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Tuesday April 27, 4:02 pm Eastern Time
Company Press Release
SOURCE: Labor Ready, Inc.
Labor Ready Reports Record First Quarter Revenue
& Earnings
Earnings Per Share $0.16 (Before $0.05 Extraordinary Charge) Vs. $0.01 Year Ago; Wider
Operating Margins Result From Streamlining Operations and Strong Demand for Workers
Company Plans to Open 300 New Stores in Year 2000
TACOMA, Wash., April 27 /PRNewswire/ -- Labor Ready, Inc. (NYSE: LRW - news), the nation's leading provider of
temporary manual labor, announced today that sales for its first quarter ended April 2, 1999 increased 67% to a record $157
million from $94 million last year. Net income was a record $4,687,000 or $0.16 per diluted share, before a one-time charge
of $1,453,000 or $0.05 per share, vs. $145,000 or $0.01 per share for the year earlier period. The Company noted that the
earnings were well above the analyst consensus estimate of $0.01 per share before the one time charge.
After the one-time charge, a write-off of previously capitalized new store pre-opening costs as required by new accounting
standard SOP 98-5, net income was $3,234,000 or $0.11 per diluted share. The new accounting standard requires that
pre-opening costs must be expensed in the quarter in which they occur. The Company had previously capitalized pre-opening
costs and amortized them over two years.
President, Chairman and CEO, Glenn Welstad said, ''Our strong sales and earnings were the result of the Company's growing
national presence, the continued high demand for manual labor, efficiencies in marketing and the streamlining of field operations.
For example, the Company lowered its store operating costs by staffing its stores with fewer employees than would have been
utilized in the past. Looking ahead, our new stores will break even faster and existing stores will be larger contributors to
operating results in what are traditionally our strongest labor demand quarters of the year.''
So strong is the demand that the Company said it plans to open 300 stores in the year 2000 versus the 200 originally planned.
In the first quarter, Labor Ready opened 166 of the record 200 stores it is opening this year. As of today it had opened 182
new stores and expects to open the remaining 18 stores by June, bringing the total of stores open in 1999 to 686.
Welstad indicated that the first quarter's gross margins as a percentage of sales were 32.5% as compared to 30.1% in 1998.
One factor for this increase was the strong demand for manual labor that allowed the Company to increase its average bill-rate,
while the average wage paid to workers did not increase amid continued heavy availability of laborers.
''Unlike other areas of the temporary staffing industry that have been besieged by wage increases, stiff competition and overall
lack of workers, Labor Ready is finding no shortage of workers, nor is it under wage pressures,'' said Welstad, adding that
because Labor Ready continues to focus on small businesses it doesn't have to contend with the pricing pressures associated
with doing business with large companies and nationwide fulfillment contracts.
Another area that positively affected margins was the growing usage by workers of the Company's cash machines, resulting in
fees of $1,200,000 in the first quarter compared to $175,000 for the year earlier period.
Welstad said that another major milestone was positive cash flow from operations for the first quarter resulting in cash and cash
equivalents at April 2, of $24.2 million, despite heavy spending during the quarter for new store openings.
''We continue to gain market share from our spreading geographical reach. For example, we have a system that automatically
connects customers to the office located nearest to them by simply dialing 888-24-LABOR. Beyond the benefit of our
increasing critical mass, it is our ability to serve our customers better and faster, and that sets Labor Ready apart,'' said
Welstad.
Labor Ready is currently operating 668 dispatch offices in 46 states, Puerto Rico, Canada and the United Kingdom. Based in
Tacoma, Washington Labor Ready is the nation's leading provider of temporary manual labor to the light industrial and small
business markets.
This release contains forward-looking statements, such as statements about the Company's plans to open new offices in 1999
and 2000, and the time it takes offices to achieve break-even. The Company's actual results could differ materially from the
results identified in any forward-looking statements. Factors that could cause such a difference include, (1) uncertainties
regarding its ability to manage and continue its rapid growth, (2) economic conditions in its key market areas, and (3) other
risks described in the Company's 1998 Form 10-K.
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Thirteen Weeks Ended
April 2, April 3,
1999 1998
(unaudited)
Revenues from services $156,933 $94,030
Cost of services 105,907 65,695
Gross profit 51,026 28,335
Selling, general and
administrative expenses 42,662 26,913
Depreciation and amortization 676 1,380
Income from operations 7,688 42
Interest income, net 18 208
Income before taxes on income
and extraordinary item 7,706 250
Taxes on income 3,019 105
Income before extraordinary item 4,687 145
Extraordinary item, net of tax benefit (1,453) --
Net income $3,234 $145
Earnings per share
Basic
Income before extraordinary item $0.17 $0.01
Extraordinary item, net (0.05) --
Net income $0.12 $0.01
Diluted
Income before extraordinary item $0.16 $0.01
Extraordinary item, net (0.05) --
Net income $0.11 $0.01
Weighted average shares outstanding
Basic 28,029 27,689
Diluted 28,979 28,502
LABOR READY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(in thousands of dollars)
(unaudited)
April 2, December 31,
1999 1998
Assets
Current assets
Cash and cash equivalents $24,243 $25,940
Accounts receivable, net 64,572 65,484
Other current assets 18,063 14,509
Total current assets 106,878 105,933
Property and equipment, net 24,945 20,271
Other assets 5,608 4,532
Total assets $137,431 $130,736
Liabilities and shareholders' equity
Current liabilities $30,520 $34,842
Long-term liabilities 20,281 15,397
Total liabilities 50,801 50,239
Shareholders' equity 86,630 80,497
Total liabilities and
shareholders' equity $137,431 $130,736
SOURCE: Labor Ready, Inc.
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