Attached files
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| 8-K - REISSUE FOR FASB ASC 470-20 - POWERWAVE TECHNOLOGIES INC | reissue8k.htm |
NEWS
RELEASE
1801 E. St. Andrew Place, Santa Ana,
CA 92705 FOR
IMMEDIATE RELEASE
(714) 466-1100 Fax
(714)
466-5800 Company
Contact: Kevin
Michaels
(714) 466-1608
POWERWAVE
TECHNOLOGIES
ANNOUNCES
CHANGE OF ACCOUNTING
FOR
SPECIFIED CONVERTIBLE DEBT
|
·
|
Non-cash
convertible debt discount related to change in accounting for an
outstanding convertible subordinated
note
|
SANTA ANA, Calif., March 1,
2010 – Powerwave Technologies, Inc. (Nasdaq:PWAV), a global supplier of
end-to-end wireless solutions for wireless communications networks, today
announced that it plans to reissue certain of its previously issued financial
statements to revise the accounting treatment of its 1.875% convertible
subordinated notes due 2024.
The
financial statement restatement is in respect to the accounting treatment
specified in FASB Staff Position (FSP) Accounting Principles Board Opinions
(APB) 14-1, Accounting for
Convertible Debt Instruments that May be Settled in Cash upon Conversion
(Including Partial Cash Settlement) (FSP APB 14-1), accounting guidance
now codified as FASB Accounting Standards Codification (ASC) Topic
470-20. This FSP impacts the accounting for the Company’s 1.875%
convertible subordinated notes due 2024 by requiring the Company to account
separately for the liability and equity components of this convertible
debt. The Company’s 3.875% convertible subordinated notes due 2027 do
not have a cash conversion feature and therefore are not subject to FASB ASC
Topic 470-20. FASB ASC Topic 470-20 was effective beginning for
fiscal year 2009 and should have been applied beginning in the first quarter of
2009. Therefore, at this time the Company expects to amend and
reissue its financial statements in its amended and restated Annual Report on
Form 10-K for the fiscal year ended January 3, 2010 and in its amended and
restated quarterly reports on Form 10-Q for the quarterly periods ended March
29, 2009, June 28, 2009 and September 27, 2009 to reflect the adoption of this
accounting standard. The Company is currently working to prepare the
appropriate amended filings with the Securities and Exchange
Commission.
Pursuant
to FASB ASC Topic 470-20, if a convertible debt instrument may be settled in
cash or some combination of cash and stock upon conversion of the debt, then the
Company is required to account separately for the liability and equity
components of such convertible debt. The liability component is
measured at its estimated fair value such that the effective interest expense
associated with the convertible debt reflects the issuer’s borrowing rate at the
date of issuance for similar debt instruments without the conversion
feature. The difference between the cash proceeds associated with the
convertible debt and this estimated fair value is recorded as a debt discount
and amortized to interest expense over the life of the convertible debt using
the effective interest rate method. Upon application of this
guidance, there is no change to diluted earnings per share other than the
effects of increased interest expense and a reduction in the gain on repurchase
of debt that is re-allocated to the equity component. There are no
cash impacts as this increased amortization is not payable in cash and is not
deductible for tax purposes. There are no changes to the prior
reported pro forma results as this convertible debt discount amortization would
be excluded from pro forma results. FASB ASC Topic 470-20 requires
retrospective application to the terms of instruments for all periods
presented.
Summary
of Change in Accounting on Fiscal Year 2009
The
following is a brief summary of the reconciliations between amounts reported in
previous filings to the amounts revised to reflect retroactive adjustments for
the fiscal year ended January 3, 2010. These amounts are preliminary
and subject to audit.
Balance Sheet Summary:
|
January
3, 2010
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||||||||||||
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(Unaudited
– in thousands)
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||||||||||||
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As
reported
|
Adjustments
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As
amended
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||||||||||
|
Assets
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||||||||||||
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Other
assets
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$
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5,987
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$
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(333
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)
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$
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5,654
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|||||
|
Total
assets
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390,185
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(333
|
)
|
389,852
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||||||||
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Liabilities and
Shareholders' Equity (Deficit):
|
||||||||||||
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Long-term
debt
|
280,887
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(11,904
|
)
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268,983
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||||||||
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Common
stock
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769,825
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55,529
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825,354
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|||||||||
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Accumulated
deficit
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(791,306
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)
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(43,958
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)
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(835,264
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)
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||||||
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Total
shareholders' equity (deficit)
|
(10,959
|
)
|
11,571
|
612
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||||||||
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Total
liabilities and shareholders' equity (deficit)
|
390,185
|
(333
|
)
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389,852
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||||||||
Statement of
Operations Summary:
|
Fiscal
Year Ended
January
3, 2010
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||||||||||||
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(Unaudited
– in thousands. except per share data)
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||||||||||||
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As
reported
|
Adjustments
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As
amended
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||||||||||
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Operating
loss
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$
|
(1,877
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)
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$
|
$
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(1,877
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)
|
|||||
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Other
income (expense), net
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8,381
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(8,892
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)
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(511
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)
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|||||||
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Income
tax provision
|
3,282
|
3,282
|
||||||||||
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Net
income (loss)
|
3,222
|
(8,892
|
)
|
(5,670
|
)
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|||||||
|
Basic
earnings (loss) per share
|
0.02
|
(0.04
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)
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|||||||||
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Diluted
earnings (loss) per share
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0.02
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(0.04
|
)
|
|||||||||
|
Basic
shares outstanding
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131,803
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131,803
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||||||||||
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Diluted
shares outstanding
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134,006
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131,803
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||||||||||
FASB ASC
Topic 470-20 requires the Company to calculate the carrying value of the
liability component by estimating the fair value of a similar liability that
does not have an associated conversion feature. The annual interest
rate utilized by the Company was estimated to be 7.05% and was applied to the
notes and coupon interest using a present value technique to arrive at the fair
value of the liability component. The difference between the cash
proceeds associated with the convertible debt and this estimated fair value of
the liability component is recorded as an equity component. As of
January 3, 2010, the principal amount of the Company’s 1.875% convertible
subordinated notes due 2024 was $130.9 million and the unamortized discount was
$11.9 million, resulting in a net carrying amount of the liability component of
$119.0 million. As shown in the above table, for the fiscal year
ended January 3, 2010, the total amount of additional debt discount amortization
included in the amended results is $8.9 million, which represents approximately
6 cents per share.
The
remaining unamortized debt discount will be amortized over the period to
November 15, 2011, which is the first put date of the notes.
Additional
information, including quarterly summaries of the impact of FASB Topic ASC
470-20 for the fiscal year ended January 3, 2010, is included in the Form 8-K
filed today with the Securities and Exchange Commission, and will be included in
the amended and restated Form 10-K which will be filed with the
Commission.
Company
Background
Powerwave Technologies, Inc., is a
global supplier of end-to-end wireless solutions for wireless communications
networks. Powerwave designs, manufactures and markets a comprehensive
suite of wireless solutions, including antennas, base station products and
advanced coverage solutions, utilized in all major wireless network protocols
and frequencies, including Next Generation Networks in 4G technology, such as
LTE and WiMAX. Corporate headquarters are located at 1801 E. St.
Andrew Place, Santa Ana, Calif. 92705. For more information on
Powerwave’s advanced wireless coverage and capacity solutions, please call
(888)-PWR-WAVE (797-9283) or visit our web site at www.powerwave.com. Powerwave,
Powerwave Technologies and the Powerwave logo are registered trademarks of
Powerwave Technologies, Inc.
Forward-Looking
Statements
This
press release contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The foregoing statements
regarding the statement of operations and balance sheet impact of the
application of FASB ASC 470-20 to the 1.875% Notes are forward-looking
statements and are preliminary in nature and subject to audit by our independent
accounting firm. These statements reflect the Company’s current
beliefs and are based on information currently available to the Company as of
the date of this Press Release. There are known and unknown factors
that could cause actual results or outcomes to differ materially from those
addressed in the forward-looking information. Such known factors are detailed in
the Company’s Annual Report on Form 10-K for the year ended January 3, 2010 and
in the Company’s Quarterly Reports on Form 10-Q as filed with the Securities and
Exchange Commission, and in other reports filed by the Company with the
Securities and Exchange Commission from time to time. These forward-looking
statements should not be relied upon as representing the Company’s views as of
any subsequent date and the Company undertakes no obligation to update
forward-looking statements to reflect events or circumstances after the date
they were made.