Pulse Electronics Corporation Reports Third Quarter Results

  Pulse Electronics Corporation Reports Third Quarter Results

     Revenue and Operating Profit within Guidance; Secures $102.7 Million
  Investment from Affiliates of Funds Managed by Oaktree Capital Management,
     L.P.; Company Recapitalizes Using NYSE Financial Viability Exception

Business Wire

SAN DIEGO -- November 07, 2012

Pulse Electronics Corporation (NYSE:PULS), a leading provider of electronic
components, today reported results for its third quarter ended September 28,
2012.

Third Quarter Highlights

  *Net sales were $88.2 million, down 8.1 percent from $96.0 million in the
    prior-year quarter, and down 12.1 percent from $100.4 million in the
    second quarter.
  *Operating loss (U.S. GAAP) was $5.8 million compared with a loss of $0.7
    million in the prior-year quarter and a loss of $0.1 million in the second
    quarter.
  *Non-GAAP operating loss was $0.6 million, compared with a profit of $2.6
    million in the prior-year quarter and a profit of $0.8 million in the
    second quarter. (See Schedule A for a reconciliation of U.S. GAAP results
    to non-GAAP measures.)

Additionally, the company and certain affiliates of investment funds managed
by Oaktree Capital Management, L.P., an affiliate of Oaktree Capital Group,
LLC (NYSE: OAK), a leading global investment management firm with
approximately $81 billion under management, have entered into definitive
agreements to recapitalize Pulse with a debt and equity investment of
approximately $102.7 million in Pulse. At closing, Pulse intends to use the
proceeds to repay $55 million outstanding under its senior credit agreement
with its existing lenders and use $20 million for working capital and general
business purposes. In addition, Oaktree has agreed to exchange $27.7 million
of the company’s $50 million in outstanding 7% senior convertible notes due
2014. The new capital structure supports the company’s long term strategy and
the execution of its business plans. The loan has a five-year term and will
allow Pulse to further strengthen its technology leadership in the electronics
components industry, continue the turnaround of its wireless business, and
significantly reduce the amount of cash required for debt service. Pulse
expects these transactions to close on or around November 19, 2012.

Completion of these transactions is urgent due to liquidity constraints the
company currently faces. This difficult liquidity situation resulted from high
levels of debt and impending maturity in February 2013, unsustainable levels
of cash interest expense to service the debt, and reduced operating cash flow
due to a decrease in demand for the company’s products resulting from the
unfavorable economic and industry environment. At current rates of cash use,
the company estimates that it would be unable to meet its current obligations
prior to the end of 2012. The company expects that the Oaktree transactions
will substantially resolve its liquidity constraints and enable it to continue
its pursuit of growth.

CEO Comments

“Our operating performance for both revenue and non-GAAP operating profit were
within guidance again this quarter,” said Pulse Chairman and Chief Executive
Officer Ralph Faison, “which indicates that our business is performing as
expected, given the challenging economic and industry environment. Our network
business made sequential improvements in operating profit despite restrained
demand, even excluding one time beneficial items. Our wireless business
performed as expected due to customer program ramp delays at two large
customers that we announced in August. These delays led to a temporary decline
in revenues in the segment. We believe the wireless segment, depending on
customer ramps, remains on track to attain near breakeven performance on
annualized revenue of approximately $100 million by the end of this year.

"Oaktree’s investment demonstrates a strong belief in the fundamental market
and operational strength of the company,” continued Mr. Faison. “In connection
with Pulse's thorough review of capital alternatives, the company received
interest from a number of well-recognized investment firms. Oaktree’s
investment uniquely satisfied our objectives of providing immediate
improvement to our liquidity, addressing the maturity of our existing credit
agreement, and reducing our cash debt service costs while providing the best
outcome to stakeholders under the circumstances.”

"We are pleased to have the opportunity to partner with Pulse and provide
additional capital to drive strong financial and operating performance and
position the company for long-term success," said Ken Liang, a Managing
Director at Oaktree Capital Management. "We look forward to working with
Pulse's management team to further its business strategy in the years ahead.”

Third Quarter Operating Performance

Net sales were $88.2 million compared with $96.0 million in the prior-year
quarter, reflecting ongoing economic and industry weakness which constrained
demand for network and power products, partially offset by higher wireless
sales to new antenna customers. Sequentially, net sales decreased 12.1 percent
compared with second quarter net sales of $100.4 million mainly due to delayed
customer product ramps in wireless that extended into the third quarter.

Cost of sales decreased 3.6 percent to $71.3 million from $73.9 million in the
prior-year quarter. The company’s gross profit margin was 19.2 percent
compared with 23.0 percent in the prior-year quarter and 19.1 percent in the
second quarter. The lower gross profit margin compared to the prior year
reflects ramp up costs for new programs and inefficiencies associated with the
growth in wireless, and higher labor costs, lower pricing, and volumes for
network and power products. The sequential improvement in gross margin was due
mainly to the favorable effects of manufacturing plant consolidations and
lower cost parts suppliers in network and power.

Operating expenses decreased 8.8 percent to $18.0 million from $19.8 million
in the third quarter of 2011, and on a comparable basis excluding one-time
items operating expenses declined 5.9 percent. The decrease in spending was
due to aggressive expense reduction actions, the $1.0 million favorable impact
of reaching an agreement on intellectual property licensing, and sustained
scrutiny over all discretionary spending.

Operating loss (U.S. GAAP) was $5.8 million compared with a loss of $0.7
million in the prior-year quarter. Non-GAAP operating loss was $0.6 million
compared with a profit of $2.6 million in the prior-year quarter and a profit
of $0.8 million in the second quarter. Third quarter operating loss (U.S.
GAAP) included $3.9 million for severance, impairment and associated costs and
$0.8 million for debt restructuring and related costs.

The company had $22.3 million of cash and cash equivalents at September 28,
2012 compared with $17.6 million at December 30, 2011. The company has been
diligent in maximizing the efficiency of working capital to maintain adequate
levels of cash in the uncertain economic and market environment. The company
generated $1.8 million in cash from operations during the quarter and
restrained capital expenditures to $0.7 million. During the third quarter the
company had no changes to its outstanding debt.

As part of the amendment to the credit facility completed in March 2012, the
company issued warrants to purchase approximately 2.6 million shares of common
stock, which represent 6.1% of all outstanding shares, to its existing bank
group. Unless the outstanding borrowings under the credit facility are repaid
by certain dates, the vesting of the warrants occurs in three stages over the
course of the remainder of this calendar year. The company did not retire the
facility in full by the second vesting date of September 28, 2012, and
approximately 0.4 million warrants, which convert into the equivalent of 0.9%
of the outstanding shares of common stock, vested on that date. The cumulative
vested warrants total approximately 1.2 million shares, or the equivalent of
2.8% of the outstanding shares.

Oaktree Investment

The company expects that the investment of new capital by Oaktree will provide
it with sufficient liquidity to meet its anticipated funding needs. The
Oaktree investment totals approximately $102.7 million and is comprised of two
phases. The company expects the initial phase to close on or about November
19, 2012, and it consists of:

  *a $75 million senior secured Term Loan A with funds to be used for
    retirement of $55 million of outstanding debt under Pulse’s existing
    senior secured credit facility and $20 million in new cash to be used for
    working capital and general business purposes;
  *a $27.7 million secured Term Loan B issued and exchanged for $27.7 million
    of Pulse’s outstanding 7% senior convertible notes due December 2014 now
    held by Oaktree;
  *the issuance by Pulse to Oaktree of an amount of shares of Pulse common
    stock which, along with any other common stock Oaktree already owns, will
    represent approximately 49% of the outstanding common stock of Pulse; and
  *the issuance by Pulse to Oaktree of a warrant to purchase shares of a
    subsidiary that will terminate upon issuance of shares of a new class of
    Pulse non-voting preferred stock as described below.

The interest rate on the $75 million secured Term Loan A will be 12% per
annum, and the interest rate on the $27.7 million Term Loan B will be 10% per
annum. Interest on each of the secured term loans is payable-in-kind (PIK) for
the first three years of the loans. Both term loans mature five years after
closing of the term loan credit facility agreement and are secured by a
perfected first lien on the collateral that currently secures Pulse’s
outstanding senior secured credit facility and Pulse’s available unencumbered
assets. The loans are non-amortizing and prepayable without penalty. While the
Term Loan B is not junior in priority to the Term Loan A, the Term Loan B may
not be repaid until the Term Loan A has been repaid in full.

As part of the initial phase of the recapitalization, Oaktree will be issued
shares of a new class of non-voting preferred stock as soon as Pulse
shareholders approve an amendment to Pulse’s articles of incorporation to
authorize the issuance of non-voting preferred stock at a special shareholder
meeting. If Pulse shareholders do not approve the amendment, Oaktree will be
entitled to exercise warrants to purchase 19.9% of the common stock of Pulse’s
wholly-owned Delaware subsidiary, Technitrol Delaware, Inc. However, if the
non-voting preferred stock is authorized and issued to Oaktree, the subsidiary
warrant will be terminated. Following the issuance of the Pulse preferred
stock, from time to time after completion of the second phase of the
recapitalization, in the event Oaktree’s percentage ownership of outstanding
shares of common stock falls below 49%, the company will issue to Oaktree
shares of Pulse common stock that it is ultimately entitled to in the
recapitalization in order to maintain Oaktree’s ownership of then outstanding
Pulse common stock at 49% until such time as it has received all such shares
of common stock. The new Pulse preferred stock will automatically convert into
additional shares of Pulse common stock upon discharge of the company’s 7%
senior convertible notes and Oaktree would then hold approximately 64.38% of
the equity of Pulse (on a fully diluted basis immediately following closing,
and without giving effect to shares of common stock and warrants it owns prior
to this transaction). The terms of its investment provide Oaktree the right to
designate three individuals to the company’s slate of director nominees at any
shareholder meeting.

The company expects the second phase of the recapitalization to occur during
2013. In this phase, Pulse intends to offer each holder of its outstanding
senior convertible notes, other than Oaktree, the option to receive new debt
under secured Term Loan B in exchange for its senior convertible notes at up
to 80% of their par amount, as well as shares of Pulse common stock. To the
extent the holders of 90% of the senior convertible notes, including those
exchanged by Oaktree in the first phase, exchange their notes under this
optional exchange, then the $27.7 million portion of Oaktree’s Term Loan B
will be reduced by 20%.

The information contained in this press release is for informational purposes
only and is not an offer to buy or the solicitation of an offer to sell any
security. The second phase exchange offer will only be made by means of
appropriate offer documents and related materials.

The issuance of new shares of Pulse common stock in these transactions would
normally require approval of Pulse shareholders according to the shareholder
approval policy of the New York Stock Exchange. The audit committee of the
Pulse board of directors determined that the delay necessary to obtain
shareholder approval prior to securing the term loan would seriously
jeopardize the financial viability of Pulse due to its current liquidity
constraints. Therefore, the audit committee pursued an exception provided in
the NYSE’s shareholder approval policy and applied to the NYSE to waive the
shareholder approval that would otherwise be required. The NYSE has accepted
Pulse’s application for the exception. In reliance on the exception, Pulse and
Oaktree expect to consummate the first phase of the recapitalization on or
around November 19, 2012, which is at least 10 days after Pulse mails a letter
to all shareholders notifying them of its intention to issue the shares of its
common stock without seeking their approval, in accordance with NYSE rules.
The following table is intended to illustrate the relative equity interest of
the Company’s existing equity holders and Oaktree immediately after Closing
taking into account only issued and outstanding shares of common stock and
common stock underlying vested warrants owned by Oaktree.

Ownership of Common Stock on an Issued and Outstanding Basis Immediately
Following Closing

Non Oaktree Common Stock Outstanding prior to the        40.7    51.00%
Closing
Common Stock Beneficially Owned by Oaktree                      
Post-Transaction
Common Stock Beneficially Owned by Oaktree prior to      2.4     3.02%
Transaction ^(1)
Common Stock issued to Oaktree immediately upon          36.7    45.98%
Closing
                                                        39.1    49.00%
Common Stock Outstanding immediately after the           79.9    100.00%
Closing

    
Share amounts in millions
Totals may not add due to rounding
      Common Stock Beneficially Owned by Oaktree prior to Transaction includes
(1)   698,555 warrants to purchase, and for purposes of this table, is
      included in Common Stock Outstanding Post-Transaction.
      

The following tables are intended to illustrate the relative equity interest
of the company’s current equity holders, Oaktree and the non-Oaktree senior
convertible noteholders giving effect to the completion of the first and
second phases under three different hypothetical scenarios.


Assuming 0% Exchange of Senior Convertible Notes by non-Oaktree holders:

Existing Equity (includes Common Stock and Common
Stock underlying warrants owned by Oaktree prior to     44.8     35.62%
the Closing)
Common Stock issued and issuable to Oaktree                     
Common Stock issued to Oaktree immediately upon         36.7     29.19%
Closing
Common Stock underlying Convertible Preferred           44.3     35.19%
issuable to Oaktree
                                                       81.0     64.38%
Total Common Stock, fully diluted basis                 125.8    100.00%
                                                                
Assuming 90% Exchange of Senior Convertible Notes by all holders, including
Oaktree:
                                                               
Existing Equity (includes Common Stock and Common
Stock underlying warrants owned by Oaktree prior to     44.8     23.50%
the Closing)
Common Stock issued and issuable to Oaktree                     
Common Stock issued to Oaktree immediately upon         36.7     19.26%
Closing
Common Stock underlying Convertible Preferred           86.1     45.12%
issuable to Oaktree
                                                       122.8    64.38%
Common Stock issued in the Exchange Offer to            23.1     12.12%
non-Oaktree holders of senior convertible notes
Total Common Stock, fully diluted basis                 190.7    100.00%
                                                                       
Assuming 100% Exchange of Senior Convertible Notes by all holders, including
Oaktree:
                                                               
Existing Equity (includes Common Stock and warrants     44.8     20.00%
owned by Oaktree prior to the Closing)
Common Stock issued and issuable to Oaktree                     
Common Stock issued to Oaktree immediately upon         36.7     16.39%
Closing
Common Stock underlying Convertible Preferred           107.5    47.99%
issuable to Oaktree
                                                       144.3    64.38%
Common Stock issued in the Exchange Offer to            35.0     15.62%
non-Oaktree holders of senior convertible notes
Total Common Stock, fully diluted basis                 224.1    100.00%
                                                                       

Share amounts in millions
Totals may not add due to rounding

      Existing Equity consists of (i) 42,460,311 outstanding shares of common
(1)  stock, (ii) 1,271,960 shares underlying options and (iii) 1,086,945
      shares underlying warrants, in each case as of November 7, 2012.

      Shares of common stock issued and issuable to Oaktree does not include
(2)   shares of common stock and shares of common stock issuable upon exercise
      of vested warrants owned by Oaktree prior to the transaction.

      The actual amounts and percentage equity interest of the company’s
      Existing Equity, Oaktree and the non-Oaktree senior convertible
(3)   noteholders may vary from the amounts and percentage set forth above as
      a result of any changes to the company’s capital structure following the
      date of this press release.
      

The description of the terms of the recapitalization transactions contained in
this press release is a summary. The recapitalization plan is subject
tonumerousconditions, including certaincustomary conditions typical for
transactions of this nature. No assurances can be made that these closing
conditions will besatisfiedor that any transaction will be consummated. The
company encourages you to read the full agreements which it expects to file as
exhibits to a Current Report on Form 8-K with the Securities and Exchange
Commission.

Fourth Quarter 2012 Outlook

“As we look to the fourth quarter, we are pleased to see that the two customer
ramps in our wireless segment that we noted earlier are now on track and we
are very busy executing to meet their demand,” said Mr. Faison. “Accordingly,
we expect the wireless segment to reach our targets of approximately $100
million in annualized sales and near breakeven profitability. This should
contribute to improved performance in the fourth quarter despite ongoing
uncertainty and weakness in the network and power segments.”

The company expects fourth quarter 2012 net sales to range from $87 million to
$93 million and non-GAAP operating profit to range from a loss of $1 million
to a profit of $1 million.

Conference Call

Pulse management will conduct a conference call at 5 p.m. Eastern (2 p.m.
Pacific) today. The conference call will be available via telephone and the
Internet. The dial-in number is 1-800-860-2442 (international 1-412-858-4600).
A link to the earnings press release, the Internet web cast and a slide
presentation that will accompany management’s prepared remarks will be
available on the “Investor Information” section of the company’s web site
www.pulseelectronics.com for two weeks.

About Pulse Electronics Corporation

Pulse Electronics is the electronic components partner that helps customers
build the next great product by providing the needed technical solutions.
Pulse Electronics has a long operating history of innovation in magnetics,
antennas and connectors, as well as the ability to ramp quickly into
high-quality, high-volume production. The company serves the wireless and
wireline communications, power management, military/aerospace and automotive
industries. Pulse Electronics is a participating member of the IEEE, SFF, OIF,
HDBaseT Alliance, CommNexus, and MoCA. Visit the Pulse Electronics website at
www.pulseelectronics.com.

About Oaktree

Oaktree is a leading global investment management firm focused on alternative
markets, with an estimated $81.0 billion in assets under management as of
September 30, 2012. The firm emphasizes an opportunistic, value-oriented and
risk-controlled approach to investments in distressed debt, corporate debt
(including high yield debt and senior loans), control investing, convertible
securities, real estate and listed equities. Headquartered in Los Angeles, the
firm has over 700 employees and offices in 13 cities worldwide. For additional
information, please visit Oaktree’s website at http://www.oaktreecapital.com/.

Safe Harbor

This press release contains statements, including projections of future
business objectives and financial results, that are "forward-looking" within
the meaning of the Private Securities Litigation Reform Act of 1995 and
involve a number of risks and uncertainties. These forward-looking statements
are based on the company's current information and expectations. There can be
no assurance these forward-looking statements, including, without limitation,
the company’s results for the fourth quarter and the recapitalization
transactions, will be achieved. Factors that may cause expected results or
anticipated events or circumstances discussed in this press release to not
occur or to differ from expected results include: the company’s ability to
close on the recapitalization; its ability to satisfy other conditions of the
transactions, the ability of the investors to fund the refinancing; general
conditions in the capital markets; general economic conditions; and the
company’s ability to maintain adequate liquidity to operate its business.
Actual results may differ materially due to the risk factors listed from time
to time in the company's SEC reports including, but not limited to, those
discussed in its Current Reports on Form 8-K, Quarterly Reports on Form 10-Q
and Annual Reports on Form 10-K. All such risk factors are incorporated herein
by reference as though set forth in full. The company undertakes no obligation
to update any forward looking statement.

Non-GAAP Rationale

Non-GAAP operating profit or loss (operating profit or loss according to
accounting principles generally accepted in the United States excluding
pre-tax severance, impairment and other associated costs; pre-tax non-cash
stock-based compensation expenses; and other pre-tax adjustments as described
in the applicable period), non-GAAP diluted earnings (loss) per share (net
earnings (loss) per share from continuing operations according to principles
generally accepted in the United States excluding after-tax severance,
impairment and other associated costs; after-tax non-cash stock-based
compensation expenses; and other after-tax adjustments as described in the
applicable period) and adjusted EBITDA (net earnings attributable to Pulse
Electronics Corporation plus net earnings from discontinued operations and
non-controlling interest, excluding income taxes; depreciation and
amortization; interest expense/income; non-cash stock-based compensation
expenses; other expense/income; and severance, impairment and other associated
costs and other adjustments as described in the applicable period), are not
measures of performance under accounting principles generally accepted in the
United States. Non-GAAP operating profit or loss, non-GAAP diluted earnings
(loss) per share and adjusted EBITDA should not be considered a substitute
for, and an investor should also consider, net income, operating profit, cash
flow from operations and other measures of performance as defined by
accounting principles generally accepted in the United States as indicators of
the company’s profitability or liquidity. Non-GAAP operating profit (loss) and
non-GAAP diluted earnings (loss) per share are often used by the company’s
shareholders and analysts as an additional measure of its operating
performance. Adjusted EBITDA is often used by the company’s shareholders and
analysts as an indicator of a company’s ability to service debt and fund
capital expenditures. The company believes these non-GAAP measures enhance a
reader’s understanding of the company’s financial condition, results of
operations and cash flow because they are unaffected by capital structure and,
therefore, enable investors to compare its operating performance to that of
other companies. The company understands that its presentation of non-GAAP
operating profit (loss), non-GAAP diluted earnings (loss) per share and
adjusted EBITDA may not be comparable to other similarly titled captions of
other companies due to differences in the method of calculation.

Based on discussions with investors and analysts, the company believes that a
reader’s understanding of the company’s operating performance is enhanced by
references to these non-GAAP measures. Removing charges for severance,
impairment and other associated costs, non-cash stock-based compensation
expenses and other adjustments may facilitate comparisons of operating
performance among financial periods and peer companies. These charges may
result from facility closures, the exit of a product line, production
relocations and capacity reductions and / or restructuring of overhead and
operating expenses to enhance or maintain profitability in an increasingly
competitive environment. Removing non-cash stock-based compensation expenses
facilitates comparisons of the company’s operating performance with that of
other companies with differing compensation structures and with the company’s
performance in periods during which its own compensation structure may have
been different. Impairment charges, accelerated depreciation and costs related
to an unsolicited takeover attempt are not part of the normal operating
expense structure of the relevant business in the period in which the charge
is recorded.

Copyright © 2012 Pulse Electronics Corporation. All rights reserved. All brand
names and trademarks are properties of their respective holders.


CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in thousands, except per-share data)

                   Three Months Ended          Nine Months Ended
                     9/28/12      9/30/11        9/28/12       9/30/11
                                                                             
Net sales            $ 88,233       $ 96,014       $ 282,751       $ 278,811
Cost of sales         71,281       73,913       228,198       215,913 
Gross profit           16,952         22,101         54,553          62,898
Operating              18,049         19,798         55,834          62,594
expenses
Severance,
impairment and         3,851          2,968          5,901           13,591
other associated
costs
Debt
restructuring          814            -              814             -
and related
costs
Costs related to
unsolicited           -            -            -             1,916   
takeover attempt
Operating loss         (5,762 )       (665   )       (7,996  )       (15,203 )
                                                                             
Interest               (3,754 )       (1,917 )       (10,099 )       (4,368  )
expense, net
Other (expense)       948          (1,088 )      877           621     
income, net
Loss from
continuing
operations             (8,568 )       (3,670 )       (17,218 )       (18,950 )
before income
taxes
Income tax
(expense)             (356   )      2,682        (2,504  )      8,512   
benefit
Net loss from
continuing             (8,924 )       (988   )       (19,722 )       (10,438 )
operations
Net earnings
from                  -            (270   )      -             342     
discontinued
operations
Net loss               (8,924 )       (1,258 )       (19,722 )       (10,096 )
Less: Net (loss)
earnings
attributable to       35           (118   )      (259    )      (26     )
non-controlling
interest
Net loss
attributable to
Pulse                  (8,959 )       (1,140 )       (19,463 )       (10,070 )
Electronics
Corporation
                                                                             
Basic shares           42,430         41,252         41,827          41,211
outstanding
Basic loss per
share from             (0.21  )       (0.02  )       (0.47   )       (0.25   )
continuing
operations
Basic (loss)
earnings per
share from            -            (0.01  )      -             0.01    
discontinued
operations
Basic loss per         (0.21  )       (0.03  )       (0.47   )       (0.24   )
share
                                                                             
Diluted shares         42,430         41,252         41,827          41,211
outstanding
Diluted loss per
share from             (0.21  )       (0.02  )       (0.47   )       (0.25   )
continuing
operations
Diluted (loss)
earnings per
share from            -            (0.01  )      -             0.01    
discontinued
operations
Diluted loss per       (0.21  )       (0.03  )       (0.47   )       (0.24   )
share
                                                                             
AMOUNTS
ATTRIBUTABLE TO
PULSE
ELECTRONICS
CORPORATION:
                                                                             
Net loss from
continuing
operations           $ (8,959 )     $ (870   )     $ (19,463 )     $ (10,412 )
excluding
non-controlling
interest
Net (loss)
earnings from         -            (270   )      -             342     
discontinued
operations
Net loss
attributable to
Pulse                  (8,959 )       (1,140 )       (19,463 )       (10,070 )
Electronics
Corporation
                                                                             


BUSINESS SEGMENT INFORMATION (UNAUDITED)
(in thousands)

                 Three Months Ended            Nine Months Ended
                   9/28/2012     9/30/2011       9/28/2012     9/30/2011
Net Sales
Network            $ 39,902        $ 43,832        $ 120,355       $ 129,767
Power                28,932          36,580          92,743          107,147
Wireless            19,399        15,602        69,653        41,897  
Total net            88,233          96,014          282,751         278,811
sales
                                                                             
Operating
profit (loss)
Network              2,487           1,090           2,381           2,777
Power                678             4,012           5,056           7,939
Wireless            (4,262  )      (2,799  )      (8,718  )      (10,412 )
Operating
profit (loss)
excluding
severance,
impairment and
other                (1,097  )       2,303           (1,281  )       304
associated
costs, and
costs related
to unsolicited
takeover
attempt
Severance,
impairment and
other                3,851           2,968           5,901           13,591
associated
costs
Debt
restructuring        814             -               814             -
and related
costs
Costs related
to unsolicited      -             -             -             1,916   
takeover
attempt
Operating loss     $ (5,762  )     $ (665    )     $ (7,996  )     $ (15,203 )
                                                                             
FINANCIAL
POSITION
(UNAUDITED)
(in thousands)     9/28/2012       12/30/2011
                                   [1]
                                                                             
Cash and cash      $ 22,348        $ 17,606
equivalents
Accounts
receivable,          55,746          59,507
net
Inventory, net       31,492          36,968
Prepaid
expenses and         25,293          22,144
other current
assets
Net property,
plant and            30,202          28,605
equipment
Other assets        11,420        16,235  
Total assets         176,501         181,065
                                                                             
                                                                             
Accounts           $ 60,549        $ 52,802
payable
Accrued
expenses and         41,435          44,935
other current
liabilities
Current
portion of           54,950          -
long-term debt
Long-term debt       50,000          93,950
Other
long-term           18,295        21,650  
liabilities
Total                225,229         213,337
liabilities
Total deficit       (48,728 )      (32,272 )
                                                                             
Total
liabilities        $ 176,501       $ 181,065
and deficit
                                                                             
Shares               42,460          41,980
outstanding
                                                                             

[1] The Company's prior period financial results have been revised to reflect
an immaterial correction. During the third quarter of 2012 the Company
identified an adjustment related to its deferred tax valuation allowance
recorded in the fourth quarter of 2011. The Company has concluded that the
correction was not material to any of its prior period financial statements.
As a result of the revision, our other assets increased by $5.5 million and
our total deficit decreased by $5.5 million as of December 30, 2011.


Schedule A
NON-GAAP MEASURES                                         
(UNAUDITED)
(in thousands,
except per-share
amounts)
                                                                             
1. Adjusted
EBITDA
                                                                             
                      Quarter Ended
                      9/28/12        9/30/11
                                                                             
Net loss
attributable to       $ (8,959 )     $ (1,140 )
Pulse Electronics
Corporation
Net earnings from
discontinued            -              270
operations
Non-controlling         35             (118   )
interest
Income tax              356            (2,682 )
expense (benefit)
Interest expense,       3,754          1,917
net
Non-cash
stock-based             483            336
compensation
expenses
Depreciation and        2,040          2,616
amortization
Other expense           (948   )       1,088
(income)
Severance,
impairment and          3,851          2,968
other associated
costs
Debt
restructuring and       814            -
related costs
Costs related to
unsolicited            -            -      
takeover attempt
Adjusted EBITDA         1,427          5,255
                                                                             
                                                                             
2. Net (loss) earnings per diluted share from continuing operations excluding
severance, impairment and other associated costs, debt restructuring and
related costs, costs related to unsolicited takeover attempt, non-cash
stock-based compensation expenses and other adjustments
                                                                             
                      Quarter Ended                 Nine Months Ended
                      9/28/12        9/30/11        9/28/12        9/30/11
                                                                             
Net loss per          $ (0.21  )     $ (0.03  )     $ (0.47  )     $ (0.24   )
diluted share
Diluted earnings
per share from          -              0.01           -              (0.01   )
discontinued
operations
After-tax
severance,
impairment and          0.08           0.05           0.11           0.25
other associated
costs, per share
After-tax
non-cash
stock-based             0.01           0.01           0.02           0.01
compensation
expenses, per
share
After-tax debt
restructuring and       0.01           -              0.01           -
related costs,
per share
After-tax costs
related to
unsolicited            -            -            -            0.04    
takeover attempt,
per share
Net (loss)
earnings per
diluted share
from continuing
operations
excluding
severance,
impairment and          (0.11  )       0.04           (0.33  )       0.05
other associated
costs, debt
restructuring
costs, non-cash
stock-based
compensation
expenses and
other adjustments
                                                                             
3. Operating profit (loss) excluding severance, impairment and other
associated costs, debt restructuring and related costs, costs related to
unsolicited takeover attempt, non-cash stock-based compensation expenses and
other adjustments
                                                                             
                      Quarter Ended                 Nine Months Ended
                      9/28/12        9/30/11        9/28/12        9/30/11
                                                                             
Operating loss        $ (5,762 )     $ (665   )     $ (7,996 )     $ (15,203 )
Pre-tax
severance,
impairment and          3,851          2,968          5,901          13,591
other associated
costs
Pre-tax non-cash
stock-based             483            336            1,323          1,253
compensation
expenses
Pre-tax debt
restructuring and       814            -              814            -
related costs
Pre-tax costs
related to             -            -            -            1,916   
unsolicited
takeover attempt
Operating profit
(loss) excluding
severance,
impairment and
other associated
costs, debt             (614   )       2,639          42             1,557
restructuring
costs, non-cash
stock-based
compensation
expenses and
other adjustments
                                                                             

Contact:

Pulse Electronics Corporation
Drew A. Moyer
Senior Vice President, Chief Financial Officer
858-674-8268
dmoyer@pulseelectronics.com