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Network Associates to restate three years of results

Network Associates to restate three years of results

Citing information uncovered through federal investigations into its accounting practices, Network Associates has said that it is restating financial results for fiscal years 1998, 1999 and 2000.

The antivirus software vendor also said it would delay filing its 2002 Form 10-K, which is due March 31, so it can restate those results for prior years.

The company, which is under investigation by the U.S. Securities and Exchange Commission (SEC) and the Department of Justice, said the restatement would reflect revenue on sales to distributors on a sell-through basis.

That, the company said, is how it has reported sales to distributors since the beginning of 2001. Network Associates said the restatement "may also include other matters addressed by the government investigations."

A year ago, Network Associates announced that the SEC was looking into questions about the company's accounting, but this is the first time it has said the Justice Department is also involved in the probe.

It isn't clear when the Justice Department joined the investigation.

On March 26, 2002, Network Associates announced that it was under investigation by the SEC for a series of events that happened on December 26, 2000, when then-CEO, William Larson, company president, Peter Watkins, and chief financial officer, Prabhat Goyal, suddenly quit.

The same day, the company also unveiled sweeping changes to its channel sales policy and announced that its fourth-quarter revenue for 2000 would come in at $US55 million to $US65 million, roughly one-quarter of the $US239 million revenue it had announced in October.

The events pushed the company's share price down 63 per cent the next day.

Last year, Network Associates CEO George Samenuk said a review of the company's accounting practices for 2000 showed that the accounting methods had been "proper".


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