Injection molder and thermoformer Solo Cup Co. of Highland Park, Ill., will restate finances for fiscal 2003, 2004, 2005 and the first quarter of 2006.
Officials said the original statements contain errors and investors should not rely on the information. Solo delayed filing its second quarter 10-Q until the review is complete. The company also will restate certain consolidated financial data for 2001 and 2002.
Chief Executive Officer Robert Korzenski and interim Chief Financial Officer Eric Simonsen fielded questions from analysts during a Sept. 20 conference call. The company has set a deadline of Oct. 16 to complete the accounting review, which has been going on for eight weeks. Solo is working with accounting firm KPMG LLP.
``I want to emphasize that the accounting review is still under way,'' Korzenski said. ``As soon as we are in a position to do so, we will fully disclose our findings, file the necessary restatements and talk to you all about both in detail.''
The accounting review has identified errors in the application of certain accounting practices, Korzenski said.
``Primarily, [they're] related to the timely recognition of certain customer credits, accounts payable and accrued expenses, and valuation of certain assets,'' he said. ``As part of our continuing review of these matters, we are investigating whether any of the errors may have resulted from intentional actions and if found, we intend to take any and all appropriate action upon completion of our investigation.''
The amounts of the restatements have not been determined.
Korzenski was named president and chief operating officer in April, and then added CEO to his title in August upon the resignation of Robert Hulseman, who stayed on as chairman of the board. Chief Financial Officer Susan Marks resigned in July. Earlier this year, President and Chief Operating Officer Ronald Whaley also resigned.
Officials said there is no connection between the departure of the president and CFO earlier this year and the accounting review.
``These individuals resigned before the accounting review began,'' Korzenksi said.
Some analysts during the call expressed concern at Solo's aggressive deadline, but Solo officials said they are confident they will meet the timeframe. Analysts also asked if there was potential criminal activity involved, but Korzenski said: ``Based on what we know at this point in time, the answer is no.''
In April, Solo laid off 400 workers to improve cash flow. Officials were vague about the state of the company's operations in the call, which stood out to one analyst.
``There was a lack of disclosure on how things are going right now,'' said Shawn Paydar, a debt analyst with Fitch Ratings based in New York. ``Investors want to know. You only got vague answers. That was a little light.''
Still, Paydar said two items stood out as positive.
``This is not criminal so far and there's no impact to cash flow,'' he said. Solo is getting cooperation from its bondholders. As for the deadline, Paydar said he believes Oct. 16 is realistic.
Officials said Solo has $63 million of cash availability today.