HUNTINGDON VALLEY, Pa., Nov. 3, 2005 (PRIMEZONE) -- Wireless Xcessories Group, Inc. (AMEX: XWG), a nationwide distributor of over 4,000 accessories for cellular phones and other wireless devices, announced today results for the third quarter ended September 30, 2005. The company reported revenue of $5,293,000, an increase of 29.9% compared to $4,075,000 for the same period in fiscal 2004. Wireless Xcessories had 2005 third quarter pre-tax net income of $439,000, an increase of 69.5% versus 2004 third quarter pre-tax net income of $259,000. The company had net income of $ 321,000, or $0.07 per basic and diluted share, an increase of 23.9 % compared to net income of $ 259,000, or $0.06 per basic and diluted share in the same period for 2004. The company accrued taxes in the 2005 third fiscal quarter, of $118,000 compared to no taxes in the 2004 third fiscal quarter. The Company utilized its available Federal and State net operating tax loss carry forward benefit in 2004 to offset its tax expense. The Federal portion of the net operating loss carry forward was fully used up in the first six months of 2005 and accordingly, the Company began accruing taxes in the third quarter of 2005.
For the nine months ended September 30, 2005, Wireless Xcessories Group had revenue of $16,083,000, an increase of 44.5% compared to revenue of $11,131,000 for the same period in 2004. The company had pre-tax income for the first nine months of 2005 of $1,723,000, an increase of 159.1% compared to $665,000 for the same period in 2004. The company had net income of $1,605,000, or $0.36 per basic share ($0.35 per diluted share), an increase of 141.4% compared to net income of $665,000, or $0.14 per basic and diluted share, for the first nine months of fiscal 2004. The 2005 results include $118,000 of income tax expense. The company had utilized the net operating loss carry forwards that it had available to it in the first six months of 2005. Accordingly, the Company began accruing income taxes in the third quarter of 2005.
"The investments that we made in both the second and third quarters have allowed us to capitalize on new products such as the IPOD, MP3, and PDA and has provided us with the ability to distribute phones," said Steve Rade, CEO of Wireless Xcessories. "The sale of new phones has allowed us to penetrate new customers, and has made us even more valuable to our regular customer base. We are also beginning to see results from our sales force, which we expanded to 30 sales people during the quarter. These new initiatives helped us to overcome the loss of approximately $465,000 in revenue from our largest customer, who began to import directly from China and higher freight costs, which we expect to decline in the fourth quarter."
"Our new sales activities have allowed us to capture new customers," continued Mr. Rade. "Recently, we announced that we had signed accessory supply agreements with four large wireless multi store retailers and franchising groups, with over 400 store locations combined. These groups will sell the Company's electronic and cellular accessories throughout the U.S., and expect to double their number of retail locations within the next 24 months. In addition to the increase in our direct sales activities, we continue to expand our online presence through our IndustrialStrengthCellular.com website. We signed a joint marketing and distribution agreement where we will offer InPhonic's services to 1,000 of our private label website affiliates. This will allow these affiliates to provide their customers with the opportunity to activate cell phone services on any of the nation's largest wireless carriers. InPhonic has also agreed to make Wireless Xcessories Group a preferred accessory supplier, charged with creating accessory marketing programs for InPhonic's customers. We believe that the combination of new and exciting accessories, combined with expanded marketing activities, positions us well for the future."
Business Outlook
The Company plans for the balance of 2005 to focus on expanding the variety of phone brands it sells and the addition of entertainment accessories like MP3 players. In addition, gross margins are expected to increase as a result of the Company's increased sales of its core product lines. The Company has updated its fourth quarter and full-year forecast. For the fourth quarter ending Dec. 31, 2005, the Company expects revenue of between $5.3 million and $5.6 million, generating net income of approximately $315,000 to $435,000 resulting in diluted EPS of $0.07 to $0.09. For the full year ended December 31, 2005, the Company expects revenue of $21,383,000 to $21,683,000 and net income of $1,920,000 to $2,040,000, or $0.42 to $0.44 per diluted share. This outlook assumes that the Company will continue to accrue income tax at normal rates. Previously, the Company expected to report 2005 full year net income of $0.51 to $0.54 per diluted share.
The Company's executives will host a conference call at 4:30 pm eastern time today to discuss financial results and the business outlook. Interested participants should call (877) 559-4661 when calling within the United States or (706) 758-9580 when calling internationally. Please reference Conference I.D. Number 2040940. There will be a playback available, beginning at 10 pm eastern time today, until midnight, December 2, 2005. To listen to the playback, please call (800) 642-1687 when calling within the United States or (706) 645-9291 when calling internationally. Please use pass code 2040940 for the replay. This call is being webcast and can be accessed at Wireless Xcessories Groups's Web site at www.wirexgroup.com until December 2, 2005. The conference call can be found under the subheadings, "Investor Relations" and then "Calendar".
Wireless Xcessories Group, Inc. designs and distributes a range of accessories for cellular phones throughout the United States and Canada. The Company offers in excess of 4,000 items that include rechargeable batteries, personal and vehicle hands free kits, portable and vehicle antennas, in-car and travel chargers, and plain and colored carrying cases. The Company sells to dealers and distributors through an in-house sales force and directly from its website, www.wirexgroup.com. Wireless Xcessories also creates customized e- commerce websites, Industrial Cellular Strength.com, for its dealers and produces 2 product line catalogs that are circulated nationally and internationally. This press release contains forward-looking statements; Actual results may differ materially from the forward-looking statements. All such statements may involve risk and uncertainties, including without limitation, whether the new product lines will have a positive impact on sales and profits, as well as any other assertions and risks detailed in the Wireless Xcessories Group, Inc. filings and reports with the Securities and Exchange Commission. Such statements are only predictions and actual events or results may differ.