Many Numbers Still Don't Add Up at Tyco

Even a peek into Tyco's (TYC Quote) closet reveals some pretty ghoulish skeletons.

Facing doubts about the trustworthiness of its accounting after its former CEO and finance chief were charged earlier this year with looting the company, Tyco's new management, led by new CEO Ed Breen, released a long-awaited review of past bookkeeping practices. While Monday's report said there was "no significant or systemic fraud" in past results, it did catalog a range of aggressive accounting maneuvers -- including the practice of manipulating the books of acquired companies -- to make Tyco's results look better.

Critical for investors to understand is that Tyco chose not to include the impact of its aggressive acquisition accounting in a $382 million cleanup charge. Instead, that pretax charge, taken in its 2002 fiscal year ended Sept. 30, covers audit adjustments for 2002, as well as corrections of what Tyco calls "errors" in prior years. ...