Dell to Restate More Than 4 Years of Earnings
Up to $150 Million to Be Excised After Probe, Company Says
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Friday, August 17, 2007; Page D02
DALLAS, Aug. 16 -- Computer maker Dell said Thursday that it would reduce more than four years' worth of earnings by up to $150 million after an internal probe found that the company misled its auditors and manipulated results to meet performance goals.
The struggling company said that its profit for the restatement period, fiscal 2003 through 2006 and the first quarter of fiscal 2007, would be reduced by $50 million to $150 million, or 2 cents to 7 cents per share.
The largest reductions in quarterly profits were expected to be in the first quarter of fiscal 2003 and the second quarter of fiscal 2004, each lowered 10 to 13 percent.
The investigation, which began in August 2006 and evaluated more than 5 million documents, "identified evidence that certain adjustments appear to have been motivated by the objective of attaining financial targets," Dell said.
Dell, based in Round Rock, Tex., added that unspecified terminations, reassignments, reprimands, increased supervision, training and financial penalties either have been or will be made as a result.
"We are committed to achieving and maintaining a strong control environment, high ethical standards and financial reporting integrity," chief executive Michael Dell said in a statement. "This commitment will be communicated to every Dell employee and external stakeholder. It is accompanied by renewed management focus on decision-making and processes intended to drive long-term shareholder value."
An investigation by the Securities and Exchange Commission into Dell's accounting and financial reporting practices is ongoing, the company said.
Dell said the findings would not have a material impact on second-quarter results, which are scheduled for release Aug. 30.
Dell has issued only preliminary financial results for the four most recent quarters and hasn't filed its annual report for the fiscal year that ended Feb. 2 because of the investigations.
With the internal probe complete, Dell said that it expects to file the past-due documents by the first week of November. Its annual shareholders meeting is Dec. 4.
Dell still faces shareholder lawsuits, and federal prosecutors in New York subpoenaed documents on the company's financial reporting since 2002.
