UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 2, 1999
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to ____________
Commission File Number 0-23828
Labor Ready, Inc.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as specified in its charter)
Washington 91-1287341
- --------------------------------------------------------------------------------
(State of Incorporation) (Employer Identification No.)
1016 S. 28th Street, Tacoma, Washington 98409
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(253) 383-9101
- --------------------------------------------------------------------------------
(Registrant's Telephone Number)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) 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 ( )
- --------------------------------------------------------------------------------
As of August 10, 1999, the Registrant had 42,790,889 shares of Common Stock
outstanding.
- --------------------------------------------------------------------------------
DOCUMENTS INCORPORATED BY REFERENCE: None.
LABOR READY, INC.
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Balance Sheets
July 2, 1999 and December 31, 1998...................2
Consolidated Statements of Income
Thirteen and Twenty-Six Weeks Ended
July 2, 1999 and July 3, 1998........................4
Consolidated Statements of Cash Flows
Twenty-Six Weeks Ended July 2, 1999
and July 3, 1998.....................................5
Notes to Consolidated Financial Statements...........6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations........9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders..16
Item 6. Exhibits and Reports on Form 8-K.....................16
Signatures....................................................17
- ----------------------------------------------------------------------------
Page 1
LABOR READY, INC.
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS
ASSETS
(UNAUDITED)
JULY 2, DECEMBER 31,
1999 1998
---------------------- -------------------
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 17,142 $ 25,940
Accounts receivable, less allowance for doubtful accounts
of $4,990 and $4,218............................................. 89,034 65,484
Workers' compensation deposits and credits........................ 4,690 2,961
Prepaid expenses and other........................................ 9,490 4,947
Deferred income taxes............................................. 6,611 6,601
-------------------- -------------------
Total current assets............................................. 126,967 105,933
-------------------- -------------------
PROPERTY AND EQUIPMENT:
Buildings and land ............................................... 5,425 4,854
Computers and software............................................ 19,351 13,443
Cash dispensing machines.......................................... 10,312 7,376
Furniture and equipment........................................... 717 667
-------------------- -------------------
35,805 26,340
Less accumulated depreciation .................................... 7,811 6,069
-------------------- -------------------
Property and equipment, net...................................... 27,994 20,271
-------------------- -------------------
OTHER ASSETS:
Intangible assets and other, less accumulated
amortization of $199 and $6,383.................................. 84 2,630
Restricted cash................................................... 1,195 151
Deferred income taxes............................................. 4,452 1,751
-------------------- -------------------
Total other assets............................................... 5,731 4,532
-------------------- -------------------
Total assets...................................................... $ 160,692 $ 130,736
-------------------- -------------------
-------------------- -------------------
See accompanying notes to consolidated financial statements.
- ----------------------------------------------------------------------------
Page 2
LABOR READY, INC.
CONSOLIDATED BALANCE SHEETS
IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
JULY 2, DECEMBER 31,
1999 1998
-------------------- -----------------
CURRENT LIABILITIES:
Line of credit.......................................................... $ 14,312 $ --
Accounts payable........................................................ 3,493 6,889
Accrued wages and benefits.............................................. 7,350 7,544
Current portion of workers' compensation claims reserve................. 16,196 15,300
Current portion of capital lease obligations............................ 1,018 754
Income taxes payable.................................................... -- 4,355
----------------- ----------------
Total current liabilities............................................. 42,369 34,842
----------------- ----------------
LONG-TERM LIABILITIES:
Capital lease obligations............................................... 6,884 5,073
Workers' compensation claims reserve.................................... 12,068 10,324
----------------- ----------------
Total long-term liabilities............................................ 18,952 15,397
----------------- ----------------
Total liabilities...................................................... 61,321 50,239
----------------- ----------------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY:
Preferred stock, $0.197 par value, 20,000 shares authorized;
6,486 shares issued and outstanding..................................... 854 854
Common stock, no par value, 100,000 shares authorized;
42,750 and 41,961 shares issued and outstanding......................... 61,899 54,131
Retained earnings....................................................... 36,618 25,512
----------------- ----------------
Total shareholders' equity............................................. 99,371 80,497
----------------- ----------------
Total liabilities and shareholders' equity............................. $ 160,692 $ 130,736
----------------- ----------------
----------------- ----------------
See accompanying notes to consolidated financial statements.
- ----------------------------------------------------------------------------
Page 3
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF INCOME
IN THOUSANDS (EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
----------------------------- ----------------------------
JULY 2, JULY 3, JULY 2, JULY 3,
1999 1998 1999 1998
-------------- -------------- --------------- ------------
Revenues from services....................................... $ 207,369 $ 142,997 $ 364,302 $ 237,028
Cost of services.......................................... 143,240 100,588 249,147 166,284
------------ --------------- --------------- -------------
Gross profit................................................. 64,129 42,409 115,155 70,744
Selling, general and administrative expenses.............. 50,062 34,910 92,724 61,824
Depreciation and amortization............................. 1,084 1,723 1,760 3,103
------------ --------------- --------------- -------------
Income from operations....................................... 12,983 5,776 20,671 5,817
Interest income (expense), net............................... (99) (96) (81) 112
------------ --------------- --------------- -------------
Income before taxes and cumulative effect of accounting change
12,884 5,680 20,590 5,929
Income taxes................................................. 5,015 2,331 8,034 2,436
------------ --------------- --------------- -------------
Income before cumulative effect of accounting change......... 7,869 3,349 12,556 3,493
Cumulative effect of accounting change, net of income tax
benefit of $897.............................................. -- -- (1,453) --
------------ --------------- --------------- -------------
Net income................................................... $ 7,869 $ 3,349 $ 11,103 $ 3,493
------------ --------------- --------------- -------------
------------ --------------- --------------- -------------
Basic income per common share:
Income before cumulative effect of accounting change...... $ 0.19 $ 0.08 $ 0.29 $ 0.08
Cumulative effect of accounting change, net............... -- -- (.03) --
------------ --------------- --------------- -------------
Net income................................................... $ 0.19 $ 0.08 $ 0.26 $ 0.08
------------ --------------- --------------- -------------
------------ --------------- --------------- -------------
Diluted income per common share:
Income before cumulative effect of accounting change...... $ 0.18 $ 0.08 $ 0.28 $ 0.08
Cumulative effect of accounting change, net............... -- -- (.03) --
------------ --------------- --------------- -------------
Net income................................................ $ 0.18 $ 0.08 $ 0.25 $ 0.08
------------ --------------- --------------- -------------
------------ --------------- --------------- -------------
Weighted average shares outstanding:
Basic..................................................... 42,506 41,651 42,277 41,591
------------ --------------- --------------- -------------
------------ --------------- --------------- -------------
Diluted................................................... 44,401 43,478 43,875 43,112
------------ --------------- --------------- -------------
------------ --------------- --------------- -------------
See accompanying notes to consolidated financial statements.
- ----------------------------------------------------------------------------
Page 4
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
IN THOUSANDS
(UNAUDITED)
TWENTY-SIX WEEKS ENDED
---------------------------------------
JULY 2, 1999 JULY 3, 1998
------------------ -----------------
CASH FLOWS FROM OPERATING ACTVITIES:
Net income................................................................. $ 11,103 $ 3,493
Adjustments to reconcile net income to net cash
used in operating activities:
Depreciation and amortization.............................................. 1,760 3,102
Provision for doubtful accounts............................................ 4,212 2,562
Deferred income taxes...................................................... (2,711) 92
Cumulative effect of accounting change..................................... 2,351 --
Changes in operating assets and liabilities
Accounts receivable........................................................ (27,763) (24,091)
Workers' compensation deposits and credits................................. (1,880) (1,254)
Prepaid expenses and other................................................. (4,543) (1,303)
Accounts payable........................................................... (3,417) 396
Accrued wages and benefits................................................. (194) 1,304
Income taxes payable....................................................... (703) 676
Workers' compensation claims reserve....................................... 2,640 5,142
---------------- ----------------
Net cash used in operating activities......................................... (19,145) (9,881)
---------------- ----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures....................................................... (7,004) (5,795)
Additions to restricted cash............................................... (1,044) 14
Additions to intangible assets and other................................... 334 --
---------------- ----------------
Net cash used in investing activities......................................... (7,714) (5,781)
---------------- ----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings on line of credit........................................... 14,312 8,278
Proceeds from options exercised............................................ 3,605 549
Proceeds from sale of stock through employee stock purchase plan........... 365 249
Proceeds from sale of stock through 401(k) plan............................ 146 --
Payments on capital lease obligations...................................... (391) (223)
---------------- ----------------
Net cash provided by financing activities..................................... 18,037 8,853
Effect of exchange rates on cash........................................... 24 (19)
---------------- ----------------
Net decrease in cash and cash equivalents..................................... (8,798) (6,828)
CASH AND CASH EQUIVALENTS, beginning of period................................ 25,940 22,117
---------------- ----------------
CASH AND CASH EQUIVALENTS, end of period...................................... $ 17,142 $ 15,289
---------------- ----------------
---------------- ----------------
See accompanying notes to consolidated financial statements.
- ----------------------------------------------------------------------------
Page 5
ITEM 1. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SIGNIFICANT ACCOUNTING POLICIES
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and rules and regulations of the Securities and
Exchange Commission. Accordingly, certain information and footnote
disclosures usually found in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted.
These financial statements should be read in conjunction with the
consolidated financial statements and related notes included in the Labor
Ready, Inc.'s ("the Company") 1998 annual report on Form 10-K. Certain
amounts in the consolidated balance sheet at December 31, 1998 have been
restated to conform to the 1999 presentation. The accompanying consolidated
financial statements reflect all adjustments, including normal recurring
adjustments, which in the opinion of management, are necessary to present
fairly the financial position, results of operations and cash flows for the
interim periods presented. Operating results for the twenty-six week period
ended July 2, 1999 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1999.
NOTE 2. WORKERS' COMPENSATION
The Company provides workers' compensation insurance to its temporary workers
and regular employees. For workers' compensation claims originating in the
majority of states (the 43 non-monopolistic states), the Company has
purchased a deductible insurance policy. Under terms of the policy, the
Company's workers' compensation exposure is limited to a deductible amount
per occurrence and a maximum aggregate stop-loss limit. Should any single
occurrence exceed the deductible amount per occurrence, all losses and
expenses beyond the deductible amount are paid by independent insurance
companies unrelated to the Company. Similarly, should the total of paid
losses related to any one year period exceed the maximum aggregate stop-loss
limit for that year, all losses beyond the maximum aggregate stop-loss limit
are paid by independent insurance companies unrelated to the Company. In
1997, the per occurrence deductible amount was $250,000 per claim, to an
aggregate maximum of $11.60 per $100 of temporary worker payroll, or $18.8
million. For claims arising in 1998 and 1999, the per occurrence deductible
amount was increased to $350,000 and the maximum aggregate stop-loss limit
was reduced to $10.41 per $100 of temporary worker payroll, or $31.7 million
for the year ended December 31, 1998 and $19.4 million for the twenty-six
weeks ended July 2, 1999.
For claims arising in years prior to 1997, the Company has insured all losses
beyond amounts reserved in its financial statements with independent
insurance companies unrelated to the Company. The difference between the
discounted maximum aggregate stop-loss limit for claims arising in all
periods prior to July 2, 1999, and the total of claims paid and reserved for
in the Company's financial statements for the same periods is $6.3 million.
This amount represents the discounted maximum additional exposure, net of
tax, to the Company before its maximum aggregate stop-loss limits are met.
The Company establishes its reserve for workers' compensation claims using
actuarial estimates of the future cost of claims and related expenses that
have been reported but not settled, and that have been incurred but not
reported. Adjustments to the claims reserve are charged or credited to
expense in the periods in which they occur. Included in the accompanying
consolidated balance sheets as of July 2, 1999 and December 31, 1998, are
workers' compensation claims reserves in the non-monopolistic states of $27.7
million and $24.4 million and in the monopolistic states of $0.6 million and
$1.1 million, respectively. The claims reserves were computed using a
discount rate of 6.0% at July 2, 1999 and December 31, 1998.
Workers' compensation expense totaling $9.7 million, and $7.5 million was
recorded as a component of cost of services in each of the thirteen weeks
ended July 2, 1999 and July 3, 1998, respectively. Workers' compensation
expense totaling $15.3 million and $12.3 million was recorded as a component
of cost of services in each of the twenty-six weeks ended July 2, 1999 and
July 3, 1998, respectively.
For the 1997 and 1998 program years, the Company is required to provide
collateral in the amount of the maximum aggregate stop-loss limits, less
claims paid to date. The Company has provided approximately 50% of the
required collateral in the form of a surety bond, and 50% in letters of
credit. Accordingly, at July 2, 1999, $14.5 million of the collateral was
satisfied with surety bonds and $12.6 million was satisfied with letters of
credit for the 1997 and 1998 program years.
- ----------------------------------------------------------------------------
Page 6
NOTE 2. WORKERS' COMPENSATION, (CONTINUED)
The Company has a deductible insurance policy for the non-monopolistic states
covering the years ended 1999 and 2000. The policy includes substantially the
same terms and limitations as the 1998 policy described above except that the
required collateral was reduced to an amount equal to 60% of claims reserves.
However, the Company was required to provide approximately half of the
estimated collateral for the 1999 program year as of the beginning of the
year. Collateral for the 1999 program year will consist of 50% letters of
credit and 50% surety bond. Accordingly, as of July 2, 1999, the Company has
provided the insurance carrier with a letter of credit totaling $12.0 million
and a surety bond for $12.6 million. During 1999, the total amount of the
letters of credit and surety bonds for the 1999 program year will increase to
approximately $26.0 million.
For workers' compensation claims originating in Washington, Ohio and West
Virginia (the monopolistic states), Canada and Puerto Rico, the Company pays
workers' compensation insurance premiums as required by state administered
programs. The insurance premiums are established by each jurisdiction,
generally based upon the job classification of the insured workers and the
previous claims experience of the Company.
The Company's risk management department has established working
relationships with its insurers, third party claims administrators, and
medical service providers. To reduce wage-loss compensation claims, the
Company employs claims coordinators throughout the United States. The claims
coordinators manage the acceptance, processing and final resolution of claims
and administer the Company's return to work program. Workers in the program
are employed on customer assignments that require minimal physical exertion
or within the Company in the local dispatch office. The Company has an
on-line connection with its third party administrators that allows the claims
coordinators to maintain visibility of all claims, manage their progress and
generate required management information.
NOTE 3. CHANGE IN ACCOUNTING PRINCIPLE
In the first quarter of 1999, the Company adopted the provisions of Statement
of Position 98-5, "Reporting on the Costs of Start-up Activities" ("the
Statement"). The Statement establishes new rules for the financial reporting
of start-up costs, and requires the Company to expense the cost of
establishing new dispatch offices as incurred and write off, as a cumulative
effect of adopting the Statement, any capitalized pre-opening costs in the
first quarter of the year adopted. Prior to adopting the Statement,
pre-opening costs incurred to open new dispatch offices, including salaries,
recruiting, testing, training, lease and other related costs, were
capitalized and amortized using the straight-line method over two years. The
cumulative effect of adopting the Statement was to decrease net income by
$1.5 million or $0.03 per common share.
NOTE 4. SUPPLEMENTAL CASH FLOW INFORMATION
(AMOUNTS IN THOUSANDS)
TWENTY-SIX WEEKS ENDED
------------------------------------
JULY 2, 1999 JULY 3, 1998
--------------- -----------------
Cash paid during the period for:
Interest ........................................................... $ 399 $ 231
Income taxes ....................................................... $ 8,317 $ 1,551
Non-cash investing and financing activities:
Tax benefits related to stock options............................... $ 3,652 $ 287
Assets acquired with capital lease obligations...................... $ 2,466 $ 5,667
- ----------------------------------------------------------------------------
Page 7
NOTE 5. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income, less preferred
stock dividends, by the weighted average number of common shares outstanding
during the period. Diluted earnings per share is computed by dividing net
income, less preferred stock dividends, by the weighted average number of
common shares and common share equivalents outstanding during the period.
Common share equivalents for the Company include the dilutive effect of
outstanding options, except where their inclusion would be anti-dilutive.
Basic and diluted earnings per share were calculated as follows (amounts in
thousands, except per share amounts):
------------------------------ -----------------------------
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
------------------------------ -----------------------------
JULY 2, JULY 3, JULY 2, JULY 3,
1999 1998 1999 1998
----------- ----------- ----------- -----------
Basic:
Net income........................ $ 7,869 $ 3,349 $ 11,103 $ 3,493
Less preferred stock dividends.... (11) (11) (21) (21)
----------- ----------- ----------- -----------
Income allocable to common
shareholders.................... 7,858 3,338 11,082 3,472
----------- ----------- ----------- -----------
Weighted average
shares outstanding.............. 42,506 41,651 42,277 41,591
----------- ----------- ----------- -----------
Net income per share.............. $ 0.19 $ 0.08 $ 0.26 $ 0.08
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Diluted:
Income allocable to common
shareholders.................... $ 7,858 $ 3,338 $ 11,082 $ 3,472
----------- ----------- ----------- -----------
Weighted average shares outstanding
42,506 41,651 42,277 41,591
Plus options to purchase common
stock outstanding at end of period
3,650 3,855 3,650 3,855
Less shares assumed repurchased... (1,755) (2,028) (2,052) (2,334)
----------- ----------- ----------- -----------
Weighted average shares outstanding,
including dilutive effect of
options......................... 44,401 43,478 43,875 43,112
----------- ----------- ----------- -----------
Net income per share.............. $ 0.18 $ 0.08 $ 0.25 $ 0.08
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
NOTE 6. COMMITTMENTS
During the twenty-six weeks ended July 2, 1999, the Company entered into an
agreement to lease approximately 200 automated Cash Dispensing Machines
("CDMs") for installation in the Company's dispatch offices opened in 1999.
The fair market value of the CDMs at inception of the lease was approximately
$2.6 million. The lease is payable over 72 months with an imputed interest
rate of 6.5% and a residual payment equal to 20% of the CDMs original cost.
The leases are secured by the CDMs. During the twenty-six weeks ended July 2,
1999, the Company installed approximately 200 of the CDMs in its new dispatch
offices throughout the United States. Accordingly, the Company recorded
assets under capital lease and capital lease obligations totaling $2.6
million with future minimum lease payments over the next 6 years of
approximately $0.4 million per year.
- ----------------------------------------------------------------------------
Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain matters discussed in this Form 10-Q, including statements about the
Company's revenue growth, the demand for temporary labor and its plans for
opening new offices, are forward-looking statements within the meaning of the
Private Litigation Reform Act of 1995. As such, these forward-looking
statements may involve known and unknown risks, uncertainties and other
factors which may cause the actual results, performance or achievements of
the Company to be different from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
factors include, but are not limited to (1) the Company's ability to manage
and continue its rapid growth, (2) economic conditions in its key market
areas, and (3) other risks as set forth in Item 7 of the Company's Form 10-K
for the year ended December 31, 1998. Although the Company believes the
expectations reflected in such forward-looking statements are based upon
reasonable assumptions, it can give no assurance that its expectations will
be attained.
OVERVIEW
Labor Ready is the nation's leading provider of temporary manual labor. The
Company's customers are primarily in the freight handling, warehousing,
landscaping, construction, light manufacturing, and other light industrial
businesses. The Company has grown from eight dispatch offices in 1991 to 687
dispatch offices at July 2, 1999. Substantially all of the growth in dispatch
offices was achieved by opening Company-owned locations rather than through
acquisitions or franchising. The Company's annual revenues have grown from
approximately $6 million in 1991 to $607 million in 1998 and $364.3 million
for the twenty-six weeks ended July 2, 1999. This revenue growth has been
generated both by opening new dispatch offices in markets throughout the
U.S., Canada, United Kingdom and Puerto Rico and by continuing to increase
sales at existing dispatch offices.
The Company opened 201 dispatch offices during the first twenty-six weeks of
1999 and expects to open 300 additional dispatch offices in the year 2000.
The Company expects the average cost of opening each new dispatch office in
1999 to be approximately $45,000. The cost of opening a new dispatch office
includes extensive management training, the installation of sophisticated
computer and other office systems and a CDM. Further, once open, the Company
invests significant amounts of additional cash into the operations of new
dispatch offices until they begin to generate sufficient revenue to cover
their operating costs, generally within six months. The Company pays its
temporary workers on a daily basis, and generally bills its customers weekly.
Consequently, the Company may experience significant negative cash flow from
operations and investment activities during periods of high growth and may
require additional sources of working capital in order to continue to grow.
Approximately 20% of the Company's customers are construction and landscaping
businesses, which are significantly affected by the weather. Construction and
landscaping businesses and, to a lesser degree, other customer businesses
typically increase activity in spring, summer and early fall months and
decrease activity in late fall and winter months. Further, inclement weather
can slow construction and landscaping activities in such periods. As a
result, the Company has generally experienced a significant increase in
temporary labor demand in the spring, summer and early fall months, and lower
demand in the late fall and winter months.
Depending upon location, new dispatch offices initially target the
construction industry for potential customers. As dispatch offices mature,
the customer base broadens and the customer mix diversifies. From time to
time during peak periods, the Company experiences shortages of available
temporary workers. The Company has completed the installation of the CDMs in
substantially all of its dispatch offices in the United States. The CDMs
provide the Company's temporary workers with the option of receiving cash
payment instead of a payroll check. The Company believes this additional
feature is unique among its direct competitors and should increase the
Company's ability to attract available temporary workers.
Revenue from services includes revenues earned on services provided by the
Company's temporary workers and fees generated by the CDMs.
Cost of services includes the wages and related payroll taxes of temporary
workers, workers' compensation expense, unemployment compensation insurance
and transportation. Cost of services as a percentage of revenues has
historically been affected by numerous factors, including the use of lower
introductory rates to attract new customers at new dispatch offices, the use
of higher pay rates to attract more skilled workers, changes in the Company's
workers' compensation reserve rates and the changing geographic mix of new
and established, more mature markets. Although the Company has implemented
policies and procedures to prevent unplanned increases in pay rates, and is
no longer required to discount billing rates to attract new customers,
significant continuing fluctuations in cost of services may be experienced as
the Company pursues further aggressive growth.
- ----------------------------------------------------------------------------
Page 9
Selling, general and administrative expenses include the salaries and wages
of the Company's operations and administrative personnel, dispatch office
operating expenses, corporate office operating expenses and the costs of the
CDM program.
Labor Ready pays employee-related expenses of its temporary workers,
including workers' compensation coverage, unemployment compensation
insurance, and Social Security and Medicare taxes. The Company does not
provide health, dental, disability or life insurance to its temporary
workers. Generally, the Company bills its customers for the hours worked by
its temporary workers assigned to the customer. Because the Company pays its
temporary workers only for the hours actually worked, wages for the Company's
temporary workers are a variable cost that increases or decreases directly in
proportion to revenue. The Company has one franchisee, which operates five
dispatch offices. The Company does not intend to grant additional franchises.
Royalty revenues from the franchised dispatch offices are not material during
any period presented herein.
RESULTS OF OPERATIONS
The following table compares the operating results of the Company for the
twenty-six and thirteen weeks ended July 2, 1999 and July 3, 1998 (in
thousands):
THIRTEEN WEEKS ENDED TWENTY-SIX WEEKS ENDED
-------------------------------------- -------------------------------------
JULY 2 PERCENT JULY 3, JULY 2, PERCENT JULY 3,
1999 CHANGE 1998 1999 CHANGE 1998
-------------- ---------- ------------ ------------ ---------- -------------
Revenues from services........................ $ 207,369 45.0% $ 142,997 $ 364,302 53.7% $ 237,028
Cost of services.............................. 143,240 42.4 100,588 249,147 49.8 166,284
Selling, general and administrative expenses.. 50,062 43.4 34,910 92,724 50.0 61,824
Depreciation and amortization................. 1,084 (37.1) 1,723 1,760 (43.3) 3,103
Interest income (expense), net................ (99) 3.1 (96) (81) (172.3) 112
Income before income taxes and cumulative
effect of accounting change................ 12,884 126.8 5,680 20,590 247.3 5,929
Net income.................................... $ 7,869 135.0 $ 3,349 $ 11,103 217.9 $ 3,493
THIRTEEN WEEKS ENDED JULY 2, 1999 COMPARED TO THIRTEEN WEEKS ENDED JULY 3, 1998
DISPATCH OFFICES
The number of offices grew to 687 at July 2, 1999 from 652 locations at April
2, 1999, a net increase of 35 dispatch offices, or 5.4%. During the thirteen
weeks ended July 3, 1998, the number of offices grew to 481 from 420
locations at April 3, 1998, a net increase of 61 dispatch offices, or 14.5%.
The Company has met its target for 1999 office openings and does not expect
to open any material number of offices during the balance of the year. The
Company estimates that its aggregate costs of opening 35 new dispatch offices
in the second quarter of 1999 were approximately $1.6 million, an average of
approximately $45,000 per dispatch office, compared to aggregate costs of
approximately $3.0 million, an average of approximately $50,000 per dispatch
office, to open 61 new offices in the second quarter of 1998. The decrease in
per-store costs in 1999 was primarily the result of a decline in equipment
costs.
REVENUES FROM SERVICES
The Company's revenues from services increased to $207.4 million for the
thirteen weeks ended July 2, 1999, as compared to $143.0 million for the
thirteen weeks ended July 3, 1998, an increase of $64.4 million or 45.0%. The
increase in revenues is due primarily to the increase in the number of
dispatch offices and continued increases in revenues from mature dispatch
offices. Additionally, the Company continues to consolidate its position in
the marketplace and build brand awareness, allowing the Company to increase
its average bill rates over the same period a year ago. Included in revenues
from services for the thirteen weeks ended July 2, 1999 and July 3, 1998 are
CDM fees of $1.7 million and $0.9 million, respectively.
COST OF SERVICES
Cost of services increased to $143.2 million for the thirteen weeks ended
July 2, 1999 as compared to $100.6 million for the thirteen weeks ended July
3, 1998, an increase of $42.6 million or 42.4%. This increase is directly
related to the corresponding increase in revenues during the period. Cost of
services was 69.1% of revenue in the second quarter of 1999 compared to 70.3%
of revenue in the second quarter of 1998. Cost of services as a percentage of
revenues decreased 1.2% as compared to the second quarter of 1998 because the
Company experienced a decline in workers compensation expense due to
continuous improvements in workers' compensation claims experience and an
increase in CDM revenues. Significant continuing fluctuations in cost of
services may be expected as the Company pursues further aggressive growth.
- ----------------------------------------------------------------------------
Page 10
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $50.0 million in the second
quarter of 1999 as compared to $34.9 million in the second quarter of 1998,
an increase of $15.1 million or 43.3%. The increase is commensurate with the
45.0% increase in revenue from 1998 to 1999. Selling, general and
administrative expenses were 24.1% of revenues for the second quarter of 1999
as compared to 24.4% of revenues in the second quarter of 1998. The decrease
in selling, general and administrative expenses as a percentage of revenue in
the second quarter of 1999 is due mainly to continued economies of scale on
fixed and semi-fixed dispatch office operating and corporate administrative
costs. Included in selling, general and administrative expense for the
thirteen weeks ended July 2, 1999 and July 3, 1998 are CDM related expenses
of $0.8 million and $0.4 million, respectively.
The Company expects that selling, general and administrative expenses as a
percentage of revenues may fluctuate in future periods as the Company from
time to time adjusts its staffing model at the dispatch offices and upgrades
its operating and administrative capabilities to accommodate anticipated
revenue and dispatch office growth.
DEPRECIATION AND AMORTIZATION EXPENSE
Depreciation and amortization expense was $1.1 million in the second quarter
of 1999 and $1.7 million in the second quarter of 1998, a decrease of $0.6
million or 37.1%. The decrease in quarterly depreciation and amortization
expense is primarily the result of the elimination of amortization expense
when the Company adopted the provisions of the Statement. Beginning in 1999,
the Statement required the Company to expense as incurred, pre-opening costs
for new dispatch offices, and recognize as a cumulative effect of a change in
accounting principle, a one-time charge for the unamortized balance of
pre-opening costs. Prior to the change, the Company had capitalized
pre-opening costs and amortized them over two years. Offsetting this decrease
is a higher level of depreciation resulting from the addition of $4.1 million
of property and equipment since the first quarter of 1999. These additions
primarily include the CDMs and computer equipment, software, and other
equipment needed for the new offices opened during the period and to expand
the Company's data processing capabilities to accommodate the growth in
dispatch offices. Included in depreciation and amortization expense for the
thirteen weeks ended July 2, 1999 and July 3, 1998 are depreciation on CDMs
of $0.3 million and $0.2 million, respectively.
INTEREST INCOME (EXPENSE), NET
The Company recorded net interest expense of $99,000 in the second quarter of
1999 as compared to interest expense of $96,000 in the second quarter of
1998, an increase of $3,000 or 3.1%. The increase in net interest expense was
the result of increases in interest expense on CDM leases, higher letter of
credit and line of credit fees than in 1998 as a result of providing
additional collateral to the Company's workers' compensation insurers and
increasing the line of credit to $60 million. Additionally, the Company had
cash balances of approximately $16.9 million held in the CDMs at July 2, 1999
compared to $14.0 million at July 3, 1998.
The Company expects to incur interest expense during the balance of 1999 as
the cash demands of the Company's busiest time of year will require borrowing
on the Company's revolving line of credit. Additionally, cash balances held
in the CDMs for payment of temporary worker payrolls, will continue to reduce
cash available for investing.
TAXES ON INCOME
Taxes on income increased to a provision of $5.0 million in the second
quarter of 1999 from a provision of $2.3 million in the second quarter of
1998, an increase of $2.7 million. The increase in taxes was due to the
increase in income before taxes of $12.9 million in the second quarter of
1999 from pretax income of $5.7 million in the second quarter of 1998. The
Company's effective tax rate was 38.9% in the second quarter of 1999 as
compared to 41.0% in the second quarter of 1998. The decrease in the
effective rate was primarily due to reductions in the Company's expected
state income tax rates. The principal difference between the statutory
federal income tax rate and the Company's effective income tax rate results
from state income taxes and certain non-deductible expenses.
The Company had a net deferred tax asset of approximately $11.1 million at
July 2, 1999, resulting primarily from workers' compensation claims reserves.
The Company has not established a valuation allowance against this net
deferred tax asset as management believes that it is more likely than not
that the tax benefits will be realized in the future based on the historical
levels of pre-tax income and expected future taxable income.
- ----------------------------------------------------------------------------
Page 11
NET INCOME
The Company reported net income of $7.9 million for the thirteen weeks ended
July 2, 1999, as compared to net income of $3.3 million, for the thirteen
weeks ended July 3, 1998, an increase of $4.6 million. As a percentage of
revenues from services, net income increased to 3.8% for the second quarter
of 1999, which compares to 2.3% for the second quarter of 1998, an increase
of 1.5%. This increase in net income is primarily the result of increased
revenues and gross margins and economies of scale realized on selling,
general and administrative expenses.
TWENTY-SIX WEEKS ENDED JULY 2, 1999 COMPARED TO TWENTY-SIX WEEKS ENDED JULY 3,
1998
DISPATCH OFFICES
The company opened 201 dispatch offices during the twenty-six weeks ended
July 2, 1999 as compared to 165 opened during the same period of the prior
year. The total number of offices grew to 687 at July 2, 1999 from 481
locations at July 3, 1998, a net increase of 206 dispatch offices, or 42.8%.
The company has met its target for 1999 office openings and does not expect
to open any material number of offices during the balance of the year. The
Company estimates that its aggregate costs of opening 201 new dispatch
offices in the first half of 1999 were approximately $9.1 million, an average
of approximately $45,000 per dispatch office, compared to aggregate costs of
approximately $8.3 million, an average of approximately $50,000 per dispatch
office, to open 165 new stores for the same period in 1998. The decrease in
per-store costs in 1999 was primarily the result of a decline in equipment
costs.
REVENUES FROM SERVICES
The Company's revenues from services increased to $364.3 million for the
twenty-six weeks ended July 2, 1999, as compared to $237.0 million for the
twenty-six weeks ended July 3, 1998, an increase of $127.3 million or 53.7%.
The increase in revenues is due primarily to the increase in the number of
dispatch offices and continued increases in revenues from mature dispatch
offices. Additionally, the Company opened more offices in the first two
quarters of 1999 than in the same period in 1998. Finally, the Company
continues to consolidate its position in the marketplace and build brand
awareness, allowing the Company to increase its average bill rates over the
same period a year ago. Included in revenues from services for the twenty-six
weeks ended July 2, 1999 and July 3, 1998 are CDM fees of $2.9 million and
$1.1 million, respectively.
COST OF SERVICES
Cost of services increased to $249.1 million for the twenty-six weeks ended
July 2, 1999 as compared to $166.3 million for the twenty-six weeks ended
July 3, 1998, an increase of $82.8 million or 49.8%. This increase is
directly related to the corresponding increase in revenues during the period.
Cost of services was 68.4% of revenue in the first half of 1999 compared to
70.2% of revenue for the same period in 1998. Cost of services as a
percentage of revenues decreased 1.8% as compared to 1998 because the company
was able to increase its billing rates over the same period a year ago while
the average wage paid to temporary workers did not increase. Additionally,
the Company experienced a decline in workers' compensation expense due to
continuous improvements in workers' compensation claims experience.
Significant continuing fluctuations in cost of services may be expected as
the Company pursues further aggressive growth.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling, general and administrative expenses were $92.7 million for the first
half of 1999 as compared to $61.8 million for the first half of 1998, an
increase of $30.9 million or 50.0%. The increase was largely due to the 53.7%
increase in revenue from 1998 to 1999. Selling, general and administrative
expenses were 25.5% of revenues for the twenty-six weeks ended July 2, 1999
as compared to 26.1% of revenues for the twenty-six weeks ended July 3, 1998.
The decrease in selling, general and administrative expenses as a percentage
of revenue for the first two quarters of 1999 is due mainly to continued
economies of scale on fixed and semi-fixed dispatch office operating and
corporate administrative costs. Included in selling, general and
administrative expense for the twenty-six weeks ended July 2, 1999 and July
3, 1998 are CDM related expenses of $1.3 million and $0.5 million,
respectively.
The Company expects that selling, general and administrative expenses as a
percentage of revenues may fluctuate in future periods as the Company from
time to time adjusts its staffing model at the dispatch offices and upgrades
its operating and administrative capabilities to accommodate anticipated
revenue and dispatch office growth.
- ----------------------------------------------------------------------------
Page 12
DEPRECIATION AND AMORTIZATION EXPENSE
Depreciation and amortization expense was $1.8 million for the twenty-six
weeks ended July 2, 1999 and $3.1 million for the same period in 1998, a
decrease of $1.3 million or 43.3%. The decrease in depreciation and
amortization expense is primarily the result of the elimination of
amortization expense when the Company adopted the provisions of the
Statement. Beginning in 1999, the Statement required the Company to expense
as incurred, pre-opening costs for new dispatch offices, and recognize as a
cumulative effect of a change in accounting principle, a one-time charge for
the unamortized balance of pre-opening costs. Prior to the change, the
Company had capitalized pre-opening costs and amortized them over two years.
Offsetting this decrease is higher levels of depreciation resulting from the
addition of $9.5 million of property and equipment since the beginning of
1999. These additions primarily include the CDMs and computer equipment,
software, and other equipment needed for the new offices opened during the
period and to expand the Company's data processing capabilities to
accommodate the growth in dispatch offices. Included in depreciation and
amortization expense for the twenty-six weeks ended July 2, 1999 and July 3,
1998 are depreciation on CDMs of $0.6 million and $0.3, respectively.
INTEREST INCOME (EXPENSE), NET
The Company recorded net interest expense of $81,000 for the twenty-six weeks
July 2, 1999 as compared to interest income of $112,000 for the same period
in 1998, an increase of $193,000 or 172.3%. The increase in net interest
expense was the result of increases in interest expense on CDM leases, higher
letter of credit and line of credit fees than in 1998 as a result of
providing additional collateral to the Company's workers' compensation
insurers and increasing the line of credit to $60 million, and an increase in
borrowings on the line of credit. Additionally, the Company had cash balances
of approximately $16.9 million held in the CDMs at July 2, 1999 compared to
$14.0 million at July 3, 1998.
The Company expects to incur interest expense during the balance of 1999 as
the cash demands of the Company's busiest time of year will require borrowing
on the Company's revolving line of credit. Additionally, cash balances held
in the CDMs for payment of temporary worker payrolls, will continue to reduce
cash available for investing.
TAXES ON INCOME
Taxes on income increased to a provision of $8.0 million for the first two
quarters of 1999 from a provision of $2.4 million in the first two quarters
of 1998, an increase of $5.6 million. The increase in taxes was due to the
increase in income before taxes and cumulative effect of accounting change to
$20.6 million for the first two quarters of 1999 from pretax income of $5.8
million for the first two quarters of 1998. The Company's effective tax rate
was 39.0% for the first two quarters of 1999 as compared to 41.1% for the
first two quarters of 1998. The decrease in the effective rate was primarily
due to reductions in the Company's expected state income tax rates. The
principal difference between the statutory federal income tax rate and the
Company's effective income tax rate result from state income taxes and
certain non-deductible expenses.
The Company had a net deferred tax asset of approximately $11.1 million at
July 2, 1999, resulting primarily from workers' compensation claims reserves.
The Company has not established a valuation allowance against this net
deferred tax asset as management believes that it is more likely than not
that the tax benefits will be realized in the future based on the historical
levels of pre-tax income and expected future taxable income.
NET INCOME
The Company reported net income of $11.1 million for the twenty-six weeks
ended July 2, 1999, as compared to net income of $3.5 million, for the
twenty-six weeks ended July 3, 1998, an increase of $7.6 million. As a
percentage of revenues from services, net income increased to 3.0% for the
first half of 1999, which compares to 1.5%, for the first half of 1998, an
increase of 1.5%. This increase in net income is primarily the result of
increased revenues and gross margins, economies of scale realized on selling,
general and administrative expenses and decreases in amortization expense,
offset by a one-time charge of $1.5 million related to the change in
accounting principle for dispatch office pre-opening costs discussed above.
- ----------------------------------------------------------------------------
Page 13
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities was $19.1 million for the period ended
July 2, 1999 compared to $9.9 million for the period ended July 3, 1998. The
increase in cash used in operations in 1999, is largely due to the increase
in accounts receivable and prepaid expenses along with the decrease in
accounts payable, offset by an increase in net income and the reserve for
workers' compensation.
The Company used net cash in investing activities of $7.7 million in the
first half of 1999, compared to $5.8 million in the first half of 1998. The
increase in cash used in investing activities in 1999 as compared to 1998 is
due primarily to an increase in capital expenditures to open 201 new offices
and increase the Company's data processing capabilities to accommodate the
growth in dispatch offices. The Company's cash used for capital expenditures
in 1999 and 1998 include property and equipment acquired other than through
capital lease.
Net cash provided by financing activities was $18.0 million for the period
ended July 2, 1999 and $8.9 million for the period ended July 3, 1998. The
increase in cash provided by financing activities in 1999 as compared to 1998
is due mainly to net borrowings on the line of credit and proceeds from the
exercise of employee stock options.
In February 1999, the Company entered into a new line of credit agreement
with U.S. Bank. The new agreement allows the company to borrow up to the
lesser of $60 million or 80% of eligible accounts receivable, as defined by
the bank, with interest at the lesser of the bank's prime rate (8.00% at July
2, 1999) or the London Inter-Bank Offering Rate (LIBOR) plus 1.25%. The line
of credit is secured primarily by the Company's accounts receivable and is
due in full on June 30, 2000. The line of credit agreement requires that the
Company maintain certain minimum net worth and working capital amounts and
ratios. The Company was in compliance with the requirements at July 2, 1999.
As discussed further in Note 2 to the consolidated financial statements, the
Company is required by the workers' compensation program to collateralize a
portion of its workers' compensation liability with irrevocable letters of
credit. At July 2, 1999, the Company had provided its insurance carriers with
letters of credit totaling $24.6 million. The letters of credit bear fees of
.75% per year and are supported by an equal amount of available borrowings on
the line-of-credit. Accordingly, at July 2, 1999, $14.3 million was
outstanding on the line-of-credit, $24.6 million was committed by the letters
of credit and $21.1 million was available for borrowing.
During the first quarter of 1999, the Company entered into an agreement to
lease approximately 200 automated CDMs for installation in the Company's
dispatch offices opened in 1999. The fair market value of the CDMs at
inception of the lease is approximately $2.7 million. The lease is payable
over 72 months with an imputed interest rate of 6.5% and a residual payment
equal to 20% of the CDMs' original cost. The leases are secured by the CDMs.
During the six months ended July 2, 1999, the Company installed approximately
200 CDMs in dispatch offices throughout the United States. Accordingly, the
Company recorded assets under capital lease and capital lease obligations
totaling $2.5 million with future minimum lease payments over the next 6
years of approximately $0.4 million per year.
Included in cash and cash equivalents at July 2, 1999, is approximately $16.9
million of cash which is located in the CDMs for payment of temporary worker
payrolls. The Company anticipates further increases in cash held in the CDMs
as it enters the busiest time of its year and completes the installation of
CDMs at all of its dispatch offices in the United States.
Historically, the Company has financed its operations through cash generated
by external financing including term loans, credit lines and stock offerings.
The principal use of cash is to finance the growth in receivables, and fund
the cost of opening new dispatch offices. The Company may experience cash
flow deficits from operations and investing activities while the Company
expands its operations, including the acceleration of opening new dispatch
offices. Management expects cash flow deficits to be financed by profitable
operations, the use of the Company's line of credit, and may consider other
equity or debt financings as necessary. The Company analyzes acquisition
opportunities from time to time and may pursue acquisitions in certain
circumstances. Any acquisitions the Company enters into may require
additional equity or debt financing.
- ----------------------------------------------------------------------------
Page 14
INFORMATION PROCESSING SYSTEMS AND THE YEAR 2000
As the year 2000 approaches, there are uncertainties concerning whether
computer systems and electronic equipment with date functions will properly
recognize date-sensitive information when the year changes to 2000. Systems
that do not properly recognize such information could generate erroneous data
or fail. Due to the Company's reliance on its management information systems,
failure of the management information systems for any reason (including year
2000 noncompliance) could result in the loss of communications with its
dispatch offices and could result in unforeseeable but potentially material
losses to the Company. However, management believes that the year 2000 does
not pose a significant operational problem for the Company's computer systems.
The Company has developed and is currently implementing a significant upgrade
to its proprietary management information systems to address the dramatic
growth (and expected future growth) in the number of the Company's dispatch
offices and provide certain enhanced features. The software upgrade is year
2000 compliant. Through July 2, 1999, the Company has incurred approximately
$1.4 million in development costs which is included in the accompanying
consolidated balance sheets in "Computers and Software". The Company expects
that the upgrade will be installed Company-wide not later than September 30,
1999.
Management has identified three systems with potential year 2000 problems:
(1) its proprietary management information system, which is being replaced as
discussed above, (2) the communication system currently used to exchange
point of sale information between corporate headquarters and the dispatch
offices, and (3) the payroll system for corporate employees (but not for
temporary employees dispatched to customers). The Company expects to correct
the year 2000 problem related to its system for communicating point of sale
information with an upgrade supplied by the vendor. Alternatively, the
Company believes that it could implement an alternative, year 2000 compliant
system with minimal cost. The Company expects to upgrade the payroll system
by year-end, but will use, if necessary, a third party capable of providing
payroll services. The Company has not negotiated the cost of such services
but believes there are alternative providers to assure that any costs
incurred are at competitive rates.
The Company has tested and will continue to test other computer components
and software including its non-information processing systems such as its
data and phone communications systems for year 2000 compliance. Based on such
testing, the Company expects to replace its voice mail system for a total
cost of approximately $50,000. Testing to date has indicated no other year
2000 compliance problems. If other systems fail, the Company will be required
to replace them. Replacement systems are mass produced and available from a
large number of vendors and would constitute an immaterial expense relative
to the operating budget of the Company.
Management believes that as a result of the nature of the Company's business
the Company bears little exposure to risk of year 2000 non-compliance by
third parties. The Company acquires supplies (e.g., personal safety
equipment, office supplies) that are mass-produced and readily available from
a large number of suppliers. None of the Company's customers represent more
than 2% of the Company's revenues, so that, unless a significant number of
the Company's customers experience complete disruptions to their business,
the Company is unlikely to experience significant loss of revenue.
Nevertheless, the Company is currently conducting a survey of its largest
vendors and customers in order to assess the readiness of these third parties
with which it deals. If the Company determines that any of its vendors are
unable to adequately address year 2000 issues, the Company believes that
alternatives could be found before the year 2000.
The Company has a contingency plan for certain year 2000 issues, however, the
Company believes that its systems will be year 2000 compliant by year end, if
not before, and that the year 2000 issue will not materially impact its
operations. The forward looking statements referenced above, including the
preceding sentence, are subject to a number of risks and uncertainties,
including the ability of customers, vendors and other third parties to solve
timely their year 2000 issues, the accuracy of year 2000 testing methods and
that remediation of year 2000 issues will be correctly implemented.
- ----------------------------------------------------------------------------
Page 15
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On August 4, 1999, at the Company's Annual Meeting of Shareholders ("the
Annual Meeting") the shareholders of the Company voted to: (1) elect 5
directors, (2) amend the Company's Articles of Incorporation to limit the
liability of Directors to the maximum extent permitted by Washington state
law, and (3) to appoint Arthur Andersen LLP as the Company's independent
auditors for the year ended December 31, 1999. The results of the proposals
voted upon at the Annual Meeting are as follows:
FOR AGAINST WITHHELD ABSTAIN
---------- ------- -------- -------
1. a) Election of
Glenn A. Welstad 31,883,516 -- 435,958 --
b) Election of
Robert J. Sullivan 31,882,675 -- 436,799 --
c) Election of
Thomas E. McChesney 32,059,829 -- 259,645 --
d) Election of
Ronald L. Junck 31,881,327 -- 438,147 --
e) Election of
Richard W. Gasten 31,871,936 -- 447,538 --
2. Amending the Articles of Incorporation to
limit Directors liability to the maximum
extent permitted by Washington state law. 31,726,940 465,561 -- 126,973
3. Ratification of Arthur Andersen LLP as the
Company's independent auditors for the
calendar year ended December 31, 1999. 31,885,205 366,116 -- 68,153
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS:
THE FOLLOWING EXHIBIT IS BEING FILED AS A PART OF THIS REPORT:
EXHIBIT NO. DESCRIPTION
27 Financial Data Schedules as of July 2, 1999
and for the thirteen week period then
ended.
27.1 Financial Data Schedules as of July 3, 1998
and for the thirteen week period then ended.
(b) REPORTS ON FORM 8-K
None.
- ----------------------------------------------------------------------------
Page 16
SIGNATURES
Pursuant to the requirements 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.
REGISTRANT: LABOR READY, INC.
By: /s/ Glenn A. Welstad August 13, 1999
----------------------------------- ---------------
Glenn A. Welstad Date
Chairman of the Board, Chief Executive
Officer and President
By: /s/ Joseph P. Sambataro, Jr. August 13, 1999
----------------------------------- ---------------
Joseph P. Sambataro, Jr. Date
Executive Vice President,
Chief Financial Officer, Treasurer
and Assistant Secretary
- ----------------------------------------------------------------------------
Page 17