The Arthur Andersen scandal continues to reverberate. Bio-Technology General (Nasdaq:BTGC) restated its earnings for 1999 and 2001 as recommended by its new accountants, the company announced Friday. The company said its earnings should have been 24 cents in 1999, instead of 26 cents. For 2000, its earnings per share were 23 cents, instead of 28 cents, before a 14-cent reduction from a change in accounting. The restated 2001 results show a wider loss of 56 cents from the 53 cents previously reported. The restatement will not affect BTGC's results for 2002, stresses John Bond, the company's CFO. Back in May BTGC said it had changed accountants, from Arthur Andersen to KPMG. Its new numbers-crunchers suggested that it recalculate its results, the company said. The company's official reason for restating its results is that KPMG and Arthur Andersen employ different methods of reporting. Under Arthur Andersen's tutelage, BTGC capitalized the costs of establishing new production facilities for oxandrin. These costs totaled $3.1 million from 1999 to 2001. For 2002, these costs are reflected in expenses for the first half, the company added. But KPMG advised BTGC, which develops genetically engineered and other health-care products, to expense certain manufacturing costs when they were incurred rather than when they were capitalized. Moreover, BTGC decided that changes made when employees were exercising and vesting stock options, around the time they were leaving the company, should have been recognized as compensation expenses. The company's original reports do not mention stock compensation expense. The company estimates that the expense to be recognized totals $2.9 million during those three years. No such compensation expenses are anticipated in 2002, it says. For the second quarter, Bio-Technology said earnings fell to $2.2 million, or 4 cents a share, from $5.1 million, or 9 cents a share, excluding the effect of the amortization of goodwill resulting from an acquisition, a year earlier. Second-quarter revenue fell to $25 million from $26.6 million. The company said it expects to report full-year earnings of 15 cents to 20 cents a share. Chief executive Sim Fass blames the flaws in the company's reports on Arthur Andersen.