Fossil Inc. filed a non-reliance 8-K yesterday on its financials for fiscal years 2004 and 2005, for all fiscal quarters of 2005 and the first and second fiscal quarters of 2006.
The situation contains a lot of the now-familiar ingredients: the improper treatment went all the way back to 1993; some of it was due to executives who are no longer with the company; tax effects have yet to be completely determined; and the specific charges for specific periods have yet to be figured, as well. Total effect for the 1993 to 2006 period: estimated to be about $16 million.
On a company that’s earned about $370 million between 2000 and 2005, there might be a good chance that any one year’s correction could be pretty material. The company plans to restate as far back to 2004, with a cumulative-effect adjustment for amounts prior to that date. To their credit, they’re not trying to interpret Staff Accounting Bulletin 108 in some oblique fashion so they can bury the whole correction in the beginning of year retained earnings.
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