Ailing supply chain management applications vendor i2 Technologies Inc. has at last completed an arduous reaudit of its quarterly and annual finances for the last four years -- a move that may allow it to comply with financial regulations and seek relisting on the Nasdaq Stock Market.
The Dallas-based company had been forced to reaudit its revenue after former executives claimed there were accounting irregularities, triggering a U.S. Securities and Exchange Commission probe. While the reaudit process continued, i2 was unable to comply with reporting regulations, leading to its delisting by Nasdaq in May. That further put a brake on sales among potential customers as they awaited the final outcome.
On Monday, however, the firm released a restatement of its revenue, with the final tally considerably out of line with what it originally had reported: Cumulative revenue from 1999 through 2002 was down by US$359.7 million. That number included US$127.3 million in revenue that was reversed, and US$232 million that has been deferred but may be recognized in the future, i2 explained.
I2 CEO and Chairman Sanjiv Sidhu said the variation in the numbers had to do with how software revenue is recognized. He also said in an interview that the company's $441 million in cash won't be affected. "Surely, the audit was no fun for us or our customers, and our customers were asked a lot of questions internally by their own people...," he said. "The main message is the company has been around 15 years and we understand SCM better than anyone."
He said the company has been strengthened by the reaudit process. And in August, Sidhu plans to hold a hearing with Nasdaq for possible relisting.
"For many of us, it's pretty exciting to have the reaudit behind us," said Sidhu. "We're keen to demonstrate what we talked about at the i2 Planet (user convention), the concept of next generation of supply chain management solutions."
Although the reaudit is complete, i2 said the SEC investigation is ongoing.
"It is common for companies undergoing reaudit and restatement to have this happen," a spokeswoman said. "And i2 is cooperating fully with the investigation."
I2 also reported earnings of US$41 million for the first quarter of 2003, up from a loss of US$12 million in the same quarter in 2002. It also gave a preliminary estimate for the second quarter, saying it would report break-even results to a loss of 2 cents per share.
"Customers have continued to show support for i2 and interest in our next-generation closed-loop supply chain management solutions and services in the past two quarters," Sidhu said in a statement. "For 15 years, we have been providing leading supply chain management solutions to businesses around the world. ... We look forward to building on that heritage and helping customers solve their most difficult business problems."