UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 18, 2008
West Marine, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware 0-22512 77-0355502
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(State or Other (Commission File (I.R.S. Employer
Jurisdiction of Number) Identification No.)
Incorporation)
500 Westridge Drive Watsonville, California 95076
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(Address of Principal Executive Offices, Including Zip Code)
(831) 728-2700
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(Registrant's Telephone Number, Including Area Code)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act 17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
On March 11, 2008, West Marine, Inc. (the "Company") filed a Notification of
Late Filing on Form 12b-25 indicating that it would be late in filing its 2007
annual report on Form 10-K principally due to management's continuing analysis
of certain current and historical expense accruals. On Wednesday, March 26,
2008, at 8:30 a.m. Pacific Time, the Company will hold a conference call to
discuss its 2008 earnings guidance and 2007 fourth quarter and fiscal year-end
2007 operating results, including a restatement of prior-period financial
results, as described below under Item 4.02.
Additionally, the Company intends to file its Form 10-K for the year ended
December 29, 2007 on or before March 28, 2008. The 2007 Form 10-K will reflect
the adjustments described below under Item 4.02 and appropriately disclose the
impact of these adjustments for the fiscal years 2005 and 2006, the four
quarters of 2006 and the first three quarters of 2007. The Company also will
file an amended quarterly report on Form 10-Q/A for each of the first three
quarters of 2007 reflecting these adjustments.
Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related
Audit Report or Completed Interim Review.
(a) In the course of finalizing its financial results for 2007, management
determined that the Company had made an error in the manner in which it had
established and recorded its reserves for estimated workers' compensation
claims.
Historically, the Company's policy for estimating the required reserve
necessary to meet expected future workers' compensation liability was based on
a review performed by management and the Company's third party claims adjuster
of each outstanding claim, using a combination of experience and the particular
facts and circumstances of each individual claim. In early 2008, the Company
engaged an actuary to perform an actuarial study of workers' compensation
claims. Based on the actuary's analysis, management determined that the Company
had not been accruing properly for losses incurred but not reported, for third
party administration fees and for possible escalation of claims. This error
prompted the Company to perform a review of other reserves and accounts,
particularly those involving management estimates. As a result of this review,
in addition to the workers' compensation liability adjustment, the Company also
identified several other adjustments which individually were not material but,
in the aggregate, required correction in the Company's previously issued 2007
quarterly and prior-period annual and quarterly financial statements relating
to, among other things, sales return reserves, inventory reserves, sales and
use tax reserves, deferred income taxes, and foreign currency translation gains
and losses.
On March 18, 2008, upon the recommendation of management, the Company's Board
of Directors authorized the restatement of the Company's financial statements.
Accordingly, the financial statements as of and for the three years ended
December 30, 2006 included in the Company's 2006 Form 10-K (and the
corresponding reports of our independent registered public accountant Deloitte
& Touche LLP) and the Company's quarterly financial statements for fiscal year
2006 and the first three quarters of fiscal year 2007 should no longer be
relied upon. The restatement will be reflected in the 2007 Form 10-K, which the
Company intends to file on or before March 28, 2008.
The effect of the restatement on previously reported net income is as follows:
Net Income Effect (after tax)*
(dollars in thousands)
39 Weeks
Ended
September 29,
2005 2006 2007
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Previously Reported
Net Income (Loss) $ (2,314) $ (7,099) $ 14,148
Corrections to
Previously Reported
Net Income (Loss) (708) (580) 1,344
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Restated
Net Income (Loss) $ (3,022) $ (7,679) $ 15,492
The impact on 2005 beginning Retained Earnings is a reduction of $2.4 million,
reflecting the cumulative impact on net income for all prior years.
* The restated results presented above are preliminary and unaudited, and
may change as the Company finalizes its financial statements. The final
restated results will be reflected in the Company's Form 10-K for the
year ended December 29, 2007.
The disclosures set forth above, including the timing for releasing fourth
quarter and full year earnings and filing of the Company's 2007 Form 10-K, are
qualified by the fact that the Company has not finalized its year-end
accounting review or completed the preparation of year-end financial statements
and that the Company's independent registered public accounting firm has not
completed its audit. It is possible that additional errors could be identified
before the Company's 2007 earnings are released and the 2007 Form 10-K is
filed.
The Audit Committee of the Company's Board of Directors has discussed the above
matters with the Company's independent registered public accountant, Deloitte &
Touche LLP.
SIGNATURE
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 hereunto duly authorized.
WEST MARINE, INC.
Date: March 24, 2008 By: /s/ Thomas R. Moran
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Thomas R. Moran
Senior Vice President and
Chief Financial Officer