CALAMP HIRES NEW AUDITOR FIRM CITES ANDERSEN 'DIFFICULTIES'.

Byline: Brent Hopkins Staff Writer

CAMARILLO - Severing a two-decade relationship, California Amplifier Inc. dismissed Arthur Andersen LLP as its auditor Thursday.

Though Andersen shepherded CalAmp through difficult financial straits last year when the electronics manufacturer had to restate earnings amid a slew of lawsuits from investors, the troubled accounting firm's woes in the wake of the Enron debacle proved to be too great. It had audited CalAmp for more than 20 years, since the tech firm incorporated in 1981, but will be replaced by KPMG to audit the recently closed fiscal year 2002.

``It's because of the current difficulties that Arthur Andersen is facing,'' said Chief Financial Officer Rick Vitelle. ``We spoke to the other Big Five accounting firms as well, and we felt that KPMG was in the best position to step in and rapidly pick up where Arthur Andersen was at in terms of our year-end audit.''

This will delay the full-year report until late May, but CalAmp did release unaudited numbers for the fourth quarter. Revenue checked in at approximately $22.5 million, and earnings per share are expected to be at the high end of guidance, near 4 cents per share. Investors warmed to the news, sending the stock, traded on the Nasdaq under the symbol CAMP, to close at $6.70, up 54 cents.

CalAmp's severing of ties with Andersen contains some irony, as it stood behind the accounting firm's integrity last year when it came under fire for misstated earnings. Vitelle, who took over as CFO after the restatement fiasco, said that the decision to switch had nothing to do with the two companies' past relationship.

``There were no problems whatsoever with Andersen's auditing,'' Vitelle said. ``They did what was expected in the circumstances - go back and reaudit fiscal year 2000, which they'd previously reported on, and which had contained misstatements. This is not related to that situation.''

The decision is unlikely to affect stock price, said principal equity analyst Rich Valera, who follows the stock for investment bank Needham & Co. It could, however, help CalAmp's image in the future, he said, especially since it has had ``a pretty checkered financial past.''

``It's a reaction to Andersen's obvious legal and other issues,'' Valera said. ``I think it's a practical move to eliminate a potential dark cloud over them. No one wants an auditor who's been indicted on criminal charges - they're supposed to be independent and honorable.''

As a result of the switch, KMPG will have an intense six weeks of work on its hands to report on time, according to Jim Macklin, a professor of accounting and information systems at California State University, Northridge.

``It's not unusual for firms to change auditors, but there's more work involved when the new ones come in,'' he said. ``They have to come in and satisfy themselves with all the past results, so there's a significant amount of work to be done in that first year. Once they've established a relationship, it goes much more smoothly.''

With CalAmp's past legal difficulties settled, Vitelle said, the company stands on relatively firm ground, in spite of its reliance on the tech market.