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Press Release
Palm Clarifies Rebate Accounting Described in News Article
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SANTA CLARA, Calif., Feb. 15 /PRNewswire/ -- Palm, Inc. (Nasdaq: PALM),
the world's leading provider of handheld computers, issued a statement today
to clarify the accounting for the rebate program referenced in an online news
article published by the Street.com yesterday. Palm believes the rebate
program discussed in the article was appropriately accounted for in accordance
with applicable accounting guidance, including the Emerging Issues Task Force
(EITF) consensus No. 00-14 published in May 2000, titled "Accounting for
Certain Sales Incentives."
The article published by the Street.com made reference to distributor
rebate programs. Palm records distributor rebates when the related revenues
are recognized. However, the rebate program discussed in this article was not
a distributor rebate program, but rather a coupon offer made available to end
user customers. This offer was made available to customers who purchased the
Palm(TM) IIIxe between Dec. 3, 2000 and Jan. 19, 2001, and who returned the
rebate coupon post marked by Feb. 19, 2001 and received by Feb. 26, 2001.
The accounting guidance for such programs provided by the EITF consensus
No. 00-14 states:
"The Task Force reached a consensus on Issue 1 (1) that for a sales
incentive that will not result in a loss on the sale of a product or service,
a vendor should recognize the 'cost' of the sales incentive at the latter of
the following:
a. The date at which the related revenue is recorded by the vendor
b. The date at which the sales incentive is offered (which would be the
case when the sales incentive offer is made after the vendor has recognized
revenue; for example, when a manufacturer issues coupons offering discounts on
a product that it already has sold to retailers)."
Palm accounted for its Palm IIIxe rebate program by reflecting the
rebate's "cost" at the date that the sales incentive was offered to customers
(which is the latter date described in paragraph b above) in conformity with
the guidance of the EITF.
The Emerging Issues Task Force was formed in 1984 in response to the
recommendations of the Financial Accounting Standards Board's (FASB's) task
force on timely financial reporting guidance and an FASB Invitation to Comment
on those recommendations. Task Force members are drawn primarily from public
accounting firms but also include representatives of large companies and major
associations of preparers, such as the Financial Executives Institute and the
Institute of Management Accountants. The chief accountant of the Securities
and Exchange Commission attends Task Force meetings regularly as an observer
with the privilege of the floor. Timothy S. Lucas, FASB director of research
and technical activities, is chairman of the Task Force.
About Palm, Inc.
Palm, Inc. is a pioneer in the field of mobile and wireless Internet
solutions and a leading provider of handheld computers (source: IDC, December
1999). Based on the Palm OS(R) platform, Palm's handheld solutions allow
people to carry and access their most critical information with them wherever
they go. Palm handhelds address the needs of individuals, enterprises and
educational institutions through thousands of application solutions. The Palm
OS platform is also the foundation for products from Palm's licensees and
strategic partners, such as Franklin Covey, Handspring, IBM, Kyocera, Sony,
Symbol Technologies, and TRG. Platform licensees also include Nokia and
Samsung. The Palm Economy is a growing global community of industry-leading
licensees, world-class OEM customers, and more than 135,000 innovative
developers and solution providers that have registered to develop solutions
based on the Palm OS platform. Palm went public on March 2, 2000. Its stock is
traded on the Nasdaq national market under the symbol PALM. More information
is available at http://www.palm.com.
(1) Issue 1 -- For a sales incentive offered voluntarily by a vendor(2)
and without charge to customers that can be used in, or that becomes
exercisable by a customer as a result of, a single exchange transaction and
that will not result in a loss on the sale of a product or service, when to
recognize and how to measure the cost of the sales incentive
(2) For purposes of this Issue, the term vendor includes a manufacturer
that sells its products to retailers or other distributors.
NOTE: Palm OS is a registered trademark and Palm is a trademark of Palm,
Inc. or its subsidiaries.
SOURCE Palm, Inc.
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