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Powerwave Technologies Reports Third Quarter Results

Summary of Significant Items Impacting the Third Quarter

During the third quarter of 2012, we incurred approximately $0.3 million of non-cash equity based compensation expense, as well as $1.5 million of non-cash debt interest accretion and debt discount amortization related to our outstanding convertible notes which is included in interest expense for the quarter. We also incurred a $0.5 million loss on early extinguishment of debt and $0.6 million reduction in the fair value of derivatives related to warrants issued in conjunction with our new senior term loan agreement, and $2.9 million of restructuring and impairment charges.

During the third quarter of 2011, we incurred approximately $1.8 million of non-cash equity based compensation expense, $0.1 million of restructuring and impairment charges, $2.1 million of non-cash debt interest accretion and debt discount amortization and a net loss on the repurchase of outstanding debt, which is all included in interest expense for the quarter.

The following is a brief summary of the significant items impacting the comparability of per share amounts for the three months ended September 30, 2012 and October 2, 2011. To calculate the per share impact of these significant items, an underlying effective tax rate of zero percent was used for both periods and the fully diluted shares outstanding for each respective period were used.

          Three Months Ended
(unaudited)

Summary of Significant Items Impacting Results

Sept. 30, 2012

 

Oct. 2, 2011

 
Restructuring and impairment charges ($0.09 ) -
Non-cash ASC Topic 718 compensation charge ($0.01 ) ($0.06 )
Debt discount amortization, interest accretion and a
net loss on extinguishment of outstanding debt ($0.06 ) ($0.07 )
Reduction in fair value of derivatives ($0.02 ) -  
 
Total per share impact

($0.18

)*

($0.13

)*

 

(Note: * this amount is rounded to the nearest whole cent.)

In addition, below is a brief summary of significant items impacting the comparability of the gross margin percentage for the third quarter of 2012 versus the third quarter of 2011, on a GAAP and pro forma basis.

    Three Months Ended
(unaudited)
Sept. 30, 2012   Oct. 2, 2011
 
GAAP reported gross margin (loss)% (25.5 %) 7.5 %
Add: Pro Forma adjustments

Non-cash ASC Topic 718 compensation charge

0.1 % 0.3 %
Restructuring and impairment charges 1.9 % -  
Pro Forma gross margin (loss)% (23.5 %) 7.8 %

As an additional note, for the third quarter of fiscal 2012, Powerwave incurred additional inventory related charges which totaled approximately $8.5 million, which are included in the pro forma gross margin (loss).

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