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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549





Form 10-Q







|þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ---------------------------------------------------------------------------------------

For the quarterly period ended March 29, 2009

OR



| ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- | ----------------------------------------------------------------------------------------

For the transition period from  to

Commission File Number 000-21507





POWERWAVE TECHNOLOGIES, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 11-2723423                          
|(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

1801 E. St. Andrew Place, Santa Ana, CA 92705

(Address of principal executive offices, zip code)

(714) 466-1000

(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: Common Stock, Par Value $.0001 NASDAQ Global Select

Market

Securities registered
pursuant to Section 12(g) of the Act: None





Indicate by check mark whether
the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File
required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files).    Yes   ̈    No   ̈

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of large accelerated filer,
accelerated filer, and smaller-reporting company in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated
filer   ̈        Accelerated filer  þ         Non-accelerated
filer   ̈         Smaller reporting company   ̈

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  þ

As of April 30, 2009, the registrant had 131,978,122 shares of Common Stock outstanding.









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POWERWAVE TECHNOLOGIES, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE THREE MONTHS ENDED MARCH 29, 2009

TABLE OF CONTENTS



|                                                           |  |                                                                                       |  |     
|---------------------------------------------------------- |  | ------------------------------------------------------------------------------------- |  | ----
|                                                           |  |                                                                                       |  | PAGE
|CAUTIONARY STATEMENT RELATED TO FORWARD LOOKING STATEMENTS |  | 3                                                                                    
|                                                           | 
|HOW TO OBTAIN POWERWAVE SEC FILINGS                        |  | 3                                                                                    
|                                                           | 
|PART I  FINANCIAL INFORMATION                             |  | 4                                                                                    
|                                                           |  |                                                                                      
|Item 1.                                                    |  | Financial Statements (Unaudited)                                                      |  | 4   
|                                                           |  |                                                                                      
|                                                           |  | Consolidated Balance Sheets                                                           |  | 4   
|                                                           |  |                                                                                      
|                                                           |  | Consolidated Statements of Operations                                                 |  | 5   
|                                                           |  |                                                                                      
|                                                           |  | Consolidated Statements of Comprehensive Income (Loss)                                |  | 6   
|                                                           |  |                                                                                      
|                                                           |  | Consolidated Statements of Cash Flows                                                 |  | 7   
|                                                           |  |                                                                                      
|                                                           |  | Notes to Consolidated Financial Statements                                            |  | 8   
|                                                           |  |                                                                                      
|Item 2.                                                    |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 19  
|                                                           |  |                                                                                      
|Item 3.                                                    |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 31  
|                                                           |  |                                                                                      
|Item 4.                                                    |  | Controls and Procedures                                                               |  | 33  
|                                                           | 
|PART II  OTHER INFORMATION                                |  | 34                                                                                   
|                                                           |  |                                                                                      
|Item 1.                                                    |  | Legal Proceedings                                                                     |  | 34  
|                                                           |  |                                                                                      
|Item 1A.                                                   |  | Risk Factors                                                                          |  | 35  
|                                                           |  |                                                                                      
|Item 2.                                                    |  | Unregistered Sales of Equity Securities and Use of Proceeds                           |  | 46  
|                                                           |  |                                                                                      
|Item 3.                                                    |  | Defaults Upon Senior Securities                                                       |  | 47  
|                                                           |  |                                                                                      
|Item 4.                                                    |  | Submission of Matters to a Vote of Security Holders                                   |  | 48  
|                                                           |  |                                                                                      
|Item 5.                                                    |  | Other Information                                                                     |  | 49  
|                                                           |  |                                                                                      
|Item 6.                                                    |  | Exhibits                                                                              |  | 50  
|                                                           | 
|SIGNATURES                                                 |  | 51                                                                                   



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CAUTIONARY STATEMENT RELATED TO FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements as defined within Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, relating to revenue, revenue composition, market and economic conditions, demand and pricing trends, future expense levels, competition and growth
prospects in our industry, trends in average selling prices and gross margins, product and infrastructure development, market demand and acceptance, the timing of and demand for next generation products, customer relationships, tax rates, employee
relations, the timing of and cost savings from restructuring activities, restructuring charges, and the level of expected future capital and research and development expenditures. Such forward-looking statements are based on the beliefs of,
estimates made by, and information currently available to Powerwave Technologies, Inc.s (Powerwave or the Company) management and are subject to certain risks, uncertainties and assumptions. Any other statements
contained herein (including without limitation statements to the effect that Powerwave or management estimates, expects, anticipates, plans, believes, projects,
continues, may, will, could, or would or statements concerning potential or opportunity or variations thereof or comparable terminology or the negative thereof) that
are not statements of historical fact are also forward-looking statements. The actual results of Powerwave may vary materially from those expected or anticipated in these forward-looking statements. The realization of such forward-looking statements
may be impacted by certain important unanticipated factors, including those discussed under Part I, Item 1A, Risk Factors. Because of these and other factors that may affect Powerwaves operating results, past performance should not be
considered as an indicator of future performance, and investors should not use historical results to anticipate results or trends in future periods. We undertake no obligation to publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Readers should carefully review the risk factors described in this and other documents that Powerwave files
from time to time with the Securities and Exchange Commission, including subsequent Current Reports on Form 8-K, Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K.

HOW TO OBTAIN POWERWAVE SEC FILINGS

All
reports filed by Powerwave with the SEC are available free of charge via EDGAR through the SEC website at www.sec.gov. In addition, the public may read and copy materials filed by the Company with the SEC at the SECs public reference room
located at 100 F Street, N.E., Washington, D.C. 20549. Powerwave also provides copies of its Forms 8-K, 10-K, 10-Q, Proxy Statement and Annual Report at no charge to investors upon request and makes electronic copies of its most recently filed
reports available through its website at www.powerwave.com as soon as reasonably practicable after filing such material with the SEC.



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PART I  FINANCIAL INFORMATION



|ITEM 1. | FINANCIAL STATEMENTS
|------- | --------------------

POWERWAVE TECHNOLOGIES, INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except
share data)



|                                                                                                                                        |  |               |          |   |                  |   |          |  
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | -------- | - | ---------------- | - | -------- | -
|                                                                                                                                        |  | March 29,2009 |          |   | December 28,2008 |  
|ASSETS                                                                                                                                  |  |               |          |   |                  |   |          |  
|Current assets:                                                                                                                         |  |               |          |   |                  |   |          |  
|Cash and cash equivalents                                                                                                               |  | $             | 52,552   |   |                  | $ | 46,906   |  
|Restricted cash                                                                                                                         |  |               | 2,850    |   |                  |   | 3,433    |  
|Accounts receivable, net of allowance for sales returns and doubtful accounts of $11,143 and $9,478, respectively                       |  |               | 178,107  |   |                  |   | 213,871  |  
|Inventories                                                                                                                             |  |               | 72,918   |   |                  |   | 81,098   |  
|Prepaid expenses and other current assets                                                                                               |  |               | 25,590   |   |                  |   | 25,303   |  
|Deferred income taxes                                                                                                                   |  |               | 3,204    |   |                  |   | 3,204    |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|Total current assets                                                                                                                    |  |               | 335,221  |   |                  |   | 373,815  |  
|Property, plant and equipment, net                                                                                                      |  |               | 94,639   |   |                  |   | 98,616   |  
|Intangible assets, net                                                                                                                  |  |               | 2,490    |   |                  |   | 3,803    |  
|Asset held for sale                                                                                                                     |  |               | 4,085    |   |                  |   | 4,845    |  
|Other assets                                                                                                                            |  |               | 6,363    |   |                  |   | 6,817    |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|TOTAL ASSETS                                                                                                                            |  | $             | 442,798  |   |                  | $ | 487,896  |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                                   |  |               |          |   |                  |   |          |  
|Current liabilities:                                                                                                                    |  |               |          |   |                  |   |          |  
|Accounts payable                                                                                                                        |  | $             | 108,881  |   |                  | $ | 139,267  |  
|Accrued payroll and employee benefits                                                                                                   |  |               | 11,817   |   |                  |   | 12,286   |  
|Accrued restructuring costs                                                                                                             |  |               | 5,029    |   |                  |   | 5,813    |  
|Accrued expenses and other current liabilities                                                                                          |  |               | 33,923   |   |                  |   | 37,390   |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|Total current liabilities                                                                                                               |  |               | 159,650  |   |                  |   | 194,756  |  
|Long-term debt                                                                                                                          |  |               | 300,887  |   |                  |   | 306,321  |  
|Other liabilities                                                                                                                       |  |               | 1,774    |   |                  |   | 1,898    |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|Total liabilities                                                                                                                       |  |               | 462,311  |   |                  |   | 502,975  |  
|Commitments and contingencies (Notes 9 and 10)                                                                                          |  |               |          |   |                  |   |          |  
|Shareholders equity (deficit):                                                                                                         |  |               |          |   |                  |   |          |  
|Preferred stock, $0.0001 par value, 5,000,000 shares authorized and no shares issued or outstanding                                     |  |               |         |   |                  |   |         |  
|Common stock, $0.0001 par value, 250,000,000 shares authorized, 131,978,122 and 131,637,460 shares issued and outstanding,
respectively |  |               | 766,234  |   |                  |   | 765,204  |  
|Accumulated other comprehensive income                                                                                                  |  |               | 10,881   |   |                  |   | 14,245   |  
|Accumulated deficit                                                                                                                     |  |               | (796,628 | ) |                  |   | (794,528 | )
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|Net shareholders deficit                                                                                                               |  |               | (19,513  | ) |                  |   | (15,079  | )
|                                                                                                                                        |  |               |          |   |                  |   |          |  
|TOTAL LIABILITIES AND SHAREHOLDERS DEFICIT                                                                                             |  | $             | 442,798  |   |                  | $ | 487,896  |  
|                                                                                                                                        |  |               |          |   |                  |   |          |  

The accompanying notes are an integral part of these consolidated financial statements.



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POWERWAVE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)



|                                                  |  |                    |         |   |               |   |         |  
|------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                  |  | Three Months Ended |        
|                                                  |  | March 29,2009      |         |   | March 30,2008 |  
|Net sales                                         |  | $                  | 149,745 |   |               | $ | 226,302 |  
|Cost of sales:                                    |  |                    |         |   |               |   |         |  
|Cost of goods                                     |  |                    | 114,962 |   |               |   | 172,764 |  
|Intangible asset amortization                     |  |                    | 623     |   |               |   | 6,110   |  
|Restructuring and impairment charges              |  |                    | 1,408   |   |               |   | 5,372   |  
|                                                  |  |                    |         |   |               |   |         |  
|Total cost of sales                               |  |                    | 116,993 |   |               |   | 184,246 |  
|                                                  |  |                    |         |   |               |   |         |  
|Gross profit                                      |  |                    | 32,752  |   |               |   | 42,056  |  
|Operating expenses:                               |  |                    |         |   |               |   |         |  
|Sales and marketing                               |  |                    | 9,741   |   |               |   | 12,546  |  
|Research and development                          |  |                    | 15,147  |   |               |   | 19,672  |  
|General and administrative                        |  |                    | 12,099  |   |               |   | 15,097  |  
|Intangible asset amortization                     |  |                    | 327     |   |               |   | 2,597   |  
|Restructuring and impairment charges              |  |                    | 1,498   |   |               |   | 113     |  
|                                                  |  |                    |         |   |               |   |         |  
|Total operating expenses                          |  |                    | 38,812  |   |               |   | 50,025  |  
|                                                  |  |                    |         |   |               |   |         |  
|Operating loss                                    |  |                    | (6,060  | ) |               |   | (7,969  | )
|Other income (expense), net                       |  |                    | 5,430   |   |               |   | (5,310  | )
|                                                  |  |                    |         |   |               |   |         |  
|Loss before income taxes                          |  |                    | (630    | ) |               |   | (13,279 | )
|Income tax provision                              |  |                    | 1,470   |   |               |   | 968     |  
|                                                  |  |                    |         |   |               |   |         |  
|Net loss                                          |  | $                  | (2,100  | ) |               | $ | (14,247 | )
|                                                  |  |                    |         |   |               |   |         |  
|Loss per share, basic and diluted                 |  | $                  | (0.02   | ) |               | $ | (0.11   | )
|                                                  |  |                    |         |   |               |   |         |  
|Shares used in the computation of loss per share: |  |                    |         |   |               |   |         |  
|Basic and diluted                                 |  |                    | 131,491 |   |               |   | 130,927 |  
|                                                  |  |                    |         |   |               |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



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POWERWAVE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)

(In thousands)



|                                                              |  |                    |        |   |               |   |         |  
|------------------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------- | -
|                                                              |  | Three Months Ended |       
|                                                              |  | March 29,2009      |        |   | March 30,2008 |  
|Net loss                                                      |  | $                  | (2,100 | ) |               | $ | (14,247 | )
|Other comprehensive income (loss):                            |  |                    |        |   |               |   |         |  
|Foreign currency translation adjustments, net of income taxes |  |                    | (3,364 | ) |               |   | 36,544  |  
|                                                              |  |                    |        |   |               |   |         |  
|Comprehensive income (loss)                                   |  | $                  | (5,464 | ) |               | $ | 22,297  |  
|                                                              |  |                    |        |   |               |   |         |  

The accompanying notes are an integral part of these condensed consolidated financial statements.



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POWERWAVE TECHNOLOGIES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)



|                                                                                          |  |                    |         |   |               |   |         |  
|----------------------------------------------------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                                                                          |  | Three Months Ended |        
|                                                                                          |  | March 29,2009      |         |   | March 30,2008 |  
|CASH FLOWS FROM OPERATING ACTIVITIES:                                                     |  |                    |         |   |               |   |         |  
|Net loss                                                                                  |  | $                  | (2,100  | ) |               | $ | (14,247 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                    |         |   |               |   |         |  
|Depreciation and amortization                                                             |  |                    | 6,033   |   |               |   | 14,756  |  
|Non-cash restructuring and impairment charges                                             |  |                    | 2,906   |   |               |   | 5,485   |  
|Provision for sales returns and doubtful accounts                                         |  |                    | 1,848   |   |               |   | (472    | )
|Provision for excess and obsolete inventories                                             |  |                    | 694     |   |               |   | 4,279   |  
|Compensation costs related to stock-based awards                                          |  |                    | 899     |   |               |   | 1,290   |  
|Gain on repurchase of convertible debt                                                    |  |                    | (4,023  | ) |               |   |        |  
|Loss (gain) on disposal of property, plant and equipment                                  |  |                    | 17      |   |               |   | (88     | )
|Gain on settlement of litigation                                                          |  |                    | (645    | ) |               |   |        |  
|Changes in operating assets and liabilities, net of acquisitions:                         |  |                    |         |   |               |   |         |  
|Accounts receivable                                                                       |  |                    | 33,477  |   |               |   | (5,691  | )
|Inventories                                                                               |  |                    | 5,387   |   |               |   | (6,597  | )
|Prepaid expenses and other current assets                                                 |  |                    | (952    | ) |               |   | 4,909   |  
|Accounts payable                                                                          |  |                    | (30,835 | ) |               |   | 30,261  |  
|Accrued expenses and other current liabilities                                            |  |                    | (6,178  | ) |               |   | (7,432  | )
|Other non-current assets                                                                  |  |                    | 52      |   |               |   | (158    | )
|Other non-current liabilities                                                             |  |                    | (76     | ) |               |   | (4,763  | )
|                                                                                          |  |                    |         |   |               |   |         |  
|Net cash provided by operating activities                                                 |  |                    | 6,504   |   |               |   | 21,532  |  
|CASH FLOWS FROM INVESTING ACTIVITIES:                                                     |  |                    |         |   |               |   |         |  
|Purchase of property, plant and equipment                                                 |  |                    | (1,687  | ) |               |   | (3,409  | )
|Restricted cash                                                                           |  |                    | 583     |   |               |   | 4,177   |  
|Proceeds from sale of business, other assets & investments                                |  |                    |        |   |               |   | 250     |  
|Acquisitions, net of cash acquired                                                        |  |                    | 1,960   |   |               |   |        |  
|                                                                                          |  |                    |         |   |               |   |         |  
|Net cash provided by investing activities                                                 |  |                    | 856     |   |               |   | 1,018   |  
|CASH FLOW FROM FINANCING ACTIVITIES:                                                      |  |                    |         |   |               |   |         |  
|Proceeds from stock-based compensation arrangements                                       |  |                    | 131     |   |               |   | 491     |  
|Repurchase of common stock                                                                |  |                    |        |   |               |   | (417    | )
|Retirement of long-term debt                                                              |  |                    | (1,345  | ) |               |   |        |  
|                                                                                          |  |                    |         |   |               |   |         |  
|Net cash provided by (used in) financing activities                                       |  |                    | (1,214  | ) |               |   | 74      |  
|                                                                                          |  |                    |         |   |               |   |         |  
|EFFECT OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS                                     |  |                    | (500    | ) |               |   | 2,260   |  
|                                                                                          |  |                    |         |   |               |   |         |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                                                 |  |                    | 5,646   |   |               |   | 24,884  |  
|CASH AND CASH EQUIVALENTS, beginning of period                                            |  |                    | 46,906  |   |               |   | 58,151  |  
|                                                                                          |  |                    |         |   |               |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                                                  |  | $                  | 52,552  |   |               | $ | 83,035  |  
|                                                                                          |  |                    |         |   |               |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                        |  |                    |         |   |               |   |         |  
|Cash paid for:                                                                            |  |                    |         |   |               |   |         |  
|Interest expense                                                                          |  | $                  | 126     |   |               | $ | 90      |  
|                                                                                          |  |                    |         |   |               |   |         |  
|Income taxes                                                                              |  | $                  | 1,559   |   |               | $ | 1,622   |  
|                                                                                          |  |                    |         |   |               |   |         |  
|SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:                     |  |                    |         |   |               |   |         |  
|Unpaid purchases of property and equipment                                                |  | $                  | 660     |   |               | $ | 360     |  
|                                                                                          |  |                    |         |   |               |   |         |  

The accompanying notes are an integral part of these consolidated financial statements.



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)

Note 1. Nature of Operations

Powerwave Technologies
Inc. (the Company) is a global supplier of end-to-end wireless solutions for wireless communications networks. The Company designs, manufactures and markets antennas, boosters, combiners, filters, radio frequency power amplifiers,
repeaters, tower-mounted amplifiers, remote radio head transceivers and advanced coverage solutions for use in cellular, PCS, 3G and WiMAX networks throughout the world.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. These financial statements have
been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do
not include certain footnotes and financial presentations normally required under accounting principles generally accepted in the United States of America for complete financial statements. The interim financial information is unaudited; however, it
reflects all normal adjustments and accruals which are in the opinion of management considered necessary to provide a fair presentation for the interim periods presented. All significant intercompany balances and transactions have been eliminated in
the accompanying consolidated financial statements.

The results of operations for the interim periods are not necessarily indicative of
the results to be expected for the future quarters or full year ending January 3, 2010, (fiscal 2009). The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial
statements included in the Companys Annual Report on Form 10-K for the fiscal year ended December 28, 2008.

Newly Adopted
Accounting Pronouncements

In November 2008, the Financial Accounting Standards Board (FASB) ratified Emerging Issues Task Force (EITF)
No. 08-7, Accounting for Defensive Intangible Assets (EITF 08-7). EITF 08-7 applies to defensive intangible assets, which are acquired intangible assets that the acquirer does not intend to actively use but intends to hold to
prevent its competitors from obtaining access to them. As these assets are separately identifiable, EITF 08-7 requires an acquiring entity to account for defensive intangible assets as a separate unit of accounting, and such assets should be
amortized to expense over the period such assets diminish in value. Defensive intangible assets must be recognized at fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 141R (revised 2007), Business
Combinations(SFAS 141R) and SFAS No. 157, Fair Value Measurement (SFAS 157). EITF 08-7 is effective for financial statements in the first quarter of 2009. The adoption of EITF 08-7 did not have a material impact on the
Companys business, results of operations or financial condition.

In April 2008, the FASB issued FASB Staff Position (FSP)
No. 142-3,Determination of the Useful Life of Intangible Assets, (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized
intangible asset under SFAS No. 142, Goodwill and Intangible Assets (SFAS 142). FSP 142-3 is effective in the first quarter of 2009. The adoption of FSP 142-3 did not have a material impact on the Companys business, results of
operations or financial condition.

In December 2007, the FASB issued SFAS 141R and SFAS No. 160, Noncontrolling Interests in
Consolidated Financial Statements(SFAS 160), an amendment of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements (ARB 51). SFAS 141R will change how business acquisitions are accounted for and SFAS 160 will
change the accounting and reporting for minority interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 141R and SFAS 160 are effective in the first quarter of 2009. The adoption of
SFAS 141R and SFAS 160 did not have a material impact on the Companys business, results of operations or financial condition.

New Accounting Pronouncements

In April 2009, the FASB issued related Staff Positions: (i) FSP No. 157-4,
Determining Fair Value When the Volume and Level of Activity for the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4) and (ii) FSP No. 107-1 and Accounting Principles
Board (APB) No. 28-1, Interim Disclosures about Fair Value of Financial Instruments (FSP 107-1 and APB 28-1), both of which are effective for interim and annual periods ending after June 15, 2009. FSP 157-4 provides guidance on how
to determine the fair value of assets and liabilities under SFAS 157 in the current economic



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



environment and reemphasizes that the objective of a fair value measurement remains an exit price. FSP 107-1 and APB 28-1 enhance the disclosure of
instruments under the scope of SFAS 157 for both interim and annual periods. The Company does not expect the adoption of either of these Staff Positions to have a material effect on its business, results of operations or financial condition.

Stock-Based Compensation

The Company accounts for stock-based compensation in accordance with SFAS No. 123 (Revised 2004), Share-Based Payment(SFAS 123R). Under the fair value recognition provision of SFAS 123R, stock-based compensation cost is
estimated at the grant date based on the fair value of the award. The Company estimates the fair value of stock options granted according to the Black-Scholes-Merton option pricing model and a single option award approach. The fair value of
restricted stock awards is based on the closing market price of the Companys Common Stock on the date of grant.

Stock-based
compensation expense was recognized as follows in the consolidated statement of operations (in thousands):



|                                               |  |                    |      |                |   |      
|---------------------------------------------- |  | ------------------ | ---- | -------------- | - | -----
|                                               |  | Three Months Ended
|                                               |  | March 29, 2009     |      | March 30, 2008
|Cost of sales                                  |  | $                  | 267  |                | $ | 244  
|Sales and marketing expenses                   |  |                    | 90   |                |   | 115  
|Research and development expenses              |  |                    | 247  |                |   | 278  
|General and administrative expenses            |  |                    | 295  |                |   | 653  
|                                               |  |                    |      |                |   |      
|Increase to operating loss before income taxes |  |                    | 899  |                |   | 1,290
|Income tax benefit recognized                  |  |                    |     |                |   |     
|                                               |  |                    |      |                |   |      
|Increase to net loss                           |  | $                  | 899  |                | $ | 1,290
|                                               |  |                    |      |                |   |      
|Increase to net loss per share:                |  |                    |      |                |   |      
|Basic and diluted                              |  | $                  | 0.01 |                | $ | 0.01 
|                                               |  |                    |      |                |   |      

As of March 29, 2009, unrecognized compensation expense related to the unvested portion of
the Companys stock-based awards and employee stock purchase plan was approximately $4.9 million, net of estimated forfeitures of $1.9 million, which is expected to be recognized over a weighted-average period of 1.7 years.

The Black-Scholes-Merton option valuation model was developed for use in estimating the fair value of traded options that have no vesting restrictions
and are fully transferable. Option valuation methods require the input of highly subjective assumptions including the weighted average risk-free interest rate, the expected life, and the expected stock price volatility. The weighted average
risk-free interest rate was determined based upon actual U.S. treasury rates over a one to ten year horizon and the actual life of options granted. The Company grants options with either a five year or ten year life. The expected life is based on
the Companys actual historical option exercise experience. For the employee stock purchase plan, the actual life of 6 months is utilized in this calculation. The expected life was determined based upon actual option grant lives over a 10 year
period. The Company has utilized various market sources to calculate the implied volatility factor utilized in the Black-Scholes-Merton option valuation model. These included the implied volatility utilized in the pricing of options on the
Companys Common Stock as well as the implied volatility utilized in determining market prices of the Companys outstanding convertible notes. Using the Black-Scholes-Merton option valuation model, the estimated weighted average fair value
of options granted during the first quarter of fiscal years 2009 and 2008 were $0.43 per share and $1.60 per share, respectively.



9



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



The fair value of options granted under the Companys stock incentive plans during the first
three months of fiscal 2009 and 2008 was estimated on the date of grant according to the Black-Scholes-Merton option-pricing model utilizing the multiple option approach and the following weighted-average assumptions:



|                                         |  |                    |   |  |               |  
|---------------------------------------- |  | ------------------ | - |  | ------------- | -
|                                         |  | Three Months Ended |  
|                                         |  | March 29,2009      |   |  | March 30,2008 |  
|Weighted average risk-free interest rate |  | 1.7                | % |  | 2.1           | %
|Expected life (in years)                 |  | 5.2                |   |  | 4.5           |  
|Expected stock volatility                |  | 148                | % |  | 60            | %
|Dividend yield                           |  | None               |   |  | None          |  

Note 3. Supplemental Balance Sheet Information

Inventories

Net inventories are as
follows:



|                     |  |               |        |                  |   |       
|-------------------- |  | ------------- | ------ | ---------------- | - | ------
|                     |  | March 29,2009 |        | December 28,2008
|Parts and components |  | $             | 28,833 |                  | $ | 28,547
|Work-in-process      |  |               | 2,133  |                  |   | 2,618 
|Finished goods       |  |               | 41,952 |                  |   | 49,933
|                     |  |               |        |                  |   |       
|Total inventories    |  | $             | 72,918 |                  | $ | 81,098
|                     |  |               |        |                  |   |       

Inventories are net of an allowance for excess and obsolete inventory of approximately $34.2
million and $43.4 million as of March 29, 2009 and December 28, 2008, respectively.

Asset Held For Sale

In the fourth quarter of 2008, the Company completed the closure of its manufacturing facility in Salisbury, Maryland as part of its 2008 Restructuring
Plan. The carrying value of the building has been separately presented in the accompanying balance sheet under the caption Asset Held for Sale and this asset is no longer being depreciated. In the first quarter of 2009, the Company
recorded an additional charge of $0.8 million to write the building down to its fair value less cost to sell in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets(SFAS 144). The Company signed a
Purchase and Sale Agreement for the building in April 2009 and expects the sale of the building to be completed in the second quarter of 2009.

Warranty

Accrued warranty costs are as follows:



|                                                         |  |                    |        |   |               |   |        |  
|-------------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------ | -
|                                                         |  | Three Months Ended |       
|Description                                              |  | March 29,2009      |        |   | March 30,2008 |  
|Balance at beginning of period                           |  | $                  | 10,763 |   |               | $ | 26,975 |  
|Reductions for warranty costs incurred                   |  |                    | (2,501 | ) |               |   | (2,725 | )
|Warranty accrual related to current year sales           |  |                    | 1,444  |   |               |   | 2,142  |  
|Settlement of previous warranty claims                   |  |                    |       |   |               |   | (2,858 | )
|Change in estimate related to previous warranty accruals |  |                    |       |   |               |   | (2,360 | )
|Effect of exchange rates                                 |  |                    | (2     | ) |               |   | 503    |  
|                                                         |  |                    |        |   |               |   |        |  
|Balance at end of period                                 |  | $                  | 9,704  |   |               | $ | 21,677 |  
|                                                         |  |                    |        |   |               |   |        |  



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



Note 4. Intangible Assets

Intangible Assets

Intangible assets are as follows:



|                                                                                            |  |               |       |                  |   |      
|------------------------------------------------------------------------------------------- |  | ------------- | ----- | ---------------- | - | -----
|Intangible Assets Subject to Amortization:                                                  |  | March 29,2009 |       | December 28,2008
|Developed technology (net of accumulated amortization of $3,829 and $3,206, respectively)   |  | $             | 1,871 |                  | $ | 2,494
|Customer relationships (net of accumulated amortization of $1,269 and $3,479, respectively) |  |               | 619   |                  |   | 1,309
|                                                                                            |  |               |       |                  |   |      
|Intangible assets, net                                                                      |  | $             | 2,490 |                  | $ | 3,803
|                                                                                            |  |               |       |                  |   |      

Amortization expense related to intangible assets totaled $1.0 million and $8.7 million for the
first quarter of 2009 and 2008, respectively. The remaining $2.5 million of intangible assets will be fully amortized in 2009.

Note 5. Financing
Arrangements and Long-Term Debt

In the first quarter of 2009, the Company repurchased approximately $5.4 million in aggregate par value
of its outstanding 1.875% convertible subordinated notes due November 2024, resulting in a gain of $4.0 million on the purchase. After the purchase, the Company had $150.9 million remaining on the 1.875% convertible subordinated notes.

On April 3, 2009, the Company entered into a Credit Agreement (the Credit Agreement), by and among the Company, the several lenders
named therein as Lenders from time to time and Wells Fargo Foothill, LLC, as arranger and administrative agent for the Lenders. Pursuant to the Credit Agreement, the Lenders will make available to the Company a senior secured revolving
credit facility up to a maximum of $50.0 million. Availability under the Credit Agreement is based on the calculation of our borrowing base as defined in the Credit Agreement and on eligible domestic and foreign accounts receivables. The Credit
Agreement is secured by a first priority security interest on a majority of the Companys assets, including without limitation, all accounts, equipment, inventory, chattel paper, records, intangibles, deposit accounts and cash and cash
equivalents. The Credit Agreement expires on August 15, 2011. The Credit Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations on the Company with respect to indebtedness,
liens, investments, distributions, mergers and acquisitions, dispositions of assets and transactions with affiliates of the Company. The Credit Agreement also includes financial covenants including minimum EBITDA and maximum capital expenditures.

On April 3, 2009, in connection with entering into the Credit Agreement referenced above, the Company terminated its Revolving Trade
Receivables Purchase Agreement with Deutsche Bank AG, New York Branch, as Administrative Agent, as amended on May 15, 2008 (the Amended Receivables Purchase Agreement). As of the date of termination, the Company did not have any
borrowings outstanding under the Amended Receivables Purchase Agreement. In addition, the Company did not incur any early termination penalties in connection with the termination of the Amended Receivables Purchase Agreement.

Note 6. Restructuring and Impairment Charges

2009
Restructuring Plan

In January 2009, the Company formulated and began to implement a plan to further reduce manufacturing overhead costs
and operating expenses. As part of this plan, the Company initiated personnel reductions in both its domestic and foreign locations, with primary reductions in the United States, Finland and Sweden. These reductions were undertaken in response to
current economic conditions and the global macro-economic slowdown that began in the fourth quarter of 2008. The Company expects to finalize the plan in the second half of 2009.



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##### Table of Contents

POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



A summary of the activity affecting its accrued restructuring liability related to the 2009
Restructuring Plan for the three months ended March 29, 2009 is as follows:



|                             |  |                     |       |  
|---------------------------- |  | ------------------- | ----- | -
|                             |  | WorkforceReductions |      
|Balance at December 28, 2008 |  | $                   |      |  
|Amounts accrued              |  |                     | 1,517 |  
|Amounts paid/incurred        |  |                     | (506  | )
|Effects of exchange rates    |  |                     | 13    |  
|                             |  |                     |       |  
|Balance at March 29, 2009    |  | $                   | 1,024 |  
|                             |  |                     |       |  

The costs associated with these exit activities were recorded in accordance with the accounting
guidance in SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities(SFAS 146). The restructuring and integration plan is subject to continued future refinement as additional information becomes available. The
Company expects that the workforce reduction amounts will be paid through the first quarter of 2010.

2008 Restructuring Plan

In June 2008, the Company formulated and began to implement a plan to further consolidate operations and reduce manufacturing and
operating expenses. As part of this plan, the Company closed its Salisbury, Maryland manufacturing facility and transferred most of the production to its other manufacturing operations. In addition, the Company closed its design and development
center in Bristol, UK and discontinued manufacturing operations in Kempele, Finland. These actions were finalized in the first quarter of 2009.

A summary of the activity affecting its accrued restructuring liability related to the 2008 Restructuring Plan for the three months ended March 29, 2009 is as follows:



|                             |  |                     |        |   |                                         |   |     |       |  |   |        |  
|---------------------------- |  | ------------------- | ------ | - | --------------------------------------- | - | --- | ----- |  | - | ------ | -
|                             |  | WorkforceReductions |        |   | Facility Closures& EquipmentWrite-downs |   |     | Total | 
|Balance at December 28, 2008 |  | $                   | 3,106  |   |                                         | $ | 585 |       |  | $ | 3,691  |  
|Amounts accrued              |  |                     | 595    |   |                                         |   | 32  |       |  |   | 627    |  
|Amounts paid/incurred        |  |                     | (1,714 | ) |                                         |   | (90 | )     |  |   | (1,804 | )
|Effects of exchange rates    |  |                     | (99    | ) |                                         |   | (3  | )     |  |   | (102   | )
|                             |  |                     |        |   |                                         |   |     |       |  |   |        |  
|Balance at March 29, 2009    |  | $                   | 1,888  |   |                                         | $ | 524 |       |  | $ | 2,412  |  
|                             |  |                     |        |   |                                         |   |     |       |  |   |        |  

The costs associated with these exit activities were recorded in accordance with the accounting
guidance in SFAS 146. The restructuring and integration plan is subject to continued future refinement as additional information becomes available. The Company expects that the workforce reductions will be paid out through the third quarter of 2009,
and the facility closure amounts will be paid out over the remaining lease term, which extends through September 2010.

2007
Restructuring Plan

In the second quarter of 2007, the Company formulated and began to implement a plan to further consolidate
operations and reduce operating costs. As part of this plan, the Company closed its design and development centers in El Dorado Hills, California and Toronto, Canada, and discontinued its design and development center in Shipley, UK. Also as part of
this plan, the Company sold its manufacturing operations located in Hungary to Sanmina SCI, a third party contract manufacturing supplier, and entered into a manufacturing services agreement with Sanmina SCI. The transaction included inventories and
fixed assets and included a sublease of the existing facility, along with the assumption of certain liabilities, including all transferred employees. The Company finalized this plan in the fourth quarter of 2007.



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##### Table of Contents

POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



A summary of the activity affecting its accrued restructuring liability related to the 2007
Restructuring Plan for the three months ended March 29, 2009 is as follows:



|                             |  |                                         |      |  
|---------------------------- |  | --------------------------------------- | ---- | -
|                             |  | Facility Closures& EquipmentWrite-downs |     
|Balance at December 28, 2008 |  | $                                       | 551  |  
|Amounts accrued              |  |                                         | 2    |  
|Amounts paid/incurred        |  |                                         | (145 | )
|Effects of exchange rates    |  |                                         | (94  | )
|                             |  |                                         |      |  
|Balance at March 29, 2009    |  | $                                       | 314  |  
|                             |  |                                         |      |  

The costs associated with these exit activities were recorded in accordance with the accounting
guidance in SFAS 146. The restructuring and integration plan is subject to continued future refinement as additional information becomes available. The Company expects that the facility closure amounts will be paid out over the remaining
lease term, which extends through June 2009.

2006 Plan for Consolidation of Operations

In the fourth quarter of 2006, and in connection with the Filtronic plc wireless acquisition, the Company formulated and began to implement a plan to
restructure its global manufacturing operations, including the consolidation of its manufacturing facilities in Wuxi and Shanghai, China, into the manufacturing facility located in Suzhou, China. The plan includes a reduction of workforce,
impairment and disposal of inventory and equipment utilized in discontinued product lines, and facility closure costs. In addition, the Company also ceased the production of certain product lines manufactured at these facilities to eliminate
duplicative product lines.

A summary of the activity affecting its accrued restructuring liability related to the 2006 Plan for
Consolidation of Operations for the three months ended March 29, 2009 is as follows:



|                             |  |                                         |    
|---------------------------- |  | --------------------------------------- | ---
|                             |  | Facility Closures& EquipmentWrite-downs
|Balance at December 28, 2008 |  | $                                       | 146
|Amounts accrued              |  |                                         |   
|Amounts paid/incurred        |  |                                         |   
|Effects of exchange rates    |  |                                         | 1  
|                             |  |                                         |    
|Balance at March 29, 2009    |  | $                                       | 147
|                             |  |                                         |    

The costs associated with these exit activities were recorded in accordance with the accounting
guidance in SFAS 146. The Companys restructuring and integration plans are subject to continued future refinement as additional information becomes available. The Company expects that the remaining payments on this plan will be made
in the second quarter of 2009.

Integration of LGP Allgon and REMEC, Inc.s Wireless Systems Business

The Company recorded liabilities in connection with the acquisitions for estimated restructuring and integration costs related to the consolidation of
REMEC, Inc.s wireless systems business and LGP Allgons operations, including severance and future lease obligations on excess facilities. These estimated costs were included in the allocation of the purchase consideration and resulted in
additional goodwill pursuant to EITF No. 95-3, Recognition of Liabilities in Connection with a Purchase Business Combination(EITF 95-3). The implementation of the restructuring and integration plan is substantially complete.



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##### Table of Contents

POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



A summary of the activity affecting the Companys accrued restructuring liability related to the
integration of the REMEC, Inc.s wireless systems business and LGP Allgon for the three months ended March 29, 2009 is as follows:



|                             |  |                                         |       |  
|---------------------------- |  | --------------------------------------- | ----- | -
|                             |  | Facility Closures& EquipmentWrite-downs |      
|Balance at December 28, 2008 |  | $                                       | 1,425 |  
|Amounts accrued              |  |                                         |      |  
|Amounts paid/incurred        |  |                                         | (293  | )
|Effect of exchange rates     |  |                                         |      |  
|                             |  |                                         |       |  
|Balance at March 29, 2009    |  | $                                       | 1,132 |  
|                             |  |                                         |       |  

The Company expects that the facility closure amounts will be paid out over the remaining lease
term which extends through January 2011.

Restructuring and Impairment Charges

In the first quarter of 2009, the Company recorded a charge of approximately $0.8 million to write down the Salisbury, Maryland building to its fair value
less the cost to sell. The Company also incurred severance charges of $2.1 million related to personnel reductions primarily in the United States, Finland and Sweden.

In the first quarter of 2008, the Company recorded a charge of approximately $5.4 million for the impairment of inventory that either has been or will be disposed of and is not expected to generate future revenue due
primarily to the consolidation of its facilities in China, and incurred charges of $0.1 million for professional fees related to the Companys restructuring plans.

Note 7. Other Income (Expense), Net

The components of other income (expense), net, are as follows:



|                                  |  |                    |        |   |               |   |        |  
|--------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------ | -
|                                  |  | Three Months Ended |       
|                                  |  | March 29,2009      |        |   | March 30,2008 |  
|Interest income                   |  | $                  | 398    |   |               | $ | 181    |  
|Interest expense                  |  |                    | (2,731 | ) |               |   | (2,959 | )
|Foreign currency gain (loss), net |  |                    | 2,821  |   |               |   | (3,248 | )
|Other income, net                 |  |                    | 4,942  |   |               |   | 716    |  
|                                  |  |                    |        |   |               |   |        |  
|Total                             |  | $                  | 5,430  |   |               | $ | (5,310 | )
|                                  |  |                    |        |   |               |   |        |  

Other income (expense), net, for the quarter ended March 29, 2009 includes a gain of
approximately $4.0 million related to the repurchase of approximately $5.4 million in aggregate par value of the Companys outstanding 1.875% convertible subordinated notes due 2024.

Note 8. Loss Per Share

In accordance with SFAS
No. 128, Earnings Per Share (SFAS 128), basic earnings (loss) per share is based upon the weighted average number of common shares outstanding. Diluted earnings (loss) per share is based upon the weighted average number of common and
potential common shares for each period presented and income available to common stockholders is adjusted to reflect any changes in income or loss that would result from the issuance of the dilutive common shares. The Companys potential common
shares include stock options under the treasury stock method and convertible subordinated debt under the if-converted method. Potential common shares of 31,190,392 and 36,858,360 related to the Companys stock option programs and convertible
debt have been excluded from diluted weighted average common shares for the three months ended March 29, 2009 and March 30, 2008, respectively, as the effect would be anti-dilutive.



14



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##### Table of Contents

POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



The following details the calculation of basic and diluted loss per share:



|                                                 |  |               |         |   |               |   |         |  
|------------------------------------------------ |  | ------------- | ------- | - | ------------- | - | ------- | -
|                                                 |  | March 29,2009 |         |   | March 30,2008 |  
|Basic:                                           |  |               |         |   |               |   |         |  
|Loss                                             |  | $             | (2,100  | ) |               | $ | (14,247 | )
|Weighted average common shares                   |  |               | 131,491 |   |               |   | 130,927 |  
|                                                 |  |               |         |   |               |   |         |  
|Basic loss per share                             |  | $             | (0.02   | ) |               | $ | (0.11   | )
|                                                 |  |               |         |   |               |   |         |  
|Diluted:                                         |  |               |         |   |               |   |         |  
|Loss                                             |  | $             | (2,100  | ) |               | $ | (14,247 | )
|Interest expense of convertible debt, net of tax |  |               |        |   |               |   |        |  
|                                                 |  |               |         |   |               |   |         |  
|Loss, as adjusted                                |  | $             | (2,100  | ) |               | $ | (14,247 | )
|                                                 |  |               |         |   |               |   |         |  
|Weighted average common shares                   |  |               | 131,491 |   |               |   | 130,927 |  
|Potential common shares                          |  |               |        |   |               |   |        |  
|                                                 |  |               |         |   |               |   |         |  
|Weighted average common shares, as adjusted      |  |               | 131,491 |   |               |   | 130,927 |  
|                                                 |  |               |         |   |               |   |         |  
|Diluted loss per share                           |  | $             | (0.02   | ) |               | $ | (0.11   | )
|                                                 |  |               |         |   |               |   |         |  

Note 9. Commitments and Contingencies

In the first quarter of 2007, four purported shareholder class action complaints were filed in the United States District Court for the Central District
of California against the Company, its President and Chief Executive Officer, its former Executive Chairman of the Board of Directors and its Chief Financial Officer. The complaints were Jerry Crafton v. Powerwave Technologies, Inc., et. al.,
Kenneth Kwan v. Powerwave Technologies, Inc., et. al., Achille Tedesco v. Powerwave Technologies, Inc., et. al. and Farokh Etemadieh v. Powerwave Technologies, Inc. et. al.and were brought under Sections 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 thereunder. In June 2007, the four cases were consolidated into one action before the Honorable Judge Philip Gutierrez, and a lead plaintiff was appointed. In October 2007, the lead plaintiff filed an amended
complaint asserting the same causes of action and purporting to state claims on behalf of all persons who purchased Powerwave securities between May 2, 2005 and November 2, 2006. The essence of the allegations in the amended complaint were
that the defendants made misleading statements or omissions concerning the Companys projected and actual sales revenues, the integration of certain acquisitions and the sufficiency of the Companys internal controls. In December 2007, the
defendants filed a motion to dismiss the amended complaint. On April 17, 2008, the Court granted defendants motion to dismiss plaintiffs claims in connection with the Companys projected sales revenues, but denied
defendants motion to dismiss plaintiffs other claims. On August 29, 2008, the defendants answered the amended complaint. Discovery has begun, and trial of the action is scheduled to commence on January 19, 2010. The defendants
have reached an agreement in principle with the lead plaintiff to settle the consolidated action. According to the terms of the proposed settlement, the settlement payment will be funded by the Companys directors and officers liability
insurance. The proposed settlement is subject to both preliminary and final Court approval.

In March 2007, one additional lawsuit that
relates to the pending shareholder class action was filed. The lawsuit, Cucci v. Edwards, et al., filed in the Superior Court of California, is a shareholder derivative action, purported to be brought by an individual shareholder on behalf of
Powerwave, against current and former directors of Powerwave. Powerwave is also named as a nominal defendant. The allegations of the derivative complaint closely resemble those in the class action and pertain to the time period of May 2, 2005
through October 9, 2006. Based on those allegations, the derivative complaint asserts various claims for breach of fiduciary duty, waste of corporate assets, mismanagement, and insider trading under state law. The derivative complaint was
removed to federal court, and is also pending before Judge Gutierrez. The derivative action is currently stayed pursuant to a stipulation of the parties that has been entered by the Court. Powerwave disputes the allegations raised in the
derivative action and plans to pursue a vigorous defense of this matter.



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##### Table of Contents

POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



Note 10. Contractual Guarantees and Indemnities

During the normal course of its business, the Company makes certain contractual guarantees and indemnities pursuant to which the Company may be required
to make future payments under specific circumstances. The Company has not recorded any liability for these contractual guarantees and indemnities in the accompanying consolidated financial statements. A description of significant contractual
guarantees and indemnities existing as of March 29, 2009 is included below:

Intellectual Property Indemnities

The Company indemnifies certain customers and its contract manufacturers against liability arising from third-party claims of intellectual property rights
infringement related to the Companys products. These indemnities appear in development and supply agreements with the Companys customers as well as manufacturing service agreements with the Companys contract manufacturers, are not
limited in amount or duration and generally survive the expiration of the contract. Given that the amount of any potential liabilities related to such indemnities cannot be determined until an infringement claim has been made, the Company is unable
to determine the maximum amount of losses that it could incur related to such indemnifications. Historically, any amounts payable pursuant to such intellectual property indemnifications have not had a material effect on the Companys business,
financial condition or results of operations.

Director and Officer Indemnities and Contractual Guarantees

The Company has entered into indemnification agreements with its directors and executive officers which require the Company to indemnify such individuals
to the fullest extent permitted by Delaware law. The Companys indemnification obligations under such agreements are not limited in amount or duration. Certain costs incurred in connection with such indemnifications may be recovered under
certain circumstances under various insurance policies. Given that the amount of any potential liabilities related to such indemnities cannot be determined until a lawsuit has been filed against a director or executive officer, the Company is unable
to determine the maximum amount of losses that it could incur relating to such indemnifications. Historically, any amounts payable pursuant to such director and officer indemnifications have not had a material negative effect on the Companys
business, financial condition or results of operations.

The Company has also entered into severance agreements and change in control
agreements with certain of its executives. These agreements provide for the payment of specific compensation benefits to such executives upon the termination of their employment with the Company.

General Contractual Indemnities/Products Liability

During the normal course of business, the Company enters into contracts with customers where it has agreed to indemnify the other party for personal injury or property damage caused by the Companys products. The
Companys indemnification obligations under such agreements are not limited in duration and are generally not limited in amount. Historically, any amounts payable pursuant to such contractual indemnities have not had a material negative effect
on the Companys business, financial condition or results of operations. The Company maintains product liability insurance as well as errors and omissions insurance which may provide a source of recovery to the Company in the event of an
indemnification claim.

Other Guarantees and Indemnities

The Company occasionally issues guarantees for certain contingent liabilities under various contractual arrangements, including customer contracts,
self-insured retentions under certain insurance policies, and governmental value-added tax compliance programs. These guarantees normally take the form of standby letters of credit issued by the Companys banks, which may be secured by cash
deposits or pledges, or performance bonds issued by an insurance company. Historically, any amounts payable pursuant to such guarantees have not had a material negative effect on the Companys business, financial condition or results of
operations. In addition, the Company, as part of the agreements to register the convertible notes it issued in September 2007, November 2004, and July 2003, agreed to indemnify the selling security holders against certain liabilities, including
liabilities under the Securities Act of 1933. The Companys indemnification obligations under such agreements are not limited in duration and generally not limited in amount.

Note 11. Income Taxes

The Company provides for income taxes in interim periods based on the
estimated effective income tax rate for the complete fiscal year. The income tax provision is computed on the pretax income of the consolidated entities located within each taxing jurisdiction based on current tax law. Deferred tax assets and
liabilities are determined based on the future tax consequences associated with temporary differences between income and expenses reported for financial accounting and tax reporting purposes. In accordance with the provisions of SFAS No. 109,
Accounting for Income Taxes(SFAS 109), a valuation allowance for deferred tax assets is recorded to the extent that the Company cannot determine that the ultimate realization of the net deferred tax assets is more likely than not.



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



Realization of deferred tax assets is principally dependent upon the achievement of future taxable
income, the estimation of which requires significant management judgment. The Companys judgments regarding future profitability may change due to many factors, including future market conditions and the Companys ability to successfully
execute its business plans and/or tax planning strategies. These changes, if any, may require material adjustments to these deferred tax asset balances. Due to uncertainties surrounding the realization of the Companys cumulative federal and
state net operating losses and other factors, the Company has recorded a valuation allowance against a portion of its gross deferred tax assets. For the foreseeable future, the Federal tax provision related to future earnings will be offset
substantially by a reduction in the valuation allowance. Accordingly, current and future tax expense will consist primarily of certain required state income taxes and taxes in certain foreign jurisdictions.

In addition to unrecognized tax benefits, the Company has recorded valuation allowances against its net tax benefits in certain jurisdictions arising
from net operating losses. On a quarterly basis, the Company reassesses the need for such valuation allowances based on operating results and its assessment of the likelihood of future taxable income and developments in the relevant tax
jurisdictions. The Company continues to maintain a valuation allowance against its net deferred tax assets in the U.S. and various foreign jurisdictions in 2009 where the Company believes it is more likely than not that deferred tax assets will not
be realized.

As of March 29, 2009, the liability for income taxes associated with uncertain tax positions was $9.7 million, including
accrued penalties, interest, and foreign currency fluctuations of $0.4 million. Of this amount, $7.6 million, if recognized, would affect the Companys effective tax rate. In the first quarter of 2009, approximately $1.1 million of the
liability was reduced as a result of the expiration of the statutory audit period of the tax jurisdiction. Other changes to the liability during the period and potential interest expense upon settlement were immaterial.

As a result of ongoing tax audits, the total liability for unrecognized tax benefits may change within the next twelve months due to either settlement of
audits or expiration of statutes of limitations. As of March 29, 2009, the Company has concluded all United States federal income tax matters for years through 2005. The Company is currently involved in tax audits with the U.S. for fiscal year
2006 and Finland for fiscal years 2007 and 2008. All material state and local, and foreign income tax matters have been concluded for years through 2005.

Note 12. Gain on Settlement of Litigation

As part of the Companys acquisition of REMEC, Incs wireless systems
business, $15 million of the purchase price was held in escrow to cover any potential indemnification claims. In March 2009, the Company settled a dispute arising out of certain claims made against the escrow. As a result of this settlement, the
Company received approximately $2 million in cash. This payment was accounted for as an adjustment to the total consideration paid for this acquisition. As a result, the remaining net book value of the intangible assets and fixed assets acquired in
this acquisition was eliminated and the Company recorded a net gain of approximately $0.6 million. This amount is included in other income (expense), net in the accompanying consolidated statement of operations.

Note 13. Customer Concentrations

The Companys
product sales have historically been concentrated in a small number of customers. For the three months ended March 29, 2009 and March 30, 2008, sales to customers that accounted for 10% or more of revenues totaled $53.6 million and $112.8
million, respectively. Nokia Siemens accounted for approximately 36% of total net sales for the three months ended March 29, 2009. For the three months ended March 30, 2008, sales to Nokia Siemens, accounted for approximately 29% of
revenues, and sales to Alcatel-Lucent accounted for approximately 21% of revenues.

As of March 29, 2009, approximately 29% of total
accounts receivable related to customers that accounted for 10% or more of the Companys total revenue during the first three months of 2009. Nokia Siemens accounted for this 29% of the Companys total accounts receivable. The inability to
collect outstanding receivables from this customer or any other significant customers, the delay in collecting outstanding receivables within the contractual payment terms, or the loss of, or reduction in, sales to any of these customers could have
a material adverse effect on the Companys business, financial condition and results of operations.

Note 14. Supplier Concentrations

Certain of the Companys products, as well as components utilized in such products, are available in the short-term only from a
single or a limited number of sources. In addition, in order to take advantage of volume pricing discounts, the Company purchases certain customized components from single-source suppliers as well as finished products from single-source contract
manufacturers.



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POWERWAVE TECHNOLOGIES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(Tabular amounts in thousands, except per share data)



The inability to obtain single-source components or finished products in the amounts needed on a timely basis or at commercially reasonable prices could
result in delays in product introductions, interruption in product shipments or increases in product costs, which could have a material adverse effect on the Companys business, financial condition and results of operations until alternative
sources could be developed at a reasonable cost.

Note 15. Segments and Geographic Data

The Company operates in one reportable business segment: Wireless Communications. The Companys revenues are derived from the sale of
wireless communications network products and coverage solutions, including antennas, boosters, combiners, filters, radio frequency power amplifiers, repeaters, tower-mounted amplifiers and advanced coverage solutions for use in cellular, PCS, 3G and
WiMAX wireless communications networks throughout the world.

The Company manufactures multiple product categories at its manufacturing
locations and produces certain products at more than one location. With regards to sales, the Company sells its products through two major sales channels. The largest channel is the original equipment manufacturers channel, which consists of large
global companies such as Alcatel-Lucent, Ericsson, Huawei, Motorola, Nokia Siemens, Nortel and Samsung. The other major channel is direct to wireless network operators, such as AT&T, Bouygues, Orange, Sprint, Verizon Wireless and Vodafone. A
majority of the Companys products are sold to both sales channels. The Company maintains global relationships with most of the Companys customers. The Companys original equipment manufacturer customers normally purchase on a global
basis and the sales to these customers, while recognized in various reporting regions, are managed on a global basis. For network operator customers, where they have a global presence, the Company typically maintains a global purchasing agreement.
Individual sales are made on a regional basis.

The Company measures its performance by monitoring its net sales by product and
consolidated gross margins, with a short-term goal of maintaining a positive operating cash flow while striving to achieve long-term operating profits.



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|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included under Item 1,
Financial Statements (Unaudited). This discussion contains forward-looking statements, the realization of which may be impacted by certain important factors including, but not limited to, those discussed in Risk Factors, in Part II,
Item 1A included herein.

Introduction and Overview

Powerwave is a global supplier of end-to-end wireless solutions for wireless communications networks. Our business consists of the design, manufacture, marketing and sale of products to improve coverage, capacity and
data speed in wireless communication networks, including antennas, boosters, combiners, filters, radio frequency power amplifiers, remote radio head transceivers, repeaters, tower-mounted amplifiers and advanced coverage solutions. These products
are utilized in major wireless networks throughout the world that support voice and data communications by use of cell phones and other wireless communication devices. We sell such products to both original equipment manufacturers, who incorporate
our products into their proprietary base stations (which they then sell to wireless network operators), and directly to individual wireless network operators for deployment into their existing networks.

During the last decade, demand for wireless communications infrastructure equipment has fluctuated dramatically. While demand for wireless infrastructure
was strong during 2005, it weakened for Powerwave during 2006 and 2007 due to significant reductions at three major customers, as well as a general slowdown in overall demand within the wireless infrastructure industry. For the first three quarters
of 2008, demand once again increased. Starting in the fourth quarter of 2008 and carrying over into 2009, demand for our products has been negatively impacted by the global economic crisis. We anticipate that the global credit crisis and economic
recession that began in the fall of 2008 will lead to reduced capital spending and lower demand for our products in the near term. This will likely negatively impact our financial results in the near term. During 2008 and the first quarter of 2009,
we undertook several cost cutting initiatives aimed at lowering our operating expenses. These initiatives will continue and we may be required to further reduce operating expenses if there is a significant or prolonged reduction in spending by our
customers.

In the past there have been significant slowdowns in capital spending by wireless network operators due to delays in the
expected deployment of infrastructure equipment and financial difficulties on the part of the wireless network operators who were forced to consolidate and reduce spending to strengthen their balance sheets and improve their profitability. Economic
conditions, such as the turmoil in the global equity and credit markets, as well as the global recession, and the rise of inflationary pressures related to rising commodity prices, have also had a negative impact on capital spending by wireless
network operators, and will likely have a negative impact going forward in the near term. All of these factors can have a significant negative impact on overall demand for wireless infrastructure products, and at various times, have directly reduced
demand for our products and increased price competition within our industry which has in the past led to reductions in our revenues and contributed to our reported operating losses. During fiscal 2006 and 2007, we experienced a significant slowdown
in demand from one of our direct network operator customers, AT&T, as well as reduced demand from several of our original equipment manufacturing customers, including Nokia Siemens and Nortel Networks, all of which combined directly reduced
demand for our products and contributed to our operating losses for both fiscal 2006 and 2007.

We believe that we have maintained our
overall market share within the wireless communications infrastructure equipment market during this period of changing demand for wireless communication infrastructure equipment. We continue to invest in the research and development of wireless
communications network technology and the diversification of our product offerings, and we believe that we have one of our industrys leading product portfolios in terms of performance and features. We believe that our proprietary design
technology is a further differentiator for our products.

Looking back over the last several years, beginning in fiscal 2004 we focused on
cost savings while we expanded our market opportunities, as evidenced by our acquisition of LGP Allgon. This acquisition involved the integration of two companies based in different countries that previously operated independently, which was a
complex, costly and time-consuming process. During fiscal 2005, we continued to focus on cost savings while we expanded our market opportunities, as evidenced by our acquisition of selected assets and liabilities of REMEC, Inc.s wireless
systems business. We believe that this acquisition further strengthened our position in the global wireless infrastructure market. In October 2006, we completed the Filtronic pls wireless acquisition. We believe that this strategic acquisition
provided us with the leading position in transmit and receive filter products, as well as broadening our RF conditioning and base station solutions product portfolio and added significant additional technology to our intellectual property portfolio.
For fiscal years 2007 and 2008, we focused on finalizing and implementing our plans to integrate this acquisition, consolidate operations and reduce our overall cost structure. During this same time, we encountered a significant unanticipated
reduction in revenues, which caused us to revise our integration and consolidation plans with a goal of further reducing our operating costs and significantly lowering our breakeven operating structure. As has been demonstrated during the last five
years, these acquisitions do not provide any guarantee that our revenues will increase. We currently have a number of ongoing restructuring activities which are aimed at further reducing our overall operating cost structure and positioning us to
return to profitability.



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We measure our success by monitoring our net sales by product and consolidated gross margins, with a
short-term goal of maintaining a positive operating cash flow while striving to achieve long-term operating profits. We believe that there continues to be long-term growth opportunities within the wireless communications infrastructure marketplace,
and we are focused on positioning Powerwave to benefit from these long-term opportunities.

Critical Accounting Policies and Estimates

Managements Discussion and Analysis of Financial Condition and Results of Operations is based on our unaudited consolidated financial statements
included in this Quarterly Report on Form 10-Q, which have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and in accordance with the instructions to Form 10-Q and
Article 10 of Regulation S-X. The preparation of these financial statements requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. On an ongoing basis, we evaluate these estimates and assumptions, including those related to revenue recognition,
allowances for doubtful accounts, inventory reserves, warranty obligations, restructuring reserves, asset impairment, income taxes and stock-based compensation expense. We base these estimates on our historical experience and on various other
factors which we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of certain expenses that are not readily apparent from
other sources. These estimates and assumptions by their nature involve risks and uncertainties, and may prove to be inaccurate. In the event that any of our estimates or assumptions are inaccurate in any material respect, it could have a material
adverse effect on our reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

For a summary of our significant accounting policies and estimates, see Item 7, Managements Discussion and Analysis of Financial Condition
and Results of Operations, of Part II of our Annual Report on Form 10-K for the year ended December 28, 2008.

Accruals for
Restructuring and Impairment Charges

In the first quarters of 2009 and 2008, the Company recorded restructuring and impairment charges
of approximately $2.9 million and $5.5 million, respectively.

Such charges relate to our 2007, 2008 and 2009 Restructuring Plans. See
further discussion of these plans in Note 6 of the Notes to Consolidated Financial Statements under Part I, Item I, Financial Information.

All of these restructuring and impairment accruals related primarily to workforce reductions, consolidation of facilities, and the discontinuation of certain product lines, including the associated write-downs of
inventory, manufacturing and test equipment, and certain intangible assets. Such accruals were based on estimates and assumptions made by management about matters which were uncertain at the time, including the timing and amount of sublease income
that will be recovered on vacated property and the net realizable value of used equipment that is no longer needed in our continuing operations. While we used our best current estimates based on facts and circumstances available at the time to
quantify these charges, different estimates could reasonably be used in the relevant periods to arrive at different accruals and/or the actual amounts incurred or recovered may be substantially different from the assumptions utilized, either of
which could have a material impact on the presentation of our financial condition or results of operations for a given period. As a result, we periodically review the estimates and assumptions used and reflect the effects of those revisions in the
period that they become known.

Newly Adopted Accounting Pronouncements

In November 2008, the Financial Accounting Standards Board (FASB) ratified Emerging Issues Task Force (EITF) No. 08-7, Accounting for Defensive
Intangible Assets (EITF 08-7). EITF 08-7 applies to defensive intangible assets, which are acquired intangible assets that the acquirer does not intend to actively use but intends to hold to prevent its competitors from obtaining
access to them. As these assets are separately identifiable, EITF 08-7 requires an acquiring entity to account for defensive intangible assets as a separate unit of accounting, and such assets should be amortized to expense over the period such
assets diminish in value. Defensive intangible assets must be recognized at fair value in accordance with Statement of Financial Accounting Standards (SFAS) No. 141R (revised 2007), Business Combinations(SFAS 141R) and SFAS No.
157, Fair Value Measurement (SFAS 157). EITF 08-7 is effective for financial statements in the first quarter of 2009. The adoption of EITF 08-7 did not have a material impact on our business, results of operations or financial condition.



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In April 2008, the FASB issued FASB Staff Position (FSP) No. 142-3,Determination of the Useful
Life of Intangible Assets, (FSP 142-3). FSP 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142,
Goodwill and Intangible Assets (SFAS 142). FSP 142-3 is effective in the first quarter of 2009. The adoption of FSP 142-3 did not have a material impact on our business, results of operations or financial condition.

In December 2007, the FASB issued SFAS 141R and SFAS No. 160, Noncontrolling Interests in Consolidated Financial Statements(SFAS 160), an
amendment of Accounting Research Bulletin (ARB) No. 51, Consolidated Financial Statements (ARB 51). SFAS 141R will change how business acquisitions are accounted for and SFAS 160 will change the accounting and reporting for minority
interests, which will be recharacterized as noncontrolling interests and classified as a component of equity. SFAS 141R and SFAS 160 are effective for in the first quarter of 2009. The adoption of SFAS 141R and SFAS 160 did not have a
material impact on our business, results of operations or financial condition.

New Accounting Pronouncements

In April 2009, the FASB issued related Staff Positions: (i) FSP No. 157-4, Determining Fair Value When the Volume and Level of Activity for
the Asset or Liability have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP 157-4), and (ii) FSP No. 107-1 and Accounting Principles Board (APB) No. 28-1, Interim Disclosures about Fair Value of
Financial Instruments (FSP 107-1 and APB 28-1), both of which are effective for interim and annual periods ending after June 15, 2009. FSP 157-4 provides guidance on how to determine the fair value of assets and liabilities under SFAS 157 in
the current economic environment and reemphasizes that the objective of a fair value measurement remains an exit price. FSP 107-1 and APB 28-1 enhance the disclosure of instruments under the scope of SFAS 157 for both interim and annual periods. We
do not expect the adoption of either of these Staff Positions to have a material effect on our business, results of operations or financial condition.



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Results of Operations

The following table summarizes Powerwaves results of operations as a percentage of net sales for the three months ended March 29, 2009 and March 30, 2008:



|                                     |  |                   |    |  |               |   
|------------------------------------ |  | ----------------- | -- |  | ------------- | --
|                                     |  | Three MonthsEnded |   
|                                     |  | March 29,2009     |    |  | March 30,2008 |   
|Net sales                            |  | 100.0             | %  |  | 100.0         | % 
|Cost of sales:                       |  |                   |    |  |               |   
|Cost of goods                        |  | 76.8              |    |  | 76.3          |   
|Intangible asset amortization        |  | 0.4               |    |  | 2.7           |   
|Restructuring and impairment charges |  | 0.9               |    |  | 2.4           |   
|                                     |  |                   |    |  |               |   
|Total cost of sales                  |  | 78.1              |    |  | 81.4          |   
|                                     |  |                   |    |  |               |   
|Gross profit                         |  | 21.9              |    |  | 18.6          |   
|Operating expenses:                  |  |                   |    |  |               |   
|Sales and marketing                  |  | 6.5               |    |  | 5.5           |   
|Research and development             |  | 10.1              |    |  | 8.7           |   
|General and administrative           |  | 8.1               |    |  | 6.7           |   
|Intangible asset amortization        |  | 0.2               |    |  | 1.1           |   
|Restructuring and impairment charges |  | 1.0               |    |  | 0.1           |   
|                                     |  |                   |    |  |               |   
|Total operating expenses             |  | 25.9              |    |  | 22.1          |   
|                                     |  |                   |    |  |               |   
|Operating loss                       |  | (4.0              | )  |  | (3.5          | ) 
|Other income (expense), net          |  | 3.6               |    |  | (2.3          | ) 
|                                     |  |                   |    |  |               |   
|Loss before income taxes             |  | (0.4              | )  |  | (5.8          | ) 
|Income tax provision                 |  | 1.0               |    |  | 0.5           |   
|                                     |  |                   |    |  |               |   
|Net loss                             |  | (1.4              | )% |  | (6.3          | )%
|                                     |  |                   |    |  |               |   

Three Months ended March 29, 2009 and March 30, 2008

Net Sales

Our sales are derived from
the sale of wireless communications network products and coverage solutions, including antennas, boosters, combiners, filters, radio frequency power amplifiers, remote radio head transceivers, repeaters, tower-mounted amplifiers and advanced
coverage solutions for use in cellular, PCS, 3G and WiMAX wireless communications networks throughout the world.

The following table
presents a further analysis of our sales based upon our various customer groups:



|                                     |  |                                  |         |  |                |   |  |   |         |  |     |  
|------------------------------------ |  | -------------------------------- | ------- |  | -------------- | - |  | - | ------- |  | --- | -
|                                     |  | Three Months Ended(in thousands) |        
|Customer Group                       |  | March 29, 2009                   |         |  | March 30, 2008 |  
|Wireless network operators and other |  | $                                | 54,565  |  | 36             | % |  | $ | 73,100  |  | 32  | %
|Original equipment manufacturers     |  |                                  | 95,180  |  | 64             | % |  |   | 153,202 |  | 68  | %
|                                     |  |                                  |         |  |                |   |  |   |         |  |     |  
|Total                                |  | $                                | 149,745 |  | 100            | % |  | $ | 226,302 |  | 100 | %
|                                     |  |                                  |         |  |                |   |  |   |         |  |     |  

Sales decreased by 34% to $149.7 million for the three months ended March 29, 2009, from
$226.3 million, for the three months ended March 30, 2008. This decrease was due to several factors, including decreased demand from both our direct operator customers and our original equipment manufacturer customers, which decreased by
approximately 25% and 38%, respectively, for the three months ended March 29, 2009 from the three months ended March 30, 2008. The decreases were primarily due to significantly reduced demand related to the global macro-economic crisis and
associated global credit crisis and economic recession that began in the fall of 2008. This economic instability and the tight credit markets have impacted our customers demand for products throughout the first quarter of 2009.



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The following table presents a further analysis of our sales based upon our various product groups:



|                                      |  |                                  |         |  |                |   |  |   |         |  |     |  
|------------------------------------- |  | -------------------------------- | ------- |  | -------------- | - |  | - | ------- |  | --- | -
|                                      |  | Three Months Ended(in thousands) |        
|Wireless Communications Product Group |  | March 29, 2009                   |         |  | March 30, 2008 |  
|Antenna systems                       |  | $                                | 35,756  |  | 24             | % |  | $ | 51,879  |  | 23  | %
|Base station systems                  |  |                                  | 102,418 |  | 68             | % |  |   | 152,499 |  | 67  | %
|Coverage systems                      |  |                                  | 11,571  |  | 8              | % |  |   | 21,924  |  | 10  | %
|                                      |  |                                  |         |  |                |   |  |   |         |  |     |  
|Total                                 |  | $                                | 149,745 |  | 100            | % |  | $ | 226,302 |  | 100 | %
|                                      |  |                                  |         |  |                |   |  |   |         |  |     |  

Antenna systems consist of base station antennas and tower-mounted amplifiers. Base station
systems consist of products that are installed into or around the base station of wireless networks and include products such as boosters, combiners, filters, radio frequency power amplifiers and VersaFlex cabinets. Coverage systems consist
primarily of repeaters and advanced coverage solutions. The decrease in all three product groups listed in the table above is due to the significantly reduced demand related to the global economic crisis impacting both our original equipment
manufacturer and direct operator customers during the three months ended March 29, 2009 as compared with the three months ended March 30, 2008.

We track the geographic location of our sales based upon the location of our customers to which we ship our products. Since many of our original equipment manufacturer customers purchase products from us at central
locations and then reship the product with other base station equipment to locations throughout the world, we are unable to identify the final installation location of many of our products.

The following table presents an analysis of our net sales based upon the geographic area to which a product was shipped:



|                    |  |                                  |         |  |                |   |  |   |         |  |     |  
|------------------- |  | -------------------------------- | ------- |  | -------------- | - |  | - | ------- |  | --- | -
|                    |  | Three Months Ended(in thousands) |        
|Geographic Area     |  | March 29, 2009                   |         |  | March 30, 2008 |  
|Americas            |  | $                                | 35,601  |  | 24             | % |  | $ | 86,081  |  | 38  | %
|Asia Pacific        |  |                                  | 58,520  |  | 39             | % |  |   | 62,756  |  | 28  | %
|Europe              |  |                                  | 43,488  |  | 29             | % |  |   | 70,513  |  | 31  | %
|Other international |  |                                  | 12,136  |  | 8              | % |  |   | 6,952   |  | 3   | %
|                    |  |                                  |         |  |                |   |  |   |         |  |     |  
|Total net sales     |  | $                                | 149,745 |  | 100            | % |  | $ | 226,302 |  | 100 | %
|                    |  |                                  |         |  |                |   |  |   |         |  |     |  

Revenues decreased in all regions in the first quarter of 2009 as compared to the first quarter of
2008 with the exception of the other international category. The increase in revenues in the other international category largely represents increased revenues in the Middle East region. The decrease in the other regions was largely due
to contraction in both the operator direct channel as well as the original equipment manufacturer sales channel, resulting from the global macro-economic crisis. Since wireless network infrastructure spending is dependent on individual network
coverage and capacity demands, we do not believe that our revenue fluctuations for any geographic region are necessarily indicative of a trend for our future revenues by geographic area. In addition, as noted above, growth in one geographic location
may not reflect actual demand growth in that location due to the centralized buying processes of our original equipment manufacturer customers.

A large portion of our revenues are generated in currencies other than the U.S. Dollar. During the last year, the value of the U.S. Dollar has fluctuated significantly against many other currencies. We have calculated that when
comparing exchange rates in effect for the first quarter of 2008 to those in effect for the first quarter of 2009, the change in the value of foreign currencies as compared with the U.S. Dollar did not have a material impact on our net sales.
During the first quarter of 2009, the value of the U.S. Dollar fluctuated dramatically and weakened significantly when compared to values in the fourth quarter of 2008. We are unable to predict the future impact of such currency fluctuations on
our future results.

For the quarter ended March 29, 2009, total sales to Nokia Siemens accounted for approximately 36% of sales. For
the first quarter of 2009, no other single customer accounted for 10% or more of sales. For the quarter ended March 30, 2008, total sales to Nokia Siemens accounted for approximately 29% of sales and sales to Alcatel-Lucent accounted for
approximately 21% of sales for the quarter. Notwithstanding our acquisitions, our business remains largely dependent upon a limited number of customers within the wireless communications market and we cannot guarantee that we will continue to be
successful in attracting new customers or retaining or increasing business with our existing customers.



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A number of factors have caused delays and may cause future delays in new wireless infrastructure and
upgrade deployment schedules throughout the world, including deployments in the United States, Europe, Asia, South America and other areas. In addition, a number of factors may cause original equipment manufacturers to alter their outsourcing
strategy concerning certain wireless communications network products, which could cause such original equipment manufacturers to reduce or eliminate their demand for external supplies of such products or shift their demand to alternative suppliers
or internal suppliers. Such factors include lower perceived internal manufacturing costs and competitive reasons to remain vertically integrated. Due to the possible uncertainties associated with wireless infrastructure deployments and original
equipment manufacturer demand, we have experienced and expect to continue to experience significant fluctuations in demand from our original equipment manufacturer and network operator customers. Such fluctuations have caused and may continue to
cause significant reductions in our revenues and/or operating results, which has adversely impacted and may continue to adversely impact our business, financial condition and results of operations.

Cost of Sales and Gross Profit

Our
cost of sales includes both fixed and variable cost components and consists primarily of materials, assembly and test labor, overhead, which includes equipment and facility depreciation, transportation costs, warranty costs and amortization of
product-related intangibles. Components of our fixed cost structure include test equipment and facility depreciation, purchasing and procurement expenses and quality assurance costs. Given the fixed nature of such costs, the absorption of our
overhead costs into inventory decreases and the amount of overhead variances expensed to cost of sales increases as volumes decline since we have fewer units to absorb our overhead costs against. Conversely, the absorption of our overhead costs into
inventory increases and the amount of overhead variances expensed to cost of sales decreases as volumes increase since we have more units to absorb our overhead costs against. As a result, our gross profit margins generally decrease as revenue and
volumes decline due to lower sales volume and higher amounts of overhead variances expensed to cost of sales. Our gross profit margins generally increase as our revenue and volumes increase due to higher sales volume and lower amounts of overhead
variances expensed to cost of sales.

The following table presents an analysis of our gross profit:



|                                     |  |                                  |         |  |                |   |  |   |         |  |       |  
|------------------------------------ |  | -------------------------------- | ------- |  | -------------- | - |  | - | ------- |  | ----- | -
|                                     |  | Three Months Ended(in thousands) |        
|                                     |  | March 29, 2009                   |         |  | March 30, 2008 |  
|Net sales                            |  | $                                | 149,745 |  | 100.0          | % |  | $ | 226,302 |  | 100.0 | %
|Cost of sales:                       |  |                                  |         |  |                |   |  |   |         |  |       |  
|Cost of goods                        |  |                                  | 114,962 |  | 76.8           | % |  |   | 172,764 |  | 76.3  | %
|Intangible amortization              |  |                                  | 623     |  | 0.4            | % |  |   | 6,110   |  | 2.7   | %
|Restructuring and impairment charges |  |                                  | 1,408   |  | 0.9            | % |  |   | 5,372   |  | 2.4   | %
|                                     |  |                                  |         |  |                |   |  |   |         |  |       |  
|Total cost of sales                  |  |                                  | 116,993 |  | 78.1           | % |  |   | 184,246 |  | 81.4  | %
|                                     |  |                                  |         |  |                |   |  |   |         |  |       |  
|Gross profit                         |  | $                                | 32,752  |  | 21.9           | % |  | $ | 42,056  |  | 18.6  | %
|                                     |  |                                  |         |  |                |   |  |   |         |  |       |  

Our actual total gross profit decreased during the first quarter of fiscal 2009, compared to the
first quarter of fiscal 2008, primarily as a result of our decreased revenues. As a percentage of revenue, our gross profit margin increased during the first quarter of fiscal 2009 compared to the first quarter of fiscal 2008 due primarily to lower
amortization and restructuring costs. The decrease in the intangible amortization costs is due to the intangible asset impairment recorded in the fourth quarter of 2008 (see Note 6 in the Notes to Consolidated Financial Statements included
under Part II, Item 8, and Financial Statements and Supplementary Data of the Companys Annual Report on Form 10-K for the fiscal year ended December 28, 2008). We incurred approximately $1.4 million of restructuring and
impairment charges during the first quarter of fiscal 2009, primarily related to the write down of our facility held for sale in Salisbury, Maryland and severance charges in the U.S., Finland and the UK. For the first quarter of 2008, we incurred
restructuring and impairment charges totaling $5.4 million. Our cost of goods sold for the first quarter of 2009 is slightly higher as a percentage of revenue compared to the prior year period. This increase in the percentage of cost of goods sold
is due mainly to lower revenues in 2009 resulting in lower absorption of costs when compared to 2008.

The wireless communications
infrastructure equipment industry is extremely competitive and is characterized by rapid technological change, new product development and product obsolescence, evolving industry standards and significant price erosion over the life of a product.
Certain of our competitors have aggressively lowered prices in an attempt to gain market share. Due to these competitive pressures and the pressures of our customers to continually lower product costs, we expect that the average sales prices of our
products will continue to decrease and negatively impact our gross margins. In addition, we have introduced new products at lower sales prices and these lower sales prices have impacted the average sales prices of our products. We have also reduced
prices on our existing products in response to our competitors and customer demands. We currently expect that pricing pressures will remain strong in our industry. Future pricing actions by our competitors and us may adversely impact our gross
profit margins and profitability, which could result in decreased liquidity and adversely affect our business, financial condition and results of operations.



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We continue to strive for manufacturing and engineering cost reductions to offset pricing pressures on
our products, as evidenced by our decision to close or transfer our Salisbury, Maryland, Finland, Hungary, Shanghai and Wuxi, China manufacturing operations as part of our restructuring plans to reduce our manufacturing costs. However, we cannot
guarantee that these cost reductions, and our outsourcing or product redesign efforts will keep pace with price declines and cost increases. If we are unable to further reduce our costs through our manufacturing, outsourcing and/or engineering
efforts, our gross margins and profitability will be adversely affected. See Our average sales prices have declined and Our reliance on contract manufacturers exposes us to risks under Part II, Item 1A,
Risk Factors.

Operating Expenses

The following table presents a breakdown of our operating expenses by functional category and as a percentage of net sales:



|                                     |  |                                  |        |  |                |   |  |   |        |  |      |  
|------------------------------------ |  | -------------------------------- | ------ |  | -------------- | - |  | - | ------ |  | ---- | -
|                                     |  | Three Months Ended(in thousands) |       
|Operating Expenses                   |  | March 29, 2009                   |        |  | March 30, 2008 |  
|Sales and marketing                  |  | $                                | 9,741  |  | 6.5            | % |  | $ | 12,546 |  | 5.5  | %
|Research and development             |  |                                  | 15,147 |  | 10.1           | % |  |   | 19,672 |  | 8.7  | %
|General and administrative           |  |                                  | 12,099 |  | 8.1            | % |  |   | 15,097 |  | 6.7  | %
|Intangible amortization              |  |                                  | 327    |  | 0.2            | % |  |   | 2,597  |  | 1.1  | %
|Restructuring and impairment charges |  |                                  | 1,498  |  | 1.0            | % |  |   | 113    |  | 0.1  | %
|                                     |  |                                  |        |  |                |   |  |   |        |  |      |  
|Total operating expenses             |  | $                                | 38,812 |  | 25.9           | % |  | $ | 50,025 |  | 22.1 | %
|                                     |  |                                  |        |  |                |   |  |   |        |  |      |  

Sales and marketing expenses consist primarily of sales salaries and commissions, travel expenses,
advertising and marketing expenses, selling expenses, charges for customer demonstration units and trade show expenses. Sales and marketing expenses decreased by $2.8 million, or 22%, during the quarter ended March 29, 2009 as compared to the
quarter ended March 30, 2008. The decrease was due to lower personnel and other selling and marketing costs primarily resulting from restructuring actions taken in the last year, partially offset by higher bad debt expense in the first quarter
of 2009.

Research and development expenses consist primarily of ongoing design and development expenses for new wireless communications
network products, as well as for advanced coverage solutions. We also incur design expenses associated with reducing the cost and improving the manufacturability of our existing products. Research and development expenses can fluctuate dramatically
from period to period depending on numerous factors including new product introduction schedules, prototype developments and hiring patterns. Research and development expenses decreased by $4.5 million, or 23%, during the first quarter of 2009 as
compared to the first quarter of 2008 due to restructuring actions taken in the last year and lower professional fees for outsourced research and development costs. Also contributing to the decrease in research and development expenses were lower
travel expenses and professional fees.

General and administrative expenses consist primarily of salaries and other expenses for
management, finance, information systems, legal fees, facilities and human resources. General and administrative expenses decreased $3.0 million, or 20%, during the first quarter of 2009 as compared to the first quarter of 2008. This decrease was
due to reduced payroll resulting from personnel reductions over the last year from our restructuring activities and lower legal fees.

Amortization of customer-related intangibles from our acquisitions, amounted to $0.3 million for the first quarter of fiscal 2009, compared to $2.6 million for the first quarter of fiscal 2008. The decreased amortization expense for the
first quarter of 2009 was a result of the intangible asset impairment recorded in the fourth quarter of 2008.

Restructuring charges of
$1.5 million were recorded in the first quarter of fiscal 2009, primarily for severance costs in the U.S., Finland and Sweden, compared to charges of $0.1 million in the first quarter of fiscal 2008.



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##### Table of Contents

Other Income (Expense), net

The following table presents an analysis of other income, net:



|                                  |  |                                  |        |   |                |      |    |  |   |        |   |  |      |   
|--------------------------------- |  | -------------------------------- | ------ | - | -------------- | ---- | -- |  | - | ------ | - |  | ---- | --
|                                  |  | Three Months Ended(in thousands) |       
|                                  |  | March 29, 2009                   |        |   | March 30, 2008 |     
|Interest income                   |  | $                                | 398    |   |                | 0.2  | %  |  | $ | 181    |   |  | 0.1  | % 
|Interest expense                  |  |                                  | (2,731 | ) |                | (1.8 | )% |  |   | (2,959 | ) |  | (1.3 | )%
|Foreign currency gain (loss), net |  |                                  | 2,821  |   |                | 1.9  | %  |  |   | (3,248 | ) |  | (1.4 | )%
|Other income, net                 |  |                                  | 4,942  |   |                | 3.3  | %  |  |   | 716    |   |  | 0.3  | % 
|                                  |  |                                  |        |   |                |      |    |  |   |        |   |  |      |   
|Other income (expense), net       |  | $                                | 5,430  |   |                | 3.6  | %  |  | $ | (5,310 | ) |  | (2.3 | )%
|                                  |  |                                  |        |   |                |      |    |  |   |        |   |  |      |   

Interest income increased by $0.2 million during the first quarter ended March 29, 2009
compared to the first quarter ended March 30, 2008. Interest expense decreased by $0.2 million during the first quarter of fiscal 2009 due to the retirement of approximately $50 million of our long-term debt when compared to the first quarter
of 2008. The increase in other income, net is primarily due to the gain of $4.0 million that we recognized on the purchase of $5.4 million in aggregate par value of our outstanding 1.875% convertible subordinated notes due 2024 that were purchased
at a discount during the first quarter of 2009. Additionally, we recognized a net foreign currency translation gain of $2.8 million in the first quarter of 2009, primarily due to the strength of the U.S. Dollar versus several other currencies,
as compared to the first quarter of 2008 when we recognized a foreign currency translation loss of $3.2 million.

Income Tax Provision

Our effective tax rate for the three months ended March 29, 2009 was an expense of approximately 233% of our pre-tax loss of $0.6
million. We have recorded a valuation allowance against a portion of our deferred tax assets pursuant to SFAS 109 due to the uncertainty as to the timing and ultimate realization of those assets. As such, for the foreseeable future, the tax
provision or tax benefit related to future U.S. earnings or losses will be offset substantially by a reduction in the valuation allowance. Accordingly, for the three months ended March 29, 2009, tax expense consisted primarily of taxes or tax
benefits in certain foreign jurisdictions, primarily China. In addition, in the first quarter of 2009, tax expense was reduced by approximately $1.1 million from a reduction in our liability for income taxes associated with uncertain tax positions
as a result of the expiration of the statutory audit period of the tax jurisdiction.

Net Loss

The following table presents a reconciliation of operating loss to net loss:



|                            |  |                                  |        |   |               |   |         |  
|--------------------------- |  | -------------------------------- | ------ | - | ------------- | - | ------- | -
|                            |  | Three Months Ended(in thousands) |       
|                            |  | March 29,2009                    |        |   | March 30,2008 |  
|Operating loss              |  | $                                | (6,060 | ) |               | $ | (7,969  | )
|Other income (expense), net |  |                                  | 5,430  |   |               |   | (5,310  | )
|                            |  |                                  |        |   |               |   |         |  
|Loss before income taxes    |  |                                  | (630   | ) |               |   | (13,279 | )
|Income tax provision        |  |                                  | 1,470  |   |               |   | 968     |  
|                            |  |                                  |        |   |               |   |         |  
|Net loss                    |  | $                                | (2,100 | ) |               | $ | (14,247 | )
|                            |  |                                  |        |   |               |   |         |  

Our net loss from operations for the quarter ended March 29, 2009 was $2.1 million, compared
to our net loss of $14.2 million for the quarter ended March 30, 2008. The decrease in our net loss during the first quarter of fiscal 2009 as compared to the first quarter of fiscal 2008 is primarily the result of our worldwide cost-cutting
and restructuring activities. Additionally, we have benefited from prior year asset impairments which significantly reduced our intangible amortization costs as well as the benefit from the gain on the purchase of a portion of our outstanding debt.

Liquidity and Capital Resources

We
have historically financed our operations through a combination of cash on hand, cash provided from operations, equipment lease financings, available borrowings under our bank line of credit, private debt placements and both private and public
equity offerings. Our principal sources of liquidity consist of existing cash balances, funds expected to be generated from future operations



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and borrowings under our receivables credit facility. As of March 29, 2009, we had working capital of $175.6 million, including $52.6 million in
unrestricted cash and cash equivalents as compared to working capital of $199.4 million at March 30, 2008, which included $83.0 million in unrestricted cash and cash equivalents. We currently invest our excess cash in short-term,
investment-grade, money-market instruments with maturities of three months or less. We typically hold such investments until maturity and then reinvest the proceeds in similar money market instruments. We believe that all of our cash investments
would be readily available to us should the need arise.

Cash Flows

The following table summarizes our cash flows for the three months ended March 29, 2009 and March 30, 2008:



|                                                                    |  |                    |        |   |               |   |       
|------------------------------------------------------------------- |  | ------------------ | ------ | - | ------------- | - | ------
|                                                                    |  | Three Months Ended
|                                                                    |  | March 29,2009      |        |   | March 30,2008
|Net cash provided by (used in):                                     |  |                    |        |   |               |   |       
|Operating activities                                                |  | $                  | 6,504  |   |               | $ | 21,532
|Investing activities                                                |  |                    | 856    |   |               |   | 1,018 
|Financing activities                                                |  |                    | (1,214 | ) |               |   | 74    
|Effect of foreign currency translation on cash and cash equivalents |  |                    | (500   | ) |               |   | 2,260 
|                                                                    |  |                    |        |   |               |   |       
|Net increase in cash and cash equivalents                           |  | $                  | 5,646  |   |               | $ | 24,884
|                                                                    |  |                    |        |   |               |   |       

Net cash provided by operations in the first quarter of 2009 was $6.5 million as compared to $21.5
million in the first quarter of 2008. The reduction in cash flow from operations from the prior year is due to significantly lower revenues in the first quarter of 2009.

Net cash provided by investing activities during the first three months of fiscal 2009 was $0.9 million as compared to $1.0 million during the first three months of fiscal 2008. The $0.9 million in net cash provided
by investing activities during the three months ended March 29, 2009 represents a reduction in our restricted cash of $0.6 million and proceeds from a settlement of litigation of $2.0 million, partially offset by capital expenditures of $1.7
million. Total capital expenditures during the three months ended March 29, 2009 and March 30, 2008 were approximately $1.7 million and $3.4 million, respectively. The majority of the capital spending during both periods related to
computer hardware and test equipment utilized in our manufacturing and research and development areas. We expect our capital spending requirements for the remainder of this year to range between $5 million and $10 million, consisting of test
and production equipment, as well as computer hardware and software.

Net cash used in financing activities of $1.2 million during the
first three months of 2009 relates primarily to the repurchase of $5.4 million in aggregate par value of our 1.875% convertible subordinated notes due 2024. Net cash provided by financing activities for the first three months of 2008 of $0.1 million
was primarily related to our employee stock purchase plan.

We currently believe that our existing cash balances, funds expected to be
generated from operations and borrowings under our Credit Agreement will provide us with sufficient funds to finance our current operations for at least the next twelve months. Our principal sources of liquidity consist of our existing cash
balances, funds expected to be generated from operations and our Credit Agreement with Wells Fargo Foothill, LLC, described below. We regularly review our cash funding requirements and attempt to meet those requirements through a combination of cash
on hand and cash provided by operations. Our ability to increase revenues and generate profits is subject to numerous risks and uncertainties, and any significant decrease in our revenues or profitability would reduce our operating cash flows and
erode our existing cash balances. No assurances can be given that we will be able to generate positive operating cash flows in the future or maintain and/or grow our existing cash balances.

We had a total of $300.9 million of long-term convertible subordinate notes outstanding at March 29, 2009, consisting of $150.9 million of 1.875%
convertible subordinated notes due 2024 (2024 Notes) and $150.0 million of 3.875% convertible subordinated notes due 2027 (2027 Notes). Holders of the 2024 Notes may require us to repurchase all or a portion of their notes
for cash on November 15, 2011, 2014 and 2019 at 100% of the principal amount of the notes, plus accrued and unpaid interest. Holders of the 2027 Notes may require us to repurchase all or a portion of their notes for cash on October 1,
2014, 2017 and 2022 at 100% of the principal amount of the notes, plus accrued and unpaid interest. No assurance can be given that we will be able to generate positive operating cash flows in the future or maintain and/or grow our existing cash
balances. If we do not generate sufficient cash from operations, or improve our ability to generate cash, we may not have sufficient funds available to pay our maturing debt. If we have not retired the debt prior to maturity, and if we do not have
adequate cash available at that time, we would be required to refinance the notes and no assurance can be given that we will be able to refinance the notes on terms acceptable to us or at all given current conditions in the credit markets. If our
financial performance is poor or if credit markets remain tight, we will likely encounter a more difficult environment in terms of raising additional financing. If we are not able to repay or refinance the notes or if we experience a prolonged
period of reduced customer demand for our products, our ability to maintain operations may be impacted.



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Financing Activities

As indicated in Note 5 of the Notes to Consolidated Financial Statementsunder Part I, Item I, FinancialInformation, the Company entered into a Credit Agreement on April 3, 2009. Pursuant to the
Credit Agreement, the Lenders thereunder have made available to the Company a senior secured credit facility in the form of a revolving line of credit up to a maximum of $50.0 million. Availability under the Credit Agreement is based on the
calculation of our borrowing base as defined in the Credit Agreement and on eligible domestic and foreign accounts receivable. The Credit Agreement is secured by a first priority security interest on a majority of the Companys assets,
including without limitation, all accounts, equipment, inventory, chattel paper, records, intangibles, deposit accounts, cash and cash equivalents and proceeds of the foregoing. The Credit Agreement expires on August 15, 2011. The Credit
Agreement contains customary affirmative and negative covenants for credit facilities of this type, including limitations on the Company with respect to indebtedness, liens, investments, distributions, mergers and acquisitions, dispositions of
assets and transactions with affiliates of the Company. The Credit Agreement also includes financial covenants including minimum EBITDA and maximum capital expenditures.

On April 3, 2009, in connection with entering into the Credit Agreement referenced above, the Company terminated its Amended Receivables Purchase Agreement. As of the date of termination, the Company did not have
any borrowings outstanding under the Amended Receivables Purchase Agreement. In addition, the Company did not incur any early termination penalties in connection with the termination of the Amended Receivables Purchase Agreement.

On occasion, we have previously utilized both operating and capital lease financing for certain equipment purchases used in our manufacturing and
research and development operations and may selectively continue to do so in the future. We may require additional funds in the future to support our working capital requirements or for other purposes such as acquisitions, and we may seek to raise
such additional funds through the sale of public or private equity and/or debt financings, as well as from other sources. Our ability to secure additional financing or sources of funding is dependent upon our financial performance, credit rating and
the market price for our Common Stock, which are both directly impacted by our ability to grow revenues and generate profits. In addition, our ability to obtain financing is directly dependent upon the availability of financial markets to provide
sources of financing on reasonable terms and conditions. The capital and credit markets have been experiencing extreme volatility and disruption recently and, over the past several weeks, the volatility and disruption have reached nearly
unprecedented levels. In several cases, the markets have exerted downward pressure on stock prices and credit capacity for certain issuers. Given current market conditions, we can make no guarantee that we will be able to obtain additional financing
or secure new financing arrangements in the future. If our operating performance was to deteriorate and our cash balances were to be significantly reduced, we would likely encounter a more difficult environment in terms of raising additional funding
to support our business and we may be required to further reduce operating expenses or scale back operations

Off-Balance Sheet Arrangements

Our off-balance sheet arrangements consist primarily of conventional operating leases, purchase commitments and other commitments
arising in the normal course of business, as further discussed in our Form 10-K for the year ended December 28, 2008, in Part II, Item 7 under the heading Contractual Obligations and Commercial Commitments. As of March 29,
2009, we did not have any other relationships with unconsolidated entities or financial partners, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating
off-balance sheet arrangements or other contractually-narrow or limited purposes.

Disclosure About Stock Option Plans

Our stock option program is a broad-based, long-term retention program that is intended to attract and retain talented employees and align stockholder and
employee interests. The program consists of six separate plans: one under which non-employee directors may be granted options to purchase shares of stock, and five broad-based plans under which options may be granted to all employees, including
officers. One such plan provides for both option grants and stock based awards including restricted stock awards. Options granted under these plans expire either five or ten years from the grant date and generally vest over two to four years.



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##### Table of Contents

During the three months ended March 29, 2009, we granted options to purchase a total of 3,998,750
shares of Common Stock. We did not grant any shares of restricted stock to employees during the first quarter of fiscal 2009. After deducting 378,310 shares for options forfeited, the result was net options granted of 3,620,440. Net options granted
during the quarter represented 2.7% of our total outstanding common shares of 131,978,122 as of March 29, 2009. The following table summarizes the net stock option grants and restricted stock awards to our employees, directors and executive
officers during the two most recent fiscal periods:



|                                                                                                            |  |                                 |   |  |                            |  
|----------------------------------------------------------------------------------------------------------- |  | ------------------------------- | - |  | -------------------------- | -
|                                                                                                            |  | Three Months EndedMarch 29,2009 |   |  | Year EndedDecember 28,2008 |  
|Net grants (forfeitures) during the period as a % of total outstanding common shares                        |  | 2.7                             | % |  | 0.2                        | %
|Grants to executive officers during the period as a % of total options and awards granted during the period |  | 38.7                            | % |  | 21.6                       | %
|Grants to executive officers during the period as a % of total outstanding common shares                    |  | 1.2                             | % |  | 0.3                        | %
|Cumulative options held by executive officers as a % of total options outstanding                           |  | 37.5                            | % |  | 34.7                       | %

As of March 29, 2009, a total of 2,278,512 options were available for grant under all of our
option plans with a total of 21,575 shares of Common Stock held in escrow to cover all remaining exercises under the Companys 1995 Stock Option Plan. See Note 13 in the Notes to Consolidated Financial Statements included under Part II,
Item 8, Financial Statements and Supplementary Data of the Companys Annual Report on Form 10-K for the fiscal year ended December 28, 2008 for further information regarding the Companys 1995 Stock Option Plan. The
following table summarizes activity for outstanding options under all of our stock option plans during the three months ended March 29, 2009:



|                             |  |                 |   |  |                 |             |                              |   |                             |  |                              |  |   |      
|---------------------------- |  | --------------- | - |  | --------------- | ----------- | ---------------------------- | - | --------------------------- |  | ---------------------------- |  | - | -----
|                             |  | Number ofShares |   |  | Price Per Share |             | WeightedAverageExercisePrice |   | Number ofOptionsExercisable |  | WeightedAverageExercisePrice
|Balance at December 28, 2008 |  | 6,840,921       |   |  | $               | 0.49-$67.08 |                              | $ | 8.34                        |  | 3,724,870                    |  | $ | 10.62
|Granted                      |  | 3,998,750       |   |  | $               | 0.42-$0.56  |                              | $ | 0.47                        |  |                              |  |   |      
|Exercised                    |  |                |   |  |                 |            |                              |   |                            |  |                              |  |   |      
|Cancelled                    |  | (378,310        | ) |  | $               | 0.48-$61.67 |                              | $ | 9.86                        |  |                              |  |   |      
|                             |  |                 |   |  |                 |             |                              |   |                             |  |                              |  |   |      
|Balance at March 29, 2009    |  | 10,461,361      |   |  | $               | 0.42-$67.08 |                              | $ | 5.28                        |  | 3,771,221                    |  | $ | 10.11
|                             |  |                 |   |  |                 |             |                              |   |                             |  |                              |  |   |      

The following table summarizes outstanding stock options that are in-the-money and
out-of the-money as of March 29, 2009. For purposes of this table, in-the-money stock options are those options with an exercise price less than $0.47 per share, the closing price of Powerwave Common Stock on March 27, 2009,
the last trading day of the fiscal quarter. Out-of-the-money stock options are stock options with an exercise price greater than or equal to the $0.47 per share closing price.



|                          |  |             |  |                        |       |             |           |                        |   |      |  |           
|------------------------- |  | ----------- |  | ---------------------- | ----- | ----------- | --------- | ---------------------- | - | ---- |  | ----------
|                          |  | Exercisable |  | Unexercisable          |       | TotalShares
|                          |  | Shares      |  | Wtd. Avg.ExercisePrice |       | Shares      |           | Wtd. Avg.ExercisePrice |  
|In-the-Money              |  |            |  | $                      |      |             | 772,050   |                        | $ | 0.42 |  | 772,050   
|Out-of-the-Money          |  | 3,771,221   |  |                        | 10.11 |             | 5,918,090 |                        |   | 2.83 |  | 9,689,311 
|                          |  |             |  |                        |       |             |           |                        |   |      |  |           
|Total Options Outstanding |  | 3,771,221   |  | $                      | 10.11 |             | 6,690,140 |                        | $ | 2.55 |  | 10,461,361
|                          |  |             |  |                        |       |             |           |                        |   |      |  |           



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##### Table of Contents

The following table sets forth certain information concerning the exercise of options by each of our
executive officers during the three months ended March 29, 2009, including the aggregate value of gains on the date of exercise held by such executive officers, as well as the number of shares covered by both exercisable and unexercisable stock
options as of March 29, 2009. Also reported are the values for the in-the-money options which represent the positive spread between the exercise prices of any such existing stock options and the closing price of the Companys Common Stock
on the last trading day of the fiscal quarter.



|                  |  |                          |             |               |               |                                                                    |             |                                                              |               |  |   |   |  |   |       
|----------------- |  | ------------------------ | ----------- | ------------- | ------------- | ------------------------------------------------------------------ | ----------- | ------------------------------------------------------------ | ------------- |  | - | - |  | - | ------
|Name              |  | SharesAcquiredonExercise |             | ValueRealized |               | Number ofSecurities UnderlyingUnexercised Options atMarch 29, 2009 |             | Value of UnexercisedIn-the-Money Options atMarch 29, 2009(1)
|                  |  |                          | Exercisable |               | Unexercisable |                                                                    | Exercisable |                                                              | Unexercisable
|Ronald J. Buschur |  |                         |             | $             |              |                                                                    | 1,025,000   |                                                              | 575,000       |  | $ |  |  | $ | 12,500
|Kevin T. Michaels |  |                         |             | $             |              |                                                                    | 522,500     |                                                              | 367,500       |  | $ |  |  | $ | 6,250 
|J. Marvin Magee   |  |                         |             | $             |              |                                                                    | 115,416     |                                                              | 544,584       |  | $ |  |  | $ | 10,000
|Khurram P. Sheikh |  |                         |             | $             |              |                                                                    | 73,229      |                                                              | 483,021       |  | $ |  |  | $ | 4,813 
|Basem Anshasi     |  |                         |             | $             |              |                                                                    | 37,811      |                                                              | 177,189       |  | $ |  |  | $ |      



|(1) | In accordance with the Securities and Exchange Commissions rules, values are calculated by subtracting the
exercise price from the fair market value of the underlying Common Stock. For purposes of this table, fair market value per share is deemed to be $0.47, the Companys closing Common Stock price reported by NASDAQ on March 27, 2009, the
last trading day of the fiscal quarter.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our shareholders have previously approved all stock option plans under which our
Common Stock is reserved for issuance. The following table provides summary information as of March 29, 2009, for all of our stock option plans:



|                                                       |  |                                                                                                   |  |                                                                       |      |                                                                                                                                            |          
|------------------------------------------------------ |  | ------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------- | ---- | ------------------------------------------------------------------------------------------------------------------------------------------ | ---------
|                                                       |  | Number of Shares ofCommon Stock tobe Issued uponExercise ofOutstandingOptions,
Warrantsand Rights |  | WeightedAverageExercise Priceof OutstandingOptions,Warrants andRights |      | Number of Shares ofCommon StockRemaining Availablefor Future Issuanceunder our StockOption
Plans(Excluding SharesReflected in Column 1)(1)
|Equity Compensation Plans Approved by Shareholders     |  | 10,461,361                                                                                        |  | $                                                                     | 5.28 |                                                                                                                                            | 2,278,512
|Equity Compensation Plans Not Approved by Shareholders |  |                                                                                                  |  |                                                                       |     |                                                                                                                                            |         
|                                                       |  |                                                                                                   |  |                                                                       |      |                                                                                                                                            |          
|Total                                                  |  | 10,461,361                                                                                        |  | $                                                                     | 5.28 |                                                                                                                                            | 2,278,512
|                                                       |  |                                                                                                   |  |                                                                       |      |                                                                                                                                            |          



|(1) | The number of securities remaining available for future issuance has also been reduced to reflect 341,250 shares of
restricted stock issued under the 2005 Stock Incentive Plan.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Our financial instruments include cash and cash equivalents, restricted cash, short-term investments, capital leases and long-term debt. As of March 29, 2009, the carrying values of our financial instruments approximated their fair
values based upon current market prices and rates.

We are exposed to a number of market risks in the ordinary course of business. These
risks, which include foreign currency risk, interest rate risk and commodity price risk, arise in the normal course of business rather than from trading. We have examined our exposures to these risks and have concluded, as we similarly concluded in
our Form 10-K for the preceding fiscal year, that none of our exposures in these areas are material to fair values, cash flows or earnings.

Foreign
Currency Risk

Our international operations represent a substantial portion of our operating results and asset base. We maintain various
operations in multiple foreign locations including Brazil, China, Estonia, Finland, France, Germany, India, Singapore, Sweden and the United Kingdom. These international operations generally incur local operating costs and generate third-party
revenues in the currencies used in such foreign jurisdictions. Such foreign currency revenues and expenses expose us to foreign currency risk and give rise to foreign exchange gains and losses.

We regularly pursue new customers in various international locations where new deployments or upgrades to existing wireless communication networks are
planned. As a result, a significant portion of our revenues are derived from international sources (excluding North America), with our international customers accounting for approximately 77% of our net sales during the three months ended
March 29, 2009, 70% of our net sales during fiscal 2008 and 73% of our fiscal 2007 sales. Such international sources include Europe, Asia and South America, where there has been historical volatility in several of the regions currencies.
Changes in the value of the U.S. Dollar versus the local currency in which our products are sold exposes us to foreign currency risk, since the weakening of an international customers local currency and banking market may negatively
impact such customers ability to meet their payment obligations to us. Alternatively, if a sale price is denominated in U.S. Dollars and the value of the Dollar falls, we may suffer a loss due to the lower value of the Dollar. In addition,
certain of our international customers require that we transact business with them in their own local currency regardless of the location of our operations, which also exposes us to foreign currency risk. As we sell products or services in foreign
currencies, we may be required to convert the payments received into U.S. Dollars or utilize such foreign currencies as payments for expenses of our business, which may give rise to foreign exchange gains and losses. Given the uncertainty as to when
and what specific foreign currencies we may be required or agreed upon to accept as payment from our international customers, we cannot predict the ultimate impact that such a decision would have on our business, gross margins and results of
operations. For the first quarter of 2009, due to the increased value of the U.S. Dollar, we recorded a foreign exchange translation gain of $2.8 million. There can be no assurance that we will not incur additional foreign exchange translation
losses in the future if the Dollar begins to weaken.

Interest Rate Risk

As of March 29, 2009, we had cash equivalents of approximately $55.4 million in both interest and non-interest bearing accounts, including restricted
cash. We also had $150.9 million of our convertible subordinated notes due November 2024 at a fixed annual interest rate of 1.875% and $150.0 million of convertible subordinated notes due October 2027 at a fixed rate of 3.875%. We are exposed to
interest rate risk primarily through our convertible subordinated debt and our cash investment portfolio. Short-term investment rates decreased significantly during 2008 and 2009 as the U.S. Federal Reserve attempted to soften the impacts of the
economic slowdown and subprime mortgage issues. In spite of this, we believe that we are not subject to material fluctuations in principal given the short-term maturities and high-grade investment quality of our investment portfolio, and the fact
that the effective interest rate of our portfolio tracks closely to various short-term money market interest rate benchmarks. Therefore, we currently do not use derivative instruments to manage our interest rate risk. Based on our overall interest
rate exposure at March 29, 2009, we do not believe that a 100 basis point change in interest rates would have a material effect on our consolidated financial position, results of operations or cash flows.



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Commodity Price Risk

Our internal manufacturing operations and contract manufacturers require significant quantities of transistors, semiconductors and various metals for use in the manufacture of our products. Therefore, we are exposed
to certain commodity price risk associated with variations in the market prices for these electronic components as these prices directly impact the cost to manufacture products and the price we pay our contract manufacturers to manufacture our
products. We attempt to manage this risk by entering into supply agreements with our contract manufacturers and various suppliers of these components in order to mitigate the impact on the Company of any fluctuations in commodity prices. These
supply agreements are not long-term supply agreements. If we or our contract manufacturers become subject to a significant increase in the price of one of these components, we would likely be forced to pay such higher prices and we may be unable to
pass such costs onto our customers. In addition, certain transistors and semiconductors are regularly revised or changed by their manufacturers, which may result in a requirement for us to redesign a product that utilizes such components or cease to
produce such products. In such events, our business, results of operations and financial condition could be adversely affected. Additionally, we require specialized electronic test equipment, which is utilized in both the design and manufacture of
our products. Such electronic test equipment is available from limited sources and may not be available in the time periods required for us to meet our customers demand. If required, we may be forced to pay higher prices for such equipment
and/or we may not be able to obtain the equipment in the time periods required, which would then delay our development or production of new products. Such delays and any potential additional costs could have a material adverse effect on our
business, results of operations and financial condition. Further, the world economy experienced significant increases in the price of oil and energy during the first three quarters of 2008. Such increases have translated into higher freight and
transportation costs and, in certain cases, higher raw material supply costs. These higher costs have negatively impacted our production costs. We may not be able to pass on these higher costs to our customers and if we insist on raising prices, our
customers may curtail their purchases from us. Further increases in energy prices may negatively impact our results of operations.



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|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Controls and Procedures

We have established disclosure controls and procedures to ensure that material information relating to Powerwave and its consolidated subsidiaries is
made known to the officers who certify the Companys financial reports, as well as other members of senior management and the Board of Directors, to allow timely decisions regarding required disclosures. As of the end of the period covered by
this report, Powerwave carried out an evaluation, under the supervision and with the participation of the Companys management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design
and operation of the Companys disclosure controls and procedures pursuant to Rule 13a-15 of the Securities and Exchange Act of 1934. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the
Companys disclosure controls and procedures are effective in timely alerting them to material information related to the Company that is required to be included in Powerwaves annual and periodic SEC filings.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls and procedures or our
internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a
control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that all control issues and instances of fraud, if any, within Powerwave have been detected.

Internal Control Over Financial
Reporting

There has been no change in the Companys internal control over financial reporting during the first three months of
fiscal 2009 that has materially affected, or is reasonable likely to materially affect, the Companys internal control over financial reporting.



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PART II  OTHER INFORMATION



|ITEM 1. | LEGAL PROCEEDINGS
|------- | -----------------

In the first quarter of 2007,
four purported shareholder class action complaints were filed in the United States District Court for the Central District of California against the Company, its President and Chief Executive Officer, its former Executive Chairman of the Board of
Directors and its Chief Financial Officer. The complaints were Jerry Crafton v. Powerwave Technologies, Inc., et. al., Kenneth Kwan v. Powerwave Technologies, Inc., et. al., Achille Tedesco v. Powerwave Technologies, Inc., et. al. and Farokh
Etemadieh v. Powerwave Technologies, Inc. et. al.and were brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. In June 2007, the four cases were consolidated into one action before the
Honorable Judge Philip Gutierrez, and a lead plaintiff was appointed. In October 2007, the lead plaintiff filed an amended complaint asserting the same causes of action and purporting to state claims on behalf of all persons who purchased Powerwave
securities between May 2, 2005 and November 2, 2006. The essence of the allegations in the amended complaint were that the defendants made misleading statements or omissions concerning the Companys projected and actual sales
revenues, the integration of certain acquisitions and the sufficiency of the Companys internal controls. In December 2007, the defendants filed a motion to dismiss the amended complaint. On April 17, 2008, the Court granted
defendants motion to dismiss plaintiffs claims in connection with the Companys projected sales revenues, but denied defendants motion to dismiss plaintiffs other claims. On August 29, 2008, the defendants answered
the amended complaint. Discovery has begun, and trial of the action is scheduled to commence on January 19, 2010. The defendants have reached an agreement in principle with the lead plaintiff to settle the consolidated action. According to the
terms of the proposed settlement, the settlement payment will be funded by the Companys directors and officers liability insurance. The proposed settlement is subject to both preliminary and final Court approval.

In March 2007, one additional lawsuit that relates to the pending shareholder class action was filed. The lawsuit, Cucci v. Edwards, et al., filed
in the Superior Court of California, is a shareholder derivative action, purported to be brought by an individual shareholder on behalf of Powerwave, against current and former directors of Powerwave. Powerwave is also named as a nominal defendant.
The allegations of the derivative complaint closely resemble those in the class action and pertain to the time period of May 2, 2005 through October 9, 2006. Based on those allegations, the derivative complaint asserts various claims for
breach of fiduciary duty, waste of corporate assets, mismanagement, and insider trading under state law. The derivative complaint was removed to federal court, and is also pending before Judge Gutierrez. The derivative action is currently stayed
pursuant to a stipulation of the parties that has been entered by the Court. Powerwave disputes the allegations raised in the derivative action and plans to pursue a vigorous defense of this matter.



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|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our business faces significant
risks. The risks described below may not be the only risks we face. Additional risks that we do not yet know of or that we currently think are immaterial may also impair our business operations. If any of the events or circumstances described in the
following risks actually occur, our business, results of operations or financial condition could suffer, and the trading price of our Common Stock could decline, and you may lose all or a part of your investment.

Risks Related to the Business

We rely upon a few
customers for the majority of our revenues and the loss of any one or more of these customers, or a significant loss, reduction or rescheduling of orders from any of these customers, would have a material adverse effect on our business, results of
operations and financial condition.

We sell most of our products to a small number of customers, and while we are continually seeking
to expand our customer base, we expect this will continue. For the three months ended March 29, 2009, sales to Nokia Siemens accounted for approximately 36% of our net sales. Nokia Siemens accounted for approximately 31% of our revenues in
2008, and Alcatel-Lucent accounted for approximately 17% of our net revenues in fiscal 2008. Nokia Siemens and Alcatel-Lucent are our two largest customers and any decline in business with either of these customers will have an adverse impact on our
business, results of operations and financial condition. For the first quarter of 2009, our sales to Alcatel-Lucent did decline significantly, which had a negative impact on our business and results of operations. Our future success is dependent
upon the continued purchases of our products by a small number of customers such as Nokia Siemens, Alcatel-Lucent, other original equipment manufacturers and network operator customers. Any fluctuations in demand from such customers or other
customers would negatively impact our business, results of operations and financial condition. If we are unable to broaden our customer base and expand relationships with major wireless original equipment manufacturers and major operators of
wireless networks, our business will continue to be impacted by unanticipated demand fluctuations due to our dependence on a small number of customers. Unanticipated demand fluctuations can have a negative impact on our revenues and business, and an
adverse effect on our business, results of operations and financial condition. In addition, our dependence on a small number of major customers exposes us to numerous other risks, including:



| |  |  | a slowdown or delay in deployment of wireless networks by any one or more customers could significantly reduce demand for our products;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | reductions in a single customers forecasts and demand could result in excess inventories;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | the current economic crisis could negatively affect one or more of our major customers and cause them to significantly reduce operations, or file for bankruptcy;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | consolidation of customers can reduce demand as well as increase pricing pressure on our products due to increased purchasing leverage;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------



| |  |  | each of our customers has significant purchasing leverage over us to require changes in sales terms including pricing, payment terms and product delivery schedules;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | direct competition should a customer decide to increase its level of internal designing and/or manufacturing of wireless communication network products; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | concentration of accounts receivable credit risk, which could have a material adverse effect on our liquidity and financial condition if one of our major customers
declared bankruptcy or delayed payment of their receivables.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our operating results have been adversely impacted by
the worldwide economic crisis and credit tightening.

Beginning in the fourth quarter of 2008, worldwide economic conditions
significantly deteriorated due to the credit crisis driven initially by the subprime mortgage crisis and other factors, including slower economic activity, recessionary concerns, increased energy costs, decreased consumer confidence, reduced
corporate profits, reduced or canceled capital spending, adverse business conditions and liquidity concerns. Our revenues declined approximately 17% in the first quarter of 2009, compared to the fourth quarter of 2008, and they declined
approximately 34% from the first quarter of 2008. All of these factors combined are having a negative impact on the availability of financial capital which is contributing to a reduction in demand for infrastructure in the wireless communication
market. These conditions make it difficult or impossible for our customers and vendors to accurately forecast and plan future business activities, causing domestic and foreign businesses to slow or suspend spending on our products and services. As
customers face this challenging economic time, they are finding it difficult to gain sufficient credit in a timely manner, which has resulted in an impairment of their ability to place orders with us or to make timely payments to us for previous
purchases. If this continues to occur, our revenues will be significantly reduced, thereby having a negative impact on our business, results of operations and financial condition. In addition, we may be forced to increase our allowance for doubtful
accounts and our days of sales outstanding may increase significantly, which would have a negative impact on our cash position, liquidity and financial condition. We cannot predict the timing or the duration of this economic recession or the impact
on the wireless industry.



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We have previously experienced significant reductions in demand for our products by certain customers
and if this continues, our operating results will be adversely impacted.

We have a history of significant unanticipated reductions in
demand that demonstrate the risks related to our customer and industry concentration levels. While our revenues have increased at times during fiscal years 2005, 2006, 2007 and 2008, a significant portion of this increase was due to our various
acquisitions. During fiscal years 2006 and 2007, we experienced significantly reduced demand for our products due to lower than anticipated purchasing plans by a major North American wireless network operator. In addition, beginning in the fourth
quarter of 2006, when we acquired the wireless infrastructure division of Filtronic plc, Nokia and Siemens significantly reduced their demand which had a significant negative impact on both Powerwave and the Filtronic plc wireless businesses. As a
result of this reduction and the general slowdown in the wireless infrastructure marketplace during the fourth quarter of fiscal 2006, our revenues decreased to $169.8 million in the fourth quarter of fiscal 2006 from $249.4 million in the
fourth quarter of 2005. This slowdown continued in the first six months of 2007, when our revenues declined from the fourth quarter of 2006. Our revenues also declined when compared to the first six months of 2006, even though the first six months
of 2007 included the Filtronic plc wireless acquisition. These types of reductions in overall market demand have had a negative impact on our business, results of operations and financial condition.

Beginning in the fourth quarter of 2008, the global economic crisis and related recession began to have an impact on our customers and their demand for
our products. As a result of this economic crisis, our revenues decreased to $149.7 million in the first quarter of 2009, from $180.3 million in the fourth quarter of 2008, $238.0 million in the third quarter of 2008, and $230.6 million in the
fourth quarter of 2007. We currently anticipate that our customers will significantly reduce their demand for wireless infrastructure products in the near term, thereby negatively impacting all companies within our industry. This expected reduction
in demand will have a negative impact on our business, results of operations and financial condition.

During fiscal 2005, 2006 and 2007,
we also experienced a significant reduction in demand from Nortel. In the first quarter of 2009, Nortel filed for bankruptcy protection. Given the current economic climate, it is possible that one or more of our customers will suffer significant
financial difficulties, including potentially filing for bankruptcy protection. In such an event, the demand for our products from these customers may decline significantly or cease completely. We cannot guarantee that we will be able to continue to
generate new demand to offset any such reductions from existing customers. If we are unable to continue to generate new demand, our revenues will go down and our results of operations and financial condition will be negatively impacted.

Also, in the past we have experienced significant unanticipated reductions in wireless network operator demand as well as significant delays in demand
for 3G, or next generation service based products, due to the high projected capital cost of building such networks and market concerns regarding the inoperability of such network protocols. In combination with these market issues, a majority of
wireless network operators have in the past regularly reduced their capital spending plans in order to improve their overall cash flow. There is a substantial likelihood that the global economic recession will continue throughout 2009, thereby
having a negative impact on network operator deployment spending plans. The impact of any future reduction in capital spending by wireless network operators, coupled with any delays in deployment of wireless networks, will result in reduced demand
for our products, which will have a material adverse effect on our business.

We may need additional capital in the future and such
additional financing may not be available on favorable terms.

As of March 29, 2009, we had approximately $55.4 million of cash,
with $2.8 million of it restricted. We cannot provide any guarantee that we will generate sufficient cash in the future to maintain or grow our operations over the long-term. We rely upon our ability to generate positive cash flow from operations to
fund our business. If we are not able to generate positive cash flow from operations, we may need to utilize sources of financing such as our Credit Agreement or other sources of cash. While the Credit Agreement signed April 3, 2009, provides
us with additional sources of liquidity, we may need to raise additional funds through public or private debt or equity financings in order to fund existing operations or to take advantage of opportunities, including more rapid international
expansion or acquisitions of complementary businesses or technologies. If we are not successful in integrating our businesses, reducing our inventories and accounts receivable and managing the worldwide aspects of our company, our operations may not
generate positive cash flow and we may consume our cash resources faster than we anticipate. Such losses would make it difficult to obtain new sources of financing. In addition, if we do not generate sufficient cash flow from operations, we may need
to raise additional funds to repay our $300.9 million of remaining outstanding convertible debt that we issued in 2004 and 2007. Our ability to secure additional financing or sources of funding is dependent upon numerous factors, including the
current outlook of our business, our credit rating and the market price of our Common Stock, all of which are directly impacted by our ability to increase revenues and generate profits. In addition, the availability of new financing is dependent
upon functioning debt and equity markets



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with financing available on reasonable terms. Given the recent credit crisis, there can be no guarantee that such a market will be available to us. If such a
market is not available, we may not be able to raise new financing, which would negatively impact our business and possibly impact our ability to maintain operations as presently conducted.

Our ability to increase revenues and generate profits is subject to numerous risks and uncertainties including the likelihood of decreased revenues in
the current macro-economic environment, and any significant decrease in our revenues or profitability could reduce our operating cash flows and erode our existing cash balances. Our ability to reduce our inventories and accounts receivable and
improve our cash flow is dependent on numerous risks and uncertainties and if we are not able to reduce our inventories, we will not generate the cash required to operate our business. Our ability to secure additional financing is also dependent
upon the credit markets, which have recently become highly constrained due to credit concerns arising from the subprime mortgage lending market and subsequent worldwide economic recession. If we are unable to secure additional financing or such
financing is not available on acceptable terms, we may not be able to fund our operations, otherwise respond to unanticipated competitive pressures, or repay our convertible debt.

We may be adversely affected by the bankruptcy of our customers.

We may not successfully evaluate the creditworthiness of our customers. While we maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments,
greater than anticipated nonpayment and delinquency rates could harm our financial results and liquidity. Given the current global economic recession, there are potentials risks of greater than anticipated customer defaults. In the first quarter of
2009, our customer Nortel filed for U.S. bankruptcy protection. If the financial condition of any of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances would be required and would
negatively impact our business, results of operations and financial condition.

We may incur unanticipated costs as we complete the
restructuring of our business.

We have previously encountered difficulties and delays in integrating and consolidating operations
which have had a negative impact on our business, results of operations and financial condition. The failure to successfully integrate these operations could undermine the anticipated benefits and synergies of the restructuring, which could
adversely affect our business, financial condition and results of operations. The anticipated benefits and synergies of our restructurings relate to cost savings associated with operational efficiencies and greater economies of scale. However, these
anticipated benefits and synergies are based on projections and assumptions, not actual experience, and assume a smooth and successful integration of our business.

We may need to undertake restructuring actions in the future.

We have previously recognized
restructuring charges in response to slowdowns in demand for our products and in conjunction with cost cutting measures and measures to improve the efficiency of our operations. As a result of business conditions, we may need to initiate
restructuring actions that could result in restructuring charges which could have a material impact on our business, results of operations and financial condition. Such potential restructuring actions could include cash costs that could reduce our
available cash balances, which would have a negative impact on our business.

The potential for increased commodity and energy costs may
adversely affect our business, results of operations and financial condition.

The world economy experienced significant fluctuations
in the price of oil and energy during 2008. During the first three quarters of 2008, such fluctuations resulted in significant price increases which translated into higher freight and transportation costs and, in certain cases, higher raw material
supply costs. These higher costs negatively impacted our production costs. We were not able to pass on these higher costs to our customers and if we insist on raising prices, our customers may curtail their purchases from us. The costs of energy and
items directly related to the cost of energy will fluctuate due to factors that may not be predictable, such as the economy, political conditions and the weather. Further increases in energy prices may negatively impact our business, results of
operations and financial condition.

We have experienced, and will continue to experience, significant fluctuations in sales and
operating results from quarter to quarter.

Our quarterly results fluctuate due to a number of factors, including:



| |  |  | the lack of any obligation by our customers to purchase their forecasted demand for our products;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | costs associated with restructuring activities, including severance, inventory obsolescence and facility closure costs;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | variations in the timing, cancellation, or rescheduling of customer orders and shipments;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | costs associated with consolidating acquisitions;
| | - |  | -------------------------------------------------



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| |  |  | high fixed expenses that increase operating expenses, especially during a quarter with a sales shortfall;
| | - |  | ---------------------------------------------------------------------------------------------------------



| |  |  | product failures and associated warranty and in-field service support costs; and
| | - |  | --------------------------------------------------------------------------------



| |  |  | discounts given to certain customers for large volume purchases.
| | - |  | ----------------------------------------------------------------

We have regularly generated a large percentage of our revenues in the last month of a quarter. Since we attempt to ship products quickly after we receive orders, we may not always have a significant backlog of
unfilled orders at the start of each quarter and we may be required to book a substantial portion of our orders during the quarter in which such orders ship. Our major customers generally have no obligation to purchase forecasted amounts and may
cancel orders, change delivery schedules or change the mix of products ordered with minimal notice and without penalty. As a result, we may not be able to accurately predict our quarterly sales. Because our expense levels are partially based on our
expectations of future sales, our expenses may be disproportionately large relative to our revenues, and we may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall. Any shortfall in sales relative to
our quarterly expectations or any delay of customer orders would adversely affect our business, results of operations and financial condition.

Order deferrals and cancellations by our customers, declining average sales prices, changes in the mix of products sold, delays in the introduction of new products and longer than anticipated sales cycles for our products have, in the past,
adversely affected our business, results of operations and financial condition. Despite these factors, we, along with our contract manufacturers, maintain significant finished goods, work-in-progress and raw materials inventory to meet estimated
order forecasts. If our customers purchase less than their forecasted orders or cancel or delay existing purchase orders, there will be higher levels of inventory that face a greater risk of obsolescence. If our customers desire to purchase products
in excess of the forecasted amounts or in a different product mix, there may not be enough inventory or manufacturing capacity to fill their orders.

Due to these and other factors, our past results are not reliable indicators of our future performance. Future revenues and operating results may not meet the expectations of public market analysts or investors. In
either case, the price of our Common Stock could be materially adversely affected.

Our average sales prices have declined, and we
anticipate that the average sales prices for our products will continue to decline and negatively impact our gross profit margins.

Wireless service providers are continuing to place pricing pressure on wireless infrastructure manufacturers, which in turn, has resulted in lower selling prices for our products, with certain competitors aggressively reducing prices in an
effort to increase their market share. The consolidation of original equipment manufacturers such as Alcatel-Lucent and Nokia Siemens is concentrating their purchasing power at the surviving entities, which is placing further pricing pressures on
the products we sell to such customers. Moreover, the current economic downturn may cause wireless service providers to be even more aggressive in demanding price reductions as they attempt to reduce costs. As a result, we may be forced to further
reduce our prices to such customers, which would have a negative impact on our business and results of operations. If we do not agree to lower our prices as some customers request, those customers may stop purchasing our products, which would
significantly impact our business. We believe that the average sales prices of our products will continue to decline for the foreseeable future. The weighted average sales price for our products declined approximately 6% to 9% from fiscal 2007 to
fiscal 2008 and we expect that this will continue going forward. Since wireless infrastructure manufacturers frequently negotiate supply arrangements far in advance of delivery dates, we must often commit to price reductions for our products before
we know how, or if, we can obtain such cost reductions. With ongoing consolidation in our industry, the increased size of many of our customers allows them to exert greater pressure on us to reduce prices. In addition, average sales prices are
affected by price discounts negotiated without firm orders for large volume purchases by certain customers. To offset declining average sales prices, we must reduce manufacturing costs and ultimately develop new products with lower costs or higher
average sales prices. If we cannot achieve such cost reductions or increases in average selling prices, our gross margins will decline.

Our suppliers, contract manufacturers or customers could become competitors.

Many of our customers internally design
and/or manufacture their own wireless communications network products. These customers also continuously evaluate whether to manufacture their own wireless communications network products or utilize contract manufacturers to produce their own
internal designs. Certain of our customers regularly produce or design wireless communications network products in an attempt to replace products manufactured by us. In addition, some customers threaten to undertake such activities if we do not
agree to their requested price reductions. We believe that all of these practices will continue. In the event that our customers manufacture or design their own wireless communications network products, such customers could reduce or eliminate their
purchases of our products, which would result in reduced revenues and would adversely impact our business, results of operations and financial condition. Wireless infrastructure equipment manufacturers with internal manufacturing capabilities,
including many of our customers, could also sell wireless communications network products externally to other manufacturers,



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thereby competing directly with us. In addition, our suppliers or contract manufacturers may decide to produce competing products directly for our customers
and, effectively, compete against us. If, for any reason, our customers produce their wireless communications network products internally, increase the percentage of their internal production, require us to participate in joint venture manufacturing
with them, require us to reduce our prices, engage our suppliers or contract manufacturers to manufacture competing products, or otherwise compete directly against us, our revenues would decrease, which would adversely impact our business, results
of operations and financial condition.

Our success is tied to the growth of the wireless services communications market and our future
revenue growth is dependent upon the expected increase in the size of this market.

Our revenues come from the sale of wireless
communications network products and coverage solutions. Our future success depends solely upon the growth and increased availability of wireless communications services. Wireless communications services may not grow at a rate fast enough to create
demand for our products, as we experienced during fiscal 2003, in fiscal 2006, in fiscal 2007, in the fourth quarter of fiscal 2008 and in the first quarter of fiscal 2009. Some of our network operator customers rely on credit to finance the
build-out or expansion of their wireless networks. The current credit environment and the worldwide economic recession will likely result in a reduction of demand from some of our customers in the near term. During fiscal 2006 and into fiscal 2007,
a major North American wireless network operator significantly reduced demand for new products. In addition, during the same period, several major equipment manufacturers began a process of consolidating their operations, which significantly reduced
their demand for products. During fiscal 2003, wireless network operators reduced or delayed capital spending on wireless networks in order to preserve their operating cash and improve their balance sheets. Such reduced spending on wireless networks
had a negative impact on our operating results. If wireless network operators delay or reduce levels of capital spending, our operating results will be negatively impacted.

Our reliance on contract manufacturers exposes us to risks of excess inventory or inventory carrying costs.

If our contract manufacturers are unable to respond in a timely fashion to changes in customer demand, we may be unable to produce enough products to
respond to sudden increases in demand, resulting in lost revenues. Alternatively, in the case of order cancellations or decreases in demand, we may be liable for excess or obsolete inventory or cancellation charges resulting from contractual
purchase commitments that we have with our contract manufacturers. We regularly provide rolling forecasts of our requirements to our contract manufacturers for planning purposes, pursuant to our agreements, a portion of which is binding upon us.
Additionally, we are committed to accept delivery on the forecasted terms for a portion of the rolling forecast. Cancellations of orders or changes to the forecasts provided to any of our contract manufacturers may result in cancellation costs
payable by us. In the past, we have been required to take delivery of materials from our suppliers and subcontractors that were in excess of our requirements and we have previously recognized charges and expenses related to such excess material. We
expect that we will incur such costs in the future.

By using contract manufacturers, our ability to directly control the use of all
inventories is reduced since we do not have full operating control over their operations. If we are unable to accurately forecast demand for our contract manufacturers and manage the costs associated with our contract manufacturers, we may be
required to pay inventory carrying costs or purchase excess inventory. If we or our contract manufacturers are unable to utilize such excess inventory in a timely manner, and are unable to sell excess components or products due to their customized
nature, our operating results and liquidity would be negatively impacted.

Future acquisitions, or strategic alliances, may present
risks, and we may be unable to achieve the financial and strategic goals intended at the time of any acquisition or strategic alliance.

In the past, we have acquired and made investments in other companies, products and technologies and entered into strategic alliances with other companies. We continually evaluate these types of opportunities. We may acquire or invest in
other companies, products or technologies, or we may enter into joint ventures, mergers or strategic alliances with other companies. Such transactions subject us to numerous risks, including the following:



| |  |  | difficulty integrating the operations, technology and personnel of the acquired company;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | inability to achieve the anticipated financial and strategic benefits of the specific acquisition or strategic alliance;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | significant additional warranty costs due to product failures and or design differences that were not identified during due diligence, and such costs could result
in charges to earnings if they are not recoverable from the seller;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | inability to retain key technical and managerial personnel from the acquired company;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | difficulty in maintaining controls, procedures and policies during the transition and integration process;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | diversion of our managements attention from other business concerns;
| | - |  | ---------------------------------------------------------------------



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| |  |  | failure of our due diligence process to identify significant issues, including issues with respect to product quality, product architecture, legal and financial
contingencies, and product development; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | significant exit charges if products acquired in business combinations are unsuccessful.
| | - |  | ----------------------------------------------------------------------------------------

If we are unable to manage these risks effectively as part of any acquisition or joint venture, our business would be adversely affected.

We depend on single sources or limited sources for key components and products, which exposes us to risks related to product shortages or delays, as
well as potential product quality issues, all of which could increase the cost of our products thereby reducing our operating profits.

A number of our products and the parts used in our products are available from only one or a limited number of outside suppliers due to unique component designs, as well as certain quality and performance requirements. To take advantage of
volume pricing discounts, we also purchase certain products, and along with our contract manufacturers, purchase certain customized components from single or limited sources. We have experienced, and expect to continue to experience, shortages of
single-source and limited-source components. Shortages have compelled us to adjust our product designs and production schedules and have caused us to miss customer requested delivery dates. To date, missed customer delivery dates have not had a
material adverse impact on our financial results. If single-source or limited-source components become unavailable in sufficient quantities in the desired time periods, are discontinued or are available only on unsatisfactory terms, we would be
required to purchase comparable components from other sources and may be required to redesign our products to use such components which could delay production and delivery of our products. If production and delivery of our products are delayed such
that we do not meet the agreed upon delivery dates of our customers, such delays could result in lost revenues due to customer cancellations, as well as potential financial penalties payable to our customers. Any such loss of revenue or financial
penalties could have a material adverse effect on our business, results of operations and financial condition.

Our reliance on certain
single-source and limited-source components and products also exposes us and our contract manufacturers to quality control risks if these suppliers experience a failure in their production process or otherwise fail to meet our quality requirements.
A failure in a single-source or limited-source component or product could force us to repair or replace a product utilizing replacement components. If we cannot obtain comparable replacements or redesign our products, we could lose customer orders
or incur additional costs, which would have a material adverse effect on our business, results of operations and financial condition.

We may fail to develop products that are sufficiently manufacturable, which could negatively impact our ability to sell our products.

Manufacturing our products is a complex process that requires significant time and expertise to meet customers specifications. Successful manufacturing is substantially dependent upon the ability to assemble and
tune these products to meet specifications in an efficient manner. In this regard, we largely depend on our staff of assembly workers and trained technicians at our internal manufacturing operations in the U.S., Europe and Asia, as well as our
contract manufacturers staff of assembly workers and trained technicians located in Asia and Europe. If we cannot design our products to minimize the manual assembly and tuning process, or if we or our contract manufacturers lose a number of
trained assembly workers and technicians or are unable to attract additional trained assembly workers or technicians, we may be unable to have our products manufactured in a cost effective manner.

We may fail to develop products that are of adequate quality and reliability, which could negatively impact our ability to sell our products.

We have had quality problems with our products including those we have acquired in recent business acquisitions. We may have similar
product quality problems in the future. We have replaced components in some products and replaced entire products in accordance with our product warranties. We believe that our customers will demand that our products meet increasingly stringent
performance and reliability standards. If we cannot keep pace with technological developments, evolving industry standards and new communications protocols, if we fail to adequately improve product quality and meet the quality standards of our
customers, or if our contract manufacturers fail to achieve the quality standards of our customers, we risk losing business which would negatively impact our business, results of operations and financial condition. Design problems could also damage
relationships with existing and prospective customers and could limit our ability to market our products to large wireless infrastructure manufacturers, many of which build their own products and have stringent quality control standards. In
addition, we have incurred significant costs addressing quality issues from products that we have acquired in certain of our acquisitions. We are also required to honor certain warranty claims for products that we have acquired in our recent
acquisitions. While we intend to seek recovery of amounts that we have paid, or may pay in the future, to resolve warranty claims through indemnification from the prior manufacturer, such processes can be costly and time consuming.



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If we are unable to hire and retain highly qualified technical and managerial personnel, we may not be
able to sustain or grow our business.

Competition for personnel, particularly qualified engineers, is intense. The loss of a
significant number of such persons, as well as the failure to recruit and train additional technical personnel in a timely manner, could have a material adverse effect on our business, results of operations and financial condition. The departure of
any of our management and technical personnel, the breach of their confidentiality and non-disclosure obligations to us or the failure to achieve our intellectual property objectives may also have a material adverse effect on our business.

We believe that our success depends upon the knowledge and experience of our management and technical personnel and our ability to market
our existing products and to develop new products. Our employees are generally employed on an at- will basis and do not have non-compete agreements. Therefore, we have had, and may continue to have, employees leave us and go to work for competitors.

There are significant risks related to our internal and contract manufacturing operations in Asia and Europe.

As part of our manufacturing strategy, we utilize contract manufacturers in China, Europe, Singapore and Thailand. We also maintain our own manufacturing
operations in China and Estonia, as well as the United States. We closed our Costa Rica manufacturing facility in December 2006, sold our Hungary manufacturing operations in December 2007, and began to discontinue manufacturing operations in Finland
in the fourth quarter of 2008.

The Chinese legal system lacks transparency, which gives the Chinese central and local government
authorities a higher degree of control over our business in China than is customary in the United States and makes the process of obtaining necessary regulatory approval in China inherently unpredictable. In addition, the protection accorded our
proprietary technology and know-how under the Chinese and Thai legal systems is not as strong as in the United States and, as a result, we may lose valuable trade secrets and competitive advantage. Also, manufacturing our products and utilizing
contract manufacturers, as well as other suppliers throughout the Asia region, exposes our business to the risk that our proprietary technology and ownership rights may not be protected or enforced to the extent that they may be in the United
States.

Although the Chinese government has been pursuing economic reform and a policy of welcoming foreign investments during the past
two decades, it is possible that the Chinese government will change its current policies in the future, making continued business operations in China difficult or unprofitable.

In September 2006, Thailand experienced a military coup which overturned the existing government. In late 2008, anti-government protests and civilian
occupations culminated with a court-ordered ouster of Thailands prime minister. In 2009, continued unrest has impacted the government of Thailand, and potential civil unrest may continue. To date, this has not had a long-term impact on our
operations in Thailand. If there are future coups or some other type of political unrest, such activity may impact the ability to manufacture products in this region and may prevent shipments from entering or leaving the country. Any such
disruptions could have a material negative impact on our operations and financial results.

We require air or ocean transport to ship
products built in our various manufacturing locations to our customers. High energy costs have increased our transportation costs which has had a negative impact on our production costs. Transportation costs would also escalate if there were a
shortage of air or ocean cargo space and any significant increase in transportation costs would cause an increase in our expenses and negatively impact our business, results of operations and financial condition. In addition, if we are unable to
obtain cargo space or secure delivery of components or products due to labor strikes, lockouts, work slowdowns or work stoppages by longshoremen, dock workers, airline pilots or other transportation industry workers, our delivery of products could
be adversely delayed.

The initial sales cycle associated with our products is typically lengthy, often lasting from nine to eighteen
months, which could cause delays in forecasted sales and cause us to incur substantial expenses before we record any associated revenues.

Our customers normally conduct significant technical evaluations, trials and qualifications of our products before making purchase commitments. This qualification process involves a significant investment of time and resources from both our
customers and us in order to ensure that our product designs are fully qualified to perform as required. The qualification and evaluation process, as well as customer field trials, may take longer than initially forecasted, thereby delaying the
shipment of sales forecasted for a specific customer for a particular quarter and causing our operating results for the quarter to be less than originally forecasted. Such a sales shortfall would reduce our profitability and negatively impact our
results of operations.



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We conduct a significant portion of our business internationally, which exposes us to increased
business risks.

For the three months ended March 29, 2009, and fiscal years 2008, 2007, and 2006, international revenues
(excluding North American sales) accounted for approximately 77%, 70%, 73% and 72% of our net sales, respectively. There are many risks that currently impact, and will continue to impact, our international business and multinational operations,
including the following:



| |  |  | compliance with multiple and potentially conflicting regulations in Europe, Asia and North and South America, including export requirements, tariffs, import duties
and other trade barriers, as well as health and safety requirements;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | potential labor strikes, lockouts, work slowdowns and work stoppages at U.S. and international ports;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | differences in intellectual property protections throughout the world;
| | - |  | ----------------------------------------------------------------------



| |  |  | difficulties in staffing and managing foreign operations in Europe, Asia and South America, including dealings with unionized labor pools in Europe and in Asia;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | longer accounts receivable collection cycles in Europe, Asia and South America;
| | - |  | -------------------------------------------------------------------------------



| |  |  | currency fluctuations and resulting losses on currency translations;
| | - |  | --------------------------------------------------------------------



| |  |  | terrorist attacks on American companies;
| | - |  | ----------------------------------------



| |  |  | economic instability, including inflation and interest rate fluctuations, such as those previously seen in South Korea and Brazil;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | competition for foreign based suppliers throughout the world;
| | - |  | -------------------------------------------------------------



| |  |  | overlapping or differing tax structures;
| | - |  | ----------------------------------------



| |  |  | the complexity of global tax and transfer pricing rules and regulations and our potential inability to benefit/offset losses in one tax jurisdiction with income
from another;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | cultural and language differences between the United States and the rest of the world; and
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | political or civil turmoil.
| | - |  | ---------------------------

Any
failure on our part to manage these risks effectively would seriously reduce our competitiveness in the wireless infrastructure marketplace.

Protection of our intellectual property is limited.

We rely upon trade secrets and patents to protect our intellectual
property. We execute confidentiality and non-disclosure agreements with certain employees and our suppliers, as well as limit access to and distribution of our proprietary information. We have an ongoing program to identify and file applications for
U.S. and other international patents.

The departure of any of our management and technical personnel, the breach of their confidentiality
and non-disclosure obligations to us, or the failure to achieve our intellectual property objectives could have a material adverse effect on our business, results of operations and financial condition. We do not have non-compete agreements with our
employees who are generally employed on an at-will basis. Therefore, we have had, and may continue to have, employees leave us and go to work for competitors. If we are not successful in prohibiting the unauthorized use of our proprietary technology
or the use of our processes by a competitor, our competitive advantage may be significantly reduced which would result in reduced revenues.

We are at risk of third-party claims of infringement that could harm our competitive position.

We have received
third-party claims of infringement in the past and have been able to resolve such claims without having a material impact on our business. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as
the coverage of these rights and the functionality of the products in the market further overlap, we believe that we may face additional infringement claims. Such claims, whether or not valid, could result in substantial costs and diversion of our
resources. A third party claiming infringement may also obtain an injunction or other equitable relief, which could effectively block the distribution or sale of allegedly infringing products, which would adversely affect our customer relationships
and negatively impact our revenues.



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The communications industry is heavily regulated. We must obtain regulatory approvals to manufacture
and sell our products, and our customers must obtain approvals to operate our products. Any failure or delay by us or any of our customers to obtain such approvals could negatively impact our ability to sell our products.

Various governmental agencies have adopted regulations that impose stringent radio frequency emissions standards on the communications industry. Future
regulations may require that we alter the manner in which radio signals are transmitted or otherwise alter the equipment transmitting such signals. The enactment by governments of new laws or regulations or a change in the interpretation of existing
regulations could negatively impact the market for our products.

The increasing demand for wireless communications has exerted pressure on
regulatory bodies worldwide to adopt new standards for such products, generally following extensive investigation and deliberation over competing technologies. The delays inherent in this type of governmental approval process have caused, and may
continue to cause, the cancellation, postponement or rescheduling of the installation of communications systems by our customers. These types of unanticipated delays would result in delayed or cancelled customer orders.

The wireless communications infrastructure equipment industry is extremely competitive and is characterized by rapid technological change, frequent
new product development, rapid product obsolescence, evolving industry standards and significant price erosion over the life of a product. If we are unable to compete effectively, our business, results of operations and financial condition would be
adversely affected.

Our products compete on the basis of the following characteristics:



| |  |  | performance;
| | - |  | ------------



| |  |  | functionality;
| | - |  | --------------



| |  |  | reliability;
| | - |  | ------------



| |  |  | pricing;
| | - |  | --------



| |  |  | quality;
| | - |  | --------



| |  |  | designs that can be efficiently manufactured in large volumes;
| | - |  | --------------------------------------------------------------



| |  |  | time-to-market delivery capabilities; and
| | - |  | -----------------------------------------



| |  |  | compliance with industry standards.
| | - |  | -----------------------------------

If we fail to address the above factors, there could be a material adverse effect on our business, results of operations and financial condition.

Our current competitors include CommScope, Inc., Fujitsu Limited, Hitachi Kokusai Electric Inc., Japan Radio Co., Ltd., Kathrein-Werke KG, Mitsubishi Electric Corporation, and Radio Frequency Systems, in addition to a
number of privately held companies throughout the world, subsidiaries of certain multinational corporations and the internal manufacturing operations and design groups of the leading wireless infrastructure manufacturers such as Alcatel-Lucent,
Ericsson, Huawei, Motorola, Nokia Siemens, Nortel, and Samsung. Some competitors have adopted aggressive pricing strategies in an attempt to gain market share, which in turn, has caused us to lower our prices in order to remain competitive. Such
pricing actions have had an adverse effect on our financial condition and results of operations. In addition, some competitors have significantly greater financial, technical, manufacturing, sales, marketing and other resources than we do and have
achieved greater name recognition for their products and technologies than we have. If we are unable to successfully increase our market penetration or our overall share of the wireless communications infrastructure equipment market, our revenues
will decline, which would negatively impact our results of operations.

Our failure to enhance our existing products or to develop and
introduce new products that meet changing customer requirements and evolving technological standards could have a negative impact on our ability to sell our products.

To succeed, we must improve current products and develop and introduce new products that are competitive in terms of price, performance and quality. These products must adequately address the requirements of wireless
infrastructure manufacturing customers and end-users. To develop new products, we invest in the research and development of wireless communications network products and coverage solutions. We target our research and development efforts on major
wireless network deployments worldwide, which cover a broad range of frequency and transmission protocols. In addition, we are currently working on products for next generation networks, as well as development projects for products requested by our
customers and improvements to our existing products. The deployment of a wireless network may be delayed which could result in the failure of a particular research or development effort to generate a revenue producing product. Additionally, the new
products we develop may not achieve market acceptance or may not be able to be manufactured cost effectively in sufficient volumes. Our research and development efforts are generally funded internally and our customers do not normally pay for our
research and development efforts. These costs are expensed as incurred. Therefore, if our efforts are not successful at creating or improving products that are purchased by our customers, there will be a negative impact on our operating results due
to high research and development expenses.



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Our business is subject to the risks of earthquakes and other natural catastrophic events, and to
interruptions by man made problems such as computer viruses or terrorism.

Our corporate headquarters and a large portion of our U.S.
based research and development operations are located in the State of California in regions known for seismic activity. In addition, we have production facilities and have outsourced some of our production to contract manufacturers in Asia, another
region known for seismic activity. A significant natural disaster, such as an earthquake in either of these regions, could have a material adverse effect on our business, operating results and financial condition. In addition, despite our
implementation of network security measures, our servers are vulnerable to computer viruses, break-ins, and similar disruptions from unauthorized tampering with our computer systems. Any such event could have a material adverse effect on our
business.

Our stock price currently does not meet the minimum bid price for continued listing on the NASDAQ Global Select Market. Our
ability to publicly or privately sell equity securities and the liquidity of our Common Stock could be adversely affected if we are delisted from the NASDAQ Global Select Market or if we are unable to transfer our listing to another stock market.

The minimum bid price for our Common Stock listed on the NASDAQ Global Select Market has been below the $1.00 minimum since the
beginning of the fourth quarter of 2008. The NASDAQ MarketPlace Rules provide that one of the continuing listing requirements for an issuers common stock is having a minimum bid price of $1.00 per share. NASDAQ has announced a moratorium on
the enforcement of this minimum bid requirement that is effective through July 19, 2009. If our stock price does not increase above $1.00 per share, we risk being delisted from the NASDAQ Global Select Market if the moratorium is not extended.
We cannot control whether NASDAQ will agree to extend the moratorium in the future or the duration of any such moratorium.

If our Common
Stock is delisted by NASDAQ, our Common Stock may be eligible to trade on the OTC Bulletin Board maintained by NASDAQ, another over-the-counter quotation system, or on the pink sheets. Each of these alternatives will likely result in it being more
difficult for investors to dispose of, or obtain accurate quotations as to the market value of, our Common Stock. In addition, there can be no assurance that our Common Stock will be eligible for trading on any of such alternative exchanges or
markets.

In addition, delisting from NASDAQ could adversely affect our ability to raise additional capital through the public or private
sale of equity securities. Delisting from NASDAQ also would make trading our Common Stock more difficult for investors, potentially leading to further declines in our share price and inhibiting a stockholders ability to liquidate all or part
of their investment in Powerwave.

The price of our Common Stock has been, and may continue to be, volatile and our shareholders may not
be able to resell shares of our Common Stock at or above the price paid for such shares.

The price for shares of our Common Stock has
exhibited high levels of volatility with significant volume and price fluctuations, which makes our Common Stock unsuitable for many investors. For example, for the two years ended December 28, 2008, the closing price of our Common Stock ranged
from a high of $7.45 to a low of $0.40 per share. During the first quarter of 2009, the closing price of our Common Stock reached a low of $0.23 per share. The fluctuations in the price of our Common Stock have occasionally been unrelated to our
operating performance. These broad fluctuations may negatively impact the market price of shares of our Common Stock. The price of our Common Stock has also been influenced by:



| |  |  | fluctuations in our results of operations or the operations of our competitors or customers;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | the aggregate amount of our outstanding debt and perceptions about our ability to make debt service payments;
| | - |  | -------------------------------------------------------------------------------------------------------------



| |  |  | failure of our results of operations and sales revenues to meet the expectations of stock market analysts and investors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | reductions in wireless infrastructure demand or expectations regarding future wireless infrastructure demand by our customers;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | delays or postponement of wireless infrastructure deployments, including new 3G deployments;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | changes in stock market analyst recommendations regarding us, our competitors or our customers;
| | - |  | -----------------------------------------------------------------------------------------------



| |  |  | the timing and announcements of technological innovations, new products or financial results by us or our competitors;
| | - |  | ----------------------------------------------------------------------------------------------------------------------



| |  |  | lawsuits attempting to allege misconduct by the Company and its officers;
| | - |  | -------------------------------------------------------------------------



| |  |  | increases in the number of shares of our Common Stock outstanding; and
| | - |  | ----------------------------------------------------------------------



| |  |  | changes in the wireless industry.
| | - |  | ---------------------------------



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In addition, the potential conversion of our outstanding convertible debt instruments would add
approximately 30.8 million shares of Common Stock to our outstanding shares. Such an increase may lead to sales of such shares or the perception that such sales may occur, either of which may adversely affect the market for, and the market
price of, our Common Stock. Any potential future sale or issuance of shares of our Common Stock or instruments convertible or exchangeable into shares of our Common Stock, or the perception that such sales or transactions could occur, could
adversely affect the market price of our Common Stock.

Based on the above, we expect that our stock price will continue to be extremely
volatile. Therefore, we cannot guarantee that our investors will be able to resell our Common Stock at or above its acquisition price.

Failure to maintain effective internal controls over financial reporting could adversely affect our business and the market price of our Common Stock.

Pursuant to rules adopted by the SEC under the Sarbanes-Oxley Act of 2002, we are required to assess the effectiveness of our internal controls over financial reporting and provide a management report on our internal
controls over financial reporting in all annual reports. This report contains, among other matters, a statement as to whether or not our internal controls over financial reporting are effective and the disclosure of any material weaknesses in our
internal controls over financial reporting identified by management. Section 404 also requires our independent registered public accounting firm to audit managements report.

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) provides a framework for companies to assess and improve their internal
control systems. Auditing Standard No. 5 provides the professional standards and related performance guidance for auditors to report on managements assessment of the effectiveness of internal control over financial reporting under
Section 404. Managements assessment of internal controls over financial reporting requires management to make subjective judgments and, particularly because Section 404 and Auditing Standard No. 5 are newly effective, some of
the judgments will be in areas that may be open to interpretation. Therefore, our managements report on our internal controls over financial reporting may be difficult to prepare, and our auditors may not agree with our managements
assessment.

While we currently believe our internal controls over financial reporting are effective, we are required to comply with
Section 404 on an annual basis. If, in the future, we identify one or more material weaknesses in our internal controls over financial reporting during this continuous evaluation process, our management may not be able to assert that such
internal controls are effective. Although we currently anticipate being able to continue to satisfy the requirements of Section 404 in a timely fashion, we cannot be certain as to the timing of completion for our future evaluation, testing and
any required remediation due in large part to the fact that there are limited precedents available by which to measure compliance with these new requirements. Therefore, if we are unable to assert that our internal controls over financial
reporting are effective in the future, or if our auditors are unable to attest that our managements report is fairly stated or they are unable to express an opinion on the effectiveness of our internal controls, we could lose investor
confidence in the accuracy and completeness of our financial reports, which would have an adverse effect on our business and the market price of our Common Stock.

Our shareholder rights plan and charter documents could make it more difficult for a third party to acquire us, even if doing so would be beneficial to our shareholders.

Our shareholder rights plan and certain provisions of our certificate of incorporation and Delaware law are intended to encourage potential acquirers to
negotiate with us and allow our Board of Directors the opportunity to consider alternative proposals in the interest of maximizing shareholder value. However, such provisions may also discourage acquisition proposals or delay or prevent a change in
control, which in turn, could harm our stock price and our shareholders.



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|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

Not
applicable.



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|ITEM 3. | DEFAULTS UPON SENIOR SECURITIES
|------- | -------------------------------

Not applicable.



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|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|------- | ---------------------------------------------------

Not
applicable.



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|ITEM 5. | OTHER INFORMATION
|------- | -----------------

Not applicable.



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|ITEM 6. | EXHIBITS
|------- | --------

The following exhibits are filed as part
of this report:



|              |  |                                                                                                                                 
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                     
|31.1          |  | Certification of the Chief Executive Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.              
|              | 
|31.2          |  | Certification of the Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.              
|              | 
|32.1          |  | Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.*
|              | 
|32.2          |  | Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350.*



|* | In accordance with Item 601(b)(32)(ii) of Regulation S-K, this exhibit shall not be deemed filed for the purposes of Section 18 of the Securities and Exchange
Act of 1934 or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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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, thereunto duly authorized.



|                  |  |  |  |                              |  |     |  |                         
|----------------- |  |  |  | ---------------------------- |  | --- |  | ------------------------
|Date: May 5, 2009 |  |  |  | POWERWAVE TECHNOLOGIES, INC.
|                  |  |  |  |                             
|                  |  |  |  |                              |  | By: |  | /s/    KEVIN T. MICHAELS
|                  |  |  |  |                              |  |     |  | Kevin T. Michaels       
|                  |  |  |  |                              |  |     |  | Chief Financial Officer 



51