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ACCOUNTING CHANGE FOR SHIPPING AND HANDLING COSTS
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Dec. 31, 2012
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| ACCOUNTING CHANGE FOR SHIPPING AND HANDLING COSTS |
NOTE 2: ACCOUNTING CHANGE FOR SHIPPING AND HANDLING COSTS
During the year ended December 31, 2012, the Company changed its method of accounting to present shipping and handling costs related to the sale of the Company’s products together with the cost of sales in the consolidated statement of operations. These shipping and handling costs have previously been presented by the Company as part of selling, general and administrative expenses. This change has been made retrospectively to all periods presented in the Company’s financial statements. In connection with the change in presentation, the Company also changed its definition of shipping and handling costs to include expenses of our distribution facilities to prepare products for shipment. Previously, the Company defined shipping and handling costs as costs incurred for a third-party shipper to transport products to the customer. The amount of shipping and handling costs under the previous definition were $12,231, $11,245, and $10,310 for the three years ended December 31, 2012. The amount of additional costs included in shipping and handling costs under the new definition increased the retrospective adjustment for shipping and handling costs by $9,374, $8,754, and $9,914 for the three years ended December 31, 2012. This presentation is preferable as it better matches all the costs directly associated with generating revenue and therefore better presents gross margin, and this financial statement presentation will be more comparable to the Company’s peer group. The only impact on the Company’s financial statements was to increase cost of sales and decrease selling, general, and administrative expenses in the consolidated statement of operations. The impact of this change in accounting principle was to increase cost of sales and decrease selling, general and administrative expenses by $21,605 for the year ended December 31, 2012. The impact of this change in accounting principle on cost of sales and selling, general and administrative expenses for the years ended December 31, 2011 and 2010 was $19,999 and $20,224, respectively.
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