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Read the footnotes and review the Statement of Stockholders Equity for Advanced Drainage Systems. Then answer the following questions.

1. Looking at the footnotes, in your own words, what were the errors that occurred? (3 points)

2. What did the Audit Committee conclude regarding the reliability of the financial statements? (2 points)

3. What did The Company (Advanced Drainage Systems) do about the errors? (2 points)

We dont get to see prior period adjustments very often. Enjoy this. (1 point each)

4. What was the beginning balance in Total Stockholders Equity at April 1, 2012?

5. What was the total amount of the cumulative restatement adjustment (prior period adjustment)?

6. What was the adjusted balance in Total Stockholders Equity at April 1, 2012?

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Amounts in thousands, except per share data) 1. BACKGROUND AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Organization Advanced Drainage Systems, Inc. and subsidiaries (collectively referred to as ADS, the Company, we, us and our), incorporated in Delaware, designs, manufactures and markets high performance thermoplastic corrugated pipe and related water management products, primarily in North and South America and Europe. Our broad product line includes corrugated high density polyethylene (or HDPE) pipe, polypropylene (or PP) pipe and related water management products. Our fiscal year begins on April 1 and ends on March 31. Unless otherwise noted, references to year pertain to our fiscal year. For example, 2015 refers to fiscal 2015, which is the period from April 1, 2014 to March 31, 2015. The Company is managed based primarily on the geographies in which it operates and reports results of operations in two reportable segments. The reportable segments are Domestic and International. 2. RESTATEMENT OF PREVIOUSLY ISSUED FINANCIAL STATEMENTS Background In June of 2015, in connection with the preparation of the Companys consolidated annual financial statements for the fiscal year ended March 31, 2015, certain errors related to the Companys accounting treatment for its transportation and equipment leases and inventory methodology were identified. As the Company completed additional accounting review procedures, it identified additional errors related to long-lived assets, ADS Mexicana and certain other miscellaneous items. Due to these errors, as further described below, and based upon the recommendation of management, the Audit Committee of the Companys Board of Directors (the Audit Committee) determined on August 14, 2015 that the Companys previously issued audited financial statements should no longer be relied upon. As a result of the foregoing the Company has restated its consolidated financial statements for the fiscal years ended March 31, 2014 and 2013, as well as the quarterly periods for the first three quarters of the fiscal year ended March 31, 2015 and for all of the quarterly periods in the fiscal year ended March 31, 2014. The restatement also affects periods prior to fiscal year 2013, with the cumulative effect of the errors reflected as an adjustment to the fiscal year 2013 opening stockholders equity (deficit) balance

ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND MEZZANINE EQUITY Balance ADVANCED DRAINAGE SYSTEMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) AND MEZZANINE EQUITY Balance

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