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
EXTENDED SYSTEMS REPORTS FIRST QUARTER FINANCIAL RESULTS
COMPANY BREAKS EVEN ON 4% REVENUE GROWTH OVER SAME QUARTER LAST YEAR
BOISE, Idaho--(November 3, 2004)--Extended Systems Incorporated (NASDAQ: XTND),
a leading provider of mobile application solutions for the enterprise, todaY
reported net revenue of $7.846 million for the first quarter of fiscal 2005
ended September 30, 2004, an increase of 4% over net revenue of $7.555 million
in the first quarter of fiscal 2004 and essentially flat as compared to net
revenue of $7.817 million in the fourth quarter of fiscal 2004.
The Company reported net income of $47,000, or breakeven per share, for the
first quarter of fiscal 2005, compared to a net loss of $1.436 million, or
($0.10) per share, in the first quarter last year, and a net loss of $188,000,
or ($0.01) per share in the fourth quarter of fiscal 2004. Income from
operations was $202,000 in the first fiscal quarter of 2005 compared to a loss
from operations of $1.499 million in the first quarter of the prior year and
income from operations of $116,000 in the fourth quarter of fiscal 2004. Cash
and cash equivalents were $7.121 million as of September 30, 2004, compared to
$7.225 million as of June 30, 2004 and $7.811 million at September 30, 2003.
The Company indicated that first quarter financial results have not been
reviewed by a registered independent public accounting firm, which is contrary
to the Company's customary practice. On October 28th, Extended Systems announced
that its registered independent public accounting firm, Deloitte & Touche LLP
("Deloitte"), had informed the Company they are not independent and cannot
perform audit and quarterly review services for the fiscal year ending June 30,
2005. The Audit Committee of the Company's Board of Directors had previously
selected Deloitte as the Company's independent registered public accounting firm
for the fiscal year ending June 30, 2005. Deloitte advised the Company of its
acceptance of this appointment effective October 1, 2004. However, a formal
engagement letter had not been executed between the Company and Deloitte. The
Company has not yet engaged another independent accounting firm to replace
Deloitte although it has initiated discussions with several candidates.
"We are very pleased to report income from operations in our first quarter of
fiscal 2005," said Charles Jepson, president and CEO. "The first quarter is
normally our weakest revenue quarter due to the lack of business activity in
Europe during the summer months. Focusing our resources on those areas with the
greatest growth potential, combined with strong expense discipline, resulted in
first quarter profitability," Jepson continued.
"Our enterprise mobility product line delivered the strongest growth this
quarter, increasing revenues 17% over the year-ago quarter. Enterprises are
increasingly investing in business-critical mobile applications for business
advantage and we are seeing growing demand from our installed customer base in
addition to new successes with Global 2000 companies," said Jepson. "Revenue
growth from new channels, including wireless operators, is beginning to
materialize with notable wins of mobile email for enterprise customers through
partners Orange, O2 and T-Systems this quarter," he added.
OTHER HIGHLIGHTS
INCLUDED:
o Released OneBridge Mobile Secure, the newest module to its
award-winning OneBridge Mobile Solutions Platform. OneBridge Mobile
Secure provides robust "on device" encryption capabilities while
enabling IT departments to extend corporate security policies to
virtually any mobile device including PDA's, smartphones, laptops and
tablet PC's.
o Shipped a new release of OneBridge Mobile Solutions Platform. Notable
new features include increased synchronization performance to support
enterprise-wide mobile application deployments, enhanced
administrative monitoring and control, mobile Web Services
capabilities, and expanded device support.
o Licensed ExtendConnect Mobile Suite, a complete, out-of-the-box
PC-to-handset synchronization solution to NEC America, a leading
provider of innovative communications products, solutions and
services, to be used with the NEC 232E+ High Definition Mobile++
(HDM(TM)) handset. The NEC 232E HDM marks the first mid-tier-priced,
GSM(TM)/EDGE handset from NEC.
o Received the Handango Champion Award in the Best Business Application
category for its XTNDConnect PC Phone Sync software. The Handango
Champion Awards are designed to recognize exceptional mobile
applications delivering the highest value to customers.
o Licensed XTNDConnect PC to Laplink Software, a provider of PC remote
access and synchronization products, in connection with the launch of
a new version of their PDAsync product.
BUSINESS OUTLOOK
The Company said that it expects net revenue in the second fiscal quarter of
2005 to range between $7.5 million and $8.5 million, compared with $7.8 million
for the first quarter of fiscal 2005 and $8.5 million in the year-ago second
quarter. The Company expects operating expenses, including cost of license fees
and royalties and cost of services, in a range of $8.0 million to $8.2 million
for the second quarter. The Company currently expects operating results ranging
between a loss of ($500,000) and income of $300,000, and net results ranging
between a ($0.04) per share loss and $.01 per share net income. This outlook
assumes basic and diluted outstanding shares of 15.1 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. 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/q1call and at
www.vcall.com. A replay of the call will also be available by telephone through
November 5, 2004 at 877-660-6853 (International dial 201-612-7415), account
number 1628 and conference ID number 122585.
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 OneBridge 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 2,500 enterprise
customers worldwide and key alliance relationships. 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 application
solutions for the enterprise; the Company's engagement of an independent
accounting firm; future demand for our products and revenue growth from new
channels; the Company's ongoing relationship with Laplink Software; and expected
revenue, operating expenses, operating loss or income, and net loss or income
per share for the second quarter of fiscal 2005. 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, the
limited number of independent public accounting firms in the Company's
geographic markets with relevant experience, the uncertainty about whether
independent public accounting firms are accepting new clients due to the
resource shortages related to Sarbanes-Oxley Sections 404 compliance reviews,
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, 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 2004 Annual Report on Form 10-K filed on September 29,
2004.
EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED BALANCE SHEET DATA
(IN THOUSANDS, EXCEPT PAR VALUE PER SHARE AMOUNTS)
(UNAUDITED)
SEPT 30, JUNE 30,
2004 2004
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ASSETS
Current:
Cash and cash equivalents.......................... $ 7,121 $ 7,225
Receivables, net of allowances of $469 and $446.... 6,939 6,772
Prepaid and other.................................. 1,318 1,449
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Total current assets........................... 15,378 15,446
Property and equipment, net............................ 4,212 4,331
Construction in Progress............................... 783 384
Goodwill............................................... 12,489 12,489
Intangibles, net....................................... 502 576
Other long-term assets................................. 128 130
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Total assets................................... $ 33,492 $ 33,356
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current:
Accounts payable................................... $1,152 $1,664
Accrued expenses................................... 4,245 3,531
Deferred revenue................................... 3,624 3,569
Accrued restructuring.............................. 40 116
Current portion of long-term debt.................. 217 325
Current portion of capital leases.................. 24 25
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Total current liabilities...................... 9,302 9,230
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Non-current:
Long-term debt..................................... 4,800 4,800
Capital leases..................................... 12 17
Other long-term liabilities........................ 153 153
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Total non-current liabilities.................. 4,965 4,970
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Total liabilities.............................. $ 14,267 $ 14,200
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; 15,098 and 15,078
shares issued and outstanding..................... 15 15
Additional paid-in capital......................... 48,045 48,005
Treasury stock; $0.001 par value per share,
-4- and 0 common shares............................ -- --
Accumulated deficit................................ (27,087) (27,134)
Unamortized stock-based compensation............... (64) (231)
Accumulated other comprehensive loss............... (1,684) (1,499)
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Total stockholders' equity..................... 19,225 19,156
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Total liabilities and stockholders' equity..... $ 33,492 $ 33,356
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EXTENDED SYSTEMS INCORPORATED
CONSOLIDATED STATEMENT OF OPERATIONS DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
THREE MONTHS ENDED
SEPTEMBER 30,
2004 2003
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Revenue:
License fees and royalties......................... $ 5,801 $ 5,771
Services and other................................. 2,045 1,784
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Total net revenue............................. $ 7,846 $ 7,555
Costs and expenses:
Cost of license fees and royalties................. 67 82
Cost of services and other......................... 885 1,103
Amortization of purchased technology............... 74 189
Research and development........................... 1,710 1,668
Marketing and sales................................ 3,384 3,194
General and administrative......................... 1,376 1,181
Restructuring charges.............................. -- 1,068
Patent litigation fees, license and settlement..... -- 569
Non-cash stock compensation........................ 148 --
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Total costs and expenses....................... 7,644 9,054
Income (loss) from operations.................. 202 (1,499)
Other income, net...................................... 3 60
Interest expense....................................... (133) (34)
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Income (loss) before income taxes.............. 72 (1,473)
Income tax provision 25 4
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Income (loss) from continuing operations....... 47 (1,477)
Income from discontinued operations, net of tax........ -- 41
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Net income (loss).............................. $ 47 $ (1,436)
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Earnings (loss) per share from continuing operations:
Basic ............................................. $0.00 $(0.11)
Diluted............................................ $0.00 $(0.11)
Earnings per share from discontinued operations:
Basic ............................................. $0.00 $ 0.01
Diluted............................................ $0.00 $ 0.01
Earnings (loss) per share:
Basic ............................................. $0.00 $(0.10)
Diluted............................................ $0.00 $(0.10)
Number of shares used in per share calculations:
Basic ............................................. 15,089 14,011
Diluted............................................ 15,317 14,011