A Kick in the ACS
We've mentioned a few times that Dallas-based Affiliated Computer Services, Inc., is having some issues--if you consider being investigated by the Securities and Exchange Commission and receiving a grand jury subpoena from the U.S. Attorney for the Southern District of New York issues. Well, on Wednesday ACS will have is fourth-quarter earnings conference call, and the company issued a release this morning that says not only will it not discuss the ongoing investigations into backdating stock, but also the company's earnings results "for both the fourth quarter and total fiscal year 2006 will not take into consideration the resolution of the stock-based compensation charge related to the investigation." That sounds like the corporate world's version of: I'm just sayin'. For what ACS has to say about the investigation, and how it might alter those earning results, check after the jump.
Since it won't be commenting on the investigation on Wednesday, ACS thought it would go ahead and offer comment in advance. So here it is:
"ACS' internal investigation is being conducted under the direction of its Board of Directors utilizing the Company's regular outside legal counsel, which was not involved in the Company's historical stock option grant processes, and specially-engaged outside legal counsel. Members of the ACS Audit Committee have also been monitoring the investigation, and since late July 2006 the Audit Committee has been utilizing its own specially engaged independent outside legal counsel for this purpose. ACS currently believes that its internal investigation should be substantially complete during September 2006.
Following the completion of its internal investigation, ACS intends to announce updated findings there from, including (i) an updated summary of the Company's historical stock option practices, (ii) an updated estimate of the cumulative pretax stock-based compensation charge that will be required as a result of such practices, (iii) whether the updated charge will require the restatement of any prior period financial statements, and (iv) the likely impact of such practices on any related tax deductions previously claimed by the Company. The Company's previously disclosed preliminary findings regarding these matters were set forth in Note 3 to its consolidated financial statements included in its Form 10-Q for the quarterly period ended March 31, 2006. The information set forth in that note, which can no longer be relied upon, will be superceded by the Company's updated announcement. All other portions of that Form 10-Q remain unchanged and continue to be reliable, including the financial statements and other notes thereto included therein which did not give effect to the information set forth in Note 3 due to the preliminary nature thereof."
In other words: What we say Wednesday might not mean so much in a few weeks. But we're not talking about that. Till we have to. --Robert Wilonsky