2006 Press Releases

Workstream Inc. Announces Fiscal Second Quarter 2006 Results

Ottawa, ON, - January 5, 2006 - Workstream Inc. (NASDAQ – WSTM), a provider of On-Demand Enterprise Workforce Management software, today announced its fiscal second quarter financial results for the period ended November 30, 2005. All figures are in U.S. dollars.

Workstream reported second quarter 2006 revenue of $7,200,000 compared to $6,342,000 in the preceding quarter and $7,148,000 for the same period last year, an increase of 13.5% or $858,000 quarter over quarter or 1% or $52,000 to last year. The increase compared to the previous quarter was driven by higher revenue in the Enterprise Workforce (EWF) segment of $768,000 and an increase in Career Networks (CN) revenue of $90,000. The increase in the Company’s revenue compared to the second quarter 2005 related to a $367,000 or 7% increase in the Enterprise Workforce segment, offset by a 14% or $315,000 decline in the legacy Career Networks business.

Gross profit was $4,956,000 or 69% of revenues for the second quarter 2006 and was up slightly from the previous quarters gross profit of $4,285,000 or 68% of revenues and flat compared to $4,953,000 or 69% of revenues for the second quarter 2005.

The Company’s EBITDA loss was $(1,718,000) or $(0.03) per share for the second quarter 2006 compared to EBITDA loss of $(1,945,000) or $(0.04) per share for the first quarter of 2006 and an EBITDA loss of $(1,258,000) or $(0.03) per share for the second quarter 2005. (GAAP Reconciliation shown below.) The net loss for the first quarter 2006 was $(3,303,000) or $(0.07) per share compared to a net loss of $(2,849,000) or $(0.07) per share for the same period last year. The increase in the EBITDA loss and net loss compared to prior year’s second quarter was due to an increase in operating expenses in excess of the margin improvement from new revenue. Additionally, last year’s net loss was further reduced by the recovery of deferred income taxes.

Revenue for the six months ended November 30, 2005 was $13,542,000 compared to $12,867,000 for the same period last year, an increase of $675,000 or 5%. Gross profit was $9,241,000 or 68% of revenues compared to $9,601,000 or 75% of revenues for the same period last year.

For the six months ended November 30, 2005, the net loss was $(7,141,000) or $(0.15) per share compared to a net loss of $(5,358,000) or $(0.14) per share for the same period last year. For the six months ended November 30, 2005, the Company’s EBITDA loss was $(3,692,000) or $(0.08) per share compared to EBITDA loss of $(2,231,000) or $(0.06) per share for the same period last year. (GAAP Reconciliation shown below.)

“DRS Technologies selection of Workstream’s complete TalentCenter suite in this past quarter further validates our belief that customers will increasingly look for the value of a full suite of products from a single provider,” said Michael Mullarkey, Chairman and Chief Executive Officer. “We continue to make solid progress on our fiscal 2006 initiatives. We have made considerable headway in the simplification of our product suite and streamlining our integrated solution. We are scaling our business in a prudent, fiscal manner and are constantly evaluating opportunities to better leverage our unique capabilities and assets,” stated Mullarkey.

Stephen Lerch, Chief Operating and Financial Officer added, “We are pleased to be able to show strong revenue growth over last quarter and a return to the baseline needed to move forward. Our focus is growing our Company in a rapid but fiscally responsible manner while maintaining strict control over operating expenses and cash utilization.”
Management will host a conference call today at 5:00 p.m. EST. The dial in number to participate in the call is 866-862-3912 for North American participants and 800-8989-6323 for those outside of North America. The instant replay number for the call will be available until January 12, 2006 by calling 800-408-3053 access code 3170573#.

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 and non recurring goodwill impairment. Included, following the financial statements, 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 Enterprise Workforce 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, Benefits, Performance, Compensation, Rewards 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 nine offices across North America, Workstream services over 400 customers including Chevron, The Gap, Home Depot, Kaiser Permanente, Motorola, Nordstrom, Samsung, Sony Music Canada, VISA, and Wells Fargo. For more information visit www.workstreaminc.com or call toll free 1-866-470-WORK.

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.

Click here to get Workstream Inc. Consolidated Balance Sheets

For more information contact:
Investor Relations:
Tammie Brown
Workstream Inc.
Tel: 877-327-8483 ext. 8263
Email: tammie.brown@workstreaminc.com