Lucent Settles SEC Probe; Will Pay No Fines, Make No Restatements

By Agence France-Presse Lucent Technologies said Feb. 27 it had reached an agreement in principle with the Securities and Exchange Commission to settle its accounting probe. Lucent said in a statement that it will not pay any fines or penalties and will not make any financial restatements as part of the settlement of the probe of revenue recognition in the telecom equipment maker's 2000 accounts. "We self reported certain revenue recognition issues to the SEC in November and December 2000 as soon as we discovered them and cooperated with the SEC," said Patricia Russo, chairman and CEO of Murray Hill, N.J.-based Lucent. "We are very pleased to be able to put this issue behind us in this manner and totally focus on moving our business forward." The settlement is subject to final approval by the SEC. Lucent has not admitted or denied any wrongdoing but will "consent to a settlement enjoining the company from future violations of the anti-fraud, reporting, books and records and internal-control provisions of the federal securities laws." The regulator's probe focused on Lucent's methods of booking sales, on its use of "nonrecurring credits," or one-time discounts given to customers, as well as its accounting treatment of software-licensing agreements. The company was also probed for the practice known as "channel stuffing" where distributors are encouraged to stock up on more product than needed. The company's sales team are understood to have engaged in the practice in order to meet sales targets and boost their commission pay. Copyright Agence France-Presse, 2003