EX-99.1 3 d11247exv99w1.htm EX-99.1 PRESS RELEASE exv99w1
 

EXHIBIT 99.1

     
NEWS RELEASE
     
Date:   December 2, 2003
    FOR IMMEDIATE RELEASE
     
Contact:   Cheryl Moll
    XETA Technologies
    (918) 879-9308

XETA TECHNOLOGIES ANNOUNCES
77 PERCENT YEAR-OVER-YEAR PROFIT GAIN

Broken Arrow, OK - XETA Technologies (NASDAQ: XETA) announced today the results for its fourth fiscal quarter and year ending October 31, 2003. The Company reported revenues of $12.6 million for the fourth quarter and $52.7 million for the year. Earnings were reported at $0.04 per diluted share for the quarter and $0.16 per diluted share for the year.

These results represent an increase in fiscal 2003 earnings of 77 percent compared to fiscal 2002, despite a 2 percent decline in 2003 revenues. Company officials said the revenue decline was related to a reduction in service customers’ discretionary “time and material” spending, but added that the decline was more than offset by increased margins in all reporting categories.

“As was the case throughout fiscal 2003, the fourth quarter was one of careful management in a stagnant capital spending environment,” said Jack Ingram, XETA president and CEO. “We negotiated this climate and concluded the year with another good performance. Our margin improvements and cost controls fueled significant year-over-year earnings growth and substantial balance sheet strengthening. I am very pleased that we could deliver 77 percent earnings growth along with an $8.9 million (60%) debt reduction in this economic environment.”

Fourth quarter revenues declined $0.3 million (2.6%) compared to the third quarter of fiscal 2003 and $2.0 million (13.9%) compared to the fourth quarter of last year. Earnings for fourth quarter 2003 were up slightly over those of third quarter 2003 and down slightly compared to the fourth quarter of last year.

XETA’s 2003 earnings results are toward the high end of the range of expectations set by the Company in its press release of August 19, 2003. These results are unaudited and, although no material changes are expected, are subject to change. The audit is expected to be complete by the end of December.

 

 

“We enter fiscal 2004 with cautious optimism,” said Ingram. “Basic economic fundamentals are certainly improving, but we are receiving mixed signals regarding whether sustained improvement in capital spending has begun. Late in our fourth quarter, we received two very significant systems orders, both in excess of $1 million. Shortly after the end of the quarter we received a third large order, this one in excess of $2.5 million. All three of these systems orders involve multiple site installations and are scheduled for shipments throughout the first three quarters of fiscal 2004. Large orders such as these have been rare in the marketplace over the last two to three years and therefore lead to optimism. However, except for these three large orders, the level of our systems sales has yet to show reliable signals of a broad base of increased capital spending by our customers.

“Additionally, the two growth engines we instituted during fiscal 2003 are beginning to bear fruit,” he added. “The Avaya mid-market sales effort is just now beginning to gain traction, and the start-up of our Nortel partnership is progressing very well. In normal times we would expect significant contributions from these investments, however, as we have all learned during this downturn, sales cycles are extremely long. Therefore, until the economic uncertainties further subside, we are going to continue to set expectations one quarter at a time. We expect earnings for the first quarter of fiscal 2004 to be in the range of from 2 to 6 cents. While this is higher than the range we have set for the last several quarters it is still highly influenced by the fact that, while we are hoping the economy is finally turning, we are prepared to deal with more of the same.”

XETA Technologies will host a conference call regarding this announcement on Wednesday, December 3, at 10:00 a.m. CST. The media, analysts and investors are invited to participate by dialing 1-888-273-9890. A replay of the call will be available from 1:30 p.m. CST on December 3 until 11:59 p.m. December 9 by dialing 1-800-475-6701, access code 708158.

        4th Quarter Ending Oct 31st   Year Ending Oct 31st
       
 
       
2003
 
2002
 
2003
 
2002
       
 
 
 
 
Sales   Systems  
5,964

 

7,709

 

27,550

 
27,852
    Services  
5,914

 

6,819

 

23,339

 
25,390
    Other  
696

 

82

 

1,793

 
498
    Total  
12,575

 

14,610

 

52,681

 
53,740
 
Gross Profit Margins   Systems  
27%

 

20%

 

29%

 
23%
    Services  
29%

 

31%

 

29%

 
26%
    Other  
53%

 

16%

 

60%

 
28%
    Corp COGS  
-3%

 

-3%

 

-3%

 
-3%
    Overall  
27%

 

23%

 

27%

 
22%
 
Gross Profit      
3,402

 

3,285

 

14,318

 
11,598
Operating Expense      
2,610

 

2,833

 

11,211

 
10,459
 
Income from Operations      
792

 

452

 

3,108

 
1,138
Interest and Other Income (Expense)      
-170

 

316

 

-545

 
309
 
Net Income After Tax      
377

 

466

 

1,558

 
878
Basic Earnings Per Share       $
0.04

 
$
0.05

 
$
0.16

 
$0.09
Diluted Earnings Per Share       $
0.04

 
$
0.05

 
$
0.16

 
$0.09
Wt. Avg. Common Shares Outstanding      
10,003

 

9,641

 

9,828

 
9,375

 

 
Wt. Avg. Common Equivalent Shares      
10,132
 
9,894
 
9,960
 
9,866

(The information is presented in thousands except percentages and per-share data.)

              Oct 31, 2003
  Oct 31, 2002
Assets   Current   Cash  
291

 
1,967
        Receivables (net)  
5,795

 
9,423
        Inventories (net)  
5,615

 
7,477
        Other  
2,188

 
2,969
        Subtotal  
13,889

 
21,836
 
    Non-Current   Receivables (net)  
420

 
519
        PPE (net)  
10,467

 
10,458
        Goodwill  
25,727

 
25,782
        Capitalized Software  
58

 
238
        Other  
112

 
171
        Subtotal  
36,784

 
37,168
 
    Total Assets      
50,673

 
59,004
 
 
Liabilities   Current   Notes Payable  
1,210

 
3,288
        Revolving Line of Credit  
719

 
0
        Accounts Payable  
3,929

 
5,739
        Unearned Revenue  
1,620

 
2,079
 
        Accrued Liabilities  
2,206

 
2,150
        Subtotal  
9,684

 
13,256
 
    Non-Current   Long Term Debt  
4,030

 
11,565
        Other  
2,348

 
1,662
        Subtotal  
6,378

 
13,227
 
    Total Liabilities      
16,062

 
26,483
 
 
Equity          
34,611

 
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—the leading provider of communication systems for the lodging industry—and has long been recognized as the leading provider of call accounting solutions to the lodging and hospitality industries.

 

 

XETA Technologies has recently been recognized by Business 2.0 magazine’s “Fastest-Growing Technology Companies” and has also 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 earnings expectations for the fourth quarter of fiscal 2004 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, 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, April 30, 2003 and July 31, 2003.