The Orlando Sentinel from Orlando, Florida on December 21, 2002 · C3
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The Orlando Sentinel from Orlando, Florida · C3

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Saturday, December 21, 2002
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C3
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Orlando Sentinel: PRODUCT: OS DESK: BIZ DATE: 12-21-2002 EDITION: FLA ZONE: FLA PAGE: C3.0 DEADLINE: 20.45 OP: dswiderski COMPOSETIME: 22.28 CMYK L Orlando Sentinel SATURDAY, DECEMBER 21, 2002 C3 INSIDE MONEY Briefcase I News of note Alabama court orders retrial of Exxon case The Alabama Supreme Court reversed a $3.5 billion judgment against Exxon Mobil on Friday, ruling in a gas royalty dispute that a confidential legal opinion written for the energy giant should never have been admitted as evidence. The high court sent the case back to state Circuit Court for retrial. The ruling did not address the size of the judgment, which Exxon argued in its appeal was excessive. STATE Suit targets telemarketing firm A Florida telemarketing company allegedly deceived thousands of debt-ridden consumers from Massachusetts into paying exorbitant fees for credit-counseling services, according to Massachusetts Attorney General Tom Reilly. His office filed a federal lawsuit in Boston against Largo-based Integrated Credit Solutions Inc. The suit, which seeks to recover an estimated $1 million that 3,000 Bay State consumers paid in upfront fees, claims ICS gave misleading information about benefits and savings. NATION US Airways unions agree to cuts Bankrupt US Airways Group Inc. completed negotiations with its unions for an additional $200 million in concessions late Friday by reaching tentative deals with its mechanics, baggage handlers, and flight attendants, the company said. The airline, which filed for bankruptcy protection in August, hopes to achieve $1.6 billion annually in cost cuts with much of that coming from labor. Consolidation will bring layoffs Duke Energy Corp. will cut about 275 jobs in its North American merchant power and trading division after consolidating its trading operations in Houston. The move will eliminate trading positions in Salt Lake City and Calgary, Alberta, as well as support positions in those cities and in Houston. The layoffs are in addition to 1,500 job cuts Duke Energy announced earlier this year. Xerox reports accounting error Xerox Corp., which was fined $10 million earlier this year for faulty financial practices, said Friday it has discovered an accounting error that resulted in understating its interest expense. Xerox said the error involved the calculation of interest expense related to a debt instrument and associated interest-rate swap agreements. The error was identified by the company and occurred in January 2001, Xerox said. It resulted in an after-tax understatement of interest expense of $5 million to $6 million, or less than 1 cent per share, in each of the four quarters of 2001 and the first three quarters of 2002. Heinz seals deal with Del Monte H.J. Heinz Co. said Friday it had completed a $1.2 billion deal that sends StarKist tuna, 9-Lives cat food and other brands to Del Monte Foods Co. and allows the ketchup-maker to concentrate on its core products. The deal, which was first announced in June, gives Heinz shareholders a 75 percent stake in Del Monte, which will see its presence on supermarket shelves increase with the acquisition of the new brands. IPO flap leads to resignation Meg Whitman, the chief executive of eBay Inc., has resigned from the board of Goldman Sachs Group Inc. after questions arose about the propriety of lucrative initial public offerings she got from the investment bank, which also provides financial services to eBay. Congressional investigators disclosed in October that Goldman Sachs offered hot IPO shares to executives of at dUbett Scott Adams TECHNICALLY, I WAS DEAD FOR EIGHT MINUTES. I DON'T KNOW WHY I WASN'T AFRAID. 1 Profit warning hits Tupperware stock Shares of Tupperware Corp. dropped Friday, following news of a 1 9 percent drop in core earnings for 2002. Orlando-based Tupperware said it now forecasts earnings of $1.30 a share, excluding items. Analysts were expecting earnings of $1.46 a share, excluding items. In 2001, Tupperware earned $94 million, or $1.60 a share, excluding charges, on sales of $1.11 billion. Shares of Tupperware closed Friday at $1 4.85 on the New York Stock Exchange, down $2.06, or 12 percent. Tupperware said sales declines in Mexico, Venezuela, Korea and the Philippines overshadowed progress in Europe, North America and most markets in the Pacific Rim. Tupperware noted that while these problems were isolated and temporary, it didn't expect improvement in these markets until the latter part of 2003. FROM WIRE REPORTS least 20 companies that did investment banking business with Goldman, and the executives often quickly sold the shares for big profits. Whitman was among the biggest beneficiaries, receiving stock in more than 100 Goldman-managed IPOs. News trips up Foot Locker shares Shares of Foot Locker Inc. tumbled Friday after news of a dispute with Nike Inc. Mark Parker, Nike brand co-president, said Foot Locker will "no longer be a primary distribution channel for our elite and performance product," effective February. Foot Locker will continue to sell Nike products, but not key, coveted footwear. Analysts called Nike's decision a major blow to Foot Locker. Shares of Foot Locker closed at $10.48 on Friday on the New York Stock Exchange, down $1.19, or 10 percent. WORLD FirstCaribbean on the move FirstCaribbean International Bank, the product of a merger between two banks based in London and Canada, announced Friday it would open for business next week in Grenada and the British Virgin Islands. FirstCaribbean created last year by London's Barclays Bank PLC and a Barbadian-based subsidiary of Canadian Imperial Bank of Commerce will be one of the largest banks in the region, with a market capitalization of $9 billion and 700,000 customer accounts. GM expands China operations General Motors said Friday it has bought control of a fourth factory in China as it moves to seize a bigger piece of the world's fastest-growing car market. The $108 million purchase by GM and its Chinese partner, Shanghai Automotive Industry Corp., comes amid a scramble by foreign carmakers for position in the Chinese market. GM said it will use the plant in Yantai, in Shandong Province, to increase production. Skandia agrees to sell U.S. unit Swedish financial services group Skandia said Friday it will sell its U.S. operations to Prudential Financial for about $1.15 billion in a bid to pay down its debt. The deal, which needs regulatory approval, is expected to close during the second quarter of 2003. Prudential is one of the United States' largest insurance companies. EARNINGS Roadhouse Grill Inc. reported a net loss for its fiscal second quarter of $5.8 million, or 32 cents a common share, compared with a net loss of $9 million, or 92 cents per common share, for the year-ago quarter. Revenue fell to $33.3 million from $39.4 million. $40 oil prices likely if U.S. goes to war, economists say By BRAD F0SS THE ASSOCIATED PRESS It's probably a matter of time before the recent surge in oil prices leads to higher fuel costs for the Jefferson Lines bus company. At this point, though, with oil hovering around $30 a barrel and diesel fuel retailing for about $1.40 per gallon, the chief executive of the Minneapolis-based company is not too worried about a severe financial jolt. But if the current energy shock intensifies a real possibility given the political tumult in oil-rich Venezuela and the prospect of war in Iraq Charlie Zelle said it could become the kind of situation that "keeps me up at night." That is basically the state of mind of airline, trucking and manufacturing executives, too, and it sums up the broader view of economists, who Ex-SurgiLight chief may By CHRISTOPHER BOYD SENTINEL STAFF WRITER The former chief executive of Sur-giLight Inc. could be sentenced to up to nine years in prison following his conviction on federal money laundering and securities fraud charges related to a pump-and-dump stock scheme. Jui-Teng Lin is scheduled for sentencing in March in U.S. District Court for the Eastern District of New York for manipulating the price of Surgi-Light stock when he led the Orlando company in late 1999 and early 2000. Federal prosecutors said Lin issued false and misleading news releases to inflate the company's share price, then sold stock in the company at a huge profit. Lin, 54, was convicted last week on two counts of money laundering and one count of securities fraud for his role in masterminding the operation. The government argued that Lin issued news releases that promoted a new optical laser system that Surgi- Guilty verdict Soros is convicted. A French court found George Soros (left) guilty of insider trading on Friday and fined the Hungarian magnate $2.2 million in the 14-year-old case involving French bank Societe Generale. Halliburton By NICH0LA GROOM REUTERS NEW YORK Shares of Halliburton Co. fell Friday after the company acknowledged that regulators had intensified a probe into disclosure and accounting practices during Vice President Dick Cheney's tenure as chief executive. The announcement dampened the stock's recent run-up after Halliburton, the world's second-largest oilfield services company, Wednesday announced a $4 billion settlement with asbestos claimants. Wall Street analysts, however, cautioned against reading too much into the formalization of the Securities and Exchange Commission's investigation. "The informal investigation has t i think the current higher energy prices are an irritant to the country's financial recovery, but not a detriment. Oil prices at $40 a barrel for a sustained period of time would impede growth, several economists said. For now, "it's not a nightmare scenario," said David Resler, chief economist at Nomura Securities in New York. "But if we hold these levels for very much longer, we will see some negative impact on the overall economy." That could change, though, under the worst-case scenario cited by most economists and analysts. Considered highly unlikely, it entails a drawn-out and costly war in Iraq and retaliatory attacks against Middle Eastern oil fields and refineries. That could cause price spikes above $60 a barrel, analysts said. The more widely anticipated sce Sentencing in March. Jui-Teng Lin founded Orlando laser company SurgiLight in 1998. Light was developing to reverse the effects of presbyopia, a vision problem that affects nearly everyone older than 45. The government said that Lin's releases sparked a stock rally that drove the price of SurgiLight stock from $2.50 a share to about $25. Lin dumped a substantial amount of stock during the run-up through two nominee accounts and transferred about $1.5 million in proceeds to two bank accounts in Taiwan. Assistant U.S. Attorney David Pitof-sky, the lead prosecutor in the case, said the government's pursuit of Lin reflects its concern with officers of pu Boeing scraps plans to build Sonic Cruiser By HELEN JUNG THE ASSOCIATED PRESS SEATTLE Boeing Co. is shelving its proposed high-speed Sonic Cruiser passenger jet in favor of developing a more traditional but highly fuel-efficient airliner, the head of Boeing Commercial Airplanes said Friday. Commercial Airplanes chief executive Alan Mulally said while airlines had shown interest in the high-tech cruiser, they thought development of the fuel-efficient plane was more important. "The real key is going to be the efficiency in terms of fuel burn," Mulally said. "Everybody is behind us. The airlines' response has been very enthusiastic." Although no orders have been received for either plane, Mulally said Boeing estimates the eventual market for the as-yet unnamed mid-sized jet could reach 2,000 to 3,000 jets over its lifetime. He said Boeing hopes to launch the plane in probe heats up; shares slide been going on for months," said Jim Wicklund, an analyst with Banc of America Securities, who said the decline in Halliburton's stock represents a buying opportunity. "I don't see that the scope, importance, etc., has changed at all." Wicklund does not own shares of the company and rates the stock a "buy." The probe involves a change in accounting for cost overruns that occurred in 1998. Cheney served as Halliburton's CEO from 1995 to 2000. The SEC launched an informal investigation in May and issued a request June 1 1 for documents related to cost overruns on construction projects at Halliburton. The company turned over about 200,000 documents to the agency in November. Halliburton is the latest in a string of major companies subject to regula nario among economists calls for oil prices to rise to about $40 after the U.S. invades Iraq, then falling sharply after a quick and clear victory. The price of crude oil finished the week at $30.35 a barrel on the New York Mercantile Exchange after climbing above $30 on Monday because of escalating tensions between the Venezuelan government and opposition forces. Despite the turmoil in world oil markets, gas prices at the pump have actually fallen this month in the United States. Nationally, the average price of a gallon of regular gas has dropped from $1.40 to $1.38 since Dec. 1, according to OPIS Energy, a Lake-wood, N.J., publisher of oil-industry news and data. Prices in metropolitan Orlando have done about the same, falling from $1.41 to $1.37 for a gallon of regular. face prison blic companies who mislead investors for their own gain. "Investors can be particularly vulnerable in over-the-counter markets, where SurgiLight was traded," Pitof-sky said. "Because these markets aren't as heavily regulated as the larger exchanges, investors are more easily misled." Though Lin no longer works for SurgiLight and has been removed from its board, he continues to own a substantial amount of the company's stock. SurgiLight stock closed at 19 cents a share Friday, down 2 cents. Pitofsky said the Securities and Exchange Commission, which brought related civil charges against Lin, Lin's wife, Yuchin Lin, and Aaron Tsai, Lin's financial adviser, would continue to pursue its cases. The SEC is seeking permanent injunctions, forfeiture of allegedly ill-gotten gains and civil penalties. Christopher Boyd can be reached at cboydorlandosentinel.com or 407-420-5723. 2004. The Sonic Cruiser project, announced in March 2001, was envisioned as a mid-sized jet carrying about 250 passengers that could travel near the speed of sound and shave two or three hours off international flights. The concept was unveiled as Boeing shelved previous plans to develop a larger version of the 747 jumbojet. But even though it wouldn't have started flying before 2008, the timing proved bad as airlines struggled amid the worst downturn in commercial aviation history. With its huge triangular wing, twin vertical fins and small canards or forward wings, the plane was one of the most radical designs in the history of commercial aviation. Analysts estimated Sonic Cruiser development could cost about $10 billion while a more traditional plane would be much less. Mulally would not disclose cost estimates for either. tory crackdowns in the wake of the Enron Corp. and WorldCom Inc. scandals. While analysts said Halliburton had lagged in disclosing changes in certain accounting practices, the practices themselves were appropriate. "I just don't see that this is any scary smoking gun," Wicklund said. "Everything was done according to proper accounting standards." By launching a formal investigation, the SEC has power to subpoena documents related to Halliburton's bookkeeping, including information from third parties. Shares of Halliburton which dropped as much as 6.4 percent earlier in the session closed down 42 cents, or 2.1 percent, at $19.08 on the New York Stock Exchange.

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