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Impact on Previously Issued Financial Statements for the Correction of an Error | 9 Months Ended
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Dec. 31, 2018
Impact on Previously Issued Financial Statements for the Correction of an Error [Abstract] |
Impact on Previously Issued Financial Statements for the Correction of an Error |
2. | Impact on Previously Issued Financial Statements for the Correction of an Error
Revision of Prior Period Financial Statements During the quarter ended September 30, 2018, the Company identified and corrected immaterial errors that affected previously issued consolidated financial statements. These errors primarily related to historical misapplication of GAAP related to the timing of recognizing certain expenses incurred in connection with allowances paid for core inventory purchase obligations at the start of a new business relationship. The Company previously recorded the difference between the acquisition price of Remanufactured Cores purchased from customers generally in connection with new business, and the related inventory cost as a sales allowance reducing revenue when the purchases were made. These sales allowances are now recorded as an asset and recognized as a reduction of revenue through the later of the date at which related revenue is recognized or the date at which the sales incentive is offered (as further described under the caption “Contract Assets” in Note 4). The Company also corrected errors resulting from differences between the original cost estimate and the actual cost of the Remanufactured Cores held at customers’ locations. The Company also corrected other immaterial errors, which primarily relate to bonus accruals and core inventory, and recorded certain adjustments to income taxes, including reflecting the tax effect of the aforementioned adjustments. In addition, the Company reclassified certain customer contract related prepayments from prepaid expenses and other current assets and other assets to contract assets related to the adoption of ASC 606 on April 1, 2018 (see Note 4). In order to correctly present the errors noted above, previously issued comparative financial statements, which were revised during the quarter ended September 30, 2018, are presented as “As Revised” in the tables presented in the following footnotes. In addition, upon the adoption of ASC 606 on April 1, 2018, the Company adjusted its revised consolidated financial statements and related footnotes for the year ended March 31, 2018 and applicable interim periods within the fiscal year ended March 31, 2018. These consolidated financial statements and tables are presented as “As Adjusted”. The effect of the above corrections on the consolidated statement of operations for the fiscal year ended March 31, 2018 is as follows:
|  | Year Ended March 31, 2018 |
Revised Consolidated Statement of Operations Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net sales |  | $ | 428,072,000 |  |  | $ | (1,081,000 | ) |  | $ | 426,991,000 |
Cost of goods sold |  |  | 322,199,000 |  |  |  | (1,750,000 | ) |  |  | 320,449,000 |
Gross profit |  |  | 105,873,000 |  |  |  | 669,000 |  |  |  | 106,542,000 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |
General and administrative |  |  | 35,527,000 |  |  |  | (50,000 | ) |  |  | 35,477,000 |
Sales and marketing |  |  | 15,030,000 |  |  |  | - |  |  |  | 15,030,000 |
Research and development |  |  | 5,692,000 |  |  |  | - |  |  |  | 5,692,000 |
Total operating expenses |  |  | 56,249,000 |  |  |  | (50,000 | ) |  |  | 56,199,000 |
Operating income |  |  | 49,624,000 |  |  |  | 719,000 |  |  |  | 50,343,000 |
Interest expense, net |  |  | 15,445,000 |  |  |  | - |  |  |  | 15,445,000 |
Income before income tax expense (benefit) |  |  | 34,179,000 |  |  |  | 719,000 |  |  |  | 34,898,000 |
Income tax expense (benefit) |  |  | 17,863,000 |  |  |  | (1,791,000 | ) |  |  | 16,072,000 |
Net income |  | $ | 16,316,000 |  |  | $ | 2,510,000 |  |  | $ | 18,826,000 |
Basic net income per share |  | $ | 0.87 |  |  | $ | 0.13 |  |  | $ | 1.00 |
Diluted net income per share |  | $ | 0.84 |  |  | $ | 0.13 |  |  | $ | 0.96 |
The effect of the above corrections on the consolidated statement of comprehensive income for the fiscal year ended March 31, 2018 is as follows:
|  | Year Ended March 31, 2018 |
Revised Consolidated Statement of Comprehensive Income Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net income |  | $ | 16,316,000 |  |  | $ | 2,510,000 |  |  | $ | 18,826,000 |
Comprehensive income |  | $ | 18,329,000 |  |  | $ | 2,510,000 |  |  | $ | 20,839,000 |
The effect of the above corrections on the consolidated balance sheet at March 31, 2018 is as follows:
|  | March 31, 2018 |
Revised Consolidated Balance Sheet Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
ASSETS |  |  |  |  |  |  |  |  |
Income tax receivable |  | $ | 7,796,000 |  |  | $ | 176,000 |  |  | $ | 7,972,000 |
Prepaid expenses and other current assets |  |  | 11,491,000 |  |  |  | 3,613,000 |  |  |  | 15,104,000 |
Long-term core inventory — net |  |  | 301,656,000 |  |  |  | (3,362,000 | ) |  |  | 298,294,000 |
Long-term deferred income taxes |  |  | 10,556,000 |  |  |  | (3,619,000 | ) |  |  | 6,937,000 |
Other assets |  |  | 7,392,000 |  |  |  | 14,603,000 |  |  |  | 21,995,000 |
TOTAL ASSETS |  | $ | 494,497,000 |  |  | $ | 11,411,000 |  |  | $ | 505,908,000 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Accrued liabilities |  | $ | 11,799,000 |  |  | $ | 249,000 |  |  | $ | 12,048,000 |
TOTAL LIABILITIES |  | $ | 219,521,000 |  |  | $ | 249,000 |  |  | $ | 219,770,000 |
Retained earnings |  | $ | 66,606,000 |  |  | $ | 11,162,000 |  |  | $ | 77,768,000 |
TOTAL SHAREHOLDERS’ EQUITY |  | $ | 274,976,000 |  |  | $ | 11,162,000 |  |  | $ | 286,138,000 |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |  | $ | 494,497,000 |  |  | $ | 11,411,000 |  |  | $ | 505,908,000 |
The effect of the above corrections on the consolidated statement of shareholders’ equity for the fiscal year ended March 31, 2018 is as follows:
|  | Year Ended March 31, 2018 |
Revised Consolidated Statement of Shareholders’ Equity Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Retained earnings at March 31, 2017 |  | $ | 50,290,000 |  |  | $ | 8,652,000 |  |  | $ | 58,942,000 |
Net income |  |  | 16,316,000 |  |  |  | 2,510,000 |  |  |  | 18,826,000 |
Retained earnings at March 31, 2018 |  | $ | 66,606,000 |  |  | $ | 11,162,000 |  |  | $ | 77,768,000 |
The effect of the above corrections on the consolidated statement of cash flows for the fiscal year ended March 31, 2018 is as follows:
|  | Year Ended March 31, 2018 |
Revised Consolidated Statement of Cash Flow from Operating Activities Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net income |  | $ | 16,316,000 |  |  | $ | 2,510,000 |  |  | $ | 18,826,000 |
Deferred income taxes |  |  | 3,055,000 |  |  |  | (1,560,000 | ) |  |  | 1,495,000 |
Income tax receivable |  |  | (6,081,000 | ) |  |  | (231,000 | ) |  |  | (6,312,000 | )
Prepaid expenses and other current assets |  |  | (2,507,000 | ) |  |  | (318,000 | ) |  |  | (2,825,000 | )
Other assets |  |  | (384,000 | ) |  |  | 788,000 |  |  |  | 404,000 |
Accounts payable and accrued liabilities |  |  | (11,621,000 | ) |  |  | (50,000 | ) |  |  | (11,671,000 | )
Long-term core inventory |  |  | (45,839,000 | ) |  |  | (1,139,000 | ) |  |  | (46,978,000 | )
Net cash used in operating activities |  | $ | (13,944,000 | ) |  | $ | - |  |  | $ | (13,944,000 | )
The effect of the above corrections on the consolidated statements of operations for the three and nine months ended December 31, 2017 is as follows:
|  | Three Months Ended December 31, 2017 |  |  | Nine Months Ended December 31, 2017 |
Revised Consolidated Statement of Operations Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |  |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net sales |  | $ | 100,127,000 |  |  | $ | 1,586,000 |  |  | $ | 101,713,000 |  |  | $ | 306,964,000 |  |  | $ | (159,000 | ) |  | $ | 306,805,000 |
Cost of goods sold |  |  | 77,583,000 |  |  |  | (1,750,000 | ) |  |  | 75,833,000 |  |  |  | 231,419,000 |  |  |  | (1,750,000 | ) |  |  | 229,669,000 |
Gross profit |  |  | 22,544,000 |  |  |  | 3,336,000 |  |  |  | 25,880,000 |  |  |  | 75,545,000 |  |  |  | 1,591,000 |  |  |  | 77,136,000 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
General and administrative |  |  | 11,915,000 |  |  |  | - |  |  |  | 11,915,000 |  |  |  | 26,717,000 |  |  |  | (299,000 | ) |  |  | 26,418,000 |
Sales and marketing |  |  | 4,048,000 |  |  |  | - |  |  |  | 4,048,000 |  |  |  | 10,899,000 |  |  |  | - |  |  |  | 10,899,000 |
Research and development |  |  | 1,678,000 |  |  |  | - |  |  |  | 1,678,000 |  |  |  | 3,920,000 |  |  |  | - |  |  |  | 3,920,000 |
Total operating expenses |  |  | 17,641,000 |  |  |  | - |  |  |  | 17,641,000 |  |  |  | 41,536,000 |  |  |  | (299,000 | ) |  |  | 41,237,000 |
Operating income |  |  | 4,903,000 |  |  |  | 3,336,000 |  |  |  | 8,239,000 |  |  |  | 34,009,000 |  |  |  | 1,890,000 |  |  |  | 35,899,000 |
Interest expense, net |  |  | 3,953,000 |  |  |  | - |  |  |  | 3,953,000 |  |  |  | 10,789,000 |  |  |  | - |  |  |  | 10,789,000 |
Income before income tax expense (benefit) |  |  | 950,000 |  |  |  | 3,336,000 |  |  |  | 4,286,000 |  |  |  | 23,220,000 |  |  |  | 1,890,000 |  |  |  | 25,110,000 |
Income tax expense (benefit) |  |  | 7,756,000 |  |  |  | (820,000 | ) |  |  | 6,936,000 |  |  |  | 16,099,000 |  |  |  | (1,357,000 | ) |  |  | 14,742,000 |
Net (loss) income |  | $ | (6,806,000 | ) |  | $ | 4,156,000 |  |  | $ | (2,650,000 | ) |  | $ | 7,121,000 |  |  | $ | 3,247,000 |  |  | $ | 10,368,000 |
Basic net (loss) income per share |  | $ | (0.36 | ) |  | $ | 0.22 |  |  | $ | (0.14 | ) |  | $ | 0.38 |  |  | $ | 0.17 |  |  | $ | 0.55 |
Diluted net (loss) income per share |  | $ | (0.36 | ) |  | $ | 0.22 |  |  | $ | (0.14 | ) |  | $ | 0.37 |  |  | $ | 0.17 |  |  | $ | 0.53 |
The effect of the above corrections on the consolidated statements of comprehensive (loss) income for the three and nine months ended December 31, 2017 is as follows:
|  | Three Months Ended December 31, 2017 |  |  | Nine Months Ended December 31, 2017 |
Revised Consolidated Statement of Comprehensive (Loss) Income Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |  |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net (loss) income |  | $ | (6,806,000 | ) |  | $ | 4,156,000 |  |  | $ | (2,650,000 | ) |  | $ | 7,121,000 |  |  | $ | 3,247,000 |  |  | $ | 10,368,000 |
Comprehensive (loss) income |  | $ | (6,476,000 | ) |  | $ | 4,156,000 |  |  | $ | (2,320,000 | ) |  | $ | 8,404,000 |  |  | $ | 3,247,000 |  |  | $ | 11,651,000 |
The effect of the above corrections on the consolidated statements of cash flows for the nine months ended December 31, 2017 is as follows:
|  | Nine Months Ended December 31, 2017 |
Revised Consolidated Statement of Cash Flow from Operating Activities Amounts: |  | As Previously Reported |  |  | Adjustment |  |  | As Revised |
Net income |  | $ | 7,121,000 |  |  | $ | 3,247,000 |  |  | $ | 10,368,000 |
Deferred income taxes |  |  | (909,000 | ) |  |  | (1,805,000 | ) |  |  | (2,714,000 | )
Prepaid expenses and other current assets |  |  | (2,093,000 | ) |  |  | 448,000 |  |  |  | (1,645,000 | )
Other assets |  |  | 289,000 |  |  |  | (452,000 | ) |  |  | (163,000 | )
Accounts payable and accrued liabilities |  |  | (15,647,000 | ) |  |  | (299,000 | ) |  |  | (15,946,000 | )
Long-term core inventory |  |  | (37,222,000 | ) |  |  | (1,139,000 | ) |  |  | (38,361,000 | )
Net cash used in operating activities |  | $ | (9,803,000 | ) |  | $ | - |  |  | $ | (9,803,000 | )

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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