IBM accounting queried by SEC
The U.S. Securities and Exchange Commission asked the computer giant to consider amending its 1999 annual report. IBM says the request was routine.
At least four letters from the U.S. Securities and Exchange Commission recently obtained by The Wall Street Journal requested that IBM consider amending its 1999 annual report and its first-quarter 2000 report. The requests did not lead to changes in either report.
The letters, sent in mid-2000, contested the way IBM booked a $4.06 billion gain from the sale of its Global Networks business to AT&T. Instead of recording the figure as a separate line item, IBM booked it under the "Sales, General and Administrative" line in its income statement. The letters also questioned whether IBM disclosed the extent to which pension funds added to the company's revenue, according to the paper.
IBM said in a statement Thursday that "comment letters such as these are routine for large public companies" and declined to comment on "private" communications with the SEC. "We are proud of our accounting and disclosure practices, and we stand behind them," the statement added.
The SEC could not confirm that the letters had been sent and said it wouldn't comment on whether any investigations were currently under way. The letters were obtained under the Freedom of Information Act.
The recent Enron debacle has put a spotlight on corporate accounting practices this year. Global Crossing and PeopleSoft have also come under scrutiny for their accounting practices.
Concerns about IBM's accounting practices were also raised earlier this year after the Armonk, N.Y.-based company sold one of its businesses for a $280 million gain on the last day of 2001, a move that boosted its earnings but wasn't disclosed in a press release.
However, IBM's latest annual report quelled most concerns about its accounting practices on Wall Street, according to analysts.
"There is no smoking gun in IBM's 10K (report). In fact, increased disclosure paints IBM's financial position in a somewhat more positive light," Merrill Lynch analyst Steven Milunovich said in a research note earlier this month after IBM released its annual filing.