Friday, September 11, 2009
Curiouser and Curiouser
"The restatement pertains to the accounting for certain acquisition-related payments received by selling shareholders of four acquired businesses that were subsequently redistributed by such selling shareholders among themselves and to other select client-serving and administrative Company employees based, in part, on continuing employment with the Company or the achievement of personal performance measures. The selling shareholders were not prohibited from redistributing such acquisition-related payments under the terms of the purchase agreements with the Company for the acquisitions of the acquired businesses. ... While the correction of the errors in accounting for the acquisition-related payments significantly reduced the Company's net income and earnings per share for each of the affected periods, it had no effect on our total assets, total liabilities or total stockholders' equity on an annual basis. ... However, as a result of the significant decline in the price of the Company's common stock following the July 31, 2009 announcement of the restatement, the Company expects to engage in an impairment analysis with respect to the carrying value of its goodwill in connection with the preparation of its financial statements for the quarter ended September 30, 2009", my emphasis, Huron Form 8-K 17 August 2009, link: http://www.sec.gov/Archives/edgar/data/1289848/000119312509176991/dex991.htm.
What's going on here? What "errors"? Either HURN's original accounting was fine, or the selling shareholders or HURN's management committed a fraud. The restatements had "no effect on total assets ... or total stockholders' equity". Did the selling shareholders run eleemosynary institutions and gave employees $56 million out of the goodness of their hearts? HURN is not Goldman Sachs. $56 million is real money to HURN and its shareholders. Stay tuned for further developments. Impairment analysis? Do I smell a "big bath" coming up? See my 26 August 2009 post: http://skepticaltexascpa.blogspot.com/2009/08/accounting-scandal-which.html.