After Error, Audit Integrity Removes Mylan Inc. from Bankruptcy List

Audit Integrity, an independent financial research and risk modeling firm, announced today that it has revised and upgraded Mylan Inc’s bankruptcy probability ranking. Due to a stock pricing error made by data provider Thomson Reuters, Mylan was erroneously placed among the companies most likely to go bankrupt over the next twelve months.

Audit Integrity’s bankruptcy model is comprised of multiple data factors with various weightings, including the volatility of a company’s stock price. After releasing its bankruptcy model, Audit Integrity discovered that Thomson Reuters mistakenly applied a dividend issue to Mylan’s common stock instead of its preferred stock. The error significantly skewed the calculation Audit Integrity used to determine Mylan’s stock volatility. Audit Integrity informed Thomson Reuters of the error and it has subsequently been corrected.

“We deeply regret our error, and we sincerely apologize to Mylan for the inadvertent misrepresentation,” said Jack Zwingli, Audit Integrity’s CEO. “Thomson Reuters is a highly reliable and respected supplier of stock pricing information and this error is an aberration. We are confident that we can continue to reliably use the service going forward, but nevertheless we have implemented additional data checking processes.”

Audit Integrity recently released the findings of its newly launched bankruptcy model, which calculates the statistical likelihood that publicly-traded companies will file for bankruptcy. The model is designed as a risk measurement tool for insurance companies, auditors and institutional investors, who have a greater concern about companies’ financial solvency risks and likelihood of going bankrupt. The model uses objective information and a proven modeling approach that has yielded highly predictive results.

Business bankruptcy filings during the first six months of 2009 are up more than 60 percent from a year ago. While bankruptcy is a relatively low incidence event, corporate stakeholders use bankruptcy models to identify companies with financial distress issues that fall short of bankruptcy but are still of great concern.

Mr. Zwingli said Audit Integrity has manually re-verified the data used to determine the pricing data and the rankings of the 19 other companies with a market capitalization in excess of $1 billion that it previously identified as statistically most likely to go bankrupt and stands behind its earlier findings. One of those companies, New Jersey-based Hertz Holdings, has sued Audit Integrity and Mr. Zwingli for defamation and trade libel because of its bankruptcy ranking.

“Given the 24 pages disclosing extensive financial and business continuity risks contained in Hertz’s most recent 10-K, we are incredulous that Hertz has chosen to squander its shareholder resources by filing a frivolous lawsuit,” Mr. Zwingli said. “Many of the arguments it makes to support its claim of sound financial health actually support our model’s findings. Taking actions such as accounting changes, selling assets, restructuring and downsizing are clear warning signs of financial distress and raise legitimate concerns about the company’s well-being.”

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