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WALNUT CREEK, CA, Thursday, March 6, 2003
Westaff, Inc. (NASDAQ: WSTF), a leading provider of temporary light industrial, clerical/administrative and call center staff, today reported financial results for its first fiscal quarter, which ended January 25, 2003.

Revenues for the first quarter increased from $107.0 million in fiscal 2002 to $117.8 million in fiscal 2003, an increase of 10.1%. This is the highest such comparative increase since the third fiscal quarter of 1999. The increase reflects the successful results of sales initiatives first introduced in fiscal 2002 and continuing in fiscal 2003 as well as improvements in the domestic economy as compared to the prior year. In particular, domestic same branch revenues showed marked improvements, with a 16.3% increase over the prior year first fiscal quarter.

Gross margin declined from 18.7% in the first quarter of fiscal 2002 to 17.3% in the fiscal 2003 quarter. This decline is due largely to the highly competitive pricing environment within the temporary staffing industry as well as increased costs, primarily for workers' compensation and state unemployment insurance benefits.

"I am very pleased with the progress that we are making with respect to sales growth, particularly given the current uncertain economy," said Westaff President and Chief Executive Officer Dwight S. Pedersen. "I believe that our consultative sales approach as well as our new sales initiatives and products are generating positive results.

"We recently embarked on a comprehensive program to address the declining gross margins within this very difficult economy," commented Mr. Pedersen. "Improving margins will be a primary focus for Westaff in the coming months."

Westaff also reported a loss from continuing operations of $0.7 million, or $0.04 per share, for the first quarter of fiscal 2003. The loss compares to a $4.7 million loss from continuing operations or $0.29 per share for the corresponding fiscal 2002 quarter. The fiscal 2002 first quarter loss included restructuring charges of $1.9 million.

Selling and administrative expenses decreased $1.9 million or 10.5% for the first quarter of fiscal 2003 as compared to the fiscal 2002 first quarter. As a percentage of revenues, selling and administrative expenses were 13.5% in the fiscal 2003 quarter compared to 16.6% in the corresponding 2002 fiscal year quarter.

"We are taking a very disciplined approach to cost control throughout the Company," Pedersen said. "We recently consolidated our Company headquarters and are working hard to reduce our debt. However, we are also investing in key initiatives to support the continued growth of the Company and to return the Company to sustained profitability."

The Company also reported income from discontinued operations of $316,000 or $0.02 per share relating to cash received from a successful appeal of its 1996 Medicare Cost Report.

Westaff will discuss these results in a conference call at 8:00 a.m. (Pacific) on Friday, March 7, 2003. The call will be Webcast live at http://cc.event-it.com/asx/genmab030703.asx and will be available after the call on our Web site at www.westaff.com. The call will also be recorded so you may listen at your convenience. The recording will be available through March 11, 2003 by dialing 800-428-6051 and entering I.D. code 286641.

Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs approximately 175,000 people and services more than 20,000 clients from more than 300 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 sales, margins and costs and the prospects for fiscal 2003. 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: compliance with debt covenants, liquidity, possible adverse effects of fluctuations in the general economy, reliance on executive management, uncertain ability to continue and manage growth, control by a significant shareholder, reliance on management information systems, risks related to international operations, variability of employee-related costs including workers' compensation liabilities, risks related to customers, variability of operating results and the seasonality of the business cycle, ability to attract and retain the services of qualified temporary personnel, a highly competitive market, reliance on field management, employer liability risks and risks related to franchise agent and licensed operations.

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.