Fourth Quarter 2007 Highlights: -- Q4 2007 revenue up 5% to $20.3 million from $19.3 million in Q4 2006 -- Q4 2007 power and keyboard revenue up 13% to $18.3 million from $16.2 million in Q4 2006SCOTTSDALE, Ariz., Feb 13, 2008 (BUSINESS WIRE) -- Mobility Electronics, Inc. (Nasdaq: MOBE), a leading provider of
innovative portable power and computing solutions, today reported
financial results for the fourth quarter ended December 31, 2007.
Total revenue was $20.3 million in the fourth quarter of 2007,
compared with revenue of $19.3 million in the fourth 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 $18.3 million in the fourth
quarter of 2007, compared to $16.2 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 $5.0 million, or ($0.16) per diluted share, in the
fourth quarter of 2007, compared with a net loss of $7.1 million, or
($0.23) per diluted share, in the same quarter of the prior year.
Excluding non-cash compensation expense, non-cash asset impairment
charges, and the operating results of the divested businesses, net
income was $399,000, or $0.01 per share, in the fourth quarter of
2007, compared to a net loss of $1.7 million, or ($0.05) per share, in
the fourth quarter of 2006. 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 were very pleased with the performance of
our base power business in the fourth quarter and we are encouraged by
the progress we have made in growing sales of our low-power products
while reducing our cost structure. Sales of our low-power products
increased 28% over the prior year, driven primarily by higher sales to
RadioShack. We also saw a solid increase in retail sales of our
high-power adapters, driven by the expanded roll-out of our 90-watt
combination AC/DC model and positive sales trends at RadioShack."
Fourth Quarter Product Area Highlights
-- Unit sales of universal power products for high-power mobile
electronic (ME) devices, such as portable computers, were
approximately 327,000 units in the fourth 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 617,000 units in the fourth
quarter of 2007.
-- Revenue from the sale of power products for high-power ME
devices was $13.0 million in the fourth quarter of 2007, an
increase of 10.4% from $11.9 million in the same period of the
prior year. During the fourth 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 $4.7 million in the fourth quarter of 2007, an
increase of 28% from $3.6 million in the same period of the
prior year.
-- Revenue from the sale of all power products was $17.7 million
in the fourth quarter of 2007, compared with $15.5 million in
the same period of the prior year.
Financial Highlights
In accordance with SFAS 142 "Goodwill and Other Intangible
Assets," the Company tested its goodwill for possible impairment at
December 31, 2007. As a result of this process, the Company concluded
that its goodwill was fully impaired and recorded a non-cash charge of
$3.9 million in the fourth quarter of 2007 to write-down the value of
the goodwill on its balance sheet.
In addition, during the fourth quarter of 2007, Mobility
Electronics made a decision to no longer actively produce and market
foldable keyboard products due to weak demand and the high cost of
continuing to update the products for compatibility. As a result, in
accordance with SFAS 144 "Accounting for the Impairment or Disposal of
Long-Lived Assets," the Company recorded a non-cash charge of $1.1
million to write-down the value of other long-lived assets related to
this product line.
Gross margin was 29.6% in the fourth quarter of 2007, compared to
8.6% in the fourth quarter of 2006. Excluding the operations of the
divested businesses and non-cash asset impairment charges, gross
margin was 27.5% in the fourth quarter of 2007, compared to 26.6% in
the fourth quarter of 2006. The increase in gross margin is primarily
attributable to higher sales of the Company's low-power products,
which carry higher margins.
Total operating expenses in the fourth quarter of 2007 were $11.2
million, compared with $9.2 million in the fourth quarter of 2006.
Excluding non-cash equity compensation expense, non-cash asset
impairment charges and the operations of the divested businesses,
operating expenses were $5.0 million in the fourth quarter of 2007, or
27.3% of revenue (excluding revenue from divested businesses),
compared to $6.4 million in the fourth quarter of 2006, or 39.7% of
revenue (excluding revenue from divested businesses). The decline in
operating expenses as a percentage of revenue reflects the impact of
the lower cost structure following the restructuring actions taken
during 2007.
Excluding assets of the divested businesses, the Company's balance
sheet remained strong with $24.2 million in cash, cash equivalents,
and short-term investments at December 31, 2007. The Company continued
to have no long-term debt and had a current ratio of 2.9 at December
31, 2007.
Outlook
The Company has elected not to provide U.S. GAAP-based financial
guidance for the first quarter of 2008 because Mission Technology
Group does not prepare financial forecasts. However, Mission
Technology Group's revenue and operating results for the first quarter
of 2008 are not expected to be more or less significant to the
Company's consolidated financial results than they were for the fourth
quarter of 2007.
On a non-GAAP basis, which excludes revenue from divested
businesses, the Company believes that revenue will range from $16
million to $17 million in the first quarter of 2008. The expected
sequential quarter decline in revenue is primarily attributable to the
termination of the high-power program with Lenovo, declining sales of
foldable keyboard products and the impact of seasonality. The Company
also believes that fully diluted earnings (loss) per share, excluding
the operating results of divested businesses and non-cash equity
compensation, will range from $0.00 to ($0.01).
Commenting on Mobility's outlook, Mr. Heil said, "In 2008, we
expect that higher revenues in our European markets, increased retail
distribution of high-power products through Targus, and the continued
growth of our low-power products will help offset the loss of OEM
accounts. We expect to significantly increase our sales of low-power
products through the wireless carrier channel in 2008, as sell-through
continues to increase at existing accounts and we initiate trial
programs or rollouts with additional wireless carriers later in the
year. We believe that revenues in the second half of 2008 will be
higher than the first half of the year, which should result in solid
profitability in the third and fourth quarters of 2008."
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.
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 first quarter of
2008; the expectation that Mission Technology Group's revenue and
operating results for the first quarter of 2008 will not be more or
less significant to the Company's consolidated financial results than
they were for the fourth quarter of 2007; expectations regarding the
Company's financial performance in 2008; the expectation of higher
revenues in European markets in 2008; the expectation of increased
retail distribution of higher-power products through Targus in 2008;
the expectation of a significant increase in sales of low-power
products through the wireless carrier channel in 2008; the belief that
sell-through of low-power products will continue to increase at
existing accounts; the expectation that the Company will initiate
trial programs or rollouts with additional wireless carriers in 2008;
the belief that quarterly revenues will increase throughout 2008; and
the belief that higher levels of revenue will result in consistent
increases in profitability. 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 Year ended
December 31, December 31,
------------------ --------------------
2007 2006 2007 2006
-------- -------- --------- ---------
Net revenue $20,309 $19,310 $ 77,719 $ 92,464
Gross profit 6,016 1,669 19,246 23,116
Selling, engineering and
administrative expenses 6,121 9,189 29,818 32,967
Asset impairment 5,048 - 5,048 8,073
-------- -------- --------- ---------
loss from operations (5,153) (7,520) (15,620) (17,924)
Interest income (expense),
net 309 273 1,156 1,203
Other income (expense), net 48 107 2,283 129
Litigation settlement expense - - - (250)
-------- -------- --------- ---------
Loss before minority interest (4,796) (7,140) (12,181) (16,842)
Minority interest (197) - (384) -
-------- -------- --------- ---------
Net loss $(4,993) $(7,140) $(12,565) $(16,842)
======== ======== ========= =========
Net loss per share -- basic
and diluted $ (0.16) $ (0.23) $ (0.40) $ (0.54)
Weighted avg common shares
outstanding -- basic and
diluted 31,432 31,697 31,534 31,392
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
December 31, 2007
Power,
Keyboards Expansion
& &
Corporate Handheld Total
Net revenue $18,282 $2,027 $20,309
Gross profit 5,030 986 6,016
Selling, engineering and administrative
expenses 5,394 727 6,121
Asset impairment 5,048 - 5,048
---------- --------- --------
Income (loss) from operations (5,412) 259 (5,153)
Interest income (expense), net 302 7 309
Other income (expense), net 50 (2) 48
Litigation settlement expense - - -
---------- --------- --------
Income (loss) before minority interest (5,060) 264 (4,796)
Minority interest - (197) (197)
---------- --------- --------
Net income (loss) (5,060) 67 (4,993)
Non-cash equity compensation 411 - 411
Asset impairment 5,048 - 5,048
---------- --------- --------
Net income (loss) as adjusted $399 $67 $466
========== ========= ========
Net income (loss) per share as adjusted $0.01 $0.00 $0.01
Weighted avg common shares outstanding
-- basic: 31,432 31,432 31,432
Three months ended
December 31, 2006
Power,
Keyboards Expansion
& &
Corporate Handheld Total
Net revenue $16,231 $3,079 $19,310
Gross profit 4,323 (2,654) 1,669
Selling, engineering and administrative
expenses 7,654 1,535 9,189
Asset impairment - - -
---------- --------- --------
Income (loss) from operations (3,331) (4,189) (7,520)
Interest income (expense), net 273 - 273
Other income (expense), net 107 - 107
Litigation settlement expense - - -
---------- --------- --------
Income (loss) before minority interest (2,951) (4,189) (7,140)
Minority interest - - -
---------- --------- --------
Net income (loss) (2,951) (4,189) (7,140)
Non-cash equity compensation 1,213 - 1,213
Asset impairment - - -
---------- --------- --------
Net income (loss) as adjusted $(1,738) $(4,189) $(5,927)
========== ========= ========
Net income (loss) per share as adjusted $(0.05) $(0.13) $(0.19)
Weighted avg common shares outstanding --
basic: 31,697 31,697 31,697
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
December 31, 2007
Power,
Keyboards Expansion
& &
Corporate Handheld Total
Selling, engineering and administrative
expenses $5,394 $727 $6,121
Non-cash equity compensation (411) - (411)
--------- --------- -------
Selling, engineering and administrative
expenses as adjusted $4,983 $727 $5,710
========= ========= =======
Three months ended
December 31, 2006
Power,
Keyboards Expansion
& &
Corporate Handheld Total
Selling, engineering and administrative
expenses $7,654 $1,535 $9,189
Non-cash equity compensation (1,213) - (1,213)
--------- --------- -------
Selling, engineering and administrative
expenses as adjusted $6,441 $1,535 $7,976
========= ========= =======
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)
December 31,
---------------------
2007 2006
----------- --------
(unaudited)
ASSETS
Cash and cash equivalents $15,908 $ 9,201
Short-term investments 9,026 8,143
Accounts receivable, net 16,924 20,855
Inventories 7,406 12,350
Prepaid expenses and other current assets 445 405
----------- -------
Total current assets 49,709 50,954
Long-term investments - 4,636
Other assets, net 4,441 10,274
----------- -------
Total assets $54,150 $65,864
=========== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $16,311 $16,459
Minority interest 384 -
----------- -------
Total liabilities 16,695 16,459
Total stockholders' equity 37,455 49,405
----------- -------
Total liabilities and stockholders'
equity $54,150 $65,864
=========== =======
Mobility Electronics, Inc. and Subsidiaries
Selected Other Data
(unaudited)
SELECTED OTHER DATA
Reconciliation of non-GAAP Financial Measure - Balance sheet excluding
accounts of Mission Technology Group.
December 31, 2007
------------------------------------------
Mission
Mobility Tech Eliminations Consolidated
-------- ------- ------------ ------------
ASSETS
Cash and cash
equivalents $15,216 $ 692 $ - $15,908
Short-term investments 9,026 - - 9,026
Accounts receivable,
net 16,564 471 (111) 16,924
Inventories 6,442 1,196 (232) 7,406
Prepaid expenses and
other current assets 371 74 - 445
-------- ------- ------------ ------------
Total current assets 47,619 2,433 (343) 49,709
Long-term investments - - - -
Other assets, net 5,653 1,632 (2,844) 4,441
-------- ------- ------------ ------------
Total assets $53,272 $4,065 $(3,187) $54,150
======== ======= ============ ============
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities $15,885 $ 537 $ (111) $16,311
Minority interest 384 3,141 (3,141) 384
-------- ------- ------------ ------------
Total liabilities 16,269 3,678 (3,252) 16,695
Total stockholders'
equity 37,003 387 65 37,455
-------- ------- ------------ ------------
Total liabilities and
stockholders' equity $53,272 $4,065 $(3,187) $54,150
======== ======= ============ ============
Reconciliation of non-GAAP Financial Measure - Cash, cash equivalents
and short-term investments excluding accounts of Mission Technology
Group.
Cash and cash
equivalents $15,216 $ 692 $ - $15,908
Short-term investments 9,026 - - 9,026
-------- ------- ------------ ------------
Total cash, cash
equivalents, short-
term investments $24,242 $ 692 $ - $24,934
======== ======= ============ ============
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, and short-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.
SOURCE: Mobility Electronics, Inc.
Financial Relations Board
Tony Rossi
213-486-6545
trossi@frbir.com
