UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
April 14, 2006
COMVERSE TECHNOLOGY, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 0-15502 13-3238402
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
909 Third Avenue,
New York, New York
10022
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (212) 652-6801
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 3.01. NOTICE OF DELISTING OR FAILURE TO SATISFY A CONTINUED LISTING RULE
OR STANDARD; TRANSFER OF LISTING.
On April 17, 2006, Comverse Technology, Inc. (the "Company") notified The NASDAQ
Stock Market that it expects not to be in compliance with the NASDAQ
requirements for continued listing under NASDAQ Marketplace Rule 4310(c)(14)
that requires the Company to make on a timely basis all required filings with
the Securities and Exchange Commission. The Company expects that it will receive
a Staff Determination letter from The NASDAQ Stock Market indicating that, due
to its noncompliance with NASDAQ Marketplace Rule 4310(c)(14), its common stock
would be delisted unless the Company requests a hearing in accordance with the
NASDAQ Marketplace Rules. If the Company receives such a Staff Determination
Letter, the Company intends to request a hearing before the NASDAQ Listing
Qualifications Panel to review the Staff Determination. Under NASDAQ Marketplace
Rules, a request for a hearing stays the delisting action pending the issuance
of a written determination by the NASDAQ Listing Qualification Panel.
ITEM 4.02. NON-RELIANCE ON PREVIOUSLY ISSUED FINANCIAL STATEMENTS OR A RELATED
AUDIT REPORT OR COMPLETED INTERIM REVIEW.
Item 4.02(a)
As previously announced on March 14, 2006, the Company's Board of Directors
created a Special Committee (the "Special Committee") composed of outside
directors to review matters relating to the Company's stock option grants,
including the accuracy of the stated dates of option grants and whether all
proper corporate procedures were followed. The Special Committee is being
assisted by independent outside legal counsel and accounting experts. At this
time the Special Committee has not completed its work or reached final
conclusions and is continuing its review. The Special Committee has, however,
reached a preliminary conclusion that the actual dates of measurement for
certain past stock option grants for accounting purposes differed from the
recorded grant dates for such awards. As a result of changes in the measurement
dates, the Company expects to record additional non-cash charges for stock-based
compensation expenses in prior periods. Based on the Special Committee's
preliminary conclusion, the Company expects that (i) such non-cash charges will
be material and (ii) the Company will need to restate its historical financial
statements for each of the fiscal years ended January 31, 2005, 2004, 2003, 2002
and 2001 and for the first three quarters of the fiscal year ended January 31,
2006. Such charges could also affect prior periods. On April 14, 2006, the Audit
Committee of the Company's Board of Directors (the "Audit Committee") concluded
that such financial statements and any related reports of its independent
registered public accounting firm should no longer be relied upon.
Any such stock-based compensation charges would have the effect of decreasing
the income from operations, net income and retained earnings figures contained
in the Company's historical financial statements. The Company does not expect
that the anticipated restatements would have a material impact on its historical
revenues, cash position or non-stock option related operating expenses.
The Audit Committee discussed with the Company's independent registered public
accounting firm the matters disclosed in this Item 4.02 but, as the review has
not been completed the independent registered public accounting firm has not yet
had an opportunity to consider the results of the review.
In addition, the Company is evaluating Management's Report on Internal Control
Over Financial Reporting set forth in the Company's Annual Report on Form 10-K
for the fiscal year ended January 31, 2005. Although the Company has not yet
completed its analysis of the impact of this situation on its internal controls
over financial reporting, the Company has determined that it is highly likely
that it had a material weakness in internal control over financial reporting as
of January 31, 2005 and January 31, 2006. A material weakness is a control
deficiency, or a combination of control deficiencies, that results in more than
a remote likelihood that a material misstatement of the annual or interim
financial statements will not be prevented or detected. If the Company were to
conclude that a material weakness existed, it would expect to receive an adverse
opinion on internal control over financial reporting from its independent
registered public accounting firm.
2
The Company intends to issue results for its fourth quarter and the fiscal year
ended January 31, 2006, file its Annual Report on Form 10-K for the fiscal year
ended January 31, 2006 and file any financial statements required to be restated
as soon as practicable after the completion of the Special Committee's review.
A copy of a press release relating to the foregoing is attached hereto as
Exhibit 99.1 and is incorporated in this Item 4.02 by reference.
Note: This Current Report on Form 8-K contains "forward-looking statements"
under the Private Securities Litigation Reform Act of 1995 that involve risks
and uncertainties. There can be no assurances that forward-looking statements
will be achieved, and actual results could differ materially from forecasts and
estimates. Important factors that could cause actual results to differ
materially include: the results of the review of the Special Committee,
appointed by the Board of Directors on March 14, 2006, of matters relating to
the Company's stock option grants, including, but not limited to, the accuracy
of the stated dates of option grants and whether all proper corporate procedures
were followed; the impact of any restatement of financial statements of the
Company or other actions that may be taken or required as a result of such
reviews; the Company's inability to file reports with the Securities and
Exchange Commission; risks associated with the Company's inability to meet
NASDAQ requirements for continued listing, including possible delisting; risks
of litigation related to the Company's stock option grants or any restatement of
the financial statements of the Company; risks associated with integrating the
business and employees of the GSS division of CSG Systems, International;
changes in the demand for the Company's products; changes in capital spending
among the Company's current and prospective customers; the risks associated with
the sale of large, complex, high capacity systems and with new product
introductions as well as the uncertainty of customer acceptance of these new or
enhanced products from either the Company or its competition; risks associated
with rapidly changing technology and the ability of the Company to introduce new
products on a timely and cost-effective basis; aggressive competition may force
the Company to reduce prices; a failure to compensate any decrease in the sale
of the Company's traditional products with a corresponding increase in sales of
new products; risks associated with changes in the competitive or regulatory
environment in which the Company operates; risks associated with prosecuting or
defending allegations or claims of infringement of intellectual property rights;
risks associated with significant foreign operations and international sales and
investment activities, including fluctuations in foreign currency exchange
rates, interest rates, and valuations of public and private equity; the
volatility of macroeconomic and industry conditions and the international
marketplace; risks associated with the Company's ability to retain existing
personnel and recruit and retain qualified personnel; and other risks described
in filings with the Securities and Exchange Commission. These risks and
uncertainties, as well as others, are discussed in greater detail in the filings
of the Company with the Securities and Exchange Commission, including its most
recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K. These documents are available through the
Company, or its website, www.cmvt.com, or through the SEC's Electronic Data
Gathering Analysis and Retrieval system (EDGAR) at www.sec.gov. The Company
makes no commitment to revise or update any forward-looking statements in order
to reflect events or circumstances after the date any such statement is made.
ITEM 8.01. OTHER EVENTS
The Company today announced that, as a result of the ongoing review relating to
the Company's stock option grants, it has filed a Form 12b-25 with the
Securities and Exchange Commission (the "SEC") indicating that its Annual Report
on Form 10-K for the fiscal year ended January 31, 2006 will not be filed on its
due date of April 17, 2006. The Company did not seek a 15-day filing extension
because it does not believe it could file the Annual Report by the end of the
extension period.
On April 11, 2006, a complaint was filed in the New York State Supreme Court
with respect to a shareholder derivative action brought by one of the Company's
shareholders against certain executives of the Company and certain current and
former members of the Company's board of directors for allegedly breaching their
fiduciary duties beginning in 1994 through present by: (i) allowing and
participating in a scheme to backdate the grant dates of employee stock options
3
to improperly benefit the Company's executives and certain directors; (ii)
allowing insiders, including certain of the defendants, to personally profit by
trading the Company's stock while in possession of material inside information;
(iii) failing to properly oversee or implement procedures to detect and prevent
such improper practices; (iv) causing the Company to issue materially false and
misleading proxy statements, as well as causing the Company to file other false
and misleading documents with the SEC; and (v) exposing the Company to civil
liability.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(D) EXHIBITS:
Exhibit No. Description
----------- -----------
99.1 Press Release of Comverse Technology, Inc.
dated April 17, 2006
4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COMVERSE TECHNOLOGY, INC.
Date: April 17, 2006 By: /s/ Paul L. Robinson
------------------------------------
Name: Paul L. Robinson
Title: General Counsel and V.P.-Legal
5
EXHIBIT INDEX
Exhibit No. Description
- ----------- -----------
99.1 Press Release of Comverse Technology, Inc. dated April 17, 2006
6