UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
ý ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2002
OR
o TRANSITION REPORT PURSUANT TO SECTION 15(d)
OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-14543
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
LABOR READY, INC. 401(k) Plan
B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive office:
Labor
Ready, Inc
1015 A Street
Tacoma, Washington 98402
REQUIRED INFORMATION
Labor Ready, Inc. 401(k) Plan (the Plan) is subject to the Employee Retirement Income Security Act of 1974 (ERISA). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K, the following financial statements and schedules have been prepared in accordance with the financial reporting requirements of ERISA.
The following financial statements, schedules and exhibits are filed as a part of the Annual Report on Form 11-K.
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Financial Statements |
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Supplemental Schedule |
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Exhibits |
To the Employee
Benefits Committee of the
Labor
Ready, Inc. 401(k) Plan
Tacoma, Washington
We have audited the accompanying statements of net assets available for benefits of Labor Ready, Inc. 401(k) Plan as of December 31, 2002 and 2001, and the related statement of changes in net assets available for benefits for the year ended December 31, 2002. These financial statements are the responsibility of the Plan’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of Labor Ready, Inc. 401(k) Plan as of December 31, 2002 and 2001, and the changes in net assets available for benefits for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedule of assets held for investment purposes as of December 31, 2002 is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the United States Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.
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/s/ McGladrey & Pullen, LLP |
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McGladrey & Pullen, LLP |
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Tacoma, Washington |
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May 2, 2003 |
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1
Statements of Net Assets Available for Benefits
Labor Ready, Inc. 401(k) Plan
December 31, 2002 and 2001
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2002 |
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2001 |
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Assets |
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Investments: |
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ING Fixed Account |
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$ |
732,648 |
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$ |
645,976 |
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ING Money Market Fund |
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66,485 |
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47,393 |
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ING Strategic Allocation Growth Fund |
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42,539 |
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28,590 |
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ING Strategic Allocation Balance Fund |
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42,618 |
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39,179 |
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ING Strategic Allocation Income Fund |
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62,134 |
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34,647 |
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ING Balanced Fund |
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63,560 |
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54,286 |
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ING Index Plus Large Cap Fund |
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304,715 |
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328,347 |
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ING Small Company Fund |
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117,143 |
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96,173 |
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ING International Fund |
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223,103 |
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219,073 |
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AIM Premier Equity Fund |
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290,982 |
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366,208 |
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Invesco Growth Fund |
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220,612 |
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313,449 |
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Baron Growth Fund |
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258,401 |
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193,653 |
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Oppenheimer Main Street Growth & Income Fund |
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207,464 |
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155,782 |
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Templeton Growth Fund |
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146,807 |
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82,429 |
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Other miscellaneous mutual funds |
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115,976 |
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— |
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Participant loans |
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146,249 |
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186,305 |
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Labor Ready, Inc. Common Stock Fund |
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1,283,295 |
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1,083,956 |
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Total investments |
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4,324,731 |
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3,875,446 |
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Contributions receivable: |
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Participant |
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— |
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58,293 |
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Employer - employer stock |
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283,779 |
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278,428 |
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Employer - cash |
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24,470 |
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— |
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Total contributions receivable |
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308,249 |
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336,721 |
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Total assets |
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4,632,980 |
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4,212,167 |
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Liabilities |
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— |
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— |
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Net assets available for benefits |
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$ |
4,632,980 |
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$ |
4,212,167 |
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See notes to financial statements.
2
Statement of Changes in Net Assets Available for Benefits
Labor Ready, Inc. 401(k) Plan
Year Ended December 31, 2002
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Additions to Net Assets |
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Investment income (loss): |
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Net depreciation in fair value of investments |
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$ |
(187,820 |
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Dividend and interest income |
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52,057 |
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Total investment income (loss) |
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(135,763 |
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Contributions: |
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Participant |
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1,242,293 |
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Employer |
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294,831 |
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Total contributions |
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1,537,124 |
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Total additions to net assets |
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1,401,361 |
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Deductions from Net Assets |
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Benefits paid to participants |
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977,323 |
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Administrative fees |
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3,225 |
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Total deductions from net assets |
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980,548 |
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Net increase |
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420,813 |
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Net Assets Available for Benefits |
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Beginning of year |
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4,212,167 |
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End of year |
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$ |
4,632,980 |
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See notes to financial statements.
3
Labor Ready, Inc. 401(k) Plan
December 31, 2002 and 2001
Note 1 - Description of Plan
The following description of Labor Ready, Inc. 401(k) Plan (the Plan) provides only general information. Participants should refer to the Plan agreement for a more complete description of the Plan’s provisions.
General
The Plan is a defined contribution plan established by Labor Ready, Inc. (the Company) under the provisions of Section 401(a) of the Internal Revenue Code (IRC), which includes a qualified cash or deferred arrangement as described in Section 401(k) of the IRC, for the benefit of eligible employees of the Company. All employees of the Company who are 21 years of age or older and who have completed six months of service are eligible to participate. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
Contributions and Participant Investment Options
Eligible employees may contribute to the Plan up to 15% of compensation, as defined by the Plan, subject to certain limitations under the IRC. Participants may also contribute amounts representing distributions from other qualified defined contribution plans. During 2002, the Company provided a discretionary matching contribution equal to 25% of each participant’s deferral contribution. Participants must be employed as of the end of the year to receive the matching contribution. Participants may direct the investment of their contributions, along with matching contributions, into various investment options offered by the Plan; currently a variety of mutual funds (underlying investments of the group annuity contract), a guaranteed interest account (the fixed account), and Company common stock.
Participant Accounts
Participant accounts are valued daily based on quoted market prices. Each participant’s account is credited with the participant’s contribution and allocations of the Company’s contribution, Plan earnings and costs associated with the funds and loan processing fees. Allocations are based on participant earnings or account balances as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.
Vesting
Participants are fully vested in their contributions, plus actual earnings thereon. Vesting in the Company’s discretionary matching contribution portion of their accounts, plus earnings thereon is based on years of continuous service. A participant is 100% vested after five years of credited service or upon death or disability. In the event of termination of employment prior to the completion of five years of continuous service, for any reason other than death or disability, participants forfeit their nonvested portion of employer matching contributions.
4
Participant Loans
A participant may borrow the lesser of $50,000 or 50% of his or her vested account balance, with a minimum loan amount of $1,000. The loans are secured by the balance in the participant’s account and are repayable through payroll deductions over periods ranging up to 60 months, unless the loan is used to acquire a principal residence, in which case the loan may be issued for a reasonable time, determined by the Plan administrator. The interest rate is also determined by the Plan administrator and is fixed over the life of the loan. Interest rates on loans outstanding at December 31, 2002 ranged from 8.75% to 9.50%, with maturities through March 2009.
Forfeited Accounts
Forfeited nonvested accounts are used to reduce future employer discretionary matching contributions. Unallocated forfeitures as of December 31, 2002 and 2001 totaled approximately $66,500 and $47,400, respectively.
Payments of Benefits
On termination of service due to death, disability or retirement, a participant may elect to receive an amount equal the participant’s vested interest in his or her account. The form of payment is a lump-sum distribution or an annuity as administratively practicable following the participant’s separation from service. Participants are fully vested in the event of death or disability.
Plan Administration
ING Life Insurance and Annuity Company (ING) serves as the investment manager, record keeper and trustee for the Plan. The Plan is administered by an employee benefits committee, whose members are appointed by the Compensation Committee of the Board of Directors of the Company. Certain Plan investments are shares of registered investment company funds and a guaranteed interest account (the fixed account) managed by ING; transactions in these funds and account qualify as party-in-interest transactions.
Note 2 - Summary of Accounting Policies
Basis of Accounting
The financial statements of the Plan are prepared under the accrual method of accounting.
Use of Estimates
In preparing the financial statements in conformity with generally accepted accounting principles, management is required to make estimates and assumptions that affect the reported amounts of assets, liabilities and changes therein, and disclosure of contingent assets and liabilities. Actual results could differ from those estimates.
5
Investment Valuation and Income Recognition
The Plan’s investments consist of a group annuity contract with ING (underlying assets are mutual funds and a guaranteed interest or fixed account), a Labor Ready, Inc. common stock fund, and participant loans.
Investments in mutual funds are reported at fair value based on quoted market price. The fixed account (guaranteed interest contract) is not considered fully benefit responsive; therefore, it is reported at fair value. Participant loans are recorded at book value, which approximate fair value. The Labor Ready, Inc. common stock fund includes shares of Labor Ready, Inc. and cash, and is reported at fair value based on quoted market prices.
Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded as earned on the accrual basis. Dividend income is recorded on the ex-dividend date.
Payment of Benefits
Benefits are recorded when paid.
Note 3 - Investments
The following presents investments that represent 5% or more of the Plan’s net assets at either December 31:
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2002 |
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2001 |
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Guaranteed interest contract: |
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ING Fixed Account (Interest rate: 5% for 2002 and 2001) |
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$ |
732,648 |
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$ |
645,976 |
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Mutual Funds: |
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ING Index Plus Large Cap Fund |
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304,715 |
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328,347 |
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ING International Fund |
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223,103 |
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219,073 |
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AIM Premier Equity Fund |
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290,982 |
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366,208 |
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Baron Growth Fund |
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258,401 |
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193,653 |
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Invesco Growth Fund |
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220,612 |
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313,449 |
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Other |
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864,726 |
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538,479 |
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Labor Ready, Inc. Common Stock Fund |
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1,283,295 |
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1,083,956 |
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Participant loans |
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146,249 |
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186,305 |
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Total investments |
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$ |
4,324,731 |
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$ |
3,875,446 |
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During 2002, the Plan’s investments, including gains and losses on investments bought and sold, as well as held during the year, appreciated or (depreciated) in value as follows:
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Mutual funds |
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$ |
(564,178 |
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Labor Ready, Inc. Common Stock Fund |
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376,358 |
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Net depreciation in fair value of investments |
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$ |
(187,820 |
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6
Note 4 - Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contribution at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants will become 100% vested in their employer contributions.
Note 5 - Tax Status
The Company adopted a non-standardized Prototype Profit Sharing Plan with CODA, which received a favorable opinion letter from the Internal Revenue Service (IRS) on August 30, 2001 stating that the Plan and related trust were designed in accordance with applicable sections of the Internal Revenue Code (IRC). The Plan sponsor believes the Plan is currently being operated in compliance with applicable requirements of the IRC.
Note 6 - Administrative Fees
Certain administrative functions are performed by officers and employees of the Company. No such officer or employee receives compensation from the Plan.
The Company has retained the services of a third party to perform certain administrative functions. The Company pays all administrative expenses of the Plan, except for the administrative costs of mutual funds and loan processing fees.
7
Schedule of Assets Held for Investment Purposes
Labor Ready, Inc. 401(k) Plan
December 31, 2002
EIN #: 91-1287341
Plan #: 001
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(a) and (b) |
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(c) |
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(d) |
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(e) |
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ING Aetna Financial Services* |
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Fixed Account |
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** |
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$ |
732,648 |
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Money Market Fund |
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** |
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66,485 |
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Strategic Allocation Growth Fund |
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** |
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42,539 |
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Strategic Allocation Balance Fund |
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** |
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42,618 |
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Strategic Allocation Income Fund |
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** |
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62,134 |
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Balanced Fund |
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** |
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63,560 |
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Index Plus Large Cap Fund |
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** |
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304,715 |
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Small Company Fund |
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** |
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117,143 |
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International Fund |
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** |
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223,103 |
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Bond Fund |
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** |
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11,209 |
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GNMA Income Fund |
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** |
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59,564 |
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Index Plus Small Cap Fund |
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** |
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12,170 |
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Value Opportunity Fund |
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** |
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178 |
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Invesco |
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Growth Fund |
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** |
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220,612 |
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AIM |
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Premier Equity Fund |
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** |
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290,982 |
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Baron Funds |
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Growth Fund |
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** |
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258,401 |
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Fidelity |
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Advisor Mid Cap Fund |
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** |
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17,149 |
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Oppenheimer Funds |
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Main Street Growth & Income Fund |
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** |
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207,464 |
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Capital Appreciation Fund |
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** |
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15,706 |
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Franklin Templeton |
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Growth Fund |
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** |
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146,807 |
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Labor Ready, Inc.* |
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Common Stock Fund |
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** |
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1,283,295 |
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Participant loans* |
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Secured by participant’s vested interest in the Plan, with interest rates of 8.75% to 9.50%, maturing through March 2009 |
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** |
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146,249 |
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$ |
4,324,731 |
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* Represents party-in-interest.
** Cost information not required for participant-directed investments.
8
Pursuant to the requirements of the Securities Exchange Act of 1934, the Employee Benefits Committee of the Labor Ready, Inc. 401(k) Plan, which is the Plan administrator of the Labor Ready, Inc. 401(k) Plan, has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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Labor Ready, Inc. 401(k) Plan |
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By: Employee
Benefits Committee of the Labor Ready, Inc. 401(k) |
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June 26, 2003 |
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/s/ Thomas J. Stonich |
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Thomas J. Stonich, Vice President of Human Resources & Training |
9