Adaptec 2006 Annual Report Download - page 79

Table of Contents
delegation documents, where the last approval of the grants, primarily to non-executives, was received after the dates for which we set the exercise
price of the options. New accounting measurement dates were assigned to these grants as of the date that we received the last written approval. For
three grants, application of the new measurement date did not result in stock-based compensation expense because the stock price had declined over
the period. The majority of these option grants were cancelled in the 2002 option exchange program, resulting in immediate recognition of the
remaining unamortized expense.
• Stock-based compensation expense of $20.6 million was recorded with respect to a stock option grant which was substantially all to non-executives
where allocations were revised after the grant date. New accounting measurement dates were assigned to these grants as of the date the allocation to
individual recipients was completed. This option grant was cancelled in the 2002 option exchange program, resulting in immediate recognition of the
remaining unamortized expense.
• Stock-based compensation expense of $24.3 million was recorded with respect to a stock option grant which was substantially all to executives where
the Company was unable to locate sufficient documentation that confirmed the selection of the grant date. A new accounting measurement date was
assigned to this grant as of the date immediately prior to the Company’s public announcement of the grant in an earnings conference call. This option
grant was cancelled in the 2002 option exchange program, resulting in immediate recognition of the remaining unamortized expense.
As the majority of the stock options in question were cancelled in an option exchange program in 2002, or were otherwise fully vested, the new measurement
dates did not affect operating results for 2003 and subsequent years. The Audit Committee concluded that, while the Company used incorrect accounting
measurement dates for certain stock option grants awarded during the years 1998-2001, those errors were not the product of any deliberate misconduct by the
Company’s executives, staff, or members of its Board of Directors.
As a result of the review the Company adjusted its opening stockholders’ equity as at December 29, 2002 and on the consolidated balance sheets for all
subsequent periods. The effect of the adjustments was to increase additional paid-in capital and increase accumulated deficit on all consolidated balance sheets
commencing in 2003. The restatement had no impact on the Company’s consolidated statements of operations or consolidated statements of cash flows in 2003
or subsequent periods. The restatement had no impact on the Company’s cash position or previously reported revenues.
The adjustments would have increased stock-based compensation expense in each of the years impacted, by type, as follows:
(in thousands) 2002 2001 2000 1999 Total
Receipt of final approval $ 19,473 $ 15,597 $ 5,021 $ 4,590 $ 44,681
Allocation to recipients 3,744 3,785 12,789 329 20,647
Sufficiency of documentation of date selection 15,442 8,860 — — 24,302
$ 38,659 $ 28,242 $ 17,810 $ 4,919 $ 89,630
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Source: PMC SIERRA INC, 10-K, March 01, 2007 Powered by Morningstar® Document Research℠