The SWX Swiss Exchange has pronounced a reprimand with related publication against Synthes Inc., Delaware USA, for violation of the provisions of US GAAP as well as those of the Listing Rules. The SWX reprimand pertains to the company’s incomplete segment reporting and its failure to produce a cash flow statement and a statement of changes in shareholders’ equity.
The 2005 semi-annual report of Synthes Inc. (Synthes) was not in full compliance with the provisions of US Generally Accepted Accounting Principles (US GAAP) and those of the Listing Rules. Apart from meeting the requirements laid down in APB Opinion No. 28 "Interim Financial Reporting", companies applying US GAAP have also been obligated since 1 January 2005 to observe more extensive SWX disclosure rules in their interim financial reports. In this connection, Synthes failed to disclose among other things complete segment reporting, a cash flow statement and a statement of changes in shareholders’ equity.
Through the lack of disclosure of detailed segment results, key information on the performance of the company’s individual business segments and the future development of Synthes was not provided to investors. Moreover, the lack of a cash flow statement resulted in the fact that important information on the ability of Synthes to generate liquid funds was not made available to investors. In addition, due to the non-disclosed statement of changes in shareholders’ equity, Synthes did not provide information on the business events recorded in shareholders’ equity. In the meantime, the company has published the missing information on its Website.
The inadequate disclosures in Synthes’ 2005 semi-annual report represent a breach of US GAAP and the provisions of the Listing Rules. For that reason, the Executive Committee of the SWX Admission Board has pronounced a reprimand with related publication against Synthes.
Periodic financial reporting in compliance with applicable accounting standards represents an integral part of the information that contributes to transparent trading as stipulated by the Stock Exchange Act and the Listing Rules. One of the regulatory tasks of SWX is to ensure enforcement of the transparency rules imposed on issuers.
Information on accounting standards can be accessed at: http://www.swx.com/admission/being_public/accounting_en.html
Previous sanctions issued by SWX with regard to accounting can be accessed at: http://www.swx.com/admission/being_public/sanctions/accounting_en.html
