BLOOMINGDALE, Ill. -- (BUSINESS WIRE) -- (NASDAQ: PCTI) The Audit Committee of the Board of Directors of PCTEL, Inc. (the “Company” or “PCTEL”) has concluded that the financial statements relating to the recently acquired assets of the TelWorx Entities contain material errors. The Audit Committee further concluded that these material errors relate solely to pre-acquisition financial statements of the TelWorx Entities and have no material effect on any pre-acquisition consolidated financial statements of PCTEL.
Management detected accounting irregularities at its PCTelWorx subsidiary in December, 2012. PCTelWorx holds the assets acquired from the TelWorx Entities in July 2012. Management promptly informed the Audit Committee and its Board of Directors. With the oversight of the Audit Committee and assistance from outside counsel and forensic accountants, the Company immediately commenced a formal, internal investigation.
The expanded investigation is ongoing, but results to date indicate that pre and post-acquisition accounting errors and irregularities stem from Tim Scronce’s actions. Scronce was the executive formerly responsible for PCTelWorx operations and the principal owner of the TelWorx Entities. Management believes that the accounting irregularities in the TelWorx Financial Statements identified as a result of this investigation were directed and/or permitted by management of the TelWorx Entities, principally Tim Scronce and those acting at his direction. The Company further believes that Scronce continued to engage in these actions after the July 2012 acquisition.
PCTEL is seeking restitution from Tim Scronce, Brenda Scronce, the CEO of TowerWorx, and other responsible parties. Scronce and two other individuals involved with these irregularities are no longer with the Company.
Management expects to record a non-cash impairment charge to good will in the fourth quarter of 2012 related to the actual performance and the expected future financial performance of PCTelWorx. The amount of this charge is under review with PCTEL’s auditors and the Audit Committee, but management currently projects that it will be in the range of approximately $13-14 million. When the precise amount is determined, the Company will report it in accordance with SEC requirements. PCTEL does not expect the impairment charge to result in any future cash expenditures. Management also does not anticipate a restatement of the Company’s third quarter financial statements. All of this will be reviewed at the Company’s fourth quarter earnings release which is scheduled for March 28, 2013 at 4:00 p.m. CDT.
PCTEL self-reported to the SEC regarding these matters, and is cooperating fully with the SEC.
“While disappointing, we are relieved that we detected and eliminated unethical executive behavior within a few months of the acquisition of the TelWorx business,” said Marty Singer, PCTEL’s Chairman and CEO. “We are actively pursuing restitution on behalf of the Company and are confident that the acquisition still gives PCTEL expanded access to key vertical markets,” added Singer.
Management has scheduled a conference call for tomorrow morning, Wednesday, March 13, 2013, at 7:30 a.m. CDT to discuss these matters, including its 8-K/A filing with shareholders and other interested parties. The call can be accessed by dialing (877) 734-5369 (U.S./Canada) or (706) 679-6397 (International) conference ID: 23141289. The call will also be webcast at http://investor.pctel.com/events.cfm. 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: 23141289.
PCTEL, Inc. (NASDAQ: PCTI), develops antenna, scanning receiver, and engineered site solutions and services for public and private networks. PCTEL RF Solutions specializes in the design, optimization and testing of today's wireless communication networks. The company's SeeGull® scanning receivers, SeeHawk® visualization tool, and Clarify® system, measure and analyze wireless signals for efficient cellular network planning, deployment, and optimization. PCTEL develops and supports scanning receivers for LTE, TD-LTE, EV-DO, CDMA, WCDMA, TD-SCDMA, GSM, and WiMAX networks.
PCTEL Connected Solutions™ simplifies network deployment for wireless, data and communications applications for private network, public safety, and government customers. PCTEL Connected Solutions develops and delivers high-value YAGI, Land Mobile Radio, WiFi, GPS, In-Tunnel, Subway, and broadband antennas (parabolic and flat panel) through its MAXRAD®, Bluewave™ and Wi-Sys™ product lines. PCTEL also designs specialized towers, enclosures, fiber optic panels, and fiber jumper cables to deliver custom engineered site solutions. The company's vertical markets include SCADA, Health Care, Smart Grid, Positive Train Control, Precision Agriculture, Indoor Wireless, Telemetry, Off-loading, and Wireless Backhaul. PCTEL Secure focuses on Android® mobile platform security. PCTEL's products are sold worldwide through direct and indirect channels. For more information, please visit the company's web sites www.pctel.com, www.antenna.com, www.rfsolutions.pctel.com, www.connectedsolutions.pctel.com, www.towerworx.com, www.wirelesstesting.com or www.pctelsecure.com.
PCTEL Safe Harbor Statement
This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Specifically, the statements regarding PCTEL's expectations as to the successful resolution of the matters described in this press release and the projected amount of non-cash impairment charge to good will in the fourth quarter 2012 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 difficulty of predicting the outcome of litigation, settlement negotiations and other dispute resolution procedures. 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.