Submitted by: Submitted by voicenyerhed
Views: 665
Words: 1169
Pages: 5
Category: Business and Industry
Date Submitted: 08/07/2010 04:25 PM
While the Review is not complete, the Audit Committee has identified facts indicating that there were accounting errors and possible irregularities, which are now being considered as part of the restatement. Substantially all of these facts relate to the manner in which the Company recognized revenue on (a) sales to certain of the Company’s distributors, sales agents and customers and (b) other sales programs, during the period from fiscal 2005 through fiscal 2008. These transactions involved distributors, customers or programs in the Company’s Spine, Sports Medicine, and Ear, Nose, and Throat (“ENT”) business units. The transactions that were improperly accounted for were primarily quarter-end transactions and were frequently structured in an effort to meet revenue forecasts.
Facts identified in the Review indicate that actions employed by senior sales management, including the Senior Vice President of the Strategic Business Units (John Raffle) and the former Senior Vice President and General Manager of the Spine Unit (David Applegate), primarily led to the accounting errors and possible irregularities now being considered as part of the Company’s financial restatement. Those actions included failing to communicate and/or withholding key information and practices bearing on revenue recognition and other accounting issues to the Company’s accounting staff or the Company’s independent registered public accounting firm.
As a result of the facts identified in the Review to date, three officers, including two executive officers, have resigned. Michael Gluk, Senior Vice President and Chief Financial Officer; John Raffle, Senior Vice President, Strategic Business Units; and David Applegate, former Senior Vice President and General Manager, Spine, have resigned effective immediately. The Company is currently negotiating separation agreements with these individuals that may include separation payments and limited benefits in exchange for their entry into release of...