- The Washington Times - Tuesday, December 31, 2002

CONCORD, N.H. (AP) Tyco International Inc. used aggressive accounting to inflate financial results by nearly $400 million this year, but an exhaustive internal review found no "systemic or significant fraud," the company said yesterday.
In a long-awaited report to the Securities and Exchange Commission, the diversified manufacturing conglomerate said several accounting errors had been found and corrected, but that they were not material to the company's overall finances.
The report described a pattern of aggressive accounting by former management with the purpose of increasing reported profits. The tactics included pressuring and inducing midlevel managers to increase earnings by adopting more aggressive accounting policies.
As a result of the accounting errors, the company overstated its financial results by a total of $382.2 million in 2002, the report said.
Tyco reported a net loss of $9.1 billion on revenues of $35.7 billion in the fiscal year ending Sept. 30.
The pretax adjustment comes on top of a previously announced $2.8 billion in charges for the year.
Tyco's accounting is under review by the SEC, and several former top executives face criminal charges of fraud and corruption.
The investigation was conducted by the law firm Boies, Schiller & Flexner LLP and the forensic accounting firm of Urbach Kahn & Werlin.
Based in Bermuda but headquartered in Exeter, N.H., Tyco makes everything from telecommunications equipment to home alarm systems.
Its stock dropped sharply early this year when the company announced, and then rescinded, a breakup plan. In June, Chief Executive Officer Dennis Kozlowski resigned a day before being indicted on charges of evading New York sales tax on art purchases.
Mr. Kozlowski and former Chief Financial Officer Mark Swartz face criminal charges for reportedly stealing hundreds of millions of dollars from the company.
The company's fortunes have improved since former Motorola chief executive Ed Breen became chief executive in July and began replacing Tyco's board.
The report was filed after the end of trading on Wall Street. Tyco stock rose 20 cents to $15.35 on the New York Stock Exchange. A year ago, the stock was trading near $60 a share.
In a preliminary report to the SEC in September, the company said it had found tens of millions of dollars in unauthorized payments to dozens of employees, including Mr. Kozlowski. It accused Mr. Kozlowski of trying to thwart an investigation of the payments.
Mr. Kozlowski and Mr. Swartz have pleaded not guilty to all charges.

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