By Ed Frauenheim, 4 November 2004 09:23
NEWS
Technology services giant Electronic Data Systems on Wednesday again postponed the release of its third-quarter earnings but confirmed that it will take another charge related to its massive Navy contract.
EDS, which initially delayed its earnings release on 25 October, said the latest delay comes because it and auditor KPMG need time to finish assessing "the timing and amount of the (charge)".
Until the audit committee work is done, KPMG will not be able to complete its interim review of EDS' financial statements for the quarter ended 30 September, EDS said in a statement. "This is not expected to occur by the date EDS is required to file its Form 10-Q for that quarter."
A spokesman for EDS said the company plans to meet its 9 November deadline for filing the quarterly earnings report, even if KPMG hasn't certified it. Alternatively, the spokesman said, if it appears that the audit committee report and KPMG's quarterly review will be done by 15 November, the company may file an extension to the 9 November deadline. It would then submit auditor-certified results by 15 November, the spokesman said.
Wednesday's delay amounts to another setback for EDS, which has struggled for some time, with problems including a probe by the US Securities and Exchange Commission and troubled contracts. The 119,000-employee company also plans to trim 15,000 to 20,000 jobs during the next two years or so.
EDS' multibillion-dollar deal to upgrade computer and communications systems for the US Navy has incurred about $2bn in operating losses since it began in 2000. Earlier this year, EDS wrote down $559m related to the contract because it decided it would not recoup that cost through the contract.
The contract was also at the heart of the earnings announcement delay last week. EDS said more time was needed for it and KPMG to assess whether an asset impairment charge related to the contract was in order.
On Wednesday, EDS confirmed that it would take another charge, but said it is evaluating "the timing and amount of the write-down".
EDS said resolving the issues related to the bonus plan accruals "could result in revisions to quarterly financial statements within 2003". But the company said it "does not believe these issues will affect its reported financial results for that full year".
EDS also said it "believes the accounting issues will be resolved expeditiously without impact to its business and will not affect the strong improvement under way".
Ed Frauenheim writes for CNET News.com.
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