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| Workstream Inc. Announces Third Quarter Fiscal 2008 Results |
MAITLAND, Fla.--(BUSINESS WIRE)--April 10, 2008--Workstream (NASDAQ:WSTM), the leading provider of on demand talent management solutions, today announced financial results for the third quarter ended February 29, 2008.
Third Quarter Highlights Include:
-- Bookings of $4.4 Million
-- Announced definitive letter of agreement to merge with Empagio
-- Appointed new leadership
"During the third quarter Workstream enjoyed new bookings growth. We accomplished this while reducing expenses to attain our positive working capital goal as defined in the merger agreement with Empagio. Our seasoned sales team, armed with our new Pay for Performance product TalentCenter 7.0, will position us to grow Workstream's customer base." said newly appointed Chief Executive Officer Steve Purello. Workstream delivered the following results for the quarter ended February 29, 2008: Revenues were $6.2 million compared to $7.0 million during the same period last year. The year over year decline in revenues was primarily attributable to lower recurring software revenues. EBITDA, or earnings before interest, taxes, depreciation and amortization, was $(4.7) million, compared to $(1.7) million during the same period last year. Net loss for the period in accordance with accounting principles generally accepted in the United States, or GAAP, was $(19.7) million, reflecting the recording of $13.1 million of interest expense during the quarter related to the Company's common stock warrant liability. GAAP Earnings per share for the quarter were $(0.38) with 52 million weighted average shares outstanding. Conference Call Details In conjunction with this announcement, Workstream will host a conference call today at 5:00 p.m. ET to discuss the Company's third quarter 2008 financial results. To access this call, dial 888-789-9572 (domestic) or 800-6578-9818 (international) using passcode 3256906. A replay of this conference call will be available through May 9, 2008 by calling 800-408-3053 using passcode 3256906. EBITDA and EBITDA per share are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. EBITDA is commonly defined as earnings before interest, taxes, depreciation and amortization. We believe that EBITDA provides useful information to investors as it excludes transactions not related to the core cash operating business activities. We believe that excluding these transactions allows investors to meaningfully trend and analyze the performance of our core cash operations. All companies do not calculate EBITDA in the same manner, and EBITDA as presented by Workstream may not be comparable to EBITDA presented by other companies. Workstream defines EBITDA as earnings or loss before interest, taxes, depreciation amortization, non-cash equity compensation and non-recurring goodwill impairment, if applicable. Following the financial statements attached is a reconciliation of net loss to EBITDA loss and EBITDA per share that should be read in conjunction with the financial statements. About Workstream Inc. Workstream provides on-demand compensation, performance and talent management solutions and services that help companies manage the entire employee lifecycle - from recruitment to retirement. Workstream's TalentCenter provides a unified view of all Workstream products and services including Recruitment, Performance, Compensation, Development and Transition. Access to TalentCenter is offered on a monthly subscription basis under an on-demand software delivery model to help companies build high performing workforces, while controlling costs. With offices across North America, Workstream services customers including Chevron, The Gap, Nordstrom, Visa and Wells Fargo. For more information visit www.workstreaminc.com or call (407)475-5500. This press release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the current expectations or beliefs of Workstream's management and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: inability to grow our client base and revenue because of the number of competitors and the variety of sources of competition we face; client attrition; inability to offer services that are superior and cost effective when compared to the services being offered by our competitors; inability to further identify, develop and achieve success for new products, services and technologies; increased competition and its effect on pricing, spending, third-party relationships and revenues; as well as the inability to enter into successful strategic relationships and other risks detailed from time to time in filings with the Securities and Exchange Commission.
WORKSTREAM INC.
CONSOLIDATED BALANCE SHEETS (unaudited)
February 29, 2008 May 31, 2007
------------------- ------------
ASSETS
Current assets:
Cash and cash equivalents $4,117,404 $2,752,601
Restricted cash 461,086 524,497
Short-term investments 67,664 65,851
Accounts receivable, net 4,726,411 3,789,838
Prepaid expenses and other assets 477,326 848,359
------------------- ------------
Total current assets 9,849,891 7,981,146
Property and equipment, net 2,157,203 2,715,494
Other assets 101,319 85,122
Acquired intangible assets, net 589,029 2,602,590
Goodwill 45,276,411 45,276,411
------------------- ------------
TOTAL ASSETS $57,973,853 $58,660,763
=================== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable 2,218,630 2,259,010
Accrued liabilities 3,190,457 2,961,928
Accrued compensation 1,564,935 1,378,444
Line of Credit - 4,557,395
Current portion of long-term
obligations 719,996 639,445
Deferred revenue 4,073,345 2,699,461
------------------- ------------
Total current liabilities 11,767,363 14,495,683
Long-term obligations 278,600 742,025
Deferred revenue - long term 258,268 234,036
Deferred income tax liability 662,310 2,456
Common stock warrant liability 19,000,000 -
------------------- ------------
Total liabilities 31,966,541 15,474,200
------------------- ------------
Contingencies
STOCKHOLDERS' EQUITY
Preferred stock, no par value - -
Common stock, no par value:
52,192,818 and 51,531,152
shares issued and outstanding,
respectively 112,588,378 112,549,178
Additional paid-in capital 18,150,868 10,907,755
Accumulated other comprehensive
loss (884,514) (867,288)
Accumulated deficit (103,847,420) (79,403,082)
------------------- ------------
Total stockholders' equity $26,007,312 $43,186,563
------------------- ------------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $57,973,853 $58,660,763
=================== ============
WORKSTREAM INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months ended Nine Months ended
February 29 February 28 February 29 February 28
-------------------------- --------------------------
2008 2007 2008 2007
------------- ------------ ------------- ------------
Revenues:
Software $2,045,775 $2,497,246 $6,804,533 $7,607,435
Professional
services 741,307 888,777 2,562,044 3,334,811
Rewards and
discount
products 1,326,317 1,365,064 4,283,658 4,441,049
Career networks 2,071,127 2,261,335 6,954,646 6,549,687
------------- ------------ ------------- ------------
Revenues, net 6,184,526 7,012,422 20,604,881 21,932,982
Cost of revenues:
Rewards and
discount
products 1,012,377 1,153,208 3,188,460 3,578,714
Other 668,040 746,063 2,109,323 2,111,824
------------- ------------ ------------- ------------
Cost of revenues
(exclusive of
amortization
and depreciation
expense noted
below) 1,680,417 1,899,270 5,297,783 5,690,538
------------- ------------ ------------- ------------
Gross profit 4,504,109 5,113,152 15,307,098 16,242,444
------------- ------------ ------------- ------------
Operating
expenses:
Selling and
marketing 2,664,602 1,995,558 8,302,606 5,553,445
General and
administrative 5,186,038 3,876,064 14,590,757 10,890,740
Research and
development 1,901,563 896,733 4,823,741 2,794,359
Amortization and
depreciation 693,026 1,677,404 3,101,263 4,888,531
------------- ------------ ------------- ------------
Total operating
expenses 10,445,229 8,445,759 30,818,367 24,127,075
------------- ------------ ------------- ------------
Operating loss (5,941,120) (3,332,607) (15,511,269) (7,884,631)
------------- ------------ ------------- ------------
Interest and
other income 88,317 188,274 331,130 430,830
Warrant liability
interest expense (13,051,901) - (6,318,102) -
Interest and
other expense (16,700) (1,206,883) (2,155,371) (2,168,033)
------------- ------------ ------------- ------------
Other income
(expense), net (12,980,284) (1,018,609) (8,142,343) (1,737,203)
------------- ------------ ------------- ------------
Loss before
income tax
expense (18,921,404) (4,351,216) (23,653,612) (9,621,834)
Current income
tax expense (101,329) (29,428) (87,745) (100,626)
Deferred income
tax expense (702,981) - (702,981) -
------------- ------------ ------------- ------------
NET LOSS $(19,725,714) $(4,380,644) $(24,444,338) $(9,722,460)
============= ============ ============= ============
Weighted average
number of
common
shares
outstanding
-basic and
diluted 51,926,151 51,258,672 52,192,818 51,531,152
============= ============ ============= ============
Basic and diluted
loss per share $(0.38) $(0.09) $(0.47) $(0.19)
============= ============ ============= ============
WORKSTREAM INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
February 29 February 28
2008 2007
------------- ------------
Cash flows used in operating activities:
Net loss $(24,444,338) $(9,722,460)
Adjustments to reconcile net loss to net
cash used in operating activities:
Amortization and depreciation 3,101,263 4,851,418
Leasehold inducement amortization (41,144) -
Provision for bad debt 527,075 271,892
Loss on sale or disposal of fixed asset 12,623 -
Stock related compensation 1,262,841 673,510
Non-cash interest expense 6,318,102 1,372,801
Deferred income taxes 762,835 -
Change in long-term portion of deferred
revenue 23,975 (83,943)
Net change in components of working capital:
Accounts receivable (1,464,343) (1,752,127)
Prepaid expenses and other assets 354,837 (164,090)
Accounts payable and accrued expenses 738,149 (923,254)
Accrued compensation 186,491 -
Deferred revenue 1,373,884 278,046
------------- ------------
Net cash used in operating activities (11,287,750) (5,198,207)
------------- ------------
Cash flows provided by (used in) investing
activities:
Purchase of property and equipment (542,033) (497,891)
Decrease in restricted cash 63,411 2,747,943
Increase/Decrease in short-term investments (1,813) 77,889
------------- ------------
Net cash (used in) provided by investing
activities (480,435) 2,327,941
------------- ------------
Cash flows provided by financing activities:
Proceeds from exercise of options and
warrants 43,200 -
Proceeds from financing, net of financing
costs - 14,650,000
Cash equivalents held as compensating
balance - (10,000,000)
Repayment of long-term obligations (502,534) (827,728)
Payment of guaranteed financing costs (550,000) -
Proceeds from warrant financing 18,658,172 -
Net repayments on line of credit (4,498,619) (2,387,351)
------------- ------------
Net cash provided by financing activities 13,150,219 1,434,921
------------- ------------
Effect of exchange rate changes on cash and
cash equivalents (17,231) 112,394
------------- ------------
Net increase / (decrease) in cash and cash
equivalents 1,364,803 (1,322,951)
Cash and cash equivalents, beginning of
period 2,752,601 4,577,040
------------- ------------
Cash and cash equivalents, end of period $4,117,404 $3,254,089
============= ============
Supplemental disclosure of cash flow
information:
Cash paid during the period for interest $399,998 $761,029
============= ============
Cash paid during the period for income
taxes $80,224 $100,626
============= ============
Supplemental schedule of non-cash investing
and financing activities:
Equipment acquired under capital leases $133,478 $1,097,501
============= ============
Discount on debt for fair value of
warrants issued $ - $2,392,500
============= ============
WORKSTREAM INC.
UNAUDITED RECONCILIATION OF EARNINGS OR LOSS BEFORE INTEREST,
DEPRECIATION,
AMORTIZATION AND NON-CASH COMPENSATION (EBITDA)
Three Months ended
2/29/2008
-------------------
Net loss, per GAAP ($19,725,714)
Income tax expense 804,310
Interest and other income -88,317
Warrant liability interest expense 13,051,091
Interest and other expense 16,700
Amortization and depreciation 693,026
Non-cash compensation 573,569
-------------------
EBITDA (loss) ($4,675,335)
===================
Weighted average number of common shares
outstanding 51,926,151
===================
Basic and diluted loss per share, per GAAP ($0.38)
===================
Basic and diluted EBITDA loss per share ($0.09)
===================
CONTACT: Investor Relations:
Workstream Inc.
Tammie Brown, 407-475-5500
Tammie.Brown@workstreaminc.com
or
Media/Press:
Workstream Inc.
Tammie Brown, 407-475-5500
Tammie Brown@workstreaminc.com
SOURCE: Workstream
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