(MOBILITY ELECTRONICS LOGO)
FOR IMMEDIATE RELEASE
CONTACTS: Tony Rossi Charlie Mollo
FRB | Weber Shandwick Mobility Electronics
310-407-6563 480-596-0061, ext. 153
trossi@webershandwick.com cmollo@mobl.com
MOBILITY ELECTRONICS REPORTS 73%
INCREASE IN FIRST QUARTER REVENUES
Company now expects 2003 revenue to increase by at least 70%
HIGHLIGHTS
o REVENUES INCREASE TO $12 MILLION, AT TOP END OF GUIDANCE
o GROSS MARGIN IMPROVES TO 35% FROM 22% IN Q4 2002
o OVER 30,000 JUICE UNITS SHIPPED; RESPONSE CONTINUES TO BE EXCELLENT
o NET LOSS REDUCED TO $1.1 MILLION FROM $3.4 MILLION IN Q4 2002
SCOTTSDALE, Ariz., May 6, 2003 -- Mobility Electronics, Inc. (Nasdaq: MOBE), a
leading provider of innovative portable computing solutions for the mobile
computer user, today reported financial results for the first quarter ended
March 31, 2003. Revenue was approximately $12.0 million in the first quarter of
2003, an increase of 73% over revenue of $6.9 million in the first quarter of
2002, and an increase of 16% over revenue of $10.3 million in the fourth quarter
of 2002.
Net loss for the first quarter of 2003 was $1.1 million, compared with a net
loss of $2.3 million, before the cumulative effect of a change in accounting
principle, in the same period of the prior year. The net loss in the first
quarter of 2002 was adjusted retroactively to include a non-cash transition
charge in the amount of $5.6 million pursuant to the adoption of Statement of
Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets."
Net loss per diluted share was ($0.07) for the first quarter of 2003, compared
with net loss per diluted share of ($0.15) for the first quarter of 2002, also
before the cumulative effect of a change in accounting principle.
Earnings before interest, taxes, depreciation, amortization and certain other
non-cash charges (beneficial conversion costs of preferred stock) was a loss of
$572,000 for the first quarter of
-more-
Mobility Electronics Reports 73% Increase in First Quarter Revenues
Page 2 of 6
2003. This compares to EBITDA less certain other non-cash charges (cumulative
effect of change in accounting principle) for the same period of the prior year
of negative $2.1 million.
"We are seeing strong demand in each of our product areas and we continue to add
important OEM, reseller, and retail accounts that will generate additional
growth going forward," said Charlie Mollo, President and Chief Executive Officer
of Mobility Electronics. "Sales of, and opportunities for, our new products such
as Juice(TM), Pitch(TM) and Quickoffice Premier(TM) are exceeding our
expectations, and the growing interest is enabling us to further expand our
distribution channels and reach more mobile professionals than ever before."
The following are the notable drivers of the first quarter revenue growth, as
well as the major achievements that lay the foundation for further sales growth
in each product area:
POWER PRODUCTS
o Shipping approximately 30,000 units of Juice, the new all-in-one power
adapter, to OEMs such as Apple, Winbook and SOTEC; resellers such as
CDW, PC Connection, PC Mall, Insight, Zones, Compucom and Comark;
retailers such as Costco, SkyMall, MicroCenter, Wayport, In Motion,
TechDepot.com, Ballio's and Airport Wireless; and airlines such as
United and LanChile.
o Securing a large number of additional OEM, retailer and reseller
accounts for Juice, in the United States, Canada, and Europe, as well
as receiving material re-orders from many initial accounts. As a result
of the expanding distribution channels, Juice will be sold by
approximately 20 chain stores representing approximately 5,000 stores
by the end of the second quarter of 2003, a significant increase from
the 370 stores selling Juice in the first quarter of 2003.
o Receiving orders to date for approximately 35,000 Juice units for
delivery in the second quarter of 2003.
o Completing a major power adapter development program for IBM, including
commencing shipment of this important new product.
o Initiating evaluation programs with Juice in many corporate accounts
for possible company-wide roll out.
o Finalizing a major retail distribution agreement with Radio Shack to
carry Juice in 3,500 stores throughout the United States.
ENHANCEMENT PRODUCTS FOR HANDHELD COMPUTING, PDA AND MOBILE PHONE DEVICES
o Launching Quickoffice Premier for Palm OS, and launching QuickPoint for
Symbian (the new smart phone OS).
o Signing agreements to bundle the Quickoffice software suite with four
smart phone OEMs, including Kyocera and AlphaSmart, and to offer the
Pitch presentation solution as a companion product with several of
these OEMs.
o Launching the next generation of the Pitch product family - Pitch Duo -
which adds Bluetooth(TM) wireless capabilities and Microsoft
compatibility.
EXPANSION AND DOCKING PRODUCTS
o Shipping the EasiDock(R) 1000EV docking station as a companion product to
Acer America's TravelMate C100 Convertible Tablet PC.
"Most importantly, the response to Juice continues to be excellent, and it
appears to be driving a
Mobility Electronics Reports 73% Increase in First Quarter Revenues
Page 3 of 6
major shift in the way power adapters are viewed and used," said Mr. Mollo. "We
are actively developing new products based on Juice's underlying technology, and
we believe we have the opportunity to develop and maintain a leadership position
in this emerging product category with a broad range of leading-edge solutions."
FINANCIAL HIGHLIGHTS
Gross margin was 35.0% in the first quarter of 2003, compared to 26.7% in the
first quarter of 2002, and 21.8% in the fourth quarter of 2002. The substantial
sequential quarter improvement in gross margin was primarily attributable to the
introduction of higher margin products such as Juice and reduced overhead
expenses following the outsourcing and closing of iGo's historical Reno facility
and call center and Mobility's Scottsdale warehouse.
Total first quarter operating expenses were $5.3 million, or 44.4% of revenue,
compared to $4.4 million, or 63.6% of revenue, in the first quarter 2002. This
also compares with operating expenses of $5.7 million, or 55.7% of revenue, in
the fourth quarter of 2002.
"We are executing well on our business plan and achieving the interim targets
that will lead to profitability in the near future," said Mr. Mollo. "As we
expected, we had a substantial increase in revenues and gross profit compared to
the previous quarter, while further reducing our operating expenses."
OUTLOOK
For the second quarter of 2003, Mobility expects revenues to be between $12 and
$13 million, with continued improvement in its bottom line results in the
quarter and throughout the remainder of the year. Operating expenses in the
second quarter are expected to increase somewhat due to development costs
required to complete new OEM programs that are expected to begin contributing
revenue in the second half of 2003, as well as expenses related to
Sarbanes-Oxley compliance efforts. Mobility expects to utilize a modest amount
of its $10 million line of credit to finance working capital needs over the
course of 2003.
The Company also increased its revenue guidance for the full year 2003. The
Company now expects 2003 revenue growth of more than 70% over 2002, which is an
increase from the previous guidance of more than 50% growth. The increased
revenue guidance is based on the strong response to Juice, new material OEM and
retail accounts for Juice and other products that are expected to contribute
revenue in the third and fourth quarters, and the introduction of a variety of
exciting new products.
"We have made dramatic progress towards achieving profitability, and we continue
to have a clear path to that near-term goal," said Mr. Mollo. "We have strong
interest from additional retailers, resellers and OEMs for our recently
introduced products and we expect to see further expansion of our domestic and
international distribution channels.
"We anticipate continued sales growth in each product area for the remainder of
the year. Sales of our power products will continue to grow significantly as we
expand our distribution and OEM network and introduce extensions to the Juice
product family; growth in the handheld area will be driven by increasing sales
of intelligent PDA cradles, the Pitch presentation solutions, and the
Quickoffice family of software, which is benefiting from the continued roll-out
of smart phones;
Mobility Electronics Reports 73% Increase in First Quarter Revenues
Page 4 of 6
and sales of our expansion and docking products will continue to expand as we
leverage the recent success we have had in key vertical markets," said Mr.
Mollo.
ABOUT MOBILITY ELECTRONICS, INC.
Mobility Electronics, Inc., based in Scottsdale, Ariz., is a leading designer,
developer and marketer of innovative products and solutions for the mobile
computing user. The company's unique product portfolio includes widely
compatible docking stations for portable computers; connectivity and video
products for handheld computing devices; expansion products for desktop, server
and portable computers; and power products and accessories for portable
computing devices of all types. The company's technology base includes its
award-winning Split Bridge(R) technology and multi-function Card Bus, high-speed
bus expansion and portable computing device power technologies.
Mobility Electronics possesses a broad range of internally developed
intellectual property with numerous patents, patents pending, license agreements
and/or strategic relationships with industry leaders such as Avocent, LSI Logic,
Molex Corporation, National Instruments, 2C Computing and Philips
Semiconductors. The company's subsidiaries include MAGMA, which focuses on
expansion products, Portsmith, Inc., which focuses on the handheld market,
Cutting Edge Software, Inc., which develops, markets and supports software
solutions for the mobile professional and enterprises, and iGo Direct
Corporation, which is a leading mobile computer solution provider. Mobility
Electronics markets its products through a worldwide network of OEMs,
distributors, resellers, retail channels and direct catalog and e-commerce
channels.
For information on Mobility Electronics' products and services, call
480-596-0061, or visit its Web site at www.mobilityelectronics.com.
This release may contain forward-looking statements as defined by the Private
Securities Litigation Reform Act of 1995, which involve risks and uncertainties.
Among the important factors which could cause actual results to differ
materially from those in the forward-looking statements are economic,
competitive and technological factors effecting the company's operations,
markets, products, services and prices, as well as other factors detailed in the
company's filings with the Securities and Exchange Commission.
Mobility Electronics Reports 73% Increase in First Quarter Revenues
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MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(000's except per share data)
(unaudited)
<Table>
<Caption>
THREE MONTHS ENDED
MARCH 31,
-----------------------
2003 2002
-------- --------
Net revenue $ 11,971 $ 6,919
Gross profit 4,190 1,845
Selling, engineering and administrative expenses 5,310 4,402
Other income, net 44 216
-------- --------
Net loss before cumulative effect of change
in accounting principle (1,076) (2,341)
Cumulative effect of change in accounting principle -- (5,627)
-------- --------
Net loss (1,076) (7,968)
Beneficial conversion costs of preferred stock (1) (445) --
-------- --------
Net loss attributable to common stockholders $ (1,521) $ (7,968)
======== ========
Net loss per share:
Net loss per share before cumulative effect of
change in accounting principle $ (0.07) $ (0.15)
Cumulative effect of change in accounting principle -- (0.37)
-------- --------
Basic and diluted $ (0.07) $ (0.52)
======== ========
Weighted avg common shares outstanding:
Basic and diluted 20,375 15,371
======== ========
Reconciliation of net loss attributable to common stockholders to EBITDA, less
certain other non-cash charges:
Net loss attributable to common stockholders $ (1,521) $ (7,968)
Other income, net (44) (216)
Depreciation and amortization 548 425
Cumulative effect of change in accounting principle -- 5,627
Beneficial conversion costs of preferred stock 445 --
-------- --------
EBITDA, less certain other non-cash charges $ (572) $ (2,132)
======== ========
</Table>
(1) Non-cash adjustment to reflect the issuance of Series E and F preferred
stock and related warrants at a discount to the fair value of the common
stock at the date of issuance.
Mobility Electronics Reports 73% Increase in First Quarter Revenues
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MOBILITY ELECTRONICS, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(000's)
<Table>
<Caption>
MARCH 31, DECEMBER 31,
2003 2002
----------- ------------
(unaudited)
ASSETS
Cash and cash equivalents $ 995 $ 3,166
Accounts receivable, net 9,280 7,245
Inventories 5,093 4,414
Prepaid expenses and other current assets 213 176
------- -------
Total current assets 15,581 15,001
Other assets, net 13,266 13,368
------- -------
Total assets $28,847 $28,369
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 9,649 $ 9,356
Long-term liabilities 1,303 1,385
------- -------
Total liabilities 10,952 10,741
Total stockholders' equity 17,895 17,628
------- -------
Total liabilities and stockholders' equity $28,847 $28,369
======= =======
</Table>
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