Consumers spent frugally for a fourth straight month in September, with companies including Wal-Mart Stores, Gap, Federated Department Stores and J.C. Penney reporting tepid results. The International Council of Shopping Centers-UBS sales tally of 71 retailers, based on same-store sales, was up 2.4 percent, well off the average 6 percent increase of January through May. Separately, the Federal Reserve said consumer credit, including credit card debt and boat, car and mobile-home loans but not real estate loans, dropped by a seasonally adjusted annual rate of 1.4 percent in August, or by $2.4 billion, from the previous month, the largest dollar decline since December 1990. The first decline in nine months left total consumer credit outstanding at $2.04 trillion. Demand for revolving credit, such as credit cards, fell at a 5.4 percent annual rate, or by $3.3 billion.
KPMG Settles Audit-Related Suit
KPMG agreed to pay $115 million to settle a shareholder lawsuit claiming it failed in its audit of Lernout & Hauspie Speech Products, which later collapsed. Lernout & Hauspie, which produced software that turns human speech into computer text, collapsed four years ago and later admitted fraud, including fabricating 70 percent of the sales in its largest unit.
Oracle's $7.7 billion hostile bid for PeopleSoft may not be final, said Oracle director Joseph A. Grundfest in a trial over PeopleSoft's takeover defenses. Separately, Oracle extended its bid, which was to expire today, until Oct. 22. Also, the European Union set a new deadline of Nov. 9 to conclude its antitrust review of Oracle's bid.
The House approved legislation that would temporarily suspend government-guaranteed 9.5 percent interest rates on student loans for lenders. The bill would lift a requirement that the government pay the difference between the 9.5 percent guaranteed rate and market rates, which have fallen to about 4 percent. Lenders can charge the government as much as $1 billion annually under the current requirement.
Sentinel Financial Services agreed to pay $700,000 to settle NASD allegations that the company failed to prevent market timing in three mutual funds. Sentinel neither admitted nor denied wrongdoing, the NASD said. In addition, Sentinel has paid $659,674 in restitution to the three affected funds, the NASD said. The NASD said its investigation found that Sentinel also failed to preserve internal e-mails about firm business as required by federal securities laws.
Bank of America said it will cut an additional 4,500 jobs, or 2.5 percent of its workforce of about 178,000, beginning this month as a result of its merger with FleetBoston Financial. Bank of America said the reductions, most of which will come from support areas, will not affect employment commitments it made in New England after complaints by state officials in Massachusetts.
Pillowtex said KPMG resigned as its independent auditor and found information that may materially affect the fairness or reliability of past reports. The towel and sheet manufacturer, which is under bankruptcy protection, said the issue involves its internal review of its fiscal 2002 statements, particularly Pillowtex's accounting for trade allowances. The issue wasn't resolved to KPMG's satisfaction prior to its resignation, the company said. KPMG said that it found related information during Pillowtex's fiscal year ended Jan. 3.
Friedman's, the specialty-jewelry retailer, said it received a notice from the Securities and Exchange Commission indicating that it may suggest holding public hearings on suspending or revoking Friedman's shares. The Savannah, Ga., company received a notice from the SEC in March indicating it may be sued over accounting and financial-reporting practices.
Initial U.S. jobless claims fell sharply, by a seasonally adjusted 37,000 to 335,000, the lowest level since the beginning of September. The more stable, four-week moving average of claims, which smooths out week-to-week fluctuations, rose by 4,250 last week to 348,500. That compares with 394,250 a year ago.
Mortgage rates rose, Freddie Mac said in its latest weekly survey. Rates on 30-year mortgages climbed to 5.82 percent for the week ending Oct. 7, up from 5.72 percent last week, while rates for 15-year, fixed-rate mortgages, a popular refinancing option, increased to 5.24 percent from 5.12 percent. Rates on one-year adjustable rate mortgages climbed to 4.08 percent from 3.97 percent, Freddie Mac said.
Sun Microsystems said it agreed to pay $92 million to Eastman Kodak to settle a patent-infringement lawsuit over Sun's Java programming language. The settlement was reached after a jury determined that Java infringed software patents Kodak bought in 1997 from Wang Laboratories. Sun will get a license to the Kodak patents as part of the agreement. Kodak was seeking $1.06 billion in licensing fees and damages, and Sun had said in court papers that Kodak was entitled to no more than $25 million.
American Airlines boosted most U.S. leisure fares $5 each way for the second time in a week, the company said. The increase means some round-trip fares have risen $20 in the past seven days, the company said. Continental Airlines, Delta Air Lines, United Airlines and America West Airlines matched the increase, spokeswomen for the four companies said.
Payless ShoeSource, which is shedding one-seventh of its stores, cut 200 management and administrative jobs amid falling sales.
Clorox and Henkel will unwind a 30-year partnership in a $2.84 billion transaction that gives the German producer of Persil detergent cash for its expansion in the United States. Henkel will sell its 29 percent Clorox holding back to the company. Clorox will pay Henkel $2.1 billion and transfer businesses including Soft Scrub cleanser and a joint-venture stake.
Charter Communications said it lost 55,000 to 60,000 basic cable-TV subscribers in the third quarter. The St. Louis company added up to 110,000 high-speed Internet subscribers and 40,000 digital-TV customers during the quarter, less than it added a year earlier.
Massey Energy agreed to use a shareholder proposal to limit severance packages for executives. The Richmond company said it will require shareholder approval to give senior executives severance packages exceeding 2.99 times their base salary and bonuses.
Iams, Procter & Gamble's pet-food division, said it is phasing out its animal-testing contracts with outside laboratories and universities while more than doubling the capacity of its in-house testing facilities. The announcement came the week before Procter & Gamble's annual meeting, for which People for the Ethical Treatment of Animals proposed a resolution to end contracts with outside laboratories and to end all testing on animals in company laboratories.
Corning said it will take a third-quarter charge of as much as $2.9 billion, mostly to reflect the reduced value of assets in its business that supplies phone companies. The expense includes $1.4 billion for its telecommunications unit and as much as $1 billion for deferred tax assets it may never use, the company said in a statement.
Parmalat's government-appointed administrator filed a lawsuit against Bank of America in U.S. District Court, seeking to recoup money from past dealings with the financial institution, the Italian dairy giant said. Parmalat did not say how much money it is hoping to recover, but an Italian news agency put the figure at about $10 billion. Similar suits have already been filed against Citigroup, UBS, Deutsche Bank and Credit Suisse First Boston.
Air France-KLM Group will increase fuel surcharges this month on tickets for long-haul flights as oil prices surge. The increases will affect tickets issued as of Oct. 11 and will be withdrawn when fuel prices fall below $40 a barrel for 30 straight days, the company said. Fuel surcharges for flights within Europe will remain unchanged. Separately, Lufthansa said it also plans to increase its fuel surcharges.
Rhee Bros. of Columbia is recalling Assi brand dried sweet potatoes due to the discovery of undeclared sulfites, the Food and Drug Administration said. No illnesses have been reported. The recall applies to one-pound packages with the item number 09870C that were distributed to Maryland, Virginia and 24 other states. Consumers can return the product to the place of purchase for a full refund. People with questions may call the company at 410-381-9000.
Marriott International, the largest U.S. hotel company, said third-quarter profit climbed 45 percent, to $133 million (56 cents a share) from $92 million (37 cents) in the same quarter a year earlier, the biggest gain in almost two years, as business and leisure travel picked up. Revenue in the quarter ended Sept. 10 rose 9.2 percent, to $2.3 billion, the Bethesda company said in a statement. Revenue per available room, a measure of average occupancy and room rate, rose 7.7 percent at its North American hotels.
Costco Wholesale's fiscal fourth-quarter profit rose 24 percent, to $296.8 million from $239.4 million in the comparable quarter a year earlier, lifted by improvement in membership fees and an 11 percent increase in revenue that more than offset a minor accounting charge.
Alcoa said third-quarter profit rose 1.1 percent, to $283 million from $280 million in the comparable period a year ago. Sales for the quarter ended Sept. 30 rose 12.5 percent, to $5.98 billion from $5.3 billion.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.