EPSON SAYS BRAZIL & MEXICO UNITS INFLATED PROFITS

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EPSON SAYS BRAZIL & MEXICO UNITS INFLATED PROFITS

 user 2009-03-02 at 11:54:58 am Views: 51
  • #21750

    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.