The math still doesn’t add up at Hanover Compressor. The industry’s largest supplier of natural gas compression equipment revealed on Wednesday that for the third time this year it must restate prior financial results. After a review of prior business transactions, the company found that it incorrectly accounted for four transactions totaling revenues of $5.1 million and net income of $2 million.

“Senior management is satisfied it has conducted a thorough review of prior transactions and, consequently, will certify and file with the Securities and Exchange Commission within 30 days amended financial results for 1999, 2000 and 2001 to reflect the restatements,” said CFO John Jackson.

CEO Chad Deaton said despite the minor changes to prior results the company felt it was necessary to correct the accounting “in order to assure shareholders that the company’s accounts are accurate and transparent. Our focus now is to begin making the necessary changes that take Hanover to the next level of performance.” Investors reacted positively to the announcement, pushing Hanover shares up 9% Wednesday to $9.48. However, the company’s shares are down from a 52-week high of $30.40.

Restating 1999 financial results will reduce revenues by $5.1 million, pre-tax income by $3.1 million and net income by $2 million. The impact of the restatement of the 1999 transactions on 2000 net income is an increase of $0.4 million, and the impact on 2001 net income is a decrease of $0.4 million.

Similar changes were made in February and August, after which former CEO Michael McGhan and COO Charles Erwin resigned (Aug. 2) amid growing questions about the company’s accounting practices and criticism about loans McGhan received from the company. The company hired Deaton, a former Schlumberger executive, as CEO on Aug. 20.

Hanover’s August restatement cut 2001 revenue of $1.1 billion by $7.1 million, while leaving diluted earnings unchanged at 95 cents. For 2000, revenue of $566.1 million was reduced by $2.2 million and diluted earnings of 77 cents a share were reduced by 2 cents.

In February, the company announced that it was being examined by the SEC for income errors stemming from a Nigerian joint venture with Royal Dutch/Shell. As a result of the errors, Hanover restated financial results for 2000 and for the first nine months of 2001, lowering its net income by a total of $8.9 million (see Daily GPI, Feb. 27).

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