NU Online News Service, March 25, 2003, 12:55 p.m. EST – UnumProvident Corp., Chattanooga, Tenn., says it has responded to an accounting critique from the U.S. Securities and Exchange Commission by changing the way it reports problems with investments in low-rated securities.
The change will increase reported net income for 2002 by $34.2 million, to $401.2 million, and it will cut reported net income for 2001 by $38 million, to $541 million, the company says.
The changes will not affect the total stockholder equity figures, UnumProvident says.
UnumProvident says it caught the attention of the SEC because it used its own analysis to come up with market value figures for certain impaired, low-rated securities. The SEC told UnumProvident it ought to stick with quoted market prices, and UnumProvident says it will now follow those instructions.
Some critics have blamed the SEC for failing to catch accounting problems at several large companies that collapsed in 2001 and 2002. The SEC has reacted by forcing many public companies to restate their earnings for the fourth quarter of 2002.
The SEC’s critique of UnumProvident’s accounting practices worried investors by blocking final approval of a filing that UnumProvident needs to raise $1.5 billion on Wall Street. Now that UnumProvident has worked out an agreement with the SEC, the filing should take effect in a few weeks, the company says.