L-3 Fires 4 Workers Over Accounting Misconduct
Defense contractor L-3 Communications said Thursday that it fired four employees after discovering they overstated the company's profit and sales from a contract with the U.S. government.
The New York company said a fifth employee resigned. It said the employees, who worked for its aerospace systems business, also inappropriately deferred some cost overruns associated with the contract. L-3 described the contract as a maintenance and logistics support contract with the U.S. Department of Defense, and said the deal began Dec. 1, 2010, and ends January 31. The deal brings in about $115 million in annual revenue for the company.
"The misconduct included concealment from L-3's Corporate staff and external auditors," L-Communications 3 Chairman and CEO Michael Strianese said during a conference call.
The company did not disclose the names or positions of the employees or provide other details about the contract. The Defense Department did not immediately respond to a request for comment.
L-3 Communications said it is conducting an internal review and will take an $84 million charge associated with the misconduct. It said $34 million of that total will come from the first half of 2014. Separately, it will reduce its net sales by $43 million. The company also cut its estimate for second-half operating income for the aerospace systems business by $35 million.
Shares of L-3 Communications Holdings Inc. tumbled $17.49, or 14.6 percent, to $102.15 in afternoon trading.