EXHIBIT 99.1
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CONTACTS:
Karla K. Rosa Joanne Taylor
Chief Financial Officer Media Relations Manager
Extended Systems Extended Systems
(208) 322-7575 (208) 322-7575
EXTENDED SYSTEMS TO STRENGTHEN BALANCE SHEET
THROUGH REAL ESTATE TRANSACTIONS
COMPANY EXPECTS TO ADD $6.1 MILLION IN CASH UPON CLOSE OF TRANSACTIONS
BOISE, IDAHO --(Sept. 3 2003)--Extended Systems (NASDAQ: XTND) announced today
that the company has entered into two real estate transactions that are expected
to add $6.1 million in cash to the company's balance sheet within the next 60
days.
First, the company has entered into a sale/leaseback transaction with Hopkins
Financial Services for the company's corporate headquarters building and land in
Boise, Idaho that is expected to add $4.6 million in cash to the company's
balance sheet upon closing later this month. The company will sign a 10-year
master lease for the building and will also have a 10-year option to repurchase
the building from Hopkins at a price of $5.1 million. The transaction will be
reflected as long-term debt on the company's balance sheet. Monthly payments of
interest only will be paid at a rate of 9.2%. The company expects this
transaction to close prior to the end of September.
The company also announced that it has entered into a purchase and sale
agreement with Brighton Investments, LLC for the sale of excess land adjacent to
the company's headquarters. Extended Systems expects to generate $1.5 million in
cash upon closing, which is expected to occur within the next 60 days. The
company expects to report a gain of approximately $1.0 million upon the close of
this transaction.
Because Extended Systems' corporate headquarters building and the adjacent land
were owned debt free by the company, all proceeds from these two real estate
transactions will flow directly to the company's balance sheet upon closing.
"During the past six months, Extended Systems has made several powerful,
strategic moves to remain a leader in a highly competitive market," said
Extended Systems CEO and President Charles Jepson. "The building and land
transactions were planned to add cash to our balance sheet and increase
confidence in the company's longevity. Unlike many of our competitors," Jepson
continued, "Extended Systems has survived tough economic times by carefully
controlling expenses, increasing software and services revenue, and delivering
sound technology. We plan to remain very competitive in this market and to
retain our ranking as one of the top wireless email and mobile middleware
vendors in the world."
The Company also provided an update on its financial outlook for the quarter
ending September 30, 2003. The company expects to report a restructuring charge
of approximately $1.2 million in the September quarter. This charge is primarily
related to severance charges resulting from the August resignation of Steven
Simpson, the company's former president and CEO, in addition to a workforce
reduction completed in August and September. The restructuring charge reflects
approximately $450,000 in non-cash compensation resulting from accelerated
vesting of employee stock options. Of the remaining $750,000, $ 300,000 is
expected to be paid prior to the end of September and $450,000 will be paid over
the next 15 months. The company expects an operating expense decrease of
approximately $300,000 per quarter as a result of the restructuring completed in
the first quarter of fiscal 2004.
Since the beginning of the July, the U.S. dollar has significantly strengthened
relative to the Euro, British Pound Sterling and Canadian Dollar. As a result,
the company also announced that it expects to report a foreign exchange loss in
a range of $200,000 to $300,000 when the company's receivables from its
international subsidiaries are revalued based on end-of-quarter foreign exchange
rates.
The company continues to project revenue of $7.4 to $8.5 million for the
September quarter and expects to report net operating profit, excluding the
restructuring charge of $1.2 million, in a range of a loss of approximately
$100,000 to an operating profit of approximately $650,000, consistent with the
outlook provided on the company's July 28, 2003 earnings call.
ABOUT EXTENDED SYSTEMS
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 expected closing of the sale/leaseback transaction, the expected
closing of the sale of the excess land, the expected addition of cash to the
company's balance sheet in connection with such closings, and the expected gain
to be reported upon closing the sale of the excess land; the company's ability
to retain its competitive position in the wireless email and mobile middleware
market; the expected restructuring charges in the first quarter of fiscal 2004
and the timing of the related cash payments; the expected operating expense
reductions resulting from restructuring charges during the first quarter of
fiscal 2004; future changes in the value of the U.S. dollar compared to the
Euro, British Pound Sterling, and Canadian dollar, and the resulting expected
foreign exchange loss expected to be recognized by the company in the first
quarter of fiscal
2004; and projected revenue and net operating profit or loss for the first
quarter of fiscal 2004. These statements are subject to risks and uncertainties.
These risks and uncertainties include the risks that the sale/leaseback
transaction or the sale of the excess land will not occur when expected or at
all; the risks that the restructuring charges or the changes in the value of the
U.S. dollar relative to other currencies will be greater or less than expected;
the risks associated with development of new products and product enhancements,
the timely development and acceptance of new products and technologies, the
perceived and realized benefits of mobile devices, continued growth in the
markets for our products, overall economic conditions and the level of
information technology spending by existing and potential customers, the timing
of purchases by significant customers, and the impact of competitive products
and pricing; 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.