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

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, IL 60108
(Address of Principal Executive Offices, including Zip Code)

(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):

o		Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o		Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12(b))
o		Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o		Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.01 Completion of Acquisition or Disposition of Assets

     On January 4, 2008, PCTEL, Inc. (“PCTEL”) completed the sale of its Mobility Solutions Group to Smith Micro Software, Inc. (“Smith Micro”) in accordance with an Asset Purchase Agreement (the “Asset Purchase Agreement”) entered into between the two companies and publicly announced on December 10, 2007. Under the terms of the Asset Purchase Agreement, Smith Micro purchased substantially all of the assets of the Mobility Solutions Group for total consideration of $59.7 million in cash. In the transaction, PCTEL retained the accounts receivable, non customer-related accrued expenses and accounts payable of the division.

     Substantially all of the employees of the Mobility Solutions Group continued as employees of Smith Micro in connection with the completion of the acquisition. Biju Nair has departed PCTEL as its Vice President and General Manager of the Mobility Solutions Group to join Smith Micro as its Senior Vice President and General Manager in charge of Smith Micro’s Connectivity and Security business unit.

     In connection with the sale of the division, the corporate headquarters of PCTEL have moved to the company’s facilities in Bloomingdale, Illinois. The address at that location is 471 Brighton Drive, Bloomingdale, IL 60108. In addition, the corporate telephone number for PCTEL has changed to (630) 372-6800.

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers; Compensatory Arrangements of Certain Officers

     In conjunction with the completion of the sale of PCTEL’s Mobility Solutions Group to Smith Micro on January 4, 2008, Mr. Nair received a $100,000 cash incentive payment from PCTEL. In addition, a total of 36,010 shares of restricted common stock granted to Mr. Nair under PCTEL’s 1997 Stock Plan subject to vesting in 2008 were accelerated for the benefit of Mr. Nair (all other then unvested restricted stock grants terminated), and all stock options held by Mr. Nair for the purchase of common stock under PCTEL’s 1997 Stock Plan were amended to extend the exercise date of such options from 90 days to 120 days following the date of Mr. Nair’s departure from PCTEL.

Item 9.01 Financial Statements and Exhibits

(b) Pro forma financial information

     The following unaudited pro forma financial statements give effect to the Mobility Solutions Group sale in accordance with Article 11 of Regulation S-X and are based upon currently available information and certain assumptions management considered reasonable under the circumstances.

     The unaudited pro forma condensed balance sheet assumes the Mobility Solutions Group sale occurred as of September 30, 2007. Such pro forma financial statement information is based on the consolidated historical unaudited balance sheet data of PCTEL and the Mobility Solutions Group as of September 30, 2007. The unaudited pro forma balance sheet is not necessarily indicative of the results that would have been reported had the Mobility Solutions Group sale actually occurred on that date, nor is it necessarily indicative of PCTEL’s future financial position. The unaudited pro forma statements of operations for the nine months ended September 30, 2007 and for the year ended December 31, 2006 give effect to the Mobility Solutions sale as if the sale had occurred on January 1, 2006.

     The unaudited pro forma financial statements are based on and should be read in conjunction with, and are qualified in their entirety by, the historical consolidated financial statements and notes thereto of PCTEL.

PCTEL, INC.
CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2007
(Unaudited)
(in thousands, except share data)

		Mobility Solutions
		As Reported				Adjustments				Pro Forma
ASSETS
CURRENT ASSETS:
Cash and cash equivalents		$	65,898			$	59,700	a		$	125,598
Accounts receivable, net of allowance for doubtful accounts			14,877								14,877
Inventories, net			8,802								8,802
Prepaid expenses and other current assets			2,030				(49	)b			1,981
Total current assets			91,607				59,651				151,258
PROPERTY AND EQUIPMENT, net			12,719				(789	)b			11,930
GOODWILL			17,641				(871	)b			16,770
OTHER INTANGIBLE ASSETS, net			4,774								4,774
OTHER ASSETS			1,091				(75	)b			1,016
DEFERRED TAX ASSETS, net							4,721	d			4,721
TOTAL ASSETS		$	127,832			$	62,637			$	190,469
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable		$	2,442							$	2,442
Deferred revenue			1,074				(1,024	)b			50
Other accrued liabilities			5,920				1,934	b,c			7,854
Income Tax Liability			491				19,082	d			19,573
Short-term debt			1,092								1,092
Total current liabilities			11,019				19,992				30,011
Other long-term accrued liabilities			2,705				(241	)b			2,464
Total liabilities			13,724				19,751				33,475
STOCKHOLDERS’ EQUITY:
Common stock			22								22
Additional paid-in capital			164,020				922	d			164,942
Accumulated deficit			(49,996	)			41,964	e			(8,032	)
Accumulated other comprehensive income			62								62
Total stockholders’ equity			114,108				42,886				156,994
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY		$	127,832			$	62,637			$	190,469

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

PCTEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS — PRO FORMA
FOR THE YEAR ENDED SEPTEMBER 30, 2007
(Unaudited)
(in thousands, except per share data)

		Mobility Solutions
		As Reported				Adjustments (f)				Pro Forma
REVENUES		$	58,231			$	7,490			$	50,741
COST OF REVENUES			28,132				35				28,097
GROSS PROFIT			30,099				7,455				22,644
OPERATING EXPENSES:
Research and development			11,604				4,220				7,384
Sales and marketing			10,377				2,114				8,263
General and administrative			10,494				770				9,724
Amortization of intangible assets			1,580								1,580
Restructuring charges , net			1,922								1,922
Gain on sale of assets and related royalties			(750	)							(750	)
Total operating expenses			35,227				7,104				28,123
INCOME (LOSS) FROM OPERATIONS			(5,128	)			351				(5,479	)
OTHER INCOME, NET			2,621								2,621
INCOME (LOSS) BEFORE INCOME TAXES			(2,507	)			351				(2,858	)
PROVISION FOR INCOME TAXES			818				146				672
NET INCOME (LOSS)			($3,325	)			205				($3,530	)
Basic loss per share			($0.16	)		$	0.01				($0.17	)
Shares used in computing basic loss per share			20,981				20,981			$	20,981
Diluted loss per share			($0.16	)		$	0.01				($0.17	)
Shares used in computing diluted loss per share			20,981				21,636			$	20,981

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

PCTEL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS — PRO FORMA
FOR THE YEAR ENDED DECEMBER 31, 2006
(Unaudited)
(in thousands, except per share data)

		Mobility Solutions
		As Reported				Adjustments (f)				Pro Forma
REVENUES		$	86,562				9,794			$	76,768
COST OF REVENUES			39,990				61				39,929
GROSS PROFIT			46,572				9,733				36,839
OPERATING EXPENSES:
Research and development			13,762				4,596				9,166
Sales and marketing			13,287				2,289				10,998
General and administrative			14,127				1,052				13,075
Impairment of goodwill and intangible assets			20,349								20,349
Amortization of intangible assets			3,593								3,593
Restructuring charges , net			389								389
Gain on sale of assets and related royalties			(1,000	)							(1,000	)
Total operating expenses			64,507				7,937				56,570
INCOME (LOSS) FROM OPERATIONS			(17,935	)			1,796				(19,731	)
OTHER INCOME, NET			3,303								3,303
INCOME (LOSS) BEFORE INCOME TAXES			(14,632	)			1,796				(16,428	)
PROVISION (BENEFIT) FOR INCOME TAXES			(4,613	)			762				(5,375	)
NET INCOME (LOSS) FROM OPERATIONS			($10,019	)			1,034				($11,053	)
Basic loss per share			($0.48	)		$	0.05				($0.53	)
Shares used in computing basic loss per share			20,810				20,810			$	20,810
Diluted loss per share			($0.48	)		$	0.05				($0.53	)
Shares used in computing diluted loss per share			20,810				21,512			$	20,810

The accompanying notes are an integral part of these unaudited pro forma consolidated financial statements

Notes to the Unaudited Pro Forma Financial Statements

The unaudited pro forma condensed balance sheet presented herein assumes the Mobility Solutions Group sale occurred as of September 30, 2007. Such pro forma information is based on the consolidated historical unaudited balance sheet of PCTEL, Inc. and Mobility Solutions as of September 30, 2007. The unaudited pro forma statement of operations for the nine months ended September 30, 2007 and for the year ended December 31, 2006 gives the effect to the sale of the Mobility Solutions Group as if the sale had occurred on January 1, 2006.

The unaudited pro forma financial statements are based on and should be read in conjunction with, and are qualified in their entirety by, the historical consolidated financial statements and notes thereto by PCTEL, Inc.

	a.		To record cash proceeds received in the sale of the Mobility Solutions Group to Smith Micro.
	b.		To record assets and liabilities transferred to Smith Micro or written off by PCTEL.
	c.		To record accrued transaction related expenses of $2.0 million incurred by PCTEL.
	d.		To record the estimated tax impact of the calculation, including income tax liability of $19.1 million, an increase in deferred tax assets of $4.7 million, and adjustment to additional paid in capital of $1.0 million. The actual income tax impact at January 4, 2008, will differ due to changes in the balance sheet between September 30, 2007 and January 4, 2008.
	e.		Reflects the estimated gain on sale of the Mobility Solutions Group of $57.2 million, net of income tax expense of $15.3 million as if the transaction occurred as of September 30, 2007. The actual gain at January 4, 2008, will differ due to working capital adjustments in the balance sheet between September 30, 2007 and January 4, 2008.
	f.		To record the discontinued operations of the Mobility Solutions Group.

(e) Exhibits

99.1

Press Release of PCTEL, Inc., dated January 4, 2008

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: January 10, 2008

EXHIBIT INDEX

Exhibit Number		Description
99.1		Press Release of PCTEL, Inc. dated January 4, 2008