Bristol-Myers Raises Litigation Reserve

The move could presage a settlement of an accounting probe.
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Bristol-Myers Squibb

(BMY) - Get Report

drifted lower ahead of the bell Tuesday despite a bookkeeping tweak that some observers believe suggests the company is on the verge of putting a massive accounting headache behind it.

After the bell Monday, the drugmaker announced it was downwardly revising its previously reported first-quarter earnings by $88 million, or 5 cents a share, to $533 million, or 27 cents a share. The company earned $964 million, or 49 cents a share, in the year-ago quarter.

The revision reflects the addition of about $110 million to a litigation reserve that is intended to cover a settlement of the government's two-year-old probe of the company's accounting for wholesaler inventory levels. Bristol-Myers previously restated $2.5 billion off its revenue line to fix the problem.

The company didn't comment on the reason for the raised reserve.

The

Wall Street Journal

reported Tuesday that Bristol-Myers might be nearing an agreement in which the Justice Department would defer prosecution of the accounting scandal and prescribe rules for future conduct which, if complied with, would spare the firm from criminal prosecution.

In premarket Instinet trading, Bristol-Myers' shares were down 64 cents, or 2.5%, to $25.30.