The company reported fourth quarter net earnings of $0.16 per diluted share, which included a previously communicated charge of $0.11 per diluted share related to the departure of the company's former chairman and chief executive officer. The costs associated with this leadership transition were not included in the company's guidance provided at the end of the third quarter. When excluding the charges related to the leadership transition, fourth quarter fiscal 2009 adjusted earnings totaled $0.27 per diluted share and compare to net earnings of $0.55 per diluted share in the prior-year period. Fourth quarter earnings benefited from cost reduction activities, lower energy and incentive compensation costs. These earnings improvements were offset by a reduction in fixed cost absorption due to lower revenue, higher health care costs, increases to certain reserves and the effect of the weak Canadian dollar.

"Our fourth quarter results mark the end of a challenging and disappointing fiscal year," said Douglas A. Milroy, G&K's recently appointed chief executive officer. "As such, we're moving quickly to reshape the business with a sharpened focus on profitability. Going forward, G&K will operate with a more intense focus on the details of great execution and a more lean cost structure, while driving even higher levels of customer satisfaction. For example, during the fourth quarter, we idled manufacturing capacity, further scaled our workforce and divested a small non-core operation. We'll continue to take such actions, streamlining our business to maximize profitability in this difficult environment."

Financial Strength

The company's balance sheet remains strong. As of June 27, 2009, the company had total borrowings of $232.5 million and a debt to capitalization ratio of 34.7 percent. The company also recently completed a new $300.0 million three-year credit facility, which maintains the company's strong liquidity position and increases its financial flexibility. The new facility replaces the company's previous credit facility which was scheduled to mature in August 2010.

The company continued to generate strong cash flow from operations and further reduced its overall level of debt financing. Cash provided by operating activities for the fiscal year ended June 27, 2009 was a record $103.2 million, driven by strong working capital management. For the fiscal year, free cash flow, defined as cash flow from operations less capital expenditures, was a record $79.8 million. During the fiscal year, the company utilized its strong free cash flow to reduce debt, net of cash, by $56.3 million.

Outlook

"For the first quarter of fiscal 2010, we expect the continued economic stress on our customers to pressure organic revenue growth, operating margins and earnings per diluted share below fourth quarter results reported today," Milroy added. "In spite of the continued economic challenges ahead, we're confident the changes we're making will reposition G&K to improve our future financial performance."

Due primarily to prolonged difficult economic conditions, continued deterioration of customer employment levels and numerous operating changes the company's new leadership team is executing, the company will not be providing a specific quarterly range for anticipated revenue or earnings.

Conference Call Information

The company will host a conference call today at 10:00 a.m. (CST) to discuss its financial results and outlook. The call will be webcast and is available on the Investor Relations section of the company's website at www.gkservices.com (click on webcast icon and follow the instructions). A replay of the call will be available on the company's website through September 6, 2009.

Safe Harbor for Forward-Looking Statements

Statements made in this press release concerning our intentions, expectations or predictions about future results or events are "forward-looking statements" within the meaning of The Private Securities Litigation Reform Act of 1995. 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. 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.

Information concerning potential factors that could affect future financial results is included in our Annual Report on Form 10-K for the fiscal year ended June 28, 2008.

About G&K Services, Inc.

G&K Services, Inc. is a market leader in branded identity apparel programs and facility services in the United States, and is the largest such provider in Canada. Headquartered in Minneapolis, Minnesota, G&K Services has approximately 8,500 employees serving more than 175,000 customers from over 170 facilities in North America and Europe. G&K Services is a publicly held company traded over the NASDAQ Global Select Market under the symbol GKSR and is a component of the Standard & Poor's SmallCap 600 Index. For more information on G&K Services, visit the company's website at www.gkservices.com.

Comparison of GAAP to Non-GAAP Financial Measures

The company reports its consolidated financial results in accordance with generally accepted accounting principles (GAAP). To supplement these consolidated financial results, management believes that certain non-GAAP operating results, which exclude non-cash impairment and certain other non-recurring charges, may provide a more meaningful measure on which to compare the company's results of operations between periods. The company believes these non-GAAP results provide useful information to both management and investors by excluding certain costs that impact comparability of the results. A reconciliation of fourth quarter and fiscal 2009 earnings per diluted share on a GAAP basis to adjusted earnings per diluted share on a non-GAAP basis are presented in the table below:

                                                         Three Months Ended June 27, 2009                         Twelve Months Ended June 27, 2009                         (U.S.