July 29, 2004
I.R.S. Says Americans’ Income Shrank for 2 Consecutive
Years
The overall income Americans reported to the government shrank for
two consecutive years after the Internet stock market bubble burst in
2000, newly disclosed information from the Internal Revenue Service
shows, the New York Times reported. The total adjusted gross income on
tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most
recent year for which data is available, from $6.35 trillion in 2000.
Because of population growth, average incomes declined even more, by 5.7
percent. Adjusted for inflation, the income of all Americans fell 9.2
percent from 2000 to 2002, according to the new I.R.S. data.
Fed Regional Survey Shows Slowdown in Recent
Growth
The Federal Reserve reported on Wednesday that the economy cooled in
June and July as consumer spending slowed after a surge in early spring,
the Associated Press reported. Separately, the Commerce Department said
that orders to factories for durable goods rose 0.7 percent in June,
reflecting demand for military aircraft, after declines in orders in
April and May. The increase was nonetheless smaller than analysts
expected.
The survey of business activity, compiled from reports from the
Federal Reserve’s 12 regional banks, was the latest indication of
what the Fed chairman, Alan Greenspan, calls a “soft patch”
in the economy that developed in June. Elements of the Fed report will
be used on Aug. 10 when the Federal Open Market Committee meets on
interest rates, the newswire reported.
United Airlines
UAL Director Skips Meeting To Protest Pension
Move
A UAL Corp. director who heads one of United Airlines#8217; labor
unions said he is boycotting the company’s latest board meeting to
protest UAL’s plan to stop making pension-fund contributions as
long as it remains in bankruptcy proceedings, the Wall Street
Journal reported. The move comes as UAL was scheduled to meet
today with the Pension Benefit Guaranty Corp. (PBGC), which also
expressed concern about the plan. The PBGC fears that UAL will ask the
judge overseeing its bankruptcy case to allow the company to terminate
some or all of the four underfunded pension plans, a step that would
dump the assets and liabilities onto the agency.
Machinists Boycott UAL Board Meeting Over
Pensions
A union at United Airlines said on Wednesday it would boycott this
week’s meeting of the carrier’s board over plans by the
company to stop funding employee pensions during the rest of its
bankruptcy, Reuters reported. The International Association of
Machinists, which represents 37,000 active and retired employees at the
No. 2 airline, is considering legal action against the company over its
announcement on pensions last week.
Federal-Mogul Creditors to Vote on
Reorganization
Auto parts maker Federal-Mogul Corp. on Wednesday said a Delaware
bankruptcy court approved the disclosure statement for its amended
reorganization plan, paving the way for a vote by creditors and asbestos
claimants, Reuters reported. Federal-Mogul filed for chapter 11
bankruptcy protection in October 2001 after it was hit with numerous
asbestos lawsuits stemming from its acquisition of British piston maker
T&N LLC in 1998. The T&N unit, which made building materials
that led to the asbestos compensation claims, is currently operating
under U.K. administration, a parallel process to the U.S. bankruptcy
proceedings. The U.S. Bankruptcy Court in Delaware set a deadline of
Nov. 3 for receiving the votes. It will determine whether to confirm the
plan at a hearing set for Dec. 9.
Airline Woes Loom Over U.S. Pension Agency
Looming insolvency at pension plans run by bankrupt United Airlines
and other struggling companies could overwhelm the U.S. agency that
insures plans and force it to seek a taxpayer bailout, the
agency’s former head says, Reuters reported. The Pension Benefit
Guaranty Corporation (PBGC) expressed alarm this week after United, a
unit of UAL Corp., said it would stop contributing to its pension plans
while under bankruptcy protection, raising the specter of default.
“The PBGC wasn’t designed to withstand the level of
underfunding that we are now witnessing in the system,” former
PBGC Executive Director Steve Kandarian, who stepped down in February,
said in a telephone interview with Reuters.
Dynegy Posts Profit After Year-ago Loss
Dynegy Inc. on Wednesday reported a second-quarter profit, reversing
a year-ago loss and sending its shares higher as the electricity
producer benefited from rising sales volumes and improved power prices,
Reuters reported. The Houston-based company reported net income of $10
million, or 2 cents per diluted share, compared with a net loss of $290
million, or $1 per share in the year-ago quarter. The figure was boosted
by an $88 million gain in the quarter from unwinding four natural gas
transportation contracts linked to a money-losing power contract. The
sale of the company’s interest in the Indian Basin Gas Processing
Plant also contributed $36 million in one-time gains, the company said,
the newswire reported.
Slim Adds to Global Crossing Stake
Shares of telecommunications firm Global Crossing Ltd. rose 18
percent on Wednesday after Mexican billionaire Carlos Slim added to his
holdings of the company’s shares, Reuters reported. According to a
filing with the U.S. Securities and Exchange Commission, the holding
group for Slim and his family bought 120,500 shares of Global Crossing
on Friday, bringing their total to 4.1 million, or just over 10 percent
of Global Crossing’s equity. Slim and his family started
purchasing Global Crossing stock shortly after the company emerged from
bankruptcy in December, the newswire reported.
Kids Learn to Manage Their Money at Camp
About 30 students in grades 8-12 this week are taking part in the
second annual “Bringing Home the Gold” financial fitness
camp at Northern Kentucky University, the Cincinnati
Enquirer reported. Along with resume writing, the kids are
learning how to research careers, open bank accounts, manage credit,
invest, buy insurance and start a business. The class was organized by
the NKU Center for Economic Education and paid for by Citigroup and the
Procter & Gamble Fund. “It’s important to get to people
when they’re young, before they get into a financial fix,”
said Johnna Fasold, vice president of public relations for Citigroup.
href='http://www.enquirer.com/editions/2004/07/28/loc_loc2kyfit.html'>Read
the full article.
Court Approves Plan of Liquidation for Westar
Financial
The U.S. Bankruptcy Court for the Western District of Washington has
approved the plan of liquidation for Westar Financial Services Inc., the
company announced in a press release. Should the 10-day appeal period
end without further action, trading in the shares of Westar shall be
suspended as of the morning of Aug. 9. All trades executed through the
effective date will carry the right to receive subsequent liquidation
distributions, if any, regardless of the settlement date.
Shareholders of record on the date of cancellation will be entitled
to receive future distributions, if any, following payments to superior
claimants pursuant to the terms of the plan of liquidation. A complete
copy of the debtor’s proposed plan of liquidation can be requested
by visiting
href='http://www.stockvalues.com/clients/westar.htm'>www.stockvalues.com/clients/westar.htm,
according to the press release.
U.S. Plastic Lumber Files For Chapter 11
Bankruptcy
U.S. Plastic Lumber Corp., a maker of decking and lumber made from
recycled plastics, said last week it has filed for chapter 11 as a
result of a weak balance sheet, Reuters reported. The company is seeking
debtor-in-possession financing to support its current operations, the
Boca Raton, Fla.-based company said. “Given our company’s
current condition, we believe that this action will give us the ability
to preserve and maximize our value,” CFO Michael Schmidt said in a
statement, the newswire reported.