Anaren Announces Accounting Errors at Its China Subsidiary and Advises that 2nd and 3rd Quarter Fiscal 2007 Financial Statements
July 02 2007 - 5:15PM
PR Newswire (US)
SYRACUSE, N.Y., July 2 /PRNewswire-FirstCall/ -- Anaren, Inc.
(NASDAQ:ANEN) today reported that on June 27, 2007, Anaren
management concluded that as a result of control deficiencies at
the Company's Suzhou, China subsidiary, its pretax income was
overstated 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, and therefore previously issued
financial statements for these interim periods should no longer be
relied upon. The overstatement of pretax income resulted from
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. These procedural changes were made without the
knowledge of corporate management and the control procedures to
identify these changes have been determined to be ineffective.
Management has presented its preliminary findings to the Company's
audit committee and, in consultation with the audit committee,
intends to continue its review of the Company's accounting records
for vendor purchases and inventory reconciliations during the
interim reporting periods noted above. Management and the audit
committee have discussed this matter with the Company's independent
registered public accounting firm, KPMG LLP. Although not
finalized, management's preliminary assessment is that the accounts
payable accrual and inventory reconciliation errors resulted in an
understatement of the Company's cost of sales and an overstatement
of pretax income in the range of approximately $800,000 to $900,000
for the nine months ended March 31, 2007, with the estimated error
impacting both the Company's fiscal 2007 second and third quarters.
If these preliminary assessments are confirmed as the result of the
Company's final review, management currently anticipates that
previously reported net income for the nine months ended March 31,
2007 of $11.9 million, and $0.66 per diluted share, will be revised
downward by approximately $700,000 to $800,000, or $0.03 to $0.04
per diluted share. The Company is continuing to determine the
specific allocation of the overstatement amount between the second
and third quarters of fiscal 2007. Management has concluded the
Company's disclosure controls and procedures were not effective due
to a material weakness related to the Company's internal control
surrounding the accounting for materials received and not invoiced
and the reconciliation of inventory accounts at its China
subsidiary at December 31, 2006 and March 31, 2007. As soon as
practicable following the completion of its review, the Company
intends to announce its final conclusions regarding these errors
and, if necessary, file any required amendments to its fiscal year
2007 filings with the Securities and Exchange Commission.
Management does not believe that these errors had a material impact
on any periods prior to the Company's current fiscal year 2007
second quarter. Similarly, management believes that these
procedural problems, will not have an impact on the Company's
fourth quarter results, and management does not anticipate
incurring extraordinary third party expenses related to the
restatement process. 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 relating to the expected outcome of the Company's
ongoing review, statements regarding the anticipated nature and
scope of the Company's accounting errors, statements relating to
the anticipated timing of the Company's restatement of its
financial statements, statements relating the expected impact of a
restatement 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 results of the ongoing review of
the Company's accounting errors, the actual timing of the Company's
restatement of financial statements and the need for any follow- on
actions in connection with the Company's accounting practices, and
the impact of the Company's anticipated restatement and the
reaction to it from the Company's stockholders and customers and
the financial markets in general, whether the accounting errors had
any material impact on periods prior to 2nd quarter, or any
material impact on the 4th quarter of fiscal year 2007, 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
signal distribution networks and components 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, Sr. VP of Finance of Anaren, Inc.,
+1-315-362-0514, +1-315-432-8909 Web site: http://www.anaren.com/
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