Oh the dreaded Friday afternoon press release – the place companies go to tell you things they hope you will forget by Monday! Groupon (GRPN) just dropped a nice anvil on investors with a restatement of the previous quarter by 4 cents lower and cites material weakness in its accounting. While this doesn't affect current quarter estimates it's one of those trust issues. This company already had a ton of push-pull with the SEC in their offering documents on how they wanted to report their financials. Looks like they are still working on it.
The stock was up over 3% in normal hours (nearly 7% at peak) and is now down 10%+ in after hours. Well maybe it will be "forgotten" by Monday (not).
- The revisions resulted in a reduction to fourth quarter 2011 revenue of $14.3 million. The revisions also resulted in an increase to fourth quarter operating expenses that reduced operating income by $30.0 million, net income by $22.6 million, and earnings per share by $0.04. Financial results for prior periods, including as of and for the nine months ended September 30, 2011, were not affected by the revisions.
- The revisions are primarily related to an increase to the Company’s refund reserve accrual to reflect a shift in the Company’s fourth quarter deal mix and higher price point offers, which have higher refund rates. The revisions have an impact on both revenue and cost of revenue.
- In conjunction with the completion of the audit of Groupon’s financial statements for the year ended December 31, 2011 by its independent auditor, Ernst & Young LLP, the Company included a statement of a material weakness in its internal controls over its financial statement close process in its Annual Report on Form 10-K for year ended December31, 2011.
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