Why were the 2023 financial statements for Sonesta Simply Suites restated?
Sonesta_Simply_Suites Franchise · 2025 FDDAnswer from 2025 FDD Document
nd, subsequently, consideration totaling $87.9 million was transferred from Sonesta to RLHC shareholders.
2. Restatement of Previously Issued Financial Statements
The financial statements for the year ended December 31, 2023 have been restated to correct errors within the statement of cash flows. In connection with the preparation of our 2024 financial statements, we detected that key money disbursements of $9,598 were not correctly presented in the 2023 statement of cash flows. In the previously issued financial statements, such disbursements were erroneously presented as investing cash outflows, and the 2023 statement of cash flows has been restated to correctly present these disbursements as operating cash outflows, within changes in other long-term assets.
In addition, during the preparation of the 2024 financial statements, we detected that cash transfers for centralized cash management of $38,264 were not correctly presented in the 2023 statement of cash flows. This resulted in an overstatement of cash provided by financing activities of $38,264 and an understatement of cash provided by investing activities of $38,264. The 2023 statement of cash flows has been restated to correctly present these cash transfers as investing cash inflows.
These misstatements did not have any impact on the Company's net income, balance sheet,
Source: Item 21 — FINANCIAL STATEMENTS (FDD page 79)
What This Means (2025 FDD)
According to Sonesta Simply Suites's 2025 Franchise Disclosure Document, the financial statements for the year ended December 31, 2023, were restated to correct errors within the statement of cash flows. Specifically, key money disbursements of $9,598 were not correctly presented. These disbursements were initially and incorrectly shown as investing cash outflows but were restated to be correctly presented as operating cash outflows, within changes in other long-term assets.
Additionally, cash transfers for centralized cash management of $38,264 were incorrectly presented in the 2023 statement of cash flows. This resulted in an overstatement of cash provided by financing activities of $38,264 and an understatement of cash provided by investing activities of the same amount. The restatement corrected these cash transfers to be shown as investing cash inflows.
The FDD clarifies that these misstatements did not affect the company's net income, balance sheet, or statement of shareholders' equity. The restatements only impacted the presentation of cash flows as of December 31, 2023. This type of restatement is not uncommon, and the independent auditor's report indicates that their opinion on the financial statements is not modified as a result of this restatement.