Also included in the Class are all those who acquired Baxter’s shares through its acquisitions of Autros, Fusion Medical, ESI Lederle, Acambis, Alpha-1, Cook Pharmaceutical, and Icodextrin.

Specifically, the complaint alleges that:
• The Company’s financial results during the Class Period were materially overstated;
• The overstatement occurred because the Company improperly and “incorrectly” recognized $40 million in revenues and maintained inadequate and “incorrect” provisions for bad debts relating to its Brazilian operations;
• As a result of this, the Company’s financial results were in violation of Generally Accepted Accounting Principles (“GAAP”);
• The Company lacked adequate internal controls;
• As a result of the above, the Company’s financial results, including its net income figures, were materially and artificially inflated at all relevant times.
On July 22, 2004, Baxter announced that it planned to restate its financial results for the years 2001 through 2003, and for the first quarter of 2004. The restatement was primarily the result of incorrect revenue recognition and inadequate provisions for bad debts in Brazil during that period, which would result in a decrease in net income over the restatement period by an amount expected to be no more than $40 million, or $0.07 per share. News of this shocked the market. Shares of Baxter fell $1.48 per share, or 4.59 percent, to close at $30.79 per share.