McAfee Uncovers Options Ills

The security software maker says it likely will have to restate its financial results.
Author:
Publish date:

McAfee

(MFE)

said late Wednesday that it found discrepancies in certain options-award grant dates and expects any resulting restatement costs to be "significant."

Shares of the security software company slumped 2.5%, or 52 cents, to $20.50 in after-hours trading.

In an 8-K/A filed with the

Securities and Exchange Commission

, McAfee said a special committee found that the actual dates and the measurement dates used to award some options were different. Thus, new accounting measurement dates will apply to the affected option grants.

The company, which had alluded to such a possibility in its

second-quarter earnings call, admitted in the filing that "it is more likely than not that the amount of such additional adjustments relating to prior periods will be material and that McAfee will restate its financial statements in at least one, and potentially several, prior periods."

McAfee said that financial statements for fiscal years 2005, 2004 and 2003, including data from 2002 and 2001, "should no longer be relied upon."

"In the event that a restatement of these financial statements is required, it likely will affect financial statements for prior periods," McAfee said.

"McAfee also expects that expenses arising from the special committee's review, any potential restatement of financial statements and related activities, which will be recorded in the periods incurred, will be significant," the company said in the filing.

As the committee has not yet completed its review, it is unable to estimate the amount of noncash, stock-based compensation expenses, the amount of such expenses for specific time periods, or the taxes that could result from any adjustments.

During the regular session of trading, McAfee rose 2 cents to $21.02.