Xerium to restate certain previously-issued financial statements
11 Aug '07
4 min read
It has been determined that the swaps do not qualify as hedging instruments because the Company inappropriately applied the 'short-cut' method to evaluate these interest rate swaps for hedge accounting purposes from the date of inception. Accordingly, the Company will recognize the change in the fair value of these swaps as a component of earnings for past and future periods.
The consolidated financial statements expected to be restated are the consolidated balance sheets as of December 31, 2006 and 2005 and the consolidated statements of operations, stockholders' equity (deficit), and cash flows for the years 2006 and 2005 and the Company's unaudited quarterly financial statements during these years, commencing with the quarter ended June 30, 2005, and the quarter ended March 31, 2007.
These consolidated financial statements, as filed, contain errors and should therefore not be relied upon. As a result of this determination, related reports of the Company's independent registered public accounting firm on the consolidated financial statements and internal control over financial reporting included in the annual report on Form 10-K for the year ended December 31, 2006 should no longer be relied upon.
Following completion of its work and that of its independent registered public accounting firm, the restatement of the Company's financial results will be effected as soon as practicable by the filing of an amended annual report for the year endedDecember 31, 2006 and an amended quarterly report on Form 10-Q for the quarter ended March 31, 2007.
The accounting review was initiated to address a matter involving the Company's historical accounting for interest rate swap agreements that it entered into in June 2005. The Company identified the matter during the ordinary course of reviewing the Company's interest rate swaps and financial results for the second quarter of 2007.
It is necessary for the Company to complete these restatements in order to complete its quarterly report on Form 10-Q for the quarter ended June 30, 2007, and accordingly, this report was not filed by its due date, but is expected to be filed upon the completion of the restatement.
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