|
|
Washington
|
|
91-1287341
|
|
|
(State of incorporation)
|
|
(I.R.S. employer identification no.)
|
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
Common stock, no par value
|
TBI
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
|
|
|
|
|
Page
|
PART I
|
||
Item 1.
|
||
Item 1A.
|
||
Item 1B.
|
||
Item 2.
|
||
Item 3.
|
||
Item 4.
|
||
PART II
|
||
Item 5.
|
||
Item 6.
|
||
Item 7.
|
||
Item 7A.
|
||
Item 8.
|
||
Item 9.
|
||
Item 9A.
|
||
|
||
|
||
Item 9B.
|
||
PART III
|
||
Item 10.
|
||
Item 11.
|
||
Item 12.
|
||
Item 13.
|
||
Item 14.
|
||
PART IV
|
||
Item 15.
|
||
|
||
Item 16.
|
||
|
|
Item 1.
|
BUSINESS
|
|
|
•
|
Workforce flexibility: The staffing industry continues to experience increased demand in relation to total job growth as demand for a flexible workforce continues to grow with competitive and economic pressures to reduce costs, meet dynamic seasonal demands and respond to rapidly changing market conditions.
|
•
|
Workforce productivity: Companies are under increasing competitive pressures to improve productivity through workforce solutions that improve performance.
|
•
|
Worker preferences and access to talent: Workers are demanding more flexibility in how, when and where they work as well as access to contingent work opportunities through mobile technology. Baby boomers are leaving the workforce resulting in a talent shortage in what have traditionally been blue-collar trades. The remaining workers are in greater demand and have more power to find the employment situation they want.
|
•
|
Scalability: RPO providers can add significant scalability to a company’s recruiting and hiring efforts, including accommodating seasonal, project or peak hiring needs without sacrificing quality, which enables clients to focus on their core business. Providers also help clients increase efficiency and drive better performance by standardizing processes, reducing time to fill, and onboarding the best fit talent into a client’s organization.
|
•
|
Talent access and engagement: As competition for qualified candidates increases, clients are relying on RPO providers to elevate the employer brand, build talent communities, create a world class candidate experience, leverage innovative talent technology, and facilitate effective recruitment marketing and candidate communication strategies.
|
•
|
Leveraging talent acquisition technology: Automation, artificial intelligence and machine learning are transforming talent acquisition. The fragmented talent technology ecosystem is becoming more crowded, with significant investments flowing in and new technology coming online rapidly. RPO providers are continuously identifying, evaluating and investing in new technology to leverage as part of their talent technology stack to best meet today’s candidate’s expectations of a personalized, mobile-optimized and efficient hiring process. RPO providers are uniquely positioned to successfully integrate and deploy new talent technology based on the volume of candidate engagements they manage and their understanding of the talent landscape, thereby reducing the investments required to be made by clients.
|
•
|
Vendor consolidation and cost savings: Vendor consolidation can achieve significant efficiencies through enhanced scale and cost advantages such as a single point of contact to manage multiple outside vendors, standardized contracts, consistency among contractors and processes, centralized invoicing and reporting, and maintaining robust performance tracking and analytics.
|
•
|
Access to talent: An MSP solution allows a company access to a large variety of staffing vendors with the efficiency of working with one supplier. An MSP can access numerous vendors to find the best talent at the best price more quickly, thereby delivering a better outcome for the client.
|
•
|
Compliance pressure: Demand for contingent employee sourcing and workforce vendor management solutions is driven by increasing worker eligibility legislation and compliance monitoring to ensure correct worker classification in order to properly
|
|
•
|
We will continue to evaluate opportunities to expand our market presence for specialized blue-collar staffing services, expand our geographical reach through new physical locations, expand use of existing locations to provide the full range of blue-collar staffing services, and dispatch our contingent workers to areas without a physical location. Continued investment in specialized sales, recruiting and service expertise will create a more seamless experience for our clients to access all our services with more comprehensive solutions to enhance their performance and our growth. Our service lines offer complementary workforce solutions with unique value propositions to meet our clients’ demand for talent.
|
•
|
We will continue to invest in technology that increases our ability to attract more clients and employees as well as reduce the cost of delivering our services. We are committed to leveraging technology to improve the experience of our contingent workers, permanent employee candidates and clients. Our technological innovations make it easier for our clients to do business with us, and easier to connect contingent workers with work opportunities and candidates to permanent employment opportunities. We are making significant investments in online and mobile applications to improve the access, speed and ease of connecting our clients with high-quality contingent and permanent employee workforce solutions.
|
◦
|
Complementing our PeopleReady branch network is our JobStack platform which connects our contingent workers and clients through real time 24/7 digital exchange with easy-to-use mobile apps. JobStack currently fills a job every nine seconds and enables our branches to expand their recruiting, sales and service delivery efforts. JobStack is helping to competitively differentiate our services, expand our reach into new demographics, and improve both service delivery and work order fill rates as we lead our business into a digital future. Currently 87% of PeopleReady’s workers use JobStack to find on-demand work. In 2018, we introduced JobStack to our clients, and we ended 2019 with approximately 21,300 registered clients using JobStack to order workers, rate their performance, and approve their time worked. In 2019, approximately 48% of the orders filled by our PeopleReady branches were digitally filled through JobStack. We continue to expand functionality to further leverage this technology to transform our business, and further enhance our client and worker retention.
|
◦
|
Complementing our PeopleScout dedicated service delivery teams is our mobile-enabled cloud-based proprietary platform, Affinix, used for sourcing, screening and delivering a permanent workforce. Affinix creates a consumer-like candidate experience and streamlines the sourcing process. Affinix delivers speed and scalability while leveraging recruitment marketing, machine learning, predictive analytics and other emerging technology to make the end-to-end process seamless for the candidate. We will continue to invest in Affinix to further improve our ability to quickly and efficiently source the most attractive talent at the best price.
|
•
|
We are recognized as an industry leader for RPO services. The RPO industry is in the early majority stage of its adoption cycle, and therefore, we believe it has higher growth potential. We have a differentiated service that leverages innovative technology for high-volume sourcing and dedicated client service teams for connecting people to opportunities. We have a track record of helping our clients reduce the cost of hiring, add significant scalability to recruiting and hiring, and access numerous sources to quickly find the best talent, thereby delivering a better outcome for the client. Companies are facing rapidly changing employment demographics, a shortage of talent, and dynamic changes to how people connect with work opportunities. Our solution addresses these growing challenges. We expanded our services with the TMP acquisition, which increases our ability to win multi-continent engagements by adding a physical presence in Europe, referenceable clients, and employer branding capabilities.
|
•
|
Our MSP solution is focused primarily on domestic middle-market companies with a growing dependence on contingent labor. Our managed service provider solutions have enabled our clients to efficiently source, engage, fulfill, measure and manage all categories of contingent and externally sourced labor. We believe our MSP solution is uniquely positioned to manage the full range of our clients’ labor needs.
|
|
|
|
Item 1A.
|
RISK FACTORS
|
|
|
|
|
|
|
Item 1B.
|
UNRESOLVED STAFF COMMENTS
|
Item 2.
|
PROPERTIES
|
|
Item 3.
|
LEGAL PROCEEDINGS
|
Item 4.
|
MINE SAFETY DISCLOSURES
|
|
Item 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
Period
|
Total number
of shares
purchased (1)
|
Weighted
average price
paid per
share (2)
|
Total number of shares
purchased as part of
publicly announced plans
or programs (3)
|
Maximum number of shares (or
approximate dollar value) that
may yet be purchased under
plans or programs at period
end (4)
|
||||
09/30/2019 through 10/27/2019
|
3,030
|
|
|
$21.12
|
|
280,154
|
|
$120.8 million
|
10/28/2019 through 11/24/2019
|
4,458
|
|
|
$23.03
|
|
17,600
|
|
$120.4 million
|
11/25/2019 through 12/29/2019
|
5,243
|
|
|
$23.20
|
|
62,838
|
|
$119.0 million
|
Total
|
12,731
|
|
|
$22.65
|
|
360,592
|
|
|
(1)
|
During the thirteen weeks ended December 29, 2019, we purchased 12,731 shares in order to satisfy employee tax withholding obligations upon the vesting of restricted stock. These shares were not acquired pursuant to our publicly announced share repurchase program.
|
(2)
|
Weighted average price paid per share does not include any adjustments for commissions.
|
(3)
|
The weighted average price per share for shares repurchased under the share repurchase program during the period was $21.51.
|
(4)
|
On September 17, 2017, our Board of Directors authorized a $100 million share repurchase program of our outstanding common stock. As of December 29, 2019, $19.0 million remains available for repurchase. On October 16, 2019, our Board of Directors authorized an additional $100 million share repurchase program of our outstanding common stock. These share repurchase programs do not obligate us to acquire any particular amount of common stock and do not have expiration dates.
|
|
Total return analysis
|
2014
|
2015
|
2016
|
2017
|
2018
|
2019
|
||||||||||||
TrueBlue, Inc.
|
$
|
100
|
|
$
|
117
|
|
$
|
109
|
|
$
|
121
|
|
$
|
96
|
|
$
|
104
|
|
S&P SmallCap 600 Index
|
100
|
|
99
|
|
123
|
|
140
|
|
127
|
|
156
|
|
||||||
S&P 1500 Human Resources and Employment Services Index
|
100
|
|
106
|
|
117
|
|
148
|
|
123
|
|
152
|
|
|
Item 6.
|
SELECTED FINANCIAL DATA
|
Statements of operations data:
|
(52 weeks)
|
|
(53 weeks)
|
|
(52 weeks)
|
||||||||||||
(in thousands, except per share data)
|
2019
|
2018
|
2017
|
|
2016
|
|
2015
|
||||||||||
Revenue from services
|
$
|
2,368,779
|
|
$
|
2,499,207
|
|
$
|
2,508,771
|
|
|
$
|
2,750,640
|
|
|
$
|
2,695,680
|
|
Cost of services
|
1,742,621
|
|
1,833,607
|
|
1,874,298
|
|
|
2,070,922
|
|
|
2,060,007
|
|
|||||
Gross profit
|
626,158
|
|
665,600
|
|
634,473
|
|
|
679,718
|
|
|
635,673
|
|
|||||
Selling, general and administrative expense
|
522,430
|
|
550,632
|
|
510,794
|
|
|
546,477
|
|
|
495,988
|
|
|||||
Depreciation and amortization
|
37,549
|
|
41,049
|
|
46,115
|
|
|
46,692
|
|
|
41,843
|
|
|||||
Goodwill and intangible asset impairment charge
|
—
|
|
—
|
|
—
|
|
|
103,544
|
|
|
—
|
|
|||||
Interest and other income (expense), net
|
3,865
|
|
1,744
|
|
(14
|
)
|
|
(3,345
|
)
|
|
(1,395
|
)
|
|||||
Income (loss) before tax expense (benefit)
|
70,044
|
|
75,663
|
|
77,550
|
|
|
(20,340
|
)
|
|
96,447
|
|
|||||
Income tax expense (benefit)
|
6,971
|
|
9,909
|
|
22,094
|
|
|
(5,089
|
)
|
|
25,200
|
|
|||||
Net income (loss)
|
$
|
63,073
|
|
$
|
65,754
|
|
$
|
55,456
|
|
|
$
|
(15,251
|
)
|
|
$
|
71,247
|
|
|
|
|
|
|
|
|
|
||||||||||
Net income (loss) per diluted share
|
$
|
1.61
|
|
$
|
1.63
|
|
$
|
1.34
|
|
|
$
|
(0.37
|
)
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
||||||||||
Weighted average diluted shares outstanding
|
39,179
|
|
40,275
|
|
41,441
|
|
|
41,648
|
|
|
41,622
|
|
|||||
|
|
|
|
|
|
|
|
||||||||||
Balance sheet data(2):
|
|
|
|
|
|
|
|
||||||||||
(in thousands)
|
2019
|
2018
|
2017
|
|
2016
|
|
2015
|
||||||||||
Working capital
|
$
|
190,927
|
|
$
|
204,301
|
|
$
|
215,860
|
|
|
$
|
176,668
|
|
|
$
|
314,989
|
|
Total assets
|
1,136,155
|
|
1,114,844
|
|
1,109,031
|
|
|
1,130,445
|
|
|
1,259,442
|
|
|||||
Long-term liabilities
|
279,376
|
|
297,879
|
|
341,765
|
|
|
354,131
|
|
|
495,893
|
|
|||||
Total liabilities
|
510,182
|
|
523,405
|
|
554,184
|
|
|
605,266
|
|
|
723,869
|
|
(1)
|
In the fourth quarter of fiscal 2016, we changed our fiscal year-end from the last Friday in December to the Sunday closest to the last day in December. In addition, the 2016 fiscal year included 53 weeks, with the 53rd week falling in our fourth quarter. All other years presented include 52 weeks.
|
(2)
|
Fiscal year 2015 data has been impacted by the adoption and retrospective application of ASU 2015-17, which classifies all deferred income taxes as non-current.
|
|
Item 7.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
|
|
Years ended
|
|||||||||
(in thousands, except percentages and per share data)
|
2019
|
% of revenue
|
2018
|
% of revenue
|
||||||
Revenue from services
|
$
|
2,368,779
|
|
|
$
|
2,499,207
|
|
|
||
Total revenue decline %
|
(5.2
|
)%
|
|
(0.4
|
)%
|
|
||||
|
|
|
|
|
||||||
Gross profit
|
$
|
626,158
|
|
26.4
|
%
|
$
|
665,600
|
|
26.6
|
%
|
Selling, general and administrative expense
|
522,430
|
|
22.1
|
%
|
550,632
|
|
22.0
|
%
|
||
Depreciation and amortization
|
37,549
|
|
1.6
|
%
|
41,049
|
|
1.6
|
%
|
||
Income from operations
|
66,179
|
|
2.8
|
%
|
73,919
|
|
3.0
|
%
|
||
Interest and other income (expense), net
|
3,865
|
|
|
1,744
|
|
|
||||
Income before tax expense
|
70,044
|
|
|
|
75,663
|
|
|
|||
Income tax expense
|
6,971
|
|
|
9,909
|
|
|
||||
Net income
|
$
|
63,073
|
|
2.7
|
%
|
$
|
65,754
|
|
2.6
|
%
|
|
|
|
|
|
||||||
Net income per diluted share
|
$
|
1.61
|
|
|
$
|
1.63
|
|
|
|
•
|
PeopleReady provides access to reliable workers in the United States, Canada and Puerto Rico through a wide range of staffing solutions for on-demand contingent general and skilled labor. PeopleReady connects people to work in a broad range of industries that include construction, manufacturing and logistics, warehousing and distribution, waste and recycling, energy, retail, hospitality, and others. PeopleReady helped approximately 138,000 clients in fiscal 2019 to be more productive by providing easy access to dependable, blue-collar contingent labor. Through our PeopleReady service line, we connected approximately 317,000 people with work in fiscal 2019. We have a network of 614 branches across all 50 states, Canada and Puerto Rico. Complementing our branch network is our mobile application, JobStackTM, which connects workers with jobs, creates a virtual exchange between our workers and clients, and allows our branch resources to expand their recruiting and sales efforts and service delivery. JobStack is helping to competitively differentiate our services, expand our reach into new demographics, and improve both service delivery and work order fill rates as we lead our business into a digital future.
|
•
|
PeopleManagement predominantly provides a wide range of on-site contingent staffing and workforce management solutions to larger multi-site manufacturing, distribution and fulfillment clients. In comparison with PeopleReady, services are larger in scale, longer in duration, and dedicated service teams are located at the client’s facility. Effective December 30, 2019 (first day of our 2020 fiscal year), we combined our two on-site contingent industrial workforce operating segments, Staff Management | SMX (“Staff Management”) and SIMOS Insourcing Solutions (“SIMOS”) into one operating segment titled “On-site,” which continues to be reported under PeopleManagement. On-site includes our branded service offerings for hourly and productivity-based industrial staffing solutions serving the same industries and similar customers. PeopleManagement also includes Centerline Drivers (“Centerline”), which specializes in dedicated and contingent commercial truck drivers to the transportation and distribution industries. Effective March 12, 2018, we divested the PlaneTechs, LLC (“PlaneTechs”) business from our PeopleManagement reportable segment.
|
•
|
PeopleScout provides recruitment process outsourcing of end-to-end talent acquisition services from candidate sourcing and engagement through the onboarding of employees. Our solution is highly scalable and flexible, which allows for the outsourcing of all or a subset of skill categories across a series of recruitment, hiring and onboarding steps. Our solution delivers improved talent quality and candidate experience, faster hiring, increased scalability, lower cost of recruitment, greater flexibility, and increased compliance. Our clients outsource the recruitment process to PeopleScout in all major industries and jobs. We leverage our proprietary technology platform (AffinixTM) for sourcing, screening and delivering a permanent workforce, along with dedicated service delivery teams to work as an integrated partner with our clients. Affinix uses artificial intelligence and machine learning to search the web and source candidates, which means we can create the first slate of candidates for a job posting within minutes rather than days.
|
|
|
Years ended
|
|||||||||||
(in thousands, except percentages)
|
2019
|
Growth
(decline)
%
|
Segment % of total
|
2018
|
Segment % of total
|
|||||||
Revenue from services:
|
|
|
|
|
|
|||||||
PeopleReady
|
$
|
1,474,062
|
|
(3.2
|
)%
|
62.2
|
%
|
$
|
1,522,076
|
|
60.9
|
%
|
PeopleManagement
|
642,233
|
|
(11.8
|
)
|
27.1
|
|
728,254
|
|
29.1
|
|
||
PeopleScout
|
252,484
|
|
1.4
|
|
10.7
|
|
248,877
|
|
10.0
|
|
||
Total company
|
$
|
2,368,779
|
|
(5.2
|
)%
|
100.0
|
%
|
$
|
2,499,207
|
|
100.0
|
%
|
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Gross profit
|
$
|
626,158
|
|
$
|
665,600
|
|
Percentage of revenue
|
26.4
|
%
|
26.6
|
%
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Selling, general and administrative expense
|
$
|
522,430
|
|
$
|
550,632
|
|
Percentage of revenue
|
22.1
|
%
|
22.0
|
%
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Depreciation and amortization
|
$
|
37,549
|
|
$
|
41,049
|
|
Percentage of revenue
|
1.6
|
%
|
1.6
|
%
|
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Income tax expense
|
$
|
6,971
|
|
$
|
9,909
|
|
Effective income tax rate
|
10.0
|
%
|
13.1
|
%
|
|
Years ended
|
|||
|
2019
|
2018
|
||
Effective income tax rate without adjustments below
|
28.1
|
%
|
29.1
|
%
|
WOTC job credits estimate from current year wages
|
(15.8
|
)
|
(14.6
|
)
|
WOTC additional job credits from prior year wages
|
(1.9
|
)
|
(1.4
|
)
|
Other job tax credits
|
(0.4
|
)
|
—
|
|
Effective income tax rate
|
10.0
|
%
|
13.1
|
%
|
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Revenue from services
|
$
|
1,474,062
|
|
$
|
1,522,076
|
|
Segment profit
|
$
|
82,106
|
|
$
|
85,998
|
|
Percentage of revenue
|
5.6
|
%
|
5.7
|
%
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Revenue from services
|
$
|
642,233
|
|
$
|
728,254
|
|
Segment profit
|
$
|
12,593
|
|
$
|
21,627
|
|
Percentage of revenue
|
2.0
|
%
|
3.0
|
%
|
|
Years ended
|
|||||
(in thousands, except percentages)
|
2019
|
2018
|
||||
Revenue from services
|
$
|
252,484
|
|
$
|
248,877
|
|
Segment profit
|
$
|
37,831
|
|
$
|
47,383
|
|
Percentage of revenue
|
15.0
|
%
|
19.0
|
%
|
|
•
|
We expect additional pressure on our revenue trends in 2020 due primarily to a widespread decline in same client demand as clients continue to experience weaker volumes within their own businesses across most geographies and industries. PeopleReady, our largest segment, experienced year-over-year revenue declines in 2019 and experienced growing revenue pressure as the year progressed. Similar to PeopleReady, PeopleManagement, our lowest margin segment, experienced less demand from existing clients and continued economic uncertainty. PeopleScout, our highest margin segment, passed the one-year anniversary of the TMP acquisition in June 2019. PeopleScout will experience further pressure due to the continued impact of the loss of a key client that was acquired by a strategic buyer which will anniversary in the first quarter of 2020 and substantially reduced project-based recruiting volumes at another large industrial client due to adverse business conditions which will anniversary in the third quarter of 2020. We expect continued challenges in the industrial markets we serve, but we are encouraged by recent improvements in the demand trend for PeopleReady services.
|
•
|
We believe there is a changing pace of underlying economic activity in some of the industries we serve. Our belief is based on our same client revenue trends and the softening demand for our PeopleReady services. Given the project-based nature of PeopleReady’s business, we believe it is often an early indicator of changing demand patterns. We remain focused on client expansion and retention, disciplined cost management, and investing in our digital strategies to differentiate our service offerings.
|
•
|
We are committed to technological innovation to transform our business for a digital future that makes it easier for our clients to do business with us and easier to connect people to work. We continue making investments in online and mobile applications to improve access to workers and candidates, as well as improve the speed and ease of connecting our clients and workers for our staffing businesses, and candidates for our recruitment process outsourcing business. We expect these investments will increase the competitive differentiation of our services over the long-term, improve the efficiency of our service delivery, and reduce our PeopleReady dependence on local branches to find contingent workers and connect them with work. Examples include our new JobStack mobile application in the PeopleReady business and our Affinix talent acquisition technology in our PeopleScout business. PeopleReady’s JobStack app has filled more than six million shifts since its inception and is currently filling a job every nine seconds. PeopleScout’s Affinix is helping clients improve time to fill, candidate flow and candidate satisfaction. We believe our digital strategies provide further opportunity to differentiate our services, capture additional market share and deliver industry-leading growth.
|
|
|
Years ended
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Net income
|
$
|
63,073
|
|
$
|
65,754
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
||||
Depreciation and amortization
|
37,549
|
|
41,049
|
|
||
Provision for doubtful accounts
|
7,661
|
|
10,042
|
|
||
Non-cash lease expense, net of changes in operating lease liabilities
|
(355
|
)
|
—
|
|
||
Stock-based compensation
|
9,769
|
|
13,876
|
|
||
Other operating activities
|
(326
|
)
|
3,225
|
|
||
Changes in operating assets and liabilities, net of amounts acquired and divested:
|
|
|
||||
Accounts receivable
|
5,450
|
|
11,640
|
|
||
Income tax receivable
|
(6,480
|
)
|
(996
|
)
|
||
Change in all other assets
|
(12,575
|
)
|
(12,928
|
)
|
||
Workers’ compensation claims reserve
|
(10,828
|
)
|
(7,877
|
)
|
||
Change in all other liabilities
|
593
|
|
1,907
|
|
||
Net cash provided by operating activities
|
$
|
93,531
|
|
$
|
125,692
|
|
•
|
Depreciation and amortization decreased primarily due to certain fixed assets and intangible assets becoming fully depreciated during the prior year. Additionally, a greater portion of our investment funds are being directed toward non-capitalized third-party cloud-based solutions.
|
•
|
Provision for doubtful accounts decreased primarily due to the overall reduction in revenue during fiscal 2019. Additionally, 2019 benefited from the recovery of receivables which had been reserved for in 2018 when a customer filed for bankruptcy protection.
|
•
|
Stock-based compensation decreased primarily due to $4 million of accelerated stock compensation costs associated with the CEO transition in fiscal 2018.
|
•
|
The decrease in accounts receivable in fiscal 2019 was primarily due to the decline in revenue due to less demand for our services attributable to lower volumes within the businesses of our clients. This was partially offset by higher days sales outstanding due to continued economic uncertainty and longer payment terms.
|
•
|
The increase in income tax receivable in fiscal 2019 was primarily due to delays in foreign jurisdiction processing of refunds and higher than expected WOTC benefits.
|
•
|
Change in all other assets decreased primarily due to unrealized gains on deferred compensation assets as both equity and bond markets strengthened into fiscal 2019, verses unrealized losses in fiscal 2018 after a sharp decline in equity markets in the fourth quarter of 2018.
|
•
|
Generally, our workers’ compensation claims reserve for estimated claims decreases as contingent labor services declines, as is the case in the current and prior year. Additionally, our worker safety programs have had a positive impact and have created favorable adjustments to our workers’ compensation liabilities recorded in each period. Continued favorable adjustments to our workers’ compensation liabilities are dependent on our ability to continue to lower accident rates and claim costs.
|
|
|
Years ended
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Capital expenditures
|
$
|
(28,119
|
)
|
$
|
(17,054
|
)
|
Acquisition of business, net of divestiture of business
|
215
|
|
(12,155
|
)
|
||
Purchases and sales of restricted investments
|
18,483
|
|
8,694
|
|
||
Net cash used in investing activities
|
$
|
(21,631
|
)
|
$
|
(20,515
|
)
|
•
|
Capital expenditures increased in fiscal 2019 primarily due to investments in a cost savings initiative to upgrade our telephone system to voice over internet protocol, an expansion of our India shared services center, a computer hardware upgrade cycle, and further investment in software technology to support our digital strategy.
|
•
|
Net cash used in investing activities in fiscal 2018 was impacted by the acquisition of the outstanding equity interests of TMP for a cash purchase price of $23 million, net of cash acquired of $7 million. The acquisition was partially offset by the divestiture of all the assets and certain liabilities of our PlaneTechs business for a sales price of $11 million. See Note 2: Acquisition and Divestiture, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the purchase of TMP and divestiture of PlaneTechs.
|
•
|
Restricted investments consist primarily of collateral that has been provided or pledged to insurance carriers and state workers’ compensation programs. The decrease in the cash provided by the selling of securities was primarily due to lower collateral requirements from our workers’ compensation insurance providers, as well as the timing of collateral payments.
|
|
Years ended
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Purchases and retirement of common stock
|
$
|
(38,826
|
)
|
$
|
(34,818
|
)
|
Net proceeds from employee stock purchase plans
|
1,329
|
|
1,503
|
|
||
Common stock repurchases for taxes upon vesting of restricted stock
|
(2,222
|
)
|
(3,404
|
)
|
||
Net change in Revolving Credit Facility
|
(42,900
|
)
|
(15,900
|
)
|
||
Payments on debt
|
—
|
|
(22,397
|
)
|
||
Other
|
(296
|
)
|
—
|
|
||
Net cash used in financing activities
|
$
|
(82,915
|
)
|
$
|
(75,016
|
)
|
•
|
During fiscal 2019, we repurchased $39 million of common stock as compared to $35 million for the prior year. As of December 29, 2019, $119 million remains available for repurchase of common stock under existing authorizations.
|
•
|
During fiscal 2019, we increased net repayments on our Revolving Credit Facility of $43 million as compared to $16 million for the comparable period in the prior year. Draws on the Revolving Credit Facility during fiscal 2018 enabled the pre-payment of the outstanding balance of our existing long-term debt of $22 million with Synovus Bank on June 25, 2018.
|
|
|
S&P
|
Moody’s
|
Fitch
|
Short-term rating
|
A-1/SP-1
|
P-1/MIG-1
|
F-1
|
Long-term rating
|
A
|
A2
|
A
|
|
(in thousands)
|
December 29, 2019
|
December 30,
2018 |
||||
Cash collateral held by workers’ compensation insurance carriers
|
$
|
22,256
|
|
$
|
22,264
|
|
Cash and cash equivalents held in Trust
|
23,681
|
|
28,021
|
|
||
Investments held in Trust
|
149,373
|
|
156,618
|
|
||
Letters of credit (1)
|
6,202
|
|
6,691
|
|
||
Surety bonds (2)
|
20,731
|
|
21,881
|
|
||
Total collateral commitments
|
$
|
222,243
|
|
$
|
235,475
|
|
(1)
|
We have agreements with certain financial institutions to issue letters of credit as collateral.
|
(2)
|
Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which is determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.
|
(in thousands)
|
December 29, 2019
|
December 30,
2018 |
||||
Total workers’ compensation reserve
|
$
|
255,618
|
|
$
|
266,446
|
|
Add back discount on workers’ compensation reserve (1)
|
19,316
|
|
18,179
|
|
||
Less excess claims reserve (2)
|
(45,253
|
)
|
(48,229
|
)
|
||
Reimbursable payments to insurance provider (3)
|
8,121
|
|
7,866
|
|
||
Other (4)
|
(15,559
|
)
|
(8,787
|
)
|
||
Total collateral commitments
|
$
|
222,243
|
|
$
|
235,475
|
|
(1)
|
Our workers’ compensation reserves are discounted to their estimated net present value while our collateral commitments are based on the gross, undiscounted reserve.
|
(2)
|
Excess claims reserve includes the estimated obligation for claims above our deductible limits. These are the responsibility of the insurance carriers against which there are no collateral requirements.
|
(3)
|
This amount is included in restricted cash and represents a timing difference between claim payments made by our insurance carrier and the reimbursement from cash held in the Trust. When claims are paid by our carrier, the amount is removed from the workers’ compensation reserve but not removed from collateral until reimbursed to the carrier.
|
(4)
|
Represents the difference between the self-insured reserves and collateral commitments.
|
•
|
changes in medical and time loss (“indemnity”) costs;
|
•
|
changes in mix between medical only and indemnity claims;
|
•
|
regulatory and legislative developments impacting benefits and settlement requirements;
|
•
|
type and location of work performed;
|
|
•
|
the impact of safety initiatives; and
|
•
|
positive or adverse development of claims.
|
|
Years ended
|
|||||
(in thousands)
|
2019
|
2018
|
||||
Beginning balance
|
$
|
266,446
|
|
$
|
274,323
|
|
Self-insurance reserve expenses related to current year, net
|
78,367
|
|
79,874
|
|
||
Payments related to current year claims (1)
|
(14,997
|
)
|
(17,413
|
)
|
||
Payments related to claims from prior years (1)
|
(48,177
|
)
|
(47,242
|
)
|
||
Changes to prior years’ self-insurance reserve, net (2)
|
(21,748
|
)
|
(24,899
|
)
|
||
Amortization of prior years’ discount (3)
|
(1,393
|
)
|
2,404
|
|
||
Net change in excess claims reserve (4)
|
(2,880
|
)
|
(601
|
)
|
||
Ending balance
|
255,618
|
|
266,446
|
|
||
Less current portion
|
73,020
|
|
76,421
|
|
||
Long-term portion
|
$
|
182,598
|
|
$
|
190,025
|
|
(1)
|
Payments made against self-insured claims are made over a weighted average period of approximately 5 years at December 29, 2019.
|
(2)
|
Changes in reserve estimates are reflected in cost of services on the Consolidated Statement of Operations and Comprehensive Income in the period when the changes are made.
|
(3)
|
The discount is amortized over the estimated weighted average life. In addition, any changes to the estimated weighted average lives and corresponding discount rates for actual payments made are reflected in cost of services on the Consolidated Statement of Operations and Comprehensive Income in the period when the changes in estimates are made.
|
(4)
|
Changes to our excess claims are discounted to its estimated net present value using the risk-free rates associated with the actuarially determined weighted average lives of our excess claims. Certain workers’ compensation insurance companies with which we formerly did business are in liquidation and have failed to pay a number of excess claims to date. We have recorded a valuation allowance against all of the insurance receivables from the insurance companies in liquidation.
|
|
|
Payments due by period
(in thousands)
|
||||||||||||||
Contractual obligations
|
Total
|
Less than 1 year
|
1-3 years
|
3-5 years
|
More than 5 years
|
||||||||||
Long-term debt obligations, including interest and fees (1):
|
$
|
31,861
|
|
$
|
1,610
|
|
$
|
30,251
|
|
$
|
—
|
|
$
|
—
|
|
Workers’ compensation claims (2)
|
229,681
|
|
73,729
|
|
63,804
|
|
25,956
|
|
66,192
|
|
|||||
Deferred compensation (3)
|
8,232
|
|
2,930
|
|
2,383
|
|
1,343
|
|
1,576
|
|
|||||
Operating leases (4)
|
49,100
|
|
16,328
|
|
19,798
|
|
8,062
|
|
4,912
|
|
|||||
Purchase obligations (5)
|
29,811
|
|
13,837
|
|
14,730
|
|
1,244
|
|
—
|
|
|||||
Total contractual cash obligations
|
$
|
348,685
|
|
$
|
108,434
|
|
$
|
130,966
|
|
$
|
36,605
|
|
$
|
72,680
|
|
(1)
|
Interest and fees are calculated based on the rates in effect at December 29, 2019. Our Revolving Credit Facility expires in 2023. For additional information, see Note 8: Long-term Debt to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
|
(2)
|
Excludes estimated expenses related to claims above our self-insured limits, for which we have a corresponding receivable based on the contractual policy agreements we have with insurance carriers. For additional information, see Note 7: Workers’ Compensation Insurance and Reserves to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
|
(3)
|
Represents scheduled distributions based on the elections of plan participants. Additional payments may be made if plan participants terminate, retire, or schedule additional distributions during the periods presented. For additional information, see Note 12: Defined Contribution Plans to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
|
(4)
|
Excludes all payments related to branch leases with short-term cancellation provisions, typically within 90 days. Operating lease payments exclude approximately $37 million of legally binding minimum lease payments for leases signed but not yet commenced. For additional information, see Note 9: Commitments and Contingencies to the consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
|
(5)
|
Purchase obligations include agreements to purchase goods and services that are enforceable, legally binding and specify all significant terms. Purchase obligations do not include agreements that are cancelable without significant penalty.
|
|
|
|
|
Item 7A.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
|
Item 8.
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
|
•
|
We tested the effectiveness of controls over management’s evaluation of goodwill for impairment, including those over the forecast of future revenue and earnings.
|
•
|
We evaluated management’s ability to accurately forecast future revenues and earnings by comparing actual results to management’s historical forecasts.
|
•
|
We evaluated the reasonableness of management’s revenue and earnings forecast by comparing the forecasts to:
|
•
|
Historical revenues and earnings; and
|
•
|
Internal communications between management, brand presidents, and the Board of Directors, including assessment of current and future growth opportunities.
|
•
|
We further evaluated the reasonableness of management’s forecast by evaluating alternative assumptions about future revenue and cash flows, using both the Company’s internal information and analyst and industry reports.
|
•
|
We tested the effectiveness of controls over workers’ compensation, including those over payments and related expenses, claims data provided to the actuary, and review of actuarial results.
|
•
|
We evaluated the methods and assumptions used by management to estimate the workers’ compensation reserves by:
|
•
|
Making selections of the underlying data that served as the basis for the actuarial analysis, including claims payments and related expenses, to evaluate whether the inputs to the actuarial estimate were accurate; and
|
•
|
Comparing management’s prior-year assumptions of expected future cost of claims and related expenses to actuals incurred during the current year to identify potential bias in the determination of the workers’ compensation reserves.
|
•
|
With the assistance of our actuarial specialists, we developed independent estimates of the reserves and compared our estimates to the Company’s recorded reserves.
|
|
(in thousands, except par value data)
|
December 29,
2019 |
December 30,
2018 |
||||
ASSETS
|
|
|
||||
Current assets:
|
|
|
||||
Cash and cash equivalents
|
$
|
37,608
|
|
$
|
46,988
|
|
Accounts receivable, net of allowance for doubtful accounts of $4,288 and $5,026
|
342,303
|
|
355,373
|
|
||
Prepaid expenses, deposits and other current assets
|
30,717
|
|
22,141
|
|
||
Income tax receivable
|
11,105
|
|
5,325
|
|
||
Total current assets
|
421,733
|
|
429,827
|
|
||
Property and equipment, net
|
66,150
|
|
57,671
|
|
||
Restricted cash and investments
|
230,932
|
|
235,443
|
|
||
Deferred income taxes, net
|
3,228
|
|
4,388
|
|
||
Goodwill
|
237,498
|
|
237,287
|
|
||
Intangible assets, net
|
73,673
|
|
91,408
|
|
||
Operating lease right-of-use assets
|
41,082
|
|
—
|
|
||
Workers’ compensation claims receivable, net
|
44,624
|
|
44,915
|
|
||
Other assets, net
|
17,235
|
|
13,905
|
|
||
Total assets
|
$
|
1,136,155
|
|
$
|
1,114,844
|
|
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
|
|
||||
Current liabilities:
|
|
|
||||
Accounts payable and other accrued expenses
|
$
|
68,406
|
|
$
|
62,045
|
|
Accrued wages and benefits
|
67,604
|
|
77,098
|
|
||
Current portion of workers’ compensation claims reserve
|
73,020
|
|
76,421
|
|
||
Operating lease current liabilities
|
14,358
|
|
—
|
|
||
Other current liabilities
|
7,418
|
|
9,962
|
|
||
Total current liabilities
|
230,806
|
|
225,526
|
|
||
Workers’ compensation claims reserve, less current portion
|
182,598
|
|
190,025
|
|
||
Long-term debt
|
37,100
|
|
80,000
|
|
||
Long-term deferred compensation liabilities
|
26,765
|
|
21,747
|
|
||
Operating lease long-term liabilities
|
28,849
|
|
—
|
|
||
Other long-term liabilities
|
4,064
|
|
6,107
|
|
||
Total liabilities
|
510,182
|
|
523,405
|
|
||
|
|
|
||||
Commitments and contingencies (Note 9)
|
|
|
||||
|
|
|
||||
Shareholders’ equity:
|
|
|
||||
Preferred stock, $0.131 par value, 20,000 shares authorized; No shares issued and outstanding
|
—
|
|
—
|
|
||
Common stock, no par value, 100,000 shares authorized; 38,593 and 40,054 shares issued and outstanding
|
1
|
|
1
|
|
||
Accumulated other comprehensive loss
|
(13,238
|
)
|
(14,649
|
)
|
||
Retained earnings
|
639,210
|
|
606,087
|
|
||
Total shareholders’ equity
|
625,973
|
|
591,439
|
|
||
Total liabilities and shareholders’ equity
|
$
|
1,136,155
|
|
$
|
1,114,844
|
|
|
|
Years ended
|
||||||||
(in thousands, except per share data)
|
2019
|
2018
|
2017
|
||||||
Revenue from services
|
$
|
2,368,779
|
|
$
|
2,499,207
|
|
$
|
2,508,771
|
|
Cost of services
|
1,742,621
|
|
1,833,607
|
|
1,874,298
|
|
|||
Gross profit
|
626,158
|
|
665,600
|
|
634,473
|
|
|||
Selling, general and administrative expense
|
522,430
|
|
550,632
|
|
510,794
|
|
|||
Depreciation and amortization
|
37,549
|
|
41,049
|
|
46,115
|
|
|||
Income from operations
|
66,179
|
|
73,919
|
|
77,564
|
|
|||
Interest expense
|
(2,783
|
)
|
(4,881
|
)
|
(5,494
|
)
|
|||
Interest and other income
|
6,648
|
|
6,625
|
|
5,480
|
|
|||
Interest and other income (expense), net
|
3,865
|
|
1,744
|
|
(14
|
)
|
|||
Income before tax expense
|
70,044
|
|
75,663
|
|
77,550
|
|
|||
Income tax expense
|
6,971
|
|
9,909
|
|
22,094
|
|
|||
Net income
|
$
|
63,073
|
|
$
|
65,754
|
|
$
|
55,456
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
||||||
Basic
|
$
|
1.63
|
|
$
|
1.64
|
|
$
|
1.35
|
|
Diluted
|
$
|
1.61
|
|
$
|
1.63
|
|
$
|
1.34
|
|
|
|
|
|
||||||
Weighted average shares outstanding:
|
|
|
|
||||||
Basic
|
38,778
|
|
39,985
|
|
41,202
|
|
|||
Diluted
|
39,179
|
|
40,275
|
|
41,441
|
|
|||
|
|
|
|
||||||
Other comprehensive income (loss):
|
|
|
|
||||||
Foreign currency translation adjustment
|
$
|
1,411
|
|
$
|
(6,320
|
)
|
$
|
3,355
|
|
Unrealized gain on investments, net of tax
|
—
|
|
—
|
|
1,274
|
|
|||
Total other comprehensive income (loss), net of tax
|
1,411
|
|
(6,320
|
)
|
4,629
|
|
|||
Comprehensive income
|
$
|
64,484
|
|
$
|
59,434
|
|
$
|
60,085
|
|
|
|
|
Common stock
|
|
Accumulated other comprehensive loss
|
Total shareholders’ equity
|
||||||||||
(in thousands)
|
Shares
|
Amount
|
Retained earnings
|
||||||||||||
Balances,
|
January 1, 2017
|
42,171
|
|
$
|
1
|
|
$
|
536,611
|
|
$
|
(11,433
|
)
|
$
|
525,179
|
|
Net income
|
—
|
|
—
|
|
55,456
|
|
—
|
|
55,456
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
4,629
|
|
4,629
|
|
|||||
Purchases and retirement of common stock
|
(1,530
|
)
|
—
|
|
(36,680
|
)
|
—
|
|
(36,680
|
)
|
|||||
Issuances under equity plans, including tax benefits
|
418
|
|
—
|
|
(1,481
|
)
|
—
|
|
(1,481
|
)
|
|||||
Stock-based compensation
|
39
|
|
—
|
|
7,744
|
|
—
|
|
7,744
|
|
|||||
Balances,
|
December 31, 2017
|
41,098
|
|
1
|
|
561,650
|
|
(6,804
|
)
|
554,847
|
|
||||
Net income
|
—
|
|
—
|
|
65,754
|
|
—
|
|
65,754
|
|
|||||
Other comprehensive loss, net of tax
|
—
|
|
—
|
|
—
|
|
(6,320
|
)
|
(6,320
|
)
|
|||||
Purchases and retirement of common stock
|
(1,371
|
)
|
—
|
|
(34,818
|
)
|
—
|
|
(34,818
|
)
|
|||||
Issuances under equity plans, including tax benefits
|
299
|
|
—
|
|
(1,900
|
)
|
—
|
|
(1,900
|
)
|
|||||
Stock-based compensation
|
28
|
|
—
|
|
13,876
|
|
—
|
|
13,876
|
|
|||||
Change in accounting standard cumulative-effect adjustment
|
—
|
|
—
|
|
1,525
|
|
(1,525
|
)
|
—
|
|
|||||
Balances,
|
December 30, 2018
|
40,054
|
|
1
|
|
606,087
|
|
(14,649
|
)
|
591,439
|
|
||||
Net income
|
—
|
|
—
|
|
63,073
|
|
—
|
|
63,073
|
|
|||||
Other comprehensive income, net of tax
|
—
|
|
—
|
|
—
|
|
1,411
|
|
1,411
|
|
|||||
Purchases and retirement of common stock
|
(1,855
|
)
|
—
|
|
(38,826
|
)
|
—
|
|
(38,826
|
)
|
|||||
Issuances under equity plans, including tax benefits
|
365
|
|
—
|
|
(893
|
)
|
—
|
|
(893
|
)
|
|||||
Stock-based compensation
|
29
|
|
—
|
|
9,769
|
|
—
|
|
9,769
|
|
|||||
Balances,
|
December 29, 2019
|
38,593
|
|
$
|
1
|
|
$
|
639,210
|
|
$
|
(13,238
|
)
|
$
|
625,973
|
|
|
|
Years ended
|
||||||||
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
||||||
Net income
|
$
|
63,073
|
|
$
|
65,754
|
|
$
|
55,456
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||||
Depreciation and amortization
|
37,549
|
|
41,049
|
|
46,115
|
|
|||
Provision for doubtful accounts
|
7,661
|
|
10,042
|
|
6,808
|
|
|||
Stock-based compensation
|
9,769
|
|
13,876
|
|
7,744
|
|
|||
Deferred income taxes
|
1,263
|
|
(1,929
|
)
|
2,440
|
|
|||
Non-cash lease expense
|
14,823
|
|
—
|
|
—
|
|
|||
Other operating activities
|
(1,589
|
)
|
5,154
|
|
2,349
|
|
|||
Changes in operating assets and liabilities, net of amounts acquired and divested:
|
|
|
|
||||||
Accounts receivable
|
5,450
|
|
11,640
|
|
(28,483
|
)
|
|||
Income tax receivable
|
(6,480
|
)
|
(996
|
)
|
14,875
|
|
|||
Other assets
|
(12,575
|
)
|
(12,928
|
)
|
5,289
|
|
|||
Accounts payable and other accrued expenses
|
6,921
|
|
3,029
|
|
(7,657
|
)
|
|||
Accrued wages and benefits
|
(9,494
|
)
|
(1,613
|
)
|
(2,713
|
)
|
|||
Workers’ compensation claims reserve
|
(10,828
|
)
|
(7,877
|
)
|
(1,048
|
)
|
|||
Operating lease liabilities
|
(15,178
|
)
|
—
|
|
—
|
|
|||
Other liabilities
|
3,166
|
|
491
|
|
(1,041
|
)
|
|||
Net cash provided by operating activities
|
93,531
|
|
125,692
|
|
100,134
|
|
|||
Cash flows from investing activities:
|
|
|
|
||||||
Capital expenditures
|
(28,119
|
)
|
(17,054
|
)
|
(21,958
|
)
|
|||
Acquisition of businesses, net of cash acquired
|
—
|
|
(22,742
|
)
|
—
|
|
|||
Divestiture of business
|
215
|
|
10,587
|
|
—
|
|
|||
Payments for company-owned life insurance
|
(12,210
|
)
|
—
|
|
—
|
|
|||
Purchases of restricted available-for-sale investments
|
(7,667
|
)
|
(6,173
|
)
|
(5,907
|
)
|
|||
Sales of restricted available-for-sale investments
|
20,859
|
|
1,991
|
|
2,897
|
|
|||
Purchases of restricted held-to-maturity investments
|
(22,963
|
)
|
(6,768
|
)
|
(44,694
|
)
|
|||
Maturities of restricted held-to-maturity investments
|
28,254
|
|
19,644
|
|
17,260
|
|
|||
Other
|
—
|
|
—
|
|
(1,979
|
)
|
|||
Net cash used in investing activities
|
(21,631
|
)
|
(20,515
|
)
|
(54,381
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
||||||
Purchases and retirement of common stock
|
(38,826
|
)
|
(34,818
|
)
|
(36,680
|
)
|
|||
Net proceeds from employee stock purchase plans
|
1,329
|
|
1,503
|
|
1,646
|
|
|||
Common stock repurchases for taxes upon vesting of restricted stock
|
(2,222
|
)
|
(3,404
|
)
|
(3,127
|
)
|
|||
Net change in Revolving Credit Facility
|
(42,900
|
)
|
(15,900
|
)
|
(16,607
|
)
|
|||
Payments on debt
|
—
|
|
(22,397
|
)
|
(2,267
|
)
|
|||
Payment of contingent consideration at acquisition date fair value
|
—
|
|
—
|
|
(18,300
|
)
|
|||
Other
|
(296
|
)
|
—
|
|
—
|
|
|||
Net cash used in financing activities
|
(82,915
|
)
|
(75,016
|
)
|
(75,335
|
)
|
|||
Effect of exchange rate changes on cash, cash equivalents and restricted cash
|
936
|
|
(1,542
|
)
|
191
|
|
|||
Net change in cash, cash equivalents and restricted cash
|
(10,079
|
)
|
28,619
|
|
(29,391
|
)
|
|||
Cash, cash equivalents and restricted cash, beginning of period
|
102,450
|
|
73,831
|
|
103,222
|
|
|||
Cash, cash equivalents and restricted cash, end of period
|
$
|
92,371
|
|
$
|
102,450
|
|
$
|
73,831
|
|
Supplemental disclosure of cash flow information:
|
|
|
|
||||||
Cash paid during the period for:
|
|
|
|
||||||
Interest
|
$
|
2,432
|
|
$
|
4,373
|
|
$
|
3,811
|
|
Income taxes
|
12,166
|
|
12,898
|
|
4,593
|
|
|||
Operating lease liabilities
|
17,643
|
|
—
|
|
—
|
|
|||
Non-cash transactions:
|
|
|
|
||||||
Property and equipment purchased but not yet paid
|
993
|
|
1,553
|
|
375
|
|
|||
Divestiture non-cash consideration
|
—
|
|
798
|
|
—
|
|
|||
Right-of-use assets obtained in exchange for new operating lease liabilities
|
18,759
|
|
—
|
|
—
|
|
|
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|
NOTE 1:
|
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
|
•
|
We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.
|
•
|
We demonstrate control over the services provided to our clients by being the employer of record for the individuals performing the service.
|
•
|
We establish our worker’s billing rate.
|
|
|
•
|
Level 1: The carrying value of cash and cash equivalents and mutual funds approximates fair value because of the short-term nature of these instruments. Inputs are valued using quoted market prices in active markets for identical assets or liabilities.
|
•
|
Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities are used. We use quoted prices for similar instruments in active markets or we estimate the fair value using a variety of valuation methodologies, which include observable inputs for comparable instruments and unobservable inputs.
|
•
|
Level 3: For assets and liabilities with unobservable inputs, we typically rely on management’s estimates of assumptions that market participants would use in pricing the asset or liability.
|
|
|
|
|
|
|
(in thousands)
|
Purchase price allocation
|
||
Cash purchase price, net of cash acquired
|
$
|
22,742
|
|
|
|
||
Accounts receivable
|
9,770
|
|
|
Prepaid expenses, deposits and other current assets
|
337
|
|
|
Property and equipment
|
435
|
|
|
Customer relationships
|
6,286
|
|
|
Trade names/trademarks
|
1,738
|
|
|
Total assets acquired
|
18,566
|
|
|
|
|
||
Accounts payable and other accrued expenses
|
9,139
|
|
|
Accrued wages and benefits
|
1,642
|
|
|
Income tax payable
|
205
|
|
|
Deferred income tax liability
|
1,444
|
|
|
Total liabilities assumed
|
12,430
|
|
|
|
|
||
Net identifiable assets acquired
|
6,136
|
|
|
Goodwill (1)
|
16,606
|
|
|
Total consideration allocated
|
$
|
22,742
|
|
(in thousands, except for estimated useful lives, in years)
|
Estimated fair value
|
Estimated useful life in years
|
||
Customer relationships - other
|
$
|
2,809
|
|
3
|
Customer relationships - RPO
|
3,477
|
|
7
|
|
Trade names/trademarks
|
1,738
|
|
14
|
|
Total acquired identifiable intangible assets
|
$
|
8,024
|
|
|
|
|
December 29, 2019
|
|||||||||||
(in thousands)
|
Total fair value
|
Quoted prices in active markets for identical assets (level 1)
|
Significant other observable inputs (level 2)
|
Significant unobservable inputs (level 3)
|
||||||||
Cash and cash equivalents
|
$
|
37,608
|
|
$
|
37,608
|
|
$
|
—
|
|
$
|
—
|
|
Restricted cash and cash equivalents
|
54,763
|
|
54,763
|
|
—
|
|
—
|
|
||||
Cash, cash equivalents and restricted cash (1)
|
$
|
92,371
|
|
$
|
92,371
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Municipal debt securities
|
$
|
74,236
|
|
$
|
—
|
|
$
|
74,236
|
|
$
|
—
|
|
Corporate debt securities
|
76,068
|
|
—
|
|
76,068
|
|
—
|
|
||||
Agency mortgage-backed securities
|
1,376
|
|
—
|
|
1,376
|
|
—
|
|
||||
U.S. government and agency securities
|
1,051
|
|
—
|
|
1,051
|
|
—
|
|
||||
Restricted investments classified as held-to-maturity
|
$
|
152,731
|
|
$
|
—
|
|
$
|
152,731
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Deferred compensation investments (2)
|
$
|
13,670
|
|
$
|
13,670
|
|
$
|
—
|
|
$
|
—
|
|
|
December 30, 2018
|
|||||||||||
(in thousands)
|
Total fair value
|
Quoted prices in active markets for identical assets (level 1)
|
Significant other observable inputs (level 2)
|
Significant unobservable inputs (level 3)
|
||||||||
Cash and cash equivalents
|
$
|
46,988
|
|
$
|
46,988
|
|
$
|
—
|
|
$
|
—
|
|
Restricted cash and cash equivalents
|
55,462
|
|
55,462
|
|
—
|
|
—
|
|
||||
Cash, cash equivalents and restricted cash (1)
|
$
|
102,450
|
|
$
|
102,450
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Municipal debt securities
|
$
|
76,690
|
|
$
|
—
|
|
$
|
76,690
|
|
$
|
—
|
|
Corporate debt securities
|
75,432
|
|
—
|
|
75,432
|
|
—
|
|
||||
Agency mortgage-backed securities
|
2,531
|
|
—
|
|
2,531
|
|
—
|
|
||||
U.S. government and agency securities
|
988
|
|
—
|
|
988
|
|
—
|
|
||||
Restricted investments classified as held-to-maturity
|
$
|
155,641
|
|
$
|
—
|
|
$
|
155,641
|
|
$
|
—
|
|
|
|
|
|
|
||||||||
Deferred compensation investments (2)
|
$
|
22,621
|
|
$
|
22,621
|
|
$
|
—
|
|
$
|
—
|
|
(1)
|
Cash, cash equivalents and restricted cash consist of money market funds, deposits, and investments with original maturities of three months or less.
|
(2)
|
Deferred compensation investments consist of mutual funds and money market funds.
|
|
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
||||
Cash collateral held by insurance carriers
|
$
|
24,612
|
|
$
|
24,182
|
|
Cash and cash equivalents held in Trust
|
23,681
|
|
28,021
|
|
||
Investments held in Trust
|
149,373
|
|
156,618
|
|
||
Deferred compensation investments
|
13,670
|
|
22,621
|
|
||
Company owned life insurance policies
|
13,126
|
|
742
|
|
||
Other restricted cash and cash equivalents
|
6,470
|
|
3,259
|
|
||
Total restricted cash and investments
|
$
|
230,932
|
|
$
|
235,443
|
|
|
December 29, 2019
|
|||||||||||
(in thousands)
|
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair value
|
||||||||
Municipal debt securities
|
$
|
72,017
|
|
$
|
2,219
|
|
$
|
—
|
|
$
|
74,236
|
|
Corporate debt securities
|
75,000
|
|
1,102
|
|
(34
|
)
|
76,068
|
|
||||
Agency mortgage-backed securities
|
1,357
|
|
21
|
|
(2
|
)
|
1,376
|
|
||||
U.S. government and agency securities
|
999
|
|
52
|
|
—
|
|
1,051
|
|
||||
Total held-to-maturity investments
|
$
|
149,373
|
|
$
|
3,394
|
|
$
|
(36
|
)
|
$
|
152,731
|
|
|
December 30, 2018
|
|||||||||||
(in thousands)
|
Amortized cost
|
Gross unrealized gains
|
Gross unrealized losses
|
Fair value
|
||||||||
Municipal debt securities
|
$
|
76,750
|
|
$
|
456
|
|
$
|
(516
|
)
|
$
|
76,690
|
|
Corporate debt securities
|
76,310
|
|
30
|
|
(908
|
)
|
75,432
|
|
||||
Agency mortgage-backed securities
|
2,559
|
|
5
|
|
(33
|
)
|
2,531
|
|
||||
U.S. government and agency securities
|
999
|
|
—
|
|
(11
|
)
|
988
|
|
||||
Total held-to-maturity investments
|
$
|
156,618
|
|
$
|
491
|
|
$
|
(1,468
|
)
|
$
|
155,641
|
|
|
|
December 29, 2019
|
|||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||
(in thousands)
|
Estimated fair value
|
Unrealized losses
|
|
Estimated fair value
|
Unrealized losses
|
|
Estimated fair value
|
Unrealized losses
|
||||||||||||
Municipal debt securities
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
|
$
|
—
|
|
$
|
—
|
|
Corporate debt securities
|
15,920
|
|
(32
|
)
|
|
2,765
|
|
(2
|
)
|
|
18,685
|
|
(34
|
)
|
||||||
Agency mortgage-backed securities
|
—
|
|
—
|
|
|
276
|
|
(2
|
)
|
|
276
|
|
(2
|
)
|
||||||
U.S. government and agency securities
|
—
|
|
—
|
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
||||||
Total held-to-maturity investments
|
$
|
15,920
|
|
$
|
(32
|
)
|
|
$
|
3,041
|
|
$
|
(4
|
)
|
|
$
|
18,961
|
|
$
|
(36
|
)
|
|
December 30, 2018
|
|||||||||||||||||||
|
Less than 12 months
|
|
12 months or more
|
|
Total
|
|||||||||||||||
(in thousands)
|
Estimated fair value
|
Unrealized losses
|
|
Estimated fair value
|
Unrealized losses
|
|
Estimated fair value
|
Unrealized losses
|
||||||||||||
Municipal debt securities
|
$
|
12,803
|
|
$
|
(74
|
)
|
|
$
|
22,638
|
|
$
|
(442
|
)
|
|
$
|
35,441
|
|
$
|
(516
|
)
|
Corporate debt securities
|
22,567
|
|
(277
|
)
|
|
44,463
|
|
(631
|
)
|
|
67,030
|
|
(908
|
)
|
||||||
Agency mortgage-backed securities
|
385
|
|
—
|
|
|
1,375
|
|
(33
|
)
|
|
1,760
|
|
(33
|
)
|
||||||
U.S. government and agency securities
|
988
|
|
(11
|
)
|
|
—
|
|
—
|
|
|
988
|
|
(11
|
)
|
||||||
Total held-to-maturity investments
|
$
|
36,743
|
|
$
|
(362
|
)
|
|
$
|
68,476
|
|
$
|
(1,106
|
)
|
|
$
|
105,219
|
|
$
|
(1,468
|
)
|
|
December 29, 2019
|
|||||
(in thousands)
|
Amortized cost
|
Fair value
|
||||
Due in one year or less
|
$
|
20,312
|
|
$
|
20,356
|
|
Due after one year through five years
|
92,358
|
|
94,159
|
|
||
Due after five years through ten years
|
36,703
|
|
38,216
|
|
||
Total held-to-maturity investments
|
$
|
149,373
|
|
$
|
152,731
|
|
|
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
||||
Buildings and land
|
$
|
43,621
|
|
$
|
41,300
|
|
Software
|
132,378
|
|
119,241
|
|
||
Computers, furniture and equipment
|
57,770
|
|
52,115
|
|
||
Construction in progress
|
8,727
|
|
8,350
|
|
||
Gross property and equipment
|
242,496
|
|
221,006
|
|
||
Less accumulated depreciation
|
(176,346
|
)
|
(163,335
|
)
|
||
Property and equipment, net
|
$
|
66,150
|
|
$
|
57,671
|
|
(in thousands)
|
PeopleReady
|
PeopleManagement
|
PeopleScout
|
Total company
|
|||||||||
Balance at
|
December 31, 2017
|
|
|
|
|
||||||||
Goodwill before impairment
|
$
|
106,304
|
|
$
|
100,146
|
|
$
|
132,323
|
|
$
|
338,773
|
|
|
Accumulated impairment loss
|
(46,210
|
)
|
(50,700
|
)
|
(15,169
|
)
|
(112,079
|
)
|
|||||
Goodwill, net
|
60,094
|
|
49,446
|
|
117,154
|
|
226,694
|
|
|||||
|
|
|
|
|
|
||||||||
Divested goodwill before impairment (1)
|
—
|
|
(19,054
|
)
|
—
|
|
(19,054
|
)
|
|||||
Divested accumulated impairment loss (1)
|
—
|
|
17,000
|
|
—
|
|
17,000
|
|
|||||
Acquired goodwill (2)
|
—
|
|
—
|
|
16,606
|
|
16,606
|
|
|||||
Foreign currency translation
|
—
|
|
—
|
|
(3,959
|
)
|
(3,959
|
)
|
|||||
|
|
|
|
|
|
||||||||
Balance at
|
December 30, 2018
|
|
|
|
|
||||||||
Goodwill before impairment
|
106,304
|
|
81,092
|
|
144,970
|
|
332,366
|
|
|||||
Accumulated impairment loss
|
(46,210
|
)
|
(33,700
|
)
|
(15,169
|
)
|
(95,079
|
)
|
|||||
Goodwill, net
|
60,094
|
|
47,392
|
|
129,801
|
|
237,287
|
|
|||||
|
|
|
|
|
|
||||||||
Foreign currency translation
|
—
|
|
—
|
|
211
|
|
211
|
|
|||||
|
|
|
|
|
|
||||||||
Balance at
|
December 29, 2019
|
|
|
|
|
||||||||
Goodwill before impairment
|
106,304
|
|
81,092
|
|
145,181
|
|
332,577
|
|
|||||
Accumulated impairment loss
|
(46,210
|
)
|
(33,700
|
)
|
(15,169
|
)
|
(95,079
|
)
|
|||||
Goodwill, net
|
$
|
60,094
|
|
$
|
47,392
|
|
$
|
130,012
|
|
$
|
237,498
|
|
(1)
|
Effective March 12, 2018, we divested our PlaneTechs business. As a result of this divestiture, we eliminated the remaining goodwill balance of the PlaneTechs business, which was a part of our PeopleManagement reportable segment. For additional information, see Note 2: Acquisition and Divestiture.
|
(2)
|
Effective June 12, 2018, we acquired TMP through PeopleScout. Accordingly, the goodwill associated with the acquisition has been assigned to our PeopleScout reportable segment based on the purchase price allocation. For additional information, see Note 2: Acquisition and Divestiture.
|
|
|
December 29, 2019
|
|
December 30, 2018
|
||||||||||||||||
(in thousands)
|
Gross carrying amount
|
Accumulated
amortization
|
Net
carrying
amount
|
|
Gross carrying amount
|
Accumulated
amortization |
Net
carrying amount |
||||||||||||
Finite-lived intangible assets (1):
|
|
|
|
|
|
|
|
||||||||||||
Customer relationships
|
$
|
149,299
|
|
$
|
(83,317
|
)
|
$
|
65,982
|
|
|
$
|
153,704
|
|
$
|
(70,887
|
)
|
$
|
82,817
|
|
Trade names/trademarks
|
2,052
|
|
(441
|
)
|
1,611
|
|
|
2,580
|
|
(1,069
|
)
|
1,511
|
|
||||||
Technologies
|
600
|
|
(520
|
)
|
80
|
|
|
9,800
|
|
(8,720
|
)
|
1,080
|
|
||||||
Total finite-lived intangible assets
|
$
|
151,951
|
|
$
|
(84,278
|
)
|
$
|
67,673
|
|
|
$
|
166,084
|
|
$
|
(80,676
|
)
|
$
|
85,408
|
|
(1)
|
Excludes assets that are fully amortized.
|
(in thousands)
|
|
||
2020
|
$
|
15,885
|
|
2021
|
14,252
|
|
|
2022
|
13,381
|
|
|
2023
|
12,726
|
|
|
2024
|
10,319
|
|
|
Thereafter
|
1,110
|
|
|
Total future amortization
|
$
|
67,673
|
|
|
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
||||
Undiscounted workers’ compensation reserve
|
$
|
274,934
|
|
$
|
284,625
|
|
Less discount on workers’ compensation reserve
|
19,316
|
|
18,179
|
|
||
Workers’ compensation reserve, net of discount
|
255,618
|
|
266,446
|
|
||
Less current portion
|
73,020
|
|
76,421
|
|
||
Long-term portion
|
$
|
182,598
|
|
$
|
190,025
|
|
•
|
changes in medical and time loss (“indemnity”) costs;
|
•
|
changes in mix between medical only and indemnity claims;
|
•
|
regulatory and legislative developments impacting benefits and settlement requirements;
|
•
|
type and location of work performed;
|
•
|
impact of safety initiatives; and
|
•
|
positive or adverse development of claims.
|
|
(in thousands)
|
|
||
2020
|
$
|
73,020
|
|
2021
|
39,284
|
|
|
2022
|
22,190
|
|
|
2023
|
14,143
|
|
|
2024
|
9,862
|
|
|
Thereafter
|
51,866
|
|
|
Sub-total
|
210,365
|
|
|
Excess claims (1)
|
45,253
|
|
|
Total
|
$
|
255,618
|
|
(1)
|
Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements.
|
|
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
||||
Cash collateral held by workers’ compensation insurance carriers
|
$
|
22,256
|
|
$
|
22,264
|
|
Cash and cash equivalents held in Trust
|
23,681
|
|
28,021
|
|
||
Investments held in Trust
|
149,373
|
|
156,618
|
|
||
Letters of credit (1)
|
6,202
|
|
6,691
|
|
||
Surety bonds (2)
|
20,731
|
|
21,881
|
|
||
Total collateral commitments
|
$
|
222,243
|
|
$
|
235,475
|
|
(1)
|
We have agreements with certain financial institutions to issue letters of credit as collateral.
|
(2)
|
Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.
|
|
Year ended
|
||
(in thousands)
|
December 29, 2019
|
||
Operating lease costs
|
$
|
17,333
|
|
Short-term lease costs
|
7,110
|
|
|
Other lease costs (1)
|
4,722
|
|
|
Total lease costs
|
$
|
29,165
|
|
(1)
|
Other lease costs include immaterial variable lease costs and sublease income.
|
|
December 29, 2019
|
Weighted average remaining lease term in years
|
4.1
|
Weighted average discount rate
|
5.0%
|
|
(in thousands)
|
|
||
2020
|
16,328
|
|
|
2021
|
12,283
|
|
|
2022
|
7,515
|
|
|
2023
|
5,375
|
|
|
2024
|
2,687
|
|
|
Thereafter
|
4,912
|
|
|
Total undiscounted future non-cancelable minimum lease payments (1)
|
49,100
|
|
|
Less: Imputed interest (2)
|
5,893
|
|
|
Present value of lease liabilities
|
$
|
43,207
|
|
(1)
|
Operating lease payments exclude approximately $36.7 million of legally binding minimum lease payments for leases signed but not yet commenced.
|
(2)
|
Amount necessary to reduce net minimum lease payments to present value calculated using our incremental borrowing rates, which are consistent with the lease terms at adoption date (for those leases in existence as of the adoption date of the new lease standard) or lease inception (for those leases entered into after the adoption date).
|
(in thousands)
|
|
||
2019
|
$
|
8,337
|
|
2020
|
7,192
|
|
|
2021
|
4,990
|
|
|
2022
|
2,442
|
|
|
2023
|
1,324
|
|
|
Thereafter
|
699
|
|
|
Total future non-cancelable minimum lease payments
|
$
|
24,984
|
|
|
|
(shares in thousands)
|
|
Shares
|
Average price per share
|
|||
Issued during fiscal
|
2019
|
73
|
|
$
|
18.31
|
|
Issued during fiscal
|
2018
|
68
|
|
$
|
22.17
|
|
Issued during fiscal
|
2017
|
72
|
|
$
|
20.43
|
|
|
NOTE 13:
|
INCOME TAXES
|
|
Years ended
|
||||||||
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Current taxes:
|
|
|
|
||||||
Federal
|
$
|
(933
|
)
|
$
|
5,088
|
|
$
|
12,134
|
|
State
|
3,835
|
|
5,208
|
|
3,979
|
|
|||
Foreign
|
2,806
|
|
1,542
|
|
3,545
|
|
|||
Total current taxes
|
5,708
|
|
11,838
|
|
19,658
|
|
|||
Deferred taxes:
|
|
|
|
||||||
Federal
|
846
|
|
(1,283
|
)
|
3,645
|
|
|||
State
|
1,216
|
|
120
|
|
(195
|
)
|
|||
Foreign
|
(799
|
)
|
(766
|
)
|
(1,014
|
)
|
|||
Total deferred taxes
|
1,263
|
|
(1,929
|
)
|
2,436
|
|
|||
Provision for income taxes
|
$
|
6,971
|
|
$
|
9,909
|
|
$
|
22,094
|
|
|
Years ended
|
||||||||||||||
(in thousands, except percentages)
|
2019
|
%
|
2018
|
%
|
2017
|
%
|
|||||||||
Income tax expense based on statutory rate
|
$
|
14,709
|
|
21.0
|
%
|
$
|
15,889
|
|
21.0
|
%
|
$
|
27,140
|
|
35.0
|
%
|
Increase (decrease) resulting from:
|
|
|
|
|
|
|
|||||||||
State income taxes, net of federal benefit
|
3,666
|
|
5.3
|
|
3,826
|
|
5.1
|
|
2,667
|
|
3.4
|
|
|||
Tax credits, net
|
(13,627
|
)
|
(19.4
|
)
|
(12,303
|
)
|
(16.3
|
)
|
(9,964
|
)
|
(12.9
|
)
|
|||
Transition to the U.S. Tax Cuts and Job Act
|
97
|
|
0.1
|
|
(194
|
)
|
(0.3
|
)
|
2,466
|
|
3.2
|
|
|||
Non-deductible/non-taxable items
|
1,559
|
|
2.2
|
|
1,191
|
|
1.6
|
|
1,157
|
|
1.5
|
|
|||
Foreign taxes
|
282
|
|
0.4
|
|
735
|
|
1.0
|
|
(342
|
)
|
(0.4
|
)
|
|||
Other, net
|
285
|
|
0.4
|
|
765
|
|
1.0
|
|
(1,030
|
)
|
(1.3
|
)
|
|||
Total taxes on income
|
$
|
6,971
|
|
10.0
|
%
|
$
|
9,909
|
|
13.1
|
%
|
$
|
22,094
|
|
28.5
|
%
|
|
Years ended
|
||||||||
(in thousands)
|
2019
|
2018
|
2017
|
||||||
U.S.
|
$
|
61,610
|
|
$
|
73,051
|
|
$
|
69,119
|
|
International
|
8,434
|
|
2,612
|
|
8,431
|
|
|||
Income before tax expense
|
$
|
70,044
|
|
$
|
75,663
|
|
$
|
77,550
|
|
|
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
||||
Deferred tax assets:
|
|
|
||||
Allowance for doubtful accounts
|
$
|
973
|
|
$
|
1,049
|
|
Workers’ compensation
|
817
|
|
4,162
|
|
||
Accounts payable and other accrued expenses
|
3,818
|
|
3,957
|
|
||
Net operating loss carryforwards
|
2,085
|
|
2,103
|
|
||
Tax credit carryforwards
|
9,528
|
|
1,562
|
|
||
Accrued wages and benefits
|
5,148
|
|
7,016
|
|
||
Deferred compensation
|
6,622
|
|
5,438
|
|
||
Lease liabilities
|
8,670
|
|
—
|
|
||
Other
|
969
|
|
636
|
|
||
Total
|
38,630
|
|
25,923
|
|
||
Valuation allowance
|
(1,780
|
)
|
(2,079
|
)
|
||
Total deferred tax asset, net of valuation allowance
|
36,850
|
|
23,844
|
|
||
Deferred tax liabilities:
|
|
|
||||
Prepaid expenses, deposits and other current assets
|
(1,282
|
)
|
(2,054
|
)
|
||
Lease right-of-use assets
|
(7,985
|
)
|
—
|
|
||
Depreciation and amortization
|
(24,355
|
)
|
(17,402
|
)
|
||
Total deferred tax liabilities
|
(33,622
|
)
|
(19,456
|
)
|
||
Net deferred tax asset, end of year
|
$
|
3,228
|
|
$
|
4,388
|
|
(in thousands)
|
Carryover tax benefit
|
Valuation allowance
|
Expected
benefit
|
Year expiration begins
|
||||||
Year-end tax attributes:
|
|
|
|
|
||||||
Federal WOTCs
|
$
|
8,209
|
|
$
|
—
|
|
$
|
8,209
|
|
2039
|
State NOLs
|
1,355
|
|
—
|
|
1,355
|
|
Various
|
|||
Foreign NOLs
|
730
|
|
(730
|
)
|
—
|
|
Various
|
|||
California Enterprise Zone credits
|
1,319
|
|
(1,050
|
)
|
269
|
|
2023
|
|||
Foreign alternative minimum tax credits
|
722
|
|
—
|
|
722
|
|
2028
|
|||
Total
|
$
|
12,335
|
|
$
|
(1,780
|
)
|
$
|
10,555
|
|
|
|
|
Years ended
|
||||||||
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Balance, beginning of fiscal year
|
$
|
2,190
|
|
$
|
2,210
|
|
$
|
2,242
|
|
Increases for tax positions related to the current year
|
318
|
|
377
|
|
356
|
|
|||
Reductions due to lapsed statute of limitations
|
(430
|
)
|
(397
|
)
|
(388
|
)
|
|||
Balance, end of fiscal year
|
$
|
2,078
|
|
$
|
2,190
|
|
$
|
2,210
|
|
NOTE 14:
|
NET INCOME PER SHARE
|
|
Years ended
|
||||||||
(in thousands, except per share data)
|
2019
|
2018
|
2017
|
||||||
Net income
|
$
|
63,073
|
|
$
|
65,754
|
|
$
|
55,456
|
|
|
|
|
|
||||||
Weighted average number of common shares used in basic net income per common share
|
38,778
|
|
39,985
|
|
41,202
|
|
|||
Dilutive effect of non-vested restricted stock
|
401
|
|
290
|
|
239
|
|
|||
Weighted average number of common shares used in diluted net income per common share
|
39,179
|
|
40,275
|
|
41,441
|
|
|||
Net income per common share:
|
|
|
|
||||||
Basic
|
$
|
1.63
|
|
$
|
1.64
|
|
$
|
1.35
|
|
Diluted
|
$
|
1.61
|
|
$
|
1.63
|
|
$
|
1.34
|
|
|
|
|
|
||||||
Anti-dilutive shares
|
225
|
|
538
|
|
418
|
|
NOTE 15:
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
Years ended
|
||||||||||||||||||
|
December 29, 2019
|
December 30, 2018
|
|||||||||||||||||
(in thousands)
|
Foreign currency translation adjustment
|
Unrealized gain on investments, net of tax (1)
|
Total other comprehensive (loss), net of tax
|
|
Foreign currency translation adjustment
|
Unrealized gain on investments, net of tax (1)
|
Total other comprehensive (loss), net of tax
|
||||||||||||
Balance at beginning of period
|
$
|
(14,649
|
)
|
$
|
—
|
|
$
|
(14,649
|
)
|
|
$
|
(8,329
|
)
|
$
|
1,525
|
|
$
|
(6,804
|
)
|
Current period other comprehensive income (loss)
|
1,411
|
|
—
|
|
1,411
|
|
|
(6,320
|
)
|
—
|
|
(6,320
|
)
|
||||||
Change in accounting standard cumulative-effect adjustment (2)
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(1,525
|
)
|
(1,525
|
)
|
||||||
Balance at end of period
|
$
|
(13,238
|
)
|
$
|
—
|
|
$
|
(13,238
|
)
|
|
$
|
(14,649
|
)
|
$
|
—
|
|
$
|
(14,649
|
)
|
(1)
|
Consisted of deferred compensation plan accounts, comprised of mutual funds and money market funds previously classified as available-for-sale securities, prior to our adoption of the new accounting standard for equity investments in the fiscal first quarter of 2018.
|
(2)
|
As a result of our adoption of the new accounting standard for equity investments issued by the FASB in January 2016, $1.5 million in unrealized gains, net of tax on equity securities previously classified as available-for-sale were reclassified from accumulated other
|
|
•
|
Staff Management | SMX and SIMOS Insourcing Solutions: On-site management and recruitment for the contingent industrial workforce of manufacturing, warehouse, and distribution facilities; and
|
•
|
Centerline Drivers: Recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries.
|
•
|
PeopleScout: Outsourced recruitment of permanent employees on behalf of clients; and
|
•
|
PeopleScout MSP: Management of multiple third-party staffing vendors on behalf of clients.
|
|
Years ended
|
||||||||
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
December 31,
2017 |
||||||
Revenue from services:
|
|
|
|
||||||
Contingent staffing
|
|
|
|
||||||
PeopleReady
|
$
|
1,474,062
|
|
$
|
1,522,076
|
|
$
|
1,511,360
|
|
PeopleManagement
|
642,233
|
|
728,254
|
|
807,273
|
|
|||
Human resource outsourcing
|
|
|
|
||||||
PeopleScout
|
252,484
|
|
248,877
|
|
190,138
|
|
|||
Total company
|
$
|
2,368,779
|
|
$
|
2,499,207
|
|
$
|
2,508,771
|
|
|
|
Years ended
|
||||||||
(in thousands)
|
December 29,
2019 |
December 30,
2018 |
December 31,
2017 |
||||||
Segment profit:
|
|
|
|
||||||
PeopleReady
|
$
|
82,106
|
|
$
|
85,998
|
|
$
|
79,044
|
|
PeopleManagement
|
12,593
|
|
21,627
|
|
27,216
|
|
|||
PeopleScout
|
37,831
|
|
47,383
|
|
39,354
|
|
|||
|
132,530
|
|
155,008
|
|
145,614
|
|
|||
Corporate unallocated
|
(21,870
|
)
|
(26,066
|
)
|
(20,968
|
)
|
|||
Work Opportunity Tax Credit processing fees
|
(960
|
)
|
(985
|
)
|
(805
|
)
|
|||
Acquisition/integration costs
|
(1,562
|
)
|
(2,672
|
)
|
—
|
|
|||
Gain on deferred compensation assets
|
(495
|
)
|
—
|
|
—
|
|
|||
Other costs
|
(3,915
|
)
|
(10,317
|
)
|
(162
|
)
|
|||
Depreciation and amortization
|
(37,549
|
)
|
(41,049
|
)
|
(46,115
|
)
|
|||
Income from operations
|
66,179
|
|
73,919
|
|
77,564
|
|
|||
Interest and other income (expense), net
|
3,865
|
|
1,744
|
|
(14
|
)
|
|||
Income before tax expense
|
$
|
70,044
|
|
$
|
75,663
|
|
$
|
77,550
|
|
|
Years ended
|
||||||||||||||
(in thousands, except percentages)
|
2019
|
%
|
2018
|
%
|
2017
|
%
|
|||||||||
United States
|
$
|
2,222,543
|
|
93.8
|
%
|
$
|
2,369,024
|
|
94.8
|
%
|
$
|
2,387,992
|
|
95.2
|
%
|
International operations
|
146,236
|
|
6.2
|
|
130,183
|
|
5.2
|
|
120,779
|
|
4.8
|
|
|||
Total revenue from services
|
$
|
2,368,779
|
|
100.0
|
%
|
$
|
2,499,207
|
|
100.0
|
%
|
$
|
2,508,771
|
|
100.0
|
%
|
•
|
No single client represented 10.0% or more of our PeopleReady reportable segment revenue for fiscal 2019, 2018, or 2017.
|
•
|
One client represented 10.0% of our PeopleManagement reportable segment revenue for fiscal 2019. No single client represented 10.0% or more of our PeopleManagement reportable segment revenue for fiscal 2018 or 2017.
|
•
|
One client represented 12.5%,13.3% and 14.4% of our PeopleScout reportable segment revenue for fiscal 2019, 2018 and 2017, respectively. Another client represented 10.1% of our PeopleScout reportable segment revenue for fiscal 2017.
|
|
(in thousands, except per share data)
|
First
|
Second
|
Third
|
Fourth
|
||||||||
2019
|
|
|
|
|
||||||||
Revenue from services
|
$
|
552,352
|
|
$
|
588,594
|
|
$
|
636,793
|
|
$
|
591,040
|
|
Cost of services
|
403,976
|
|
430,277
|
|
467,671
|
|
440,697
|
|
||||
Gross profit
|
148,376
|
|
158,317
|
|
169,122
|
|
150,343
|
|
||||
Selling, general and administrative expense
|
129,661
|
|
127,599
|
|
131,187
|
|
133,983
|
|
||||
Depreciation and amortization
|
9,952
|
|
9,827
|
|
8,749
|
|
9,021
|
|
||||
Income from operations
|
8,763
|
|
20,891
|
|
29,186
|
|
7,339
|
|
||||
Interest expense
|
(722
|
)
|
(660
|
)
|
(715
|
)
|
(686
|
)
|
||||
Interest and other income
|
1,275
|
|
1,487
|
|
1,186
|
|
2,700
|
|
||||
Interest and other income (expense), net
|
553
|
|
827
|
|
471
|
|
2,014
|
|
||||
Income before tax expense
|
9,316
|
|
21,718
|
|
29,657
|
|
9,353
|
|
||||
Income tax expense
|
1,040
|
|
2,312
|
|
2,981
|
|
638
|
|
||||
Net income
|
$
|
8,276
|
|
$
|
19,406
|
|
$
|
26,676
|
|
$
|
8,715
|
|
Net income per common share:
|
|
|
|
|
||||||||
Basic
|
$
|
0.21
|
|
$
|
0.50
|
|
$
|
0.69
|
|
$
|
0.23
|
|
Diluted
|
$
|
0.21
|
|
$
|
0.49
|
|
$
|
0.68
|
|
$
|
0.23
|
|
|
|
|
|
|
||||||||
2018
|
|
|
|
|
||||||||
Revenue from services
|
$
|
554,388
|
|
$
|
614,301
|
|
$
|
680,371
|
|
$
|
650,147
|
|
Cost of services
|
411,120
|
|
448,717
|
|
496,053
|
|
477,717
|
|
||||
Gross profit
|
143,268
|
|
165,584
|
|
184,318
|
|
172,430
|
|
||||
Selling, general and administrative expense
|
125,763
|
|
134,207
|
|
145,382
|
|
145,280
|
|
||||
Depreciation and amortization
|
10,090
|
|
10,101
|
|
10,586
|
|
10,272
|
|
||||
Income from operations
|
7,415
|
|
21,276
|
|
28,350
|
|
16,878
|
|
||||
Interest expense
|
(890
|
)
|
(1,355
|
)
|
(1,357
|
)
|
(1,279
|
)
|
||||
Interest and other income
|
3,094
|
|
387
|
|
1,017
|
|
2,127
|
|
||||
Interest and other income (expense), net
|
2,204
|
|
(968
|
)
|
(340
|
)
|
848
|
|
||||
Income before tax expense
|
9,619
|
|
20,308
|
|
28,010
|
|
17,726
|
|
||||
Income tax expense
|
864
|
|
2,576
|
|
3,630
|
|
2,839
|
|
||||
Net income
|
$
|
8,755
|
|
$
|
17,732
|
|
$
|
24,380
|
|
$
|
14,887
|
|
Net income per common share:
|
|
|
|
|
||||||||
Basic
|
$
|
0.22
|
|
$
|
0.44
|
|
$
|
0.61
|
|
$
|
0.38
|
|
Diluted
|
$
|
0.22
|
|
$
|
0.44
|
|
$
|
0.61
|
|
$
|
0.37
|
|
Item 9.
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
|
Item 9A.
|
CONTROLS AND PROCEDURES
|
|
|
Item 9B.
|
OTHER INFORMATION
|
|
Item 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Item 11.
|
EXECUTIVE COMPENSATION
|
Item 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
Item 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Item 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
|
Item 15.
|
EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
a)
|
The following documents are filed as a part of this 10-K:
|
|
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Balance, beginning of the year
|
$
|
5,026
|
|
$
|
4,344
|
|
$
|
5,160
|
|
Charged to expense
|
8,113
|
|
9,785
|
|
6,903
|
|
|||
Write-offs
|
(8,851
|
)
|
(9,103
|
)
|
(7,719
|
)
|
|||
Balance, end of year
|
$
|
4,288
|
|
$
|
5,026
|
|
$
|
4,344
|
|
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Balance, beginning of the year
|
$
|
3,314
|
|
$
|
3,778
|
|
$
|
4,019
|
|
Charged to expense
|
120
|
|
120
|
|
1,153
|
|
|||
Release of allowance
|
(2,805
|
)
|
(584
|
)
|
(1,394
|
)
|
|||
Balance, end of year
|
$
|
629
|
|
$
|
3,314
|
|
$
|
3,778
|
|
(in thousands)
|
2019
|
2018
|
2017
|
||||||
Balance, beginning of the year
|
$
|
2,079
|
|
$
|
2,508
|
|
$
|
2,266
|
|
Charged to expense
|
—
|
|
—
|
|
2
|
|
|||
Transition to the U.S. Tax Cuts and Jobs Act
|
—
|
|
—
|
|
240
|
|
|||
Release of allowance
|
(299
|
)
|
(429
|
)
|
—
|
|
|||
Balance, end of year
|
$
|
1,780
|
|
$
|
2,079
|
|
$
|
2,508
|
|
|
|
|
|
Incorporated by reference
|
||
Exhibit number
|
Exhibit description
|
Filed herewith
|
Form
|
File no.
|
Date of first filing
|
|
|
|
|
|
|
3.1
|
|
8-K
|
001-14543
|
05/12/2016
|
|
|
|
|
|
|
|
3.2
|
|
10-Q
|
001-14543
|
10/30/2017
|
|
|
|
|
|
|
|
4.1
|
X
|
|
|
|
|
|
|
|
|
|
|
10.1
|
|
10-K
|
001-14543
|
03/11/2005
|
|
|
|
|
|
|
|
10.2
|
|
10-K
|
001-14543
|
03/11/2005
|
|
|
|
|
|
|
|
10.3*
|
|
8-K
|
001-14543
|
08/09/2005
|
|
|
|
|
|
|
|
10.4*
|
|
10-Q
|
001-14543
|
05/04/2007
|
|
|
|
|
|
|
|
10.5*
|
|
10-Q
|
001-14543
|
05/04/2007
|
|
|
|
|
|
|
|
10.6*
|
|
10-Q
|
001-14543
|
05/04/2007
|
|
|
|
|
|
|
|
10.7*
|
X
|
|
|
|
|
|
|
|
|
|
|
10.8*
|
|
10-Q
|
001-14543
|
05/04/2007
|
|
|
|
|
|
|
|
10.9*
|
|
S-8
|
333-164614
|
02/01/2010
|
|
|
|
|
|
|
|
10.10
|
|
S-8
|
333-167770
|
06/25/2010
|
|
|
|
|
|
|
|
10.11*
|
|
10-K
|
001-14543
|
02/22/2012
|
|
|
|
|
|
|
|
10.12*
|
|
S-8
|
333-190220
|
07/29/2013
|
|
|
|
|
|
|
|
10.13*
|
|
S-8
|
333-211737
|
06/01/2016
|
|
|
|
|
|
|
|
10.14
|
|
8-K
|
001-14543
|
07/16/2018
|
|
|
|
|
|
|
|
10.15*
|
|
8-K
|
001-14543
|
09/18/2018
|
|
|
|
|
|
|
|
10.16*
|
|
8-K
|
001-14543
|
09/18/2018
|
|
|
|
|
|
|
|
10.17*
|
|
8-K
|
001-14543
|
09/18/2018
|
|
|
|
|
|
|
|
10.18*
|
|
8-K
|
001-14543
|
11/13/2019
|
|
|
|
|
|
|
|
10.19*
|
X
|
|
|
|
|
|
|
|
|
|
|
10.20*
|
X
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incorporated by reference
|
||
Exhibit number
|
Exhibit description
|
Filed herewith
|
Form
|
File no.
|
Date of first filing
|
|
|
|
|
|
|
10.21*
|
X
|
|
|
|
|
|
|
|
|
|
|
10.22*
|
X
|
|
|
|
|
|
|
|
|
|
|
21.1
|
X
|
—
|
—
|
—
|
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23.1
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X
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—
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—
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—
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31.1
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X
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—
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—
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—
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31.2
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X
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—
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—
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—
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32.1
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X
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—
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—
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—
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101
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The following financial statements from the Company’s 10-K, formatted as Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations and Comprehensive Income, (iii) Consolidated Statements of Shareholders’ Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to consolidated financial statements.
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X
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—
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—
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—
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104
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Cover page interactive data file - The cover page from this Annual Report on Form 10-K is formatted as Inline XBRL
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X
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—
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—
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—
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*
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Indicates a management contract or compensatory plan or arrangement
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Item 16.
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FORM 10-K SUMMARY
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TrueBlue, Inc.
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/s/ A. Patrick Beharelle
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2/24/2020
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Signature
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Date
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By:
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A. Patrick Beharelle, Director, President and Chief Executive Officer
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/s/ Derrek L. Gafford
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2/24/2020
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Signature
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Date
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By:
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Derrek L. Gafford, Chief Financial Officer and
Executive Vice President
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/s/ Norman H. Frey
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2/24/2020
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Signature
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Date
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By:
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Norman H. Frey, Chief Accounting Officer and
Senior Vice President |
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/s/ A. Patrick Beharelle
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2/24/2020
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/s/ Steven C. Cooper
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2/24/2020
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Signature
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Date
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Signature
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Date
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A. Patrick Beharelle, Director, President and Chief Executive Officer
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Steven C. Cooper, Chairman of the Board
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/s/ Colleen B. Brown
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2/24/2020
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/s/ William C. Goings
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2/24/2020
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Signature
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Date
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Signature
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Date
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Colleen B. Brown, Director
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William C. Goings, Director
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/s/ Kim Harris Jones
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2/24/2020
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/s/ Stephen M. Robb
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2/24/2020
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Signature
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Date
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Signature
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Date
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Kim Harris Jones, Director
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Stephen M. Robb, Director
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/s/ Jeffrey B. Sakaguchi
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2/24/2020
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/s/ Bonnie W. Soodik
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2/24/2020
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Signature
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Date
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Signature
|
Date
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Jeffrey B. Sakaguchi, Director
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|
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Bonnie W. Soodik, Director
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|
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/s/ Kristi A. Savacool
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2/24/2020
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Signature
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Date
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Kristi A. Savacool, Director
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•
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a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person;
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•
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termination of 5% or more of the employees of the target corporation as a result of the acquiring person’s acquisition of 10% or more of the shares; or
|
•
|
receipt by the acquiring person of any disproportionate benefit as a shareholder.
|
CORPORATE NAME
|
|
Incorporated in
state/country of:
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Centerline Drivers, LLC
|
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Nevada
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Labor Ready Holdings, Inc.
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Nevada
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Labour Ready Temporary Services, Ltd.
|
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Canada
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PeopleReady, Inc.
|
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Washington
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PeopleReady Florida, Inc.
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Washington
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PeopleScout, Inc.
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Delaware
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PeopleScout MSP, LLC
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Nevada
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PeopleScout Pty, Ltd
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Australia
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SIMOS Insourcing Solutions, LLC
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Delaware
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SMX, LLC
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Illinois
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Spartan Staffing Puerto Rico, LLC
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Puerto Rico
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Staff Management Solutions, LLC
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Illinois
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Staffing Solutions Holdings, Inc.
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Delaware
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TBI Outsourcing Canada, Inc.
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Canada
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TBI Outsourcing Poland, Inc.
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Poland
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TMP (UK) Limited
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United Kingdom
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TrueBlue Enterprises, Inc.
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Nevada
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TrueBlue India LLP
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India
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TrueBlue Netherlands I, B.V.
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Netherlands
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TrueBlue Netherlands II, B.V.
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Netherlands
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TrueBlue Services, Inc.
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Delaware
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Worker’s Assurance of Hawaii, Inc.
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Hawaii
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1.
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I have reviewed this Annual Report on Form 10-K of TrueBlue, Inc.;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ A. Patrick Beharelle
|
A. Patrick Beharelle
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Chief Executive Officer
(Principal Executive Officer)
|
1.
|
I have reviewed this Annual Report on Form 10-K of TrueBlue, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
(a)
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Derrek L. Gafford
|
Derrek L. Gafford
|
Chief Financial Officer (Principal Financial Officer)
|
(1)
|
The Annual Report of the company on Form 10-K, for the fiscal period ended December 29, 2019 (the “Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the company.
|
/s/ A. Patrick Beharelle
|
|
/s/ Derrek L. Gafford
|
A. Patrick Beharelle
|
|
Derrek L. Gafford
|
Chief Executive Officer
|
|
Chief Financial Officer
|
(Principal Executive Officer)
|
|
(Principal Financial Officer)
|