BearingPoint expects steep quarterly loss

IT services provider BearingPoint Inc. on Thursday said it expects to post a steep net loss and slight revenue drop in the quarter ended Dec. 31, 2003, compared with the same quarter in 2002.

Reporting preliminary results for the quarter, BearingPoint said it expects a net loss of about $117 million, or $0.60 per share. This compares with net income of $14.5 million, or $0.08 per share which the company reported last year.

The expected net loss includes a variety of one-time charges, such as a $2 million lease and facilities charge, an expected goodwill impairment charge of $120 million and a tax rate of 86 percent, the consulting and systems integration specialist said.

The lease and facilities charge is related to office closings, while the extremely high tax rate is “a bit of an aberration” due to a change in the company’s fiscal year structure and the timing of certain international losses, said spokesman John Schneidawind. For the rest of the year, the company expects to face a tax rate of about 47 percent, he said. Meanwhile, the goodwill impairment charge “has nothing to do with operating performance” and is simply a “resizing of what we have on the balance sheet” the company felt it needed to do as part of its fiscal-year format change, he said.

Earlier this month, BearingPoint, based in McLean, Virginia, announced its intention to change its fiscal year structure to have it end on Dec. 31 instead of June 30. On Thursday, the company refrained from identifying the quarter ended on Dec. 31, 2003 because it is in the process of changing the fiscal year structure. Under the old structure, the quarter would have been its second fiscal quarter. As part of the transition, it will be considered the final quarter of a 6-month fiscal year, he said.

Excluding one-time charges, the company’s estimated net income would have been $11 million, or $0.06 per share, Schneidawind said, meeting the consensus expectation of analysts polled by Thomson First Call.

Revenue is expected to come in at $792 million, a 2 percent drop compared with the quarter ended Dec. 31, 2002, but exceeding the company’s previously stated guidance of $730 million to $760 million, Schneidawind said.

BearingPoint expects to release a final earnings report for the six-month period ended Dec. 31, 2003 on or around April 16, 2004.

In August 2003, BearingPoint announced layoffs and a significant earnings restatement when it issued its fourth quarter financial report, in which it also missed expectations. At the time, the company adjusted its accounting and erased from the books almost 25 percent of the net income it had reported in the fiscal year’s first three quarters, from $44 million to $33.2 million. The restatement shaved $0.05 per share from the company’s first three quarters, to $0.19. The company also announced layoffs of between 250 and 275 staffers, from a total then of about 16,000.