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Company Files 2006 Form 10-K and Third Quarter Form 10-Q
PEACHTREE CITY, Ga. (July 5, 2007) – World Air Holdings, Inc. (OTC: WLDA.PK), today reported its financial results for the quarter and year ended Dec. 31, 2006, and for the quarter ended Sept. 30, 2006. Total year, revenue was $825.7 million, up 5 percent over 2005 revenue of $787.1 million; operating loss was $0.8 million, compared to 2005 operating income of $56.6 million; and the net loss was $2.3 million, or a loss of $0.10 per diluted share, compared to 2005 net income of $31.6 million and $1.19 per diluted share. Operating cash flow for the year was $36.1 million.
Third Quarter Highlights:
Revenue for the third quarter of 2006 was $231.4 million, or 7 percent higher compared to $217.2 million for the same period in 2005. This increase was primarily driven by a 49 percent increase in scheduled service revenue due to expansion in Accra and Lagos routes. Operating income was $6.8 million, compared to $10.2 million for the same period of 2005. The reduction of operating margin was driven by a 66 percent increase in maintenance cost, offset by the favorable impact of a $12.5 million litigation expense accrued in 2005 that did not repeat in 2006. Net income was $5.4 million compared to $5.5 million in 2005, or $0.20 per diluted share, compared to $0.20 per diluted share in 2005. Consolidated block hours of 22,568 were virtually flat versus 2005, which reflects a 12 percent decrease in military flying, offset by favorable increases in various commercial programs.
Fourth Quarter Highlights:
Revenue for the fourth quarter of 2006 was $201.3 million, compared to $238.5 million for the same period in 2005. This decrease was primarily driven by a 25 percent reduction in military revenue due to an unexpected curtailment of military troop movements in the last half of December. The operating loss was $4.1 million, compared to operating income of $18.4 million for the same period of 2005. The reduction of operating margin was primarily driven by the 16 percent decrease in overall revenue and the unfavorable impact of a reversal of $10.4 million litigation expense in the fourth quarter of 2005 that did not repeat in 2006. The net loss was $3.8 million compared to net income of $10.8 million in 2005, or a net loss of $0.17 per diluted share, compared to net income of $0.40 per diluted share in 2005. Consolidated block hours of 21,457 were 3 percent lower versus 2005, which reflects an 11 percent decrease in military flying, offset by favorable increases in various commercial programs.
Full-Year 2006 Highlights:
Revenue for the total year was $825.7 million, compared to $787.1 million in 2005. This 5 percent increase was primarily driven by the impact of a full year of North American, offset by a 17 percent reduction in military revenue at World Airways due to an unexpected curtailment of military troop movements in the last half of December and a penalty imposed by the military in the second quarter for not achieving minimum performance standards. Operating loss was $0.8 million, compared to operating income of $56.6 million for the same period of 2005. The reduction of operating margin was primarily driven by the decrease in military revenue and a 21 percent increase in maintenance spending at World Airways. Consolidated block hours of 83,577 were 10 percent higher versus 2005, which reflects a full year impact of North American, offset by a 19 percent decrease in military flying at World Airways.
Stock Option Review
The company also reported the completion of an in-depth stock option review by independent counsel, and the findings were accepted by the Audit Committee. The independent counsel found no evidence of intentional backdating, but noted that documentation gaps existed in the 1995 through 2000 time period, which caused incorrect measurement dates to be used for a small number of awards. The company increased compensation expense by $570,000 in the third quarter to properly reflect corrected measurement dates on the specific awards that were not included in the financial statements from 1997 to present.
World Air Holdings has three wholly owned subsidiaries, World Airways, Inc., North American Airlines, Inc., and World Risk Solutions, Ltd. World Airways is a charter passenger and cargo airline founded in 1948, North American is a charter and scheduled passenger airline founded in 1989, and World Risk Solutions is an insurance subsidiary established in 2004. For additional information, visit www.worldairholdings.com.
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“Safe Harbor” statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements that are subject to risks and uncertainties including, but not limited to, the impact of competition in the market for air transportation services, the cyclical nature of the air carrier business, reliance on key customer relationships, fluctuations in operating results and other risks detailed from time to time in the company's periodic reports filed with the SEC. (Reports are available from the company upon request.) These various risks and uncertainties may cause the company's actual results to differ materially from those expressed in any of the forward-looking statements made by, or on behalf of, the company in this release.
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