SEC Company Response from Peraso Inc. (PRSO) (CIK 0000890394) (PRSO) — Jan 31, 2011
Peraso Inc. (PRSO) (CIK 0000890394)
Date: Jan. 31, 2011 · CIK: 0000890394 · Accession: 0001104659-11-003973
AI Filing Summary & Sentiment
Reasoning
File numbers found in text: 000-32929
Referenced dates: December 30, 2010
Letter
Division of Corporation Finance United States Securities and Exchange Commission Filed March 26, 2010 Form 10-Q for the quarter ended September 30, 2010 Filed November 3, 2010 File No. 000-32929
Re: Mosys, Inc.
Dear Mr. Jaramillo:
MoSys, Inc. (“we” or the “Company”) submits this letter in response to the comments from the Staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “Staff”), which were set forth in your letter dated December 30, 2010 (the “Letter”) regarding the above referenced documents.
Form 10-K for the Year Ended December 31, 2009
Financial Statements, page 49
Note 1. The Company and Summary of Significant Accounting Policies, page 55
Revenue Recognition, page 58
1. We note from your disclosure that for license agreements that do not require significant development, modification, or customization, revenues are generally recognized when the revenue recognition criteria have been met. Please revise future filings to clearly explain when in the sales process you have met the recognition criteria and recognized the related revenues. Please provide us with your proposed future disclosure. Also, tell us why you use the word “generally” in the aforementioned disclosure. If you recognize revenue other than when the revenue recognition criteria have been met, please describe those circumstances and your rationale for using such an accounting policy.
For stand-alone license agreements or license deliverables in multi-element arrangements that do not require significant development, modification or customization (“Standard Licenses”), we recognize revenue when all of the revenue recognition criteria are met. For Standard Licenses, the final revenue criterion that is met and triggers revenue recognition is typically “delivery.” There have been instances when revenue has not been recognized for a Standard License upon delivery. In those cases, one of the other revenue recognition criteria (e.g., collectibility was not reasonably assured) had not been met, so revenue recognition would be delayed until that criterion had been met. We will remove the term “generally” from our revenue recognition accounting policy included in future filings.
Our proposed future revenue recognition disclosure relating to Standard Licenses will be:
For stand-alone license agreements or license deliverables in multi-element arrangements that do not require significant development, modification or customization, revenues are recognized when all revenue recognition criteria have been met. Delivery of the licensed technology is typically the final revenue recognition criterion met, at which time revenue is recognized.
2. We see that you provide unspecified upgrades under certain agreements. Please explain the nature of the upgrades, the related agreements and how you account for the upgrades offered.
Our license agreements generally provide for the first year of maintenance and support as part of the initial license fee. After the initial term, maintenance and support can be renewed for successive one-year terms. The one-year obligation to provide maintenance and support is a separate element of the license arrangement. The fair value of the maintenance and support is determined by objective evidence, and the revenue is recognized ratably over the period during which the maintenance and support obligation exists. Unspecified upgrades are considered a component of maintenance and support. Unspecified upgrades primarily represent bug fixes to the licensed technology, but may occasionally include semiconductor layout or design changes that optimize the performance of the licensed technology but are not essential to the functionality. The changes that optimize performance may result from a technology change by the licensee’s foundry (manufacturer). Such changes require minimal effort and would be made available to other maintenance and support customers that share the same foundry and technology node (e.g., Taiwan Semiconductor Manufacturing Company - 65 nanometer process). If a license agreement includes a clause to deliver specific upgrades, the specific upgrades would be accounted for as a separate deliverable within that arrangement.
Note 4: Revision to Prior Period Financial Statements, page 66
3. We see that you identified a calculation error in your determination of stock based compensation expense that led to an understatement of previously reported non-cash stock based compensation expense for 2008, 2007 and 2006 and the quarters within those years and also changed the timing of stock based compensation expense. We also see that you determined that this error was determined to be immaterial to those previously reported financial results, but you retroactively corrected those related financial statements. It appears from your table, however, that your adjustments may be quantitatively material to certain line items in certain periods. Please tell us how management concluded these adjustments were not material to each related period and provide us with your complete SAB 99 and SAB 108 analysis.
The main components of the SAB 99 and SAB 108 analysis that we evaluated in reaching our conclusions are set forth below. The original analysis we prepared has been included as Exhibit A to this response letter.
A summary of the quantitative effects of the adjustments is set forth in the tables below.
The effects of the adjustments for the year ended December 31, 2006 were as follows:
As of and for the
Year ended
December 31, 2006
As Reported
Adjustment
As Revised
% impact
Consolidated Statement of Operations:
Cost of net revenue
$
1,498
$
$
1,585
%
Gross profit
13,411
(87
)
13,324
-1
%
Research and development
8,156
8,355
%
Selling, general and administrative
11,370
11,721
%
Total operating expenses
21,926
22,476
%
Loss from operations
(8,515
)
(637
)
(9,152
)
%
Loss before income taxes
(5,229
)
(637
)
(5,866
)
%
Net loss
(5,338
)
(637
)
(5,975
)
%
Net loss per share
Basic and diluted
$
(0.17
)
$
(0.02
)
$
(0.19
)
%
Consolidated Balance Sheets:
Additional paid-in capital
$
106,850
$
$
107,487
%
Accumulated deficit
(6,172
)
(637
)
(6,809
)
%
The effects of the adjustments for the years ended December 31, 2008 and 2007 were as follows (as disclosed in Note 4 to the financial statements in our 2009 Form 10-K):
As of and for the
As of and for the
Year ended
Year ended
December 31, 2008
December 31, 2007
As Reported
Adjustment
As Revised
% impact
As Reported
Adjustment
As Revised
% impact
Consolidated Statement of Operations:
Cost of net revenue
$
2,800
$
(3
)
$
2,797
%
$
2,737
$
$
2,744
%
Gross profit
11,226
11,229
%
11,597
(7
)
11,590
%
Research and development
17,168
17,206
%
11,988
12,203
%
Selling, general and administrative
11,875
12,006
%
11,659
12,011
%
Total operating expenses
31,756
31,925
%
24,613
25,180
%
Loss from operations
(20,530
)
(166
)
(20,696
)
%
(13,016
)
(574
)
(13,590
)
%
Loss before income taxes
(18,287
)
(166
)
(18,453
)
%
(8,496
)
(574
)
(9,070
)
%
Net loss
(18,419
)
(166
)
(18,585
)
%
(8,521
)
(574
)
(9,095
)
%
Net loss per share
Basic and diluted
$
(0.58
)
$
(0.01
)
$
(0.59
)
%
$
(0.27
)
$
(0.01
)
$
(0.28
)
%
Consolidated Balance Sheets:
Additional paid-in capital
$
114,403
$
1,377
$
115,780
%
$
110,631
$
1,211
$
111,842
%
Accumulated deficit
(33,112
)
(1,377
)
(34,489
)
%
(14,693
)
(1,211
)
(15,904
)
%
To evaluate the quantitative results of the adjustments, we considered the “rollover” and “iron curtain” approaches. Applying the rollover approach in evaluating materiality, the impact of the adjustments on net loss for the years 2006 through 2008 ranged from 0% to 12%. While 12% is not a small percentage, we believed an important consideration was that the adjustment was being applied to our existing accumulated deficit and increasing the net loss and accumulated deficit. If the iron curtain approach was utilized, the impact on accumulated deficit and additional-paid-in capital (no net effect on total stockholders’ equity) would have been $3.2 million, or 10% of accumulated deficit, taking into account the cumulative adjustments from 2006 to 2008. For 2009, the calculation errors were identified prior to the issuance of our 2009 financial statements, so the 2009 financial results were correctly reported. We relied on the guidance provided by SAB 99 and SAB 108 to assess the materiality of the stock-based compensation adjustments, therefore evaluated the qualitative impact of the adjustments, in addition to the quantitative impact discussed above.
Management deemed the adjustments applicable to 2006, 2007 and 2008, whether viewed on a stand-alone annual or cumulative basis, to be immaterial based on the evaluation of qualitative considerations and SAB 99 and SAB 108 analysis performed. The Form 10-K presentations represented the disclosure that management considered appropriate and most useful. Because the relative changes to stock-based compensation were not considered to be likely to affect investment decisions, management did not believe that presenting restated financial statements would be more useful to investors than the disclosure that was provided.
We believe that our conclusions are supported as well by the following further analysis of the suggested considerations provided by SAB 99 under Item 1, Assessing Materiality:
1. Whether the adjustments mask a change in earnings or other trends?
No, the adjustments did not mask a change in earnings or other trends. The Company reported increasing net losses in fiscal years 2006, 2007 and 2008.
2. Whether the adjustments hide a failure to meet analysts’ consensus expectations for the Company?
No, the adjustments did not hide a failure to meet analysts’ consensus expectations due to the following:
1) Since 2006, the only forward-looking financial guidance the Company provided was quarterly revenue forecasts for 2006 and 2007. Historically, revenue has been the financial metric that the Company’s covering analysts are most focused on. No forward-looking guidance was provided for 2008. The adjustments did not impact the revenue forecasts provided by management. As the Company was not profitable during those years, the analysts were not highlighting their net loss estimates. The adjustments, on a stand-alone basis, did not result in the Company’s net loss and net loss per share missing analyst consensus for any of the affected years. For 2006-2008, the Company’s net loss was worse than analyst projections without the impact of the additional expense of the stock-based compensation adjustments.
2) Our quarterly earnings releases include both GAAP and non-GAAP financial results, which our management believes are useful to investors and other interested parties because they are one of the primary indicators that the Company’s management uses for analyzing past performance and planning and forecasting future performance. Non-GAAP financial results exclude stock-based compensation expense because the Company believes that measuring this expense depends substantially on factors that are not a direct consequence of operating performance. Moreover, stock-based compensation is a non-cash expense, and analysts’ forecasts for the Company have consisted of operating results including and excluding stock-based compensation.
3) Historically, the feedback received from investors has indicated that their predominant concerns have been the Company’s non-GAAP results, which exclude stock-based compensation and acquisition related charges. Investors have been focused on the Company’s revenue growth potential as a function of our long-term strategy.
3. Whether the adjustments changes a loss into income or vice versa?
No, the Company was in a net loss position for all periods presented and the adjustments did not change this position.
4. Whether the adjustments concern a segment or other portion of the Company’s business that has been identified as playing a significant role in the Company’s operations or profitability?
No, the adjustments did not concern a segment or portion of the business that was identified as playing a significant role in the Company’s operations or profitability. The Company only had one segment and was not close to being profitable.
5. Whether the adjustments affected the Company’s compliance with loan covenants or other contractual requirements?
No, the Company did not have any loan covenants or other contractual requirements that were impacted by the adjustments.
6. Whether the adjustments affected the Company’s compliance with regulatory requirements?
No, the Company was not subject to any regulatory requirements that were impacted by the adjustments.
7. Whether the adjustments involved concealment of an unlawful transaction?
No, the adjustments did not involve concealment of an unlawful transaction.
8. Whether the adjustments have any impact on management’s compensation, for example by satisfying requirements for the award of bonuses or other forms of incentive compensation?
No, stock-based compensation was excluded from the calculation of non-GAAP operating loss that was included as a component of the bonus plans in effect in 2006 and 2007. No management bonus plans have been in effect since 2007.
9. Whether the adjustments arise from an item capable of precise measurement?
The adjustments arose from an item capable of precise measurement. The Company identified a calculation error in the third-party software, E*Trade Inc.’s Equity Edge, used for stock administration. The error was brought to the attention of the Company through a technical brief issued by E*Trade in January 2010. The technical brief provided guidance on correcting the calculation error by changing one of the parameters selected when running the stock-based compensation calculation report. That software calculation error resulted in the Company’s failure to update the estimated stock option forfeiture rate used for stock-based compensation calculations to reflect the actual forfeiture rate at the end of each reporting period. Accordingly, precise measurement for this component of the stock-based compensation calculation was possible. However, the overall calculation of stock-based compensation is not capable of precise measurement because it involves significant management assumptions in determining the inputs related to future volatility, expected term and forfeiture rates.
10. Are the adjustments considered material from the viewpoint of a reasonable investor having access to the total mix of information?
No, we do not believe that the adjustments are material to a reasonable investor having access to the total mix of information. The adjustments did not impact revenue, the trend in earnings or the trend in cash flows. The Company’s financial trend since 2004 shows recurring annual losses, and increasing operating expenses and negative cash flows. Cumulative losses for the three years ended December 31, 2009 were approximately $46.8 million, including the adjustments, and $46.0 million, excluding the adjustments. Our accumulated deficit at December 31, 2009 wa
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CORRESP 1 filename1.htm January 31, 2011 Mr. Jeff Jaramillo Branch Chief Division of Corporation Finance United States Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549 Re: Mosys, Inc. Form 10-K for the year ended December 31, 2009 Filed March 26, 2010 Form 10-Q for the quarter ended September 30, 2010 Filed November 3, 2010 File No. 000-32929 Dear Mr. Jaramillo: MoSys, Inc. (“we” or the “Company”) submits this letter in response to the comments from the Staff of the Division of Corporation Finance of the Securities and Exchange Commission (the “Staff”), which were set forth in your letter dated December 30, 2010 (the “Letter”) regarding the above referenced documents. Form 10-K for the Year Ended December 31, 2009 Financial Statements, page 49 Note 1. The Company and Summary of Significant Accounting Policies, page 55 Revenue Recognition, page 58 1. We note from your disclosure that for license agreements that do not require significant development, modification, or customization, revenues are generally recognized when the revenue recognition criteria have been met. Please revise future filings to clearly explain when in the sales process you have met the recognition criteria and recognized the related revenues. Please provide us with your proposed future disclosure. Also, tell us why you use the word “generally” in the aforementioned disclosure. If you recognize revenue other than when the revenue recognition criteria have been met, please describe those circumstances and your rationale for using such an accounting policy. For stand-alone license agreements or license deliverables in multi-element arrangements that do not require significant development, modification or customization (“Standard Licenses”), we recognize revenue when all of the revenue recognition criteria are met. For Standard Licenses, the final revenue criterion that is met and triggers revenue recognition is typically “delivery.” There have been instances when revenue has not been recognized for a Standard License upon delivery. In those cases, one of the other revenue recognition criteria (e.g., collectibility was not reasonably assured) had not been met, so revenue recognition would be delayed until that criterion had been met. We will remove the term “generally” from our revenue recognition accounting policy included in future filings. Our proposed future revenue recognition disclosure relating to Standard Licenses will be: For stand-alone license agreements or license deliverables in multi-element arrangements that do not require significant development, modification or customization, revenues are recognized when all revenue recognition criteria have been met. Delivery of the licensed technology is typically the final revenue recognition criterion met, at which time revenue is recognized. 2. We see that you provide unspecified upgrades under certain agreements. Please explain the nature of the upgrades, the related agreements and how you account for the upgrades offered. Our license agreements generally provide for the first year of maintenance and support as part of the initial license fee. After the initial term, maintenance and support can be renewed for successive one-year terms. The one-year obligation to provide maintenance and support is a separate element of the license arrangement. The fair value of the maintenance and support is determined by objective evidence, and the revenue is recognized ratably over the period during which the maintenance and support obligation exists. Unspecified upgrades are considered a component of maintenance and support. Unspecified upgrades primarily represent bug fixes to the licensed technology, but may occasionally include semiconductor layout or design changes that optimize the performance of the licensed technology but are not essential to the functionality. The changes that optimize performance may result from a technology change by the licensee’s foundry (manufacturer). Such changes require minimal effort and would be made available to other maintenance and support customers that share the same foundry and technology node (e.g., Taiwan Semiconductor Manufacturing Company - 65 nanometer process). If a license agreement includes a clause to deliver specific upgrades, the specific upgrades would be accounted for as a separate deliverable within that arrangement. 1 Note 4: Revision to Prior Period Financial Statements, page 66 3. We see that you identified a calculation error in your determination of stock based compensation expense that led to an understatement of previously reported non-cash stock based compensation expense for 2008, 2007 and 2006 and the quarters within those years and also changed the timing of stock based compensation expense. We also see that you determined that this error was determined to be immaterial to those previously reported financial results, but you retroactively corrected those related financial statements. It appears from your table, however, that your adjustments may be quantitatively material to certain line items in certain periods. Please tell us how management concluded these adjustments were not material to each related period and provide us with your complete SAB 99 and SAB 108 analysis. The main components of the SAB 99 and SAB 108 analysis that we evaluated in reaching our conclusions are set forth below. The original analysis we prepared has been included as Exhibit A to this response letter. A summary of the quantitative effects of the adjustments is set forth in the tables below. The effects of the adjustments for the year ended December 31, 2006 were as follows: As of and for the Year ended December 31, 2006 As Reported Adjustment As Revised % impact Consolidated Statement of Operations: Cost of net revenue $ 1,498 $ 87 $ 1,585 6 % Gross profit 13,411 (87 ) 13,324 -1 % Research and development 8,156 199 8,355 2 % Selling, general and administrative 11,370 351 11,721 3 % Total operating expenses 21,926 550 22,476 3 % Loss from operations (8,515 ) (637 ) (9,152 ) 7 % Loss before income taxes (5,229 ) (637 ) (5,866 ) 12 % Net loss (5,338 ) (637 ) (5,975 ) 12 % Net loss per share Basic and diluted $ (0.17 ) $ (0.02 ) $ (0.19 ) 12 % Consolidated Balance Sheets: Additional paid-in capital $ 106,850 $ 637 $ 107,487 1 % Accumulated deficit (6,172 ) (637 ) (6,809 ) 10 % The effects of the adjustments for the years ended December 31, 2008 and 2007 were as follows (as disclosed in Note 4 to the financial statements in our 2009 Form 10-K): As of and for the As of and for the Year ended Year ended December 31, 2008 December 31, 2007 As Reported Adjustment As Revised % impact As Reported Adjustment As Revised % impact Consolidated Statement of Operations: Cost of net revenue $ 2,800 $ (3 ) $ 2,797 0 % $ 2,737 $ 7 $ 2,744 0 % Gross profit 11,226 3 11,229 0 % 11,597 (7 ) 11,590 0 % Research and development 17,168 38 17,206 0 % 11,988 215 12,203 2 % Selling, general and administrative 11,875 131 12,006 1 % 11,659 352 12,011 3 % Total operating expenses 31,756 169 31,925 1 % 24,613 567 25,180 2 % Loss from operations (20,530 ) (166 ) (20,696 ) 1 % (13,016 ) (574 ) (13,590 ) 4 % Loss before income taxes (18,287 ) (166 ) (18,453 ) 1 % (8,496 ) (574 ) (9,070 ) 7 % Net loss (18,419 ) (166 ) (18,585 ) 1 % (8,521 ) (574 ) (9,095 ) 7 % Net loss per share Basic and diluted $ (0.58 ) $ (0.01 ) $ (0.59 ) 2 % $ (0.27 ) $ (0.01 ) $ (0.28 ) 4 % Consolidated Balance Sheets: Additional paid-in capital $ 114,403 $ 1,377 $ 115,780 1 % $ 110,631 $ 1,211 $ 111,842 1 % Accumulated deficit (33,112 ) (1,377 ) (34,489 ) 4 % (14,693 ) (1,211 ) (15,904 ) 8 % To evaluate the quantitative results of the adjustments, we considered the “rollover” and “iron curtain” approaches. Applying the rollover approach in evaluating materiality, the impact of the adjustments on net loss for the years 2006 through 2008 ranged from 0% to 12%. While 12% is not a small percentage, we believed an important consideration was that the adjustment was being applied to our existing accumulated deficit and increasing the net loss and accumulated deficit. If the iron curtain approach was utilized, the impact on accumulated deficit and additional-paid-in capital (no net effect on total stockholders’ equity) would have been $3.2 million, or 10% of accumulated deficit, taking into account the cumulative adjustments from 2006 to 2008. For 2009, the calculation errors were identified prior to the issuance of our 2009 financial statements, so the 2009 financial results were correctly reported. We relied on the guidance provided by SAB 99 and SAB 108 to assess the materiality of the stock-based compensation adjustments, therefore evaluated the qualitative impact of the adjustments, in addition to the quantitative impact discussed above. Management deemed the adjustments applicable to 2006, 2007 and 2008, whether viewed on a stand-alone annual or cumulative basis, to be immaterial based on the evaluation of qualitative considerations and SAB 99 and SAB 108 analysis performed. The Form 10-K presentations represented the disclosure that management considered appropriate and most useful. Because the relative changes to stock-based compensation were not considered to be likely to affect investment decisions, management did not believe that presenting restated financial statements would be more useful to investors than the disclosure that was provided. We believe that our conclusions are supported as well by the following further analysis of the suggested considerations provided by SAB 99 under Item 1, Assessing Materiality: 1. Whether the adjustments mask a change in earnings or other trends? No, the adjustments did not mask a change in earnings or other trends. The Company reported increasing net losses in fiscal years 2006, 2007 and 2008. 2. Whether the adjustments hide a failure to meet analysts’ consensus expectations for the Company? 2 No, the adjustments did not hide a failure to meet analysts’ consensus expectations due to the following: 1) Since 2006, the only forward-looking financial guidance the Company provided was quarterly revenue forecasts for 2006 and 2007. Historically, revenue has been the financial metric that the Company’s covering analysts are most focused on. No forward-looking guidance was provided for 2008. The adjustments did not impact the revenue forecasts provided by management. As the Company was not profitable during those years, the analysts were not highlighting their net loss estimates. The adjustments, on a stand-alone basis, did not result in the Company’s net loss and net loss per share missing analyst consensus for any of the affected years. For 2006-2008, the Company’s net loss was worse than analyst projections without the impact of the additional expense of the stock-based compensation adjustments. 2) Our quarterly earnings releases include both GAAP and non-GAAP financial results, which our management believes are useful to investors and other interested parties because they are one of the primary indicators that the Company’s management uses for analyzing past performance and planning and forecasting future performance. Non-GAAP financial results exclude stock-based compensation expense because the Company believes that measuring this expense depends substantially on factors that are not a direct consequence of operating performance. Moreover, stock-based compensation is a non-cash expense, and analysts’ forecasts for the Company have consisted of operating results including and excluding stock-based compensation. 3) Historically, the feedback received from investors has indicated that their predominant concerns have been the Company’s non-GAAP results, which exclude stock-based compensation and acquisition related charges. Investors have been focused on the Company’s revenue growth potential as a function of our long-term strategy. 3. Whether the adjustments changes a loss into income or vice versa? No, the Company was in a net loss position for all periods presented and the adjustments did not change this position. 4. Whether the adjustments concern a segment or other portion of the Company’s business that has been identified as playing a significant role in the Company’s operations or profitability? No, the adjustments did not concern a segment or portion of the business that was identified as playing a significant role in the Company’s operations or profitability. The Company only had one segment and was not close to being profitable. 5. Whether the adjustments affected the Company’s compliance with loan covenants or other contractual requirements? No, the Company did not have any loan covenants or other contractual requirements that were impacted by the adjustments. 6. Whether the adjustments affected the Company’s compliance with regulatory requirements? No, the Company was not subject to any regulatory requirements that were impacted by the adjustments. 7. Whether the adjustments involved concealment of an unlawful transaction? No, the adjustments did not involve concealment of an unlawful transaction. 8. Whether the adjustments have any impact on management’s compensation, for example by satisfying requirements for the award of bonuses or other forms of incentive compensation? No, stock-based compensation was excluded from the calculation of non-GAAP operating loss that was included as a component of the bonus plans in effect in 2006 and 2007. No management bonus plans have been in effect since 2007. 9. Whether the adjustments arise from an item capable of precise measurement? The adjustments arose from an item capable of precise measurement. The Company identified a calculation error in the third-party software, E*Trade Inc.’s Equity Edge, used for stock administration. The error was brought to the attention of the Company through a technical brief issued by E*Trade in January 2010. The technical brief provided guidance on correcting the calculation error by changing one of the parameters selected when running the stock-based compensation calculation report. That software calculation error resulted in the Company’s failure to update the estimated stock option forfeiture rate used for stock-based compensation calculations to reflect the actual forfeiture rate at the end of each reporting period. Accordingly, precise measurement for this component of the stock-based compensation calculation was possible. However, the overall calculation of stock-based compensation is not capable of precise measurement because it involves significant management assumptions in determining the inputs related to future volatility, expected term and forfeiture rates. 10. Are the adjustments considered material from the viewpoint of a reasonable investor having access to the total mix of information? No, we do not believe that the adjustments are material to a reasonable investor having access to the total mix of information. The adjustments did not impact revenue, the trend in earnings or the trend in cash flows. The Company’s financial trend since 2004 shows recurring annual losses, and increasing operating expenses and negative cash flows. Cumulative losses for the three years ended December 31, 2009 were approximately $46.8 million, including the adjustments, and $46.0 million, excluding the adjustments. Our accumulated deficit at December 31, 2009 wa