EA reports restated earnings

Ex-employee booked `fictitious revenue'


June 17, 2000|By Amanda J. Crawford | Amanda J. Crawford,SUN STAFF

Citing a former employee who booked "fictitious revenue," EA Engineering, Science and Technology Inc. said yesterday that its cumulative loss for 1998 and 1999 was $901,700 more than originally reported.

The Hunt Valley environmental and safety consulting firm said the bulk of the inaccuracies were recorded in 1998.

Company spokeswoman Melissa L. Kunkel said the individual is "no longer employed by or associated with the company" but would not say whether that person was fired as a result of the inaccuracies. Company management discovered the mistakes during a "routine review of balance sheet accounts," she said.

Kunkel declined to say whether the company would pursue legal action against the former employee.

The company filed the restatements late Thursday with the Securities and Exchange Commission.

The restated loss for fiscal year 1999 totaled $1.53 million, or 24 cents per diluted share, vs. the originally reported loss of $1.47 million, or 23 cents per diluted share.

The adjustment for fiscal year 1998 was more substantial, changing the reported net income of $604,800, or 10 cents per diluted share, to a net loss of $240,100 or 4 cents per diluted share.

"It's been a frustrating time for the company and the shareholders," Kunkel said. "With the restatements complete, we look forward to putting this matter behind us and concentrating on the company's current and future operations."

Kunkel said the company has received several new contracts in the government and private sectors and has seen growth in several of its regional operations.

"With the new contracts and growth, we are on sound footing," she said.

David D. Weaver, an analyst with Legg Mason Wood Walker, said, "Things look pretty good for the company.

"The key is that this is behind them and now they can concentrate on the opportunities they have," he said. "They got new management last year and have refocused on the core consulting business they have done in the past."

Weaver predicted that the company will post 13 percent revenue growth this year to about 14 cents per share.

Shares of the company were unchanged at 75 cents yesterday on the Nasdaq stock market.

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