Marvell Technology filed a non-reliance 8-K yesterday that pretty much sums up the state of most of the backdating investigations to date. (It’s almost like they’re “channelling” for much of Silicon Valley.) This excerpt:
Based on the report of the special committee, and upon the recommendation of management and the Audit Committee of the Board of Directors, the Board of Directors concluded on October 2, 2006 that the Company will need to restate historical financial statements to record additional non-cash charges for stock-based compensation expense related to past option grants. The Company has not yet been able to determine the amount of these charges, the resulting tax and accounting impact of these actions, or which specific reporting periods require restatement.
In short, they know for sure by now that they’ve got problems with the information in prior financial statements. What remains is to isolate the particular effects - tax and accounting - to specific periods. And naturally, the goal will be to minimize the damage, using the care that should have been present the first time things were reported. Reconsidering these issues - including the tax implications - will still be a staggering effort, not just for Marvell, but for all in their boat. The accounting issues are complicated enough; things don’t get easier when taxes are added to the mix. That’s probably one good reason there’s been so little resolution on the announced investigations so far. The good news for Marvell: at least they only have to worry about issues from as far back as 2000, when they first went public. Others will be less fortunate.