Exhibit 99.1
Palm Reports Second Quarter Revenue Up 36 Percent Over First Quarter, Sequential
Improvement in Operating Results
SANTA CLARA, Calif., Dec. 19 /PRNewswire/ -- Palm, Inc. (Nasdaq: PALM)
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today reported revenues of $290.6 million for the second quarter of fiscal 2002,
ended Nov. 30, down 44 percent from the $522.2 million reported for the same
period last year, but up 36 percent from the $214.3 million reported in the
preceding fiscal quarter.
"This quarter's significant increase in revenue and improved results over
last quarter reflect that we have gained traction in the marketplace and
restored operational rigor," said Eric Benhamou, Palm's chairman and chief
executive officer. "We have a tightly focused strategy; we are growing again;
and we believe we can execute our plans on time and within budget."
Pro forma net loss -- which excludes the effects of special excess
inventory and related costs/benefit, amortization of goodwill and intangible
assets, purchased in-process technology, separation costs, and restructuring
charges -- totaled $36.6 million, or $0.06 per share, compared with pro forma
net income of $27.5 million, or $0.05 per share, for the second quarter of
fiscal year 2001, and pro forma net loss of $38.7 million, or $0.07 per share,
reported in the first quarter of fiscal year 2002. Actual net loss for the
second quarter of fiscal year 2002 calculated in accordance with GAAP was $25.2
million, or $0.04 per share, compared with net income of $20.3 million, or $0.04
per share, for the second quarter of fiscal year 2001.
For the first six months of fiscal 2002, revenues totaled $504.9 million,
down 45 percent compared with revenues of $923.2 million for the first six
months of fiscal 2001. Pro forma net loss for the first six months of fiscal
2002 was $75.3 million, or $0.13 per share, compared with pro forma net income
of $51.4 million, or $0.09 per share, for the first six months of fiscal 2001.
Actual net loss for the first six months of fiscal 2002 calculated in accordance
with GAAP was $57.6 million, or $0.10 per share, compared with actual net income
of $37.5 million, or $0.07 per share for the first six months of fiscal 2001.
About Palm, Inc.
Palm, Inc. is a pioneer in the field of mobile and wireless Internet
solutions and a leading provider of handheld computers, according to IDC
(December 2000). Based on the Palm OS(R) platform, Palm's handheld solutions
allow people to carry and access their most critical information wherever they
go. Palm(TM) handhelds address the needs of individuals, enterprises and
educational institutions through thousands of application solutions.
The Palm OS platform is also the foundation for products from Palm's
licensees and strategic partners, such as Acer, Franklin Covey, HandEra
(formerly TRG), Handspring, IBM, Kyocera, Samsung, Sony and Symbol Technologies.
Platform licensees also include AlphaSmart, Garmin and Nokia. The Palm Economy
is a growing global community of industry-leading licensees, world-class OEM
customers, and approximately 175,000 innovative developers and solution
providers that have registered to develop solutions based on the Palm OS
platform. Palm went public on March 2, 2000. Its stock is traded on the Nasdaq
national market under the symbol PALM. More information is available at
http://www.palm.com.
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Safe Harbor Statement
This press release contains forward-looking statements within the meaning
of the federal securities laws, including statements regarding Palm's
performance in the marketplace and operational success, Palm's strategy and
focus, Palm's growth, and Palm's belief that it can execute its plans on time
and within budget. These statements are subject to risks and uncertainties that
could cause actual results and events to differ materially, including possible
fluctuations in the demand for Palm's products and services, possible
fluctuations in economic conditions affecting the markets for Palm's products
and services, the ability to develop and consumer acceptance of new products and
services, Palm's ability to compete with existing and new competitors and
possible future price-cutting or other actions by Palm's competitors. A detailed
discussion of other risks and uncertainties that could cause actual results and
events to differ materially from such forward-looking statements is included in
Palm's most recent filings with the Securities and Exchange Commission,
including Palm's quarterly report on Form 10-Q for the quarterly period ended
August 31, 2001, as amended, and Palm's Registration Statement on Form S-4 filed
on Sept. 10, 2001, as amended. Palm undertakes no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of this press release.
Note to Investors
LIVE WEBCAST: Investors can listen to a live webcast of Palm's Q2 2002
financial results conference call today at 2 p.m. PST by logging onto the
investor relations section of Palm's website at the following address:
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=PALM&script=2400.
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DIGITAL REPLAY: An audio replay of the conference call will be available
for two weeks beginning today at approximately 5 p.m. PST.
-- Dial-in number for North America: 877-519-4471.
-- Dial-in number for international: 973-341-3080.
-- Pass code for both: 3005280.
NOTE: Palm OS is a registered trademark and Palm is a trademark of Palm,
Inc. Other brands may be trademarks of their respective owners.
Palm, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Excluding: cost of revenues -- charges/(reduction) for excess inventory and
related costs, amortization of goodwill and intangible assets, purchased
in-process technology, separation costs and restructuring charges
Three Months Ended Six Months Ended
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Nov. 30, Dec. 1, Nov. 30, Dec. 1,
2001 2000 2001 2000
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Revenues ....................................... $290,580 $522,192 $504,897 $923,168
Costs and operating expenses:
Cost of revenues ............................. 230,868 333,427 386,228 580,940
Sales and marketing .......................... 60,757 89,829 126,304 165,830
Research and development ..................... 37,694 40,993 78,900 71,313
General and administrative ................... 15,492 24,865 27,635 45,356
Pro forma costs and operating
expenses .................................. 344,811 489,114 619,067 863,439
Pro forma operating income (loss) .......... (54,231) 33,078 (114,170) 59,729
Interest and other income, ................. 464 12,744 3,458 25,988
Pro forma income (loss) before income
taxes ..................................... (53,767) 45,822 (110,712) 85,717
Pro forma income tax provision (benefit) ... (17,205) 18,329 (35,427) 34,287
Pro forma net income (loss) ................ $(36,562) $ 27,493 $(75,285) $ 51,430
Pro forma net income (loss) per share:
Basic ...................................... $(0.06) $0.05 $(0.13) $0.09
Diluted .................................... $(0.06) $0.05 $(0.13) $0.09
Shares used in computing per share amounts:
Basic ...................................... 568,459 565,946 567,837 565,548
Diluted .................................... 568,459 571,594 567,837 569,845
The above pro forma amounts for the three and six months ended November 30,
2001 have been adjusted to eliminate cost of revenues -- charge/(reduction) for
excess inventory and related costs, amortization of goodwill and intangible
assets, separation costs, and restructuring charges. The above pro forma amounts
for the three and six months ended December 1, 2000 have been adjusted to
eliminate amortization of goodwill and intangible assets, purchased in-process
technology and separation costs.
A reconciliation of pro forma net income (loss) presented above with Palm's
net income (loss) as determined in conformity with generally accepted accounting
principles is presented on the following page.
Palm, Inc.
Reconciliation of Pro Forma Income (Loss) to Reported Results
(In thousands)
(Unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
Nov. 30, Dec. 1, Nov. 30, Dec. 1,
2001 2000 2001 2000
-------- -------- -------- --------
Pro forma net income (loss) .................... $(36,562) $27,493 $(75,285) $51,430
Cost of revenues - charge/(reduction) for
excess inventory and related costs .......... (43,850) -- (58,150) --
Amortization of goodwill and intangible
assets ...................................... 2,927 7,504 5,837 12,739
Purchased in-process technology .............. -- -- -- 853
Separation costs ............................. -- 802 376 2,617
Restructuring charges ........................ 24,227 -- 25,988 --
Related income tax provision (benefit) ....... 5,342 (1,072) 8,303 (2,313)
Net income (loss) .............................. $(25,208) $20,259 $(57,639) $37,534
For the three and six months ended December 1, 2000, pro forma cost of
revenues includes $802 thousand and $1,489 thousand, respectively, which is
reclassified in Palm's Condensed Consolidated Statement of Operations from cost
of revenues to amortization of goodwill and intangible assets.
Palm, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
--------------------- ---------------------
Nov. 30, Dec. 1, Nov. 30, Dec. 1,
2001 2000 2001 2000
-------- -------- -------- --------
Revenues ....................................... $290,580 $522,192 $504,897 $923,168
Costs and operating expenses:
Cost of revenues ........................... 230,868 332,625 386,228 579,451
Cost of revenues - charge/(reduction) for
excess inventory and related costs ....... (43,850) -- (58,150) --
Sales and marketing ........................ 60,757 89,829 126,304 165,830
Research and development ................... 37,694 40,993 78,900 71,313
General and administrative ................. 15,492 24,865 27,635 45,356
Amortization of goodwill and
intangible assets (*) .................... 2,927 8,306 5,837 14,228
Purchased in-process technology ............ -- -- -- 853
Separation costs ........................... -- 802 376 2,617
Restructuring charges ...................... 24,227 -- 25,988 --
Total costs and operating expenses ......... 328,115 497,420 593,118 879,648
Operating income (loss) .................... (37,535) 24,772 (88,221) 43,520
Interest and other income, net ............. 464 12,744 3,458 25,988
Income (loss) before income taxes .......... (37,071) 37,516 (84,763) 69,508
Income tax provision (benefit) ............. (11,863) 17,257 (27,124) 31,974
Net income (loss) .......................... $(25,208) $20,259 $(57,639) $37,534
Net income (loss) per share:
Basic .................................... $(0.04) $0.04 $(0.10) $0.07
Diluted .................................. $(0.04) $0.04 $(0.10) $0.07
Shares used in computing per share amounts:
Basic .................................... 568,459 565,946 567,837 565,548
Diluted .................................. 568,459 571,594 567,837 569,845
(*) Amortization of goodwill and intangible assets:
Cost of revenues ........................... $1,401 $802 $2,780 $1,489
Sales and marketing ........................ -- 160 11 320
Research and development ................... 1,515 7,344 3,035 12,419
General and administrative ................. 11 -- 11 --
Total amortization of goodwill and
intangible assets ........................ $2,927 $8,306 $5,837 $14,228
Palm, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value amounts)
Nov. 30, 2001 June 1, 2001
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(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents .................... $ 241,978 $513,769
Accounts receivable, net of allowance for
doubtful accounts of $10,628 and $14,899,
respectively ................................. 130,103 115,342
Inventories .................................. 78,633 107,813
Deferred income taxes ........................ 109,472 154,362
Prepaids and other ........................... 14,306 12,867
Total current assets ....................... 574,492 904,153
Property and equipment, net .................. 225,328 223,422
Goodwill, net ................................ 54,970 43,169
Intangible assets, net ....................... 12,469 18,218
Deferred income taxes ........................ 170,232 90,656
Other assets ................................. 20,069 17,633
Total assets ............................... $1,057,560 $1,297,251
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................. $146,654 $238,235
Accrued restructuring ........................ 39,891 32,399
Other accrued liabilities .................... 170,566 282,851
Total current liabilities .................. 357,111 553,485
Non-current liabilities:
Deferred revenue and other ................... 8,576 9,614
Stockholders' equity:
Preferred stock, $.001 par value,
125,000 shares authorized; none
outstanding ................................ -- --
Common stock, $.001 par value,
2,000,000 shares authorized; outstanding
November 30, 2001, 572,192 shares;
June 1, 2001, 567,215 shares ............... 572 567
Additional paid-in capital ................... 1,103,067 1,092,329
Unamortized deferred stock-based
compensation ............................... (10,464) (14,929)
Accumulated deficit .......................... (401,678) (344,039)
Accumulated other comprehensive income ....... 376 224
Total stockholders' equity ................. 691,873 734,152
Total liabilities and stockholders' equity ... $1,057,560 $1,297,251