What is the main reason for Apple's announcement?

Apple announced that its financial statements for several past fiscal years (2003-2005) and certain interim periods are unreliable and should no longer be relied upon. This implies that historical financial results will need to be restated.

What periods are affected by this non-reliance?

The affected periods include fiscal years ended 2003, 2004, and 2005, the interim periods within those years, the fiscal quarters ended December 31, 2005, and April 1, 2006, and all earnings and press releases and similar communications issued by Apple relating to periods commencing on September 29, 2002.

Who was involved in this decision?

The conclusion was reached by Apple's management and approved by the Audit and Finance Committee of Apple's Board of Directors. Apple's independent auditors, KPMG LLP, were also consulted.

What are the likely implications for investors?

Investors should be aware that historical financial performance may be restated, potentially impacting previously reported earnings per share and other financial metrics. The exact nature and magnitude of the adjustments will be detailed in the press release. This also raises questions about the effectiveness of Apple's internal controls over financial reporting during the affected periods.

AAPL 8-K: Earnings & Results & Financial Events

Summary

Apple Computer, Inc. (AAPL) filed an 8-K on August 3, 2006, reporting a significant accounting issue. The company, in conjunction with its Audit and Finance Committee and independent auditors KPMG LLP, has concluded that its financial statements for the fiscal years 2003, 2004, and 2005, as well as interim periods within those years, and specific quarters in late 2005 and early 2006, should no longer be relied upon. This also impacts related earnings releases and communications dating back to September 29, 2002. The core reason for this restatement appears to be related to stock option accounting practices. While the specific details of the restatement are expected to be in the accompanying press release (Exhibit 99.1), this announcement signals a material weakness in internal controls and potential adjustments to historical financial results, which will be a primary focus for investors.

Key Highlights

1Apple has concluded that its financial statements for fiscal years 2003, 2004, and 2005, and interim periods therein, are unreliable and should no longer be relied upon.
2This non-reliance extends to specific fiscal quarters ending December 31, 2005, and April 1, 2006, and all related earnings releases and communications since September 29, 2002.
3The decision was made by Apple's management and approved by the Audit and Finance Committee.
4Apple's independent registered public accounting firm, KPMG LLP, has been consulted and involved in discussions regarding these matters.
5The filing indicates potential adjustments to historical financial reporting, likely related to stock option accounting, which will require investor attention.
6A press release dated August 3, 2006, providing further details, is incorporated by reference as Exhibit 99.1.

Apple Inc. 8-K Report, Financial Results (Aug 4, 2006)

Summary

Key Highlights

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