PCTEL Announces Results of Operations for the Second Quarter of 2002

PCTEL Announces Results of Operations for the Second Quarter of 2002

August 6, 2002
PCTEL Announces Results of Operations for the Second Quarter of 2002

MILPITAS, Calif., Aug. 6 -- PCTEL, Inc. (Nasdaq: PCTI - News), a leading provider of Internet access products, today announced financial results for the second quarter of 2002. Total revenue was $9.6 million for the second quarter of 2002 compared to $12.3 million reported in the second quarter of 2001. Net loss for the second quarter of 2002 was $(0.1) million, or $(0.01) per diluted share, compared to a net loss of $(7.8) million, or $(0.41) per share reported in the second quarter of 2001.

We are pleased that core product and licensing revenue, which excludes favorable one-time items in the first quarter, grew 23% in sequential quarters. Customer inventories, which had reached excessive levels in 2001, returned to manageable levels for key customers during the quarter. This was one quarter earlier than anticipated for our largest customer of 2001.

The second quarter 2002 earnings results included three significant events impacting costs. The company was able to utilize $1.5 million of inventory that was previously reserved as excess in the third quarter of 2001. This amount was brought back to income in the quarter. The second was a $0.6 million restructuring charge related to the reduction in force of resources focused on modem products. The reductions were taken in June. The company acquired the assets and key employees of cyberPixie, a provider of wireless local area network software products. The transaction was concluded in early June and the second quarter's results include approximately one month of costs associated with the engineering resources acquired.

Cash and short-term investments ended the quarter at $111.0 million The company continues to have no debt.

"We had three goals for this quarter," said Marty Singer, PCTEL's chairman and CEO. "They were to grow core product and licensing revenue from the first quarter, acquire wireless software assets, and continue to address the cost structure focused on our modem products. We accomplished these goals. Our core product revenue is up, we successfully completed the acquisition of an innovative wireless software company, and the headcount focused on our modem products is 50% of what it was in October 2001," added Singer.


The company will hold a conference call at 2:00 PM PDT (5:00 PM 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 800-374-0092 (domestic) or 706-679-0409 (international).

To listen via the Internet, please visit, www.pctel.com, or http://www.shareholder.com/pctel/MediaList.cfm .

REPLAY: The replay will be available on PCTEL's web site at www.pctel.com or by calling 800-642-1687 (domestic) or 706-645-9291 (international); access code: 4856636.


PCTEL, founded in March 1994, is leading the evolution of innovative, cost-effective Internet access solutions, including analog soft modems, embedded DSP-based modems, and the latest high speed wireless technology. The company's market leadership 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, Specifically, statements regarding PCTEL's future business prospects are forward looking statements within the meaning of the safe harbor, including but not limited to statements, regarding the manageability of channel inventories. 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. 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; our ability to successfully address the cost structure of our modem products; our success at developing and sustaining our wireless business; 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.

     For further information contact:

          John Schoen              Jack Seller
          COO/CFO                  Public Relations
          PCTEL, Inc.              PCTEL, Inc.
          408-965-2162             408-965-2127
          john_schoen@pctel.com    jack_seller@pctel.com

                                 PCTEL, Inc.

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

                                    Three Months Ended      Six Months Ended
                                          June 30,               June 30,
                                      2002       2001         2002      2001

    REVENUES                        $9,557    $12,255      $19,899   $28,706
    COST OF REVENUES                 5,568      8,899       10,794    20,232
    INVENTORY RECOVERY             (1,553)         --      (1,553)        --
    GROSS PROFIT                     5,542      3,356       10,658     8,474
      Research and development       2,761      2,810        5,157     6,278
      Sales and marketing            1,853      3,213        3,491     6,689
      General and administrative     1,142      2,914        2,608     5,081
      Amortization of goodwill
       and other intangible assets      --        949           --     1,895
      Restructuring charges            647      1,583          647     2,107
      Amortization of deferred
       compensation                    183        261          358       554
        Total operating expenses     6,586     11,730       12,261    22,604
    LOSS FROM OPERATIONS           (1,044)    (8,374)      (1,603)  (14,130)

      Other income, net                937      1,704        1,990     3,466
     PROVISION FOR INCOME TAXES      (107)    (6,670)          387  (10,664)
    PROVISION FOR INCOME TAXES          31      1,114           63        16
    NET INCOME (LOSS)               $(138)   $(7,784)         $324 $(10,680)

    Basic earnings (loss)
     per share                     $(0.01)    $(0.41)        $0.02   $(0.56)
    Shares used in computing
     basic earnings per share       19,933     19,206       19,827    19,090

    Diluted earnings (loss)
     per share                     $(0.01)    $(0.41)        $0.02   $(0.56)
    Shares used in computing
     diluted earnings per share     19,933     19,206       20,042    19,090

                                 PCTEL, Inc.

                    Condensed Consolidated Balance Sheets
                   (in thousands, except share information)

                                                    June 30,     December 31,
                                                      2002            2001
      Cash and cash equivalents                      $40,529        $38,393
      Short-term investments                          70,520         87,235
      Accounts receivable, net                         2,680          2,849
      Inventories, net                                 1,586          2,870
      Prepaid expenses and other assets                5,160          5,055
      Deferred tax asset                                 400            400
        Total current assets                         120,875        136,802
    PROPERTY AND EQUIPMENT, net                        2,290          2,769
    GOODWILL AND OTHER INTANGIBLE ASSETS, net          1,772            384
    OTHER ASSETS                                       3,159            228
    TOTAL ASSETS                                    $128,096       $140,183

      Accounts payable                                $1,216         $4,944
      Accrued royalties                                3,299         12,343
      Income taxes payable                             5,559          5,573
      Accrued liabilities                              7,480          9,421
      Current portion of long-term liabilities            16             --
     Total current liabilities                        17,570         32,281
    LONG-TERM LIABILITIES                                 63            141
        Total liabilities                             17,633         32,422

      Common stock                                        20             20
      Additional paid-in capital                     152,936        150,319
      Deferred compensation                          (1,006)        (1,158)
      Retained earnings (deficit)                   (41,908)       (42,232)
      Accumulated other comprehensive income             421            812
      Total stockholders' equity                     110,463        107,761
    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY      $128,096       $140,183