IBM OKs Informal SEC Investigation
Online Staff -- EDN, June 28, 2005
IBM Corp. announced today that it will voluntarily comply with an informal investigation by the staff of the U.S. Securities and Exchange Commission (SEC).
The SEC probe concerns IBM's disclosures relating to the company's Q1 earnings and expensing of equity compensation. The SEC informed IBM that this does not indicate the company has violated any laws.
On April 14, IBM announced Q1 2005 results, which reflected expensing of equity compensation, or stock options. Revenues from continuing operations for the quarter were $22.9 billion, up 3 percent, compared with revenues of $22.2 billion in the year-ago period.
Prior to reporting its Q1 results, IBM announced its intention to expense equity compensation in the first quarter. That made it one of the first high-tech companies to do so, ahead of the government's deadline for the accounting changes. The adoption is based on the implementation guidance provided in the SEC's release of Staff Accounting Bulletin No. 107, and in accordance with the FASB's revised Statement of Financial Accounting Standards (SFAS) No. 123(R), "Share-based Payments."
Other than saying that it was working with SEC investigators, a Big Blue spokesman said the company had no further comment on the matter.
