We just received word from Jonathan, there will be no July shutdown this coming year. Getting work done is again more important than accounting!
For the last several years, Sun has shutdown the first week in July with the employees taking mandatory vacation time. This was largely due to the accounting practices of GAAP which accounts outstanding unused vacation time against the companies accounts payable. Now, the actual payment of salaries comes out of the operating budget and is reflected in that section, but since in principle the unused vacation time is a liability the total is deducted from your bottom line. The actual outlay is constant of course, because everybody gets paid for 52 weeks every year out of the operating budget either working or taking vacation time. But by forcing all the employees to take the vacation time it helps the bottom line on paper by reducing the accounts payable.
Now this is all on paper, but there are some real benefits shutting the whole company down. You can forgo heating and electricity consumption and maintenance for the week. But since the company cannot really completely shutdown, the potential benefits are not as great as they might be. On the other hand, you definitely get one week of lost productivity.
For the last several years, Sun has been described as “beleaguered” and “struggling” and Sun’s bottom line has mostly been red. In the grand scheme of things, the amount of loss we had per share each year was more important than the lost productivity, hence the forced vacation.
Well, no more. That lost week is now more important to us because of lost revenues, lost opportunities and lost time to market. Accounting fictions are now a thing of the past. Back to reality!