Does anyone have any more information on this SourceCorp stuff? You’ve probably read about this as it has unfolded, but it seems that one of its subsidiaries overstated their earnings for a period of time in 2003 and 2004. What makes this intriguing is that apparently this subsidiary was a company SourceCorp had required and its earnouts were based on its revenue. So, the company inflated the revenue and increased their earnout payments. Needless to say, now that all of this has come to light, SourceCorp execs are a bit upset and they are trying to collect like $10 millino worth of earnout payments they’ve made to these guys.
My quesiton is who are these guys? Does anyone know. SourceCorp doesn’t seem to name names in its SEC filings, but I’m sure somewhat out there knows.
To SoruceCorp’s credit, they seem to have handled the whole situation rather well, and here’s hoping they get their money back. Of course, that is assuming they are in the right… Anyways, here’s a link to the transcript of a recent conference call they did discussing their business model and the revenue restatements. Sounds like their going to do pretty well despite the recent financial restatements.
Of course, looking at the history of SourceCorp competitors like Lason and ImageMax, service bureau financial restatements have proven disastrous for service bureaus in the past, but once again to SourceCorp’s credit, it appears they have nipped this thing in the bud early enough, where there won’t be any more ramifications. Also, of course, unlike the Lason problems, which started at the top, these problems appear to be more of a rogue happenstance.