To correct a $115 million error in its classification of convertible notes, Dress Barn will restate its balance sheets for the fiscal year ended July 29, 2006, and the first three quarters of fiscal 2007, the company said.
The specialty retailer said in a regulatory filing that it would change the balance-sheet classification of $115 million worth of 2.5 percent senior convertible notes due in 2024 from a long-term liability to a current liability.
From January 30, 2006, through October 26, 2007, investors were able to convert their notes. Dress Barn’s stock price closed at or above $12.61 for 20 trading days within the 30-day trading period, according to the company. As a result, that obligation should have been classified as a current liability on the balance sheet, Dress Barn said.
The error has some wide-ranging consequences, the company acknowledged. The restatement will affect its previously reported deferred income-tax assets, current liabilities, long-term debt, and deferred income-tax liability. The retailer also said it will delay the filing of its annual report for the fiscal year ended July 28, 2007.
On the other hand, the company said, the restatement will not affect its income or cash flows, or consolidated statements of shareholders’ equity and comprehensive income.