B&L to restate financial results

ROCHESTER, N.Y. — Bausch & Lomb will restate financial earnings for the third quarter as a result of investigations into its Brazilian subsidiary found a “material weakness in its controls over financial reporting relating to detection and prevention of local management’s fraudulent override of Brazil tax reporting controls,” the company said in a press release.

B&L’s audit committee’s independent investigation of the Brazilian subsidiary determined that the general manager, the controller and other employees engaged in “improper management and accounting practices, including, among other things, the mischaracterization of approximately $600,000 in expenses to fund an approximately $1.5 million unauthorized local pension arrangement for the benefit of themselves and other members of local management.” In addition, these individuals were found to have avoided Brazilian payroll tax obligations and misused company assets for personal benefit, B&L said.

The independent investigation concluded no one outside of the Brazilian subsidiary was aware of the misconduct; those involved have since been fired.

The estimated restated earnings drop net income in the six months ending June 25, 2005, from $79.6 million to $78.1 million; and year-end net income in 2004 from $159.6 million to $158.9 million. To date, year-end earnings are being restated from 2000 forward, the company said.

B&L also said it is investigating employee reports about potential improper sales practices at the company’s Korean subsidiary, but that the investigation remains in the early stages.