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WALNUT CREEK, CA, Friday, March
5, 2004
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 24, 2004.
Revenues
for the first quarter of fiscal 2004 were $122.5
million, up $4.6 million or 3.9% from the first
quarter of fiscal 2003. International revenues increased
by 31.4% while domestic revenues decreased 2.1%.
Excluding the effect of exchange rate fluctuations,
international revenues increased 9.1% reflecting
continued success in growing these markets. The
slight decline in domestic revenues reflects a reduction
in government business beginning in the second
quarter of fiscal 2003 which has not been fully replaced
by new business as of the end of the current fiscal
quarter. "I am very pleased with the overall increase in
revenues for the quarter," commented Westaff President
and CEO, Dwight S. Pedersen, "and I am optimistic
about future sales growth, particularly in light of
our strong, targeted marketing efforts in the improving
domestic economy. The first fiscal quarter is always
a challenge for us due to holiday closures; however,
I am encouraged that domestic sales for the first four
weeks of the second fiscal quarter are up over 3% compared
to the same period in the prior year. This is an encouraging
early indication that we are moving ahead and our sales
and marketing efforts are producing results. Our international
operations are continuing to execute on their growth
plans that began in the second and third quarters of
fiscal 2003."
Gross margin for the quarter was 16.9% compared with
17.3% for the first quarter of 2003. The lower gross
margin reflects ongoing pricing pressures in the
domestic staffing industry, as well as higher workers'
compensation costs and higher state unemployment
insurance rates.
Westaff was successful throughout fiscal 2003 in
reducing and controlling its operating costs and
is committed to aggressively continuing these efforts.
Selling and administrative expenses increased $0.2
million for the first quarter of fiscal 2004 compared
to the fiscal 2003 quarter due to higher foreign
exchange rates used to convert the local currency
expenses into US dollars. As a percentage of revenues,
selling and administrative expenses were down from
13.5% in the first quarter of fiscal 2003 to 13.1%
in 2004. The Company reported an operating loss from continuing
operations of $0.4 million in the first quarter of
2004 compared with a loss of $0.2 million in 2003.
The Company also reported a net loss of $0.9 million
for the first quarter of 2004 compared with a net
loss of $1.0 million in 2003. The fiscal quarter
of 2003 includes income from discontinued operations
of $0.3 million and a loss from the cumulative effect
of a change in accounting principle of $0.7 million.
As a result of the Company's fiscal 2003 adoption
of Statement of Financial Accounting Standards No.
142 "Goodwill
and Other Intangible Assets", the Company recorded
a charge for goodwill impairment. In accordance with
the new standard, the fiscal 2003 first quarter results
were restated to reflect the impairment as a cumulative
effect of a change in accounting principle.
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 265 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 domestic and international sales, marketing
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.
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