PCTEL Announces Results of Operations for the First Quarter of 2002
Sequential Quarter Analysis
First quarter total revenue was $10.3 million, comprised of $7.8 million of core product and licensing revenue, a one time royalty payment of $2.0 million, pursuant to a licensing agreement entered into during the quarter, and recovery of $0.5 million in previously reserved accounts receivable. This compares to fourth quarter total revenue of $7.5 million, comprised of $4.7 million of product and licensing revenue and collection of $2.8 million of previously reserved accounts receivable. Net income for the quarter was $462,000 or $0.02 per diluted share. This compares to a net loss of $(6.1) million, or $(0.31) per diluted share, in the fourth quarter of last year. The improvement in net income reflects the sequential increase in core product and licensing revenue, the one-time royalty payment, and the further reduction of operating expenses. The cost reduction programs initiated in the fourth quarter were in place for the entire first quarter and the company's standard operating expenses declined from $9.9 million to $5.7 million.
During the first quarter, the company settled its two outstanding patent lawsuits. The first was with ESS Technologies. The settlement required ESS to make an initial license payment of $2.0 million to PCTEL and future royalty payments based on the terms under the settlement agreement. The second was with Dr. Brent Townshend. Under the Settlement Agreement, PCTEL made a cash payment of $14.3 million related to royalties on the company's shipments prior to 2002 and the prepayment of future royalties. The company is not in litigation with any parties at this time.
The company's balance sheet remains strong. Cash and short-term investments ended the quarter at $111.8 million, with no debt.
"We had four goals for the second 90 days of the new management team,"
said Marty Singer, PCTEL's chairman and CEO. "They were to grow product
revenues, eliminate areas of unnecessary cost, bring our patent litigation
matters to a successful conclusion, and recruit leadership for our wireless
efforts. Now that we have accomplished those immediate goals we are turning
our attention to strategic investments and additional cost reductions in our
legacy business. We have been very active in both of these areas," added
Singer.
Year Over Year Quarter Analysis
Quarterly revenue declined sequentially in each of the first three
quarters of 2001 due to the slow down in the PC industry and related build up
of inventory in the channel. The company saw product and licensing revenue
decline from a high of $16.5 million in the first quarter to a low of
$4.7 million in each of the third and fourth quarters last year. Channel
inventories have returned to manageable levels for most of our customers, as
reflected in the first quarter 2002 revenue. Net income increased to $462,000,
or $0.02 per diluted share, from a net loss of $(2.9) million, or $(0.15) per
diluted share, from a year ago. The increase in income is primarily attributed
to the one time royalty payment in 2002 and reduction of operating expenses
from $10.9 million last year's first quarter to $5.7 million this year's first
quarter.
CONFERENCE CALL / WEBCAST
The company will hold a conference call at 2:00 p.m. PDT (5:00 p.m. EDT) today with Marty Singer, chairman and chief executive officer, and John Schoen, chief operating officer and chief financial officer. The session will include brief remarks, and can be accessed by calling 800-633-8548 (domestic) or 212-346-6576 (international).
To listen via the Internet, please visit http://www.pctel.com, or http://www.videonewswire.com/event.asp?id=4583 .
REPLAY: The replay will be available on PCTEL's web site at http://www.pctel.com
or by calling (800) 633-8284 (domestic) or (858) 812-6440 (international);
access code: 20542127.
ABOUT PCTEL
PCTEL, founded in March 1994, is a leading provider of innovative, cost-
effective Internet access solutions, including analog soft modems, and
embedded DSP-based modems. The company is built upon a wide-ranging and
comprehensive portfolio of more than 80 analog and broadband communications
patents, issued or pending, including the key and essential patents for Host
Signal Processing (HSP) modem technology. PCTEL products are available to PC
and data communications equipment manufacturers. PCTEL is located at 1331
California Circle, Milpitas, CA., 95035. Telephone: 408-965-2100. Fax: 408-
895-0178. For more information on PCTEL products, visit the PCTEL website at
http://www.pctel.com .
Safe Harbor Statement
This press release contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, regarding the company's intent to enter future markets other than the analog modem business. Actual results may differ materially from those projected as a result of certain risks and uncertainties. These risks and uncertainties include, but are not limited to; the demand for personal computers and the markets addressed by the company's and its customers' products; the cyclical nature of the semiconductor and PC industries; demand for and market acceptance of new alternative Internet access devices; and the ability to develop and implement new technologies and to obtain protection for the related intellectual property. The risks and uncertainties in the company's business, including but not limited to those detailed from time to time in the company's Securities and Exchange Commission filings, can affect results. These forward-looking statements are made only as of the date hereof, and the company disclaims any obligation to update or revise the information contained in any forward- looking statements, whether as a result of new information, future events or otherwise.
PCTEL, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share information)
Three Months Ended
March 31,
2002 2001
(Unaudited)
REVENUES $10,342 $16,451
COST OF REVENUES 5,226 11,333
GROSS PROFIT 5,116 5,118
OPERATING EXPENSES:
Research and development 2,396 3,468
Sales and marketing 1,638 3,476
General and administrative 1,466 2,167
Amortization of goodwill and other
intangible assets -- 946
Restructuring charges -- 524
Amortization of deferred compensation 175 293
Total operating expenses 5,675 10,874
LOSS FROM OPERATIONS (559) (5,756)
OTHER INCOME, NET:
Other income, net 1,053 1,762
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME TAXES 494 (3,994)
PROVISION (BENEFIT) FOR INCOME TAXES 32 (1,098)
NET INCOME (LOSS) $462 $(2,896)
Basic earnings (loss) per share $0.02 $(0.15)
Shares used in computing basic earnings
per share 19,720 18,973
Diluted earnings (loss) per share $0.02 $(0.15)
Shares used in computing diluted
earnings per share 19,868 18,973
PCTEL, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
March 31, December 31,
2002 2001
(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $21,665 $38,393
Short-term investments 90,166 87,235
Accounts receivable, net 2,256 2,849
Inventories, net 1,296 2,870
Prepaid expenses and other assets 5,435 5,055
Deferred tax asset 400 400
Total current assets 121,218 136,802
PROPERTY AND EQUIPMENT, net 2,368 2,769
GOODWILL, net 384 384
OTHER ASSETS 3,083 228
TOTAL ASSETS $127,053 $140,183
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $1,582 $4,944
Accrued royalties 3,202 12,343
Income taxes payable 5,573 5,573
Accrued liabilities 7,327 9,421
Total current liabilities 17,684 32,281
LONG-TERM LIABILITIES -- 141
Total liabilities 17,684 32,422
STOCKHOLDERS' EQUITY:
Common stock 20 20
Additional paid-in capital 152,060 150,319
Deferred compensation (1,293) (1,158)
Accumulated deficit (41,770) (42,232)
Accumulated other comprehensive income 352 812
Total stockholders' equity 109,369 107,761
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $127,053 $140,183