Veritas Software Corp. (Nasdaq: VRTS) will restate its financial statements for 2001 and 2002 and delay its 2003 annual report, after an internal investigation turned up accounting irregularities.
In other words, Veritas, which means truth in Latin, is making a belated attempt to live up to its name. Although CEO Gary Bloom reiterated the companys guidance for the current quarter, todays announcement will certainly have consequences. The company is subject to Nasdaq delisting, and who knows how long it will take for the stock to regain the value it lost after a hold was placed on trading for more than an hour. By late afternoon, the stocks price lost $1.77 to $29.24 on the day.
In a conference call, Veritas executives said the restatements will likely increase 2001 income by $5 million to $10 million; decrease 2002 income by $5 million to $10 million; and decrease 2003 income by $15 million to $20 million.
This is an unfortunate announcement, Bloom said in a conference call.
For Veritas, it is not unprecedented. Last year Veritas restated its 2000 and 2001 earnings by a combined $20 million after an SEC investigation into a transaction with AOL (see Veritas Revises Balance Sheet and SEC Probes Veritas-AOL Deal). As with those restatements, the current adjustments concern business booked when Kenneth Lonchar was CFO. Lonchar resigned in October 2002 after Veritas discovered he lied on his resume about receiving an MBA from Stanford (see Veritas Fires Veteran CFO).
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