Tyco Sets $1B Charge
Conglomerate says it discovered additional accounting problems in ADT security alarm unitApr 30, 2003 | CNN/Money
Tyco International Ltd. said Wednesday it will take more than $1 billion in after-tax charges in the second quarter after unearthing new accounting problems, yet another setback to the conglomerate's credibility with investors.
The financially troubled conglomerate said it will report a quarterly loss from continuing operations of 23 cents a share and take charges of 55 cents a share to reflect the accounting problems.
Tyco also said it will unveil some details of its earnings later today, rather than Thursday, as originally had been scheduled.
Bermuda-based Tyco said the charges resulted from internal audits and reviews and two accounting changes involving its ADT unit, particularly regarding the length of time over which it writes off its investment in security-alarm systems installed in customers' premises.
The Wall Street Journal reported that most of the new accounting issues were found in Tyco's fire and security division and in its Earth Tech engineered-services unit. It said managers misused acquisition-accounting techniques to boost results. It also said a significant part of the new changes to results are due to a more conservative accounting interpretation by new management.
After a delayed opening, Tyco stock tumbled as much as 6 percent but later recovered and was off about 2 percent on the New York Stock Exchange.