CNet to Restate
CNet (CNET) said Monday it expects to restate its financials for at least three years to correct its accounting for stock-based compensation.
The news comes as the San Francisco-based online tech publisher looks into its stock-option practices and accounting. CNet was subpoenaed last month on those issues and is among several dozen companies being probed by the regulators and prosecutors over possible stock-option missteps.
CNet said a special committee of its board is continuing its review and has not reached final conclusions. The special committee and the company have reached the preliminary conclusion that the actual measurement dates for certain stock options granted between 1998 and 2001 differ from the recorded measurement dates. CNet accordingly expects to record noncash charges for stock-based compensation expense in certain reported periods commencing with the year ended Dec. 31, 1998. These charges continue during at least the vesting periods of the options and, therefore, affect subsequent periods, decreasing net income or increasing net loss.
The company believes that these charges are material and expects to restate its financial statements for 2003, 2004 and 2005 contained in the company's annual report on Form 10-K filed in March 2006 and the company's balance sheet as of March 31, 2006. Based on the continuing review by the special committee, the company may also restate its financial statements for earlier years and its operating results for the first quarter of 2006.The company will not be in a position to announce full financial results for the second quarter until the special committee has completed its review and a determination of the appropriate stock-based compensation has been made. Similarly, the company will not be in a position to file its quarterly report on Form 10-Q for the quarter ended June 30, 2006, on a timely basis pending completion of the special committee's review and completion of procedures by the company's independent registered public accountants. Shares of CNet rose 35 cents Monday to $7.94.
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