EXHIBIT 99.1

 

FOR IMMEDIATE RELEASE:

 

LABOR READY ANNOUNCES SECOND QUARTER 2004 RESULTS

Net Income Improves 94 Percent on 24 Percent Increase in Revenue

 

TACOMA, WA, July 21, 2004—Labor Ready, Inc. (NYSE: LRW) reported revenue for the second quarter ended July 2, 2004 of $267.1 million compared to revenue of $215.7 million for the second quarter of 2003. Net income for the quarter was $10.1 million or $0.21 per diluted share, as compared to net income of $5.2 million or $0.12 per diluted share for the second quarter of 2003.

 

“We are pleased with our solid operating performance in the second quarter,” said Labor Ready President and CEO Joe Sambataro. “We continue to leverage the strength of our operating model and increased net income 94 percent on a 24 percent improvement in revenue.”

 

According to Sambataro, during the quarter, revenue from branches open 12 months or longer grew approximately 15 percent over a year earlier. The Company operated 831 branch locations at the end of the quarter, after closing six branches, and opening three branches in the U.S., two in the U.K. and two Spartan Staffing branches.

 

Labor Ready acquired Spartan Staffing, which included 16 Workforce branches and nine Spartan Staffing branches, at the onset of the second quarter. The newly acquired Spartan branches provided seven percent of Labor Ready’s 24 percent year-over-year revenue growth during the quarter and made a positive contribution to the company’s net income performance.

 

Labor Ready stated that gross profit margins in the second quarter improved to 29.9 percent from 29.1 percent in the first quarter of 2004. According to Sambataro, the improvement in gross profit margins was primarily driven by better pricing, seasonal business mix and containment of workers’ compensation costs.

 

Labor Ready also reiterated revenue guidance for 2004 in the range of $1.03 to $1.04 billion and increased guidance for net income per diluted share for the year to between $0.62 and $0.65. For the third quarter of 2004, the Company estimates revenue in the range of $292 million to $298 million, representing year-over-year growth of 15 percent to 17 percent, and net income per diluted share between $0.26 and $0.29.

 

Management will discuss second quarter 2004 results on a conference call at 7 a.m. (PT) Thursday, July 22, 2004. The conference call can be accessed on Labor Ready’s web site at www.laborready.com.

 

This news release contains forward-looking statements, such as statements about the ranges of revenues and profits anticipated for future periods and other factors that may affect our financial results and operations in the future. Our actual results are, however, subject to a number of risks, including:  1) national and global economic conditions; 2) our ability to continue to attract and retain customers and maintain profit margins in the face of new and existing competition; 3) potential new laws and regulations that could have a materially adverse effect on our operations and financial results; 4) significant labor disturbances which

 

 

could disrupt industries we serve; 5) increased costs and collateral requirements in connection with our insurance obligations, including workers’ compensation insurance; 6) the adequacy of our financial reserves; 7) our continuing ability to comply with financial covenants in our lines of credit and other financing agreements; 8) our ability to attract and retain competent employees in key positions; 9) our ability to successfully complete and integrate acquisitions that we may make from time to time; and 10) other risks described in our filings with the Securities and Exchange Commission, including the Report on Form 10-Q filed May 3, 2004.

 

About Labor Ready

Labor Ready is the nation’s leading provider of temporary manual labor, serving more than 275,000 customers by providing a flexible, dependable workforce to such industries as freight handling, warehousing, landscaping, construction and light manufacturing. Annually, Labor Ready puts nearly 600,000 people to work. Labor Ready operates more than 830 locations in the United States, Canada, and the United Kingdom.  For additional information, visit Labor Ready’s website at www.laborready.com

 

For more information, contact:

 

Steve Cooper, CFO

253-680-8213

 

Stacey Burke, director of corporate communications

253-680-8291

 

 

LABOR READY, INC.

SUMMARY CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

 

		Thirteen Weeks Ended							Twenty-six Weeks Ended
		July 2,				June 27,			July 2,				June 27,
		2004				2003			2004				2003
		(unaudited)							(unaudited)
Revenue from services		$	267,056			$	215,684		$		475,968		$	387,964
Cost of services		187,297				150,710			335,482				272,093
Gross profit		79,759				64,974			140,486				115,871
Selling, general and administrative expenses		60,310				53,868			116,756				106,587
Depreciation and amortization		2,280				2,044			4,339				4,115
Income from operations		17,169				9,062			19,391				5,169
Interest and other expense, net		260				1,020			1,265				2,082
Income before tax expense		16,909				8,042			18,126				3,087
Income tax		6,781				2,821			7,268				1,081
Net income		$		10,128		$	5,221		$	10,858			$	2,006
Net Income per common share:
Basic		$		0.24		$	0.13		$	0.26			$	0.05
Diluted		$		0.21		$	0.12		$	0.24			$	0.05
Weighted average shares outstanding:
Basic		41,503				40,055			41,356				40,227
Diluted		52,187				50,312			52,023				40,801

 

 

 

LABOR READY, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

 

		As of
		July 2,			Jan 2,
		2004			2004
Assets
Current assets
Cash and cash equivalents		$	90,116		$	83,112
Marketable securities		21,562			25,257
Accounts receivable, net		99,287			79,620
Other current assets		23,719			16,815
Total current assets		234,684			204,804
Property and equipment, net		28,141			28,489
Other assets		139,621			129,735
Total assets		$	402,446		$	363,028
Liabilities and shareholders’ equity
Current liabilities		$	84,039		$	70,830
Long-term liabilities		146,705			138,059
Total liabilities		230,744			208,889
Shareholders’ equity		171,702			154,139
Total liabilities and shareholders’ equity		$	402,446		$	363,028

 

 

 

LABOR READY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

In Thousands

(Unaudited)

 

		Twenty-six weeks ended
		July 2,			June 27,
		2004			2003
Cash Flows from Operating activities:
Net income		$	10,858		$	2,006
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization		4,725			4,581
Provision for doubtful accounts		3,508			4,040
Deferred income taxes		(4,259		)	(7,477		)
Other operating activities		1,639			297
Changes in operating assets and liabilities:
Accounts receivable		(23,175		)	(18,201		)
Workers’ compensation claim reserve		13,887			4,567
Other current assets		(3,099		)	508
Other current liabilities		14,127			9,491
Net cash provided by (used in) operating activities		18,211			(188		)
Cash Flows from Investing activities:
Capital expenditures		(2,876		)	(1,545		)
Purchases of marketable securities		(13,660		)	(15,600		)
Maturities of marketable securities		17,303			7,910
Purchase of Spartan Staffing, Inc.		(9,890		)	—
Other assets		(30		)	—
Restricted cash and other assets		(1,441		)	25,952
Proceeds from sale of property and equipment		10			—
Net cash provided by (used in) investing activities		(10,584		)	16,717
Cash Flows from Financing activities:
Proceeds from sale of stock through options and employee benefit plans		4,722			1,048
Payments on debt		(1,304		)	(1,169		)
Payments for offering costs		—			(3		)
Payments in excess of funds		(4,197		)	—
Purchase and retirement of common stock		—			(4,957		)
Net cash used in financing activities		(779		)	(5,081		)
Effect of exchange rates on cash		156			997
Net change in cash and cash equivalents		7,004			12,445
Cash and cash equivalents, beginning of period		83,112			69,255
Cash and cash equivalents, end of period		$	90,116		$	81,700