SCOTTSDALE, Ariz.--(BUSINESS WIRE)--Oct. 25, 2007--Mobility
Electronics, Inc. (Nasdaq:MOBE), a leading provider of innovative
portable power and computing solutions, today reported financial
results for the third quarter ended September 30, 2007. Total revenue
was $19.0 million in the third quarter of 2007, compared with revenue
of $24.2 million in the third quarter of 2006. Excluding revenues
related to business lines divested during and subsequent to the end of
the first quarter of 2007 (handheld and expansion/docking), total
revenues were $17.1 million in the third quarter of 2007, compared to
$19.4 million in the same quarter of the prior year. According to
Generally Accepted Accounting Principles in the United States (U.S.
GAAP), Mobility must consolidate the operating results of Mission
Technology Group, the acquirer of the Company's expansion/docking
business, into its financial results until such time as the Company's
financial interest in the performance of Mission Technology Group no
longer meets the criteria for consolidation.
Net loss was $760,000, or ($0.02) per diluted share, in the third
quarter of 2007, compared with a net loss of $9.7 million, or ($0.31)
per diluted share, in the same quarter of the prior year. Excluding
non-cash compensation expense and the operating results of the
divested businesses, net loss was $155,000, or ($0.00) per diluted
share, in the third quarter of 2007. This compares to net income of
$10,000, or $0.00 per diluted share, in the third quarter of 2006,
which excludes the operating results of the divested businesses,
non-cash compensation expense, and asset impairment charges. A
detailed reconciliation of GAAP to non-GAAP financial results is
provided in the financial tables at the end of this release.
Michael D. Heil, President and Chief Executive Officer of Mobility
Electronics, commented, "We executed well during the third quarter and
delivered on two key priorities: initiating the national roll-out of
our low-power products at AT&T stores and reducing our cost structure.
Sales of our low-power products continue to trend positively at our
existing customers and we also recently added two new significant
retail accounts in Carrefour, France's largest retailer, and The
Source by Circuit City, one of Canada's largest electronics retailers.
While initial shipments to the new accounts are relatively small, we
expect that sales will steadily increase over time."
Third Quarter Product Area Highlights
-- Unit sales of universal power products for high-power mobile
electronic (ME) devices, such as portable computers, were
approximately 254,000 units in the third quarter of 2007.
-- Unit sales of universal power adapters for low-power ME
devices, such as mobile phones, PDAs, MP3 players and digital
cameras, were approximately 796,000 units in the third quarter
of 2007.
-- Revenue from the sale of power products for high-power ME
devices was $10.7 million in the third quarter of 2007,
compared with $14.3 million in the same period of the prior
year. During the third quarter of 2007, Mobility received
additional orders for its high-power products from Lenovo,
although the relationship with this OEM continues to wind
down.
-- Revenue from the sale of power products for low-power ME
devices was $5.7 million in the third quarter of 2007,
compared with $4.8 million in the same period of the prior
year.
-- Revenue from the sale of all power products was $16.4 million
in the third quarter of 2007, compared with $19.1 million in
the same period of the prior year, due primarily to the loss
of sales of high-power adapters to Dell.
Financial Highlights
Gross margin was 30.0% in the third quarter of 2007, compared to
28.6% in the third quarter of 2006. Excluding the operations of the
divested businesses, gross margin was 28.0% in the third quarter of
2007, compared to 30.1% in the third quarter of 2006. The decline in
gross margin is primarily attributable to increased pricing pressure
in the Company's private label channel for high-power products.
Total operating expenses in the third quarter of 2007 were $6.8
million, compared with $8.9 million in the third quarter of 2006.
Excluding non-cash equity compensation expense and the operations of
the divested businesses, operating expenses were $5.3 million in the
third quarter of 2007, or 31.2% of revenue (excluding revenue from
divested businesses), compared to $6.2 million in the third quarter of
2006, or 31.7% of revenue (excluding revenue from divested
businesses). Total operating expenses in the third quarter of 2007
also included $393,000 in severance charges related to a workforce
reduction.
Excluding assets of the divested businesses, the Company's balance
sheet remained strong with $21.9 million in cash, cash equivalents,
and short- and long-term investments at September 30, 2007. The
Company continued to have no long-term debt and had a current ratio of
3.2 at September 30, 2007.
Outlook
The Company has elected not to provide U.S. GAAP-based financial
guidance for the fourth quarter of 2007 because Mission Technology
Group does not prepare financial forecasts. However, Mission
Technology Group's revenue and operating results for the fourth
quarter of 2007 are not expected to be more or less significant to the
Company's consolidated financial results than they were for the third
quarter of 2007.
On a non-GAAP basis, which excludes revenue from divested
businesses, the Company believes that revenue will range from $16.0
million to $17.0 million in the fourth quarter of 2007. The Company
also believes that fully diluted loss per share, excluding the
operating results of divested businesses and non-cash equity
compensation, will range from ($0.01) to ($0.02). This reflects an
expected increase in legal expense during the fourth quarter related
to ongoing intellectual property litigation. Fully diluted loss per
share for the fourth quarter of 2007, including non-cash equity
compensation but excluding financial results from divested businesses,
is expected to range from ($0.03) to ($0.04).
Commenting on Mobility's outlook, Mr. Heil said, "We anticipate
that continued growth in our low-power sales will help offset the loss
of OEM customers for our high-power products. As we fully implement
our training and merchandising programs at our new low-power accounts,
we believe we will see steady increases in sell-through. Building
positive sales data at these new customers will also help us to
develop relationships with other accounts in the wireless carrier and
retail channels. Given the streamlined cost structure now in place, we
believe we can achieve profitability with modest sales growth above
current levels."
Non-GAAP Financial Measures
Although the Company consolidates the operating results of Mission
Technology Group, the acquirer of its docking/expansion business, for
accounting purposes under U.S. GAAP, the Company believes that the
discussion of operating results excluding the handheld and
expansion/docking lines of business, non-cash equity compensation and
asset impairment expense allows management and investors to evaluate
and compare the Company's operating performance on a more meaningful
and consistent manner. In addition, management uses these measures
internally for evaluation of the performance of the business,
including the allocation of resources. These non-GAAP financial
measures should be considered in addition to, not as a substitute for,
or superior to, measures of financial performance in accordance with
GAAP.
About Mobility Electronics, Inc.
Mobility Electronics, Inc., based in Scottsdale, Arizona, is a
developer of universal power adapters for portable computers and
mobile electronic devices (e.g., mobile phones, PDAs, digital cameras,
etc.) and creator of the patented iGo(R) intelligent tip technology.
Mobility Electronics' iGo brand offers a full line of AC, DC and
combination AC/DC power adapters for portable computers and low-power
mobile electronic devices. All of these adapters leverage the
Company's iGo intelligent tip technology, which enables one power
adapter to power/charge hundreds of brands and thousands of models of
mobile electronic devices through the use of interchangeable tips.
The Company also offers other accessories for the mobile
electronic device market, such as foldable keyboards.
Mobility Electronics' products are available at www.iGo.com as
well as through leading resellers, retailers and OEM partners. For
additional information call 480-596-0061, or visit
www.mobilityelectronics.com.
Mobility Electronics and iGo are registered trademarks of Mobility
Electronics, Inc. All other trademarks or registered trademarks are
the property of their respective owners.
This press release contains "forward-looking statements" within
the meaning of Section 21E of the Securities Exchange Act of 1934. The
words "believe," "expect," "anticipate," "should," and other similar
statements of expectations identify forward-looking statements.
Forward-looking statements in this press release include expectations
regarding the Company's financial performance in the fourth quarter of
2007; the expectation that Mission Technology Group's revenue and
operating results for the fourth quarter of 2007 will not be more or
less significant to the Company's consolidated financial results than
they were for the third quarter of 2007; the expectation that the full
implementation of the Company's training and merchandising programs
will result in a steady increase in sales of low-power products at new
accounts; the expectation that sales will steadily increase over time
at new accounts such as Carrefour and The Source by Circuit City; the
belief that the Company's revenue from Lenovo will decline in the
future; the belief that building positive sales data at existing
customers will help the Company develop relationships with new
customers in the wireless carrier and retail channels; the belief that
higher sales of low-power products will help to offset a decline in
OEM revenues for high-power products; and the belief that the Company
can achieve profitability with modest sales growth above current
levels. These forward-looking statements are based largely on
management's expectations and involve known and unknown risks,
uncertainties and other factors, which may cause the Company's actual
results, performance or achievements, or industry results, to be
materially different from any future results, performance or
achievements expressed or implied by these forward-looking statements.
Risks that could cause results to differ materially from those
expressed in these forward-looking statements include, among others,
the loss of, and failure to replace, any significant customers; the
inability of the Company's new sales and marketing strategy to
generate broader consumer awareness, increased adoption rates, or
impact sell-through rates at the retail and wireless carrier level;
the timing and success of product development efforts and new product
introductions, including internal development projects as well as
those being pursued with strategic partners; the timing and success of
product developments, introductions and pricing of competitors; the
timing of substantial customer orders; the availability of qualified
personnel; the availability and performance of suppliers and
subcontractors; the ability to expand and protect the Company's
proprietary rights and intellectual property; the successful
resolution of unanticipated and pending litigation matters; market
demand and industry and general economic or business conditions; and
other factors to which this press release refers. Additionally, other
factors that could cause actual results to differ materially from
those set forth in, contemplated by, or underlying these
forward-looking statements are included in the Company's Annual Report
on Form 10-K for the year ended December 31, 2006 under the heading
"Risk Factors." In light of these risks and uncertainties, the
forward-looking statements contained in this press release may not
prove to be accurate. The Company undertakes no obligation to publicly
update or revise any forward-looking statements, or any facts, events,
or circumstances after the date hereof that may bear upon
forward-looking statements. Additionally, the Company does not
undertake any responsibility to update you on the occurrence of
unanticipated events which may cause actual results to differ from
those expressed or implied by these forward-looking statements.
Mobility Electronics, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(000's except per share data)
(unaudited)
Three months ended Nine months ended
September 30, September 30,
------------------ -------------------
2007 2006 2007 2006
-------- --------- --------- ---------
Net revenue $19,039 $ 24,170 $ 57,410 $ 73,155
Gross profit 5,705 6,924 13,231 21,447
Selling, engineering and
administrative expenses 6,791 8,908 23,697 23,778
Asset impairment - 8,073 - 8,073
-------- --------- --------- ---------
loss from operations (1,086) (10,057) (10,466) (10,404)
Interest income (expense), net 291 313 847 930
Other income (expense), net 95 1 2,235 22
Litigation settlement expense - - - (250)
-------- --------- --------- ---------
Loss before minority interest (700) (9,743) (7,384) (9,702)
Minority interest (60) - (187) -
-------- --------- --------- ---------
Net loss $ (760) $ (9,743) $ (7,571) $ (9,702)
======== ========= ========= =========
Net loss per share -- basic and
diluted $ (0.02) $ (0.31) $ (0.24) $ (0.31)
Weighted avg common shares
outstanding -- basic and
diluted 31,391 31,651 31,568 31,290
Mobility Electronics, Inc. and Subsidiaries
Selected Other Data
(unaudited)
Reconciliation of non-GAAP Financial Measure - Operating results by
product line to net income (loss) before non-cash equity compensation
and asset impairment by product line:
Three months ended
September 30, 2007
Power,
Keyboards Expansion
& &
Corporate Handheld Total
---------- --------- --------
Net revenue $17,128 $ 1,911 $19,039
Gross profit 4,799 906 5,705
Selling, engineering and administrative
expenses 6,031 760 6,791
Asset impairment - - -
---------- --------- --------
Income (loss) from operations (1,232) 146 (1,086)
Interest income (expense), net 281 10 291
Other income (expense), net 106 (11) 95
Litigation settlement expense - - -
---------- --------- --------
Income (loss) before minority interest (845) 145 (700)
Minority interest - (60) (60)
---------- --------- --------
Net income (loss) (845) 85 (760)
Non-cash equity compensation 690 - 690
Asset impairment - - -
---------- --------- --------
Net income (loss) as adjusted $ (155) $ 85 $ (70)
========== ========= ========
Net income (loss) per share as adjusted $ (0.00) $ 0.00 $ (0.00)
Weighted avg common shares outstanding
-- basic: 31,391 31,391 31,391
Three months ended
September 30, 2006
Power,
Keyboards Expansion
& &
Corporate Handheld Total
---------- --------- ---------
Net revenue $19,433 $ 4,737 $ 24,170
Gross profit 5,849 1,075 6,924
Selling, engineering and administrative
expenses 6,600 2,308 8,908
Asset impairment - 8,073 8,073
---------- --------- ---------
Income (loss) from operations (751) (9,306) (10,057)
Interest income (expense), net 313 - 313
Other income (expense), net 1 - 1
Litigation settlement expense - - -
---------- --------- ---------
Income (loss) before minority interest (437) (9,306) (9,743)
Minority interest - - -
---------- --------- ---------
Net income (loss) (437) (9,306) (9,743)
Non-cash equity compensation 447 - 447
Asset impairment - 8,073 8,073
---------- --------- ---------
Net income (loss) as adjusted $ 10 $(1,233) $ (1,223)
========== ========= =========
Net income (loss) per share as adjusted $ 0.00 $ (0.04) $ (0.04)
Weighted avg common shares outstanding
-- basic: 31,651 31,651 31,651
Mobility Electronics, Inc. and Subsidiaries
Selected Other Data Continued
(unaudited)
Reconciliation of non-GAAP Financial Measure - Selling, engineering
and administrative expenses by product line to selling, engineering
and administrative expenses before non-cash equity compensation by
product line:
Three months ended
September 30, 2007
Power,
Keyboards Expansion
& &
Corporate Handheld Total
---------- --------- -------
Selling, engineering and administrative
expenses $6,031 $ 760 $6,791
Non-cash equity compensation (690) - (690)
---------- --------- -------
Selling, engineering and administrative
expenses as adjusted $5,341 $ 760 $6,101
========== ========= =======
Three months ended
September 30, 2006
Power,
Keyboards Expansion
& &
Corporate Handheld Total
---------- --------- -------
Selling, engineering and administrative
expenses $6,600 $2,308 $8,908
Non-cash equity compensation (447) - (447)
---------- --------- -------
Selling, engineering and administrative
expenses as adjusted $6,153 $2,308 $8,461
========== ========= =======
This information is being provided because management believes these
are key metrics to the investment community and assist in the
understanding and analysis of operating performance. Operating
results by product line and corresponding net income (loss) before
non-cash equity compensation and asset impairment; and selling,
engineering and administrative expenses before non-cash equity
compensation by product line should be considered in addition to, not
as a substitute for, or superior to, measures of financial
performance in accordance with GAAP.
Mobility Electronics, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(000's)
September 30, December 31,
2007 2006
------------- ------------
(unaudited)
ASSETS
Cash and cash equivalents $ 17,893 $ 9,201
Short-term investments 4,092 8,143
Accounts receivable, net 16,856 20,855
Inventories 5,386 12,350
Prepaid expenses and other current
assets 528 405
------------- ------------
Total current assets 44,755 50,954
Long-term investments 558 4,636
Other assets, net 10,791 10,274
------------- ------------
Total assets $ 56,104 $ 65,864
============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ 13,929 $ 16,459
Minority interest 187 -
------------- ------------
Total liabilities 14,116 16,459
Total stockholders' equity 41,988 49,405
------------- ------------
Total liabilities and stockholders'
equity $ 56,104 $ 65,864
============= ============
Mobility Electronics, Inc. and Subsidiaries
Selected Other Data
(unaudited)
Reconciliation of non-GAAP Financial Measure - Balance sheet excluding
accounts of Mission Technology Group.
September 30, 2007
------------------------------------------
Mission
Mobility Tech Eliminations Consolidated
-------- ------- ------------ ------------
ASSETS
Cash and cash equivalents $17,269 $ 624 $ - $17,893
Short-term investments 4,092 - - 4,092
Accounts receivable, net 16,472 458 (74) 16,856
Inventories 4,439 1,367 (420) 5,386
Prepaid expenses and other
current assets 454 74 - 528
-------- ------- ------------ ------------
Total current assets 42,726 2,523 (494) 44,755
Long-term investments 558 - - 558
Other assets, net 12,126 1,664 (2,999) 10,791
-------- ------- ------------ ------------
Total assets $55,410 $4,187 $(3,493) $56,104
======== ======= ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $13,456 $ 547 $ (74) $13,929
Minority interest - 3,649 (3,462) 187
-------- ------- ------------ ------------
Total liabilities 13,456 4,196 (3,536) 14,116
Total stockholders' equity 41,954 (9) 43 41,988
-------- ------- ------------ ------------
Total liabilities and
stockholders' equity $55,410 $4,187 $(3,493) $56,104
======== ======= ============ ============
Reconciliation of non-GAAP Financial Measure - Cash, cash equivalents,
short-term investments and long-term investments excluding accounts
of Mission Technology Group.
Cash and cash equivalents $17,269 $ 624 $ - $17,893
Short-term investments 4,092 - - 4,092
Long-term investments 558 - - 558
-------- ------- ------------ ------------
Total cash, cash
equivalents, short-
term investments,
and long-term
investments $21,919 $ 624 $ - $22,543
======== ======= ============ ============
This information is being provided because management believes these
are key metrics to the investment community and assist in the
understanding and analysis of financial position. Balance sheet
excluding the accounts of Mission Technology Group and related
eliminations and cash, cash equivalents, short-term investment, and
long-term investments excluding the accounts of Mission Technology
Group should be considered in addition to, not as a substitute for,
or superior to, measures of financial position in accordance with
GAAP.
CONTACT: Financial Relations Board
Tony Rossi, 213-486-6545
trossi@frbir.com
SOURCE: Mobility Electronics, Inc.
