Opinion ID: 731320
Heading Depth: 4
Heading Rank: 2

Heading: The Restructuring Reserve

Text: 45 Plaintiffs contend that MIPS' failure to record a restructuring charge of $25.5 million before June 30, 1991 violated GAAP. Plaintiffs' experts assert that defendants should have recorded the restructuring by the end of the second quarter of 1991, because at that time defendants knew a restructuring was necessary. In April 1991, MIPS and twenty other companies announced the formation of ACE, the Advanced Computing Environment initiative. 46 MIPS, however, waited until the third quarter of 1991 to record the restructuring charge. Apparently, defendants waited until then because MIPS had not yet made a formal decision to redirect its new product development around ACE. MIPS made this decision at the end of the second quarter of 1991. At that time, MIPS warned that a restructuring in the third quarter would be significant and would cause a loss position for the third quarter and for total year 1991. 47 We fail to see why waiting to record the restructuring charge until the third quarter was unreasonable. In reviewing the whole record, we find nothing that suggests this accounting decision violated GAAP or any of MIPS' policies. Thus, we hold that the defendants' decision to record the restructuring in the third quarter rather than the second quarter is not actionable as a false or misleading statement.