Remedytemp (REMX) 8-K RemedyTemp Reports Financial Results for Second Fiscal Quarter

EXHIBIT 99.1

News Release    . . . .

FOR:	REMEDYTEMP, INC.
	CONTACT:
	Monty Houdeshell
	Senior Vice President and
	Chief Financial Officer
	(949) 425-7600
	Roger Pondel/Rob Whetstone
	PondelWilkinson Inc.
	(323) 866-6006

RemedyTemp Reports Financial Results for Second Fiscal Quarter

—Trends Point to Improving Performance for Balance of Fiscal Year—

ALISO VIEJO, Calif.—May 11, 2004—RemedyTemp Inc. (Nasdaq:REMX), which operates as Remedy Intelligent Staffing^® and RemX^® Specialty Staffing, today reported results for its second fiscal quarter ended March 28, 2004.

Revenue for the second quarter totaled $115.4 million, compared with $115.8 million last year. The company’s pre-tax loss was reduced to $3.8 million from $5.6 million last year. The net loss for the second quarter of $4.0 million, or $0.45 per diluted share, compared with a net loss of $2.8 million, or $0.31 per diluted share, in the corresponding period last year.

Greg Palmer, president and chief executive officer, said the net loss for the second quarter was anticipated and primarily reflected higher state unemployment insurance and a valuation allowance against its deferred tax assets. He said continued investments in connection with the expansion of the company’s specialty staffing unit and clerical service lines, which command higher margins, also impacted results by approximately $1.6 million. Palmer attributed the flat revenue for the quarter to the company’s exiting of certain unprofitable accounts that it had a year ago, offset by generally improved business conditions and investments in the company’s specialty staffing and clerical service lines.

“Our first priority is returning the company to profitability,” Palmer said. “We are making great progress toward achieving that goal, which we expect to attain sometime in our next fiscal year, which starts in October. The strategies we set in place are working, and business conditions are improving in the core markets we serve. Moreover, we anticipate added help from the external environment with the recently passed workers’ compensation reform law in California, the benefits of which we expect to realize starting in fiscal 2005.

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“I am encouraged by the improving trend in gross margins from 16.3% in the first quarter to 16.7% in the most recent quarter, to an expected rate of approximately 18.0% in the third quarter,” Palmer said. “We expect to report improving operating results for the balance of the current fiscal year.”

For the first half of the current fiscal year, revenue increased to $241.4 million from $236.6 million for the first half of last year. The net loss for the fiscal 2004 six-month period amounted to $7.3 million, or $0.81 per diluted share, versus a net loss of $4.8 million, or $0.53 per diluted share, a year ago, which included a $2.4 million charge for implementing SFAS 142, “Goodwill and Other Intangible Assets.”

Palmer said RemedyTemp continues to have no debt and its cash position and balance sheet remain strong. At March 28, 2004, the company had $54.4 million in total cash and investments, including $37.9 million in restricted cash and investments.

RemedyTemp also announced that it expects its third quarter pre-tax loss to be approximately $2.0 million to $2.5 million, compared with a pre-tax loss of $2.1 million in the third quarter of fiscal 2003, and a pre-tax loss of $3.8 million in the immediately preceding second fiscal quarter. Revenue is anticipated to be about 5-7% higher than last year’s third fiscal quarter.

About RemedyTemp Inc.

RemedyTemp, with 240 offices throughout North America, is a professional staffing organization focused on delivering human capital workforce solutions in various business sectors. For additional information about RemedyTemp visitwww.remedytemp.com.

This news release contains forward-looking statements that involve material risks and uncertainties. Such forward-looking statements, including, but not limited to growth and strategies, future operating and financial results, returning to profitability in fiscal 2005, financial expectations for the third quarter and current business indicators, are subject to change based on factors beyond the control of the company. (Certain of such statements are identified by the use of words such as “anticipate,” “believe,” “estimate,” “intend,” “plan,” “expect,” “will,” or “future”).

Accordingly, the company’s actual results may differ materially from those expressed or implied in any such forward-looking statements as a result of various additional factors, including, without limitation, the continued performance of the RemX^® Specialty Staffing division, the company’s ability to realize improvements in the months ahead, changes in general or local economic conditions that could impact the company’s expected financial results, the availability of sufficient personnel, various costs relating to temporary workers and personnel including but not limited to workers’ compensation and state unemployment rates, the company’s ability to expand its sales capacity and channels, to open new points of distribution and expand in core geographic markets, attract and retain clients and franchisees/licensees, the outcome of litigation,

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software integration and implementation, and other factors described in the company’s filings with the Securities and Exchange Commission regarding risks affecting the company’s financial condition and results of operations. The company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized.

The following table sets forth summary statements of operations and condensed balance sheets and should be read in conjunction with this news release.

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(Table to follow)

RemedyTemp, Inc.

Statements of Operations

(Amounts in ‘000s, except for per share amounts)

	(Unaudited)						(Unaudited)
	Three Months Ended						Six Months Ended
	March 28, 2004			March 30, 2003			March 28, 2004			March 30, 2003
Total revenues	$	115,385		$	115,835		$	241,396		$	236,629
Cost of sales		96,113			98,382			201,634			196,050
Licensees’ share of gross profit		5,327			5,640			11,145			12,361
Selling and administrative expenses		16,634			16,369			33,075			31,514
Depreciation and amortization		1,514			1,299			3,262			2,508
Loss from operations		(4,203	)		(5,855	)		(7,720	)		(5,804	)
Other income:
Interest income, net		200			63			331			402
Other, net		181			228			375			377
Loss before income taxes		(3,822	)		(5,564	)		(7,014	)		(5,025	)
Provision for (benefit from) income taxes		203			(2,752	)		327			(2,663	)
Loss before cumulative effect of adoption of a new accounting standard		(4,025	)		(2,812	)		(7,341	)		(2,362	)
Cumulative effect of adoption of a new accounting standard, net of income taxes of $1,634		—			—			—			(2,421	)
Net loss	$	(4,025	)	$	(2,812	)	$	(7,341	)	$	(4,783	)
Net loss per share, diluted	$	(0.45	)	$	(0.31	)	$	(0.81	)	$	(0.53	)
Diluted weighted average shares		9,019			9,042			9,019			9,039

Condensed Balance Sheets

As of

	(Unaudited)
	March 28, 2004		September 28, 2003
ASSETS
Current assets:
Cash and investments	$	16,447	$	31,620
Accounts receivable, net		51,675		60,594
Other current assets		5,984		7,009
Total current assets		74,106		99,223
Fixed assets, net		10,116		12,337
Restricted cash and investments		37,941		21,615
Other assets		6,331		6,019
Total Assets	$	128,494	$	139,194
LIABILITIES AND SHAREHOLDERS’ EQUITY
Total current liabilities	$	37,646	$	43,149
Long-term liabilities		22,374		20,681
Total liabilities		60,020		63,830
Total shareholders’ equity		68,474		75,364
Total Liabilities and Shareholders’ Equity	$	128,494	$	139,194