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Delay in the company's annual report may threaten its Nasdaq listing.
Stephen Taub, CFO.com | US
March 17, 2004
Veritas Software Corp. announced that it will restate its financials for the past three years as a result of an internal investigation, reported Reuters.
The probe uncovered accounting practices not in compliance with generally accepted accounting principles during 2002, 2001, and prior periods. According to the Associated Press, these practices — which included the incorrect deferral of professional services revenue and the unsubstantiated accrual of certain expenses — produced inaccuracies "that also spilled over into 2003."
Veritas management warned that the resulting delay in filing its annual report will probably trigger a delisting notice from the Nasdaq stock market, but that the company intends to return to compliance before the stock is dropped.
Most of the company's accounting problems occurred on the watch of former CFO Kenneth Lonchar, who resigned in October 2002 after the company discovered that he had lied about getting an MBA from Stanford. (Lonchar could not be immediately reached for comment by Reuters.) Veritas hired Ed Gillis as CFO the following month.
During a conference call, Veritas CEO Gary Bloom said that the company's accounting controls have "substantially improved" under Gillis, according to the AP. Bloom added that the audit that uncovered the accounting problems was unconnected to Lonchar's departure.
The company estimated that revisions will reduce it loss for 2001, previously reported at $642 million, by $5 million to $10 million. However, noted the AP, that could be offset by a decrease of $5 million to $10 million in the company's previously reported profit of $57 million for 2002.
Veritas also expects to decrease its previously reported 2003 profit of $274 million by $15 million to $20 million. The 2003 revision, which will reflect corrections of the two prior years, also takes into account a settlement of tax audits related to the company's 2000 acquisition of Seagate Technology.