8-KEarnings & ResultsFinancial EventsOther Events+1

KLA CORP 8-K Report, Financial Results (Oct 3, 2006)

Filed October 3, 2006For Securities:KLAC

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.

Frequently Asked Questions

The main reason is KLA Corp's determination that it must restate certain historical financial statements due to incorrect accounting for stock option grants made primarily between July 1, 1997, and July 30, 2002. This means previously issued financial information may no longer be accurate.

The company has concluded that financial statements and related communications issued for periods beginning on or after July 1, 1997, should not be relied upon. This includes financial statements for fiscal years 1998 through 2005, as well as interim periods within those years and fiscal quarters ended September 30, 2005, December 31, 2005, and March 31, 2006. The company is still determining the exact periods that require restatement.

A blackout period has been imposed on employee benefit plans, including the 401(k) Plan, because the S-8 registration statements for these plans incorporate financial statements that will need to be restated. This suspension prevents participants from acquiring or moving Company common stock within the plan until the restated financials are filed, to avoid potential issues arising from the unreliable historical data.

Executive officers and board members are subject to a blackout period that includes prohibitions on purchasing, selling, or acquiring any shares of KLA Corp common stock or related derivative securities. This is due to Section 306(a) of the Sarbanes-Oxley Act of 2002, as they are restricted from trading company stock during a period when participants in the company's retirement plans are unable to trade.