RealTime IT News

Apple Stock Option Probe Escalates

Apple Computer Inc.  said it may have to restate past financial results after uncovering additional accounting regularities during its internal investigation into stock option grants.

The computer maker, which will also delay filing its results for the current quarter, said the restatements would include non-cash charges for compensation expense relating to stock option grants made between 1997 and 2001.

Apple said in a statement it has not determined the amount of the charges, taxes and accounting impact, or which periods may require restatement.

For those reasons, the company filed a form 8-K stating that financial statements, earnings and other communications issued by the company from Sept. 29, 2002 are unreliable.

"The company is focused on resolving these issues as quickly as possible and plans to file its Form 10-Q and any required restated financial statements following completion of the investigation," Apple said.

Apple did not respond to calls or e-mails seeking comment.

What is known is that Apple enlisted outside counsel in June after it said that it had some concerns about its accounting of certain stock option grants.

One of the grants in question was to CEO Steve Jobs, but Apple claimed it was cancelled and resulted in no financial gain to the CEO.

"We are focused on resolving these issues as quickly as possible," Jobs said in a statement in June.

A week later Apple said it was being sued in two California courts for claims against current and former officers and directors with respect to the company's awarding of stock option grants.

While Apple is being cagey about the irregularities, the updates filtering from the Cupertino, Calif., company come against a backdrop of some of the most serious stock option scandals in history.

Last month, the SEC, FBI and California prosecutors came down hard on former Brocade Communications Systems  CEO Greg Reyes and Stephanie Jensen, former vice president of human resources, charging them with federal securities fraud.

Reyes and Jensen, like many other current and former executives at companies like Mercury Interactive, Sycamore Networks and other high-tech concerns, are accused of backdating documents to indicate stocks options granted were issued at a time when the stock's value was actually lower.

While executives at those companies have yet to be formally charged, Reyes and Jensen could receive 20 years in prison, along with $5 million in fines for granting backdated stock options to employees between 2000 and 2004.