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G&K SERVICES RESUMES DOUBLE-DIGIT EARNINGS GROWTH IN SECOND QUARTER OF FISCAL 1992; COMPANY EXPECTS CONTINUED GAINS IN SECOND HALF

G&K SERVICES RESUMES DOUBLE-DIGIT EARNINGS GROWTH IN SECOND QUARTER OF
 FISCAL 1992; COMPANY EXPECTS CONTINUED GAINS IN SECOND HALF
 MINNEAPOLIS, Jan. 29 /PRNewswire/ -- G&K Services, Inc. (NASDAQ: GKSRA), the Minneapolis-based textile leasing company, today reported a significant gain in fiscal 1992 second quarter earnings on marginally higher revenues. The company said it expects to achieve further earnings growth through the remainder of the fiscal year.
 Net earnings for the current quarter rose 31 percent to $2,269,000, or 17 cents per share, from the $1,760,000 or 13 cents per share earned in the same period a year ago. Revenues reached a record $49,235,000, a gain of 2 percent from $48,276,000 in the prior year.
 For the first six months of fiscal 1992, net earnings were $4,668,000 or 35 cents per share, down 3 percent from $4,883,000 or 36 cents per share earned a year earlier. The net income figure for fiscal 1991 was restated to reflect the cumulative effects of the company's adoption of FASB 96, accounting for income taxes. Excluding the effect of this change which added $700,000 or five cents per share, earnings for the six months increased nearly 12 percent from the prior year. The fiscal 1991 amount includes three months revenues from the Canadian operations acquired at the end of September 1990.
 Chairman and CEO Richard Fink said, "G&K's quarterly earnings increased over the prior year for the first time since our Canadian acquisition. Canadian earnings continue to be adversely affected by recessionary pressures, but a strong operating performance in almost all U.S. locations drove consolidated earnings up sharply. U.S. earnings benefited from the maturing of several recent acquisitions which are now generating meaningful earnings, better utilization of merchandise inventories, and reduced selling and administrative costs. Reduced interest expense, resulting from lower borrowing levels and interest rates, also contributed to the earnings increase.
 "U.S. revenues rose 8.5 percent due to good new account sales and retention rates," Mr. Fink said. "Growth rates continue at a healthy level despite a weak economy because of G&K's aggressive marketing activities and the continued positive reception to its quality-oriented uniform programs. Canadian revenues were well below those recorded in last year's second quarter but remained at a level similar to the first quarter of this year."
 Mr. Fink reiterated that the outlook for the second half of fiscal 1992 is favorable. "The efficiencies which have been added to overall operations over the past year should continue to expand margins," he said. "We should see continued progress from our Canadian operations now that the bulk of our integration program is behind us. Assuming stable U.S. and Canadian economies, we expect fiscal 1992 will produce a strong earnings recovery."
 G&K Services is one of North America's largest suppliers of uniforms and related textile products. In the United States, the company operates in 23 states, serving customers from 21 processing plants and 26 sales and service centers. In Canada, G&K serves customers from 22 locations, including 9 processing plants in the provinces of Ontario and Quebec.
 G&K SERVICES, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF INCOME
 (in thousands, except per-share amounts)
 Three Months Ended Six Months Ended
 12/28/91 12/29/90 12/28/91 12/29/90
 (Unaudited) (Unaudited)
 REVENUES $49,235 $48,276 $97,211 $79,948
 EXPENSES
 Operating 27,957 27,223 55,509 45,476
 Cost of
 merchandise sold 1,543 1,182 2,464 1,287
 Selling and
 administrative 10,257 11,252 20,786 18,573
 Depreciation 2,787 2,135 5,370 3,758
 Amortization of
 intangibles 814 764 1,586 1,104
 -- $43,358 $42,556 $85,715 $70,198
 INCOME FROM
 OPERATIONS 5,877 5,720 11,496 9,750
 Interest expenses 2,251 2,908 4,363 3,144
 Interest income (97) (123) (160) (171)
 Other (income)
 expense, net (239) (160) (743) (290)
 INCOME BEFORE
 INCOME TAXES 3,962 3,095 8,036 7,067
 Provision for
 income taxes 1,693 1,335 3,368 2,884
 INCOME BEFORE CUMULATIVE
 EFFECT OF
 ACCOUNTING CHANGE 2,269 1,760 4,668 4,183
 Cumulative effect of
 change in method of
 accounting for
 income taxes -- -- -- 700
 NET INCOME $ 2,269 $ 1,760 $ 4,668 $ 4,883
 Weighted average
 no. of shares
 outstanding 13,485 13,463 13,485 13,457
 INCOME PER SHARE
 Before cumulative
 effect of
 accounting change $0.17 $0.13 $0.35 $0.31
 Cumulative effect of
 change in method of
 accounting for
 income taxes -- -- -- 0.05
 Net income $0.17 $0.13 $0.25 $0.36
 Dividends per share $0.025 $0.025 $0.050 $0.050
 -0- 01/29/92
 /CONTACT: Richard Fink, G&K Services chairman, 612-546-7440, Nick Farina, The Financial Relations Board (Chicago), 312-266-7800, or Karen Griffiths, Financial Relations Board (New York), 212-661-8030/
 (GKSRA) CO: G&K Services, Inc. ST: Minnesota IN: TEX SU: ERN


KH -- MN005 -- 4693 01/29/92 11:30 EST
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Date:Jan 29, 1992
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