IMMATERIAL CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS IMMATERIAL CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS

12 Months Ended

Aug. 01, 2020

Accounting Changes and Error Corrections [Abstract]

IMMATERIAL CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS

NOTE 20—IMMATERIAL CORRECTION TO PRIOR PERIOD FINANCIAL STATEMENTS

For certain of the Company’s subsidiaries prior to fiscal 2020, the Company recognized vendor consideration for vendor rebate programs, product defect allowances, slotting fees and similar programs when received in connection with inventory procurement, instead of deferring the recognition of the vendor consideration as a reduction of inventory on its Consolidated Balance Sheets and subsequently recognizing the vendor consideration within Cost of goods sold when the inventory was sold.

The Company considered both the quantitative and qualitative factors within the provisions of SEC Staff Accounting Bulletin No. 99, Materiality, and Staff Accounting Bulletin No. 108, Considering the Effect of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements. Based on evaluation of the misstatements on an individual and aggregate basis, the Company concluded the prior period errors were immaterial to the previously issued consolidated financial statements. As such, the Company has elected to correct the identified error in the prior periods within the current Consolidated Financial Statements. Components of this assessment included that the identified misstatements accumulated over several years and the income statement effect of the correction in any period never materially impacted results of operations.

Previously reported balances were revised for these identified misstatements. The revisions reflect the accounting treatment that would have been in place had the vendor consideration been appropriately deferred against the procured inventory and recognized when the inventory was sold. In doing so, balances in the Consolidated Financial Statements to which this note relates have been adjusted to reflect the correction in the proper periods.

The correction of the error resulted in a decrease to Inventories of $9.0 million in fiscal 2019 and an increase to Deferred income taxes (asset) of $2.4 million in fiscal 2019. This resulted in a decrease to Retained earnings of $6.6 million, $6.9 million and $4.0 million for fiscal 2019, 2018 and 2017, respectively.

The correction of the error resulted in a Cost of sales decrease of $0.4 million and an increase of $2.8 million in fiscal 2019 and 2018, respectively, and an increase to (Benefit) provision for income taxes of $0.1 million and $0.1 million in fiscal 2019 and 2018, respectively.