The economy is showing momentum heading into summer, according to key indicators. The Commerce Department said construction in April rose 1.3 percent to reach its best month on record with a seasonally adjusted $970.4 billion worth of buildings put in place. And the Institute for Supply Management said its index of manufacturing activity rose to 62.8 in May, up from 62.4 in April. Any reading above 50 indicates expansion. Economists had expected 61.5.
Dow Corning Leaves Bankruptcy
Dow Corning emerged from bankruptcy, ending the longest-ever Chapter 11 reorganization. The company had sought bankruptcy in May 1995 because of thousands of personal-injury suits involving silicone-gel breast implants. Bondholders, lenders and other creditors will receive full payment on the more than $1.2 billion they are owed, plus compound interest. Dow Corning's plan to pay $2.3 billion over 16 years to settle the injury claims was approved five years ago but has been delayed by legal wrangling.
HealthSouth said it had finished a massive internal review that verified years of fraud at the rehabilitation giant. The company statement said the total was consistent with HealthSouth's previous estimates, which in January were put at between $3.8 billion and $4.6 billion. Seventeen former HealthSouth executives have pleaded guilty to federal fraud charges and are cooperating with prosecutors. Fired chief executive Richard M. Scrushy, who has pleaded not guilty, is free on $10 million bond awaiting trial.
Federal prosecutors in U.S. District Court in Manhattan rested their case against Adelphia founder John J. Rigas, sons Michael and Timothy, and former executive Michael C. Mulcahey after 13 weeks of testimony. The four pleaded not guilty to charges of conspiracy, bank fraud, securities fraud and wire fraud. John and Michael Rigas won't testify in their defense, lawyers said, while Mulcahy plans to testify. Timothy Rigas has not yet decided.
J.C. Penney's sale of Eckerd drugstores has been cleared by the Federal Trade Commission. Penney is splitting Eckerd, selling its mail-order business and about 1,260 mostly Southern drugstores to CVS while 1,539 stores in the Mid-Atlantic and Northeast will go to Jean Coutu Group of Canada. The sale is valued at $4.53 billion.
Forstmann Little & Co. disputed Connecticut's claim that the private equity firm improperly invested state pension fund money in two telecommunications companies, including an 8 percent interest in Reston-based XO Communications that became worthless. The state said its agreement prohibited risky ventures and required that the money go into only those companies in which the firm was buying a controlling interest. Forstmann Little said Connecticut questioned the investments only when the telecom sector went into a downturn.
Treasury bill rates rose. The discount rate on three-month bills was 1.130 percent, up from 1.050 percent last week. The discount rate for six-month bills was 1.400 percent, up from 1.375 percent. The actual return to investors is 1.150 percent for three-month bills, with a $10,000 bill selling for $9,971.40, and 1.430 percent for six-month bills selling for $9,929.20.
A federal appeals judge revived an antitrust lawsuit by 23,000 Los Angeles area gasoline dealers against ChevronTexaco and Royal Dutch/Shell. The dealers claim that Shell and what was then Texaco created two joint ventures, Equilon Enterprises and Motiva Enterprises, to overcharge dealers. Shell bought out Texaco's interests in the ventures after Chevron acquired Texaco in 2001.
American Airlines and Boeing separately agreed to pay $3.3 million to settle alleged rule violations, the Federal Aviation Administration said. American's $2.5 million settlement covers 50 cases from 1997 to 2003 that include safety, flight operations and maintenance issues. Boeing's $824,800 covers cases from 1998 to 2002 that include quality-control systems for production of 737, 747, 767 and 777 aircraft.
Regal Entertainment can pay a disputed $710 million dividend that primarily benefits the company's controlling shareholder, billionaire Philip Anschutz, a Delaware Chancery Court judge ruled. The Teachers' Retirement System of Louisiana had argued that Regal's board hastily approved the payout to allow Anschutz, who bought the movie theater chain out of bankruptcy and holds a 57 percent interest, to recover his investment.
Allianz Dresdner, parent company of the Pimco stock funds, has agreed to pay New Jersey $18 million to settle allegations that the firm improperly allowed a hedge fund to make predatory short-term trades in the funds. The state dropped similar charges against the separately managed Pimco bond funds.
Computer Sciences won a $1.6 billion contract from Sears to support the retailer's Internet sites and data networks. The California company said it will install desktop computers and servers as part of the contract.
Boston Scientific announced it will spend an initial $740 million to acquire privately held Advanced Bionics, a maker of tiny electronic devices that can be implanted for neurological disorders. Among its products is the only U.S.-made cochlear implant for the deaf.
A real estate tycoon once ranked as China's 11th-richest man was sentenced to three years in prison on fraud and stock manipulation charges. Zhou Zhengyi's arrest last September came amid a crackdown on financial offenses by tycoons accused of using bribery and political connections to profit from China's economic reforms. Forbes magazine in 2002 estimated his fortune at $320 million.
Anheuser-Busch raised its stake in China's Harbin Brewery Group to 36 percent, triggering a mandatory 72 cents per share offer for the stock it does not own already. SABMiller, which holds a 29.4 percent stake, previously offered 55 cents per share in the first attempted hostile takeover of a listed Chinese firm by a foreign company.
Mexico will repeal laws that have cost foreign phone companies more than $1 billion in fees since 2000 for calls to Mexico. The United States had won a ruling by the World Trade Organization in March.
The United States signed a Trade and Investment Framework Agreement with five Central Asian nations -- Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan and Uzbekistan -- that gained independence from the Soviet Union a decade ago and are trying to liberalize trade.
Avianca, the Colombian airline reorganizing under U.S. bankruptcy laws, picked Brazilian conglomerate Grupo Sinergy to take over the company instead of a rival group led by U.S. carrier Continental Airlines.
General Electric and Freddie Mac led U.S. companies in 2003 lobbying expenditures, which reached a record $2 billion. GE spent $17.2 million and Freddie Mac $15.9 million, according to disclosure records compiled by the nonpartisan PoliticalMoneyLine. With a Medicare drug benefit on the line, the health care industry led all groups, spending $151.4 million. AARP spent $20.9 million and the American Medical Association $17.3 million.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.