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Non-Tech : Tyco International Limited (TYC)
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To: Howard Salwen who wrote (3601)10/27/2002 4:57:22 PM
From: rich evans   of 3770
 
The ADT accounting issue not a problem or error. It is judgment issue like LIFO vs FIFO in inventory value. Tyco buys a SERVICE contract for $1000 dollars paying $30/mo for 3 years. The customer needs to be connected. The dealer could connect as tyco deal is service only but hires Tyco ADT to connect for $200. The dealer pays Tyco $200 and tyco expenses its cost- say about $200. It depends how you want to look at it. Service vs installation is two different deals and contracts or treat it as one contract with cap ex acquistion of the net $800 paid the dealer after the $200 offset. Frankly the two contract approach I think is correct but the net approach is more conservative. Not fraud like WCOM capitalizing real expenses. Also not a big deal at 35mill dollars per Q on a 9 bill per quarter rev.It just gives the negative spinners like Reuters a chance to mislead. Both ways are legit. Rich
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