The Financial Accounting Standards Board plans to decide in the first quarter whether to change rules that allow U.S. companies to avoid treating stock options as a compensation expense. The board has been under pressure to review the rules since the collapse of Enron and WorldCom, companies where some executives were able to reap windfalls from option awards. More than 100 U.S. companies have said they plan to expense stock options in an effort to give investors more information and restore market confidence.
Allegheny Gets Break From Lenders
Allegheny Energy, a Hagerstown, Md.-based utility owner that needs $2 billion in new financing to avoid bankruptcy, said lenders agreed to extend waivers on loan defaults by two subsidiaries. The waivers to Allegheny Energy Supply and Allegheny Generating, which were to expire yesterday, were extended through Jan. 14. The parent company warned that it will probably seek bankruptcy protection if it cannot renegotiate its bank loans.
Consumer confidence fell in December for the sixth time in seven months, the Conference Board said. The board's reading was 80.3, down from 84.9 in November and just above the nine-year low of 79.6 in October. Its "present situation" index, which reflects views of labor and business conditions, fell to 69.9 in December from 78.3 in November. The confidence report is based on a survey of 5,000 households and was conducted in the first three weeks of December.
First USA Bank, the nation's largest issuer of Visa credit cards, agreed to pay $1.3 million in a settlement with 28 states over how telemarketing companies sold products and services to First USA customers. First USA, now doing business as Bank One Card Services, agreed to police its third-party vendors to prevent deceptive telemarketing aimed at its more than 53 million credit card holders. The settlement ends a three-year investigation into customer complaints led by attorneys general in California, Illinois, New York and Vermont. Maryland is among the states that agreed to the settlement.
United Airlines said in a recorded message to employees that it may announce "significant layoffs" in the next several weeks as it seeks to cut $2.4 billion a year in labor costs and emerge from Chapter 11 bankruptcy protection. The International Association of Machinists is challenging United's request that a judge impose a 13 percent pay cut on its members. United has agreed with four other unions on wage cuts that would save the airline as much as $70 million a month.
Atlantic Coast Airlines Holdings wants United Airlines to decide by Feb. 28 whether it will keep their contract intact so the commuter carrier can get financing for new jets. Atlantic Coast gets 85 percent of its revenue from flying as United Express. A delay or rejection of the contract would hurt Atlantic Coast's ability to finance 47 Bombardier 50-seat jets it ordered, the carrier said in a filing to the federal bankruptcy judge overseeing United's case.
American Airlines plans to lay off 218 fleet service clerks and 197 airport agents and representatives at Dallas-Fort Worth International Airport on Jan. 18, the airline said in a notice to the Texas Workforce Commission. The airline said in November that it would cut North American capacity an additional 3.3 percent by March, leaving it with 18.6 percent less passenger capacity than in March 2001.
Rite Aid's credit outlook was raised to stable from negative by Moody's Investors Service. The No. 3 U.S. drugstore chain's bond ratings, all of which are non-investment, or "junk," grade, may be raised if it makes "concrete arrangements" to refinance a bank loan and two notes maturing in 2005, Moody's said. Rite Aid is slowing expansion, selling more generic drugs and repaying loans to try to return to profitability in the fourth quarter, having lost money in 17 of the past 18 quarters.
Electronic Data Systems won approval to proceed with a $6.1 billion Navy contract to set up and maintain the military's biggest information technology program. The Navy-Marine Corps intranet project, managed by EDS, showed "decidedly measurable progress" in four months of tests of procedures to identify glitches and make repairs, said John Stenbit, assistant secretary for command, control and communications, who is authorized to approve the project.
A Baltimore judge dismissed a lawsuit seeking to force Allfirst executives and directors to personally repay $691.2 million lost in a currency-trading scandal. Circuit Judge Albert J. Matricciani Jr. ruled that Irish law applies because Allfirst is a subsidiary of Dublin-based Allied Irish Banks. Tomran Inc., an Allfirst depositor and owner of 4,800 shares of Allied Irish Banks, sued former and current Allfirst directors and officers in May, claiming they were negligent in their duties and should repay the Baltimore bank.
Global Crossing's board said it expects to name two independent board members to replace Chairman Gary Winnick, who resigned. The appointments of Jeremiah D. Lambert and Myron E. Ullman III to replace him will be temporary, however. When the company emerges from bankruptcy protection, Hutchison Whampoa and Telemedia, the two companies that have agreed to buy Global Crossing, each will name four new board members. A new board chairman will come from that group, according to the purchase agreement.
New York Times Co. took full control of the Paris-based International Herald Tribune, ending a 35-year partnership with The Washington Post. The purchase of the Post's 50 percent stake took place Monday, said Robert McCartney, the Tribune's managing editor. The deal, which Times Co. valued at less than $75 million, was announced in October. The Post at the time suggested that it had been strong-armed into selling by a Times threat to start a newspaper that would compete with the Herald Tribune.
Vivendi Universal, the Paris-based media company, said it completed its sale of U.S. publisher Houghton Mifflin to a group of private investors for $1.28 billion in cash. The U.S.-based investment groups Thomas H. Lee and Bain Capital are also assuming $380 million of Vivendi's debt. Vivendi bought Houghton Mifflin, which publishes textbooks, in 2001 for $2.2 billion, including debt.
A Canadian author claimed in a lawsuit that the characters in "Peter Pan" are now longer protected by a copyright awarded in 1929. The suit by Emily Somma was filed in San Francisco in anticipation of legal action by the British hospital that holds the copyright to Peter Pan. The Great Ormand Street Hospital for Sick Children in London already has warned Somma to halt publication of "After the Rain: A New Adventure for Peter Pan," which has been published in Canada and can be purchased on the Internet. An attorney for the hospital claims Somma's efforts to publish a work without paying royalties is depriving the hospital of revenue it needs to treat sick children. Somma's lawyer said the author offered to pay royalties.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers