This excerpt taken from the RBCAA 10-Q filed Jul 14, 2008.
Republic Bancorp, Inc. (the Company) is filing this Amendment No. 1 (the Amended Report) to its Quarterly Report on Form 10-Q/A for its quarterly period ended March 31, 2008, originally filed with the U.S. Securities and Exchange Commission, (SEC), on May 12, 2008 (the Original Filing). The Company hereby amends Item 1. Financial Statements and Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations to reflect a restatement of the financial statements in connection with its miscalculation of product rebate accruals. See Footnote 11 of the restated financial statements for the specific line items restated.
This miscalculation caused an understatement of the previously reported net income for the first quarter ended March 31, 2008 by $2.3 million ($3.6 million pre-tax), or $0.11 per Class A diluted earnings per share. As a result of this miscalculation, interest income on loans, including fees was understated by $373,000 and electronic refund check fees (non interest income) was understated by $3.3 million. Net income as previously reported for the quarter ended March 31, 2008 was $19.8 million and will be restated to $22.1 million.
Subsequent to the filing of the original first quarter 2008 Form 10-Q, management concluded that it had miscalculated the accrual of rebate payments which the Company makes to third party technology and service providers in its Tax Refund Solutions segment. Historically, for every Tax Refund Solutions product for which the applicable taxing authority made a refund payment, the Company paid a rebate to the corresponding technology provider and service provider. With respect to the first quarter 2008 tax season, however, the Company entered into contracts with certain technology providers which did not involve corresponding service providers. Approximately 67% of the miscalculated amount related to accruals the Company mistakenly made for estimated amounts due to both a technology and a service provider, when the Company was contractually obligated to pay only a technology provider. The remaining portion of the miscalculation related to rebate accruals made for originated but unfunded products for which the Company expected to receive refund payments later in 2008 and, to a lesser extent, a duplication of rebate accruals for certain state related products.
In connection with the restatement of the items described above, the Company reevaluated the effectiveness of its internal controls over financial reporting and accordingly, included revised disclosure in this Amended Report under Part I, Item 4, Controls and Procedures.
The Company has not modified or updated disclosures presented in the Original Filing, except as required to reflect the effects of the restatement in this Amended Report. Accordingly, this Amended Report does not reflect events occurring after the Original Filing or modify or update those disclosures affected by subsequent events, except as specifically referenced herein. Information not affected by the restatement is unchanged and reflects the disclosures made at the time of the Original Filing.
For the convenience of the reader, this Amended Report sets forth the Original Filing in its entirety, although the Company is only restating those portions affected by corrected financial information. This Amended Report includes currently-dated certifications from the Companys Chief Executive Officer and Chief Financial Officer, as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002.