Accounting & Tax

Dynacq Healthcare to Restate Results

The income tax effect of the exercise of stock options is one matter at issue.
Stephen TaubApril 8, 2004

Dynacq Healthcare Inc., which has been undergoing an investigation by the Securities and Exchange Commission, announced that it will restate its results for the fiscal years ended August 31, 2001, and August 31, 2002.

The holding company, which provides surgical healthcare services and related services, said that the restatement will reclassify certain accounts receivable to long-term status.

The restatement will also correct an error in the application of an accounting principle related to the income tax effect of the exercise of stock options. Dynacq said that an income tax benefit of $794,000 from the exercise of stock options was treated as a tax benefit rather than as an increase in stockholders’ equity during the 2001 fiscal year. The error was corrected the following fiscal year, added the company, when it increased the tax provision by $794,000 with a corresponding increase to stockholders’ equity.

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In conjunction with the restatement, Killman, Murrell & Co., the company’s recently appointed independent accountants, will reaudit the restated financial statements for the fiscal year ended August 31, 2002.