Westaff Reports Fiscal 2008 Third Quarter Results
Walnut Creek, Calif.--(BUSINESS WIRE)--Westaff, Inc. (NASDAQ:WSTF) a leading provider of staffing services, Tuesday reported financial results for its third fiscal quarter, which ended July 12, 2008. 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 Company reported a net loss for the third quarter of 2008 of $15.1 million and a before tax loss from continuing operations of $14.4 million as compared to a net loss of $2.9 million and a before tax loss from continuing operations of $3.2 million in the same quarter of 2007. The current quarter reported losses included a non-cash write down of goodwill and other intangible assets totaling $11.5 million. This non-cash charge does not affect the Company's liquidity, cash flow, or debt covenants, nor does it have any negative impact on future operations.
Thus, the before tax loss from continuing operations before the write down for the current quarter was $2.9 million. (1)
Selling and administrative expenses for the third quarter of 2008 were reduced to $14.5 million from $16.9 million in the same quarter of 2007 yielding a $2.4 million or 14.3% year over year decline in expenses.
International revenues increased by $4.5 million or 19.6% to $27.5 million for the third quarter of 2008 compared to third quarter of 2007. For the first three quarters of 2008, international revenues increased by $13.8 million from $68.3 million to $82.1 million or 20.3%, from the same period last year. These increases were the result of strong performances across most geographic regions in Australia and New Zealand.
"We have assembled a high quality management team and continue our turnaround by aggressively pursuing expense management and focusing on top-line revenue growth. We are starting to see progress in our results," commented Westaff CEO and Chairman Michael T. Willis.
The before tax loss from continuing operations in the third quarter of 2008, before the non-cash write down of goodwill and intangibles represents a $2.4 million quarter over quarter improvement when compared to the before tax loss from continuing operations of $5.3 million for the second quarter of 2008. (1)
Revenue from the third quarter of 2008 of $99.4 million was slightly lower than revenue from the second quarter of the 2008 of $102.8 million. Comparing the 2008 third quarter selling and administrative expenses to the 2008 second quarter expenses of $15.5 million, the Company realized a savings of $1.0 million or 6.5%.
The Company is in active discussions with U.S. Bank National Association and Wells Fargo Bank, National Association (as agent for the bank group) regarding the forbearance agreement, which expired Tuesday. The Company is confident that a mutually acceptable agreement will be reached within days.
"We continue to make progress in strengthening our operations," added Mr. Willis. "We have adequate working capital to fund near-term operations and we are working with our lenders and our partners to ensure access to capital to support our long-term growth initiatives. We are excited about our prospects and we look forward to sharing our operational objectives and longer-term growth strategies in the near term."
(1) The before tax loss from continuing operations before the impairment for goodwill and intangibles represents a non-GAAP financial measure. This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for comparable GAAP measures, however is intended to provide additional insight into our operations that, when viewed with our GAAP results and the accompanying reconciliations to the corresponding GAAP financial measures, offers a more complete understanding of the factors and trends affecting our business.
12 weeks ended
July 12, 2008
Loss from continuing operations before income taxes,
as reported in our 3rd quarter 10-Q $(14,400)
Less impairment of goodwill and intangibles (11,500)
Loss from continuing operations
before income taxes and
before impairment of goodwill and intangibles $(2,900)
12 weeks ended
April 19, 2008
Loss from continuing operations before income taxes,
as reported in our 2nd quarter 10-Q $(5,300)
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 Company's 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.