SafeNet says it will meet deadline for restating results

December 08, 2006|By Stacey Hirsh | Stacey Hirsh,Sun Reporter

SafeNet Inc., the Harford County technology company whose stock option grants are under federal investigation, said yesterday that it is planning to meet a Jan. 31 deadline for restating results over a five-year period to correct improper accounting of stock option grants.

The company disclosed the timetable in an announcement yesterday that Nasdaq, which imposed the deadline, would continue to list its shares until that date, at which time it is requiring Safenet to file its delayed second- and third-quarter reports plus any restatements. Nasdaq issued delisting warnings in August and again last month. At the time of the August warning, SafeNet had said it expected to file restated results by October.

"We continue to make significant progress in this complex effort and believe we are nearing the end of the restatement process," Walter Straub, SafeNet's chairman and interim chief executive officer, said in yesterday's statement.

In October, SafeNet said that it would have to revise financial statements from 2000 through March 31, because some options grants made between 2000 and last year were accounted for "using incorrect measurement dates under applicable accounting rules in effect at the time."

The company has not identified the quarters to be restated.

The filing of the restatements will conclude the internal investigation into the accounting of stock options, Gregg Lampf, SafeNet's director of investor relations, said yesterday.

SafeNet is one of dozens of publicly traded companies that have come under federal investigation for possible illegal backdating of option grants. Backdating is when options are awarded with an effective date other than their grant date to take advantage of previous declines in the stock. The effect is to make the option potentially more valuable.

The Belcamp company said in May that the U.S. attorney's office for the Southern District of New York had subpoenaed information about stock option awards, and that it had received an informal inquiry from the Securities and Exchange Commission. The company formed a board committee to investigate the option grants. The committee has retained counsel and forensic accountants to help.

A separate committee of SafeNet's board is conducting an investigation into personnel matters.

Two top SafeNet Inc. executives -- Anthony A. Caputo, who was chairman and chief executive of the encryption company, and Carole Argo, who was president, chief operating officer and acting chief financial officer -- resigned in October result of the stock options investigation. Both agreed not to cash in most of their options pending a determination of whether they were fired or resigned.

SafeNet has said its personnel committee will determine by March 29 whether the executives' terminations were for cause.

Yesterday, SafeNet also said it was rescheduling a meeting with investors that was set for today. A new date for the meeting was not announced, but the company said it would correspond with the restatement filings.

Shares of SafeNet closed yesterday at $24.59, up 48 cents.

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