Nvidia Restates Earnings In Stock Options Probe

In a filing with the Securities and Exchange Commission, the Santa Clara, Calif.-based graphics chip maker said it is making the restatement because of erroneous accounting of employee and executive stock options. However, Nvidia said the audit committee of its board found no evidence that the company's management tried to deceive investors or regulators or inflate Nvidia's earnings.

Nvidia said in the filing that it would take a total of $190.2 million in previously unreported charges for compensation expenses and $9.4 million in compensation taxes for fiscal years 2000 through 2006.

"The audit committee carefully considered the involvement of current members of management in the option grant process and concluded that the evidence did not give rise to any concern about the integrity of any current officer or director of Nvidia," the company said in the SEC filing. "The audit committee also found that the accounting errors and improper practices brought to light during their review were not motivated by any intent to mislead investors, improve Nvidia reported financial results or obtain any personal benefit."

Nvidia is one of scores of companies that have been tripped up by improper dating or backdating of stock options, or how the options were reported to investors and regulators. The company said in the filing that it first realized it had problems with stock options dating earlier this year, when management examined its options practices in light of similar practices reported by other companies. After problems were found, the Nvidia audit committee began its investigation and notified the SEC. The committee finished its investigation Nov. 13.

"We determined that, in connection with certain annual or retention stock-option grants that we made to employees during our fiscal years 2000, 2001, 2002, 2003 and 2004, the final number of shares that an individual employee was entitled to receive was not determined and/or the proper approval of the related stock-option grant had not been given until after the stated grant date," the company said in the filing. "Therefore, the measurement date for such options for accounting purposes was actually subsequent to the stated grant date, resulting in new measurement dates for the related options."

Nvidia also has been late in filing some required reports with the SEC as a result of the internal investigation, and the company had been notified by the Nasdaq stock exchange that it faced delisting. The chip maker said in the latest filing that it was hopeful that it was now back in compliance with the SEC's and Nasdaq's reporting requirements.