Broadcom to Record $750M in Stock Option Expenses
Staff Reporter -- EDN, July 14, 2006
Broadcom Corp. plans to restate results for the past five years and record additional noncash expenses in excess of $750 million related to stock option granting, the company said today in a statement.
An audit committee appointed by the Irvine, Calif.-based communications chip supplier recommended that the company should restate its financial statements for each of the years 2000 through 2005 as well as for Q1 2006, as Broadcom's financial statements and the related auditors' reports for those times are currently unreliable.
Broadcom expects to record an additional non-cash stock-based compensation expense, likely to be more than $750 million, related to the ongoing investigation. The company said the non-cash expense will be recorded in the years 2000-2003; most of the additional expense relates to a broad-based employee focal grant awarded May 26, 2000, Broadcom added in the statement.
Last month, the SEC launched an investigation into the company's stock option practices.
The company asserted that it does not expect the expense to affect Broadcom's current financial condition or previously reported revenues and will be offset by corresponding increases in additional paid-in capital.
"We are making good progress in our equity award review and toward the eventual resolution of this issue," Scott McGregor, Broadcom's president and CEO, said in a statement.
After the restated finances are completed and audited, Broadcom said it expects to file an amended Form 10-K report for the year ended Dec. 31, 2005, along with an amended Form 10-Q for the quarter ended March 31 with the SEC.
Broadcom added in the statement that it is set to announce Q2 revenues on July 20, along with Q3 revenue guidance.
Broadcom is only one in an increasingly growing group of tech companies under investigation for allegedly backdating stock options.
