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Strategies & Market Trends : Paint The Table -- Ignore unavailable to you. Want to Upgrade?

To: Original Mad Dog who wrote (12798)	2/4/2002 7:18:45 PM
From: MulhollandDrive	Read Replies (2) \| Respond to of 23786

Quite shocking??? quote.bloomberg.com Tyco Spent $8 Bln on Unannounced Purchases in 3 Years (Update1) By Rachel Layne Exeter, New Hampshire, Feb. 4 (Bloomberg) -- Tyco International Ltd., whose stock fell 40 percent this year on concern about its accounting, spent $8 billion in the past three fiscal years on more than 700 purchases it didn't make public. Half of the acquisitions were made in the year ended Sept. 30 and cost $4.19 billion, said Tyco spokeswoman Maryanne Kane. That's about 37 percent of the total $11.3 billion the company spent that year on purchases. Tyco lost about $46 billion in market value this year on concern the biggest maker of electronic connectors used acquisitions to mask slowing growth. Bowing to investor demands for greater transparency, Tyco said two weeks ago it plans to split into four companies and cut debt by about $11 billion. The smaller acquisitions didn't need to be announced because they weren't ``material compared with the company's total assets,'' Chief Financial Officer Mark Swartz said in an interview. ``The income statement, balance sheet and cash flow statement would not have changed by one dollar if every one of these transactions'' had been announced. In 2001, for example, the company didn't issue press releases for acquisitions of non-public companies of less than $220 million, Swartz said. Tyco reported $36.39 billion in revenue for the fiscal year ended Sept. 30. `Quite Shocking' ``It's really quite shocking,'' said James Stettler, an analyst at Dresdner Kleinwort Wasserstein in London, who covers stocks of Tyco's European rivals such as Invensys Plc, ABB Ltd. and Schneider Electric SA. ``We all thought U.S. accounting standards were really the strictest you can get.'' The shares rose as much as 1.95 euros, or 4.7 percent, to 43.7 euros ($37.68) in Germany today after advancing 1.4 percent to $35.63 in U.S. trading on Friday. The stock reached a high of $63.21 on Jan. 29 last year. Disclosures of shares being returned by Tyco Chief Executive Officer Dennis Kozlowski and Swartz in part to pay taxes, along with possible conflicts of interest on Tyco's board, have dragged down the stock. Enron Corp.'s accounting lapses, management conflicts and failure heightened concern of whether investors can trust the accounting of many companies. Bonds Fall Tyco's 685 million euros of 5.5 percent bonds maturing in 2008 fell to 85 percent of face value from 88 percent on Friday, traders said. The decline in price sent their yield rising to 8.49 percent from 7.84 percent. Tyco spent about $2.3 billion in 2000 to buy 225 companies and $1.5 billion for as many as 175 companies in 1999 that weren't announced. Swartz pointed to a footnote in the company's annual filing with the Securities and Exchange Commission where Tyco discloses the ``net'' amount paid for the companies -- what Tyco paid minus the cash at the acquired company, because that cash effectively lowers the purchase price. In some cases the acquisitions were announced by the companies acquired or were listed on their Web sites, said Kane. The totals of the purchases were reported earlier by the Wall Street Journal. More Information? The company disclosed more detail about what it paid for the acquisitions as part of more detailed disclosure to analysts for years, Swartz said. That doesn't violate disclosure regulations because such detail doesn't change reported numbers, he said. The company may include the detail in future filings, he said. ``What we're talking about is to go to an even greater level of information, if that's what investors want,'' Swartz said. Kozlowski, who oversaw $64 billion in acquisitions over eight years, is reversing strategy after failing to regain investor confidence that Tyco's accounting in sound. He predicted that splitting the company into four would bolster the value of the companies by 50 percent. The company announced 42 transactions last year, including its $9.2 billion acquisition of finance company CIT Group Inc., according to Bloomberg data. Tyco plans to sell its plastics unit and use proceeds from that and share sales of about 20 percent from three businesses to repay $11 billion of the $21.6 billion in debt at its industrial units. Tyco's finance business has about $35.5 billion in debt. Share Sales Kozlowski will run Tyco's electronics and security company that remains while finance, fire systems and flow control, and health care will be spun off following share sales. He said he'll consider selling the units if reasonable offers are made. On Tuesday, Tyco's shares posted their biggest decline in at least two decades after the company disclosed it had paid $10 million to director Frank E. Walsh Jr., and contributed another $10 million to a charity of which Walsh is trustee, in exchange for his help in purchasing CIT Group.