NEW YORK - Warrantech Corp. has ended a dispute with the Securities and Exchange Commission over when the company should record revenues and expenses.
The Stamford, Conn., marketer and administrator of extended service contracts on autos and consumer electronics has restated two previous years of financial results and changed its accounting policy.
The net effect of the new policy is to spread revenue for some service contracts over the life of the contracts, instead of booking the revenue up front, said CFO Richard Gavino.
Under the restatement, revenue for the fiscal year ended March 31, 1998, was lowered to $111.3 million from $199.7 million. Conversely, net income for that period rose to $5.6 million, from a previously reported $5.3 million.
For the fiscal year ended March 31, 1999, which was not restated, Warrantech reported a net loss of $7.6 million.
The accounting dispute delayed Warrantech's financial report for the fiscal year that ended March 31, 1999. And that caused Warrantech to be delisted by the NASDAQ National Market in September 1999. The company will seek to be relisted after filing its restated results with the SEC this month, Gavino said.
Gavino said the accounting change has most significance for big, publicly traded consumer electronics chains that offer extended service contracts. He said in a phone interview, 'I really don't think this is an issue on the automotive side.'