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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

For the Fiscal Year Ended June 29, 2002

Commission file number 0-4063

G&K SERVICES, INC.
(Exact name of registrant as specified in its charter)

5995 OPUS PARKWAY, STE. 500
MINNETONKA, MINNESOTA 55343
(Address of principal executive offices)

Registrant’s telephone number, including area code    (952) 912-5500  

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(b) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.      Yes   X   No      

Indicate 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.     

The aggregate market value of the voting stock of registrant held by non-affiliates of registrant, on September 12, 2002, computed by reference to the closing sale price of such shares on such date, was approximately $704,550,464.

On September 12, 2002, there were outstanding 19,253,173 and 1,474,996 shares of the registrant’s Class A and Class B Common Stock, respectively.

DOCUMENTS INCORPORATED BY REFERENCE

Table of Contents

G&K Services, Inc.
Form 10-K
For the fiscal year ended June 29, 2002

Table of Contents

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PART I

ITEM 1. BUSINESS

G&K Services, Inc., founded in 1902 and headquartered in Minnetonka, Minnesota, is a market leader in providing corporate identity apparel and facility services programs to a wide variety of North American industrial, service and high-technology companies. We rent uniforms and other related products such as floor mats, dust mops, wiping towels, restroom supplies and selected linen items. We also sell uniforms and branded and other apparel items to customers in our direct sale programs. The North American rental market is approximately $6.0 billion, while the direct sales market, targeted by us, is approximately $4.5-$5.0 billion in size.

We made several small acquisitions in each of the past three fiscal years. All acquisitions were accounted for using the purchase method. The pro forma effect of these acquisitions, had they been acquired at the beginning of the fiscal year, were not material. The total purchase consideration, including related acquisition costs of these transactions, was approximately $69.7 million, $20.3 million and $38.3 million in fiscal 2002, 2001 and 2000, respectively. The total purchase price exceeded the estimated fair values of assets acquired by approximately $52.1 million in fiscal 2002, $9.0 million in fiscal 2001 and $19.1 million in fiscal 2000.

Through internal growth and acquisitions, we have steadily expanded our operations into additional geographic markets. We operate out of over 130 North American locations serving customers in 46 states and two Canadian Provinces. By comparison, we operated from 43 locations serving customers in 21 states in 1989.

We target our marketing efforts on those customers, industries and geographic locations that are expanding and are in need of a quality-oriented corporate identity program that provides high levels of product quality, consistent customer-centric service levels, multi-channel sales, service, reporting and outsourced program management. Our experience with both existing and potential customers, large and small, confirms that a large segment of the market is willing to pay a premium price to a vendor that can consistently supply these features.

Customers, Products and Services

We serve over 140,000 customers, from divisions of more than half of the Fortune 100 companies to fast-growing small and midsize firms. No one customer represents more than 1.0% of our total revenues. We serve virtually all industries including automotive, warehousing, distribution, transportation, energy, manufacturing, pharmaceutical, semi-conductor, restaurants and hospitality, and many others. Over one million people wear our uniforms every day.

Our full-service business apparel and facility services programs provide rental-lease or purchase options to meet varied customer needs including heavy-industrial, light-manufacturing, service businesses, corporate casual and executive apparel. In addition, we offer cleanroom garments and process control services to meet the needs of high-technology customers.

We believe that customers use business apparel programs to meet a variety of critical business needs.

	•		Corporate identity and security — uniforms help identify employees working for a particular company or department. Uniformed employees are perceived as trained, competent and dependable.
	•		Brand awareness — uniforms promote a company’s brand identity and employees serve as a “walking billboard”.
	•		Image — uniforms help project a professional image of employees. It frames the perception of credibility, knowledge, trust and a commitment to quality to their customers.
	•		Employee retention — uniforms enhance worker morale and help build a teamwork attitude in addition to being an employee benefit.
	•		Worker protection — uniforms help protect workers from difficult environments such as heavy soils, heat, flame or chemicals.

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•

Product protection — uniforms help protect products against contamination in the food, pharmaceutical, electronics and health care industries.

We provide our apparel-rental customers with a full range of services. A consultative approach is used to advise and assist our customers in creating a tailored program in determining garment application, choosing fabrics, styles and colors appropriate to the customer’s branding and/or specific needs. A large stock of new and used garments are available to provide rapid response as customer needs change due to increases, decreases or turnover in their work force. Professional cleaning, finishing, repair and replacement of uniforms in use is a normal part of the rental service. Soiled uniforms are picked up at the customer’s location and returned clean and in good condition on a weekly cycle.

We also believe that uniform rental provides customers with significant advantages over ownership. Renting eliminates investment in uniforms; offers flexibility in styles, colors and quantities as customer requirements change; assures consistent professional cleaning, finishing, repair and replacement of items in use; and provides freedom from the expense and management time necessary to administer a uniform program.

Our facility services programs provide a wide range of dust control and maintenance products and services. They include several floor mat offerings (traction control, logo, message, scraper and anti-fatigue), dust and wet mops, wiping towels, fender covers, selected linen items and several restroom products. These products support customer efforts in maintaining a clean, safe and attractive environment within their facilities.

Direct sale and custom-logo embroidered apparel programs are also offered by us to meet customer corporate identity needs. The direct sale programs can be used for those departments and/or customers that require highly customized and branded apparel or for those workers who don’t start at the same location each day. It can be more economical for high turnover positions and can be used for employee rewards and recognition or customer and vendor appreciation programs.

Competition

We encounter a high level of competition from a number of companies in the geographic areas we serve. We rank among the nation’s largest garment rental suppliers. Major competitors include publicly held companies such as ARAMARK (a division of ARAMARK Corporation), Cintas Corporation and Unifirst Corporation. We also compete with a multitude of regional and local competitors that vary by market. We believe that we compete effectively in our line of business because of the quality and breadth of our product line, the comprehensive customer service levels we provide and our proven ability as an outsource partner.

Manufacturing

We manufactured almost one half of the uniform garments placed into service in fiscal 2002. These garments are manufactured in four Company owned facilities located in the U.S., Canada and Dominican Republic. Various outside vendors are used to supplement our additional rental needs, including garments, floor mats, dustmops and cloths, wiping towels, linens and related products. We are not aware of any circumstances that would limit our ability to obtain raw materials to support the manufacturing process or to obtain garments or other rental items to meet our customers needs.

Environmental Matters

Our operations are subject to various federal, state and/or local laws regulating the discharge of materials into the environment. This includes discharges into wastewater and air, and the generation, handling, storage, transportation and disposal of waste and hazardous substances. We generate modest amounts of waste in connection with our laundry operations, specifically detergent wastewater, wastewater sludge, waste oil and other residues. Some of these wastes are classified as hazardous wastes under these laws. We have continued to make significant investments in properly handling and disposing of these wastes.

We have been identified as a potentially responsible party (PRP) under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended (CERCLA), or similar state laws, at a number of waste disposal sites. Under such laws, PRP’s typically are jointly and severally liable for any investigation and remediation costs incurred with respect to such sites. Therefore, there can be no assurance that we will not have to contribute material amounts for future remediation that could be greater than the share of waste contributed by us would otherwise indicate. Additionally, environmental laws may impose liability for cost of removal or remediation of certain hazardous wastes located on or in or emanating from owned or leased real estate, whether or not we knew of or were responsible for the presence of such wastes.

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While we take appropriate steps when acquiring or leasing new properties, there can be no assurance that this risk has been eliminated.

We have been placed on notice by the owners of a Wayzata, Minnesota, shopping center regarding the alleged presence of solvents in the ground water in the vicinity of the shopping center, where certain affiliates of ours formerly operated a dry cleaning establishment in the shopping center. At this time, no demand has been made and no action has been commenced against us. The owners of the shopping center have informed us that they are pursuing cleanup through state funding mechanisms. Since little information is available at this time, we are unable to predict what, if any, liability we may have in this matter.

Although any ultimate liability arising from environmental related matters described herein could result in significant expenditures that, if aggregated and assumed to occur within a single fiscal year, could be material to our financial statements, the likelihood of such occurrence is considered remote. Based on information currently available to management and its best assessment of the ultimate amount and timing of environmental-related events, management believes that the cost of these environmental-related matters are not reasonably likely to have a material adverse effect on our consolidated financial statements.

Employees

Our U.S. operations had a total of 7,310 employees as of June 29, 2002, consisting of 4,139 production employees and 3,171 sales, office, route and management personnel. Unions represent approximately 15.0% of our U.S. employees. Management believes its domestic employee relations are satisfactory.

Our Canadian operations had a total of 1,048 employees as of June 29, 2002, consisting of 576 production employees and 472 sales, office, route and management personnel. Unions represent approximately 68.0% of our Canadian employees. Management believes Canadian employee relations are satisfactory.

Foreign and Domestic Operations

Financial information relating to foreign and domestic operations is set forth in Note 10 of our consolidated financial statements included in Item 8 of this Form 10-K.

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ITEM 2. PROPERTIES

We occupy 150 facilities located in the United States, Canada and the Dominican Republic. These facilities include our processing, branch, garment manufacturing, distribution and administrative support locations. We own approximately 80.0% of our processing facilities, which average over 43,000 square feet in size. We clean and supply rental items principally from 57 industrial garment, cleanroom garment, dust control and linen supply plants located in 53 cities in the United States and Canada.

ITEM 3. LEGAL PROCEEDINGS

We are involved in a variety of legal actions relating to personal injury, customer contracts, employment, trade practices, environmental and other legal matters that arise in the normal course of business. These legal actions include those items set forth in Item 1. Business — Environmental Matters and lawsuits that challenge the practice of charging for certain environmental services on invoices. While we are unable to predict the ultimate outcome of these legal actions, it is the opinion of management that the disposition of these matters will not have a material adverse effect on our consolidated financial statements taken as a whole.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to a vote of our security holders during the fourth quarter of fiscal 2002.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON STOCK AND RELATED SECURITY HOLDER MATTERS

Our Class A Common Stock is quoted on Nasdaq National Market under the symbol “GKSRA”. Our Class B Common Stock is not registered and no active trading market exists for the Class B Common Stock. The following table sets forth the high and low reported sales prices for the Class A Common Stock as quoted on the Nasdaq National Market for the periods indicated.

As of September 12, 2002, we had approximately 625 registered stockholders.

We have declared cash dividends of $0.0175 per share in each of the quarters for the fiscal years ended June 29, 2002 and June 30, 2001. Our debt agreements contain various restrictive covenants, which, among other things, limit the payment of cash dividends.

The following table sets forth certain information as of June 29, 2002 with respect to equity compensation plans under which securities are authorized for issuance:

(1)  Includes our 1989 Stock Option and Compensation Plan and 1998 Stock Option and Compensation Plan.

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ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth certain selected financial data. All amounts are in thousands, except per share data.

See Note 1 of our consolidated financial statements included in Item 8 of this Form 10-K for an explanation of the method employed to determine the number of shares used to compute per share amounts.

The fiscal 2002 results include the impact of the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets,” under which goodwill and intangible assets with indefinite lives are no longer amortized. See Note 3 of the consolidated financial statements included in Item 8 of this Form 10-K.

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The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes thereto which are included herein. We utilize a 52-53 week fiscal year ending on the Saturday nearest June 30. The fiscal year ended July 1, 2000 was a 53-week year with the extra week reported in the fourth quarter.

Overview

G&K Services, Inc., founded in 1902 and headquartered in Minnetonka, Minnesota, is a market leader in providing corporate identity apparel and facility services programs to a wide variety of North American industrial, service and high-technology companies. We rent uniforms and other related products such as floor mats, dust mops, wiping towels, restroom supplies and selected linen items. We also sell uniforms and other apparel items to customers in our direct sale programs. The North American rental market is approximately $6.0 billion, while the direct sales market, targeted by us, is approximately $4.5-$5.0 billion in size.

In fiscal 2002, we achieved 3.7% revenue growth and a 13.3% increase in net income from fiscal 2001. Return on average equity increased slightly to 11.9% from 11.8% in the prior year. Revenue growth has continued to be impacted by weak economic conditions that negatively impacted existing customer employment levels and customer turnover. Fiscal 2002 results also include the impact of the adoption of Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (SFAS 142) under which goodwill and intangible assets with indefinite lives are no longer amortized. This change resulted in an increase in net income of approximately $3.0 million for the year.

We made several small acquisitions in each of the past three fiscal years. All acquisitions were accounted for using the purchase method. The pro forma effect of these acquisitions, had they been acquired at the beginning of the fiscal year, were not material. The total purchase consideration, including related acquisition costs of these transactions, was approximately $69.7 million, $20.3 million and $38.3 million in fiscal 2002, 2001 and 2000, respectively. The total purchase price exceeded the estimated fair values of assets acquired by approximately $52.1 million in fiscal 2002, $9.0 million in fiscal 2001 and $19.1 million in fiscal 2000.

For the latest five-year period, revenues grew at a rate of 12.3%, compounded annually. This result includes the weak economic conditions over the last two to three years that have negatively impacted the retention of our customer base and ability to attract new customers. The impact of the economy on revenue has been partially offset by our focus on new product promotions, continued success in signing national accounts and acquisitions.

Our five-year growth rate for net income was 5.7%, compounded annually. Net income was negatively impacted in both fiscal 2002 and fiscal 2001 by the difficult economy, higher energy costs and higher employee benefit costs. In addition, we continue to focus on investments and process improvements that support future success. These investments include new technologies focused on enhancing revenue growth and improving human resource management. Better merchandise control and lower processing costs have positively contributed to the bottom line, while garment manufacturing facilities have enhanced product quality and decreased merchandise costs.

Critical Accounting Policies

The discussion of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States. As such, management is required to make certain estimates, judgments and assumptions that are believed to be reasonable based on the information available. These estimates and assumptions affect the reported amount of assets and liabilities, revenues and expenses, and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective of significant judgments and uncertainties, and potentially result in materially different results under different assumptions and conditions. See Note 1 to the consolidated financial statements for additional discussion of the application of these and other accounting policies.

Revenue Recognition and Allowance for Doubtful Accounts

We recognize revenue from rental operations in the period in which the services are provided. Direct sale revenue is recognized in the period in which the product is shipped. Estimates are used in determining the collectability of billed accounts

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receivable. Management analyzes specific accounts receivable and historical bad debt experience, customer credit worthiness, current economic trends and the age of outstanding balances when evaluating the adequacy of the allowance for doubtful accounts. Significant management judgments and estimates are used in connection with establishing the allowance in any accounting period. Material differences may result in the amount and timing of bad debt expense recognition for any given period if management makes different judgments or utilizes different estimates.

Inventories

Our inventories consist of new goods and rental merchandise in service. Estimates are used in determining the likelihood that new goods on hand can be sold to customers or used in rental operations. Historical inventory usage and current revenue trends are considered in estimating both obsolete and excess inventories. New goods are stated at lower of cost or market, net of any reserve for obsolete or excess inventory. Merchandise placed in service to support rental operations is amortized into cost of rental operations over the estimated useful lives of the underlying inventory items, primarily on a straight-line basis. Estimated lives of rental merchandise in service range from nine months to three years. In establishing estimated lives for merchandise in service, management considers manufacturer expectations, historical experience and the intended use of the merchandise. Material differences may result in the amount and timing of operating profit for any period if management makes different judgments or utilizes different estimates.

Goodwill, Intangibles and Other Long-Lived Assets

In June 2001, the Financial Accounting Standards Board issued SFAS No. 142. We adopted SFAS 142 at the beginning of fiscal 2002 and as a result will no longer amortize goodwill. SFAS 142 also requires that companies test goodwill for impairment on an annual basis and when events occur or circumstances change that would more likely than not reduce the fair value of the reporting unit to which goodwill is assigned below its carrying amount. There have been no impairments of goodwill in fiscal 2002, 2001 or 2000. Our evaluation considers changes in the operating environment, competitive information, market trends, operating performance and cash flow modeling. Future events could cause management to conclude that impairment indicators exist and that goodwill and other intangibles associated with acquired businesses are impaired. Any resulting impairment loss could have a material impact on our financial condition and results of operations.

Property, plant and equipment and definite-lived intangible assets are depreciated or amortized over their useful lives. Useful lives are based on management estimates of the period that the assets will generate revenue. Long-lived assets are evaluated for impairment whenever events and circumstances indicate an asset may be impaired. There have been no write-downs of any long-lived assets in fiscal 2002, 2001 or 2000.

Insurance

We self-insure for certain obligations related to health and workers’ compensation programs. We purchase stop-loss insurance policies to protect us from catastrophic losses. Estimates are used in determining the potential value associated with reported claims and for losses that have occurred, but have not been reported. Management estimates consider historical claims experience, escalating medical cost trends, expected timing of claim payments and actuarial analysis provided by a third party. During 2002, we changed certain assumptions utilized in evaluating our self-insurance liability and began to apply a discounting factor to estimated future payments. The impact of these changes was not material to our consolidated balance sheets or statements of operations for any period presented. Changes in the cost of medical care, our ability to settle claims or the estimates and judgement used by management could have a material impact on the amount and timing of expense for any period.

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Results of Operations

The percentage relationships to net sales of certain income and expense items for the three fiscal years ended June 29, 2002, June 30, 2001 and July 1, 2000, and the percentage changes in these income and expense items between years are presented in the following table:

Fiscal 2002 Compared to Fiscal 2001

Revenues. Total revenues in fiscal 2002 rose 3.7% to $625.9 million from $603.6 million in fiscal 2001. Rental revenue rose $21.3 million in fiscal 2002, a 3.6% increase over fiscal 2001. Higher unemployment levels and overall weak economic conditions resulting in continued net reductions of customer employees in uniform have negatively impacted revenue growth rates. These conditions were partially offset through the addition of new customers, penetrating existing customers with a broader mix of product and service offerings and acquisitions.

Direct sale revenue was $21.5 million in fiscal 2002, a 5.3% increase over $20.4 million in fiscal 2001. The increase in revenue was primarily due to several large customer shipments that occurred primarily in the first half of the fiscal year.

Cost of Rental and Direct Sale. Cost of rental operations increased 3.3% to $351.4 million in fiscal 2002 from $340.1 million in fiscal 2001. Gross margin from rental sales improved to 41.9% in fiscal 2002 from 41.7% in the prior year. The combination of improved operational productivity, lower merchandise expense and reduced energy costs have contributed to improved rental gross margin. We continue to be negatively impacted by increased employee benefit costs and the compounding impact of revenue lost within our existing customer base over the past two years.

Cost of direct sales decreased slightly to $15.7 million in fiscal 2002 from $15.8 million in fiscal 2001. Gross margin from direct sales increased in fiscal 2002 to 27.0% from 22.8% in fiscal 2001. This improvement is largely due to improved merchandise costs and a continued focus on fulfillment operations efficiency.

Selling and Administrative. Selling and administrative expenses increased 8.1% to $146.3 million in fiscal 2002 from $135.3 million in fiscal 2001. As a percentage of total revenues, selling and administrative expenses increased to 23.4% in fiscal 2002 from 22.4% in fiscal 2001. Sales and marketing expenses aimed at new account growth, new product development and product penetration drove the majority of the increase. Also contributing to the increase were additional bad debt expenses associated with the slow economy.

Depreciation. Depreciation expense increased 2.8% to $29.6 million in fiscal 2002 from $28.8 million in fiscal 2001. As a percentage of total revenues, depreciation expense decreased to 4.7% in fiscal 2002 compared to 4.8% in fiscal 2001. Capital expenditures for fiscal 2002, excluding acquisition of businesses, was $29.2 million compared to $34.1 million in fiscal 2001.

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Amortization. Amortization expense decreased to $6.1 million in fiscal 2002 from $10.1 million in fiscal 2001. As a percent of total revenues, amortization expense decreased to 1.0% in fiscal 2002 compared to 1.7% in fiscal 2001. The reduction was driven by the adoption of SFAS 142, under which goodwill and intangible assets with indefinite lives are no longer amortized. The adoption of SFAS 142 reduced amortization expense by 0.7% of a percent of total revenues.

Interest Expense. Interest expense was $13.6 million in fiscal 2002, down from $17.2 million in fiscal 2001. The decrease in interest expense is due primarily to lower effective interest rates.

Provision for Income Taxes. Our effective tax rate for fiscal 2002 was 39.5% compared to 40.1% in fiscal 2001. The decrease was due largely to decreases in Canadian statutory income tax rates.

Fiscal 2001 Compared to Fiscal 2000

Revenues. Total revenues in fiscal 2001 rose 4.5% to $603.6 million from $577.4 million in fiscal 2000 (6.6% after excluding the extra week of revenue in fiscal 2000). Rental revenue rose $26.5 million in fiscal 2001, a 4.8% increase over fiscal 2000 (6.9% after excluding the extra week of revenue in fiscal 2000). The rental growth was influenced by several factors including our focus on new product promotions and programs to address rising operating costs, continued success in signing national accounts, improvement in sales productivity and acquisitions.

Direct sale revenue was $20.4 million, consistent with fiscal 2000 (after excluding the extra week of revenue in fiscal 2000). Direct sale revenue remained constant as we focused early in the fiscal year on improving efficiency and productivity of our direct sale operations.

Cost of Rental and Direct Sale. Cost of rental operations increased 7.6% to $340.1 million in fiscal 2001 from $316.1 million in fiscal 2000. As a percent of rental revenue, these costs increased to 58.3% in fiscal 2001 compared to 56.8% in fiscal 2000. The increase reflects higher gasoline and natural gas prices, increased employee benefit costs and the margin impact on lost revenue as a result of economic conditions during the last half of the fiscal year. These increases were partially offset by the benefit of revenue generated by new customers and product promotions.

Cost of direct sales, as a percent of direct sale revenue, decreased to 77.2% in fiscal 2001 from 84.0% in fiscal 2000. The improvement in gross margin was driven by improved productivity in the fulfillment operation.

Selling and Administrative. Selling and administrative expenses increased 7.9% to $135.3 million in fiscal 2001 from $125.4 million in fiscal 2000. As a percentage of total revenues, selling and administrative expenses increased to 22.4% in fiscal 2001 from 21.7% in fiscal 2000. The increase as a percent of revenue was driven by information systems initiatives focused on enhancing revenue growth and improving human resources management. These increases were partially offset by cost reductions in the direct sale operations.

Depreciation. Depreciation expense decreased 2.4% to $28.8 million in fiscal 2001 from $29.5 million in fiscal 2000. As a percentage of total revenues, depreciation expense decreased to 4.8% in fiscal 2001 compared to 5.1% in fiscal 2000. Capital expenditures for fiscal 2001, excluding acquisition of businesses, was $34.1 million compared to $43.7 million in fiscal 2000. Additional depreciation on fixed asset additions supporting company initiatives and revenue growth were offset by equipment leasing programs used for fleet and computer equipment and certain equipment purchased in fiscal 1998 from the National Linen Services acquisition that were fully depreciated in fiscal 2001.

Amortization. Amortization expense increased to $10.1 million in fiscal 2001 from $9.3 million in fiscal 2000. As a percent of total revenues, amortization expense increased to 1.7% in fiscal 2001 compared to 1.6% in fiscal 2000. The increase in amortization expense was due to the goodwill and other intangibles associated with acquisitions made during fiscal years 2001 and 2000.

Interest Expense. Interest expense was $17.2 million in fiscal 2001, up from $16.7 million in fiscal 2000. The increase in interest expense was due primarily to higher average interest rates in fiscal 2001.

Provision for Income Taxes. Our effective tax rate increased to 40.1% in fiscal 2001 from 40.0% in fiscal 2000.

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Liquidity, Capital Resources and Financial Condition

Our primary sources of cash are net cash flows from operations and borrowings under the term loan and revolving credit facilities. Primary uses of this cash are interest payments on indebtedness, capital expenditures, acquisitions and general corporate purposes.

Operating Activities. Net cash provided from operating activities was $79.7 million in fiscal 2002, $84.9 million in fiscal 2001 and $83.3 million in fiscal 2000. The decrease in net operating cash flow in fiscal 2002 was due largely to the timing of collections from customers and reductions of trade and accrued payables, excluding the effects of acquisitions.

Working capital at June 29, 2002 was $95.8 million, a $46.2 million increase from $49.6 million at June 30, 2001. This increase is largely due to reclassification of amounts outstanding under our revolving credit facilities from current maturities to long-term debt in connection with the new term loan and revolving credit facility agreement entered into on June 25, 2002.

Investing Activities. Net cash used for investing activities was $100.1 million in fiscal 2002, $55.5 million in fiscal 2001 and $84.6 million in fiscal 2000. In fiscal 2002, cash was largely used for acquisitions. The reductions in capital expenditures in fiscal 2002 and fiscal 2001 reflect continued focus on ensuring appropriate financial return on capital resources.

Financing Activities. Financing activities provided cash of $15.2 million in fiscal 2002, used cash of $20.5 million in fiscal 2001 and provided cash of $1.5 million in fiscal 2000. Cash provided in fiscal 2002 was used primarily in acquisitions of businesses. Cash used in fiscal 2001 was primarily related to repayment of long-term debt. We paid dividends of $1.4 million in each of the fiscal years 2002, 2001 and 2000.

During the fourth quarter of fiscal 2002, we entered into a $325.0 million term loan and revolving credit facility expiring July 2, 2007 to repay the existing facilities that were to expire June 30, 2002. The facility provides for a $75.0 million term loan and a $250.0 million revolving credit facility. As of June 29, 2002, borrowings outstanding under the term loan were $75.0 million and under the revolving credit facility were $92.8 million at rates ranging from 3.09% to 3.21%. Borrowings under this facility are unsecured. The unused portion of the revolver may be used for general corporate purposes, acquisitions, working capital needs and to provide up to $25.0 million in letters of credit. As of June 29, 2002, letters of credit outstanding against the revolver were $11.2 million.

In fiscal 2001, we completed a $50.0 million, 8.4% private placement debt transaction with certain institutional investors. The 10-year notes have a seven-year average life with a final maturity on July 20, 2010. We used the net proceeds from the sale of the notes to reduce amounts outstanding under our term loan and revolving credit facility and for general corporate purposes.

The credit facilities and the fixed rate notes contain various restrictive covenants that among other matters require us to maintain a minimum fixed charge coverage ratio, minimum stockholders’ equity and a maximum leverage ratio, all as defined. These debt arrangements also provide for certain limits related to additional indebtedness, investments, issuance of stock and dividends. At June 29, 2002, we were in compliance with all debt covenants and only a material adverse change in our financial performance and condition could result in a potential event of default. In the unlikely event that an event of default would be imminent, management believes that we would be able to successfully negotiate amended covenants or obtain waivers; however, certain financial concessions might be required. Our results of operations and financial condition could be adversely affected if amended covenants or waivers in acceptable terms could not be successfully negotiated.

Cash Obligations. Under various agreements, we are obligated to make future cash payments in fixed amounts. These include payments under the variable rate term loan and revolving credit facility, the fixed rate term loan, capital lease obligations and rent payments required under non-cancelable operating leases with initial or remaining terms in excess of one year.

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The following table summarizes our fixed cash obligations as of June 29, 2002 for the fiscal years ending June (in millions):

Also, at June 29, 2002, we had stand-by letters of credit totaling $11.2 million that have been issued and are outstanding, primarily in connection with our property and casualty insurance programs. No amounts have been drawn upon these letters of credit.

At June 29, 2002, we had available cash on hand of $10.0 million and approximately $146.0 million of available capacity under our revolving credit facility. We anticipate that we will generate sufficient cash flows from operations to satisfy our cash commitments and capital requirements for fiscal 2003 and to significantly reduce the amounts outstanding on the revolving credit facility; however, we may utilize borrowings under the revolving credit facility to supplement our cash requirements from time to time. We estimate that capital expenditures in fiscal 2003 will be approximately $30.0 million to $35.0 million.

The amount of cash flow generated from operations is subject to a number of risks and uncertainties. In fiscal 2003, we may actively seek and consider acquisitions of business assets, the consummation of any acquisition could affect our liquidity profile and level of outstanding debt. We believe that available capacity under our revolving credit facility will be adequate to finance any such acquisitions.

Impact of Inflation

In general, management believes that our results of operations are not dependent on moderate changes in the inflation rate. Historically, we have been able to manage the impacts of more significant changes in inflation rates through our customer relationships, customer agreements that generally provide for price increases consistent with the rate of inflation or 5.0%, whichever is greater, and continued focus on improvements of operational productivity.

Litigation

We are involved in a variety of legal actions relating to personal injury, customer contracts, employment, trade practices, environmental and other legal matters that arise in the normal course of business. These legal actions include lawsuits that challenge the practice of charging for certain environmental services on invoices, and being named, along with other defendants, as a potentially responsible party at certain waste disposal sites where ground water contamination has been detected or is suspected. While we are unable to predict the ultimate outcome of these legal actions, it is the opinion of management that the disposition of these matters will not have a material adverse effect on our consolidated financial statements taken as a whole.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board issued SFAS No. 143, “Accounting for Asset Retirement Obligations” (SFAS 143). SFAS 143 addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. SFAS 143 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. SFAS 143 is effective for financial statements issued for fiscal years beginning after June 15, 2002. We do not believe that SFAS 143 will have a material impact on our consolidated financial statements.

In August 2001, the Financial Accounting Standards Board issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (SFAS 144). SFAS 144 establishes a single accounting model, based on the framework established in SFAS No. 121, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of” (SFAS

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121), for long-lived assets to be disposed of by sale. SFAS 144 also resolves several significant implementation issues related to SFAS 121, such as eliminating the requirement to allocate goodwill to long-lived assets to be tested for impairment and establishing criteria to define whether a long-lived asset is held for sale. SFAS 144 is effective for financial statements issued for fiscal years beginning after December 15, 2001. We do not believe that SFAS 144 will have a material impact on our consolidated financial statements.

In June 2002, the Financial Accounting Standards Board issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities” (SFAS 146). SFAS 146 addresses financial accounting and reporting for costs associated with exit or disposal activities. It nullifies Emerging Issues Task Force Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity.” SFAS 146 requires that a liability be recognized for costs associated with an exit or disposal activity only when the liability is incurred. SFAS 146 also establishes fair value as the objective for initial measurement of liabilities related to exit or disposal activities. SFAS 146 is effective for exit or disposal activities that are initiated after December 31, 2002. We do not believe that SFAS 146 will have a material impact on our consolidated financial statements.

Outlook

The economic conditions in the United States are mixed. Based on current trends, we expect fiscal 2003 revenue to be in the range of $645.0 million to $655.0 million. The compounding impact of revenue lost within our existing customer base over the past two years will continue to pressure near-term earnings. Diluted earnings per share is expected to be in the range of $2.00 to $2.10 for the full year ending June 28, 2003, with higher earnings growth rates in the last half of the fiscal year driven by our customers’ improved employment levels.

Cautionary Statement Regarding Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 (the “Act”) provides companies with a “safe harbor” when making forward-looking statements as a way of encouraging them to furnish their shareholders with information regarding expected trends in their operating results, anticipated business developments and other prospective information. Statements made in this report concerning our intentions, expectations or predictions about future results or events are “forward-looking statements” within the meaning of the Act. These statements reflect our current expectations or beliefs, and are subject to risks and uncertainties that could cause actual results or events to vary from stated expectations, which could be material and adverse. Given that circumstances may change, and new risks to the business may emerge from time to time, having the potential to negatively impact our business in ways we could not anticipate at the time of making a forward-looking statement, you are cautioned not to place undue reliance on these statements, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Some of the factors that could cause actual results or events to vary from stated expectations include, but are not limited to, the following: unforeseen operating risks; the effects of overall economic conditions; fluctuations in costs of insurance and energy; acquisition integration costs; the performance of acquired businesses; preservation of positive labor relationships; competition, including pricing, within the corporate identity apparel and facility services industry; and the availability of capital to finance planned growth.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

We are exposed to market risks. Market risk is the potential loss arising from adverse changes in interest rates and foreign currency exchange rates. We do not enter into derivative or other financial instruments for speculative purposes.

Interest Rate Risk

We are subject to market risk exposure related to changes in interest rates. We use financial instruments, including fixed and variable rate debt, as well as interest rate swaps to manage interest rate risk. Interest rate swap agreements are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. Assuming the current level of borrowings, a 100 basis point increase in interest rates under these borrowings would have increased our interest expense for fiscal 2002 by approximately $1.3 million. This estimated exposure considers the mitigating effects of interest rate swap agreements outstanding at June 29, 2002 on the change in the cost of variable rate debt.

The following table provides information about our derivative financial instruments and other financial instruments that are sensitive to changes in interest rates. The fair values were estimated by discounting the projected cash flows using the current

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rate applicable to similar transactions. For debt obligations, the following table presents principal cash flow and related weighted average interest rates by expected maturity dates by fiscal year.

For interest rate swaps, the following table presents notional amounts and weighted average interest rates by expected (contractual) maturity dates by fiscal year. Notional amounts are used to calculate the contractual payments to be exchanged under the contract.

Foreign Currency Exchange Risk

We have a significant foreign subsidiary located in Canada. The assets and liabilities of this subsidiary are denominated in the Canadian dollar and as such are translated into U.S. dollars at the exchange rate in effect at the balance sheet date. Results of operations are translated using the average exchange rates throughout the period. The effect of exchange rate fluctuations on translation of assets and liabilities are recorded as a component of stockholders’ equity. Gains and losses from foreign currency transactions are included in results of operations.

We may periodically hedge firm commitments with our foreign subsidiary, generally with foreign currency contracts. These agreements are recorded at current market values and the gains and losses are included in earnings. Gains and losses on such transactions were not significant in fiscal 2002. Notional amounts outstanding under foreign currency contracts at June 29, 2002 were $4.8 million, all of which will mature during fiscal 2003. No amounts were outstanding under such contracts at June 30, 2001 or July 1, 2000. The fair values of the foreign currency contracts were not materially different as of June 29, 2002.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is hereby made to the Consolidated Financial Statements and Notes thereto beginning on page F-1 hereof.

Following is a summary of the results of operations for each of the quarters within fiscal years ended June 29, 2002 and June 30, 2001. All amounts are in thousands, except per share data.

QUARTERLY FINANCIAL DATA

G&K Services, Inc. and Subsidiaries

On May 23, 2002, the Board of Directors of the Company and its Audit Committee decided to no longer engage Arthur Andersen LLP as the Company’s independent auditors and engaged Ernst & Young LLP to serve as the Company’s independent auditors for the fiscal year ended June 29, 2002.

Arthur Andersen’s reports on the Company’s consolidated financial statements for each of the fiscal years ended July 1, 2000 and June 30, 2001 did not contain an adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended July 1, 2000 and June 30, 2001 and through the date of Arthur Andersen’s dismissal, there were no disagreements with Arthur Andersen on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to Arthur Andersen’s satisfaction, would have caused them to make reference to the subject matter in connection with their report on the Company’s consolidated financial statements, and there are no reportable events as described under Item 304 (a) (2) (i) and (ii) of Regulation S-K.

The Company provided Arthur Andersen with a copy of the foregoing disclosures in connection with the 8-K filing, as amended, dated June 11, 2002. A copy of Arthur Andersen’s letter, stating its agreement with such statements, was attached as Exhibit 16.1 to the filing.

During the fiscal years ended July 1, 2000 and June 30, 2001 and through the date of the Company’s engagement of Ernst & Young, the Company did not consult Ernst & Young with respect to the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s consolidated financial statements, or any other matters or reportable events described under Item 304 (a) (2) (i) and (ii) of Regulation S-K.

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PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Richard M. Fink has served as Chairman of the Board since 1981. Mr. Fink was also Chief Executive Officer of the Company until January 1997.

Thomas R. Moberly has served as Chief Executive Officer of the Company since January 1999 and served as President of the Company from September 1997 until July 2002. Mr. Moberly also served as the Company’s Chief Operating Officer from September 1997 to January 1999 and as the Company’s Executive Vice President from February 1993 to September 1997. Prior thereto, Mr. Moberly was a Regional Manager of the Company.

Richard L. Marcantonio has served as President and Chief Operating Officer of the Company since July 2002. Prior to joining the Company, Mr. Marcantonio served as President of the industrial and service sectors at Ecolab Inc., a leading global developer and marketer of cleaning and maintenance products (“Ecolab”), from March 2002 until June 2002. Mr. Marcantonio served as Senior and/or Executive Vice President of Ecolab’s industrial sector from March 1997 until December 2000 and served as Executive Vice President of Ecolab’s industrial and service sectors from January 2000 until February 2002. Prior to his employment at Ecolab, Mr. Marcantonio served in senior management, sales and marketing positions at Keebler Company, a subsidiary of United Biscuits (Holdings) plc. He also served as president and chief executive officer of Specialty Brands, another subsidiary of United Biscuits (Holdings) plc.

Robert G. Wood has served as President of the Company’s Canadian operations since 1998 and Regional Vice President since 1997. Mr. Wood joined the Company in 1995 as a General Manager and served as an Executive Vice President of the Company from May 2000 until July 2002. Prior to joining the Company, he was Vice President of Marketing and Director of Sales with Livingston International, Inc., where he spent 23 years in a variety of operating, sales, service and marketing positions.

Jeffrey L. Wright has served as the Company’s Chief Financial Officer and Secretary since February 1999, and served as the Company’s Treasurer from February 1999 until November 2001. Mr. Wright was Controller for BMC Industries, Inc. (“BMC”) from 1996 to 1997 and Treasurer for BMC from 1997 until the time he joined the Company. From 1993 to 1996 Mr. Wright was Treasurer for Employee Benefit Plans, Inc.

Michael F. Woodard joined the Company in September 1996 as Controller. Mr. Woodard was Treasurer of Dataserv, Inc. from 1993 to the time he joined the Company.

Michael G. Allen has been a director of the Company since 2001. Retired, Founder Chairman of the Michael Allen Company, a strategy development firm. Mr. Allen formerly served as Vice President of Corporate Strategy for General Electric from 1974 to 1979.

Paul Baszucki has been a director of the Company since 1994. Chairman of the Board of Directors of Norstan, Inc. since May 1997. Mr. Baszucki also served as Chief Executive Officer of that company from 1986 until May 1997 and from December 1999 to October 2000. Mr. Baszucki is also a director and a member of the Compensation Committee of WSI Industries, Inc.

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Wayne M. Fortun has been a director of the Company since 1994. Mr. Fortun has served as President, Chief Executive Officer, Chief Operating Officer and a director of Hutchinson Technology, Inc. Mr. Fortun is also a director of C.H. Robinson Worldwide, Inc.

Donald W. Goldfus has been a director of the Company since 1989. Retired since June 1999. Mr. Goldfus was formerly the Chairman of the Board of Directors of Apogee Enterprises, Inc. (“Apogee”) and continues as a director of Apogee. Mr. Goldfus also served as Chief Executive Officer of Apogee from 1986 until January 1998.

William M. Hope has been a director of the Company since 1983. Formerly the Chief Executive Officer of the Company from January 1997 until January 1999. From 1993 to 1997, Mr. Hope served as President and Chief Operating Officer of the Company. Mr. Hope served as a director of Minntech Corporation and served as Chairman of the Board of that company from June 2000 until September 2001. Mr. Hope formerly served as that company’s Interim Chief Executive Officer from June 2000 to November 2000.

M.Lenny Pippin has been a director of the Company since 2001. President and Chief Executive Officer of Schwan’s Sales Enterprises, Inc. since November 1999. Mr. Pippin serves as a director of Lykes Brothers and formerly served as that company’s President and Chief Executive Officer.

D.R. Verdoorn has been a director of the Company since 2000. Chairman of the Board of C.H. Robinson Worldwide, Inc. since 1998 and a member of the Board of Directors of that corporation since 1975. Mr. Verdoorn also served as Chief Executive Officer of that corporation and its predecessor from 1977 until May 2002, and as President of that corporation from 1977 until 1999. Mr. Verdoorn has served on the Boards of Directors for United Fresh Fruit and Vegetable Association and the Produce Marketing Association.

ITEM 11. EXECUTIVE COMPENSATION

Reference is made to information with respect to the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Reference is made to information with respect to the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Form 10-K.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Reference is made to information with respect to the Company’s Proxy Statement for the 2002 Annual Meeting of Stockholders to be filed pursuant to Regulation 14A within 120 days after the end of the fiscal year covered by this Form 10-K.

ITEM 14. CONTROLS AND PROCEDURES

There have been no changes in internal controls during the fiscal year covered by this Form 10-K.

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PART IV, ITEM 15

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)

The following documents are filed as a part of this report:

	(1)		Financial Statements
			The following consolidated financial statements of G&K are part of this report and are submitted in a separate section of this report.

	(2)		Financial Statement Schedules
			All schedules for which provision is made in the applicable accounting regulations of the SEC have been omitted as not required or not applicable, or the information has been included elsewhere by reference in the financial statements and related notes, except for Schedule II, which is included as Exhibit 99.1 and Exhibit 99.2 to this Form 10-K, as filed with the SEC.
	(3)		Exhibits
			The following exhibits, as required by Item 601 of Regulation S-K are filed as a part of this report:
			3(a) Articles of Amendment and Restatement of the Registrant, as filed with the Secretary of State of Minnesota (incorporated herein by reference to Exhibit 3(i) to the Registrant’s Form 10-Q filed November 13, 2001).
			3(b) Amended and Restated Bylaws of the Registrant (incorporated herein by reference to Exhibit 3 (ii) to the Registrant’s Form 10-Q filed November 13, 2001).
			4(a) Rights Agreement, dated as of September 17, 2001, by and between G&K Services, Inc. and Wells Fargo Bank Minnesota, National Association (incorporated by reference to the Registrant’s Form 8-K filing dated September 19, 2001).
			10(a) Stockholder Agreement by and among the Registrant, Richard Fink, William Hope, Stephen LaBelle, Daniel Nielsen, Phillip Oberg and Robert Stotts, dated June 14, 1985 (incorporated herein by reference to the Registrant’s Schedule 13E-4 filing dated May 13, 1985).
			10(b) 1989 Stock Option and Compensation Plan (incorporated herein by reference to the Registrant’s definitive proxy statement for the 1989 Annual Meeting of Shareholders filed August 29, 1989). **
			10(c) 1996 Director Stock Option Plan (incorporated herein by reference to the Registrant’s Form 10-K, for the fiscal year ended June 29, 1996). **
			10(d) Asset Purchase Agreement, dated as of May 30, 1997, by and among National Service Industries, Inc., a Delaware corporation; National Service Industries, Inc., a Georgia corporation; NSI Enterprises, Inc., a California corporation and G&K Services, Inc. (incorporated herein by reference to the Registrant’s Form 8-K filing dated July 14, 1997).

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			10(e) Side Letter dated as of July 14, 1997, by and among National Service Industries, Inc., a Delaware corporation; National Service Industries, Inc., a Georgia corporation; NSI Enterprises, Inc., a California corporation and G&K Services, Inc. (incorporated herein by reference to the Registrant’s Form 8-K filing dated July 14, 1997).
			10(f) Asset Purchase Agreement, dated as of April 25, 1998, by and among G&K Services Linen Co., G&K Services Co., G&K Services, Inc., and TTSI Services Acquisition Sub, Inc. and Tartan Textile Services, Inc. (incorporated herein by reference to the Registrant’s Form 8-K filing dated May 14, 1998).
			10(g) 1998 Stock Option and Compensation Plan (incorporated herein by reference to the Registrant’s definitive proxy statement for the 1998 Annual Meeting of Shareholders filed October 5, 1998). **
			10(h) Form of Change of Control Agreement between Registrant and each of Richard Fink, Thomas Moberly, Robert G. Wood and Jeffrey L. Wright, dated February 24, 1999 (incorporated herein by reference to the Registrant’s Form 10-Q filed May 11, 1999). **
			10(i) Credit Agreement dated March 28, 2000 among G&K Services, Inc. and Norwest Bank Minnesota, National Association (incorporated herein by reference to the Registrant’s Form 10-K filed September 28, 2000).
			10(j) Note Purchase Agreement dated July 20, 2000 among G&K Services, Inc. and seven institutional investors (incorporated herein by reference to the Registrant’s Form 10-K filed September 28, 2000).
			10(k) Form of Executive Employment Agreement between Registrant and each of Richard Fink, Thomas Moberly, Robert G. Wood and Jeffrey L. Wright, dated January 1, 2001 (incorporated herein by reference to the Registrant’s Form 10-K filed September 27, 2001). **
			10(l) Amendment to 1996 Director Stock Option Plan (incorporated herein by reference to Exhibit 10(a) to the Registrant’s Form 10-Q filed November 13, 2001).
			10(m) Credit Agreement, dated June 25, 2002, by and among the Registrant, G&K Services Canada, Inc., Bank One N.A., Wachovia Bank, National Association, Wachovia Securities, Inc (f/k/a First Union Securities, Inc.), Banc One Capital Markets, Inc. and various lenders. *
			10(n) Form of Executive Employment Agreement between Registrant and Richard Marcantonio, dated June 25, 2002.*, **
			21 Subsidiaries of G&K Services, Inc. *
			23 Consent of Independent Auditors *
			24 Power of Attorney dated as of August 29, 2002 *
			99.1 Report of Ernst & Young LLP, Independent Auditors and Schedule II *
			99.2 Report of Arthur Andersen LLP, Independent Public Accountants and Schedule II *
			Footnotes:
			* Filed herewith
			** Compensatory plan or arrangement

(b)		Reports filed on Form 8-K
		A Form 8-K, Item 4. Changes to Registrant’s Certifying Accountant was filed on May 31, 2002, and amended on June 11, 2002.
(c)		See exhibits listed under Item 15(a)(3).
(d)		See the financial statement schedules listed under Item 15(a)(2).

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SIGNATURES

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

Pursuant to 18 U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned hereby certifies in his capacity as an officer of the registrant that (a) the Annual Report of the registrant on Form 10-K for the period ended June 29, 2002 fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that (b) the information contained in such report fairly presents, in all material respects, the financial condition of the registrant at the end of such period and the results of operations of the registrant for such period.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, this report on Form 10-K has been signed below on the 26th day of September 2002, by the following persons in the capacity indicated:

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CERTIFICATION (Principal Executive Officer):

I, Thomas R. Moberly, certify that:

1.		I have reviewed this annual report on Form 10-K of G&K Services, Inc.;
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 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;

Date: September 26, 2002

CERTIFICATION (Principal Financial Officer):

I, Jeffrey L. Wright, certify that:

1.		I have reviewed this annual report on Form 10-K of G&K Services, Inc.;
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 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;

Date: September 26, 2002

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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CONSOLIDATED STATEMENTS OF OPERATIONS
G&K Services, Inc. and Subsidiaries