Riverstone restates earnings

Riverstone Networks this week said it is restating revenue for fiscal 2002 and 2003 after an internal review of its accounting practices.

The internal review was prompted by requests for information and then the launch of a formal investigation into Riverstone's accounting practices by the Securities and Exchange Commission (SEC).

Riverstone said it overstated previously reported net revenues for the 2002 fiscal year ended March 2, 2002, by as much as US$47.3 million. Riverstone posted sales of $210.8 million for that period.

The company also said its previously reported net revenues for the nine months ended November 30, 2002 - $54.5 million - is overstated by as much as $4.2 million. And previously announced net revenues for the fiscal year ended March 1, 2003, of $69.6 million were overstated by as much as $4.2 million, Riverstone says.

These overstatements are related to the company's recent discovery that, in some cases, sales to customers were subject to contingencies that were not accounted for at the time the transactions were originally recorded.

Riverstone does not anticipate a negative impact on previously announced net revenues for the first quarter of fiscal 2004 ended May 31, 2003, of $12.7 million.

The review of the company's accounting practices by a special committee of the board of directors is ongoing. Based on that review, additional items may be restated, Riverstone says.

The review has prompted Riverstone to delay filing of its Form 10-K for the fiscal year ended March 1, 2003, and its Form 10-Q for the quarter ended May 31, 2003. The company says it cannot state with certainty when it will file those reports.

The delayed filing and restatement prompted NASDAQ to halt trading of Riverstone stock for about 24 hours. Trading resumed at 12:15pm EST on Tuesday after Riverstone provided NASDAQ with additional information on its restatement and SEC document filings.

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