Thursday, May 1, 2003

Tyco says audit finds new problems in books

The Associated Press

NEW YORK - Troubled conglomerate Tyco International Ltd., just months after assuring investors an internal probe of its books had failed to find any "significant or systemic fraud," acknowledged Wednesday that it has uncovered a new round of accounting problems.

Tyco is preparing to absorb substantial new charges partly "arising out of the company's intensified internal audits and detailed controls and operating reviews," the company said in a written release.

The announcement came after The Wall Street Journal reported Wednesday that the company had found roughly $1.2 billion in fresh accounting problems.

Tyco did not directly address that figure. But it said it was prepared to take a charge of 55 cents a share against its second-quarter earnings to reflect the accounting problems.

As a result of those charges, the company said it will report a second-quarter loss of 23 cents a share. Analysts had been expecting Tyco to report a profit of 32 cents a share.

The Bermuda-based company said the new charges resulted from internal audits, as well as two accounting changes involving its ADT fire and security subsidiary.

It said revenues for the second quarter were $9 billion.

Tyco, which has about $36 billion in annual revenues, makes electronics, medical supplies and other products.

Tyco has been rocked in the past year by criminal charges against its two former top executives, who have been accused of looting $600 million from the company.

Trading in Tyco shares, which was suspended early Wednesday, resumed after the company released its statement. The share price rose 23 cents to close Wednesday at $15.60.

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