Labor Ready Announces Record Second Quarter Results; Net Income Increases 21 Percent

Labor Ready, Inc. (NYSE:LRW) reported revenue for the
second quarter ended June 30, 2006 increased 15.1 percent to $339.8
million compared to revenue of $295.2 million for the second quarter
of 2005. Net income for the quarter increased 21 percent to $18.6
million or $0.35 per diluted share, as compared to $15.4 million or
$0.30 per diluted share for the second quarter of 2005.
   "Revenue was in line with our expectations for the second
quarter," said Labor Ready President and CEO Steve Cooper. "We
executed our strategies of improving same branch revenue growth while
controlling operating expenses which resulted in net income growth of
25 percent, excluding incremental stock-based compensation expense, on
same branch revenue growth of 8 percent."
   CLP Resources, a leading skilled construction trades staffing firm
acquired by Labor Ready in May 2005, provided 7.3 percentage points of
Labor Ready's 15.1 percent revenue growth for the quarter.
   Referring to the completion of one year of combined results with
CLP Resources, Cooper said, "The operating results for the first year
were in line with expectations and we remain excited about the growth
opportunities available for CLP Resources."
   Gross profit as a percentage of revenue improved 80 basis points
compared to the same quarter a year ago as a result of lower workers'
compensation costs. "Our increased focus in safety and risk management
programs over the past few years continues to result in lower injury
rates and ultimately lower costs," said Cooper.
   "As expected, selling, general and administration costs for the
quarter increased by 1.0 percent of revenue compared to the same
quarter a year ago," said Cooper. "This increase was primarily the
result of incremental stock-based compensation expenses related to the
implementation of FAS 123R and the impact to the company of adding CLP
Resources' higher cost structure."
   The company opened a total of 17 new branches and closed two
branches during the quarter and plans to open six additional branches
during the second half of fiscal year 2006. The company currently
operates 923 branches.
   During the quarter the company also completed the planned
repurchase of 2.16 million shares previously approved by its Board of
Directors.
   For the third quarter of 2006, Labor Ready estimates revenue in
the range of $380 million to $385 million and net income per diluted
share between $.45 and $.48. For the year, the company estimates
revenue in the range of $1.37 billion to $1.38 billion. Net income per
diluted share for the year is expected to be between $1.33 and $1.38,
unchanged from previous estimates. These estimates include incremental
stock-based compensation expense of $0.07 per diluted share for fiscal
year 2006.
   According to Cooper, "We remain confident with our business model
and optimistic about the demand for both skilled and unskilled labor.
Although there is some uncertainty in the economy, we believe our
diverse customer and industry mix will allow us to continue to show
year-over-year revenue growth. Our focus remains growing our existing
branch revenue, leveraging our fixed cost structure, and increasing
profits."
   Management will discuss second quarter 2006 results on a
conference call at 8 a.m. (PT) Thursday, July 20, 2006. 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, 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;
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; and 10) 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 temporary employees
for manual labor, light industrial and skilled trades, operating under
the brand names of Labor Ready, Workforce, Spartan Staffing, and CLP
Resources. Labor Ready'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, Labor Ready serves approximately
300,000 customers and puts more than 600,000 people to work through
its more than 900 branch locations in the United States, Canada, and
the United Kingdom. For additional information, visit Labor Ready's
website at www.laborready.com.
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                          LABOR READY, INC.
              SUMMARY CONSOLIDATED STATEMENTS OF INCOME
               (in thousands, except per share amounts)
                             (Unaudited)

                        Thirteen Weeks Ended   Twenty-six Weeks Ended
                         June 30,    July 1,     June 30,     July 1,
                           2006       2005        2006         2005

Revenue from services   $  339,777  $295,208  $  636,844  $   538,424
Cost of services           230,326   202,535     434,476      369,613
Gross profit               109,451    92,673     202,368      168,811
Selling, general and
 administrative expenses    79,509    66,253     153,733      125,667
Depreciation and
 amortization                2,672     2,189       5,468        4,395
Income from operations      27,270    24,231      43,167       38,749
Interest and other
 income, net                 3,001       711       5,747        1,186
Income before tax
 expense                    30,271    24,942      48,914       39,935
Income tax                  11,655     9,498      18,832       15,135
Net income              $   18,616  $ 15,444  $   30,082  $    24,800

Net income per common
 share:
  Basic                 $     0.35  $   0.35  $     0.56  $      0.57
  Diluted               $     0.35  $   0.30  $     0.56  $      0.49

Weighted average shares
 outstanding:
  Basic                     53,277    44,611      53,478       43,557
  Diluted                   53,775    53,535      54,039       53,254





                          LABOR READY, INC.
                 SUMMARY CONSOLIDATED BALANCE SHEETS

                                                       As of
                                               June 30,   December 30,
                                                 2006         2005
                                              (Unaudited)
Assets
 Current assets
  Cash and cash equivalents                   $   60,337   $   82,155
  Marketable securities                           94,864       93,510
  Accounts receivable, net                       127,985      121,959
  Other current assets                            21,877       21,039
    Total current assets                         305,063      318,663
 Property and equipment, net                      29,005       26,615
 Other assets                                    235,046      226,798
    Total assets                              $  569,114   $  572,076

Liabilities and shareholders' equity
 Current liabilities                          $   98,324   $  100,014
 Long-term liabilities                           132,683      123,464
   Total liabilities                             231,007      223,478
 Shareholders' equity                            338,107      348,598
    Total liabilities and shareholders'
     equity                                   $  569,114   $  572,076






                          LABOR READY, INC.
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                             In Thousands
                             (Unaudited)
                                                Twenty-six Weeks Ended
                                                  June 30,   July 1,
                                                    2006       2005
Cash Flows from Operating activities:
Net income                                        $ 30,082  $  24,800
Adjustments to reconcile net income to
 net cash provided by operating activities:
  Depreciation and amortization                      5,468      4,749
  Provision for doubtful accounts                    2,999      3,180
  Deferred income taxes                            (13,262)    (5,604)
  Stock-based compensation                           3,891        540
  Excess tax benefits from stock-based
   compensation                                     (3,505)         -
  Tax benefit on stock options                           -      3,248
  Other operating activities                           414         42
Changes in operating assets and liabilities,
 exclusive of business acquired:
  Accounts receivable                               (9,025)   (17,627)
  Income tax                                        11,119      5,839
  Other assets                                       1,225        173
  Accounts payable                                  (6,128)     2,965
  Accrued wages and benefits                           495      3,490
  Workers' compensation claims reserve              10,460      7,154
  Other current liabilities                            (38)      (151)
                                                   --------  ---------
Net cash provided by operating activities           34,195     32,798
                                                   --------  ---------

Cash Flows from Investing activities:
  Capital expenditures                              (6,808)    (2,744)
  Purchases of marketable securities               (36,255)   (50,888)
  Maturities of marketable securities               34,916     52,822
  Increase in restricted
   cash and other assets                            (2,087)   (10,705)
  Purchase of CLP Holdings Corp., net of cash
   acquired                                              -    (45,892)
  Other                                               (167)        36
                                                   --------  ---------
Net cash used in investing activities              (10,401)   (57,371)
                                                   --------  ---------

Cash Flows from Financing activities:
  Purchase and retirement of common stock          (51,833)         -
  Net proceeds from sale of stock through options
   and employee benefit plans                        2,869      6,608
  Excess tax benefits from stock-based
   compensation                                      3,505          -
  Payments on debt                                    (829)    (1,141)
                                                   --------  ---------
Net cash (used in) provided by financing
 activities                                        (46,288)     5,467
                                                   --------  ---------

  Effect of exchange rates on cash                     676       (765)
                                                   --------  ---------

  Net change in cash and cash equivalents          (21,818)   (19,871)

Cash and cash equivalents, beginning of period      82,155     87,555
                                                   --------  ---------
Cash and cash equivalents, end of period          $ 60,337  $  67,684
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