Ajay, you were right: 8/16/98 WSJ Online: Vesta Insurance Group Expects Second-Quarter Loss of $14 Million
Dow Jones Newswires
BIRMINGHAM, Ala. -- Vesta Insurance Group Inc. said Friday it
expects to report a second-quarter net loss of about $14 million. An
internal investigation completed in June identified improper accounting
entries that caused earnings to be overstated.
The property and casualty insurance company blames the expected loss
on a high level of catastrophe losses in the second quarter ended June 30
and to costs related to its $238 million acquisition last year of Shelby
Insurance Cos.
The Birmingham, Ala., company said it will also restate its financial results
for the year-ago second quarter due to an accounting error and will
release the results next week. It filed with the Securities and Exchange
Commission for a five-day extension to submit its Form 10-Q for
reporting second-quarter earnings. The company also hired a financial
advisor to suggest ways to boost shareholder value.
For the year-ago second quarter, the company reported net income of
$15.5 million, or 81 cents a share, on revenue of $140.8 million.
Also, the company said its banks agreed to amend certain provisions in its
loan agreements and waive any defaults so that it will continue to comply
with its loan agreements.
In June, the company launched a probe of accounting irregularities and its
chief executive officer, Robert Y. Huffman, resigned. At the time, the
company said it would restate earnings for 1993 through this year's first
quarter, lowering net income for the entire span by a total of $72.4 million.
An investigation by the New York law firm of Shereff, Friedman, Hoffman
& Goodman LLP recognized the improper accounting entries that caused
earnings to be overstated, most of which occurred in late 1997 and early
1998. The company also adopted more conservative accounting
procedures.
Shares of Vesta rose $2.125, or 16%, to close at $15.625 on the New
York Stock Exchange. |
