Proxim Corporation Reports First Quarter 2005 Financial Results

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, [phone], or





Web site:  http://www.proxim.com/ 

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