EasyLink Determines Prior Period Items; Corrections Expected to Result in $0.2 Million Increase in Net Income for 2004 and $0.4
November 09 2005 - 4:30PM
Business Wire
Nasdaq Panel Grants EasyLink Extension of Time to Cure Filing
Deficiency EasyLink Services Corporation (NASDAQ: EASYE), a leading
global provider of services that power the exchange of information
between enterprises, their trading communities and their customers,
today announced that it has completed its determination of
previously announced prior period corrections. The Company has
determined that the impact of these items is to increase net income
for the year ending December 31, 2004 by approximately $0.2 million
and to increase the net loss for the quarter ending March 31, 2005
by approximately $0.4 million. The Company estimates that these
adjustments will also result in a cumulative net decrease in
stockholders' equity of approximately $0.4 million through March
31, 2005. The Company will restate its financial statements for the
fiscal year ended December 31, 2004 and the quarter ended March 31,
2005 to reflect these adjustments. The amendments to the Company's
financial statements to effect the restatements are subject to the
review and approval of the Company's former independent registered
public accountants. Such revision may result in changes to the
Company's determination and/or the identification of additional
adjustments. EasyLink previously announced that on August 3, 2005
it had retained Grant Thornton LLP as its independent registered
public accountants. In connection with its review of the Company's
financial results for the quarter ending June 30, 2005, Grant
Thornton identified certain items related to prior periods that it
indicated may need to be adjusted to enable it to complete its
review. The Company also announced that any adjustment in prior
period accounts, however, would require the review and concurrence
of KPMG LLP, the Company's former independent registered public
accountants, and that it would be unable to announce its 2nd
quarter earnings and to file its Quarterly Report on Form 10-Q
until these adjustments are satisfactorily resolved. The Company is
preparing the amendments to its Annual Report on Form 10-K for the
year ended December 31, 2004 and its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2005 reflecting the adjustments
and, subject to completion of the review and approval by its former
independent registered public accountants, intends to file the
amendments within the next two weeks. The Company intends to file
its Quarterly Reports on Form 10-Q for the second quarter ended
June 30, 2005 and the third quarter ended September 30, 2005,
subject to completion of the review and approval of its current
independent registered public accountants, by the end of November
2005. On September 29, 2005, the Company appeared before a Nasdaq
Listing Qualifications Panel to request an extension of time to
file its Quarterly Reports on Form 10-Q for the quarters ended June
30, 2005 and September 30, 2005. On November 7, 2005, the Company
received notice that the Panel granted the Company's request for an
extension until December 19, 2005 to file these reports. In
addition to the filing requirement, the Company must regain
compliance with the $1 minimum bid price requirement by February
21, 2006 and the Company's Form 10-Q for the quarter ended
September 30, 2005 and Form 10-K for the year ended December 31,
2005 must report stockholders' equity of at least $10 million.
About EasyLink Services Corporation EasyLink Services Corporation
(NASDAQ: EASYE), headquartered in Piscataway, New Jersey, is a
leading global provider of outsourced business process automation
services that enable medium and large enterprises, including 60 of
the Fortune 100, to improve productivity and competitiveness by
transforming manual and paper-based business processes into
efficient electronic business processes. EasyLink is integral to
the movement of information, money, materials, products, and people
in the global economy, dramatically improving the flow of data and
documents for mission-critical business processes such as client
communications via invoices, statements and confirmations,
insurance claims, purchasing, shipping and payments. Driven by the
discipline of Six Sigma Quality, EasyLink helps companies become
more competitive by providing the most secure, efficient, reliable,
and flexible means of conducting business electronically. For more
information, please visit www.EasyLink.com. This news release may
contain statements of a forward-looking nature relating to future
events or financial results of EasyLink Services Corporation.
Investors are cautioned that such statements are only predictions
and actual events or results may differ materially. In evaluating
such statements, investors should specifically consider the various
factors that could cause actual events or results to differ
materially from those indicated from such forward-looking
statements. These include: the proposed adjustments to certain
prior period items and the filing of amendments to the Company's
Annual Report on Form 10-K for the year ending December 31, 2005
and the Quarterly Report on Form 10-Q for the quarter ending March
31, 2005 are subject to review and approval by the Company's former
independent public auditors, KPMG LLP, and such review may result
in changes to the Company's estimates and/or the identification of
additional adjustments; the Company's 2nd and 3rd quarter 2005
results and filing of the Company's Quarterly Reports on Form 10Q
for the quarters ending June 30, 2005 and September 30, 2005 are
subject to review by Grant Thornton LLP; the need to raise
additional capital; the ability to service our remaining
indebtedness; the ability to continue as a going concern being
dependent upon the ability to generate sufficient cash flow to meet
our obligations on a timely basis, to obtain additional financing
or refinancing as may be required, and to achieve and maintain
profitable operations; significant leverage; the ability to attract
additional customers or to expand services sold to existing
customers; the ability to successfully implement our business
strategy; significant competition; the risks inherent in
integrating the EasyLink business; and the risk of being delisted
from NASDAQ, including the risk that the Company is unable to
complete the filings of its Quarterly Reports on Form 10-Q for the
2nd and 3rd quarters of 2005 by December 19, 2005, or the risk that
the Company is unable to regain compliance with the $1 minimum bid
price requirement by February 21, 2006. These and other risks and
uncertainties are described in more detail in the Company's filings
with the Securities and Exchange Commission.
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