Network adapter maker
said it overstated its fourth-quarter and fiscal year 2001 revenue by $501,000, and the company fired its chief executive as a result of the error.
JNI said that the revenue in question was recognized in violation of company policy, and the company said it would restate its results to correct the overstatement. Fourth-quarter 2001 revenue will be reduced from $13.5 million to $13 million, and the loss per share will increase to 16 cents from 15 cents. For the full year, the loss per share will increase to 51 cents from 50 cents.
In a press release Monday, JNI said that the company recognized the revenue at the time of the sale of products to an original equipment manufacturer without knowing that JNI's CEO had granted the customer the right of return on the merchandise. JNI said its CEO granted the right of return without notifying financial personnel or the company's auditors.
Under company policy, the revenue should not have been recognized until the returnable period ran out, and the company did not discover the error until the OEM customer returned some of the purchase in the second quarter of 2002.
The company's board asked for and received the resignation of CEO Neal Waddington, replacing him with company director John Stiska, who will serve as interim CEO.
JNI said that it has conducted a full review of all accounting entries from the beginning of 2001 through May 13, 2002, and has found no other improper activities.
Shares of JNIC were trading down about 8% to $4.95 in premarket trading on news of the restatement after closing at $5.37 Monday.