S&P: Baxter unaffected

While disturbing, Standard & Poor's said Baxter International Inc.'s restatement of financials for the years 2001 through 2003 and the first three quarters of 2004 will not precipitate a rating action.

S&P said the net affect of the restatement, which relates to income tax errors on balance sheet accounts, is an increase in stockholder equity at Dec. 31 by about $130 million dollars. According to the company, prior and future earnings and cash flow will not be affected.

Baxter is expected to file its 2004 annual report on Form 10-K on a timely basis, however, S&P said its external auditors (PricewaterhouseCoopers LLP) will issue an adverse opinion given that this internal control deficiency constitutes a "material weakness."

Because the company appears to have identified and corrected its processes and controls in the context of the Sarbanes-Oxley Section 404 review, S&P said the restatement has no immediate bearing on the company's A- rating or negative outlook.

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