Cardinal Health Inc.

Washington, DC: (Jul-26-07) The US Securities and Exchange Commission (SEC) brought charges against Cardinal Health Inc., a medical products provider, alleging that it presented fraudulent revenue and earnings information during a more than three-year period. The SEC claimed that the company materially overstated its operating revenue, earnings and growth trends in certain earnings releases and filings with the commission from September 2000 through March 2004. It was accused of inflating reported operating revenue by misclassifying more than $5 billion of bulk sales. It reclassified any revenue from the sale of bulk product held on its premises for 24 hours or longer as operating revenue and began intentionally holding certain bulk shipments for longer than 24 hours to shift sales to the operating revenue line.

The SEC said the company also improperly adjusted reserve accounts, which misstated earnings by more than $65 million, and improperly classified $22 million of expected litigation settlement proceeds to increase operating earnings. As part of the settlement reached, Cardinal Health agreed to pay $35 million to settle federal regulators' charges against it. Dublin, Ohio-based Cardinal did not admit or deny the allegations. [FORBES: FISCAL MISREPRESENTATION]

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Published on Jul-27-07