High-tech manufacturing and services conglomerate Tyco International Ltd. on Wednesday posted a 38 percent jump in its fiscal fourth-quarter profit. But the company said it found errors in its stock-option granting practices under prior management that will cost $171 million in after-tax expenses.

Tyco will restate results for the prior periods — from 1999 through early 2002, the era of disgraced former CEO L. Dennis Kozlowski — in its fiscal year 2006 financial statement to reflect additional stock-based compensation expense.

The company also unveiled a restructuring program designed to improve its operating efficiency ahead of its planned breakup next year. The program is expected to bring total savings of $50 million in 2007 and $200 million the following year.

"There will be some job cuts and some closures of plants or offices," but Tyco isn't announcing details yet, spokeswoman Sheri Woodruff said.

Its shares slipped 4 cents to $29.89 in morning trading on the New York Stock Exchange. They are still near the high end of their 52-week range of $24.65 to $31.28.

Net income increased to $1.27 billion, or 62 cents per share, in the three months ended Sept. 29, from $917 million or 44 cents per share, during the same period last year. It cited higher revenues and reduced overhead.

Revenue rose 8 percent to $10.76 billion from $9.94 billion, topping Wall Street's estimate of $10.5 billion.

Income from continuing operations in the latest quarter was 63 cents per share, including a net gain of 12 cents per share from several special items. Those included an acquisition-related writeoff, costs related to splitting Tyco into three companies next year, a benefit on tax items and income of $72 million, or 4 cents per share, for a settlement with Kozlowski that ends Tyco's obligation to make future payments on an insurance policy on him.

Kozlowski and former chief financial officer Mark Swartz were convicted in June 2005 of stealing hundreds of millions of dollars from Tyco and illegally earning hundreds of millions more by manipulating stock, all to maintain luxurious lifestyles. Both are now serving prison sentences of up to 25 years; Kozlowski was ordered to pay $167 million in fines and restitution.

Tyco's latest results beat by 2 cents a share the forecast of analysts polled by Thomson Financial; they were expecting 49 cents per share, excluding the one-time items.

"We had a solid finish to the year, with good organic revenue growth, increased operating income and strong cash flow," chief executive officer Edward Breen, who took over in June 2002 after Kozlowski was forced out, told analysts during a conference call.

He said Tyco expects in mid-January to file paperwork with the Securities and Exchange Commission outlining the planned breakup and has nearly completed selecting the management teams and boards of directors for the three companies that will result.

The companies are Tyco International, composed of the current engineered products and fire and safety divisions, under Breen and still based in West Windsor; Tyco Electronics, which move from Harrisburg, Pa., to a Philadelphia suburb; and the health-care business, which is to be renamed but will keep its headquarters in Mansfield, Mass. The split-up will occur no sooner than late March.

Full-year earnings grew 22 percent to $3.71 billion, or $1.80 per share, compared with $3.03 billion, or $1.43 per share, a year ago. Annual revenue rose to $40.96 billion from $39.31 billion last year.

The company said it anticipates first-quarter 2007 earnings from continuing operations in a range of 42 cents to 44 cents per share, excluding special items and restructuring charges.

On the stock options matter, Tyco said an audit committee reviewed its equity incentive plan practices and approvals between October 1999 and June 2006. It found errors related to stock-option granting practices due to incomplete documentation, unintentional misapplication of accounting principles and the absence of adequate control procedures in 1999 through early 2002.

Woodruff, the spokeswoman, said the review didn't find "any evidence of fraud or intentional backdating. It was really sloppy bookkeeping."

Tyco will record compensation expenses of $171 million after taxes relating to grants awarded before the end of 2002, which will cut 2005 reported results by a penny per share.

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On the Net: http://www.tyco.com

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