Anaren Completes Final Review of Accounting Errors at its China Subsidiary
August 28 2007 - 3:13PM
PR Newswire (US)
SYRACUSE, N.Y. Aug. 28 /PRNewswire-FirstCall/ -- Anaren, Inc.
(NASDAQ:ANEN) today reported that it has completed its final review
of the accounting errors resulting from control deficiencies found
at its China subsidiary previously disclosed by the Company on July
2, 2007. The accounting errors, which were caused by unapproved and
undetected changes in procedures over accounting for the
reconciliation of inventory and recording of vendor payables for
materials received, but not yet invoiced at the China subsidiary,
resulted in an overstatement of the Company's pretax income for
both the six months and second quarter ended December 31, 2006, and
for the nine months and third quarter ended March 31, 2007 of
fiscal year 2007. The total overstatement of pretax income was
initially estimated to be in the range of $800,000 to $900,000.
After completion of its final review, the Company has determined
that the cumulative overstatement of pretax income due to the China
accounting errors for the nine months ended March 31, 2007 was
$876,000. Additionally, in connection with the year end annual
audit, the Company has identified and made corrections to errors in
stock based compensation and pension expense and, as part of the
Company's adoption of Securities and Exchange Commission Staff
Accounting Bulletin No. 108, the Company has identified errors with
their warranty expense and allowance for sale returns. There errors
resulted in overstatement of pretax income of $38,000 for the first
nine months of fiscal 2007. Including these adjustments, the total
decrease in pretax income to correct the nine months ended March
31, 2007 was $914,000. Of this amount, $238,000 represents an
overstatement of pretax income in the second quarter and first six
months of fiscal 2007 and $676,000 relates to the third quarter
ended March 31, 2007. Management, after consultation with the
Company's Audit Committee, concluded that the overstatement is
material to both the second and third quarters of fiscal 2007.
Therefore, the Company is restating the previously filed financial
statements for the fiscal 2007 second quarter ended December 31,
2006 and the third quarter ended March 31, 2007 to correct these
errors, and as previously reported on July 2, 2007, these financial
statements should no longer be relied upon. As soon as practicable,
the Company will file all required amendments to the quarterly
periods impacted by these corrections and modifications with the
Securities and Exchange Commission. As a result of the adjustments
to pretax income, net income as previously reported for the
effected periods is restated as follows: Three Months ended Six
Months ended December 31, 2006 December 31, 2006 Previously
Previously Reported Restated Reported Restated Net income
$4,048,294 $3,761,294 $7,808,972 $7,521,972 Diluted income per
share $0.22 $0.21 $0.43 $0.42 Three Months Ended Nine Months Ended
March 31, 2007 March 31, 2007 Previously Previously Reported
Restated Reported Restated Net income $4,101,725 $3,510,725
$11,910,697 $11,032,697 Diluted income per $0.23 $0.20 $0.66 $0.62
share Management has also concluded that the Company's disclosure
controls and procedures were not effective in the second and third
quarters of fiscal year 2007 due to a material weakness in internal
control. Accordingly, management's report on Controls and
Procedures included in the Company's Quarterly Reports on Form 10-Q
for the periods ending December 31, 2006 and March 31, 2007 should
no longer be relied upon. Management believes that the controls
over procedural changes have been corrected and all adjustments
have been recorded in the appropriate periods. Any adjustments
relating to the fourth quarter were identified and corrected in the
fourth quarter and would, therefore, not impact the Company's
fourth quarter fiscal year 2007 financial results. The Company will
report fiscal year end 2007 fourth quarter results on Tuesday,
August 28, 2007. This Release contains certain "forward-looking
statements" that are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. These
"forward-looking statements" include, without limitation,
statements regarding the nature and scope of the Company's
accounting errors and the effectiveness of its disclosure controls
and procedures, statements relating to the Company's restatement of
its financial statements, statements relating to the expected
impact of the restatements on the Company, and other statements of
management's opinion or expectations. These, and other
"forward-looking statements", are subject to business and economic
risks and uncertainties that could cause actual results to differ
materially from those discussed. Actual results may differ
materially due to, among other factors, the actual timing and
content of the Company's restatements of financial statements and
the need for any follow-on actions in connection with the Company's
accounting practices, previously filed financial statements, and
the impact of the Company's anticipated restatements and the
reaction to them from the Company's stockholders and the financial
markets in general, as well as changes in economic, business,
competitive, technological and/or regulatory factors and trends.
Unless required by law, Anaren disclaims any obligation to update
or revise any forward-looking statement. Anaren designs,
manufactures and sells complex microwave components and subsystems
to the wireless communications, satellite communications and
defense electronics markets. For more information on Anaren's
products, visit our Website at http://www.anaren.com/. DATASOURCE:
Anaren, Inc. CONTACT: Joseph E. Porcello, VP of Finance, Anaren,
Inc., +1-315-432-8909 Web site: http://www.anaren.com/
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