CNET Networks Announces Expected Restatement of Financials Arising From Stock-Based Compensation
July 10 2006 - 7:45AM
Business Wire
CNET Networks, Inc. (Nasdaq:CNET) announced today that it expects
to restate previously issued financial statements to correct errors
related to accounting for stock-based compensation. CNET does not
expect that the anticipated restatement will have any impact on its
previously reported revenues or cash positions. As previously
announced, the Company's Board of Directors has established a
special committee of independent directors to review the Company's
stock option practices and related accounting. The special
committee is assisted by independent counsel and outside accounting
experts. The special committee is continuing its review and has not
completed its work or 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 non-cash charges for stock-based
compensation expense in certain reported periods commencing with
the year ended December 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 financial
statements and all earnings and press releases and similar
communications issued by the Company relating to periods commencing
on January 1, 2003 should therefore not be relied upon. The Company
has discussed these matters with its independent registered public
accountants. The Special Committee's review is continuing and the
Company may conclude that the measurement dates for options granted
in periods not yet reviewed differ from the recorded grant dates.
For this reason, the Company may determine that the financial
statements issued by the Company with respect to additional periods
should not be relied upon. CNET expects to announce second quarter
revenue results and its cash position at June 30, 2006 as well as
third quarter and calendar year 2006 revenue guidance on July 24,
2006. The Company will not be in a position to announce additional
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. Cautionary Statement Regarding Forward-Looking
Statements The press release contains forward-looking statements
concerning the special committee's continuing review of the
Company's stock option grant practices and related accounting as
well as the Company's expected restatement of its historical
financial statements. The special committee's review is ongoing and
the Company's expectation that it will 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 is based upon the special
committee's preliminary review of only some of the Company's option
grants. The final result of the special committee's review will
depend upon a number of important factors including further
analysis of option grants reviewed to date and a review and
analysis of other option grants not yet reviewed. Forward-looking
statements are made as of the date of this press release and,
except as required by law, the Company does not undertake an
obligation to update its forward-looking statements to reflect
future events or circumstances. About CNET Networks, Inc. CNET
Networks is a global media company with some of the most important
and valuable brands on the Web targeting passionate audiences. The
company's brands -- such as CNET, GameSpot, TV.com, MP3.com,
Webshots, BNET and ZDNet -- serve the technology, games and
entertainment, business, and community categories. CNET Networks
was founded in 1993 and has always been "a different kind of media
company" creating engaging media experiences through a combination
of world-class content and technology infrastructure
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