Vitesse Financial Statements May Be Inaccurate
Online staff -- EDN, April 27, 2006
Camarillo, Calif.-based communications chip provider Vitesse Semiconductor Corp. announced yesterday that its recent Q1 results as well as the last three years of financial statements may not be accurate.
Vitesse’s board of directors has determined that its previously reported financial statements for the three months ended December 31, 2005 and the three years ended September 30, 2005 and possibly earlier periods should not be relied upon.
The board of directors also determined that the Management Report on Internal Control over Financial Reporting as of September 30, 2005 and the Report of KPMG LLP, the company's independent registered public accounting firm, relating to the effectiveness of the company's internal controls over financial reporting and management's assessment thereof as of September 30, 2005, both of which reports are included in the company's annual Form 10-K for the year ended September 30, 2005, should not be relied upon.
As previously disclosed, the company's board of directors has appointed a special committee of independent directors to conduct an internal investigation relating to past stock option grants, the timing of such grants and other related accounting and documentation issues. The special committee is being assisted by independent legal counsel. In the course of its investigation, issues have arisen relating to the integrity of documents concerning Vitesse's stock option grants.
During the internal investigation, additional issues have arisen concerning Vitesse's practices in connection with credits issued to or requested by customers (for returned products or otherwise) and the related accounting treatment, as well as the application of payments received to the proper accounts receivable. The special committee is reviewing these issues and, pending further investigation, believes that the company's accounts receivable and revenues may have been misstated during certain periods. Whether Vitesse's accounts receivable and revenues were misstated and, if so, the extent of such misstatements is still under investigation.
Vitesse also announced that it has engaged Alvarez & Marsal LLC, and specifically Shawn C.A. Hassel as acting CFO of the company. Hassel, a managing director with Alvarez & Marsal, brings 12 years of experience as an interim manager and financial advisor to under-valued or under-performing companies and companies in transition.
