updated 11:00 am EST, Fri December 29, 2006
Apple 10-K findings
Apple's 10-K filing reiterates that current management was not involved with stock options wrongdoing, according to Piper Jaffray senior analyst Gene Munster. The investigation found that Apple CEO Steve Jobs was aware of some favorable options grant dates, but that he did not benefit from them personally and was not aware of the accounting implications. The filing also states that Apple admitted to a falsified special board meeting to approve 7.5 million options for Jobs, but adds that no member of the current management team was aware of the irregularity. "The financial impact of Apple's restatement is immaterial (around 2 percent impact) to net income over the last nine years," said Munster. Additionally, the special committee concluded that procedures for granting, accounting for, and reporting stock option grants failed to include sufficient safeguards.
"Apple reiterated that its investigation and the investigation of the special committee did not find any wrongdoing by current management; we view this as a positive given investor's concerns that this issue could lead to the removal of Steve Jobs," the analyst said. "While this is a significant positive, we have not heard any formal comments from the SEC on this matter; given the scope of Apple's exhaustive internal investigation (reviewed more than 1 million documents, spent over 26,500 person-hours, and interviewed more than 40 current and former employees), we believe that any SEC findings would be consistent with Apple's findings."