The Sportsmans Guide, Inc. will change its accounting for Buyers Club membership fees and restate certain of the companys previously issued consolidated financial statements. The restatement will increase net earnings for the quarters ended March 31, 2005 and 2004 by $161,000, or two cents per diluted share, and $141,000, or a penny per diluted share, respectively. The restatement will also increase net earnings by approximately $2,000 and $35,000 for the years ended December 31, 2004 and 2003, respectively, with no impact on diluted earnings per share in either period.
Gregory R. Binkley, president and CEO, commented, “This change is the result of comments we received from the Securities and Exchange Commission arising from their review of our 2004 Annual Report on Form 10-K and it only impacts our timing of revenue recognition of the Buyers Club membership fees. Based on our discussions with the SEC, we have determined that our membership fees were analogous to refundable fees for services and should be deferred and recognized in income on a straight-line basis over the membership term. Under our previous accounting policy we recognized a portion of the club fees in an amount equal to the discount earned by the members on actual product shipments.
The change in the Companys revenue recognition policy related to the Buyers Club membership fees, when compared to the Companys previous policy, will tend to delay the recognition of fee income especially in the fourth quarter with the first three quarters of the next fiscal year benefiting from the change.
“While the impact of the change for the last several annual periods is not material, we are restating previously issued consolidated financial statements because the effects of the accounting change to certain past quarterly periods are more significant and we have included a schedule showing such with this release. We believe all of our recent trends with respect to revenue and earnings growth remain intact in all material respects and this accounting change will have no impact on our cash flows in the past or future periods.” Binkley concluded.
In other SGDE news, the company has pulled its planned secondary offering of shares, citing “uncertain market conditions”. The company had the S-3 registration papers with the SEC in early May for a proposed public offering of 2,500,000 shares of its common stock. In a form RW filed Thursday, SGDE requested that the SEC withdraw the registration statement.
The Sportsmans Guide, Inc.
Diluted EPS Impact of Financial Restatement
Diluted Earnings Per Share* | ||||||||||||||||
2004 | 2003 | |||||||||||||||
As | As | |||||||||||||||
Reported | Restated | Reported | Restated | |||||||||||||
Q1 | $ | 0.15 | $ | 0.16 | $ | 0.12 | $ | 0.14 | ||||||||
Q2 | $ | 0.10 | $ | 0.16 | $ | 0.08 | $ | 0.13 | ||||||||
Q3 | $ | 0.13 | $ | 0.17 | $ | 0.09 | $ | 0.13 | ||||||||
Q4 | $ | 0.57 | $ | 0.46 | $ | 0.47 | $ | 0.38 | ||||||||
Full Year | $ | 0.95 | $ | 0.95 | $ | 0.78 | $ | 0.78 | ||||||||
* | Quarterly diluted EPS may not add to annual diluted EPS due to differences in average number of diluted shares outstanding for the various periods and rounding. |
