Veritas To Restate Three Years Worth Of Earnings

The Mountain View, Calif.-based company said Monday that an internal investigation identified improper accounting for some revenue and expenses during 2001 and 2002, producing inaccuracies that also spilled over into 2003.

As management scrambles to clean up the accounting mess, Veritas will miss a deadline later this month for filing its annual report. The company warned the delay probably will trigger a Nasdaq delisting notice, but management expects to take the necessary steps to get back in compliance before Veritas's stock is dropped.

Veritas estimated the revisions will reduce its combined profit for the three affected years by a net total of $15 million to $20 million _ a relatively small amount for a company so large. Veritas projects revenue of $2 billion this year.

The accounting setback will be more than offset by a $95 million gain Veritas expects to recognize from a federal tax settlement reached Monday.

id
unit-1659132512259
type
Sponsored post

The whiff of financial trouble nevertheless rattled investors still antsy about the corporate accounting shenanigans that have cropped up in the past few years. Veritas's shares fell $1.87, or 6 percent, to close at $29.14 Monday on the Nasdaq.

"This announcement is unfortunate, but I believe we are dealing with (the problems) effectively," Gary Bloom, Veritas's chief executive, said during a conference call Monday.

Most of the employees responsible for the improper accounting practices have already left the company, Bloom said.

Most of the abuses occurred while Veritas's books were being overseen by Kenneth E. Lochnar, who resigned as the company's chief financial officer in October 2002 after Bloom discovered Lochnar had fabricated a Stanford University MBA that he never received.

The audit that found the improper accounting wasn't prompted by Lochnar's resume fraud, Bloom told investors.

Bloom, Veritas's CEO since December 2000, assured investors that Veritas's accounting controls have "substantially improved" since Ed Gillis became the company's CFO in November 2002.

The inaccuracies in 2001 and 2002 may offset each other. Veritas estimated the revisions will reduce its previously reported loss of $642 million by $5 million to $10 million, but that improvement could be wiped out by a $5 million to $10 million decrease in the company's 2002 profit of $57 million.

The company expects the accounting mess to erase $15 million to $20 million from its previously announced 2003 profit of $274 million.

Copyright © 2004 The Associated Press. All rights reserved. The information contained in the AP News report may not be published, broadcast, rewritten or redistributed without the prior written authority of The Associated Press.