Proxim Corporation Reports First Quarter 2005 Financial Results
SUNNYVALE, Calif., May 11 /PRNewswire-FirstCall/ -- Proxim
Corporation (NASDAQ:PROX), a provider of wireless networking
equipment for Wi-Fi and broadband wireless, today announced
unaudited financial results for the first quarter ended April 1,
2005. Revenue for the first quarter of 2005 was $25.4 million. This
compares with revenue of $24.1 million in the fourth quarter of
2004, and $26.7 million for the first quarter of 2004. The net loss
attributable to common stockholders computed in accordance with
generally accepted accounting principles (GAAP) for the first
quarter of 2005 was $(7.8) million, or $(0.24) per common share.
This compares with a GAAP net loss of $( 67.7) million, or $(2.69)
per common share, in the preceding fourth quarter of 2004 and with
a GAAP net loss of $(17.5) million, or $(1.42) per common share, in
the first quarter of 2004. The non-GAAP, or pro-forma net loss in
the first quarter of 2005 was $(4.5) million, or $(0.14) per common
share, compared to a pro-forma net loss of $(7.6) million, or
$(0.30) per common share, in the fourth quarter of 2004, and a
pro-forma net loss of $(5.1) million, or $(0.41) per common share,
in the first quarter of 2004. A detailed and specific
reconciliation of the differences between the GAAP net loss and
pro-forma net loss is included in the accompanying financial table.
On January 27, 2005, the Company announced that it engaged Bear,
Stearns & Co. to explore strategic alternatives for the
Company, including capital raising and merger opportunities. The
Company remains actively engaged with Bear, Stearns & Co. and
is currently in discussions with a potential third party purchaser.
There can be no assurance that a transaction will occur and, if a
transaction occurred, there can be no assurance that any
consideration available to the holders of the Company's Class A
common stock (Common Stock) would approach the current market
trading value of the Company's Common Stock given, among other
factors, the preferences held by senior equity and debt holders.
The Company has an immediate need for additional financing. If the
Company were not able to enter into an agreement with a third party
purchaser or able to obtain sufficient financing in the second
quarter of 2005, it would be required to seek protection under
applicable bankruptcy laws. About Proxim Proxim Corporation designs
and sells wireless networking equipment for Wi-Fi and broadband
wireless networks. The company is providing its enterprise and
service provider customers with wireless solutions for the mobile
enterprise, security and surveillance, last mile access, voice and
data backhaul, public hot spots, and metropolitan area networks.
This press release and more information about Proxim can be found
on the Web at http://www.proxim.com/. Safe Harbor This press
release contains forward-looking statements as that term is defined
in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include the Company's expectation
regarding the exploration of strategic alternatives, and are
subject to risks and uncertainties that could cause actual results
to differ materially. These risks and uncertainties include, but
are not limited to: Proxim not successfully exploring or
consummating strategic alternatives due to due diligence,
competition, product performance, product pricing, product supply,
liquidity constraints or other issues and other risks and
uncertainties associated with Proxim's business. For additional
information regarding risks relating to Proxim's business, see
Proxim Corporation's Form 10-K for the year ended December 31, 2004
and current reports on Form 8-K, and other relevant materials filed
by Proxim with the Securities and Exchange Commission. Proxim
assumes no obligation and does not intend to update these
forward-looking statements. Use of Pro Forma Financial Information
To supplement our consolidated financial statements presented on a
GAAP basis, Proxim uses non-GAAP, or pro forma, measures of
operating results, net income/loss and income/loss per share, which
are adjusted to exclude certain costs, expenses, gains and losses
that we believe are useful to enhance the overall understanding of
our financial performance. These adjustments to our GAAP results
are made with the intent of providing both management and investors
a supplemental understanding of Proxim's underlying operational
results and trends. Adjusted pro forma results are among the
primary indicators management uses as a basis for planning and
forecasting our business. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for Proxim's financial results prepared in accordance
with generally accepted accounting principles in the United States.
Proxim Corporation Condensed Consolidated Balance Sheets (in
thousands) (Unaudited) April 1, December 31, 2005 2004 Assets
Current assets: Cash and cash equivalents $12,117 $16,003 Accounts
receivable, net 5,522 6,050 Inventory 10,470 13,020 Other current
assets 2,507 2,238 Total current assets 30,616 37,311 Property and
equipment, net 5,407 5,981 Goodwill and other intangible assets,
net 18,953 19,910 Restricted cash -- 20 Other assets 385 385 Total
assets $55,361 $63,607 Liabilities and Stockholders' Deficit
Current liabilities: Short-term bank loan, secured $-- $3,000
Accounts payable 6,469 8,440 Capital lease obligations, current 619
893 Accrued royalties and interest, current 11,559 11,808 Other
accrued liabilities 20,490 20,017 Convertible bridge notes 10,000
10,000 Total current liabilities 49,137 54,158 Capital lease
obligations, long-term 14 49 Accrued royalties, long-term 4,401
6,579 Long-term debt 101 101 Restructuring accruals, long-term
6,444 6,977 Common stock warrants 151 -- Series C mandatorily
redeemable preferred stock 41,559 40,671 Total liabilities 101,807
108,535 Stockholders' deficit: Capital stock 459,322 453,087
Accumulated deficit (505,239) (497,486) Notes receivable from
stockholders (529) (529) Total stockholders' deficit (46,446)
(44,928) Liabilities and stockholders' deficit $55,361 $63,607
Proxim Corporation Condensed Consolidated Statements of Operations
(in thousands, except per share data) (Unaudited) Three Months
Ended April 1, April 2, 2005 2004 Revenue $25,375 $26,697 Cost of
revenue 17,188 17,377 Royalty charges -- 828 Gross profit 8,187
8,492 Operating expenses: Research and development 4,709 4,554
Selling, general and administrative 10,311 11,721 Legal expense for
certain litigation 54 745 Amortization of intangible assets 957
5,364 Amortization of deferred stock compensation 229 --
Restructuring charges 410 2,167 Loss from operations (8,483)
(16,059) Interest expense (1,446) (2,716) Other income, net 2,176
2,208 Loss before income taxes (7,753) (16,567) Income tax benefit
-- (745) Net loss (7,753) (15,822) Accretion of Series A preferred
stock obligations -- (1,658) Net loss attributable to common
stockholders - basic and diluted $(7,753) $(17,480) Net loss per
share - basic and diluted $(0.24) $(1.42) Weighted average common
shares 31,684 12,318 As a percentage of revenue: Gross margin 32.3%
31.8% Research and development expense 18.6% 17.1% Selling, general
and administrative expense 40.6% 43.9% Proxim Corporation Pro Forma
Condensed Consolidated Statements of Operations (in thousands,
except per share data) (Unaudited) Three Months Ended April 1,
April 2, 2005 2004 Revenue $25,375 $26,697 Cost of revenue 17,188
17,377 Gross profit 8,187 9,320 Operating expenses: Research and
development 4,709 4,554 Selling, general and administrative 10,311
11,721 Legal expense for certain litigation 54 745 Loss from
operations (6,887) (7,700) Interest expense (38) (83) Loss before
income taxes (6,925) (7,783) Income tax benefit (2,424) (2,724) Net
loss $(4,501) $(5,059) Net loss per share - basic and diluted
$(0.14) $(0.41) Weighted average common shares 31,684 12,318 As a
percentage of revenue: Gross margin 32.3% 34.9% Research and
development expense 18.6% 17.1% Selling, general and administrative
expense 40.6% 43.9% Proxim Corporation GAAP to Pro Forma Net Loss
Reconciliation (in thousands) (Unaudited) Three Months Ended April
1, April 2, 2005 2004 GAAP net loss $(7,753) $(17,480) Royalty
charges and interest 124 913 Amortization of intangible assets 957
5,364 Amortization of deferred stock compensation 229 --
Restructuring charges 410 2,167 Interest on convertible promissory
notes -- 2,548 Amortization of debt discount and issuance costs --
2,892 Interest on bridge notes 396 -- Revaluation of common stock
warrants (2,176) (5,100) Income tax benefit 2,424 1,979 Accretion
of Series A preferred stock obligations -- 1,658 Accretion of
Series C preferred stock obligations 888 -- Pro forma net loss
$(4,501) $(5,059) Use of Pro Forma Financial Information To
supplement our consolidated financial statements presented on a
GAAP basis, Proxim uses non-GAAP, or pro forma, measures of
operating results, net income/loss and income/loss per share, which
are adjusted to exclude certain costs, expenses, gains and losses
that we believe are useful to enhance the overall understanding of
our financial performance. These adjustments to our GAAP results
are made with the intent of providing both management and investors
a supplemental understanding of Proxim's underlying operational
results and trends. Adjusted pro forma results are among the
primary indicators management uses as a basis for planning and
forecasting our business. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for Proxim's financial results prepared in accordance
with generally accepted accounting principles in the United States
of America. DATASOURCE: Proxim Corporation CONTACT: Susan Trout of
Proxim Corporation, +1-408-542-5366, or Web site:
http://www.proxim.com/
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