Ixia Announces Intention to Restate 2013 First & Second Quarters, SEC Filings Update & Nasdaq Extension of Time to Regain Com...
April 17 2014 - 8:05PM
Business Wire
Ixia (Nasdaq: XXIA) announced today that the Audit
Committee of the company’s Board of Directors (the “Audit
Committee”) has concluded that the company’s previously issued
condensed consolidated financial statements contained in its
Quarterly Reports on Form 10-Q for the quarters ended March 31,
2013 and June 30, 2013 should no longer be relied upon and should
be restated.
As previously reported, on February 26, 2014, the Audit
Committee completed an internal investigation, which included
performing procedures to assess the company’s recording of
financial transactions and the corresponding impact on the
company’s financial reporting. Through the internal investigation
and the company’s own internal accounting review, the company
identified certain errors, as described below.
Certain identified errors in the company’s revenue recognition
practices involved the company’s incorrect assessment of and
accounting for certain sales transactions which led to revenue
being recognized prematurely for: 1) an extended maintenance and
warranty arrangement that included a fixed fee to cover products
owned by the customer at the date of execution of the arrangement
as well as extended coverage for any additional products purchased
by the customer over the multi-year term of the applicable
arrangement, 2) multiple-element arrangements that included
separate customer purchase orders for products and related
professional services, or arrangements that included future
deliverables that were committed to be provided to the customers
but were not considered, and 3) an arrangement with a customer
involving the extension of payment terms beyond the company’s
customary terms. Additional information regarding these matters can
be found in the company’s Current Report on Form 8-K filed today
with the SEC.
The correction of the errors is expected to reduce total
revenues by approximately $2.0 million and $4.5 million for the
quarters ended March 31, 2013 and June 30, 2013, respectively.
Further, the correction of the errors is expected to increase
deferred revenues by approximately $2.0 million and $6.5 million as
of March 31, 2013 and June 30, 2013, respectively. The
company’s restated condensed consolidated financial statements for
the affected periods will also reflect the correction of errors
related to the income tax effects of the revenue errors, as well as
the correction of certain other tax items. The restatement will
result in revenue recognition timing differences between quarterly
periods and will not have any impact on the total revenue to be
recognized over the life of the applicable arrangements. As part of
the restatement process, the company is continuing to assess the
estimated errors identified above and will assess any other
potential identified errors for correction as needed.
In connection with the restatement of the company’s previously
issued condensed consolidated financial statements for the quarters
ended March 31, 2013 and June 30, 2013, the company’s management
has reassessed its evaluation of the effectiveness of the company’s
disclosure controls and procedures and internal control over
financial reporting as of each of March 31, 2013 and June 30,
2013. Based on such reassessment and review, management has
concluded, and the company expects to report in its amended filing
for each quarter, that due to the identified errors and material
weaknesses in the company’s internal controls, the company did not
maintain effective disclosure controls and procedures or effective
internal control over financial reporting as of either
March 31, 2013 or June 30, 2013.
The company plans to amend its previously filed Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2013 and June
30, 2013 as soon as practicable and at or about the same time the
company files its Quarterly Report on Form 10-Q for the quarter
ended September 30, 2013 (the “Form 10-Q”) and its Annual Report on
Form 10-K for the fiscal year ended December 31, 2013 (the “Form
10-K”).
Updated Plan to Regain Compliance with Nasdaq Listing Rule
As previously reported, as a result of Ixia’s delayed filing of
its Form 10-Q and Form 10-K, the company is not in compliance with
Nasdaq Listing Rule 5250(c)(1) (the “Listing Rule”), which requires
the timely filing with the SEC of all required periodic financial
reports. The company announced today that, as requested by the
company in an updated plan to regain compliance with the Listing
Rule, The Nasdaq Stock Market LLC (“Nasdaq”) has granted the
company through April 30, 2014 to regain compliance with the
Listing Rule, which will permit the continued listing of our common
stock on the Nasdaq Global Select Market.
Under the terms of the extension granted by Nasdaq, the company
is required to file the Form 10-Q and Form 10-K on or before
April 30, 2014 to regain compliance with the Listing Rule. If
the company does not make the filings on or before April 30, 2014,
Nasdaq has advised that it will notify the company that its stock
will be delisted. If Ixia receives such a notice, the company
will have an opportunity to appeal the delisting decision to a
Nasdaq Hearings Panel. Under Nasdaq’s rules and procedures, a
company’s request for such a hearing is generally due within seven
calendar days after receipt of the delisting notification, and such
a request automatically stays any delisting (and suspension of
trading) for an additional 15 calendar days from the deadline to
request a hearing. Upon receiving any such notification, the
company intends to timely request a hearing and to request an
additional stay (beyond the 15 calendar days) should it become
necessary.
About Ixia
Ixia develops amazing products so its customers can connect the
world. Ixia helps its customers provide an always-on user
experience through fast, secure delivery of dynamic, connected
technologies and services. Through actionable insights that
accelerate and secure application and service delivery, Ixia's
customers benefit from faster time to market, optimized application
performance, and higher-quality deployments. Learn more at
http://www.ixiacom.com.
Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, including, without limitation, statements regarding the
expected impact of the identified errors on the company’s
previously issued unaudited consolidated financial statements; the
manner in which the company will effect the restatements in its
filings with the SEC and the anticipated timing of the filing of
the amended Quarterly Reports, the Form 10-Q and the Form 10-K; and
the company’s intention to appeal to a Nasdaq Hearings Panel any
notification from Nasdaq that the company’s common stock will be
delisted. In some cases, such forward-looking statements can be
identified by terms such as “may,” “will,” “expect,” “plan,”
“believe,” “estimate,” “predict” or the like. Such statements
reflect the company’s current intent, belief and expectations and
are subject to risks and uncertainties that could cause the
company’s actual results to differ materially from those expressed
or implied in the forward-looking statements. Factors that may
cause future results to differ materially from our current
expectations include risks that the completion and filing of the
amended Quarterly Reports, the Form 10-Q and the Form 10-K will
take longer than anticipated; that prior to making such filings the
company will identify additional issues or considerations that
relate to such filings, such as additional errors in the company’s
accounting practices, that will require additional adjustments to
the company’s previously issued financial statements; and that, if
necessary, the company will be unable to timely appeal any
delisting notification to a Nasdaq Hearings Panel. Factors that may
cause future results to differ materially from our current
expectations also include those identified in our Annual Report on
Form 10-K for the year ended December 31, 2012 and in our other
filings with the SEC. There can be no assurance that the final
impact of the restatement and the effect of the changes in our
accounting practices will not differ materially from our
expectations as described herein or that any other information set
forth herein regarding the restatement will not change materially
before we complete the filing of our restated unaudited
consolidated financial statements. The company undertakes no
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise.
Financial Contact:The Blueshirt GroupInvestor
RelationsMaria Riley, 415-217-7722
Ixia (NASDAQ:XXIA)
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