BearingPoint, the tech and management consulting firm forced to split off from parent KPMG by the Sarbenes-Oxley Act (SOX), could be dropped from the New York Stock Exchange (NYSE), the company’s 2005 annual report said.

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In October, the Exchange had given the company three months to file its 2005 annual report or face delisting proceedings. Chief executive (CEO) Harry You told the Washington Post that last week's filing "puts the past behind us, and we are now moving full speed ahead at completing our 2005 Form 10-Qs and 2006 filings.”

The company’s 2005 annual report said that BearingPoint’s ongoing failure to file timely reports with the SEC over the past two years could still lead the NYSE to "begin proceedings to delist our common stock."

BearingPoint failed to file its annual reports for fiscal 2004 and 2005 on time. It also has failed to file quarterly reports for the past six quarters, InformationWeek reported.

Stock analysts at Robert W Baird, in New York, published a research note on the report saying that the 2005 filing reflects all the major weaknesses of financial controls that were present in the 2004 filing. The firm maintained a “neutral” rating.

The specter of NYSE delisting was just one issue disclosed in BearingPoint’s annual report. Other downside news for shareholders included a net loss for fiscal 2005 of $721.6 million, compared with a loss of $546.2 million the previous year. The company reported flat revenue year-over-year at $3.38 billion.

BearingPoint said its loss in 2005 included $113.3 million incurred due to delays and missed milestones on a contract to build an information technology infrastructure for Hawaiian Telcom, which is more money for the failures.

BearingPoint's former corporate parent, accounting company KPMG, also has its hand out. KPMG says it's owed $31.5 million for providing ongoing IT services and support to BearingPoint for a period following BearingPoint's spin-off from KPMG in 2001, InformationWeek reported. BearingPoint said in its report that it is disputing the claim.

BearingPoint also is facing a host of legal problems, InformationWeek reported. The company disclosed that it is responding to subpoenas from a federal grand jury in California and the U.S. Army, requesting information on contracting activities with the federal government.
The report also notes that BearingPoint paid a $15.5 million settlement to the Justice Department(DOJ), which claimed the government was overcharged for travel expenses.

These complications may be what drives another matter that is most troublesome to many analysts. The company’s attrition rate among professional staff in fiscal 2006 was almost 27 percent. Douglas Hayward, analyst for UK based Ovum, called that rate “unsustainable.”