Craig Consumer Electronics Inc. announces preliminary 1996 financial results, restates 1995 earnings.CERRITOS Cer·ri·tos A city of southern California, a suburb of Los Angeles. Population: 52,600. , Calif.--(BUSINESS WIRE)--March 10, 1997--Craig Consumer Electronics Inc. (NASDAQ/NM:CREG) Monday Monday: see week. announced its preliminary 1996 financial results and that it had discovered adjustments and accounting irregularities that require restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of previously reported earnings for the company's 1995 year. The effect of the adjustments and accounting irregularities was principally an overstatement o·ver·state tr.v. o·ver·stat·ed, o·ver·stat·ing, o·ver·states To state in exaggerated terms. See Synonyms at exaggerate. o of inventory and an understatement of cost of sales. The restatement will reduce previously reported net income and earnings per share by $763,000 and 32 cents, respectively. Accordingly, the company will amend its 1995 financial statements to present net income and earnings per share of $29,000 and 1 cent, respectively. Upon discovery of the errors, which arose during the company's 1996 audit, the company has proceeded with an investigation assisted by its outside counsel and independent public accountants. The company has taken administrative action on the employees involved. At this time, management believes that the irregularities have been fully investigated and accounted for properly. Management foresees no ongoing effects of these irregularities. The company also announced its preliminary 1996 operating results for the year ended Dec. 31, 1996. The company had net income of approximately $56,000, or 2 cents per share Cents per share The amount of a mutual fund's dividend or capital gains distributions that a shareholder will receive for each share owned. , for the year ended Dec. 31, 1996. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight for the year ended Dec. 31, 1996, were approximately $81 million. However, the company maintained or enhanced its market share in certain product categories. The industry, in management's view, is suffering through a weak period. Operating results for the year were adversely impacted by unusually high costs associated with the company's joint venture. This expense was due primarily to interruption INTERRUPTION. The effect of some act or circumstance which stops the course of a prescription or act of limitation's. 2. Interruption of the use of a thing is natural or civil. of the venture's operations and other costs related to the start-up Start-up The earliest stage of a new business venture. of the Chinese operations. The company also experienced a greater-than-anticipated redemption rate attributable to fourth-quarter revenues associated with its consumer rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. programs. Additionally, in connection with its annual audit for 1996, the company has reassessed its accounting policy with respect to capitalizing certain costs in its Chinese production operations, undertaken through a joint venture with a People's Republic People's Republic n. A political organization founded and controlled by a national Communist party. of China partner. Accordingly, the company has also restated its quarterly results for the quarters ended June 30 and Sept. 30, 1996, as presented below. -0-
CRAIG CONSUMER ELECTRONICS INC.
Financial Highlights
Quarter ended
June 30,
1996
As reported As restated
Cost of sales $9,824,000 $9,547,000
Net loss $ (535,000) $ (737,000)
Loss per share (20 cents) (27 cents)
Quarter ended
Sept. 30,
1996
As reported As restated
Cost of sales $21,123,000 $20,910,000
Net income $ 579,000 $ 387,000
Earnings per share 16 cents 11 cents
CONTACT: Craig Consumer Electronics Inc., Cerritos Donna M. Richardson, 562/926-9944 |
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