VeriFone Completes Restatement

Errors over inventory costs will take $36.9 million from operating income.
By Robert Holmes ,

VeriFone

(PAY)

said its audit committee has found that the company did not maintain effective internal controls over financial reporting, leading to an overstatement of its income by $36.9 million.

The San Jose, Calif.-based maker of electronic payment systems said in December it would restate financial results for the first three quarters of its fiscal year ended Oct. 31, 2007, due to accounting errors. VeriFone said Wednesday those errors over inventory costs will take $36.9 million from operating income, $7.2 million more than the company estimated in December.

Broken down by quarter, VeriFone said it expects its operating income to be reduced by approximately $12.5 million in the first quarter, $9.8 million in the second quarter and $14.7 million in the third quarter. The company reaffirmed revenue estimates it made in December for the full year ended Oct. 31, 2007, but shares were still down 17% to $13.97.

Since originally uncovering the accounting errors in December, VeriFone shares have plummeted more than 70%.

"We are focused on addressing the errors we made to ensure they are not repeated, while remaining committed to driving the business forward in these admittedly challenging times," said CEO Douglas Bergeron in a release.

VeriFone said that CFO Barry Zwarenstein has resigned, and the resignation will be effective following the completion of the company's restatement and filing of quarterly reports and its annual report with the

Securities and Exchange Commission

.

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