SAN JOSE, Calif.--(BUSINESS WIRE)--
A10 Networks (NYSE:ATEN) announced today that the Audit Committee of its
Board of Directors has completed the internal investigation previously
disclosed on January 30, 2018. The Committee conducted the investigation
with the assistance of outside counsel, as well as independent counsel.
Counsel retained forensic accountants to assist with their work.
Results of Audit Committee Internal Investigation
As a result of the investigation, errors in the company’s financial
statements were identified relating to the recognition of revenue in a
limited number of sale transactions between the company and its
resellers. The errors do not have an impact on the aggregate amount of
revenue recognized by the company. The company does, however, expect to
shift the timing of recognition of revenue among certain quarterly
periods.
The Audit Committee believes that the errors identified during the
investigation relate to the application of accounting principles that
require interpretation and judgment. The principal factors that
contributed to the company prematurely recognizing revenue on these
transactions were incorrect assessment of resellers’ ability or intent
to pay the company before they received a purchase order or payment from
their end customers, and some of the facts and circumstances of certain
transactions not being fully communicated to accounting personnel at the
time of the transaction.
The company is also evaluating the impact of these errors on its
internal control over financial reporting and disclosure controls and
procedures, and expects to report one or more material weaknesses in
internal control over financial reporting related to this matter and
that its disclosure controls and procedures were not effective. The
company is evaluating, has begun to implement and will continue to
implement remedial measures identified by the investigation.
The company’s Board of Directors continues to have the utmost confidence
in the company’s current officers, none of whom were implicated in any
misconduct or caused any of the errors identified in the investigation.
The Audit Committee notes management’s assistance and helpful
cooperation with all aspects of the investigation.
Restatement of Financial Statements
As a result of the errors identified during the investigation, the Audit
Committee, in consultation with the company’s management, has concluded
that the company’s previously issued consolidated financial statements
and other financial information, and the related report of its
independent registered public accounting firm, each as contained in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2016,
and its condensed consolidated financial statements contained in its
Quarterly Reports on Form 10-Q for the quarters ended September 30, 2016
and March 31, 2017 should no longer be relied upon and should be
restated.
The company’s Total Revenue was overstated by approximately $1 million
for the three months ended September 30, 2016, overstated by
approximately $3 million for the year ended December 31, 2016, and
understated by approximately $4 million for the three months ended March
31, 2017. The company’s Net Loss was understated by approximately $1
million for the three months ended September 30, 2016, understated by
approximately $2 million for the year ended December 31, 2016, and
overstated by approximately $3 million for the three months ended March
31, 2017.
As part of the restatement process, the company is continuing to assess
the adjustments identified above and will assess any other potential
items for correction as needed.
Further Information
The company is proceeding to complete its quantification and evaluation
of the impact of the identified errors on its previously issued
financial statements. The company will provide additional information
regarding the foregoing errors and the consequent adjustments to its
financial statements and expects to file restated consolidated financial
statements as soon as practicable. Due to the procedures required before
such process can be completed, the company is not able to predict at
this time the exact dates for such filings, but currently expects to be
able to make such filings in the third quarter of 2018. The company also
expects to provide during the third quarter an update on its business
and financial performance in the first half of 2018.
Forward Looking Statements
This press release contains forward-looking statements within the
meaning of the federal securities laws. You can identify these
statements by our use of such words as "will," "expects," "plans,"
"intends," "believes," and similar expressions that do not relate to
historical matters. Forward-looking statements in this press release
include, but are not limited to, statements, inferences, beliefs or
expectations regarding: consequences and effects of the Audit Committee
investigation, including on previously announced company financial
results and the anticipated adjustments thereto discussed above; timing
of the announcement of the company's financial results for the fourth
quarter and full year of 2017 and for the first half of 2018; and the
company's plans, objectives and intentions that are not historical facts
generally.
The above forward-looking statements reflect the current intent, beliefs
and expectations of the company's management. They involve known and
unknown risks, uncertainties and other factors that may cause future
events, including the company's performance and results to differ
materially from those expressed or implied by the forward-looking
statements. Factors that may cause actual future events to differ from
those in the forward-looking statements include the outcome of the
company’s completion of the quantification and evaluation of the
specific impact of the errors in the company’s revenue recognition
practices on the company’s financial results and previously issued
financial statements, including the possibility of material adjustments
thereto; the discovery of additional and unanticipated information
during the procedures required to be completed before the company is
able to file its required reports; review by, and the conclusions of,
our independent registered public accounting firm regarding our revenue
recognition and related accounting practices; the application of
accounting or tax principles in an unanticipated manner; and any
unanticipated delay in the preparation and filing of our required
reports with the SEC. See also the factors described under the heading
"Item 1A -- Risk Factors" in the company’s Annual Report on Form 10-K
for the year ended December 31, 2016, and in the company’s Quarterly
Report on Form 10-Q for the quarter ended September 30, 2017, or as
otherwise described in the company’s other public filings. The company's
results may also be affected by factors of which the company is not
currently aware. The company may not update these forward-looking
statements, even though its situation may change in the future, unless
it has obligations under the federal securities laws to update and
disclose material developments related to previously disclosed
information.
About A10 Networks
A10 Networks (NYSE: ATEN) is a provider of intelligent and automated
cybersecurity solutions, providing a portfolio of high-performance,
secure application solutions that enable intelligent automation with
machine learning to ensure business-critical applications are secure and
always available. Founded in 2004, A10 Networks is based in San Jose,
California, and serves customers in more than 80 countries with offices
worldwide. For more information, visit: www.a10networks.com and
@A10Networks.
The A10 logo, A10 Networks, A10 Thunder, Reliable Security Always and
Secure Application Services are trademarks or registered trademarks of
A10 Networks, Inc. in the United States and other countries. All other
trademarks are the property of their respective owners.
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Investor Contact:
The Blueshirt Group
Maria Riley &
Chelsea Lish, 415-217-7722
investors@a10networks.com
or
Media
and Analyst Contact:
A10 Networks
Ben Stricker
bstricker@a10networks.com
Source: A10 Networks