Business Today

UNITED BRACES FOR BANKRUPTCY: United Airlines' struggling parent company announced an urgent cost-cutting effort and said it is preparing to file for bankruptcy protection this fall unless it can lower expenses. It would be the largest airline to file. UAL Corp. cited the approach of $875-million in debt payments due in the fourth quarter and said it is setting a 30-day limit to reach agreements on cost-cutting. Its pilots' union agreed to a 10 percent pay reduction earlier this summer, but other groups have rejected proposed pay cuts. United is awaiting a decision on its application for a $1.8-billion government-backed loan.

INVENTORIES INCREASE: Companies trying to gauge Americans' appetites during the uneven economic recovery added to their stocks of unsold goods in June for a second month. The Commerce Department said stockpiles of goods edged up to a seasonally adjusted $1.1-trillion in June, a 0.2 percent increase from May. Inventories also rose by 0.2 percent in May, the first increase in 16 months. The small buildup comes after a more than yearlong string of inventory reductions by businesses reacting to diminished demand that caused goods to pile up. Economists think the massive inventory liquidation is ending, which bodes well for future ramped-up production.

IMCLONE SUES WAKSAL: Troubled biotech company ImClone Systems sued its founder, Sam Waksal, for more than $7 million, charging he betrayed the company during an insider trading investigation. ImClone, which is now run by Waksal's brother, claims Waksal lied to its board of directors when he assured them he would cooperate with the investigation. Prosecutors say that instead of cooperating with authorities, Waksal ordered someone at the company to destroy critical e-mail and bank records. Waksal's attorney, Mark Pomerantz, called the lawsuit "distressing" but would not comment on the specific accusations.

AOL SAYS ACCOUNTING MAY BE IMPROPER: AOL Time Warner Inc. acknowledged it may have improperly recognized revenues from three transactions at America Online, whose accounting practices are being scrutinized by federal regulators. AOL Time Warner said the transactions in question totaled about $49-million over a year-and-a-half -- an insignificant portion of its overall revenues. The company said it was examining those and other transactions at AOL and has not yet determined if they were accounted for properly. The company said earlier that David Colburn, an executive who had negotiated many key advertising deals for America Online, left the company last week. The circumstances were unclear. Colburn couldn't be reached for comment.

WAL-MART TO BUY BACK SHARES: Wal-Mart Stores said it will buy back as much as $5-billion of its stock. The buyback plan replaces a previous program to buy back $3-billion, the company said. Shares of Wal-Mart rose $3.91, or 8 percent, to $52.62, their biggest increase in 19 months. The retailer also said it will begin accounting for options as an expense starting next year.

VIVENDI POSTS HUGE LOSS, WILL SELL ASSETS: Vivendi Universal, the teetering French media conglomerate, reported a massive loss of $12-billion for the first half of the year and said it will sell $10-billion in assets as it seeks to pare debt. Sales will include publisher Houghton Mifflin, which the company bought last year for $1.7-billion. A ratings agency downgraded the company's debt to junk. On the New York Stock Exchange, shares plunged 23.9 percent to close at $11.66.

SPIRIT LOAN REQUEST REJECTED: Spirit Airlines says its request for a federal loan guarantee has been rejected. Company officials say they are disappointed, but expect to continue operating. The Fort Lauderdale carrier is the fourth airline to be denied a request by the board set up after the Sept. 11 terrorist attacks to distribute billions of dollars in loan guarantees to airlines in financial distress.

CONSECO ACCOUNTING INVESTIGATED: Conseco Inc. said federal regulators are investigating the troubled insurance and finance company's accounting. It said the inquiry "relates to events in and before the spring of 2000, including the company's accounting for its interest-only securities and servicing rights." Conseco, which on Friday said it was delaying bond interest payments and radically restructuring its debt and operations, also said it would seek bankruptcy protection if it could not reach agreement with creditors on restructuring its debt.

BANKRUPTCIES SET ANOTHER RECORD: Consumers and businesses amassed so much debt in recent years that record numbers filed for bankruptcy protection for the second year in a row, the Administrative Office of the U.S. Courts said. The 1.5-million new cases filed during the year ended June 30 represented an 8.6 percent increase over the record number of cases filed in the year ended June 30, 2001. Individual bankruptcies totaled 1.47-million, up 8.6 percent from a year earlier. Business bankruptcies rose to 39,201, 5.6 percent more than the year before. Experts said bankruptcy filings do not reflect the current economy, but what happened in the past year or so.

AGERE TO CUT THIRD OF WORK FORCE: Communications componentmaker Agere Systems said it will attempt to cut its losses by eliminating more than a third of its work force -- about 4,000 jobs -- and getting out of a business that accounts for about 10 percent of its revenue. The spinoff of Lucent Technologies said it was getting out of the optical electronics business, which makes equipment that controls fiber optic systems. Instead, it will focus on its main revenue generator, supplying integrated circuits that access, move and store network information for everything from telecommunications hardware to desktop computers.

SEARS SUES TOOLMAKER: Sears Roebuck and Co. alleges in a lawsuit that a company contracted to produce certain Craftsman tools scammed Sears out of millions of dollars by making counterfeits. The civil lawsuit claims that Emerson Electric Co. concocted an elaborate scheme to use Sears' manufacturing machines to make bench power tools for an unnamed competitor. Sears claims Emerson lied about the number of Sears' tool-making machines it was using, and then hid some of them in an abandoned shirt factory. Sears is seeking unspecified compensatory damages.

FREEDOM BOARD APPROVES OWNERSHIP PLAN: The board of directors of Freedom Communications, publisher of the Orange County Register, voted to support plans to transfer ownership to the youngest generation of the controlling Hoiles family. Forty-three adult descendants of company founder R.C. Hoiles voted over the weekend not to support a sale of the company, but to explore other options to satisfy shareholders who have complained they can't cash out their holdings. The full board -- six family members, six independent directors and Freedom chief executive Samuel Wolgemuth -- voted to direct the younger members of the family to devise a stock transfer plan.

CHEVY TO PRODUCE CROSSOVER VEHICLE: The Chevrolet division of General Motors will produce a small sport utility vehicle called the Equinox in 2004. The Equinox will be based on the Saturn VUE sport utility vehicle and built on a truck architecture, GM spokesman Tom Wilkinson said. It will be classified as a truck, but will have the car-like characteristics of competitors such as the Toyota Highlander. Such vehicles are known as crossovers. No decision has been made yet on whether the arrival of the Equinox means the demise of the Tracker, a holdover from the defunct Geo brand now being sold as a Chevy.

TAX DEADLINE TODAY: Time for tax procrastinators is running out. As a reminder to those who got an automatic four-month reprieve from the IRS in April, the deadline to complete your tax return is today. More than 8-million taxpayers put off filing their taxes on April 15 by requesting an extension, according to the Internal Revenue Service.

EX-TYCO CFO SUES FOR SEVERANCE: Tyco International is being sued by its former chief financial officer, Richard D. Power, who claims the company owes him more than $9-million in severance pay. Power says he was fired June 26 and didn't receive the severance he was promised when he agreed in 1999 to return to Tyco, which sells ADT alarm systems, electrical connectors and fiber-optic cable. Power said he negotiated the severance payment with chief executive Dennis Kozlowski, who was ousted in June ahead of his indictment for sales-tax evasion. Tyco spokesman Gary Holmes declined to comment.

AMES SHUTTING DOORS: Ames Department Stores, one of the last surviving regional discounters, is shutting down. Ames, which sought bankruptcy court protection last August for the second time since 1990, said it would shutter all 327 stores in 14 states and the District of Columbia and liquidate inventory, leaving 22,000 employees without jobs. Ames has stores in the Northeast, Midwest and Middle Atlantic states.

Earnings

Medical Technology Systems Inc.

The Clearwater drug packaging company refinanced its debt in June, partly by issuing preferred shares. As a result, the company took a non-cash charge for the quarter of $347,000. Medical Technology also sold its first packaging machine during the quarter to PharMerica Inc., an institutional pharmacy.

Federated Department Stores Inc.

The parent company of Burdines in Florida said sales were flat, but profits rose 21 percent in the quarter ended Aug. 3. Like many retailers, Federated reined in summer inventories to protect profit margins and avoid big clearance sales. Sales in stores open more than a year decreased 2.8 percent. Earnings per share on continuing operations was 66 cents.

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