The stock-option backdating scandal slammed into a major high-tech company again Wednesday as memory technology company Rambus said it expects to restate its financial results for 2003 through 2005 and the first quarter of 2006.
The audit committee of Rambus’ board of directors, which is conducting an independent investigation into the company’s stock option practices and accounting, has determined that the results for those periods can’t be relied upon, the company said. Rambus will file the restated results as soon as it can after the investigation is finished, it said. The Los Altos, Calif., company expects to incur “significant” expenses arising from the investigation.
When a company backdates its stock options grants to employees, it moves the date of the grant to a time when the company’s stock was worth less, in order to give employees a greater gain when they cash in. A flurry of allegations about the practice has hit the high-tech industry, including a May 16 report by the Center for Financial Research and Analysis that accused 17 companies of backdating options. Apple Computer, McAfee, Broadcom, Sycamore Networks and other vendors are embroiled in the controversy.
Rambus’ audit committee determined that the actual measurement dates for some stock option grants were different from the recorded grant dates, according to a Wednesday press release. It also found that Rambus should have recorded expenses for the stock grants. But the panel, which is not finished with its probe, hasn’t identified the backdated grants or determined the amount of the additional expenses the company would have to take.
The company also expects to miss the deadline for filing its financial report for the second quarter, which ended June 30. However, on Wednesday it reported revenue for the quarter. That figure was US$48.9 million, up 22 percent from the second quarter of last year and 3.5 percent from the first quarter of this year. The gain was caused mostly by new patent licensing revenues, Rambus said.
-Stephen Lawson, IDG News Service (San Francisco Bureau)
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