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The printing company said that, at the end of fiscal 2006, income tax liabilities were understated by about C$10 million ($9.9 million), and that property, plant and equipment at Mexican subsidiaries were overstated by about C$10 million.
The impact of the restatements on net income will total about C$20 million, of which about C$10 million relates to 2006 and about C$10 million relates to previous years, Transcontinental said.
Montreal-based Transcontinental said the understated income tax liabilities were mainly related to accounting provisions for income taxes on inter-company transactions and to future income tax assets on operating losses considered twice.
It said the overstatement of the property, plant and equipment was due to an incorrect calculation of amortization, and said it did not expect the restatements to have any impact on cash flow or cash balances.
Transcontinental said the restatements for fiscal 2006 will be available when it releases its 2007 financials later this month. It will also restate results for each of the previous years affected.
“We take our obligation to provide accurate financial information very seriously and our internal controls remain very strong overall,” said Chief Financial Officer Benoit Huard in a statement. “In fact, recent improvements in controls and procedures led to the discovery of these two errors and reduce the risk of similar errors occurring again.”
Shares of Transcontinental were up 9 Canadian cents, or 0.5 percent, at C$18.31 after being halted on the Toronto Stock Exchange pending the news.
$1=$1.01 Canadian Reporting by Leah Schnurr; Editing by Rob Wilson