Financial: Proxim, Inc. Reports First Quarter 1999 Results - Company Financial Information

Edge: Work-Group Computing Report, April 26, 1999

Proxim, Inc. (NASDAQ:PROX) announced Monday its financial results for the first quarter ended March 31, 1999. Revenue for the first quarter of 1999 was $14,750,000 compared to revenue of $10,250,000 for the first quarter of 1998 and $14,659,000 for the fourth quarter of 1998. During the first quarter of 1999, the company took a $1,100,000 charge to research and development expense related to a minority investment in a startup company developing ultra-broadband wireless products.

During the fourth quarter of 1998, the company took a $1,000,000 charge to selling, general and administrative expense related to an investment in a startup wireless services company. Excluding the charges, pro forma net income for the first quarter of 1999 was $1,836,000, or $.15 per share (diluted), compared to net income of $866,000, or $.08 per share (diluted) for the first quarter of 1998, and pro forma net income of $2,007,000, or $.17 per share (diluted) for the fourth quarter of 1998. Including the charges, net income for the first quarter of 1999 was $736,000, or $.06 per share (diluted), compared to net income of $866,000, or $.08 per share (diluted) for the first quarter of 1998, and net income $1,007,000, or $.09 per share (diluted) for the fourth quarter of 1998. "The highlight of Q1 1999 for Proxim was the strong early momentum of our Symphony suite of cordless home networking products," said David C. King, Proxim's Chairman, President and CEO. "This momentum was reflected in both exceptionally favorable product reviews - a clean sweep of the four major home networking competitive awards given to date, including PC Magazine Editor's Choice and CNET Editor's choice - as well as strong sell-through in the limited retail and e-commerce distribution channels offering Symphony to date. The strength of Proxim's emerging home networking business and the continuing recovery of our commercial wireless LAN business in Japan served to offset the anticipated seasonal weakness of the Company's U.S. OEM channel, enabling us to achieve record revenues and sequential growth for the quarter." Headquartered in Mountain View, Calif., Proxim, Inc. is the world's leading supplier of spread spectrum wireless LAN products to OEMs and wireless solutions providers. Proxim was first to market with 2.4 GHz frequency hopping wireless LAN technology with its RangeLAN2 product family in 1994. Since that time, more than 50 wireless solution providers worldwide have selected RangeLAN2, including AMP, Casio, Data General, Fujitsu, HBO & Company, IBM, Intermec, LXE, Matsushita, Mitsubishi, Motorola, Sharp and Toshiba. In 1998, the Company introduced both its RangeLAN802 family of IEEE-compliant products and Symphony suite of cordless home networking products.

                         Proxim, Inc.
                    Statement of Operations
             (in thousands, except per share data)

                                           Three Months Ended
                                       March 31,      December 31,
                                    1999       1998        1998
                                      (unaudited)      (unaudited)

Revenue                           $14,750     $10,250     $14,659
Cost of revenue                     7,674       5,299       7,590
                                  -------     -------     -------
Gross profit                        7,076       4,951       7,069
Research and development            3,108       1,811       1,927
Selling, general
 and administrative                 3,096       2,698       4,125
                                  -------     -------     -------
Income from operations                872         442       1,017
Interest and other income             852         795         851
                                  -------     -------     -------
Income before income taxes          1,724       1,237       1,868
Provision for income taxes            988         371         861
                                  -------     -------     -------
Net income                        $   736     $   866     $ 1,007
                                  =======     =======     =======

Basic net
income per share                  $  0.07     $  0.08     $  0.10
                                  =======     =======     =======
Weighted average
 common shares                     10,593      10,251      10,396
                                  =======     =======     =======
Diluted net
 income per share                 $  0.06     $  0.08     $  0.09
                                  =======     =======     =======
Weighted average
 common shares
 and equivalents                   12,041      10,875      11,637
                                  =======     =======     =======

As a percentage of revenue:
Gross margin                         48.0%       48.3%       48.2%
Research and development             21.1%       17.7%       13.1%
Selling, general
 and administrative                  21.0%       26.3%       28.1%
Income (loss)
 from operations                      5.9%        4.3%        6.9%
Net income (loss)                     5.0%        8.4%        6.9%


                         Proxim, Inc.
                    Condensed Balance Sheet
                        (in thousands)

                                    March 31,        December 31,
                                      1999            1998
    Assets                         (unaudited)
Current assets:
   Cash and marketable securities    $69,836           $66,687
   Accounts receivable                 8,371             9,193
   Inventories                        12,682            11,825
   Deferred tax assets                 1,612             1,612
   Other assets                          323               297
                                   ----------    --------------
   Total current assets               92,824            89,614
Property and equipment, net            3,520             3,355
Deferred taxe assets                   1,273             1,273
                                   ----------    --------------
                                     $97,617           $94,242
                                   ==========    ==============
Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable                   $2,143            $2,321
   Other current liabilities           7,141             6,451
                                   ----------    --------------
  Total current liabilities            9,284             8,772
                                   ----------    --------------
Capital stock                         85,302            83,175
Retained earnings                      3,031             2,295
                                   ----------    --------------
Total stockholders' equity            88,333            85,470
                                   ----------    --------------
                                     $97,617           $94,242