These items include: 1) the recording of certain previously-expensed manufacturing and freight costs that should have been capitalized in inventory and recorded in cost of goods sold upon shipment, and 2) the classification of certain customer incentive program credits as operating expenses that should have been recorded as an offset to reported net revenue. The aggregate impact of these items on the Company's previously-reported net income or loss for these periods is expected to be de minimis, although gross profit levels will be reduced from amounts previously-reported
it simply means the old cfo was an idiot..the recording will not impact old numbers by much but it is a recording error that must be corrected in order to make current restatements accurate and legitamite..it shows the current mgmt is more than competent and will build ocz into a powerhouse
Many businesses sell goods that they have bought or produced. When the goods are bought or produced, the costs associated with such goods are capitalized as part of inventory (or stock) of goods. These costs are treated as an expense in the period the business recognizes income from sale of the goods.
Determining costs requires keeping records of goods or materials purchased and any discounts on such purchase. In addition, if the goods are modified, the business must determine the costs incurred in modifying the goods. Such modification costs include labor, supplies or additional material, supervision, quality control, use of equipment, and other overhead costs. Principles for determining costs may be easily stated, but application in practice is often difficult due to a variety of considerations in the allocation of costs.
Cost of goods sold may also reflect adjustments. Among the potential adjustments are decline in value of the goods (i.e., lower market value than cost), obsolescence, damage, etc.
When multiple goods are bought or made, it may be necessary to identify which costs relate to which particular goods sold. This may be done using an identification convention, such as specific identification of the goods, first-in-first-out (FIFO), or average cost. Alternative systems may be used in some countries, such as last-in-first-out (LIFO), gross profit method, retail method, or combinations of these.
It will be interesting to see how they describe the inventory method for raw materials and also the market price adjustments.
Its a fancy way of saying Minor or low impact. Yet they also go on to basically say they have no idea of the full extent of the impact. Todays rise is just one of those crazy days when you see a company come out and say we are restating our earning all the hell back to 2009 (but it will be minor!) yet we really dont know if it will be minor but thats our guess!
At the same time they are saying that hopefully the earnings get signed off on and wrapped but before the deadline.
I would have never suspected a stock would go up on such news but o well... works for me. It can keep going up and eventually I'll just buy some cheap protective puts or if it goes down cover the calls to profit hopefully.
The key to me and the one that austinwcraig apparently misses is that gross profit levels will be reduced from amounts previously-reported, but no mention of net profit, which is really what matters, because moving line items around are still counted the same for net earnings. Or the same loss as stated before in some cases. I thought I better point out that last comment before Austin does!