TULSA, Okla. – Lowrance Electronics, Inc., a SONAR and GPS products manufacturer, will restate its financial results for Fiscal 2003 and the first three quarters of Fiscal 2004 to reflect the company’s determination that grants under its stock-option plan require variable accounting treatment, Lowrance said this morning in a release.
The company previously accounted for its stock option grants as fixed awards under the provisions of APB No. 25. However, due to the fact that one of the three methods participants may elect to pay their exercise price permits cashless exercise payment terms, Lowrance has since concluded the stock option grants should have been accounted for as variable awards under APB No. 25, the company said.
Accordingly, Lowrance is amending its filings and will file today a Form 10-K/A for Fiscal 2003 and Form 10-Q/As for the first three quarters of Fiscal 2004. The net impact of the restatement reduces fully diluted EPS for Fiscal 2003 to $1.19, from $1.27, as initially reported. The net impact of the restatement reduces fully diluted EPS for the nine months ended April 30, 2004, to $1.46, from $1.70, as initially reported, according to the manufacturer.
Further, in order to conform to preferable stock compensation treatment, Lowrance has adopted in the current fourth quarter of Fiscal 2004 fair value accounting for its stock options, effective August 1, 2003, in accordance with SFAS No. 123. In accordance with the adoption provisions, when Lowrance files its Fiscal 2004 Form 10-K, it will again restate the quarterly information for the first three quarters of Fiscal 2004 as presented in its Form 10-Q/As, the company said.
The impact of the adoption of SFAS No. 123 on the nine months ended April 30, 2004, will increase fully diluted EPS by $0.23 from $1.46 (as restated for variable award accounting) to $1.69. The combined impact of the restatement for variable award accounting and the adoption of SFAS No. 123 will reduce fully diluted EPS for the nine months ended April 30, 2004, to $1.69 from $1.70, as initially reported.
“Neither the current restatement for variable award accounting nor the future restatement for fair value accounting have any cash flow impact and they actually increase stockholders’ equity. The net effect after our adoption of the preferable accounting for stock options results in only a penny reduction in our April 30, 2004, fully diluted EPS from what we initially reported,” said Darrell Lowrance, president and CEO.
Lowrance discussed the restatement and the adoption of fair value accounting for stock options in a conference call this morning. A replay will be available through midnight Eastern time on June 18, by dialing 800-642-1687 domestically or 706-645-9291 internationally and entering passcode number 8159712.