Extended Systems reports 13% year-over-year revenue growth in third quarter of fiscal 2004


Company expects GAAP profit for Q4

Extended Systems Inc., a leading provider of mobile application solutions for the enterprise, today reported net revenue of $8.3 million for the third quarter of fiscal 2004 ended March 31, 2004, an increase of 13% over net revenue of $7.4 million in the third quarter of fiscal 2003 and a 2% decrease over net revenue of $8.5 million in the second quarter of fiscal 2004.

The Company reported a net loss of $2.1 million, or ($.14) per share, for the third quarter of fiscal 2004 compared to a net loss of $648,000 or ($.05) per share, in the third quarter last year, and a net income of $459,000, or $.03 per share in the second quarter of fiscal 2004. 

Pro-forma net income was $419,000, or $.03 per share for the third quarter of fiscal 2004 compared to a pro-forma net income of $327,000, or $.02 per share in the third quarter a year ago and $761,000, or $0.05 per share in the preceding quarter. The adjustments to arrive at pro-forma income for the third quarter of fiscal 2004 include restructuring charges of $117,000 related primarily to severance, $169,000 of non-cash stock compensation, $138,000 of amortization related to purchased intangibles and $2.1 million of expenses related to legal fees and settlement costs for the litigation with Intellisync Corporation (formerly Pumatech, Inc.). Loss from operations on a GAAP basis was $1.9 million. On a pro-forma basis, income from operations was $563,000 and the Company achieved an operating margin of 6.8% 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 $7.8 million as of March 31, 2004, compared to $8.8 million as of December 31, 2003 and $3.5 million at June 30, 2003. The decrease in cash during the third quarter was primarily the result of the $2.0 million payment to settle the Intellisync Corporation lawsuit.
"Our third quarter results continued the trend of both growth over the previous year's revenue and profitability on a pro-forma basis," said Charles Jepson, president and CEO. "In the quarter we experienced an increasing trend where our customers moved from a pilot or small trial to deploying our solutions at multiple locations." Jepson added. "We view this as an indicator that our large customers have confidence in Extended Systems to provide mission critical applications to mobile workers."

"We believe that the enabling infrastructure is now in place where enterprises can deploy mobile applications effectively," continued Jepson. "Large organizations are rapidly becoming aware of the benefits and competitive advantages of mobilizing corporate information. Although we expect some fluctuation in market adoption rates, we believe our OneBridge platform is well positioned to take advantage of the growing opportunity for mobile middleware."