XATA Reports Fiscal 2011 First Quarter Results

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MINNEAPOLIS Feb. 2, 2011 December 31, 2010

$14.0 million December 31, 2010 $17.5 million $0.1 million $1.7 million

$11.3 million December 31, 2010 $9.7 million
The Company acquired 48 new customers in the first quarter of fiscal 2011, bringing its total customer count to approximately 1,500.
Software revenue grew approximately 5 percent on an organic basis in the first quarter of fiscal 2011, with our flagship XATANET and Turnpike products growing at approximately 13 percent.
Fiscal 2011 first quarter software revenue accounted for 81 percent of total revenue, compared to 55 percent for the same period of fiscal 2010.
$2.6 million $7.3 million
$1.5 million

Jay Coughlan

"Continued improvement in our software margins again allowed the Company to generate positive non-GAAP earnings and cash flow from operations," said Mark Ties, chief financial officer of XATA.

Gross margins were 60 percent for the first quarter of fiscal 2011, compared to 45 percent for the same period of fiscal 2010. This margin increase was driven largely by a favorable revenue mix shifting towards higher margin software revenue. Software margins of 75.5 percent for the first quarter of fiscal 2011 were consistent with the same period of fiscal 2010.

$6.1 million December 2009

$2.2 million $1.3 million

$0.1 million $1.7 million $0.01 December 31, 2010 $0.20

$1.6 million

December 31, 2010 $14.0 million $18.0 million

Non-GAAP vs. GAAP Financials

To supplement the Company’s consolidated financial statements presented in accordance with GAAP, the Company provides certain non-GAAP measures of financial performance. These non-GAAP measures include non-GAAP earnings, which is earnings before interest (net), acquisition and financing related costs, taxes, depreciation, amortization, stock based compensation and preferred stock dividends and deemed dividends, and non-GAAP earnings per diluted share. The Company’s reference to these non-GAAP measures should be considered in addition to results prepared under current accounting standards, but are not a substitute for, or superior to, GAAP results.

These non-GAAP measures are provided to enhance investors’ overall understanding of the Company’s current financial performance and ability to generate cash flow. In many cases non-GAAP financial measures are used by analysts and investors to evaluate the Company’s performance. Reconciliation to the nearest GAAP measure of all non-GAAP measures included in this press release can be found in a financial table included below.

About XATA

Minneapolis, MN www.xata.com

Cautionary note regarding forward-looking statements

September 30, 2009 www.xata.com www.sec.gov

CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share amounts)
(Unaudited)

		Three Months Ended
		December 31,
		2010	2009
Revenue		$ 13,978	$ 17,523

Cost of goods sold		5,658	9,692
Selling, general and administrative		6,113	6,150
Research and development		2,224	1,333
Acquisition related costs		–	779
Total costs and expenses		13,995	17,954

Operating loss		(17)	(431)
Net interest and other expense		(83)	(276)
Interest expense on financing activities		–	(779)
Acquisition related interest and mark to market		–	(162)

Loss before income taxes		(100)	(1,648)
Income tax expense (benefit)		(15)	–
Net loss		(85)	(1,648)

Preferred stock dividends and deemed dividends		(35)	(65)
Net loss to common shareholders		$ (120)	$ (1,713)

Net loss per common share:
	Basic and diluted	$ (0.01)	$ (0.20)

Weighted average common and common share equivalents:
	Basic and diluted	9,740	8,646

XATA CORPORATION
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
	December 31,	September 30,
	2010	2010
	(Unaudited)
Current assets
Cash and cash equivalents	$ 14,030	$ 13,374
Accounts receivable, net	6,493	11,392
Inventories	4,107	3,047
Deferred product costs	1,875	2,042
Prepaid expenses and other current assets	1,134	1,260
Total current assets	$ 27,639	$ 31,115

Equipment and leasehold improvements, net	6,651	5,798
Intangible assets, net	14,417	14,901
Goodwill	17,525	17,048
Deferred product costs, non-current	1,491	1,757
Deferred tax assets	348	337
Other assets	410	420

Total assets	$ 68,481	$ 71,376


Current liabilities
Current portion of long-term obligations	$ 973	$ 839
Accounts payable	3,842	5,138
Accrued expenses	3,917	4,872
Deferred revenue	3,878	5,070
Total current liabilities	$ 12,610	$ 15,919

Long-term obligations, net of current portion	688	485
Deferred revenue, net of current portion	2,976	3,591
Deferred tax liabilities	2,317	2,242
Other long-term liabilities	592	638
Total liabilities	$ 19,183	$ 22,875

Shareholders’ equity
Preferred stock	44,068	43,980
Common stock	44,232	41,637
Contingent common stock earn-out	4,062	6,452
Accumulated deficit	(44,249)	(44,129)
Accumulated other comprehensive income	1,185	561
Total shareholders’ equity	49,298	48,501

Total liabilities and shareholders’ equity	$ 68,481	$ 71,376

XATA CORPORATION
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(Amounts in thousands, except per share amounts)
(Unaudited)

		Three Months Ended
		December 31,
		2010	2009
Net loss to common shareholders		$ (120)	$ (1,713)

Adjustments:
	Depreciation and amortization expense	1,440	935
	Stock-based compensation	205	287
	Net interest expense	40	282
	Preferred stock dividends and deemed dividends	35	65
	Income taxes	(15)	–
	Interest expense on financing activities	–	779
	Acquisition related interest, mark to market, and costs	–	941
Total adjustments		1,705	3,289

Non-GAAP earnings		$ 1,585	$ 1,576


Non-GAAP earnings per diluted share		$ 0.06	$ 0.10

Shares used in calculating non-GAAP earnings per diluted share		26,151	15,181

SOURCE XATA Corporation

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