Stanley Furniture Uncovers Accounting Error

January 9, 2015  by in Financial Reports, Industry   

In response, the company’s shares dropped 5.3 percent in premarket trading this morning.

The company said it has determined that correcting the cumulative amount of the error would be material to the expected fiscal 2014 consolidated financial statements. 

Stanley plans to revise its previously issued consolidated financial statement beginning with its Form 10-K for the year ended Dec. 31, 2014. The impact of the revision of the company’s statement of operations is to reduce the net loss for fiscal 2014 and 2013 or increase net income for fiscal 2012, according to the company.

The cumulative impact of the error correction to the company’s consolidated balance sheet and statement of stockholders equity will result in recognizing an additional deferred compensation liability of approximately $3.8 million at Sept. 27, 2014, $3.8 million at Dec. 31, 2013 and $4.3 million at Dec. 31, 2012, with a corresponding decrease in retained earnings and accumulated other comprehensive loss for each period.

Stanley management and audit committee have determined that a material weakness in internal control over financial reporting existed related to its accounting for the plan. A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Stanley also reported that it expects fourth quarter sales of more than 15 percent year-over-year growth and year-end growth in the low single digits.

The results will be announced Feb. 3 after the close of the markets.