January 20, 2004
Senate to Consider Pension Reform Legislation
The Senate could take up pension-reform legislation as early as
Wednesday, CongressDaily reported. The bill temporarily changes
the rate that companies must use to calculate the contributions they
must make to their pension plans, a change that is expected to reduce
contributions. Under an agreement aimed at limiting debate and the scope
of the bill, each side will be permitted to offer three amendments.
Lobbyists backing the bill say they hope that news last week that the
Pension Benefit Guaranty Corp. -- the nation's pension insurer -- is
running a $11.2 billion deficit does not affect the bill's prospects.
They noted that the reduced payments only would stay in place for two
years as lawmakers consider long-term pension reforms.
Luxury Retail Business Has Holiday Boom
From $16,000 designer evening gowns at Nordstrom to $50,000 jewelry
pieces at Tiffany & Co., big-ticket items helped the booming
high-end retail sector enjoy its strongest holiday season in four years,
Reuters reported. Thomson First Call estimates a 23 percent
year-over-year earnings growth for its luxury retail segment, said
research analyst Ken Perkins. Thomson also predicts earnings growth for
upscale department stores Nordstrom Inc. and the Neiman Marcus Group
Inc. to jump 45 percent and 25 percent, respectively. 'Clearly, the
high-end consumer is back,' said analyst Kristine Koerber of WR
Hambrecht, who credits tax cuts, an improved stock market and higher
corporate bonuses with bringing improved results to upscale stores.
Honeywell Ends Talks with Federal-Mogul
Honeywell International Inc. said on Monday it had ended talks with
bankrupt auto-parts maker Federal-Mogul Corp. about the possible sale of
Honeywell's automotive Bendix friction materials business, Reuters
reported. Honeywell said that after several months of negotiations, the
parties could not agree on terms of a deal. The end of the talks follows
the November expiration of Federal-Mogul's letter of intent to acquire
the unit. Any deal would have been contingent on Honeywell receiving a
bankruptcy court-issued injunction shielding it from all asbestos
liabilities related to the business.
Honeywell spokeswoman Victoria Streitfeld told Reuters that the company
is not in any new discussions about selling the Bendix unit and it
intends to keep operating the business. The end of the talks will not
impact Honeywell's previously issued 2003 and 2004 financial guidance,
the Morris Township, N.J.-based company said. Southfield, Mich.-based
Federal-Mogul is reorganizing under chapter 11 bankruptcy protection as
a result of asbestos claims. It expects to emerge from bankruptcy this
year, reported the newswire.
11th Arrest in Parmalat Probe
Italian police arrested a former regional bank chairman, a judicial
source said on Monday, as the fraud probe into Parmalat widened, Reuters
reported. Franco Gorreri, a director at Parmalat until 1992 and who
temporarily stepped down as head of Banca Monte Parma last week, was
arrested by tax police in Parma and was due to be taken to a prison in
the city, the judicial source told Reuters. He was the 11th person so
far to be arrested in the case. Gorreri was already under investigation
for alleged fraudulent bankruptcy and false corporate statements as a
former member of Parmalat's board. Investigators in Parma and Milan say
Parmalat's top management for years concealed a hole in the
multinational's accounts, which could surpass 10 billion euros ($12.70
billion), reported the newswire.
Lea Fastow's Pending Charges Not Dismissed Yet
Lea Fastow, a former assistant treasurer at Enron, pleaded guilty on
Wednesday to one count of filing a false tax return, the Texas
Lawyer reported. She wanted to enter a plea on Jan. 7, but U.S.
District Judge David Hittner told her he wanted to wait until he saw a
pre-sentencing report into her alleged crimes and background before
deciding if he would accept the terms of her plea agreement. Read the
href='http://www.law.com/jsp/article.jsp?id=1074259224581'>full
article.
Continental Swings to a Profit But Warns of Tough 2004
Continental Airlines announced a profit for the fourth quarter, helped
by a one-time gain, the Wall Street Journal reported. But the
nation's fifth-largest airline warned that it's going to be tough to
break even this year, citing high fuel prices. Continental reported on
Tuesday net income of $47 million, or 67 cents a share, for the latest
quarter, compared with a year-earlier net loss of $109 million, or $1.67
a share. The latest results were boosted by an $85 million gain
primarily from the sale of its interests in Hotwire and Orbitz.
Excluding special items, Continental's loss per share was 58 cents for
the quarter, reported the Journal.
Citigroup Net Almost Doubles, Boosted by Consumer Banking
Citigroup Inc.'s net income almost doubled in the fourth quarter,
boosted by growth in consumer banking and improved results in its
investment-banking business, the Wall Street Journal reported.
The financial-services company posted profit of $4.76 billion, or 91
cents a share, up 96 percent from $2.43 billion, or 47 cents a share, a
year earlier. The latest quarter's results included a $242 million
after-tax charge for credit and trading losses related to the fraud
announced last month at Parmalat SpA. The final quarter of 2002 included
a charge of $1.3 billion to cover the costs of the company's settlement
of investigations into its research practices and related civil
litigation, reported the Journal.
Fraud Cases Show Gaps In Bankruptcy System
A Wall Street Journal article examines fraud cases that have
resulted from gaps in the bankruptcy system. In one case, Frank Carone
found a lucrative supplement to his work as an auctioneer and seller of
pizza ovens by stealing from the federal bankruptcy system. To read the
article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
Consumer Loan Demand Boosts Wells Fargo
Wells Fargo & Co. today said fourth-quarter profit rose 10 percent,
helped by increased consumer loan demand and a portfolio restructuring,
Reuters reported. The San Francisco-based bank said net income rose to a
record $1.62 billion, or 95 cents per share, from $1.47 billion, or 86
cents per share, a year earlier. Profit per share matched the average
analyst forecast according to Reuters Research, a unit of Reuters Group
PLC.
Wells Fargo said fourth-quarter results included $143 million of gains
from equity investments and 5 cents per share of charges from some bond
sales, consolidation of businesses, contract renegotiations and stock
donations, reported the newswire.
