January 28, 2004
House Rules Committee Approves Bankruptcy Bill Rule
The House Rules Committee voted yesterday to allow House leaders to
attach a controversial, House-passed bankruptcy bill to a
noncontroversial, Senate-passed 'family farmers' bankruptcy bill
scheduled today for floor debate, CongressDaily reported. The
rule allows the combined legislation to be offered as a substitute for
the Senate bill, which authorizes a six-month extension of chapter 12,
the Bankruptcy Code provision that gives relief to family farmers. The
rule also waives all points of order on the substitute.
Should the full House approve the leadership move today, it could lead
to a House-Senate conference on the larger bankruptcy reform bill (H.R.
975), which has been stalled in the Senate. Such a conference would
limit the right of Senate Democrats to offer amendments to H.R. 975, and
thus several Senators are expected to fight the procedural move and
insist on the regular order.
Senate Rejects Kyl Amendment to Pension Bill
The Senate ignored warnings of a presidential veto yesterday and
advanced toward passage of legislation to ease pension plan payments for
thousands of companies and to give special relief to a few,
CongressDaily reported. Senators voted 67-25 to reject an
amendment proposed by Sen. Jon Kyl (R-Ariz.) that he said could make the
bill more acceptable to the Bush administration by making taxpayers less
vulnerable should companies that get special breaks become insolvent.
With that vote, the Senate moved a step closer toward passage, possibly
today, to send the legislation into negotiations with the House.
Lawmakers are moving with some urgency because companies could see
significant jumps in their pension plan obligations if Congress fails to
act by April 15, reported the newswire.
Asbestos Litigation Bill Up After Senate Class Action
Debate
Senate Majority Leader Bill Frist (R-Tenn.) is planning to bring up
asbestos litigation reform legislation after the chamber considers the
class action bill, and he hopes that the asbestos bill that will get a
floor vote will draw broader support than the committee version did,
CongressDaily reported. 'We're going to lay the best possible
compromise legislation on the table,' he said. Frist had given a March
deadline for a vote, but yesterday said the asbestos bill would follow
the legislation on class action and reauthorizing federal surface
transportation programs.
Senate Judiciary Chairman Orrin Hatch (R-Utah), who authored the
original bill, said he and Frist are in touch about the legislation.
Hatch's bill would replace the current court system with a 'trust fund'
used to compensate victims of asbestos-related illnesses and would also
set medical criteria and awards to victims with varying levels of
illness. Hatch said negotiations would resume over the bill -- which
failed to reach consensus among insurers, defendant companies in
asbestos litigation, labor unions and victims' groups -- because of
disagreements over financing and awards to victims, reported the
newswire.
Consumer Confidence Rises; at Its Highest Since July 2002
Consumer confidence in the economy rose this month to the highest level
since July 2002 as Americans grew more optimistic about their prospects
later this year, a private research group reported yesterday, Bloomberg
News reported. The Conference Board said its index of consumer
confidence rose to 96.8 this month from a revised 91.7 in December. The
percentage of people who expected better business conditions and more
hiring in six months also rose, the group said.
Assessments of current economic conditions were not as strong because
the economy is having trouble creating jobs. Federal Reserve
policy-makers, meeting yesterday and today, will probably keep the
benchmark interest rate at the lowest since 1958 until job growth
improves, a survey of economists showed. 'People are more optimistic but
the consumer is still worried about their job situation,' a Conference
Board economist, Delos Smith, said, reported the newswire. 'Jobs, jobs,
jobs is everybody's concern.'
Four Airlines Bid for US Airways assets
Four U.S. airlines have bid on various US Airways assets, including
American Airlines, which wants the East Coast shuttle, according to
banking sources familiar with the matter, Reuters reported. Arlington,
Va.-based US Airways is seeking ways to cut costs 10 months after
emerging from bankruptcy protection in a bid to survive. Unions have
balked at giving up any more concessions, although pilots recently
agreed to meet with management to learn details about the current
financial picture. Executives at American Airlines parent AMR Corp.,
which recently reported a much narrower fourth-quarter loss, have sought
the shuttle for years, said the sources. In 1997, American bid about
$300 million for the shuttle.
The shuttle was for sale again in 2001, when UAL Corp.'s United Airlines
tried to buy US Airways. That deal failed after it was blocked by
antitrust regulators. Also bidding on different pieces of US Airways
assets are JetBlue Airways Corp, Delta Air Lines Inc. and AirTran
Holdings Inc. Bids were submitted last Thursday, according to bankers,
and the US Airways board is to meet in early February to review the
proposals, reported the newswire.
UAL Corp. Posts Narrower Loss, Showing Signs of a
Turnaround
United Airlines parent UAL Corp. narrowed its fourth-quarter net loss to
$476 million, or $4.33 a share, from the year-earlier loss of $1.47
billion, or $20.70 a share, the Wall Street Journal reported. The
airline said its fourth-quarter operating loss was $135 million,
compared with a year-earlier operating loss of $994 million. UAL
credited its improved revenue performance and aggressive cost cuts
achieved since it filed for bankruptcy-court protection nearly 14 months
ago.
Compared with fourth-quarter profits reported by several of the nation's
leading low-cost carriers, the airlines had poor, though improved,
results as they continued to wrestle with weak pricing power, higher
fuel expenses and competition from low-cost carriers, reported the
online newspaper.
New Issues Are Raised Over Independence of Auditor for MCI
New questions are surfacing about whether investors can trust the
independence of WorldCom Inc.'s latest auditor, KPMG LLP, the Wall
Street Journal reported. The doubts stem from a series of disputes
between state taxing authorities and WorldCom over an aggressive KPMG
tax-avoidance strategy that the long-distance company used to reduce its
state-tax bills by hundreds of millions of dollars from 1998 until 2001.
MCI, which hopes to exit bankruptcy-court protection in late February,
says it continues to use the strategy. Under it, MCI treated the
'foresight of top management' as an asset valued at billions of dollars.
It licensed this foresight to its subsidiaries in exchange for royalties
that the units deducted as business expenses on state tax forms. To read
the full article, point your browser to
href='http://www.wsj.com/'>www.wsj.com (subscription required).
PG&E Cuts 2004 Electric Rates a Further $60 Million
Pacific Gas & Electric Co. plans to cut 2004 electricity rate by
$875 million, about $60 million more than it estimated earlier this
month, the utility said in a regulatory filing on Monday, Reuters
reported. The PG&E Corp.-owned utility said the California Public
Utilities Commission (CPUC) may vote on the proposed cut at its Feb. 26
meeting. The added reductions are due to increased 'headroom' -- the
difference between the cost of producing power and generation revenues
-- and other revenue changes, PG&E said. PG&E's filing said
actual rates for 2004 will depend on the result of various proceedings
at the CPUC, including a 2003 general rate case settlement, and other
factors, among them wholesale power costs.
PG&E's reorganization plan to get out of bankruptcy in the first
quarter this year called for lower electricity rates. The plan has been
approved by the CPUC and a U.S. Bankruptcy Court judge, but has been
challenged by two CPUC commissioners and the cities of San Francisco and
Palo Alto, Reuters reported.
Tweeter Profit Down, But Sales Growth Boosts Shares
Electronics chain Tweeter Home Entertainment Group Inc. on Tuesday
reported a quarterly profit decline on weak December sales, but said
same-store sales so far this month grew 3 percent, Reuters reported.
News of the January sales growth sent shares of Tweeter soaring about 16
percent to their highest price in more than a year. Shares of upscale
retailer Ultimate Electronics Inc., Tweeter's rival electronics chain,
also rose sharply on Tuesday, up 10.5 percent, or 75 cents, to $7.93 in
afternoon trading on Nasdaq.
'This is a turnaround story,' said Independent Research Group analyst
Robert Straus, who does not own Tweeter shares and rates the stock a
'buy.' 'We haven't seen 3 percent comparable sales increases from them
in a long time.' Bankruptcy rumors swirled around Tweeter this time last
year, as the company struggled to compete with lower-priced retailers
entering the upscale consumer electronics market. 'It feels good to
report fairly positive news,' said CEO Jeffrey Stone, conceding that
previous quarterly results had been 'lackluster,' reported the newswire.
