Human Capital & Careers

American Tower, Valeant to Restate

Companies have to complete reviews before full extent of restatements are known.
Stephen TaubOctober 23, 2006

American Tower and Valeant Pharmaceuticals said they will restate prior financial results based on investigations into their stock option granting practices.

American Tower, which operates wireless and broadcast communications sites, will revise its financial statements for 2005 and for the first quarter of 2006. The company, which has a $15 billion market capitalization, would not elaborate on the restatements, but said it will provide more information regarding the stock option matter if it has not released regulatory filings by its third quarter conference call on November 8.

“The Special Committee of our Board of Directors and its external advisors have made substantial progress in completing their review of the company’s historical stock option practices,” said Jim Taiclet, American Tower’s Chairman and Chief Executive Officer, in a statement.

Meanwhile, Valeant said the board of directors has determined that the company’s financial statements for and after 1997 should no longer be relied upon. A special committee determined that when the Valeant made broad-based grants in 1997 and subsequent years, it should have used different measurement dates for the purpose of computing compensation expense for the stock option grants. However, because the special committee has not completed its review, the company said it has not yet determined the magnitude of the restatement or what other periods may ultimately be affected.

Valeant previously announced it had received a request from the Securities and Exchange Commission for data on its stock option granting practices dating back to January 1, 2000 as part of an informal inquiry. The company added that it continues to cooperate with the SEC inquiry. The company also noted that its option accounting errors are due to an incorrect application of the measurement date of option grants according to the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees.

Valeant officials pointed out that the majority of options accounting errors pertain to the grants made prior to the change in board and management in mid-2002. In fact, the errors were noted when the company reported on certain options granted to employees after the new board and management took charge. In company filings, officials reiterated that none of the errors related to options granted to the current chief executive officer or chief financial officer.

When Valeant announces its third quarter results, it will exclude the impact of any additional options expense until the company completes its review. The company also warned that it will not file its third-quarter report on time. The SEC also is investigating trading in Valeant’s stock and release of data on its investigational drug for Hepatitis C called Viramidine, according to Reuters.

In related news, The Cheesecake Factory Inc. said on Monday that it will postpone the release of financial results for the third quarter of fiscal 2006 until its audit committee and special outside legal counsel complete their review of the company’s historical stock option granting practices. More than 125 companies have announced internal reviews or that they are under investigation for the timing of stock options grants to executives, reports Reuters.