Business Context and Reporting Period
Company: Asbury Automotive Group, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: February 2, 2006 (Event Date: January 27, 2006)
Context: The Company announced a decision to amend and restate its Form 10-K for the fiscal year ended 2004 and Forms 10-Q for the quarters ended March 31, June 30, and September 30, 2005. This action is taken to conform financial statement presentation with Statement of Financial Accounting Standards No. 95 (SFAS No. 95) regarding the Statement of Cash Flows.
Key Financial Metrics
The filing does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. The report focuses on a change in the classification of cash flows and balance sheet presentation rather than reporting new operational results.
- Net Income & EPS: The filing explicitly states the change in presentation has no effect on previously reported net income or earnings per share.
- Stockholders' Equity: No effect on previously reported stockholders' equity.
- Cash Flow Classification: Previously, all cash flows related to floor plan notes payable were reported as operating activities. The restatement will reclassify borrowings and repayments from lenders not affiliated with vehicle manufacturers as financing activities.
Material Changes Versus Prior Period
The material change involves the reclassification of financial data in previously issued statements to align with SFAS No. 95 and industry practices adopted by peers. Specific changes include:
- Balance Sheet: Floor plan notes payable will be separated into two categories: those from lending institutions affiliated with vehicle manufacturers and those from non-affiliated institutions.
- Statement of Cash Flows: Borrowings and repayments from non-affiliated lenders will be moved from operating activities to financing activities, with gross borrowings and gross repayments reflected separately.
- Discontinued Operations: The amendments will also reflect entities that became discontinued operations through September 30, 2005.
Guidance, Outlook, and Risks
Management Commentary: Management and the Audit Committee concluded that the restatement is necessary for conformity with accounting standards. The Audit Committee has discussed these matters with the independent auditors, Deloitte & Touche LLP.
Risks and Contingencies: The primary risk disclosed is the non-reliance on previously issued financial statements and related audit reports. Investors are advised that the Company is still compiling the specific effects of this classification change on the consolidated statements of cash flows and balance sheets.
Unusual Items: The filing notes that certain industry peers have similarly restated their financial statements to conform to SFAS No. 95.
Important Facts for Investor Verification
- Previously issued financial statements (2004 10-K and 2005 10-Qs) should no longer be relied upon.
- The Company plans to file amended and restated financial statements as soon as practicable, which will include a reconciliation of previously reported amounts.
- The restatement does not alter net income, earnings per share, or stockholders' equity figures.
- The change affects the classification of floor plan financing activities between operating and financing cash flows.