Details on PTC'sToshiba Problem

Here is PTC CFO Neil Moses describing how PTC and GE Leasing were allegedly defrauded by an employee of Toshiba in Japan:

First, during 2001 to 2006, PTC received orders made by or on behalf of Toshiba that we believed were valid. We delivered the ordered items and we were paid for the orders in question. All of the transactions were in Japan and involved our Japanese subsidiary.

Subsequently, the Toshiba employee involved in placing these orders with PTC Japan was arrested along with three other individuals for allegedly perpetuating a complex scheme to defraud various leasing companies. The details of this scheme are still unclear, but there are allegations that the individual secured financing in excess of the purchase amount for the applicable transactions and that funds were misappropriated for these individual's personal benefit.

This scheme went undetected by the companies involved, which include multinational corporations Toshiba and GE. Some of PTC Software that was sold to Toshiba during this period of time has been installed and is in use. We believe we are entitled to retain payment for all items delivered and upon resolution of the various parties' obligations in this matter; we will record revenue or other income at that time.