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Stock Option Woes Continue for Cirrus, KLA, MIPS
By Ann Steffora Mutschler -- Electronic News, 11/16/2006
As the number of companies impacted by stock option backdating troubles, three more companies were reminded of their Nasdaq listing requirements Wednesday.
Austin, Texas-based analog and mixed-signal chip provider Cirrus Logic Inc., San Jose-based semiconductor manufacturing equipment provider KLA-Tencor Corp., and Mountain View, Calif.-based semiconductor intellectual property (IP) provider MIPS Technologies Inc. all marked their mid-week with statements saying they had received warning letters from the Nasdaq stock exchange that they are no longer in compliance with listing requirements.
Cirrus received a Nasdaq Staff Determination letter on November 10, stating that the company is not in compliance with the continued listing requirements of Nasdaq Marketplace Rule 4310(c)(14) because it has not timely filed with the Securities and Exchange Commission (SEC) its Quarterly Report on Form 10-Q for the quarter ended September 23.
The company said it plans to request a hearing before a Nasdaq Listing Qualifications Panel to review the Staff Determination. Pending a decision by the panel, shares of Cirrus’ common stock will continue to be listed on the Nasdaq Global Select Market.
As previously announced, Cirrus’ Board of Directors formed a Special Committee to voluntarily review the company's historical stock option granting practices and related accounting matters.
Although the timeframe for completing the Special Committee's internal review is uncertain, the company said it remains committed to resolving these issues as quickly as possible. The company plans to file with the SEC its Form 10-Q for its fiscal Q2 2007 as soon as practicable following the conclusion of the Special Committee's review.
Next, KLA reported Wednesday that because the company has not yet completed the restatement of its financial statements required due to the retroactive pricing of certain stock options, it was unable to file its quarterly report on Form 10-Q for the fiscal quarter ended September 30 by the required filing date of November 14.
As a result, KLA received Tuesday an Additional Nasdaq Staff Determination notice indicating that it is not in compliance with the filing requirements for continued listing as set forth in Nasdaq Marketplace Rule 4310(c)(14) and that this non-compliance will serve as an additional basis for delisting the Company's securities from the Nasdaq Global Select Market.
KLA said it has already appealed the previous Nasdaq Staff Determination and appeared in a hearing before the Nasdaq Listing Qualifications Panel on October 26, but a decision has not yet been rendered by the panel. As with Cirrus, pending the panel’s decision, KLA’s shares will continue to be listed on the NASDAQ Global Select Market.
Finally, MIPS also received its NASDAQ Additional Staff Determination letter dated Tuesday, advising the company that it is not in compliance with the filing requirements for continued listing as set forth in Marketplace Rule 4310(c)(14).
The notice was issued due to MIPS’ delayed filing of its Quarterly Report on Form 10-Q for the quarter ended September 30, and follows a similar letter received on September 19 stating that the company was not in compliance with the filing requirements for continued listing due to the delayed filing of its Annual Report on Form 10-K for the fiscal year ended June 30.
MIPS said it plans to present its views with respect to this additional deficiency to the NASDAQ Listing Qualification Panel in writing no later than November 21.
The company was granted a hearing with the panel which was held on November 9, during which the company's management presented its plan to regain compliance with NASDAQ's filing requirements with respect to the Annual Report on Form 10-K.
Pending a decision of the panel, MIPS’ shares will continue to be listed on the NASDAQ Global Market.
MIPS reminded that on August 30, it announced that it had initiated a voluntary review of historical stock-based compensation practices and related potential accounting impact, and its board of directors had formed a special committee, consisting of independent directors to review the company's historical option grant practices and its accounting for its option grants.
MIPS’ special committee retained independent outside legal counsel to assist it in its review. The company still has not filed its Annual Report on Form 10-K for the year ended June 30 pending the completion of the special committee's investigation and, similarly, is unable to file its Quarterly Report on Form 10-Q for the period ended September 30. The company said it is focused on resolving these issues as soon as possible and plans to file these reports as soon as practical following completion of the investigation by the special committee.
Also, on October 25, MIPS said that although the investigation by the special committee remains ongoing, the special committee has reached a determination that different measurement dates should have been used for computing compensation costs for certain historic stock option grants than those used in the preparation of the company's historical financial statements.
The committee has not yet completed its investigation to allow for the final determination of the proper measurement dates, and, therefore, has not determined the amount of additional compensation expenses that will be recorded.
Nonetheless, MIPS said its historical financial statements included in reports that it has previously filed with the SEC will need to be restated. Consequently, such financial statements, and the company's earnings releases reporting periodic operating results and financial conditions for such periods, should no longer be relied upon.
