The distributorship said the effect of the correction will increase previously reported earnings before cumulative effect of accounting change and net earnings for the 39 weeks of fiscal 2007 by $15 million and $54.7 million, or 2 cents and 8 cents per diluted share, respectively.
In the first quarter of fiscal 2007, the company explained that it adopted the provisions of FASB Staff Position No. FTB 85-4-1, Accounting for Life Settlement Contracts by Third-Party Investors (FSP FTB 85-4-1), which resulted in a charge to earnings of $39.7 million related to the cumulative effect of the accounting change. In accordance with FSP FTB 85-4-1, the distributorship said it also ceased to recognize adjustments for increases or decreases in the cash surrender values of these policies. It has since been determined that Sysco