ST. LOUIS, Jan. 13 /PRNewswire-FirstCall/ -- Kellwood Company today reported that the Company completed the financial restatement process announced in its press release of December 1, 2005.
The Company has filed an amended Form 10-K/A with the Securities Exchange Commission, covering the fiscal years ended January 29, 2005 and January 31, 2004 and amended Forms 10-Q/A for the periods ended April 30, 2005 and July 30, 2005. The Company has also filed its quarterly report on Form 10-Q for the period ended October 29, 2005. The restated financial statements were filed to correct for an accounting error related to the recording of freight, duty and agents' commission costs that resulted in the understatement of cost of products sold and a cumulative overstatement of earnings before income taxes of $8.2 million ($5.2 million after tax). In addition, the restatements reflect the effect of the correction of the underaccrual of liabilities (previously deemed immaterial) related to a Death Benefits Program that had resulted in the understatement of selling, general and administrative expenses and a cumulative overstatement of earnings before income taxes of $3.9 million ($2.5 million after tax).
The restatement reduced earnings before income taxes in the 2004 fiscal year ended January 29, 2005 by $6.0 million ($3.8 million after tax) and in the 2003 fiscal year ended January 31, 2004 by $5.9 million ($3.7 million after tax). The restatement reduced earnings before income taxes for the fiscal 2005 first quarter ended April 30, 2005 by $1.0 million ($0.7 million after tax) and increased earnings before income taxes for the second quarter ended July 30, 2005 by $0.7 million ($0.5 million after tax). In connection with the restatement described above, management determined that as of January 29, 2005, the Company did not maintain effective internal control over financial reporting and that a material weakness existed. Management has taken steps to remediate these control deficiencies, which will be fully tested by year-end.
The Audit Committee of the Company's Board of Directors has completed its review and investigation related to the accounting error described above. The investigation concluded that the accounting error did not result from misconduct or intentional wrongdoing. The restatement and the actions taken to remedy control deficiencies were approved by the Audit Committee.
Kellwood is a marketer of apparel and consumer soft goods with sales in excess of $2 billion. Kellwood specializes in branded as well as private label products, and markets to all channels of distribution with product specific to a particular channel. For more information, visit http://www.kellwood.com/ .
Statements in this press release that are not strictly historical are "forward-looking" statements within the meaning of the safe harbor provisions of the federal securities laws. Actual results may differ materially due to risks and uncertainties that are described in the Company's Form 10-K/A (Amendment No. 2) and other filings with the SEC.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe", "expect", "will", "estimate", "project", "forecast", "planned", "should", "anticipate" and similar expressions may identify forward-looking statements. These forward-looking statements represent the Company's expectations concerning future events, are based on various assumptions and are subject to a number of risks and uncertainties. These risks include, without limitation: changes in the retail environment; an economic downturn in the retail market, including deflationary pressures; economic uncertainty due to the elimination of quotas on Chinese imports; a decline in the demand for the Company's products; the lack of customer acceptance of the Company's new designs and/or product lines; the increasingly competitive and consolidating retail environment; financial or operational difficulties of customers or suppliers; disruptions to transportation systems used by the Company or its suppliers; continued satisfactory relationships with licensees and licensors of trademarks and brands; ability to generate sufficient sales and profitability related to licenses containing minimum royalty payments; the ability to successfully complete the restructuring plan; the economic impact of uncontrollable factors, such as terrorism and war; the effect of economic conditions and trade, legal social and economic risks (such as import, licensing and trade restrictions); stable governments and business conditions in the countries where the Company's products are manufactured; the impact of acquisition activity and the ability to effectively integrate acquired operations; and changes in the Company's strategies and expectations. These risks are more fully described in the Company's periodic filings with the SEC. Actual results could differ materially from those expressed or implied in forward-looking statements. The Company disclaims any obligation to publicly update or revise any of its forward-looking statements.
