##### Table of Contents









UNITED STATES SECURITIES AND EXCHANGE COMMISSION




Form 10-K


FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO
SECTIONS 13 OR 15(d)


OF THE SECURITIES EXCHANGE ACT OF 1934


|           |  |                                                                                             
|---------- |  | --------------------------------------------------------------------------------------------
|(Mark One) |  |                                                                                             
|þ          |  | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934    
|           |  | For the fiscal year ended October 2, 2005                                                   
|or        
|          
|o          |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES 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 No.)





(Address of Principal Executive Offices) (Zip Code)


Registrants Telephone Number, Including Area Code:
(949) 425-7600


Securities Registered Pursuant to Section 12(b) of the
Act: None


Securities Registered Pursuant to Section 12(g) of the
Act:


Title of Each Class




o þ


o þ


þ o


þ


þ o


o þ






DOCUMENTS INCORPORATED BY REFERENCE












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##### 










REMEDYTEMP, INC.


2005 FORM 10-K ANNUAL REPORT


TABLE OF CONTENTS


|                                     |  |                                                                                                                      |    |          |    | 
|------------------------------------ |  | -------------------------------------------------------------------------------------------------------------------- | -- | -------- | -- | 
|                                     |  |                                                                                                                      |    | Page No. |   
|                                     |  |                                                                                                                      |    |          |   
|PART I                              
|Item 1.                              |  | Business                                                                                                             |    |          | 3  | 
|Item 1A.                             |  | Risk Factors                                                                                                         |    |          | 11 | 
|Item 1B.                             |  | Unresolved Staff Comments                                                                                            |    |          | 14 | 
|Item 2.                              |  | Properties                                                                                                           |    |          | 14 | 
|Item 3.                              |  | Legal Proceedings                                                                                                    |    |          | 14 | 
|Item 4.                              |  | Submission of Matters to a Vote of Security
    Holders.                                                             |    |          | 16 | 
|Executive Officers of the Registrant |  |                                                                                                                      | 17 |         
|                                    
|PART II                             
|Item 5.                              |  | Market for Registrants Common Equity,
    Related Shareholder Matters and Issuer Purchases of Equity
    Securities |    |          | 17 | 
|Item 6.                              |  | Selected Financial Data                                                                                              |    |          | 19 | 
|Item 7.                              |  | Managements Discussion and Analysis
    of Financial Condition and Results of Operations                            |    |          | 20 | 
|Item 7A.                             |  | Quantitative and Qualitative Disclosures
    About Market Risk                                                       |    |          | 36 | 
|Item 8.                              |  | Financial Statements and Supplementary
    Data                                                                      |    |          | 37 | 
|Item 9.                              |  | Changes in and Disagreements With
    Accountants on Accounting and Financial Disclosure                             |    |          | 37 | 
|Item 9A.                             |  | Controls and Procedures                                                                                              |    |          | 37 | 
|Item 9B.                             |  | Other Information                                                                                                    |    |          | 38 | 
|                                    
|PART III                            
|Item 10.                             |  | Directors and Executive Officers of the
    Registrant                                                               |    |          | 38 | 
|Item 11.                             |  | Executive Compensation                                                                                               |    |          | 38 | 
|Item 12.                             |  | Security Ownership of Certain Beneficial
    Owners and Management and Related Shareholder Matters                   |    |          | 38 | 
|Item 13.                             |  | Certain Relationships and Related
    Transactions                                                                   |    |          | 39 | 
|Item 14.                             |  | Principal Accounting Fees and Services                                                                               |    |          | 39 | 
|                                    
|PART IV                             
|Item 15.                             |  | Exhibits and Financial Statement
    Schedule                                                                        |    |          | 39 | 
|Signatures                           |  |                                                                                                                      | 42 |         
|EXHIBIT 10.11                       
|EXHIBIT 10.22                       
|EXHIBIT 10.24                       
|EXHIBIT 10.41                       
|EXHIBIT 10.46                       
|EXHIBIT 23.1                        
|EXHIBIT 31.1                        
|EXHIBIT 31.2                        
|EXHIBIT 32                          



2



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In addition to historical information, the description of
business below, managements discussion and analysis in
Part II and other statements contained elsewhere in this
Annual Report on Form 10-K include certain forward-looking
statements, including, but not limited to, those related to the
growth and strategies, future operating results and financial
position as well as economic and market events and trends of
RemedyTemp, Inc., including its wholly owned subsidiaries
(collectively, the Company). All forward-looking
statements made by the Company, including such statements
herein, include material risks and uncertainties and 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 factors,
including, without limitation, the success of certain cost
reduction efforts, the continued performance of the RemX®
specialty business unit, 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, software integration and implementation,
application of deferred tax assets and other factors described
below, under Risk Factors, and elsewhere herein and
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 should be read in conjunction with
the Consolidated Financial Statements of the Company and Notes
thereto.


(Unless otherwise noted all dollar amounts are in thousands,
except for rent per sq. foot and per share amounts)





PART I







|        |         
|------- | --------
|Item 1. | Business

General






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tm tm tm i/Search 2000 tm tm i/Search 2000








The Staffing Industry






4



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Operations






| |                   
| | ------------------
| | Commercial Segment



Light Industrial Services




Clerical Services


5



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| |                  
| | -----------------
| | Specialty Segment



Business Services.


Information Technology Services.


Financial Staffing Services.


Office Organization.


|                       |  |                       |    |                       |                    |  |    |             |  |  |          |  |  |         |    |  |  |  |     | 
|---------------------- |  | --------------------- | -- | --------------------- | ------------------ |  | -- | ----------- |  |  | -------- |  |  | ------- | -- |  |  |  | --- | 
|                       |  |                       |    | Independently Managed |                    |  |   
|                       |  | Company-Owned Offices |    |                       | Franchised Offices |  |    |            
|                       |  |                       |    |                       |                    |  |    | Total       | 
|                       |  | Commercial            |    |                       | Specialty          |  |    | Traditional |  |  | Licensed |  |  | Offices |   
|                       |  |                       |    |                       |                    |  |    |             |  |  |          |  |  |         |   
|California             |  |                       | 41 |                       |                    |  | 31 |             |  |  |         |  |  |         | 1  |  |  |  | 73  | 
|Western Region(1)      |  |                       | 3  |                       |                    |  | 5  |             |  |  | 4        |  |  |         | 16 |  |  |  | 28  | 
|Midwestern Region(2)   |  |                       | 3  |                       |                    |  | 4  |             |  |  | 4        |  |  |         | 31 |  |  |  | 42  | 
|Southeastern Region(3) |  |                       | 14 |                       |                    |  | 17 |             |  |  | 3        |  |  |         | 35 |  |  |  | 69  | 
|Northeastern Region(4) |  |                       |   |                       |                    |  | 13 |             |  |  |         |  |  |         | 11 |  |  |  | 24  | 
|Puerto Rico            |  |                       |   |                       |                    |  |   |             |  |  |         |  |  |         | 1  |  |  |  | 1   | 
|Canada                 |  |                       |   |                       |                    |  |   |             |  |  |         |  |  |         | 1  |  |  |  | 1   | 
|                       |  |                       |    |                       |                    |  |    |             |  |  |          |  |  |         |   
|Total                  |  |                       | 61 |                       |                    |  | 70 |             |  |  | 11       |  |  |         | 96 |  |  |  | 238 | 
|                       |  |                       |    |                       |                    |  |    |             |  |  |          |  |  |         |   






|    |                                                                                        
|--- | ---------------------------------------------------------------------------------------
|(1) | Includes Arizona, Colorado, Hawaii, Idaho, Nevada, Oregon, Utah
    and Washington.    
|   
|(2) | Includes Illinois, Indiana, Iowa, Michigan, Missouri, Nebraska,
    Ohio and Wisconsin.

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|    |                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | Includes Arkansas, Florida, Georgia, Kentucky, Louisiana, North
    Carolina, Oklahoma, South Carolina, Tennessee, Texas and
    Virginia.      
|   
|(4) | Includes Connecticut, Delaware, Maryland, Massachusetts, New
    Jersey, New Hampshire, New York, Pennsylvania and the District
    of Columbia.

Company-Owned Offices.






Independently Managed Franchised Offices.




Traditional Franchises.


7



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Licensed Franchises.




Acquisitions and Office Closures.


8



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Seasonality




Clients




Competition








Workers Compensation






9



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|          |                                                                             |                               |   |        |            |  |   |        |        | 
|--------- | --------------------------------------------------------------------------- | ----------------------------- | - | ------ | ---------- |  | - | ------ | ------ | 
|          |                                                                             | For the Fiscal                |  
|          |                                                                             | Years Ended                   |  
|          |                                                                             |                               |  
|          |                                                                             | October 2,                    |   |        | October 3, | 
|          |                                                                             | 2005                          |   |        | 2004       | 
|          |                                                                             |                               |   |        |            | 
|Current   |                                                                             |                               |   |        |            |  |   |       
|          | Liability for various state funds and previous guaranteed cost
    policies |                               | $ | 2,552  |            |  | $ | 2,677  |       
|          | Accrued workers compensation                                               |                               |   | 11,974 |            |  |   | 12,359 |       
|          |                                                                             |                               |   |        |            | 
|          |                                                                             | Accrued workers compensation |   | $      | 14,526     |  |   | $      | 15,036 | 
|          |                                                                             |                               |   |        |            | 
|Long-term |                                                                             |                               |   |        |            |  |   |       
|          | Other liabilities                                                           |                               | $ | 116    |            |  | $ | 300    |       
|          | Accrued CIGA litigation costs                                               |                               |   | 5,877  |            |  |   | 5,877  |       
|          | Accrued workers compensation                                               |                               |   | 26,307 |            |  |   | 24,090 |       
|          |                                                                             |                               |   |        |            | 
|          |                                                                             | Other liabilities             |   | $      | 32,300     |  |   | $      | 30,267 | 
|          |                                                                             |                               |   |        |            | 





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Employees




Governmental Regulation




Proprietary Rights and Systems


i/Search
2000


I/SEARCH 2000 SM TM TM TM





Item 1A.Risk
Factors




Any significant economic downturn could result in our
clients using fewer temporary employees, which could materially
adversely affect the Company.




11



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Remedy operates in highly competitive markets with low
barriers to entry, potentially limiting its ability to maintain
or increase its market share or profit margins.




Remedys success depends upon its ability to attract
and retain qualified temporary personnel.




Remedys business may suffer if it loses its key
personnel.




Remedy may be exposed to employment-related claims and
costs that could materially adversely affect its
business.




The cost of unemployment insurance premiums and
workers compensation costs for Remedys temporary
employees may rise and reduce Remedys profit
margins.


12



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Remedy derives a significant portion of its revenues from
licensed franchised operations.




The Company is continually subject to the risk of new
regulations, which could harm its business.




13



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The Company faces litigation that could have a material
adverse effect on its business, financial condition and results
of operations.









|         |                          
|-------- | -------------------------
|Item 1B. | Unresolved Staff Comments








|        |           
|------- | ----------
|Item 2. | Properties










|        |                  
|------- | -----------------
|Item 3. | Legal Proceedings

Litigation




| |                                                          
| | ---------------------------------------------------------
| | Lindsay Welch-Hess v. Remedy Temporary Services,
    Inc.





14



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| |     
| | ----
| | CIGA





15



---



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Other Litigation




Other Contingency









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



16



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Executive Officers of the Registrant




|                    |  |     |    |  |                  |                                                                        
|------------------- |  | --- | -- |  | ---------------- | -----------------------------------------------------------------------
|Name                |  | Age |    |  | Position(s) Held
|                    |  |     |    |  |                 
|Greg D. Palmer      |  |     | 49 |  |                  | President and Chief Executive Officer                                  
|Monty A. Houdeshell |  |     | 57 |  |                  | Senior Vice President and Chief Administrative Officer                 
|Janet L. Hawkins    |  |     | 50 |  |                  | Senior Vice President, Sales and Marketing and President,
    Franchise
|Gunnar B. Gooding   |  |     | 42 |  |                  | Vice President, Human Resources and Legal Affairs                      

Greg D. Palmer


Monty A. Houdeshell


Janet L. Hawkins


Gunnar B. Gooding





PART II







|        |                                                                                                                     
|------- | --------------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Shareholder Matters and Issuer Purchases of Equity
    Securities

Price Range of Common Stock




|     |  |                            |       |  |          |   |       |         |  |   |            |  |  |   |      | 
|---- |  | -------------------------- | ----- |  | -------- | - | ----- | ------- |  | - | ---------- |  |  | - | ---- | 
|     |  | For the Three Months Ended |      
|     |  |                            |      
|     |  | January 2,                 |       |  | April 3, |   |       | July 3, |  |   | October 2, | 
|     |  | 2005                       |       |  | 2005     |   |       | 2005    |  |   | 2005       | 
|     |  |                            |       |  |          |   |       |         |  |   |            | 
|High |  | $                          | 11.95 |  |          | $ | 11.77 |         |  | $ | 11.28      |  |  | $ | 9.80 | 
|Low  |  | $                          | 9.61  |  |          | $ | 9.30  |         |  | $ | 7.50       |  |  | $ | 7.55 | 

|     |  |              |       |  |           |   |       |          |  |   |            |  |  |   |       | 
|---- |  | ------------ | ----- |  | --------- | - | ----- | -------- |  | - | ---------- |  |  | - | ----- | 
|     |  | December 28, |       |  | March 28, |   |       | June 27, |  |   | October 3, | 
|     |  | 2003         |       |  | 2004      |   |       | 2004     |  |   | 2004       | 
|     |  |              |       |  |           |   |       |          |  |   |            | 
|High |  | $            | 13.41 |  |           | $ | 13.82 |          |  | $ | 14.49      |  |  | $ | 12.31 | 
|Low  |  | $            | 10.60 |  |           | $ | 10.88 |          |  | $ | 11.28      |  |  | $ | 7.72  | 

17



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Dividend Policy




Issuer Purchasees of Equity Securities




Securities Available for Issuance Under Our Equity
Compensation Plans




|                                                           |       |                         |         |                  |                   |                      |                         |                           |  |  |         |         | 
|---------------------------------------------------------- | ----- | ----------------------- | ------- | ---------------- | ----------------- | -------------------- | ----------------------- | ------------------------- |  |  | ------- | ------- | 
|                                                           |       |                         |         |                  |                   | Number of Securities |                        
|                                                           |       |                         |         | Weighted-Average |                   |                      | Remaining Available for |                          
|                                                           |       | Number of Securities to |         |                  | Exercise Price    |                      |                         | Future Issuance under     | 
|                                                           |       | be Issued upon Exercise |         |                  | of Outstanding    |                      |                         | Equity Compensation Plans | 
|                                                           |       | of Outstanding Options, |         |                  | Options, Warrants |                      |                         | (Excluding Securities     | 
|                                                           |       | Warrants and Rights     |         |                  | and Rights        |                      |                         | Reflected in Column (a))  | 
|Plan category                                              |       | (a)                     |         |                  | (b)               |                      |                         | (c)                       | 
|                                                           |       |                         |         |                  |                   |                      |                         |                           | 
|Equity compensation plans approved by security holders     |       |                         | 670,562 |                  |                   | $                    | 14.47                   |                           |  |  | 476,528 | (1)    
|Equity compensation plans not approved by security holders |       |                         |        |                  |                   |                      |                        |                           |  |  | 35,018  | (2)    
|                                                           |       |                         |         |                  |                   |                      |                         |                           | 
|                                                           | Total |                         |         | 670,562          |                   |                      | $                       | 14.47                     |  |  |         | 511,546 | 
|                                                           |       |                         |         |                  |                   |                      |                         |                           | 






|    |                                                                                                                                                                                                                                                       
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Includes 111,689 shares of Common Stock that may be issued
    under the Companys 1996 Employee Stock Purchase Plan and
    364,839 shares of Common Stock that may be issued under the
    Companys 1996 Amended and Restated Stock Incentive Plan.
|   
|(2) | Pertains to shares of Common Stock that may be issued under the
    Non-Employee Director Plan discussed below.                                                                                                                                       

Non-Employee Director Plan




18



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|        |                        
|------- | -----------------------
|Item 6. | Selected Financial Data



|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|---------------------------------------------------------------------------------------------------- |  | --------------------------------------------- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | - |  | ---- | ------- |  |  | - | ------- | 
|                                                                                                     |  | For the Fiscal Years Ended                    |        
|                                                                                                     |  |                                               |        
|                                                                                                     |  | 2005                                          |         |   | 2004 |   |         | 2003 |  |   | 2002    |   |  | 2001 |        
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|                                                                                                     |  | (Amounts in thousands, except per share data) |        
|Statement of Operation Data:                                                                         |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Total revenues                                                                                       |  | $                                             | 514,274 |   |      | $ | 519,928 |      |  | $ | 481,965 |   |  | $    | 464,538 |  |  | $ | 519,223 | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|(Loss) income before income taxes and cumulative effect of
    adoption of a new accounting standard |  | $                                             | (2,577  | ) |      | $ | (13,115 | )    |  | $ | (18,542 | ) |  | $    | 2,514   |  |  | $ | 12,356  | 
|Provision for (benefit from) income taxes                                                            |  |                                               | 991     |   |      |   | (323    | )    |  |   | 8,280   |   |  |      | 377     |  |  |   | 3,960   | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|(Loss) income before cumulative effect of adoption of a new
    accounting standard(1)               |  |                                               | (3,568  | ) |      |   | (12,792 | )    |  |   | (26,822 | ) |  |      | 2,137   |  |  |   | 8,396   | 
|Cumulative effect of adoption of a new accounting standard, net
    of tax(2)                        |  |                                               |        |   |      |   |        |      |  |   | 2,421   |   |  |      |        |  |  |   |        | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Net (loss) income                                                                                    |  | $                                             | (3,568  | ) |      | $ | (12,792 | )    |  | $ | (29,243 | ) |  | $    | 2,137   |  |  | $ | 8,396   | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Earnings per share  basic and diluted:                                                              |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|(Loss) income before cumulative effect of adoption of a new
    accounting standard                  |  | $                                             | (0.39   | ) |      | $ | (1.42   | )    |  | $ | (2.98   | ) |  | $    | 0.24    |  |  | $ | 0.94    | 
|Cumulative effect of adoption of a new accounting standard, net
    of taxes                         |  |                                               |        |   |      |   |        |      |  |   | (0.27   | ) |  |      |        |  |  |   |        | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Net (loss) income  basic and diluted                                                                |  | $                                             | (0.39   | ) |      | $ | (1.42   | )    |  | $ | (3.25   | ) |  | $    | 0.24    |  |  | $ | 0.94    | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Weighted-average number of shares:                                                                   |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Basic                                                                                                |  |                                               | 9,050   |   |      |   | 9,022   |      |  |   | 9,010   |   |  |      | 8,973   |  |  |   | 8,917   | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Diluted                                                                                              |  |                                               | 9,050   |   |      |   | 9,022   |      |  |   | 9,010   |   |  |      | 9,076   |  |  |   | 8,940   | 
|                                                                                                     |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |        
|Balance Sheet Data:(3)                                                                               |  |                                               |         |   |      |   |         |      |  |   |         |   |  |      |         |  |  |   |         | 
|Cash and cash equivalents                                                                            |  | $                                             | 24,954  |   |      | $ | 7,075   |      |  | $ | 13,236  |   |  | $    | 17,311  |  |  | $ | 37,362  | 
|Restricted cash and investments                                                                      |  | $                                             | 25,660  |   |      | $ | 41,086  |      |  | $ | 24,269  |   |  | $    |        |  |  | $ |        | 
|Investments                                                                                          |  | $                                             | 692     |   |      | $ | 339     |      |  | $ | 15,730  |   |  | $    | 31,745  |  |  | $ | 1,708   | 
|Working capital                                                                                      |  | $                                             | 55,762  |   |      | $ | 54,957  |      |  | $ | 56,074  |   |  | $    | 83,822  |  |  | $ | 74,496  | 
|Total assets                                                                                         |  | $                                             | 138,083 |   |      | $ | 137,621 |      |  | $ | 139,194 |   |  | $    | 146,544 |  |  | $ | 137,302 | 
|Shareholders equity                                                                                 |  | $                                             | 61,539  |   |      | $ | 63,511  |      |  | $ | 75,364  |   |  | $    | 102,984 |  |  | $ | 99,575  | 






|    |                                                                                                                                                                                                               
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | The Company recorded a full valuation allowance of $25,890,
    $22,516 and $16,879 against the deferred tax assets for fiscal
    years 2005, 2004 and 2003, respectively.                                   
|   
|(2) | Effective September 30, 2002 the Company adopted
    SFAS No. 142, Goodwill and Other Intangible
    Assets. As a result, the Company recorded a non-cash charge
    of $2,421, net of income taxes of $1,634.
|   
|(3) | Certain items in prior periods have been reclassified to conform
    to current year classifications.                                                                                                         

19



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|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 7. | Managements Discussion and Analysis of Financial
    Condition and Results of Operations

Company Overview




Executive Summary




.










| |   |                                                                                                                                                                           
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | continuing to grow RemX® by leveraging existing
    infrastructure and selectively adding to the Companys
    sales force;                                               
|
| |  | focusing on attracting small to mid-sized accounts across the
    Companys business units;                                                                               
|
| |  | continuing to roll out the Companys new higher margin
    specialty brand, Talent Magnet by Remedy®;                                                                     
|
| |  | expanding upon the Companys 78.5% increase in direct-hire
    revenue in 2005;                                                                                           
|
| |  | selectively growing the Companys base business of light
    industrial clients now that we have successfully concluded the
    exiting of high risk, low margin accounts;

20



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| |   |                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | expanding the Companys franchise model in select secondary
    markets; and                                                                          
|
| |  | remaining vigilant in the Companys efforts to identify
    additional cost cutting opportunities to add to those taken at
    the end of fiscal 2005.



|                                              |  |                            |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|--------------------------------------------- |  | -------------------------- | ------- |  | ---- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                              |  | For the Fiscal Years Ended |        
|                                              |  |                            |        
|                                              |  | 2005                       |         |  | 2004 |   |         | 2003 |  |   | 2002    |  |  | 2001 |        
|                                              |  |                            |         |  |      |   |         |      |  |   |         |  |  |      |        
|Company-Owned Offices                         |  |                            |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Number of offices                             |  |                            | 131     |  |      |   | 130     |      |  |   | 116     |  |  |      | 126     |  |  |   | 117     | 
|Average hours billed per office               |  |                            | 166,510 |  |      |   | 190,974 |      |  |   | 193,492 |  |  |      | 168,258 |  |  |   | 204,782 | 
|Total revenue                                 |  | $                          | 320,322 |  |      | $ | 341,691 |      |  | $ | 300,070 |  |  | $    | 267,207 |  |  | $ | 288,396 | 
|Average revenue per office                    |  | $                          | 2,445   |  |      | $ | 2,628   |      |  | $ | 2,587   |  |  | $    | 2,121   |  |  | $ | 2,465   | 
|Traditional Franchise Offices                 |  |                            |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Number of offices                             |  |                            | 11      |  |      |   | 10      |      |  |   | 13      |  |  |      | 14      |  |  |   | 17      | 
|Average hours billed per office               |  |                            | 129,600 |  |      |   | 167,724 |      |  |   | 124,696 |  |  |      | 137,904 |  |  |   | 180,973 | 
|Total billings                                |  | $                          | 22,073  |  |      | $ | 23,846  |      |  | $ | 23,255  |  |  | $    | 26,776  |  |  | $ | 40,420  | 
|Average billings per office                   |  | $                          | 2,007   |  |      | $ | 2,385   |      |  | $ | 1,789   |  |  | $    | 1,913   |  |  | $ | 2,378   | 
|Royalties revenues and initial franchise fees |  | $                          | 1,439   |  |      | $ | 1,538   |      |  | $ | 1,633   |  |  | $    | 1,743   |  |  | $ | 2,591   | 
|Licensed Franchise Offices                    |  |                            |         |  |      |   |         |      |  |   |         |  |  |      |         |  |  |   |         | 
|Number of offices                             |  |                            | 96      |  |      |   | 98      |      |  |   | 109     |  |  |      | 126     |  |  |   | 156     | 
|Average hours billed per office               |  |                            | 140,588 |  |      |   | 128,365 |      |  |   | 125,072 |  |  |      | 115,617 |  |  |   | 106,185 | 
|Total revenue                                 |  | $                          | 192,513 |  |      | $ | 176,699 |      |  | $ | 180,262 |  |  | $    | 195,588 |  |  | $ | 228,236 | 
|Average revenue per office                    |  | $                          | 2,005   |  |      | $ | 1,803   |      |  | $ | 1,654   |  |  | $    | 1,552   |  |  | $ | 1,463   | 
|Total Offices                                 |  |                            | 238     |  |      |   | 238     |      |  |   | 238     |  |  |      | 266     |  |  |   | 290     | 
|Average Hours Billed Per Office               |  |                            | 154,348 |  |      |   | 164,217 |      |  |   | 158,399 |  |  |      | 141,726 |  |  |   | 150,348 | 
|Total Company Revenues                        |  | $                          | 514,274 |  |      | $ | 519,928 |      |  | $ | 481,965 |  |  | $    | 464,538 |  |  | $ | 519,223 | 

Consolidated Results of Operations




| |                                              
| | ---------------------------------------------
| | Fiscal year 2005 Compared to Fiscal year 2004



| |        
| | -------
| | Revenue

|                                               |                |                |         |         |            |   |         |          |  |   |          |        |   |  |      |      |   
|---------------------------------------------- | -------------- | -------------- | ------- | ------- | ---------- | - | ------- | -------- |  | - | -------- | ------ | - |  | ---- | ---- | --
|                                               |                | For the Fiscal |         |         |            |   |        
|                                               |                | Years Ended    |         |         |            |   |        
|                                               |                |                |         |         |            |   |        
|                                               |                | October 2,     |         |         | October 3, |   |         |          |  |  
|                                               |                | 2005           |         |         | 2004       |   |         | $ Change |  |   | % Change |       
|                                               |                |                |         |         |            |   |         |          |  |   |          |       
|Company-owned office revenues                  |                | $              | 320,322 |         |            | $ | 341,691 |          |  | $ | (21,369  | )      |   |  | (6.3 | )%  
|Licensed franchise revenues                    |                |                | 192,513 |         |            |   | 176,699 |          |  |   | 15,814   |        |   |  | 8.9  | %   
|Franchise royalties and initial franchise fees |                |                | 1,439   |         |            |   | 1,538   |          |  |   | (99      | )      |   |  | (6.4 | )%  
|                                               |                |                |         |         |            |   |         |          |  |   |          |       
|                                               | Total revenues |                | $       | 514,274 |            |   | $       | 519,928  |  |   | $        | (5,654 | ) |  |      | (1.1 | )%
|                                               |                |                |         |         |            |   |         |          |  |   |          |       



| |   |                                                                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The mix between Company-owned, licensed franchise and
    traditional franchise royalty revenues shifted with
    Company-owned revenues accounting for 62.3% of total revenues
    for fiscal year 2005 down

21



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| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | from 65.7% for fiscal year 2004. The decline in total revenues
    is primarily a result of managements decision to eliminate
    approximately $35,000 of certain higher risk and lower margin
    business, principally in California, that did not meet the
    Companys strategic directives.                                                                                                                                                                                                                                                                                
|
| |  | Company-owned revenues decreased 6.3% to $320,322 in fiscal year
    2005 from $341,691 in fiscal year 2004. Fiscal year 2005
    consisted of 52 weeks as compared to 53 weeks in
    fiscal year 2004. Exclusive of the extra week, Company-owned
    revenues decreased $13,618. Revenues from the Companys
    RemX® specialty staffing business unit increased $16,726 to
    $45,679 for fiscal year 2005 from $28,953 for fiscal year 2004.                                                                                                                                
|
| |  | Licensed franchise revenues increased $15,814 in fiscal year
    2005 as a result of revenue from new and existing clients.
    Exclusive of the extra week in 2004, licensed franchise revenues
    increased $19,465.                                                                                                                                                                                                                                                                                                                                                            
|
| |  | The Companys focus on smaller retail and mid-sized clients
    during fiscal year 2005 continued to contribute to the
    Companys improved margins. Our initiative to concentrate
    on client accounts that spend less than $5,000 annually on
    temporary staffing services continues to provide tangible
    returns to the Company. In fiscal year 2005, the number of small
    and mid-size accounts we serve grew approximately 3% over the
    prior year, and accounted for approximately 75% of our total
    volume, versus approximately 72% in fiscal year 2004.
|
| |  | The continued increase in the revenues generated from the
    RemX® business unit and direct-hire services is consistent
    with the Companys long-term strategic plan to shift its
    overall business mix to higher margin services.                                                                                                                                                                                                                                                                                                                                          



| |                 
| | ----------------
| | Cost of Revenues

|                                      |                        |                |         |         |            |   |         |          |  |   |          |         |   |  |       |      |   
|------------------------------------- | ---------------------- | -------------- | ------- | ------- | ---------- | - | ------- | -------- |  | - | -------- | ------- | - |  | ----- | ---- | --
|                                      |                        | For the Fiscal |         |         |            |   |        
|                                      |                        | Years Ended    |         |         |            |   |        
|                                      |                        |                |         |         |            |   |        
|                                      |                        | October 2,     |         |         | October 3, |   |         |          |  |  
|                                      |                        | 2005           |         |         | 2004       |   |         | $ Change |  |   | % Change |        
|                                      |                        |                |         |         |            |   |         |          |  |   |          |        
|Cost of Company-owned office revenues |                        | $              | 256,901 |         |            | $ | 286,158 |          |  | $ | (29,257  | )       |   |  | (10.2 | )%  
|Cost of licensed franchise revenues   |                        |                | 153,721 |         |            |   | 141,224 |          |  |   | 12,497   |         |   |  | 8.8   |     
|                                      |                        |                |         |         |            |   |         |          |  |   |          |        
|                                      | Total cost of revenues |                | $       | 410,622 |            |   | $       | 427,382  |  |   | $        | (16,760 | ) |  |       | (3.9 | )%
|                                      |                        |                |         |         |            |   |         |          |  |   |          |        



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total cost of Company-owned licensed franchise revenues consists
    of wages and other expenses related to temporary associates and
    as a percentage of revenues was 79.8% and 82.2% for fiscal years
    2005 and 2004, respectively. The 2.4 percentage point
    improvement is attributable to a number of factors, including
    our revenue mix, which included greater contributions from the
    direct-hire activity of the specialty segment, as well as,
    temporary business from our RemX® business unit, along with
    a generally better pricing environment and a 14% reduction in
    workers compensation costs.                                                   
|
| |  | Correspondingly, overall consolidated gross profit increased
    12.0% to $103,652 in fiscal year 2005 from $92,546 in fiscal
    year 2004. Gross margin improved to 20.2% as compared to 17.8%
    for fiscal year 2004 and was primarily attributable to improved
    mix and pricing which helped contribute 1.0 percentage
    point to the increase; the strength of our direct-hire business
    accounted for approximately 0.8 percentage points; and
    lower workers compensation costs represented about
    0.6 percentage points. State unemployment insurance costs
    represented 3.1% and 2.7% of total cost of revenue for fiscal
    years 2005 and 2004, respectively.
|
| |  | The decrease in cost of Company-owned revenues (or
    3.5 percentage point increase in Company-owned office gross
    margin) is primarily attributable to improved mix in pricing,
    which helped achieve a 1.5 percentage points improvement to
    margin. An adjustment in workers compensation expense had a
    0.7 percentage point positive impact. A $5,028 increase in
    direct-hire revenues contributed 1.3 percentage points to
    the improved margins. All contributed to the improvement in
    Company-owned gross margin of 19.8% for fiscal year 2005 as
    compared to 16.3% for fiscal year 2004.                                                                

22



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| |   |                                                                                                                            
| | - | ---------------------------------------------------------------------------------------------------------------------------
| |  | The increase in cost of licensed franchise revenues is
    consistent with the 8.9% increase in licensed franchise revenue.



| |                   
| | ------------------
| | Operating Expenses

|                                    |                          |                |        |         |            |   |        |          |  |   |          |      |   |  |       |      |   
|----------------------------------- | ------------------------ | -------------- | ------ | ------- | ---------- | - | ------ | -------- |  | - | -------- | ---- | - |  | ----- | ---- | --
|                                    |                          | For the Fiscal |        |         |            |   |       
|                                    |                          | Years Ended    |        |         |            |   |       
|                                    |                          |                |        |         |            |   |       
|                                    |                          | October 2,     |        |         | October 3, |   |        |          |  |  
|                                    |                          | 2005           |        |         | 2004       |   |        | $ Change |  |   | % Change |     
|                                    |                          |                |        |         |            |   |        |          |  |   |          |     
|Licensees share of gross profit    |                          | $              | 26,282 |         |            | $ | 23,818 |          |  | $ | 2,464    |      |   |  | 10.3  | %   
|Selling and administrative expenses |                          |                | 76,245 |         |            |   | 71,251 |          |  |   | 4,994    |      |   |  | 7.0   |     
|CIGA litigation costs               |                          |                | 315    |         |            |   | 6,080  |          |  |   | (5,765   | )    |   |  | (94.8 | )   
|Depreciation and amortization       |                          |                | 5,133  |         |            |   | 5,844  |          |  |   | (711     | )    |   |  | (12.2 | )   
|                                    |                          |                |        |         |            |   |        |          |  |   |          |     
|                                    | Total operating expenses |                | $      | 107,975 |            |   | $      | 106,993  |  |   | $        | (982 | ) |  |       | (0.9 | )%
|                                    |                          |                |        |         |            |   |        |          |  |   |          |     



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Licensees share of gross profit represents the net
    payments to licensed franchisees based upon a percentage of
    gross profit generated by the licensed franchise operation. The
    increase in licensees share of gross profit is consistent
    with the increase in licensed franchise revenues and cost of
    licensed franchise revenues. Licensees share of gross
    profit as a percentage of licensed gross profit increased to
    67.8% for fiscal year 2005 as compared to 67.1% for fiscal year
    2004 and primarily resulted from certain large franchisees
    renewing their licensed franchise agreements during the year,
    which incorporated certain revenue thresholds, resulting in
    higher gross profit payouts to the licensees, as well as an
    increase in direct hire revenue.



|                                   |            |                         |        |        |        |   |        |          |   |   |       |      |  
|---------------------------------- | ---------- | ----------------------- | ------ | ------ | ------ | - | ------ | -------- | - | - | ----- | ---- | -
|                                   |            | Favorable (Unfavorable) |       
|                                   |            |                         |       
|                                   |            | Consolidated            |        |        | RemX®  |   |        | Other    |  
|                                   |            | Change                  |        |        | Change |   |        | Offices* |  
|                                   |            |                         |        |        |        |   |        |          |  
|Colleague salary and related taxes |            | $                       | (2,889 | )      |        | $ | (2,531 | )        |   | $ | (358  | )   
|Profit sharing                     |            |                         | (2,099 | )      |        |   | (1,425 | )        |   |   | (674  | )   
|Telephone and datalines            |            |                         | (486   | )      |        |   | (142   | )        |   |   | (344  | )   
|Professional fees                  |            |                         | (422   | )      |        |   | 0      |          |   |   | (422  | )   
|Bad debt                           |            |                         | 1,309  |        |        |   | 0      |          |   |   | 1,309 |     
|Other SG&A                         |            |                         | (3     | )      |        |   | (312   | )        |   |   | 309   |     
|Rent                               |            |                         | (404   | )      |        |   | (305   | )        |   |   | (99   | )   
|                                   |            |                         |        |        |        |   |        |          |  
|                                   | Net change |                         | $      | (4,994 | )      |   | $      | (4,715   | ) |   | $     | (279 | )
|                                   |            |                         |        |        |        |   |        |          |  






|  |                                                     
|- | ----------------------------------------------------
|* | Other Offices category includes the corporate office



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Selling and administrative expenses as a percentage of total
    revenues were 14.8% for fiscal year 2005 compared to 13.7% for
    fiscal year 2004. The largest factor contributing to the net
    increase was a $3,956 increase in colleague salaries and profit
    sharing due to the Companys expansion of the RemX®
    specialty staffing business unit, somewhat offset by recoveries
    of bad debt expense. Professional fees increased over the prior
    year due to the impact of the requirements of Sarbanes-Oxley.
|
| |  | Fiscal year 2004 was impacted by a charge of $5,877 for the
    costs of indemnifying certain clients for losses they may suffer
    as a result of the Court of Appeals October 2004 CIGA
    decision. The Companys CIGA litigation cost at
    October 2, 2005 and October 3, 2004 were $315 and
    $203, respectively (See Item 3. Legal Proceedings).                                                                                                                                                                         
|
| |  | The decrease in depreciation and amortization for fiscal year
    2005 as compared to fiscal year 2004 is due to an increase in
    fully depreciated fixed assets.                                                                                                                                                                                                                                                                                                                                                                   

23



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##### Table of Contents









| |                                              
| | ---------------------------------------------
| | Fiscal year 2004 Compared to Fiscal year 2003



| |        
| | -------
| | Revenue

|                                               |                |                |         |         |               |   |         |          |  |   |          |        |  |  |      |     |  
|---------------------------------------------- | -------------- | -------------- | ------- | ------- | ------------- | - | ------- | -------- |  | - | -------- | ------ |  |  | ---- | --- | -
|                                               |                | For the Fiscal |         |         |               |   |        
|                                               |                | Years Ended    |         |         |               |   |        
|                                               |                |                |         |         |               |   |        
|                                               |                | October 3,     |         |         | September 28, |   |         |          |  |  
|                                               |                | 2004           |         |         | 2003          |   |         | $ Change |  |   | % Change |       
|                                               |                |                |         |         |               |   |         |          |  |   |          |       
|Company-owned office revenues                  |                | $              | 341,691 |         |               | $ | 300,070 |          |  | $ | 41,621   |        |  |  | 13.9 | %  
|Licensed franchise revenues                    |                |                | 176,699 |         |               |   | 180,262 |          |  |   | (3,563   | )      |  |  | (2.0 | )  
|Franchise royalties and initial franchise fees |                |                | 1,538   |         |               |   | 1,633   |          |  |   | (95      | )      |  |  | (5.8 | )  
|                                               |                |                |         |         |               |   |         |          |  |   |          |       
|                                               | Total revenues |                | $       | 519,928 |               |   | $       | 481,965  |  |   | $        | 37,963 |  |  |      | 7.9 | %
|                                               |                |                |         |         |               |   |         |          |  |   |          |       



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The mix between Company-owned, licensed franchise and
    traditional franchise royalty revenues shifted with
    Company-owned revenues accounting for 65.7% of total revenues
    for fiscal year 2004 up from 62.3% for fiscal year 2003. This
    overall shift in business mix is consistent with the
    Companys long-term strategy of buying strategic franchise
    offices and continuing to grow the RemX® business unit.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|
| |  | Company-owned revenue increased 13.9% to $341,691 in fiscal year
    2004 from $300,070 in fiscal year 2003. Fiscal year 2004
    consisted of 53 weeks as compared to 52 weeks in
    fiscal year 2003. The acquisition of two licensed franchises
    during the second and third quarters of fiscal year 2003 and a
    traditional franchise during the second quarter of fiscal year
    2004 also contributed $19,419 to the increase in Company-owned
    (See Note 6 to the consolidated financial statement). The
    Companys RemX® specialty staffing business unit
    increased $12,004 to $28,953 for fiscal year 2004 from $16,949
    for fiscal year 2003; $2,645 of the increase in RemX® is
    attributable to the acquisition of the traditional franchise
    office during the second quarter of fiscal year 2004 as noted
    above. The Company also experienced increased revenue from the
    addition of several large new clients and increased revenue from
    existing clients.
|
| |  | The decrease in licensed franchise revenue is primarily related
    to the acquisitions of the licensed franchise offices as
    described above. The acquired offices generated licensed
    franchise revenue of $12,098 during fiscal year 2003 prior to
    the acquisition dates. The increased revenue from new and
    existing clients in fiscal year 2004 was offset by the reduction
    in licensed franchise revenues of $8,535.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

24



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##### Table of Contents





| |   |                                                                                                                                                                                                                                                                                                                                                                         
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The Companys focus on smaller retail clients during fiscal
    year 2004 also contributed to the Companys revenue growth
    and improved margins. The Company defines retail clients as
    clients with annual sales volume under $250 or clerical and
    RemX® clients with gross margin over 25.0% and light
    industrial clients with gross margin over 18.0%.
|
| |  | The Companys investment-hire goal had a positive impact on
    the fiscal year 2004 revenue growth with the addition of 101
    sales colleagues during the year representing a 68.7% increase
    in the Companys sales force over the prior year.                                                                                                                   
|
| |  | The continued increase in the revenues generated from the
    RemX® division and direct-hire revenues is consistent with
    the Companys long-term strategic plan to shift its overall
    business mix to higher margin services.                                                                                                                                    



| |                 
| | ----------------
| | Cost of Revenues

|                                      |                        |                |         |         |               |   |         |          |  |   |          |        |  |  |      |     |  
|------------------------------------- | ---------------------- | -------------- | ------- | ------- | ------------- | - | ------- | -------- |  | - | -------- | ------ |  |  | ---- | --- | -
|                                      |                        | For the Fiscal |         |         |               |   |        
|                                      |                        | Years Ended    |         |         |               |   |        
|                                      |                        |                |         |         |               |   |        
|                                      |                        | October 3,     |         |         | September 28, |   |         |          |  |  
|                                      |                        | 2004           |         |         | 2003          |   |         | $ Change |  |   | % Change |       
|                                      |                        |                |         |         |               |   |         |          |  |   |          |       
|Cost of Company-owned office revenues |                        | $              | 286,158 |         |               | $ | 261,628 |          |  | $ | 24,530   |        |  |  | 9.4  | %  
|Cost of licensed franchise revenues   |                        |                | 141,224 |         |               |   | 143,577 |          |  |   | (2,353   | )      |  |  | (1.6 | )  
|                                      |                        |                |         |         |               |   |         |          |  |   |          |       
|                                      | Total cost of revenues |                | $       | 427,382 |               |   | $       | 405,205  |  |   | $        | 22,177 |  |  |      | 5.5 | %
|                                      |                        |                |         |         |               |   |         |          |  |   |          |       



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Total cost of Company-owned and licensed franchise revenues
    consists of wages and other expenses related to temporary
    associates and as a percentage of revenues was 82.2% and 84.1%
    for fiscal years 2004 and 2003, respectively. The 5.5% increase
    in total cost of revenue is consistent with the growth in total
    revenue with a 1.9% improvement in gross margin.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|
| |  | The increase in cost of Company-owned revenues is consistent
    with the 13.9% increase in Company-owned revenue offset with
    significant improvements in gross margin despite an increase in
    the state unemployment insurance costs during fiscal year 2004.
    The Company experienced a decrease in workers compensation
    expense, which directly contributed to the improvement in
    Company-owned gross margin of 16.3% for fiscal year 2004 as
    compared to 12.8% for fiscal year 2003. The increase in gross
    margin is also attributable to the Companys success in its
    efforts to increase markup (defined as the bill rate/wage rate)
    and the continued growth in the RemX® business unit, which
    traditionally generates higher gross margins.                                                                                                                                                                  
|
| |  | The decrease in cost of licensed franchise revenues is
    consistent with the 2.0% decrease in licensed franchise revenue.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|
| |  | Overall consolidated gross margin improved to 17.8% as compared
    to 15.9% for fiscal year 2003 and was primarily attributable to
    the decrease in workers compensation expense from $33,197
    in fiscal year 2003 to $27,944 in fiscal year 2004. Increases in
    the Companys markup during fiscal year 2004, the continued
    growth in the RemX® business unit and increased revenues
    from retail customers also contributed to the improved gross
    margins in fiscal year 2004. The increase in gross margin was
    also enhanced with increases in direct hire revenues, whereby
    the Company earns a fee for placing an associate in a
    direct-hire position. The improvements in gross margin were
    partially offset by increases in state unemployment insurance
    costs. State unemployment insurance costs represented 2.7% and
    1.5% of total cost of revenue for fiscal years 2004 and 2003,
    respectively.

25



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##### Table of Contents





| |                   
| | ------------------
| | Operating Expenses

|                                    |                          |                |        |         |               |   |        |          |  |   |          |        |  |  |       |      |  
|----------------------------------- | ------------------------ | -------------- | ------ | ------- | ------------- | - | ------ | -------- |  | - | -------- | ------ |  |  | ----- | ---- | -
|                                    |                          | For the Fiscal |        |         |               |   |       
|                                    |                          | Years Ended    |        |         |               |   |       
|                                    |                          |                |        |         |               |   |       
|                                    |                          | October 3,     |        |         | September 28, |   |        |          |  |  
|                                    |                          | 2004           |        |         | 2003          |   |        | $ Change |  |   | % Change |       
|                                    |                          |                |        |         |               |   |        |          |  |   |          |       
|Licensees share of gross profit    |                          | $              | 23,818 |         |               | $ | 24,431 |          |  | $ | (613     | )      |  |  | (2.5  | )%  
|Selling and administrative expenses |                          |                | 71,251 |         |               |   | 64,622 |          |  |   | 6,629    |        |  |  | 10.3  |     
|CIGA litigation costs               |                          |                | 6,080  |         |               |   | 796    |          |  |   | 5,284    |        |  |  | 664.0 |     
|Depreciation and amortization       |                          |                | 5,844  |         |               |   | 6,748  |          |  |   | (904     | )      |  |  | (13.4 | )   
|                                    |                          |                |        |         |               |   |        |          |  |   |          |       
|                                    | Total operating expenses |                | $      | 106,993 |               |   | $      | 96,597   |  |   | $        | 10,396 |  |  |       | 10.8 | %
|                                    |                          |                |        |         |               |   |        |          |  |   |          |       



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Licensees share of gross profit represents the net
    payments to licensed franchisees based upon a percentage of
    gross profit generated by the licensed franchise operation. The
    decrease in licensees share of gross profit is consistent
    with the decrease in licensed franchise revenues and cost of
    licensed franchise revenues. Licensees share of gross
    profit as a percentage of licensed gross profit increased to
    67.1% for fiscal year 2004 as compared to 66.6% for fiscal year
    2003 and primarily resulted from certain large franchisees
    renewing their licensed franchise agreements during the year,
    which incorporated certain revenue thresholds, resulting in
    higher gross profit payouts to the licensees, as well as an
    increase in direct-hire revenue.



|                                          |            |                         |        |        |        |   |        |          |   |   |        |        |  
|----------------------------------------- | ---------- | ----------------------- | ------ | ------ | ------ | - | ------ | -------- | - | - | ------ | ------ | -
|                                          |            | Favorable (Unfavorable) |       
|                                          |            |                         |       
|                                          |            | Consolidated            |        |        | RemX®  |   |        | Other    |  
|                                          |            | Change                  |        |        | Change |   |        | Offices* |  
|                                          |            |                         |        |        |        |   |        |          |  
|Colleague salary and related taxes        |            | $                       | (6,840 | )      |        | $ | (3,220 | )        |   | $ | (3,620 | )     
|Colleague travel and business conferences |            |                         | (434   | )      |        |   | (168   | )        |   |   | (266   | )     
|Royalty payments                          |            |                         | (369   | )      |        |   |       |          |   |   | (369   | )     
|Legal fees                                |            |                         | (140   | )      |        |   | 3      |          |   |   | (143   | )     
|Profit sharing                            |            |                         | (94    | )      |        |   | (652   | )        |   |   | 558    |       
|Other SG&A                                |            |                         | 157    |        |        |   | (819   | )        |   |   | 976    |       
|Rent                                      |            |                         | 1,091  |        |        |   | (218   | )        |   |   | 1,309  |       
|                                          |            |                         |        |        |        |   |        |          |  
|                                          | Net change |                         | $      | (6,629 | )      |   | $      | (5,074   | ) |   | $      | (1,555 | )
|                                          |            |                         |        |        |        |   |        |          |  






|  |                                                     
|- | ----------------------------------------------------
|* | Other Offices category includes the corporate office



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Selling and administrative expenses as a percentage of total
    revenues were 13.7% for fiscal year 2004 as compared to 13.4%
    for fiscal year 2003. The primary factor contributing to the net
    increase was a $6,840 increase in colleague salaries due to the
    Companys sales force investment hire initiative and the
    expansion of the RemX® specialty staffing business unit,
    offset by a $1,091 decrease in rent expense resulting from the
    fiscal year 2003 office closures.                                                         
|
| |  | During the fourth quarter of fiscal year 2004, the Company
    recorded a $5,877 charge for the costs of indemnifying certain
    clients for losses they may suffer as a result of the Court of
    Appeals October 2004 decision. The Companys CIGA
    litigation cost at October 3, 2004 and September 28,
    2003 were $203 and $796, respectively (See Item 3. Legal
    Proceedings).                                                                                                                                                                    
|
| |  | The decrease in depreciation and amortization for fiscal year
    2004 as compared to fiscal year 2003 is due to a $985
    amortization charge resulting from a change in accounting
    estimate related to the useful life of certain capitalized
    software costs during the fourth quarter of fiscal year 2003.
    Additionally, the decrease resulted from an increase in fully
    depreciated fixed assets at October 3, 2004 as compared to
    September 28, 2003. The decrease in depreciation and
    amortization in fiscal year 2004 was offset by

26



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| |  |                                                                                                                                                                                                                                  
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the incremental amortization expense from identifiable
    intangible assets resulting from the franchise acquisition
    during the second quarter of fiscal year 2004 (See Note 6
    to the consolidated financial statement).





Segment Information






Commercial




|               |  |                            |         |   |            |   |         |               |  |   |           |   |  |           |      |    |  |  |      |   
|-------------- |  | -------------------------- | ------- | - | ---------- | - | ------- | ------------- |  | - | --------- | - |  | --------- | ---- | -- |  |  | ---- | --
|               |  | For the Fiscal Years Ended |         |   |            |   |        
|               |  |                            |         |   |           
|               |  | October 2,                 |         |   | October 3, |   |         | September 28, |  |   | Change    |  
|               |  | 2005                       |         |   | 2004       |   |         | 2003          |  |   | 2005-2004 |   |  | 2004-2003 |     
|               |  |                            |         |   |            |   |         |               |  |   |           |   |  |           |     
|Revenue        |  | $                          | 409,979 |   |            | $ | 425,149 |               |  | $ | 394,929   |   |  |           | (3.6 | )% |  |  | 7.7  | % 
|Gross Margin   |  |                            | 17.5    | % |            |   | 16.3    | %             |  |   | 14.5      | % |  |           | 1.2  | pp |  |  | 1.8  | pp
|Segment Income |  | $                          | 24,728  |   |            | $ | 17,524  |               |  | $ | 12,012    |   |  |           | 41.1 | %  |  |  | 45.9 | % 

27



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##### Table of Contents





| |                                              
| | ---------------------------------------------
| | Fiscal year 2005 Compared to Fiscal year 2004





| |                                              
| | ---------------------------------------------
| | Fiscal year 2004 Compared to Fiscal year 2003



Specialty


®


|                      |  |                            |         |   |            |   |        |               |  |   |           |   |  |           |       |    |  |  |        |   
|--------------------- |  | -------------------------- | ------- | - | ---------- | - | ------ | ------------- |  | - | --------- | - |  | --------- | ----- | -- |  |  | ------ | --
|                      |  | For the Fiscal Years Ended |         |   |            |   |       
|                      |  |                            |         |   |           
|                      |  | October 2,                 |         |   | October 3, |   |        | September 28, |  |   | Change    |  
|                      |  | 2005                       |         |   | 2004       |   |        | 2003          |  |   | 2005-2004 |   |  | 2004-2003 |      
|                      |  |                            |         |   |            |   |        |               |  |   |           |   |  |           |      
|Revenues              |  | $                          | 104,295 |   |            | $ | 94,778 |               |  | $ | 87,036    |   |  |           | 10.0  | %  |  |  | 8.9    | % 
|Gross Margin          |  |                            | 30.8    | % |            |   | 24.6   | %             |  |   | 22.2      | % |  |           | 6.2   | pp |  |  | 2.4    | pp
|Segment Income (Loss) |  | $                          | 808     |   |            | $ | (1,536 | )             |  | $ | (209      | ) |  |           | 152.6 | %  |  |  | (634.9 | )%



| |                                              
| | ---------------------------------------------
| | Fiscal year 2005 Compared to Fiscal year 2004

®




| |                                              
| | ---------------------------------------------
| | Fiscal year 2004 Compared to Fiscal year 2003



28



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##### Table of Contents





|                                     |                                                                                               |                            |        |         |        |   |        |         |         |   |        |         |         |  
|------------------------------------ | --------------------------------------------------------------------------------------------- | -------------------------- | ------ | ------- | ------ | - | ------ | ------- | ------- | - | ------ | ------- | ------- | -
|                                     |                                                                                               | For the Fiscal Years Ended |       
|                                     |                                                                                               |                            |       
|                                     |                                                                                               | 2005                       |        |         | 2004   |   |        | 2003    |        
|                                     |                                                                                               |                            |        |         |        |   |        |         |        
|Segment income                       |                                                                                               |                            |        |         |        |   |        |         |         |   |        |        
|Total income for reportable segments |                                                                                               | $                          | 25,536 |         |        | $ | 15,988 |         |         | $ | 11,803 |        
|Unallocated amounts:                 |                                                                                               |                            |        |         |        |   |        |         |         |   |        |        
|                                     | Corporate and other expenses                                                                  |                            |        | (25,993 | )      |   |        | (25,350 | )       |   |        | (26,033 | )      
|                                     | Depreciation and amortization                                                                 |                            |        | (3,866  | )      |   |        | (5,085  | )       |   |        | (5,607  | )      
|                                     | Interest income                                                                               |                            |        | 1,394   |        |   |        | 1,010   |         |   |        | 998     |        
|                                     | Interest expense                                                                              |                            |        | (677    | )      |   |        | (413    | )       |   |        | (434    | )      
|                                     | Other, net                                                                                    |                            |        | 1,029   |        |   |        | 735     |         |   |        | 731     |        
|                                     | (Provision for) benefit from income taxes                                                     |                            |        | (991    | )      |   |        | 323     |         |   |        | (8,280  | )      
|                                     | Cumulative effect of adoption of a new accounting standard, net
    of income taxes of $1,634 |                            |        |        |        |   |        |        |         |   |        | (2,421  | )      
|                                     |                                                                                               |                            |        |         |        |   |        |         |        
|                                     |                                                                                               | Net loss                   |        | $       | (3,568 | ) |        | $       | (12,792 | ) |        | $       | (29,243 | )
|                                     |                                                                                               |                            |        |         |        |   |        |         |        

Liquidity and Capital Resources






|                                                     |                                         |                |        |        |            |   |        |        |  
|---------------------------------------------------- | --------------------------------------- | -------------- | ------ | ------ | ---------- | - | ------ | ------ | -
|                                                     |                                         | For the Fiscal |       
|                                                     |                                         | Years Ended    |       
|                                                     |                                         |                |       
|                                                     |                                         | October 2,     |        |        | October 3, |  
|                                                     |                                         | 2005           |        |        | 2004       |  
|                                                     |                                         |                |        |        |            |  
|Cash provided by (used in):                          |                                         |                |        |        |            |   |        |       
|                                                     | Operating activities                    |                | $      | 6,296  |            |   | $      | (495   | )
|                                                     | Investing activities                    |                |        | 11,282 |            |   |        | (5,885 | )
|                                                     | Financing activities                    |                |        | 176    |            |   |        | 193    |  
|                                                     | Effect of exchange rate changes on cash |                |        | 125    |            |   |        | 26     |  
|                                                     |                                         |                |        |        |            |  
|Net increase (decrease) in cash and cash equivalents |                                         |                | 17,879 |        |            |   | (6,161 | )     
|Cash and cash equivalents at beginning of period     |                                         |                | 7,075  |        |            |   | 13,236 |       
|                                                     |                                         |                |        |        |            |  
|Cash and cash equivalents at end of period           |                                         | $              | 24,954 |        |            | $ | 7,075  |       
|                                                     |                                         |                |        |        |            |  



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Cash flows from operating activities, compared to the preceding
    year, were primarily impacted by lower net loss, the timing of
    receivables collections, the timing of payroll disbursements
    (including incentive compensation payments), as well as the
    timing of vendor payments.                                                                                                                                                                                                                                                              
|
| |  | Cash provided by investing activities is primarily related to
    the Companys investment portfolio, which includes highly
    rated debt securities with various maturity dates through fiscal
    year 2008. During the second quarter of fiscal year 2004, the
    Company used $16,000 in cash to collateralize its $40,000 line
    of credit as required by its credit facility (See Note 4 to
    the consolidated financial statements). As of December 1,
    2004, under the Companys new Credit Agreement, the Company
    is no longer required to

29



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##### Table of Contents



| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | maintain the $16,000 collateralization of its line of credit and
    accordingly, the certificate of deposit has been reclassified
    within cash and cash equivalents in the consolidated balance
    sheets. Net cash outflows related to available-for-sale
    investments were $10,661 during fiscal year 2005 as compared to
    $2,133 of net cash inflows in fiscal year 2004. Cash used for
    purchases of fixed assets, including information systems
    development costs, was $3,345 for fiscal year 2005 and $3,365
    for fiscal year 2004. The Company continues to invest in
    computer-based technologies and select office openings and
    anticipates approximately $3,500 in related capital expenditures
    for fiscal year 2006.
|
| |  | Cash provided by financing activities is primarily a result of
    shares of the Companys Class A Common Stock issued
    through the Employee Stock Purchase Plan.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           











30



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##### Table of Contents





|                                                                        |                                                   |                |        |        |            |   |        |        | 
|----------------------------------------------------------------------- | ------------------------------------------------- | -------------- | ------ | ------ | ---------- | - | ------ | ------ | 
|                                                                        |                                                   | For the Fiscal |       
|                                                                        |                                                   | Years Ended    |       
|                                                                        |                                                   |                |       
|                                                                        |                                                   | October 2,     |        |        | October 3, |  
|                                                                        |                                                   | 2005           |        |        | 2004       |  
|                                                                        |                                                   |                |        |        |            |  
|Collateralized certificate of deposit related to bank agreement         |                                                   | $              |       |        |            | $ | 16,000 |       
|Deferred compensation investments                                       |                                                   |                | 3,771  |        |            |   | 3,161  |       
|                                                                        |                                                   |                |        |        |            |  
|                                                                        | Total restricted investments  current            |                | $      | 3,771  |            |   | $      | 19,161 | 
|                                                                        |                                                   |                |        |        |            |  
|Pledged cash and securities related to workers compensation
    polices |                                                   | $              | 21,889 |        |            | $ | 21,925 |       
|                                                                        |                                                   |                |        |        |            |  
|                                                                        | Total restricted cash and investments  long-term |                | $      | 21,889 |            |   | $      | 21,925 | 
|                                                                        |                                                   |                |        |        |            |  
|Letters of credit                                                       |                                                   | $              | 36,538 |        |            | $ | 34,661 |       
|                                                                        |                                                   |                |        |        |            |  











31



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##### Table of Contents



Off-Balance Sheet Arrangements




Contractual Obligations






|                       |  |                                               |        |        |      |   |        |           |  |        |           |  |  |            |       |  |  |   |        | 
|---------------------- |  | --------------------------------------------- | ------ | ------ | ---- | - | ------ | --------- |  | ------ | --------- |  |  | ---------- | ----- |  |  | - | ------ | 
|                       |  | Contractual Obligations Payment Due by Period |       
|                       |  |                                               |       
|                       |  |                                               |        | Fiscal |      |   | Fiscal |           |  | Fiscal |           |  | 
|                       |  | Total                                         |        |        | 2006 |   |        | 2007-2008 |  |        | 2009-2010 |  |  | Thereafter |      
|                       |  |                                               |        |        |      |   |        |           |  |        |           |  |  |            |      
|Operating Leases       |  | $                                             | 14,630 |        |      | $ | 4,353  |           |  | $      | 6,502     |  |  | $          | 3,768 |  |  | $ | 7      | 
|Capital Leases         |  |                                               | 168    |        |      |   | 35     |           |  |        | 70        |  |  |            | 63    |  |  |   |       | 
|Workers Compensation* |  |                                               | 38,281 |        |      |   | 11,974 |           |  |        | 10,822    |  |  |            | 3,308 |  |  |   | 12,177 | 
|                       |  |                                               |        |        |      |   |        |           |  |        |           |  |  |            |      
|Total                  |  | $                                             | 53,079 |        |      | $ | 16,362 |           |  | $      | 17,394    |  |  | $          | 7,139 |  |  | $ | 12,184 | 
|                       |  |                                               |        |        |      |   |        |           |  |        |           |  |  |            |      






|  |                                                                                                                                                                                                                                                                                         
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|* | Estimated obligation is based upon actuarial analysis and
    represents the remaining deductible liability under the
    Companys current workers compensation contracts.
    This amount excludes $2,552 of amounts due to various state
    funds related to workers compensation.





Critical Accounting Policies and Estimates




32



---



##### Table of Contents







Revenue Recognition


Reporting Revenue
Gross as a Principal versus Net as an Agent


Accounts Receivable


Workers Compensation Costs


33



---



##### Table of Contents





Goodwill and Other Intangible Assets Goodwill and Other
Intangible Assets


Other Long-Lived Assets Accounting for the Impairment or
disposal of Long-Lived Assets


Income Taxes




34



---



##### Table of Contents







Contingencies and Litigation


New Accounting Standards


Accounting
Changes and Error Corrections  a replacement of APB
No. 20 and FAS No. 3


Share-Based Payments




35



---



##### Table of Contents





Exchanges of Nonmonetary Assets  An Amendment of
APB Opinion No. 29, Accounting for Nonmonetary Transactions Accounting for Nonmonetary Transactions,


Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within
the American Jobs Creation Act of 2004 Accounting for
Income Taxes


Determining the Amortization Period of
Leasehold Improvements or Acquired in a Business Combination


Inflation









|         |                                                               
|-------- | --------------------------------------------------------------
|Item 7A. | Qualitative and Quantitative Disclosures About Market
    Risk



Interest rate risk.


36



---



##### Table of Contents





Equity price risk.


Foreign currency risks.







|        |                                            
|------- | -------------------------------------------
|Item 8. | Financial Statements and Supplementary Data








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements With Accountants on
    Accounting and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures






Managements Report on Internal Control Over Financial
Reporting








37



---



##### Table of Contents







Changes in Internal Control Over Financial Reporting









|         |                  
|-------- | -----------------
|Item 9B. | Other Information






PART III







|         |                                                       
|-------- | ------------------------------------------------------
|Item 10. | Directors and Executive Officers of the
    Registrant



www.remedytemp.com







|         |                       
|-------- | ----------------------
|Item 11. | Executive Compensation








|         |                                                                                                    
|-------- | ---------------------------------------------------------------------------------------------------
|Item 12. | Security Ownership of Certain Beneficial Owners and
    Management and Related Shareholders Matters



38



---



##### Table of Contents










|         |                                                   
|-------- | --------------------------------------------------
|Item 13. | Certain Relationships and Related
    Transactions








|         |                                       
|-------- | --------------------------------------
|Item 14. | Principal Accounting Fees and Services






PART IV







|         |                                           
|-------- | ------------------------------------------
|Item 15. | Exhibits and Financial Statement Schedules





| |     |                                                                                                                                                                     
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | (1) | Consolidated Financial Statements filed as part of this Report
    are set forth in the Index to Consolidated Financial
    Statements on page F-1 of this Report.
|
| | (2) | Financial Statement Schedule filed as part of this report is set
    forth in the Index to Consolidated Financial
    Statements on page F-1 of this report.      





|        |    |             |  |                                                                                                                                   
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Amended and Restated Articles of Incorporation of the Company(a)                                                                  
|        | 3  | .2          |  | Amended and Restated Bylaws of the Company(e)                                                                                     
|        | 4  | .1          |  | Specimen Stock Certificate(a)                                                                                                     
|        | 4  | .2          |  | Shareholder Rights Agreement(a)                                                                                                   
|        | 10 | .1          |  | *Robert E. McDonough, Sr. Amended and Restated Employment
    Agreement(f)                                                        
|        | 10 | .2          |  | *Paul W. Mikos Employment Agreement, as amended(g)                                                                                
|        | 10 | .3          |  | *Robert E. McDonough, Sr. Amendment No. 1 to Amended
    and Restated Employment Agreement(i)                                     
|        | 10 | .7          |  | *Deferred Compensation Agreement for Alan M. Purdy(a)                                                                             
|        | 10 | .9          |  | Form of Indemnification Agreement entered into by RemedyTemp,
    Inc. and each of its directors and certain executive officers(a)
|        | 10 | .11         |  | *Amended and Restated RemedyTemp, Inc. 1996 Stock Incentive Plan
    (effective as of January 1, 2005)                            
|        | 10 | .12         |  | *Amended and Restated RemedyTemp, Inc. 1996 Employee Stock
    Purchase Plan (effective as of September 26, 2005)(z)              
|        | 10 | .13         |  | Form of Franchising Agreement for Licensed Offices(k)                                                                             
|        | 10 | .14         |  | Form of Franchising Agreement for Franchised Offices(a)                                                                           

39



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##### Table of Contents



|        |    |             |  |                                                                                                                                                           
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 10 | .15         |  | Form of Licensing Agreement for IntelliSearch(a)                                                                                                          
|        | 10 | .18         |  | *Additional Deferred Compensation Agreement for Alan M. Purdy(b)                                                                                          
|        | 10 | .19         |  | Lease Agreement between RemedyTemp, Inc. and Parker-Summit,
    LLC(c)                                                                                    
|        | 10 | .22         |  | *RemedyTemp, Inc. Deferred Compensation Plan (effective as of
    January 1, 2005)                                                                        
|        | 10 | .23         |  | *Amended and Restated Employment Agreement for Greg Palmer(m)                                                                                             
|        | 10 | .24         |  | *1998 RemedyTemp, Inc. Amended and Restated Deferred
    Compensation and Stock Ownership Plan for Outside Directors
    (effective as of January 1, 2005)
|        | 10 | .25         |  | Form of Licensing Agreement for i/Search 2000®(e)                                                                                                         
|        | 10 | .27         |  | *Paul W. Mikos Severance Agreement and General Release(j)                                                                                                 
|        | 10 | .28         |  | *Gunnar B. Gooding Employment and Severance Letter(l)                                                                                                     
|        | 10 | .29         |  | *Cosmas N. Lykos Employment and Severance Letter(l)                                                                                                       
|        | 10 | .30         |  | *Alan M. Purdy Retirement Agreement and General Release(n)                                                                                                
|        | 10 | .31         |  | *Monty Houdeshell Employment Letter(o)                                                                                                                    
|        | 10 | .34         |  | Amendment No. 2 to the Lease Agreement between RemedyTemp,
    Inc. and Parker-Summit, LLC(q)                                                             
|        | 10 | .36         |  | Business Loan Agreement between Bank of America N.A. and
    RemedyTemp, Inc.(s)                                                                          
|        | 10 | .37         |  | Amended and Restated Credit Agreement between Bank of America,
    N.A. and Remedy Temp, Inc.(t)                                                          
|        | 10 | .38         |  | *Robert E. McDonough, Sr. Amendment No. 2 to Amended
    and Restated Employment Agreement(u)                                                             
|        | 10 | .39         |  | *Short-term Incentive Bonus Plan for Fiscal 2005(v)                                                                                                       
|        | 10 | .40         |  | *Amended Agreement with Janet Hawkins(w)                                                                                                                  
|        | 10 | .41         |  | *Deferred Compensation Plan for Greg Palmer                                                                                                               
|        | 10 | .42         |  | *Form of Change in Control Severance Agreement(x)                                                                                                         
|        | 10 | .43         |  | *Amendment to Amended and Restated Employment Agreement for Greg
    Palmer(y)                                                                            
|        | 10 | .44         |  | *Short-Term Incentive Bonus Plan for Fiscal 2006(aa)                                                                                                      
|        | 10 | .45         |  | *Form of Lock-Up Agreement with certain executive officers(bb)                                                                                            
|        | 10 | .46         |  | Summary of Compensation Arrangements for Named Executive
    Officers and Directors                                                                       
|        | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm                                                                                                  
|        | 31 | .1          |  | Chief Executive Officer Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                       
|        | 31 | .2          |  | Chief Administrative Officer Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                                  
|        | 32 |             |  | Chief Executive Officer and Chief Administrative Officer
    Certifications Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002                 






|    |  |                                                                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Indicates a management contract or a compensatory plan, contract
    or arrangement.                                                                               
|   
|(a) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Registration Statement on Form S-1 (Reg.
    No. 333-4276), as amended.            
|   
|(b) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 29, 1996.
|   
|(c) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 30, 1997.   
|   
|(d) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 28, 1997.     
|   
|(e) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 27, 1998.     

40



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##### Table of Contents





|     |  |                                                                                                                                                                                                                                                               
|---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(f)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Reports on Form 10-Q for the
    quarterly period ended December 27, 1998.                                                                                          
|    
|(g)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Reports on Form 10-Q for the
    quarterly period ended June 27, 1999 (original agreement)
    and for the quarterly period ended December 31, 2000
    (amendment).
|    
|(h)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended March 28, 1999.                                                                                                    
|    
|(i)  |  | Incorporated by reference to exhibit number 10.1 to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2000.                                                                                                  
|    
|(j)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended April 1, 2001.                                                                                               
|    
|(k)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended July 1, 2001.                                                                                                
|    
|(l)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 30, 2001.                                                                                                
|    
|(m)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 30, 2001.                                                                                           
|    
|(n)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002.                                                                                               
|    
|(o)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 29, 2002.                                                                                                
|    
|(p)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended June 29, 2003.                                                                                               
|    
|(q)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 28, 2003.                                                                                                
|    
|(r)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 28, 2004.                                                                                              
|    
|(s)  |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 28, 2004.                                                                                              
|    
|(t)  |  | Incorporated by reference to the exhibit of same number to
    Registrants Current Report on Form 8-K filed on
    December 3, 2004.                                                                                                                         
|    
|(u)  |  | Incorporated by reference to the exhibit of same number to
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended January 2, 2005.                                                                                                 
|    
|(v)  |  | Incorporated by reference to Item 1.01 of the
    Registrants Current Report on Form 8-K filed on
    February 1, 2005.                                                                                                                                      
|    
|(w)  |  | Incorporated by reference to Item 10.1 of the
    Registrants Current Report on Form 8-K filed on
    May 9, 2005.                                                                                                                                           
|    
|(x)  |  | Incorporated by reference to Exhibit 10.1 to
    Registrants Current Report on Form 8-K filed on
    April 22, 2005.                                                                                                                                         
|    
|(y)  |  | Incorporated by reference to Exhibit 10.2 to
    Registrants Current Report on Form 8-K filed on
    April 22, 2005.                                                                                                                                         
|    
|(z)  |  | Incorporated by reference to Exhibit 10.2 to
    Registrants Current Report on Form 8-K filed on
    September 27, 2005.                                                                                                                                     
|    
|(aa) |  | Incorporated by reference to Item 1.01 of the
    Registrants Current Report on Form 8-K filed on
    September 23, 2005.                                                                                                                                    
|    
|(bb) |  | Incorporated by reference to Exhibit 10.1 of the
    Registrants Current Report on Form 8-K filed on
    September 27, 2005.                                                                                                                                 

41



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##### Table of Contents






SIGNATURES






| |                                      
| | -------------------------------------
| | REMEDYTEMP, INC.                     
|
| | /s/ Greg D. Palmer                   
| |                                      
| | Greg D. Palmer                       
| | President and Chief Executive Officer





|                                                    |  |                                                                                              |  |                   |  | 
|--------------------------------------------------- |  | -------------------------------------------------------------------------------------------- |  | ----------------- |  | 
|Signature                                           |  | Title                                                                                        |  | Date             
|                                                    |  |                                                                                              |  |                  
|                                                   
|/s/ Greg D. PalmerGreg
    D. Palmer                |  | President and Chief
    Executive Officer                                                    |  | December 16, 2005
|                                                   
|/s/ Paul W. MikosPaul
    W. Mikos                  |  | Chairman of
    the Board of Directors                                                       |  | December 16, 2005
|                                                   
|/s/ Robert E. McDonoughRobert
    E. McDonough, Sr. |  | Vice-Chairman of
    the Board of Directors                                                  |  | December 16, 2005
|                                                   
|/s/ Monty A. HoudeshellMonty
    A. Houdeshell      |  | Senior Vice President and
    Chief Administrative Officer
    (Principal Financial Officer) |  | December 16, 2005
|                                                   
|/s/ John D. SwancoatJohn
    D. Swancoat            |  | Vice President and Controller (Principal Accounting Officer)                                 |  | December 16, 2005
|                                                   
|/s/ William D. CvengrosWilliam
    D. Cvengros      |  | Director                                                                                     |  | December 16, 2005
|                                                   
|/s/ Gary BrahmGary
    Brahm                        |  | Director                                                                                     |  | December 16, 2005
|                                                   
|/s/ Robert A. ElliottRobert
    A. Elliott          |  | Director                                                                                     |  | December 16, 2005
|                                                   
|/s/ Mary GeorgeMary
    George                      |  | Director                                                                                     |  | December 16, 2005
|                                                   
|/s/ J. Michael HaganJ.
    Michael Hagan            |  | Director                                                                                     |  | December 16, 2005
|                                                   
|/s/ John B. ZaepfelJohn
    B. Zaepfel              |  | Director                                                                                     |  | December 16, 2005

42



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##### Table of Contents



REMEDYTEMP, INC.


INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


|                              |                                                                                                                                                      |  |     
|----------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----
|Financial Statements:         |                                                                                                                                                      | 
|                              | Report of Independent Registered Public
    Accounting Firm                                                                                          |  | F-2 
|                              | Consolidated Balance Sheets as of
    October 2, 2005 and October 3, 2004                                                                            |  | F-4 
|                              | Consolidated Statements of Operations for
    the three fiscal years ended October 2, 2005,
    October 3, 2004 and September 28, 2003               |  | F-5 
|                              | Consolidated Statements of
    Shareholders Equity for the three fiscal years ended
    October 2, 2005, October 3, 2004 and
    September 28, 2003 |  | F-6 
|                              | Consolidated Statements of Cash Flows for
    the three fiscal years ended October 2, 2005,
    October 3, 2004 and September 28, 2003               |  | F-7 
|                              | Notes to Consolidated Financial
    Statements                                                                                                       |  | F-8 
|Financial Statement Schedule: |                                                                                                                                                      | 
|                              | For the three fiscal years ended October 2, 2005,
    October 3, 2004 and September 28, 2003                                                         |  |     
|                              | II  Valuation and Qualifying
    Accounts                                                                                                           |  | F-35



F-1



---



##### Table of Contents






REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM








Consolidated financial statements and financial statement
schedule




Goodwill and
Other Intangible Assets.


Internal control over financial reporting


Internal Control  Integrated Framework Internal Control 
Integrated Framework




F-2



---



##### Table of Contents







PricewaterhouseCoopers
LLP






F-3



---



##### Table of Contents



REMEDYTEMP, INC.





CONSOLIDATED BALANCE SHEETS


(In thousands, except par value)


|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |   |         |        |        | 
|--------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------- | ------- | ------ | ---------- | - | ------- | ------ | ------ | 
|                                                                                        |                                                                                                                                                                                       | October 2,                 |         |        | October 3, |  
|                                                                                        |                                                                                                                                                                                       | 2005                       |         |        | 2004       |  
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|ASSETS                                                                                 
|Current assets:                                                                         |                                                                                                                                                                                       |                            |         |        |            |   |         |       
|                                                                                        | Cash and cash equivalents                                                                                                                                                             |                            | $       | 24,954 |            |   | $       | 7,075  |       
|                                                                                        | Investments                                                                                                                                                                           |                            |         | 692    |            |   |         | 339    |       
|                                                                                        | Restricted investments (Note 1)                                                                                                                                                       |                            |         | 3,771  |            |   |         | 19,161 |       
|                                                                                        | Accounts receivable, net of allowance for doubtful accounts of
    $905 and $2,984, respectively                                                                                      |                            |         | 60,787 |            |   |         | 63,152 |       
|                                                                                        | Prepaid expenses and other current assets                                                                                                                                             |                            |         | 7,406  |            |   |         | 6,517  |       
|                                                                                        | Prepaid workers compensation insurance                                                                                                                                               |                            |         | 2,396  |            |   |         | 2,396  |       
|                                                                                        | Current income taxes (Note 5)                                                                                                                                                         |                            |         |       |            |   |         | 160    |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|                                                                                        |                                                                                                                                                                                       | Total current assets       |         |        | 100,006    |   |         |        | 98,800 | 
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|Fixed assets, net (Note 2)                                                              |                                                                                                                                                                                       |                            | 9,696   |        |            |   | 10,589  |       
|Restricted cash and investments (Note 1)                                                |                                                                                                                                                                                       |                            | 21,889  |        |            |   | 21,925  |       
|Other assets                                                                            |                                                                                                                                                                                       |                            | 279     |        |            |   | 330     |       
|Intangible assets, net of accumulated amortization of $1,244 and
    $700, respectively |                                                                                                                                                                                       |                            | 1,730   |        |            |   | 2,274   |       
|Goodwill (Note 1)                                                                       |                                                                                                                                                                                       |                            | 4,483   |        |            |   | 3,703   |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|Total Assets                                                                            |                                                                                                                                                                                       | $                          | 138,083 |        |            | $ | 137,621 |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|                                                                                       
|LIABILITIES AND SHAREHOLDERS EQUITY                                                   
|Current liabilities:                                                                    |                                                                                                                                                                                       |                            |         |        |            |   |         |       
|                                                                                        | Accounts payable                                                                                                                                                                      |                            | $       | 1,275  |            |   | $       | 4,225  |       
|                                                                                        | Accrued workers compensation, current portion (Note 3)                                                                                                                               |                            |         | 14,526 |            |   |         | 15,036 |       
|                                                                                        | Accrued payroll, benefits and related costs                                                                                                                                           |                            |         | 17,979 |            |   |         | 17,938 |       
|                                                                                        | Accrued licensees share of gross profit                                                                                                                                              |                            |         | 2,630  |            |   |         | 2,745  |       
|                                                                                        | Other accrued expenses                                                                                                                                                                |                            |         | 7,834  |            |   |         | 3,899  |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|                                                                                        |                                                                                                                                                                                       | Total current liabilities  |         |        | 44,244     |   |         |        | 43,843 | 
|Other liabilities (Note 3)                                                              |                                                                                                                                                                                       |                            | 32,300  |        |            |   | 30,267  |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|                                                                                        |                                                                                                                                                                                       | Total liabilities          |         |        | 76,544     |   |         |        | 74,110 | 
|Commitments and contingent liabilities (Note 8)                                         |                                                                                                                                                                                       |                            |         |        |            |   |         |       
|Shareholders equity (Note 11):                                                         |                                                                                                                                                                                       |                            |         |        |            |   |         |       
|                                                                                        | Preferred Stock, $0.01 par value; authorized
    5,000 shares; none outstanding                                                                                                       |                            |         |       |            |   |         |       |       
|                                                                                        | Class A Common Stock, $0.01 par value; authorized
    50,000 shares; 8,813 and 8,778 shares issued and
    outstanding at October 2, 2005 and October 3, 2004,
    respectively       |                            |         | 88     |            |   |         | 88     |       
|                                                                                        | Class B Non-Voting Common Stock, $0.01 par value;
    authorized 4,530 shares; 798 and 800 shares issued and
    outstanding at October 2, 2005 and October 3, 2004,
    respectively |                            |         | 8      |            |   |         | 8      |       
|                                                                                        | Additional paid-in capital                                                                                                                                                            |                            |         | 41,824 |            |   |         | 41,522 |       
|                                                                                        | Unearned compensation                                                                                                                                                                 |                            |         | (2,382 | )          |   |         | (3,737 | )     
|                                                                                        | Accumulated other comprehensive loss                                                                                                                                                  |                            |         | (129   | )          |   |         | (68    | )     
|                                                                                        | Retained earnings                                                                                                                                                                     |                            |         | 22,130 |            |   |         | 25,698 |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|                                                                                        |                                                                                                                                                                                       | Total shareholders equity |         |        | 61,539     |   |         |        | 63,511 | 
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  
|Total Liabilities and Shareholders Equity                                              |                                                                                                                                                                                       | $                          | 138,083 |        |            | $ | 137,621 |       
|                                                                                        |                                                                                                                                                                                       |                            |         |        |            |  



F-4



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##### Table of Contents



REMEDYTEMP, INC.





CONSOLIDATED STATEMENTS OF OPERATIONS


(In thousands, except per share amounts)


|                                                                                                    |                  |                |         |       |            |   |         |               |         |   |         |      |         | 
|--------------------------------------------------------------------------------------------------- | ---------------- | -------------- | ------- | ----- | ---------- | - | ------- | ------------- | ------- | - | ------- | ---- | ------- | 
|                                                                                                    |                  | October 2,     |         |       | October 3, |   |         | September 28, |        
|                                                                                                    |                  | 2005           |         |       | 2004       |   |         | 2003          |        
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Company-owned office revenues                                                                       |                  | $              | 320,322 |       |            | $ | 341,691 |               |         | $ | 300,070 |     
|Licensed franchise revenues                                                                         |                  |                | 192,513 |       |            |   | 176,699 |               |         |   | 180,262 |     
|Franchise royalties and initial franchise fees                                                      |                  |                | 1,439   |       |            |   | 1,538   |               |         |   | 1,633   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|                                                                                                    |                  | Total revenues |         |       | 514,274    |   |         |               | 519,928 |   |         |      | 481,965 | 
|Cost of Company-owned office revenues (exclusive of depreciation
    and amortization shown below)  |                  |                | 256,901 |       |            |   | 286,158 |               |         |   | 261,628 |     
|Cost of licensed franchise revenues (exclusive of depreciation
    and amortization shown below)    |                  |                | 153,721 |       |            |   | 141,224 |               |         |   | 143,577 |     
|Licensees share of gross profit                                                                    |                  |                | 26,282  |       |            |   | 23,818  |               |         |   | 24,431  |     
|Selling and administrative expenses                                                                 |                  |                | 76,245  |       |            |   | 71,251  |               |         |   | 64,622  |     
|CIGA litigation costs (Note 8)                                                                      |                  |                | 315     |       |            |   | 6,080   |               |         |   | 796     |     
|Depreciation and amortization                                                                       |                  |                | 5,133   |       |            |   | 5,844   |               |         |   | 6,748   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Loss from operations                                                                                |                  |                | (4,323  | )     |            |   | (14,447 | )             |         |   | (19,837 | )   
|Other income and expense:                                                                           |                  |                |         |       |            |   |         |               |         |   |         |     
|                                                                                                    | Interest expense |                |         | (677  | )          |   |         | (413          | )       |   |         | (434 | )      
|                                                                                                    | Interest income  |                |         | 1,394 |            |   |         | 1,010         |         |   |         | 998  |        
|                                                                                                    | Other, net       |                |         | 1,029 |            |   |         | 735           |         |   |         | 731  |        
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Loss before income taxes and cumulative effect of adoption of a
    new accounting standard         |                  |                | (2,577  | )     |            |   | (13,115 | )             |         |   | (18,542 | )   
|Provision for (benefit from) income taxes (Note 5)                                                  |                  |                | 991     |       |            |   | (323    | )             |         |   | 8,280   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Loss before cumulative effect of adoption of a new accounting
    standard                          |                  |                | (3,568  | )     |            |   | (12,792 | )             |         |   | (26,822 | )   
|Cumulative effect of adoption of a new accounting standard, net
    of income tax benefit of $1,634 |                  |                |        |       |            |   |        |               |         |   | 2,421   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Net loss                                                                                            |                  | $              | (3,568  | )     |            | $ | (12,792 | )             |         | $ | (29,243 | )   
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Loss per share  basic and diluted:                                                                 |                  |                |         |       |            |   |         |               |         |   |         |     
|Loss per share before cumulative effect of adoption of a new
    accounting standard                |                  | $              | (0.39   | )     |            | $ | (1.42   | )             |         | $ | (2.98   | )   
|Cumulative effect per share of adoption of a new accounting
    standard, net of income taxes       |                  |                |        |       |            |   |        |               |         |   | (0.27   | )   
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Net loss per share                                                                                  |                  | $              | (0.39   | )     |            | $ | (1.42   | )             |         | $ | (3.25   | )   
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Weighted average shares:                                                                            |                  |                |         |       |            |   |         |               |         |   |         |     
|Basic                                                                                               |                  |                | 9,050   |       |            |   | 9,022   |               |         |   | 9,010   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        
|Diluted                                                                                             |                  |                | 9,050   |       |            |   | 9,022   |               |         |   | 9,010   |     
|                                                                                                    |                  |                |         |       |            |   |         |               |        



F-5



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##### Table of Contents



REMEDYTEMP, INC.





CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY


|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |         |         |  
|----------------------------- | ------------------------------------------ | ---------------------------------- | ---------------------------------------- | ---- | ------------ | - | -- | ---------- | - |  | -------- | ---- | - | ----------- | ----- | -- | ------------- | - | ------ | -------- | - | - | ------------- | ------ | - | ----- | ------ |  |  | ------- | ---- | - |  | ---- | ------- | ----- | ------- | ------- | -
|                              |                                            | Class A                            |                                          |      | Class B      |   |    |            |   |  |          |      |   | Accumulated |       |    |              
|                              |                                            | Common Stock                       |                                          |      | Common Stock |   |    | Additional |   |  |          |      |   |             | Other |    |               |  
|                              |                                            |                                    |                                          |      |              |   |    | Paid-In    |   |  | Unearned |      |   | Retained    |       |    | Comprehensive |   |        |         
|                              |                                            | Shares                             |                                          |      | Amount       |   |    | Shares     |   |  | Amount   |      |   | Capital     |       |    | Compensation  |   |        | Earnings |   |   | (Loss) Income |        |   | Total |       
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|                              |                                            | (Amounts in thousands)             |                                         
|Balance at September 29, 2002 |                                            |                                    | 8,142                                    |      |              | $ | 82 |            |   |  | 1,253    |      |   | $           | 13    |    |               | $ | 39,923 |          |   | $ | (4,728        | )      |   | $     | 67,733 |  |  | $       | (39  | ) |  | $    | 102,984 |      
|                              | Activity of Employee Stock Purchase Plan   |                                    |                                          | 11   |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        | 112      |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         | 112   |        
|                              | Conversion upon transfer to non-affiliates |                                    |                                          | 359  |              |   |    | 4          |   |  |          | (359 | ) |             |       | (4 | )             |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Restricted stock grants                    |                                    |                                          | 320  |              |   |    | 3          |   |  |          |      |   |             |       |    |               |   |        | 3,474    |   |   |               | (3,477 | ) |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Forfeiture of restricted stock             |                                    |                                          | (63  | )            |   |    | (1         | ) |  |          |      |   |             |       |    |               |   |        | (835     | ) |   |               | 836    |   |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Amortization of unearned compensation      |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               | 1,338  |   |       |        |  |  |         |      |   |  |      |         | 1,338 |        
|                              | Comprehensive loss:                        |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |        
|                              |                                            | Other comprehensive income:        |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |         |        
|                              |                                            |                                    | Unrealized gain on marketable securities |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | 152  |         |       |         | 152     |  
|                              |                                            |                                    | Translation adjustment                   |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | 21   |         |       |         | 21      |  
|                              |                                            |                                    | Net loss                                 |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  | (29,243 | )    |   |  |      |         |       |         | (29,243 | )
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|                              |                                            | Comprehensive loss                 |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       | (29,070 | )      
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|Balance at September 28, 2003 |                                            |                                    | 8,769                                    |      |              |   | 88 |            |   |  | 894      |      |   |             | 9     |    |               |   | 42,674 |          |   |   | (6,031        | )      |   |       | 38,490 |  |  |         | 134  |   |  |      | 75,364  |      
|                              | Activity of Employee Stock Purchase Plan   |                                    |                                          | 19   |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        | 185      |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         | 185   |        
|                              | Stock-based compensation                   |                                    |                                          | 1    |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        | 8        |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         | 8     |        
|                              | Conversion upon transfer to non-affiliates |                                    |                                          | 94   |              |   |    | 1          |   |  |          | (94  | ) |             |       | (1 | )             |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Forfeiture of restricted stock             |                                    |                                          | (105 | )            |   |    | (1         | ) |  |          |      |   |             |       |    |               |   |        | (1,345   | ) |   |               | 1,346  |   |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Amortization of unearned compensation      |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               | 948    |   |       |        |  |  |         |      |   |  |      |         | 948   |        
|                              | Comprehensive loss:                        |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |        
|                              |                                            | Other comprehensive (loss) income: |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |         |        
|                              |                                            |                                    | Unrealized loss on marketable securities |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | (228 | )       |       |         | (228    | )
|                              |                                            |                                    | Translation adjustment                   |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | 26   |         |       |         | 26      |  
|                              |                                            |                                    | Net loss                                 |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  | (12,792 | )    |   |  |      |         |       |         | (12,792 | )
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|                              |                                            | Comprehensive loss                 |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       | (12,994 | )      
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|Balance at October 3, 2004    |                                            |                                    | 8,778                                    |      |              |   | 88 |            |   |  | 800      |      |   |             | 8     |    |               |   | 41,522 |          |   |   | (3,737        | )      |   |       | 25,698 |  |  |         | (68  | ) |  |      | 63,511  |      
|                              | Activity of Employee Stock Purchase Plan   |                                    |                                          | 23   |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        | 176      |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         | 176   |        
|                              | Stock-based compensation                   |                                    |                                          | 10   |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        | 126      |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         | 126   |        
|                              | Conversion upon transfer to non-affiliates |                                    |                                          | 2    |              |   |    |            |   |  |          | (2   | ) |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |      |        
|                              | Amortization of unearned compensation      |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               | 1,355  |   |       |        |  |  |         |      |   |  |      |         | 1,355 |        
|                              | Comprehensive loss:                        |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |        
|                              |                                            | Other comprehensive (loss) income: |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       |         |        
|                              |                                            |                                    | Unrealized loss on marketable securities |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | (186 | )       |       |         | (186    | )
|                              |                                            |                                    | Translation adjustment                   |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  | 125  |         |       |         | 125     |  
|                              |                                            |                                    | Net loss                                 |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  | (3,568  | )    |   |  |      |         |       |         | (3,568  | )
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|                              |                                            | Comprehensive loss                 |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |        |  |  |         |      |   |  |      |         |       | (3,629  | )      
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       
|Balance at October 2, 2005    |                                            |                                    | 8,813                                    |      |              | $ | 88 |            |   |  | 798      |      |   | $           | 8     |    |               | $ | 41,824 |          |   | $ | (2,382        | )      |   | $     | 22,130 |  |  | $       | (129 | ) |  | $    | 61,539  |      
|                              |                                            |                                    |                                          |      |              |   |    |            |   |  |          |      |   |             |       |    |               |   |        |          |   |   |               |        |   |       |       



F-6



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##### Table of Contents



REMEDYTEMP, INC.





CONSOLIDATED STATEMENTS OF CASH FLOWS


|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |   |       |         |         |   |       |        |  
|---------------------------------------------------- | ---------------------------------------------------------------------- | ---------------------------------------------------------------------------- | ----------------------------------------------------------------------------------- | ------------------------------------------- | ---------- | ----- | ------ | ------------- | - | ----- | ------- | ------- | - | ----- | ------ | -
|                                                     |                                                                        | October 2,                                                                   |                                                                                     |                                             | October 3, |       |        | September 28, |  
|                                                     |                                                                        | 2005                                                                         |                                                                                     |                                             | 2004       |       |        | 2003          |  
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|                                                     |                                                                        | (Amounts in thousands)                                                       |                                                                                    
|Cash flows from operating activities:                |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |   |       |         |        
|                                                     | Net loss                                                               |                                                                              | $                                                                                   | (3,568                                      | )          |       | $      | (12,792       | ) |       | $       | (29,243 | )
|                                                     |                                                                        | Adjustments to reconcile net loss to net cash from operating
    activities: |                                                                                     |                                             |            |       |        |               |   |       |         |         |   |      
|                                                     |                                                                        |                                                                              | Cumulative effect of adoption of a new accounting standard, net
    of income taxes |                                             |            |      |        |               |   |      |         |         |   | 2,421 |       
|                                                     |                                                                        |                                                                              | Depreciation and amortization                                                       |                                             |            | 5,038 |        |               |   | 5,844 |         |         |   | 6,778 |       
|                                                     |                                                                        |                                                                              | (Recovery of) provision for losses on accounts receivable                           |                                             |            | (95   | )      |               |   | 1,213 |         |         |   | 1,357 |       
|                                                     |                                                                        |                                                                              | Stock-based compensation expense                                                    |                                             |            | 1,427 |        |               |   | 1,054 |         |         |   | 1,459 |       
|                                                     |                                                                        |                                                                              | Gain on sale of securities                                                          |                                             |            | (5    | )      |               |   | (70   | )       |         |   | (8    | )     
|                                                     |                                                                        |                                                                              | Deferred income taxes                                                               |                                             |            |      |        |               |   |      |         |         |   | 7,080 |       
|                                                     |                                                                        |                                                                              | Other                                                                               |                                             |            | 90    |        |               |   |      |         |         |   | 725   |       
|                                                     |                                                                        |                                                                              | Changes in assets and liabilities, net of purchase of franchises:                   |                                             |            |       |        |               |   |       |         |         |   |       |       
|                                                     |                                                                        |                                                                              |                                                                                     | Trading investments                         |            |       | (610   | )             |   |       | (507    | )       |   |       | (862   | )
|                                                     |                                                                        |                                                                              |                                                                                     | Accounts receivable                         |            |       | 2,460  |               |   |       | (3,771  | )       |   |       | (227   | )
|                                                     |                                                                        |                                                                              |                                                                                     | Prepaid expenses and other current assets   |            |       | (1,007 | )             |   |       | (2,484  | )       |   |       | (934   | )
|                                                     |                                                                        |                                                                              |                                                                                     | Other assets                                |            |       | 51     |               |   |       | 1,004   |         |   |       | 701    |  
|                                                     |                                                                        |                                                                              |                                                                                     | Accounts payable                            |            |       | (2,950 | )             |   |       | (595    | )       |   |       | 1,639  |  
|                                                     |                                                                        |                                                                              |                                                                                     | Other liabilities                           |            |       | 1,407  |               |   |       | 3,182   |         |   |       | 15,809 |  
|                                                     |                                                                        |                                                                              |                                                                                     | Accrued CIGA litigation costs               |            |       |       |               |   |       | 5,877   |         |   |       |       |  
|                                                     |                                                                        |                                                                              |                                                                                     | Accrued payroll, benefits and related costs |            |       | 41     |               |   |       | 408     |         |   |       | 3,743  |  
|                                                     |                                                                        |                                                                              |                                                                                     | Accrued licensees share of gross profit    |            |       | (115   | )             |   |       | 514     |         |   |       | (635   | )
|                                                     |                                                                        |                                                                              |                                                                                     | Other accrued expenses                      |            |       | 2,992  |               |   |       | 458     |         |   |       | (407   | )
|                                                     |                                                                        |                                                                              |                                                                                     | Income taxes payable                        |            |       | 1,140  |               |   |       | 170     |         |   |       | 13     |  
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Net cash provided by (used in) operating activities  |                                                                        |                                                                              | 6,296                                                                               |                                             |            |       | (495   | )             |   |       | 9,409   |        
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Cash flows from investing activities:                |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |   |       |         |        
|                                                     | Purchase of fixed assets                                               |                                                                              |                                                                                     | (3,345                                      | )          |       |        | (3,365        | ) |       |         | (2,622  | )
|                                                     | Purchase of available-for-sale investments                             |                                                                              |                                                                                     | (10,661                                     | )          |       |        | (28,033       | ) |       |         | (31,628 | )
|                                                     | Proceeds from maturity and sales of available-for-sale
    investments |                                                                              |                                                                                     | 10,128                                      |            |       |        | 43,396        |   |       |         | 26,499  |  
|                                                     | Restricted cash and investments                                        |                                                                              |                                                                                     | 16,035                                      |            |       |        | (16,440       | ) |       |         | (2,103  | )
|                                                     | Purchase of franchises                                                 |                                                                              |                                                                                     | (875                                        | )          |       |        | (1,443        | ) |       |         | (3,763  | )
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Net cash provided by (used in) investing activities  |                                                                        |                                                                              | 11,282                                                                              |                                             |            |       | (5,885 | )             |   |       | (13,617 | )      
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Cash flows from financing activities:                |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |   |       |         |        
|                                                     | Proceeds from stock option activity                                    |                                                                              |                                                                                     |                                            |            |       |        | 8             |   |       |         |        |  
|                                                     | Proceeds from Employee Stock Purchase Plan activity                    |                                                                              |                                                                                     | 176                                         |            |       |        | 185           |   |       |         | 112     |  
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Net cash provided by financing activities            |                                                                        |                                                                              | 176                                                                                 |                                             |            |       | 193    |               |   |       | 112     |        
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Effect of exchange rate changes in cash              |                                                                        |                                                                              | 125                                                                                 |                                             |            |       | 26     |               |   |       | 21      |        
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Net increase (decrease) in cash and cash equivalents |                                                                        |                                                                              | 17,879                                                                              |                                             |            |       | (6,161 | )             |   |       | (4,075  | )      
|Cash and cash equivalents at beginning of year       |                                                                        |                                                                              | 7,075                                                                               |                                             |            |       | 13,236 |               |   |       | 17,311  |        
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Cash and cash equivalents at end of year             |                                                                        | $                                                                            | 24,954                                                                              |                                             |            | $     | 7,075  |               |   | $     | 13,236  |        
|                                                     |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |  
|Other cash flow information:                         |                                                                        |                                                                              |                                                                                     |                                             |            |       |        |               |   |       |         |        
|                                                     | Cash paid for interest                                                 |                                                                              | $                                                                                   | 628                                         |            |       | $      | 487           |   |       | $       | 348     |  
|                                                     | Cash (refund) paid for income taxes, net                               |                                                                              | $                                                                                   | (172                                        | )          |       | $      | (512          | ) |       | $       | 445     |  



F-7



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(Amounts in thousands, except per share amounts)







|   |                                                                           
|-- | --------------------------------------------------------------------------
|1. | Description of business and summary of significant accounting
    policies



| |                        
| | -----------------------
| | Description of business







| |                      
| | ---------------------
| | Basis of presentation





| |             
| | ------------
| | Fiscal years





| |                    
| | -------------------
| | Revenue recognition



Recording Revenue Gross as a
Principal versus Net as an Agent




F-8



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










| |                                                                      
| | ---------------------------------------------------------------------
| | Concentrations of credit risk and allowance for doubtful
    accounts





| |                                                                             
| | ----------------------------------------------------------------------------
| | Use of estimates in the preparation of consolidated
    financial statements



F-9



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                    
| | -----------------------------------
| | Fair value of financial instruments





| |                 
| | ----------------
| | Foreign currency





| |                          
| | -------------------------
| | Cash and cash equivalents





| |                                        
| | ---------------------------------------
| | Accounting for stock-based compensation

Accounting for
Stock-Based Compensation Accounting for Stock-Based
Compensation  Transition and Disclosure Accounting for Stock Issued to Employees




|                                                                                                     |  |                            |        |   |            |   |         |               |  |   |         |  
|---------------------------------------------------------------------------------------------------- |  | -------------------------- | ------ | - | ---------- | - | ------- | ------------- |  | - | ------- | -
|                                                                                                     |  | For the Fiscal Years Ended |       
|                                                                                                     |  |                            |       
|                                                                                                     |  | October 2,                 |        |   | October 3, |   |         | September 28, | 
|                                                                                                     |  | 2005                       |        |   | 2004       |   |         | 2003          | 
|                                                                                                     |  |                            |        |   |            |   |         |               | 
|Net loss, as reported                                                                                |  | $                          | (3,568 | ) |            | $ | (12,792 | )             |  | $ | (29,243 | )
|Deduct: total stock-based employee compensation expense
    determined under fair value based method |  |                            | (934   | ) |            |   | (494    | )             |  |   | (425    | )
|                                                                                                     |  |                            |        |   |            |   |         |               | 
|Net loss, as adjusted                                                                                |  | $                          | (4,502 | ) |            | $ | (13,286 | )             |  | $ | (29,668 | )
|                                                                                                     |  |                            |        |   |            |   |         |               | 
|Basic and diluted net loss per share:                                                                |  |                            |        |   |            |   |         |               |  |   |         |  
|As reported                                                                                          |  | $                          | (0.39  | ) |            | $ | (1.42   | )             |  | $ | (3.25   | )
|                                                                                                     |  |                            |        |   |            |   |         |               | 
|As adjusted                                                                                          |  | $                          | (0.50  | ) |            | $ | (1.47   | )             |  | $ | (3.29   | )
|                                                                                                     |  |                            |        |   |            |   |         |               | 

F-10



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                                    |       |                            |       |       |            |   |     |               |  |   |       |       | 
|--------------------------------------------------- | ----- | -------------------------- | ----- | ----- | ---------- | - | --- | ------------- |  | - | ----- | ----- | 
|                                                    |       | For the Fiscal Years Ended |      
|                                                    |       |                            |      
|                                                    |       | October 2,                 |       |       | October 3, |   |     | September 28, | 
|                                                    |       | 2005                       |       |       | 2004       |   |     | 2003          | 
|                                                    |       |                            |       |       |            |   |     |               | 
|Restricted stock-based compensation expense         |       | $                          | 1,355 |       |            | $ | 948 |               |  | $ | 1,338 |      
|Board of Directors stock-based compensation expense |       |                            | 71    |       |            |   | 106 |               |  |   | 120   |      
|Other stock-based compensation expense              |       |                            | 1     |       |            |   |    |               |  |   | 1     |      
|                                                    |       |                            |       |       |            |   |     |               | 
|                                                    | Total |                            | $     | 1,427 |            |   | $   | 1,054         |  |   | $     | 1,459 | 
|                                                    |       |                            |       |       |            |   |     |               | 





Share-Based Payment


F-11



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |            
| | -----------
| | Investments

Accounting for Certain Investments in
Debt and Equity Securities


|                                                                |                                      |                 |        |        |            |   |      |            |   |   |        |        | 
|--------------------------------------------------------------- | ------------------------------------ | --------------- | ------ | ------ | ---------- | - | ---- | ---------- | - | - | ------ | ------ | 
|                                                                |                                      | October 2, 2005 |       
|                                                                |                                      |                 |       
|                                                                |                                      |                 |        | Gross  |            |   |     
|                                                                |                                      | Adjusted        |        |        | Unrealized |   |      |           
|                                                                |                                      | Cost            |        |        | Losses     |   |      | Fair Value |  
|                                                                |                                      |                 |        |        |            |   |      |            |  
|Available-for-sale investments:                                 |                                      |                 |        |        |            |   |      |            |   |   |        |       
|U.S. government securities                                      |                                      | $               | 22,409 |        |            | $ | (301 | )          |   | $ | 22,108 |       
|Mutual funds                                                    |                                      |                 | 68     |        |            |   |     |            |   |   | 68     |       
|                                                                |                                      |                 |        |        |            |   |      |            |  
|                                                                | Total available-for-sale investments |                 | $      | 22,477 |            |   | $    | (301       | ) |   | $      | 22,176 | 
|                                                                |                                      |                 |        |        |            |   |      |            |  
|Classified as:                                                  |                                      |                 |        |        |            |   |      |            |   |   |        |       
|Available-for-sale                                              |                                      |                 |        |        |            |   |      |            |   | $ | 22,176 |       
|Trading (deferred compensation plan)                            |                                      |                 |        |        |            |   |      |            |   |   | 3,771  |       
|Cash and cash equivalents                                       |                                      |                 |        |        |            |   |      |            |   |   | 405    |       
|                                                                |                                      |                 |        |        |            |   |      |            |  
|                                                                | Total                                |                 |        |        |            |   |      |            |   |   | $      | 26,352 | 
|                                                                |                                      |                 |        |        |            |   |      |            |  
|Reported as:                                                    |                                      |                 |        |        |            |   |      |            |   |   |        |       
|Investments                                                     |                                      |                 |        |        |            |   |      |            |   | $ | 692    |       
|Restricted investments, short-term (deferred compensation plan) |                                      |                 |        |        |            |   |      |            |   |   | 3,771  |       
|Restricted cash and investments, long-term                      |                                      |                 |        |        |            |   |      |            |   |   | 21,889 |       
|                                                                |                                      |                 |        |        |            |   |      |            |  
|                                                                | Total                                |                 |        |        |            |   |      |            |   |   | $      | 26,352 | 
|                                                                |                                      |                 |        |        |            |   |      |            |  

F-12



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


|                                           |                                      |                 |        |        |            |   |      |            |   |   |        |        | 
|------------------------------------------ | ------------------------------------ | --------------- | ------ | ------ | ---------- | - | ---- | ---------- | - | - | ------ | ------ | 
|                                           |                                      | October 3, 2004 |       
|                                           |                                      |                 |       
|                                           |                                      |                 |        | Gross  |            |   |     
|                                           |                                      | Adjusted        |        |        | Unrealized |   |      |           
|                                           |                                      | Cost            |        |        | Losses     |   |      | Fair Value |  
|                                           |                                      |                 |        |        |            |   |      |            |  
|Available-for-sale investments:            |                                      |                 |        |        |            |   |      |            |   |   |        |       
|U.S. government securities                 |                                      | $               | 15,472 |        |            | $ | (115 | )          |   | $ | 15,357 |       
|Auction rate securities                    |                                      |                 | 6,400  |        |            |   |     |            |   |   | 6,400  |       
|Mutual funds                               |                                      |                 | 66     |        |            |   |     |            |   |   | 66     |       
|                                           |                                      |                 |        |        |            |   |      |            |  
|                                           | Total available-for-sale investments |                 | $      | 21,938 |            |   | $    | (115       | ) |   | $      | 21,823 | 
|                                           |                                      |                 |        |        |            |   |      |            |  
|Classified as:                             |                                      |                 |        |        |            |   |      |            |   |   |        |       
|Available-for-sale                         |                                      |                 |        |        |            |   |      |            |   | $ | 21,823 |       
|Trading (deferred compensation plan)       |                                      |                 |        |        |            |   |      |            |   |   | 3,161  |       
|Cash and cash equivalents                  |                                      |                 |        |        |            |   |      |            |   |   | 441    |       
|Certificate of deposit                     |                                      |                 |        |        |            |   |      |            |   |   | 16,000 |       
|                                           |                                      |                 |        |        |            |   |      |            |  
|                                           | Total                                |                 |        |        |            |   |      |            |   |   | $      | 41,425 | 
|                                           |                                      |                 |        |        |            |   |      |            |  
|Reported as:                               |                                      |                 |        |        |            |   |      |            |   |   |        |       
|Investments                                |                                      |                 |        |        |            |   |      |            |   | $ | 339    |       
|Restricted investments, short-term         |                                      |                 |        |        |            |   |      |            |   |   | 19,161 |       
|Restricted cash and investments, long-term |                                      |                 |        |        |            |   |      |            |   |   | 21,925 |       
|                                           |                                      |                 |        |        |            |   |      |            |  
|                                           | Total                                |                 |        |        |            |   |      |            |   |   | $      | 41,425 | 
|                                           |                                      |                 |        |        |            |   |      |            |  





|                      |       |            |   |   |            |   |    |    | 
|--------------------- | ----- | ---------- | - | - | ---------- | - | -- | -- | 
|                      |       | October 2, |   |   | October 3, |  
|                      |       | 2005       |   |   | 2004       |  
|                      |       |            |   |   |            |  
|Gross realized gains  |       | $          | 5 |   |            | $ | 76 |   
|Gross realized losses |       |            |  |   |            |   | (5 | ) 
|                      |       |            |   |   |            |  
|                      | Total |            | $ | 5 |            |   | $  | 71 | 
|                      |       |            |   |   |            |  



|                           |  |            |     |  |            |   |     | 
|-------------------------- |  | ---------- | --- |  | ---------- | - | --- | 
|                           |  | October 2, |     |  | October 3, |  
|                           |  | 2005       |     |  | 2004       |  
|                           |  |            |     |  |            |  
|Net holding gains (losses) |  | $          | 317 |  |            | $ | 193 | 

F-13



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                           |  |                     |       |  |                        |   |     |       |  |   |            |  |  |       |      |   |            |   |        |  |  |   |      |  
|-------------------------- |  | ------------------- | ----- |  | ---------------------- | - | --- | ----- |  | - | ---------- |  |  | ----- | ---- | - | ---------- | - | ------ |  |  | - | ---- | -
|                           |  | Less than 12 Months |       |  | Greater than 12 Months |   |     | Total | 
|                           |  |                     |       |  |                        |   |     |       | 
|                           |  | Fair                |       |  | Unrealized             |   |     | Fair  |  |   | Unrealized |  |  | Fair  |      |   | Unrealized |  
|                           |  | Value               |       |  | Loss                   |   |     | Value |  |   | Loss       |  |  | Value |      |   | Loss       |  
|                           |  |                     |       |  |                        |   |     |       |  |   |            |  |  |       |      |   |            |  
|U.S. government securities |  | $                   | 7,892 |  |                        | $ | (76 | )     |  | $ | 14,216     |  |  | $     | (225 | ) |            | $ | 22,108 |  |  | $ | (301 | )



|                                   |       |                 |        |        |            |   |        |        | 
|---------------------------------- | ----- | --------------- | ------ | ------ | ---------- | - | ------ | ------ | 
|                                   |       | October 2, 2005 |       
|                                   |       |                 |       
|                                   |       | Cost Basis      |        |        | Fair Value |  
|                                   |       |                 |        |        |            |  
|Due within one year                |       | $               | 7,968  |        |            | $ | 7,892  |       
|Due after one year through 3 years |       |                 | 14,509 |        |            |   | 14,284 |       
|                                   |       |                 |        |        |            |  
|                                   | Total |                 | $      | 22,477 |            |   | $      | 22,176 | 
|                                   |       |                 |        |        |            |  

|                                   |       |                 |        |        |            |   |        |        | 
|---------------------------------- | ----- | --------------- | ------ | ------ | ---------- | - | ------ | ------ | 
|                                   |       | October 3, 2004 |       
|                                   |       |                 |       
|                                   |       | Cost Basis      |        |        | Fair Value |  
|                                   |       |                 |        |        |            |  
|Due within one year                |       | $               | 6,400  |        |            | $ | 6,400  |       
|Due after one year through 3 years |       |                 | 15,538 |        |            |   | 15,423 |       
|                                   |       |                 |        |        |            |  
|                                   | Total |                 | $      | 21,938 |            |   | $      | 21,823 | 
|                                   |       |                 |        |        |            |  



| |             
| | ------------
| | Fixed assets



Accounting for the Impairment or
Disposal of Long-Lived Assets




Accounting for the Cost of


F-14



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)


Computer Software Developed or Obtained for Internal Use






| |                                     
| | ------------------------------------
| | Goodwill and other intangible assets

Goodwill and
Intangible Assets




F-15



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |                                                                           |            |       |     |            |   |       |     |  
|----------------- | ------------------------------------------------------------------------- | ---------- | ----- | --- | ---------- | - | ----- | --- | -
|                  |                                                                           | October 2, |       |     | October 3, |  
|                  |                                                                           | 2005       |       |     | 2004       |  
|                  |                                                                           |            |       |     |            |  
|Beginning balance |                                                                           | $          | 3,703 |     |            | $ | 3,030 |    
|                  | Goodwill recorded in connection with purchase of franchise
    operations |            |       |    |            |   |       | 700 |  
|                  | Goodwill recorded in connection with contingent consideration
    earned  |            |       | 875 |            |   |       |    |  
|                  | Other adjustments                                                         |            |       | (95 | )          |   |       | (27 | )
|                  |                                                                           |            |       |     |            |  
|Ending balance    |                                                                           | $          | 4,483 |     |            | $ | 3,703 |    
|                  |                                                                           |            |       |     |            |  





|                           |       |                 |       |             |              |   |      |        |   |   |       |       | 
|-------------------------- | ----- | --------------- | ----- | ----------- | ------------ | - | ---- | ------ | - | - | ----- | ----- | 
|                           |       | October 2, 2005 |      
|                           |       |                 |      
|                           |       |                 |       | Accumulated |              |   |     
|                           |       | Gross           |       |             | Amortization |   |      | Net    |  
|                           |       |                 |       |             |              |   |      |        |  
|Franchise rights           |       | $               | 2,090 |             |              | $ | (780 | )      |   | $ | 1,310 |      
|Client relationships       |       |                 | 470   |             |              |   | (254 | )      |   |   | 216   |      
|Non-competition agreements |       |                 | 414   |             |              |   | (210 | )      |   |   | 204   |      
|                           |       |                 |       |             |              |   |      |        |  
|                           | Total |                 | $     | 2,974       |              |   | $    | (1,244 | ) |   | $     | 1,730 | 
|                           |       |                 |       |             |              |   |      |        |  

|                           |       |                 |       |             |              |   |      |      |   |   |       |       | 
|-------------------------- | ----- | --------------- | ----- | ----------- | ------------ | - | ---- | ---- | - | - | ----- | ----- | 
|                           |       | October 3, 2004 |      
|                           |       |                 |      
|                           |       |                 |       | Accumulated |              |   |     
|                           |       | Gross           |       |             | Amortization |   |      | Net  |  
|                           |       |                 |       |             |              |   |      |      |  
|Franchise rights           |       | $               | 2,090 |             |              | $ | (446 | )    |   | $ | 1,644 |      
|Client relationships       |       |                 | 470   |             |              |   | (120 | )    |   |   | 350   |      
|Non-competition agreements |       |                 | 414   |             |              |   | (134 | )    |   |   | 280   |      
|                           |       |                 |       |             |              |   |      |      |  
|                           | Total |                 | $     | 2,974       |              |   | $    | (700 | ) |   | $     | 2,274 | 
|                           |       |                 |       |             |              |   |      |      |  





|     |       |   |     |       | 
|---- | ----- | - | --- | ----- | 
|2006 |       | $ | 542 |      
|2007 |       |   | 493 |      
|2008 |       |   | 379 |      
|2009 |       |   | 242 |      
|2010 |       |   | 74  |      
|     |       |   |    
|     | Total |   | $   | 1,730 | 
|     |       |   |    

F-16



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




| |                  
| | -----------------
| | Other income, net





| |                  
| | -----------------
| | Advertising costs





| |             
| | ------------
| | Income taxes

Accounting for Income Taxes




| |                           
| | --------------------------
| | Variable interest entities

Consolidation of Variable Interest Entities






| |                  
| | -----------------
| | Reclassifications



F-17



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                  |  |                |       |  |                 |   |               |  |                |      |       |            |             |   |     |       |  |   |       |  |  |   |       | 
|----------------- |  | -------------- | ----- |  | --------------- | - | ------------- |  | -------------- | ---- | ----- | ---------- | ----------- | - | --- | ----- |  | - | ----- |  |  | - | ----- | 
|                  |  | As Reported    |       |  | As Reclassified |  
|                  |  |                |       |  |                 |  
|                  |  | Cash and Cash  |       |  |                 |   | Cash and Cash |  |                |     
|                  |  | Equivalents    |       |  |                 |   | Equivalents   |  |                |     
|                  |  | and Restricted |       |  | Restricted      |   |               |  | and Restricted |      |       | Restricted |             |   |    
|Fiscal Year Ended |  | Cash           |       |  | Investments     |   | Total         |  |                | Cash |       |            | Investments |   |     | Total | 
|                  |  |                |       |  |                 |   |               |  |                |      |       |            |             |   |     |       | 
|2005              |  | $              |      |  |                 | $ |              |  |                | $    |      |            |             | $ |    |       |  | $ |      |  |  | $ |      | 
|2004              |  |                | 6,400 |  |                 |   |              |  |                |      | 6,400 |            |             |   | 457 |       |  |   | 5,943 |  |  |   | 6,400 | 
|2003              |  |                | 4,900 |  |                 |   |              |  |                |      | 4,900 |            |             |   |    |       |  |   | 4,900 |  |  |   | 4,900 | 

|                  |  |             |       |          |                 |   |       |            |          |   |             |   |  |            |       |  |            |   |       |  |  |   |         |  
|----------------- |  | ----------- | ----- | -------- | --------------- | - | ----- | ---------- | -------- | - | ----------- | - |  | ---------- | ----- |  | ---------- | - | ----- |  |  | - | ------- | -
|                  |  | As Reported |       |          | As Reclassified |  
|                  |  |             |       |          |                 |  
|                  |  |             |       | Net cash |                 |   |       |            | Net Cash |  
|                  |  | Restricted  |       |          | Provided By     |   |       | Restricted |          |   | Provided By |  
|                  |  | Investment  |       |          | (Used In)       |   |       | Investment |          |   | (Used In)   |  
|                  |  |             |       |          | Investing       |   |       |            |          |   | Investing   |  
|Fiscal Year Ended |  | Purchases   |       |          | Maturities      |   |       | Activities |          |   | Purchases   |   |  | Maturities |       |  | Activities |  
|                  |  |             |       |          |                 |   |       |            |          |   |             |   |  |            |       |  |            |  
|2005              |  | $           |      |          |                 | $ | 6,400 |            |          | $ | 11,282      |   |  | $          |      |  |            | $ | 6,400 |  |  | $ | 11,282  |  
|2004              |  |             | 1,500 |          |                 |   |      |            |          |   | (5,680      | ) |  |            | 6,400 |  |            |   | 4,900 |  |  |   | (5,885  | )
|2003              |  |             |      |          |                 |   | 3,890 |            |          |   | (22,415     | ) |  |            | 5,525 |  |            |   | 9,415 |  |  |   | (13,617 | )



| |                  
| | -----------------
| | Segment Reporting





| |                         
| | ------------------------
| | New Accounting Standards

Accounting
Changes and Error Corrections  a replacement of APB
No. 20 and FAS No. 3


Share-Based Payments


F-18



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






Exchanges of Nonmonetary Assets  An Amendment of
APB Opinion No. 29, Accounting for Nonmonetary Transactions Accounting for Nonmonetary Transactions,


Accounting and Disclosure
Guidance for the Foreign Earnings Repatriation Provision within
the American Jobs Creation Act of 2004 Accounting for Income Taxes


Determining the Amortization Period of
Leasehold Improvements or Acquired in a Business Combination


F-19



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |             
|-- | ------------
|2. | Fixed assets



|                                               |  |            |        |  |            |   |        | 
|---------------------------------------------- |  | ---------- | ------ |  | ---------- | - | ------ | 
|                                               |  | October 2, |        |  | October 3, |  
|                                               |  | 2005       |        |  | 2004       |  
|                                               |  |            |        |  |            |  
|Computer equipment and software                |  | $          | 25,542 |  |            | $ | 24,807 | 
|Furniture and fixtures                         |  |            | 6,244  |  |            |   | 5,751  | 
|Leasehold improvements                         |  |            | 2,558  |  |            |   | 2,480  | 
|Construction in progress                       |  |            | 1,940  |  |            |   | 974    | 
|                                               |  |            |        |  |            |  
|                                               |  |            | 36,284 |  |            |   | 34,012 | 
|Less accumulated depreciation and amortization |  |            | 26,588 |  |            |   | 23,423 | 
|                                               |  |            |        |  |            |  
|Fixed assets, net                              |  | $          | 9,696  |  |            | $ | 10,589 | 
|                                               |  |            |        |  |            |  





|   |                      
|-- | ---------------------
|3. | Workers compensation





F-20



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|          |                                                                             |                               |   |        |            |  |   |        |        | 
|--------- | --------------------------------------------------------------------------- | ----------------------------- | - | ------ | ---------- |  | - | ------ | ------ | 
|          |                                                                             | October 2,                    |   |        | October 3, | 
|          |                                                                             | 2005                          |   |        | 2004       | 
|          |                                                                             |                               |   |        |            | 
|Current   |                                                                             |                               |   |        |            |  |   |       
|          | Liability for various state funds and previous guaranteed cost
    policies |                               | $ | 2,552  |            |  | $ | 2,677  |       
|          | Accrued workers compensation                                               |                               |   | 11,974 |            |  |   | 12,359 |       
|          |                                                                             |                               |   |        |            | 
|          |                                                                             | Accrued workers compensation |   | $      | 14,526     |  |   | $      | 15,036 | 
|          |                                                                             |                               |   |        |            | 
|Long-term |                                                                             |                               |   |        |            |  |   |       
|          | Other liabilities                                                           |                               | $ | 116    |            |  | $ | 300    |       
|          | Accrued CIGA litigation                                                     |                               |   | 5,877  |            |  |   | 5,877  |       
|          | Accrued workers compensation                                               |                               |   | 26,307 |            |  |   | 24,090 |       
|          |                                                                             |                               |   |        |            | 
|          |                                                                             | Other liabilities             |   | $      | 32,300     |  |   | $      | 30,267 | 
|          |                                                                             |                               |   |        |            | 







|   |               
|-- | --------------
|4. | Line of credit





F-21



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|   |             
|-- | ------------
|5. | Income taxes



|                                                 |         |                            |     |     |            |   |      |               |   |   |       |       |  
|------------------------------------------------ | ------- | -------------------------- | --- | --- | ---------- | - | ---- | ------------- | - | - | ----- | ----- | -
|                                                 |         | For the Fiscal Years Ended |    
|                                                 |         |                            |    
|                                                 |         | October 2,                 |     |     | October 3, |   |      | September 28, |  
|                                                 |         | 2005                       |     |     | 2004       |   |      | 2003          |  
|                                                 |         |                            |     |     |            |   |      |               |  
|Current tax expense (benefit):                   |         |                            |     |     |            |   |      |               |   |   |       |      
|                                                 | Federal |                            | $   | 579 |            |   | $    | (260          | ) |   | $     | (241  | )
|                                                 | State   |                            |     | 288 |            |   |      | (261          | ) |   |       | 518   |  
|                                                 | Foreign |                            |     | 124 |            |   |      | 198           |   |   |       | 40    |  
|                                                 |         |                            |     |     |            |   |      |               |  
|Total current                                    |         |                            | 991 |     |            |   | (323 | )             |   |   | 317   |      
|Deferred tax expense:                            |         |                            |     |     |            |   |      |               |   |   |       |      
|                                                 | Federal |                            |     |    |            |   |      |              |   |   |       | 5,537 |  
|                                                 | State   |                            |     |    |            |   |      |              |   |   |       | 792   |  
|                                                 |         |                            |     |     |            |   |      |               |  
|Total deferred                                   |         |                            |    |     |            |   |     |               |   |   | 6,329 |      
|                                                 |         |                            |     |     |            |   |      |               |  
|Total provision for (benefit from ) income taxes |         | $                          | 991 |     |            | $ | (323 | )             |   | $ | 6,646 |      
|                                                 |         |                            |     |     |            |   |      |               |  

F-22



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)










|                                                         |                                       |                |         |        |            |   |         |        | 
|-------------------------------------------------------- | ------------------------------------- | -------------- | ------- | ------ | ---------- | - | ------- | ------ | 
|                                                         |                                       | For the Fiscal |        
|                                                         |                                       | Years Ended    |        
|                                                         |                                       |                |        
|                                                         |                                       | October 2,     |         |        | October 3, |  
|                                                         |                                       | 2005           |         |        | 2004       |  
|                                                         |                                       |                |         |        |            |  
|Deferred income tax assets:                              |                                       |                |         |        |            |   |         |       
|                                                         | Deferred compensation                 |                | $       | 2,982  |            |   | $       | 2,476  | 
|                                                         | Accrued workers compensation         |                |         | 15,942 |            |   |         | 14,433 | 
|                                                         | Accrued CIGA litigation costs         |                |         | 2,433  |            |   |         | 2,414  | 
|                                                         | Accrued settlement                    |                |         | 389    |            |   |         |       | 
|                                                         | Bad debt expense                      |                |         | 361    |            |   |         | 1,178  | 
|                                                         | Job tax credits                       |                |         | 4,343  |            |   |         | 2,684  | 
|                                                         | State net operating loss carryforward |                |         | 26     |            |   |         | 122    | 
|                                                         | Other, net                            |                |         | 1,646  |            |   |         | 1,535  | 
|                                                         |                                       |                |         |        |            |  
|Total deferred income tax asset                          |                                       | $              | 28,122  |        |            | $ | 24,842  |       
|                                                         |                                       |                |         |        |            |  
|Prepaid expenses                                         |                                       |                | (814    | )      |            |   | (813    | )     
|Depreciation and amortization                            |                                       |                | (1,418  | )      |            |   | (1,513  | )     
|                                                         |                                       |                |         |        |            |  
|Total deferred income tax liability                      |                                       | $              | (2,232  | )      |            | $ | (2,326  | )     
|                                                         |                                       |                |         |        |            |  
|Net deferred income tax asset before valuation allowance |                                       |                | 25,890  |        |            |   | 22,516  |       
|Valuation allowance                                      |                                       |                | (25,890 | )      |            |   | (22,516 | )     
|                                                         |                                       |                |         |        |            |  
|Net deferred income tax asset                            |                                       | $              |        |        |            | $ |        |       
|                                                         |                                       |                |         |        |            |  

F-23



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|                                              |  |                            |       |    |            |  |       |               |  |  |       |   
|--------------------------------------------- |  | -------------------------- | ----- | -- | ---------- |  | ----- | ------------- |  |  | ----- | --
|                                              |  | For the Fiscal Years Ended |      
|                                              |  |                            |      
|                                              |  | October 2,                 |       |    | October 3, |  |       | September 28, | 
|                                              |  | 2005                       |       |    | 2004       |  |       | 2003          | 
|                                              |  |                            |       |    |            |  |       |               | 
|Federal tax computed at statutory rate        |  |                            | (35.0 | )% |            |  | (35.0 | )%            |  |  | (35.0 | )%
|State taxes, net of federal benefit           |  |                            | (4.6  | )  |            |  | (4.6  | )             |  |  | (4.4  | ) 
|Federal tax credits                           |  |                            | (91.1 | )  |            |  | (6.7  | )             |  |  | (6.7  | ) 
|Meals and entertainment                       |  |                            | 5.5   |    |            |  | 0.6   |               |  |  | 0.6   |   
|Change in valuation allowance                 |  |                            | 171.2 |    |            |  | 43.5  |               |  |  | 75.2  |   
|Change in reserve for uncertain tax positions |  |                            | (6.2  | )  |            |  |      |               |  |  |      |   
|Other                                         |  |                            | (1.3  | )  |            |  | (0.3  | )             |  |  | (0.3  | ) 
|                                              |  |                            |       |    |            |  |       |               | 
|Total provision for income taxes              |  |                            | 38.5  | %  |            |  | (2.5  | )%            |  |  | 29.4  | % 
|                                              |  |                            |       |    |            |  |       |               | 







|   |                                  
|-- | ---------------------------------
|6. | Purchase of franchised operations



F-24



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)








|   |                
|-- | ---------------
|7. | Office closures



F-25



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|   |                                       
|-- | --------------------------------------
|8. | Commitments and contingent liabilities



| |                             
| | ----------------------------
| | Operating and capital leases



|                                                    |       |           |        |        |         |   |     |      | 
|--------------------------------------------------- | ----- | --------- | ------ | ------ | ------- | - | --- | ---- | 
|                                                    |       | Operating |        |        | Capital |  
|                                                    |       | Leases    |        |        | Leases  |  
|                                                    |       |           |        |        |         |  
|2006                                                |       | $         | 4,353  |        |         | $ | 35  |     
|2007                                                |       |           | 3,615  |        |         |   | 35  |     
|2008                                                |       |           | 2,887  |        |         |   | 35  |     
|2009                                                |       |           | 2,189  |        |         |   | 35  |     
|2010                                                |       |           | 1,579  |        |         |   | 28  |     
|Thereafter                                          |       | $         | 7      |        |         | $ |    |     
|                                                    |       |           |        |        |         |  
|Amounts representing interest                       |       |           |       |        |         |   | (30 | )   
|                                                    |       |           | 14,630 |        |         |   | 138 |     
|                                                    |       |           |        |        |         |  
|Less sublease income                                |       |           | (178   | )      |         |   |    |     
|                                                    |       |           |        |        |         |  
|Less: capital lease obligations, short term portion |       |           |       |        |         |   | (22 | )   
|                                                    |       |           |        |        |         |  
|                                                    | Total |           | $      | 14,452 |         |   | $   | $116 | 
|                                                    |       |           |        |        |         |  



|                      |                  |                            |       |       |            |   |       |               |  |   |       |       | 
|--------------------- | ---------------- | -------------------------- | ----- | ----- | ---------- | - | ----- | ------------- |  | - | ----- | ----- | 
|                      |                  | For the Fiscal Years Ended |      
|                      |                  |                            |      
|                      |                  | October 2,                 |       |       | October 3, |   |       | September 28, | 
|                      |                  | 2005                       |       |       | 2004       |   |       | 2003          | 
|                      |                  |                            |       |       |            |   |       |               | 
|Rent expense          |                  | $                          | 5,422 |       |            | $ | 5,199 |               |  | $ | 6,362 |      
|Less: sublease income |                  |                            | (149  | )     |            |   | (175  | )             |  |   | (182  | )    
|                      |                  |                            |       |       |            |   |       |               | 
|                      | Net rent expense |                            | $     | 5,273 |            |   | $     | 5,024         |  |   | $     | 6,180 | 
|                      |                  |                            |       |       |            |   |       |               | 



| |           
| | ----------
| | Litigation



| |                                                          
| | ---------------------------------------------------------
| | Lindsay Welch-Hess v. Remedy Temporary Services,
    Inc.





F-26



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)
















| |     
| | ----
| | CIGA



F-27



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)












| |                 
| | ----------------
| | Other Litigation





| |                  
| | -----------------
| | Other Contingency



F-28



---



##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






|   |                       
|-- | ----------------------
|9. | Employee benefit plans



| |            
| | -----------
| | 401(k) Plan





| |                           
| | --------------------------
| | Deferred Compensation Plan





|    |                                     
|--- | ------------------------------------
|10. | Accumulated other comprehensive loss



|                                           |  |                |      |   |            |   |      |  
|------------------------------------------ |  | -------------- | ---- | - | ---------- | - | ---- | -
|                                           |  | For the Fiscal |     
|                                           |  | Years Ended    |     
|                                           |  |                |     
|                                           |  | October 2,     |      |   | October 3, |  
|                                           |  | 2005           |      |   | 2004       |  
|                                           |  |                |      |   |            |  
|Accumulated unrealized loss on investments |  | $              | (301 | ) |            | $ | (115 | )
|Accumulated translation adjustments        |  |                | 172  |   |            |   | 47   |  
|                                           |  |                |      |   |            |  
|Total accumulated other comprehensive loss |  | $              | (129 | ) |            | $ | (68  | )
|                                           |  |                |      |   |            |  

F-29



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                     
|--- | --------------------
|11. | Shareholders equity



| |                               
| | ------------------------------
| | Earnings per share calculation

Earnings Per Share.




|                                        |                                                                                     |                            |   |        |            |  |   |               |   |  |   |         |  
|--------------------------------------- | ----------------------------------------------------------------------------------- | -------------------------- | - | ------ | ---------- |  | - | ------------- | - |  | - | ------- | -
|                                        |                                                                                     | For the Fiscal Years Ended |  
|                                        |                                                                                     |                            |  
|                                        |                                                                                     | October 2,                 |   |        | October 3, |  |   | September 28, |  
|                                        |                                                                                     | 2005                       |   |        | 2004       |  |   | 2003          |  
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|Numerator:                              |                                                                                     |                            |   |        |            |  |   |               |   |  |   |        
|                                        | Loss before cumulative effect of adoption of a new accounting
    standard          |                            | $ | (3,568 | )          |  | $ | (12,792       | ) |  | $ | (26,822 | )
|                                        | Cumulative effect of adoption of a new accounting standard, net
    of income taxes |                            |   |       |            |  |   |              |   |  |   | 2,421   |  
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|                                        | Net loss                                                                            |                            | $ | (3,568 | )          |  | $ | (12,792       | ) |  | $ | (29,243 | )
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|Denominator:                            |                                                                                     |                            |   |        |            |  |   |               |   |  |   |        
|                                        | Weighted-average number of shares, basic                                            |                            |   | 9,050  |            |  |   | 9,022         |   |  |   | 9,010   |  
|                                        | Effect of dilutive securities: Stock options                                        |                            |   |       |            |  |   |              |   |  |   |        |  
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|                                        | Weighted-average number of shares  assuming dilution                               |                            |   | 9,050  |            |  |   | 9,022         |   |  |   | 9,010   |  
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|Earnings per share  Basic and Diluted: |                                                                                     |                            |   |        |            |  |   |               |   |  |   |        
|                                        | Loss before cumulative effect of adoption of a new accounting
    standard          |                            | $ | (0.39  | )          |  | $ | (1.42         | ) |  | $ | (2.98   | )
|                                        | Cumulative effect of adoption of a new accounting standard, net
    of income taxes |                            |   |       |            |  |   |              |   |  |   | (0.27   | )
|                                        |                                                                                     |                            |   |        |            |  |   |               |  
|                                        | Net loss                                                                            |                            | $ | (0.39  | )          |  | $ | (1.42         | ) |  | $ | (3.25   | )
|                                        |                                                                                     |                            |   |        |            |  |   |               |  





| |                             
| | ----------------------------
| | Employee Stock Purchase Plan



F-30



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)






| |                                           
| | ------------------------------------------
| | Stock Ownership Plan for Outside Directors





| |                   
| | ------------------
| | Phantom Stock Plan





| |                     
| | --------------------
| | Stock Incentive Plan



F-31



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|             |  |             |       |  |     |   |       |      |  |   |       | 
|------------ |  | ----------- | ----- |  | --- | - | ----- | ---- |  | - | ----- | 
|Fiscal Years |  | # of Grants |       |  | Low |   |       | High | 
|             |  |             |       |  |     |   |       |      | 
|2005         |  |             | 77.0  |  |     | $ | 8.08  |      |  | $ | 9.75  | 
|2004         |  |             | 15.0  |  |     |   | 8.26  |      |  |   | 13.28 | 
|2003         |  |             | 158.3 |  |     |   | 10.23 |      |  |   | 12.25 | 





|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |                |  |   |  |  |   |   | 
|------------------------------- |  | ---------------------- | ------ | ---------------- | ------------------- | --------------- | ----- | -------------- | ---------------- |  | -------------- | - |  | ---------------- | ----- |  | -------------- |  | - |  |  | - | - | 
|                                |  |                        |        |                  |                     | Options Outside
|                                |  | Incentive Plan Options |        |                  | Stock Purchase Plan |                 |       | Incentive Plan
|                                |  |                        |        |                  |                     |                 |       |               
|                                |  |                        |        | Weighted-Average |                     |                 |       |                | Weighted-Average |  |                |   |  | Weighted-Average
|                                |  | Shares                 |        |                  | Exercise Price      |                 |       | Shares         |                  |  | Exercise Price |   |  | Shares           |       |  | Exercise Price
|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |               
|Outstanding September 29, 2002  |  |                        | 663.6  |                  |                     | $               | 15.95 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Granted                         |  |                        | 158.3  |                  |                     | $               | 11.91 |                |                  |  | 10.6           |   |  | $                | 10.42 |  |                |  |  |  |  | $ |  | 
|Cancelled                       |  |                        | (120.2 | )                |                     | $               | 15.75 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Exercised                       |  |                        |       |                  |                     | $               |      |                |                  |  | (10.6          | ) |  | $                | 10.42 |  |                |  |  |  |  | $ |  | 
|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |                | 
|Outstanding September 28, 2003  |  |                        | 701.7  |                  |                     | $               | 15.07 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Granted                         |  |                        | 15.0   |                  |                     | $               | 10.46 |                |                  |  | 18.7           |   |  | $                | 9.88  |  |                |  |  |  |  | $ |  | 
|Cancelled                       |  |                        | (45.6  | )                |                     | $               | 13.67 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Exercised                       |  |                        | (0.7   | )                |                     | $               | 11.88 |                |                  |  | (18.7          | ) |  | $                | 9.88  |  |                |  |  |  |  | $ |  | 
|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |                | 
|Outstanding
    October 3, 2004 |  |                        | 670.4  |                  |                     | $               | 15.07 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Granted                         |  |                        | 77.0   |                  |                     | $               | 9.41  |                |                  |  | 22.9           |   |  | $                | 7.69  |  |                |  |  |  |  | $ |  | 
|Cancelled                       |  |                        | (76.9  | )                |                     | $               | 14.65 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|Exercised                       |  |                        |       |                  |                     | $               |      |                |                  |  | (22.9          | ) |  | $                | 7.69  |  |                |  |  |  |  | $ |  | 
|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |                | 
|Outstanding
    October 2, 2005 |  |                        | 670.5  |                  |                     | $               | 14.47 |                |                  |  |               |   |  | $                |      |  |                |  |  |  |  | $ |  | 
|                                |  |                        |        |                  |                     |                 |       |                |                  |  |                |   |  |                  |       |  |                | 

F-32



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|             |  |        |       |               |       |   |       | 
|------------ |  | ------ | ----- | ------------- | ----- | - | ----- | 
|             |  |        |       | Weighted Avg. |      
|Fiscal Years |  | Shares |       |               | Price |  
|             |  |        |       |               |       |  
|2005         |  |        | 660.1 |               |       | $ | 14.53 | 
|2004         |  |        | 531.5 |               |       |   | 15.80 | 
|2003         |  |        | 485.5 |               |       |   | 16.21 | 



|                           |  |      |      |   |      |   |      |      |  |   |      |  
|-------------------------- |  | ---- | ---- | - | ---- | - | ---- | ---- |  | - | ---- | -
|Assumptions                |  | 2005 |      |   | 2004 |   |      | 2003 | 
|                           |  |      |      |   |      |   |      |      | 
|Dividend Yield             |  |      | 0.0  | % |      |   | 0.0  | %    |  |   | 0.0  | %
|Risk-Free Interest         |  |      | 4.04 | % |      |   | 2.43 | %    |  |   | 3.12 | %
|Volatility                 |  |      | 46.0 | % |      |   | 48.9 | %    |  |   | 49.3 | %
|Expected Life              |  |      | 5.6  |   |      |   | 2.8  |      |  |   | 5.6  |  
|Weighted Average Per Share |  | $    | 4.84 |   |      | $ | 4.15 |      |  | $ | 5.83 |  



|                    |                 |                  |                     |  |                |            |  |                  |       |  |        |             |       |                  |       |  |       |  |  |   |       | 
|------------------- | --------------- | ---------------- | ------------------- |  | -------------- | ---------- |  | ---------------- | ----- |  | ------ | ----------- | ----- | ---------------- | ----- |  | ----- |  |  | - | ----- | 
|Options Outstanding |                 |                  | Options Exercisable | 
|                    |                 |                  |                     | 
|                    |                 | Weighted-Average |                     |  |                |            | 
|                    |                 | Shares           |                     |  | Remaining Life |            |  | Weighted-Average |       |  | Shares |             |       | Weighted-Average |      
|Exercise Price      |                 |                  | Outstanding         |  |                | (in years) |  |                  | Price |  |        | Exercisable |       |                  | Price | 
|                    |                 |                  |                     |  |                |            |  |                  |       |  |        |             |       |                  |       | 
|                    | $ 8.00 - $10.0  |                  |                     |  | 0 74.5         |            |  |                  | 9.6   |  |        | $           | 9.26  |                  |       |  | 67.0  |  |  | $ | 9.21  | 
|                    | $10.01 - $13.00 |                  |                     |  | 227.0          |            |  |                  | 4.9   |  |        | $           | 12.13 |                  |       |  | 224.0 |  |  | $ | 12.13 | 
|                    | $13.01 - $16.00 |                  |                     |  | 234.8          |            |  |                  | 4.8   |  |        | $           | 14.74 |                  |       |  | 234.8 |  |  | $ | 14.74 | 
|                    | $16.01 - $20.00 |                  |                     |  | 55.0           |            |  |                  | 3.8   |  |        | $           | 17.58 |                  |       |  | 55.0  |  |  | $ | 17.58 | 
|                    | $20.01 - $25.00 |                  |                     |  | 69.3           |            |  |                  | 2.6   |  |        | $           | 22.64 |                  |       |  | 69.3  |  |  | $ | 22.64 | 
|                    | $25.01 - $30.00 |                  |                     |  | 10.0           |            |  |                  | 2.5   |  |        | $           | 26.19 |                  |       |  | 10.0  |  |  | $ | 26.19 | 

F-33



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##### Table of Contents



REMEDYTEMP, INC.


NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS  (Continued)




|    |                                             
|--- | --------------------------------------------
|13. | Unaudited consolidated quarterly information

|                                                                                                |  |                                   |         |   |          |   |         |         |  |   |            |   |  |   |         |  
|----------------------------------------------------------------------------------------------- |  | --------------------------------- | ------- | - | -------- | - | ------- | ------- |  | - | ---------- | - |  | - | ------- | -
|                                                                                                |  | For the Three Fiscal Months Ended |        
|                                                                                                |  |                                   |        
|                                                                                                |  | January 2,                        |         |   | April 3, |   |         | July 3, |  |   | October 2, |  
|                                                                                                |  | 2005                              |         |   | 2005     |   |         | 2005    |  |   | 2005       |  
|                                                                                                |  |                                   |         |   |          |   |         |         |  |   |            |  
|Total revenues                                                                                  |  | $                                 | 137,356 |   |          | $ | 125,263 |         |  | $ | 122,257    |   |  | $ | 129,398 |  
|Total cost of direct and licensed revenues                                                      |  | $                                 | 110,565 |   |          | $ | 100,431 |         |  | $ | 97,565     |   |  | $ | 102,060 |  
|Licensees share of gross profit                                                                |  | $                                 | 6,468   |   |          | $ | 6,392   |         |  | $ | 6,418      |   |  | $ | 7,005   |  
|Selling and administrative expense, CIGA litigation costs and
    depreciation and amortization |  | $                                 | 20,810  |   |          | $ | 20,544  |         |  | $ | 20,265     |   |  | $ | 20,076  |  
|Net loss                                                                                        |  | $                                 | (22     | ) |          | $ | (1,381  | )       |  | $ | (1,446     | ) |  | $ | (719    | )
|Net loss per share  basic and diluted                                                          |  | $                                 | (0.00   | ) |          | $ | (0.15   | )       |  | $ | (0.16      | ) |  | $ | (0.08   | )

|                                                                                                |  |                                   |         |   |           |   |         |          |  |   |            |   |  |   |         |  
|----------------------------------------------------------------------------------------------- |  | --------------------------------- | ------- | - | --------- | - | ------- | -------- |  | - | ---------- | - |  | - | ------- | -
|                                                                                                |  | For the Three Fiscal Months Ended |        
|                                                                                                |  |                                   |        
|                                                                                                |  | December 28,                      |         |   | March 28, |   |         | June 27, |  |   | October 3, |  
|                                                                                                |  | 2003                              |         |   | 2004      |   |         | 2004     |  |   | 2004       |  
|                                                                                                |  |                                   |         |   |           |   |         |          |  |   |            |  
|Total revenues                                                                                  |  | $                                 | 126,011 |   |           | $ | 115,385 |          |  | $ | 129,250    |   |  | $ | 149,282 |  
|Total cost of direct and licensed revenues                                                      |  | $                                 | 105,521 |   |           | $ | 96,113  |          |  | $ | 105,472    |   |  | $ | 120,276 |  
|Licensees share of gross profit                                                                |  | $                                 | 5,817   |   |           | $ | 5,327   |          |  | $ | 5,900      |   |  | $ | 6,774   |  
|Selling and administrative expense, CIGA litigation costs and
    depreciation and amortization |  | $                                 | 18,190  |   |           | $ | 18,148  |          |  | $ | 19,368     |   |  | $ | 27,469  |  
|Net loss                                                                                        |  | $                                 | (3,316  | ) |           | $ | (4,025  | )        |  | $ | (1,308     | ) |  | $ | (4,143  | )
|Net loss per share  basic and diluted                                                          |  | $                                 | (0.37   | ) |           | $ | (0.45   | )        |  | $ | (0.14      | ) |  | $ | (0.46   | )



F-34



---



##### Table of Contents



REMEDYTEMP, INC.


FINANCIAL STATEMENT SCHEDULE


(Amounts in thousands)





SCHEDULE II  VALUATION AND QUALIFYING
ACCOUNTS


|                                           |  |              |       |  |           |   |       |               |            |   |               |  |  |   |       | 
|------------------------------------------ |  | ------------ | ----- |  | --------- | - | ----- | ------------- | ---------- | - | ------------- |  |  | - | ----- | 
|                                           |  | Balance at   |       |  |           |   |       |               |           
|                                           |  | Beginning of |       |  |           |   |       |               | Balance at |  
|Allowance for Doubtful Accounts Receivable |  | Period       |       |  | Additions |   |       | Deductions(1) |            |   | End of Period | 
|                                           |  |              |       |  |           |   |       |               |            |   |               | 
|Year ended October 2, 2005                 |  | $            | 2,984 |  |           | $ | (95   | )             |            | $ | 1,984         |  |  | $ | 905   | 
|Year ended October 3, 2004                 |  | $            | 2,627 |  |           | $ | 1,213 |               |            | $ | 856           |  |  | $ | 2,984 | 
|Year ended September 28, 2003              |  | $            | 1,913 |  |           | $ | 1,357 |               |            | $ | 643           |  |  | $ | 2,627 | 






|                                       |  |              |        |  |           |   |        |            |            |               |   |  |  |   |        | 
|-------------------------------------- |  | ------------ | ------ |  | --------- | - | ------ | ---------- | ---------- | ------------- | - |  |  | - | ------ | 
|                                       |  | Balance at   |        |  |           |   |        |            |           
|                                       |  | Beginning of |        |  |           |   |        |            | Balance at |              
|Deferred Tax Asset Valuation Allowance |  | Period       |        |  | Additions |   |        | Deductions |            | End of Period |  
|                                       |  |              |        |  |           |   |        |            |            |               |  
|Year ended October 2, 2005             |  | $            | 22,516 |  |           | $ | 3,374  |            |            | $             |  |  |  | $ | 25,890 | 
|Year ended October 3, 2004             |  | $            | 16,879 |  |           | $ | 5,637  |            |            | $             |  |  |  | $ | 22,516 | 
|Year ended September 28, 2003          |  | $            |       |  |           | $ | 16,879 |            |            | $             |  |  |  | $ | 16,879 | 

F-35



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##### Table of Contents



EXHIBIT INDEX


|        |    |             |  |                                                                                                                                                           
|------- | -- | ----------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 3  | .1          |  | Amended and Restated Articles of Incorporation of the Company(a)                                                                                          
|        | 3  | .2          |  | Amended and Restated Bylaws of the Company(e)                                                                                                             
|        | 4  | .1          |  | Specimen Stock Certificate(a)                                                                                                                             
|        | 4  | .2          |  | Shareholder Rights Agreement(a)                                                                                                                           
|        | 10 | .1          |  | *Robert E. McDonough, Sr. Amended and Restated Employment
    Agreement(f)                                                                                
|        | 10 | .2          |  | *Paul W. Mikos Employment Agreement, as amended(g)                                                                                                        
|        | 10 | .3          |  | *Robert E. McDonough, Sr. Amendment No. 1 to Amended
    and Restated Employment Agreement(i)                                                             
|        | 10 | .7          |  | *Deferred Compensation Agreement for Alan M. Purdy(a)                                                                                                     
|        | 10 | .9          |  | Form of Indemnification Agreement entered into by RemedyTemp,
    Inc. and each of its directors and certain executive officers(a)                        
|        | 10 | .11         |  | *Amended and Restated RemedyTemp, Inc. 1996 Stock Incentive Plan
    (effective as of January 1, 2005)                                                    
|        | 10 | .12         |  | *Amended and Restated RemedyTemp, Inc. 1996 Employee Stock
    Purchase Plan (effective as of September 26, 2005)(z)                                      
|        | 10 | .13         |  | Form of Franchising Agreement for Licensed Offices(k)                                                                                                     
|        | 10 | .14         |  | Form of Franchising Agreement for Franchised Offices(a)                                                                                                   
|        | 10 | .15         |  | Form of Licensing Agreement for IntelliSearch®(a)                                                                                                         
|        | 10 | .18         |  | *Additional Deferred Compensation Agreement for Alan M. Purdy(b)                                                                                          
|        | 10 | .19         |  | Lease Agreement between RemedyTemp, Inc. and Parker-Summit,
    LLC(c)                                                                                    
|        | 10 | .22         |  | *RemedyTemp, Inc. Deferred Compensation Plan (effective as of
    January 1, 2005)                                                                        
|        | 10 | .23         |  | *Amended and Restated Employment Agreement for Greg Palmer(m)                                                                                             
|        | 10 | .24         |  | *1998 RemedyTemp, Inc. Amended and Restated Deferred
    Compensation and Stock Ownership Plan for Outside Directors
    (effective as of January 1, 2005)
|        | 10 | .25         |  | Form of Licensing Agreement for i/Search 2000(e)                                                                                                          
|        | 10 | .27         |  | *Paul W. Mikos Severance Agreement and General Release(j)                                                                                                 
|        | 10 | .28         |  | *Gunnar B. Gooding Employment and Severance Letter(l)                                                                                                     
|        | 10 | .29         |  | *Cosmas N. Lykos Employment and Severance Letter(l)                                                                                                       
|        | 10 | .30         |  | *Alan M. Purdy Retirement Agreement and General Release(n)                                                                                                
|        | 10 | .31         |  | *Monty Houdeshell Employment Letter(o)                                                                                                                    
|        | 10 | .34         |  | Amendment No. 2 to the Lease Agreement between RemedyTemp,
    Inc. and Parker-Summit, LLC(q)                                                             
|        | 10 | .36         |  | Business Loan Agreement between Bank of America N.A. and
    RemedyTemp, Inc.(s)                                                                          
|        | 10 | .37         |  | Amended and Restated Credit Agreement between Bank of America,
    N.A. and Remedy Temp, Inc.(t)                                                          
|        | 10 | .38         |  | *Robert E. McDonough, Sr. Amendment No. 2 to Amended
    and Restated Employment Agreement(u)                                                             
|        | 10 | .39         |  | *Short-term Incentive Bonus Plan for Fiscal 2005(v)                                                                                                       
|        | 10 | .40         |  | *Amended Agreement with Janet Hawkins(w)                                                                                                                  
|        | 10 | .41         |  | *Deferred Compensation Plan for Greg Palmer                                                                                                               
|        | 10 | .42         |  | *Form of Change in Control Severance Agreement(x)                                                                                                         
|        | 10 | .43         |  | *Amendment to Amended and Restated Employment Agreement for Greg
    Palmer(y)                                                                            
|        | 10 | .44         |  | *Short-Term Incentive Bonus Plan for Fiscal 2006(aa)                                                                                                      
|        | 10 | .45         |  | *Form of Lock-Up Agreement with certain executive officers(bb)                                                                                            
|        | 10 | .46         |  | Summary of Compensation Arrangements for Named Executive
    Officers and Directors                                                                       



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##### Table of Contents



|        |    |             |  |                                                                                                                                          
|------- | -- | ----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |    |            
|No.     |    | Description
|        |    |            
|        | 23 | .1          |  | Consent of Independent Registered Public Accounting Firm                                                                                 
|        | 31 | .1          |  | Chief Executive Officer Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                      
|        | 31 | .2          |  | Chief Administrative Officer Certification Pursuant to
    Section 302 of the Sarbanes-Oxley Act of 2002                                 
|        | 32 |             |  | Chief Executive Officer and Chief Administrative Officer
    Certifications Pursuant to Section 906 of the
    Sarbanes-Oxley Act of 2002






|    |  |                                                                                                                                                                                                                                                               
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|*   |  | Indicates a management contract or a compensatory plan, contract
    or arrangement.                                                                                                                                                                          
|   
|(a) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Registration Statement on Form S-1 (Reg.
    No. 333-4276), as amended.                                                                                                       
|   
|(b) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 29, 1996.                                                                                           
|   
|(c) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 30, 1997.                                                                                              
|   
|(d) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 28, 1997.                                                                                                
|   
|(e) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 27, 1998.                                                                                                
|   
|(f) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Reports on Form 10-Q for the
    quarterly period ended December 27, 1998.                                                                                          
|   
|(g) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Reports on Form 10-Q for the
    quarterly period ended June 27, 1999 (original agreement)
    and for the quarterly period ended December 31, 2000
    (amendment).
|   
|(h) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended March 28, 1999.                                                                                                    
|   
|(i) |  | Incorporated by reference to exhibit number 10.1 to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 31, 2000.                                                                                                  
|   
|(j) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended April 1, 2001.                                                                                               
|   
|(k) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended July 1, 2001.                                                                                                
|   
|(l) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 30, 2001.                                                                                                
|   
|(m) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended December 30, 2001.                                                                                           
|   
|(n) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended June 30, 2002.                                                                                               
|   
|(o) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 29, 2002.                                                                                                
|   
|(p) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended June 29, 2003.                                                                                               
|   
|(q) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Annual Report on Form 10-K for the yearly
    period ended September 28, 2003.                                                                                                
|   
|(r) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 28, 2004.                                                                                              
|   
|(s) |  | Incorporated by reference to the exhibit of same number to the
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended March 28, 2004.                                                                                              



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##### Table of Contents





|     |  |                                                                                                                                                              
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------
|(t)  |  | Incorporated by reference to the exhibit of same number to
    Registrants Current Report on Form 8-K filed on
    December 3, 2004.                        
|    
|(u)  |  | Incorporated by reference to the exhibit of same number to
    Registrants Quarterly Report on Form 10-Q for the
    quarterly period ended January 2, 2005.
|    
|(v)  |  | Incorporated by reference to Item 1.01 of the
    Registrants Current Report on Form 8-K filed on
    February 1, 2005.                                     
|    
|(w)  |  | Incorporated by reference to Item 10.1 of the
    Registrants Current Report on Form 8-K filed on
    May 9, 2005.                                          
|    
|(x)  |  | Incorporated by reference to Exhibit 10.1 to
    Registrants Current Report on Form 8-K filed on
    April 22, 2005.                                        
|    
|(y)  |  | Incorporated by reference to Exhibit 10.2 to
    Registrants Current Report on Form 8-K filed on
    April 22, 2005.                                        
|    
|(z)  |  | Incorporated by reference to Exhibit 10.2 to
    Registrants Current Report on Form 8-K filed on
    September 27, 2005.                                    
|    
|(aa) |  | Incorporated by reference to Item 1.01 of the
    Registrants Current Report on Form 8-K filed on
    September 23, 2005.                                   
|    
|(bb) |  | Incorporated by reference to Exhibit 10.1 of the
    Registrants Current Report on Form 8-K filed on
    September 27, 2005.