PCTEL Announces Results of Operations for the First Quarter of 2002

PCTEL Announces Results of Operations for the First Quarter of 2002

April 30, 2002
PCTEL Announces Results of Operations for the First Quarter of 2002 MILPITAS, Calif., April 30 /PRNewswire-FirstCall/ -- PCTEL, Inc. (Nasdaq: PCTI), a leading provider of personal connectivity and Internet access technology, today announced results for the first quarter of 2002. The company announced an increase in product and licensing revenue, significant reduction in operating expenses, and a continued strong balance sheet position.

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.


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.


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.


               Condensed Consolidated Statements of Operations
                 (in thousands, except per share information)

                                                       Three Months Ended
                                                            March 31,
                                                       2002          2001

    REVENUES                                         $10,342        $16,451

    COST OF REVENUES                                   5,226         11,333

    GROSS PROFIT                                       5,116          5,118

     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                                 1,053         1,762

    (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
     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

    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

     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