Foothill Ranch-based sunglasses maker Oakley Inc. plans to restate five years of results and reduced its guidance for 2006 after changing the way it accounts for hedging against currency exchange rates.
Oakley plans to restate results for 2000 to 2005 to bring them in line with an accounting standard for handling derivative and hedging investments, the company said.
Like other companies, Oakley uses hedge instruments to smooth out fluctuations in foreign currency, which could cause big swings in sales and profits.
The restatment will lower profits for some periods and raise them for others, said Richard Shields, Oakley’s chief financial officer.
The accounting change also prompted Oakley to change its guidance for 2006. Last month, the company said it could earn $50 million, on par with 2005 after stock compensation expenses.
Along with taxes, the hedge accounting change could bring earnings to $47 million for the year, Oakley said.
Wall Street shook off the news. Oakley’s shares were down slightly in trading Friday. The company, which makes sunglasses and clothes, has yearly sales of about $700 million.
Oakley’s market value is about $1 billion.
