DALLAS, Jan. 18 /PRNewswire-FirstCall/ -- SOURCECORP, Incorporated
(Nasdaq: SRCPE) today provided an update on matters relating to the internal
investigation it announced October 27, 2004, which is focused on one of the
Company's operating subsidiaries in the Information Management Division of the
Company's Information Management and Distribution reportable segment. The
operating subsidiary that is the subject of this investigation represented
approximately 8% and 18% of the Company's previously reported 2003 revenues
and earnings, respectively, from continuing operations (before giving effect
to any necessary adjustments in connection with the Company's pending
restatement of its 2003 and 2004 financial results).
The Company initially self-reported the restatement issues to, and is
cooperating with, the staff of the enforcement division of the Securities and
Exchange Commission (the "SEC") and is providing the SEC with periodic updates
as to the progress of the Company's internal investigation. On January 14,
2005, the Company received written confirmation that the previously announced
informal SEC inquiry in connection with these issues has been converted into a
formal investigation by the SEC. The Company intends to continue to cooperate
with the SEC in connection with the investigation.
On November 16, 2004, the Company announced the receipt of a Nasdaq Staff
Determination letter, which indicated that the Company's stock was subject to
delisting from The Nasdaq Stock Market for failure to timely file the
Company's Quarterly Report on Form 10-Q for the quarter ended September 30,
2004. The Company appeared before the Nasdaq Listing Qualifications Panel on
December 15, 2004, at which time the Company formally requested an exception
to the Nasdaq listing requirement concerning filing public reports (the
"Requested Exception") to permit the Company to file the required quarterly
report and file any required restatements without being delisted. By letter
dated January 12, 2005, the Company received the determination of the Nasdaq
Listing Qualifications Panel (the "Panel") granting the Requested Exception
through February 15, 2005, subject to a variety of conditions, including that
the Company file its third quarter 2004 quarterly report and all required
restatements by such date, that the Company provide certain requested
information by January 25, 2005, and that the Company timely file all other
periodic reports for all reporting periods ending on or before December 31,
2005. In its determination, the Panel reserved the right to reconsider the
terms of its exception. The Nasdaq Listing and Hearing Review Council may, on
its own motion, determine to review any Panel decision within 45 calendar days
after issuance of the decision. Assuming there is no such reconsideration or
review, the Company's stock will not be delisted for failure to timely file
the required third quarter 2004 quarterly report provided that the Company
meets the required conditions noted above. Although the Company is attempting
to resolve all pending restatement issues in a timely manner, since the
Company's related internal investigation is still ongoing, the Company cannot
predict with certainty whether it will be able to meet the Panel's required
filing deadline.
The Company further announced that a purported stockholder derivative
action was filed against certain of its current and former officers and
directors as individual defendants and the Company as a nominal defendant in
the 116th District Court for Dallas County, Texas. The purported stockholder
derivative action alleges breach of fiduciary duty, abuse of control, gross
mismanagement, waste of assets, and unjust enrichment related to the Company's
press release dated October 27, 2004, in which the Company disclosed that its
2003 and 2004 financial statements should no longer be relied upon and also
provided updated financial guidance. All of these claims are asserted
derivatively on behalf of the Company.
The Company also announced that the Chairman of the Company's Board
received from a purported shareholder a demand letter based on the same set of
facts as the derivative claims.
About SOURCECORP(R)
SOURCECORP, Incorporated provides business process outsourcing solutions
and specialized high value consulting services to clients throughout the
U.S. SOURCECORP focuses on business processes in information-intensive
industries including healthcare, legal, financial services, government and
transportation & logistics. Headquartered in Dallas, the Company serves
clients throughout the United States through a network of locations in the
U.S., Mexico and India.
SOURCECORP is a component of both the S&P SmallCap 600 Index and the
Russell 2000 Index. The Company has been cited among the Top 100 Hot Growth
Companies by BusinessWeek magazine. SOURCECORP has also been recognized twice
by Forbes magazine as one of the 200 Best Small Companies, based on return
equity, sales growth, and EPS growth, and by FORTUNE magazine as one of
America's 100 Fastest Growing Public Companies. For more information
about SOURCECORP's solutions, including case-study examples, visit
the SOURCECORP website at http://www.sourcecorp.com
The statements in this press release, which are not historical fact, are
forward-looking statements that involve risks and uncertainties, which could
cause actual results to differ materially from such forward-looking
statements. These forward-looking statements include, but are not limited to,
any financial estimates, projections, and estimates of future contract values
included in this press release. The aforementioned risks and uncertainties
include, without limitation, the risks of integrating our operating companies,
of the timing and magnitude of technological advances, of the occurrences of a
diminution in our existing customers' needs for our services, of a change in
the amount companies outsource business processes, of the impact to margins
resulting from a change in revenue mix as well as the risks detailed
in SOURCECORP's filings with the Securities and Exchange Commission, including
without limitation, those detailed under the heading "Risk Factors" in the
Company's most recent annual report on Form 10-K. SOURCECORP disclaims any
intention or obligation to revise any forward-looking statements, including
financial estimates, whether as a result of new information, future events, or
otherwise, except as required by law.
SOURCE SOURCECORP
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Related links:
http://www.sourcecorp.com
CONTACT:
Chuck S. Gilbert, Sr. VP, General Counsel and
Secretary of SOURCECORP, +1-214-740-6598, or
chuckgilbert@srcp.com
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