Exhibit 99.1
iBasis Will Restate Its Financial Statements to Account for Additional
Non-Cash Stock-Based Compensation
BURLINGTON, Mass.--(BUSINESS WIRE)--Oct. 20, 2006--iBasis (NASDAQ:
IBAS), the global VoIP company, today announced that on October 17,
2006 the Board of Directors adopted the recommendations of a special
independent committee of the Board of Directors (the Special
Committee). The Company will restate its previously issued financial
statements in order to correct errors relating to its accounting for
non-cash stock-based compensation. The Company does not expect that
the anticipated restatement will have any impact on its previously
reported revenue.
The Special Committee has concluded that the appropriate
measurement dates for determining the accounting treatment of certain
stock option grants differ from the measurement dates used by the
Company in preparing its financial statements. As a result, the
Company currently expects to record additional non-cash charges in the
range of $10 million to $20 million for stock-based compensation over
the period from December 1999 through April 2006. The Company has not
yet completed its review of the amount to be recorded in any specific
period, nor has the Company determined the tax consequences and any
related liabilities that may result from these matters. The amounts to
be recorded are subject to review and audit by the Company's
independent registered public accounting firm.
On October 18, 2006, the Audit Committee, in consultation with
management and after discussion with the Company's independent
registered public accounting firm, concluded that the Company's
financial statements, including the reports of the Company's
independent registered public accounting firm thereon, and its
earnings releases and similar communications for fiscal 1999 and
subsequent periods should no longer be relied upon.
The Company expects to announce its financial results for the
third quarter of fiscal 2006 after a final determination of the
appropriate stock-based compensation expense for the periods affected
has been made. The Company has not yet determined whether it will be
able to file its related quarterly report on Form 10-Q in a timely
manner. The Company will file its restated financial statements as
soon as possible.
The Company also announced that, subsequent to the Company's
announcement on September 11, 2006 of the Special Committee review, it
received a letter of informal inquiry from the United States
Securities and Exchange Commission (SEC) relating to the Company's
historical stock option grants. The Company intends to cooperate fully
with the SEC in this matter.
In accordance with the determinations of the Special Committee,
the Company has terminated the employment of Jonathan D. Draluck, the
Company's Vice President, Business Affairs and General Counsel.
About iBasis
Founded in 1996, iBasis (NASDAQ: IBAS) is a leading wholesale
carrier of international long distance telephone calls and a provider
of retail prepaid calling services, including the Pingo(R) web-based
offering (www.pingo.com) and disposable calling cards that are sold
through major distributors and available at retail stores throughout
the U.S. iBasis customers include many of the largest
telecommunications carriers, including AT&T, Verizon, China Mobile,
China Unicom, IDT, Qwest, Skype, Telecom Italia, and Telefonica.
iBasis carried 7.8 billion minutes of international voice over IP
(VoIP) traffic in 2005, and is one of the largest carriers of
international voice traffic in the world(1). For four consecutive
years service providers have named iBasis the best international
wholesale carrier in ATLANTIC-ACM's annual International Wholesale
Carrier Report Card(2). The Company can be reached at its worldwide
headquarters in Burlington, Massachusetts, USA at 781-505-7500 or on
the Internet at www.ibasis.com.
Safe Harbor Statement
Except for historical information, all of the expectations, plans
and assumptions contained in the foregoing press release, including
statements regarding the Company's review of its stock option grant
practices and related accounting as well as the Company's expected
restatement of certain of its historical financial statements,
constitute forward-looking statements under Section 21E of the
Securities Exchange Act of 1934 and involve risks and uncertainties.
Important factors that could cause actual results to differ materially
from such forward-looking statements include, but are not limited to
the following: the possibility that the review of the Company's stock
option grant practices may expand in scope and/or result in additional
charges; unanticipated consequences of any restatement; the risk that
the anticipated accounting adjustments and other factors described
above could have negative tax or other implications for the Company,
including additional tax liabilities; the risk that the Company's
internal control over financial reporting and disclosure controls and
procedures are not, and have not been, effective; the risk that the
Company will be unable to comply with its SEC filing obligations in a
timely manner; the risk that the Nasdaq Global Market will delist the
Company's common stock; the risk that the Company will face additional
claims and proceedings in connection with its stock option grant
practices, including additional shareholder litigation and more formal
proceedings by the SEC or other governmental agencies; and the
financial impact of the foregoing, including potentially significant
litigation defense costs and claims for indemnification and
advancement of expenses by directors, officers and others. The Company
undertakes no obligation to update information contained in this
release. For further information regarding risks and uncertainties
associated with the Company's business, please refer to the Company's
filings with the SEC.
iBasis and Pingo are registered marks; the global VoIP company and
The iBasis Network are trademarks of iBasis, Inc. All other trademarks
are the property of their respective owners.
(1) Telegeography 2006 data compared with iBasis 2005 traffic
volume.
(2) ATLANTIC-ACM International Wholesale Carrier Report Card -
2002, 2003, 2004, & 2005.
CONTACT: iBasis, Inc.
Media:
Chris Ward, 781-505-7557
cward@ibasis.net
or
Investors:
Richard Tennant, 781-505-7409
ir@ibasis.net