<http://online.wsj.com/article_print/0,,SB104868663390882600,00.html>
The Wall Street Journal March 26, 2003 4:46 p.m. EST Network Associates Plans Another Restatement of Results By MARK BOSLET and RIVA RICHMOND DOW JONES NEWSWIRES Network Associates Inc. said Wednesday it would again restate financial results for 1998, 1999 and 2000 and disclosed that the Department of Justice had opened an investigation into the company. It will be the second time Network Associates has had to restate results for those years. The Santa Clara, Calif., software company said the latest restatement would probably lead to a significant or "material" change to financial results for the period, which precedes the resignation of its former management team headed by Chief Executive William Larson. Network Associates' current chief executive, George Samenuk, said on a conference call Wednesday that the company learned of the Justice Department investigation during the first quarter. "We will not speculate on where it is headed or on what the potential outcome might be," Mr. Samenuk said. However, legal experts said the Justice Department likely wouldn't become involved unless there was a criminal aspect to the investigation, which up to now had been confined to an accounting probe by the Securities and Exchange Commission. While the Justice Department can indict corporations, history shows it tends to look upon them as victims of unscrupulous executives, said John Coffee, a legal expert at Columbia University Law School. "They're most likely to indict the person who has the evil motive," he said. "And that tends to be the managers who are dumping their stock" to benefit from practices that inflated financial results. The restatement is the result of new information that came up during the government investigations, Network Associates said. "We had lots of discussions with the government in recent weeks," said General Counsel Kent Roberts. He declined to elaborate on their content. The restatement that Network Associates announced Wednesday stems from a decision to change its revenue recognition policy made in 2001, the new results will reflect that policy, which recognizes sales when products reached users rather than when they were shipped to a distributor or reseller. The company suggested the restatement would take at least a couple weeks to complete and that it would delay its quarterly SEC filing for its 2002 financial report. The news sent Network Associates' shares modestly lower Wednesday, falling 53 cents, or 3.5%, to $14.85 on the New York Stock Exchange. In June, Network Associates restated 1998, 1999 and 2000 results after an internal probe of the company's accounting revealed "inaccuracies," which it traced to an unidentified member of the finance team who was no longer with the company. The bad accounting had the effect of overstating revenue and understating operating costs. None of Network Associates' current financial executives worked for the company during the years in question. The company's announcement marks the third time in four years it has had to restate financial results. It restated its financials in 1999 to reflect the cost of numerous acquisitions, which it accounted for as in-process research-and-development costs. -- R. A. Hettinga <mailto: [EMAIL PROTECTED]> The Internet Bearer Underwriting Corporation <http://www.ibuc.com/> 44 Farquhar Street, Boston, MA 02131 USA "... however it may deserve respect for its usefulness and antiquity, [predicting the end of the world] has not been found agreeable to experience." -- Edward Gibbon, 'Decline and Fall of the Roman Empire' --------------------------------------------------------------------- The Cryptography Mailing List Unsubscribe by sending "unsubscribe cryptography" to [EMAIL PROTECTED]