Mercury Interactive to restate financials.

(From Israel Business Arena)

Byline: Globes correspondent

Business optimization systems company Mercury Interactive Corporation (Nasdaq: MERQ) has announced that, following an enquiry into its reporting of stock option grants, it will have to restate its financial statements for the years 2002 to 2004. Mercury said that it would incur additional charges to its stock-based compensation expense. The amounts are not yet known precisely, but the company said they would be material.

The restatement will not affect previously stated revenue, or previously stated cash positions, but it will mean a reduction in earnings figures.

Mercury also said it was highly likely that it had a material weakness in internal control over financial reporting.

In addition, because of its failure to file its second Form 10-Q report with the Securities and Exchange Commission, Mercury has been notified by the trustee of its $500 million Senior Convertible Notes due 2008 and $300 million Subordinated Notes due 2007 that it may have to make immediate repayment of the notes. The …