Exhibit 99.1
Westaff, Inc.
Pro Forma Consolidated Balance Sheet (Unaudited)
as of July 12, 2008
(in thousands, except per share amounts)
| | | | Pro Forma | | | |
| | Westaff, Inc.
Historical | | Adjustment
Australia and New
Zealand | | Westaff, Inc.
Pro Forma | |
ASSETS | | | | | | | |
Current assets: | | | | | | | |
Cash and cash equivalents | | $ | 1,841 | | $ | 9,650 | (1) | $ | 6,647 | |
| | | | (1,755 | )(2) | | |
| | | | (3,089 | )(6) | | |
Restricted cash | | 5,017 | | — | | 5,017 | |
Trade accounts receivable, less allowance for doubtful accounts of $1,246 and $1,274 | | 51,383 | | (15,047 | )(2) | 36,336 | |
Income taxes receivable | | 241 | | — | | 241 | |
Prepaid expenses | | 2,839 | | (565 | )(2) | 2,274 | |
Other current assets | | 1,154 | | (435 | )(2) | 719 | |
Total current assets | | 62,475 | | (11,241 | ) | 51,234 | |
Property and equipment, net | | 11,724 | | (956 | )(2) | 10,768 | |
Deferred income taxes | | 840 | | (204 | )(2) | 636 | |
Goodwill | | 1,337 | | (1,337 | )(2) | — | |
Intangible assets | | 3,509 | | — | | 3,509 | |
Other long-term assets | | 2,020 | | 1,911 | (5) | 3,931 | |
| | $ | 81,905 | | $ | (11,827 | ) | $ | 70,078 | |
| | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | |
Current liabilities: | | | | | | | |
Borrowing under revolving credit facilities | | $ | 3,089 | | $ | (3,089 | )(6) | $ | — | |
Current portion of capital lease obligations | | 601 | | — | | 601 | |
Note payable to related party | | 2,000 | | — | | 2,000 | |
Accounts payable | | 2,701 | | (1,226 | )(2) | 1,475 | |
Accrued expenses | | 23,973 | | (6,639 | )(2) | 17,334 | |
Short-term portion of workers compensation | | 8,766 | | (85 | )(2) | 8,681 | |
Income taxes payable | | 80 | | (30 | )(2) | 50 | |
Total current liabilities | | 41,210 | | (11,069 | ) | 30,141 | |
Note payable to related party | | | | | | | |
Long-term capital lease obligations | | 325 | | — | | 325 | |
Long-term portion of workers compensation | | 15,000 | | — | | 15,000 | |
Other long-term liabilities | | 1,465 | | (180 | )(2) | 1,285 | |
Total liabilities | | 58,000 | | (11,249 | ) | 46,751 | |
| | | | | | | |
Stockholders’ equity: | | | | | | | |
| | | | | | | |
Total stockholders’ equity | | 23,905 | | 1,319 | (3) | 23,327 | |
| | | | (1,897 | )(7) | | |
| | $ | 81,905 | | $ | (11,827 | ) | $ | 70,078 | |
Westaff, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
For the Fiscal Year Ended November 3, 2007
(in thousands, except per share amounts)
| | Westaff, Inc.
Historical | | (1)
Adjustment
for
Discontinued
Operations of
UK | | Adjusted
Westaff, Inc. | | ProForma
Adjustment
Australia and
New Zealand | | Westaff, Inc.
Pro Forma | |
| | | | | | | | | | | |
Revenue | | $588,716 | | $(44,753 | ) | $543,963 | | $(104,141 | )(4) | $439,822 | |
| | | | | | | | | | | |
Cost of services | | 483,055 | | (33,543 | ) | 449,512 | | (89,099 | )(4) | 360,413 | |
| | | | | | | | | | | |
Gross Profit | | 105,661 | | (11,210 | ) | 94,451 | | (15,042 | ) | 79,409 | |
| | | | | | | | | | | |
Franchise agents’ share of gross profit | | 17,357 | | — | | 17,357 | | — | | 17,357 | |
Selling and administrative expenses | | 83,761 | | (10,693 | ) | 73,068 | | (13,301 | )(4) | 59,767 | |
Depreciation and amortization | | 3,954 | | (416 | ) | 3,538 | | (389 | )(4) | 3,149 | |
Restructuring expenses | | 3,299 | | — | | 3,299 | | (150 | )(4) | 3,149 | |
| | | | | | | | | | | |
Operating loss from continuing operations | | (2,710 | ) | (101 | ) | (2,811 | ) | (1,202 | ) | (4,013 | ) |
| | | | | | | | | | | |
Interest expense | | 2,836 | | (1 | ) | 2,835 | | (422 | )(4) | 2,413 | |
Interest income | | (261 | ) | 45 | | (216 | ) | (206 | )(4) | (422 | ) |
| | | | | | | | | | | |
Loss from continuing operations before income taxes | | (5,285 | ) | (145 | ) | (5,430 | ) | (574 | ) | (6,004 | ) |
Income tax expense (benefit) | | (3,351 | ) | (65 | ) | (3,416 | ) | (53 | )(4) | (3,469 | ) |
| | | | | | | | | | | |
Loss from continuing operations | | $(1,934 | ) | $(80 | ) | $(2,014 | ) | $(521 | ) | $(2,535 | ) |
| | | | | | | | | | | |
Loss per share: | | | | | | | | | | | |
Continuing operations - basic and diluted | | $(0.12 | ) | | | | | | | $(0.15 | ) |
| | | | | | | | | | | |
Weighted average shares outstanding-basic and diluted | | 16,625 | | | | | | | | 16,625 | |
(1) To reflect the disposition of the UK reporting unit that occurred on March 31, 2008
Westaff, Inc.
Pro Forma Consolidated Statement of Operations (Unaudited)
For the 36 weeks ended July 12, 2008
(in thousands, except per share amounts)
| | Westaff, Inc.
Historical | | ProForma
Adjustments
Australia and
New Zealand | | Westaff, Inc.
Pro Forma | |
| | | | | | | |
Revenue | | $ | 310,319 | | $ | (82,133 | )(4) | $ | 228,186 | |
| | | | | | | |
Cost of services | | 259,587 | | (71,358 | )(4) | 188,229 | |
| | | | | | | |
Gross Profit | | 50,732 | | (10,775 | ) | 39,957 | |
| | | | | | | |
Franchise agents’ share of gross profit | | 10,046 | | — | | 10,046 | |
Selling and administrative expenses | | 44,994 | | (9,749 | )(4) | 35,245 | |
Impairment of goodwill and intangibles | | 11,540 | | — | | 11,540 | |
Depreciation and amortization | | 4,131 | | (295 | )(4) | 3,836 | |
Restructuring expenses | | (150 | ) | — | | (150 | ) |
| | | | | | | |
Operating loss from continuing operations | | (19,829 | ) | (731 | ) | (20,560 | ) |
| | | | | | | |
Interest expense | | 2,134 | | (429 | )(4) | 1,705 | |
Interest income | | (134 | ) | (66 | )(4) | (200 | ) |
| | | | | | | |
Loss from continuing operations before income taxes | | (21,829 | ) | (236 | ) | (22,065 | ) |
Income tax expense (benefit) | | 20,188 | | — | | 20,188 | |
| | | | | | | |
Loss from continuing operations | | $ | (42,017 | ) | $ | (236 | ) | $ | (42,253 | ) |
| | | | | | | |
Loss per share: | | | | | | | |
Continuing operations - basic and diluted | | $ | (2.52 | ) | | | $ | (2.53 | ) |
| | | | | | | |
Weighted average shares outstanding-basic and diluted | | 16,697 | | | | 16,697 | |
Notes to Pro Forma Financial Information
(in thousands of dollars)
(1) | Pro forma adjustment reflects cash proceeds of $9,650 (US) to be received at settlement based on the conversion rate to US dollars of $.637 at the settlement date. |
(2) | Pro forma adjustments reflect removal of the assets and liabilities of Australia and New Zealand which were assumed by the buyer. |
(3) | Pro forma adjustment reflects the estimated gain on the sale of Australia and New Zealand as if the transaction had occurred as of July 12, 2008 but is not adjusted for any estimated tax impact related to this gain. The gain was estimated using proceeds based on the conversion rate of $.637 at the settlement date. |
(4) | Pro forma adjustment reflects elimination of the results of operations of Australia and New Zealand |
(5) | Pro forma adjustment reflects deferred payment promissory note due one year from closing date; assumed a conversion rate to US dollars of $.637. |
(6) | Pro forma adjustment reflects debt payoff from proceeds on sale. |
(7) | Pro forma adjustment reflects elimination of accumulated currency translation adjustments. |
