Special to CONTRACTOR
PEMBROKE, BERMUDA — Tyco International Ltd. in mid-March announced that it had terminated Jerry Boggess, the longtime president of its Fire & Security Services Division, after discovering accounting problems in the division’s European operations.
Tyco also announced that in the quarter ending March 31, it expected to take non-cash, pre-tax charges that are estimated to be between $265 million and $325 million for issues identified primarily in its Fire & Security Services business.
The company appointed David Robinson, previously the president of Tyco Plastics & Adhesives, as president of the Fire & Security Services segment. In January, Tyco appointed Mark Schmitz, a 20-year veteran of General Motors, as chief financial officer of Tyco Fire & Security.
“Our Fire & Security unit has solid business fundamentals,” said Ed Breen, Tyco’s chairman and chief executive officer. “The demand for Fire & Security’s ‘life safety’ services and products remains strong in these uncertain times, and its powerful brand names, with leading positions in global markets, provide steady recurring revenue. However, we have concluded that management changes are necessary in order for us to fully address the opportunities in this business, strengthen its operating margins, improve performance and make it a more efficient and well-run enterprise.”
Tyco Fire & Security Services designs, manufactures, installs and services electronic security systems, fire protection, detection and suppression systems, sprinklers and fire extinguishers. It is the largest fire sprinkler contractor in the country, although it does not report those revenues separately. Tyco Fire & Security Services consists of more than 60 brands that are represented in more than 100 countries.
As a result of audits and reviews, Tyco said it identified a number of issues, primarily in its Fire & Security Services business. The charges result from conforming accounting policies across a number of Fire & Security European businesses that were recently reorganized under a single management team, improving compliance with other existing policies, conducting additional account reconciliation procedures, as well as other matters, according to the company.
At an investors’ conference in New York in March, Breen announced plans to close 300 of Tyco’s 3,000 plants. He also vowed to “clean up the crap,” and that if he found anything wrong that, “heads will roll.”
Breen was brought in last year to clean up Tyco after former Chairman Dennis Kozlowski resigned and was indicted. Kozlowski and two other officers have been charged with allegedly misappropriating hundreds of millions of dollars of Tyco funds.
Breen had brought in lawyer David Boies to conduct a detailed internal audit of Tyco businesses and accounting practices. That audit had not uncovered the problems at Fire & Security’s European operation.
As a result of Robinson’s appointment to head the Fire & Security Services segment, Tyco has named Terry Sutter, the former president of Specialty Chemicals at Cytec Industries, to succeed Robinson as president of Tyco Plastics & Adhesives.