<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------
FORM 8-K/A
CURRENT REPORT
----------
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 9, 1998
--------------------------------
POWERWAVE TECHNOLOGIES, INC.
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Delaware 000-21507 11-2723423
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
2026 McGaw Avenue, Irvine, California 92614
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (949) 757-0530
-----------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)
<PAGE>
The undersigned Registrant hereby amends the following items, financial
statements, exhibits or other portions of its Current Report on Form 8-K,
originally filed with the Securities and Exchange Commission on October 26, 1998
(the "Form 8-K") as set forth in the pages attached hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
(a) Financial Statements of Business Acquired.
-----------------------------------------
The following financial statements of Hewlett-Packard Company Radio
Frequency Power Amplifier Product Line (the "Product Line") are
attached hereto:
Audited Statement of Tangible Assets Sold and Liabilities Assumed as
of October 9, 1998
Unaudited Statement of Revenues and Direct Expenses of the Product
Line for the nine months ended July 31, 1998 and July 31, 1997
Audited Statement of Revenue and Direct Expenses of the Product Line
for the year ended October 31, 1997, 1996 and 1995
(b) Pro Forma Financial Information.
-------------------------------
Unaudited consolidated pro forma statements of operations for the nine
months ended September 27, 1998 and the year ended December 28, 1997
and an unaudited consolidated pro forma balance sheet as of September
27, 1998 are attached hereto.
(c) Exhibits.
--------
Exhibit
Number
------
99.2 Financial Statements of the Product Line described in Item 7(a)
99.3 Pro Forma Financial Statements described in Item 7(b) above
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
POWERWAVE TECHNOLOGIES, INC.
Date: December 28, 1998 By: /s/ Kevin T. Michaels
------------------------
Kevin T. Michaels
Vice President, Finance and
Chief Financial Officer
3
<PAGE>
EXHIBIT INDEX
The following exhibits are attached hereto and incorporated herein by
reference:
Exhibit Sequentially
Number Description Numbered Page
- ------- ----------- -------------
99.2 Financial Statements of the Product Line described in
Item 7(a) above 5
99.3 Pro Forma Financial Statements described in Item 7(b)
above 11
4
<PAGE>
EXHIBIT 99.2
------------
REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Board of Directors of
Hewlett-Packard Company
We have audited the accompanying statement of tangible assets sold and
liabilities assumed of the Hewlett-Packard Company ("HP") Radio Frequency Power
Amplifier Product Line (the "Product Line") as of October 9, 1998, and the
related statement of revenues and direct expenses for each of the three years in
the period ended October 31, 1997. These statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
historical statements based on our audits.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the historical statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in these statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall presentation of the statements.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying historical statements were prepared for inclusion in the
Securities and Exchange Commission Current Report on Form 8-K of Powerwave
Technologies, Inc. as described in Note 2 and are not intended to be a complete
presentation of the Product Line's financial position and results of operations.
In our opinion the statements referred to above present fairly, in all material
respects, the tangible assets sold and liabilities assumed as described in Note
2 as of October 9, 1998, and the revenues and direct expenses as described in
Note 2 for each of the three years in the period ended October 31, 1997, of the
Product Line in conformity with generally accepted accounting principles.
PricewaterhouseCoopers LLP
San Jose, California
December 21, 1998
5
<PAGE>
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
STATEMENT OF TANGIBLE ASSETS SOLD AND LIABILITIES ASSUMED
(In thousands)
<TABLE>
<CAPTION>
October 9,
1998
---------
<S> <C>
Tangible assets sold:
Inventories:
Raw Materials $ 9,781
Work in progress 3,565
Finished goods 5,293
--------
18,639
--------
Property, plant and equipment
Land and building 7,587
Machinery and equipment 10,571
--------
18,158
Less: Accumulated depreciation (12,037)
--------
6,121
--------
Total tangible assets sold $ 24,760
========
Liabilities assumed:
Accrued warranties $ 3,500
Other 116
--------
Total liabilities assumed $ 3,616
========
</TABLE>
See accompanying Notes.
6
<PAGE>
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
STATEMENT OF REVENUES AND DIRECT EXPENSES
(In thousands)
<TABLE>
<CAPTION>
For the Nine Months For the Year Ended
Ended July 31, October 31,
1998 1997 1997 1996 1995
---------- ---------- ---------- ---------- ----------
(unaudited)
<S> <C> <C> <C> <C> <C>
Net Revenues $65,093 $45,243 $67,200 $45,210 $40,078
Cost of goods sold 58,935 37,338 54,244 40,945 32,700
------- ------- ------- ------- -------
6,158 7,905 12,956 4,265 7,378
Direct expenses:
Research and development 3,498 2,853 4,418 4,073 3,978
Selling, general and administrative 6,392 6,022 8,150 6,026 4,981
------- ------- ------- ------- -------
Excess (deficiency) of revenues over
direct expenses $(3,732) $ (970) $ 388 $(5,834) $(1,581)
======= ======= ======= ======= =======
</TABLE>
See accompanying Notes.
7
<PAGE>
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
NOTES TO STATEMENT OF TANGIBLE ASSETS SOLD AND LIABILITIES ASSUMED AND
STATEMENT OF REVENUES AND DIRECT EXPENSES
(In thousands)
1. Description of Business
The Radio Frequency Power Amplifier Product Line (the "Product Line"), of
Hewlett-Packard Company ("HP"), is engaged in manufacturing, marketing, and
distributing radio frequency power amplifiers.
2. Basis of Presentation
On October 9, 1998, HP sold to Powerwave Technologies, Inc. ("Powerwave" or
the "Company") certain tangible assets and the buyer assumed certain
liabilities of the Product Line in accordance with the Amended and Restated
Asset Purchase Agreement between HP and Powerwave dated October 9, 1998 (the
"Purchase Agreement").
The accompanying statements of tangible assets sold and liabilities assumed
as of October 9, 1998, and of revenues and direct expenses for the nine
months ended July 31, 1998 and 1997 (unaudited) and the three years ended
October 31, 1997, 1996 and 1995 have been prepared for the purpose of
complying with the rules and regulations of the Securities and Exchange
Commission (for inclusion in the Current Report on Form 8-K of Powerwave).
The statement of tangible assets sold and liabilities assumed includes the
amounts of certain tangible assets and liabilities of the Product Line at
October 9, 1998. Tangible assets sold include inventories and property,
plant and equipment as specifically identified in the Purchase Agreement.
The property, plant and equipment include the manufacturing facility and
equipment for research and development, manufacturing and testing of power
amplifiers. Liabilities assumed include the Product Line's warranty
obligations (except for two specific claims, of which Powerwave's assumption
is limited to $2.5 million), and certain other operating liabilities, as
specifically identified in the Purchase Agreement.
The statement of revenues and direct expenses includes direct expenses of
the Product Line for research and design, manufacturing, marketing,
distribution, and administration as well as allocations of costs incurred by
HP primarily for selling, administration and management services that are
directly attributed to the operations of the Product Line. Corporate
overhead, interest expense and income tax incurred by HP have been excluded
from the statement of revenues and direct expenses. These statements do not
purport to represent all the costs and expenses associated with a stand-
alone separate company, or the costs which may be incurred by an
unaffiliated company to achieve similar results. Complete financial
statements, including historical balance sheets, were not prepared as HP did
not maintain the Product Line as a separate business unit and has not
segregated indirect operating cost information or certain assets and
liabilities in the Product Line's accounting records.
The statement of revenues and direct expenses for the nine months ended July
31, 1998 and 1997 are unaudited; however, in the opinion of HP and the
Product Line's management these statements reflect all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation of these statements.
3. Summary of Significant Policies
Use of estimates
The preparation of financial statements in accordance with generally
accepted accounting policies requires management to make estimates and
assumptions that affect the amounts reported in the Product Line's financial
statements and accompanying notes. Actual results could differ from those
estimates.
8
<PAGE>
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
NOTES TO STATEMENT OF TANGIBLE ASSETS SOLD AND LIABILITIES ASSUMED AND
STATEMENT OF REVENUES AND DIRECT EXPENSES - (Continued)
(In thousands)
Revenue recognition
Revenue from product line sales is recognized at the time the product is
shipped with provisions established for the estimated cost that may be
incurred for product warranties.
The Product Line sells radio frequency power amplifier products to domestic
and international telecommunication customers. During the year ended October
31, 1997, 1996 and 1995, revenues from international customers approximated
34%, 13% and 17% of the Product Line's total revenues, respectively.
The following table is a summary of significant customers comprising greater
than 10% of revenues:
<TABLE>
<CAPTION>
For the Year Ended
October 31,
1997 1996 1995
(percent of total revenues)
<S> <C> <C> <C>
Company A 58% 34% 17%
Company B - 27% 38%
Company C - - 12%
Company D - 27% 25%
Company E 14% - -
</TABLE>
Inventories
Inventories are valued at standard costs that approximate actual costs
computed on a first-in, first-out basis, not in excess of market values.
Property, plant and equipment
Property, plant and equipment are stated at cost. Additions, improvements and
major renewals are capitalized. Maintenance, repairs and minor renewals are
expensed as incurred. Depreciation is provided using accelerated methods,
principally over 10 to 18 years for buildings and improvements and 3 to 10
years for machinery and equipment. Depreciation expense amounted to $1,934
(unaudited), $1,662 (unaudited), $2,409, $2,232 and $1,654 during the nine
months ended July 31, 1998 and 1997 and the year ended October 31, 1997, 1996
and 1995, respectively.
Research and development
Research and development costs are charged to operations in the period
incurred. The Product Line has entered into third party research and
development arrangements, which have partially funded certain research and
development projects. Amounts funded are offset against direct research and
development expense. During the nine months ended July 31, 1998 and 1997 and
the year ended October 31, 1997, 1996 and 1995, amounts funded under such
arrangements aggregated $746 (unaudited), $1,119 (unaudited), $1,176, $329 and
$41, respectively.
Foreign currency translations
HP and the Product Line use the U.S. dollar as its functional currency.
Foreign currency assets and liabilities are remeasured into U.S. dollars at
end-of-period exchange rates except for inventories and property, plant and
equipment, which are remeasured at historical exchange rates.
9
<PAGE>
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
NOTES TO STATEMENT OF TANGIBLE ASSETS SOLD AND LIABILITIES ASSUMED AND
STATEMENT OF REVENUES AND DIRECT EXPENSES - (Continued)
(In thousands)
Company Allocations
Allocated costs directly related to operations of the Product Line primarily
include field selling costs and certain management and administrative costs.
Such costs are allocated on a basis considered reasonable by management as
discussed below.
Research and development costs
Research and development costs of $306 (unaudited), $421 (unaudited), $561,
$204 and $142, were allocated to the Product Line during the nine months ended
July 31, 1998 and 1997 and the year ended October 31, 1997, 1996 and 1995,
respectively. These costs include research and development support costs and
are allocated based on relative usage.
Field selling costs
Field selling costs of $4,430 (unaudited), $3,925 (unaudited), $5,225, $4,392
and $3,438 were allocated to the Product Line during the nine months ended
July 31, 1998 and 1997 and the year ended October 31, 1997, 1996 and 1995,
respectively. These costs include salaries and benefits, travel, facilities
and other expenses associated with HP's sales force and are allocated based on
sales volume.
Administrative and management costs
Administrative and management costs of $986 (unaudited), $1,098 (unaudited),
$1,464, $895 and $735 were allocated to the Product Line during the nine
months ended July 31, 1998 and 1997 and the year ended October 31, 1997, 1996
and 1995, respectively. These costs include certain marketing, management and
administrative services and information technology and are allocated based on
relative usage.
10
<PAGE>
Exhibit 99.3
------------
POWERWAVE TECHNOLOGIES, INC. AND
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
PRO FORMA FINANCIAL DATA
Introduction
The following unaudited consolidated pro forma financial data is based upon
the historical financial statements of Powerwave Technologies, Inc. (the
"Company") for the nine months ended September 27, 1998 (unaudited), and the
year ended December 28, 1997 and the unaudited historical financial statements
of Hewlett-Packard Company Radio Frequency Power Amplifier Product Line (the
"Product Line") for the nine months ended July 31, 1998 and the year ended
October 31, 1997. The unaudited consolidated pro forma financial data has been
prepared to present, on a pro forma basis, the combined results of the
operations of the Company and the Product Line. An unaudited consolidated pro
forma balance sheet has been prepared as of September 27, 1998 and gives effect
to the acquisition as if it had been completed as of that date using the
purchase method of accounting. The unaudited consolidated pro forma statements
of operations have been prepared for the nine months ended September 27, 1998
and the year ended December 28, 1997. The unaudited pro forma statements of
operations include the unaudited results of operations of the Company for the
nine months ended September 27, 1998 and the year ended December 28, 1997, and
the revenues and direct expenses of the Product Line for the nine months ended
July 31, 1998 and the year ended October 31, 1997. The unaudited consolidated
pro forma statements of operations give effect to the acquisition as if it had
been completed as of December 30, 1996 (the first day of the Company's 1997
fiscal year). The pro forma consolidated statements of operations are provided
for comparative purposes only and do not purport to represent the actual results
of operations of the Company that actually would have been obtained if the
acquisition had been consummated on the date specified, nor is it necessarily
indicative of the results of operations that may be achieved in the future. The
pro forma financial data is based on certain assumptions and adjustments
described in the notes thereto and should be read in conjunction therewith.
The estimated net purchase price of $65,863,883 (which includes cash paid
of $57,383,724, transaction costs of $1,149,883, specific liabilities assumed of
$4,296,000, assumed operating liabilities of $2,116,276 and $918,000 in accruals
for estimated closure costs of the facility acquired in the transaction) was
allocated to tangible assets acquired of $34,711,230, capitalized developed
technology of $11,500,000, other intangible assets of $7,252,653 and in-process
research and development of $12,400,000. Final valuations, including the
valuation of certain intangibles which are currently being discussed with the
Securities and Exchange Commission, will be made and included in the Company's
Form 10-K for its fiscal year ended January 3, 1999.
11
<PAGE>
POWERWAVE TECHNOLOGIES, INC. AND
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
As of September 27, 1998
--------------------------------------------------
Powerwave Product Line Adjustments Combined
--------- ------------ ------------- --------
<S> <C> <C> <C> <C>
ASSETS:
Current Assets:
Cash and cash equivalents $ 52,409 $ - $(32,384) (1) $ 20,025
Accounts receivable, net of allowance
for doubtful accounts of $855 14,834 - - 14,834
Inventories, net 10,345 18,639 (2,139) (2) 26,845
Prepaid expenses and other current
assets 1,113 - - 1,113
Deferred tax assets 3,083 - 4,526 (3) 7,609
-------- -------- -------- --------
Total current assets 81,784 18,639 (29,997) 70,426
Property, plant and equipment 14,199 18,158 53 (4) 32,410
Accumulated depreciation and
amortization (4,556) (12,037) 12,037 (4) (4,556)
-------- -------- -------- --------
Net property and equipment 9,643 6,121 12,090 27,854
Other assets 3,516 - 17,603 (5) 21,119
-------- -------- -------- --------
TOTAL ASSETS $ 94,943 $ 24,760 $ (304) $119,399
======== ======== ======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable $ 6,718 $ - $ - $ 6,718
Accrued expenses and other liabilities 5,721 3,616 3,714 (6) 13,051
Income taxes payable 3,197 - - 3,197
Current portion of long-term debt 523 - 6,000 (1) 6,523
-------- -------- -------- --------
Total current liabilities 16,159 3,616 9,714 29,489
Long-term debt 257 - 19,000 (1) 19,257
Deferred tax liabilities 289 - - 289
Other non-current liabilities 392 - - 392
-------- -------- -------- --------
TOTAL LIABILITIES 17,097 3,616 28,714 49,427
Shareholders' Equity:
Preferred Stock $.0001 par value,
5,000,000 shares authorized and
no shares outstanding - - - -
Common Stock, $.0001 par value,
40,000,000 shares authorized,
17,955,748 shares issued and
17,245,743 shares outstanding
at September 27, 1998 64,701 - - 64,701
Retained earnings 35,902 - (7,874) (7) 28,028
Less treasury stock at cost (22,757) - - (22,757)
Excess of tangible assets sold and
liabilities assumed - 21,144 (21,144) (8) -
-------- -------- -------- --------
Total shareholders' equity and
excess of tangible assets
sold and liabilities assumed 77,846 21,144 (29,018) 69,972
-------- -------- -------- --------
TOTAL LIABILITIES,
SHAREHOLDERS' EQUITY AND EXCESS
OF TANGIBLE ASSETS SOLD AND
LIABILITIES ASSUMED $ 94,943 $ 24,760 $ (304) $119,399
======== ======== ======== ========
</TABLE>
12
<PAGE>
POWERWAVE TECHNOLOGIES, INC. AND
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA BALANCE SHEET
(1) Adjustment to reflect the financing of the acquisition. Total cash paid
was $57.4 million of which $32.4 million was from the Company's existing
cash balances and $25.0 million from the proceeds of long-term debt
incurred concurrent with the closing of the transaction.
(2) Adjustment of inventories to net realizable value, which primarily includes
adjustments for inventory that has no current intended use and will be
disposed of by the Company.
(3) Adjustment to record deferred taxes due to timing differences resulting
from the amortization of in-process research and development for book and
tax purposes.
(4) Adjustment to record property and equipment at its fair market value.
(5) Adjustment to reflect the purchase price allocation to intangible assets
including developed technology of $11.5 million, customer list of $2.0
million, non-compete agreement of $500,000, workforce of $200,000 and
goodwill of $4.6 million, offset by previously capitalized transaction
costs of $1.1 million.
(6) Adjustment to record the fair market value of liabilities assumed by the
Company, including $1.0 million for warranty claims, $1.8 million of
employee retention bonuses, and $918,000 for moving and closure costs of
the manufacturing facility acquired.
(7) Adjustment to record the effect of the immediate write-off of in-process
research and development of $12.4 million, net of income tax benefit of
$4.5 million.
(8) Adjustment to eliminate the excess of tangible assets sold and liabilities
assumed.
13
<PAGE>
POWERWAVE TECHNOLOGIES, INC. AND
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
UNAUDITED CONSOLIDATED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(in thousands except for per share data and notes)
<TABLE>
<CAPTION>
For the year ending December 28, 1997
---------------------------------------------
Product Pro Forma
Powerwave Line Adjustments Combined
--------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $119,709 $67,200 $ - $186,909
Cost of sales 71,027 54,244 2,181 (1) 127,452
-------- ------- ------- --------
Gross profit 48,682 12,956 (2,181) 59,457
Operating expenses:
Research and development 11,483 4,418 (35) (2) 15,866
Selling, general and administrative 13,942 8,150 1,247 (3) 23,339
In-process research and development - - - (4) -
-------- ------- ------- --------
Total operating expenses 25,425 12,568 1,212 39,205
-------- ------- ------- --------
Operating income 23,257 388 (3,393) 20,252
Other income (expense), net 2,601 - (3,924) (5) (1,323)
-------- ------- ------- --------
Income before income taxes 25,858 388 (7,317) 18,929
Provision for income taxes 9,667 - (2,590) (6) 7,077
-------- ------- ------- --------
Net income $ 16,191 $ 388 $(4,727) $ 11,852
======== ======= ======= ========
Basic earnings per share $ 0.95 (7) $ 0.70
Diluted earnings per share $ 0.92 (7) $ 0.68
Weighted average common shares - basic 16,958 16,958
Weighted average common shares - diluted 17,436 17,436
</TABLE>
Notes:
(1) Adjustment to reflect $2.3 million of amortization of purchased technology
on a straight line basis over five years resulting from the allocation of a
portion of the purchase price to developed technology, $139,000 decrease
in depreciation on property, plant and equipment at fair market value
compared to depreciation at historical values, and $20,000 of amortization
of workforce.
(2) Adjustment to reflect $35,000 decrease in depreciation on property, plant
and equipment at fair market value compared to depreciation at historical
values.
(3) Adjustment to reflect $455,000 of amortization of goodwill on a straight
line basis over ten years, $125,000 of amortization of a non-compete
agreement on a straight line basis over four years, and $667,000 of
amortization of customer list on a straight line basis over three years.
(4) No adjustment has been recorded to reflect the one-time write-off of in-
process research and development costs, as it is a non-recurring item.
(5) Adjustment to reflect additional interest expense of $2.0 million resulting
from $25.0 million of debt incurred to finance the transaction. Also
reflects a reduction of interest income of $1.9 million due to the effect
of lower levels of interest earning cash balances resulting from cash paid
for the acquisition of approximately $32.4 million. The cash was paid from
the Company's existing cash and investment balances.
(6) Adjustment to reflect the provision for income taxes at the Company's
consolidated effective tax rate of 37.4%.
(7) Adjusted to reflect earnings per share based on revised net income.
14
<PAGE>
POWERWAVE TECHNOLOGIES, INC. AND
HEWLETT-PACKARD COMPANY RADIO FREQUENCY POWER AMPLIFIER PRODUCT LINE
UNAUDITED PRO FORMA COMBINED STATEMENTS OF OPERATIONS
(in thousands except for per share data and notes)
<TABLE>
<CAPTION>
For the nine months ending September 27, 1998
---------------------------------------------
Product Pro Forma
Powerwave Line Adjustments Combined
--------- ------- ----------- ---------
<S> <C> <C> <C> <C>
Net sales $60,205 $65,093 $ - $125,298
Cost of sales 37,059 58,935 1,636 (1) 97,630
------- ------- ------- --------
Gross profit 23,146 6,158 (1,636) 27,668
Operating expenses:
Research and development 8,845 3,498 (26) (2) 12,317
Selling, general and administrative 10,111 6,392 935 (3) 17,438
In-process research and development - - - (4) -
------- ------- ------- --------
Total operating expenses 18,956 9,890 909 29,755
------- ------- ------- --------
Operating income (loss) 4,190 (3,732) (2,545) (2,087)
Other income, net 2,435 - (2,899) (5) (464)
------- ------- ------- --------
Income (loss) before income taxes 6,625 (3,732) (5,444) (2,551)
Provision for income taxes 2,418 - (3,349) (6) (931)
------- ------- ------- --------
Net income (loss) $ 4,207 $(3,732) $(2,095) $ (1,620)
======= ======= ======= ========
Basic earnings (loss) per share $ 0.25 (7) $ (0.09)
Diluted earnings (loss) per share $ 0.25 (7) $ (0.09)
Weighted average common shares - basic 17,155 17,155
Weighted average common shares - diluted 17,389 17,389
</TABLE>
Notes:
(1) Adjustment to reflect $1.7 million of amortization of purchased technology
on a straight line basis over five years resulting from the allocation of a
portion of the purchase price to developed technology, $104,000 decrease in
depreciation on property, plant and equipment at fair market value compared
to depreciation at historical values, and $15,000 amortization of
workforce.
(2) Adjustment to reflect $26,000 decrease in depreciation on property, plant
and equipment at fair market value compared to depreciation at historical
values.
(3) Adjustment to reflect $341,000 of amortization of goodwill on a straight
line basis over ten years, $94,000 of amortization of the non-compete
agreement on a straight line basis over four years, and $500,000 of
amortization of customer list on a straight line basis over three years.
(4) No adjustment has been recorded to reflect the one-time write-off of in-
process research and development costs, as it is a non-recurring item.
(5) Adjustment to reflect additional interest expense of $1.5 million resulting
from $25.0 million of debt incurred to finance the transaction. Also
reflects a reduction of interest income of $1.4 million due to the effect
of lower levels of interest earning cash balances resulting from cash paid
for the acquisition of approximately $32.4 million. The cash was paid from
the Company's existing cash and investment balances.
(6) Adjustment to reflect the provision for income taxes at the Company's
consolidated effective rate of 36.5%.
(7) Adjusted to reflect earnings per share based on revised net income.
15
