<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) January 28, 1999
----------------
P-COM, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
Delaware 0-25356 77-0289371
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(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
- -------------------------------------------------------------------------------
(Former name or former address, if changed since last report.)
<PAGE>
Item 5. Other Events.
------------
In a press release disseminated on January 28, 1999, the Registrant
publicly announced its earnings for the fourth quarter and twelve months ended
December 31, 1998. A copy of the press release is attached hereto and
incorporated herein by reference.
Statements in this report 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, introduction of new products, commercial acceptance
and viability of new products and expenses associated therewith, cancellations
of orders without penalties, 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, accounting for adjustments for
the Cylink Acquisition and the pending stockholder class action lawsuits. In
addition, actual 1998 annual and fourth quarter results and previously reported
results for such prior periods may differ or change materially due to potential
prior period adjustments and such related restatements required by the SEC in
response to its new guidelines or made on the advice of the Company's
independent accountants. Similarly, results for future periods may be impacted
by these potential adjustments and related restatement. Further, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond 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.
Item 7. Financial Statement and Exhibits.
--------------------------------
A copy of the Registrant's press release announcing its earnings for
the fourth quarter and twelve months ended December 31, 1998 is attached hereto
as an exhibit.
<PAGE>
SIGNATURES
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 hereunto duly authorized.
P-COM, INC.
DATE: January 28, 1999 By: /s/ Michael J. Sophie
-------------------------------------
Name: Michael J. Sophie
Title: Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit
- -------
99.1 Press Release disseminated January 28, 1999
<PAGE>
Exhibit 99.1
FOR IMMEDIATE RELEASE
Page 1 of 5
COMPANY CONTACT:
Michael Sophie
Chief Financial Officer
(408) 866-3666
P-COM, INC. ANNOUNCES PRELIMINARY NET SALES AND
NET LOSS FOR FOURTH QUARTER OF 1998 AND FISCAL YEAR
________________________________________________________________________________
CAMPBELL, CA, USA (January 28, 1999) -- P-Com, Inc. (NASDAQ National
Market: PCMS), reported preliminary results for its fourth quarter ended
December 31, 1998 with net sales of $42.6 million, an increase of 41% over net
sales of $30.2 for the third quarter of 1998, compared to a 34% decrease from
$64.2 million in net sales for the fourth quarter of 1997.
For the twelve months ended December 31, 1998, net sales were $194.9
million, a 12% decrease over the $220.7 million in net sales for the same period
in 1997.
Based on guidelines recently published by the Securities and Exchange
Commission, the Company is in the process of re-evaluating its first quarter
1998 in-process research and development ("IPR&D") charge taken in connection
with its acquisition of Cylink Corporation's Wireless Communications Group.
Although the first quarter results, including an IPR&D charge, were reported in
accordance with then established accounting practice and the valuation provided
by the Company's independent appraiser, the Company is evaluating this charge
and responding to new guidance from the Securities and Exchange Commission
regarding in-process research and development changes. As a result, the Company
will restate its first quarter 1998 results of operations by decreasing the
IPR&D charge which would result in an increase to earnings in the first quarter
and fiscal year of 1998 and an increase in goodwill which the Company expects to
amortize over ten years.
Before giving effect to any revisions to such IPR&D charge that the Company
is currently evaluating, the Company's net loss was $6.8 million for the fourth
quarter of 1998 compared to net income of $8.1 million for the comparable period
last year. Prior to any such revision, the net loss applicable to holders of
common stock was $8.6 million or $0.20 diluted per share with weighted average
common and common equivalent shares of 43.5 million in the fourth quarter of
1998 compared to a diluted net income per share of $0.18 with weighted average
common and common equivalent shares of 46.9 million for the prior year's fourth
quarter.
--more--
<PAGE>
Page 2 of 5
P-COM, INC. ANNOUNCES NET SALES AND NET LOSS FOR FOURTH QUARTER OF 1998 AND
FISCAL YEAR
________________________________________________________________________________
Before giving effect to any revisions to such IPR&D charge that the Company
is currently evaluating, the Company's net loss was $65.8 million and the net
loss applicable to holders of common stock was $67.6 million for the year ended
December 31, 1998. These losses included the original $33.9 million IPR&D charge
taken in the first quarter of 1998 associated with the acquisition of Cylink
Corporation's Wireless Communications Group and the restructuring and other
charges of $26.6 million taken in the third quarter of 1998 and are net of an
extraordinary after tax gain from the extinguishment of certain long-term debt
of $4.3 million. This compares to net income of $18.9 million for the comparable
twelve-month period last year. Prior to any such revision, the basic and diluted
net loss attributable to holders common stock of $1.56 per share with weighted
average common shares of 43.3 million in the year ended December 31, 1998
compares to diluted net income per share of $0.43 with weighted average common
and common equivalent shares of 44.6 million for the prior year.
Separately, during the quarter, the Company raised $15 million from three
investors through the issuance of preferred stock and warrants. In addition, in
the fourth quarter, the Company exchanged $14.4 million principal amount of its
Convertible Subordinated Notes for 2,467,000 shares of Common Stock. This
exchange resulted in an extraordinary after tax gain of $4.3 million, which is
included in the preliminary results referred to above.
P-Com's Chairman and Chief Executive Officer George P. Roberts said,
"Significant progress was made during the quarter with our new product
development as evidenced by the successful trial of our point-to-multipoint
equipment with Siemens and WinStar. In addition to our progress in new products,
our sales efforts with existing customers and in new geographic areas has
resulted in a year-end backlog of approximately $75.2 million."
Michael J. Sophie, Chief Financial Officer and Vice President, Finance
added, "We are pleased with our progress in increasing revenues, reducing
expenses and strengthening of the balance sheet as compared with our third
quarter."
Once the Company has finalized its revisions to such IPR&D charge, the
Company will publish its net sales and net income for the fourth quarter of 1998
and fiscal year and restate its first quarter 1998 operating results.
--more--
<PAGE>
Page 3 of 5
P-COM, INC. ANNOUNCES NET SALES AND NET LOSS FOR FOURTH QUARTER OF 1998 AND
FISCAL YEAR
________________________________________________________________________________
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.
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, introduction of new products, commercial acceptance
and viability of new products and expenses associated therewith, cancellations
of orders without penalties, 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, accounting for adjustments for
the Cylink Acquisition and the pending stockholder class action lawsuits. In
addition, actual 1998 annual and fourth quarter results and previously reported
results for such prior periods may differ or change materially due to potential
prior period adjustments and such related restatements required by the SEC in
response to its new guidelines or made on the advice of the Company's
independent accountants. Similarly, results for future periods may be impacted
by these potential adjustments and related restatement. Further, the Company
operates in an industry sector where securities values are highly volatile and
may be influenced by economic and other factors beyond 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
--more--
<PAGE>
Page 4 of 5
P-COM, INC.
CONDENSED PRELIMINARY CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
<TABLE>
<CAPTION>
December 31,
1998 1997
---------------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 29,241 $ 88,145
Accounts receivable, net 50,533 70,883
Notes receivable 264 205
Inventories 79,026 58,003
Prepaid expenses and other assets 19,545 12,329
---------------- ----------------
Total currents assets 178,609 229,565
Property and equipment, net 52,086 32,313
Deferred income taxes 17,224 1,697
Goodwill and other assets 55,954 41,946
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$ 303,873 $ 305,521
================ ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 39,618 $ 38,043
Accrued employee benefits 3,345 3,930
Other accrued liabilities 10,318 6,255
Income taxes payable -- 6,409
Notes payable 46,360 293
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Total current liabilities 99,641 54,930
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Long-term debt 92,769 101,690
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Minority interest -- 604
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Mandatorily redeemable preferred stock 13,559 --
---------------- ----------------
Mandatorily redeemable common stock warrants 1,839 --
---------------- ----------------
Stockholders' equity:
Common stock 5 4
Additional paid-in capital 145,246 131,735
Retained earnings (deficit) (49,268) 18,380
Cumulative translation adjustment 82 (1,822)
---------------- ----------------
Total stockholders' equity 96,065 148,297
---------------- ----------------
$ 303,873 $ 305,521
================ ================
</TABLE>
--more--
<PAGE>
Page 5 of 5
P-COM, INC.
CONDENSED PRELIMINARY CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share data, unaudited)
<TABLE>
<CAPTION>
Three Months Ended Year Ended
---------------------------------- ----------------------------------
Dec 31, 1998 Dec 31, 1997 Dec 31, 1998 Dec 31, 1997
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Sales $ 42,608 $ 64,226 $ 194,944 $ 220,702
Cost of Sales 30,322 36,334 144,275 129,235
---------------- ---------------- ---------------- ----------------
Gross profit 12,286 27,892 50,669 91,467
---------------- ---------------- ---------------- ----------------
Operating expenses:
Research and development 11,548 8,221 41,473 29,127
Selling and marketing 5,069 4,703 22,020 15,696
General and administrative 5,295 2,604 24,965 14,539
Goodwill amortization 1,242 661 4,169 2,409
Restructuring and other one-time charges -- -- 4,332 --
Acquired in-process research and
development expenses -- -- 33,856 --
---------------- ---------------- ---------------- ----------------
Total operating expenses 23,154 16,189 130,815 61,771
---------------- ---------------- ---------------- ----------------
Income (loss) from operations (10,868) 11,703 (80,146) 29,696
Interest and other income (expense), net (2,945) 517 (7,903) 247
---------------- ---------------- ---------------- ----------------
Income (loss) before extraordinary item
and income taxes (13,813) 12,220 (88,049) 29,943
Provision (benefit) for income taxes (2,763) 4,155 (17,974) 11,052
---------------- ---------------- ---------------- ----------------
Income (loss) before extraordinary item (11,050) 8,065 (70,075) 18,891
---------------- ---------------- ---------------- ----------------
Extraordinary item, net of income taxes 4,266 -- 4,266 --
---------------- ---------------- ---------------- ----------------
Net income (loss) (6,784) 8,065 (65,809) 18,891
---------------- ---------------- ---------------- ----------------
Charge related to preferred
stock discount (1,839) -- (1,839) --
---------------- ---------------- ---------------- ----------------
Net loss applicable to common
stock holders $ (8,623) $ 8,065 $ (67,648) $ 18,891
================ ================ ================ ================
Net income (loss) per share:
Basic $ (0.20) $ 0.19 $ (1.56) $ 0.45
================ ================ ================ ================
Diluted $ (0.20) $ 0.18 $ (1.56) $ 0.43
================ ================ ================ ================
Shares used in per share computation:
Basic 43,465 42,793 43,254 42,175
================ ================ ================ ================
Diluted 43,465 46,889 43,254 44,570
================ ================ ================ ================
</TABLE>
###
