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G&K Services reports fiscal 2008 Q3 results

Apr '08
G&K Services Inc reported revenue for the third quarter ended March 29, 2008 of $251.1 million, a 6.8 percent increase from previous year revenue of $235.2 million. This increase in quarterly revenue was driven by rental organic growth, strong revenue contribution from acquisitions and the benefit of foreign currency translation.

For the quarter, operating income increased 8.1 percent compared to the prior-year period. This increase in operating income was driven by leverage from revenue growth, improved productivity and lower merchandise costs.

The improvement in operating income was achieved despite continued economic softness, higher gasoline costs, increased bad debt expense, lower contribution from direct sales and expenses related to systems implementation activities.

The company reported third quarter earnings of $0.54 per diluted share. Prior-year third quarter earnings were $0.57 per diluted share, and reflected an unusually low effective tax rate of 25.4 percent. The lower effective tax rate resulted in a $0.11 per diluted share benefit in the prior-year third quarter.

For the nine months ended March 29, 2008, revenue increased to $750.2 million, up 8.9 percent as compared to the prior-year period. This record level of revenue was driven by rental organic growth, strategic acquisitions and the benefit of foreign currency translation.

For the nine month period, operating income increased 20.6 percent compared to the prior-year period. The increase in year-to-date operating income was driven by overall revenue growth, lower merchandise costs and savings achieved from on-going productivity initiatives.

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