About a month and a half ago, Altera Corporation (NASDAQ:ALTR) announced a special committee that would investigate their past option grant practices. This morning, the company announced an update to to its investigation via a non-reliance 8-K filing.
The news is what you would expect by this time. The special committee did indeed find instances of option grants that didn’t properly make it into the financials. They reached
a preliminary conclusion that the actual measurement dates for certain stock option grants issued between 1996 and 2000 differ from the recorded grant dates for such awards. As a result, the Company expects to record additional non-cash charges for stock-based compensation expense in prior periods. The Company believes that these charges are material and, accordingly, expects to restate its financial statements for the fiscal years ended 1996 through 2005.
That is one extensive restatement. 1996 through 2000 alone would be the restatement of the firm’s financial history during the internet bubble era. That alone would provide some interesting contrasts between erroneous reporting and clean reporting. Ten years is really far-reaching, though. If it’s material enough to affect all those years, you’ve got to believe that the grants issued in the 1996-2000 era had lingering effects in the subseqent years, even if the grants in 2001-2005 were properly accounted for. If so, it’ll be a testimony to how mistakes in one period can affect reporting in many other later periods.
Altera’s announcement focused on the “non-cash charge” aspect of the pending restatement; no amounts given in the filing. And no information was given on the sole cash aspect of the restatement, either: the firm didn’t yet know if the findings driving their restatement would also affect tax deductions taken for the improperly recorded options. Hard to imagine that they wouldn’t, but we’ll see.
ALTR 1-yr chart: