Ariba to restate more results, appeal Nasdaq delisting

Ariba Inc. extended the period for which it is restating its financial results following the announcement of previously undisclosed off-the-books transactions and warned investors that its stock may be delisted from the Nasdaq exchange because of a failure to file its 2002 fiscal-year report on time.

Ariba, a financial management software vendor based in Sunnyvale, California, warned in December it would need to reissue financial statements for the 2001 fiscal year because of an audit committee review of benefits provided to several executives. The company said on Wednesday that it will restate 10 quarters of results from January 2000 through June 2002.

Primarily at issue is a US$10 million payment made in March 2001 from Ariba co-founder and Chairman Keith Krach to then-President and Chief Operating Officer Larry Mueller.

Because the transaction took place directly between Krach and Mueller and no company funds were used, Ariba initially treated the payment as a personal transaction. It has since decided the deal should be recorded as a capital contribution from Krach to Ariba and a subsequent compensation payment from Ariba to Mueller.

The company disclosed that deal in December. This week, it added that it is similarly recognizing US$1.2 million in chartered air services Krach provided Mueller from September 2000 through July 2001, when Mueller stepped down from his executive position at Ariba.

Ariba also added this week that it is recategorizing the cost of stock options issued to several individuals by companies Ariba acquired during its 2000 fiscal year. Previously amortized as goodwill, those costs will now be booked as stock-based compensation expenses to Ariba.

None of the restatements affect Ariba's net cash flows for the periods in question, the company said.

Ariba has not yet completed an accounting review, which is delaying the filing of a financial report for the fiscal year ended Sept. 30, 2002, the company said.

Because Ariba is late with that filing, its stock (ARBA) is subject to delisting by the Nasdaq exchange. Ariba has requested an appeal hearing. In the meantime, its stock ticker will change to ARBAE on Friday, reflecting Nasdaq's listing convention for companies making delayed regulatory filings.

Following the additional disclosures Wednesday, trading of Ariba's shares rose to more than three times the usual volume, although the stock ended the day up 1.4 percent over the previous day's close, at US$3.55. In mid-day trading Thursday, shares were down 5.9 percent, at US$3.34.

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