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| CLRO > SEC Filings for CLRO > Form 8-K on 21-Aug-2009 | All Recent SEC Filings |
21-Aug-2009
Non-Reliance on Previous Financials, Audits or Interim Review
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
On August 20, 2009 ClearOne Communications, Inc. (the "Company") decided to change the method by which it accounts for deferred revenue and associated costs.
The Company provides a right of return on product sales to distributors. The revenue from product sales to distributors is not recognized until the return privilege has expired, which approximates when product is sold through to customers of the Company's distributors, rather than when the product is initially shipped to a distributor. The Company estimated at each quarter-end the amount of revenue and costs to be deferred, based on the channel inventory information provided by certain distributors. Although only certain distributors provided certain channel inventory amounts, the Company made estimates with regard to the amount of inventory in the entire channel for all customers and for all channel inventory items based on information available from certain distributors.
As the Company further expands into international markets, introduces new products, and develops new channel relationships, the Company decided that it is appropriate to adopt a method which is more reflective of, and is compatible to, its business environment. The Company considered several alternate methods. Under the adopted new method, revenue and costs are deferred for the actual channel inventory items reported by the distributors and other channel partners. Further, with respect to distributors and other channel partners not reporting the channel inventory, the revenue and costs are deferred until the Company receives payment for the product sales made to such distributors or channel partners.
The Company plans to amend its Form 10-K in the near-term for the fiscal year ended June 30, 2008 and will restate the financial statements for the fiscal year ended June 30, 2008 and comparative periods for the fiscal years ended 2004, 2005, 2006, and 2007 to reflect the change in the method of estimating deferred revenue and costs. The effect of this change in the method on previously reported periods is described in more detail in the attached statement.
The Company has discussed the above matter with Jones Simkins, P.C., the Company's independent registered accountants.
ClearOne Communications, Inc.
Statement of impact of change in the method of computing deferred revenue and
costs
All amounts in $ are in thousands except for per share details
Fiscal years ended June 30,
2008 2007 2006 2005 2004
Revenue
Previously reported $ 39,752 $ 39,861 $ 35,362 $ 29,087 $ 25,736
Under new method $ 38,757 $ 39,786 $ 34,528 $ 31,433 $ 24,048
Difference - Increase
(Decrease) $ (995 ) $ (75 ) $ (834 ) $ 2,346 $ (1,688 )
Difference as % of previously
reported Revenue 2.5% 0.2% 2.4% 8.1% 6.6%
Gross Profit
Previously reported $ 23,291 $ 22,138 $ 17,987 $ 16,367 $ 10,976
Under new method $ 22,552 $ 22,149 $ 17,675 $ 18,015 $ 9,450
Difference - Increase
(Decrease) $ (739 ) $ 11 $ (312 ) $ 1,648 $ (1,526 )
Difference as % of previously
reported Gross Profit 3.2% - 1.7% 10.1% 13.9%
Income (Loss) from Continuing
Operations
Previously reported $ 5,640 $ 4,787 $ (60 ) $ 1,947 $ (11,902 )
Under new method $ 5,202 $ 4,798 $ (372 ) $ 3,595 $ (13,428 )
Difference $ (438 ) $ 11 $ (312 ) $ 1,648 $ (1,526 )
Difference as % of previously
reported Income (Loss) 7.8% 0.2% 520.0% 84.6% 12.8%
Income (Loss) from Continuing
Operations per share (Diluted)
Previously reported $ 0.52 $ 0.41 $ - $ 0.16 $ (1.08 )
Under new method $ 0.48 $ 0.41 $ (0.03 ) $ 0.29 $ (1.21 )
Difference $ (0.04 ) $ - $ (0.03 ) $ 0.13 $ (0.13 )
Difference as % of previously
reported Income (Loss) per
share 7.7% - 300.0% 81.3% 12.0%
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