Accounting & Tax

Inventory Foul-up for Bar-Code Company

Symbol Technologies, the world's largest seller of barcode scanners, isn't quite ready to put its years-long accounting troubles behind it.
Stephen TaubNovember 9, 2004

Symbol Technologies Inc. announced on Monday that it will delay the filing of its September quarterly report and that it may restate its results for 2004.

The world’s largest seller of barcode scanners has already restated five years of financials, and earlier this year it settled charges with the government and investors stemming from an accounting scandal. Now, Symbol says it has discovered discrepancies in the amount of inventory at a distributor and inventory on hand, affecting previously reported results. “We’ve moved swiftly to ascertain the nature and extent of these discrepancies,” said president and chief executive officer William Nuti, in a statement.

Kevin Starke, an analyst with Imperial Capital, told Reuters, “It is a little amazing that the company still has accounting issues.” Symbol’s stock dropped more than 7 percent yesterday on the news.

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Symbol elaborated in a press release that two independent errors were discovered as a result of two events.

In one case, one of the company’s large distribution partners reported inaccurate inventory levels to Symbol, leading the company to inaccurately record approximately $3.3 million in sales in the third quarter. According to Symbol, this was an oversight on the part of the distributor, which made Symbol aware of the reporting error as soon as it was discovered. This error affected only the third quarter of 2004, added the company.

The other discrepancy was the result of errors that occurred at a Symbol-owned distribution facility that serves one of its large retail customers. The distribution center, which relies on its own internal reporting system, misreported quarter-end inventory levels that resulted in inaccurate sales reporting, explained the company. As a result, Symbol overstated revenue for the nine months ended September 30, by about $10 million; most of this overstatement occurred in the third quarter.

Altogether, the company plans to revise year-to-date revenue downward to $1.282 billion, from the previously announce $1.295 billion and reduce earnings per share to 22 cents, from the previously announced 24 cents.