PCTEL Posts $13.7 Million in Third Quarter Revenue from Continuing Operations

PCTEL, Inc. (NASDAQ: PCTI), a leader in propagation and optimization solutions for the wireless industry, announced results for the third quarter ended September 30, 2009.

Third Quarter Financial Highlights – Continuing Operations

• $13.7 million in revenue from continuing operations for the quarter, a decrease of 32% over the same period last year.
• GAAP & Non-GAAP Gross Profit Margin from continuing operations of 47%, as compared to 48% for the same period last year.
• GAAP Operating Margin from continuing operations of a negative (6)% as compared to a positive 3% in the same period last year.
• Non-GAAP Operating Margin from continuing operations of 3% versus 15% in the same period last year. The Company’s reporting of non-GAAP operating margin excludes expenses for restructuring, gain or loss on sale of assets, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions.
• GAAP net loss from continuing operations of $(757,000) for the quarter, or $(0.04) per share, compared to a net income of $11.1 million, or $0.60 per diluted share for the same period in 2008. The results from the third quarter last year include a $10 million benefit to the tax provision related to the reversal of a valuation allowance that the company had carried on its deferred tax assets.
• Non-GAAP net income from continuing operations of $669,000 for the quarter, or $0.04 per diluted share compared to $2.6 million of net income, or $0.14 per diluted share, for the same period in 2008. The Company’s reporting of non-GAAP net income excludes expenses for restructuring, gain or loss on sale of assets, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions, and non-cash related income tax expense.
• $78 million of cash, short term investments, and long term investments at September 30, 2009. The Company repurchased approximately 153,000 shares of its common stock during the third quarter at an average price of $6.12. The company has approximately $3.5 million remaining under previously authorized share repurchase programs.

"Our modest sequential quarterly revenue increase from Q2’s $13.4 million revenue level was a significant accomplishment given the dramatic decline in state and local public safety programs and the depressed carrier spending on wireless networks,” said Marty Singer, PCTEL’s Chairman and CEO. "As we enter our fourth quarter, we are seeing improved booking activity compared with that in Q3. On the antenna side of our business, we are establishing meaningful traction with targeted vertical markets such as defense, utilities and smart grid, agriculture, and machine to machine applications. With respect to scanning receivers, we are establishing early leadership in support of new technologies such as LTE.”

The Company completed the sale of its Mobility Solutions Group (MSG) in January, 2008. The Company’s financial statements reflect MSG as a discontinued operation.

The company identified accounting misstatements primarily related to its first quarter 2009 purchase of Wi-Sys Communications. The company’s revenue, cash flow and non-GAAP earnings are unaffected. The affect on GAAP earnings was that in the first quarter, the goodwill impairment expense should have been $222,000 higher than reported and income tax expense should have been $127,000 higher than reported; in the second quarter, income tax expense should have been $274,000 lower than reported. The affect on GAAP net loss in the first quarter is that it should be $(1.9) million instead of the $(1.5) million reported, or a $(374,000) greater loss. The affect on GAAP net loss in the second quarter is that the net loss should be $(1.3) million instead of the $(1.6) million reported, or $274,000 less of a loss. The affect on GAAP Q2 year to date net loss is that it should be $(3.2) million instead of the $(3.1) million reported, or a $(75,000) greater loss. Q1 2009 EPS should be net loss of $(0.11) instead of the $(0.09) reported, or $(0.02) lower. Q2 2009 GAAP EPS should be a net loss of ($0.07) instead of the $(0.09) reported, or $0.02 higher. GAAP Q2 year to date EPS is unchanged at $(0.17), as reported. The company expects to amend its filings on form 10-Q/A for the first and second quarters reflecting these changes as soon as practicable. The company is still evaluating the level of internal control deficiency that the misstatements represent and expects to report on its conclusion in the third quarter 10-Q and 10-Q/A’s for Q1 and Q2.

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 5:00 PM ET. The call can be accessed by dialing (877) 693-6682 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 32658893. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available until November 12 on either the website listed above or by calling (800) 642-1687 (U.S./Canada), or International (706) 645-9291, conference ID: 32658893.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), is a global leader in propagation and wireless network optimization solutions. The company designs and develops software-based radios for wireless network optimization and develops and distributes innovative antenna solutions. The company’s SeeGull^® scanning receivers, receiver-based products and CLARIFY^® interference management solutions are used to measure, monitor and optimize cellular networks. PCTEL’s SeeGull scanning receivers are deployed in industry leading wireless test and measurement equipment and viewed as an essential wireless data collection tool for cellular network optimization, drive tests, and spectrum clearing. PCTEL develops and supports scanning receivers for LTE, EVDO, CDMA, WCDMA, UMTS, TDS-CDMA and WiMAX networks.

PCTEL’s MAXRAD^®, Bluewave™ and Wi-Sys™ antenna solutions address public safety, military, aviation, defense and government applications; SCADA, Health Care, Energy, Smart Grid and Agricultural applications; Indoor Wireless, Wireless Backhaul, and Cellular applications. Its portfolio includes a broad range of WiMAX antennas, WiFi antennas, Land Mobile Radio antennas, and precision GPS antennas that serve innovative applications in telemetry, RFID, in-building, fleet management, and mesh networks. PCTEL provides parabolic antennas, ruggedized antennas, yagi antennas, military antennas, precision aviation antennas and other high performance antennas for many applications. PCTEL’s products are sold worldwide through direct and indirect channels. For more information, please visit the company’s web site www.pctel.com, www.antenna.com, www.antenna.pctel.com, or www.rfsolutions.pctel.com.

PCTEL Safe Harbor Statement

This press release contains "forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding PCTEL’s momentum and opportunities for growth in the future is a forward-looking statement within the meaning of the safe harbor. These statements are based on management’s current expectations and actual results may differ materially from those projected as a result of certain risks and uncertainties, including the ability to successfully grow the wireless products business and the ability to implement new technologies and obtain protection for the related intellectual property. These and other risks and uncertainties are detailed in PCTEL's Securities and Exchange Commission filings. These forward-looking statements are made only as of the date hereof, and PCTEL disclaims any obligation to update or revise the information contained in any forward-looking statement, whether as a result of new information, future events or otherwise.