News Releases

WALNUT CREEK, CA, Tuesday, August 21, 2007 - Westaff, Inc. (NASDAQ: WSTF), a leading provider of staffing services, today reported financial results for its third fiscal quarter, which ended July 7, 2007. Consistent with historic financial reporting, the Company's first three fiscal quarters comprise twelve weeks each while the fourth quarter comprises 16 or 17 weeks.

The net loss for the third quarter of 2007 was $2.9 million or $0.18 per diluted share compared to net income of $1.2 million or $0.07 per diluted share in the same quarter of fiscal 2006. During the third quarter, the company undertook a restructuring initiative to reduce its workforce and consolidate facilities which represented severance and lease termination costs totaling $2.3 million.

Michael T. Willis, Westaff's new Chief Executive Officer commented, "We have significant opportunity to improve the Company's operating results, and I am confident that the changes we have made are one of many positive steps we will take towards improving performance. We anticipate our restructuring plans will produce annualized operating expense savings of approximately $6.0 million in fiscal 2008."

Revenue for the third quarter of fiscal 2007 was $132.7 million, which represented a decrease of $8.1 million or 5.8% as compared to the third quarter of fiscal 2006. Domestic revenue decreased $12.0 million or 10.8%, largely as a result of a 10.6% decrease in sales of temporary help, caused by a 12.6% decrease in billable hours, partially offset by a 2.3% increase in average billing rates, changes in senior field management and terminating some unprofitable accounts. We expect these effects to be short-term only and that our efforts will lead to increased future profitability.

Offsetting a portion of the domestic revenue decline was an increase in international revenue of $3.9 million, or 13.3%, which benefited from favorable exchange rates as compared to those in place in the third quarter of fiscal 2006.

A discussion of financial results from Mike Willis will be available on August 22, 2007 after 6:00 a.m. Pacific Time by accessing our web-site at www.westaff.com. In addition, the pre-recorded call may be accessed telephonically by dialing the following numbers:

Replay Number (Toll Free): 1-877-660-6853
Replay Number (International): 1-201-612-7415
Replay Passcodes (both required for playback):
Account #: 286
Conference ID #: 253031

Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs in excess of 100,000 people and services more than 15,000 client accounts from more than 200 offices located throughout the United States, the United Kingdom, Australia and New Zealand. For more information, please visit our website 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. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement. Forward-looking statements contained herein include, but are not limited to, statements regarding revenue, gross margins, operating results and the Company's prospects for fiscal 2007. 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: risks related to control by a significant shareholder, an intensely price competitive market, variability on our heavy working capital needs and our ability to borrow to meet those needs, our ability to borrow under our credit facilities and our compliance with the debt covenants, variability of the amount of collateral that we are required to maintain to support our workers' compensation obligation, the sufficiency of our workers' compensation claims reserve, variability of employee-related costs, including workers' compensation liabilities, possible adverse effects of fluctuations in the general economy, our ability to collect on our accounts receivable, risks related to franchise agent operations, risks related to international operations and fluctuating exchange rates, reliance on executive management and key personnel, our ability to attract and retain the services of qualified temporary personnel, the ability of our customers to terminate our service agreement on short notice, variability of the cost of unemployment insurance for our temporary employees, any difficulty with our information technology system, potential exposure to employment-related claims, the volatility of the Company's stock price, increased regulatory compliance costs and litigation and other claims. 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 Annual Report on Form 10-K for the year ended October 28, 2006.

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 except as required by applicable laws and regulations.