Comverse files a 10-K for the ages …

Remember Comverse Technology (CMVT), the billing-software company that became a poster-child for stock-options back-dating? It’s the one whose former CEO fled to Namibia and has managed not to be extradited to the U.S.

Well, on Monday, amid reports that the company’s assets will soon be snapped up by circling tech companies, Comverse filed its first 10-K since 2005, and it’s a doozy: It adds up to well over 1,200 pages, including more than 120 exhibits — most of them executive compensation contracts of one sort or another. Woven throughout is the tale of its Special Committee, the board panel that was originally tasked with looking into stock-options back-dating allegations, and ultimately also

“other financial and accounting matters, including the recognition of revenue related to certain contracts, errors in the recording of certain deferred tax accounts, the misclassification of certain expenses, the misuse of accounting reserves and the intentional, inaccurate presentation of backlog.”

Just to put things in perspective, the main document itself — excluding all those exhibits — amounts to 280,623 words. With the exhibits? That would be just shy of 597,000 words. At a page a minute without a break, that’s more than 21 hours of reading. It’s longer than Atlas Shrugged or War and Peace, at least according to Wikipedia, but still shorter than the King James Bible, at something like 783,000 words, and just a fraction of Proust’s Rememberance of Things Past, at roughly 1.5 million words. (With all due respect to the best efforts of Comverse’s lawyers, we can’t help but feel it lacks some of the pizazz of Tolstoy, Proust and the Bible. But we refuse to get into the debate about the length of the U.S. Tax Code.)

Keep in mind, incidentally, this is just the 10-K for fiscal 2009, which ended in January of last year. The most recent fiscal year won’t be ready until — well, as far as we can tell, Comverse isn’t saying just yet when it’ll be ready.

Ha’ beat us to some of the more salient points, but they’re worth repeating: $1 billion in losses over three years, and a $100 investment in Comverse shares at the end of 2004 would have been worth $36 at the end of last year; the S&P 500: $80.50. (Your mattress, of course, offered better returns still.) And the all-in cost of putting the financial statements together seems to have reached $500 million to $600 million. Anyone know if that’s a record?

Anyway, it isn’t often that we here at footnoted get to write about fugitives in Namibia, accounting imbroglios and Proust all at once. For investors’ sake — and the sake of our eyesight — we hope it doesn’t happen again for a good long time.


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