Baxter
(NYSE:BAX) says its income for the past four years may have been overstated by $276 million.
The Deerfield, Ill.–based healthcare products company said the figures came out of a previously announced internal probe into its foreign exchange trading practices. That investigation is now substantially complete, the company said in an SEC filing yesterday.
Baxter said its income was over-reported by $40 million for 2016, $117 million for 2017, $77 million for 2018 and $42 million for the first half of 2019. The company said it expects to file restated financial statements, its third- and fourth-quarter 2019 financial reports and its annual report by March 31, 2020.
The problem involved transactions using a foreign exchange rate convention historically applied by the company that was not in accordance with U.S. generally accepted accounting principles (GAAP). “The company believes that the use of its previous exchange rate convention to generate non-operating foreign exchange gains and avoid losses had occurred for at least 10 years,” Baxter said in yesterday’s filing.
“Yesterday’s SEC filing is an important step forward in our internal investigation,” the company said in a statement emailed to MassDevice.
“It’s important to note that these misstatements of foreign exchange gains and losses are non-operational in nature. This means they are unrelated to our core operations and business results. In fact, our preliminary 2019 results (announced January 11) reflect the fundamental strength of the business globally.”
By the end of March, Baxter plans to announce our complete Q3 and Q4 2019 results and submit our restated financial results to the SEC. “We take this matter very seriously and are focused on delivering these next milestones by the end of the quarter.”
The Street appears to have already priced in Baxter’s income misstatements. BAX shares are only down slightly today.
This article has been updated with comments from Baxter.
