MINNEAPOLIS, Aug. 15 /PRNewswire/ -- G&K Services, Inc. (Nasdaq: GKSRA),
one of North America's market leaders in corporate identity apparel programs
and facility services, today announced revenue and earnings results for its
fourth quarter and year ended July 1, 2000.  "We are pleased with our progress
toward re-establishing historical revenue growth rates, despite the issues
encountered in our direct sale operation," said Richard Fink, chairman.  "The
combination of increased organic growth over fiscal 1999 and two successful
acquisitions in key markets resulted in total revenue growth of 8.9 percent in
fiscal 2000."
    Consolidated revenues grew to $577.4 million for the year, 11.0 percent
over the prior year.  Fiscal 2000 revenues included an extra week in the
fourth quarter.  Excluding this week, revenues grew 8.9 percent.  The Company
reported diluted earnings per share of $1.85 for the year compared to $1.81 in
fiscal 1999.  Net income increased 2.1 percent to $37.8 million from
$37.0 million last year.
    "Rental revenues showed a steady increase in most areas of the United
States and Canada.  In fact, we are seeing improved performance in portions of
the southeast, where significant acquisition integration activities were
completed earlier this year," Fink said.  "Furthermore, we have taken positive
actions to better position the direct sale operation to begin contributing in
the near future."
    Revenues for the fourth quarter rose to $156.6 million from $132.8 million
in the fourth quarter last year.  Excluding the extra week during the fourth
quarter, revenues grew 9.5 percent.  Earnings per diluted share were $0.51
compared with $0.47 for the prior-year quarter.  Net income increased
7.8 percent to $10.4 million compared to $9.7 million last year.
    Fourth quarter revenue from G&K's rental business increased 17.7 percent
to $151.4 million over the prior-year and 6.2 percent on a comparable basis,
after adjusting for acquisitions, divestitures and an extra week of operating
results.  The improvement was driven by the United States and Canadian
industrial growth rates, offset by slower growth in the cleanroom business.
Consolidated direct sale revenue for the quarter increased 25.2 percent to
$5.2 million and was up 16.2 percent when excluding the extra week.  Direct
sale revenue growth rebounded in the fourth quarter, as the Company made
substantial progress on reducing its operating loss run rate during the
quarter.
    Cost of rental operations for the quarter increased to 57.2 percent of
rental revenue compared with 56.4 percent for the prior-year quarter.  The
increase reflects higher fuel costs and expenses associated with a one-time
charge in connection with closing the Company's Portland cleanroom facility.
    Cost of direct sales for the quarter increased to 88.0 percent of direct
sale revenue compared with 74.7 percent last year.  Expenses associated with a
new fulfillment center and information system implemented in the direct sale
operation caused the increase.
    SG&A expenses increased to 22.3 percent of revenue in the fourth quarter
compared to 21.1 percent in the prior-year quarter.  The increase was driven
by expenses related to the direct sale operation and commissions related to a
new product launch.
    Other income for the quarter was up $1.0 million over last year driven by
a one-time gain related to the adoption of the new Financial Accounting
Standards Statement No. 133.  Under this accounting standard, the Company
recognized deferred gains associated with its deferred compensation plan.
    "Fiscal 2000 was a transitional year in many ways," said Thomas Moberly,
chief executive officer.  "In addition to producing record revenues and
earnings for the year, we continued to make important investments to support
long-term performance.  We staffed our regional operating teams to support our
local businesses and made two key acquisitions in markets that expanded our
geographic coverage.  Finally, we performed a comprehensive review of our
long-term information system needs and are beginning to implement new systems
in fiscal 2001," Moberly continued.
    "The highlight of the past quarter was our successful launch of an anti-
fatigue mat program.  In a short promotional period, we installed a large base
of these mats with existing customers, which will generate substantial revenue
and earnings in fiscal 2001," Moberly said.  "This product extends our product
portfolio and fills a critical need for our customers.  In addition, the
success of this program demonstrates the financial benefits of leveraging our
customer base with additional products and services."
    Cash flows remained strong producing cash from operations of $83.3 million
for fiscal 2000, an increase of 40.1 percent over the prior-year.  Debt, net
of cash, was up only slightly over last year, even with the completion of two
acquisitions that were funded with cash during the year.  Subsequent to year-
end, the Company completed a $50 million, 10-year, 8.4 percent private
placement debt transaction.  The transaction diversifies the Company's capital
structure and provides increased liquidity under its revolving credit
facility.
    "Going into fiscal 2001, we are confident that, with the initiatives we
have taken during the past year and the momentum we are building, we will be
returning to our historical revenue growth rates," Moberly stated.  "In
addition, the current status of the direct sale operation will support
improved earnings in fiscal 2001.  We anticipate another record year of
revenue and profit."
    This press release contains "forward-looking statements" within the
meaning of the federal securities laws, including statements concerning
business strategies and their intended results, and similar statements
concerning anticipated future events and expectations that are not historical
facts.  These forward-looking statements are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.  The
forward-looking statements in this press release reflect management's best
judgment at the time they are made, but all such statements are subject to
numerous risks and uncertainties, which could cause actual results to differ
materially from those expressed in or implied by the statements herein.
Additional information concerning potential factors that could effect future
financial results is included in the Company's Annual Report on Form 10-K for
the Fiscal Year Ended June 26, 1999.
    G&K Services, Inc. is headquartered in Minneapolis, Minnesota.  The
Company is a market leader in corporate identity apparel programs and facility
services in the United States, and is the largest such provider in Canada.
G&K operates in Canada as Work Wear Corporation of Canada Ltd.  G&K operates
over 130 processing facilities and branch offices, serving over 105,000
customers and processing over 2 million garments daily.
    To receive the latest information about G&K Services, Inc. by fax, at no
cost, dial 1-800-pro-info, code GKSRA


                              G&K SERVICES, INC.
                     CONSOLIDATED STATEMENTS OF EARNINGS
             (US dollars in thousands, except per share amounts)

                              For the 3 Months Ended  For the 12 Months Ended
                                   July 1    June 26      July 1     June 26
                                    2000       1999        2000       1999
                                (unaudited)(unaudited)

    REVENUES
      Rental operations          $151,439   $128,674     $556,646  $503,062
      Direct sales                  5,205      4,158       20,746    16,904
        Total revenues            156,644    132,832      577,392   519,966
    OPERATING EXPENSES
      Cost of rental operations    86,650     72,586      316,131   283,419
      Cost of direct sales          4,582      3,108       17,435    11,938
      Selling and administrative   34,877     28,084      127,451   111,228
      Depreciation                  7,793      7,359       29,481    27,410
      Amortization of intangibles   2,496      2,145        9,250     8,569
        Total operating expenses  136,398    113,282      499,748   442,564
    INCOME FROM OPERATIONS         20,246     19,550       77,644    77,402
      Interest expense              4,358      4,012       16,702    17,213
      Other income, net            (1,536)      (488)      (2,077)   (1,009)
    INCOME BEFORE INCOME TAXES     17,424     16,026       63,019    61,198
      Provision for income taxes    6,987      6,343       25,207    24,169
    NET INCOME                    $10,437     $9,683      $37,812   $37,029
      Basic weighted average
       number of shares
        outstanding                20,454     20,431       20,456    20,414
    BASIC EARNINGS PER COMMON
      SHARE                         $0.51      $0.47        $1.85     $1.81
      Diluted weighted average
       number of shares
        outstanding                20,457     20,516       20,487    20,509
    DILUTED EARNINGS PER COMMON
      SHARE                         $0.51      $0.47        $1.85     $1.81
      Dividends per share         $0.0175    $0.0175      $0.0700   $0.0700


                              G&K SERVICES, INC.
                      SELECTED BALANCE SHEET INFORMATION
                          (US dollars in thousands)


                                                     July 1,       June 26,
                                                      2000           1999


    WORKING CAPITAL                                  $65,695        $73,168
    TOTAL ASSETS                                     594,952        541,432
    LONG-TERM DEBT                                   183,370        193,952
    STOCKHOLDERS' EQUITY                             271,522        235,633

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