Tyco International Ltd, the world's biggest maker of burglar alarms and industrial valves, said it had a fiscal second-quarter net loss after it discovered about US$1 billion in new accounting discrepancies four months after telling investors that an audit found no "significant" fraud.
That adds to at least US$6 billion in writedowns, restatements and charges Tyco has taken since it ousted Chief Executive Officer Dennis Kozlowski in June and accused him of mismanagement.
"I believe at this point we have identified all, or nearly all, legacy accounting issues," new Chairman and CEO Edward Breen told investors on a conference call.
Most of the "issues" have centered on the way Kozlowski booked sales of ADT alarms and how he valued Tyco's former CIT finance unit. The new irregularities were uncovered in a financial audit led by Breen that followed a separate investigation by lawyer David Boies, who said he had found nothing significant.
Breen's audit "makes more believable the numbers that they will report in the future," said Donald Yacktman, president of Yacktman Asset Management, which holds 3.5 million Tyco shares among US$440 million. "Kozlowski was using the most aggressive accounting he could. Breen is putting a solid foundation under the business. It's a different attitude, more conservative."
Tyco's net loss in the second quarter ended last month narrowed to US$467.9 million, or US$0.23 a share, from US$6.38 billion, or US$3.20 a share, in the year-ago period that also included writedowns and restatements.