This excerpt taken from the ALTR 8-K filed Jun 22, 2006.
Item 4.02(a). Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
As previously announced, the board of directors of Altera Corporation (the Company) has established a special committee of independent directors to review the Companys historical stock option practices and related accounting. The special committee is being assisted by independent legal counsel and outside accounting experts. At this time, the special committee has not completed its work nor reached final conclusions and is continuing its review.
The special committee has reached a preliminary conclusion that the actual measurement dates for certain stock option grants issued between 1996 and 2000 differ from the recorded grant dates for such awards. As a result, the Company expects to record additional non-cash charges for stock-based compensation expense in prior periods. The Company believes that these charges are material and, accordingly, expects to restate its financial statements for the fiscal years ended 1996 through 2005. The company has not yet determined the tax impact that may result from this matter. Because the special committees review is still ongoing, there may be additional years subject to restatement.
Accordingly, on June 19, 2006, the Companys audit committee, after consultation with management and the special committee, determined that the Companys financial statements and any related reports of its independent registered public accounting firm for the fiscal years ended 1996 through 2005 should no longer be relied upon. The Company intends to file its restated financial statements and its quarterly report for the period ended March 31, 2006 as soon as practicable after the completion of the special committees investigation.
The audit committee has discussed the matters disclosed in this Item 4.02(a) with the Companys independent registered public accounting firm. However, as the special committees review has not been completed, the final conclusions of its review are not yet known to the independent registered public accounting firm.
Additionally, the Company is evaluating Managements Report on Internal Controls Over Financial Reporting set forth in the Companys Annual Report on Form 10-K for the fiscal year ended December 30, 2005. Although the Company has not yet completed its analysis of the impact of this situation on its internal controls over financial reporting, the Company has determined that it is likely that it had a material weakness in internal control over financial reporting as of December 30, 2005. A material weakness is a control deficiency, or a combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financials will not be prevented or detected. If the Company were to conclude that a material weakness existed as of December 30, 2005, it would expect to receive an adverse opinion on internal control over financial reporting from its independent registered public accounting firm.
Any stock-based compensation charges incurred as a result of the restatement would have the effect of decreasing reported income or increasing reported loss from operations, decreasing reported net income or increasing reported net loss, and decreasing the reported retained earnings figures contained in the Companys historical financial statements for the periods mentioned above. The Company does not expect that the anticipated restatements will have any impact on its historical revenues.
A copy of the press release announcing the planned restatement is attached hereto as Exhibit 99.1 and is incorporated in this Item 4.02 by reference.