This excerpt taken from the UNH 8-K filed Nov 8, 2006.
Provides Update on Accounting for Past Option Grants
MINNEAPOLIS (Nov. 8, 2006) UnitedHealth Group today announced a series of steps taken by its Board of Directors as it continues to take action following the report by the Independent Committee and its independent counsel on October 15.
Among its actions, the Board:
grant dates between 1994 and 2002, reset to the highest share price during the recorded grant year for each particular option. For options suspended in 1999 and reinstituted in 2000, the exercise prices will be reset to the highest share price in 2000;
The Company has substantially completed its internal analysis of the WilmerHale report findings 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 that 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 the non-cash compensation 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, the Company has concluded that, due solely to the stock option matter, its financial statements and similar communications for the years ended 1994 to 2005 and the interim quarters through September 30, 2006, should no longer be relied upon and the Company will delay filing its Form 10-Q for third quarter 2006. 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.
Additionally, the Company announced that it has substantially remediated a material weakness in its internal controls relating to stock option plan administration that it has now concluded existed as of December 31, 2005.