NEW YORK (CNNfn) - Cendant Corp. has restated its results downward for 1995, 1996 and 1997 to make up for massive accounting irregularities discovered earlier this year by the U.S. Securities and Exchange Commission.
The SEC asked the company to revise its figures after finding heavy accounting irregularities at CUC International, one of the companies that merged to form the Parsippany, N.J.-based franchise giant.
For 1997, Cendant experienced a net loss of $217.2 million, or 27 cents per diluted share, rather than net income of $55.4 million, or 6 cents per diluted share, as originally reported.
Results for 1997 were restated to reflect a change in membership revenue and expense recognition, not just accounting irregularities.
Excluding merger-related costs and other unusual charges, the company originally reported earnings of $872.2 million, or $1.00 per diluted share, for 1997, including continuing operations of $816.2 million, or 94 cents per diluted share.
The restated income from continuing operations excluding unusual charges, extraordinary gain and the cumulative effect of a change in accounting totaled $571 million, or 66 cents per diluted share.
The drop of $245.2 million, or 28 cents per diluted share, in income from continuing operations represents additional after-tax expenses of $15.3 million, resulting from an SEC-requested change of 2 cents per diluted share and $229.9 million, or 26 cents per diluted share, of accounting errors and irregularities.
The company said the impact of the restated accounting policy will reduce 1998 earnings by 7 cents to 9 cents per diluted share.
Cendant said the accounting change affects 1998 results differently from 1997 results because of the significant growth in the volume of individual memberships sold in 1998.
Under the restated policy, revenue and resulting earnings will be recorded in the year following the year in which the company incurred costs to solicit those members.
Shares of Cendant (CD) fell 1/4 to 13-15/16 on the new York Stock Exchange Monday.