Apple Believes SEC Investigation Poses Risk
In Apple's quarterly 10Q filing, filed last Friday, Apple acknowledged the ongoing SEC investigations into the company's past stock options backdating practices as a considerable risk, and adds that the potential exists for further delay of SEC filings and possible delistment from a prestigious NASDAQ market.
The internal review, the independent investigation, and related activities have required the Company to incur substantial expenses for legal, accounting, tax and other professional services, have diverted managements attention from the Companys business, and could in the future harm its business, financial condition, results of operations and cash flows.
While the Company believes it has made appropriate judgments in determining the correct measurement dates for its stock option grants, the SEC may disagree with the manner in which the Company has accounted for and reported, or not reported, the financial impact. Accordingly, there is a risk the Company may have to further restate its prior financial statements, amend prior filings with the SEC, or take other actions not currently contemplated. Additionally, if the SEC disagrees with the manner in which the Company has accounted for and reported, or not reported, the financial impact of past stock option grants, there could be delays in filing subsequent SEC reports that could subject the Companys common stock to potential delisting from the NASDAQ Global Select Market.
The report also addresses many other risks facing the company that often go un-noticed (i.e. economic conditions, war, terrorism, etc), however the acknowledgment nevertheless comes as a reminder that the SEC's investigation of Apple's accounting practices remains ongoing.
Note that delistment from the NASDAQ Global Select Market does not necessarily mean delistment from the general NASDAQ market. The NASDAQ Global Select Market, created in July 2006, is for companies that satisfy the "highest initial financial and liquidity qualifications."
Raw Data: Apple's Quarterly 10Q (pdf)