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Office electronics giant Xerox is the most recent multinational to admit it has misreported earnings, involving USD1.9 billion of revenues from 1997 to 2001.
Revenue for the five-year period was originally USD92.5 billion, but now Xerox's new accountants, PriceWaterhouseCoopers, are going through the books and earnings will be re-stated as USD91 billion. "Approximately USD1.9 billion of revenue that was recognised over past years has been reversed and will be recognised in the company's future results, beginning in 2002," the company said in a statement. Xerox will also make adjustments to previously announced 2001 results, it said.
The company had already been accused of accounting irregularities prior to Friday's news. In April Xerox agreed to pay a USD10 million fine imposed on it by the Securities and Exchange Commission for improper accounting from 1997 to 2001.
The SEC spent over two years investigating Xerox's accounting practices before fining the copier company. Xerox fired its then auditors KPMG and has hired PWC, which is now going to file restated sales and earnings for the five year period.
The company's CEO Anne Mulcahy was seeking on Friday to put a line under the company's accounting difficulties.
"Xerox today closes a difficult chapter in the company's history," Mulcahy said. "With the filing of the 2001 10-K, we will have resolved the company's accounting issues with the SEC and completed the restatement... Our new management team has put the past behind us."
Following the news Xerox shares plummeted more than 14 percent in early trading to USD6.84 in New York, down from a close of USD8 on Thursday. The company is scheduled to report its second-quarter 2002 earnings on July 25.
This news marks the latest bumps in a rocky road for Xerox. Last month reports emerged that the IDA was negotiating with Xerox to repay grants of up to EUR8 million relating to the closure of the firm's inkjet facility in Dundalk, which resulted in a loss of 350 jobs last year. Xerox has received grant aid of EUR41 million from the IDA and the company employs more than 1,900 in Ballycoolin, Blanchardstown and Dundalk.
Xerox's restatement of revenues comes just two days after WorldCom sent shockwaves through the markets by admitting that it had inflated profits by incorrectly accounting for more than USD3.8 million in costs.
WorldCom will re-state its results for 2001 and the first quarter of 2002 and plans to slash 17,000 jobs in an attempt to cut annual costs by USD900 million. In Ireland the company employs 180, but a 10 percent workforce reduction was announced this week.
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