A brief excerpt from the memorandum and order by United States District Judge Paul Barbadoro:

...Tyco had improperly recognized as income fees that one of its major division, ADT, had charged authorized dealers in the course of purchasing their customer contracts. To correct these accounting misstatements, Tyco pledged that it would reduce its “reported pre-tax earnings during the fiscal year 2002 by $135 million” and “take a charge of $185.9 million in fiscal year 2002 representing the amount of revenue effectively recognized in the fiscal years 1999 to 2001 that should have been deferred and amortized over the estimated useful life of the account.” The Form 10-K made similar disclosures regarding Tyco’s past accounting practices, and further specified that the amortization of improperly recognized income would take place over a ten-year period.

In addition to these disclosures, the Forms also contained statements about Tyco’s status in the wake of the investigation. The Form 8-K stated that Tyco was “not aware of any systemic or significant fraud related to the Company’s financial statements or any clear accounting errors that would materially adversely affect the Company’s reported earnings or cash flow from operations for the year 2003 and thereafter.”

PwC, which served as Tyco’s accountant and one of its consultants, performed an audit of Tyco’s disclosures and included its endorsement of the Form 10-K as an addendum to the filing. PwC’s endorsement stated that...