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Ferro Corp.'s announcement stemmed from an internal investigation of accounting entries by the company's polymer additives business unit.
Stephen Taub, CFO.com | US
July 26, 2004
Chemical maker Ferro Corp. announced that its second-quarter earnings will be less than one-third of analysts' estimates — in part because the company overstated its earnings.
Investors pounded its stock, sending it down as much as 25 percent during Friday morning's trading, according to Reuters, before it rebounded to about 16 percent down at the close.
Ferro's announcement stemmed from an internal investigation of accounting entries by the company's polymer additives business unit, which overstated the unit's performance and undermined the reliability of its forecasting process.
"We have investigated this matter internally and believe all of the inappropriate accounting entries have been corrected," said chairman and chief executive officer Hector R. Ortino, in a statement. He noted that the personnel within the business unit who were potentially responsible have either resigned or been put on administrative leave pending completion of the investigation.
Ortino added that Ferro executives "have instituted new procedures and are examining others beyond those currently in place to strengthen our system of internal controls. The company's audit committee has monitored the internal investigation and engaged independent legal counsel and independent auditors to review the matter. That review is expected to be completed in about four weeks, according to the company.