Westaff Reports Fiscal 2008 Second Quarter Results
June 09, 2008 // Franchising.com // WALNUT CREEK, Calif. - Westaff, Inc. (NASDAQ: WSTF), a leading provider of staffing services, today reported financial results for its second fiscal quarter, which ended April 19, 2008. Consistent with historic financial reporting, the Companyï¿½s first two fiscal quarters comprise twelve weeks each while the fourth quarter comprises 16 or 17 weeks.
The net loss for the second quarter of 2008 was $25.2 million or $1.51 per share compared to net loss of $0.7 million or $0.04 per share in the same quarter of fiscal 2007. During the second quarter, the Company, based on analysis, took a non-cash reserve of $23.2 million against its deferred tax asset balances. The year-to-date net loss was $27.1 million or $1.62 per share compared to $0.3 million loss or $0.02 per share in the same period of fiscal 2007.
Revenue for the second quarter of fiscal 2008 was $102.8 million, a decrease of $17.3 million or 14.4% as compared to the second quarter of fiscal 2007. Fiscal year-to-date revenues were $ 210.9 million, a $29.9 million or 12.4% decrease for the comparable period of fiscal 2007. Domestic revenue for the second quarter decreased $23.1 million or 23.5%, and for the fiscal year-to-date, domestic revenue decreased by $39.2 million or 20.1%. These decreases were primarily a result of a decrease in temporary help revenues, caused by decrease in billable hours, partially offset by an increase in average billing rates, changes in field management and termination of some unprofitable accounts. Management anticipates these declines to be short-term and that new strategies and efforts will potentially result in future profitability.
During the second fiscal quarter, the Company sold its loss incurring United Kingdom ("UK") subsidiary for $6.7 million, a gain of $1.2 million, net of tax. Excluding the revenues for UK subsidiary, international revenues, coupled with favorable exchange rate conversions, increased by $ 5.8 million or 26.5% compared to second quarter of 2007. Fiscal year-to-date international revenues increased by $9.3 million or 20.6%, from the same period last year. These increases, a result of strong performances in Australia and New Zealand, partially offset the decline in domestic revenues.
Westaff provides staffing services and employment opportunities for businesses in global markets. Westaff annually employs in excess of 125,000 people and services more than 20,000 client accounts from more than 177 offices located throughout the United States, Australia and New Zealand. For more information, please visit the Companyï¿½s website at www.westaff.com.
This press release contains forward-looking statements within the meaning of U.S. securities laws. Forward-looking statements in this release are generally identified by words such as "expects," "believes," "will," and similar expressions that are intended to identify forward-looking statements. 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 expected delivery of improved performance during fiscal 2008, domestic revenues in the first quarter of fiscal 2008, continued gross margins, and first quarter net income for fiscal 2008. The forward-looking statements contained herein involve a number of assumptions, risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these forward-looking statements. Many of these risks and uncertainties cannot be controlled by the Company. These risks and uncertainties include, but are not limited to: risks related to control by a significant shareholder, an intensely priced competitive market, our significant working capital needs and our ability to borrow to meet those needs, our ability to borrow under our credit facilities and our compliance with their 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, government regulation, 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 Form 10-K for the year ended November 3, 2007.
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.