UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
 
FORM 8-K
 
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date of report (Date of earliest event reported):  October 17, 2007
 
LABOR READY, INC.
(Exact Name of Registrant as Specified in Its Charter)
 
Washington
(State or Other Jurisdiction of Incorporation)

001-14543	 	91-1287341	
(Commission File Number)	 	(IRS Employer Identification No.)	
 	 	 	
1015 A Street, Tacoma, Washington	 	98402	
(Address of Principal Executive Offices)	 	(Zip Code)	
 
(253) 383-9101
(Registrant’s Telephone Number, Including Area Code)
 
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):
 
o     Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o     Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o     Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o     Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 
Item 2.02.	 	Results of Operations and Financial Condition.	
 
On October 17, 2007, Labor Ready, Inc. (the “Company”) issued a press release (the “Press Release”) reporting its financial results for the third quarter ended September 28, 2007 and earnings guidance for the fourth quarter of 2007, a copy of which is attached hereto as Exhibit 99.1 and the contents of which are incorporated herein by this reference.
 
In accordance with General Instruction B.2. of Form 8-K, the information contained in the Press Release shall not be deemed “Filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01.	 	Financial Statements and Exhibits.	
 	 	 	
 	 	(d)           Exhibits	
 	 	 	
 	 	99.1.        Press Release of the Company dated October 17, 2007.	
 
2

 
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 hereunto duly authorized.

 	 	LABOR READY, INC.	
 	 	(Registrant)	
 	 	 	
Date:  October 17, 2007	By:	 	/s/ Derrek Gafford	 	
 	 	 	
 	 	Derrek Gafford	
 	 	Chief Financial Officer	
 
3

EXHIBIT 99.1
 
Labor Ready Announces 2007 Third Quarter Results
 
TACOMA, Wash. – October 17, 2007 — Labor Ready, Inc. (NYSE:LRW) reported revenue for the third quarter ended Sept. 28, 2007 of $390.7 million, an increase of 4.4 percent from $374.1 million for the third quarter of 2006. Net income for the third quarter was $22.7 million or $0.51 per diluted share, a decrease in net income of 8.5 percent, as compared to $24.8 million or $0.48 per diluted share for the third quarter of 2006.
 
“Although the operating environment in industrial staffing remains difficult, we continued our positive momentum in same branch sales growth and stabilized our gross profit margin this quarter despite the minimum wage increases throughout the year,” said Labor Ready CEO Steve Cooper.
 
Revenue for the quarter from branches open 12 months or longer increased 1.2 percent over the same quarter a year ago.
 
A recent acquisition provided 3 percent of additional revenue growth for the quarter. As expected, the acquisition’s contribution to net income was slight due to related amortization of intangible assets.
 
Labor Ready opened six new branches and closed 19 branches during the quarter resulting in 919 branches in operation at the end of the quarter. The company anticipates closing approximately 16 additional branches during the fourth quarter of 2007.
 
“We will have closed approximately 47 branches during 2007 as a result of the downturn in demand for our services, said Cooper. “We are a disciplined company and will continue to use the flexibility of our business model to control costs and scale our operations to meet demand.”
 
During the quarter the company purchased approximately 2.5 million shares of its outstanding common stock for $53 million, which leaves $40 million available to purchase additional shares under the current share repurchase authorization. Since the beginning of 2006, the company has purchased approximately 11.7 million shares of its common stock at the cost of $237 million.
 
Labor Ready also provided guidance for the fourth quarter and updated its outlook for 2007. For the fourth quarter, the company estimates revenue in the range of $345 million to $350 million and net income per diluted share between $0.32 and $0.34.
 
Management will discuss the company’s performance with analysts on a conference call at 5 p.m. (ET) today, Oct. 17, 2007. The conference call will be broadcast on the internet at www.laborready.com and archived later in the day for replay.

 
This news release contains forward-looking statements, such as statements about the ranges of revenues, gross margins and net income anticipated for future periods, improvements in safety and workers’ compensation claims and costs, strategies for increasing revenue and net income, and other factors that may affect Labor Ready’s financial results and operations in the future. Labor Ready’s actual results are, however, subject to a number of risks, including without limitation the following:  1) national and global economic conditions, including the impact of changes in national and global credit markets and other changes on Labor Ready customers; 2) Labor Ready’s 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 Labor Ready’s operations and financial results; 4) significant labor disturbances which could disrupt industries Labor Ready serves; 5) increased costs and collateral requirements in connection with Labor Ready’s insurance obligations, including workers’ compensation insurance; 6) the adequacy of Labor Ready’s financial reserves; 7) Labor Ready’s continuing ability to comply with financial covenants in its lines of credit and other financing agreements; 8) Labor Ready’s ability to attract and retain competent employees in key positions or to find temporary employees or skilled trade workers to fulfill the needs of our customers; 9) Labor Ready’s ability to successfully complete and integrate acquisitions that it may make from time to time; 10) Labor Ready’s ability to timely execute strategies for acquired companies; and 11) other risks described in Labor Ready’s filings with the Securities and Exchange Commission, including its most recent Form 10-K and Form 10-Q filings.
 
About Labor Ready
 
Labor Ready is an international provider of blue-collar staffing with three business lines including general labor, light industrial and skilled trades. The company operates under the brand names of Labor Ready for its general labor business line; Spartan Staffing for its light industrial business line; and CLP Resources for its skilled trades business line. The company’s customers are primarily small to mid-sized businesses in the construction, warehousing, hospitality, landscaping, transportation, light manufacturing, retail, wholesale, facilities and sanitation industries. Annually, the company serves more than 300,000 customers and puts approximately 600,000 people to work through its more than 900 branch offices 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:
 
Derrek Gafford, CFO
253-680-8214
 
Stacey Burke, VP, Corporate Communications
253-680-8291

 
LABOR READY, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
In Thousands, except per share data
(Unaudited)

 	 	Thirteen Weeks Ended	 	Thirty-Nine Weeks Ended	 	
 	 	September 28,	 	September 29,	 	September 28,	 	September 29,	 	
 	 	2007	 	2006	 	2007	 	2006	 	
 	 	 	 	 	 	 	 	 	 	
Revenue from services	 	$	390,672	 	$	374,126	 	$	1,032,040	 	$	1,010,970	 	
Cost of services	 	265,168	 	253,262	 	701,858	 	687,738	 	
Gross profit	 	125,504	 	120,864	 	330,182	 	323,232	 	
Selling, general and administrative expenses	 	89,077	 	81,790	 	248,355	 	235,523	 	
Depreciation and amortization	 	3,402	 	2,441	 	8,661	 	7,909	 	
Income from operations	 	33,025	 	36,633	 	73,166	 	79,800	 	
Interest and other income, net	 	2,504	 	3,018	 	8,223	 	8,765	 	
Income before tax expense	 	35,529	 	39,651	 	81,389	 	88,565	 	
Income tax	 	12,806	 	14,823	 	29,545	 	33,655	 	
Net income	 	$	22,723	 	$	24,828	 	$	51,844	 	$	54,910	 	
 	 	 	 	 	 	 	 	 	 	
Net income per common share:	 	 	 	 	 	 	 	 	 	
Basic	 	$	0.51	 	$	0.48	 	$	1.12	 	$	1.04	 	
Diluted	 	$	0.51	 	$	0.48	 	$	1.11	 	$	1.03	 	
 	 	 	 	 	 	 	 	 	 	
Weighted average shares outstanding:	 	 	 	 	 	 	 	 	 	
Basic	 	44,487	 	51,690	 	46,484	 	52,882	 	
Diluted	 	44,784	 	52,009	 	46,775	 	53,361	 	

 
LABOR READY, INC.
SUMMARY CONSOLIDATED BALANCE SHEET
In Thousands

 	 	September 28,	 	December 29,	 	
 	 	2007	 	2006	 	
 	 	(unaudited)	 	 	 	
Assets	 	 	 	 	 	
Current assets	 	 	 	 	 	
Cash and cash equivalents	 	$	55,884	 	$	107,944	 	
Marketable securities	 	10,697	 	91,510	 	
Accounts receivable, net	 	153,509	 	120,173	 	
Other current assets	 	29,621	 	20,131	 	
Total current assets	 	249,711	 	339,758	 	
Property and equipment, net	 	42,659	 	31,949	 	
Other assets	 	234,136	 	220,599	 	
Total assets	 	$	526,506	 	$	592,306	 	
 	 	 	 	 	 	
Liabilities and shareholders’ equity	 	 	 	 	 	
Current liabilities	 	$	110,201	 	$	101,385	 	
Long-term liabilities	 	146,480	 	138,403	 	
Total liabilities	 	256,681	 	239,788	 	
Shareholders’ equity	 	269,825	 	352,518	 	
Total liabilities and shareholders’ equity	 	$	526,506	 	$	592,306	 	

 
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)

 	 	Thirty-Nine Weeks Ended	 	
 	 	September 28,	 	September 29,	 	
 	 	2007	 	2006	 	
 	 	 	 	 	 	
Cash Flows from Operating activities:	 	 	 	 	 	
Net income	 	$	51,844	 	$	54,910	 	
Adjustments to reconcile net income to net cash provided by operating activities:	 	 	 	 	 	
Depreciation and amortization	 	8,661	 	7,909	 	
Provision for doubtful accounts	 	7,543	 	5,445	 	
Deferred income taxes	 	(4,458	)	(8,993	)	
Stock-based compensation	 	5,457	 	5,129	 	
Excess tax benefits from stock-based compensation	 	(1,293	)	(3,741	)	
Other operating activities	 	105	 	423	 	
Changes in operating assets and liabilities, exclusive of business acquired:	 	 	 	 	 	
Accounts receivable	 	(34,904	)	(27,366	)	
Income taxes	 	10,829	 	5,798	 	
Other assets	 	298	 	(6,559	)	
Accounts payable	 	1,696	 	(3,708	)	
Accrued wages and benefits	 	(342	)	529	 	
Workers’ compensation claims reserve	 	5,621	 	17,568	 	
Other current liabilities	 	—	 	(38	)	
Net cash provided by operating activities	 	51,057	 	47,306	 	
 	 	 	 	 	 	
Cash Flows from Investing activities:	 	 	 	 	 	
Capital expenditures	 	(16,311	)	(10,141	)	
Maturities of marketable securities	 	227,706	 	57,771	 	
Purchases of marketable securities	 	(146,901	)	(59,410	)	
Purchase of Skilled Services Corporation, net of cash acquired	 	(26,456	)	—	 	
Change in restricted cash and other assets	 	809	 	284	 	
Other	 	(167	)	(167	)	
Net cash provided by (used in) investing activities	 	38,680	 	(11,663	)	
 	 	 	 	 	 	
Cash Flows from Financing activities:	 	 	 	 	 	
Purchase and retirement of common stock	 	(148,233	)	(59,865	)	
Net proceeds from sale of stock through options and employee benefit plans	 	4,092	 	3,385	 	
Excess tax benefits from stock-based compensation	 	1,293	 	3,741	 	
Payments on debt	 	(842	)	(1,013	)	
Net cash used in financing activities	 	(143,690	)	(53,752	)	
 	 	 	 	 	 	
Effect of exchange rates on cash	 	1,893	 	985	 	
 	 	 	 	 	 	
Net change in cash and cash equivalents	 	(52,060	)	(17,124	)	
 	 	 	 	 	 	
Cash and cash equivalents, beginning of period	 	107,944	 	82,155	 	
Cash and cash equivalents, end of period	 	$	55,884	 	$	65,031