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Intuit announces no sign of fraud and no restatement over backdating. Other tech firms, including McAfee and Amkor, prove less fortunate, with both planning to restate. Others, including BEA and Cablevision, launch internal probes.
Stephen Taub, CFO.com | US
August 17, 2006
Wednesday was a good day for Intuit Inc. On a day in which software companies McAfee and Amkor Technology, Inc. both announced that the backdating of stock options would require them to restate past financial results, Intuit announced that a special committee investigating its past options granting practices had uncovered "no evidence of fraud or intentional wrongdoing." As a result, the maker of the popular TurboTax software program said it will not restate any previously filed financial statements.
Intuit initiated its review last May, after it was named in a report by the Center for Financial Research and Analysis (CFRA). Many companies appearing in the CFRA report subsequently received subpoenas or requests for information from the Securities and Exchange Commission and the Department of Justice. Intuit received an SEC request for information on June 9 and a subpoena from the US Attorney on June 26. The company said Wednesday it had reported the conclusions of its internal investigation to both enforcement agencies.
In another Wednesday announcement, McAfee said an independent review of its historical stock option grant practices and related accounting found that the actual accounting measurement dates differ from the measurement dates previously used for the option awards.
Although the security software supplier stressed it has not yet completed its review, it said that it "is more likely than not" that the amount of additional adjustments relating to prior periods will be material, forcing it to restate its financial statements in at least one, and potentially several, prior periods. Any potential restatement, it warned, "will be significant."
The company added it its previously issued financial statements for the past five fiscal years and first quarter of fiscal 2006 should no longer be relied upon. "In the event that a restatement of these financial statements is required, it likely will affect financial statements for prior periods," it added.
Amkor Technology, Inc. also said it expects to restate its results for the years 1998 through 2005 and the first quarter of 2006 to correct errors related to accounting for stock-based compensation expense.
The provider of advanced semiconductor assembly and test services said that in the course of furnishing information to a special committee reviewing its historical stock option grant practices, Amkor identified a number of occasions on which the measurement date used for financial accounting and reporting purposes for option awards granted to certain employees was different from the actual grant date.
The company explained that it should have recorded compensation expense for the difference in the values between these two dates, over their original vesting periods.
Meanwhile, BEA Systems Inc. said after the stock market closed on Wednesday that its audit committee has launched an internal review of its historical stock option grants.
"Facts may come to light once the review is completed that may require us to change our accounting treatment of stock options granted in prior periods, which may or may not have a material adverse effect on our results of operations for those periods or other periods," it added in a press release.
Cablevision Systems Corp. Wednesday said in a regulatory filing that the SEC and the U.S. Attorney's Office are each conducting an investigation into its stock options and SAR grants during the 1997 to 2002 period.
The company previously announced that as a result of a voluntary, ongoing review it and CSC Holdings, Inc., the operating company of Cablevision Systems, it had determined that the date and exercise price assigned to a number of its stock options and SAR grants during the period did not correspond to the actual grant date and the closing price of the company's common stock on that day.
Meanwhile, on August 13, the company's subsidiary, Rainbow National Services LLC, advised the trustee for its outstanding notes that, in light of the option and SAR review disclosed on August 8, RNS would not deliver financial information under the RNS indentures by August 14, but expected to be able to deliver that information by August 21.