US: Investigation finds no wrong doing at Hansen

By | 26 March 2007

A special committee of the board of directors of Hansen Natural Corporation has completed over four months of investigations into the company's stock option practices and found "no willful or intentional misconduct", the company has said.

In November 2006, Hansen set up a special committee following an information request from the Securities and Exchange Commission. The Californian soft drinks producer said late last week that the SEC had asked for "certain documents and information relating to the company's filing of SEC Forms 4 and the company's stock option grant practices from 1 January, 1996 to the present".

The company said the special committee had reviewed all stock option grants from 1 January, 2001 until 13 November, 2006 and in the course of its investigation, had reviewed more than 1m documents and e-mails.

"The special committee found no willful or intentional misconduct in connection with the granting or dating of, or the accounting for, stock options. The special committee also found that the late filing of certain Form 4 reports, as identified in a report issued last year by Glass Lewis & Co., did not indicate that option grants had been backdated," Hansen said.

The special committee found no evidence raising concerns with the integrity of management and found that management and other company personnel interviewed in the course of the investigation were cooperative and credible."

However, the investigation did find that during the time period covered by its review, there were inadequate internal accounting controls at the company related to its stock option grant process, deficiencies in the process of documenting the approval of stock option grants, and some errors and potential errors with respect to the accounting for certain option grants.

"The company and its independent auditors are reviewing the findings of the special committee and have not yet determined whether any adjustments are necessary or whether any prior financial statements will require restatement," Hansen said.

With respect to internal control and other issues in the company's option granting process, the special committee found that new written option grant procedures that were adopted and implemented by the company from 1 January, 2007 constitute "best practices." The special committee recommended certain additional remedial measures, all of which were adopted by the board of the directors at a meeting in March.

The investigation is only one issue in a wider set of problems facing Hansen, which has also been under threat of being delisted from the NASDAQ stock exchange due to the delayed filing of its quarterly results. The drinks group was also hit by a lawsuit from shareholders in December, alleging that the company had broken the country's securities law.

The company is working towards filing all delinquent periodic reports, and any restatements that may be required, within the period that the Nasdaq Listing Qualifications Panel has allowed for the company to continue to be listed on the Nasdaq Capital Market, it said.

Sectors: Soft drinks

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