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Press Release
Palm Reports Third Consecutive Quarter of Revenue Growth Pro Forma Gross Margins Up 8.6 Points to 29.1%
SANTA CLARA, Calif., March 21 /PRNewswire-FirstCall/ --
Palm, Inc. (Nasdaq: PALM) today reported revenues of $292.7 million for the
third quarter of fiscal 2002, ended March 1, up 1 percent from the
$290.6 million reported in the preceding fiscal quarter and down 38 percent
from the $470.8 million reported for the comparable period last year. "We're pleased to report our third consecutive quarter of improved
financial results, despite the traditional post holiday seasonal slowdown,"
said Eric Benhamou, Palm's chairman and chief executive officer. "Tangible
progress across virtually every aspect of our income statement and balance
sheet gives us increased confidence in our ability to execute and to return to
profitability." Pro forma net loss -- excluding the effects of special excess inventory
and related costs/benefit, amortization of goodwill and intangible assets,
purchased in-process technology, separation costs, and restructuring
charges -- totaled $14.0 million, or $0.02 per share. This compares with
pro forma net loss of $36.6 million, or $0.06 per share, reported in the
second quarter of fiscal year 2002 and pro forma net income of $9.3 million,
or $0.02 per share, for the third quarter of fiscal year 2001. Actual net income for the third fiscal quarter, calculated in accordance
with Generally Accepted Accounting Principles, was $2.9 million, or
$0.01 per share, compared with a net loss of $25.2 million for the
second quarter of fiscal year 2002 and a net loss of $1.9 million, or
$0.00 per share, for the third quarter of fiscal year 2001. <![CDATA[ Key accomplishments during the quarter include the following:
-- An 8.6 percent increase in pro forma gross margins to 29.1 percent, in
line with previous guidance of 28 percent to 30 percent;
-- Three expandable product introductions from the Solutions Group: the
Palm(TM) i705 integrated wireless handheld for mobile professionals and
enterprises, the Palm m130 color handheld for first-time customers, and
the sleek and powerful Palm m515 color handheld for executives;
-- The shipment of 1.3 million Palm branded handhelds, bringing the
cumulative total to 17.2 million, and contributing to the shipment of
more than 21 million Palm Powered(TM) handhelds;
-- The early release of beta software for Palm OS(R) 5 to licensees and
developers at the PalmSource(R) Conference and Expo; and
-- Reaching a total of more than 200,000 registered developers of the
Palm OS platform.
About Palm, Inc.
]]> Palm, Inc. is a pioneer in the field of mobile and wireless Internet
solutions and a leading provider of handheld computers, according to IDC
(December 2000). Based on the Palm OS(R) platform, Palm's handheld solutions
allow people to carry and access their most critical information wherever they
go. Palm(TM) handhelds address the needs of individuals, enterprises and
educational institutions by offering the foundation for thousands of
application solutions. Palm stock is traded on the Nasdaq national market
under the symbol PALM. More information is available at http://www.palm.com .
Safe Harbor This press release contains forward-looking statements within the meaning
of the federal securities laws, including statements regarding Palm's ability
to return to profitability. These statements are subject to risks and
uncertainties that could cause actual results and events to differ materially,
including possible fluctuations in the demand for Palm's products and
services, possible fluctuations in economic conditions affecting Palm's
industry and its customers, Palm's ability to develop new products and
services and to gain consumer acceptance for them, Palm's ability to compete
with existing and new competitors, and Palm's ability to control its expenses
and cash usage. A detailed discussion of other risks and uncertainties that
could cause actual results and events to differ materially from such
forward-looking statements is included in Palm's most recent filings with the
Securities and Exchange Commission, including Palm's report on Form 10-Q for
the quarterly period ended November 30, 2001, as amended. Palm undertakes no
obligation to update forward-looking statements to reflect events or
circumstances occurring after the date of this press release. NOTE: Palm OS and PalmSource are registered trademarks and Palm and
Palm Powered are trademarks of Palm, Inc. Other brands may be trademarks of
their respective owners.
<![CDATA[ Palm, Inc.
Pro Forma Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
March 1, March 2, March 1, March 2,
2002 2001 2002 2001
Revenues $292,651 $470,849 $797,548 $1,394,017
Costs and operating
expenses:
Cost of revenues 207,541 317,666 593,769 898,606
Sales and marketing 56,313 81,949 182,617 247,779
Research and
development 33,562 43,867 112,462 115,180
General and
administrative 14,873 23,347 42,508 68,703
Pro forma costs
and operating
expenses 312,289 466,829 931,356 1,330,268
Pro forma operating
income (loss) (19,638) 4,020 (133,808) 63,749
Interest and other
income (expense),
net (945) 11,419 2,513 37,407
Pro forma income
(loss) before
income taxes (20,583) 15,439 (131,295) 101,156
Pro forma
income tax
provision (benefit) (6,587) 6,176 (42,014) 40,462
Pro forma net
income (loss) $(13,996) $9,263 $(89,281) $60,694
Pro forma net income
(loss) per share:
Basic $(0.02) $0.02 $(0.16) $0.11
Diluted $(0.02) $0.02 $(0.16) $0.11
Shares used in
computing
per share amounts:
Basic 576,769 566,463 570,814 565,853
Diluted 576,769 568,508 570,814 569,399
]]> The above pro forma amounts for the three and nine months ended
March 1, 2002 have been adjusted to eliminate cost of revenues -- charge
(reduction) for special excess inventory and related costs, amortization of
goodwill and intangible assets, separation costs, and restructuring charges.
The above pro forma amounts for the three and nine months ended March 2, 2001
have been adjusted to eliminate legal settlements, amortization of goodwill
and intangible assets, purchased in-process technology and separation costs. A reconciliation of pro forma net income (loss) presented above with
Palm's net income (loss) as determined in conformity with generally accepted
accounting principles is presented on the following page.
<![CDATA[ Palm, Inc.
Reconciliation of Pro Forma Income (Loss) to Reported Results
(In thousands)
(Unaudited)
Three Months Ended Nine Months Ended
March 1, March 2, March 1, March 2,
2002 2001 2002 2001
Pro forma net
income (loss) $(13,996) $9,263 $(89,281) $60,694
Cost of revenues
- charge
(reduction) for
special excess
inventory and
related costs (28,265) -- (86,415) --
Legal settlements -- 6,250 -- 6,250
Amortization of
goodwill
and intangible
assets 3,347 8,062 9,184 20,801
Purchased in-process
technology -- -- -- 853
Separation costs -- 2,177 376 4,794
Restructuring charges -- -- 25,988 --
Related income tax
provision (benefit) 7,974 (5,290) 16,277 (7,602)
Net income (loss) $2,948 $(1,936) $(54,691) $35,598
]]> For the three and nine months ended March 2, 2001, pro forma cost of
revenues includes $802,000 and $2,291,000, respectively, which is reclassified
in Palm's Condensed Consolidated Statement of Operations from cost of revenues
to amortization of goodwill and intangible assets.
<![CDATA[ Palm, Inc.
Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
March 1, March 2, March 1, March 2,
2002 2001 2002 2001
Revenues $292,651 $470,849 $797,548 $1,394,017
Costs and operating
expenses:
Cost of revenues 207,541 316,864 593,769 896,315
Cost of revenues
- charge
(reduction) for
special excess
inventory and
related costs (28,265) -- (86,415) --
Sales and marketing 56,313 81,949 182,617 247,779
Research and
development 33,562 43,867 112,462 115,180
General and
administrative 14,873 23,347 42,508 68,703
Legal settlements -- 6,250 -- 6,250
Amortization of
goodwill and
intangible
assets (*) 3,347 8,864 9,184 23,092
Purchased in-process
technology -- -- -- 853
Separation costs -- 2,177 376 4,794
Restructuring charges -- -- 25,988 --
Total costs and
operating expenses 287,371 483,318 880,489 1,362,966
Operating income
(loss) 5,280 (12,469) (82,941) 31,051
Interest and other
income (expense), net (945) 11,419 2,513 37,407
Income (loss) before
income taxes 4,335 (1,050) (80,428) 68,458
Income tax
provision (benefit) 1,387 886 (25,737) 32,860
Net income (loss) $2,948 $(1,936) $(54,691) $35,598
Net income (loss)
per share:
Basic $ 0.01 $0.00 $(0.10) $0.06
Diluted $ 0.01 $0.00 $(0.10) $0.06
Shares used in
computing
per share amounts:
Basic 576,769 566,463 570,814 565,853
Diluted 577,382 566,463 570,814 568,717
(*)Amortization of
goodwill and
intangible assets:
Cost of revenues $1,763 $802 $4,543 $2,291
Sales and marketing -- 162 11 482
Research and
development 1,551 7,897 4,586 20,316
General and
administrative 33 3 44 3
Total amortization
of goodwill and
intangible assets $3,347 $8,864 $9,184 $23,092
Palm, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except par value amounts)
March 1, 2002 June 1, 2001
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $285,645 $513,769
Accounts receivable, net of allowance
for doubtful accounts of $10,539 and
$14,899, respectively 98,323 115,342
Inventories 50,564 107,813
Deferred income taxes 64,376 154,362
Prepaids and other 14,918 12,867
Total current assets 513,826 904,153
Property and equipment, net 217,007 223,422
Goodwill, net 68,785 43,169
Intangible assets, net 12,932 18,218
Deferred income taxes 208,626 90,656
Other assets 18,619 17,633
Total assets $1,039,795 $1,297,251
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $110,137 $238,235
Accrued restructuring 26,602 32,399
Other accrued liabilities 130,439 282,851
Total current liabilities 267,178 553,485
Non-current liabilities:
Long-term debt 50,309 413
Deferred revenue and other 7,117 9,201
Stockholders' equity:
Preferred stock, $.001 par value,
125,000 shares authorized; none outstanding -- --
Common stock, $.001 par value, 2,000,000
shares authorized; outstanding
March 1, 2002, 577,753 shares;
June 1, 2001, 567,215 shares 578 567
Additional paid-in capital 1,121,375 1,092,329
Unamortized deferred stock-based
compensation (7,899) (14,929)
Accumulated deficit (398,730) (344,039)
Accumulated other comprehensive
income (loss) (133) 224
Total stockholders' equity 715,191 734,152
Total liabilities and stockholders' equity $1,039,795 $1,297,251
Palm, Inc.
Segment Results Reconciled to Reported Net Income
Three Months ended March 1, 2002
(In thousands)
(Unaudited)
Solutions PalmSource, Total
Group Inc. Eliminations Palm
Revenues $284,933 $19,457 $(11,739) $292,651
Cost of
revenues (*) 217,874 962 (11,295) 207,541
Operating
expenses 85,224 19,524 104,748
Pro forma operating
(loss) $(18,165) $(1,029) $(444) $(19,638)
Reconciliation of
Pro forma operating
loss to Net income:
Pro forma operating
income/(loss) $(19,638)
Cost of revenues
- reduction for
special excess
inventory and
related costs (28,265)
Amortization of
intangible assets 3,347
Reported operating
income 5,280
Interest and
other income
(expense), net (945)
Income before
income taxes 4,335
Income tax
provision 1,387
Net income $2,948
]]> (*) Cost of revenues does not include the portion of amortization of
intangible assets related to cost of revenues.
SOURCE Palm, Inc.
Web site: http: //www.palm.com
CONTACT: media relations, Marlene Somsak, +1-408-878-2592, or marlene.somsak@corp.palm.com, or investor relations, Jimmy Johnson, +1-408-878-2771, or jimmy.Johnson@corp.palm.com, both of Palm, Inc.
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