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pcti-8k_20170808.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported)

August 8, 2017

PCTEL, Inc.

(Exact name of registrant as specified in its charter)

Delaware

000-27115

77-0364943

(State or Other Jurisdiction

of Incorporation)

(Commission

File Number)

(IRS Employer
Identification No.)

471 Brighton Drive

Bloomingdale, Illinois 60108

(Address of Principal Executive Offices, including Zip Code)

(630) 372-6800

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):


☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)


☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))


☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

The following information is intended to be furnished under Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On August 8, 2017, PCTEL, Inc. issued a press release regarding its financial results for its second fiscal quarter ended June 30, 2017. The full text of the press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits


(d)	Exhibits.


99.1	Press release, dated August 8, 2017, of PCTEL, Inc. announcing its financial results for its second fiscal quarter ended June 30, 2017.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: August 10, 2017



		PCTEL, INC.

By:		/s/ John W. Schoen
		John W. Schoen, Chief Financial Officer

EXHIBIT INDEX


Exhibit Number		Description
99.1		Press release, dated August 8, 2017, of PCTEL, Inc. announcing its financial results for its second fiscal quarter ended June 30, 2017.

pcti-ex991_6.htm

EXHIBIT 99.1

PCTEL Reports $21.5 Million in Second Quarter Revenue

BLOOMINGDALE, Ill. – August 8, 2017 – PCTEL, Inc. (NASDAQ: PCTI), a leader in Performance Critical TELecom solutions, announced its results for the second quarter and first half ended June 30, 2017.

The Company sold its engineering services operations in July. At June 30, 2017 the assets sold were classified as assets held for sale and the services operations are accounted for as discontinued operations.

Highlights From Continuing Operations

•

Revenue of $21.5 million in the second quarter and $44.5 million in the first half, a 1% increase in the quarter and a 10% increase in the half compared to last year. Connected Solutions revenue was up 7% in the quarter and 12% in the half. RF Solutions was down 16% in the quarter and up 3% in the half.

•

Gross profit margin of 41.7% in the second quarter and 41.4% in the first half, down 20 basis points in the quarter and up 90 basis points in the half compared to last year.

•

Net loss per share of $0.01 in the second quarter and break even in the first half, compared to a net loss of $0.49 per share in the quarter and $0.52 in the half last year.

•

Non-GAAP net income and adjusted EBITDA are measures the company uses to reflect the results of its core earnings. A reconciliation of those non-GAAP measures to our financial statements is provided later in the press release.

•

Non-GAAP net income of $0.05 per share in the second quarter and $0.10 in the first half compared to net income of $0.08 in the quarter and the half last year.

•

Adjusted EBITDA margin as a percent of revenue of 8% in the second quarter and the first half compared to 10% in the quarter and 7% in the half last year.

•

$34.2 million of cash and short-term investments at June 30, 2017. The Company generated free cash flow (cash flow from operations less capital spending) of approximately $2.0 million in the quarter and $2.9 million in the half.

“We are pleased to see continued antenna revenue growth in small cell, fleet, and utilities markets. Consistent with the Company’s investment thesis, antennas drove growth while RF Test tools generated profitable revenue.”

said David Neumann, PCTEL’s CEO. “The recent sale of our non-core engineering services operation allows us to concentrate on our mission of being a best in class RF products company.”

CONFERENCE CALL / WEBCAST

PCTEL’s management team will discuss the Company’s results today at 5:15 p.m. ET. The call can be accessed by dialing (888) 782-2072 (U.S. / Canada) or (706) 679-6397 (International), conference ID: 47850677. The call will also be webcast at http://investor.pctel.com/events.cfm.

REPLAY: A replay will be available for two weeks after the call on either the website listed above or by calling (855) 859-2056 (U.S./Canada), or International (404) 537-3406, conference ID: 47850677.

About PCTEL

PCTEL delivers Performance Critical TELecom technology solutions to the wireless industry. We are the leading global supplier of antennas and wireless network testing solutions. PCTEL Connected Solutions designs and manufactures precision antennas. PCTEL antennas are deployed in small cells, enterprise Wi-Fi access points, fleet management and transit systems, and in equipment and devices for the Industrial Internet of Things (IIoT). PCTEL RF Solutions provides test tools that improve the performance of wireless networks globally. Mobile operators, neutral hosts, and equipment manufacturers rely on PCTEL to analyze, design, and optimize next generation wireless networks.

For more information, please visit the following websites.

PCTEL Corporate: http://www.pctel.com/

PCTEL Connected Solutions: http://www.antenna.com/

PCTEL RF Solutions: http://rfsolutions.pctel.com/

PCTEL Safe Harbor Statement

This press release and our related comments in our earnings conference call contain “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding our future financial performance, growth of our Connected Solutions and RF Solutions businesses, anticipated demand for certain products, including antennas for small cell, enterprise WiFi, IoT and FirstNet applications, and the impact of the divestiture of our engineering services assets 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 actual growth in the APAC region, impact of data densification and IoT on capacity and coverage demand, impact of 5G, customer demand for these types of products and services generally, growth and continuity in PCTEL’s vertical markets, and PCTEL’s ability to grow its wireless products business and create, protect and implement new technologies and solutions. 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.

# # #

For further information contact:

John SchoenMichael Rosenberg

CFODirector of Marketing

PCTEL, Inc.PCTEL, Inc.

(630) 372-6800(301) 444-2046

public.relations@pctel.com

PCTEL, INC.

CONSOLIDATED BANALCE SHEETS

(in thousands, except share data)

	(unaudited)
	June 30,			December 31,
	2017			2016
ASSETS

Cash and cash equivalents	$	11,875		$	14,855
Short-term investment securities		22,340			18,456
Accounts receivable, net of allowance for doubtful accounts of $257 and $273 at June 30, 2017 and December 31, 2016, respectively		17,735			19,101
Inventories, net		13,783			14,442
Prepaid expenses and other assets		1,365			1,498
Current assets held for sale		694			50
Total current assets		67,792			68,402
Property and equipment, net		12,310			11,796
Goodwill		3,332			3,332
Intangible assets, net		2,694			3,275
Deferred tax assets, net		5,647			4,512
Other noncurrent assets		83			36
Non-current assets held for sale		0			813
TOTAL ASSETS	$	91,858		$	92,166

LIABILITIES AND STOCKHOLDERS’ EQUITY

Accounts payable	$	6,009		$	6,073
Accrued liabilities		6,300			7,177
Total current liabilities		12,309			13,250

Other long-term liabilities		472			391

Total liabilities		12,781			13,641

Stockholders’ equity:
Common stock, $0.001 par value, 100,000,000 shares authorized, 17,791,498 and 17,335,122 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively		18			17
Additional paid-in capital		134,748			134,480
Accumulated deficit		(55,463	)		(55,590	)
Accumulated other comprehensive loss		(226	)		(382	)
Total stockholders’ equity		79,077			78,525
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	91,858		$	92,166

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in thousands, except per share data)


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016

REVENUES	$	21,501		$	21,308		$	44,471		$	40,491
COST OF REVENUES		12,539			12,374			26,055			24,097
GROSS PROFIT		8,962			8,934			18,416			16,394
OPERATING EXPENSES:
Research and development		2,667			2,523			5,383			5,130
Sales and marketing		2,912			3,090			6,165			5,954
General and administrative		3,598			3,256			6,937			6,185
Amortization of intangible assets		124			129			248			284
Restructuring expenses		0			22			0			216
Total operating expenses		9,301			9,020			18,733			17,769
OPERATING LOSS		(339	)		(86	)		(317	)		(1,375	)
Other income, net		14			8			42			14
LOSS BEFORE INCOME TAXES		(325	)		(78	)		(275	)		(1,361	)
(Benefit) expense for income taxes		(140	)		7,703			(274	)		6,957
NET LOSS FROM CONTINUING OPERATIONS		(185	)		(7,781	)		(1	)		(8,318	)
NET LOSS FROM DISCONTINUED OPERATIONS, NET OF TAX BENEFIT		(168	)		(3,292	)		(382	)		(4,211	)
NET LOSS	$	(353	)	$	(11,073	)		(383	)	$	(12,529	)

Net Loss per Share From Continuing Operations:
Basic	$	(0.01	)	$	(0.49	)	$	(0.00	)	$	(0.52	)
Diluted	$	(0.01	)	$	(0.49	)	$	(0.00	)	$	(0.52	)

Net Loss per Share From Discontinued Operations:
Basic	$	(0.01	)	$	(0.21	)	$	(0.02	)	$	(0.26	)
Diluted	$	(0.01	)	$	(0.21	)	$	(0.02	)	$	(0.26	)

Net Loss per Share:
Basic	$	(0.02	)	$	(0.69	)	$	(0.02	)	$	(0.78	)
Diluted	$	(0.02	)	$	(0.69	)	$	(0.02	)	$	(0.78	)

Weighted Average Shares:
Basic		16,534			15,979			16,437			16,149
Diluted		16,534			15,979			16,437			16,149

Cash dividend per share	$	0.05		$	0.05		$	0.10		$	0.10

PCTEL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited, in thousands)


	Six Months Ended June 30,
.	2017			2016

Operating Activities:
Net loss from continuing operations	$	(1	)	$	(8,318	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation		1,262			1,319
Intangible asset amortization		581			618
Stock-based compensation		1,797			2,090
Loss on disposal/sale of property and equipment		3			5
Restructuring costs		(58	)		109
Deferred tax provision		(423	)		6,700
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable		1,451			2,770
Inventories		779			2,325
Prepaid expenses and other assets		96			157
Accounts payable		(232	)		(1,907	)
Income taxes payable		(186	)		(54	)
Other accrued liabilities		(694	)		(576	)
Deferred revenue		20			41
Net cash provided by operating activities		4,395			5,279

Investing Activities:
Capital expenditures		(1,544	)		(1,268	)
Proceeds from disposal of property and equipment		0			1
Purchases of investments		(23,071	)		(28,519	)
Redemptions/maturities of short-term investments		19,187			31,274
Net cash (used in) provided by investing activities		(5,428	)		1,488

Financing Activities:
Proceeds from issuance of common stock		867			350
Payments for repurchase of common stock		0			(4,095	)
Payment of withholding tax on stock-based compensation		(692	)		(187	)
Principle payments on capital leases		(41	)		(9	)
Cash dividends		(1,752	)		(1,723	)
Net cash used in financing activities		(1,618	)		(5,664	)

Cash flows from discontinued operations:
Net cash used in operating activities		(349	)		(690	)
Net cash used in investing activities		(16	)		(124	)

Net (decrease) increase in cash and cash equivalents		(3,016	)		289
Effect of exchange rate changes on cash		36			(39	)
Cash and cash equivalents, beginning of year		14,855			7,055
Cash and Cash Equivalents, End of Period	$	11,875		$	7,305

PCTEL, INC.
P&L INFORMATION BY SEGMENT - Continuing Operations (unaudited)
(in thousands)





	Three Months Ended June 30, 2017										Six Months Ended June 30, 2017
	Connected Solutions		RF Solutions		Corporate			Total			Connected Solutions		RF Solutions		Corporate			Total

REVENUES	$	16,866	$	4,661	$	(26	)	$	21,501		$	34,137	$	10,418	$	(84	)	$	44,471

GROSS PROFIT		5,731		3,223		8			8,962			11,135		7,270		11			18,416

OPERATING (LOSS) INCOME	$	2,349	$	411	$	(3,099	)	$	(339	)	$	4,095	$	1,432	$	(5,844	)	$	(317	)


	Three Months Ended June 30, 2016										Six Months Ended June 30, 2016
	Connected Solutions		RF Solutions		Corporate			Total			Connected Solutions		RF Solutions		Corporate			Total

REVENUES	$	15,781	$	5,572	$	(45	)	$	21,308		$	30,480	$	10,116	$	(105	)	$	40,491

GROSS PROFIT		4,941		3,983		10			8,934			9,265		7,122		7			16,394

OPERATING (LOSS) INCOME	$	1,792	$	859	$	(2,737	)	$	(86	)	$	3,094	$	786	$	(5,255	)	$	(1,375	)

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)

Reconciliation of GAAP operating loss to non-GAAP operating income - Continuing Operations (a)

		Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016


	Operating Loss	$	(339	)	$	(86	)	$	(317	)	$	(1,375	)

(a)	Add:
	Amortization of intangible assets
	-Cost of revenues		167			167			333			333
	-Operating expenses		124			129			248			284
	Restructuring		0			22			0			216
	TelWorx investigation:
	-General & Administrative		0			(1	)		0			5
	Stock Compensation:
	-Cost of revenues		72			73			133			141
	-Engineering		120			175			266			342
	-Sales & Marketing		126			161			246			301
	-General & Administrative		770			892			1,152			1,306
			1,379			1,618			2,378			2,928
	Non-GAAP Operating Income	$	1,040		$	1,532		$	2,061		$	1,553
	% of revenue		4.8	%		7.2	%		4.6	%		3.8	%

Reconciliation of GAAP net loss to non-GAAP net (loss) income - Continuing Operations (b)

		Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016

	Net Loss	$	(185	)	$	(7,781	)	$	(1	)	$	(8,318	)

	Adjustments:
(a)	Non-GAAP adjustment to operating loss		1,379			1,618			2,378			2,928
(b)	Other income related to SEC investigation of TelWorx		0			1			0			(5	)
(b)	Income Taxes		(330	)		7,426			(653	)		6,676
			1,049			9,045			1,725			9,599
	Non-GAAP Net Income	$	864		$	1,264		$	1,724		$	1,281

	Non-GAAP Earning per Share:
	Basic	$	0.05		$	0.08		$	0.10		$	0.08
	Diluted	$	0.05		$	0.08		$	0.10		$	0.08

	Weighed Average Shares:
	Basic		16,534			15,979			16,437			16,149
	Diluted		17,015			15,979			16,921			16,312

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.

(a) These adjustments reflect stock based compensation expense, amortization of intangible assets, restructuring charges, and general and administrative expenses associated with the SEC investigation of TelWorx.

(b) These adjustments include the items described in footnote (a) as well as other income for insurance claims related to the SEC investigation of TelWorx, legal settlements, and non-cash income tax expense.


Reconciliation of GAAP to non-GAAP SEGMENT INFORMATION - Continuing Operations (unaudited) (a)
	(in thousands)


		Three Months Ended June 30, 2017										Six Months Ended June 30, 2017
		Connected Solutions		RF Solutions		Corporate			Total			Connected Solutions		RF Solutions		Corporate			Total

	Operating (Loss) Income	$	2,349	$	411	$	(3,099	)	$	(339	)	$	4,095	$	1,432	$	(5,844	)	$	(317	)
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167		0			167			0		333		0			333
	-Operating expenses		39		85		0			124			78		170		0			248
	Stock Compensation:
	-Cost of revenues		43		29		0			72			82		51		0			133
	-Engineering		62		58		0			120			117		149		0			266
	-Sales & Marketing		79		47		0			126			164		82		0			246
	-General & Administrative		46		17		707			770			89		31		1,032			1,152
			269		403		707			1,379			530		816		1,032			2,378
	Non-GAAP Operating (Loss) Income	$	2,618	$	814	$	(2,392	)	$	1,040		$	4,625	$	2,248	$	(4,812	)	$	2,061


		Three Months Ended June 30, 2016										Six Months Ended June 30, 2016
		Connected Solutions		RF Solutions		Corporate			Total			Connected Solutions		RF Solutions		Corporate			Total

	Operating (Loss) Income	$	1,792	$	859	$	(2,737	)	$	(86	)	$	3,094	$	786	$	(5,255	)	$	(1,375	)
	Add:
	Amortization of intangible assets:
	-Cost of revenues		0		167		0			167			0		333		0			333
	-Operating expenses		44		85		0			129			114		170		0			284
	Restructuring expenses		0		5		17			22			44		99		73			216
	TelWorx investigation:
	-General & Administrative		0		0		(1	)		(1	)		0		0		5			5
	Stock Compensation:
	-Cost of Goods Sold		43		30		0			73			84		57		0			141
	-Engineering		30		145		0			175			72		270		0			342
	-Sales & Marketing		113		48		0			161			200		101		0			301
	-General & Administrative		52		95		745			892			92		165		1,049			1,306
			282		575		761			1,618			606		1,195		1,127			2,928
	Non-GAAP Operating (Loss) Income	$	2,074	$	1,434	$	(1,976	)	$	1,532		$	3,700	$	1,981	$	(4,128	)	$	1,553

This schedule reconciles the Company's GAAP operating income (loss) by segment to its non-GAAP operating (loss) income. 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 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.

PCTEL, Inc.
Reconciliation of GAAP operating loss to Adjusted EBITDA - Continuing Operations (a)
(in thousands)



		Three Months Ended June 30,						Six Months Ended June 30,
		2017			2016			2017			2016

	Operating Loss	$	(339	)	$	(86	)	$	(317	)	$	(1,375	)

(a)	Add:
	Depreciation and amortization		633			659		$	1,262			1,319
	Intangible amortization		291			296		$	581			617
	Stock compensation expenses		1,088			1,301		$	1,797			2,090
	Restructuring - operating expenses		0			22		$	0			216
	TelWorx investigation- operating expenses		0			(1	)	$	0			5
	Adjusted EBITDA	$	1,673		$	2,191		$	3,323		$	2,872
	% of revenue		7.8	%		10.3	%		7.5	%		7.1	%

This schedule reconciles the Company's GAAP operating loss to Adjusted EBITDA. The Company believes that 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 Adjusted EBITDA when evaluating its financial results as well as for internal planning and forecasting purposes. Adjusted EBITDA should not be viewed as a substitute for the Company's GAAP results.

(a) Adjusted EBITDA is defined as net income before interest, income taxes, depreciation and amortization. These adjustments reflect depreciation, amortization of intangible assets, stock compensation expenses, restructuring expenses, and general and administrative expenses associated with the SEC investigation of TelWorx.

Restated GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)



		FY2015												FY2016												FY2017
		Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			Q1			Q2


	REVENUES	$	23,158		$	23,032		$	22,393		$	21,950		$	19,183		$	21,308		$	20,892		$	23,623		$	22,970		$	21,501
	COST OF REVENUES		13,535			14,272			14,211			13,388			11,724			12,374			12,637			13,860			13,516			12,539
	GROSS PROFIT		9,623			8,760			8,182			8,562			7,459			8,934			8,255			9,763			9,454			8,962
	OPERATING EXPENSES:
	Research and development		2,738			2,904			2,863			2,699			2,607			2,523			2,451			2,577			2,716			2,667
	Sales and marketing		3,273			3,108			3,307			3,285			2,864			3,090			3,116			3,646			3,253			2,912
	General and administrative		3,321			3,108			2,682			2,809			2,928			3,256			2,847			2,873			3,339			3,598
	Amortization of intangible assets		435			558			470			441			155			129			124			124			124			124
	Restructuring expenses		0			432			411			767			194			22			17			-			0			0
	Total operating expenses		9,767			10,110			9,733			10,001			8,748			9,020			8,555			9,220			9,432			9,301
	OPERATING (LOSS) INCOME		(144	)		(1,350	)		(1,551	)		(1,439	)		(1,289	)		(86	)		(300	)		543			22			(339	)
	Other income, net		44			2,205			534			504			6			8			35			63			28			14
	(LOSS) INCOME BEFORE INCOME TAXES		(100	)		855			(1,017	)		(935	)		(1,283	)		(78	)		(265	)		606			50			(325	)
	Expense (benefit) for income taxes		(36	)		303			(391	)		(333	)		(746	)		7,703			(354	)		5,173			(134	)		(140	)
	NET (LOSS) INCOME FROM CONTINUING OPERATIONS		(64	)		552			(626	)		(602	)		(537	)		(7,781	)		89			(4,567	)		184			(185	)
	NET (LOSS) INCOME FROM DISCONTINUED OPERATIONS		31			171			203			304			(919	)		(3,292	)		86			(760	)		(214	)		(168	)
	NET (LOSS) INCOME	$	(33	)	$	723		$	(423	)	$	(298	)	$	(1,456	)	$	(11,073	)	$	175		$	(5,327	)	$	(30	)	$	(353	)

	Earning per Share - Continuing Operations:
	Basic	$	(0.00	)	$	0.03		$	(0.04	)	$	(0.04	)	$	(0.03	)	$	(0.49	)	$	0.01		$	(0.28	)	$	0.01		$	(0.01	)
	Diluted	$	(0.00	)	$	0.03		$	(0.04	)	$	(0.04	)	$	(0.03	)	$	(0.49	)	$	0.01		$	(0.28	)	$	0.01		$	(0.01	)

	Earning per Share - Discontinued Operations:
	Basic	$	0.00		$	0.01		$	0.01		$	0.02		$	(0.06	)	$	(0.21	)	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.01	)
	Diluted	$	0.00		$	0.01		$	0.01		$	0.02		$	(0.06	)	$	(0.21	)	$	0.01		$	(0.05	)	$	(0.01	)	$	(0.01	)

	Earning per Share:
	Basic	$	(0.00	)	$	0.04		$	(0.02	)	$	(0.02	)	$	(0.09	)	$	(0.69	)	$	0.01		$	(0.33	)	$	(0.00	)	$	(0.02	)
	Diluted	$	(0.00	)	$	0.04		$	(0.02	)	$	(0.02	)	$	(0.09	)	$	(0.69	)	$	0.01		$	(0.33	)	$	(0.00	)	$	(0.02	)

	Weighed Average Shares:
	Basic		18,312			18,257			17,626			16,820			16,324			15,979			16,106			16,194			16,340			16,534
	Diluted		18,525			18,408			17,809			16,969			16,324			15,979			16,245			16,194			16,715			16,534

Reconciliation of GAAP to non-GAAP Results - Continuing Operations (unaudited)
(in thousands except per share information)

Reconciliation of GAAP operating loss to non-GAAP operating income - Continuing Operations (a)

		FY2015												FY2016												FY2017
		Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			Q1			Q2


	Operating Income (Loss)	$	(100	)	$	(1,350	)	$	(1,017	)	$	(1,439	)	$	(1,289	)	$	(86	)	$	(300	)	$	543		$	22		$	(339	)
(a)	Add:
	Amortization of intangible assets:
	-Cost of revenues		20			241			167			167			167			167			167			167			166			167
	-Operating expenses		435			558			470			441			155			129			124			124			124			124
	Restructuring:
	-Cost of revenues		0			114			132			42			0			0			0			0			0			0
	-Operating expenses		0			432			411			767			194			22			17			0			0			0
	TelWorx investigation:
	-General & Administrative		38			54			9			7			5			(1	)		0			0			0			0
	Stock Compensation:
	-Cost of revenues		52			80			64			54			68			73			78			63			61			72
	-Engineering		115			31			99			175			167			175			183			125			147			120
	-Sales & Marketing		151			(17	)		220			(142	)		140			161			176			140			119			126
	-General & Administrative		153			171			203			304			414			892			541			451			382			770
			964			1,664			1,775			1,815			1,310			1,618			1,286			1,070			999			1,379
	Non-GAAP Operating Income	$	864		$	314		$	758		$	376		$	21		$	1,532		$	986		$	1,613		$	1,021		$	1,040
	% of revenue		3.7	%		1.4	%		3.4	%		1.7	%		0.1	%		7.2	%		4.7	%		6.8	%		4.4	%		4.8	%

Reconciliation of GAAP net loss to non-GAAP net (loss) income - Continuing Operations (b)

		FY2015												FY2016												FY2017
		Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			Q1			Q2
	Net Income (Loss)	$	(64	)	$	552		$	(626	)	$	(602	)	$	(537	)	$	(7,781	)	$	89		$	(4,567	)	$	184		$	(185	)
	Adjustments:
(a)	Non-GAAP adjustment to operating loss		964			1,664			1,775			1,815			1,310			1,618			1,286			1,070			999			1,379
(b)	Other income related to SEC investigation of TelWorx		(38	)		(54	)		(10	)		(1	)		(5	)		1			0			0			0			0
	Legal Settlement - Amendment to Nexgen APA		0			(2,160	)		(500	)		(500	)		0			0			0			0			0			0
(b)	Income Taxes		(185	)		248			(450	)		(401	)		(750	)		7,426			(538	)		4,871			(424	)		(330	)
			741			(302	)		815			913			555			9,045			748			5,941			575			1,049
	Non-GAAP Net Income (Loss)	$	677		$	250		$	189		$	311		$	18		$	1,264		$	837		$	1,374		$	759		$	864
	Non-GAAP Earning per Share:
	Basic	$	0.04		$	0.01		$	0.01		$	0.02		$	0.00		$	0.08		$	0.05		$	0.08		$	0.05		$	0.05
	Diluted	$	0.04		$	0.01		$	0.01		$	0.02		$	0.00		$	0.08		$	0.05		$	0.08		$	0.05		$	0.05
	Weighed Average Shares:
	Basic		18,312			18,257			17,626			16,820			16,324			15,979			16,106			16,194			16,340			16,340
	Diluted		18,525			18,408			17,809			16,969			16,324			15,979			16,245			16,439			16,715			16,715

This schedule reconciles the Company's GAAP operating loss and GAAP net loss to its non-GAAP operating (loss) income and non-GAAP net (loss) income. 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 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.

PCTEL, Inc.
Reconciliation of GAAP operating loss to Adjusted EBITDA - Continuing Operations (a)
(in thousands)



		FY2015												FY2016												FY2017
		Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4			Q1			Q2

	Operating (Loss) Income	$	(144	)	$	(1,350	)	$	(1,551	)	$	(1,439	)	$	(1,289	)	$	(86	)	$	(300	)	$	543		$	22		$	(339	)

(a)	Add:
	Depreciation and amortization		634			656			660			660			660			659			675			635			628			633
	Intangible amortization		455			799			637			608			322			296			291			291			290			291
	Stock compensation expenses		471			265			586			391			789			1,301			978			779			709			1,088
	Restructuring - operating expenses		0			432			411			767			194			22			17			0			0			0
	TelWorx investigation- operating expenses		38			54			9			7			5			(1	)		0			0			0			0
	Adjusted EBITDA	$	1,454		$	856		$	752		$	994		$	681		$	2,191		$	1,661		$	2,248		$	1,649		$	1,673
	% of revenue		6.3	%		3.7	%		3.4	%		4.5	%		3.6	%		10.3	%		8.0	%		9.5	%		7.2	%		7.3	%