EX-99.1 3 d08593exv99w1.txt PRESS RELEASE EXHIBIT 99.1 (XETA TECHNOLOGIES, INC. LOGO) -------------------------------------------------------------------------------- NEWS RELEASE Date: August 19, 2003 FOR IMMEDIATE RELEASE Contact: Cheryl Moll XETA Technologies (918) 879-9308 XETA TECHNOLOGIES' EARNINGS NEARLY TRIPLE BROKEN ARROW, OK. --XETA Technologies (NASDAQ: XETA) today reported earnings for the third fiscal quarter ended July 31, 2003 of $0.376 million, or $0.04 per share (diluted) on revenues of $12.9 million. This compares to earnings of $0.129 million, or $0.01 per share (diluted) on revenues of $12.8 million for the third quarter of 2002. The Company also reported nine months year-to-date earnings of $1.180 million, or $0.12 per share (diluted) on revenues of $40.1 million. In the comparable nine months of 2002, earnings were $0.412 million, or $0.04 per share (diluted) on revenues of $39.1 million. These reported quarter and year-to-date earnings are nearly triple those of last year's third quarter and year-to-date and are at the upper end of the previously projected range announced by the Company. During the quarter, the Company sliced its debt nearly in half by using cash on hand and positive cash flows from operations. After reductions of $7.5 million, total debt outstanding at July 31, 2003 was $7.7 million, of which only $3.6 million is acquisition-related debt, and is expected to be retired in approximately 14 months. The remaining debt represents a mortgage on the Company's headquarters building and advances under its working capital line of credit. At July 31, the Company had approximately $5.7 million in remaining availability under the line of credit. "We are pleased with these results and continue to make good progress in executing our long range business plans," stated Larry Patterson, Sr. Vice President, Sales and Marketing. "We remain focused on broadening our customer base, managing costs to maintain profitability, and continue to build strong customer relationships. During the quarter we saw increased activity in the new Avaya midmarket sales group and expect to see positive results in the current quarter. We are also on schedule in implementing our new Nortel Networks business plan and expect to see positive financial contribution from this initiative early next year." According to Jack Ingram, President and CEO, "These outstanding 300% year-over-year earnings comparisons and 50% debt reduction during the quarter reflect the benefits of our careful management in navigating what continues to be a challenging economic and capital spending business environment. I am especially pleased that we have also been able to add potentially significant growth engines with our Avaya midmarket build-up and our entry into the Nortel Networks business community. Both of these initiatives encompass great synergistic potential. They should serve us well in the future and afford reason for great excitement once the economy truly begins to rebound." Ingram continued, "On the macro-economic front, it appears that capital spending may be on the increase, however, we have yet to see clear signs of such in our sector. Overall we are optimistic that a recovery will ultimately begin to flourish, but until then we will continue to execute the cautious cost control strategies that have served us well so far during this downturn. We are setting earnings expectations for the fourth quarter at 1 to 5 cents per share." XETA Technologies will host a conference call to discuss fiscal 2003 third quarter operating results at 10 a.m. CDST on Wednesday, August 20. The media, analysts and investors are invited to participate by dialing 800-450-0785. A replay of the call will be available from 1:30 p.m. on August 20 until 11:59 p.m. on August 27 by dialing 800-475-6701, access code 695694.
Quarter Ending July 31 Nine Months Ending July 31 ---------------------- -------------------------- 2003 2002 2003 2002 ------ ------ ------ ------ Sales Systems 6,851 6,626 21,586 20,144 Services 5,703 6,181 17,425 18,571 Other 356 0 1,096 415 Total 12,910 12,807 40,107 39,130 Systems 29% 13% 29% 24% Gross Profit Margins (w/o res adj) n/a 23% n/a 28% Services 29% 27% 29% 24% Other 85% - 64% 30% Corp COGS -3% -3% -3% -3% Overall 28% 17% 27% 21% (w/o res adj) n/a 23% n/a 23% 2,818 2,206 8,601 7,626 Operating Expense (w/o res adj) n/a 2,906 n/a 8,326 Income from Operations 742 -67 2,316 686 Interest and Other Expense -125 279 -376 -7 Net Income After Tax 376 129 1,180 412 Basic Earnings Per Share $0.04 $0.01 $0.12 $0.04 Diluted Earnings Per Share $0.04 $0.01 $0.12 $0.04 Wt. Avg. Common Shares Outstanding 9,878 9,380 9,769 9,286 Wt. Avg. Common Equivalent Shares 10,003 9,845 9,932 9,884
(The information is presented in thousands except percentages and per-share data.)
July 31, 2003 October 31, 2002 ------------- ---------------- Assets Current Cash 604 1,967 Receivables (net) 7,291 9,479 Inventories (net) 5,706 7,801 Other 1,558 2,969 Subtotal 15,159 22,216 Non-Current Receivables (net) 720 519 PPE (net) 10,388 10,458 Goodwill 25,741 25,782 Capitalized Software 103 238 Other 125 171 Subtotal 37,077 37,168 Total Assets 52,236 59,384 Liabilities Current Notes Payable 3,288 3,288 Revolving Line of Credit 1,800 0 Accounts Payable 3,755 6,119 Unearned Revenue 2,003 2,079 Accrued Liabilities 2,403 2,150 Subtotal 13,249 13,636 Non-Current Long Term Debt 2,599 11,565 Other 2,172 1,662 Subtotal 4,771 13,227 Total Liabilities 18,020 26,863 Equity 34,216 32,521
(The information is presented in thousands) # # # ABOUT XETA TECHNOLOGIES XETA Technologies is a leading communications integrator with sales and service locations nationwide, serving national business clients in sales, consulting, engineering, project management, installation and service support. Through internal growth and corporate acquisitions, XETA is a frontrunner in the emerging, highly technical world of converged communications solutions for voice, data and video applications. XETA is one of the largest integrators of Avaya voice and data systems and has recently added the Nortel Networks product line of voice and data solutions. XETA is also the largest distributor for Hitachi's PBX group. XETA Technologies has been recognized by Fortune Small Business magazine's Top 100 Fastest-Growing Companies, Fortune magazine's "100 Fastest-Growing Companies," Forbes magazine's "Best 200 Small Companies in America" and BusinessWeek's "Top 100 Hot Growth Companies." For more information about XETA Technologies, visit www.xeta.com. -------------------------------------------------------------------------------- This news release contains forward-looking statements that are made subject to the provisions of the Private Securities Litigation Reform Act of 1995. These statements include statements concerning the Company's expected or anticipated results from its mid-market initiatives and its Nortel Networks business plan; earnings expectations for the fourth quarter of fiscal 2003; and macro-economic conditions. These and other forward-looking statements (generally identified by such words as "expects," "plans," "believes," "anticipates," "could,""should," and similar words or expressions) reflect management's current expectations, assumptions, and beliefs based upon information currently available to management. Investors are cautioned that all forward-looking statements are subject to certain risks and uncertainties which are difficult to predict and that could cause actual results to differ materially from those projected. These risks and uncertainties include, but are not limited to, the Company's ability to successfully exploit the Nortel Networks market, the overall health of the U.S. economy and the telecommunications market specifically, the long-term success of the Company's growth strategies, the Company's ability to manage its bank debt and meet its covenant requirements, market acceptance of and demand for the Company's product and service offerings, inflation, competition, and the availability and retention of sales professionals and trained technicians. Additional factors which could affect actual results are described in the section entitled "Outlook and Risk Factors" contained in the Company's Form 10-K for its fiscal year ended October 31, 2002 and Form 10-Q for its quarters ended January 31, 2003 and April 30, 2003.