WILMINGTON, NC — aaiPharma, hit by a federal grand jury inquiry, management shakeup and class-action lawsuits after questions were raised about recent financial statements, disclosed Tuesday night that it had completed its review.

The news wasn’t good.

The Wilmington-based pharmaceutical company restated its 2003 earnings in a new filing with the Securities and Exchange Commission, and they show a $21.3 million loss rather than the previously reported profit of $69.4 million. That cut earnings-per-share by $2.35 from a reported profit of $1.18 to a loss of $1.17.

The news sent aaiPharma (Nasdaq: AAIIE) down 2 cents in after-hours trading to $4.10. Shares had traded up 6 cents after trading as low as $3.96, which would have been a 52-week low.

aaiPharma also cut its new revenues for 2002 by 15 cents a share, to $48.6 million from the previously reported $55.4.

The company said its review reflected “corrections” in two areas — accounting for product line acquisitions and “adjustments related to recognition of revenue, impairment of assets and other adjustments.”

The review process triggered a management shakeup. Founder Frederick Sancilio returned to the CEO position in March after Phillip Tabbiner, the man chosen to replace him in 2002, left. Chief Financial Officer William Ginna Jr. resigned on May 11.

Also, aaiPharma hired Gregory Rayburn, a restructuring specialist, as chief operating officer.

The company was able to secure a new line of credit after the executive changes were made. FTI Consulting was retained to assist in the review process.

AaiPharma stock traded as high as $31.20 in January before the financial situation began to unfold.

In a statement, Sancilio said changes have been made to ensure such accounting problems don’t occur again.

“As serious and challenging as the restatement process has been, we are committed to getting the company refocused on the businesses that have driven our success for nearly 24 years,” he said. “We have extensively examined the issues that necessitated these adjustments, and we have instituted significant measures to prevent them from recurring.”

Sancilio said that the company’s new line of credit and cash flow “will be adequate to meet our company’s needs for working capital and anticipated capital expenditures.” However, he also said management is “exploring the sale of certain non-revenue generating assets to supplement our cash flow and to help meet our cash needs.”

The firm sold off two product lines recently for $105 million.

In its release, aaiPharma said it had $8.785 million in cash and equivalents on hand as of Dec. 31.

For the complete statement and financials released by aaiPharma, see: biz.yahoo.com/bw/040615/156018_1.html

Red Hat says earnings will be better

Rocked by bad news on Monday when CFO Kevin Thompson announced he was stepping down, Red Hat (Nasdaq: RHAT) countered Tuesday with a release touting its earnings report that is due out Thursday.

The Linux software firm said earnings would hit 5 cents a share, 1 cent higher than Wall Street estimates, with net income of over $10 million.

The release hit the wires just before the markets started trading Tuesday and triggered a flurry of transactions. Despite the good news, the stock dropped at $1 at the open. RHAT fell $2.24, or 9 percent, to close at $22.06, with more than 38 million shares being traded.

Prudential also announced it had downgraded the stock to “neutral” from “overweight”.

But all the news wasn’t bad. Credit Suisse First Boston boosted RHAT to “outperform” from “neutral”.

Go figure.

The earnings report will be issued on Thursday.