EXHIBIT 99.1
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Val Heusinkveld Amy Childress
Extended Systems Extended Systems Media Relations
208-322-7575, ext. 6276 208-287-6083
val.heusinkveld@extendedsystems.com amy.childress@extendedsystems.com
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EXTENDED SYSTEMS REPORTS 6% YEAR-OVER-YEAR REVENUE GROWTH IN FOURTH
QUARTER OF FISCAL 2004
COMPANY REPORTS GAAP INCOME FROM OPERATIONS DESPITE LOWER THAN EXPECTED REVENUES
BOISE, Idaho--(July 27, 2004)--Extended Systems Incorporated (NASDAQ: XTND), a
leading provider of mobile application solutions for the enterprise, today
reported net revenue of $7.8 million for the fourth quarter of fiscal 2004 ended
June 30, 2004, an increase of 6% over net revenue of $7.4 million in the fourth
quarter of fiscal 2003 and a 6% decrease over net revenue of $8.3 million in the
third quarter of fiscal 2004.
The Company reported a net loss of $188,000, or ($0.01) per share, for the
fourth quarter of fiscal 2004 compared to net income of $118,000, or $0.01 per
share, in the fourth quarter last year, and a net loss of $2.1 million, or
$(0.14) per share in the third quarter of fiscal 2004. The company had announced
quarterly results on a preliminary basis in a news release on July 6, 2004.
Pro-forma net income was $104,000, or $0.01 per share for the fourth quarter of
fiscal 2004 compared to pro-forma net income of $663,000, or $0.05 per share in
the fourth quarter a year ago and $419,000, or $0.03 per share in the preceding
quarter. The adjustments to arrive at pro-forma income for the fourth quarter of
fiscal 2004 include $153,000 of non-cash stock compensation and $139,000 of
amortization related to purchased intangibles. Income from operations on a GAAP
basis was $116,000 and on a pro-forma basis was $408,000. The Company achieved
an operating margin of 1.5% on a GAAP basis and 5.2% on a pro-forma basis. Full
details of the Company's financial results are set forth in the attached
financial exhibits including tables with detailed reconciliations of pro-forma
and GAAP amounts.
Cash and cash equivalents were $7.2 million as of June 30, 2004, compared to
$7.8 million as of March 31, 2004 and $3.5 million at June 30, 2003.
"Although we are disappointed with our revenue this quarter, we are very pleased
to have achieved GAAP operating income," said Charles Jepson, president and CEO.
"As we indicated in our news release on preliminary results on July 6, we
experienced a combination of factors--including delayed closure of large
opportunities that had been expected to close in the fourth quarter and deferred
larger scale rollouts of our
OneBridge solutions by existing customers. We remain optimistic about the mobile
market and its growth potential over the coming year and see growing demand from
new and existing customers for mobile applications built on OneBridge."
For the year ended June 30, 2004 the Company reported a net loss of $3.3
million, or $(0.23) per share, compared to a net loss of $3.8 million or $(0.28)
per share in the prior year. On a pro-forma basis, the Company reported net
income of $1.7 million or $0.12 per share for fiscal 2004 compared to a
pro-forma net loss of $767,000 or $(0.06) per share for fiscal 2003.
OTHER HIGHLIGHTS INCLUDED:
o Appointment of Jeffrey Siegel as Vice President of Worldwide Marketing
and Chief Marketing Officer. Siegel's career spans 24 years in sales
and marketing for industry-leading technology companies including
Palm, Symbian and Microsoft.
o Release of OneBridge Mobile Sales; a packaged mobile sales application
that includes pre-defined modules such as contacts, opportunities,
reporting and forecast functionalities and integrates with virtually
any back-end application, including popular CRM systems such as
Siebel, SAP, SalesLogix and custom legacy systems. This product
provides field representatives with easy access to mission-critical
data on handheld devices, leading to improved field effectiveness and
increased adoption rates of existing CRM systems.
o PalmSource (NASDAQ: PSRC) licensed XTNDAccess Blue SDK version 2.0,
which complies with the recently announced Bluetooth Special Interest
Group (SIG) 1.2 specification and supports coexistence of Bluetooth
communications alongside 802.11. PalmSource has licensed Extended
Systems' solution in order to provide Bluetooth functionality to its
Palm OS(TM) licensees for the creation of next-generation smartphones
and wireless devices.
o The announcement of a joint partnership with palmOne, Inc. and
Singapore Technologies Electronics Limited (ST Electronics) to bring
OneBridge Mobile Groupware, a mobile email and calendaring
application, to businesses in Singapore.
o Extended Systems was awarded the best "Mobile Application Product for
Business" at the recent Handango conference.
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BUSINESS OUTLOOK
The Company said that it expects net revenue in the first fiscal quarter of 2005
to range between $7.2 million and $7.9 million, compared with $7.8 million for
the fourth quarter of fiscal 2004 and $7.6 million in the year-ago quarter. The
Company expects operating expenses, including cost of license fees and royalties
and cost of services, in a range of $7.9 million to $8.1 million for the first
quarter. GAAP operating loss is expected to range from $100,000 to $700,000.
GAAP basis loss per share is expected to be in the range of $0.02 to $.06 per
share. This outlook assumes basic outstanding shares of 15.1 million.
NON-GAAP DISCLOSURES
This press release includes financial measures for net income (loss), earnings
(loss) per share and operating income (loss) that exclude certain charges or
income and have not been calculated in accordance with GAAP. These measures
differ from GAAP in that they exclude restructuring charges, amortization of
certain intangibles, non-cash stock compensation, and legal expenses and
settlement costs related to the Intellisync Corporation litigation. Management
believes that pro-forma results described above are useful for understanding
ongoing operations. The Company's management refers to these non-GAAP financial
results because they provide meaningful supplemental information regarding the
Company's operational performance including the Company's ability to provide
cash flows to invest in research and development and fund acquisitions and
capital expenditures. Additionally, these non-GAAP financial measures facilitate
management's internal comparisons to the Company's historical operating results
and comparisons to competitors' operating results. Pro-forma results should not
be considered in isolation from, or as a substitute for, financial information
prepared in accordance with GAAP.
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. Those
wishing to participate should call 877-407-9205 (International dial
201-689-8054) at approximately 4:50 p.m. Eastern Time. At this time, management
may answer questions concerning business and financial developments and trends,
management's current view on revenue and earnings forecasts and other business
and financial matters affecting Extended Systems.
A simultaneous live webcast and replay of the call will be available on the
Extended Systems web site at www.extendedsystems.com/q4call and at
www.vcall.com. A replay of the call will also be available by telephone through
July 29, 2004 at 877-660-6853 (International dial 201-612-7415), account number
1628 and conference ID number 111212.
ABOUT EXTENDED SYSTEMS
Extended Systems provides the expertise, strategy and solutions to help
enterprise organizations streamline
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their business processes through mobile technology. The Company's OneBridge
mobile solutions suite enables companies to mobilize critical enterprise
applications such as e-mail, field service, sales force automation, enterprise
resource planning and customer relationship management. Extended Systems has
more than 2,500 enterprise customers worldwide and key alliance relationships
with Avaya, EDS, HP, Microsoft, Motorola, Nokia, palmOne, PalmSource, Sharp,
Siemens, Software AG, Sony Ericsson, 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.
###
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 closing of large opportunities delayed from the fourth
quarter of fiscal 2004, larger scale rollouts of the Company's OneBridge
solutions by existing customers, growth in the mobile market, and demand for our
mobile applications built on OneBridge. 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 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
filed on November 14, 2003, February 17, 2004, and May 17, 2004.
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EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE MONTHS ENDED JUNE 30, YEAR ENDED JUNE 30,
---------------------- ----------------------
2004 2003 2004 2003
-------- -------- -------- --------
Revenue:
License fees and royalties ........................... $ 6,124 $ 5,721 $ 25,028 $ 21,733
Services and other ................................... 1,693 1,660 7,158 5,801
-------- -------- -------- --------
Total net revenue ............................... 7,817 7,381 32,186 27,534
Costs and expenses:
Cost of license fees and royalties ................... 24 103 382 420
Cost of services and other ........................... 752 874 3,456 3,185
Research and development ............................. 1,721 1,615 6,316 7,173
Acquired in-process research and development ......... -- -- -- 430
Marketing and sales .................................. 3,821 3,721 15,362 14,482
General and administrative ........................... 1,091 886 4,486 3,649
Restructuring charges ................................ -0- 100 1,446 597
Patent litigation fees, license and settlement ....... -0- 256 3,425 1,240
Non-cash stock compensation .......................... 153 -- 490 --
Amortization of purchased technology ................. 139 189 621 726
-------- -------- -------- --------
Total costs and expenses ......................... 7,701 7,744 35,984 31,902
Income (loss) from operations .................... 116 (363) (3,798) (4,368)
Other income (expense), net .............................. (97) 315 (51) 257
Gain on sale of land ..................................... -- -- 1,058 --
Interest expense ......................................... (135) (43) (453) (307)
-------- -------- -------- --------
Income (loss) before income taxes ................ (116) (91) (3,244) (4,418)
Income tax provision (benefit) ........................... 72 (67) 94 (200)
-------- -------- -------- --------
Income (loss) from continuing operations ......... (188) (24) (3,338) (4,218)
Income from discontinued operations, net of tax .......... -- 142 88 458
-------- -------- -------- --------
Net income (loss) ................................ $ (188) $ 118 $ (3,250) $ (3,760)
======== ======== ======== ========
Earnings (loss) per share from continuing operations:
Basic ................................................ $ (0.01) $ 0.00 $ (0.23) $ (0.31)
Diluted .............................................. $ (0.01) $ 0.00 $ (0.23) $ (0.31)
Earnings per share from discontinued operations:
Basic ................................................ $ 0.00 $ 0.01 $ 0.00 $ 0.03
Diluted .............................................. $ 0.00 $ 0.01 $ 0.00 $ 0.03
Earnings (loss) per share:
Basic ................................................ $ (0.01) $ 0.01 $ (0.23) $ (0.28)
Diluted .............................................. $ (0.01) $ 0.01 $ (0.23) $ (0.28)
Number of shares used in per share calculations:
Basic ................................................ 14,776 13,842 14,370 13,376
Diluted .............................................. 14,776 14,150 14,370 13,376
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EXTENDED SYSTEMS INCORPORATED
RECONCILIATION OF GAAP TO PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
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2004 2003
-------------------------------- --------------------------------
GAAP PRO-FORMA GAAP PRO-FORMA
RESULTS ADJUSTMENTS RESULTS RESULTS ADJUSTMENTS RESULTS
-------------------------------- --------------------------------
Revenue:
License fees and royalties ................................ $ 6,124 $ -- $ 6,124 $ 5,721 $ -- $ 5,721
Services and other ........................................ 1,693 -- 1,693 1,660 -- 1,660
-------------------------------- --------------------------------
Total net revenue ..................................... 7,817 -- 7,817 7,381 -- 7,381
Costs and expenses:
Cost of license fees and royalties .................... 24 -- 24 103 -- 103
Cost of services and other ............................ 752 -- 752 874 -- 874
Research and development .............................. 1,721 -- 1,721 1,615 -- 1,615
Acquired in-process research and development .......... -- -- -- -- -- --
Marketing and sales ................................... 3,821 -- 3,821 3,721 -- 3,721
General and administrative ............................ 1,091 -- 1,091 886 -- 886
Restructuring charges ................................. -- -- A -- 100 (100) A --
Patent litigation fees, license and settlement ........ -- -- B -- 256 (256) B --
Non-cash stock compensation ........................... 153 (153) C -- -- -- C --
Amortization of purchased technology .................. 139 (139) D -- 189 (189) D --
-------------------------------- --------------------------------
Total costs and expenses .......................... 7,701 (292) 7,409 7,744 (545) 7,199
Income (loss) from operations ..................... 116 292 408 (363) 545 182
Other income (expense), net ............................... (97) -- (97) 315 -- 315
Gain on sale of land ...................................... -- -- -- -- -- --
Interest expense .......................................... (135) -- (135) (43) -- (43)
-------------------------------- --------------------------------
Income (loss) before income taxes ................. (116) 292 176 (91) 545 454
Income tax provision (benefit) ............................ 72 -- 72 (67) -- (67)
-------------------------------- --------------------------------
Income (loss) from continuing operations .......... (188) 292 104 (24) 545 521
Income from discontinued operations, net of tax ........... -- -- -- 142 -- 142
-------------------------------- --------------------------------
Net income (loss) ................................. $ (188) $ 292 $ 104 $ 118 $ 545 $ 663
================================ ================================
Earnings (loss) per share from continuing operations:
Basic ................................................. $ (0.01) $ 0.01 $ 0.00 $ 0.04
Diluted ............................................... $ (0.01) $ 0.01 $ 0.00 $ 0.04
Earnings per share from discontinued operations:
Basic ................................................. $ 0.00 $ 0.00 $ 0.01 $ 0.01
Diluted ............................................... $ 0.00 $ 0.00 $ 0.01 $ 0.01
Earnings (loss) per share:
Basic ................................................. $ (0.01) $ 0.01 $ 0.01 $ 0.05
Diluted ............................................... $ (0.01) $ 0.01 $ 0.01 $ 0.05
Number of shares used in per share calculations:
Basic ................................................. 14,776 14,776 13,842 13,842
Diluted ............................................... 14,776 15,466 14,150 14,150
PRO-FORMA ADJUSTMENTS:
A) Restructuring charges.
B) Litigation fees, license and settlement payment related to our lawsuit with
Intellisync Corporation.
C) Amortization of compensation expense for restricted stock awards granted to
key employees and directors.
D) Amortization of purchased technology related to our prior acquisitions of
ViaFone, Advance Systems Limited, and Rand Software Corporation.
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EXTENDED SYSTEMS INCORPORATED
RECONCILIATION OF GAAP TO PRO-FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
YEAR ENDED JUNE 30,
--------------------------------------------------------------------
2004 2003
-------------------------------- --------------------------------
GAAP PRO-FORMA GAAP PRO-FORMA
RESULTS ADJUSTMENTS RESULTS RESULTS ADJUSTMENTS RESULTS
-------------------------------- --------------------------------
Revenue:
License fees and royalties ................................ $ 25,028 $ -- $ 25,028 $ 21,733 $ -- $ 21,733
Services and other ........................................ 7,158 -- 7,158 5,801 -- 5,801
-------- -------- -------- -------- -------- --------
Total net revenue ...................................... 32,186 -- 32,186 27,534 -- 27,534
Costs and expenses:
Cost of license fees and royalties ..................... 382 -- 382 420 -- 420
Cost of services and other ............................. 3,456 -- 3,456 3,185 -- 3,185
Research and development ............................... 6,316 -- 6,316 7,173 -- 7,173
Acquired in-process research and development ........... -- -- -- 430 (430) F --
Marketing and sales .................................... 15,362 -- 15,362 14,482 -- 14,482
General and administrative ............................. 4,486 (62) E 4,424 3,649 -- E 3,649
Restructuring charges .................................. 1,446 (1,446) A -- 597 (597) A --
Patent litigation fees, license and settlement ......... 3,425 (3,425) B -- 1,240 (1,240) B --
Non-cash stock compensation ............................ 490 (490) C -- -- -- C --
Amortization of purchased technology ................... 621 (621) D -- 726 (726) D --
-------- -------- -------- -------- -------- --------
Total costs and expenses .............................. 35,984 (6,044) 29,940 31,902 (2,993) 28,909
Income (loss) from operations ......................... (3,798) 6,044 2,246 (4,368) 2,993 (1,375)
Other income (expense), net ............................... (51) -- (51) 257 -- 257
Gain on sale of land ...................................... 1,058 (1,058) -- -- -- --
Interest expense .......................................... (453) -- (453) (307) -- (307)
-------- -------- -------- -------- -------- --------
Income (loss) before income taxes ..................... (3,244) 4,986 1,742 (4,418) 2,993 (1,425)
Income tax provision (benefit) ............................ 94 -- 94 (200) -- (200)
-------- -------- -------- -------- -------- --------
Income (loss) from continuing operations .............. (3,338) 4,986 1,648 (4,218) 2,993 (1,225)
Income from discontinued operations, net of tax ........... 88 -- 88 458 -- 458
-------- -------- -------- -------- -------- --------
Net income (loss) ..................................... $ (3,250) $ 4,986 $ 1,736 $ (3,760) $ 2,993 $ (767)
======== ======== ======== ======== ======== ========
Earnings (loss) per share from continuing operations:
Basic .................................................. $ (0.23) $ 0.11 $ (0.31) $ (0.09)
Diluted ................................................ $ (0.23) $ 0.11 $ (0.31) $ (0.09)
Earnings per share from discontinued operations:
Basic .................................................. $ 0.00 $ 0.01 $ 0.03 $ 0.03
Diluted ................................................ $ 0.00 $ 0.01 $ 0.03 $ 0.03
Earnings (loss) per share:
Basic .................................................. $ (0.23) $ 0.12 $ (0.28) $ (0.06)
Diluted ................................................ $ (0.23) $ 0.12 $ (0.28) $ (0.06)
Number of shares used in per share calculations:
Basic .................................................. 14,370 14,370 13,376 13,376
Diluted ................................................ 14,370 14,966 13,376 13,376
PRO-FORMA ADJUSTMENTS:
A) Restructuring charges.
B) Litigation fees, license and settlement payment related to our lawsuit with
Intellisync Corporation.
C) Amortization of compensation expense for restricted stock awards granted to
key employees and directors.
D) Amortization of purchased technology related to our prior acquisitions of
ViaFone, Advance Systems Limited, and Rand Software Corporation.
E) Legal and other professional services costs of $575,000 related to failed
acquisition activities and the reversal of $513,000 of accrued professional
services costs related to the failed merger with Palm, Inc. in 2001.
F) Acquired in-process research and development incurred in connection with our
acquisition of ViaFone.
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EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PAR VALUE PER SHARE AMOUNTS)
JUNE 30, JUNE 30,
2004 2003
-------- --------
ASSETS
Current:
Cash and cash equivalents ................................................... $ 7,225 $ 3,502
Receivables, net of allowances of $446 and $831 ............................. 6,903 5,644
Prepaid and other ........................................................... 1,318 966
-------- --------
Total current assets .................................................... 15,446 10,112
Property and equipment, net ..................................................... 4,330 5,293
Construction in Progress ........................................................ 384 --
Goodwill ........................................................................ 12,489 12,489
Intangibles, net ................................................................ 577 1,197
Other long-term assets .......................................................... 130 --
-------- --------
Total assets ............................................................ $ 33,356 $ 29,091
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable ............................................................ $ 1,931 $ 2,314
Accrued expenses ............................................................ 3,264 2,888
Deferred revenue ............................................................ 3,569 2,961
Accrued restructuring ....................................................... 116 722
Current portion of long-term debt ........................................... 325 434
Current portion of capital leases ........................................... 25 22
-------- --------
Total current liabilities ............................................... 9,230 9,341
-------- --------
Non-current:
Long-term debt .............................................................. 4,800 325
Capital leases .............................................................. 17 42
Other long-term liabilities ................................................. 153 127
-------- --------
Total non-current liabilities ........................................... 4,970 494
-------- --------
Total liabilities ....................................................... $ 14,200 $ 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;
15,079 and 13,977 shares issued and outstanding ......................... 15 14
Additional paid-in capital .................................................. 48,005 44,481
Treasury stock; $0.001 par value per share, -0- and 261 common shares ....... -- --
Accumulated deficit ......................................................... (27,134) (23,884)
Unamortized stock-based compensation ........................................ (231) --
Accumulated other comprehensive loss ........................................ (1,499) (1,355)
-------- --------
Total stockholders' equity .............................................. 19,156 19,256
-------- --------
Total liabilities and stockholders' equity .............................. $ 33,356 $ 29,091
======== ========
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