GRIC Goremote Internet Communications (MM)

GoRemote Announces Second Fiscal Quarter 2005 Financial Results - Company Narrows Quarterly Loss and Increases Cash for Second Sequential Quarter MILPITAS, Calif., June 7 /PRNewswire-FirstCall/ -- GoRemote Internet Communications, Inc. (NASDAQ:GRIC), a leading provider of secure managed broadband network services, announced that its revenues for the second quarter of 2005 were $12 million, compared with $12.9 million in the three-month period ended April 30, 2004. Net loss in the second quarter of 2005 was $192,000, or $0.00 per share, compared with net loss of $2.8 million, or $0.07 per share, in the three-month period ended April 30, 2004. Overall gross margin was 62 percent in the second quarter of 2005, compared with 59 percent in the three-month period ended April 30, 2004. GoRemote had $19.8 million in cash and cash equivalents on April 30, 2005, representing an increase of more than $400,000 over the prior quarter. "Year over year broadband revenue growth in excess of 50 percent proves the wisdom of our decision in late 2003 to broaden our managed network services offering by adding the GoRemote Teleworker and GoRemote Branch Office solutions," said Tom Thimot, president and CEO. "We are proud to have achieved five sequential quarters of broadband revenue growth, which has largely offset the ongoing decline in our dialup revenue." Solid Portfolio of Customers and Channel Partners GoRemote's portfolio of customers and channel partners includes some of the world's largest and best-known Global 2000 and Fortune 1000 enterprises, many of which are leaders in their industries and market segments. GoRemote's growing roster of worldwide customers and partners includes AT&T, Boeing, Bridgestone Firestone, Lockheed Martin Corp., MCI, Merrill Lynch, Novartis, Philip Morris USA, Procter & Gamble, Schering-Plough, Stanley Works, T-Systems GmbH, VeriSign and many others. Growing Broadband Revenues GoRemote increased the percentage of its revenues that are generated from broadband services in the second quarter of 2005. Approximately 43 percent of GoRemote's revenues were generated from broadband services in the second quarter of 2005 as compared to 40 percent in the prior quarter. Broadband revenue during the prior five fiscal quarters was as follows: $2.2 million (Q1 2004, ending January 31); $3.4 million (Q2 2004, ending April 30); $4.1 million (Q3 2004, ending July 31); $4.3 million (Q4 2004, ending October 31); and $4.7 million (Q1 2005, ending January 31). The Company reported that it increased deferred revenues by approximately $1.1 million during the second quarter of 2005, principally reflecting broadband service installation revenues that will be recognized over the next 24 months. In addition, the Company reported that more than 57 percent of the Company's revenues came from monthly subscriptions or from customer commitments. The GoRemote Global Network includes an aggregated broadband footprint of thousands of mobile broadband access points around the globe as well as DSL and cable coverage throughout North America and the United Kingdom. In addition to this leading broadband footprint, the GoRemote Global Network includes more than 28,000 dial-up access locations worldwide in 153 countries and territories. GoRemote offers more than 21,400 unique Wi-Fi access points with Wi-Fi access in 58 countries and more than 1,700 Ethernet locations, primarily in hotel chains like the Marriott, Hyatt, Hilton, Four Seasons, Novotel and Mandarin. "Last quarter we achieved positive EBITDA by approximately $342,000 and grew deferred revenue by approximately $1.1 million. We believe that the strength of our business model and our expense discipline position us well for the future, despite the significant drop in demand for dial-up access service reported in early May," said Daniel W. Fairfax, senior vice president and CFO. "Because we have not yet completed a full analysis of the anticipated net income impact of the new stock expense accounting rules, however, it is premature for us to project when we will achieve profitability in terms of GAAP net income. Although we expect our broadband revenue to continue growing in the current quarter, we are not currently projecting positive EBITDA for this quarter." EBITDA stands for earnings before interest, income taxes, depreciation and amortization. It is a non-GAAP financial measure that should not be used as a substitute for GAAP measures such as net income or loss, because it reflects the elimination of material expenses. Also, because interest, taxes, depreciation and amortization can vary significantly between companies due in part to differences in accounting policies, tax strategies, acquisition activities, levels of indebtedness and interest rates, the difference from GAAP net income or loss that EBITDA represents can vary widely from company to company. The Company's management believes that EBITDA information is helpful to investors when used in conjunction with GAAP information because it is an indicator frequently used by investors to evaluate enterprises such as GoRemote. Excluding these items provides insight into the underlying financial performance of GoRemote and facilitates comparisons between GoRemote and other companies. GoRemote uses EBITDA as one measure of its performance, along with GAAP information. BUSINESS OUTLOOK The statements by Tom Thimot and Daniel Fairfax, and the Company's statements about revenue trends and business outlook, are forward-looking statements that involve risks and uncertainties. Our ability to project future results is inherently uncertain. Factors that could cause such statements to be inaccurate include the risk factors listed from time to time in our most recent reports on Form 10-K and Form 10-Q on file with the SEC and available through http://www.sec.gov/. Following the publication of its quarterly earnings release, GoRemote will continue its practice of having company representatives meet privately with investors, the media, investment analysts and others. At the same time, GoRemote will keep its earnings release publicly available on its Web site (http://www.goremote.com/). As of today, GoRemote has not provided an outlook for future periods. Towards the end of each fiscal quarter, GoRemote observes a "Quiet Period" when it no longer publishes or updates information about GoRemote's current expectations and its representatives will not comment concerning GoRemote's financial results or expectations. The Quiet Period begins on the first day of the last month of each fiscal quarter and continues until the day when GoRemote publishes its next earnings release. GoRemote's third fiscal quarter began May 1 and will end on July 31, 2005. As a result, the Quiet Period for the third fiscal quarter of 2005 will begin July 1, 2005 and end when we announce our results for that quarter. About GoRemote GoRemote Internet Communications, Inc. (NASDAQ:GRIC) is a leading provider of secure managed broadband network services, enabling customers to achieve best-of-breed network security and to increase critical business application performance, while reducing capital and operating expenses associated with their network. GoRemote provides a comprehensive portfolio of secure, managed broadband network solutions for branch office and retail environments, teleworkers/home offices and mobile workforces. The GoRemote Global Network(TM) includes more than 45,000 wired and wireless access points in more than 150 countries. More information about GoRemote is available at http://www.goremote.com/ or by calling +1.408.955.1920. NOTE: GoRemote, GoRemote Internet Communications, GoRemote Mobile Office, GoRemote Teleworker, GoRemote Branch Office, GoRemote Global Network, GoRemote Revolution, GoRemote Total Security Protection, GoRemote Universal Remote Control and "For the everywhere enterprise" are trademarks of GoRemote Internet Communications, Inc. All other trademarks mentioned in this document are the property of their respective owners. GoRemote Internet Communications, Inc. Condensed Consolidated Balance Sheets (in thousands) (unaudited) April 30, October 31, 2005 2004 Assets Cash, cash equivalents and short-term investments $19,764 $18,021 Accounts receivable, net 5,881 7,243 Inventory 104 119 Other current assets 3,174 2,150 Total current assets 28,923 27,533 Property and equipment, net 1,709 1,694 Goodwill 21,612 21,612 Purchased intangible assets 3,394 3,876 Other assets 1,300 1,182 Total Assets $56,938 $55,897 Liabilities and Stockholders' Equity Accounts payable $6,025 $6,571 Accrued restructuring 172 434 Deferred revenue 4,578 2,741 Other current liabilities 2,842 2,468 Total current liabilities 13,617 12,214 Deferred revenue, less current portion 1,393 1,305 Restructuring accrual, less current portion 327 416 Total stockholders' equity 41,601 41,962 Total Liabilities and Stockholders' Equity $56,938 $55,897 GoRemote Internet Communications, Inc. Condensed Consolidated Statements of Operations (in thousands, except per share data) (unaudited) Three Months Ended Six Months Ended April 30, April 30, 2005 2004 2005 2004 Revenues $12,030 $12,882 $24,006 $24,800 Costs and expenses: Cost of revenues 4,614 5,310 9,626 10,019 Network and operations 2,290 2,316 4,449 4,027 Research and development 515 1,193 1,098 2,061 Sales and marketing 3,058 4,734 6,167 9,492 General and administrative 1,484 1,648 3,079 3,009 Amortization of stock-based compensation & intangibles 265 489 566 815 Restructuring charge (benefit) -- -- 60 -- Total costs and expenses 12,226 15,690 25,045 29,423 Loss from operations (196) (2,808) (1,039) (4,623) Other income (expense), net 23 57 78 51 Operating loss before income taxes (173) (2,751) (961) (4,572) Provision for income taxes 19 34 50 56 Net loss attributable to common stockholders $(192) $(2,785) $(1,011) $(4,628) Basic and diluted net loss per share $0.00 $(0.07) $(0.02) $(0.12) Shares used in basic and diluted per share calculation 41,609 40,285 41,465 37,380 RECONCILIATION OF NET LOSS TO EBITDA Three Months Ended Six Months Ended April 30, April 30, 2005 2004 2005 2004 Net loss attributable to common stockholders $(192) $(2,785) $(1,011) $(4,628) Provision for income taxes 19 34 50 56 Interest income and other (23) (57) (78) (51) Depreciation and amortization 300 388 593 751 Amortization of intangibles 238 400 482 666 EBITDA $342 $(2,020) $36 $(3,206) DATASOURCE: GoRemote Internet Communications, Inc. CONTACT: investors, John Riley, +1-408-955-1920, or , media, Bethany Sebra, +1-408-965-1127, or , both of GoRemote Internet Communications, Inc. Web site: http://www.goremote.com/

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