MCI COULD SUE EBBERS: MCI has sufficient legal grounds to sue former top WorldCom executives Bernard Ebbers and Scott Sullivan, as well as Salomon Smith Barney, Arthur Andersen and KPMG for their alleged roles in a vast fraud against the company, according to a new report by bankruptcy court examiner Richard Thornburgh. The report, filed Monday in U.S. bankruptcy court, asserted that the former executives and outside firms "bear responsibility for WorldCom's injuries," and could be targeted for financial damages in a civil case, but the report "expresses no opinion whether any of the claims actually should be pursued." The new report marked the first time Thornburgh has raised the issue of KPMG and a complex tax shelter designed by the consulting firm to minimize state taxes owed by WorldCom, which now calls itself MCI. Ebbers' attorney, Reid H. Weingarten, dismissed Thornburgh's comments as "warmed over spit."
SULLIVAN TRIAL DELAYED: U.S. District Judge Barbara Jones has delayed the trial of former WorldCom finance chief Scott Sullivan until April 7, granting a request by his defense team for more time to prepare. The trial had been set for Feb. 4. Sullivan is accused of ordering WorldCom accountants to move operating expenses off the books so the company could appear to turn a profit when it was losing money. The telecommunications giant collapsed into bankruptcy in 2002, and investigators have since uncovered $11-billion in accounting irregularities.
CHEVRONTEXACO SUES IRS: ChevronTexaco Corp., the second-biggest U.S. oil company, sued the Internal Revenue Service for $118.6-million in refunds, saying Texaco Inc. overpaid federal taxes before Chevron Corp acquired it in 2001. In a suit filed Friday in federal court in San Francisco, Texaco, which was bought by Chevron to form ChevronTexaco, said its refund requests relate to settlement payments it made in 1988 to the government under a consent order that resolved claims by the U.S. Energy Department concerning Texaco's compliance with petroleum price regulations.
NEW VIRUS OPENS BACK DOOR: A malicious program attached to seemingly innocuous e-mails was spreading quickly over the Internet on Monday, clogging network traffic and leaving hackers an open door to infected personal computers. The worm, called "Mydoom" or "Novarg" by antivirus companies, appears to be an e-mail error message. A small file is attached that, when launched on computers running Microsoft Corp.'s Windows operating systems, can send out 100 infected e-mail messages in 30 seconds to e-mail addresses stored in the computer's address book and other documents. The attack was first noticed Monday afternoon, said Vincent Gullotto, vice president of Network Associates' antivirus emergency response team. Besides sending out e-mail, the program appears to open up a back door so hackers can take over the computer later.
SCRUSHY WANTS JURISTS' NAMES: Fired HealthSouth CEO Richard Scrushy asked U.S. District Court in Birmingham, Ala., on Monday for detailed information on grand jurors to determine whether anyone linked to the rehabilitation giant served on the grand jury that indicted him on fraud charges. The defense asked for names, addresses and other information on everyone called for grand jury service, plus an explanation of whether prosecutors asked if anyone who actually served had ties to HealthSouth or Scrushy. U.S. Attorney Alice Martin said, "These types of pleadings are expected in criminal cases, and the United States will file its written responses in the near future." She declined further comment.
FEDEX, UPS FIGHT ASTAR: Shipping giants FedEx Corp. and UPS Inc. are asking the Department of Transportation to reject a federal administrative law judge's ruling that Astar Air Cargo Inc. is owned and controlled by a U.S. citizen, not a German company. FedEx and UPS made the comments in a filing Friday that served as a response to the law judge's ruling Dec. 19. Final authority rests with the DOT, which has not said when it will decide. At issue in the fight is the small air freight company's ability to do business in the United States. FedEx and UPS say Astar, based in Miami and called DHL Airways under former ownership, is controlled by the German postal monopoly Deutsche Post. It is illegal for foreign companies to own more than 25 percent of a domestic air carrier.
T-BILL RATES TICK UP: The Treasury Department sold $18-billion in three-month securities at a discount rate of 0.890 percent, up from 0.875 percent last week. An additional $16-billion was sold in six-month bills at a rate of 0.955 percent, up from 0.950 percent. Also, the Federal Reserve said the average yield for one-year constant maturity Treasury bills rose to 1.20 percent last week from 1.19 percent the previous week.
McDonald's capped off a turnaround year with a modest $125.7-million profit in the fourth quarter, posting strong sales and operating results as it continued a resurgence under CEO Jim Cantalupo. The results reported Monday reflected a $323-million charge for last month's decision to shed a large part of its portfolio of non-hamburger brand restaurants. But revenues jumped 17 percent as McDonald's showed no ill effects from a U.S. mad cow scare, and results were particularly impressive matched up against the Oak Brook, Ill., chain's worst-ever financial quarter a year ago. That met the consensus estimate of analysts surveyed by Thomson First Call.
4th Qtr Year Ago
Revenue $4.56-bil $3.9-bil
Net Income $125.7-mil -$343.8-mil
Per Share 10 cents -27 cents
Revenue $17.1-bil $15.4-bil
Net Income $1.47-bil $893.5-mil
Per Share $1.15 70 cents
The struggling drug maker posted its second straight quarterly loss in the fourth quarter, mainly due to falling sales and a large restructuring charge for previously disclosed job cuts. The maker of Clarinex allergy medicine and hepatitis C treatments also reported a full-year loss, the first in its 34-year history. Excluding special charges of $229-million, or 13 cents per share, the company had a profit of 1 cent a share. Analysts surveyed by Thomson First Call had been expecting a 4-cent profit.
4th Qtr Year Ago
Revenue $1.95-bil $2.37-bil
Net Income -$181-mil $313-mil
Per Share -12 cents 21 cents
Revenue $8.33-bil $10.2-bil
Net Income -$92-mil $1.97-bil
Per Share -6 cents $1.34