ASENSIO & CO.: ABLE'S ACCOUNTING FRAUD FULLY EXPOSED NEW YORK, Feb. 26 /PRNewswire/ -- The following is being issued by Asensio
& Company, a member of the National Association of Securities Dealers,
CRD number 31742:
Able Telcom Holding Corp.'s (Nasdaq: ABTEE) Form 10K included a financial
statement showing net income of $2.5 million, operating cash flow of
$6.9 million and shareholders' equity of $40.2 million. These figures were
created using a large series of extraordinary accounting entries. In fact,
adjusted to exclude only some of these obfuscating non-cash, non-operating
entries, Able's actual results were a net loss of $12.8 million, negative
operating cash flow of $8.4 million and shareholders' equity of $15.3 million.
These figures do not include any reduction to Able's $29 million in estimated,
non-cash, unearned income currently included in net income or any adjustment
to the $31 million in goodwill. They also do not include Able's $10 million
incurred and unrealized loss on the MCI/WorldCom, Inc. refinancing, which Able
expects to recognize in the first quarter.
Able restated its MFS acquisition in the fourth quarter, changing a
previously reported negative goodwill of $50.7 million to a positive goodwill
of $16.5 million, which was created by a $67.2 million unexplained,
undisclosed adjustment. A large portion of this adjustment was used to create
a reserve for losses on uncompleted contracts of $40.5 million. This
so-called reserve was created by inflating the value of acquired assets, not
by charging earnings. Able then used $15.1 million of this artificially
created reserve to increase its reported earnings without disclosure. This
single non-cash, non-operating, non-recurring accounting income entry alone is
6 times greater than Able's reported net income. In the fourth quarter, Able
also added $12.1 million of non-cash entries based on the alleged value of
granted options directly to shareholders' equity and $17.3 million in
goodwill. These entries render Able's stated earnings and cash flow useless
to pay debt and expenses. As a result, Able's accounts payable increased
$32.2 million, from $29.2 million to $61.4 million, in its fourth quarter.
Total liabilities, excluding the new MCI/WorldCom debt and the preferred, rose
$54.4 million in the same quarter to $239.2 million.
Able's unadjusted net tangible assets are a mere $8.8 million, even before
the elimination of any of the above referred to non-cash entries. This
shareholder equity base is absolutely insufficient to support Able's
announced and expected minimum $13.3 million first quarter loss. The terms
of MCI/WorldCom's security agreements, notes, master service agreement, and
stock appreciation rights have been disclosed. These documents clearly
establish that MCI/WorldCom's interest is to collect its debts and avoid
liability under its existing performance bonds. MCI/WorldCom does not have
to enrich Able's managers or rescue Able's common shareholders to meet
these objectives. Asensio & Company's Able research reports are available at
asensio.com.
SOURCE Asensio & Company, Inc.
-0- 02/26/99
/CONTACT: Manuel Asensio of Asensio & Company, 212-702-8800/
/Web site: asensio.com
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