March 12, 2004
Pension Conferees to Continue Talks After Senate Break
House and Senate pension conferees emerged from their meeting yesterday
saying they had made no policy decisions, but House Education and the
Workforce Chairman John Boehner (R-Ohio) said staff would begin working
on alternatives to provisions that have split conferees so far,
CongressDaily reported. Members instructed staffers to work
through next week, preparing data on a 'host of topics,' including the
scope of the challenges facing companies that sponsor multi-employer
pension plans, according to Boehner. Conferees will meet again March 23,
allowing staff to work through the Senate's recess next week.
'We had a very productive conversation,' Boehner said of the
closed-door, members-only session Thursday night, the newswire reported.
'Enough so that there's ample instructions for staff to do research and
devise alternatives.' The Senate version included additional relief for
multi-employer plans, as well as about $16 billion in payment waivers
for airlines, steelmakers and other companies with underfunded pension
plans. Senators have said they will insist the conference report retain
the help for multi-employers.
Currently, the formula that companies use to calculate their pension
contributions is based on the 30-year Treasury rate. Both House and
Senate bills replace the Treasury rate with one based on the corporate
bond index rate, although the versions are slightly different. The
change is expected to save companies $80 billion over two years, while
Congress enacts long-term pension reforms.
Democrats Release Study Faulting Class Action Bill
House Judiciary ranking member John Conyers (D-Mich.), and Reps. Sheila
Jackson Lee (D-Texas) and Max Sandlin (D-Texas), joined representatives
from the NAACP and other interest groups yesterday to release a report
indicating the class action bill awaiting a Senate vote could have an
adverse impact on racial and ethnic minorities, CongressDaily
reported. The report, prepared by the Center for Justice and Democracy,
said the class action bill would 'severely overburden' federal courts
and make it more difficult for victims of discrimination to seek redress
through the class action system, the newswire reported.
Economists Stand by Forecasts Despite Sluggish Labor
Market
Many economists admit they are puzzled by the question of why the
expanding U.S. economy isn't churning out lots of new jobs, as it did so
in the 1990s, the Wall Street Journal reported. A majority of
economists said they believe that the movement of jobs overseas has
played a role in the labor market's slow rebound. Only 16 percent,
however, said they felt outsourcing has been a 'significant' factor.
Despite the weak job growth, the economists also are maintaining their
forecasts that the economy will continue to grow at a healthy pace this
year, though they think the Federal Reserve will put off thoughts of
raising interest rates until the second half, the newswire reported.
Most economists, though, remain fairly confident that job growth
eventually will occur and that the recovery will stay on course. The
survey, conducted late last week and early this week, showed that they
haven't reduced their economic growth forecasts for the year. The
average forecasts for the annual rate of inflation-adjusted growth in
gross domestic product were unchanged from a month earlier at 4.5
percent for the first quarter, 4.4 percent for the second quarter, 4.1
percent for the third quarter and 4 percent for the fourth quarter, the
online newspaper reported.
Retail Sales Were Narrowly Higher Last Month
Retail sales increased in February but the gains were mostly confined to
autos and department stores, the Commerce Department said yesterday,
Reuters reported. In another report, initial claims for unemployment
benefits decreased last week. Retail sales rose 0.6 percent, to a
seasonally adjusted $327.17 billion in February, in line with Wall
Street economists' expectations. But sales other than vehicles were flat
compared with January, defying economists' projections of a 0.5 percent
gain. The Labor Department reported that first-time claims for jobless
benefits dipped 6,000, to 341,000, last week. Analysts had expected a
level around 345,000. Economists were mildly encouraged by a drop in
continued claims in the week ended Feb. 28, to the lowest level in two
and a half years. 'That's not a lot of layoffs, but it doesn't tell us
that there's a lot of hiring,' said Robert Brusca, chief economist in
New York with Native American Securities, the newswire reported.
MCI to State Fraud Was $11 Billion
MCI is expected to reveal that its total accounting fraud reached about
$11 billion and that its final financial restatement will affect
billions more because the company has reversed many of its past
accounting practices, the Wall Street Journal reported. MCI is
expected to make the disclosure as early as today in a filing with the
Securities and Exchange Commission. In the filing, the
telecommunications company is expected to provide audited financial
results for 2000, 2001 and 2002 that will reveal the full extent of the
largest accounting fraud in U.S. history, according to these people. The
filing represents the unraveling of the massive fraud and paves the way
for the company to emerge from chapter 11 protection by the end of
April, the online newspaper reported.
SEC Complaint Accuses Former Conseco Officials
The Securities and Exchange Commission accused two former financial
executives of Conseco Inc. of conducting a 'fraudulent accounting
scheme' that led to overstating results by 'hundreds of millions of
dollars,' the Wall Street Journal reported. The civil complaint,
filed in U.S. District Court in Indianapolis, accuses Conseco's former
CFO Rollin M. Dick and former CAO James Adams of committing a number of
securities-law violations in their efforts to avoid writing down the
value of certain securities held by the company's former finance unit,
mainly in 1999.
The complaint suggests the men had borrowed a total of nearly $100
million through loan programs for directors and officers of the
corporation. The insurance company says both men still owe all the money
they borrowed and the company is suing them and certain other
participants in the loan program to recover the funds. Joseph Goldstein,
an attorney for Dick and Adams, said the allegations in the complaint
are unfounded, the online newspaper reported.
Chocolate Maker Streglio Is Put on Block by Parmalat
Bankrupt dairy giant Parmalat Finanziaria SpA is trying to sell off its
chocolate maker, Streglio, in a first move at saving the company, the
Wall Street Journal reported. The move to put Streglio on the
block marks the first asset sale in a court-appointed administrator's
strategy to save the company, which has been brought low by a massive
fraud scandal. An advertisement in Italian financial daily Milano
Finanza on Thursday, signed by the administrator, Enrico Bondi, said
Parmalat is accepting letters of interest to acquire Streglio, a
Turin-based manufacturer of upscale chocolates and other sweets.
Streglio, acquired by Parmalat in 2001, had sales in 2002 of about
€10 million ($12.25 million), the Journal reported.
NorthWestern Corporation Files Plan of Reorganization
NorthWestern Corporation announced in a press release that it has filed
a plan of reorganization and disclosure statement with the U.S.
Bankruptcy Court for the District of Delaware. Under the proposed plan,
which is subject to creditor approval and confirmation by the bankruptcy
court, NorthWestern's financial reorganization will be achieved through
a debt-for-equity swap. NorthWestern's existing common stock will be
cancelled, and no distribution will be available for current
shareholders.
The company said that its newly issued common stock will be listed on
either the New York Stock Exchange or NASDAQ. The plan anticipates that
the reorganized company's new board of directors will consider paying a
dividend on the new common stock, although there can be no assurance of
when the first dividend will be paid, according to the press
release.
American Airlines, Mechanics Union Settle Outsource Dispute
American Airlines and the Transport Workers Union (TWU), which
represents 11,800 U.S.-based mechanics, have settled a union grievance
involving overseas maintenance work, the Knight-Ridder reported.
Although the company is downplaying the importance of the agreement and
a rival union is calling it an election-eve ploy, TWU executives said on
Thursday that the deal strengthens the union's scope clause in its
current five-year contract. The scope clause defines maintenance work
that must be performed by American mechanics at domestic maintenance
bases. In a statement issued by the company yesterday, American said the
agreement clarifies 'the conditions under which the company will use
American Airlines-staffed maintenance services outside of the United
States.'
Rigas Defense Challenges Ex-Adelphia Executive
A defense lawyer for Michael Rigas continued on Thursday to raise
questions about the credibility of a former Adelphia Communications
Corp. director, the government's second witness in the fraud trial of
the company's founder and two of his sons, the Associated Press
reported. Under cross-examination, Dennis Coyle conceded that he and
other board members supported significant raises for three of the
defendants -- former top Adelphia executives John Rigas, Michael Rigas
and Timothy Rigas -- after he learned the family's businesses had drawn
more than $2 billion in off-balance-sheet debt.
Earlier this week, Coyle said he was 'shocked' when he learned during an
audit committee meeting on Feb. 28, 2002, that Adelphia would likely be
liable for roughly $2.3 billion in debt drawn by the Rigases. The board
endorsed giving the three Rigas executives raises during a March board
meeting in Cancun, Mexico, that year, Coyle testified, AP reported.
Galey & Lord Emerges From Bankruptcy
After two years of restructuring, textile maker Galey & Lord has
exited federal bankruptcy court protection as a private company owned by
its creditors, the Associated Press reported. The company, which filed
for bankruptcy protection in February 2002, has further trimmed its
North American manufacturing capacity, sharply cut employment and seen
sales decline by nearly 20 percent to $436.8 million. Galey & Lord
exited bankruptcy on Friday. In its last 10-K filing with the Securities
and Exchange Commission, the company said its strategy is to deepen ties
with customers in part by offering to manage their inventory and
increasingly complicated global manufacturing operations.
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