PCTEL Posts $19.1 Million in Q4 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, 2007 and for the entire year. During the fourth quarter the company announced the sale of its Mobility Solutions software group (MSG). The transaction closed on January 4, 2008. The company’s financial statements have been revised to reflect MSG as a discontinued operation. Fourth Quarter Financial Highlights – Continuing Operations (excludes MSG) $19.1 million in revenue from continuing operations for the quarter, an increase of 6 percent over the same period last year. The company posted a record quarter for scanning receiver sales. Gross Profit from continuing operations of 49% versus 46 % in the same period last year. GAAP Operating Profit from continuing operations of 7.7% as compared to negative (2.6) % in the same period last year. Non-GAAP Operating Profit from continuing operations of 15.3% versus 6.6% in the same period last year. The Company’s reporting of non-GAAP operating profit excludes expenses for restructuring, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions. GAAP net income from continuing operations of $9.5 million for the quarter, or $0.46 per diluted share, compared to $6.4 million, or $0.30 per share for the same period in 2006. The fourth quarters of 2007 and 2006 include one-time non-cash adjustments to the company’s income tax accruals and reserves of $7.9 million and $5.2 million, respectively. Non-GAAP net income from continuing operations of $3.1 million for the quarter, or $0.15 per diluted share compared to $2.7 million of net income, or $0.13 per share for the same period in 2006. The Company’s reporting of non-GAAP income excludes expenses for restructuring, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions, and non cash related income tax expense. $65.5 million of cash and investments net of debt at December 31, 2007, an increase of $600,000 from the third quarter this year. On January 4, 2008 the MSG sale transaction closed and the company received $59.7 million in cash proceeds. The company expects to make a $20 million estimated tax payment in Q2 related to the transaction. "The results from continuing operations suggest that we are making progress on all fronts,” said Marty Singer, PCTEL’s Chairman and CEO. "During the past two years, we have exited businesses that did not contribute or were not consistent with our long-term growth strategy. We believe that our sharpened focus will continue to propel growth, improve operational effectiveness, and enhance shareholder value. As we enter 2008, we anticipate continued progress with our WiMax, GPS, and SeeGull® product portfolios and new applications for our land mobile radio antennas,” added Singer. Fourth Quarter Financial Highlights – Discontinued Operations (MSG) GAAP net loss from discontinued operations was $(171,000) in the quarter, or $(0.01) per diluted share, compared to net income of $218,000, or $0.01 per share for the same period in 2006. Non-GAAP net income from discontinued operations was $414,000 in the quarter, or $0.02 per diluted share, compared to $599,000, or $0.03 per share for the same period in 2006. The Company’s reporting of non-GAAP income excludes expenses for restructuring, stock based compensation, amortization and impairment of intangible assets and goodwill related to the Company’s acquisitions, and non-cash related income tax expense. PCTEL’s management team will discuss the company’s results during its scheduled earnings teleconference today at 6:15 PM EST. Management will host the call from their new corporate headquarters in Bloomingdale, Illinois. CONFERENCE CALL / WEBCAST The company will hold a conference call at 6:15 PM EST (5:15 PM CST) today, Tuesday February 19, 2008 with Marty Singer, Chairman and Chief Executive Officer, and John Schoen, Chief Financial Officer. PCTEL will not be responding to inquiries regarding its financial results until the conference call. The session can be accessed by calling (888) 211-4461 (U.S. / Canada) or (913) 312-0972 (international). To listen via the Internet, please visit, www.pctel.com, or http://investor.pctel.com/events.cfm. REPLAY: A replay will be available for two weeks after the call on PCTEL's web site at www.pctel.com or by calling (888) 203-1112 (U.S. / Canada) or (719) 457-0820 (international) access code: 4932970. 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. PCTEL’s MAXRAD® antenna solutions address public safety applications, unlicensed and licensed wireless broadband, fleet management, and network timing. Its portfolio includes a broad range of antennas for WiMAX, Land Mobile Radio, GPS, telemetry, RFID, WiFi, indoor cellular, and mesh networks. 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 products are sold worldwide through direct and indirect channels. For more information, please visit the company’s web site at: www.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 expectations regarding the future sales growth and leveraging its customer base and technology investments are forward looking statements 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. PCTEL, Inc. Consolidated Condensed Statements of Operations (unaudited, in thousands, except per share information)           Three Months Ended Year Ended December 31, December 31, 2007 2006 2007 2006   REVENUES $19,147 $18,110 $69,888 $76,768 COST OF REVENUES 9,730   9,811   37,827   39,929   GROSS PROFIT 9,417   8,299   32,061   36,839   OPERATING EXPENSES: Research and development 2,223 2,668 9,605 9,169 Sales and marketing 2,489 2,675 10,723 10,993 General and administrative 2,954 2,963 12,652 13,068 Amortization of other intangible assets 408 751 1,987 3,593 Impairment of goodwill and intangible assets -- -- -- 20,349 Restructuring charges 115 (35 ) 2,038 389 Gain on sale of assets and related royalties (250 ) (250 ) (1,000 ) (1,000 ) Total operating expenses 7,939   8,772   36,005   56,561   INCOME (LOSS) FROM CONTINUING OPERATIONS 1,478 (473 ) (3,944 ) (19,722 ) OTHER INCOME, NET 211   945   2,831   3,303   INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE INCOME TAXES 1,689 472 (1,113 ) (16,419 ) (BENEFIT) FOR INCOME TAXES (7,838 ) (5,909 ) (7,226 ) (5,371 ) NET INCOME (LOSS) FROM CONTINUING OPERATIONS 9,527   6,381   6,113   (11,048 ) NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax (171 ) 218   (82 ) 1,029   NET INCOME (LOSS) $9,356   $6,599   $6,031   ($10,019 )   Basic Earnings per Share: Income (Loss) from Continuing Operations $0.46 $0.30 $0.29 ($0.53 ) Income (Loss) Discontinued Operations ($0.01 ) $0.01 $0.00 $0.05 Net Income (Loss) $0.45 $0.31 $0.29 ($0.48 )   Diluted Earnings per Share: Income (Loss) from Continuing Operations $0.46 $0.29 $0.29 ($0.53 ) Income (Loss) Discontinued Operations ($0.01 ) $0.01 $0.00 $0.05 Net Income (Loss) $0.45 $0.30 $0.28 ($0.48 )   Weighted average shares - Basic 20,670 20,976 20,897 20,810 Weighted average shares - Diluted 20,802 21,637 21,424 20,810 PCTEL Inc. Consolidated Condensed Balance Sheets (unaudited, in thousands)     December 31,   December 31, 2007 2006   ASSETS CURRENT ASSETS: Cash and cash equivalents $26,632 $59,148 Short-term investments 38,943 11,623 Accounts receivable, net 16,082 14,034 Inventories, net 9,654 7,258 Deferred tax assets, net 1,591 -- Prepaid expenses and other assets 1,882   2,059   Total current assets 94,784 94,122 PROPERTY AND EQUIPMENT, net 12,136 11,638 GOODWILL 16,820 16,698 OTHER INTANGIBLE ASSETS, net 4,318 7,451 DEFERRED TAX ASSETS, net 6,280 103 OTHER ASSETS 1,022 1,054 ASSETS OF DISCONTINUED OPERATIONS 1,806   1,654   TOTAL ASSETS $137,166   $132,720     LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Accounts payable $956 $885 Deferred revenue 49 659 Accrued liabilities 8,223 6,930 Short term debt 107   869   Total current liabilities 9,335 9,343 LONG-TERM LIABILITIES 2,609 2,211 LIABILITIES OF DISCONTINUED OPERATIONS 654   473   Total liabilities 12,598   12,027     STOCKHOLDERS’ EQUITY: Common stock 22 22 Additional paid-in capital 165,109 165,556 Accumulated deficit (40,640 ) (46,671 ) Accumulated other comprehensive income 77   1,786   Total stockholders’ equity 124,568   120,693   TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $137,166   $132,720   PCTEL, Inc. Revenue & Gross Profit by Segment (unaudited, in thousands)         Three Months Ended Year Ended December 31, December 31,   2007 2006 2007 2006 REVENUES: Broadband Technology Group $19,102 $17,638 $69,072 $68,087 Licensing 45   472   816   8,681   TOTAL REVENUES 19,147 18,110 69,888 76,768   GROSS PROFIT: Broadband Technology Group 9,375 7,830 31,262 28,181 Licensing 42   469   799   8,658   TOTAL GROSS PROFIT 9,417 8,299 32,061 36,839   GROSS PROFIT %: Broadband Technology Group 49.1 % 44.4 % 45.3 % 41.4 % Licensing 93.3 % 99.4 % 97.9 % 99.7 % TOTAL GROSS PROFIT % 49.2 % 45.8 % 45.9 % 48.0 % PCTEL, Inc. Reconciliation of Non-GAAP to GAAP Revenue & Gross Profit by Segment (unaudited, in thousands)                   Three Months EndedDecember 31, 2007 Three Months EndedDecember 31, 2006 As Non-GAAP Non As Non-GAAP Non Reported Adjustments (a) GAAP Reported Adjustments (a) GAAP REVENUES: Broadband Technology Group $19,102 $19,102 $17,638 $17,638 Licensing 45     45   472     472   TOTAL REVENUES 19,147     19,147   18,110     18,110     GROSS PROFIT: Broadband Technology Group 9,375 52 (a) 9,427 7,830 73 (a) 7,903 Licensing 42     42   469     469   TOTAL GROSS PROFIT 9,417   52 9,469   8,299   73 8,372     GROSS PROFIT %: Broadband Technology Group 49.1 % 49.4 % 44.4 % 44.8 % Licensing 93.3 % 93.3 % 99.4 % 99.4 % TOTAL GROSS PROFIT % 49.2 % 49.5 % 45.8 % 46.2 %   (a) This adjustment reflects the non-cash stock based compensation expense for restricted grants, stock bonuses, and stock options awarded to the company's employees. PCTEL, Inc.                 Reconciliation of Non-GAAP to GAAP Revenue & Gross Profit by Segment (unaudited, in thousands)     Year EndedDecember 31, 2007 Year EndedDecember 31, 2006 As Non-GAAP Non As Non-GAAP Non Reported Adjustments (a) GAAP Reported Adjustments (a) GAAP REVENUES: Broadband Technology Group $69,072 $69,072 $68,087 $68,087 Licensing 816     816   8,681     8,681   TOTAL REVENUES 69,888     69,888   76,768     76,768     GROSS PROFIT: Broadband Technology Group 31,262 370 (a) 31,632 28,181 331 (a) 28,512 Licensing 799     799   8,658     8,658   TOTAL GROSS PROFIT 32,061   370 32,431   36,839   331 37,170     GROSS PROFIT %: Broadband Technology Group 45.3 % 45.8 % 41.4 % 41.9 % Licensing 97.9 % 97.9 % 99.7 % 99.7 % TOTAL GROSS PROFIT % 45.9 % 46.4 % 48.0 % 48.4 %   (a) This adjustment reflects the non-cash stock based compensation expense for restricted grants, stock bonuses, and stock options awarded to the company's employees. Reconciliation Of Non GAAP To GAAP Results Of Operations (a) (unaudited, in thousands)                 Three Months EndedDecember 31, 2007 Three Months EndedDecember 31, 2006 As Non-GAAP Non As Non-GAAP Non Reported Adjustments (a) GAAP Reported Adjustments (a) GAAP REVENUES $ 19,147 $ 19,147 $ 18,110 $ 18,110 COST OF REVENUES 9,730   (52 ) (b) 9,678   9,811   (73 ) (b) 9,738   GROSS PROFIT 9,417 52 9,469 8,299 73 8,372 OPERATING EXPENSES: Research and development 2,223 (111 ) (b) 2,112 2,668 (87 ) (b) 2,581 Sales and marketing 2,489 (246 ) (b) 2,243 2,675 (194 ) (b) 2,481 General and administrative 2,954 (528 ) (b) 2,426 2,963 (593 ) (b) 2,370 Amortization of other intangible assets 408 (408 ) - 751 (751 ) - Restructuring charges 115 (115 ) - (35 ) 35 - Gain on sale of assets and related royalties (250 )   (250 ) (250 )   (250 ) Total operating expenses 7,939   (1,408 ) 6,531   8,772   (1,590 ) 7,182   INCOME (LOSS) FROM OPERATIONS 1,478 1,460 2,938 (473 ) 1,663 1,190 OTHER INCOME, NET 211     211   945     945   INCOME (LOSS) BEFORE INCOME TAXES 1,689 1,460 3,149 472 1,663 2,135 PROVISION (BENEFIT) FOR INCOME TAXES (7,838 ) 7,864   26   (5,909 ) 5,384   (525 ) NET INCOME (LOSS) FROM CONTINUING OPERATIONS 9,527 (6,404 ) 3,123 6,381 (3,721 ) 2,660 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax (171 ) 585   414   218   381   599   NET INCOME (LOSS) $ 9,356   $ (5,819 ) $ 3,537   $ 6,599   $ (3,340 ) $ 3,259     Basic Earnings per Share: Income (Loss) from Continuing Operations $ 0.46 $ 0.15 $ 0.30 $ 0.13 Income (Loss) Discontinued Operations $ (0.01 ) $ 0.02 $ 0.01 $ 0.03 Net Income (Loss) $ 0.45 $ 0.17 $ 0.31 $ 0.16   Diluted Earnings per Share: Income (Loss) from Continuing Operations $ 0.46 $ 0.15 $ 0.29 $ 0.12 Income (Loss) Discontinued Operations $ (0.01 ) $ 0.02 $ 0.01 $ 0.03 Net Income (Loss) $ 0.45 $ 0.17 $ 0.30 $ 0.15   Weighted average shares - Basic 20,670 20,670 20,976 20,976 Weighted average shares - Diluted 20,802 20,802 21,637 21,637   (a) These adjustments reconcile the company's GAAP results of operations to its non-GAAP results of operations. The company believes that presentation of results excluding items such as non-cash compensation expense, amortization of intangible assets, restructuring charges, and non-cash income tax expense provides meaningful supplemental information to both management and investors that is indicative of the company's core operating results and facilitates comparison of operating results across reporting periods. The company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes. These non-GAAP measures should not be viewed as a substitute for the company's GAAP results.   (b) This adjustment reflects the non-cash stock based compensation expense for restricted grants, stock bonuses, and stock options awarded to the company's employees. Reconciliation Of Non GAAP To GAAP Results Of Operations (a) (unaudited, in thousands)                 Year EndedDecember 31, 2007 Year EndedDecember 31, 2006 As Non-GAAP Non As Non-GAAP Non Reported Adjustments (a) GAAP Reported Adjustments (a) GAAP REVENUES $ 69,888 $ 69,888 $ 76,768 $ 76,768 COST OF REVENUES 37,827   (370 ) (b) 37,457   39,929   (331 ) (b) 39,598   GROSS PROFIT 32,061 370 32,431 36,839 331 37,170 OPERATING EXPENSES: Research and development 9,605 (454 ) (b) 9,151 9,169 (388 ) (b) 8,781 Sales and marketing 10,723 (650 ) (b) 10,073 10,993 (761 ) (b) 10,232 General and administrative 12,652 (2,620 ) (b) 10,032 13,068 (2,272 ) (b) 10,796 Amortization of other intangible assets 1,987 (1,987 ) - 3,593 (3,593 ) - Impairment of intangible assets - - 20,349 (20,349 ) - Restructuring charges 2,038 (2,038 ) - 389 (389 ) - Gain on sale of assets and related royalties (1,000 )   (1,000 ) (1,000 )   (1,000 ) Total operating expenses 36,005   (7,749 ) 28,256   56,561   (27,752 ) 28,809   INCOME (LOSS) FROM OPERATIONS (3,944 ) 8,119 4,175 (19,722 ) 28,083 8,361 OTHER INCOME, NET 2,831     2,831   3,303     3,303   INCOME (LOSS) BEFORE INCOME TAXES (1,113 ) 8,119 7,006 (16,419 ) 28,083 11,664 PROVISION (BENEFIT) FOR INCOME TAXES (7,226 ) 7,256   30   (5,371 ) 5,943   572   NET INCOME (LOSS) FROM CONTINUING OPERATIONS 6,113 863 6,976 (11,048 ) 22,140 11,092 NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS, net of tax (82 ) 1,354   1,272   1,029   1,457   2,486   NET INCOME (LOSS) $ 6,031   $ 2,217   $ 8,248   $ (10,019 ) $ 23,597   $ 13,578     Basic Earnings per Share: Income (Loss) from Continuing Operations $0.29 $0.33 ($0.53 ) $0.53 Income (Loss) Discontinued Operations $0.00 $0.06 $0.05 $0.12 Net Income (Loss) $0.29 $0.39 ($0.48 ) $0.65   Diluted Earnings per Share: Income (Loss) from Continuing Operations $0.29 $0.33 ($0.53 ) $0.52 Income (Loss) Discontinued Operations $0.00 $0.06 $0.05 $0.12 Net Income (Loss) $0.28 $0.38 ($0.48 ) $0.63   Weighted average shares - Basic 20,897 20,897 20,810 20,810 Weighted average shares - Diluted 21,424 21,424 20,810 21,512   (a) These adjustments reconcile the company's GAAP results of operations to its non-GAAP results of operations. The company believes that presentation of results excluding items such as non-cash compensation expense, amortization of intangible assets, restructuring charges, and non-cash income tax expense provides meaningful supplemental information to both management and investors that is indicative of the company's core operating results and facilitates comparison of operating results across reporting periods. The company uses these non-GAAP measures when evaluating its financial results as well as for internal planning and forecasting purposes. These non-GAAP measures should not be viewed as a substitute for the company's GAAP results.   (b) This adjustment reflects the non-cash stock based compensation expense for restricted grants, stock bonuses, and stock options awarded to the company's employees.