This excerpt taken from the UNH 8-K filed Nov 8, 2006.
Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review
UnitedHealth Group Incorporated (the Company) has substantially completed its internal analysis of the October 15, 2006 WilmerHale report to the Independent Committee of the Board of Directors (the Board) on stock option programs of the Company and is working expeditiously to complete its final review of accounting adjustments based on the determination of the applicable accounting measurement dates, the impact of variable accounting treatment for certain stock options (which principally relates to stock options granted in and prior to 2000) and the resulting tax implications. As a result, the Company expects to recognize non-cash charges for stock-based compensation expense which are likely to be material for certain periods covered in the review. Although the Company is not yet able to determine the final amount of such non-cash charges and additional cash charges resulting from potential tax liabilities, the Company anticipates that it will be significantly greater than the estimate contained in its Form 10-Q for the quarter ended March 31, 2006.
Accordingly, on November 7, 2006, management of the Company concluded, and the Audit Committee of the Board (the Audit Committee) approved the conclusion, that due solely to the stock option matter, the Companys financial statements for the years ended 1994 to 2005, the interim periods contained therein, the quarter ended March 31, 2006 and all earnings and press releases, including for the quarters ended June 30, 2006 and September 30, 2006 and similar communications issued by the Company for such periods, and the related reports of the Companys independent registered public accounting firm should no longer be relied upon. The Company will review its analysis and proposed restatement adjustments with the SEC prior to completing its restatement and is working as quickly as possible to return to current filing status. The Companys management and the Audit Committee have discussed the matters disclosed in this Item 4.02(a) with Deloitte & Touche LLP, the Companys independent registered public accounting firm.
Additionally, management reevaluated the Management Report on Internal Control over Financial Reporting included in the Companys Annual Report on Form 10-K for the fiscal year ended December 31, 2005 (the 2005 Management Internal Control Report). The Company has determined that it had a material weakness in internal control over financial reporting relating to stock option plan administration and accounting for and disclosure of stock option grants as of December 31, 2005. The existence of a material weakness as of December 31, 2005 would preclude management from concluding that the Companys internal control over financial reporting was effective as of December 31, 2005. The Company intends to amend its 2005 Management Internal Control Report and expects to receive an adverse opinion on the Companys internal control over financial reporting as of December 31, 2005 from Deloitte & Touche LLP, the Companys independent registered public accounting firm. As a result of the material weakness related solely to stock option plan administration and accounting for and disclosure of stock option grants, the Company also expects to report that its disclosure controls and procedures were not effective as of December 31, 2005.
The Company has substantially remediated this material weakness in internal controls by taking significant actions in 2006 to strengthen the Companys controls relating to stock option plan administration and accounting for and disclosure of stock option grants as disclosed in the Companys Form 10-Q for the quarter ended March 31, 2006 and in the Companys Form 12b-25 filed with SEC on August 10, 2006, including the following:
As a result of these actions, as of September 30, 2006, the Company has substantially remediated the material weakness that existed as of December 31, 2005.
A copy of the press release dated November 8, 2006 announcing the matters stated above is filed herewith as Exhibit 99.1 and is incorporated in this Item 4.02 by reference.