XML 20 R8.htm IDEA: XBRL DOCUMENT v3.7.0.1

Basis of presentation, out of period adjustments and restatement of prior period

12 Months Ended

Dec. 31, 2015

Notes to Financial Statements

Note 1 - Basis of presentation, out of period adjustments and restatement of prior period

Our Consolidated Financial Statements include the accounts of Lifeway Foods, Inc. and all of its wholly owned subsidiaries (collectively "Lifeway" or the "Company"). All significant intercompany accounts and transactions have been eliminated.

Out-of-period adjustments recorded during fiscal 2014

During fiscal 2014, adjustments to correct the accounting for certain items related to periods prior to 2014, in the aggregate, decreased income before provision for income taxes by approximately $600,000 and net income by approximately $400,000 for the year ended December 31, 2014. These errors related to an understatement of accrued expenses and the provision for income taxes arising primarily from inaccurate accounting for certain employee, including officer, expense reports and an understatement of depreciation expense arising from assigning incorrect useful lives. The Company determined these adjustments to be immaterial, individually and in the aggregate, to our previously filed consolidated financial statements.

Restatements of prior period financial statements

Matters affecting the statement of income and comprehensive income

During fiscal year 2015 certain indirect manufacturing overhead costs were classified as an element of General and Administrative (G&A) expense in our previously issued Statements of Income and Comprehensive Income. These indirect manufacturing overhead costs are more appropriately classified as an element of Cost of Goods Sold. Accordingly, the classification errors have been restated in the Consolidated Statements of Income and Comprehensive Income.

These classification errors have no impact on the Company's previously-reported net sales, income from operations, net income, or basic and diluted earnings per common share presented in its Consolidated Statements of Income and Comprehensive Income.

The Company determined the classification errors related to the 2015 Consolidated Statements of Income and Comprehensive Income were quantitatively large enough to require a restatement of 2015 and has captioned those periods as “restated.”

Matters affecting the balance sheet and statement of cash flows

The Company also determined that certain operating assets and liabilities at December 31, 2015 were not properly classified in our previously issued Consolidated Balance Sheets. These classification errors did not have a material impact on the Company's previously issued Consolidated Balance Sheets and Consolidated Statements of Cash Flows. To provide a higher degree of transparency and enhanced comparability between periods, these classification errors have been restated. Certain trade receivables at December 31, 2015 were reclassified from non-current assets to current assets to reflect the expected settlement of those receivables within one year; certain investments that do not meet the definition of available-for-sale securities were reclassified from investments at fair value to other assets; and we reclassified certain accounts payable amounts from accrued expenses to accounts payable.

Reclassifications of prior period financial statements

During the first quarter of 2015, certain executive compensation expense was classified as Selling expenses that management determined should have been classified as G&A expense. These classification changes are reflected in the Consolidated Statements of Income and Comprehensive Income for 2015. The reclassification has also been reflected in the 2014 and 2013 Consolidated Statements of Income and Comprehensive Income to conform to the 2015 presentation and such reclassifications do not change total operating expenses or net income in those periods.

These adjustments had the following impact on our 2015 interim and annual Consolidated Statement of Income and Comprehensive Income:

		(Unaudited) Three Months Ended March 31, 2015												(Unaudited) Six Months Ended June 30, 2015
		As Previously Reported (a)				Adjustment				As Restated				As Previously Reported (a)				Adjustment				As Restated
Net Sales		$	29,622			$	–			$	29,622			$	59,443			$	–			$	59,443
Cost of Goods Sold			21,239				458				21,697				44,044				1,017				45,061
Gross Profit			8,383				(458	)			7,925				15,399				(1,017	)			14,382
Selling expenses			3,302				–				3,302				5,920				–				5,920
General & administrative			3,492				(458	)			3,034				7,662				(1,017	)			6,645
Amortization			179				–				179				358				–				358
Operating expenses			6,973				(458	)			6,515				13,940				(1,017	)			12,923
Income from Operations		$	1,410			$	–			$	1,410			$	1,459			$	–			$	1,459

		(Unaudited) Nine Months Ended September 30, 2015												Twelve Months Ended December 31, 2015
		As Previously Reported (c)				Adjustment (b)				As Restated				As Previously Reported (d)				Adjustment (b)				As Restated
Net Sales		$	89,042			$	–			$	89,042			$	118,587			$	–			$	118,587
Cost of Goods Sold			64,588				1,137				65,725				86,986				1,719				88,705
Gross Profit			24,454				(1,137	)			23,317				31,601				(1,719	)			29,882
Selling expenses			9,486				(860	)			8,626				12,752				(860	)			11,892
General & administrative			10,920				(277	)			10,643				13,730				(859	)			12,871
Amortization			537				–				537				716				–				716
Operating expenses			20,943				(1,137	)			19,806				27,198				(1,719	)			25,479
Income from Operations		$	3,511			$	–			$	3,511			$	4,403			$	–			$	4,403

(a) As previously reported in our first and second quarter 2016 Form 10-Q filings.

(b) Includes the reclassification of certain executive compensation from Selling to G&A expenses.

(c) As previously reported in our third quarter 2015 Form 10-Q filed on November 9, 2015.

(d) As previously reported in our 2015 Form 10-K filed on March 16, 2016.

The reclassifications related to certain executive compensation had the following impact on our 2014 and 2013 Consolidated Statement of Income and Comprehensive Income:

		Twelve Months Ended December 31, 2014												Twelve Months Ended December 31, 2013
		As Previously Reported (d)				Reclassification				As Revised				As Previously Reported (d)				Reclassification				As Revised
Selling expenses		$	14,534			$	(2,923	)		$	11,611			$	11,296			$	(2,165	)		$	9,131
General & administrative			9,378				2,923				12,301				7,583				2,165				9,748
Amortization			716				–				716				713				–				713
Operating expenses		$	24,628			$	–			$	24,628			$	19,592			$	–			$	19,592

X

- References

No definition available.

+ Details

Name:	lway_NotesToFinancialStatementsAbstract
Namespace Prefix:	lway_
Data Type:	xbrli:stringItemType
Balance Type:	na
Period Type:	duration

X

- Definition

The entire disclosure for the nature of an entity's business, major products or services, principal markets including location, and the relative importance of its operations in each business and the basis for the determination, including but not limited to, assets, revenues, or earnings. For an entity that has not commenced principal operations, disclosures about the risks and uncertainties related to the activities in which the entity is currently engaged and an understanding of what those activities are being directed toward.

+ References

Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 275
-SubTopic 10
-Section 50
-Paragraph 2
-URI http://asc.fasb.org/extlink&oid=51801978&loc=d3e6003-108592

Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 275
-SubTopic 10
-Section 50
-Paragraph 2A
-URI http://asc.fasb.org/extlink&oid=51801978&loc=SL51803626-108592

+ Details

Name:	us-gaap_NatureOfOperations
Namespace Prefix:	us-gaap_
Data Type:	nonnum:textBlockItemType
Balance Type:	na
Period Type:	duration