8-KEarnings & ResultsFinancial EventsExhibits & Filings

F5, INC. 8-K Report, Financial Results (Oct 25, 2006)

Filed October 25, 2006For Securities:FFIV

Summary

F5, Inc. (FFIV) filed an 8-K on October 25, 2006, primarily to address significant accounting issues related to stock options and to announce fourth-quarter financial results. The company disclosed that its Board's Special Committee, reviewing stock option practices, found that recorded grant dates for certain options from fiscal years 1999 through 2004 may not be the correct accounting measurement dates. This could lead to an aggregate of up to $30 million in additional non-cash, stock-based compensation expense for fiscal years 1999 through 2006. Crucially, this expense is non-cash and not expected to impact current cash position or previously reported revenues. In light of these findings, the Audit Committee has determined that previously issued financial statements and related communications for periods beginning October 1, 1998, through the report date should no longer be relied upon. The company will restate financial statements for fiscal years 1999 through 2005 and the first two quarters of fiscal 2006. The filing of the third quarter 2006 Form 10-Q is delayed due to this ongoing review. The company is also evaluating the impact on its internal controls over financial reporting.

Key Highlights

  • 1F5 Networks announced that a review of its stock option practices by a Special Committee has revealed issues with the recorded grant dates for certain options granted between fiscal years 1999 and 2004.
  • 2The company anticipates potentially recording up to $30 million in additional non-cash, stock-based compensation expense in aggregate for fiscal years 1999 through 2006 due to these findings.
  • 3This potential additional expense is non-cash and is not expected to affect the Company's current cash position or previously reported revenues.
  • 4The Audit Committee has concluded that previously issued financial statements and communications from fiscal year 1999 through the report date should no longer be relied upon.
  • 5The company will be restating its financial statements for fiscal years 1999 through 2005 and the first two quarters of fiscal 2006.
  • 6The filing of the third quarter fiscal 2006 Form 10-Q is delayed as a result of the ongoing review and analysis of necessary adjustments.
  • 7An evaluation is underway to determine the impact of these findings on the Company's internal controls over financial reporting.

Frequently Asked Questions

The primary reason for the restatement is the discovery during a review of stock option practices that the recorded grant dates for certain stock options issued between fiscal years 1999 and 2004 may not be the appropriate accounting measurement dates. This necessitates a review and potential adjustment of historical financial statements.

F5 anticipates that it may need to record up to $30 million in additional non-cash, stock-based compensation expense in aggregate for fiscal years 1999 through 2006. Importantly, this is a non-cash charge and is not expected to impact the company's cash on hand or previously reported revenues.

The Audit Committee has determined that financial statements and communications relating to fiscal periods commencing on or after October 1, 1998 (beginning of fiscal year 1999) through the date of this report should no longer be relied upon. The company will restate financial statements for fiscal years 1999 through 2005 and the first two quarters of fiscal 2006.

No, based on the analysis to date, any adjustments required are not expected to affect the company's current cash position or previously reported revenues. The estimated additional compensation expense is non-cash.