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Restatement of Condensed Consolidated Financial Statements
3 Months Ended
Dec. 31, 2022
Restatement of Condensed Consolidated Financial Statements  
Restatement of Condensed Consolidated Financial Statements

Note 1. Restatement of Condensed Consolidated Financial Statements

During the preparation of its unaudited consolidated financial statements for the fiscal quarter ended April 1, 2023, the Company determined that certain personnel in one of its divisions had failed to properly substantiate and update cost estimates for materials and other costs over the life of certain contracts. As a result, the Company conducted an independent investigation (the “Investigation”) under the direction of the Audit Committee of the Company’s Board of Directors (the “Audit Committee”). The division, like other Company divisions, has a stand-alone finance organization, which reports directly to the Company finance organization and indirectly to the management of the division. References in the findings below refer solely to this division unless otherwise noted. The investigation found that:

●In connection with the preparation and review of quarterly contract cost and other estimates, an internal control in the Company’s accounting process for the division’s contracts with customers, certain division personnel made inappropriate and unsupported adjustments to reduce certain cost estimates and failed to appropriately evaluate and increase other cost estimates to reflect cost overruns and other costs associated with delays in completing certain contracts.
●The division had a culture that did not recognize or emphasize the importance of rigor in the division’s quarterly contract estimate review process or its significance to the Company’s internal control over financial reporting and accounting and financial reporting determinations with respect to the division’s contracts with customers. Instead, the division’s tone at the top and other control weaknesses enabled participants in the quarterly contract estimate review process to tolerate, place undue reliance on or otherwise fail to challenge unsupported adjustments and assumptions to contract cost estimates that had been made based on unsubstantiated optimism and/or a desire to avoid adverse outcomes.
●The division had an ineffective finance function that did not provide sufficient oversight on financial accounting and reporting matters or effectively challenge adjustments or other improper practices in the quarterly contract estimate review process.
●Certain division personnel lacked sufficient understanding of the division’s policies and procedures for the quarterly contract estimate review process as well as the relevant cost and contract accounting practices and requirements.
●Certain division personnel provided materially inaccurate and incomplete information to, including in response to inquiries from, Company management and the Company’s internal and independent auditors concerning contract cost estimates and related items.

The following tables present the impact of the financial statement adjustments on the Company’s previously reported consolidated financial statements for the three months ended December 31, 2022 and January 1, 2022. The “Previously Reported” amounts in the following tables are amounts derived from the Original Form 10-Q for the quarter ended December 31, 2022. The amounts in columns labeled “Investigation Adjustments” represent the effect of adjustments resulting from the Investigation and the amounts in columns labeled “Other Adjustments” represent the effect of other adjustments that relate primarily to uncorrected balance sheet misstatements in previously filed financial statements and were not material, individually or in the aggregate, to those previously filed financial statements. The effects of the restatement, including the related income tax impacts, have been corrected in all impacted tables and footnotes throughout these consolidated financial statements. The only impact to the Condensed Consolidated Statements of Comprehensive Income and Condensed Consolidated Statements of Stockholders’ Equity was to net income.

Investigation Adjustments correct misstatements that resulted primarily from 1) increases to estimated costs at completion of a contract that previously did not properly reflect estimated costs remaining to be incurred to complete a contract, 2) reductions in the amount of transaction consideration expected to be received under a contract, and 3) segmentation of contracts that had previously been combined. The adjustments primarily affected net sales, cost of sales, contract assets and inventory.

Other Adjustments primarily correct balance sheet misstatements related to inventory cut-off and advance payments from customers.

The following tables present the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Statements of Income for the three months ended December 31, 2022 and January 1, 2022.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

Three Months Ended

​

​

December 31, 2022

​

January 1, 2022

​

​

(Unaudited)

​

(Unaudited)

​

​

Previously

​

Investigation

​

Other

​

​

​

​

Previously

​

Investigation

​

Other

​

​

​

​

    

Reported

    

Adjustments

    

Adjustments

    

As Restated

    

Reported

    

Adjustments

    

Adjustments

    

As Restated

​

 

(In thousands, except per share data)

Net sales

​

$

2,361,361

​

$

(5,553)

​

$

—

​

$

2,355,808

​

$

1,757,325

​

$

(999)

​

$

—

​

$

1,756,326

Cost of sales

​

​

2,170,654

​

​

(10,232)

​

​

—

​

​

2,160,422

​

​

1,612,836

​

​

2,193

​

​

—

​

​

1,615,029

Gross profit

​

​

190,707

​

​

4,679

​

​

—

​

​

195,386

​

​

144,489

​

​

(3,192)

​

​

—

​

​

141,297

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating expenses:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Selling, general and administrative

​

​

60,730

​

​

—

​

​

—

​

​

60,730

​

​

61,475

​

​

—

​

​

—

​

​

61,475

Research and development

​

​

5,599

​

​

—

​

​

—

​

​

5,599

​

​

4,777

​

​

—

​

​

—

​

​

4,777

Restructuring and other

​

​

631

​

​

—

​

​

—

​

​

631

​

​

1,414

​

​

—

​

​

—

​

​

1,414

Gain on sale of long-lived assets

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(4,610)

​

​

—

​

​

—

​

​

(4,610)

Total operating expenses

​

​

66,960

​

​

—

​

​

—

​

​

66,960

​

​

63,056

​

​

—

​

​

—

​

​

63,056

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating income

​

​

123,747

​

​

4,679

​

​

—

​

​

128,426

​

​

81,433

​

​

(3,192)

​

​

—

​

​

78,241

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Interest income

​

​

2,933

​

​

—

​

​

—

​

​

2,933

​

​

309

​

​

—

​

​

—

​

​

309

Interest expense

​

​

(8,681)

​

​

—

​

​

—

​

​

(8,681)

​

​

(4,877)

​

​

—

​

​

—

​

​

(4,877)

Other income (expense), net

​

​

(6,712)

​

​

—

​

​

—

​

​

(6,712)

​

​

2,072

​

​

—

​

​

—

​

​

2,072

Interest and other, net

​

​

(12,460)

​

​

—

​

​

—

​

​

(12,460)

​

​

(2,496)

​

​

—

​

​

—

​

​

(2,496)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Income before income taxes

​

​

111,287

​

​

4,679

​

​

—

​

​

115,966

​

​

78,937

​

​

(3,192)

​

​

—

​

​

75,745

Provision for income taxes

​

​

19,788

​

​

1,064

​

​

—

​

​

20,852

​

​

20,303

​

​

(735)

​

​

—

​

​

19,568

Net income before noncontrolling interest

​

​

91,499

​

​

3,615

​

​

—

​

​

95,114

​

​

58,634

​

​

(2,457)

​

​

—

​

​

56,177

Less: Net income due to noncontrolling interest

​

​

3,100

​

​

—

​

​

—

​

​

3,100

​

​

—

​

​

—

​

​

—

​

​

—

Net income due to common shareholders

​

$

88,399

​

$

3,615

​

$

—

​

$

92,014

​

$

58,634

​

$

(2,457)

​

$

—

​

$

56,177

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income due to common shareholders per share:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

$

1.53

​

$

0.06

​

$

—

​

$

1.59

​

$

0.91

​

$

(0.04)

​

$

—

​

$

0.87

Diluted

​

$

1.48

​

$

0.06

​

$

—

​

$

1.54

​

$

0.89

​

$

(0.04)

​

$

—

​

$

0.85

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Weighted average shares used in computing per share amounts:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic

​

​

57,727

​

​

—

​

​

—

​

​

57,727

​

​

64,399

​

​

—

​

​

—

​

​

64,399

Diluted

​

​

59,867

​

​

—

​

​

—

​

​

59,867

​

​

66,233

​

​

—

​

​

—

​

​

66,233

​

The following tables present the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Balance Sheets as of December 31, 2022 and October 1, 2022.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

As of

​

As of

​

​

December 31, 2022

​

October 1, 2022

​

​

(Unaudited)

​

(Unaudited)

​

​

Previously

​

Investigation

​

Other

​

​

​

​

Previously

​

Investigation

​

Other

​

​

​

​

    

Reported

    

Adjustments

    

Adjustments

    

As Restated

    

Reported

    

Adjustments

    

Adjustments

    

As Restated

​

 

​

(In thousands)

ASSETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Current assets:

 

​

  

​

​

​

​

​

  

 

​

  

 

​

  

​

​

​

 

​

  

 

​

  

Cash and cash equivalents

​

$

735,314

​

$

—

​

$

—

​

$

735,314

​

$

529,857

​

$

—

​

$

—

​

$

529,857

Accounts receivable, net of allowances

​

​

1,308,651

​

​

—

​

 

—

​

​

1,308,651

​

​

1,138,894

​

​

—

​

​

—

​

​

1,138,894

Contract assets

​

​

501,893

​

​

(17,423)

​

 

—

​

​

484,470

​

​

503,674

​

​

(27,953)

​

​

—

​

​

475,721

Inventories

​

​

1,728,000

​

​

(27,612)

​

 

—

​

​

1,700,388

​

​

1,691,081

​

​

(21,705)

​

​

14,723

​

​

1,684,099

Prepaid expenses and other current assets

​

​

80,675

​

​

—

​

 

—

​

​

80,675

​

​

62,044

​

​

—

​

​

—

​

​

62,044

Total current assets

​

​

4,354,533

​

​

(45,035)

​

 

—

​

​

4,309,498

​

​

3,925,550

​

​

(49,658)

​

​

14,723

​

​

3,890,615

Property, plant and equipment, net

​

​

591,155

​

​

—

​

 

—

​

​

591,155

​

​

575,170

​

​

—

​

​

—

​

​

575,170

Deferred tax assets

​

​

189,638

​

​

9,983

​

 

—

​

​

199,621

​

​

198,588

​

​

10,966

​

​

—

​

​

209,554

Other

​

​

171,886

​

​

—

​

 

—

​

​

171,886

​

​

160,192

​

​

—

​

​

—

​

​

160,192

Total assets

​

$

5,307,212

​

$

(35,052)

​

$

—

​

$

5,272,160

​

$

4,859,500

​

$

(38,692)

​

$

14,723

​

$

4,835,531

LIABILITIES AND STOCKHOLDERS’ EQUITY

​

​

​

​

​

​

​

 

  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Current liabilities:

​

​

​

​

​

​

​

 

  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Accounts payable

​

$

2,139,445

​

$

—

​

$

—

​

$

2,139,445

​

$

2,029,534

​

$

—

​

$

11,900

​

$

2,041,434

Accrued liabilities

​

​

292,212

​

​

1,466

​

 

1,600

​

​

295,278

​

​

275,735

​

​

1,441

​

​

4,423

​

​

281,599

Accrued payroll and related benefits

​

​

135,880

​

​

—

​

 

—

​

​

135,880

​

​

130,892

​

​

—

​

​

—

​

​

130,892

Short-term debt, including current portion of long-term debt

​

​

17,500

​

​

—

​

 

—

​

​

17,500

​

​

17,500

​

​

—

​

​

—

​

​

17,500

Total current liabilities

​

​

2,585,037

​

​

1,466

​

 

1,600

​

​

2,588,103

​

​

2,453,661

​

​

1,441

​

​

16,323

​

​

2,471,425

Long-term liabilities:

​

​

​

​

​

​

​

 

  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Long-term debt

​

​

325,007

​

​

—

​

 

—

​

​

325,007

​

​

329,237

​

​

—

​

​

—

​

​

329,237

Other

​

​

223,376

​

​

—

​

 

—

​

​

223,376

​

​

215,333

​

​

—

​

​

—

​

​

215,333

Total long-term liabilities

​

​

548,383

​

​

—

​

 

—

​

​

548,383

​

​

544,570

​

​

—

​

​

—

​

​

544,570

Contingencies (Note 8)

​

​

​

​

​

​

​

 

  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Stockholders’ equity

​

​

2,173,792

​

​

(36,518)

​

 

(1,600)

​

​

2,135,674

​

​

1,861,269

​

​

(40,133)

​

​

(1,600)

​

​

1,819,536

Total liabilities and stockholders’ equity

​

$

5,307,212

​

$

(35,052)

​

$

—

​

$

5,272,160

​

$

4,859,500

​

$

(38,692)

​

$

14,723

​

$

4,835,531

​

The following table presents the impact of the financial statement adjustments on the Company’s previously reported Condensed Consolidated Statements of Cash Flows for the three month period ended December 31, 2022 and January 1, 2022. There were no adjustments to cash flows provided by (used in) investing or financing activities for the three month period ended December 31, 2022 and January 1, 2022.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

    

Three Months Ended

​

Three Months Ended

​

​

December 31, 2022

​

January 1, 2022

​

​

(Unaudited)

​

(Unaudited)

​

​

Previously

​

Investigation

​

Other

​

​

​

​

Previously

​

Investigation

​

Other

​

​

​

​

    

 Reported

    

Adjustments

    

Adjustments

    

As Restated

    

 Reported

    

Adjustments

    

Adjustments

    

As Restated

​

 

​

(In thousands)

CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Net income before noncontrolling interest

​

$

91,499

 

$

3,615

 

$

—

 

$

95,114

​

$

58,634

 

$

(2,457)

 

$

—

 

$

56,177

Adjustments to reconcile net income before noncontrolling interest to cash provided by (used in) operating activities:

​

​

​

 

​

​

 

​

​

 

​

​

​

​

​

 

​

​

 

​

​

 

​

​

Depreciation and amortization

​

​

28,536

 

​

—

 

​

—

 

​

28,536

​

​

27,465

 

​

—

 

​

—

 

​

27,465

Stock-based compensation expense

​

​

11,609

 

​

—

 

​

—

 

​

11,609

​

​

9,032

 

​

—

 

​

—

 

​

9,032

Deferred income taxes

​

​

8,445

 

​

983

 

​

—

 

​

9,428

​

​

6,707

 

​

(648)

 

​

—

 

​

6,059

Other, net

​

​

(311)

 

​

—

 

​

—

 

​

(311)

​

​

(3,638)

 

​

—

 

​

—

 

​

(3,638)

Changes in operating assets and liabilities, net of amounts acquired:

​

​

​

 

​

​

 

​

​

 

​

​

​

​

​

 

​

​

 

​

​

 

​

​

Accounts receivable

​

​

(166,333)

 

​

—

 

​

—

 

​

(166,333)

​

​

(106,972)

 

​

—

 

​

316

 

​

(106,656)

Contract assets

​

​

1,781

 

​

(10,530)

 

​

—

 

​

(8,749)

​

​

(15,666)

 

​

3,064

 

​

(2,791)

 

​

(15,393)

Inventories

​

​

(32,595)

 

​

5,907

 

​

14,723

 

​

(11,965)

​

​

(207,300)

 

​

88

 

​

(6,066)

 

​

(213,278)

Prepaid expenses and other assets

​

​

(27,657)

 

​

—

 

​

—

 

​

(27,657)

​

​

(2,939)

 

​

—

 

​

—

 

​

(2,939)

Accounts payable

​

​

101,265

 

​

—

 

​

(11,900)

 

​

89,365

​

​

234,525

 

​

—

 

​

6,066

 

​

240,591

Accrued liabilities

​

​

20,985

 

​

25

 

​

(2,823)

 

​

18,187

​

​

68,452

 

​

(47)

 

​

2,475

 

​

70,880

Cash provided by operating activities

​

$

37,224

 

$

—

 

$

—

 

$

37,224

​

$

68,300

 

$

—

 

$

—

 

$

68,300

​