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CriticalControl to Adjust Inventory in 2010 Year End Financial Statements(November 08, 2011)
CALGARY, ALBERTA -- (Marketwire) -- 11/09/11 -- CriticalControl Solutions Corp. (TSX:CCZ) has identified an error in the carrying value of inventory that originated in its 2010 consolidated financial statements. This error was identified as a result of the Corporation's ongoing efforts to improve processes and controls relating to the management of inventory at its North Eastern U.S. fabrication facilities.
The accounting error is attributable to incorrect costing and relieving of inventory as fabricated measurement assemblies were sold. The Corporation estimates that the total error is between $1.5 and $1.8 million and is in the process of restating its 2010 results to correct the inventory overstatement. The correction of the error will also impact the 2010 statement of earnings by increasing cost of revenue. The after tax effect on earnings for the 2010 year is expected to be a reduction in net earnings of between $0.9 million to $1.1 million. There will also be minor foreign exchange impacts that will flow through other comprehensive income.
In 2011, the Corporation has strengthened its inventory management processes through the hiring of more experienced personnel and the implementation of improved internal controls. Documentation and support related to the errors have been provided to the Corporation's external auditors.
This restatement only impacts the Corporation's 2010 North Eastern U.S. fabrication results. It does not affect its strategic recurring income streams, nor does it impact 2011 financial performance, cash flow or the ability of the Corporation to continue to meet its financial obligations.
Forward Looking Statement:
The final impact of this restatement on the 2010 annual financial statements is subject to completion of audit work by the Corporation's external auditors.
CriticalControl enables its clients to increase operational performance through the better control of critical business information. Integrating technology with labour intensive processes of imaging and data entry, CriticalControl empowers its clients to increase their competitiveness, reduce operating expenses and improve margins. For more information please visit www.criticalcontrol.com.
CriticalControl Solutions Corp.
President & CEO
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