SEC INVESTIGATION Tyco: Ex-managers didn't break rules

The company calls its accounting aggressive, not improper.
CONCORD, N.H. (AP) -- Tyco International Inc. says its former managers pushed the limits of accounting regulations to inflate profits, but didn't break the rules, according to a new report.
At a presentation on "Acquisition Balance Sheet Opportunities" in 1999, managers were told to "keep the reserve descriptions within the accounting rules but stretch the expenditures that go in," according to a report that was filed Monday with the Securities and Exchange Commission following a 6-month internal investigation.
"Be Careful!! -- I wouldn't want this to get out," reads a handwritten note on the presentation document cited in the report.
The report concluded that Tyco's accounting since 1999 has been within the law, if not always within generally accepted accounting practices.
"Aggressive accounting is not necessarily improper accounting," the report said.
Called immaterial
It said the money incorrectly accounted for last year was immaterial to a company with $36 billion in annual revenues.
The accounting errors that were found prompted additional pretax charges of $382 million for the fiscal year that ended Sept. 30.
Tyco previously announced $2.8 billion in charges for the year, during which it lost $9.1 billion, or $4.59 a share. With the new charges, the loss was $9.4 billion, or $4.73 a share.
The investigation found that Tyco managers were encouraged to make corporate acquisitions look better on paper.
Facing charges
Tyco's accounting remains under review by the SEC, and several of former top executives, including chief executive Dennis Kozlowski, face criminal charges of fraud and corruption.
Tyco launched its investigation after Kozlowski's abrupt resignation in June, one day before he was indicted on charges of evading New York sales tax on art purchases. The investigation was expanded in August to include bookkeeping practices back to 1999.