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Altera Expects $38 Million Charge In Options Scandal

The company has said it will likely restate all its earnings between 1996 and 2005.

InformationWeek Staff

September 5, 2006

2 Min Read

SAN FRANCISCO — Programmable logic supplier Altera Corp. said Tuesday (Sept. 5) it expects to take an estimated aggregate pre-tax charge of $38 million to $48 million as the result of stock option granting practices between 1996 and 2001.

Altera said a special committee appointed by the company to examine historical stock options granting practices in May has preliminarily identified some grants between December 1996 and March 2001 where the grant date differed from the recorded measurement date. The company said it expects to record additional non-cash stock-based compensation charges of approximately $18 million, pre-tax, in connection with these grants. The committee has not yet reached final conclusions, Altera said.

Based on preliminary findings, Altera said it expects to record an additional $20 million to $30 million in pre-tax stock-based compensation charges from the modification of certain employees' stock option agreements in connection with the termination of their employment.

In May, Altera became one of the first major companies to announce it would investigate its own historical stock options granting practices in the wake of scandals at other firms. The company said in June it would likely restate all of its earnings from 1996 through 2005.

In response to threats to de-list its security from the Nasdaq exchange for failing to file quarterly financial reports with the U.S. Securities and Exchange Commission (SEC), Altera said it has filed a revised plan of compliance and requested an extension to file though Oct. 26. Altera has previously said it would withhold making the filings with the SEC until it has completed its internal investigation.

Also Tuesday, Altera reaffirmed previously provided third quarter sales guidance, saying the company still expects to post sales of $334 million to $344 million.

Altera (San Jose, Calif.) said quarterly sales to date continue to improve and that the company's mature products have declined versus the comparable period in the second quarter.

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