7/30/2003 - Extended Systems Inc. (NASDAQ:XTND), a leading provider of mobile information management (MIM) solutions for the enterprise, 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
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
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.
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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