The 10-K:
sec.gov
More details:
Restating Earnings, Groupon Discloses Accounting Issues
By MICHAEL J. DE LA MERCED
DealBook
New York Times
March 30, 2012, 5:55 pm
Groupon restated its fourth-quarter earnings on Friday, widening its loss to $64.9 million after disclosing material weaknesses in its internal accounting controls.
The online coupon company said that its net loss grew in the quarter by $22.6 million, as the company recorded a reduction in revenue and a rise in its operating loss. It also included a disclosure of a material weakness in its annual report.
It is the latest blow to Groupon tied to its accounting, after the fast-growing deal site was forced to amend its financial information several times before going public last year.
Driving the recent accounting change was a need to increase the company’s reserves for refunds. The deals site said that it has been adding a number of higher-priced deal offerings, like laser eye surgery, that bore a higher rate of refunds. Depending on whether such refunds fell within 60 days of buying a coupon, the company would record either a reduction in revenue or would take an additional accounting charge.
Groupon said that the incident highlighted serious issues with its accounting controls, reducing the reliability of its financial statements. “We did not maintain effective controls to provide reasonable assurance that accounts were complete and accurate and agreed to detailed support,” the company said in its annual report.
Shares of Groupon were down more than 6 percent in after hours trading.
The issue arose as the company’s auditors at Ernst & Young pored through Groupon’s financial statements for the year.
Groupon sought to assure investors that the problem is contained, saying that other performance measures, like cash flow, remain unchanged. The company also said that it reaffirmed its earnings guidance for the first quarter of this year, including an expectation of $510 to $550 million in revenue and $15 million to $35 million in operating income.
“We remain confident in the fundamentals of our business, as our performance continues to highlight the value that we provide to customers and merchants,” Jason Child, Groupon’s chief financial officer, said in a statement.
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