<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) OCTOBER 22, 1998
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P-COM, INC.
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(Exact name of registrant as specified in charter)
DELAWARE 0-25356 77-0289371
- ------------------------------ ----------- ------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
3175 S. WINCHESTER BOULEVARD, CAMPBELL, CALIFORNIA 95008
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (408) 866-3666
--------------------------
NONE
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(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
------------
In a press release disseminated on October 22, 1998, the Registrant
publicly announced its earnings for the quarter ended September 30, 1998. A
copy of the press release is attached hereto and incorporated herein by
reference.
Item 7. Exhibits.
--------
A copy of the Registrant's press release announcing its earnings for
the quarter ended September 30, 1998 is attached hereto as an exhibit.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
P-COM, INC.
DATE: October 22, 1998 By: /s/ Michael J. Sophie
-----------------------------
Name: Michael J. Sophie
Title: Chief Financial Officer
<PAGE>
EXHIBIT INDEX
EXHIBIT
NUMBER DOCUMENT DESCRIPTION
- ------ --------------------
99.1 Press Release disseminated October 22, 1998
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
Page 1 of 5
COMPANY CONTACT:
Michael Sophie Karl Spurzem
Chief Financial Officer Director, Investor Relations
(408) 866-3666 (408) 866-3666
P-COM, INC. ANNOUNCES RESULTS FOR THIRD QUARTER OF 1998
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CAMPBELL, CA, USA (October 22, 1998) -- P-Com, Inc. (NASDAQ National
Market: PCMS) reported results for its third quarter ended September 30, 1998
with sales of $30.2 million compared to sales of $57.2 million for the same
period in 1997, a decline of 47%.
For the nine months ended September 30, 1998, sales were $152.3 million,
compared to sales of $156.5 million for the same period in 1997, a decrease of
3%.
The Company's net loss of $42.1 million for the third quarter of 1998,
which includes restructuring and other charges of $26.6 million, compares to a
net income of $4.0 million for the comparable period last year. The net loss of
$0.97 per dilutive share with weighted average common and common equivalent
shares of 43.4 million in the third quarter of 1998 compares to a net income per
dilutive share of $0.09 with weighted average common and common equivalent
shares of 44.6 million for the third quarter of 1997.
The restructuring and other charges of $26.6 million consist of $6.7
million in restructuring and other charges, including severance, facilities
consolidation expenses, write-downs of impaired assets and goodwill, a $5.4
million allowance for accounts receivable and $14.5 million in inventory write-
downs. Excluding the restructuring and other charges, the Company's fully taxed
net loss using a normalized tax rate of 34% would have been $14.5 million and
the net loss would have been $0.33 per dilutive share.
For the nine months ended September 30, 1998, the Company's net loss was
$59.0 million which includes the $33.9 million in process research and
development charge taken in the first quarter of 1998 associated with the
acquisition of the Cylink Wireless Communications Group and the restructuring
and other charges of $26.6 million described above. This compares to net income
of $10.8 million for the comparable nine-month period last year. The basic and
diluted net loss of $1.37 per share with weighted average common shares of 43.2
million in the first nine months of 1998 compares to diluted net income per
share of $0.25 with weighted average common and common equivalent shares of 43.9
million for the prior year's first nine months.
---more---
<PAGE>
Page 2 of 5
P-COM, INC. ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 1998
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The results of operations for the first nine months of 1998, without giving
effect to a one time in-process research and development charge of $33.9 million
in the first quarter of 1998 associated with the acquisition of the Cylink
Wireless Communications Group and the restructuring and other charges of $26.6
million in the third quarter, would have been a fully taxed net loss of $9.0
million or net loss of $0.21 per dilutive share with weighted average common and
common equivalent shares of 43.2 million. The nine month adjusted results were
calculated using a normalized tax rate of 34%.
P-Com's Chairman and Chief Executive Officer, George P. Roberts, said
"Important steps were taken during the quarter to consolidate our operations,
reduce costs and conserve cash. We will continue to evaluate our allocation of
capital and resources in light of the environment in which we operate. It is
now more important than ever for us to focus on bringing the most advanced and
cost effective wireless solutions to our customers."
P-Com's Chief Financial Officer, Michael J. Sophie, commented "We are
pleased with the progress we are making in reducing the amount of cash used in
our operations and are confident that more progress will be made in the fourth
quarter of 1998. The restructuring was a necessary response to the rapidly
changing environment we operate in and we believe that as a result of these
restructuring activities, our expenses going forward will be reduced."
P-Com, Inc. develops, manufactures and markets network access systems for
the worldwide wireless telecommunications market. The point-to-point, spread
spectrum, and point-to-multipoint radio links provided by P-Com are designed to
satisfy the network requirements of cellular and personal communications
services, corporate communications, public utilities and local governments. In
addition, P-Com provides comprehensive network services including system and
program planning and management, path design and installation. P-Com also
provides cost efficient network performance monitoring devices.
Statements in this release that are forward looking involve known and
unknown risks and uncertainties, which may cause the Company's actual results in
future periods to be materially different from any future performance that may
be suggested in this release. Such factors may include, but are not limited to,
reliance upon subcontractors, fluctuations in customer demand and commitments,
both in timing and volume, pricing and competition, the Company's ability to
have available an appropriate amount of production capacity in a timely manner,
the ability of the Company's customers to finance their purchases of the
Company's products and/or services, the timing of new technology and product
introductions, the risk of early obsolescence and pending stockholder class
action litigation. Further, the Company operates in an industry sector where
securities values are highly volatile and may be influenced by economic and
other factors beyond
---more---
<PAGE>
Page 3 of 5
P-COM, INC. ANNOUNCES RESULTS FOR THE THIRD QUARTER OF 1998
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the Company's control, such as announcements by competitors and service
providers. Reference is made to the discussion of risk factors detailed in the
Company's filings with the Securities and Exchange Commission, including its
reports on Form 10-K and 10-Q.
P-Com, Inc., with world headquarters in Campbell, California, USA and
offices in Florida, New Jersey, Virginia, the UK, Italy, France, Germany,
Poland, Mexico, and China, is an ISO 9001 certified company. For additional
information, contact P-Com at:
P-Com, Inc. . 3175 S. Winchester Boulevard . Campbell, CA 95008 . USA
TEL: (408) 866-3666 . FAX: (408) 866-3655
###
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Page 4 of 5
P-COM, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
<TABLE>
<CAPTION>
September 30, 1998 December 31,
(unaudited) 1997
------------------ ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 23,600 $ 88,145
Accounts receivable, net 49,906 70,883
Notes receivable 426 205
Inventories 83,227 58,003
Prepaid expenses and other assets 16,917 12,329
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Total currents assets $174,076 229,565
Property and equipment, net 47,319 32,313
Deferred income taxes 19,236 1,697
Goodwill and other assets 53,761 41,946
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$294,392 $305,521
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 32,879 $ 38,043
Accrued employee benefits 2,983 3,930
Other accrued liabilities 10,723 6,255
Income taxes payable 4,140 6,409
Notes payable 45,967 293
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Total current liabilities 96,692 54,930
Long term debt 104,922 101,690
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Minority interest -- 604
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Stockholders' equity:
Common stock 4 4
Additional paid-in capital 136,174 131,735
Retained earnings (40,645) 18,380
Cumulative translation adjustment (2,755) (1,822)
-------- --------
Total stockholders' equity 92,778 148,297
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$294,392 $305,521
======== ========
</TABLE>
--more--
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Page 5 of 5
P-COM, INC.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------- ------------------------------
Sept 30, 1998 Sept 30, 1997 Sept 30, 1998 Sept 30, 1997
----------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Sales $ 30,240 $57,191 $152,336 $156,476
Cost of Sales 41,701 33,074 113,953 92,901
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Gross profit (deficit) (11,461) 24,117 38,383 63,575
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Operating expenses:
Research and development 12,005 7,081 29,925 20,906
Selling and marketing 6,288 4,070 16,951 10,993
General and administrative 10,775 4,689 19,644 12,158
Goodwill amortization 1,109 614 2,927 1,525
Restructuring and other one-time charges 4,332 -- 4,332 --
Acquired in-process research and
development expenses -- -- 33,882 --
-------- ------- -------- -------------
Total operating expenses 34,509 16,454 107,661 45,582
-------- ------- -------- -------------
Income (loss) from operations (45,970) 7,663 (69,278) 17,993
Interest and other income (expense), net (2,652) (99) (4,958) (270)
-------- ------- -------- -------------
Income (loss) before income taxes (48,622) 7,564 (74,236) 17,723
Provision (benefit) for income taxes (6,500) 3,528 (15,211) 6,897
-------- ------- -------- -------------
Net income (loss) $(42,122) $ 4,036 $(59,025) $ 10,826
======== ======= ======== ========
Net income (loss) per share:
Basic $ (0.97) $ 0.10 $ (1.37) $ 0.26
======== ======= ======== ========
Diluted $ (0.97) $ 0.09 $ (1.37) $ 0.25
======== ======= ======== ========
Shares used in per share computation:
Basic 43,459 42,435 43,204 41,993
======== ======= ======== ========
Diluted 43,459 44,604 43,204 43,871
======== ======= ======== ========
</TABLE>
##
