result of a
weak retail market during the last three quarters of the year. The largest sales decline
occurred in the segments hospitality business, which the Company decided to exit as
part of its restructuring plan. Sales in the catalogue and e-commerce distribution
channels increased to $3.2 million in fiscal 2002 from $1.0 million in fiscal 2001, but
the increase was more than offset by the decline in sales from the retail stores.

The gross profit percent to combined
sales and revenues in fiscal 2002 was 26.1 percent, up slightly from 25.9 percent in the
prior year. An increase in gross margins in the Textile Services segment more than offset
a decrease in gross margins at Life Uniform. Gross margins in the Textile Services segment
were positively affected by better pricing, continuing improvements in plant productivity
and linen cost management and effective management of energy costs. As a result, earnings
in this segment rose 29.0 percent in fiscal 2002 from the prior year. In the Life Uniform
segment, gross margins and earnings were negatively affected by the restructuring and
other charges discussed below. Excluding the restructuring charges, gross margins at Life
Uniform were up slightly in fiscal 2002, and earnings for the segment declined from $2.5
million in fiscal 2001 to a loss of $.8 million in fiscal 2002.

Selling, general and administrative
expenses increased $4.1 million or 5.6 percent in fiscal 2002 compared with fiscal 2001.
This also represented an increase as a percentage of combined sales and revenues to 22.3
percent in fiscal 2002 from 22.0 percent in the prior year. The increase was due primarily
to increased selling expenses and incentive compensation payments in the Textile Services
segment and a full year of expenses relating to catalogue operations at Life Uniform in
fiscal 2002. Interest expense decreased in fiscal 2002 to $7.4 million from $8.1 million
in fiscal 2001 due to prepayment during the year of $25 million of debt that was
originally due to be paid in December, 2001. The Companys overall effective tax rate
for fiscal 2002 was 36.0 percent compared with 37.0 percent in the prior year. The
effective rate for continuing operations in fiscal 2002 was 9.0 percent due to the high
amount of permanent differences in relation to the low level of income in that year. This
compares with a rate of 33.0 percent for continuing operations in fiscal 2001.

# FINANCIAL CONDITION

At the end of fiscal 2003, the
Company had working capital of $61.3 million and a current ratio of 2.2 to 1 compared with
$47.0 million and 1.4 to 1 at the end of fiscal 2002. Receivables increased $1.8 million
in the year, although receivable days outstanding improved by three days from 46 to 43
following a six-day improvement in the prior year. Deferred income tax assets declined
$9.6 million in fiscal 2003 due mainly to the reversal of temporary differences related to
the loss on disposal of the discontinued Manufacturing and Marketing segment. The decrease
in current liabilities in fiscal 2003 reflects the repayment of notes payable to insurance
companies and bank debt in conjunction with the sale of the Manufacturing and Marketing
segment, discussed further below. Other accrued liabilities decreased $9.6 million in
fiscal 2003 due primarily to the payment of liabilities for severance, lease termination
and closing costs associated with the sale of the Manufacturing and Marketing segment, and
a reduction in income taxes payable due to the loss on disposal of the discontinued
segment.

The Consolidated Balance Sheets as of
January 25, 2003 and January 26, 2002 reflect the segregation of the net assets
of the discontinued Manufacturing and Marketing segment at their estimated net realizable
value. Net current assets of the discontinued segment consist primarily of accounts
receivable and inventory. Net noncurrent assets of the discontinued segment, mostly
property and equipment, were completely disposed of or written off as of January 25,
2003.

# LIQUIDITY AND CAPITAL
RESOURCES

Cash flow provided by operating
activities of continuing operations in fiscal 2003 was $23.9 million versus $13.8 million
in the prior year. The increase was due in part to higher income from continuing
operations and the reduction in deferred tax assets noted above. An increase in accounts
payable and other accrued liabilities also provided cash flow of $2.8 million compared
with a decrease or use of cash of $4.5 million last year, but was

9

---

partially offset by the
increase in receivables. Net cash used in investing activities of continuing operations
increased $1.6 million to $16.0 million in fiscal 2003 resulting from Textile
Services acquisition of assets of the hospital-owned laundry in Macon, Georgia,
partially offset by proceeds from the sale of its Denver, Colorado plant. The $35.2
million increase in cash flow used in financing activities of continuing operations in
fiscal 2003 reflects the complete refinancing of the Companys debt discussed below.
Cash provided by discontinued operations of $45.2 million in fiscal 2003 reflects the net
proceeds from the liquidation of assets of the Manufacturing and Marketing segment,
primarily inventory, less payment of certain sale-related liabilities.

Due to the writedown of assets and
related loss on disposal of the Manufacturing and Marketing segment recorded in the fourth
quarter of fiscal 2002, the Company was not in compliance with a minimum net worth
covenant contained in a loan agreement at that time. As a result, all of the notes to
insurance companies and bank were reclassified to current liabilities as of
January 26, 2002. In the first quarter of fiscal 2003, temporary waivers of the
covenant violation were received from the affected lenders. In the second quarter of
fiscal 2003, the Company repaid $54.4 million of existing debt (plus a prepayment penalty
of $6.7 million) using proceeds from the sale of the Manufacturing and Marketing segment
and $22.5 million of borrowings from a new $70.0 million unsecured revolving credit
facility with three banks. As a result of the refinancing, the Company significantly
reduced its cost of borrowing to rates less than half of those previously, and lowered the
ratio of total debt to total capitalization to 13.0 percent as of January 25, 2003
from 33.9 percent a year earlier. The unused portion of the credit line is expected to be
utilized to fund growth in continuing operations, including acquisitions, and for working
capital needs.

Management believes that the
Companys financial condition is such that internal and external resources are
sufficient and available to satisfy the Companys present and future requirements for
debt service, capital expenditures, acquisitions, dividends and working capital.

# DISCONTINUED OPERATIONS

In January 2002, the Companys
Board of Directors approved a plan to discontinue the Manufacturing and Marketing segment.
At that time, the assets of the segment were written down and a net loss on disposal of
$24.0 million was recorded based on the estimated net realizable value from the pending
sale of the business, as well as estimates of the cost of disposal and transition. During
fiscal 2003, the sale and transition of the business to the buyers was completed and the
assets of the segment were substantially liquidated. An additional after-tax loss on
disposal of $6.7 million was recorded in fiscal 2003 to reflect the actual value received
upon ultimate disposition of the segments assets, including actual costs of
disposition and transition. Of this amount, $6.1 million was due to a reduction in the
value of the inventories realized. As of January 25, 2003, the remaining assets of
the segment of $2.2 million, primarily accounts receivable and inventory, are expected to
be fully realized in fiscal 2004.

Operating results of the
Manufacturing and Marketing segment prior to its discontinuation are included in the
Consolidated Statements of Income as net (loss) income from operations of discontinued
segment for all periods presented. This business was adversely affected in fiscal 2002 by
weakness in the economy during the year and by the aftermath of the September 2001
terrorist attacks on sales to certain market segments, such as lodging, food service,
gaming and recreation.

# RESTRUCTURING ACTIVITIES

In the fourth quarter of fiscal 2002,
the Company developed plans to close 27 underperforming stores which collectively lost $.9
million in fiscal 2002 and exit the hospitality line of business in the Life Uniform
segment. At that time, the Company recorded restructuring and other charges of $4.2
million before tax relating to these activities. During fiscal 2003, the Company closed 25
of the 27 Life Uniform stores included in the plan of restructuring and liquidated the
hospitality (non-healthcare) line of inventory. In the fourth quarter of fiscal 2003,
Management decided that the remaining two stores included in the restructuring plan would
not be closed, and reversed $.3 million of the restructuring charge related to these two
stores. As of January 25, 2003, there was $1.3 million of restructuring reserve remaining
for lease termination costs that are being negotiated for 14 of the Life Uniform stores
closed in fiscal 2003. Although Management believes the remaining restructuring reserve is
adequate, there is a risk that the Company will be unable to terminate the leases of the
closed stores for the amounts reserved, which could result in additional costs.

10

---

# CRITICAL ACCOUNTING
POLICIES

The Companys significant
accounting policies are more fully described in Note 1 to the consolidated financial
statements. Certain of these policies as discussed below require the application of
significant judgment by Management in selecting appropriate assumptions for calculating
amounts to record in the consolidated financial statements. By their nature, these
judgments are subject to an inherent degree of uncertainty.

# Inventories and Linens
in Service

Substantially all of the
Companys inventories are finished goods held for resale in Life Uniforms
retail stores and catalogue/e-commerce operation. These inventories are stated at the
lower of the Companys cost or fair market value, net of a reserve for inventory
shrinkage based upon a percentage of sales. Inventory costs are determined principally by
the use of the retail inventory method. Linens in service represent the unamortized cost
of textile and linen products purchased for service in the Textile Services segment.
Linens in service are amortized on a straight-line basis over their expected useful lives
of one to two years.

# Self-Insurance
Liabilities

The Company self-insures liabilities
for non-union employee medical coverage and liabilities for casualty insurance claims,
including workers compensation, general liability and vehicle liability, up to
certain levels. The Company purchases insurance coverage for large claims over the
self-insured retention levels. In fiscal 2000, the Company negotiated a buyout of all
casualty claims occurring prior to February 1, 1999. The liability for casualty
claims as of January 25, 2003 includes losses for claims that occurred since the
buyout date. Self-insurance liabilities are developed using actuarial methods and
historical data for payment patterns, cost trends and other relevant factors. While
Management believes that the recorded liabilities for casualty and employee medical claims
as of January 25, 2003 are adequate, and that appropriate judgment has been applied
in determining the estimates, such estimated liabilities could differ materially from
actual liabilities resulting from the ultimate disposition of the claims.

# Deferred Income Taxes

The Company recognizes deferred
income tax assets and liabilities based on the differences between the financial statement
carrying amounts and the tax bases of the assets and liabilities. Balances in the deferred
income tax accounts are regularly reviewed for adequacy and recoverability by analyzing
the expected income necessary to realize the deferred assets, the anticipated tax rates
applicable when the deferred items are expected to be recognized and the ability to
utilize carryforward items. It is Managements opinion that adequate provisions for
income taxes have been made for all periods presented, that all deferred tax assets will
be fully recovered and that no valuation allowance is required.

# Loss on Early
Extinguishment of Debt

As explained above and in Note 3, the
Company incurred a loss on early extinguishment of debt in fiscal 2003 in connection with
the complete refinancing of the Companys debt following the sale of the
Manufacturing and Marketing segment. In accordance with SFAS No. 4, Reporting Gains
and Losses from Extinguishment of Debt, the loss has been treated as an
extraordinary item. In April 2002, SFAS No. 4 was rescinded by the issuance of SFAS No.
145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement
No. 13, and Technical Corrections. Under SFAS No. 145, which is effective for
financial statements issued for years beginning after May 15, 2002, the loss on early
extinguishment of debt will not be afforded extraordinary treatment, and accordingly,
fiscal 2003 results will be restated to reflect this change upon adoption of SFAS No. 145
in fiscal 2004.

# Stock-Based Compensation

The Company applies APB Opinion No.
25, Accounting for Stock Issued to Employees, in accounting for its
stock-based compensation plans. Accordingly, no compensation expense has been recognized
for the issuance of stock options to employees and directors. Under SFAS No. 123,
Accounting for Stock-Based Compensation, companies are encouraged but not
required to adopt a fair-value based method to recognize compensation expense of equity
instruments awarded to employees. Had the Company recorded compensation expense for

11

---

stock
options issued consistent with SFAS No. 123, the Companys net income and earnings
per share would approximate the pro forma amounts disclosed in Note 12.

# FORWARD-LOOKING
STATEMENTS

Any forward-looking statements made
in this report reflect the Companys current views with respect to future events and
financial performance and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and
uncertainties that may cause actual results to differ materially from those set forth in
these statements. These potential risks and uncertainties include, but are not limited to,
competitive and general economic conditions, the ability to retain current customers and
to add new customers in competitive market environments, competitive pricing in the
marketplace, delays in the shipment of orders, availability of labor at appropriate rates,
availability and cost of energy and water supplies, the cost of workers compensation
and healthcare benefits, the ability to attract and retain key personnel, actual charges
to the restructuring reserve significantly different from estimated charges, unusual or
unexpected cash needs for operations or capital transactions, the ability to obtain
financing in required amounts and at appropriate rates, and other factors which may be
identified in the Companys filings with the Securities and Exchange Commission.

# Item 7A. Quantitative
and Qualitative Disclosures About Market Risk

The Company is exposed to commodity
price risk related to the use of natural gas in laundry plants of the Textile Services
segment. The total cost of natural gas in fiscal 2003 was $8.6 million. To minimize price
risk due to market fluctuations, the Company has entered into fixed-price contracts for
approximately 55% of the segments estimated natural gas purchase requirements in the
next 12 months. A hypothetical 10% increase in the cost of natural gas not covered by
these contracts would result in a reduction of approximately $386,000 in annual pretax
earnings.

The Companys exposure to
interest rate risk relates primarily to its new debt obligations entered into in the
second quarter of fiscal 2003. As discussed in Item 7 above, the Company refinanced its
existing debt in part by borrowing $22.5 million from a new $70 million revolving credit
facility with three banks. Amounts borrowed under the credit facility bear interest at a
rate equal to either (i) LIBOR plus a margin or (ii) a base rate,
defined as the higher of the federal funds rate plus .50% or the prime rate. The margin is
based on the Companys ratio of funded debt to EBITDA, as
each is defined in the Loan Agreement. As of January 25, 2003, there was $20 million
of outstanding debt under the credit facility with an interest rate of LIBOR plus 1%
(2.4375% as of January 25, 2003). To mitigate the exposure from variable-rate debt, the
Company entered into an interest-rate swap agreement with one of its lenders effective
September 9, 2002. The swap agreement fixes the variable portion of the interest rate
at 3.58% on $10 million of the outstanding debt under the line of credit until termination
on May 30, 2007. A hypothetical increase of 100 basis points in short-term interest
rates applicable to the outstanding debt not covered by the interest-rate swap agreement
would result in a reduction of approximately $100,000 in annual pretax earnings.

# Item 8. Financial
Statements and Supplementary Data

The financial statements and
financial statement schedule listed in Item 15(a) of this Form 10-K are incorporated
herein by reference.

# Item 9. Changes in and
Disagreements With Accountants on Accounting and Financial Disclosure

Information with respect to changes
in accountants under the caption Independent Public Accountants on pages 13
and 14 of the Companys Proxy Statement dated April 23, 2003 for the Annual Meeting
of Shareholders to be held on May 28, 2003 (hereinafter proxy statement) is
incorporated herein by reference.

12

---

# PART III

# Item 10. Directors and
Executive Officers of the Registrant

Information with respect to directors
of the Company under the captions Election of Directors on pages 5 through 8,
Section 16(a) Beneficial Ownership Reporting Compliance on page 13, and
Compensation Committee Interlocks on page 18 of the Companys proxy
statement is incorporated herein by reference. Information with respect to executive
officers of the Company appears in Item 4A of this Form 10-K.

The Company has adopted a Code of
Conduct and Ethics for its senior executive and financial officers pursuant to Section 406
of the Sarbanes-Oxley Act of 2002. The Company will post this Code, as well as any
waivers or changes to the Code, on its web site, www.angelica.com.

# Item 11. Executive
Compensation

Information with respect to executive
compensation under the captions Director Compensation on pages 10 and 11,
Compensation and Organization Committee Report on Executive Compensation on
pages 16 through 18, Summary Compensation Table on pages 19 and 20,
Employment Contracts and Termination of Employment and Change-In-Control
Arrangements on pages 20 and 21, Retirement Plans on pages 21 and 22, and
Stock Options on pages 22 through 24 of the Companys proxy statement is
incorporated herein by reference.

# Item 12. Security
Ownership of Certain Beneficial Owners and Management

Information with respect to security
ownership of certain beneficial owners and management under the captions Stock
Ownership of Certain Beneficial Owners and Stock Ownership of Management
on pages 11 and 12 of the Companys proxy statement is incorporated herein by
reference.

# Equity Compensation Plan
Information

The following table provides
information as of the fiscal year ended January 25, 2003 with respect to the shares of
common stock that may be issued under our existing equity compensation plans:

|                                                           | Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
(a) | Weighted-average
exercise price
of outstanding
options,
warrants and
rights
(b) | Number of
securities
remaining
available for
future issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a))
(c)
|---------------------------------------------------------- | ----------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------
|                                                          
|Equity compensation plans approved by security holders     |                                                                                                 |                                                                                 |                                                                                                                                                
|                                                          
|Equity compensation plans not approved by security holders |                                                                                                 |                                                                                 |                                                                                                                                                
|                                                          
|Total                                                      |                                                                                                 |                                                                                 |                                                                                                                                                
|                                                          

|(1) |  | Includes 211,512 shares available for issuance under the Stock Bonus and
                    Incentive Plan as of fiscal year ended January 25, 2003. The plan
                    terminated on April 1, 2003 and no shares are available for further
                    issuance under that plan.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(2) |  | On January 2, 1998, the Company made a one-time grant of 100,000 stock
                    options to Don W. Hubble at an exercise price of $21.9375 in order to induce Mr.
                    Hubble to become the Chairman, President and Chief Executive Officer of the
                    Company. These options were granted under a non-qualified stock option agreement
                    upon substantially similar terms to grants made to other officers and Company
                    employees under the Angelica
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

13

---

| |  | Corporation 1999 Performance Plan, which plan was
                    approved by the shareholders. Mr. Hubble has since become fully vested in each
                    of these options.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

On January 1, 1991, the Company
established the Angelica Corporation Stock Award Plan in order to recognize key employees.
Our Chief Executive Officer administers the Stock Award Plan and may award up to an
aggregate of 3,000 shares of our common stock per fiscal year under the Plan. Any
employee, except our Chief Executive Officer, is eligible to receive awards under the
Plan, upon nomination by the Chief Executive of the Company, or the President of any
subsidiary or operating division. Our Board may, in its sole discretion, terminate or
amend the Plan at any time.

# Item 13. Certain
Relationships and Related Transactions

Not Applicable.

# Item 14. Controls and
Procedures

|(a) |  | The Company maintains a system of internal controls and procedures designed to
          provide reasonable assurance as to the reliability of the consolidated financial
          statements and other disclosures included in this report. The Companys
          Board of Directors, operating through its audit committee which is composed
          entirely of independent outside directors, provides oversight to the financial
          reporting process.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | Within
the 90-day period preceding the date of this report, the Companys Chief Executive
Officer and Chief Financial Officer evaluated the effectiveness of the design and
operation of the Companys disclosure controls and procedures as defined in the
Securities Exchange Act of 1934, as amended. Based upon their evaluation, the Chief
Executive Officer and Chief Financial Officer concluded that the Companys disclosure
controls and procedures are effective in ensuring that material information relating to
the Company, including its consolidated subsidiaries, is made known to them by others
within those entities in a timely manner, particularly during the period evaluated
by those officers.
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|(b) |  | There have been no significant changes in internal controls or in the other
          factors that could significantly affect internal controls subsequent to the date
          of this most recent evaluation, nor were any corrective actions required with
          regard to significant deficiencies and material weaknesses. It should be noted
          that any system of internal controls, however well designed and operated, can
          provide only reasonable, and not absolute, assurance that the objectives of the
          system are met. In addition, the design of any internal control system is based
          in part upon certain assumptions about the likelihood of future events. Because
          of these and other inherent limitations of control systems, there can be no
          assurance that any design will succeed in achieving its stated goals under all
          future conditions, regardless of how remote.
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14

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# PART IV

# Item 15. Exhibits,
Financial Statement Schedules and Reports on Form 8-K

|    |  |                           |  |                                                                                                                                                                                                                                              |  |                                                                                                                                                                            |  |           
|--- |  | ------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----------
|(a) |  | Document List            
|   
|    |  | 1.                        |  | Financial Statements                                                                                                                                                                                                                         |  | Page                                                                                                                                                                      
|   
|    |  |                           |  | The following financial statements are
attached hereto and incorporated by reference in Item 8 above:                                                                                                                                       
|   
|    |  |                           |  | (i)                                                                                                                                                                                                                                          |  | Report of Independent Public Accountants                                                                                                                                   |  | F-1 - F-2 
|   
|    |  |                           |  | (ii)                                                                                                                                                                                                                                         |  | Consolidated Statements of Income - Years ended
January 25, 2003, January 26, 2002 and January 27, 2001                                                                    |  | F-3       
|   
|    |  |                           |  | (iii)                                                                                                                                                                                                                                        |  | Consolidated Balance Sheets - January 25, 2003 and
January 26, 2002                                                                                                        |  | F-4       
|   
|    |  |                           |  | (iv)                                                                                                                                                                                                                                         |  | Consolidated Statements of Shareholders Equity - Years
ended January 25, 2003, January 26, 2002 and January 27, 2001                                                      |  | F-5       
|   
|    |  |                           |  | (v)                                                                                                                                                                                                                                          |  | Consolidated Statements of Cash Flows - Years ended
January 25, 2003, January 26, 2002 and January 27, 2001                                                                |  | F-6       
|   
|    |  |                           |  | (vi)                                                                                                                                                                                                                                         |  | Notes to Consolidated Financial Statements                                                                                                                                 |  | F-7 - F-24
|   
|    |  | 2.                        |  | Financial Statement Schedule                                                                                                                                                                                                                
|   
|    |  |                           |  | (i)                                                                                                                                                                                                                                          |  | The following financial statement schedule
appears on page S-2 of this Form 10-K:                                                                                         
|   
|    |  |                           |  |                                                                                                                                                                                                                                              |  | Schedule II - Valuation and Qualifying Accounts - For
the Three Years Ended January 25, 2003                                                                              
|   
|    |  |                           |  |                                                                                                                                                                                                                                              |  | All other schedules are not submitted because they are not
applicable or not required or because the information is included in the financial statements or notes thereto.
|   
|    |  |                           |  | (ii)                                                                                                                                                                                                                                         |  | Report of Independent Public Accountants on Schedule II
appears on page S-1 of this Form 10-K.                                                                             | 
|   
|    |  | 3.                        |  | Exhibits                                                                                                                                                                                                                                    
|   
|    |  |                           |  | See Exhibit Index for a list of all
management contracts, compensatory plans and arrangements required by this item
(Exhibit Nos. 10.1 through 10.30) and all other exhibits filed or incorporated
by reference as a part of this report.   
|   
|(b) |  | Reports on Form 8-K      
|   
|    |  |                           |  | The Registrant furnished a report on Form 8-K
under Item 9 on November 22, 2002 in which it furnished the Quarterly Report to Shareholders dated
November 14, 2002 (mailed to shareholders on November 22, 2002), pursuant to Regulation FD.
|   
|(c) |  | See Exhibit Index.       
|   
|(d) |  | See Item 15(a)2(i) above.

15

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# REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

To the Shareholders of Angelica Corporation:

We have audited the accompanying
consolidated balance sheet of Angelica Corporation and subsidiaries (the
Company) as of January 25, 2003, and the related consolidated statements of
income, shareholders equity, and cash flows for the year then ended. Our audit also
included the 2003 financial statement schedules listed in the Index at Item 15(a)2(i).
These consolidated financial statements and financial statement schedule are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement schedule based
on our audit. The consolidated financial statements and financial statement schedule of
Angelica Corporation and subsidiaries as of January 26, 2002 and the years ended January
26, 2002 and January 27, 2001 (fiscal 2002 and 2001, respectively), before the inclusion
of the disclosures discussed in Note 5 to the financial statements, were audited by other
auditors who have ceased operations. Those auditors expressed an unqualified opinion on
those consolidated financial statements and stated that such 2002 and 2001 financial
statement schedules, when considered in relation to the 2002 and 2001 basic financial
statements taken as a whole, presented fairly, in all material respects, the information
set forth therein, in their reports dated March 21, 2002.

We conducted our audit in accordance
with auditing standards generally accepted in the United States of America. Those
standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis for our
opinion.

In our opinion, the fiscal 2003
consolidated financial statements present fairly, in all material respects, the
consolidated financial position of Angelica Corporation and subsidiaries at January 25,
2003, and the consolidated results of their operations and their cash flows for the year
then ended, in conformity with accounting principles generally accepted in the United
States of America. Also, in our opinion, the 2003 financial statement schedule, when
considered in relation to the 2003 basic consolidated financial statements taken as a
whole, present fairly, in all material respects, the information set forth therein.

As discussed in the notes to the
consolidated financial statements, effective January 27, 2002, the Company changed its
method of accounting for goodwill to conform to Statement of Financial Accounting Standard
(Statement) No. 142, Goodwill and Other Intangible Assets.

As discussed above, the consolidated
financial statements of Angelica Corporation and subsidiaries as of January 26, 2002, and
for the two years then ended, were audited by other auditors who have ceased operations.
As described in Note 5, these financial statements have been revised to include the
transitional disclosures required by Statement No. 142, which was adopted by the Company
as of January 27, 2002. Our audit procedures with respect to the disclosure in Note 5 with
respect to fiscal 2002 and 2001 included (i) agreeing the previously reported net income
to the previously issued financial statements and the adjustments to reported net income
representing amortization expense (including any related tax effects) recognized in those
periods related to goodwill as a result of initially applying Statement No. 142 (including
any related tax effects) to the Companys underlying records obtained from
management, and (ii) testing the mathematical accuracy of the reconciliation of adjusted
net income to reported net income, and the related earnings per share amounts. In our
opinion, the disclosures for fiscal 2002 and fiscal 2001 in Note 5 are appropriate.
However, we were not engaged to audit, review, or apply any procedures to the 2002 and
2001 financial statements of the Company other than with respect to such adjustments and,
accordingly, we do not express an opinion or any other form of assurance on the 2002 and
2001 financial statements taken as a whole.

/s/ DELOITTE & TOUCHE
LLP
St. Louis, Missouri
March 13, 2003

F-1

---

# REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

[The following report is a copy of a
report previously issued by Arthur Andersen LLP in connection with the Companys
Annual Report to Shareholders for the year ended January 26, 2002. This opinion has not
been reissued by Arthur Andersen LLP, which has ceased operations. In fiscal 2003, the
Company adopted SFAS No. 142, Goodwill and Other Intangible Assets. As
described in Note 5, the Company has presented the transitional disclosures for fiscal
2002 and 2001 required by SFAS No. 142. The Arthur Andersen LLP report does not extend to
these transitional disclosures. These disclosures are reported on by Deloitte & Touche
LLP as stated in their report appearing on page F-1.]

To Angelica Corporation:

We have audited the accompanying
consolidated balance sheets of Angelica Corporation (a Missouri corporation) and
subsidiaries as of January 26, 2002 and January 27, 2001, and the related
consolidated statements of income, shareholders equity and cash flows for each of
the three years in the period ended January 26, 2002. These financial statements are
the responsibility of the Companys Management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance
with auditing standards generally accepted in the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and significant estimates
made by Management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial
statements referred to above present fairly, in all material respects, the financial
position of Angelica Corporation and subsidiaries as of January 26, 2002 and
January 27, 2001, and the results of their operations and their cash flows for each
of three years in the period ended January 26, 2002, in conformity with accounting
principles generally accepted in the United States.

/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri
March 21, 2002

F-2

---

CONSOLIDATED STATEMENTS OF INCOME
Angelica Corporation and Subsidiaries

|For Years Ended
(Dollars in thousands, except per share amounts) | January 25,
2003 | January 26,
2002 | January 27,
2001
|---------------------------------------------------------------- | ---------------- | ---------------- | ----------------
|                                                                
|CONTINUING OPERATIONS:                                           |                  |                  |                 
|Textile service revenues                                         |                  |                  | $               
|Net retail sales                                                 |                  |                  |                 
|                                                                
|Combined sales and revenues                                      |                  |                  |                 
|                                                                
|Cost of textile services                                         |                  |                  |                 
|Cost of goods sold (Note 2)                                      |                  |                  |                 
|                                                                
|Combined cost of textile services and goods sold                 |                  |                  |                 
|                                                                
|Gross profit                                                     |                  |                  |                 
|                                                                
|Selling, general and administrative expenses                     |                  |                  |                 
|Restructuring charge, net (Note 2)                               |                  |                  |                 
|Other operating (income) expense, net                            |                  |                  |                 
|Interest expense                                                 |                  |                  |                 
|                                                                
|                                                                 |                  |                  |                 
|                                                                
|Income from continuing operations before income taxes            |                  |                  |                 
|Provision for income taxes                                       |                  |                  |                 
|                                                                
|Income from continuing operations before extraordinary item      |                  |                  |                 
|Extraordinary loss on early extinguishment of debt,              |                  |                 
|net of tax (Note 3)                                              |                  |                  |                 
|                                                                
|Income from continuing operations                                |                  |                  |                 
|                                                                
|DISCONTINUED OPERATIONS (NOTE 4):                                |                  |                 
|(Loss) income from operations of discontinued segment,           |                  |                 
|net of tax                                                       |                  |                  |                 
|Loss on disposal of discontinued segment, net of tax             |                  |                  |                 
|                                                                
|(Loss) income from discontinued operations                       |                  |                  |                 
|                                                                
|Net (loss) income                                                |                  |                  | $               
|                                                                
|BASIC EARNINGS (LOSS) PER SHARE (NOTE 13):                       |                  |                 
|Income from continuing operations before extraordinary item      |                  |                  | $               
|Extraordinary loss                                               |                  |                  |                 
|                                                                
|Income from continuing operations                                |                  |                  |                 
|(Loss) income from discontinued operations                       |                  |                  |                 
|                                                                
|Net (loss) income                                                |                  |                  | $               
|                                                                
|DILUTED EARNINGS (LOSS) PER SHARE (NOTE 13):                     |                  |                 
|Income from continuing operations before extraordinary item      |                  |                  | $               
|Extraordinary loss                                               |                  |                  |                 
|                                                                
|Income from continuing operations                                |                  |                  |                 
|(Loss) income from discontinued operations                       |                  |                  |                 
|                                                                
|Net (loss) income                                                |                  |                  | $               
|                                                                

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

F-3

---

CONSOLIDATED BALANCE SHEETS
Angelica Corporation and Subsidiaries

|For Years Ended
(Dollars in thousands)                        | January 25,
2003 | January 26,
2002
|------------------------------------------------------------- | ---------------- | ----------------
|                                                             
|ASSETS                                                        |                  |                 
|Current Assets:                                               |                  |                 
|Cash and short-term investments                               |                  |                 
|Receivables, less reserves of $724 and $1,306                 |                  |                 
|Inventories                                                   |                  |                 
|Linens in service                                             |                  |                 
|Prepaid expenses and other current assets                     |                  |                 
|Deferred income taxes                                         |                  |                 
|Net current assets of discontinued segment (Note 4)           |                  |                 
|                                                             
|Total Current Assets                                          |                  |                 
|                                                             
|Property and Equipment:                                       |                  |                 
|Land                                                          |                  |                 
|Buildings and leasehold improvements                          |                  |                 
|Machinery and equipment                                       |                  |                 
|Capitalized leased property                                   |                  |                 
|                                                             
|                                                              |                  |                 
|Lessreserve for depreciation                                 |                  |                 
|                                                             
|Total Property and Equipment                                  |                  |                 
|                                                             
|Other:                                                        |                  |                 
|Goodwill                                                      |                  |                 
|Other acquired assets                                         |                  |                 
|Cash surrender value of life insurance                        |                  |                 
|Deferred income taxes                                         |                  |                 
|Miscellaneous                                                 |                  |                 
|Net noncurrent assets of discontinued segment (Note 4)        |                  |                 
|                                                             
|Total Other Assets                                            |                  |                 
|                                                             
|Total Assets                                                  |                  |                 
|                                                             
|LIABILITIES AND SHAREHOLDERS EQUITY                          |                  |                 
|Current Liabilities:                                          |                  |                 
|Current maturities of long-term debt (Note 7)                 |                  |                 
|Accounts payable                                              |                  |                 
|Accrued wages and other compensation                          |                  |                 
|Other accrued liabilities                                     |                  |                 
|                                                             
|Total Current Liabilities                                     |                  |                 
|                                                             
|Long-Term Debt, less current maturities (Note 7)              |                  |                 
|                                                             
|Other:                                                        |                  |                 
|Deferred compensation and pension liabilities                 |                  |                 
|Other long-term liabilities                                   |                  |                 
|                                                             
|Total Other Liabilities                                       |                  |                 
|                                                             
|Shareholders Equity:                                         |                  |                 
|Common Stock, $1 par value, authorized 20,000,000             |                  |                 
|shares, issued:  9,471,538 shares                             |                  |                 
|Capital surplus                                               |                  |                 
|Retained earnings                                             |                  |                 
|Accumulated other comprehensive (loss) income                 |                  |                 
|Common Stock in treasury, at cost: 741,755 and 863,329 shares |                  |                 
|                                                             
|Total Shareholders Equity                                    |                  |                 
|                                                             
|Total Liabilities and Shareholders Equity                    |                  |                 
|                                                             

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

F-4

---

# CONSOLIDATED STATEMENTS
OF SHAREHOLDERS EQUITY
Angelica Corporation and Subsidiaries

|For Years Ended
(Dollars in thousands)                           | January 25,
2003 | January 26,
2002 | January 27,
2001
|---------------------------------------------------------------- | ---------------- | ---------------- | ----------------
|                                                                
|COMMON STOCK ($1 PAR VALUE)                                      |                  |                  |                 
|Balance beginning of year                                        |                  |                  | $               
|                                                                
|Balance end of year                                              |                  |                  | $               
|                                                                
|CAPITAL SURPLUS                                                  |                  |                 
|Balance beginning of year                                        |                  |                  | $               
|Tax benefit of stock options exercised                           |                  |                  |                 
|                                                                
|Balance end of year                                              |                  |                  | $               
|                                                                
|RETAINED EARNINGS                                                |                  |                 
|Balance beginning of year                                        |                  |                  | $               
|Net (loss) income                                                |                  |                  |                 
|Cash dividends                                                   |                  |                  |                 
|Treasury stock reissued                                          |                  |                  |                 
|                                                                
|Balance end of year                                              |                  |                  | $               
|                                                                
|ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME                    |                  |                 
|Balance beginning of year                                        |                  |                  | $               
|Change in fair value of interest-rate swap (Note 8)              |                  |                  |                 
|Other changes during year                                        |                  |                  |                 
|Effect of discontinued operations (Note 4)                       |                  |                  |                 
|                                                                
|Balance end of year                                              |                  |                  | $               
|                                                                
|COMMON STOCK IN TREASURY, AT COST                                |                  |                 
|Balance beginning of year                                        |                  |                  | $               
|Treasury stock purchased                                         |                  |                  |                 
|Treasury stock reissued                                          |                  |                  |                 
|                                                                
|Balance end of year                                              |                  |                  | $               
|                                                                
|SHAREHOLDERS EQUITY, END OF YEAR                                |                  |                  | $               
|                                                                
|COMPREHENSIVE (LOSS) INCOME                                      |                  |                 
|Net (loss) income                                                |                  |                  | $               
|Change in fair value of interest-rate swap, net of taxes of $90: |                  |                 
|Unrealized losses deferred during year                           |                  |                  |                 
|Realized losses reclassified to net (loss) income during year    |                  |                  |                 
|Minimum pension liability adjustment, net of tax                 |                  |                  |                 
|Change in cumulative translation adjustment                      |                  |                  |                 
|Effect of discontinued operations (Note 4)                       |                  |                  |                 
|                                                                
|Total Comprehensive (Loss) Income                                |                  |                  | $               
|                                                                

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

F-5

---

# CONSOLIDATED STATEMENTS
OF CASH FLOWS
Angelica Corporation and Subsidiaries

|For Years Ended
(Dollars in thousands)                             | January 25,
2003 | January 26,
2002 | January 27,
2001
|------------------------------------------------------------------ | ---------------- | ---------------- | ----------------
|                                                                  
|CASH FLOWS FROM OPERATING ACTIVITIES                               |                  |                  |                 
|Income from continuing operations before extraordinary item        |                  |                  | $               
|Extraordinary loss, net of tax                                     |                  |                  |                 
|                                                                  
|Income from continuing operations                                  |                  |                  |                 
|Non-cash items included in income from continuing operations:      |                  |                 
|Depreciation                                                       |                  |                  |                 
|Amortization                                                       |                  |                  |                 
|Restructuring charge, net (Note 2)                                 |                  |                  |                 
|Cash surrender value of life insurance                             |                  |                  |                 
|Change in working capital components of continuing                 |                  |                 
|operations, net of businesses acquired/disposed of:                |                  |                 
|Receivables, net                                                   |                  |                  |                 
|Inventories and linens in service                                  |                  |                  |                 
|Prepaid expenses and other current assets                          |                  |                  |                 
|Accounts payable                                                   |                  |                  |                 
|Compensation and other accruals                                    |                  |                  |                 
|Income taxes                                                       |                  |                  |                 
|Utilization of restructuring reserves (Note 2)                     |                  |                  |                 
|Other, net                                                         |                  |                  |                 
|                                                                  
|Net cash provided by operating activities of continuing operations |                  |                  |                 
|                                                                  
|CASH FLOWS FROM INVESTING ACTIVITIES                               |                  |                 
|Expenditures for property and equipment, net                       |                  |                  |                 
|Cost of businesses acquired                                        |                  |                  |                 
|Disposition of businesses and property                             |                  |                  |                 
|                                                                  
|Net cash used in investing activities of continuing operations     |                  |                  |                 
|                                                                  
|CASH FLOWS FROM FINANCING ACTIVITIES                               |                  |                 
|Long-term debt repayments on refinancing and revolving debt        |                  |                  |                 
|Borrowings of long-term revolving debt                             |                  |                  |                 
|Debt issuance costs                                                |                  |                  |                 
|Repurchase of stock                                                |                  |                  |                 
|Dividends paid                                                     |                  |                  |                 
|Treasury stock reissued                                            |                  |                  |                 
|                                                                  
|Net cash used in financing activities of continuing operations     |                  |                  |                 
|                                                                  
|CASH FLOWS FROM DISCONTINUED OPERATIONS                            |                  |                 
|Net cash provided by (used in) discontinued operations             |                  |                  |                 
|                                                                  
|Net (decrease) increase in cash and short-term investments         |                  |                  |                 
|Cash and short-term investments at beginning of year               |                  |                  |                 
|                                                                  
|Cash and short-term investments at end of year                     |                  |                  | $               
|                                                                  
|Supplemental cash flow information:                                |                  |                 
|Income taxes (refunded) paid                                       |                  |                  | $               
|Interest paid, net of amounts capitalized                          |                  |                  | $               
|                                                                  

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

F-6

---

# NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
Angelica Corporation
and Subsidiaries

# 1. SUMMARY OF
SIGNIFICANT ACCOUNTING POLICIES

Nature of Operations

The Company provides textile rental
and linen management services principally to healthcare institutions, and to a limited
extent to hotels, motels and restaurants, in or near major metropolitan areas in the
United States. The Company also operates a national chain of retail healthcare uniform and
shoe stores primarily for nurses and other healthcare professionals with a
fully-integrated catalogue and e-commerce operation.

In January 2002, the Companys
Board of Directors approved a plan to discontinue the Manufacturing and Marketing segment,
as discussed in Note 4, Discontinued Operations.

Principles of
Consolidation

All subsidiaries are wholly-owned and
are included in the consolidated financial statements. All significant intercompany
accounts and transactions have been eliminated.

Revenue Recognition

Textile service revenues are
recognized at the time the service is provided to the customer. Net retail sales are
recognized at the time the merchandise is shipped to or picked up by the customer.
Returned products are estimated based on historical returns and are accrued as a reduction
of sales and cost of sales at the time of the original sale. Volume-based rebates paid to
customers are recorded as a reduction of textile service revenues at the time the related
revenue is earned.

Reclassifications

Certain amounts in prior years have
been reclassified to conform to current year presentation.

Use of Estimates

These consolidated financial
statements have been prepared in accordance with accounting principles generally accepted
in the United States, which required the use of certain estimates by Management in
determining the Companys assets, liabilities, revenues and expenses.Actual
results may vary from these estimates.

Cash Equivalents

The Company considers short-term,
highly-liquid investments (securities with an original maturity date of less than three
months) as cash equivalents.

Inventories

Inventory costs are determined
principally by the use of the retail inventory method, and are stated at the lower of cost
or market. Substantially all of the Companys inventories are finished goods.

Linens in Service

Linens in service are stated at
depreciated cost and amortized over their expected useful lives of one to two years.

Property and Equipment

Property and equipment are stated at
cost. Renewals and betterments are capitalized. Property and equipment are depreciated
over their expected useful lives (buildings  15 to 40 years; machinery and equipment
 three to 10 years). Depreciation is computed principally on the straight-line
method. Leasehold improvements are amortized using the straight-line method over the
lesser of their useful lives or lease terms.

Long-Lived Assets

The Company considers the possible
impairment of its long-lived assets, excluding goodwill, whenever events or changes in
circumstances indicate the carrying amount of an asset may not be recoverable. In
accordance with Statement of Financial Accounting Standards (SFAS) No. 144,
Accounting for the Impairment or Disposal of Long-Lived Assets, the Company
periodically assesses the carrying value of its long-lived assets by reviewing

F-7

---

the current
and projected cash flows of the property and recognizes impairment losses if it is
determined that the carrying values are not recoverable.

Other Acquired Assets

Other acquired assets, consisting of
customer contracts and non-competition agreements, are being amortized on the
straight-line basis generally over periods of three to seven years.

Self-Insurance Programs

The Company is self-insured up to
certain levels for workers compensation, general liability and vehicle liability
coverages after February 1, 1999. Provision for losses relating to these programs are
recorded based on estimates for claims incurred using actuarial analyses. The estimated
liabilities for these programs recorded in other accrued liabilities were $12,754,000 and
$12,510,000 at January 25, 2003 and January 26, 2002, respectively. In addition, the
Company is primarily self-insured for non-union employee medical coverage. The liability
is determined actuarially based on claims filed and an estimate of claims incurred but not
yet reported. The amounts included in accounts payable for this liability at January 25,
2003 and January 26, 2002 were $1,835,000 and $2,100,000, respectively.

Income Taxes

The Company accounts for income taxes
in accordance with SFAS No. 109, Accounting for Income Taxes, which utilizes
the liability method. Under this method, deferred taxes are determined based on the
estimated future tax effects of differences between the financial statement and tax bases
of assets and liabilities given the provisions of the enacted tax laws.

Stock-Based Compensation
Plans

The Company applies the provisions of
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and the related interpretations to account for its employee stock option
plans. As a consequence, compensation expense is not recorded by the Company for the
issuance of stock options.

Foreign Currency
Translation

The Company accounts for foreign
currency translation in accordance with SFAS No. 52, Foreign Currency
Translation. The cumulative effect of this method is reflected as accumulated other
comprehensive income in shareholders equity. In fiscal 2002, as part of the disposal
of the Manufacturing and Marketing segment, the accumulated other comprehensive income
related to foreign currency translation was reversed.

Earnings Per Share

Basic earnings per share is computed
by dividing net income available to Common shareholders by the weighted average number of
shares of Common Stock outstanding during the year. Diluted earnings per share is computed
by dividing net income available to Common shareholders by the weighted average number of
Common and Common equivalent shares outstanding using the treasury stock method.

Advertising Expense

Advertising expense, including cost
of catalogues, charged to continuing operations in fiscal years 2003, 2002 and 2001
totaled $3,095,000, $3,343,000 and $3,465,000, respectively.

New Accounting
Pronouncements

In June 2001, the Financial
Accounting Standards Board (FASB) issued SFAS No. 141, Business Combinations.
SFAS No. 141 requires that the purchase method of accounting be used and governs the
initial recognition and measurement of intangible assets acquired in business combinations
initiated after June 30, 2001. The Company has adopted SFAS No. 141 for all acquisitions
consummated subsequent to June 30, 2001.

In June 2001, the FASB also issued
SFAS No. 142, Goodwill and Other Intangible Assets. Under SFAS No. 142,
goodwill recorded as of June 30, 2001 is no longer amortized effective with the date of
adoption, which is January 27, 2002 for the Company. Additionally, any goodwill recognized
from a business combination completed after June 30, 2001 will not be amortized. Instead,
goodwill will be tested for impairment as of the date of adoption and at least annually
thereafter using a fair-value based analysis. The Companys initial impairment test
as of January 27, 2002 and annual impairment test as of October 26, 2002 indicated there
was no impairment of goodwill. See Note 5.

F-8

---

The FASB also issued SFAS No. 143,
Accounting for Asset Retirement Obligations in June 2001. SFAS No. 143
requires entities to record the fair value of a liability for an asset retirement
obligation in the period in which it is incurred. When the liability is initially
recorded, the entity capitalizes a cost by increasing the carrying amount of the related
long-lived asset. Over time, the liability is accreted to its present value each period,
and the capitalized cost is depreciated over the useful life of the related asset. Upon
settlement of the liability, an entity either settles the obligation for its recorded
amount or incurs a gain or loss upon settlement. The standard is effective in fiscal 2004.
Adoption of SFAS No. 143 is not expected to have a material impact on the Companys
consolidated financial position, results of operations or cash flows.

In October 2001, the FASB issued SFAS
No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets. SFAS
No. 144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of. SFAS No. 144 establishes the accounting
model for long-lived assets to be disposed of by sale, including discontinued operations,
and the disposal of segments of a business. The Company adopted this statement effective
January 27, 2002, and the adoption did not have a material impact on the Companys
consolidated financial position, results of operations or cash flows.

In April 2002, the FASB issued SFAS
No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13, and Technical Corrections. This statement rescinds, updates,
clarifies and simplifies existing accounting pronouncements. Among other things, the
statement rescinds SFAS No. 4, which required all gains and losses from extinguishment of
debt to be aggregated and, if material, classified as an extraordinary item, net of
related income tax effect. Under SFAS No. 145, the criteria in APB No. 30 will now be used
to classify those gains and losses. SFAS No. 145 is effective for financial statements
issued for years beginning after May 15, 2002. As of January 25, 2003, the Company had not
yet adopted SFAS No. 145. See Note 3.

In June 2002, the FASB issued SFAS
No. 146, Accounting for Costs Associated with Exit or Disposal Activities.
This statement requires the recording of costs associated with exit or disposal activities
at their fair values when a liability has been incurred. Under previous guidance, certain
exit costs were accrued upon managements commitment to an exit plan, which is
generally before an actual liability has been incurred. The requirements of SFAS No. 146
are effective prospectively for exit or disposal activities initiated after December 31,
2002. Previously issued financial statements will not be restated.

In December 2002, the FASB issued
SFAS No. 148, Accounting for Stock-Based CompensationTransition and
Disclosure, which is required to be adopted in fiscal years beginning after December
15, 2002. This statement amends SFAS No. 123, Accounting for Stock-Based
Compensation, to provide alternative methods of transition for a voluntary change to
the fair-value based method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No. 123 to require
prominent disclosures in both annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of the method used on
reported results.

In November 2002, the FASB issued
Interpretation No. (FIN) 45, Guarantors Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others. FIN 45
requires that upon issuance of a guarantee, a guarantor must recognize a liability for the
fair value of an obligation assumed under a guarantee. FIN 45 also requires additional
disclosures by a guarantor in its interim and annual financial statements about the
obligations associated with guarantees issued. The recognition provisions of FIN 45 are
effective for any guarantees issued or modified after December 31, 2002. The disclosure
requirements are effective for financial statements of interim or annual periods ending
after December 15, 2002. The adoption of FIN 45 for the year ended January 25, 2003 did
not have a material impact on the Companys consolidated financial position, results
of operations or cash flows.

Effective November 22, 2002, the
Emerging Issues Task Force (EITF) reached a consensus regarding EITF Issue No. 02-16,
Accounting by a Customer, Including a Reseller, for Cash Consideration Received from
a Vendor. This consensus requires that payments from a vendor be classified as a
reduction to the price of the vendors goods and taken as a reduction to cost of
sales unless the payments are (i) reimbursements for costs incurred to sell the product or
(ii) payments for assets or services provided. The consensus also requires that payments
from a vendor be recognized as a reduction to cost of sales on a rational and systematic
basis. This consensus is effective for the Company beginning January 1, 2003. The Company
currently recognizes vendor payments as a reduction to cost of sales on a rational and
systematic basis and no change will be required by the Company in

F-9

---

adopting this consensus,
thereby having no material impact on the Companys consolidated financial position,
results of operations or cash flows.

# 2. RESTRUCTURING
ACTIVITIES

In the fourth quarter of fiscal 2002,
the Company recorded restructuring and other charges of $4,180,000 ($3,804,000 after-tax
or $.44 per basic and diluted share) related primarily to the closing of certain retail
stores and the liquidation of non-healthcare inventory in the Life Uniform segment. These
charges consisted of inventory writedowns of $1,198,000 included in cost of goods sold and
other charges totaling $2,982,000 included in restructuring charge, net. The other charges
included an accrual for lease termination costs of $2,263,000 and writedowns of fixed
assets and other assets totaling $719,000.

In fiscal 2003, the Company closed 25
of the 27 Life Uniform stores included in the plan of restructuring adopted in fiscal
2002. All of the inventory related to these 25 stores was disposed of or written off in
fiscal 2003. Also in fiscal 2003, a total of $1,450,000 was charged to the restructuring
reserve, representing $803,000 of lease termination costs and $647,000 to write off the
net book value of the assets in closed stores. In the fourth quarter of fiscal 2003,
Management decided that two stores that were included in the restructuring plan would not
be closed. Consequently, the Company reversed $269,000 of the restructuring charge related
to these two stores, representing $204,000 of lease termination accruals and $65,000 to
write down the net book value of assets. As of January 25, 2003, the remaining
restructuring reserve of $1,263,000, primarily for estimated lease termination costs, is
expected to be utilized in fiscal 2004.

# 3. EXTRAORDINARY ITEM

During the second quarter of fiscal
2003, the Company incurred a loss on early extinguishment of debt of $6,783,000
($4,409,000 net of tax). The loss was due to a prepayment penalty of $6,684,000 paid to
lenders in connection with the complete refinancing of the Companys debt following
the sale of the Manufacturing and Marketing segment (plus the writeoff of unamortized loan
fees of $99,000). In accordance with SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, the loss has been treated as an extraordinary item. Under
SFAS No. 145, Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB
Statement No. 13 and Technical Corrections, effective in fiscal 2004, the loss on
early extinguishment of debt will not be treated as an extraordinary item, and
accordingly, results will be restated at that time to reflect this change in accounting
treatment.

# 4. DISCONTINUED
OPERATIONS

In January 2002, the Company
announced plans to dispose of its Manufacturing and Marketing business. Consequently, the
Manufacturing and Marketing segment was accounted for as a discontinued operation as of
January 26, 2002; and, accordingly, its operating results and net assets are segregated in
the Companys consolidated financial statements and related notes for all periods
presented. The sale of certain assets of this segments non-healthcare business to
Cintas Corporation closed on April 19, 2002, and the sale of certain assets of the
healthcare business to Medline Industries closed on May 17, 2002.

The consolidated balance sheets as of
January 25, 2003 and January 26, 2002 reflect the segregation of the net assets of the
discontinued Manufacturing and Marketing segment and writedown of those assets to their
estimated net realizable value, as well as estimates of the costs of disposal and
transition, summarized as follows:

|(Dollars in thousands)                                                      | 2003 | 2002
|--------------------------------------------------------------------------- | ---- | ----
|                                                                           
|Writedown of assets to estimated net realizable value                       |      |     
|Net curtailment gain in pension plan                                        |      |     
|Other costs of disposal, including operating losses during phase-out period |      |     
|Tax benefit of disposal                                                     |      |     
|                                                                           
|Loss on disposal of discontinued segment, net of tax                        |      |     
|                                                                           

F-10

---

The additional loss on disposal of
the Manufacturing and Marketing segment recorded in fiscal 2003 was due primarily to a
reduction in the value of the inventories realized through transition and disposition of
the business. The loss on disposal in fiscal 2002 included an estimated curtailment gain
in the defined benefit pension plan due to the reduction of a significant portion of the
workforce. The estimated gain was adjusted in fiscal 2003 to the actual gain of
$1,183,000.

The net current assets of the
discontinued segment of $2,162,000 at January 25, 2003 are primarily accounts receivable
and inventory. Net noncurrent assets were completely disposed of or written off as of
January 25, 2003.

Operating results for the
Manufacturing and Marketing segment are included in the Consolidated Statements of Income
as net (loss) income from operations of discontinued segment for all periods presented.
Results for the discontinued segment are as follows:

|(Dollars in thousands)               | 2003 | 2002 | 2001
|------------------------------------ | ---- | ---- | ----
|                                    
|Sales, including intersegment sales  |      |      | $   
|Less - intersegment sales            |      |      |     
|                                    
|Net sales                            |      |      |     
|                                    
|(Loss) income before income taxes    |      |      | $   
|(Benefit) provision for income taxes |      |      |     
|                                    
|Net (loss) income                    |      |      | $   
|                                    

In accordance with SFAS No. 52,
Foreign Currency Translation, the cumulative translation adjustment, which
related entirely to foreign operations of the discontinued segment, has been removed as a
separate component of shareholders equity and has been reported as part of the loss
on disposal of discontinued operations.

F-11

---

# 5. GOODWILL AND OTHER
ACQUIRED ASSETS

The Companys initial impairment
test of goodwill indicated there was no impairment upon adoption of SFAS No. 142,
Goodwill and Other Intangible Assets, on January 27, 2002. At the end of the
third quarter ended October 26, 2002, the Company performed its annual impairment test of
goodwill, which also resulted in no impairment as of that date. As of January 25, 2003,
the carrying amount of goodwill allocated to the Textile Services and Life Uniform
segments was $3,465,000 and $791,000, respectively. There were no material changes in the
carrying amount of goodwill in fiscal year 2003.

Following is a reconciliation of
reported income from continuing operations before extraordinary item and net (loss)
income, including related earnings (loss) per share, to adjusted amounts excluding
goodwill amortization:

|                                                             | Fiscal Year Ended
|------------------------------------------------------------ | -----------------
|(Dollars in thousands, except per share amounts)             | January 25,
2003 
|                                                            
|Income from continuing operations before extraordinary item: |                  
|As reported                                                  |                  
|Goodwill amortization, net of taxes                          |                  
|                                                            
|As adjusted                                                  |                  
|                                                            
|Basic earnings per share:                                    |                  
|As reported                                                  |                  
|As adjusted                                                  |                  
|Diluted earnings per share:                                  |                  
|As reported                                                  |                  
|As adjusted                                                  |                  
|                                                            
|Net (loss) income:                                           |                  
|As reported                                                  |                  
|Goodwill amortization, net of taxes                          |                  
|                                                            
|As adjusted                                                  |                  
|                                                            
|Basic (loss) earnings per share:                             |                  
|As reported                                                  |                  
|As adjusted                                                  |                  
|Diluted (loss) earnings per share:                           |                  
|As reported                                                  |                  
|As adjusted                                                  |                  
|                                                            

During the year ended January 25,
2003, the Textile Services segment acquired customer contracts totaling $1,593,000 with
amortization periods of three to five years. Other acquired assets consisted of the
following:

|                       | January 25, 2003      | January 26, 2002        
|---------------------- | --------------------- | ------------------------
|(Dollars in thousands) | Gross
Carrying
Amount | Accumulated
Amortization
|                      
|Customer contracts     |                       |                         
|Non-compete covenants  |                       |                         
|                      
|Other acquired assets  |                       |                         
|                      

F-12

---

Other acquired assets are scheduled
to be fully amortized by fiscal year 2008 with corresponding annual amortization expense
estimated for each fiscal year as follows (dollars in thousands):

| | 2004 |  | $680 | 
| | ---- |  | ---- | 
| | 2005 |  | 533  | 
| | 2006 |  | 421  | 
| | 2007 |  | 342  | 
| | 2008 |  | 170  | 

F-13

---

# 6. RETIREMENT BENEFITS

The Company has a non-contributory
defined benefit pension plan covering primarily all domestic salaried and hourly
administrative non-union personnel. The benefit formula is based on years of service and
compensation during employment. The funding policy of the pension plan is in accordance
with the requirements of the Employee Retirement Income Security Act of 1974. The funded
status of the plan, the net pension liability at January 1, 2003 and January 1, 2002, and
the net pension expense (income) for 2003, 2002 and 2001 were as follows:

|                                                                       
|-----------------------------------------------------------------------
|(Dollars in thousands)                                                 
|                                                                       
|Change in benefit obligation:                                          
|Benefit obligation at beginning of year                                
|Service cost                                                           
|Interest cost                                                          
|Actuarial loss                                                         
|Effect of curtailmentManufacturing and Marketing participants (Note 4)
|Benefits paid                                                          
|                                                                       
|Benefit obligation at end of year                                      
|                                                                       
|Change in plan assets:                                                 
|Fair value of plan assets at beginning of year                         
|Actual loss on plan assets                                             
|Benefits paid                                                          
|                                                                       
|Fair value of plan assets at end of year                               
|                                                                       
|Net pension liability:                                                 
|Funded status                                                          
|Unrecognized actuarial loss (gain)                                     
|Unrecognized prior service cost                                        
|Unrecognized initial obligation                                        
|                                                                       
|Net pension liability at end of year                                   
|                                                                       
|Amounts recognized in the Consolidated Balance Sheets:                 
|Accrued benefit liability                                              
|Intangible asset                                                       
|Accumulated other comprehensive income                                 
|                                                                       
|Net liability recognized                                               
|                                                                       

|(Dollars in thousands)                                                  | 2003 | 2002 | 2001
|----------------------------------------------------------------------- | ---- | ---- | ----
|                                                                       
|Pension expense:                                                        |      |      |     
|Service cost                                                            |      |      | $   
|Interest cost                                                           |      |      |     
|Expected return on plan assets                                          |      |      |     
|Plan curtailment (Note 4)                                               |      |      |     
|Amortization of prior service cost                                      |      |      |     
|Recognized actuarial gain                                               |      |      |     
|                                                                       
|Net pension expense (income)                                            |      |      | $   
|                                                                       
|                                                                        | 2003 | 2002 | 2001
|                                                                       
|Actuarial assumptions used in determining projected benefit obligation: |      |      |     
|Discount rate                                                           |      |      |     
|Expected return on plan assets                                          |      |      |     
|Rate of compensation increase                                           |      |      |     
|                                                                       

F-14

---

The Companys 401(k) retirement
savings plan provides retirement benefits to eligible employees in addition to those
provided by the defined benefit pension plan. The plan permits participants to voluntarily
defer up to 12% of their compensation, subject to Internal Revenue Code limitations. The
Company also contributes a percentage of the employees salary to the account of each
eligible employee. The Companys policy is to fully fund this plan. The cost for this
plan was $487,000, $619,000 and $648,000, for fiscal years 2003, 2002 and 2001,
respectively.

The Company maintains a voluntary
deferred compensation plan providing retirement benefits to certain employees and
directors in return for deferral of compensation payments. The amount of the retirement
benefit is determined based on the amount of compensation deferred and is payable over 15
years following retirement. In addition, the Company maintains a supplemental retirement
benefit plan for selected employees. The benefit amount is determined as a percentage of
final average compensation, as defined, and is generally payable over 120 months beginning
at age 65. The liability recorded in deferred compensation and other long-term liabilities
for future retirement obligations related to these plans as of January 25, 2003 and
January 26, 2002 was $13,616,000 and $13,348,000, respectively. The Company funds these
liabilities through the purchase of company-owned life insurance policies on plan
participants.

The Company does not provide retirees
with post-retirement benefits other than pensions.

# 7. LONG-TERM DEBT

The following table summarizes
information with respect to long-term debt for 2003 and 2002:

|(Dollars in thousands)                               | 2003 | 2002
|---------------------------------------------------- | ---- | ----
|                                                    
|Note to banks due May 30, 2005                       |      |     
|10.2% notes to insurance company, due                |      |     
|annually to November 1, 2004                         |      |     
|8.225% notes to insurance companies, due May 1, 2006 |      |     
|5.73% note to bank, due June 28, 2004                |      |     
|Other long-term debt including obligations           |      |     
|under capital leases                                 |      |     
|                                                    
|                                                     |      |     
|Less - current maturities                            |      |     
|                                                    
|                                                     |      |     
|                                                    

As discussed in Note 3, the Company
refinanced its existing debt in the second quarter of fiscal 2003. At that time, the 10.2%
and 8.225% notes to insurance companies were repaid using proceeds from the sale of the
Manufacturing and Marketing segment and $22,500,000 of borrowings from a new $70,000,000
unsecured revolving credit facility with three banks. The term of the credit facility is
three years with two optional one-year extensions. Amounts borrowed under the credit
facility bear interest at a rate equal to either (i) LIBOR plus a margin, or (ii) a Base
Rate defined as the higher of the Federal Funds Rate plus .50% or the Prime Rate. The
margin is based on the Companys ratio of Funded Debt to
EBITDA, as each is defined in the Loan Agreement. In connection with the
refinancing, the Company paid debt issuance costs totaling $794,000 that are being
amortized over three years.

As of January 25, 2003, the
outstanding balance of the note to banks under the revolving loan agreement was
$20,000,000 with an interest rate of LIBOR plus 1% (2.4375% as of January 25, 2003). The
Company has entered into an interest-rate swap agreement, discussed in Note 8, to fix the
interest rate (excluding the margin) at 3.58% on $10,000,000 of the outstanding balance.
Furthermore, the Company has $10,300,000 in letters of credit outstanding as of January
25, 2003, of which $8,002,000 reduces the amount available to borrow under the line of
credit to $41,998,000. The Company pays a fee on the unused funds based on the ratio of
Funded Debt to EBITDA described above (currently .20%).

Aggregate maturities of long-term
debt for each of the two years subsequent to January 31, 2004, are $251,000 and
$20,323,000, respectively.

F-15

---

The Company is subject to certain
financial covenants under its loan agreements. One of these covenants requires that the
Company maintain a minimum consolidated net worth of $112,600,000 plus an aggregate amount
equal to 50% of quarterly net income beginning with the second quarter of fiscal 2003
(with no reduction for net losses). The Company is in compliance with this and all other
loan covenants.

The estimated fair value of the
Companys debt at January 25, 2003 approximates book value since the interest rates
on nearly all of the outstanding borrowings are frequently adjusted. Based on the
borrowing rates currently available for debt instruments with similar terms and average
maturities, the estimated fair value of the Companys long-term debt (assuming the
original maturity dates) as of January 26, 2002 was $78,894,000.

# 8. DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES

The Company entered into an
interest-rate swap agreement with one of its lenders effective September 9, 2002. The swap
agreement fixes the variable portion of the interest rate at 3.58% on $10,000,000 of the
outstanding debt under the revolving line of credit until termination on May 30, 2007. The
Company has elected to apply cash flow hedge accounting for the interest-rate swap
agreement in accordance with SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. Accordingly, the derivative is recorded
as an asset or liability at its fair value. The effective portion of changes in the fair
value of the derivative, as measured quarterly, is reported in accumulated other
comprehensive income, and the ineffective portion, if any, is reported in net income of
the current period. As of January 25, 2003, the Company has recorded a long-term liability
of $260,000 and the related loss is included in accumulated other comprehensive (loss)
income, net of tax.

To minimize price risk due to market
fluctuations, the Company has entered into fixed-price contracts for approximately 55% of
its estimated natural gas purchase requirements in the next 12 months. Although these
contracts are considered derivative instruments, they meet the normal purchases exclusion
contained in SFAS No. 133, as amended by SFAS No. 138, Accounting for Certain
Derivative Instruments and Certain Hedging Activities, and are therefore exempted
from the related accounting requirements.

F-16

---

# 9. INCOME TAXES

The provision for income taxes from
continuing operations consisted of the following:

|(Dollars in thousands)                                                                                                      | 2003            |                 | 2002 |           | 2001
|--------------------------------------------------------------------------------------------------------------------------- | --------------- | --------------- | ---- | --------- | ----
|                                                                                                                           
|Current:                                                                                                                    |                 |                 |      |           |     
|Federal                                                                                                                     |                 | $   4,702       |      | $   2,801 |     
|State                                                                                                                       |                 | 161             |      | 310       |     
|Foreign                                                                                                                     |                 | 43              |      | 70        |     
|Deferred:                                                                                                                   |                
|Federal                                                                                                                     |                 | (536            | )    | (2,738    | )   
|State                                                                                                                       |                 | (90             | )    | (282      | )   
|                                                                                                                           
|                                                                                                                            |                 | $   4,280       |      | $     161 |     
|                                                                                                                           
|Reconciliation between the statutory
income tax rate and effective tax rate from continuing operations is summarized below:
|                                                                                                                            | 2003            |                 | 2002 |           | 2001
|                                                                                                                           
|Statutory rate                                                                                                              |                 | 34.0            | %    | 34.0      | %   
|State tax, net of federal benefit                                                                                           |                 | 2.8             |      | 1.0       |     
|Effect of permanent items:                                                                                                  |                
|Cash surrender value, net of expense                                                                                        |                 | (3.2            | )    | (19.2     | )   
|Goodwill amortization                                                                                                       |                 |                |      | 4.6       |     
|Meals and entertainment                                                                                                     |                 | 0.5             |      | 3.8       |     
|Other                                                                                                                       |                 | (0.8            | )    | (0.9      | )   
|Effect of tax credits from employment programs                                                                              |                 | (5.3            | )    | (14.3     | )   
|                                                                                                                           
|                                                                                                                            |                 | 28.0            | %    | 9.0       | %   
|                                                                                                                           
|The tax effect of significant
temporary differences representing deferred tax assets and liabilities were as follows:      
|(Dollars in thousands)                                                                                                      | January 25,2003 | January 26,2002
|                                                                                                                           
|Deferred tax assets:                                                                                                        |                 |                 |      |           |     
|Deferred compensation                                                                                                       |                 | $   5,163       |      | $   5,202 |     
|Insurance reserves not yet deductible                                                                                       |                 | 5,079           |      | 4,885     |     
|Customer contracts                                                                                                          |                 | 2,045           |      | 2,299     |     
|Loss on disposal of discontinued segment                                                                                    |                 | 1,242           |      | 12,736    |     
|Other                                                                                                                       |                 | 9,701           |      | 10,538    |     
|                                                                                                                           
|                                                                                                                            |                 | 23,230          |      | 35,660    |     
|                                                                                                                           
|Deferred tax liabilities:                                                                                                   |                
|Depreciation                                                                                                                |                 | (7,162          | )    | (9,838    | )   
|Linen amortization                                                                                                          |                 | (8,129          | )    | (8,247    | )   
|Other                                                                                                                       |                 | (424            | )    | (443      | )   
|                                                                                                                           
|                                                                                                                            |                 | (15,715         | )    | (18,528   | )   
|                                                                                                                           
|Net deferred tax assets                                                                                                     |                 | $   7,515       |      | $ 17,132  |     
|                                                                                                                           
|                                                                                                                            |                

The deferred tax asset related to
discontinued operations consists primarily of the writedown of inventory and fixed assets,
estimated severance payments and estimated losses on transitional operations.

F-17

---

Temporary differences of
approximately $8,816,000 related to investments in foreign subsidiaries are expected to
reverse in fiscal 2004. Included in deferred tax liabilities is $441,000 related to these
temporary differences.

# 10. PREFERRED STOCK

The Company has two classes of
authorized Preferred Stock: Class A, $1 stated value per share, authorized in the amount
of 100,000 shares; and Class B, authorized in the amount of 2,500,000 shares. At January
25, 2003, no shares of Class A or Class B were outstanding.

# 11. SHAREHOLDER RIGHTS
PLAN

The Company has a Shareholder Rights
Plan, under which a Right is attached to each share of the Companys Common Stock.
The Rights may only become exercisable under certain circumstances involving actual or
potential acquisitions of the Companys Common Stock by a person or group of
affiliated or associated persons. Depending upon the circumstances, if the Rights become
exercisable, the holders thereof may be entitled to purchase units of the Companys
Class B Series 2 Junior Participating Preferred Stock, shares of the Companys Common
Stock or shares of common stock of the surviving or acquiring company. The Rights will
remain in existence until September 7, 2008, unless they are earlier exercised, redeemed
or exchanged.

# 12. STOCK-BASED
COMPENSATION PLANS

The Company has various stock option
and stock bonus plans that provide for the granting to certain employees and directors of
incentive stock options, non-qualified stock options, restricted stock and performance
awards. A total of 1,725,000 shares have been authorized to be issued under all such
plans. Options and awards have been granted at the fair market value at the date of grant,
although certain plans allow for awards to be granted at a price below fair market value.
Options vest over four years and are exercisable not less than six months nor more than 10
years after the date of grant.

As permitted by SFAS No. 123,
Accounting for Stock-Based Compensation, the Company applies APB Opinion No.
25, Accounting for Stock Issued to Employees, in accounting for its plans.
Accordingly, no compensation expense has been recognized for its stock-based compensation
plans other than for restricted stock and performance-based awards, as to which the
amounts charged to expense in fiscal years 2003, 2002 and 2001 totaled $279,000, $295,000
and $404,000, respectively.

A summary of the status of the
Companys stock option plans for fiscal years 2003, 2002 and 2001 and changes during
the years then ended is presented in the table below:

F-18

---

|                                   |        | 2003                         |        | 2002                         |        | 2001                        
|---------------------------------- | ------ | ---------------------------- | ------ | ---------------------------- | ------ | ----------------------------
|                                  
|                                   | Shares | WeightedAverageExercisePrice | Shares | WeightedAverageExercisePrice | Shares | WeightedAverageExercisePrice
|                                  
|Outstanding at beginning of year   |        | 975,025                      |        | $13.78                       |        | 906,150                     
|Granted                            |        | 134,900                      |        | 16.52                        |        | 151,000                     
|Exercised                          |        | (111,425                     | )      | 11.04                        |        | (3,625                      
|Lapsed                             |        | (137,200                     | )      | 15.19                        |        | (78,500                     
|                                  
|Outstanding at end of year         |        | 861,300                      |        | $14.35                       |        | 975,025                     
|                                  
|Options exercisable at year end    |        | 477,030                      |        | $16.17                       |        | 473,511                     
|                                  
|Options available for future grant |        | 255,819                      |        |                              |        | 287,253                     
|                                  
|Weighted average fair value for    |       
|options granted during the year    |        | $3.66                        |        |                              |        | $2.81                       
|                                  

The fair value of each option granted
is estimated on the date of grant using the Black-Scholes option pricing model with the
following assumptions used for grants in fiscal 2003, 2002 and 2001, respectively:
risk-free interest rates of 3.3%, 5.2% and 6.8%; expected dividend yields of 4.3%, 4.5%
and 4.4%; volatilities of 30.7%, 33.8% and 31.4%; and expected lives of nine to 10 years
in all periods. The range of exercise prices for the 861,300 options outstanding at year
end was $7.25 to $25.50, and the weighted-average remaining contractual life was 6.2
years.

Had compensation expense for
stock-based compensation plans for 2003, 2002 and 2001 been determined consistent with
SFAS No. 123, the Companys net income and earnings per share would approximate the
following pro forma amounts (dollars in thousands except per share data):

|                                   | 2003 |       | 2002 |            | 2001
|---------------------------------- | ---- | ----- | ---- | ---------- | ----
|                                  
|Net (loss) income:                 |      |       |      |            |     
|As reported                        |      | $ (65 | )    | $(22,709   | )   
|Pro forma                          |      | (520  | )    | (23,139    | )   
|Basic (loss) earnings per share:   |     
|As reported                        |      | $(.01 | )    | $    (2.64 | )   
|Pro forma                          |      | (.06  | )    | (2.69      | )   
|Diluted (loss) earnings per share: |     
|As reported                        |      | $(.01 | )    | $    (2.62 | )   
|Pro forma                          |      | (.06  | )    | (2.67      | )   
|                                  
|                                   |     

SFAS No. 123 does not apply to awards
prior to 1996, nor are the effects of its application in this disclosure indicative of the
pro forma effect on net income in future years.

F-19

---

# 13. EARNINGS PER SHARE

The following table reconciles
weighted average shares outstanding to amounts used to calculate basic and diluted
earnings per share for fiscal years 2003, 2002 and 2001:

|(Dollars and shares in thousands, except per share amounts)            | 2003 |        | 2002 |       | 2001   
|---------------------------------------------------------------------- | ---- | ------ | ---- | ----- | -------
|                                                                      
|Net income available to Common shareholders:                           |      |        |      |       |        
|Income from continuing operations before
extraordinary item            | $    | 11,006 |      | $     | 1,629  
|Extraordinary loss on early extinguishment of
debt, net of tax         |      | (4,409 | )    |       |       
|(Loss) income from operations of discontinued
     segment, net of tax |      |       |      |       | (340   
|Loss on disposal of discontinued segment, net of
tax                   |      | (6,662 | )    |       | (23,998
|                                                                      
|Net (loss) income                                                      |      |        | $    | (65   | )      
|                                                                      
|Weighted average shares:                                               |      |       
|Average shares outstanding                                             |      |        |      | 8,669 |        
|Effect of dilutive securities - option shares                          |      |        |      | 154   |        
|                                                                      
|Average shares outstanding, adjusted for dilutive
effects              |      | 8,823  |      |       | 8,664  
|                                                                      
|Earnings (loss) per share - basic:                                     |      |       
|Income from continuing operations before
extraordinary item            | $    | 1.27   |      | $     | .19    
|Extraordinary loss                                                     |      |        |      | (.51  | )      
|(Loss) income from operations of discontinued
segment                  |      |       |      |       | (.04   
|Loss on disposal of discontinued segment                               |      |        |      | (.77  | )      
|                                                                      
|Net (loss) income                                                      |      |        | $    | (.01  | )      
|                                                                      
|Earnings (loss) per share - diluted:                                   |      |       
|Income from continuing operations before
extraordinary item            | $    | 1.25   |      | $     | .19    
|Extraordinary loss                                                     |      |        |      | (.50  | )      
|(Loss) income from operations of discontinued
segment                  |      |       |      |       | (.04   
|Loss on disposal of discontinued segment                               |      |        |      | (.76  | )      
|                                                                      
|Net (loss) income                                                      |      |        | $    | (.01  | )      
|                                                                      

F-20

---

# 14. COMMITMENTS AND
CONTINGENCIES

Future minimum payments by year and
in the aggregate under operating leases with initial or remaining terms of one year or
more, consisted of the following at January 25, 2003:

|(Dollars in thousands)       | MinimumPayments
|---------------------------- | ---------------
|                            
|2004                         | $13,209        
|2005                         | 11,988         
|2006                         | 10,944         
|2007                         | 10,505         
|2008                         | 9,321          
|Later years                  | 7,049          
|                            
|Total minimum lease payments | $63,016        
|                            

Rental
expense for all operating leases consisted of:

|(Dollars in thousands) | 2003    | 2002    | 2001   
|---------------------- | ------- | ------- | -------
|                      
|Minimum rentals        | $14,282 | $14,787 | $13,978
|Contingent rentals     | 460     | 346     | 437    
|                      
|                       | $14,742 | $15,133 | $14,415
|                      

The Company carries insurance
policies on insurable risks with coverage and other terms that it believes to be
appropriate. The Company generally has self-insured retention limits and has obtained
fully-insured layers of coverage above such self-insured retention limits. Accruals for
self-insurance losses are made based on claims experience. Liabilities for existing and
unreported claims are accrued for when it is probable that future costs will be incurred.

The Company is a party to various
claims and legal proceedings which arose in the ordinary course of its business. Although
the ultimate disposition of these proceedings is not presently determinable, Management
does not believe that an adverse determination in any or all of such proceedings will have
a material adverse effect upon the consolidated financial condition or operating results
of the Company.

# 15. BUSINESS SEGMENT
INFORMATION

Historically, the Company has
operated principally in three industry segments: Textile Services, Manufacturing and
Marketing and Life Uniform. Manufacturing and Marketing has been treated as a discontinued
operation for all years presented in this report. The Companys continuing business
segments, including products and principal markets, are described elsewhere in this
report.

F-21

---

|(Dollars in thousands)                                 |  | 2003 |   |         | 2002 |   |         | 2001
|------------------------------------------------------ |  | ---- | - | ------- | ---- | - | ------- | ----
|                                                      
|Combined sales and revenues:                           |  |      |   |         |      |   |         |     
|Textile Services                                       |  |      | $ | 271,250 |      | $ | 259,078 |     
|Life Uniform                                           |  |      |   | 92,169  |      |   | 90,985  |     
|                                                      
|                                                       |  |      | $ | 363,419 |      | $ | 350,063 |     
|                                                      
|Income from continuing operations before income taxes: |  |     
|Textile Services                                       |  |      | $ | 21,904  |      | $ | 18,741  |     
|Life Uniform                                           |  |      |   | 2,948   |      |   | (4,951  | )   
|Interest, corporate expenses and other, net            |  |      |   | (9,566  | )    |   | (11,992 | )   
|Eliminations                                           |  |      |   |        |      |   | (8      | )   
|                                                      
|                                                       |  |      | $ | 15,286  |      | $ | 1,790   |     
|                                                      
|Assets (as of year end):                               |  |     
|Textile Services                                       |  |      | $ | 145,829 |      | $ | 140,498 |     
|Life Uniform                                           |  |      |   | 29,015  |      |   | 30,318  |     
|Corporate                                              |  |      |   | 51,278  |      |   | 56,439  |     
|Net assets of discontinued segment                     |  |      |   | 2,162   |      |   | 63,610  |     
|                                                      
|                                                       |  |      | $ | 228,284 |      | $ | 290,865 |     
|                                                      
|Depreciation and amortization:                         |  |     
|Textile Services                                       |  |      | $ | 10,115  |      | $ | 9,621   |     
|Life Uniform                                           |  |      |   | 2,445   |      |   | 2,686   |     
|Corporate                                              |  |      |   | 657     |      |   | 767     |     
|                                                      
|                                                       |  |      | $ | 13,217  |      | $ | 13,074  |     
|                                                      
|Capital additions, net:                                |  |     
|Textile Services                                       |  |      | $ | 11,801  |      | $ | 10,134  |     
|Life Uniform                                           |  |      |   | 2,516   |      |   | 3,694   |     
|Corporate                                              |  |      |   | 334     |      |   | 45      |     
|                                                      
|                                                       |  |      | $ | 14,651  |      | $ | 13,873  |     
|                                                      
|                                                       |  |     

All of the Companys sales and
revenues of its continuing business segments are provided in the United States. The
Company has no one major customer. Corporate assets consist primarily of cash,
investments, deferred income taxes, cash surrender value of company-owned life insurance,
information systems equipment and office furniture and fixtures. Corporate expenses
consist of the Companys principal administrative and financial functions, which are
centrally managed. Capital additions do not include the cost of properties acquired in
business acquisitions.

F-22

---

# 16. UNAUDITED QUARTERLY
FINANCIAL DATA

Quarterly results for 2003 and 2002
are shown below:

|Fiscal 2003 Quarter Ended(Dollars in thousands, except per share amounts) | April 27 |        | July 27 |        | October 26 | January 25
|------------------------------------------------------------------------- | -------- | ------ | ------- | ------ | ---------- | ----------
|                                                                         
|Combined sales and revenues:                                              |          |        |         |        |            |           
|Textile Services                                                          |          |        | $       | 68,381 |            | $         
|Life Uniform                                                              |          |        |         | 24,876 |            |           
|                                                                         
|                                                                          |          |        | $       | 93,257 |            | $         
|                                                                         
|Gross profit:                                                             |          |       
|Textile Services                                                          |          |        | $       | 14,081 |            | $         
|Life Uniform                                                              |          |        |         | 12,790 |            |           
|                                                                         
|                                                                          |          |        | $       | 26,871 |            | $         
|                                                                         
|Income from continuing operations
 before income taxes:                   |          |       
|Textile Services                                                          |          |        | $       | 5,884  |            | $         
|Life Uniform                                                              |          |        |         | 701    |            |           
|Interest, corporate expenses and
other, net                               |          | (3,058 | )       |        | (1,960     | )         
|                                                                         
|                                                                          |          |        | $       | 3,527  |            | $         
|                                                                         
|Income from continuing operations                                         |          |       
|before extraordinary item                                                 |          |        | $       | 2,293  |            | $         
|Extraordinary loss                                                        |          |        |         |       |            |           
|                                                                         
|Income (loss) from continuing operations                                  |          | 2,293  |         |        | (1,141     | )         
|Loss from discontinued operations                                         |          |        |         | (4,447 | )          |           
|                                                                         
|Net (loss) income                                                         |          |        | $       | (2,154 | )          | $         
|                                                                         
|Income from continuing operations                                         |          |       
|before extraordinary item:                                                |          |       
|Basic earnings per share*                                                 |          |        | $       | .27    |            | $         
|Diluted earnings per share*                                               |          |        | $       | .26    |            | $         
|                                                                         

F-23

---

|Fiscal 2002 Quarter Ended(Dollars in thousands, except per share amounts) | April 28 |        | July 28 |        | October 27 | January 26
|------------------------------------------------------------------------- | -------- | ------ | ------- | ------ | ---------- | ----------
|                                                                         
|Combined sales and revenues:                                              |          |        |         |        |            |           
|Textile Services                                                          |          |        | $       | 65,285 |            | $         
|Life Uniform                                                              |          |        |         | 23,902 |            |           
|                                                                         
|                                                                          |          |        | $       | 89,187 |            | $         
|                                                                         
|Gross profit:                                                             |          |       
|Textile Services                                                          |          |        | $       | 11,182 |            | $         
|Life Uniform                                                              |          |        |         | 12,264 |            |           
|                                                                         
|                                                                          |          |        | $       | 23,446 |            | $         
|                                                                         
|Income (loss) from continuing operations before                           |          |       
|income taxes:                                                             |          |       
|Textile Services                                                          |          |        | $       | 4,740  |            | $         
|Life Uniform                                                              |          |        |         | (61    | )          |           
|Interest, corporate expenses and
other, net                               |          | (3,142 | )       |        | (3,364     | )         
|                                                                         
|                                                                          |          |        | $       | 1,537  |            | $         
|                                                                         
|Income (loss) from continuing operations                                  | $        | 1,399  |         | $      | 687        |           
|Income (loss) from discontinued operations                                |          | 50     |         |        | 208        |           
|                                                                         
|Net income (loss)                                                         |          |        | $       | 1,449  |            | $         
|                                                                         
|Income (loss) from continuing operations:                                 |          |       
|Basic and diluted earnings per share*                                     | $        | .16    |         | $      | .08        |           
|                                                                         

|* | Earnings
per share are computed independently for each of the quarters presented. Therefore, the
sum of the quarterly earnings per share may not equal the total earnings per share for the
year.
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

F-24

---

# REPORT OF INDEPENDENT
PUBLIC ACCOUNTANTS

To Angelica Corporation:

We have audited in accordance with
auditing standards generally accepted in the United States, the consolidated financial
statements of Angelica Corporation and subsidiaries included in this Form 10-K, and have
issued our report thereon dated March 21, 2002. Our audit was made for the purpose of
forming an opinion on those statements taken as a whole. The schedule listed in Item
14(a)2(i) included in this Form 10-K is the responsibility of the Corporations
management and is presented for purposes of complying with the Securities and Exchange
Commissions rules and is not part of the basic consolidated financial statements.
This schedule has been subjected to the auditing procedures applied in the audit of the
basic consolidated financial statements and, in our opinion, fairly states in all material
respects the financial data required to be set forth therein in relation to the basic
consolidated financial statements taken as a whole.

/s/ ARTHUR ANDERSEN LLP
ARTHUR ANDERSEN LLP
St. Louis, Missouri,
March 21, 2002

# EXPLANATORY NOTE REGARDING ARTHUR ANDERSEN LLP

The Company could not obtain
permission of Arthur Andersen LLP to the inclusion in this Annual Report on Form 10-K of
its Report of Independent Public Accountants above because Arthur Andersen LLP has ceased
operations. Accordingly, the report of Arthur Andersen LLP above is merely reproduced from
the Companys Annual Report on Form 10-K for the fiscal year ended January 26,
2002. Reference to Item 14(a)2(i) in the report is now Item 15(a)2(i) in the Form 10-K as
revised.

S-1

---

Schedule II

# ANGELICA CORPORATION
AND SUBSIDIARIES

# SCHEDULE II 
VALUATION AND QUALIFYING ACCOUNTS

# For the Three Years
Ended January 25, 2003

Reserve for doubtful accounts 
deducted from receivables in the balance sheet:

|Year                        | Balance atBeginning of Period | Charged to Costsand Expenses | Deductions(a) | Balance at End ofPeriod
|--------------------------- | ----------------------------- | ---------------------------- | ------------- | -----------------------
|                           
|Year Ended January 25, 2003 |                               |                              | $             | 1,306                  
|                           
|Year Ended January 26, 2002 |                               |                              |               | 1,909                  
|                           
|Year Ended January 27, 2001 |                               |                              |               | 2,072                  
|                           

---

|(a) | Doubtful accounts written off against reserve provided, net of recoveries.                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | Beginning in fiscal 2003, the Company accelerated the write-off of
bankrupt accounts against the related reserve. This had no impact on the amounts
charged to costs and expenses.

S-2

---

# SIGNATURE

Pursuant to the requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused
this annual report to be signed on its behalf by the undersigned thereunto duly
authorized.

| |  |  |                      |                                                              
| |  |  | -------------------- | -------------------------------------------------------------
| |  |  | ANGELICA CORPORATION
| |  |  |                     
| |  |  | (Registrant)        
| |  |  | By:                  | /s/ Don W. Hubble                                            
| |  |  |                      |                                                              
| |  |  |                      | Don W. Hubble
Chairman, President and Chief
Executive Officer

Date: April 22, 2003

Pursuant to the requirements of the
Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on the date indicated.

|By: | /s/ Don W. Hubble                                                                         |   |  | By: | /s/ T. M. Armstrong                                                                                                      |  
|--- | ----------------------------------------------------------------------------------------- | - |  | --- | ------------------------------------------------------------------------------------------------------------------------ | -
|    |                                                                                           |   |  |    
|    | Don W. HubbleChairman, President andChief Executive Officer
(Principal Executive Officer) |   |  |     | T. M. ArmstrongSenior Vice President-Finance andAdministration and Chief Financial Officer
(Principal Financial Officer)
|By: | /s/ James W. Shaffer                                                                      |   |  |     |                                                                                                                          |  
|    |                                                                                           |   |  |     |                                                                                                                         
|    | James W. ShafferVice President and Treasurer(Principal Accounting Officer)                |   |  |     |                                                                                                                          |  
|    | David A. Abrahamson                                                                       | * |  |     | Susan S. Elliott                                                                                                         | *
|    |                                                                                           |  
|    | (David A. Abrahamson)Director                                                             |   |  |     | (Susan S. Elliott)Director                                                                                               |  
|    | Alan C. Henderson                                                                         | * |  |     | Charles W. Mueller                                                                                                       | *
|    |                                                                                           |  
|    | (Alan C. Henderson)Director                                                               |   |  |     | (Charles W. Mueller)Director                                                                                             |  
|    | Stephen M. OHara                                                                         | * |  |     | William A. Peck                                                                                                          | *
|    |                                                                                           |  
|    | (Stephen M. OHara)Director                                                               |   |  |     | (William A. Peck)Director                                                                                                |  
|    | Kelvin R. Westbrook                                                                       | * |  |     |                                                                                                                          |  
|    |                                                                                           |  
|    | (Kelvin R. Westbrook)Director                                                             |   |  |     |                                                                                                                          |  

By his signature below, Don W. Hubble
has signed this Form 10-K on behalf of each person named above whose name is followed by
an asterisk, pursuant to power of attorney filed with this Form 10-K.

| |  |  |  |  | /s/ Don W. Hubble                  | 
| |  |  |  |  | ---------------------------------- | 
| |  |  |  | 
| |  |  |  |  | Don W. Hubble, as attorney-in-fact | 

Date: April 22, 2003



---

# CERTIFICATIONS

I, Don W. Hubble, certify that:

|1. |  | I have reviewed this annual report on Form 10-K of Angelica Corporation;
|-- |  | ------------------------------------------------------------------------

|2. |  | Based on my knowledge, this annual report does not contain any untrue statement
          of a material fact or omit to state a material fact necessary to make the
          statements made, in light of the circumstances under which such statements were
          made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
          included in this annual report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this annual report is being prepared;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this annual
               report (the Evaluation Date); and
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the Evaluation
               Date;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the audit
               committee of registrants board of directors (or persons performing the
               equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The registrants other certifying officers and I have indicated in this
          annual report whether there were significant changes in internal controls or in
          other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: April 22, 2003 |  | /s/ Don W. Hubble                                           
|-------------------- |  | ------------------------------------------------------------
|                     |  | Don W. Hubble
Chairman, President andChief Executive Officer



---

# CERTIFICATIONS

I, T. M. Armstrong, certify that:

|1. |  | I have reviewed this annual report on Form 10-K of Angelica Corporation;
|-- |  | ------------------------------------------------------------------------

|2. |  | Based on my knowledge, this annual report does not contain any untrue statement
          of a material fact or omit to state a material fact necessary to make the
          statements made, in light of the circumstances under which such statements were
          made, not misleading with respect to the period covered by this annual report;
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|3. |  | Based on my knowledge, the financial statements, and other financial information
          included in this annual report, fairly present in all material respects the
          financial condition, results of operations and cash flows of the registrant as
          of, and for, the periods presented in this annual report;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|4. |  | The registrants other certifying officers and I are responsible for
               establishing and maintaining disclosure controls and procedures (as defined in
               Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | designed such disclosure controls and procedures to ensure that material
               information relating to the registrant, including its consolidated subsidiaries,
               is made known to us by others within those entities, particularly during the
               period in which this annual report is being prepared;
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | evaluated the effectiveness of the registrants disclosure controls and
               procedures as of a date within 90 days prior to the filing date of this annual
               report (the Evaluation Date); and
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|c) |  | presented in this annual report our conclusions about the effectiveness of the
               disclosure controls and procedures based on our evaluation as of the Evaluation
               Date;
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|5. |  | The registrants other certifying officers and I have disclosed, based on
               our most recent evaluation, to the registrants auditors and the audit
               committee of registrants board of directors (or persons performing the
               equivalent functions):
|-- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|a) |  | all significant deficiencies in the design or operation of internal controls
               which could adversely affect the registrants ability to record, process,
               summarize and report financial data and have identified for the
               registrants auditors any material weaknesses in internal controls; and
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|b) |  | any fraud, whether or not material, that involves management or other employees
               who have a significant role in the registrants internal controls; and
|-- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

|6. |  | The registrants other certifying officers and I have indicated in this
          annual report whether there were significant changes in internal controls or in
          other factors that could significantly affect internal controls subsequent to
          the date of our most recent evaluation, including any corrective actions with
          regard to significant deficiencies and material weaknesses.
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|Date: April 22, 2003 |  | /s/ T. M. Armstrong                                                                        
|-------------------- |  | -------------------------------------------------------------------------------------------
|                     |  | T. M. Armstrong
Senior Vice President - Finance &Administration and Chief Financial Officer



---

# EXHIBIT INDEX

|ExhibitNumber | Description
|------------- | -----------

|      | *Asterisk indicates exhibits filed herewith.
    **Incorporated by reference from the document listed.                                                                                                                                                                                                                                                                                      
|----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1   | Restated Articles of Incorporation of the Company, as currently in effect. Filed as
Exhibit 3.1 to the Form 10-K for the fiscal year ended January 26, 1991.**                                                                                                                                                                                                                              
|3.2   | Current By-Laws of the Company, as last amended March 27, 2001. Filed as Exhibit 3.2
to the Form 10-K for the fiscal year ended January 27, 2001.**                                                                                                                                                                                                                                         
|4.1   | Shareholder Rights Plan dated August 25, 1998. Filed as Exhibit 1 to
Registration Statement on Form 8-A on August 28, 1998.**                                                                                                                                                                                                                                                               
|10.1  | Loan Agreement with LaSalle Bank N.A. et al, dated May 30, 2002. Filed as
Exhibit 10.1 to the Form 10-Q for fiscal quarter ended April 27, 2002.**                                                                                                                                                                                                                                          
|10.2  | First Amendment, effective January 24, 2003, to Loan Agreement with LaSalle
Bank N.A. et al, dated May 30, 2002.*                                                                                                                                                                                                                                                                           
|10.3  | First Extension Agreement, effective March 1, 2003, to Loan Agreement with
LaSalle Bank N.A. et al, dated May 30, 2002.*                                                                                                                                                                                                                                                                    
|10.4  | Angelica Corporation 1994 Performance Plan (as amended 1/31/95). Filed as Exhibit 10.1 to
the Form 10-K for fiscal year ended January 28, 1995.**                                                                                                                                                                                                                                           
|10.5  | Angelica Corporation Stock Award Plan. Filed as Exhibit 10 to the Form 10-K
for fiscal year ended February 1, 1992.**                                                                                                                                                                                                                                                                       
|10.6  | Angelica Corporation Supplemental Plan restated as of September 1, 2000. Filed as
Exhibit 10.6 to the Form 10-Q for fiscal quarter ended October 28, 2000.**                                                                                                                                                                                                                                
|10.7  | Deferred Compensation Option Plan for Selected Management Employees, filed as Exhibit 19.9
to the Form 10-K for fiscal year ended January 26, 1991. Amendment dated
October 25, 1994 filed as Exhibit 10.27 to the Form 10-K for fiscal year ended
January 28, 1995; and amendment dated February 25, 1997 filed as Exhibit 10.34
to the Form 10-K for fiscal year ended January 25, 1997.**
|10.8  | Deferred Compensation Option Plan for Directors, filed as Exhibit 19.8
to the Form 10-K for fiscal year ended January 26, 1991. Amendment dated
July 28, 1992 filed as Exhibit 19.3 to the Form 10-K for fiscal year ended
January 30, 1993; and amendment dated November 29, 1994 filed as Exhibit 10.24
to the Form 10-K for fiscal year ended January 28, 1995.**                        
|10.9  | Supplemental and Deferred Compensation Trust. Filed as Exhibit 19.5 to the
Form 10-K for fiscal year ended February 1, 1992.**                                                                                                                                                                                                                                                              
|10.10 | Management Retention and Incentive Plan (restated). Filed as Exhibit 19.1 to
the Form 10-K for fiscal year ended January 26, 1991.**                                                                                                                                                                                                                                                        
|10.11 | Management Retention Trust. Filed as Exhibit 19.4 to the Form 10-K for
fiscal year ended February 1, 1992.**                                                                                                                                                                                                                                                                                
|10.12 | Restated Deferred Compensation Plan for Non-Employee Directors, filed as
Exhibit 10 (v) to the Form 10-K for fiscal year ended January 28, 1984.
Amendment No. 1 dated November 29, 1994 was filed as Exhibit 10.25 to the
Form 10-K for fiscal year ended January 28, 1995.**                                                                                                              



---

|10.13 | Restated Angelica Corporation Stock Bonus and Incentive Plan. Filed as
Exhibit 10.16 to the Form 10-K for the fiscal year ended January 29, 2000.**                                                                                                                                              
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.14 | Angelica Corporation 1994 Non-Employee Directors Stock Plan. Filed as Appendix A to the
Proxy Statement for the Annual Meeting of Shareholders held on May 23, 1995. First
amendment dated January 27, 1998 was filed as Exhibit 10.35 to the Form 10-K for
fiscal year ended January 31, 1998.**
|10.15 | Specimen form of Stock Option Agreement under the Angelica Corporation 1994 Performance
Plan. Filed as Exhibit 10.15 to the Form 10-Q for fiscal quarter ended July 28,
2001.**                                                                                                                  
|10.16 | Specimen form of Stock Option Agreement under the Angelica Corporation 1999 Performance
Plan. Filed as Exhibit 10.16 to the Form 10-Q for fiscal quarter ended July 28,
2001.**                                                                                                                  
|10.17 | Form of Indemnification Agreement between the Company and each of its directors and
executive officers (filed as Exhibit 10.22 to the Form 10-K for fiscal year ended
January 30, 1999).**                                                                                                       
|10.18 | Employment Agreement between the Company and Theodore M. Armstrong, dated
January 1, 2003.*                                                                                                                                                                                                      
|10.19 | Employment Agreement between the Company and Don W. Hubble, dated February
5, 2003.*                                                                                                                                                                                                             
|10.20 | Retirement Benefit Agreement between the Company and Don W. Hubble dated January 1,
1998. Filed as Exhibit 10.31 to the Form 10-K for fiscal year ended January 31,
1998.**                                                                                                                      
|10.21 | Non-Qualified Stock Option Agreement between the Company and Don W. Hubble dated
January 2, 1998. Filed as Exhibit 10.32 to the Form 10-K for fiscal year ended
January 31, 1998.**                                                                                                              
|10.22 | First Amendment to Non-Qualified Stock Option Agreements between the Company
and Don W. Hubble, dated February 5, 2003.*                                                                                                                                                                         
|10.23 | Restricted Stock Agreement between the Company and Don W. Hubble, dated February 5, 2003.*                                                                                                                                                                                                       
|10.24 | Employment Agreement between the Company and Steven L. Frey, dated March 1, 2003.*                                                                                                                                                                                                               
|10.25 | Angelica Corporation 1999 Performance Plan. Filed as Appendix A to the Proxy
Statement for the Annual Meeting of Shareholders held May 25, 1999.**                                                                                                                                               
|10.26 | Employment Agreement between the Company and Denis R. Raab, dated February 1, 2003.*                                                                                                                                                                                                             
|10.27 | Employment Agreement between the Company and James W. Shaffer, dated February 1, 2003.*                                                                                                                                                                                                          
|10.28 | Employment Agreement between the Company and Edward P. Ryan, dated February 1, 2003.*                                                                                                                                                                                                            
|10.29 | Employment Agreement between the Company and Paul R. Anderegg, dated February 1, 2003.*                                                                                                                                                                                                          
|10.30 | Restricted Stock Agreement between the Company and Edward P. Ryan, dated April 1,
2001. Filed as Exhibit 10.34 to the Form 10-K for fiscal year ended January 27,
2001.**                                                                                                                        
|21    | Subsidiaries of the Company.*                                                                                                                                                                                                                                                                    
|23    | Consent of Independent Public Accountants.*                                                                                                                                                                                                                                                      
|24.1  | Powers of Attorney submitted by David A. Abrahamson, Susan S. Elliott, Alan
C. Henderson, Charles W. Mueller, Stephen M. OHara, William A. Peck and
Kelvin R. Westbrook.*                                                                                                                       



---

|24.2 | Certified copy of Board Resolution authorizing Form 10-K filing utilizing
powers of attorney.*
|---- | ----------------------------------------------------------------------------------------------
|99.1 | Section 906 Certification of Chief Executive Officer.*                                        
|99.2 | Section 906 Certification of Chief Financial Officer.*                                        

The Company will furnish to any
record or beneficial shareholder requesting a copy of this Annual Report on Form 10-K a
copy of any exhibit indicated in the above list as filed with this Annual Report on Form
10-K upon payment to it of its reasonable expenses in furnishing such exhibit.



---