Summary
KLA Corp (KLAC) has filed an 8-K report indicating a significant accounting issue related to past stock option grants. A Special Committee of the Board of Directors concluded that incorrect measurement dates were used for numerous stock option grants primarily between July 1, 1997, and July 30, 2002. Consequently, the company has determined that it must restate certain historical financial statements to recognize non-cash compensation expenses. While the exact financial impact, specific periods to be restated, and effects on internal controls are still under evaluation, the company anticipates these effects will be material. As a direct consequence of this accounting issue, KLA Corp is implementing a temporary suspension of trading under its employee benefit plans, including a "blackout period" for participants in its 401(k) Plan. This blackout period, which commenced on September 28, 2006, restricts participants from acquiring or moving Company common stock within the plan. Executive officers and board members face a more extended prohibition on trading Company stock due to Sarbanes-Oxley Act regulations.
Key Highlights
- 1Company to restate historical financial statements due to improper accounting for stock option grants.
- 2Incorrect measurement dates used for stock options granted primarily between July 1, 1997, and July 30, 2002.
- 3Previously issued financial statements, earnings releases, and communications related to periods beginning on or after July 1, 1997, should no longer be relied upon.
- 4Financial statements for fiscal years 1998 through 2005 and certain interim periods require restatement.
- 5Temporary suspension of employee participation in equity incentive plans and the 401(k) Plan due to the need for restatement.
- 6A "blackout period" is in effect for 401(k) plan participants, preventing stock transactions.
- 7Executive officers and board members are subject to additional trading prohibitions under Sarbanes-Oxley Act during the blackout period.