comScore, Inc. (NASDAQ:SCOR) Files An 8-K Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers
Item5.02.
|
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
(b)
The information disclosed in the section titled Board Leadership
Update in Item 7.01 of this Current Report on Form 8-K is
incorporated by reference to this Item 5.02.
| Item7.01. | Regulation FD Disclosure |
As previously disclosed, on February 19, 2016 the Audit Committee
(the Audit Committee) of the Board of Directors (the Board) of
comScore, Inc. (the Company) received a message regarding certain
potential accounting matters. In response, the Audit Committee
immediately commenced an investigation of the matters with the
assistance of King Spalding LLP, as independent counsel to the
Audit Committee, and AlixPartners, LLP, as forensic
accountants.That investigation is now complete, and the Company
is providing the following summary of the findings of the Audit
Committee and steps the Company is taking in response to these
findings.
Summary of Investigative Findings
As a result of the February 19, 2016 message, the Audit Committee
investigated the issues raised by the message and other matters
related to the Companys revenue recognition practices,
disclosures, internal controls, corporate culture, and certain
employment practices.The Audit Committees investigation concluded
that, as a result of certain instances of misconduct and errors
in accounting determinations, adjustments to the Companys
accounting for certain nonmonetary and monetary transactions were
required.
Based on the results of the Audit Committee investigation, and as
previously disclosed, the Company cannot support the prior
accounting for the nonmonetary transactions recorded by the
Company during the years ended December 31, 2013, 2014 and 2015,
and accordingly, revenue and expenses associated with all
nonmonetary transactions during these periods is being reversed
and accounted for at historical cost rather than at fair
value.There is no historical cost basis associated with the
assets that the Company exchanged and therefore there should be
no revenue recognized or expenses incurred for those
transactions.While a nonmonetary transaction inherently has no
effect on operating income or cash flow over the life of the
relevant agreement governing such transaction, the timing of
revenue recognized relative to the related expense recognized may
have an effect on a periodic basis.
Based on its investigation, the Audit Committee also found that,
for the nonmonetary transactions under review, facts collected
during the investigation called aspects of the transactions into
question, including instances where additional arrangements were
entered into and not properly disclosed to the Companys
accounting group and instances where there did not appear to be a
clear need for all of the data that was being exchanged.As
previously disclosed, the Company does not expect in the future
to enter into any nonmonetary transactions that would result in
the recognition of revenue.
The Audit Committee also determined that the accounting treatment
for certain monetary transactions will need to be adjusted,
principally relating to the timing of revenue recognition.One of
these transactions involved over-delivery of data that recurred
in multiple periods, two others included potential undisclosed
additional arrangements that required contemporaneous contracts
to be accounted for as a single arrangement, and one related to
partially delayed invoicing for delivered data inconsistent with
the terms of the contract.The Company is in the process of
reviewing the adjustments for these transactions as well as
several journal entries identified during the investigation.
The Audit Committees investigation also identified concerns
regarding internal control deficiencies, including concerns about
tone at the top; errors in judgment identified with respect to
issues reviewed; information not having been provided to the
Companys accounting group and its external auditors; and the
sufficiency of public disclosures made by the Company about
certain performance metrics.In addressing these concerns and
those noted above, the Audit Committee and the Company are in the
process of considering and implementing remedial measures, with a
view toward improved accounting and internal control
practices.These steps include separating certain Company
personnel; enhancing communications to support a robust control
environment; strengthening
the Companys disclosure controls, including through disclosure
committee enhancements; strengthening controls around the
Companys revenue recognition practices, including controls
related to contract administration and delivery of data; and
enhancing the Companys internal audit and compliance
functions.The Company is committed to maintaining an effective
control environment and making changes needed to enhance
effectiveness.
The Company will continue with its improvements to internal
controls and will continue to review transactions that were not
part of the investigation.As a result of that review, there may
be additional accounting adjustments and such adjustments may be
material.
As previously disclosed, the Company is working as expeditiously
as possible toward filing its restated consolidated financial
statements. At this time, however, the Company cannot predict
with certainty when the preparation of those prior period
restated financial statements, as well as any subsequently
required Forms 10-Q and Forms 10-K including the Companys
financial statements, will be completed. The Company is committed
to addressing the issues identified in the investigation, and to
re-establishing timely financial reporting as soon as
practicable.
Board Leadership Update
On November 17, 2016, Joan Lewis, the Chair of the Board and a
Class III director, and Patricia Gottesman, the Chair of the
Boards Nominating and Governance Committee and also a Class III
director, delivered their respective resignations to the Board
effective immediately.Ms. Gottesmans and Ms. Lewiss respective
resignations did not occur in connection with any disagreement
with the Company known to an executive officer of the Company on
any matter relating to the Companys operations, policies or
practices.The Company thanks Ms. Gottesman and Ms. Lewis for
their service to the Company, particularly with respect to their
role on the Audit Committee and their role co-chairing, through
its completion, the investigation by the Audit Committee of
certain accounting practices, as further described above.
On November 18, 2016, the Board unanimously appointed William
Henderson as Chairman of the Board.Mr. Henderson is an
independent director, and has previously served as the Boards
lead independent director.
Disclosures About Forward-Looking
Statements
This Current Report on Form 8-K contains forward-looking
statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Exchange Act, including,
without limitation, comScores expectations as to the timing
regarding preparation and filing of restated financial statements
and amended periodic reports, possible additional transactions,
assessment of control deficiencies and consideration of measures
to address the accounting issues described above.The statements
are based on managements current expectations, estimates and
projections, are not guarantees of future outcomes or
performance, and are subject to certain risks, uncertainties and
other factors, some of which are beyond the Companys control and
are difficult to predict, including, but not limited to, the
discovery of additional information relevant to the review of the
Companys accounting for transactions; the timing of the review
by, and the conclusions of, management and the Companys
independent public accounting firm regarding the internal review
and comScores financial statements; the determination of
additional adjustments for the periods to be restated; and the
risk that the completion and filing of the amended reports will
take longer than expected.The forward-looking statements
contained in this Form 8-K are also subject to other risks and
uncertainties, including those described in the Companys Annual
Report on Form 10-K for the period ended December 31, 2014, the
Companys Quarterly Report on Form 10-Q for the quarter ended
September 30, 2015 and from time to time other filings with the
SEC, which are available on the SECs Website
(http://www.sec.gov).Stockholders of the Company are
cautioned not to place undue reliance on the Companys
forward-looking statements, which speak only as of the date such
statements are made. The Company does not undertake any
obligation to publicly update any forward-looking statements to
reflect events, circumstances or new information after the date
of this disclosure, or to reflect the occurrence of unanticipated
events.
About comScore, Inc. (NASDAQ:SCOR)
comScore, Inc.( comScore) is a cross-platform measurement company that precisely measures audiences, brands and consumer behavior everywhere. comScore completed its merger with Rentrak Corporation in January 2016, to create the new model for a dynamic, cross-platform world. The Company’s unmatched data footprint combines digital, television and movie intelligence with vast demographic details to quantify consumers’ multiscreen behavior at massive scale. This approach helps media companies monetize their complete audiences and allows marketers to reach these audiences more effectively. With more than 3,200 clients and global footprint in more than 75 countries, the Company is delivering the future of measurement. comScore, Inc. (NASDAQ:SCOR) Recent Trading Information
comScore, Inc. (NASDAQ:SCOR) closed its last trading session up +0.50 at 30.50 with 190,081 shares trading hands.