Four More Warn of Options Woes

UTStarcom, Black Box, Sonic Solutions, and VeriSign have been reexamining their practices related to stock-option grants.

At least four companies in the tech-telecom arena recently disclosed that they may restate prior results after reexamining their stock-option practices.

UTStarcom announced Thursday that it expects to restate its financials by a total of about $50 million for fiscal years prior to 2003 to record additional charges related to stock-based compensation. The manufacturer of telecommunications equipment added that its financial statements for the three fiscal years ended 2005 and the first two quarters of 2006 should no longer be relied upon.

The company stressed that its governance committee is still looking into past option-granting practices and has not reached its final conclusions, but added that it does not expect the restatements to affect previously reported revenues or cash balances.

Black Box, which provides data and voice-networking products, announced Thursday that it will record additional noncash charges for stock-based compensation expense relating to certain grants. The company, which has not determined the total expense or the periods in which it would be recorded, pointed out that its investigation covers all of its stock-option grants since 1992. It also asserted that any restatement would not have a material impact on fiscal 2007 earnings.

Also on Thursday, digital media software company Sonic Solutions disclosed that it would take “significant noncash charges.” The company’s management and audit committee have preliminarily concluded that Sonic lacks sufficient accounting-related documentation for certain option grants.

The company also stated that it has not determined which years or periods will need to be restated, the amount or materiality of any noncash charges, any resulting cash charges associated with tax issues, or accounting or other consequences.

Earlier in the week, Internet security company VeriSign disclosed that it will restate its results for the years 2002 through 2005 and the first quarter of 2006 to record additional noncash stock-based compensation expense related to certain stock-option grants. The company added that noncash charges will total less than $200 million and that it expects to complete the restatement “in the near future.”

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