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WALNUT CREEK, CA, Monday, July 25, 2005 —
Westaff, Inc. (NASDAQ: WSTF), a leading provider of staffing services, today announced a series of restructuring, growth and performance enhancement measures designed to streamline the Company's operations and organization structure, improve profitability and support expansion.
"The comprehensive steps that we are taking are the result of a thorough analysis of our field organization, operating performance and strategic opportunities within the staffing industry," commented Westaff President and CEO Trish Newman. "Whilst there will be some short-term impact on profits as a result of costs associated with the restructuring, I believe that these initial steps will better position Westaff to achieve and sustain top line growth while improving profitability and operating margins over the long term."
The following are some of the key steps taken:
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The Company has eliminated its zone organization structure and has combined its 13 districts and regions into nine geographic regions. Each of these regions will report directly to Stephen J. Russo, who has been promoted to Senior Vice President of Field Operations. The revised structure will provide a more robust, responsive and consistent structure for growing sales and expanding market opportunities.
- The Company has combined a number of reporting responsibilities at its Corporate offices and has streamlined its National Accounts program to be more focused on opportunities that will benefit the Company's field operations.
- The Company is aggressively developing its permanent placement initiatives with the recent promotion of Todd Warner to the position of Vice President of Permanent Placement. The Company is in the early stages of launching a comprehensive permanent placement program similar to the program Ms. Newman established for Westaff in the United Kingdom. Permanent placement fees for Westaff's U.K. operations currently comprise over five percent of the U.K. revenue stream and have contributed significantly to the higher operating margins generated in the U.K. Permanent placement fees for Westaff in the United States are currently less than one percent of domestic revenue. Current initiatives are designed to grow this business significantly in the coming years.
Westaff currently estimates that annualized savings resulting from the restructure will be approximately $2.0 million. The Company expects to incur one-time costs associated with the restructure of approximately $500,000 during the fourth quarter of fiscal 2005.
Senior Vice President and Chief Financial Officer Dirk A. Sodestrom commented, "Cost savings generated by this restructuring will help finance some of the key growth and performance enhancement initiatives that are being rolled out. Furthermore, the Company has been consistently improving its financial strength over the last few years through increased profits, disciplined spending, selected asset sales and careful management of its debt structure. These initial restructuring efforts are positive steps in continuing efforts to return the Company to sustained growth, improved profitability and financial strength. We expect to continue to carefully evaluate our corporate structure to ensure that we are properly organized and staffed to support a long-term profitable organization."
Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs approximately 150,000 people and services more than 15,000 client accounts from more than 240 offices located throughout the United States, the United Kingdom, Australia and New Zealand. For more information, please visit our Web site at www.westaff.com.
Risk Factors/Forward Looking Statements
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 regarding revenue and the prospects for fiscal 2005. The forward-looking statements contained herein involve a number of assumptions, risks and uncertainties. Actual results could differ materially from estimates. Among the factors affecting future operating results are: credit facilities and compliance with debt covenants, liquidity, workers' compensation collateral requirements, 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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