These are the two big recent blunders.
The financial impact of the first one is pretty self-explanatory.
The change in revenue recognition involved recognizing revenue for certain key distributors upon shipment to the channel as opposed to sell-through. I can't remember how many distributors they did this with, but they said these distributors had a history of 100% sell-through. There wasn't a lot of money involved, but as I recall, it was enough to make or break the quarter. They just quietly slid the change in to the 10Q which what the SEC inquiry is all about.
On top of this, in the last conference call, their guidance for the coming year wasn't impressive.
204.167.114.22
RSA Security Announces Final Settlement and Termination of Derivative Transactions
BEDFORD, Mass., October 23, 2001 — RSA Security Inc. (Nasdaq: RSAS) today announced that it has settled its outstanding loan obligation with the counterparty to put options covering 1,875,000 shares of RSA Security stock that were terminated on September 28 and October 1, 2001. RSA Security has paid the counterparty $44.8 million in cash, and the counterparty to the loan is returning to the company the 2,801,344 shares of RSA Security common stock and the $22.4 million in cash that the counterparty was holding as collateral for the loan.
The company also announced today that it has received notice terminating additional put options covering 1,125,000 shares of RSA Security stock from the counterparty to those put options. The company sold the put options in several transactions in September 2001. The notices indicated that put options covering 375,000 shares were terminated on October 19, 2001, with the balance terminating on October 23, 2001. The cost to the company to settle the terminated put options is approximately $13 million. The company intends to settle the transactions in cash.
204.167.114.22
RSA Security Issues Clarification On SEC Investigation
BEDFORD, Mass., Jan. 25, 2002 — RSA Security Inc. (Nasdaq: RSAS) today reported that the Securities and Exchange Commission has commenced a formal investigation into certain matters relating to the company. The SEC's investigative order relates to whether a change in RSA Security's method for estimating distributor revenue disclosed in its Quarterly Report on Form 10-Q for the first quarter of 2001 should have been disclosed in its earnings press release a few weeks earlier, as well as to certain trading in the company's securities. The investigation will not require any change to RSA Security's financial statements.
"The SEC has not concluded that there has been any wrongdoing, and we don't believe that there has been any," said Art Coviello, CEO and president at RSA Security. "We are cooperating fully with the SEC on this matter." |
