Add Sanmina-SCI and PMC-Sierra to the rapidly growing list of companies that have discovered irregularities with their options granting practices.
Sanmina-SCI said a special committee looking into its stock administration practices dating back to January 1, 1997, discovered potential discrepancies between the actual dates of measurement used for financial accounting purposes and the recorded grant dates of certain stock option awards. The company said that the investigation is still on-going and that the initial findings are not conclusive.
As a result, Sanmina-SCI said it would not be able to determine the affect the discrepancies have on company financial statements, including the amount of any non-cash stock compensation charges, any resulting tax, or which accounting periods might be affected. Not surprisingly, the company said it won’t be able to file its most recent quarterly report on time, which for the electronics contract manufacturer ended July 1. It also will not be able to file the report within the five-day extension period that is allowed.
However, officials said the company hopes to file its financial statements, including restatements, within the next 30 days.
In related news, PMC-Sierra, a provider of high-speed broadband communications and storage semiconductors, said its audit committee concluded that the accounting measurement dates for certain stock option grants awarded primarily from 1998 through 2001 differ from the measurement dates previously used to determine any stock-based compensation expense for those years.
PMC-Sierra stressed, however, that those errors were not the product of deliberate misconduct by executives, staff, or members of its board of directors. The company elaborated that for certain option grants the allocations to individual recipients and/or the proper documentation of formal corporate approvals had not been completed as of the original accounting measurement dates. As a result, new accounting measurement dates are being applied to the affected option grants.
The majority of the stock options in question were cancelled in an option exchange program in 2002, according to the company. So, the new measurement dates will not affect operating results for 2003 and subsequent years. PMC-Sierra added that it expects to adjust stockholders’ equity by less than $100 million.
However, officials do not expect any restatements of income statements or statements of cash flows in 2003 or subsequent periods, and does not expect the revisions to impact on its cash position or previously reported revenues.