Announces 50 Percent Increase to Regular Quarterly Cash Dividend
Company Will Pursue Opportunistic Share Repurchases
Delivers Significant Shareholder Value and Maintains Operating
MINNEAPOLIS--(BUSINESS WIRE)--Apr. 4, 2012--
G&K Services, Inc. (NASDAQ: GKSR) announced today that its
Board of Directors declared a special cash dividend of $6.00 per share,
payable on April 27, 2012 to shareholders of record at the close of
business on April 13, 2012. The stock will begin to trade ex-dividend on
April 11, 2012.
Additionally, G&K’s Board of Directors announced a 50 percent increase
in the company’s regular quarterly cash dividend to $0.195 per share.
This is G&K’s seventh consecutive year with a dividend increase.
Finally, the company will also opportunistically pursue open market
share repurchases as another option to improve shareholder returns. The
company has approximately $58 million remaining under its existing share
“Our Game Plan is working,” said Douglas A. Milroy, Chief Executive
Officer. “Since its introduction in fiscal 2010, we’ve restored organic
growth, significantly expanded operating margins, produced strong cash
flow, and retired over $100 million in debt. Our improved performance
gives us the confidence to increase shareholder returns through today’s
“Importantly, as our first priority, we maintain the financial
flexibility to invest in our business and continue to pursue acquisition
opportunities,” said Jeffrey L. Wright, Executive Vice President and
Chief Financial Officer. “The total special dividend payment will be
approximately $113 million and will be funded through the company’s
revolving credit facility. After payment of the special dividend, the
company maintains significant liquidity, with over $100 million of debt
capacity available under its credit facilities.”
The company expects the price of its common stock will decrease by an
amount equal to the special dividend on the ex-dividend date, as is
typical when public companies pay significant special cash dividends.
Accordingly, the Board of Directors approved equitable adjustments to
all outstanding stock options to preserve the intrinsic value of the
options. Due to the equitable adjustments, the company expects to record
a pre-tax non-cash charge to earnings of approximately $2.0 million
($1.2 million after tax). This charge will be recorded in the third
quarter of fiscal year 2012. G&K estimates that this charge will reduce
the company’s earnings per diluted share for the third quarter and
full-year by $0.07.
About G&K Services, Inc.
Services, Inc. is a service-focused market leader of branded uniform and
facility services programs in the United States, and is the largest such
provider in Canada. Headquartered in Minneapolis, Minnesota, G&K
Services has over 7,500 employees serving approximately 165,000
customers from over 160 facilities in North America. 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 web
site at www.gkservices.com.
Safe Harbor for Forward-Looking Statements
made in this press release concerning the company’s 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 the
company’s 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 the
company undertakes 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 the company’s Annual Report on Form
10-K for the fiscal year ended July 2, 2011.
Source: G&K Services, Inc.
G&K Services, Inc.
Jeff Huebschen, 952-912-5773