Lovell & Stewart, LLP Announces Securities Fraud Class Action Lawsuit On Behalf of Purchasers of Tyco Common Stock

Business Wire, Feb 25, 2002

Business Editors & Legal Writers

NEW YORK--(BUSINESS WIRE)--Feb. 25, 2002

The law firm of Lovell & Stewart, LLP (212/608-1900 or www.lovellstewart.com) has filed a class action lawsuit on behalf of all persons who purchased or otherwise acquired the common stock of Tyco International Ltd. ("TYCO") (NYSE:TYC), between Feb. 1, 2000 through Feb. 1, 2002, inclusive (the "Class Period").

The action, Mario R. Garcia v. Tyco International Ltd., et al., filed on Feb. 25, 2002, is pending in the United States District Court for the Southern District of New York (500 Pearl Street, New York, New York), Docket No. 02-CV-1464. A copy of the complaint is available from Lovell & Stewart, LLP. The complaint may also be viewed on Lovell & Stewart's Web site (http://www.lovellstewart.com).

The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market during the Class Period, thereby artificially inflating the price of TYCO common stock.

The complaint alleges that TYCO's representations were rendered false and misleading by defendants' failure to disclose their use the following accounting practices to reflect the company's reported continued profit and revenue growth: (a) aggressive write-down of receivables of acquired companies, which would be charged to purchase accounting while subsequently collectively recorded to income; (b) aggressive write-down of inventory of acquired companies, which would be charged to purchase accounting while subsequent sale recorded as income; (c) aggressive write-down of fixed assets of acquired companies, which would be charged to purchase accounting while future depreciation expenses are reduced; (d) aggressive subsequent capitalization of expenses, such as spare parts and operating supplies; (e) aggressive adjustment of inventory and bad debt reserves to maximize income; and (f) aggressive use of restructuring reserves to write-off fixed assets thereby reducing future depreciation expenses.

The complaint also alleges that TYCO's representations were rendered false and misleading by defendants' failure to disclose: (a) that TYCO would achieve its earnings targets only through undisclosed acquisitions; (b) that the individual defendants sold in excess of $100,000,000 of their individual stock holdings to the company; and (c) that TYCO's management procedures were to make large payments to insiders, including a $20,000,000 payment to one director and his charity for furthering the interests of TYCO.

The complaint further alleges that external rule changes required TYCO to cease its allegedly aggressive revenue recognition practices and recognize the revenues from its security contracts only as the monies thereunder were received. Throughout the Class Period, defendants were allegedly aware that the adverse financial effect of the rule change by the Securities and Exchange Commission would be approximately $1,000,000,000. However, defendants allegedly failed to disclose this adverse financial effect until partial disclosure was made in October 2001. As defendants belatedly announced portions of the foregoing material facts between October 2001 and January 2002, TYCO stock fell allegedly by more than 40 plus percent.

Plaintiff seeks to recover damages on behalf of Class members and is represented by the law firm of Lovell & Stewart, LLP, which has significant experience and expertise in prosecuting class actions.

Christopher Lovell, the senior partner at Lovell & Stewart, has been appointed lead counsel or co-lead counsel in numerous significant class actions, including actions involving reportedly the largest class action recoveries in history under three separate federal statutes (the Sherman Antitrust Act, the Commodity Exchange Act, and the Investment Company Act of 1940). These record-breaking recoveries for class plaintiffs included the $1.027 billion recovery in In re NASDAQ Market-Makers Antitrust Litigation and a $145.35 million recovery in 1999 in In re Sumitomo Copper Litigation, a class action against various parties who conspired to manipulate the worldwide copper and copper futures markets for their own profit.

Any investor who bought or otherwise acquired the common stock of TYCO between Feb. 1, 2000 through Feb. 1, 2002, may not later than April 7, 2002, move the Court to serve as lead plaintiff of the Class. Investors who wish to discuss this action may contact Lovell & Stewart at the address, telephone number, or e-mail address below:

Contact: Lovell & Stewart, LLP, Christopher Lovell or Ian T. Stoll, 500 Fifth Avenue, New York, New York 10110, 212/608-1900, sklovell@aol.com.