October 27, 2008

PCTEL Posts $20.1 Million in Third Quarter Revenue from Continuing Operations

14 Percent Increase Over Same Period Last Year

BLOOMINGDALE, Ill., Oct 27, 2008 (BUSINESS WIRE) -- PCTEL, Inc. (NASDAQ: PCTI), a leader in propagation and optimization solutions for the wireless industry, announced results for the third quarter ended September 30, 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.

Third Quarter Financial Highlights -- Continuing Operations (excludes MSG)

-- $20.1 million in revenue from continuing operations for the quarter, an increase of 14 percent over the same period last year.

-- Gross Profit Margin from continuing operations of 48%, versus 45% from the same period last year.

-- GAAP Operating Margin from continuing operations of 3% as compared to negative (1)% in the same period last year. The operating results of the third quarter this year include a $0.9 million impairment charge (4%) related to the sale of several antenna product lines during the quarter.

-- Non-GAAP Operating Margin from continuing operations of 15% versus 6% in the same period last year. The Company's reporting of non-GAAP operating profit 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 income from continuing operations of $10.9 million for the quarter, or $0.58 per diluted share, compared to a net income of $0.5 million, or $0.03 per share for the same period in 2007. The results from the third quarter this 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. The company reversed the allowance as it believes its long term profit profile will reasonably assure the realization of those assets.

-- Non-GAAP net income from continuing operations of $2.6 million for the quarter, or $0.14 per diluted share compared to $1.8 million of net income, or $0.09 per diluted share, for the same period in 2007. The Company's reporting of non-GAAP 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.

-- $80 million of cash and investments at September 30, 2008, of which $13 million is classified as long term. The Company repurchased 503,000 shares of its common stock during the quarter at an average price of $9.92 under its recently announced 1.0 million share buyback program.

"Although WiMAX antenna sales are lower than expected, we were pleased with the performance of other product areas," said Marty Singer, PCTEL's Chairman and CEO. "The new product introductions that we announced in late September should give us some momentum in GPS, WiMAX, and new cellular opportunities as we move into 2009," added Singer.

Third Quarter Financial Highlights -- Discontinued Operations (MSG)

-- GAAP net income from discontinued operations of $157,000 in the third quarter 2008 represents an adjustment to accrued income tax related to the gain on sale of the Mobility Solutions Group recorded in the first quarter 2008. The Company excludes discontinued operations from its non-GAAP earnings.

PCTEL's management team will discuss the Company's results during its scheduled earnings teleconference today at 5:15 PM ET. Management will host the call from their corporate headquarters in Bloomingdale, Illinois.

CONFERENCE CALL / WEBCAST

The company will hold a conference call at 5:15 PM ET (4:15 PM CT) today, Monday, October 27, 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 (866) 409-1564 (U.S. / Canada) or (913) 312-1264 (International), conference ID 7490917.

To listen via the Internet, please visit 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) conference ID 7490917.

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(R) 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(R) scanning receivers, receiver-based products and CLARIFY(R) 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 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.

PCTEL Inc.
Consolidated Condensed Balance Sheets
(unaudited, in thousands)
                                                               September 30,                    December 31,
                                                               2008                             2007
ASSETS
CURRENT ASSETS:
Cash and cash equivalents                                      $53,681                          $26,632
Short-term investment securities                               13,969                           38,943
Accounts receivable, net of allowance for doubtful             15,181                           16,082
Inventories, net                                               9,330                            9,867
Deferred tax assets, net                                       988                              1,591
Prepaid expenses and other assets                              2,316                            1,800
Assets held for sale                                           485                              --
Total current assets                                           95,950                           94,915
PROPERTY AND EQUIPMENT, net                                    12,697                           12,136
LONG-TERM INVESTMENT SECURITIES                                12,662                           --
GOODWILL                                                       17,119                           16,770
OTHER INTANGIBLE ASSETS, net                                   5,758                            4,366
DEFERRED TAX ASSETS, net                                       3,175                            4,863
OTHER ASSETS                                                   834                              1,022
ASSETS OF DISCONTINUED OPERATIONS                              --                               1,807
TOTAL ASSETS                                                   $148,195                         $135,879
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable                                               $1,437                           $956
Accrued liabilities                                            5,220                            8,403
Short term debt                                                --                               107
Total current liabilities                                      6,657                            9,466
LONG-TERM LIABILITIES                                          1,035                            1,192
LIABILITIES OF DISCONTINUED OPERATIONS                         --                               654
Total liabilities                                              7,692                            11,312
STOCKHOLDERS' EQUITY:
Common stock                                                   19                               22
Additional paid-in capital                                     142,439                          165,108
Accumulated deficit                                            (1,986     )                     (40,640    )
Accumulated other comprehensive income                         31                               77
Total stockholders' equity                                     140,503                          124,567
TOTAL LIABILITIES AND STOCKHOLDERS'                            $148,195                         $135,879
EQUITY
The accompanying notes are an integral part of these consolidated
financial statements.
PCTEL, Inc.
Consolidated Condensed Statements of Operations
(unaudited, in thousands, except per share information)
                                                                                      Three Months Ended                                         Nine Months Ended
                                                                                      September 30,                                              September 30,
                                                                                      2008                            2007                       2008                 2007
CONTINUING OPERATIONS
             REVENUES                                                                 $20,087                         $17,626                    $58,661              $50,743
             COST OF REVENUES                                                         10,527                          9,753                      30,627               28,099
             GROSS PROFIT                                                             9,560                           7,873                      28,034               22,644
             OPERATING EXPENSES:
             Research and development                                                 2,591                           2,156                      7,387                7,381
             Sales and marketing                                                      2,543                           2,825                      8,180                8,233
             General and administrative                                               2,619                           3,129                      8,372                9,700
             Amortization of other intangible assets                                  552                             408                        1,544                1,579
             Restructuring charges                                                    -                               (152     )                 364                  1,922
             Impairment charge                                                        882                             -                          882                  -
             Gain on sale of assets and related royalties                             (200         )                  (250     )                 (600     )           (750     )
             Total operating expenses                                                 8,987                           8,116                      26,129               28,065
             OPERATING INCOME (LOSS) FROM CONTINUING OPERATIONS                       573                             (243     )                 1,905                (5,421   )
             OTHER INCOME, NET                                                        120                             820                        1,557                2,620
             INCOME (LOSS) FROM CONTINUING OPERATIONS BEFORE
             INCOME TAXES AND DISCONTINUED OPERATIONS                                 693                             577                        3,462                (2,801   )
             PROVISION (BENEFIT) FOR INCOME TAXES                                     (10,216      )                  34                         (8,451   )           612
             NET INCOME (LOSS) FROM CONTINUING OPERATIONS                             10,909                          543                        11,913               (3,413   )
DISCONTINUED OPERATIONS
             NET INCOME FROM DISCONTINUED OPERATIONS,
             NET OF TAX PROVISION                                                     157                             98                         37,035               89
NET INCOME (LOSS)                                                                     $11,066                         $641                       $48,948              ($3,324  )
             Basic Earnings per Share:
             Income (Loss) from Continuing Operations                                 $0.60                           $0.03                      $0.61                ($0.16   )
             Income from Discontinued Operations                                      $0.01                           $0.00                      $1.90                $0.00
             Net Income (Loss)                                                        $0.61                           $0.03                      $2.51                ($0.16   )
             Diluted Earnings per Share:
             Income (Loss) from Continuing Operations                                 $0.58                           $0.03                      $0.60                ($0.16   )
             Income from Discontinued Operations                                      $0.01                           $0.00                      $1.87                $0.00
             Net Income (Loss)                                                        $0.59                           $0.03                      $2.48                ($0.16   )
             Weighted average shares - Basic                                          18,164                          20,823                     19,525               20,981
             Weighted average shares - Diluted                                        18,709                          20,970                     19,761               20,981
The accompanying notes are an integral part of these consolidated
financial statements.
PCTEL, Inc.
Revenue & Gross Profit by Segment
(unaudited, in thousands)
                                  Three Months Ended              Nine Months Ended
                                  September 30,                   September 30,
                                  2008             2007           2008            2007
REVENUES:
Broadband Technology Group        $20,015          $17,302        $58,448         $50,144
Licensing                         72               324            213             599
TOTAL REVENUES                    20,087           17,626         58,661          50,743
GROSS PROFIT:
Broadband Technology Group        9,489            7,553          27,826          22,052
Licensing                         71               320            208             592
TOTAL GROSS PROFIT                9,560            7,873          28,034          22,644
GROSS PROFIT %:
Broadband Technology Group        47.4%            43.7%          47.6%           44.0%
Licensing                         98.6%            98.8%          97.7%           98.8%
TOTAL GROSS PROFIT %              47.6%            44.7%          47.8%           44.6%
     Reconciliation GAAP To non-GAAP
     Results Of Operations
     (unaudited, in thousands except per share information)
     Reconciliation of GAAP operating
     income from continuing operations to non-GAAP operating income
     from continuing operations (a)
                                                                         Three Months Ended September 30,                   Nine Months Ended September 30,
                                                                         2008                   2007                        2008                     2007
     Operating Income (Loss) from Continuing Operations                  $573                   ($243   )                   $1,905                   ($5,421  )
(a)  Add:
     Amortization of other intangible assets                             552                    408                         1,544                    1,579
     Restructuring charges                                               -                      (152    )                   364                      1,922
     Impairment charge                                                   882                    -                           882                      -
     Stock Compensation:
     -Cost of Goods Sold                                                 72                     131                         288                      318
     -Engineering                                                        135                    118                         437                      342
     -Sales & Marketing                                                  123                    102                         514                      403
     -General & Administrative                                           578                    678                         2,230                    2,094
                                                                         2,342                  1,285                       6,259                    6,658
     Non-GAAP Operating Income                                           $2,915                 $1,042                      $8,164                   $1,237
     % of revenue                                                        14.5     %             5.9     %                   13.9     %               2.4      %
     Reconciliation of GAAP net
     income from continuing operations to non-GAAP net income from
     continuing operations (b)
                                                                         Three Months Ended September 30,                   Nine Months Ended September 30,
                                                                         2008                   2007                        2008                     2007
     Net Income (Loss) from Continuing Operations                        $10,909                $543                        $11,913                  ($3,413  )
     Add:
(a)  Non-GAAP adjustment to operating loss                               2,342                  1,285                       6,259                    6,658
(b)  Income Taxes                                                        (10,692  )             21                          (9,977   )               608
                                                                         (8,350   )             1,306                       (3,718   )               7,266
     Non-GAAP Net Income                                                 $2,559                 $1,849                      $8,195                   $3,853
     Basic Earnings per Share:
     Income from Continuing Operations                                   $0.14                  $0.09                       $0.42                    $0.18
     Diluted Earnings per Share:
     Income from Continuing Operations                                   $0.14                  $0.09                       $0.41                    $0.18
     Weighted average shares - Basic                                     18,164                 20,823                      19,525                   20,981
     Weighted average shares - Diluted                                   18,709                 20,970                      19,761                   21,636
     This schedule reconciles the company's GAAP operating income and
     GAAP net income from continuing operations to its non-GAAP
     operating income and non-GAAP net income from continuing
     operations.The company believes that presentation of this
     schedule 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 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.
     (a) These adjustments reflect stock based compensation expense,
     amortization of intangible assets, restructuring charges and
     the impairment charges
     (b) These adjustments include the items described in footnote (a)
     as well as the non-cash income tax expense

SOURCE: PCTEL, Inc.

For further information contact: 
John Schoen 
CFO 
PCTEL, Inc. 
(630) 372-6800 
Jack Seller 
Public Relations 
PCTEL, Inc. 
(630) 372-6800 
jack.seller@pctel.com 
Mary McGowan 
Investor Relations 
Summit IR Group 
(408) 404-5401 
mary@summitirgroup.com

Copyright Business Wire 2008

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