Moore Wallace Announces Suspension of CFO; RR Donnelley Comments
Press release from the issuing company
MISSISSAUGA, Ontario and NEW YORK, Feb. 9 -- Moore Wallace Incorporated announced today that Mark Hiltwein, its Executive Vice President and Chief Financial Officer, has been suspended with pay. This suspension results from actions Mr. Hiltwein took late last week in providing a misdated document to PricewaterhouseCoopers LLP in connection with an investigation they were conducting. That investigation focused on allegations in an anonymous letter received by the Company in late December 2003 alleging misuse of acquisition-related restructuring charges, together with vague assertions of other accounting actions.
At the direction of the Audit Committee of the Company's Board of Directors, PricewaterhouseCoopers immediately began an independent review of the allegations of misconduct in the letter. PricewaterhouseCoopers had largely completed their work and found no evidence to support these allegations.
As described below, based on information available to the Company to date, it does not appear that this matter will have any financial statement impact.
Mr. Hiltwein, 40, has been replaced as Chief Financial Officer on an interim basis by James R. Sulat, Senior Executive Vice President of Moore Wallace. Mr. Sulat, 53, who joined Moore Wallace in April of 2003, brings extensive experience in corporate governance to the role of chief financial officer. Prior to joining Moore Wallace, Mr. Sulat served as Chief Financial Officer of Chiron Corporation. Prior to joining Chiron, Mr. Sulat served as Chief Financial Officer of Stanford Health Services. He was educated at Yale College and Stanford University Graduate School of Business. He currently serves as Chairman of the Audit Committee of each of Vans, Inc. and Maxygen, Inc.
As described above, PricewaterhouseCoopers had largely completed their work and found no evidence to support the allegations of misconduct in the anonymous letter. Although the Company and the Company's outside auditors were satisfied with the level of documentation supporting the restructuring charges, PricewaterhouseCoopers asked the Company's accounting staff, including Mr. Hiltwein, for any additional materials they had supporting these restructuring charges. On Thursday of last week Mr. Hiltwein directed another member of the accounting staff to send to PricewaterhouseCoopers a memorandum about the Company's restructuring processes and plans. This memorandum's dateline was "May 2003" but was created by Mr. Hiltwein last week and appears to be documentation of the kind PricewaterhouseCoopers was requesting. PricewaterhouseCoopers detected that the document had been created later than the dateline of the memorandum. The other member of the accounting staff has also been suspended with pay pending completion of the investigation of the misdated document.
Although the absence of clearly organized summary restructuring plan documents at corporate headquarters was the subject of a recommendation by PricewaterhouseCoopers for improvement and the Audit Committee had directed Mr. Hiltwein to seek to improve this area of corporate record keeping prospectively, it did not appear to be a major shortcoming. The Company does not believe that the non-existence of the memorandum created by Mr. Hiltwein would have any effect on the Company's accounting for its restructuring charges. The Company has spoken to Mr. Hiltwein and he has stated that the dating of this document was a mistake and poor judgment on his part but that it was not the product of any intention to deceive PricewaterhouseCoopers, the Audit Committee or anyone else.
When it was received, the anonymous letter was immediately forwarded to the Audit Committee for any action it deemed appropriate and also forwarded to the U. S. Securities and Exchange Commission, the Ontario Securities Commission and the New York Stock Exchange. The Company also has kept its combination partner, RR Donnelley, informed regarding the allegations and their investigation. The Company had agreed to provide documents requested by the SEC in response to the anonymous letter. The Company will, in all matters, cooperate fully with any regulatory agency that wishes to investigate any matters within the agency's jurisdiction.
PricewaterhouseCoopers is taking additional actions to confirm their earlier conclusions. The Company will report the full findings of the PricewaterhouseCoopers investigation in an expeditious manner.
Mark A. Angelson, Chief Executive Officer of the Company said, "We are extremely fortunate to have Jim Sulat as a member of our corporate family. He is a proven leader and trusted counsellor with an excellent reputation."
Mr. Angelson continued, "Mark Hiltwein's suspension should not be viewed as a conclusion that he acted with an intention to deceive. Mr. Hiltwein has a widely held reputation for personal integrity, and he has provided long, excellent service to the Company. However, Mr. Hiltwein's conduct was unacceptable and in the circumstances the Board of Directors has concluded to relieve him of his responsibilities pending completion of a full investigation by our audit committee and its independent advisors."
RR Donnelley Comments on Moore Wallace News Release
RR Donnelley was aware that an anonymous letter had been sent in late December 2003, making certain allegations regarding accounting practices at Moore Wallace Incorporated. RR Donnelley was advised that the Audit Committee of Moore Wallace promptly engaged PricewaterhouseCoopers to undertake an independent review of the allegations. In late January, RR Donnelley was told that preliminary results of the review indicated that there was no evidence to support the allegations of misconduct.
Moore Wallace continues to keep the RR Donnelley Board of Directors informed of the results of the review and actions being taken as described in the Moore Wallace news release issued Feb. 9, 2004. The RR Donnelley Board is actively monitoring these matters and looks forward to completing the combination with Moore Wallace as early as practicable.
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