Old news at this point, but SWBDE to going to restate their 2001 numbers and have them reaudited by Ernst & Young:
biz.yahoo.com
Thursday July 25, 5:20 pm Eastern Time
Press Release
SOURCE: Switchboard Incorporated
Switchboard Announces Intention To Restate Prior Year Results
WESTBOROUGH, Mass., July 25 /PRNewswire-FirstCall/ -- Switchboard Incorporated (Nasdaq: SWBD - News) today announced that it intends to restate its financial statements for fiscal 2001 to reduce approximately $2.7 million of revenue and expense attributable to a sale of banner advertising to a single customer.
In the first quarter of 2001, Switchboard sold banner advertising to the customer, which subsequently failed to make a scheduled payment. While seeking to collect payment, additional information regarding the customer and its relationship with one of Switchboard's vendors was evaluated by Switchboard and its recently engaged independent auditors, Ernst & Young. Based upon this evaluation, Switchboard has determined that it is more appropriate to record the banner advertising as a reduction of expense, instead of a contribution to revenue, in 2001. Switchboard therefore intends to restate its financial results for fiscal 2001. Accordingly, Switchboard's previously reported financial statements and information relating to fiscal 2001, including the auditors' report thereon, should not be relied upon.
The intended restatement with respect to this specific transaction is estimated to result in the reduction of revenue and expense for 2001 by approximately $2.7 million. Switchboard does not anticipate that its net loss or cash balance reported for 2001 will be affected due to its revised treatment of this transaction.
Arthur Andersen, Switchboard's independent auditors for fiscal 2001, has advised Switchboard that its Boston office has ceased operations and is unable to render a report on Switchboard's intended restated financial statements for 2001. Therefore, Ernst & Young will re-audit all financial results for 2001 in order to render a report on Switchboard's restated 2001 financial statements. The restated financial statements will be issued upon completion of the re-audit.
The intended restatement does not involve transactions integral to Switchboard's current business model, as banner advertising has become a less significant component of its business. In the second quarter of fiscal 2002, banner advertising represented only approximately 10% of total revenue.
"Through the difficult actions we are announcing today, Switchboard is taking essential steps to ensure that the company has the best possible foundation for the future," said Doug Greenlaw, CEO of Switchboard. "We are working through this planned restatement as thoroughly and expeditiously as possible and will focus on executing the key elements of our business moving forward."
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