Following its own internal investigation, Broadcom reported that the accounting measurement dates for certain stock option grants awarded during the years 2000-2002 differ from the measurement dates previously used for such awards. Specifically, allocations to individual recipients and/or formal corporate approvals had not been completed as of the original accounting measurement dates. As a result, new accounting measurement dates will apply to the affected option grants.
Consequently, Broadcom expects to record in excess of $750 million for the additional non-cash stock-based compensation expenses.
Broadcom said the additional non-cash stock-based compensation expense will not affect its current cash position or financial condition or previously reported revenues and will be offset by corresponding increases in additional paid-in capital, thus leaving shareholders’ equity unaffected.
Broadcom has decided it should restate its financial statements for each of the years 2000 through 2005 as well as for the first quarter of 2006. It also said its financial statements and the related auditors’ reports for the affected periods should not be relied upon pending completion of the restatements.
Broadcom’s equity incentive award program is very broad-based. Since its inception, approximately 95% of the total stock options and restricted stock units awarded through equity incentive programs have gone to employees of the company other than executive officers.
In addition, Broadcom stated that no issues have been identified that affect equity awards issued to Broadcom’s co-founders or CEOs or any member of the Board of Directors. No equity award has been identified that was not authorized, or where any officer or director approved an individual equity award from which he or she personally benefited.
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