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TMO Reports - Apple Records $84M Charge in SEC Filing

by , 7:40 AM EST, December 29th, 2006

Apple Computer filed its delinquent form 10-Q and form 10-K with the Securities and Exchange Commission on Friday, and is recording a non-cash charge of US$84 million to compensate for improperly handled stock option grants. Apple states that the grants in question were issued between 1997 and 2002.

Apple delayed filing the form 10-Q for the quarter ending on July 1, 2006 and form 10-K for the fiscal year ending on September 30, 2006 while an independent investigation was conducted to look into improperly backdated stock option grants. The company committed to filing the required documents by December 29.

The $84 million non-cash stock-based expense includes $7 million from 2005, and $4 million from 2006.

Former U.S. Vice President Al Gore, chair of the special committee overseeing the independent investigation, and Jerome York, chair of Apple's Audit and Finance Committee, said in a joint statement "The special committee, its independent counsel and forensic accountants have performed an exhaustive investigation of Apple's stock option granting practices. 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 investigation cleared the current management team, including CEO Steve Jobs, of any wrong doing, but expressed concerns over the actions of two former Apple executives.

Concerns over Mr. Jobs' involvement in the backdating incidents were raised earlier this week when a report surfaced claiming he had hired a legal team for representation during the investigation. Those concerns are unfounded, according to Piper Jaffray analyst Gene Munster.

He commented "Regarding the supposed hiring of a separate legal counsel by Jobs, we do not see this as surprising. We would have expected that he have his own legal counsel for the duration of the options investigation."

News of Apple's SEC filing has already had a positive impact on the Mac and iPod maker's stock. In pre-market trading, the company's stock is at $84.42, up 3.58 (4.43%).


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

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Observer Comments

Show: Subjects Only | Full Comments
Close Name:Rainy Day Posts: 607 Joined: 07 Jun 2005
Subject: Annual report make for Mindnumbing reading

I pity the poor fool who reads it cover to cover.

But it does have a few gems about how Apple views iTS and MacOS. For example, Apple sees the MacOS as the primary reason why people buy Apple hardware, so anyone who expects Apple to license MacOS will be in for a very long wait indeed: “The Company’s future operating results and financial condition are substantially dependent on its ability to continue to develop improvements to the Macintosh platform to maintain perceived design and functional advantages over competing platforms. Additionally, if unauthorized copies of the Mac OS are used on other companies’ hardware products and result in decreased demand for the Company’s hardware products, the Company’s results of operations may be adversely affected.”

Close Name:gslusher Posts: 2043 Joined: 13 Nov 2002
Subject:

Quote
Rainy Day wrote:
I pity the poor fool who reads it cover to cover.

But it does have a few gems about how Apple views iTS and MacOS. For example, Apple sees the MacOS as the primary reason why people buy Apple hardware, so anyone who expects Apple to license MacOS will be in for a very long wait indeed:


I think Steve Jobs might say, "We've been there, done that, and don't intend on doing it again." Apple was seriously hurt by the previous licensing program, as Power Computing and others were able to produce good "Macs" that cost less than Apple's "real" Macs. I had a PowerCenter 150 for many years. True, it looked like a PC--ordinary beige box--but, with a few exceptions (e.g., keyboard commands on startup), it worked just like an Apple Mac. I think that I paid about 2/3 of what a comparable Apple computer would have cost.

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