EA Engineering to restate earnings as result of audit

Work done but not billed was counted as revenue

April 11, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

EA Engineering, Science and Technology Inc. said yesterday that a new audit of its 1998 and 1999 financial statements has confirmed suspected inaccuracies that will result in the Hunt Valley company reducing its earnings by a total of $1.4 million, or 14 cents a share, on a pretax basis for those years.

Company spokeswoman Melissa L. Kunkel said an audit by EA's new accounting firm, PricewaterhouseCoopers, confirmed the suspected "irregularities" that an internal review of the company's books uncovered this year.

The chief error in the prior year's statements: Work that EA had not sent billings out for was counted incorrectly as revenue, she said.

Kunkel said the energy and environmental consulting company planned to issue restated earnings for 1998 and 1999 with its fiscal third-quarter earnings. That quarter ends May 31 for the company.

The company said it would file the restatements with the Securities and Exchange Commission no later than July 15.

EA said yesterday that its former auditors, Arthur Andersen LLP, notified it by letter Friday that its fiscal 1998 and 1999 audits of the company's finances "should no longer be relied upon." The letter was in response to questions EA management raised about the statements, Kunkel said.

PricewaterhouseCoopers replaced Arthur Andersen at the end of EA's fiscal year, Aug. 31.

EA, whose chief customer is the federal government, reported a net loss of $1.5 million, or 23 cents per diluted share, on revenue of $34.2 million in 1999. In 1998, the company booked a profit of $605,000 or 10 cents per diluted share, on revenue of $36.7 million.

Shares in the company dropped 14 percent yesterday to close at $1.125, down 18.75 cents.

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