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Cablevision delays earnings report

Cablevision Sytems Corp., a New York-area cable TV systems operator, said Tuesday it would delay filing its second-quarter earnings and restate prior results because of a review into the pricing and timing of stock options.
/ Source: The Associated Press

Cablevision Systems Corp., a New York-area cable TV systems operator, said Tuesday it would delay filing its second-quarter earnings and restate prior results because of a review into the pricing and timing of stock options.

The company said that previously issued results dating as far back as Jan. 1, 1997 shouldn’t be relied upon. Cablevision became the latest of dozens of companies to run into trouble with its stock options practices.

Cablevision, which also owns Madison Square Garden and several sports teams that play there, said an internal review found that the date and exercise price of a number of stock options grants made from 1997 through 2002 didn’t properly correspond with the actual grant date and closing price of the company’s stock on that day.

Cablevision said it has contacted the Securities and Exchange Commission as well as the U.S. Attorney’s office for the Eastern District of New York about the matters.

Bethpage, N.Y.-based Cablevision said it undertook a voluntary review of its stock options practices after several companies reported issues with the timing and pricing of stock options.

The company said it had retained outside counsel that had not previously been involved with the company’s stock option plans. Cablevision said the review is continuing and is being monitored by a special committee of independent directors on its board.

Cablevision said it had not yet fully determined the size of the adjustments it would have to make to its previous results, or what tax and accounting impacts there might be.

Cablevision didn’t say how long it expected the inquiry to take, and company executives on a conference call with analysts declined to discuss the issue.

The company also reported limited financial data for its second quarter, including a 15.6 percent gain in revenues to $1.05 billion on gains in cable subscribers and in premium services like digital video, digital phone and high speed data.

Cablevision also raised its full-year financial guidance, saying it now expects to see growth of 3.5 percent to 4 percent in basic video subscribers, up from its previous estimate of 2.5 percent to 3 percent and revenue growth in the high teens percentage range, versus mid-teens.

More than 60 companies are under scrutiny from regulators because of stock options practices and others are conducting or have completed internal probes into their practices.

Apple Computer Inc. rattled investors by disclosing last week that its options trouble was so deep that its financial results reported dating back to September 2002 can’t be trusted.

On Monday, the Islandia, N.Y.-based information technology company CA said it would delay filing its quarterly report with the SEC following a recently completed review into its stock options practices.

Options give holders the right to buy a stock at a certain price and are often used as a form of compensation for executives.

Many problems with stock options stem from a practice called backdating, under which insiders try to make the rewards more lucrative by assigning a date to the grant at which the stock’s price was lower.

Usually an option’s exercise price coincides with the market value of the stock on the day it was granted, giving the person who gets it an incentive to perform well and help contribute to the stock price going higher.

Other companies under regulatory scrutiny for stock options practices include Barnes & Noble Inc., Home Depot Inc., McAfee Inc., Michaels Stores Inc., Monster Worldwide Inc., RSA Security Inc. and VeriSign Inc.

In addition to Apple, other companies have also launched or completed internal reviews into their stock options practices. American Electric Power Co. said in its quarterly filing Friday that its review found no problems with its own options practices.