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Transat AT Inc
Symbol TRZ
Shares Issued 37,727,573
Close 2019-06-27 C$ 13.42
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Transat to restate 2018, Q1 2019, Q2 2019 financials

2019-06-27 09:39 ET - News Release

An anonymous director reports

TRANSAT A.T. INC. ANNOUNCES ITS INTENTION TO RESTATE ITS CONSOLIDATED FINANCIAL STATEMENTS AND ITS MANAGEMENT'S DISCUSSION AND ANALYSIS FOR FISCAL YEAR 2018

Transat A.T. Inc. will need to restate its consolidated financial statements and the management discussion and analysis for the year ended Oct. 31, 2018, as well as the first quarter ended Jan. 31, 2019, and the second quarter ended April 30, 2019.

Management has concluded that a restatement of its consolidated financial statements filed for the aforementioned periods is necessary regarding the carrying amount of the non-controlling interest in the Trafictours Canada Inc. subsidiary.

The carrying value of the non-controlling interest is related to the Trafictours Canada subsidiary and the right of the minority shareholder to require that the corporation purchase the Trafictours Canada shares it holds at a price calculated in accordance with a predetermined formula, subject to adjustment based on the circumstances, payable in cash. The fair value of this option is taken into account in the carrying amount of the non-controlling interest. The difference in this instance results from the use of a formula that differs from the one in the contract for the calculation of the purchase price of the minority interest. As a result, the liability for the non-controlling interest reported under "trade and other payables" in the consolidated statements of financial position is undervalued by $25.9-million, $23.3-million and $20.3-million as at Oct. 31, 2018, Jan. 31, 2019, and April 30, 2019, respectively. These underevaluations have no impact on the consolidated statements of income (loss) for the aforementioned periods as such adjustments are recorded as equity transactions in the retained earnings.

The corporation intends to restate its previously filed consolidated financial statements for the year ended Oct. 31, 2018, including all related notes. The preliminary impact of the aforementioned corrections on the consolidated financial statements of Transat for the relevant periods is as shown in the associated tables.

                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
                       FOR THE YEAR ENDED OCT. 31, 2018 
                           (in thousands of dollars)

Line item                     As reported         Adjustment          Restated   
                                                                    (unaudited)
Liabilities                                                                                                       
Trade and other payables        $ 294,021           $ 25,900         $ 319,921
Current liabilities               835,848             25,900           861,748
Equity                            599,374            (25,900)          573,474

                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
                      FOR THE QUARTER ENDED JAN. 31, 2019 
                           (in thousands of dollars)

Line item                     As reported         Adjustment          Restated   
                                                                    (unaudited)
Liabilities                                                                                                          
Trade and other payables       $  329,275           $ 23,290        $  352,565
Current liabilities             1,122,070             23,290         1,145,360
Equity                            552,475            (23,290)          529,185

                 CONSOLIDATED STATEMENTS OF FINANCIAL POSITION 
                      FOR THE QUARTER ENDED APRIL 31, 2019 
                           (in thousands of dollars)

Line item                     As reported         Adjustment          Restated   
                                                                    (unaudited)
Liabilities                                                                                                        
Trade and other payables       $  343,418           $ 20,251        $  363,669
Current liabilities             1,000,084             20,251         1,020,335
Equity                            557,578            (20,251)          537,327

Management has concluded that this difference requires a restatement of the related consolidated financial statements. Accordingly, the corporation plans on filing restated financial statements for the aforementioned periods over the next few weeks to reflect the corrections indicated herein, once its external auditor has completed the required audit procedures in connection with the preparation of such restated financial statements. The adjustments set forth herein remain preliminary and could change as a result of additional work performed in connection with the preparation of the restated financial statements.

This corporation's consolidated financial statements prior to Oct. 31, 2017, also contain the same undervaluation affecting the non-controlling interest for its Trafictours Canada subsidiary. However, the corporation believes that it is not necessary to present corrected amounts for these prior periods given the corrections made with respect to the last two fiscal years and the quarters ended in the current 2019 fiscal year.

We seek Safe Harbor.

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