Qwest to Restate $950 Million in Sales
Sunday September 22, 10:12 pm ET
one of Cramer's recent longs, lol
DENVER (Reuters) - Qwest Communications International Inc., a local U.S. telephone company facing federal probes of its accounting practices, said on Sunday it expected to restate $950 million in revenues and costs for optical-network capacity sales.
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The transactions in question include the swap or exchange of optical capacity with other carriers, it said.
The Denver-based company said it might also restate up to $531 million in sales of optical capacity for cash. The magnitude of the adjustments and the periods affected have not yet been determined.
The U.S. House Energy and Commerce Committee will hold a series of hearings over the next two weeks to examine deals among Qwest, Global Crossing Ltd, FLAG Telecom and Cable & Wireless
In July, Qwest, the dominant local telephone company in 14 states from Minnesota to Washington, said it would restate its results because it improperly booked $1.16 billion in sales and other items in 1999 to 2001.
Some of the problems disclosed on Sunday were included in that original announcement. Qwest said its total potential restatement now stands at about $1.48 billion.
The company said it continued to cooperate with an investigation by the Securities and Exchange Commission and Department of Justice.
FIRST STEP
It said it was "optimistic" that Sunday's disclosure of additional restatements offers a "first step toward a possible resolution" of its discussions with the SEC.
Qwest said it continued to analyze, along with its new auditor, KPMG, other accounting practices and transactions, but said it could not predict when a restatement would be completed. It said its historical financial statements in 2000, 2001 and the first three months of 2002 should not be relied upon.
The company also plans to take charges in the third quarter to write down the value of its telephone network, fiber-optic network and inventory.
Regulators are investigating whether Qwest and other carriers improperly inflated revenues by incorrectly booking sales of network capacity in one lump sum, rather than spreading out the sales over the lifetime of a contract.
The inquiries also focus on whether carriers "swapped" or traded unneeded capacity on each other's networks to make sales volume look higher.
On Sept. 24, the lawmakers plan to hear from former Qwest chief financial officer Robin Szeliga, who still works at the company, as well as former Global Crossing finance executive Roy Olofson, who has accused the company of fudging the books, and Patrick Joggerst, a former executive of Global Crossing.
The House Energy and Commerce Committee said last week it believed that Qwest former executive vice president Greg Casey "had intimate knowledge about several secret side deals that may have allowed Qwest to improperly recognize revenue."
Casey will likely invoke his Constitutional right not to testify at the hearing, the committee said. |
