Summary
TransDigm Group Incorporated (TDG) has filed an 8-K report dated February 10, 2010, to address a restatement of previously issued financial statements. The company determined that its basic and diluted earnings per share (EPS) calculations for fiscal years 2007, 2008, and 2009, as well as the first three quarters of 2009 and 2008, were incorrectly prepared. Specifically, TDG will transition from the "treasury stock method" to the "two-class method" for calculating EPS, due to outstanding stock options being considered "participating securities" as they include non-forfeitable rights to dividends. This restatement impacts EPS figures and weighted average share counts but does not alter the reported net income, EBITDA, or other key financial metrics. The Audit Committee, based on management's recommendation and consultation with its independent auditor, concluded that previously issued annual and interim income statements should no longer be relied upon due to these EPS calculation errors. TDG will file amended reports (10-K/A and 10-Q/A) to reflect these changes. The company also announced a conference call on February 10, 2010, to discuss its first fiscal quarter 2010 results.
Key Highlights
- 1TransDigm Group (TDG) is restating its financial statements for fiscal years 2007, 2008, and 2009, and for the first three quarters of fiscal years 2008 and 2009.
- 2The restatement is due to the incorrect calculation of basic and diluted Earnings Per Share (EPS).
- 3The company will now use the "two-class method" for EPS calculation, recognizing stock options with dividend rights as "participating securities", instead of the previously used "treasury stock method".
- 4The restatements do not affect reported net income, adjusted net income, EBITDA, or cash flow statements.
- 5The Audit Committee concluded that previously issued financial statements related to EPS should no longer be relied upon.
- 6Amended filings (10-K/A and 10-Q/A) will be submitted to reflect the corrected EPS information.
- 7TDG will host an investor conference call on February 10, 2010, to discuss Q1 2010 financial results.