BEA System’s (BEAS) announced preliminary findings of its stock option grants investigation by its Audit Committee, which found that the actual measurement dates of certain options differed from the recorded measurement dates. These differences will result in material non-cash stock-based compensation expenses, according to the company. Therefore, BEA will restate its financial statements.
In 2nd quarter 2007, BEA voluntarily began an investigation of the stock options granted since its original IPO in April 1997. Although the ongoing investigation is being conducted internally by the Audit Committee, we would expect the SEC to initiate its own investigation in the near future given the company’s findings. The company has yet to provide details of the expected restatements. It has also not determined any tax consequences, which may impact BEA’s operating cash flow.