FOR IMMEDIATE RELEASE
EXHIBIT 99.1
Karla K. Rosa
Chief Financial Officer
Extended Systems
208.322.7575
karla.rosa@extendedsystems.com
Joanne Taylor
Media Relations Manager
Extended Systems
208.322.7575, ext. 6015
joanne.taylor@extendedsystems.com
EXTENDED SYSTEMS REPORTS 28 PERCENT YEAR-OVER-YEAR REVENUE GROWTH IN
FIRST QUARTER OF FISCAL 2004
COMPANY IMPROVES OPERATIONS, STRENGTHENS CASH POSITION
BOISE, IDAHO -- OCTOBER 22, 2003 --Extended Systems Inc. (NASDAQ:XTND), a
leading provider of mobile solutions for the enterprise, today reported net
revenue of $7.6 million from continuing operations for the first quarter of
fiscal 2004 ended September 30, 2003, an increase of 28 percent over net revenue
of $5.9 million recorded in the first quarter of fiscal 2003 and compared to
$7.4 million recorded in the fourth quarter of fiscal 2003.
The company reported a net loss of $1.4 million, or $(0.10) per share, compared
to a net loss of $2.0 million, or $(0.16) per share in the first quarter of
fiscal 2003. The company reported net income of $118,000, or $0.01 per diluted
share in the fourth quarter of fiscal 2003. The increase in operating expenses
for the first fiscal quarter of 2004 was primarily attributable to $1.1 million
in restructuring charges, including $437,000 of non-cash stock option
compensation, resulting from the resignation of the company's former president
and chief executive officer and a workforce reduction of 10 positions worldwide,
both of which were completed during the quarter. The increase in the company's
general and administrative expenses in the quarter was attributable to an
increase in legal and other professional fees related, in part, to a potential
business combination which management believes will not be completed. The
company also saw an increase in legal fees associated with the on-going patent
litigation.
Cash and cash equivalents were $7.8 million as of September 30, 2003, compared
to $3.5 million as of June 30, 2003. The increase in cash was primarily the
result of the company's sale-and-leaseback of its
headquarters in Boise, which added $4.6 million in cash to the company's balance
sheet. The company added an additional $1.6 million in cash to its balance sheet
on October 16, 2003 upon closing the sale of excess land next to the company's
headquarters building.
"I am very pleased that the company has completed initiatives to strengthen its
balance sheet," said Extended Systems CEO and president Charles Jepson. "We are
well positioned for long-term success. Today, global customers use Extended
Systems' OneBridge products to mobilize critical applications-from email and PIM
to field service, sales force automation, and customer relationship management
applications. We expect to grow revenue by increasing the adoption rate of
global customers who chose a single platform to mobilize these and other
critical business applications. Additionally, the company will continue to
carefully manage our expenses, foster our strategic alliance relationships and
enhance our industry-leading products."
BUSINESS OUTLOOK
The company announced that it expects net revenue from continuing operations to
increase to a range of $7.9 million to $8.5 million, up from $7.6 million for
the first quarter of fiscal 2004. The company expects operating expenses,
including cost of license fees and royalties and cost of services, in a range of
$7.7 million to $8.0 million for the second quarter, down from $9.1 million for
the first quarter of fiscal 2004. Operating profit for the second quarter,
assuming no unusual items, is expected to be in a range of $150,000 to $500,000.
The company also expects to report a gain of $1.1 million from the sale of its
excess land. Net income for the second quarter is expected to be in a range of
$900,000 to $1.2 million.
CONFERENCE CALL
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 following the call through October 24, 2003 at (877) 660-6853 or (201)
612-7415. The account number to access the telephone replay is 1628 and the
conference identification number is 80311.
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 EDS, Ericsson, HP,
Handspring, IBM, Microsoft, Motorola, Nokia, Palm, RIM, Siemens, Symbian 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 solutions for
the enterprise; the company's long-term success and its ability to increase
revenue, control expenses and enhance its industry-leading products; the ongoing
success of Extended Systems' customer relationships; the ongoing success of the
company's strategic alliance relationships; the company's ability to speed the
adoption rates for mobile applications within the enterprise; and the company's
expectations for net revenue, gross margin, operating results, operating profit
and gain from the sale of excess land in the second quarter of fiscal 2004.
These statements are subject to risks and uncertainties. These risks and
uncertainties include the success of the company's customer relationships 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 2003 Annual Report on Form 10-K filed on September
29, 2003 and 2004 Quarterly Reports on Form 10-Q to be filed.
EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED:
SEPTEMBER 30, SEPTEMBER 30, JUNE 30,
2003 2002 2003
------------- ------------- -------------
Revenue:
License fees and royalties................................... $ 5,771 $ 4,989 $ 5,721
Services and other........................................... 1,784 920 1,660
------------- ------------- -------------
Total net revenue....................................... $ 7,555 $ 5,909 $ 7,381
Costs and expenses:
Cost of license fees and royalties........................... 271 272 292
Cost of services and other................................... 951 545 874
Research and development..................................... 1,552 1,953 1,615
Acquired in-process R&D...................................... - 430 -
Marketing and sales.......................................... 3,599 3,289 3,721
General and administrative................................... 1,613 1,124 1,142
Restructuring charges (including $437, $0 and $0 of stock
option compensation)..................................... 1,068 136 100
------------- ------------- -------------
Total costs and expenses................................. 9,054 7,749 7,744
------------- ------------- -------------
Loss from operations..................................... (1,499) (1,840) (363)
Other expense (income), net...................................... (60) 26 (315)
Interest expense................................................. 34 130 43
------------- ------------- -------------
Loss before income taxes................................. (1,473) (1,996) (91)
Income tax provision (benefit): 4 (4) (67)
------------- ------------- -------------
Net loss from continuing operations...................... (1,477) (1,992) (24)
------------- ------------- -------------
Discontinued operations, net of tax:
Income from discontinued operations.......................... 41 28 142
------------- ------------- -------------
Net (loss) income........................................ $(1,436) $ (1,964) $ 118
============= ============= =============
Loss per share from continuing operations:
Basic........................................................ $(0.11) $(0.16) $ 0.00
Diluted...................................................... $(0.11) $(0.16) $ 0.00
Earnings per share from discontinued operations:
Basic........................................................ $ 0.01 $ 0.00 $ 0.01
Diluted...................................................... $ 0.01 $ 0.00 $ 0.01
Earnings (loss) per share:
Basic........................................................ $(0.10) $(0.16) $ 0.01
Diluted...................................................... $(0.10) $(0.16) $ 0.01
Number of shares used in per share calculations:
Basic........................................................ 14,011 12,096 13,842
Diluted...................................................... 14,011 12,096 14,150
EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PAR VALUE PER SHARE AMOUNTS)
SEPTEMBER 30, JUNE 30,
2003 2003
------------- -------------
ASSETS
Current:
Cash and cash equivalents.................................... $ 7,811 $ 3,502
Receivables, net of allowances of $838 and $831.............. 5,868 5,644
Prepaids and other........................................... 814 966
------------- -------------
Total current assets..................................... 14,493 10,112
Property and equipment, net...................................... 5,192 5,293
Goodwill......................................................... 12,489 12,489
Intangibles, net................................................. 1,009 1,197
Other long-term assets........................................... 142 -
------------- -------------
Total assets............................................. $ 33,325 $ 29,091
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable............................................. $2,678 $ 2,314
Accrued expenses............................................. 3,079 2,888
Deferred revenue............................................. 2,570 2,961
Accrued restructuring........................................ 957 722
Current portion of long-term debt............................ 434 434
Current portion of capital leases............................ 23 22
------------- -------------
Total current liabilities................................ 9,741 9,341
------------- -------------
Non-current:
Long-term debt............................................... 5,017 325
Capital leases............................................... 36 42
Other long-term liabilities.................................. 133 127
------------- -------------
Total non-current liabilities............................ 5,186 494
------------- -------------
Total liabilities........................................ $ 14,927 $ 9,835
------------- -------------
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; 14,040 and 13,977 shares
issued and outstanding...................................... 14 14
Additional paid-in capital................................... 45,117 44,481
Treasury stock; $0.001 par value per share,
237 and 261 common shares................................... - -
Accumulated deficit.......................................... (25,319) (23,884)
Accumulated other comprehensive loss......................... (1,414) (1,355)
------------- -------------
Total stockholders' equity............................... 18,398 19,256
------------- -------------
Total liabilities and stockholders' equity............... $ 33,325 $ 29,091
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