Business today

TERRORISM EXCLUSION REJECTED: Florida has rejected a move by insurance companies to limit terrorism coverage in their commercial property policies. Insurers nationwide have been clamoring for a "terrorism exclusion" since the Sept. 11 attacks in New York and Washington, which cost the industry an estimated $50-billion to $70-billion. A Florida Department of Insurance spokeswoman on Monday said the agency may reconsider its decision later in the year. Only Florida and California have refused to allow a terrorism exclusion in policies issued within their states.

FACTORY ORDERS RISE: Orders to U.S. factories for manufactured goods rose by 1.2 percent in December, the second increase in the past three months, the Commerce Department reported. The increase was fueled by stronger demand for semiconductors, household appliances and machinery. Richard Yamarone, an economist with Argus Research Corp., said the December report "suggests that the manufacturing recession has bottomed and the light at the end of the 18-month-long tunnel is getting brighter."

KMART REVAMPS ORGANIZATION: Kmart Corp., which sought Chapter 11 bankruptcy protection last month, revealed plans to change the corporate organization for its stores. Kmart said it was putting into place a new field organization that will include five separate operating divisions including four geographic areas -- West, Southeast, Northeast and International -- and a separate Super Centers division. Separately, Kmart requested permission from a bankruptcy court to opt out of a sponsorship agreement with the Daytona 500. The discount retailer called the Daytona 500 contract an unnecessary use of its cash. Kmart shares fell 29 cents to $1.04.

AIRLINE LOSSES PUT AT $15-BILLION: The world's airlines may have lost a record $15-billion last year, largely as a result of the terrorist attacks on the United States, an industry spokesman said. The International Air Transport Industry Association reported that passenger traffic on international scheduled services fell 4 percent in 2001, the first decline since the 1991 Gulf War caused jitters. For the month of December, international passenger traffic was down 12 percent from the previous year and freight traffic was 10 percent lower, the IATA said in its report. The decline in passenger and freight traffic could mean losses of $10-billion on international services and $5-billion on domestic U.S. operations, IATA spokesman Tim Goodyear said.

ARTICLE HITS KRISPY KREME: Krispy Kreme Doughnuts Inc.'s shares took a hit after a Forbes magazine article called the company's accounting of a lease on a new $30-million mixing plant an "off-balance-sheet trick." Shares of Krispy Kreme plunged more than 10 percent, to $33 early Tuesday, but regained most of that ground to close down 99 cents at $35.90. Krispy Kreme chief operating officer John Tate said the company had taken extraordinary measures to make sure the use of the so-called synthetic lease -- which essentially treats the lease payments as a current expense, like employees' salaries, rather than a debt -- was legal and fully disclosed to investors.

GE REAFFIRMS FORECAST: General Electric Co. reaffirmed that it will meet profit forecasts this year. General Electric expects earnings to rise 18 percent this year to $1.65 to $1.67 a share, within the range of the average estimate of analysts. "The first quarter is only five weeks old, but we can see that it's turning out exactly as we expected," chief executive Jeffrey Immelt said. Shares of General Electric rose $1.21, or 3.5 percent, to $36.21. The stock had been hurt amid concerns about the accounting practices of Tyco International Ltd., a company whose structure and growth strategy has been compared to General Electric's. "GE is telling investors that they're not Tyco," said Michael Holton, an analyst at T. Rowe Price Group Inc.

TREASURY AUCTION: Interest rates on four-week Treasury bills rose in Tuesday's auction. The Treasury Department sold $14-billion in four-week bills at a rate of 1.70 percent, up from 1.68 percent.

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