EA Engineering, Science and Technology Inc. said yesterday that it has found "accounting irregularities" on its books and will have to restate and lower its past earnings by at least $1.4 million, or 14 cents per share.
The Hunt Valley-based environmental and safety consulting firm said it was still investigating the misstatements and has notified officials of the Nasdaq stock market, where EA's shares trade.
EA revealed little about the problem yesterday, saying only that the company had overstated its revenue and will comment further when its investigation is completed.
"Of course, it's something we realize is a serious matter, and we are doing everything we can as quickly as possible to resolve it," said EA spokeswoman Melissa L. Kunkel.
Kunkel said the company would not comment yet on how the glitch was found, when or by whom, or how it was caused.
EA also declined to discuss the precise time frame in which the revenue overstatements took place. If they occurred only in the company's fourth fiscal quarter, for example, they would account for about 15 percent of quarterly sales. If they were spread out over a longer period, their impact on EA's books would be diluted.
"We don't have any idea of the period," said David Weaver, an analyst with Legg Mason Wood Walker Inc. "If it's a five-year period, it's not too severe. If it were over a shorter period, it comprised a larger percentage of earnings. It all depends on that issue."
According to EA's fourth-quarter earnings sheet, it had revenue of $34.2 million in the fiscal year that ended Aug. 31. This was a 6.8 percent drop from the previous year's sales.
The company has experienced some significant changes recently, undergoing the resignation of its chief executive officer and the sale of its EA Laboratories division.
Loren D. Jensen, who founded EA in 1973 and took over the chief executive officer position after the departure of President and CEO Donald A. Drieso, said in April that dwindling government orders had reduced the company's revenue, contributing to "earnings erosion and morale problems within the organization."
EA has 420 employees, about half of whom are in Maryland.
EA's stock closed at $1.125, down 31.25 cents, or 21.7 percent.