BUSINESS IN BRIEF

Motorcyclists sue over insurance rates

12/30/2003

A group of Massachusetts motorcyclists has sued the state, claiming they pay excessive insurance rates because they can't get the insurance discounts offered to car and truck owners. The Massachusetts Motorcycle Association asked the Supreme Judicial Court to order insurers to return $100 million in "excessive profits from motorcycle premiums" during the past three years. Insurance Commissioner Julianne Bowler and the Automobile Insurers Bureau of Massachusetts are named as defendants. Bowler set 2004 insurance rates on Dec. 15. A Bowler spokesman declined to comment, citing the litigation. The association estimates there are 144,000 motorcyclists in the state. (AP)

THE NATION

Tyco says job cuts, sales will save $3b

Tyco International Ltd., the biggest maker of alarms, electronic connectors, and valves, said a restructuring program unveiled last month will save about $3 billion over the next three years. Tyco plans to cut 7,200 jobs and sell more than 50 businesses as it unravels operations set up by former chief executive Dennis Kozlowski, a spokeswoman said. The company, based in Bermuda and run from West Windsor, N.J., will also change its purchasing and manufacturing processes. Kozlowski, ousted in June 2002, and former chief financial officer Mark Swartz are on trial in New York for theft and stock fraud, accused of looting Tyco of $600 million. Tyco paid down about $1 billion in debt in its fourth quarter and had about $21 billion of debt as of Sept. 30. (Bloomberg)

WorldCom, Verizon settle fee dispute

WorldCom Inc., the second-largest US long-distance phone company, won court approval of a $169 million payment from Verizon Communications Inc. to settle a dispute over network access fees. The settlement, approved by bankruptcy Judge Arthur Gonzalez in Manhattan, ends a six-year-old dispute over whether Verizon must pay when its customers make calls to Internet access providers that use WorldCom's phone lines. Verizon, the largest US local phone company, also agreed to pay revised interconnection rates. WorldCom in July 2002 filed the biggest bankruptcy case in US history in terms of declared asset value. The Ashburn, Va., company expects to come out of bankruptcy early next year as MCI Inc., the name of its best-known unit. (Bloomberg) Scrushy

Judge OK's Scrushy's home-selling trip

HealthSouth's ex-chief executive, Richard Scrushy, can travel to Florida, federal Chief Magistrate Judge T. Michael Putnam ruled, amending Scrushy's $10 million bond so he can travel with his wife and four of his eight children from Alabama to Palm Beach, where he aims to sell a house. Putnam said Scrushy must return by 9 p.m. Sunday. Scrushy, 51, has pleaded not guilty to charges he directed an accounting scam that overstated HealthSouth earnings by $2.7 billion since 1996 to meet Wall Street forecasts. Also, lawyer Abbe Lowell said Scrushy wants to be able to call in and report his location to his probation officer. "He wants a system where he initiates the calls and not a computer that calls and wakes up his babies at night," Lowell said. The judge is considering that request. A prosecutor told the judge that Scrushy, who's accused of conspiracy, fraud, and money laundering, needs to be restricted. (AP)

Files ruled off-limits in Stewart trial

A judge rejected government efforts to collect more evidence in the securities fraud case against Martha Steward. US District Judge Miriam Goldman Cedarbaum said attorney-client privilege protects some of the documents sought by federal prosecutors in Manhattan, while other material is not relevant. She did permit the government to obtain billing records from a law firm hired by Stewart. Prosecutors had sought 11 categories of documents from a law firm that represents Stewart and from codefendant Peter Bacanovic. Stewart, whose trial begins in mid-January, is accused of lying about why she unloaded ImClone Systems stock in 2001 just before it plunged on a negative government review of the company's cancer drug. Stewart and Bacanovic, her stockbroker, are charged with conspiracy to "willfully and knowingly" obstruct justice in the insider-trading scandal. Stewart claims she had a standing order to sell if the stock fell to $60. Both pleaded not guilty. (AP)

Oracle secures $1.5b for acquisition

Oracle Corp., the software maker that made a hostile $7.5 billion bid for PeopleSoft Inc., said it obtained a $1.5 billion line of credit from ABN Amro Bank NV and Credit Suisse First Boston to help "consummate" the merger. Oracle had cash and short-term investments worth $8.1 billion on Nov. 30, the Redwood City, Calif., said in a filing with the Securities and Exchange Commission. Oracle said its Dec. 24 agreement allows it to draw on $1.5 billion as part of a 364-day, unsecured "acquisition facility." Oracle had said in earlier filings it received a $5 billion revolving line of credit from Credit Suisse to help cover costs of acquiring Pleasanton, Calif.-based PeopleSoft. (Bloomberg)

May chain to buy more tuxedo shops

St. Louis-based May Department Stores Co. will purchase 125 company-owned formalwear stores from Gingiss Group of Addison, Mo., including Gingiss Formalwear and Gary's Tux Shop, along with two Gingiss Group service centers in Addison, Ill., and Van Nuys, Calif. May will operate the stores as part of its Bridal Group. Terms were not disclosed. The deal brings to 225 the number of tuxedo stores acquired by May in 2003. It has also opened 30 additional David's Bridal stores and nine After Hours Formalwear stores this year. May operates 210 David's Bridal stores, 462 After Hours Formalwear stores, and 10 Priscilla of Boston stores, along with 448 department stores, including Filene's. (AP)

Boeing wins multibillion-dollar jet deal

Boeing Co., the world's biggest airplane maker, received orders worth as much as $9.6 billion to build as many as 210 Super Hornet jet fighters for the US Navy and to develop a version of the aircraft. Awarded was a five-year contract worth $8.56 billion maximum for as many as 210 of the F/A-18 E/F fighters, and a separate $979 million contract to create a "G" model capable of jamming radar. The Super Hornet fighter project is led by Boeing, with Northrop Grumman Corp. as primary subcontractor. General Electric Co. makes the engines and Raytheon Co. provides radar systems. Boeing has been trying to rebuild credibility with US officials after two executives left amid a federal review of the way the company bid for defense contracts. The Pentagon has put an order for aerial tankers on hold as it investigates whether Chicago-based Boeing's ties with military officials got the company a favorable price. (Bloomberg)

New Chevy to challenge Honda, Toyota

General Motors Corp. unveiled a new small car, the Chevrolet Cobalt, to replace the 21-year-old Cavalier and compete with Honda Motor Co.'s Civic and Toyota Motor Corp.'s Corolla. The Cobalt was shown at the Los Angeles Auto Show. GM, the world's largest automaker, expects the new design to help it reduce rebates of as much as $4,000 offered on the Cavalier. It's also counting on Cobalt to help push annual US sales of its biggest division past 3 million units. In all, the company plans to introduce 10 Chevrolet models, mostly cars. (Bloomberg)

CEO pay holding steady, study says

Average CEO pay at the 200 largest US companies by revenue held steady in 2003 at about $11.3 million, according to a study by compensation consultant Pearl Meyer & Partners. Average salary rose as much as 5 percent to $1.2 million, and cash bonuses increased as much as 15 percent to $2.2 million. Pay for CEOs almost doubled to $11.9 million from 1996 to 2001, and dropped last year to $11.3 million. (Bloomberg)

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