Company News — Descartes Systems Group Inc.

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Goodwill writedown swells loss at Descartes Systems

WATERLOO—Descartes Systems Group Inc., which announced 135 job cuts in May and fired its chief executive because of accounting problems, says its first-quarter loss soared to $28.9 million (U.S.) after an $18 million writedown.

The loss for the quarter ended April 30 amounted to 71 cents a share and compared with a loss of $9 million, or 17 cents a share, a year earlier, the Waterloo-based logistics software company said yesterday.

Revenue slipped to $13.3 million from $14.2 million. The firm reports in U.S. dollars.

After re-evaluating assets, Descartes said it is taking an $18 million writedown in goodwill "due to recent events and changes in circumstances."

Last week, Descartes reduced its fourth-quarter revenue by about $800,000 after an audit of its financial statements, cutting the total to $59.8 million.

The firm, which fired its chief executive on May 6, announced in mid-May that it was cutting 135 jobs, or about 35 per cent of its workforce, as it tried to recover from the sales shortfall.

The moves came after Descartes failed to collect millions of dollars from overseas customers. Descartes' revenue has suffered because of the failure to collect payments, particularly from a major account in China.

In May, the company more than doubled its provision for doubtful accounts to $8 million from $3 million.

On the Toronto stock market yesterday, Descartes shares fell 10 cents, or about 6 per cent, to $1.49. The 52-week high is $4.65, the low $1.32.

CANADIAN PRESS

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