Altera's Internal Investigation Reveals Errors
Staff Reporter -- EDN, June 21, 2006
Altera expects to restate its financial statements for the last 10 years, following the preliminary results of an internal investigation by a special committee of independent directors looking into potential errors related to the company’s accounting for stock-based compensation.
The company’s special investigation committee reached a preliminary conclusion that the actual measurement dates for certain stock option grants issued between 1996 and 2000 differ from the recorded grant dates.
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As a result, Altera said, it expects to record additional non-cash charges for stock-based compensation expenses in prior periods, and Altera added that it believes the charges would be material.
Altera said that any stock-based compensation charges incurred as a result of the restatement would decrease reported income or increase reported loss from operations. Altera has not yet determined the tax impact of the restatements.
The company said that it does not anticipate the restatement will result in a material charge to fiscal year 2005. But because the committee’s review is still ongoing, other years may be subject to restatement and the impact to fiscal 2005 may be different than the company currently anticipates.
“The company's audit committee, after consultation with management and the special committee, determined that Altera's financial statements and any related reports of its independent registered public accounting firm for the fiscal years ended 1996 through 2005 should no longer be relied upon,” Altera said in a statement. “Altera intends to file its restated financial statements and its quarterly report for the period ended March 31, 2006, as soon as practicable after the completion of the special committee's investigation.”
Altera is also evaluating its Management's Report on Internal Controls Over Financial Reporting that it published in Annual Report on Form 10-K for the fiscal 2005. Although the company has not yet completed its analysis of the impact of this situation on its internal controls over financial reporting, Altera has determined that it is likely that it had a material weakness in internal control over financial reporting at the end of that fiscal year.
Any stock-based compensation charges incurred as a result of the restatement would have the effect of decreasing reported income or increasing reported loss from operations, and decreasing reported net income or increasing reported net loss, and decreasing reported retained earnings figures contained in Altera's historical financial statements for the periods mentioned above. However, Altera does not expect that the anticipated restatement will have any impact on its historical revenues, the company said in its statement
Altera expects to announce second quarter revenue results and third quarter revenue guidance on July 24, 2006. The company will not be in a position to announce additional financial results for the second quarter until the special committee has completed its investigation and the company has filed its restated financial statements and its quarterly report for the period ended March 31, 2006.
