Exhibit 99
14. RESTATEMENT OF FINANCIAL STATEMENTS
In preparing the Company’s unaudited condensed consolidated financial statements for the second quarter of fiscal 2006, the Company’s management determined that its historical financial statements should have presented investments held in auction-rate securities as short-term investments and not as cash equivalents, as previously reported. Auction-rate securities are highly-liquid investments that are reset through a “dutch auction” process that occurs every 7 to 49 days, depending on the terms of the individual security, however they should not be considered cash equivalents. Additionally, management determined that its statement of cash flows for the three months ended April 1, 2006 contained a mechanical error related to unpaid purchases of property and equipment included in accounts payable as well as an error related to debt issuance costs. As a result, the Company has restated the accompanying condensed consolidated statement of cash flows for the six months ended July 2, 2005.
As a result of the errors, the Company will also file as soon as practicable (i) a Form 10-Q/A for the first quarter of fiscal 2006 to restate its statements of cash flows for the three months ended April 1, 2006 and April 2, 2005, and (ii) a Form 10-K/A for the fiscal year ended December 31, 2005 to restate its balance sheet as of January 1, 2005 as well as its statements of cash flows for the fiscal years ended December 31, 2005, January 1, 2005 and January 3, 2004. These restatements did not impact the Company’s revenue, net income, total assets, stockholders’ equity or earnings per share.
Following is a summary of the effects of the correction of the error on the Company’s statement of cash flows for the six months ended July 2, 2005.
| | | Six months ended July 2, 2005 | |
Statement of Cash Flows | | As previously reported | | As Restated | |
Cash flows from Operating Activities: | | | | | | |
Retained interests (1) | | $ | - | | | | $ | (3,089 | ) |
Net cash flows from operating activities | | | (100,534 | ) | | | | (103,623 | ) |
| | | | | | | | | | |
Cash flows from Investing Activities: | | | | | | | | | |
Purchases of short-term investments | | $ | - | | | | $ | (21,000 | ) |
Sales or maturities of short-term investments | | | - | | | | | 145,250 | |
| Change in cash reserves for retained interests (1) | | | (2,339 | ) | | | | 750 | |
Net cash flows from investing activities | | | (136,557 | ) | | | | (9,218 | ) |
| | | | | | | | | | |
| NET (DECREASE) INCREASE IN CASH OR CASH EQUIVALENTS | | $ | (177,116 | ) | | | $ | (52,866 | ) |
| CASH AND CASH EQUIVALENTS, Beginning of the Period | | | 248,184 | | | | | 123,934 | |
| As discussed in Note 1 to the condensed consolidated financial statements, the Company has changed its presentation of cash flows regarding retained interests related to the Company’s Financial Services business. |
| | |
Following is a summary of the effects of the correction of these errors on the Company’s statements of cash flows for the three months ended April 1, 2006 and April 2, 2005.
| | | Three months ended April 1, 2006 | | Three months ended April 2, 2005 | |
Statements of Cash Flows | | As previously reported | | | | As Restated | | As previously reported | | As Restated | |
Cash Flows from Operating Activities: | | | | | | | | | | | |
Accounts payable | | $ | (59,438 | ) | | | $ | (50,940 | ) | | N/a | | | N/a | |
Net cash flows from operating activities | | | (171,126 | ) | | | | (162,628 | ) | | N/a | | | N/a | |
| | | | | | | | | | | | | | | | |
Cash flows from Investing Activities: | | | | | | | | | | | | | | | |
Capital expenditures | | $ | (6,043 | ) | | | $ | (14,541 | ) | | N/a | | | N/a | |
Purchases of short-term investments | | | - | | | | | (65,000 | ) | $ | - | | $ | (21,000 | ) |
Sales or maturities of short-term investments | | | - | | | | | 65,000 | | | - | | | 145,250 | |
Purchases of intangibles | | | (447 | ) | | | | - | | | N/a | | | N/a | |
Net cash flows from investing activities | | | (19,277 | ) | | | | (27,328 | ) | | (54,998 | ) | | 69,252 | |
| | | | | | | | | | | | | | | | |
Cash flows from Financing Activities: | | | | | | | | | | | | | | | |
Change in other | | $ | - | | | | | | ) | | N/a | | | N/a | |
Net cash flows from financing activities | | | 200,180 | | | | | | | | N/a | | | N/a | |
NET (DECREASE) INCREASE IN CASH OR CASH EQUIVALENTS | | | N/a | | | | | N/a | | $ | (203,289 | ) | $ | (79,039 | ) |
CASH AND CASH EQUIVALENTS, Beginning of the Period | | | N/a | | | | | N/a | | | 248,184 | | | 123,934 | |
Following is a summary of the effects of the correction of the error on the Company’s balance sheet and statements of cash flows for the fiscal years ended December 31, 2005, January 1, 2005 and January 3, 2004.
| | | 2005 | | 2004 | | 2003 | |
Statements of Cash Flows | | As previously reported | | As Restated | | As previously reported | | As Restated | | As previously reported | | As Restated | |
Cash flows from Investing Activities: | | | | | | | | | | | | | |
Purchases of short-term investments | | $ | - | | $ | (21,000 | ) | $ | - | | $ | (156,825 | ) | $ | - | | $ | (111,450 | ) |
Sales or maturities of short-term investments | | | - | | | 145,250 | | | - | | | 112,500 | | | - | | | 74,400 | |
Net cash flows from investing activities | | | (204,867 | ) | | (80,617 | ) | | (126,811 | ) | | (171,136 | ) | | (89,735 | ) | | (126,785 | ) |
| | | | | | | | | | | | | | | | | | | | |
NET (DECREASE) INCREASE IN CASH OR CASH EQUIVALENTS | | $ | (161,261 | ) | $ | (37,011 | ) | $ | 55,603 | | $ | 11,278 | | $ | 13,945 | | $ | (23,105 | ) |
CASH AND CASH EQUIVALENTS, Beginning of the Year | | | 248,184 | | | 123,934 | | | 192,581 | | | 112,656 | | | 178,636 | | | 135,761 | |
CASH AND CASH EQUIVALENTS, End of the Year | | | N/a | | | N/a | | | 248,184 | | | 123,934 | | | 192,581 | | | 112,656 | |
| | | January 1, 2005 | |
Balance Sheet | | As previously reported | | As Restated | |
| Cash and cash equivalents | | $ | 248,184 | | $ | 123,934 | |
| Short-term investments | | | - | | | 124,250 | |
| (1) | The Company did not own any auction-rate securities as of December 31, 2005. |
