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Non-Tech : Tyco International Limited (TYC) -- Ignore unavailable to you. Want to Upgrade?

To: Dale Stempson who wrote (545)	11/3/1999 1:30:00 AM
From: Y. Samuel Arai	Read Replies (3) \| Respond to of 3770

Wall Street Journal, 11/3/99: Tyco Shies From All-Stock Deals; Shift Reflects Accounting Queries By MARK MAREMONT Staff Reporter of THE WALL STREET JOURNAL HAMILTON, Bermuda -- Tyco International Ltd., in a change of acquisition strategy, is no longer considering the kind of all-stock deals that have been at the center of investor concern about its accounting practices in recent weeks, its chairman said. L. Dennis Kozlowski, who is also chief executive of the acquisitive conglomerate, said "it's not worth doing" all-stock deals that use so-called pooling accounting, given the company's current depressed share price and the general controversy about pooling transactions, which have been under fire from regulators and may be banned next year. In an interview before Tyco's annual meeting here Wednesday, Mr. Kozlowski said the company instead will pay for acquisitions mostly with cash, and may supplement its war chest by selling a couple of smaller units for between $1 billion and $1.4 billion. The strategy shift means Tyco is less likely to do the kind of megadeals that have been its hallmark in recent years, including the $11.9 billion purchase of electronic-parts maker AMP Inc. this year. A conglomerate known for buying undermanaged companies and slashing their costs, Tyco makes electronic components, fire-control systems and fiber-optic cable, among other things (but has nothing to do with Tyco toys). Tyco, based in Bermuda but managed from Exeter, N.H., had revenue in the year ended Sept. 30 of $22.5 billion. The move away from all-stock deals comes in the wake of criticism of Tyco's accounting in recent weeks. Although the company has strongly defended its accounting practices as proper, its stock price has dropped sharply from its 52-week high of $53.875 on Oct. 8 since the accounting scare began. At 4 p.m. Tuesday on the New York Stock Exchange, Tyco closed at $39.375, up $3.75. Some of the recent criticism of Tyco's accounting stems from pooling-of-interest acquisitions. In three instances, companies that had agreed to be acquired by Tyco slowed their revenue growth or wrote off significant assets in the final quarter before being swallowed by the conglomerate. In turn, this enabled Tyco to show greater earnings growth in later periods than it would have otherwise. No such effects occur when companies are acquired using purchase accounting. Tyco executives have acknowledged the pooling accounting practice improved comparative results, but said that was not the intent. In steps intended to soothe worried investors, Mr. Kozlowski said the company plans to provide much more detail than usual about its accounting practices in its annual report, due to be published before year end, and is considering hiring a well-known academic accounting expert to advise Tyco on whether its accounting and disclosure practices are adequate. Although the Tyco chief said the company believed it disclosed everything in the past, he said the company "will go to even greater lengths. We're obviously going to err on the side of overdisclosure." Adding that "we have nothing to hide," Mr. Kozlowski said the additions "may make for a pretty thick annual report." Some investors have criticized the company for burying complex but important financial disclosure items in obscure footnotes in filings that many investors don't even peruse. Mark Swartz, Tyco's chief financial officer, said the company may decide to disclose more details of individual acquisition-related reserves, and move information previously included in lengthy verbal explanations into easier-to-follow tables. "We're going to do what we need to do, even if it's to hit someone over the head so they see exactly what we have buried in there," Mr. Swartz added. Mr. Kozlowski agreed the recent tumble in Tyco's stock has made all-stock deals less attractive to the company, but he said Tyco has been telling investors for months it was clear pooling transactions would soon be outlawed and it would shift to mostly cash deals. Although all-stock deals offer accounting advantages, regulators have put certain restrictions on companies that do such deals, including crimping their ability to repurchase stock for a lengthy period after a "pooling" deal closes. "We far prefer cash as a way to do acquisitions," Mr. Kozlowski said. Tyco anticipates having more than $3 billion in free cash flow in the current fiscal year, the Tyco chief said, and combined with selective asset sales means "we feel we will not be constrained at all" in deal making. He pointed to the company's recent $3.05 billion cash-and-stock purchase of electronic-parts maker Raychem Corp. as an example of how the company could do sizable deals using its cash. As for an inability to do deals the size of AMP, Mr. Kozlowski said "the number of $12 billion deals that would work for Tyco is very limited anyway." Mr. Kozlowski said Tyco already has started drawing up a list of prominent academic accounting experts who could consult on ways to improve its disclosure practices. He said the company wouldn't seek to ask this expert to give a stamp of approval, but to tell Tyco executives "maybe there's another step you could take here or there."

To: Dale Stempson who wrote (545)	11/4/1999 1:46:00 PM
From: Crystal ball	Respond to of 3770

Mr Special K (Kozlowski) says TYC "CASH TYCOON" buying back its own stock, I agree with you on Praegitzer Industries (PGTZ) just bought by Tyco, that again is proof they had the cash and value to do and CONTINUE TO DO these deals. When your stock is knocked down unfairly and therefore "cheaper" than the US Dollar, a company starts to agressively buy back its shares, and Tyco has now started its buy back plan. Soon the institutional buyers will put a big blocks of buy orders out on TYC also, and this demand with the finite supply of stock will drive up the price, back to where it was. Thereafter, the question will only be how soon to $161? I am, Truly yours, -Crystal Ball