SOURCE: Proxim Wireless

November 06, 2007 16:00 ET

Proxim Wireless Announces Third Quarter 2007 Financial Results

Improved Operating Performance Demonstrates Progress Toward Stated Objectives

SAN JOSE, CA--(Marketwire - November 6, 2007) - Proxim Wireless (NASDAQ: PRXM), a leader in core-to-client solutions for broadband municipal wireless networks, today announced its financial results for the third quarter ended September 30, 2007.

Achievements during the third quarter of 2007 include:

--  Achieved stated goal of reducing operating expenses by over $1 million
    sequentially including the effects of discontinued operations.
--  Re-branded under the Proxim Wireless name and PRXM stock ticker.
--  Reported gross margins of approximately 49.0% -- a sequential
    improvement of 4.6%.
--  Divested Ricochet Networks to focus on core-to-client broadband
    wireless equipment business.
--  Reached 10,000 unit milestone with a major customer.
    

Revenue for the third fiscal quarter ended September 30, 2007 was $16.9 million, net of Ricochet discontinued operations, a decrease of approximately 7% from $18.1 million, also net of the Ricochet discontinued operations, for the prior quarter ended June 30, 2007 and a decrease on a like basis of approximately 2% from the revenue of $17.3 million for the third quarter of fiscal 2006.

Gross margins for the quarter ended September 30, 2007 were 49.0%, an improvement of 3.5% from 45.5% in the quarter ended June 30, 2007 (calculated on a GAAP basis). The gross margin on a like basis was 37.5% in the quarter ended September 30, 2006 and was impacted by an inventory impairment charge.

On a GAAP basis, net loss for the quarter ended September 30, 2007 was $2.7 million, or $0.11 per share, compared with a loss of $339,000, or $0.02 per share, in the prior quarter ended June 30, 2007, and a net loss of $13.7 million, or $0.63 per share, in the third quarter of 2006. The GAAP net loss for the quarter ended September 30, 2007 includes the impact of a $1.1 million net loss from discontinued operations. The third quarter 2006 net loss included non-cash charges totaling approximately $10.4 million (approximately $0.48 per share-diluted), consisting of an inventory reserve of approximately $1.5 million and an impairment charge related to intangible assets of approximately $8.9 million.

Net loss from continuing operations on a non-GAAP basis, which excludes discontinued operations, depreciation of fixed assets, amortization of intangible assets, and stock based compensation, was $276,000, or $0.01 per share.

"We made substantial progress towards our stated objectives during the quarter and continue to demonstrate improved operating results," said Robert Fitzgerald, Proxim's Chief Executive Officer. "These results -- more than $1 million in operating expense reductions compared with the prior quarter and the improvement in gross margins -- were driven by our ability to execute on our goals. In addition, we increased our focus on our core-to-client wireless broadband business by divesting Ricochet Networks and re-branding the company with a strong, respected name in wireless networking. With these improvements and our increased focus on the expanding municipal wireless networks market, we believe we are on the right track towards continued operating results improvement and reaching profitability."

Conference Call Information

Proxim Wireless will host a conference call to discuss this release, financial results, developments at the company, and other matters of interest to investors and others today, November 6, 2007 starting at 5:00 p.m. Eastern Time. The discussion may include forward-looking information.

To participate in this conference call, please dial 877-856-1961 (or +1-719-325-4765 for international callers), confirmation code 1725943 for all callers, at least ten minutes before the starting time. The conference call will also be broadcast live over the Internet. Investors and others are invited to visit Proxim's website at http://www.proxim.com/about/investor.html to access this broadcast. Replays will be available telephonically for approximately one week by dialing 888-203-1112 for domestic callers and +1-719-457-0820 for international callers, confirmation code 1725943 for all callers, and over the Internet for approximately 90 days at Proxim's website at http://www.proxim.com/about/investor.html.

About Proxim Wireless

Proxim Wireless Corporation (NASDAQ: PRXM) is a leader in core-to-client solutions for broadband municipal wireless networks. Our systems enable a variety of wireless applications including security and surveillance systems, mobile workforce automation and machine-to-machine communications. We have shipped more than 1.5 million wireless devices to more than 200,000 customers worldwide. Proxim is ISO-9001 certified. Information about Proxim can be found at www.proxim.com. For investor relations information, e-mail ir@proxim.com or call 408-731-2610.

Safe Harbor Statement

Statements in this press release that are not statements of historical facts are forward-looking statements that involve risks, uncertainties, and assumptions. Proxim's actual results may differ materially from the results anticipated in these forward-looking statements. The forward-looking statements involve risks and uncertainties that could contribute to such differences including those relating to and arising from the ongoing uncertainty in the telecommunications industry and larger economy; the intense competition in our industries and resulting impacts on our pricing, gross margins, and general financial performance; time and costs associated with developing and launching new products; uncertainty about market acceptance of products we introduce; potential long sales cycles for new products such that there may be extended periods of time before new products contribute positively to our financial results; decisions we may make to delay or discontinue efforts to develop and introduce certain new products; time, costs, political considerations, typical multitude of constituencies, and other factors involved in evaluating, equipping, installing, and operating municipal networks; difficulties or delays in developing and supplying new products with the contemplated or desired features, performance, compliances, certifications, cost, price, and other characteristics and at the times and in the quantities contemplated or desired; the difficulties in predicting Proxim's future financial performance; and the impacts and effects of any other strategic transactions Proxim may evaluate or consummate. Further information on these and other factors that could affect Proxim's actual results is and will be included in filings made by Proxim from time to time with the Securities and Exchange Commission and in its other public statements.

                        PROXIM WIRELESS CORPORATION
                        CONSOLIDATED BALANCE SHEETS
              US dollars in thousands (except per share data)
                                (unaudited)


                                                September 30, December 31,
                                                    2007          2006
                                                ------------  ------------
Assets                                          (unaudited)
Current assets:
 Cash and cash equivalents                      $     11,528  $     10,290
 Investment securities - available-for-sale                -           168
 Accounts receivable, net                              8,123         5,539
 Inventory                                             8,786        10,142
 Prepaid expenses                                      1,575         1,246
                                                ------------  ------------
  Total current assets                                30,012        27,385

Property and equipment, net                            2,557         2,660
Other Assets:
Restricted cash                                           76            76
Goodwill                                               7,923         7,922
Intangible assets, net                                 9,762        11,545
Deposits and prepaid expenses                            255           287
                                                ------------  ------------
  Total other assets                                  18,016        19,830
                                                ------------  ------------
  Total assets                                  $     50,585  $     49,875
                                                ============  ============
Liabilities and Stockholders’ Equity
Current liabilities:
 Accounts payable and accrued expenses          $     12,455  $     13,887
 Deferred revenue                                      1,920         2,198
 License agreement payable - current maturities        1,002           868
                                                ------------  ------------
  Total current liabilities                           15,377        16,953
License agreement payable, net of current
 maturities                                            1,307         2,088
                                                ------------  ------------
  Total liabilities                                   16,684        19,041
Commitments and contingencies
Stockholders’ Equity
Preferred stock, $0.01 par value; authorized
 4,500,000, none issued at September 30, 2007
 and December 31, 2006                                     -             -
Common stock, $0.01 par value, 100,000,000
 shares authorized, 25,854,369 issued and
 outstanding at September 30, 2007, and
 21,552,572 issued and outstanding at December
 31, 2006                                                258           216
Additional paid-in capital                            66,989        57,976
Retained earnings  (accumulated deficit)             (33,346)      (27,285)
Accumulated other comprehensive income:
 Net unrealized gain (loss) on
  available-for-sale securities                            -           (73)
                                                ------------  ------------
  Total stockholders’ equity                          33,901        30,834
                                                ------------  ------------
  Total liabilities and stockholders’ equity    $     50,585  $     49,875
                                                ============  ============




                        PROXIM WIRELESS CORPORATION
                  CONSOLIDATED STATEMENTS OF OPERATIONS
              US dollars in thousands (except per share data)
                                (unaudited)


                                    Three Months Ended  Nine Months Ended
                                      September 30,       September  30,
                                    ------------------  ------------------
                                      2007      2006      2007      2006
                                    --------  --------  --------  --------
Revenues                            $ 16,902  $ 17,321  $ 51,693  $ 55,006
Cost of goods sold                     8,616     9,317    27,524    31,079
Restructuring provision for E&O
 inventory                                       1,502               1,502
                                    --------  --------  --------  --------
  Gross profit                         8,286     6,502    24,169    22,425
Operating expenses:
  Selling costs                        5,385     5,041    15,134    13,156
  Restructuring Charges                          8,874        91     8,990
  General and administrative           2,964     2,981     8,855     9,358
  Research and development             1,602     2,729     6,954    11,190
                                    --------  --------  --------  --------
   Total operating expenses            9,951    19,625    31,034    42,694
                                    --------  --------  --------  --------
Operating loss                        (1,665)  (13,123)   (6,865)  (20,269)

Other income (expenses):
  Interest income                         89       102       161       303
  Interest expense                       (29)      (50)      (98)     (150)
  Other income (loss)                      4        10     2,604       157
  Gain (loss) on sale of assets                               23       155
                                    --------  --------  --------  --------
   Total other income (expenses)          64        62     2,690       465
                                    --------  --------  --------  --------
  Income (loss) before income taxes   (1,601)  (13,061)   (4,175)  (19,804)
  Benefit (provision) for income
   taxes                                  57        17       125       (42)
                                    --------  --------  --------  --------
Net income (loss) from continuing
 operation                          ($ 1,658) ($13,078) ($ 4,300) ($19,846)
                                    --------  --------  --------  --------
Income (loss)  from discontinued
 operations                         ($ 1,078) ($   585) ($ 1,760) ($ 1,286)
                                    --------  --------  --------  --------
Net Income (loss)                   ($ 2,736) ($13,663) ($ 6,060) ($21,132)
                                    ========  ========  ========  ========

  Weighted average number of shares
   - basic  and diluted used in
   computing net earnings (loss) per
   share                              25,241    21,541    22,703    21,515
                                    ========  ========  ========  ========
  Basic net earnings (loss) per
   share:
  Continuing operations             $  (0.07) $  (0.60) $  (0.19) $  (0.92)
  Discontinued  operations          $  (0.04) $  (0.03) $  (0.08) $  (0.06)
  Total                             $  (0.11) $  (0.63) $  (0.27) $  (0.98)
                                    ========  ========  ========  ========





                        PROXIM WIRELESS CORPORATION
      RECONCILIATION BETWEEN GAAP TO NON-GAAP STATEMENT OF INCOME(*)
            U.S. Dollars in thousands,  (except per share data)
                                (unaudited)


                         Three Months Ended         Three Months Ended
                     -------------------------- --------------------------
                         September 30, 2007          June 30, 2007
                               Adjust-                    Adjust-
                       GAAP     ments  Non GAAP   GAAP     ments   Non GAAP
                     -------- -------- -------- -------- -------- --------
Revenues             $ 16,902          $ 16,902 $ 18,116          $ 18,116
                              (145)(a)                   (143)(a)
Cost of goods sold      8,616 (170)(c)    8,301    9,867 (168)(c)    9,556
Restructuring
 provision for E&O
 inventory

 Gross profit           8,286      315    8,601    8,249      311    8,560
                     -------- -------- -------- -------- -------- --------
Operating expenses:
                                 (7)(a)                    (7)(a)
 Selling costs          5,385  (149)(c)   5,229    5,094 (162)(c)    4,925
 Restructuring
  Charges                                             91  (91)(d)

                                (97)(a)                  (108)(a)
 General and                   (528)(b)                  (521)(b)
  administrative        2,964  (118)(c)   2,221    2,884 (239)(c)    2,016
 Research and                  (117)(a)                  (114)(a)
  development           1,602   (51)(c)   1,434    2,622  (51)(c)    2,457
                     -------- -------- -------- -------- -------- --------
   Total operating
    expenses            9,951   (1,067)   8,884   10,691   (1,293)   9,398
                     -------- -------- -------- -------- -------- --------
Operating profit
 (loss)                (1,665)   1,382     (283)  (2,442)   1,604     (838)
Other income
 (expenses):
 Interest income           89                89       28                28
 Interest expense         (29)              (29)     (34)              (34)
 Other income (loss)        4                 4    2,576             2,576
 Gain (loss) on sale
  of assets
                     -------- -------- -------- -------- -------- --------
   Total other income
    (expenses)             64                64    2,570             2,570
                     -------- -------- -------- -------- -------- --------
 Income (loss) before
  income taxes         (1,601)   1,382     (219)     128    1,604    1,732
 Benefit (provision)
  for income taxes         57                57       45                45
                     -------- -------- -------- -------- -------- --------
Net income (loss)
 from continuing
 operation           ($ 1,658)   1,382 ($   276)$     83    1,604 $  1,687
                     -------- -------- -------- -------- -------- --------
Income (loss)  from
 discontinued
 operations          ($ 1,078)         ($ 1,078)($   422)         ($   422)
                     -------- -------- -------- -------- -------- --------
Net Income (loss)    ($ 2,736)   1,382 ($ 1,354)($   339)   1,604 $  1,265
                     ======== ======== ======== ======== ======== ========
 Weighted average
  number of shares -
  shares used in
  computing basic net
  earnings profit
  (loss) per share     25,241            25,241   21,554            21,554
 Basic net earnings
 (loss) per share:
 Continuing
  operations         $  (0.07)         $  (0.01) $ (0.00)         $   0.08
 Discontinued
  operations         $  (0.04)         $  (0.04) $ (0.02)         $  (0.02)
 Total               $  (0.11)         $  (0.05) $ (0.02)         $   0.06

 Weighted average
  number of shares -
  shares used in
  computing diluted
  net earnings profit
  (loss) per share     25,241            25,241   21,554            24,535

 Diluted net earnings
  (loss) per share:
 Continuing
  operations         $  (0.07)         $  (0.01) $ (0.00)         $   0.07
 Discontinued
  operations         $  (0.04)         $  (0.04) $ (0.02)         $  (0.02)
 Total               $  (0.11)         $  (0.05) $ (0.02)         $   0.05
                     --------          -------- --------          --------


(*) Results of the Ricochet Network unit were sold effective August 6,
2007, are classified as discontinued operations and are not included in the
results from continuing operations

    (a) The effect of depreciation of fixed assets
    (b) The effect of amortization of intangible assets
    (c) The effect of stock based compensation. The company adopted the
        provisions of Statement of Financial Accounting Standards
        No. 123(R), "Share-Based Payment" on January 1, 2006 using the
        modified-prospective transition method.
    (d) The effect of restructuring reserve

Contact Information

  • For Further Information Contact:
    Bert Williams
    VP, Marketing and Investor Relations
    (408) 731-2610
    bwilliams@proxim.com