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Technology Stocks : Apple Inc. -- Ignore unavailable to you. Want to Upgrade?

To: Mick Mørmøny who wrote (59629)	12/29/2006 10:18:56 AM
From: Mick Mørmøny	Read Replies (1) \| Respond to of 213182

Apple says options probe clears execs MAY WONG Associated Press Posted on Fri, Dec. 29, 2006 SAN JOSE, Calif. - Apple Computer Inc. restated past earnings Friday and acknowledged the backdating of thousands of stock option grants. But the company cleared current management and Chief Executive Steve Jobs of misconduct, saying it has "complete confidence" in the executive team. In a filing with the Securities and Exchange Commission detailing its probe of stock-options practices, Apple said Jobs was aware of the selection of some favorable grant dates but did not benefit financially from them. Its options mishandling will result in an additional noncash charge of $84 million, the Cupertino, Calif.-based company said. In its full-year financial report filed with the SEC, which was delayed due to the options probe, Apple said earnings for fiscal years 2006, 2005 and 2004 will be lowered by $4 million, $7 million, and $10 million respectively. Apple shares rose about 4 percent to $84.12 in early trading on the Nasdaq Stock Market after the news. The three-month probe identified a number of instances in which option grant dates were intentionally selected in order to obtain favorable exercise prices, the company said. "The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple's stock option granting practices," former Vice President Al Gore, chair of the special committee, and Jerome York, chair of Apple's Audit and Finance Committee, said in a joint statement. "The board of directors is confident that the company has corrected the problems that led to the restatement, and it has complete confidence in Steve Jobs and the senior management team." The maker of the iPod music player and Macintosh computers is one of the most prominent among some 200 companies that have come under scrutiny for backdating stock options. It's a widespread practice, especially in Silicon Valley, that involves pegging stock options to favorable grant dates in the past to boost the recipients' award. The manipulation itself isn't necessarily illegal, but securities laws require companies to properly disclose the practice in its accounting and settle any charges that may result. Dozens of companies have been forced to restate their earnings, erasing some of their earlier recorded profits, after their stock option shenanigans came to light. Apple initiated its own stock options probe in June and delayed its quarterly report for the period ending July 1 and its annual report for the fiscal year ended Sept. 30 as a result. Apple said its investigation reviewed 42,077 stock option grants made on 259 dates between October 1996 and January 2003. Of those, 6,428 grants on 42 dates did not have the proper measurement dates, Apple said. Of two option grants awarded to Jobs, one was improperly dated Oct. 19, 2001, with an exercise price of $18.03, instead of the correct date on Dec. 18, when Apple shares were trading at $21.01. That stock-option grant was for 7.5 million shares. Jobs later surrendered those options without exercising them and realized no financial benefit. The special board meeting that was pegged to the Oct. 19 grant never occurred, the company said. "There was no evidence, however, that any current member of management was aware of this irregularity," Apple stated. Though the probe exonerated current management, it did raise "serious concerns" with the stock-options accounting actions of two former officers. Apple did not identify those officers. Speculation and media reports citing unnamed sources familiar with the matter, however, have pointed to former Chief Financial Officer Fred Anderson and former general counsel Nancy Heinen. Anderson retired as Apple's CFO in 2004 yet remained a board member until he resigned in October after the internal inquiry. Heinen left Apple for unknown reasons in May, before Apple initiated its stock options probe. Apple said it has provided the results of its internal review and independent investigation to the SEC and the U.S. Attorney's Office for the Northern District of California and has responded to their "informal requests" for documents and additional information. The details of the findings Friday appeared to ease investor concerns that the options scandal would threaten Jobs. Shares of Apple went on a roller-coaster ride earlier in the week following media reports that federal investigators were looking into the falsification of documents and that Jobs had received an award of stock options in 2001 without proper board approval. The nationwide stock options scandal has already led to criminal indictments and resignations of several executives. But none is considered as well known or tied to their company's success and identity as Jobs. Wall Street analysts have largely shrugged off the impact of the scandal on Apple as long as the company's iconic co-founder and CEO was to remain unscathed. mercurynews.com