Epicor Software Corp., a manufacturer of business software for midsized companies, announced that it has completed a financial restatement for 2003 and 2004, and said that, separately, it would lower its profit expectations for 2006.

Epicor launched a review of its revenue recognition policies in regard to determining vendor-specific objective evidence of fair value for software license agreements -- specifically, the recognition and allocation of revenues from certain licensing and maintenance agreements. Following the accounting review, Epicor and its audit committee decided to make a change to the revenue classifications.

"These changes to our revenue recognition policy have not resulted in the loss of any previously reported revenue, but rather, only impact the timing of when revenue for prior and future periods is reported," said executive vice president and chief financial officer Michael Piraino, in a statement.

The changes also resulted in restatements for interim quarterly periods in the 2004 fiscal year through Sept. 30, 2005.

The adjustments, all for the fourth quarter and the year ending Dec. 31, 2005, included:

  • A decrease of $500,000 in intangible amortization expense, related to management's revised valuation of acquired intangible assets;
  • An increase in general and administrative expenses of $700,000 for accounting fees and other accruals related to the audit of the company's financial statements and the impact of the adjustment related to the restatement and Section 404 work;
  • A $2 million write-off of for research and development work related to the revised valuation of intangible assets; and,
  • An increase of $400,000 and a decrease of $1.8 million in the income tax provision, due to the above adjustments.

The full details are included in the company's annual report, which was filed March 31.As previously announced, with the restatement complete, Epicor said that it expects its revenues for 2006 to be in the range of $372 to $377 million, shaving expected earnings per share by a penny.

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