Accounting & Tax

Dresser Inc. to Restate Results

Engineering company's accounting circuits are tripped by FAS 133.
Stephen TaubMay 24, 2006

Dresser Inc. disclosed that it will restate its financials for 2004 and the first three quarters of 2005 to correct a number of accounting errors. The engineering company, which did not provide specific figures, added that it may also need to restate for periods prior to 2004.

The restatements originated, in part, from the company’s sale of certain businesses in November 2005. Some errors deal with documentation for transactions under Financial Accounting Standard 133, Accounting for Derivative Instruments and Hedging Activities; other errors concern the accounting treatment of income tax associated with the intercompany transfer of inventory between tax jurisdictions.

Further accounting errors, Dresser elaborated, are related to the timing of the recognition of certain revenue and expense items at its existing businesses. One revenue recognition issue concerns the transfer of title of goods under certain terms and conditions that, the company stressed, it no longer uses in any of its contracts.

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Dresser added that the restatements will not have a significant impact on annual adjusted EBITDA or its financial position, including its cash position and total debt.

The company had previously delayed the filing of its 2005 annual and 2006 quarterly financial reports.