Exhibit 99.1
Westaff Reports Fiscal 2004 Second Quarter Results
WALNUT CREEK, CA, Wednesday, May 26, 2004 — Westaff, Inc. (NASDAQ: WSTF), a leading provider of temporary light industrial, clerical/administrative and call center staff, today reported financial results for its second fiscal quarter, which ended April 17, 2004.
Revenue for the second quarter of fiscal 2004 was $131.2 million, up $14.7 million or 12.7% from the second quarter of fiscal 2003. Domestic revenue increased 8.2%, primarily as a result of an increase in billed hours of 6.6%. International revenue increased 31.7%, largely due to the effect of favorable exchange rates. Excluding the effect of exchange rate fluctuations, international revenue increased 9.1% reflecting continued sales growth, particularly in the United Kingdom and Australia.
“I am very pleased with the increase in revenue for the quarter,” commented Westaff President and CEO Dwight S. Pedersen. “The increased revenue is an indication of the success of our focused sales and marketing programs as well as a strengthening in the overall economy.”
Gross margin for the quarter was 16.8% compared with 17.0% for the second quarter of 2003. The lower gross margin primarily reflects increases in workers’ compensation costs and in state unemployment insurance rates.
Selling and administrative expenses decreased $1.0 million for the second quarter of fiscal 2004 compared to the fiscal 2003 quarter. As a percentage of revenue, selling and administrative expenses were down from 14.8% in the second quarter of fiscal 2003 to
12.4% in 2004. Selling and administrative expenses in the current quarter were reduced by a gain of $0.7 million relating to the sale of the former executive headquarters building in Walnut Creek, California.
The Company reported operating income of $0.7 million in the second quarter of 2004 compared with a loss of $2.3 million in 2003. The Company also reported net income of $0.2 million, or $0.01 per share, for the second quarter of 2004 compared with a net loss of $2.7 million, or $(0.17) per share in the 2003 quarter.
“I am also pleased to report that nearly all domestic offices are running on our recently developed, proprietary front-office system,” commented Mr. Pedersen. “I believe that the improved functionality and productivity this system provides are enabling our field management and staff to focus on consistent, quality service to our customers and on an improved sales process.”
For the first 24 weeks of fiscal 2004, revenue increased $19.4 million or 8.3% over the same period in fiscal 2003. The Company reported operating income from continuing operations of $0.4 million as compared to an operating loss of $2.5 million for the fiscal 2003 period.
Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs approximately 150,000 people and services more than 14,000 client accounts from more than 260 offices located throughout the U.S., the United Kingdom, Australia, New Zealand, Norway and Denmark. For more information, please visit our Web site at www.westaff.com.
This press release contains forward-looking statements as defined in the Securities Exchange Act of 1934, and is subject to the safe harbors created by law. Forward-looking statements contained herein include, but are not limited to, the statements of Mr. Pedersen regarding revenue, programs and the prospects for fiscal 2004. The forward-looking statements contained herein involve a number of assumptions, risks and uncertainties. Actual results of future events could differ materially from estimates. Among the factors affecting future operating results are: the ability to raise additional capital and the ability to continue as a going concern, credit facilities and compliance with debt covenants, liquidity, possible adverse effects of fluctuations in the general economy, variability of employee-related costs including workers’ compensation liabilities, a highly competitive market, control by a significant shareholder, the volatility of the Company’s stock price, reliance on management information systems, risks related to customers, variability of operating results and the seasonality of the business cycle, reliance on executive management, risks related to international operations, risks related to franchise agent and licensed operations, uncertain ability to continue and manage growth, reliance on field
management, employer liability risks and ability to attract and retain the services of qualified temporary personnel and regulatory mandates, including potential mandated health insurance.
Forward-looking statements are based on the beliefs and assumptions of the Company’s management and on currently available information. The Company undertakes no responsibility to publicly update or revise any forward-looking statement. Additional information concerning the risks and uncertainties listed above, and other factors you may wish to consider, is contained in the Company’s filings with the Securities and Exchange Commission, including the Company’s most recent Form 10-K, Form 10-Q, Form 8-K and other filings.
ANALYSTS/INVESTORS CONTACT: | Dirk A. Sodestrom
Senior Vice President and
Chief Financial Officer
Telephone: 925/930-5300
e-mail: dsodestrom@westaff.com |
| |
PRESS CONTACT: | Linda Gaebler
Public Relations Director
925-952-2546, cell: 510-610-4845
e-mail: lgaebler@westaff.com |
Financial table follows……..
Westaff, Inc.
Unaudited Financial Highlights
(In thousands, except per share data)
| | Fiscal Quarter Ended | |
| | April 17, 2004 | | April 19, 2003 | |
Statements of Operations: | | | | | |
| | | | | |
Revenue | | $ | 131,172 | | $ | 116,442 | |
Costs of services | | 109,187 | | 96,632 | |
Gross profit | | 21,985 | | 19,810 | |
Gross margin | | 16.8 | % | 17.0 | % |
Franchise agents’ share of gross profit | | 3,985 | | 3,562 | |
Selling and administrative expenses | | 16,228 | | 17,226 | |
Depreciation and amortization | | 1,071 | | 1,310 | |
Operating income (loss) | | 701 | | (2,288 | ) |
Interest expense | | 442 | | 356 | |
Interest income | | (14 | ) | (49 | ) |
Income (loss) before income taxes | | 273 | | (2,595 | ) |
Provision for income taxes | | 105 | | 68 | |
Net income (loss) | | $ | 168 | | $ | (2,663 | ) |
| | | | | |
Basic and diluted earnings (loss) per share: | | $ | 0.01 | | $ | (0.17 | ) |
| | | | | |
Weighted average common shares outstanding - basic | | 16,032 | | 15,994 | |
Weighted average common shares outstanding - diluted | | 16,036 | | 15,994 | |
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| | 24 Weeks Ended | |
| | April 17, 2004 | | April 19, 2003 | |
Statements of Operations: | | | | | |
| | | | | |
Revenue | | $ | 253,656 | | $ | 234,275 | |
Costs of services | | 211,024 | | 194,095 | |
Gross profit | | 42,632 | | 40,180 | |
Gross margin | | 16.8 | % | 17.2 | % |
Franchise agents’ share of gross profit | | 7,787 | | 6,973 | |
Selling and administrative expenses | | 32,320 | | 33,114 | |
Depreciation and amortization | | 2,174 | | 2,591 | |
Operating income (loss) from continuing operations | | 351 | | (2,498 | ) |
Interest expense | | 914 | | 822 | |
Interest income | | (34 | ) | (101 | ) |
Loss from continuing operations before income taxes | | (529 | ) | (3,219 | ) |
Provision for income taxes | | 208 | | 109 | |
Loss from continuing operations before cumulative effect of change in accounting principle | | (737 | ) | (3,328 | ) |
Income from discontinued operations | | | | 316 | |
Cumulative effect of change in accounting principle | | | | (670 | ) |
Net loss | | $ | (737 | ) | $ | (3,682 | ) |
| | | | | |
Basic and diluted earnings (loss) per share: | | | | | |
Continuing operations before cumulative effect of change in accouning principle | | $ | (0.05 | ) | $ | (0.21 | ) |
Discontinued operations | | $ | — | | $ | 0.02 | |
Cumulative effect of change in accounting principle | | $ | — | | $ | (0.04 | ) |
Net loss | | $ | (0.05 | ) | $ | (0.23 | ) |
| | | | | |
Weighted average common shares outstanding - basic and diluted | | 16,024 | | 15,983 | |
| | April 17, 2004 | | November 1, 2003 | |
Balance Sheet Highlights: | | | | | |
| | | | | | | |
Current assets | | $ | 77,746 | | $ | 84,433 | |
Property and equipment, net | | 9,966 | | 12,569 | |
Goodwill, net | | 11,754 | | 11,687 | |
Other long-term assets | | 10,829 | | 4,458 | |
Total assets | | $ | 110,295 | | $ | 113,147 | |
| | | | | |
Current liabilities | | $ | 60,815 | | $ | 63,196 | |
Long term liabilities | | 14,089 | | 14,495 | |
Total liabilities | | 74,904 | | 77,691 | |
Stockholders’ equity | | 35,391 | | 35,456 | |
Total liabilities and stockholders’ equity | | $ | 110,295 | | $ | 113,147 | |
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