Voice and data carrier Global Crossing Ltd. confirmed Friday that the U.S. Securities and Exchange Commission has opened an investigation of the company.
Global Crossing said it received notification of the investigation from the SEC Friday. On Feb. 4, the SEC requested the company supply documents related to a letter from the company's former vice president of finance, which alleged that the company and its auditor, Arthur Andersen, were inflating pro forma values for cash revenue and adjusted EBITDA by including amounts for which cash were not received or where there had been non-monetary exchanges of capacity. The writer, Roy Olofson, also said it was not proper for the company to have reported those values because the numbers are not measures of cash receipts or earnings.
Olofson's complaints centered on Global Crossings' swapping of IRUs (Indefeasible Rights of Use), long-term contracts for capacity which carriers frequently swap, allowing them to record a new contract as revenue while reporting the outgoing contract as a capital expense. Olofson's claimed Global Crossing mislead investors by utilizing metrics that downplayed capital and interest costs.
However, Global Crossing maintains that its accounting practices were above-board and that numerous internal reviews and reviews by outside counsel found no merit to Olofson's allegations. It said that in filings with the SEC it disclosed that the company's management used recurring adjusted EBITDA to monitor compliance with the financial covenants contained in its debt instruments and to measure the performance and liquidity of its business segments. The company also said its "press releases and filings with the SEC have disclosed the fact that the company purchased significant amounts of assets from carriers who were also customers of the company." Global Crossing said those disclosures presented the amounts of cash received by the company and included in cash revenue and adjusted EBITDA, as well as the amounts of the cash commitments to those customers.
Securities Litigation Watch::
in some of his opening remarks about the SECs new headquarters at Station Place: Broc has opened the bidding with this 35-word 8-K filed by Global Crossing.
http://slw.riskmetrics.com/sec_generalHOME |
InternetNews Realtime IT News - Global Crossing Delays Reporting Results::
The bankrupt international voice and data carrier puts off the release of its fourth quarter and full year 2001 results in SEC Opens Global Crossing Probe
http://www.internetnews.com/bus-news/article.php/982361HOME |
 Stocks Finally Bounce
 Dirty Laundry Aired with Lawsuits?
| 
HOME