Smart Choice Automotive Group, Inc. Withdraws 1998 Earnings Report
26 February 1999
Smart Choice Automotive Group, Inc. Withdraws 1998 Earnings Report
TITUSVILLE, Fla.--Feb. 26, 1999--Smart Choice Automotive Group, Inc. , a leading consolidator in the "dealer-financed" used car retailing industry in Florida, announced 1998 net income of $4,611,523 or $.68 per diluted share. The company has determined that the net income announced on February 10 was likely overstated in a material, presently undetermined, amount.Preliminarily, the likely overstatement of net income resulted principally from various non-cash related accounting issues including certain accounting adjustments made in connection with the company's decision to sell its new car operations and Eckler Industries business segments within the near future and the recognition of $1 million of revenues resulting from a Service Protection Plan Agreement entered into by the company in or about January of 1999. These accounting issues primarily relate to the financial data for the fourth quarter of 1998. In connection with the proposed sale of Eckler Industries, the company engaged Stephens, Inc. as its exclusive financial advisor.
The company said that upon discovering the accounting issues for 1998, its Audit Committee engaged Baker & Hostetler as independent counsel, who obtained the assistance of Pricewaterhouse-Coopers, to perform an investigation of the various accounting issues and the circumstances surrounding the above-referenced overstatement. This investigation is substantially complete.
The company said that it would not comment further on this matter until the ongoing investigation and the audit of the financial statements for the year ended December 31, 1998 have been completed and the results presented to its Audit Committee and Board of Directors. The company's February 10th earnings release for 1998 should not be relied upon. Updated information will be provided in the future.
The company also announced that Joseph Mohr, the company's chief financial officer, has resigned from the company as of the date of this announcement to pursue other interests.