Question: A Financial Statement Restatement: Sunbeam (Hard) By the mid-1990s, Sunbeam Corporation, the once celebrated household appliance manufacturer, was reporting lackluster sales and losses. New management, engaged in 1996 to turn the company around, implemented a major restructuring and trumpeted higher sales and profitability. The firm's stock price rose 50 percent over 1997 as results confirmed the predictions. In 1998, the firm restated its annual reports for 1996 and 1997 with the following introduction: Subsequent to the issuance of the Company Consolidated Financial Statements for the fiscal years ended December 28, 1997, and December 29, 1996, it was determined that the reported results generally inflated 1997 results at the expense of 1996 results. The firm's stock price dropped from $50 to $10 after the announcement of the restatement. Part of the restatement had to do with improperly recognized sales. Net sales for 1997 were restated from $1.168 billion down to $1.073 billion but those for 1996 were unchanged. Expenses in both years were affected, however. Exhibits 18.2 and 18.3 are the original and restated cash flow from operations. What were the aspects of the original reports that had to be restated?
