The Document People? Accounting Woes at Xerox Continue

Shakeup in finance department: Current controller named treasurer, former treasurer retiring, current CFO retiring.
Jennifer CaplanNovember 20, 2001
  • The saga continues at Xerox Corp.

    Late last week managers at the copier giant, which is currently under federal investigation for alleged accounting irregularities, abruptly moved controller Gregory Tayler to the treasury post. Tayler is one of several Xerox executives named in shareholder lawsuits for allegedly deceiving investors about the company’s financial condition.

    Tayler has been at Xerox for more than 10 years and has been in the controller position for about a year. Last Friday a Wall Street Journal report, citing sources familiar with the matter, said that Xerox’s former auditor, KPMG LLP, had recommended that Xerox remove Tayler from his role as controller into a job where he would not have a direct financial reporting role. A Xerox spokesman declined to discuss the details of KPMG’s advice with Reuters reporters.

    Tayler replaces longtime treasurer Margie Filter, who is retiring. The controller position will remain vacant until a new chief financial officer is named. Xerox’s current CFO, Barry Romeril, plans to retire in December. Assistant treasurer Gary Kabureck was temporarily named “chief accounting officer,” responsible for many of Tayler’s former duties, including signing regulatory filings with the SEC.

    The staff shuffling at Xerox come amid rising concerns about the company’s accounting practices and alleged irregularities at its Mexico operation. As reported in September (see “Xerox Names Dugan Business Ethics Head“), when pressure from the allegations mounted, managers appointed Allan Dugan to a newly created position, executive vice president of corporate business ethics and compliance. Dugan is responsible for reinforcing Xerox’s ethical standards and assuring worldwide adherence to the company’s business practices and accounting policies.

    But apparently Dugan’s appointment isn’t making the original problems disappear. Early last week Xerox disclosed in a filing that the SEC’s division of corporate finance and the office of chief accountant were joining the investigation into the company’s accounting practices. A Xerox spokesperson told Reuters that the company had not received any word from the SEC that the scope of the investigation has broadened.

    Investors did not react well to the news, however. Last Friday, the day after the company released its latest announcement, Xerox shares fell 51 cents, or 7 percent, to $6.58. The share price bounced back on Monday, however, to $7.30

  • Managers at Synaptic Pharmaceutical Corp., a drug discovery and development specialist, announced that CFO Robert Spence has decided to retire. Spence, who has worked at Synaptic for 12 years, will remain with the Paramus, New Jersey-based company through the end of the year.

    Synaptic’s controller, Edmund Caviasco, will assume the responsibilities of “principal accounting officer,” the company said. “I am proud of what Synaptic has accomplished and believe the company is well-financed and well-positioned to embark on its next stage of growth as a drug-discovery and drug-development company,” Spence said in a statement.

    Actually, Synaptic hasn’t been doing all that well lately. In the third quarter revenues at the company took a nosedive. Sales declined to $374,000 from $2.9 million during the same period the previous year. Net losses also soared at the company, approaching $10 million (89 cents per share). In the same quarter in 2000, net losses totaled $2.0 million (18 cents per share). Despite these difficulties, company managers were able to raise $41 million in a private equity financing in the third quarter.

  • Neil Rossen, CFO at Presstek Inc., a provider of direct digital imaging technology for printing and graphic arts, is leaving the company as of December 31. “With confidence in the company’s prospects, I am ready to begin a new chapter in my life,” Rossen said in a statement.

    Officials at Presstek, which is based in Hudson, New Hampshire, immediately initiated a search for Rossen’s successor. Whoever lands the top finance job will bear the burden of leading the company back to profitability. Last month Presstek managers reported a $2.1 million third-quarter net loss, compared with a net profit of $1.7 million in the third quarter of 2000. The company attributed the loss primarily to higher-than-expected legal and warranty expenses. In more positive news, Presstek’s Q3 revenues rose 20 percent, and managers expressed optimism the company would break even in the fourth quarter.

  • David Almeida is the new CFO at Axsys Technologies Inc., a Rocky Hill, Connecticut-based designer of precision components for original equipment manufacturers. Almeida joins Axsys from network systems developer ADC Telecommunications Inc., where he held a number of executive positions in finance, human resources, information technology, and customer services. Almeida, replaces John Hanley,, who will remain with the company through the transition period. Almeida, who graduated from the University of Connecticut with a B.S. in accounting and received an M.B.A. from the University of New Haven, will report to Axsys president and chief operating officer Mark Bonney.

    Almeida will have a tough job. In the third quarter the company’s net sales declined to $21.6 million from $24.2 million in the third quarter of 2000. Net losses continued to mount, reaching $237,000, up from an $85,000 loss in the year-ago quarter. The company recently ventured into the medical technology sector. In October, Axsys received an order from Abiomed Inc. to supply 200 motors for an experimental artificial heart. Axsys’ share price closed at $9.15 last week, down substantially from the company’s 52-week high of $42.50 per share.