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Proxim Wireless
Brian Sereda
Chief Financial Officer
(408) 542-5303
San Jose, CA, 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:
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.
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.
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.
Statements in this press release that are not statements of historical facts are forward-looking statements that involve risks, uncertainties, and assumptions. Our 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 difficulties in overcoming the network installation and operational challenges relating to any specific customer or geographical area; factors beyond our control such as weather, geographic, governmental, and interference issues; and difficulties or delays in supplying products with the features, performance, compliances, certifications, cost, price, and other characteristics desired by customers. Further information on these and other factors that could affect our actual results is and will be included in filings made by Proxim Wireless Corporation from time to time with the Securities and Exchange Commission and in our other public statements.
PROXIM WIRELESS CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
December 31, |
December 31, |
|||
2007 |
2006 |
|||
Assets |
(unaudited) |
|||
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 Ended December 31, |
Twelve Months Ended 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 |
Three Months Ended |
|||||||||||
December 31 , 2007 |
September 30, 2007 |
|||||||||||
GAAP |
Adjustments |
Non-GAAP |
GAAP |
Adjustments |
Non-GAAP |
|||||||
Revenues |
$ 14,588 |
$ |
$ 14,588 |
$ 16,902 |
|
$ 16,902 |
||||||
Cost of goods sold |
7,321 |
(145)(a) (162)(c) |
7,014 |
8,616 |
(145)(a) (170)(c) |
8,301 |
||||||
Restructuring provision for E&O inventory |
2,467 |
(2,467)(d) |
||||||||||
Gross profit |
4,800 |
2,774 |
7,574 |
8,286 |
315 |
8,601 |
||||||
Operating expenses: |
||||||||||||
Selling costs |
5,019 |
(9)(a) (27)(c) |
4,983 |
5,385 |
(7)(a) (149)( c) |
5,229 |
||||||