Information technology outsourcer Computer Sciences will restate its results to add $68 million in expenses ($59 million after tax) in connection with stock option grants dating back to 1996.
The company explained that 9,234 grants should be modified, principally due to delays in authorization and approval and to the absence of definitive documentation.
In a statement, Computer Sciences stressed that an internal investigation found no intentional wrongdoing by current or former employees or directors. “The independent directors continue to have confidence in the integrity of management,” added the company.
The largest adjustment, $20.7 million, will be applied to the March 2006 fiscal year. Computer Sciences noted, however, that because the adjustments will be spread over ten years, they will not be material in any given period.
The company also stated that tax benefits associated with exercising certain stock options in foreign jurisdictions had been incorrectly credited against the foreign tax provision rather than additional paid-in capital. In addition, Computer Sciences acknowledged that it had applied the effective rate, rather than the U.S. statutory rate, in recognizing tax benefits associated with options exercised in the United States.
Correcting these two tax errors will result in a cumulative tax provision of about $14 million, which is included in the $59 million after-tax adjustment, according to the company.