CONCORD, N.H. Dec. 30 —
Tyco International Inc. said Monday that an exhaustive internal investigation into its accounting revealed no "systemic or significant fraud."
A long-awaited report to the Securities and Exchange Commission concluded that managers bent but didn't break accounting rules to inflate profits.
"Aggressive accounting is not necessarily improper accounting," it said.
The report said accounting errors that had been found and corrected were not material to the company's overall finances. The errors did prompt 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.
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 own 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.
In September, the company told the SEC it had found tens of millions of dollars in unauthorized payments to dozens of employees.
Also in September, Kozlowski, former chief financial officer Mark Swartz and former general counsel Mark Belnick were indicted on charges they improperly reaped millions from Tyco. All have pleaded innocent, and their lawyers have said any money they received was approved.
Among Kozlowski's alleged excesses according to SEC documents: buying luxurious homes on the company's dime and using company money to help pay for a $2.1 million birthday for his wife, Karen, on the Italian island of Sardinia.
Last month, former Tyco director Frank Walsh admitted he failed to tell the board he was paid a $20 million finder's fee related to the acquistion of the CIT Group in 2001. He agreed to repay it and a $2.5 million fine.
In its annual report, also released Monday, the company warned that negative publicity has hurt its stock price and harmed customer relations and employee morale. It said some suppliers have asked for letters of credit before shipping orders.
The report noted that Tyco, along with former managers, is a defendant in a number of class-action suits filed by shareholders.
The company's fortunes have improved since July, when former Motorola chief executive Ed Breen took over and began replacing Tyco's board. The report noted that Breen has pledged to make Tyco "a leader in the quality of its accounting and corporate governance."
Corrective action, some already taken, includes improving documentation of accounting decisions; requiring formal approval for charitable donations, employee compensation and employee loans; and centralizing control of employee relocations, travel and expenses, the report said.
The report was filed after the end of trading Monday during which Tyco stock rose 20 cents to $15.35 on the New York Stock Exchange.
Based in Bermuda but with U.S. headquarters in Exeter, Tyco makes everything from telecommunications equipment to home alarm systems.
The report said 25 lawyers spent more than 15,000 hours and 100 accountants spent 50,000 hours on the investigation between August and December.
"Few if any major companies have ever been subjected to the corporate governance and accounting scrutiny entailed in" the investigation, the report said.