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Tyco faces lawsuit, SEC probe Impact on Praegitzer Industries unknown By DAVID PRESZLER The company that purchased Praegitzer Industries this fall is facing questions about its accounting practices and a class-action lawsuit from shareholders. Tyco International announced earlier this month that the Securities and Exchange Commission has launched an informal, nonpublic inquiry into the company's accounting practices. The lawsuit alleges that company officers used deceptive accounting to boost the price of Tyco's stock and sold more than 2.8 million shares at a profit of at least $281 million, according to the Dow Jones News Service. Tyco has defended its accounting practices. A Tyco official said the accounting questions and lawsuit are unrelated to its $72 million purchase of Praegitzer, which has a printed circuit board plant in White City that employs nearly 400 people. Spokeswoman Maryanne Kane said it's too soon to tell what, if any, changes will be made at any of Praegitzer's four plants. She said the firm is just beginning to analyze Praegitzer's operations. "Clearly, this acquisition will enable us to strengthen our leadership role in the telecommunications area," she said in a statement. "Our overall objective is to utilize our new resources to best serve our customers and continue to grow our business." Local officials at the plant did not return phone calls seeking comment. Earlier this month, Allen Broderick, vice president of business operations at the plant, said he hadn't heard from Tyco officials about the plant's future but doubted that any significant changes would occur there. Often confused with Tyco Toys Inc., Tyco International is massive conglomerate based in Bermuda but managed from Exeter, N.H. Its businesses include electronic components, disposable medical supplies, fire and safety equipment and services. Tyco, noted for cost-cutting measures that increase profitability, has been buying companies at a torrid pace. In the past six years, the company said it has acquired more than 120 firms for more than $30 billion. But the way Tyco has done the accounting surrounding those purchases has sparked criticism. Specifically, questions have been raised about restructuring charges the company has taken related to the acquisitions. Similar charges taken by the companies Tyco bought before the purchases closed have also come under scrutiny. The charges allowed Tyco in later reporting periods to show higher profits and growth rates than it would otherwise have done. Critics have argued that the charges made the companies look healthier than they were after they were purchased by Tyco. The SEC notified Tyco of its inquiry last week. In an informal inquiry, the SEC does interviews and requests documents without subpoenas, relying on voluntary cooperation. In addition to requesting Tyco company documents, the SEC has asked for documents about restructuring charges taken by companies Tyco bought in the six months before the deals closed. "Tyco is voluntarily cooperating," company spokeswoman Kane said. "The company has said many times that it stands by its accounting." Though analysts have largely supported the company, its stock price has fallen significantly in recent months from a high of $53.875 to less than $30 a share. The stock, which trades as TYC on the New York Stock Exchange, closed at $30.75 a share Thursday. Kane said the company isn't disclosing whether the documents of subsidiaries like Praegitzer were requested. Praegitzer lost $25 million in its 1999 fiscal year that ended June 30 and $817,000 in its fiscal first quarter, which ended Sept. 30. In SEC filings for fiscal 1999, the company reported a $32 million restructuring charge. The company began its restructuring in July. (The Wall Street Journal contributed to this report) Today's Business Index Mail Tribune Copyright � The Mail Tribune 1999, Medford, Oregon USA