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Veritas to restate earnings

The storage software maker plans to restate financial results over the past three years to reflect changes in accounting related to deals with AOL Time Warner.

    After reviewing its books for irregularities, Veritas Software said Friday that it plans to restate earnings over the past three years to change the way it accounts for deals with AOL Time Warner.

    The storage software maker said it will reverse deals in which $20 million of license and support fees paid by AOL were booked as revenue and $20 million of advertising services paid to AOL were booked as expenses. Veritas said in November that the Securities and Exchange Commission was looking into the deal and had subpoenaed company records as part of the regulatory agency's investigation of AOL.

    The restatement will reduce Veritas' revenue for the year 2000 by $17 million, or 1.4 percent, and will increase its loss by $7 million, or 1.1 percent. For the year ended Dec. 31, 2002, the company will reduce its net loss by $8 million, or 1.2 percent. For the nine months ended Sept. 30, 2002, the company will cut its reported revenue by $1 million, or 0.1 percent, and reduce its previously reported income by less than $1 million, or less than 0.9 percent.

    None of the restatements will have an effect on the Mountain View, Calif.-based company's cash position, Veritas said in a statement.

    Veritas said it expects to file restated financial statements by March 31.

    Some analysts had criticized the company for not disclosing the SEC investigation until November, noting that the storage software maker could have done so on several prior occasions, including when CFO, Kenneth E. Lonchar, left the company after it was revealed that he falsely claimed to have received a master's degree in business administration from Stanford University.

    In midday trading Friday, shares of Veritas were trading at $17.35, down 92 cents, or about 5 percent.