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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
JULY 27, 2006
Date of Report (Date of earliest event reported)
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PCTEL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 000-27115 77-0364943
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(State or Other Jurisdiction of (Commission (IRS Employer
Incorporation) File Number) Identification No.)
8725 W. HIGGINS ROAD, SUITE 400
CHICAGO, IL 60631
(Address of Principal Executive Offices, including Zip Code)
(773) 243-3000
(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))
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The company filed a Current Report on Form 8-K dated April 7, 2006 related to
the discontinuance of its manufacturing operations at its factory in Dublin,
Ireland. This filing updates the information presented in the previous filing.
ITEM 2.05 COSTS ASSOCIATED WITH EXIT OR DISPOSAL ACTIVITIES
On April 7, 2006, the company reached an agreement in principle with the
labor union responsible for the company's manufacturing and certain other
personnel in its Dublin, Ireland factory to discontinue the manufacture of the
iVET, PMR and DPMR lines of the company's antenna products at that location. The
agreement was formally signed on April 20, 2006. This agreement will enable the
company to wind down its manufacturing operations at the Dublin facility,
terminate 65 redundant employee positions, terminate its facilities lease at
this location, and reduce its pension obligations to terminated employees.
Manufacturing of the discontinued lines of antenna products will be
substantially relocated either to a contract manufacturer in St. Petersburg,
Russia, or to the company's Antenna Products Group facility in Bloomingdale,
Illinois. The process of winding down manufacturing operations in Dublin and
relocating the products to their new manufacturing locations is expected to be
complete in August 2006, and the related general and administrative support
functions are expected to be eliminated by the end of 2006.
The company will continue to maintain antenna research and development as
well as sales and marketing activities in a smaller facility in Dublin to be
established during the last quarter of 2006. The company believes that its
restructuring activities in Dublin will enable it to improve the gross profit
margins of the antenna product lines that were included with the company's
acquisition of Sigma Wireless Technologies in July 2005.
The company expects to incur restructuring costs related to the
discontinuation of its Dublin manufacturing operations. The categories of costs
are: severance pay for employees whose jobs are being made redundant; future
minimum lease payments through June 2007 on the existing Dublin facility which
will be vacated; and, termination of the employee pension defined benefit plan.
The severance, future lease payments, and a portion of the termination of the
employee pension defined benefit plan will result in future cash expenditures.
The company will incur severance costs of approximately $1.5 million.
Approximately $0.5 million was recorded in the first quarter, $0.9 million in
the second quarter, with the remaining $0.1 million to be recorded over the
second half of 2006.
It is anticipated that the future minimum lease payments between the time
the facility is vacated and the end of the minimum lease period will be between
$0.1 and $0.2 million.
The company terminated the pension plan and funded an agreed upon $0.6
million obligation in June 2006. The result was a non-cash net gain on
termination of the plan of $2.6 million, which was recorded in the second
quarter as an offset to restructuring cost.
ITEM 2.06 MATERIAL IMPAIRMENTS
In conjunction with the discontinuance of manufacturing operations in the
Dublin facility, the company will dispose of fixed assets no longer required. It
anticipates the net book value of such assets to be in a range between $0.3 and
$0.5 million. The impairment is non-cash in nature.
In conjunction with the discontinuance of manufacturing operations in the
Dublin facility, the company will dispose of inventory that is not compatible
with the new manufacturing model. The value
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of the inventory is $0.4 million, and was recorded as a restructuring expense in
Q2 2006. The impairment is non-cash in nature.
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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: July 27, 2006
PCTEL, INC.
By: /s/ John W. Schoen
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John W. Schoen,
Chief Financial Officer
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