Microsoft corrects $1 billion 'clerical error'

From...

By Scarlet Pruitt

(IDG) -- Microsoft said Tuesday that it filed amendments with the U.S. Securities and Exchange Commission (SEC) to correct a nearly $1 billion "clerical error" in financial statements for 2001.

The Redmond, Washington-based company said that it misstated unearned revenue for the quarter ended September 30, 2001 and the six months ended December 31, 2001, which were formerly reported as $1.1 billion and $3.83 billion respectively. These numbers were corrected to state $2.07 billion in unearned revenue for the three months ended September 30, 2001 and $4.79 billion in unearned revenue for the six months ended December 31, 2001, the company said.

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Unearned revenue is a common financial term for money received for a product or service that has yet to be fulfilled. This revenue sits on the books as a liability until it has been earned.

Microsoft also amended its recognized unearned revenue for the two periods, claiming that the previously reported $914 million loss cited in recognized unearned revenue for the quarter ended Sept. 30, 2001 is now a loss of $1.879 billion and the $2.863 billion loss in recognized unearned revenue claimed for the last six months of 2001 has been corrected to a loss of $3.828 billion.

Despite the egregious clerical errors, the company said that its net cash from operations and net change in cash and equivalents for the periods in question remain unaffected.

Scarlet Pruitt is a Boston correspondent for the IDG News Service, an InfoWorld affiliate. Joris Evers contributed to this report.