MINNEAPOLIS, Aug. 9 /PRNewswire-FirstCall/ -- XATA Corporation , the leader in onboard fleet management systems for private fleet transportation, announced today that its 3rd quarter revenue of $7.4 million increased 52 percent compared to $4.9 million in the same period in fiscal 2005. Deferred revenue also increased 71 percent to $13.0 million at the end of the third quarter of fiscal 2006 compared to $7.6 million at the end of the third quarter of fiscal 2005.

For the nine months ended June 30, 2006, net sales increased approximately 62 percent to a record $22.3 million, compared to $13.7 million in the same period of fiscal 2005.

The growth in net sales and deferred revenue was primarily attributed to increased demand for XATANET, XATA's on-demand hosted fleet management system that helps fleets reduce fuel consumption, improve driver productivity and automate compliance reporting.

"We are pleased that the 3rd quarter of 2006 continues a trend of year-over-year revenue growth for the company with over 460 companies now on XATANET and approximately 52,000 trucks embracing our technology to help manage escalating fuel costs and improve customer service," stated Craig Fawcett, XATA Chairman and CEO. "We intend to stay focused on the expansion of our sales and customer support organizations as strong demand for our innovative solutions continues and the benefits from shifting our business model to a subscription-based platform accelerate."

"With our business beginning to scale and generating increasingly predictable cash flows, we are pleased to announce that this quarter marks our third consecutive quarter of year-over-year improvement in our operating results," stated Mark Ties, XATA Chief Financial Officer. "We continue to focus on rapid growth while closely monitoring costs. As a result, total costs and expenses have decreased on a year-over-year basis, 14 basis points and 21 basis points, respectively, for the quarter and nine months end June 30, 2006."

"Furthermore, XATA's overall financial condition remains strong as the Company generated approximately $2.9 million in cash in the third quarter and now has approximately $8.3 million in cash and cash equivalents," continued Mr. Ties.

Sales of XATANET increased to 57 percent of total net sales for the third quarter of fiscal 2006, compared to 31 percent for the third quarter of fiscal 2005. XATANET system sales amounted to 48 percent of total net sales for the nine months ended June 30, 2006. Sales of the Company's OpCenter systems were consistent with fiscal 2005 results on a year over year basis.

Costs of sales for the third quarter of fiscal 2006 were $4.4 million, compared to $2.5 million for the third quarter of fiscal 2005. The increase of $1.9 million was primarily due to an increase in XATANET system sales. Gross margins on new XATANET system sales continue to improve as cost initiatives take hold, although margin activity over the next couple of quarters will fluctuate as transactions from fiscal 2005 are recognized as part of our accounting for deferred revenue.

Research and development costs were $0.9 million for the third quarter of fiscal 2006, consistent with same period of fiscal 2005. For the nine months ended June 30, 2006 and June 30, 2005 these same costs totaled $2.5 million and $3.0 million, respectively. The decrease of $0.5 million was due to the capitalization of software development costs for projects that have reached technological feasibility.

Selling, general and administrative costs for the third quarter of fiscal 2006 were $2.8 million, compared to $2.6 million for the third quarter of fiscal 2005. The increase of $0.2 million was primarily due to costs incurred associated with the expansion of the Company's direct sales force. For the nine months ended June 30, 2006 and June 30, 2005 these same costs totaled $8.5 million and $7.1 million, respectively.

About XATA

A pioneer in onboard fleet management solutions since 1985, XATA revolutionized the trucking industry by being the first to introduce paperless driver logs, exception-based reporting and dynamically updated fleet standards. Today, XATA continues to lead the industry by seamlessly combining global positioning, wireless communication and fleet management software to help companies optimize the efficiency of their fleets. The Company's proven solutions enable its customers to reduce fuel costs, increase productivity, improve safety and enhance customer service. Today, XATA systems increase the productivity in approximately 52,000 trucks at over 1,700 distribution centers across North America. For more information, visit http://www.xata.com/ or call 1-800-745-9282.

This announcement includes forward-looking statements based on current expectations. Actual results may differ materially. These forward-looking statements involve a number of risks and uncertainties including, but not limited to, the possibility of continuing operating losses, the ability to adapt to rapid technological change, dependence on positioning systems and communication networks owned and controlled by others, the receipt and fulfillment of new orders for current products, the timely introduction and market acceptance of new products, the ability to fund future research and development activities, and the ability to establish and maintain strategic partner relationships.

XATA CORPORATION CONDENSED BALANCE SHEETS (Amounts in thousands) (UNAUDITED) June 30, September 30, 2006 2005 Current assets Cash and cash equivalents $8,270 $6,473 Accounts receivable, net 4,844 7,812 Inventories 1,695 1,257 Deferred product costs 3,706 4,671 Prepaid expenses 343 204 Total current assets 18,858 20,417 Equipment and leasehold improvements, net 2,282 1,085 Deferred product costs, non-current 2,163 1,002 Total assets $23,303 $22,504 Current liabilities Bank line of credit $- $1,800 Note and capital lease obligations 113 - Accounts payable 2,513 2,387 Accrued liabilities 2,461 2,171 Deferred revenue 6,730 7,774 Total current liabilities 11,817 14,132 Note and capital lease obligations, non-current 91 - Deferred revenue, non-current 6,276 3,335 Total liabilities 18,184 17,467 Shareholders' equity Common stock 23,213 21,534 Preferred stock 9,424 9,105 Accumulated deficit (27,518) (25,602) Total shareholders' equity 5,119 5,037 Total liabilities and shareholders' equity $23,303 $22,504 XATA CORPORATION CONDENSED STATEMENTS OF OPERATIONS (Amounts in thousands, except per share amounts) (UNUADITED) Three Months Ended Nine Months Ended June 30, June 30, 2006 2005 2006 2005 Net sales $7,447 $4,865 $22,288 $13,719 Cost of sales 4,437 2,494 12,739 7,382 Selling, general and administrative 2,784 2,645 8,476 7,078 Research and development 880 854 2,447 2,987 Total costs and expenses 8,101 5,993 23,662 17,447 Loss from operations (654) (1,128) (1,374) (3,728) Interest and other income, net 95 29 129 85 Loss before income taxes (559) (1,099) (1,245) (3,643) Income tax expense - - - - Net loss (559) (1,099) (1,245) (3,643) Preferred stock dividends and deemed dividends (137) (101) (277) (293) Net loss to common shareholders ($696) ($1,200) ($1,522) ($3,936) Net loss per common share - basic and diluted Net loss to common shareholders ($0.09) ($0.17) ($0.21) ($0.55) Weighted average common and common share equivalents Basic & Diluted 7,539 7,262 7,415 7,188

CONTACT: Mark Ties, CFO of XATA Corporation, +1-952-707-5600,
mark.ties@xata.com

Web site: http://www.xata.com/