Accounting & Tax

Baxter to Restate Three Years of Results

Restatement follows the abrupt departure of the company's former CFO in June.
Stephen TaubJuly 23, 2004

Health-care company Baxter International announced it will restate its results for the last three years as well as the first quarter of 2004. The revisions are primarily the result of incorrect revenue recognition and inadequate provisions for bad debts in its Brazil operation, according to the company.

Baxter added that the restatements will reduce net income by no more than $40 million and revenues by no more than $70 million, or less than 0.5 percent of sales in any year.

“While the adjustments to any of the individual years subject to restatement may not seem significant to Baxter’s overall operations, the company concluded that a restatement is the most appropriate action,” said chief financial officer John J. Greisch, in a statement.

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Greisch became CFO in June after the abrupt departure of Brian Anderson. At the time, the company provided no reason for the change.

The company stated that after becoming aware of the issue in Brazil, senior management, with the assistance of the company’s internal audit team, conducted a preliminary investigation. This was followed by a more comprehensive investigation by the company’s audit committee, with the assistance of external legal counsel and accountants.

As a result of those investigations, two members of senior management in the company’s Brazilian operations are being terminated, according to the company.

“The situation we discovered in Brazil was very troubling, and we took it very seriously,” said chairman and chief executive officer Robert L. Parkinson Jr., in a statement. The company noted that it looked for similar issues within its Latin America region and, aside from some minor issues in one other country, no such issues have surfaced.