EPSON SAYS BRAZIL & MEXICO UNITS INFLATED PROFITS

[Anonymous]

http://www.bloomberg.com/apps/news?pid=20601101&sid=aVbLZJQZvqKg&refer=japan
Seiko Epson Says Brazil, Mexico Units Inflated Profit
MARCH.
09 — Seiko Epson Corp., a Japanese office equipment maker, said its
Brazil and Mexico units inflated profit by about $46 million.The Suwa,
central Japan-based company’s Brazilian subsidiary overstated profit by
$42 million over a nine-year period, while its Mexico unit improperly
reported $4.1 million in net income over four years, Seiko Epson said
today. The employees responsible for the deliberate accounting
manipulation have either been fired or demoted after an investigation,
it said.

Seiko Epson delayed reporting nine-month earnings on
Jan. 30 until today after the company announced it had identified
“inappropriate accounting” at a Latin American unit. The company will
book a loss of 4.4 billion yen ($45.4 million) in the fiscal year
ending March 31 to reflect the impact, it said.“The direct cause of the
improper accounting practices is believed to be the desire of those
involved to protect their positions,” Seiko Epson said in the
statement. “However this situation was made possible by the weakness of
internal controls at Epson companies in Brazil and Mexico.”The
investigation found three employees in Brazil overstated accounts
receivable to cover up an error in reconciling local and U.S.
accounting standards, while one in Mexico inflated the receivables to
give the impression the amount of money overdue was declining, the
company said.Seiko Epson said nine-month profit fell 47 percent after
the yen strengthened and on lower earnings at its semiconductor and
liquid-crystal-display businesses amid the global recession.

Nine-Month Earnings
Net
income fell to 11.9 billion yen in the nine months ended Dec. 31 from
22.2 billion yen a year earlier, the company said. Sales dropped 13
percent to 906 billion yen, compared with 1.04 trillion yen a year
earlier.The company on Jan. 30 cut its forecast for the year ending
March 31 to a net loss of 4 billion yen on sales of 1.14 trillion yen.
That compares with 19.1 billion yen profit and revenue of 1.35 trillion
yen a year earlier.Seiko Epson gained 6.6 percent to close at 1,127 yen
on the Tokyo Stock Exchange before the announcement, trimming the
stock’s decline this year to 20 percent.

[Author]

March 2, 2009 at 11:55 AM