Sepracor delays filing of quarterly report due to internal review of stock options; to restate results

By E. Janene Geiss

Philadelphia, Aug. 10 - Sepracor Inc. announced Thursday that it will be unable to file its quarterly report on form 10-Q for the quarter ended June 30 until it has substantially completed its previously announced internal review relating to stock option grants and stock option practices. The company also said it will restate results for 2003 onwards.

The Securities and Exchange Commission is conducting an informal inquiry into the company's stock option granting practices, according to a company news release.

In June, the company said it appointed a special committee of outside directors to conduct an internal review relating to its stock option grants and stock option practices.

The special committee, with the assistance of legal counsel and accounting specialists, is reviewing stock option grants to the company's officers, directors and employees from 1996 to the present.

The company said it is cooperating with this review and its finance department also has reviewed the stock option grants and practices for the same period.

While the special committee's review is continuing, based on the results to date, Sepracor said it has determined that the measurement dates for some stock option grants to employees, officers and directors differed from the recorded dates.

In addition, the company said it has determined that the modification of some stock option grants in connection with an employee's termination of employment and the exercise of stock options that had not vested prior to an employee's termination resulted in a new measurement date for those options.

As a result, the company said it is required to record adjustments for additional non-cash charges relating to stock-based compensation expense in periods before July 1, 2006.

Based on the results of the review, Sepracor said it will need to restate its financial statements for the quarters ended March 31, June 30 and Sept. 30, 2005, the quarter ended March 31, 2006 and the fiscal years ended Dec. 31, 2005, 2004 and 2003, as well as revise the information in the earnings release for the period ended June 30, 2006.

Sepracor is a Marlborough, Mass., research-based pharmaceutical company.

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