Richard Bravman, the CEO of wireless bar-code scanner maker Symbol Technologies
, has resigned in a bid to help the company put a federal accounting probe over alleged “channel stuffing” behind it.
In a statement, Bravman said he voluntarily relinquished his roles as CEO and board member in an effort to “facilitate a favorable conclusion to the previously reported government investigation into Symbol’s past accounting practices.”
The Holtsville, N.Y.-based company also said it had completed its restatement of earnings for 1998-2001, in addition to the first three quarters of 2002. The company had delayed filing some of its quarterly reports while it worked with Securities and Exchange Commission and other federal regulators on accounting questions.
Bravman, a 24-year veteran of the company who had been named to the CEO position in June of 2002 to replace Symbol founder and interim CEO Jerome Swartz, becomes the latest in a string of executives to exit the company as a result of an investigation into its accounting.
Bravman also assumed the role of chairman last July when Swartz resigned his role as chairman after announcing that “improper finance and accounting activities occurred at Symbol Technologies” during his tenure. The company’s chief counsel also exited the company at the time.
Symbol has been under investigation by both the SEC and the U.S. Department of Justice throughout 2003 over alleged fraudulent accounting practices that inflated sales revenues, a practice known as “channel stuffing.”
Last spring, former Symbol executive Richard Asti pleading guilty to a violation of securities laws by “fabricating over $100 million in sales revenue” during his tenure as head of Symbol’s sales finance group, according to federal prosecutors.
The SEC complaint against Asti alleged that he and others in the company shipped products to customers at the end of each quarter, whether or not they needed them or planned to sell them, “in order to meet revenue and earnings targets imposed by Symbol’s president at the time.”
Symbol’s Tuesday announcement said that in the second quarter of 2001, Bravman participated in a “single transaction initiated by others” at Symbol that involved the premature recognition of approximately $860,000 in revenue. Bravman then informed his superior at the company that he would not participate in such a transaction again.
In early 2002, while under consideration for president of Symbol, Bravman discussed the transaction with members of the board, the company said. After becoming president, he also discussed his involvement in the transaction with “certain members” of then-current senior management.
Later in 2002, after he had been appointed CEO, Bravman said he detailed his role in the transaction to the outside counsel investigating the company’s past accounting practices. Bravman directed counsel to disclose that information to the government promptly.
“While this is a tremendously difficult decision for me personally after being part of Symbol’s growth and success over the past 25 years, stepping aside at this juncture is in the best interests of the company, its employees, its customers and its shareholders,” Bravman said in the statement. “When I learned that my connection to this transaction might influence the outcome of the government’s investigation of Symbol, I realized that this is the right thing to do.”
Symbol’s restatement of earnings results in a reversal of cumulative net revenue of approximately $234.2 million and cumulative net earnings of $324.7 million that were recognized in the restatement period.
As of Sept. 30, 2002, Symbol’s restated stockholders’ equity was $946.2 million as compared with the $1.1 billion originally reflected in the Form 10-Q for 2002’s third quarter.
“We are very excited about the events of today in completing the restatement period,” Nuti told reporters and financial analysts Tuesday during a conference call. “Just getting the productivity back in finance, IT and legal alone — forgetting about the overhang this whole thing has had on the company — is really very exciting.”
“Now that we are nearing the end of our long investigation into accounting improprieties by the former management of Symbol, our associates will be happy to have this chapter of the company’s history behind us,” Nuti said.
Shares of the company were rising by over 2 percent to $17.26 in early afternoon trading following the company’s announcement.