Phoenix Footwear Group, Inc. announced that it will restate its December 27, 2003 and January 1, 2005 consolidated balance sheets to revise its accounting of purchased intangibles recorded in connection with prior acquisitions. The restatement will not impact Phoenix's historical net sales, net income, earnings per share, net assets or stockholders' equity.
During its review procedures for the financial statements to be included in the Company's Quarterly Report on Form 10-Q for the quarter ended April 2, 2005, Phoenix's new independent auditors, Grant Thornton LLP, identified a required correction in the Company's accounting for its purchased intangibles resulting from prior acquisitions. As a result, Phoenix intends to record on the restated consolidated balance sheets both a deferred tax liability (which will account for the tax result of the differences between the book and tax basis of these assets) and a corresponding increase in goodwill. This amount will be $1.5 million on the Company's December 27, 2003 consolidated balance sheet and an additional $5.6 million (or $7.1 million in total) on its January 1, 2005 consolidated balance sheet.
Due to this matter, Grant Thornton LLP has been unable to complete its review of the Company's financial statements for the Quarterly Report on Form 10-Q for the quarter ended April 2, 2005. Accordingly, Phoenix will file today with the Securities & Exchange Commission a Notification of Late Filing on Form 12b-25 for that Form 10-Q. Phoenix intends to file the Form 10-Q on or before May 23, 2005 and at the same time file an amended Annual Report on Form 10-K/A for the fiscal year ended January 1, 2005. The amended filing will include the restated consolidated balance sheets.