Item 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
In connection with the integration of the dealerships acquired bySonic Automotive Inc. (the "Company") fromRFJ Auto Partners, Inc. onDecember 6, 2021 (the "RFJ Acquisition") and the preparation of the Company's unaudited condensed consolidated financial statements for the quarter endedSeptember 30, 2022 , the Company identified an error in the application of Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, related to principal (gross accounting) versus agent accounting (net accounting) for certain fleet transactions occurring at one (1) of the 33 automotive retail stores acquired in the RFJ Acquisition. It was determined that the Company should have applied net accounting to certain fleet transactions where our previously issued financial statements accounted for the transactions on a gross basis. The result of this error overstated both fleet new vehicle revenues and fleet new vehicle cost of sales along with associated subtotals, in the Company's unaudited condensed consolidated financial statements included in the Company's Quarterly Report on Form 10-Q for the quarters endedMarch 31, 2022 andJune 30, 2022 (the "Affected 10-Qs"). The error did not affect gross profit or net income, or any liquidity measure or the Company's compliance with the financial covenants contained in any of its material debt obligations. Upon an analysis of the identified misstatements and after discussion with the Company's management andKPMG LLP , the Company's independent registered public accounting firm ("KPMG"), onOctober 26, 2022 , the Audit Committee of the Company's Board of Directors (the "Audit Committee") concluded, that the Company's unaudited condensed consolidated financial statements included in the Affected 10-Qs should not be relied upon. Contemporaneously with this Current Report on Form 8-K, the Company intends to restate the unaudited condensed consolidated financial statements included in the Affected 10-Qs for the three months endedMarch 31, 2022 and the three and six months endedJune 30, 2022 , which were initially filed with the Affected 10-Qs, in order to correct the identified misstatements contained therein. The tables below reflect the sections of the Company's unaudited condensed consolidated financial statements that were impacted by the error: Three Months Ended March 31, 2022 (Dollars in millions) As Reported Adjustments As Restated Revenues: Fleet new vehicles$ 148.6 $ (130.4) $ 18.2 Total new vehicles$ 1,499.9 $ (130.4) $ 1,369.5 Total vehicles$ 3,039.5 $ (130.4) $ 2,909.1 Total revenues$ 3,586.6 $ (130.4) $ 3,456.2 Cost of sales: Fleet new vehicles$ (147.8) $ 130.4 $ (17.4) Total new vehicles$ (1,331.4) $ 130.4 $ (1,201.0) Total vehicles$ (2,821.4) $ 130.4 $ (2,691.0) Total cost of sales$ (3,015.3) $ 130.4 $ (2,884.9)
-------------------------------------------------------------------------------- Three Months Ended June 30, 2022 Six Months Ended June 30, 2022 (Dollars in millions) As Reported Adjustments As Restated As Reported Adjustments As Restated Revenues: Fleet new vehicles$ 166.4 $ (146.6) $ 19.8 $ 315.0 $ (277.0) $ 38.0 Total new vehicles$ 1,510.7 $ (146.6) $ 1,364.1 $ 3,010.6 $ (277.0) $ 2,733.6 Total vehicles$ 3,081.5 $ (146.6) $ 2,934.9 $ 6,121.0 $ (277.0) $ 5,844.0 Total revenues$ 3,652.8 $ (146.6) $ 3,506.2 $ 7,239.4 $ (277.0) $ 6,962.4 Cost of sales: Fleet new vehicles$ (165.5) $ 146.6 $ (18.9) $ (313.2) $ 277.0 $ (36.2) Total new vehicles$ (1,341.5) $ 146.6 $ (1,194.9) $ (2,672.8) $ 277.0 $ (2,395.8) Total vehicles$ (2,864.0) $ 146.6 $ (2,717.4) $ (5,685.4) $ 277.0 $ (5,408.4) Total cost of sales$ (3,064.0) $ 146.6 $ (2,917.4) $ (6,079.3) $ 277.0 $ (5,802.3) The Company's management has determined that a material weakness existed in the Company's internal control over financial reporting for the quarters endedMarch 31, 2022 ,June 30, 2022 andSeptember 30, 2022 . Such material weakness and the Company's remediation plan will be described in the Company's Quarterly Report on Form 10-Q for the quarter endedSeptember 30, 2022 .
The Company's management and the Audit Committee have discussed the matters
disclosed in this Item 4.02 with
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