Global Business

Symmetry’s UK Accounting Out of Sync

Errors going back to 1999 could force numerous restatements and jeopardize the company's credit standing.
Stephen TaubOctober 5, 2007

Accounting irregularities at the UK unit of orthopedic-implant maker Symmetry Medical Inc. may require the company to restate prior financials and has caused it to default on its bank debt.

Symmetry says employees at its Sheffield operating unit who are believed to be primarily involved in the accounting issues, including the senior vice president for Europe, either are no longer with the company or have been suspended pending the completion of an independent review by the audit committee of Symmetry’s board of directors.

Symmetry says the irregularities caused overstatements of revenue for the UK unit dating back to 1999, well before the company’s acquisition of the UK operations in June 2003. It estimates the overstated revenue and income before taxes for the nine-year period to be $12 million to $16 million, though it has not yet determined the precise impact to financial statements filed after it acquired the Sheffield unit.

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The company’s lead bank informed it that these issues resulted in a default under its credit agreement. “Such default permits the bank, at its election, to exercise various remedies,” says Symmetry.

Company officials say the accounting problems are narrow in scope. “We believe that this matter affects only the Sheffield, UK, operating unit,” says Brian Moore, president and chief executive officer, who has assumed interim responsibility for the Sheffield facility.

Says audit-committee chairman Francis Nusspickel: “Our principal concern is to move quickly to determine what occurred and how it occurred, and to ensure the integrity of our financial reporting and controls throughout the Symmetry organization.”

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