SOURCE: Proxim Wireless Corporation

March 04, 2008 16:00 ET

Proxim Wireless Reports Fourth Quarter and Full Fiscal Year 2007 Financial Results

SAN JOSE, CA--(Marketwire - March 4, 2008) - Proxim Wireless Corporation (NASDAQ: PRXM), a leader in core-to-client solutions for wireless networks, today released financial results for the fourth quarter and full fiscal year ended December 31, 2007.

Revenues for the fourth quarter were $14.6 million, compared to $16.9 million for the quarter ended September 30, 2007 and $17.7 million for the quarter ended December 31, 2006.

In the fourth quarter ended December 31, 2007, the company recorded an impairment charge of $10.6 million, which consisted of a $2.5 million charge for excess and obsolete inventory and an $8.1 million charge for impairment of goodwill.

Including the inventory charge, gross margins for the quarter ended December 31, 2007 were 32.9%, compared with 49.0% in the quarter ended September 30, 2007 and 46.4% in the quarter ended December 31, 2006. Excluding the inventory charge, gross margins for the quarter ended December 31, 2007 were 49.8%.

Net loss on a GAAP basis for the quarter ending December 31, 2007 was $13.0 million, or $0.52 per share, compared with $2.7 million, or $0.11 per share, for the quarter ended September 30, 2007 and $2.0 million, or $0.09 per share, for the quarter ended December 31, 2006. Net loss on a non-GAAP basis, which excludes the inventory charge, discontinued operations, depreciation of fixed assets, amortization of intangible assets, and stock based compensation, was $1.2 million, or $0.05 per share.

"Revenues are lower primarily due to disappointing sales results in the Americas," said Pankaj Manglik, president and chief executive officer of Proxim Wireless. "We have taken actions to address this, including appointing a seasoned Proxim Sales executive, Lionel Chmilewsky, to head worldwide sales and re-invigorating our US sales channels. Despite the lower revenue in the quarter, gross margins reached the highest we've seen in the last two years, adjusted for the inventory charge, and we were able to improve cash from operations -- a testament to the improvements we have made to our cost structure. Now, as the new CEO of Proxim Wireless, my priority is to turn my focus from operational successes to generating revenue growth with Proxim's complete core-to-client product portfolio."

For fiscal year 2007, Proxim reported revenue of $66.3 million, net loss on a GAAP basis of $19.1 million, or $0.82 per share.

Highlights of recent press announcements include:

--  Introduction of a new product extending QuickBridge line: the
    QuickBridge 60250
    
--  Announcement of Proxim's unit leadership in EMEA and ROW geographies
    in the Dell'Oro Group's Wi-Fi mesh market share report for the third
    quarter of 2007
    
--  Proxim Wireless won Frost & Sullivan's 2008 Award for Innovation of
    the Year for its MeshMax product line
    
--  Announcement of deployment of  a wireless system using Proxim's
    equipment for social inclusion in the county of Renfrewshire in Scotland
    
--  Announcement that Proxim supplied broadband wireless equipment for the
    50th running of the Daytona 500
    

Conference Call Information

Proxim Wireless will host a conference call to discuss the release, financial results, and related developments at the company today, Tuesday, March 4, 2008, starting at 5:00 P.M., Eastern Standard Time. The discussion may include forward-looking information.

To participate in this conference call, please dial 877-852-6578 (or +1 719-325-4842 for international callers), confirmation code 8227547 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 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 8227547 for all callers, and over the Internet for approximately 90 days at Proxim's website at http://www.proxim.com.

About Proxim Wireless

Proxim Wireless Corporation (NASDAQ: PRXM) is a leader in core-to-client solutions for broadband wireless networks. Our systems enable a variety of wireless applications including security and surveillance, VoIP, last mile access, enterprise LAN and Point to Point backhaul. 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 408-542-5303.

Use of Non-GAAP Financial Information

To supplement Proxim Wireless' condensed consolidated financial statements presented in accordance with GAAP, Proxim uses certain measures of financial performance that are non-GAAP financial measures within the meaning of Regulation G promulgated by the Securities and Exchange Commission. These non-GAAP measures may include gross margin, net income (loss), and net income (loss) per share data that are adjusted from results based on GAAP to exclude certain expenses, gains, and losses. These non-GAAP measures are provided to enhance investors' overall understanding of Proxim's current financial performance and Proxim's prospects for the future. Specifically, Proxim believes the non-GAAP measures provide useful information to both management and investors by excluding certain expenses that may not be indicative of its core operating results. These measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for, or superior to, GAAP results. These non-GAAP measures included in this press release have been reconciled to the GAAP results in the attached tables.

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 Wireless' 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; our ability to increase our sales in the Americas and elsewhere; 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
                  (In thousands, except share data)


                                                        December  December
                                                           31,       31,
                                                          2007      2006
                                                        --------  --------
                                                      (unaudited)
Assets
Current assets:
  Cash and cash equivalents                             $  6,329  $ 10,290
  Investment securities - available-for-sale                           168
  Accounts receivable, net                                10,010     5,539
  Inventory                                                7,154    10,142
  Prepaid expenses                                         1,029     1,246
                                                        --------  --------
    Total current assets                                  24,522    27,385

Property and equipment, net                                2,542     2,660
Other Assets:
  Restricted cash                                             76        76
  Goodwill                                                     -     7,922
  Intangible assets, net                                   9,015    11,545
  Deposits and prepaid expenses                              255       287
                                                        --------  --------
    Total other assets                                     9,346    19,830
                                                        --------  --------
    Total assets                                        $ 36,410  $ 49,875
                                                        ========  ========

Liabilities and Stockholders' Equity
Current liabilities:
  Accounts payable and accrued expenses                 $ 12,985  $ 13,887
  Deferred revenue                                         4,001     2,198
  License agreement payable - current maturities           1,064       868
                                                        --------  --------
    Total current liabilities                             18,050    16,953

License agreement payable, net of current maturities       1,023     2,088
                                                        --------  --------
    Total liabilities                                     19,073    19,041

Commitments and contingencies

Stockholders' Equity
  Preferred stock, $0.01 par value; authorized 4,500,000,
   none issued at December 31, 2007 and December 31, 2006
  Common stock, $0.01 par value, 100,000,000 shares
   authorized, 23,519,069 issued and outstanding
   December, 2007, and 21,552,572 issued and
   outstanding at December 31, 2006                          235       216
  Additional paid-in capital                              63,451    57,976
  Retained earnings  (accumulated deficit)               (46,349)  (27,285)
  Accumulated other comprehensive income:
    Net unrealized gain (loss) on available-for-sale
     securities                                                        (73)
                                                        --------  --------

    Total stockholders' equity                            17,337    30,834
                                                        --------  --------

    Total liabilities and stockholders' equity          $ 36,410  $ 49,875
                                                        ========  ========


                     PROXIM WIRELESS CORPORATION
                CONSOLIDATED STATEMENTS OF OPERATIONS
                (In thousands, except per share data)
                            (Unaudited)


                              Three Months              Twelve Months
                                  Ended                     Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                            2007         2006         2007         2006
                        -----------  -----------  -----------  -----------
Revenues                $    14,588  $    17,701  $    66,280  $    72,707

Cost of goods sold            7,321        9,481       34,844       40,560

Restructuring provision
 for E&O inventory            2,467                     2,467        1,502
                        -----------  -----------  -----------  -----------

  Gross profit                4,800        8,220       28,969       30,645

Operating expenses:
  Selling costs               5,019        4,512       20,152       17,668
  Restructuring Charges       8,142                     8,233        8,990
  General and
   administrative             3,443        2,258       12,298       11,616
  Research and
   development                1,359        2,961        8,313       14,151
                        -----------  -----------  -----------  -----------

    Total operating
     expenses                17,963        9,731       48,996       52,425
                        -----------  -----------  -----------  -----------

Operating loss              (13,163)      (1,511)     (20,027)     (21,780)

Other income
 (expenses):
  Interest income                47           65          208          177
  Interest expense              (28)         (39)        (126)         153
  Other income (loss)           105           (4)       2,708
  Gain (loss) on sale of
   assets                                                  23          203
                        -----------  -----------  -----------  -----------
    Total other income
     (expenses)                 124           22        2,813          533
                        -----------  -----------  -----------  -----------

Income (loss) before
 income taxes               (13,039)      (1,489)     (17,214)     (21,247)
  Provision for (Benefit
   from) income taxes            58           26          183           68
                        -----------  -----------  -----------  -----------

Net income (loss) from
 continuing operation   $   (13,097) $    (1,515) $   (17,397) $   (21,315)
                        -----------  -----------  -----------  -----------

Income (loss)  from
 discontinued
 operations             $        94  $      (516) $    (1,667) $    (1,848)
                        -----------  -----------  -----------  -----------

Net Income (loss)       $   (13,003) $    (2,031) $   (19,064) $   (23,163)

Weighted average number
 of shares - basic and
 diluted used in
 computing net earnings
 (loss) per share            25,169       21,523       23,278       21,548
                        ===========  ===========  ===========  ===========

Basic and diluted net
 earnings (loss) per
 share:
                        ===========  ===========  ===========  ===========
  Continuing operations $     (0.52) $     (0.07) $     (0.75) $     (0.99)
                        ===========  ===========  ===========  ===========
  Discontinued
   operations           $     (0.00) $     (0.02) $     (0.07) $     (0.09)
                        ===========  ===========  ===========  ===========

    Total               $     (0.52) $     (0.09) $     (0.82) $     (1.08)
                        ===========  ===========  ===========  ===========



                                          Three Months Ended
                                          December 31, 2007
                             --------------------------------------------
                               GAAP          Adjustments       Non-GAAP
                             ---------      -------------  --------------
Revenues                     $  14,588      $              $       14,588

                                                  (145)(a)

Cost of goods sold               7,321            (162)(c)          7,014

Restructuring provision for
 E&O inventory                   2,467          (2,467)(d)
                             ---------      -----------------------------

  Gross profit                   4,800              2,774           7,574

Operating expenses:
                                                    (9)(a)
  Selling costs                  5,019             (27)(c)          4,983

  Restructuring Charges          8,142          (8,142)(d)              -
                                                   (94)(a)
                                                  (527)(b)
  General and administrative     3,443             (63)(c)          2,759
  Research and development                         (16)(a)
                                                   (95)(b)
                                 1,359             (48)(c)          1,200
                             ---------      -----------------------------
    Total operating expenses    17,963              9,021           8,942
                             ---------      -----------------------------

Operating profit (loss)        (13,163)            11,795          (1,368)

Other income (expenses):

  Interest income                   47                                 47

  Interest expense                 (28)                               (28)

  Other income (loss)              105                                105

  Gain (loss) on sale of
   assets
                             ---------      -----------------------------

    Total other income
     (expenses)                    124                                124
                             ---------      -----------------------------

Income (loss) before income
 taxes                         (13,039)            11,795          (1,244)
  Provision for (benefit
   from) income taxes               58                                 58
                             ---------      -----------------------------

Net income (loss) from
 continuing operation        $ (13,097)             11,795       $ (1,302)
                             ---------      -----------------------------

Income (loss) from
 discontinued operations     $      94                           $     94
                             ---------      -----------------------------

Net Income (loss)            $ (13,003)             11,795       $ (1,208)

Weighted average number of
 shares - basic and diluted
 used in computing net
 earnings (loss) per share      25,169                             25,169
                             =========      =============================

Basic net earnings (loss)
 per share:
                             =========      =============================
  Continuing operations      $   (0.52)     $                    $  (0.05)
                             =========      =============================
  Discontinued operations    $    (0.0)     $                    $   (0.0)
                             =========      =============================

    Total                    $   (0.52)     $                    $  (0.05)



                                           Three Months Ended
                                           September 30, 2007
                             ---------------------------------------------
                               GAAP         Adjustments           Non-GAAP
                             ------------------------------      ---------
Revenues                     $ 16,902                             $ 16,902
                                                   (145)(a)
Cost of goods sold              8,616              (170)(c)          8,301

Restructuring provision for
 E&O inventory
                             ------------------------------      ---------
  Gross profit                  8,286                  315           8,601

Operating expenses:

  Selling costs                 5,385        (7)(a)(149)(c)          5,229

  Restructuring Charges
                                            (97)(a)(528)(b)
  General and administrative    2,964              (118)(c)          2,221

                                                   (117)(a)
  Research and development      1,602               (51)(c)          1,434
                             ------------------------------      ---------

    Total operating expenses    9,951               (1,067)          8,884
                             ------------------------------      ---------

Operating profit (loss)        (1,665)               1,382            (283)

Other income (expenses):

  Interest income                  89                                   89

  Interest expense                (29)                                 (29)

  Other income (loss)               4                                    4

  Gain (loss) on sale of
   assets
                             ------------------------------      ---------

    Total other income
     (expenses)                    64                                   64
                             ------------------------------      ---------

Income (loss) before income
 taxes                         (1,601)               1,382            (219)
  Provision for (benefit
   from) income taxes              57                                   57
                             ------------------------------      ---------
Net income (loss) from
 continuing operation        $ (1,658)               1,382        $   (276)
                             ------------------------------      ---------

Income (loss) from
 discontinued operations     $ (1,078)                            $ (1,078)
                             ------------------------------      ---------

Net Income (loss)            $ (2,736)               1,382        $ (1,354)

Weighted average number of
 shares - basic and diluted
 used in computing net
 earnings (loss) per share     25,241                               25,241
                             ==============================      =========
Basic net earnings (loss)
 per share:
                             ==============================      =========
  Continuing operations      $  (0.07)                            $  (0.01)
                             ==============================      =========
  Discontinued operations    $  (0.04)                            $  (0.04)
                             ==============================      =========

    Total                    $  (0.11)                            $  (0.05)


(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:
    Proxim Wireless
    Brian Sereda
    Chief Financial Officer
    (408) 542-5303