ACCOUNTING
Project Lightning Redacted.pdf

Wc 08 product warranty methodology change in nov 14

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WC-08 Product warranty methodology change: In Nov-14, the Company adopted a new methodology of measuring product warranty liabilities which resulted in a $1,440 reduction of the warranty accrual. The Company changed its methodology by removing glass claim rates from the general and extended warranties and applying the glass claim rates to Product 1 sales. Please see the Accrued Expenses section for more detail on the Product Warranty calculation. This adjustment removes the $1,440 reduction from the months leading up to Nov-14, resulting in no impact to working capital at the year-end balance sheet date. Please see MA-11 for our adjustment to EBITDA related to product warranties. Adjusting working capital $ in thousands Ref. No. November 29, 2014 November 28, 2015 August 27, 2016 Receivables, gross 35,531 40,919 50,260 Allowance for doubtful accounts (1,077) (855) (923) Inventories, net 16,405 17,710 20,560 Prepaid expenses 952 1,657 1,489 Current assets 51,811 59,431 71,386 Accounts payable 4,038 4,694 4,496 Accrued expenses 23,675 26,023 35,323 Current liabilities 27,713 30,718 39,818 Working capital 24,099 28,713 31,568 Adjustments Acquisition related accruals WC-01 218 191 191 Engineering reserve WC-02 - - 150 Group insurance true-up WC-03 (0) (0) 102 Reserve for AR WC-04 300 226 102 Non-operational receivables WC-05 (20) (145) 81 Bonus and profit sharing expense WC-06 - 347 - Payroll entry correction WC-07 - 6 - Product warranty methodology change WC-08 - - - Workers' compensation normalization WC-09 325 111 (92) Executive profit sharing WC-10 (113) (169) (135) Vacation accruals WC-11 - - (676) Adjusted working capital 24,809 29,279 31,290
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© 2016 Grant Thornton LLP | Project Lightning | October 21, 2016 DRAFT 35 Working capital, continued Working capital Management adjustments WC-09 Workers' compensation normalization: Due to the limited history of standalone Subsidiary incident and injury rates under Target Co. ownership, the Company utilized blended rates from Target Co. and Subsidiary to estimate workers compensation liabilities during this Historical Period. Since Subsidiary experienced a higher incident and claim rates than Target Co., the required accrual built throughout the Historical Period. The table below presents the impact to working capital if Subsidiary utilized full Subsidiary rates in estimating the workers compensation liability during the Historical Period. Please see MA-01 for further detail. WC-10 Target Co. paid employee profit sharing plan: Subsidiary 's profit sharing plan for Target Co. paid employees is recorded and paid directly through Target Co.. This adjustment layers the related accruals into working capital on a pro-rata basis during the Historical Period. Please see executive profit sharing under MA-05 for further detail. $ in thousands November 29, 2014 November 28, 2015 August 27, 2016 Accrued workers compensation 975 1,512 1,862 Working capital adjustment 325 111 (92) Adjusted workers comp liability 1,300 1,623 1,770 Adjusting working capital $ in thousands Ref. No.
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  • Spring '08
  • McCaffrey
  • Revenue, Grant Thornton LLP

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