Accounting Glitch Hits United Auto Earnings - TheStreet

Accounting Glitch Hits United Auto Earnings

Earnings are flat despite a 19% increase in revenue.
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United Auto

(UAG) - Get Report

posted flat second-quarter earnings despite a 19% year-over-year jump in revenue. The company blamed a charge related to a newly discovered accounting gaffe.

The Bloomfield, Mich., automotive specialty retailer earned $23.9 million, or 58 cents a share, in the latest quarter, compared with earnings of $23.9 million, or 56 cents a share, last year. Revenue was $2.25 billion in the latest quarter compared with $1.89 billion last year.

The latest quarter included a charge of $1.9 million, or 5 cents a share, to reserve against $3.1 million in revenue that was "falsely recorded during the 23-month period preceding March 31." The company said the overstatement was discovered during a routine internal audit. The company and its audit committee believe the error to be immaterial.

The snafu clouded over an otherwise solid quarter. United Auto said same-store sales rose 11% in the period at its retail segment, with double-digit growth in used same-store car sales, service and parts sales, and finance and insurance revenue and a 9% jump in same-store new car sales.

The company said the same-store results reflect brand mix, a focus on increasing units in operation, and its capital investment strategy. The company reiterated third-quarter earnings guidance of 58 cents to 62 cents a share and 2003 earnings guidance of $1.96 to $2.06 a share.

Analysts surveyed by Thomson First Call were predicting earnings of 60 cents a share in the quarter and $2.05 a share in the year.