PCTEL Posts $18.3 Million in Fourth Quarter Revenue from Continuing Operations

PCTEL, Inc. (NASDAQ:PCTI), a leader in propagation and optimization solutions for the wireless industry, announced results for the fourth quarter ended December 31, 2008.

The Company completed the sale of its Mobility Solutions Group (MSG) on January 4, 2008. The Company’s financial statements reflect MSG as a discontinued operation.

Fourth Quarter Financial Highlights – Continuing Operations (excludes MSG)

• $18.3 million in revenue from continuing operations for the quarter, a decrease of 5% over the same period last year.
• Gross Profit Margin from continuing operations of 47%, versus 49% from the same period last year.
• GAAP Operating Margin from continuing operations of a negative (87) % as compared to a positive 8% in the same period last year. The operating results of the fourth quarter this year include a $16.7 million impairment of goodwill related to its past acquisitions that comprise its Broadband Technology Group. Without the impairment charge the GAAP operating margin in the current quarter would have been 5%.
• Non-GAAP Operating Margin from continuing operations of 12% 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 $(10.8) million for the quarter, or $(0.61) per diluted share, compared to a net income of $9.5 million, or $0.46 per share for the same period in 2007. The $20 million difference is primarily attributed to the fourth quarter of 2008 including a goodwill impairment of $16.7 million, a $1.7 million decline in Other Income on the Company’s investments, primarily related to mark to market losses on the Company’s investment in Bank of America’s Columbia Strategic Asset Portfolio enhanced cash fund, and a $1.3 million change in the effective tax rate between years.
• Non-GAAP net income from continuing operations of $568,000 for the quarter, or $0.03 per diluted share compared to $3.1 million of net income, or $0.15 per diluted share, for the same period in 2007. 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. Non-GAAP results do include the performance of our investments, including the mark to market impairment of our investment in Bank of America’s Columbia Strategic Asset Portfolio.

• $78 million of cash, short term investments, and long term investments at December 31, 2008. Our investment in Bank of America’s Columbia Strategic Asset Portfolio at December 31, 2008 was $8.6 million, and has been further reduced by $1.4 million through a redemption payment received in January 2009. The Company repurchased 497,000 shares of its common stock during the fourth quarter at an average price of $9.14, completing share buyback programs announced prior to the fourth quarter. The company has not yet purchased any shares under the 1.0 million share buyback program authorized by the Board of Directors in November 2008.

"We are pleased that our efforts to reduce our cost structure have permitted us to deliver double digit non-GAAP operating margin in the last quarter,” said Marty Singer, PCTEL’s Chairman and CEO. "While the wireless telecom environment is extremely challenging, we have outstanding opportunities to grow organically and through acquisition. Our strong balance sheet will allow us to position PCTEL for long-term growth as the industry emerges from the current economic situation.”

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 5:15 PM ET. The call can be accessed by dialing (877) 693-6682 (U.S. / Canada) or (706) 679-6397 (International) conference ID: 81220188. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available for two weeks after the call on either the website listed above or by calling (800) 642-1687 (U.S./Canada), or International (706) 645-9291 conference ID: 81220188.

About PCTEL

PCTEL, Inc. (NASDAQ: PCTI), is a global leader in propagation and optimization solutions for the wireless industry. 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 MAXRAD^® Bluewave™ and Wi-Sys™ antenna solutions address public safety, military, and government applications; SCADA, Health Care, 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 GPS antennas that serve innovative applications in telemetry, RFID, in-building, fleet management, and mesh networks. PCTEL provides parabolic antennas, ruggedized antennas, yagi 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 sites 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 2009 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.