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Technology Stocks : Peregrine Systems Inc. (NASDAQ:PRGN) -- Ignore unavailable to you. Want to Upgrade?

To: tuck who wrote (480)	6/6/2002 11:45:28 AM
From: tuck	Read Replies (2) \| Respond to of 492

>>He may have found a good trade in a tough market, if nothing else.<< That is, if he was really fast. >>NEW YORK -- Peregrine Systems Inc. engaged in accounting practices, such as secret side deals and software swaps, that "indicated possible fraud," according to the company's former auditor. KPMG LLP, which Peregrine fired in May after seven weeks and its discovery of bookkeeping problems, disclosed the practices in a letter to the Securities & Exchange Commission Wednesday disputing the company's explanation of its dismissal. The audit firm said it was fired before these issues could be resolved. It also noted that Peregrine officials gave inconsistent responses to its questions and withheld information. A Peregrine spokeswoman declined to comment. The company's internal probe, now being handled by PricewaterhouseCoopers LLP, is still ongoing. But KPMG's letter suggests the San Diego company's accounting problems are broader than previously disclosed. For example, KPMG said Peregrine may have understated the purchase price of Remedy Corp., wrongly booked deals with extended payment terms and improperly classified accounts receivable write-offs. KPMG said it also found "numerous, significant manual adjustments to software license and maintenance revenue." KPMG said it learned that people at Peregrine made secret "side agreements" with customers that allowed them to not pay for software they were agreeing to purchase and Peregrine filed quarterly reports without uncovering the extent of such side deals. The audit firm said Peregrine officials were unable to quantify the amount of sales to resellers during certain accounting periods or the amount of licenses held by resellers and not sold to end users. Peregrine officials also gave inconsistent answers to KPMG's questions about a swap transaction being investigated by the SEC's enforcement division, KPMG said. Although KPMG didn't identify the deal, the SEC brought charges earlier this year against Critical Path Inc. for a swap involving Peregrine. The two companies exchanged software in September 2000 and booked the transactions and cash sales. David Thatcher, Critical Path's former president and a former CFO at Peregrine, pleaded guilty to securities fraud in February. Peregrine said May 6 that it was launching an investigation after KPMG found up to $100 million in revenue that may have been inappropriately recorded. KPMG was hired to replace Arthur Andersen LLP. The company later said it would restate results for the past 11 quarters and take steps to reduce its costs, including layoffs. Since the eruption of the accounting scandal, Peregrine's chief executive, chief financial officer, general counsel and the head of its audit committee have resigned. On Monday, Peregrine said it hired Gary Greenfield, a business partner of Chairman John Moores, as its new CEO. Peregrine shares, which have fallen 90% this year, closed Wednesday at $1.47.<< Ouch, Tuck