x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 30, 2003

or

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission file number 0-5260

REMEDYTEMP, INC.
(Exact name of registrant as specified in its charter)

California

95-2890471

(State or other jurisdiction of Incorporation or organization)

(I.R.S.  Employer Identification Number)

101 Enterprise

Aliso Viejo, California

92656

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (949) 425-7600

Yes   x

No   o

Page No.

PART I–– FINANCIAL INFORMATION

Item 1.  Financial Statements

Consolidated Balance Sheets as of March 30, 2003 (unaudited) and September 29, 2002

3

Consolidated Statements of Income for the three fiscal months and six fiscal months ended March 30, 2003 and March 31, 2002 (unaudited)

4

Consolidated Statements of Cash Flows for the six fiscal months ended March 30, 2003 and March 31, 2002 (unaudited)

5

Condensed Notes to Consolidated Financial Statements (unaudited)

6

Item 2.  Management’s Discussion and Analysis of Consolidated Financial Condition and Results of Operations

10

Item 3.  Quantitative and Qualitative Disclosure About Market Risk

18

Item 4.  Controls and Procedures

18

PART II–– OTHER INFORMATION

Item 1.  Legal Proceedings

19

Item 2.  Changes In Securities and Use of Proceeds

*

Item 3.  Defaults Upon Senior Securities

*

Item 4.  Submission of Matters to a Vote of Security Holders

20

Item 5.  Other Information

*

Item 6.  Exhibits and Reports on Form 8-K

21

SIGNATURES

23

CERTIFICATIONS

24

March 30,
2003
(unaudited)

September 29,
2002

ASSETS

Current assets:

Cash and cash equivalents

$

28,049

$

26,101

Investments

26,920

23,021

Accounts receivable, net of allowance for doubtful accounts of $2,235 and $1,913, respectively

53,006

61,724

Prepaid expenses and other current assets

3,515

5,745

Deferred and current income taxes

12,423

7,486

Total current assets

123,913

124,077

Fixed assets, net

15,058

16,268

Other assets

1,843

2,035

Intangible assets, net of accumulated amortization of $80 and $24, respectively

1,795

10

Goodwill

2,173

4,283

Total Assets

$

144,782

$

146,673

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$

956

$

3,151

Accrued workers’ compensation (Note 5)

26,480

20,135

Accrued payroll, benefits and related costs

13,431

13,787

Accrued licensees’ share of gross profit

2,262

2,866

Other accrued expenses

2,635

3,621

Total current liabilities

45,764

43,560

Deferred income taxes

90

90

Total liabilities

45,854

43,650

Commitments and contingent liabilities

Shareholders’ equity (Note 6):

Preferred Stock, $.01 par value; authorized 5,000 shares; none outstanding

—  

—  

Class A Common Stock, $.01 par value; authorized 50,000 shares; 8,469 and 8,142 issued and outstanding at March 30, 2003 and  September 29, 2002, respectively

85

82

Class B Non-Voting Common Stock, $.01 par value; authorized 4,530 shares; 1,198 and 1,253 issued and outstanding at March 30, 2003 and September 29, 2002, respectively

12

13

Additional paid-in capital

42,807

39,923

Unearned compensation

(6,926

)

(4,728

Retained earnings

62,950

67,733

Total shareholders’ equity

98,928

103,023

Total Liabilities and Shareholders’ Equity

$

144,782

$

146,673

Three Months Ended

Six Months Ended

March 30,
2003

March 31,
2002

March 30,
2003

March 31,
2002

Direct sales

$

73,300

$

66,846

$

143,568

$

129,633

Licensed franchise sales

42,183

39,247

92,133

90,751

Franchise royalties

346

475

916

938

Initial franchise fees

6

—  

12

6

Total revenues

115,835

106,568

236,629

221,328

Cost of direct sales

64,777

54,788

122,558

105,338

Cost of licensed franchise sales

33,605

30,362

73,492

70,155

Licensees’ share of gross profit

5,640

5,975

12,361

13,984

Selling and administrative expenses

16,369

14,264

31,514

28,759

Depreciation and amortization

1,299

1,308

2,508

2,715

(Loss) income from operations

(5,855

)

(129

)

(5,804

)

377

Other income:

Interest income, net

63

161

402

400

Other, net

228

212

377

485

(Loss) income before income taxes

(5,564

)

244

(5,025

)

1,262

(Benefit from) provision for income taxes

(2,752

)

53

(2,663

)

379

(Loss) income before cumulative effect of adoption of a new accounting standard

(2,812

)

191

(2,362

)

883

Cumulative effect of adoption of a new accounting standard, net of income taxes of $1,634

––  

––  

(2,421

)

––  

Net (loss) income

$

(2,812

)

$

191

$

(4,783

)

$

883

Earnings per share – basic and diluted:

(Loss) income before cumulative effect of adoption of a new accounting standard

$

(0.31

)

$

0.02

$

(0.26

)

$

0.10

Cumulative effect of adoption of a new accounting standard, net of incomes taxes

––  

––  

(0.27

)

––  

Net (loss) income – basic and diluted

$

(0.31

)

$

0.02

$

(0.53

)

$

0.10

Six Months Ended

March 30,
2003

March 31,
2002

Cash flows from operating activities:

Net (loss) income

$

(4,783

)

$

883

Adjustments to reconcile net (loss) income to net cash provided by operating activities:

Cumulative effect of adoption of a new accounting standard, net of income taxes

2,421

––  

Depreciation and amortization

2,508

2,715

Provision for losses on accounts receivable

759

734

Restricted stock compensation expense

635

307

Changes in assets and liabilities:

Trading investments

(622

)

(447

)

Accounts receivable

7,959

8,599

Prepaid expenses and other current assets

2,230

(224

)

Other assets

192

801

Accounts payable

(2,195

)

(816

)

Accrued workers’ compensation

6,345

4,637

Accrued payroll, benefits and related costs

(356

)

(1,216

)

Accrued licensees’ share of gross profit

(604

)

(731

)

Other accrued expenses

(986

)

(164

)

Deferred and current income taxes

(3,303

)

(1,748

)

Net cash provided by operating activities

10,200

13,330