EXHIBIT 99.1
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CONTACTS:
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Karla K. Rosa Joanne Taylor
Chief Financial Officer Media Relations Manager
Extended Systems Extended Systems
(208) 322-7575 (208) 322-7575
EXTENDED SYSTEMS ANNOUNCES FOURTH QUARTER RESULTS
COMPANY REPORTS 44 PERCENT YEAR-OVER-YEAR GROWTH IN FOURTH QUARTER REVENUE
AND PROFIT OF $0.01 PER SHARE
BOISE, IDAHO (July 28, 2003)--Extended Systems Inc. (NASDAQ:XTND), a leading
provider of mobile information management (MIM) solutions for the enterprise,
today reported net revenue of $7.4 million from continuing operations for the
fourth quarter of fiscal 2003 that ended June 30, 2003. This compares to net
revenue of $7.4 million recorded in the third quarter of fiscal 2003 and $5.1
million recorded in the fourth quarter of fiscal 2002 and amounts to
year-over-year growth of 44 percent.
The company reported net income of $118,000, or $0.01 per share, compared to a
net loss of $648,000, or $.05 per share reported in the third quarter of fiscal
2003. The company reported a net loss of $2.2 million, or $0.19 per share in the
fourth quarter of fiscal 2002. The fourth quarter fiscal 2003 profit was due to
an increase in net revenue, coupled with reduced operating expenses, and foreign
currency translation gains in Canada and Europe. Cash and cash equivalents were
$3.5 million as of June 30, 2003, compared to $3.7 million at March 31, 2003.
During the quarter the company paid off short-term borrowings of $290,000 drawn
on its line-of-credit in the third quarter of fiscal 2003. Excluding this
repayment, the company increased its cash balance during the fourth quarter.
The company's 44 percent year-over-year revenue growth and enterprise customer
wins this quarter, including Martha Stewart Living, Mercedes-Benz and Johnson &
Johnson, are additional indications of the company's leadership position in the
mobile solutions arena. In a report released this month by IDC research,
WORLDWIDE MOBILE MIDDLEWARE COMPETITIVE ANALYSIS, 2003: FORECAST FOR 2003-2007,
Extended Systems was ranked in the top four among enterprise-centric, mobile
middleware market share leaders, beating out competitors such as IBM,
Synchrologic and Pumatech.
"The trend of moving beyond mobile email and PIM to the mobilization of
strategic enterprise applications such as CRM and ERP is growing at a very rapid
rate," said Extended Systems President and CEO Steve Simpson. "As more and more
companies look to mobilize their work forces, they are relying on Extended
Systems for its mobile expertise to help maximize the value and financial
benefits that can be realized through mobile technology."
Simpson said that during the fourth quarter of fiscal 2003, Extended Systems
continued to see its business stretch across vertical markets with new customers
in utility, home health care and retail merchandising industries.
Extended Systems' gross margin for continuing operations for the fourth quarter
of fiscal 2003 was 84 percent, as compared to 85 percent in the third quarter of
fiscal 2003 and 86 percent in the fourth quarter of fiscal 2002.
PUMATECH LITIGATION UPDATE
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The company has petitioned to have three of Pumatech's patents reexamined by the
Patent Office based on prior art that was located by Extended Systems that was
not considered when the Patent Office originally issued these patents. These
three Pumatech patents are US 5,392,390; US 6,212,529; and US 6,141,664. The
Patent Office has found a "substantial new question of patentability" (which is
the standard the Patent Office uses to decide whether to reexamine a patent) in
all three cases, and all three patents are currently undergoing reexamination.
One of the patents (the '390 patent) has received an "Office Action" by the
examiner, and the examiner has rejected all Pumatech claims in the `390 patent
over the prior art. The company is awaiting further action by the Patent Office
on the other two patents. Because the claims of these three patents may be
narrowed or cancelled during the reexaminations (the claims cannot by statute be
made broader), Extended Systems has filed a motion asking the Court to stay any
further litigation proceedings on these three patents until the Patent Office
has completed its reexaminations. The Court has not yet ruled on the request to
stay.
The claims construction, or "Markman" hearing for the case was held in early
July. No ruling has been issued by the court to date. The trial is currently
scheduled for April 2004.
FISCAL YEAR 2003 RESULTS
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In the year ended June 30, 2003, Extended Systems reported net revenue from
continuing operations of $ 27.5 million, compared to $22.3 million in the year
ended June 30, 2002. The company saw its gross margin from continuing operations
decline to 84 percent in fiscal 2003, compared to 89 percent in fiscal 2002, due
to an increase in lower margin professional services revenue resulting from the
addition of a dedicated professional services team in the first quarter of
fiscal 2003. The net loss for fiscal 2003 was $3.8 million, or $0.28 per share,
a significant improvement over the net loss of $7.2 million, or $.65 per share,
for fiscal 2002.
Extended Systems will hold a conference call today at 5 p.m. Eastern Time to
discuss its quarterly financial results, business highlights and outlook. At
this time, management may answer questions concerning business and financial
developments and trends, management's view on revenue and earnings forecasts and
other business and financial matters affecting Extended Systems.
A simultaneous live Web cast and replay of the call will be available over the
Internet at www.vcall.com. Replays of the call will also be available by
telephone for five days following the call at (877) 660-6853 or (201) 612-7415.
The account number to access the telephone replay is 1628 and the conference
identification number is 72561.
ABOUT EXTENDED SYSTEMS
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Extended Systems provides the expertise, strategy and solutions to help
enterprise organizations streamline their business processes through mobile
technology. The company's mobile solutions suite enables companies to mobilize
critical enterprise applications such as e-mail, field service, sales force
automation (SFA), enterprise resource planning (ERP), and customer relationship
management (CRM). Extended Systems has more than 3,000 enterprise customers
worldwide and key alliance relationships with Ericsson, HP, Handspring, IBM,
Microsoft, Motorola, Nokia, Palm, RIM, Sharp, Siemens and Toshiba.
Founded in 1984, Extended Systems has offices and subsidiaries in the United
States and worldwide. For more information, call 1-800-235-7576 or visit the
company Web site.
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This press release contains forward-looking statements, including statements
relating to the company's position as a leading provider of mobile information
management solutions for the enterprise, enterprise customer wins and new
customers from vertical markets, the ability of Extended Systems to help
customers maximize the value and financial benefits that can be realized through
mobile technology, the ongoing success of Extended Systems' relationships with
Martha Stewart Living, Mercedes-Benz, and Johnson & Johnson and the litigation
with Pumatech. These statements are subject to risks and uncertainties. These
risks and uncertainties include the success of the relationships between
Extended Systems and Martha Stewart Living, Mercedes-Benz, and Johnson & Johnson
and other key business relationships, overall economic conditions and the level
of information technology spending by existing and potential customers, the
timing of purchases by significant customers, the perceived and realized
benefits of mobile devices, the acceptance of specific industry-wide standards
and protocols, the timely development and acceptance of new products and
technologies, the risks associated with development of new products and product
enhancements, the impact of competitive products and pricing, continued growth
in the markets for our products, the risks associated with acquisitions, the
risks associated with litigation, the risks associated with international sales
and operations and other risks as detailed from time-to-time in the company's
SEC filings, including its 2002 Annual Report on Form 10-K filed on September
23, 2002 and 2003 Quarterly Reports on Form 10-Q filed on November 14, 2002,
February 14, 2003, and May 15, 2003.
EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED JUNE 30, YEAR ENDED JUNE 30,
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2003 2002 2003 2002
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Revenue:
License fees and royalties ........................ $ 5,721 $ 4,389 $ 21,733 $ 19,176
Services and other ................................ 1,660 727 5,801 3,099
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Total net revenue ............................ $ 7,381 $ 5,116 $ 27,534 $ 22,275
Cost of revenue:
License fees and royalties ........................ 292 350 1,146 1,346
Services and other ................................ 874 341 3,185 1,207
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Total cost of revenue ........................ 1,166 691 4,331 2,553
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Gross profit ............................ 6,215 4,425 23,203 19,722
Operating expenses:
Research and development .......................... 1,615 2,080 7,173 10,030
Acquired in-process R&D ........................... -- -- 430 --
Marketing and sales ............................... 3,721 3,175 14,482 13,489
General and administrative ........................ 1,142 1,108 4,889 4,381
Amortization of goodwill .......................... -- 231 -- 925
Restructuring charges ............................. 100 213 597 213
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Total operating expenses ..................... 6,578 6,807 27,571 29,038
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Loss from operations ......................... (363) (2,382) (4,368) (9,316)
Other expense (income), net ........................... (315) 54 (257) 4
Interest expense ...................................... 43 26 307 70
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Loss before income taxes ..................... (91) (2,462) (4,418) (9,390)
Income tax benefit .................................... (67) (511) (200) (2,257)
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Loss from continuing operations .............. (24) (1,951) (4,218) (7,133)
Discontinued operations, net of tax:
Net income (loss) from discontinued operations .... 142 (209) 458 (57)
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Net income (loss) ............................ $ 118 $ (2,160) $ (3,760) $ (7,190)
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Loss per share from continuing operations:
Basic ............................................. $ 0.00 $ (0.17) $ (0.31) $ (0.64)
Diluted ........................................... $ 0.00 $ (0.17) $ (0.31) $ (0.64)
Earnings (loss) per share from discontinued operations:
Basic ............................................. $ 0.01 $ (0.02) $ 0.03 $ (0.01)
Diluted ........................................... $ 0.01 $ (0.02) $ 0.03 $ (0.01)
Earnings (loss) per share:
Basic ............................................. $ 0.01 $ (0.19) $ (0.28) $ (0.65)
Diluted ........................................... $ 0.01 $ (0.19) $ (0.28) $ (0.65)
Number of shares used in per share calculations:
Basic ............................................. 13,842 11,152 13,376 11,048
Diluted ........................................... 14,150 11,152 13,376 11,048
EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PAR VALUE PER SHARE AMOUNTS)
JUNE 30, JUNE 30,
2003 2002
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ASSETS
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Current:
Cash and cash equivalents ..................... $ 3,502 $ 5,439
Receivables, net .............................. 5,644 4,284
Prepaids and other ............................ 966 1,719
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Total current assets ..................... 10,112 11,442
Property and equipment, net ....................... 5,293 5,786
Goodwill .......................................... 12,489 1,941
Intangibles, net .................................. 1,197 1,202
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Total assets ............................. $ 29,091 $ 20,371
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current:
Accounts payable .............................. $ 2,314 $ 2,377
Accrued expenses .............................. 2,888 2,739
Deferred revenue .............................. 2,961 2,167
Accrued restructuring ......................... 722 --
Short-term debt ............................... 0 --
Current portion of long-term debt ............. 434 --
Capital leases ................................ 22 --
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Total current liabilities ................ 9,341 7,283
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Non-Current:
Long-term debt ................................ 325 --
Capital leases ................................ 42 --
Other long-term liabilities ................... 127 --
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Total non-current liabilities ............ 494 --
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Total liabilities ........................ $ 9,835 $ 7,283
Stockholders' equity:
Preferred Stock; $0.001 par value per share,
5,000 shares authorized; no shares issued
or outstanding ............................. -- --
Common stock; $0.001 par value per share,
75,000 shares authorized; 13,977 and 11,208
shares issued and outstanding .............. 14 11
Additional paid-in capital .................... 44,481 34,053
Accumulated deficit ........................... (23,883) (20,124)
Accumulated other comprehensive loss .......... (1,356) (852)
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Total stockholders' equity ............... 19,256 13,088
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Total liabilities and stockholders' equity $ 29,091 $ 20,371
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