The Securities and Exchange Commission is informally investigating Chatsworth, Calif.-based COHR, an equipment maintenance firm, according to the company.
The once high-flying COHR, which has been buffeted by earnings problems and the recent departures of most of its top executives-including its chief executive and chief financial officers-was said by sources to be an inevitable target for the SEC because it restated earnings for six consecutive quarters. COHR said in February it would make earnings restatements.
In keeping with SEC policy, a commission spokesman would neither confirm nor deny the investigation.
COHR spokesman Rusty Page confirmed that the SEC contacted CFO Daniel Clark shortly after COHR filed the restated earnings reports in mid-March.
"I would characterize it as an informal inquiry from the SEC, the nature of which was nonspecific," Page said. "The company is certainly responding. We will give the SEC whatever it wants."
According to the filings, COHR restated its fiscal 1997 earnings to reflect net income of $2.3 million, or 42 cents per share, on revenues of $86.2 million. It originally reported net income of $4.8 million, or 88 cents per share, on revenues of $90.5 million.
COHR also restated financials for the first two quarters of fiscal 1998. In its first quarter ended June 30, 1997, the company reported a loss of $355,000, or 6 cents per share, on revenues of $24.8 million. It originally claimed net income of $1.6 million, or 24 cents per share, on revenues of $26.4 million.
For its second quarter ended Sept. 30, it lost $399,000, or 6 cents per share, on revenues of $26 million. It originally claimed net income of $1.3 million, or 19 cents per share, on revenues of $25.6 million.
COHR was formed as a for-profit subsidiary of the Hospital Council of Southern California, which is now the Healthcare Association of Southern California. COHR was spun off and taken public in early 1996, but the council remains a major shareholder.
In filings and previous statements, COHR attributed the changes partly to miscalculations of liability and premature recordings of sales associated with its rapid expansion.
In December COHR announced it was seeking a potential buyer for the firm and had hired investment banking firm Lehman Brothers to expedite the process (Jan. 5, p. 4). Sources close to the company say some 30 buyout offers were tendered, including one by Chief Operating Officer Sandy Morford, but all were rejected by COHR's board of directors.
Page did confirm that an offer by current COHR managers had been rejected as "not in the best interest of shareholders" because it required an exclusive negotiating period.
Morford confirmed he and other managers had made an offer and that it was rejected, but he declined to make further comments.