The Securities and Exchange Commission has changed an informal investigation into the revenue-recognition policies of Catalina Marketing Corp. into a formal probe, according to the company.
The probe is focusing mainly on the timing issues that company management has already identified at its Catalina Health Resource division, the company says.
The company’s financial statements for its 2003 fiscal year are being audited, and its financials for fiscal 2001 and 2002 are being re-audited. The company is currently in a dispute over accounting issues with its former auditor, Ernst & Young, which resigned from the account in August.
Catalina Management says the company has been fully cooperating with the agency, and intends to continue to do so in order to conclude the inquiry as soon as possible.
Even as the SEC has decided to delve more formally into the accounting issues surrounding Catalina, it is backing off from its inquiry into 99 Cents Only Stores. The discounter said the SEC will not require it to make adjustments to its financials for the quarters ended March 31, June 30, and September 30, 2003.
The company had previously delayed its fourth quarter 2003 earnings release and conference call as a result of issues raised in a comment letter from the SEC’s division of corporate finance. The issues concerned accounting stemming from the company’s 2000 sale of its Universal International subsidiary and pending finalization of an increase to its California workers’ compensation reserve for year-end 2003.
The SEC was satisfied with the 99 Cents response, the retailer stated.