Mail Stop 0407
July 25, 2005
Mr. Dirk Sodestrom
Chief Financial Officer
Westaff, Inc.
298 North Wiget Lane
Walnut Creek, CA 94598-2453
Re: Westaff, Inc.
Form 10-K for Fiscal Year Ended October 30, 2004
Filed January 28, 2005
Forms 10-Q for Fiscal Quarter Ended April 16, 2005
File No. 0-24990
Dear Mr. Sodestrom:
We have reviewed your filing and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and do not intend to expand our review to
other
portions of your documents. Please address the following comments
in
future filings. If you disagree, we will consider your
explanation
as to why our comment is inapplicable or a future revision is
unnecessary. Please be as detailed as necessary in your
explanation.
In some of our comments, we may ask you to provide us with
information so we may better understand your disclosure. After
reviewing this information, we may or may not raise additional
comments.
Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects. We welcome
any questions you may have about our comments or any other aspect
of
our review. Feel free to call us at the telephone numbers listed
at
the end of this letter.
Form 10-K for Fiscal Year Ended October 30, 2004
Management`s Discussion and Analysis of Financial Condition and
Results of Operations, page 16
1. We note your use of the term "constant currency" in your
discussion of revenue. This appears to be a non-GAAP measure.
Accordingly, since it appears that you present this as an
operating
performance measure, it is generally not appropriate to exclude
the
effects of foreign currency translation gains as they are or could
be
recurring in nature. Revise future filings to delete the use of
"constant currency." Please refer to Item 10 of Regulation S-K
and
Question 8 of our Frequently Asked Questions document on non-GAAP
measures which is available on our website at
http://www.sec.gov/divisions/corpfin/faqs/nongaapfaq.htm.
Notes to Consolidated Financial Statements, page F-6
Note 2. Summary of Significant Accounting Policies, page F-6
Revenue Recognition
2. In future filings expand your accounting policy to address your
revenue recognition policy for services provided from your
company-
owned operations. Clearly indicate if revenue is presented on a
gross or net basis is accordance with EITF 99-19 and why.
3. Your basis for presenting franchise revenue and related cost of
sales on a gross basis in accordance with EITF 99-19 is not clear.
Please tell us about your franchise operations, providing enough
information to allow us to understand why you believe it is
appropriate to recognize revenue and related costs from these
operations on a gross basis.
4. We note that you recognize "franchise agent`s share of gross
profit" below gross profit. Please tell us in more detail what
this
charge represents and why you do not consider this distribution to
be
a cost of service.
5. It is not clear what payrolling services are, as disclosed on
page
4. Please explain and, if material, tell us if you present
revenue
associated with these services on a gross or net basis in
accordance
with EITF 99-19 and why.
Note 5. Goodwill, page F-9
6. Addressing paragraphs 30 and 31 of SFAS No. 142, tell us how
you
determined the reporting units used to perform your goodwill
impairment test and tell us what those reporting units are.
7. Revise to disclose the information required by paragraph 45(c)
of
SFAS No. 142.
* * * *
Please respond to these comments within 10 business days or
tell us when you will provide us with a response. Please furnish
a
letter that keys your responses to our comments and provides any
requested information. Detailed letters greatly facilitate our
review. Please understand that we may have additional comments
after
reviewing your responses to our comments.
We urge all persons who are responsible for the accuracy and
adequacy of the disclosure in the filing to be certain that the
filing includes all information required under the Securities
Exchange Act of 1934 and that they have provided all information
investors require for an informed investment decision. Since the
company and its management are in possession of all facts relating
to
a company`s disclosure, they are responsible for the accuracy and
adequacy of the disclosures they have made.
In connection with responding to our comments, please
provide,
in writing, a statement from the company acknowledging that
* the company is responsible for the adequacy and accuracy of the
disclosure in the filings;
* staff comments or changes to disclosure in response to staff
comments do not foreclose the Commission from taking any action
with
respect to the filings; and
* the company may not assert staff comments as a defense in any
proceeding initiated by the Commission or any person under the
federal securities laws of the United States.
In addition, please be advised that the Division of
Enforcement
has access to all information you provide to the staff of the
Division of Corporation Finance in our review of your filings or
in
response to our comments on your filings.
You may contact Christine Bashaw, Staff Accountant, at (202)
551-3363 or Ivette Leon, Assistant Chief Accountant, at (202) 551-
3351 if you have questions regarding comments on the financial
statements and related matters. Please contact me at (202) 551-
3810
with any other questions.
Sincerely,
/s/ Larry Spirgel
Assistant Director
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Mr. Dirk Sodestrom
Westaff, Inc.
July 25, 2005
Page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549