Bausch & Lomb Inc. is reducing its reported net sales by a combined $9.3 million after an internal investigation determined its South Korean subsidiary engaged in improper sales practices from 2002 to 2005.
The eye-care company, maker of contact lenses, ophthalmic drugs and vision-correction surgical instruments, said Friday it would delay filing its 2005 annual report and cut previously reported revenues for fiscal year 2002 through the first half of 2005. Its stock jumped more than 7 percent.
In December, the company moved to restate financial results back to 2001 because of accounting shenanigans at its Brazilian unit. Several class-action lawsuits were filed against the company this week alleging insider trading in connection with the investigations.
The fallout has undermined its stock, which peaked at $87.89 in July after more than two years of robust growth.
As part of its investigations into its Korean and Brazilian units, the company said it would lower previously reported revenues of $1.2 billion in last year’s first and second quarters by about $1.4 million and its reported revenues for 2002 through 2004 by about $7.9 million.
It expects to file its annual report no later than April 30. The timing hinges on the status of an independent investigation commissioned by its board into revenue recognition practices at its Bausch & Lomb Korea Co. subsidiary, which accounted for $33 million in net sales in 2004.
The investigation surfaced on Dec. 22 when Bausch & Lomb revealed that a month-long probe into its BL Industria Otica Ltd. subsidiary in Brazil turned up a “material weakness” in its controls over financial reporting.
The inquiry, which has been completed, found that local management of the Brazil unit earmarked about $2 million in unauthorized pension payments and otherwise misused company assets, the company said. BL Industria accounted for about $20 million in sales in 2004, less than 1 percent of Bausch & Lomb’s revenues that year of $2.02 billion.
After a three-year overhaul, the company boosted research spending in 2005 and began expanding its main optics center and hiring hundreds more scientists and technicians. It employs 12,400 people worldwide.
The company sold its sunglasses, animal research and hearing-aid businesses in 1999 to refocus on eye care. It lost ground in the soft-contact-lenses market after Johnson & Johnson introduced frequent-replacement lenses in the mid-1990s. But in recent years, its newer disposable lenses have more than offset stagnant sales of older-style lenses.