/raid1/www/Hosts/bankrupt/CAR_Public/021227.mbx
C L A S S A C T I O N R E P O R T E R
Friday, December 27, 2002, Vol. 4, No. 254
Headlines
ALLOY INC.: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
ATICO INTERNATIONAL: Recalls 60,000 Tealight Candles For Fire Hazard
BLUE COAT: NY Court Hears Arguments on Securities Fraud Suit Dismissal
CANADA: Government Offers $1.7B to Settle Certain Native Abuse Cases
CUTTER & BUCK: Plaintiffs Intend To File Consolidated Securities Suit
ELKTON SPARKLERS: Recalls 1.7M Bamboo Stick Sparklers For Fire Hazard
ENGAGE INC.: Asks NY Court To Dismiss Consolidated Securities Lawsuit
ENGAGE INC: Parties in Fraud Lawsuit Agree To Dismissal With Prejudice
H&R BLOCK: Agrees To Settle Consumer Fraud Lawsuit in TX State Court
H&R BLOCK: Shareholders Commence Suits For Securities Fraud in S.D. NY
HI/FN INC.: Court Grants Final Approval To Securities Suit Settlement
IRAQ: Sick Gulf War Veterans Planning Lawsuit V. Country's Suppliers
ITV DIGITAL: Former Workers Launch Suit To Block Carlton/Granada Merger
KEITHLEY INSTRUMENTS: Suit Dismissed After Appeal Deadline Passes
KOHL'S DEPARTMENT: Recalls 9.6T Children's Pant Sets For Choking Hazard
LOVEE DOLL: Voluntarily Recalls 160T Talking Dolls For Choking Hazard
MCK COMMUNICATIONS: Securities Suit May Have Adverse Effect on Business
PEERLESS SYSTEMS: CA Court Dismisses Consolidated Securities Fraud Suit
PORTAL SOFTWARE: Asks NY Court To Dismiss Consolidated Securities Suit
PROCOM TECHNOLOGY: Investors Launch Suit For Securities Act Violations
RAYTHEON CORPORATION: NATO Military Personnel Commence Injury Lawsuit
SECURITIES LITIGATION: Investment Firms Settle Securities Fraud Charges
STRATOS LIGHTWAVE: Securities Lawsuits Could Adversely Affect Business
SOUTH KOREA: Foreign Investors Have Dual Views Of New President-Elect
TIVO INC.: Officers, Directors Dismissed From Securities Fraud Lawsuit
UNITED STATES: Rights Groups Sue To Bar Arrests Of Middle Eastern Men
VODAFONE PLC: Chief Executive Faces Damaging Securities Lawsuit In US
Asbestos Alert
ASBESTOS LITIGATION: Defendants Make Progress in Various Suits, Claims
ASBESTOS LITIGATION: Firms Unite to Resolve Asbestos Related Litigation
ASBESTOS LITIGATION: Halliburton Achieves $4.1Billion Global Settlement
ASBESTOS ALERT: Aearo Pegs Asbestos, Other Liabilities at $4.8 Million
ASBESTOS ALERT: Coca-Cola Co. Challenges Asbestos Related Litigation
ASBESTOS ALERT: CSK Discloses Asbestos Related Litigation, Other Claims
ASBESTOS ALERT: IPALCO Downplays Subsidiary's Asbestos-Related Suits
ASBESTOS ALERT: ITT, Subsidiary Continue to Face Asbestos Suits
ASBESTOS ALERT: Metso Says Asbestos Accusations in the US Immaterial
New Securities Fraud Cases
CYTYC CORPORATION: Charles Piven Commences Securities Suit in MA Court
DIVERSA CORPORATION: Milberg Weiss Commences Securities Suit in S.D. NY
eFUNDS CORPORATION: Charles Piven Commences Securities Suit in E.D. WI
SEACHANGE INTERNATIONAL: Marc Henzel Commences Securities Suit in MA
SEPRACOR INC.: Charles Piven Launches Securities Fraud Suit in MA Court
SPIEGEL INC.: Charles Piven Commences Securities Fraud Suit in N.D. IL
SYNCOR INTERNATIONAL: Marc Henzel Commences Securities Suit in C.D. CA
TENET HEALTHCARE: Gold Bennett Files Securities Fraud Suit in C.D. CA
*********
ALLOY INC.: Asks NY Court To Dismiss Consolidated Securities Fraud Suit
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Alloy, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action pending against it and:
(1) James K. Johnson, Jr.,
(2) Matthew C. Diamond,
(3) BancBoston Robertson Stephens,
(4) Volpe Brown Whelan and Company,
(5) Dain Rauscher Wessels and
(6) Landenburg Thalmann & Co., Inc.
The complaint purportedly is filed on behalf of persons who purchased
the Company's stock between May 14, 1999 and December 6, 2000 and
alleges violations of Sections 11, 12(a)(2) and 15 of the Securities
Act, and Section 10(b)(5) of the Exchange Act and Rule 10b-5
promulgated thereunder.
The suit mirrors allegations asserted against scores of other issuers
sued by plaintiffs' counsel. Pursuant to an omnibus agreement
negotiated with a representative of the plaintiffs' counsel, Mr.
Diamond and Mr. Johnson have been dismissed from the litigation without
prejudice.
Management believes that the remaining allegations against the Company
are without merit and intends to vigorously defend the claims. To that
end, and in accordance with the court's case management instructions,
the Company joined in a global motion to dismiss the amended complaints
which was filed by the issuers' liaison counsel. That motion is sub
judice.
ATICO INTERNATIONAL: Recalls 60,000 Tealight Candles For Fire Hazard
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Atico International USA, Inc. is cooperating with the US Consumer
Product Safety Commission (CPSC) by voluntarily recalling about 60,000
Christmas tealight candles. The wick is not properly set inside the
tealight, which may cause the plastic holder to melt and pose a fire
hazard to consumers. The Company has received one report involving
melting of the plastic holder; however, no injuries have been reported.
The recalled candles have a clear plastic holder and were available in
red, white and green. Some of the candles have the words, "Merry
Christmas," "Christmas Morning," "Candy Cane," or "A Christmas Avenue"
on the packaging. These candles were manufactured in China.
Eckerds, Kerr Drugs, Snyders Drugstore, and Farmacias El Amal stores
nationwide sold the candles from September 2002 through December 2002
for between $2.50 and $4.
For more information, contact the Company by Phone: (800) 645-3867
between 9:00 am and 5:00 pm ET Monday through Friday.
BLUE COAT: NY Court Hears Arguments on Securities Fraud Suit Dismissal
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The United States District Court for the Southern District of New York
heard oral arguments on Blue Coat Systems, Inc.'s motion to dismiss the
consolidated securities class action pending against it, some of its
officers and directors and the firms that underwrote the Company's
initial public offering.
The consolidated suit generally alleges that the underwriters obtained
excessive and undisclosed commissions in connection with the allocation
of shares of common stock in the Company's initial public offering, and
maintained artificially high market prices through tie-in arrangements
which required customers to buy shares in the after-market at pre-
determined prices.
The suit alleges that the Company and its current and former officers
and directors violated Sections 11 and 15 of the Securities Act of
1933, and Sections 10(b) (and Rule 10b-5 promulgated thereunder) and
20(a) of the Securities Act of 1934, by making material false and
misleading statements in the prospectus incorporated in the Company's
Form S-1 registration statement filed with the Securities and Exchange
Commission in November 1999. Plaintiffs seek an unspecified amount of
damages on behalf of persons who purchased the Company's stock between
November 19, 1999 and December 6, 2000.
Various plaintiffs have filed similar actions asserting virtually
identical allegations against over 300 other public companies, their
underwriters, and their officers and directors arising out of each
company's public offering. The lawsuits against the Company, along
with these other related securities class actions currently pending in
the Southern District of New York, have been assigned to Judge Shira A.
Scheindlin for coordinated pretrial proceedings and collectively
captioned "In re Initial Public Offering Securities Litigation."
Defendants in these cases filed omnibus motions to dismiss on common
pleading issues.
The Company's officers and directors have been dismissed without
prejudice in this litigation. The Company intends to defend against
the allegations in the complaints vigorously and believes the outcome
would not have a material adverse effect on its business, results of
operations or financial condition.
CANADA: Government Offers $1.7B to Settle Certain Native Abuse Cases
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The Canadian federal government is committing $1.7 billion over seven
years to resolve up to 18,000 native residential-school lawsuits out of
court, The Globe and Mail reports. The recently announced deal would
compensate for the physical and sexual abuse only. It also would
require plaintiffs to waive rights to future litigation, including
claims for language and cultural losses.
"It is unconscionable," said Ken Young, Manitoba vice-chief for the
Assembly of First Nations, speaking of Ottawa's proposal. The
assembly, Canada's most prominent-native rights group, will urge
plaintiffs to reject the plan, Mr. Young said in an interview. Former
students are better off staying in court or joining a class action
that, if certified next year, will seek damages for physical, sexual
and cultural abuse, said Mr. Young.
Public Works Minister Ralph Goodale, charged with resolving the
mounting claims, announced the plan in Regina and explained the
Government's rationale. "Time is running out for the elderly claimants
and those in ill health," Minister Goodale said. "We need a system
that does not clog the courts nor spend all the money on lawyers."
Mr. Goodale also defended Ottawa's refusal to compensate for language
and cultural losses. No Canadian judge has ever awarded damages on
that basis, he said. Still, Ottawa will design programs to help repair
the cultural impact of its former native-schools policy, he stressed.
To this end, Heritage Minister Sheila Copps announced that $172 million
will be spent over 10 years for programs to enhance native languages
erased in residential schools.
Plaintiffs can still pursue court action, said Mr. Goodale, but it is
hoped the alternative system will be in place this spring or summer.
Applicants would have to back their claims with evidence, and each will
be rigorously validated. However, it will be faster and less
adversarial than court, concluded Mr. Goodale. Settlement for victims
would follow an established grid of offenses.
CUTTER & BUCK: Plaintiffs Intend To File Consolidated Securities Suit
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Plaintiffs in the securities class actions against Cutter & Buck, Inc.
intend to file a consolidated suit in the United States District Court
for the Western District of Washington. The suits were filed on behalf
of persons who purchased the Company's common stock during the period
from June 23, 2000 to August 12, 2002. It alleges violations of federal
securities laws. The suits are:
(1) Steven Bourret v. Cutter & Buck, Inc., Harvey N. Jones and
Stephen S. Lowber,
(2) Stanley Sved v. Cutter & Buck, Inc. and Harvey N. Jones,
(3) Jason P. Hebert v. Cutter & Buck, Inc., Harvey N. Jones and
Stephen S. Lowber
On November 12, 2002, the Tilson Growth Fund filed a motion asking the
court to consolidate the suits into a single proceeding before the
Honorable Robert Lasnik, United States District Court Judge for the
Western District of Washington, for pretrial and trial proceedings,
enter an Order requiring the defendants to preserve documents, appoint
Tilson Growth Fund as the lead plaintiff under Section 21D(a)(3)(B) of
the Securities Exchange Act of 1934, and approve Tilson Growth Fund's
selection of lead and liaison plaintiff's counsel. Counsel for the
Company's former Chief Financial Officer has opposed the appointment of
Tilson Growth Fund as lead plaintiff.
ELKTON SPARKLERS: Recalls 1.7M Bamboo Stick Sparklers For Fire Hazard
---------------------------------------------------------------------
Elkton Sparkler Company, Inc. is cooperating with the US Consumer
Product Safety Commission (CPSC) by voluntarily recalling about 1.7
million boxes of bamboo stick sparklers. The sparklers' bamboo-stick
handles can catch fire, burn and disintegrate and emit burning
fragments during use. The sparklers present a fire hazard and a risk
of burn injury.
CPSC and Elkton Sparkler have received four reports of burns and
clothing igniting. Injuries include a 6-year-old girl who received
second-degree burns to her ankle and a 3-year-old boy who received a
minor burn to his leg when his sweat pants caught on fire.
The recalled sparklers were packaged in a red, white and blue
cardboard box and sold with six sparklers per box. Three models of
sparklers were sold, including model SP08 measuring 8-inches long,
model SP14 measuring 14-inches long, and model SP20 measuring 20-inches
long. Labels on the packaging read in part "BAMBOO GOLD SPARKLERS," "6
PIECES," and "MADE IN CHINA."
Variety Stores sold these sparklers nationwide from January 2002
through May 2002 for between $2 and $5 a box.
For more information, contact the Company by Phone: (800) 322-3458
between 9 am and 5 pm ET Monday through Friday or visit the firm's
Website: http://www.easylite.com.
ENGAGE INC.: Asks NY Court To Dismiss Consolidated Securities Lawsuit
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Engage, Inc. asked the United States District Court for the Southern
District of New York to dismiss the consolidated securities class
action filed against it, several of its present and former officers and
directors and the underwriters for its July 20, 1999 initial public
offering as defendants.
The suit, filed on behalf of those persons who purchased the Company's
common stock between July 19, 1999 and December 6, 2000, alleges
violations of the Securities Act of 1933 and the Securities Exchange
Act of 1934. Specifically, the complaints each allege that the
defendants failed to disclose "excessive commissions" purportedly
solicited by and paid to the underwriter defendants in exchange for
allocating shares of Company stock to preferred customers and alleged
agreements among the underwriter defendants and preferred customers
tying the allocation of IPO shares to agreements to make additional
aftermarket purchases at pre-determined prices.
Plaintiffs claim that the failure to disclose these alleged
arrangements made the Company's prospectus incorporated in its
registration statement on Form S-1 filed with the SEC in July 1999
materially false and misleading. Plaintiffs seek unspecified
damages.
Motions to dismiss the suit have been filed on behalf of the
underwriter defendants and the issuer defendants. The Company believes
that these allegations are without merit. However, as the litigation
is in an initial stage, the Company is not able at this time to
estimate the possibility of loss or range of loss, if any, that might
result.
ENGAGE INC: Parties in Fraud Lawsuit Agree To Dismissal With Prejudice
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Parties in the consolidated securities class action filed against
Engage, Inc. in the Court of Chancery of the State of Delaware in New
Castle County agreed to dismiss the suit with prejudice.
On February 26, 2002, a putative class action was filed naming the
Company, each member of the Company's Board of Directors, and CMGI,
Engage's majority stockholder, as defendants. The suit alleges that
CMGI manipulated the Company to enter into transactions that unfairly
favor CMGI and that CMGI and the Company's directors have breached
their respective fiduciary duties to the Company and its minority
stockholders by:
(1) approving and entering into certain secured convertible notes
that Engage issued to CMGI in October 2001 on terms that were
unfair to Engage and Engage's minority stockholders;
(2) approving and recommending to Engage stockholders the approval
of a proposal in our Proxy Statement dated February 20, 2002
relating to the potential issuance of the Company's common
stock in connection with conversion of these notes; and
(3) approving and soliciting the approval of Engage stockholders
of the proposals in the Proxy Statement relating to three
proposed reverse stock splits of the Company's common stock in
order to avoid delisting from Nasdaq.
The suit also alleges that certain disclosures in the Proxy Statement
with respect to the foregoing proposals were materially misleading and
incomplete. Plaintiffs seek injunctive relief with respect to the
notes and the proposed reverse stock splits, rescission of the issuance
of the notes and proposed reverse stock splits, disgorgement of alleged
profits and benefits obtained by the defendants, rescissory and/or
compensatory damages, reasonable attorneys' fees and expenses, and
other unspecified damages.
In addition, the plaintiffs also sought an injunction to prevent
approval of the foregoing proposals at the Company's Annual Meeting of
Stockholders originally scheduled for March 15, 2002 (and later
postponed until March 29, 2002). On February 28, 2002, the court
denied plaintiffs' requests for a preliminary injunction hearing and
permission to allow expedited discovery in the lawsuit prior to the
Annual Meeting.
On May 22, 2002, plaintiffs filed an amended complaint reiterating the
claims previously alleged and adding an additional allegation that a
merger proposal announced on May 21, 2002 whereby CMGI would acquire
all outstanding shares of Engage common stock not already owned by CMGI
is a coercive transaction that allegedly does not satisfy the entire
fairness standard under Delaware law.
On May 21, 2002, two related putative class action lawsuits were filed
in the Court of Chancery for the State of Delaware, challenging the
fairness of the CMGI-Engage merger proposal announced on May 21, 2002.
The suits seek injunctive relief and/or rescission, disgorgement of any
profits received by defendants, attorneys' fees and other unspecified
damages.
The foregoing actions subsequently were consolidated. On October 18,
2002, the parties to the litigation filed a Stipulation and Order of
Dismissal, dismissing the consolidated action with prejudice. In
connection with the stipulation of dismissal, the parties are
negotiating the reimbursement of a portion of plaintiff's counsel's
fees. The Company does not believe that the resolution of this issue
will have a material impact on its financial condition.
H&R BLOCK: Agrees To Settle Consumer Fraud Lawsuit in TX State Court
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H&R Block, Inc. and a major franchisee of a subsidiary of the Company,
reached an agreement with the plaintiff class in the class action
entitled Ronnie and Nancy Haese, et al. v. H&R Block, Inc. et al., in
the District Court of Kleberg County, Texas, related to refund
anticipation loans (RALs).
The proposed settlement provides a five-year package of coupons class
members can use to obtain a variety of tax preparation and tax planning
services from the Company's subsidiaries. The Company's major
franchisee, which operates more than half of all H&R Block offices in
Texas, will share a portion of the total settlement cost.
As a result, the Company recorded a liability and pretax expense of
$41.7 million, or $.14 per basic and diluted share, during the three
months ended October 31, 2002, which represents the Company's share of
the settlement cost for plaintiff class legal fees and expenses, tax
products and associated mailing expenses. The settlement is subject to
court approval and there are no assurances such approval will be
obtained.
H&R BLOCK: Shareholders Commence Suits For Securities Fraud in S.D. NY
----------------------------------------------------------------------
H&R Block, Inc. faces several securities class actions filed in the
United States District Court for the Southern District of New York on
behalf of purchasers of the Company's stock from November 8, 1997 and
November 1, 2002. The suit also names as defendants certain of the
Company's current and former officers and directors.
The suit alleges that the defendants violated Section 10(b)(5) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder
by failing to disclose to shareholders various cases in which the
Company had been sued regarding its refund anticipations loans (RAL)
loan program
The Company believes the claims in the suits are without merit. In
addition, a shareholder of the Company has made a demand through
counsel that the Company commence a civil action against the directors
of the Company relating to the same matters as are involved in the
suits. The shareholder's demand indicates a shareholder's derivative
action will be commenced if the demanded civil action is not commenced.
HI/FN INC.: Court Grants Final Approval To Securities Suit Settlement
---------------------------------------------------------------------
The United States District Court for the Northern District of
California granted final approval to the US$9.5 million settlement
proposed by Hi/FN, Inc. to settle the consolidated securities class
action pending against it and certain of its officers and directors.
The suit, filed on behalf of persons who purchased Company stock
between July 26, 1999 and October 7, 1999, alleged that the Company and
certain of its officers and directors violated federal securities laws
in connection with various public statements made during the class
period.
In August 2000, the court dismissed the complaint as to all defendants,
other than Raymond J. Farnham and the Company. In February 2001,
the court certified the purported class. On May 15, 2002, the parties
entered into a Memorandum of Understanding to settle all claims in the
consolidated securities class action. Under the terms of the
settlement, all claims will be dismissed without any defendant's
admission of liability or wrongdoing. The shareholder class will
receive $9.5 million, comprised of $6.8 million in cash, which was
contributed by the Company's insurance carriers, and the balance in
Company stock with a minimum of 270,000 shares to be issued.
On June 10, 2002, the court entered an order preliminarily approving
the Stipulation of Settlement and providing for notice and an
opportunity to object to the shareholder class. The court approved the
settlement and entered a Final Judgment and Order of Dismissal
with Prejudice on September 4, 2002.
In accordance with the settlement, the Company will issue at least
270,000 shares of Company stock, supplementing the allotment with cash
or additional shares of common stock to compensate for shortfall in
fair value below $2.7 million. To the extent that the trading price of
the common stock exceeds $10.00 at the time of distribution, the
Company would recognize an additional litigation settlement charge
equal to the aggregate fair market value of the 270,000 shares of
common stock less the $2.7 million already recognized.
IRAQ: Sick Gulf War Veterans Planning Lawsuit V. Country's Suppliers
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Nearly 50 European chemical concerns are likely to face a class action
early next year by more than 3,000 sick Gulf War veterans who accuse
them of complicity in Iraq's drive to acquire weapons of mass
destruction, an attorney for the plaintiffs said, according to a report
by Agence France-Presse.
The potential case offers an unexpected glimpse into a sensitive
portion of an Iraqi weapons declaration that is being examined behind
closed doors by members of the UN Security Council and UN arms
inspectors, plaintiffs' attorney Gary Pitts said recently. The lawsuit
will be based on new documents provided to the Houston law firm of
Pitts and Associates by the government of Iraq, which listed a total of
56 international suppliers of equipment and raw materials necessary to
manufacture sarin, VX, mustard gas and other chemical agents.
"It is the same list of people as in the most recent (Iraqi)
declaration," Mr. Pitts said in a telephone interview. A spokesman for
the US Central Intelligence Agency, which is leading the US
government's review of the Iraqi declaration, said he could not comment
on the list because of the need to maintain confidentiality. The New
York Times, which broke the story on the weekend, said it was able to
confirm the document's authenticity through its own sources.
The list, obtained by Agence France-Presse, includes the names of 19
German, 10 British, four Swiss and two French concerns, as well as
three companies from the Netherlands, Austria and the United States
that supplied materials allegedly used in the Iraqi chemical weapons
program through the 1980s.
Leading the roster is the German firm Preussag, which, according to the
document, supplied Baghdad with tons of precursor chemicals for
manufacturing nerve gas, helped Iraq build chemical agent facilities
and sold it chemical agent production equipment.
Other German companies include Hoechst, who supplied, in 1982, 10 tons
of phosphorus oxychloride, a chemical used to manufacture the nerve gas
sarin and Karl Kolb, which provided Iraq assistance in building and
equipping a plant used for chemical weapons production, the document
said.
Dutch KBS shipped to Iraq more than 3,000 tons of precursor chemicals
between 1982 and 1984. At the same time, British firms Lummus,
Gallenkamp, Sigma, Oxoid and others provided laboratory equipment that
Iraqi weapons scientists used in perfecting their deadly agents, the
list indicated.
The list of companies was brought to the United States from Iraq by
Scott Ritter, a former UN weapons inspector-turned-critic of U.S. plans
to use military force against Iraq. Mr. Ritter made a controversial
trip to Baghdad in September, according to attorney Gary Pitts. The
document containing the list of companies occupies three full CD-ROMs
that the law firm is storing at a secure location after sharing the
information with the Federal Bureau of Investigation.
Mr. Pitts said the lawsuit on behalf of United States, British, French
and other Gulf War veterans probably will be filed sometime in the next
three months in Britain. "Essentially, what we are saying is that
Saddam Hussein was killing people with poison gas against international
law, and these companies were enabling him by doing what they did," he
said.
According to a US government report released in September, there was
"no indication" that Iraq resorted to offensive use of chemical weapons
in the 1990-1991 Gulf War. However, the September report allowed the
possibility that allied troops could have been exposed to deadly agents
following the bombing of Iraqi chemical production and storage
facilities, particularly an ammunition dump in the southern Iraqi town
of Khamisiyah that, as it became known later, was used to store sarin
and cyclosarin.
The US Department of Veterans Affairs is currently monitoring more than
100,000 veterans suffering from so-called Gulf War syndrome, which
manifests itself in joint pain, skin rashes, shortness of breath and
other ailments.
"They are accountable to these people for their medical bills and their
lost income," Mr. Pitts said of Iraq's former Western suppliers.
ITV DIGITAL: Former Workers Launch Suit To Block Carlton/Granada Merger
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A group of 140 former workers for ITV Digital, the pay-TV business,
owned by companies Carlton and Granada, which collapsed in April, have
written to the Office of Fair Trading, urging it to block the proposed
merger of Carlton and Granada because the companies ride roughshod over
industry regulations, The Sunday Telegraph reports. About 120 members
of the group also have mounted a class action against Granada and
Carlton over the terms of their ITV Digital redundancies and are
awaiting a hearing.
The group has formed the Ex-ITV Digital Employees Group, which allege
in their letter that the former staff is in a "unique position" to
comment on the propose merger, because ITV Digital was the most recent
example of the two companies running a deal together.
The Employees Group allege that Carlton and Granada tried to evade
regulatory commitments in order to secure short-term gains, and abused
safeguards put in place by Independent Television Commission (ITC).
The letter says, among other things, "For instance, the channel lineup
was altered so that channels such as Carlton News and regional new
commitments were replaced with cheaper alternatives (usually provided
by the shareholders) with little or no connection with any public
service commitments . Similarly, the license obligations to offer fair,
reasonable and non-discriminatory access to other channels were largely
ignored in favor of shareholder channels," the letter said.
Gordon Starling, former director of product procurement for ITV Digital
and chairman of the staff action group said, "It struck me that it (the
running of ITV Digital) was something of a sport, and that the
regulator was (regarded as) an unnecessary evil. It was almost good
fun trying to get one over on the regulator."
A Granada spokesman said, "Granada complies absolutely with the ITC
requirements. ITV Digital was not managed by Granada or Carlton.
These people were not employed by Carlton or Granada. It absolutely
beggars belief that they claim some sort of special knowledge of a
business with which they have no connection."
KEITHLEY INSTRUMENTS: Suit Dismissed After Appeal Deadline Passes
-----------------------------------------------------------------
The dismissal of the securities class action filed against Keithley
Instruments, Inc. and its chairman and chief executive officer Joseph
P. Keithley is deemed final after plaintiffs failed to file an appeal
of the United States District Court for the Northern District of Ohio's
ruling.
The suit was commenced in March 2001, alleging violations of Section
10(b) and Section 20(a) of the Securities Exchange Act of 1934, as
amended. The purported class action was filed on behalf of all those
who purchased Company stock between January 18, 2001 and March 9, 2001.
According to the plaintiffs, the Company, with the knowledge and
assistance of the individual defendant, made certain false and
misleading statements concerning the Company's business condition and
prospects for the second quarter of fiscal 2001, the three months
ending March 31, 2001, during the class period. The plaintiffs were
seeking unspecified amounts as damages, interest costs and other
ancillary relief.
On September 30, 2002, the court dismissed the case with prejudice.
The plaintiffs had 30 days from September 30, 2002 to appeal the
ruling, and the ruling was not appealed.
KOHL'S DEPARTMENT: Recalls 9.6T Children's Pant Sets For Choking Hazard
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Kohl's Department Stores, Inc. is cooperating with the United States
Consumer Product Safety Commission (CPSC) by voluntarily recalling
about 9,600 children's fleece, two-piece pant sets. Small pieces of
fabric at the end of the sleeves, along the hem and on the pockets of
the tops can be torn off easily, posing a choking hazard. The Company
has received two reports of young children putting torn pieces of
fabric in their mouths. One child reportedly began to choke on a piece
of material.
The recall includes the First Moments- or Second Step-brand two-piece
pant set. The brand name is written on a label inside the tops of the
set. The set's pink fleece top has two patch pockets and the cotton
pants have a pink floral print. The set came in sizes 3 months to 24
months. The set has a cut out floral pattern in the fabric at the end
of the sleeves, along the hem of the top and along the top of each
pocket. The part of the fabric subject to the cutting has been
weakened and tears easily from the rest of the garment.
Kohl's Department Stores sold the pant set nationwide from September
2002 through early November 2002, for about $18. For more information,
contact the Company by Phone: (800) 694-2647 between 8:30 am and 5:00
pm CT Monday through Friday, or visit the firm's Website:
http://www.Kohls.com
LOVEE DOLL: Voluntarily Recalls 160T Talking Dolls For Choking Hazard
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Lovee Doll & Toy Co., Inc. is cooperating with the US Consumer Product
Safety Commission (CPSC) by voluntarily recalling about 160,000
talking, electronic dolls. Buttons on the dolls' outfit could detach,
posing a choking hazard to young children. The Company has not
received any reports of incidents involving these dolls. This recall
is being conducted to prevent the possibility of injury.
This recall includes the "Talking Learn n' Play" dolls with buttons.
The dolls describe the functions of zippers, buttons, snaps and
shoelaces. The dolls are about 13- inches tall and are dressed in
pink jumpers with pink and white plaid shirts. The purple packaging
reads, "Talking Learn n' Play." The dolls were made in China.
Toy and discount department stores sold the dolls nationwide from June
2002 through December 2002, for between $10 and $15. For more
information, contact the Company by Phone: (800) 307-5911 between 9 am
and 5 pm ET Monday through Friday.
MCK COMMUNICATIONS: Securities Suit May Have Adverse Effect on Business
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MCK Communications, Inc. faces a securities class action filed on
behalf of purchasers of its securities. (NASDAQ: MCKC), between October
22, 1999 and December 6, 2000, inclusive in the United States District
Court, Southern District of New York. The suit also names as
defendants certain of the Company's officers and its underwriters.
The suit alleges violations of Sections 11, 12(a)(2) and 15 of the
Securities Act of 1933 and Section 10(b) of the Securities Exchange Act
of 1934 and Rule 10b-5 promulgated thereunder.
The Company stated in a disclosure to the Securities and Exchange
Commission that litigation may be time consuming and expensive, and can
distract the Company from the conduct of its business, and the outcome
of litigation is difficult to predict. The adverse resolution of the
lawsuit could have a material adverse effect on its business, results
of operations, and financial condition.
PEERLESS SYSTEMS: CA Court Dismisses Consolidated Securities Fraud Suit
-----------------------------------------------------------------------
The United States District Court for the Southern District of
California dismissed the consolidated securities class action filed
against Peerless Systems, Inc. and two of its former officers, alleging
a scheme to artificially inflate the Company's stock price and seeking
compensatory damages with interest and attorneys fees and expenses.
On November 12, 2002, the court entered a stipulation of voluntary
dismissal and an order dismissing the shareholder class action suit in
its entirety. The dismissal is without prejudice to the rights of
individuals to pursue separate claims. Plaintiffs submitted the
voluntary dismissal of the action against the Company and its former
officers. Neither the Company nor its former officers provided
consideration, and each side is to bear its own costs.
PORTAL SOFTWARE: Asks NY Court To Dismiss Consolidated Securities Suit
----------------------------------------------------------------------
Portal Software, Inc. asked the United States District Court for the
Southern District of New York to dismiss the consolidated securities
class action filed against it, certain of its officers and several
underwriters of its initial public offering (IPO).
The lawsuit alleges violations of Section 11 of the Securities Act of
1933, as amended and Section 10(b) of the Securities Exchange Act of
1934, as amended, arising from alleged improprieties by the
underwriters in connection with the Company's 1999 IPO and follow-on
public offering, and claims to be on behalf of all persons who
purchased Company shares from May 5, 1999 through December 6, 2000.
Specifically, the complaints allege the underwriters charged certain of
their customers fees in excess of those disclosed in the prospectus and
engaged in certain allegedly improper activities in connection with the
distribution of the IPO shares. The complaint was subsequently amended
to allege similar claims with respect to the Company's secondary public
offering in September 1999.
The consolidated suit is part of the IPO Securities Litigation against
over 300 issuers and nearly 40 underwriters alleging claims virtually
identical to those alleged against the Company. The action seeks
damages in an unspecified amount. A motion to dismiss addressing
issues common to the companies and individuals who have been sued in
these actions was filed on July 15, 2002.
In the opinion of management, resolution of this litigation is not
expected to have a material adverse effect on the financial position of
the Company. However, depending on the amount and timing, an
unfavorable resolution of these matters could materially and adversely
affect the Company's future results of operations or cash flows in a
particular period.
PROCOM TECHNOLOGY: Investors Launch Suit For Securities Act Violations
----------------------------------------------------------------------
Procom Technology, Inc. faces two securities class actions filed in the
United States District Court for the Southern District of New York, on
behalf of all investors who purchased the Company's common stock from
December 9, 1999 to September 20, 2000.
The complaints allege violations of Section 10(b) and 20(a) and Rule
10b-5 of the Securities Exchange Act of 1934. Specifically, plaintiffs
allege that the Company violated federal securities laws by:
(1) failing to fully and timely disclose purported problems with
the Company's "alliance" with Hewlett-Packard along with the
effect of such problems on the Company's business prospects;
and
(2) overstating the Company's receivables during the class period.
For relief, plaintiffs seek compensatory damages and/or rescission from
the Company as well as an award of the costs and disbursements of the
suit. The Company believes that it has substantial and meritorious
defenses to each of the claims and intends to vigorously defend the
actions. However, there can be no assurance that the Company will
prevail in defending these actions.
The Company's defense of these actions may result in the diversion of
management's time and attention and cause the Company to incur
potentially significant legal expenses. If the Company is unsuccessful
in defending these actions, the Company may be required to pay damages
in an amount that would have a material adverse effect on the Company's
results of operations and financial condition.
RAYTHEON CORPORATION: NATO Military Personnel Commence Injury Lawsuit
---------------------------------------------------------------------
Three former members of European NATO military units, and one surviving
spouse, filed a class action lawsuit against Raytheon Company (NYSE:
RTN) for injuries suffered from exposure to dangerous x-ray radiation
during the period between 1958 and 1994. The plaintiffs were exposed
to this radiation during their work on radar devices manufactured,
designed and distributed by Raytheon Company. These veterans all
served as NATO soldiers and were affected by the radar devices, which
operated primarily along the front lines of the Cold War. The
plaintiffs have filed their Complaint in Middlesex County,
Massachusetts, where Raytheon Company designed and manufactured the
radar devices.
The plaintiffs allege that Raytheon defectively designed and
manufactured the radar devices by failing to adequately shield radar
transmitter tubes that emitted dangerous amounts of x-ray radiation,
creating an unreasonable risk of harm to radar mechanics, technicians,
and operators who regularly repaired, maintained and worked in close
proximity with these devices.
In addition, the suit alleges that despite the fact that Raytheon knew,
or should have known, of the dangers posed by their radar devices,
Raytheon failed to warn users of the significant dangers and health
risks posed by potential exposure to ionizing radiation through the
maintenance and use of radar devices. In particular, the suit alleges
that Raytheon failed to advise users of the need to wear protective
clothing and to limit periods of exposure.
As a result of this radiation exposure, the plaintiffs are at higher
risk for certain illnesses or have already developed various forms of
cancer and other life-threatening conditions. They seek certification
of a medical monitoring class on behalf of a class of radar operators,
mechanics and technicians exposed to ionizing radiation produced by
Raytheon's radar devices, but not yet affected with an illness. They
also seek relief for this class in the form of a fund, to be
administered by the court, to finance the performance of such medical
monitoring and surveillance services as are deemed reasonably and
medically necessary to protect the medical monitoring class from
increased risk of harm and disease.
Those plaintiffs who have already become ill or have died as a result
of the exposure also seek monetary damages. The illnesses affecting
the plaintiffs and members of the proposed class include, but are not
limited to, leukemia, lymphoma, bladder cancer, kidney cancer, thyroid
disease, testicular cancer and brain cancer.
For more information, contact Berger & Montague, P.C. Radar Litigation
Group by Mail: 1622 Locust Street, Philadelphia, PA 19103 by Phone:
800-23- RADAR (800-237-2327) or 215-875-3000 by Fax: 215-875-4604 by E-
mail: Radar@bm.net or visit the firm's Website:
http://www.bergermontague.com
SECURITIES LITIGATION: Investment Firms Settle Securities Fraud Charges
-----------------------------------------------------------------------
Wall Street's major players agreed to pay $1.43 billion to settle
charges that analysts issued misleading stock advice in order to help
win business from corporate clients, the Atlanta Journal-Constitution
reports.
"Investors know there is no guaranteed return in the market, but the
one thing they deserve is honest advice," said New York Attorney
General Eliot Spitzer, who spearheaded the investigation that led to
the settlement. Besides being the largest penalty ever levied by
securities regulators, the landmark settlement calls for 10 firms to
enforce greater separation between research and investment banking.
The regulators hope the agreement, which establishes a new process for
disseminating research, will help restore faith in brokerages and
markets after a year of corporate scandals.
Many see another immediate reaction: a tidal wave of class actions as
investors seek to recoup the money they believe they last as a direct
result of poor recommendations from brokerage firms. "Investors have
some pretty compelling claims to make if they have been lied to," said
Boyd Page, a senior partner with the law firm of Page Gard Smiley &
Bishop in Atlanta.
The first step would be litigation to try to get whatever internal
documents led Mr. Spitzer to negotiate Friday's settlement. The
agreement was announced in Albany, New York, by Mr. Spitzer, Securities
and Exchange Commission officials and the heads of the New York Stock
Exchange, North American Securities Administrators Association and
NASD, the national membership organization for securities dealers. The
deal does not provide for any charges against Wall Street executives or
any statements of guilt or innocence by the firms involved.
Citigroup's Salomon Smith Barney unit will pay the heftiest fine, $300
million. Credit Suisse First Boston will pay $150 million, and Goldman
Sachs, J.P. Morgan Chase, Bear Stearns, Morgan Stanley, Lehman
Brothers, Deutsche Bank and UBS Paine Webber each, will pay $50
million. Merrill Lynch, the nation's largest brokerage firm, agreed to
a settlement last May that included a $100 million fine.
About half the money paid in fines will go to the states, the other
half to the federal government. The ten firms will pay out over $450
million over five years to pay for independent research for investors
and $85 million for a nationwide investor education program.
Under the accord, analysts will also be prohibited from being paid for
equity research by investment banking arms and will not be allowed to
accompany investment bankers on "road shows" to woo investment banking
clients. Investors will have access to initial public offerings of
stock previously allocated to corporate executives who could have
influence over investment banking decisions. Investors will be able
to check out an analyst's performance with an Internet search of a
public database containing details of previous stock picks.
Chuck Hill, research director at Thomson First Call, said that the
settlement may not go far enough. It does not really solve the
conflict-of-interest issue, he believes, because the research and
banking units at most brokerages will still be intertwined.
Stock analysts evaluate companies and make recommendations to investors
about their financial futures, Mr. Hill said. These analysts typically
work for investment banking firms, which raise money for companies by
various means, including offering their stock to the public. A
"Chinese wall" is supposed to separate the analysts from their
companies' investment banking operations, said Mr. Hill. However,
critics increasingly have charged that some companies have based
analysts' compensation, in part, on how much investment banking
business they help to win.
"As long as money is coming from investment banking, however indirect
it may be, there is going to be a sense among analysts that they will
be rewarded for certain recommendations," Mr. Hill said. The root
cause of the conflict of interest, he said, "is that research cannot
get paid on its own anymore."
Thomas Ajamie, securities partner with Schirrmeister Ajamie in Houston,
said the settlement doesn't mean much unless firms are forced to
release e-mails and other internal information so that the public can
learn all the facts. "The fine is OK, but $1 billion or so is really
not a lot of money if you consider the hundreds of billions lost in the
market," said Mr. Ajamie.
Scott Cleland, chief executive of the independent Precursor Group in
Washington, said that what is really needed is ongoing government
vigilance and enforcement of the law. "This can't be viewed as a quick
fix," he said.
STRATOS LIGHTWAVE: Securities Lawsuits Could Adversely Affect Business
----------------------------------------------------------------------
Stratos Lightwave faces several class actions filed on behalf of
purchasers of Company securities between June 27, 2000 and December 6,
2000, inclusive, in the United States District Court for the Southern
District of New York. The suit also names as defendants certain of its
officers and directors, and its underwriters.
The complaint alleges that defendants violated the federal securities
laws by issuing and selling the Company's common stock pursuant to the
June 27, 2000 IPO without disclosing to investors that some of the
underwriters in the offering, including the lead underwriters, had
solicited and received excessive and undisclosed commissions from
certain investors.
Specifically, the complaint alleges that in exchange for the excessive
commissions, defendants allocated Stratos shares to customers at the
IPO price. To receive the allocations at the IPO price, the
underwriters' brokerage customers had to agree to purchase additional
shares in the aftermarket at progressively higher prices. The
requirement that customers make additional purchases at progressively
higher prices as the price of Company stock rocketed upward was
intended to drive its share price up to artificially high levels. This
artificial price inflation enabled both the underwriters and their
customers to reap enormous profits by buying stock at the IPO price and
then selling it later for a profit at inflated aftermarket prices
Although the Company believes these lawsuits are without merit, an
adverse result in these lawsuits could subject it to significant money
damages. This litigation may also require the Company to incur
significant costs in defense of these lawsuits, could require
significant involvement of senior management and may divert
management's attention from business and operations, any of which could
have a material adverse affect on the Company's business, results of
operation or financial condition.
SOUTH KOREA: Foreign Investors Have Dual Views Of New President-Elect
---------------------------------------------------------------------
President-elect Roh Moo Hyun aims to push forward swiftly on South
Korea's unfinished financial restructuring, something that would boost
the confidence of foreign investors and help domestic financial
markets. However, some foreign investors worry that Mr. Roh's support
for labor and small business could discourage investment and hinder
Korea's economic performance, The Wall Street Journal reports.
Mr. Roh, who recently won a bitterly contested election, indicates that
he will keep intact key changes championed by departing President Kim
Dae Jung. One of these is the restriction of debt guarantees and
mutual financial assistance among the affiliates of Koreas's family-run
conglomerates, or chaebols. Another such measure is Mr. Roh's pledge
to improve corporate governance and push for laws enabling securities
class actions.
"A failure to reform the chaebol system could burden the economy," Mr.
Roh said in a recent nationally televised news conference. "I will
firmly push ahead with reforming the chaebol to quell concerns of
foreign investors."
On the other hand, foreign investors have expressed concern that Mr.
Roh's promise to support smaller companies could prompt him to impose
restrictions that impede growth of the chaebols, long a pillar of the
country's economy. "There is no doubt that reforms should continue,"
said a foreign investor based in Hong Kong, "but I am worried that Mr.
Roh has a personal agenda to choke the chaebol; if so, Korea could
become worse off than it was five years ago."
Mr. Roh inherits an economy that has made great strides cleaning up a
corporate and financial sector that five years ago was burdened by a
mountain of debt. Yet, some foreign investors are increasingly
concerned that South Korea's restructuring drive has stalled. They
want the government, which has spent about 157 trillion won ($130
billion) cleaning up the financial sector, to accelerate the transfer
to private hands of shares it acquired in the cleanup.
Mr. Roh agrees with this position. "Though Korea has done much to
reform the economy, there are some important tasks that we must
confront," said Kim Hyo Seuk, head of Mr. Roh's economic policy
committee. Mr. Kim gave an example of such needed reform: He said
that the reason for the so-called Korea discount, which has depressed
the stock prices of many Korean companies, lies largely with the
families who exercise enormous influence over management of the
chaebols. Last year, for instance, Samsung Electronics Company
appointed its chairman's only son to a key management position despite
resistance from minority investors who insisted that he was not
qualified for the post. Mr. Kim said the Roh administration will "work
to eliminate such opaque management style."
Another investor concern is Mr. Roh's push to give the country's labor
unions more say in management. "Labor inflexibility is still one of
the top grievances among foreign investors," said Yi Seung Gook, head
of research at BNP Paribas Peregrine Securities in Seoul. There are
also some concerns in the market that Mr. Roh may be too sympathetic
toward labor."
TIVO INC.: Officers, Directors Dismissed From Securities Fraud Lawsuit
----------------------------------------------------------------------
The United States District Court for the Southern District of New York
dismissed Tivo, Inc.'s officers and directors from the securities class
action pending against them, the Company and several of the
underwriters involved in the Company's initial public offering.
The suit, filed on behalf of purchasers of the Company's common stock
from September 30, 1999, the time of its initial public offering,
through December 6, 2000, alleges that the underwriters in the initial
public offering solicited and received undisclosed commissions from,
and entered into undisclosed arrangements with, certain investors who
purchased TiVo common stock in the initial public offering and the
after-market. The complaint also alleges that the TiVo defendants
violated the federal securities laws by failing to disclose in the
initial public offering prospectus that the underwriters had engaged in
these allegedly undisclosed arrangements.
More than 150 issuers have been named in similar lawsuits. In July
2002, an omnibus motion to dismiss all complaints against issuers and
individual defendants affiliated with issuers (including the TiVo
defendants) was filed by the entire group of issuer defendants in these
similar actions. This motion to dismiss is still pending.
The Company defendants' time to respond to the complaint has not yet
expired, and it is likely that this response will not be due for
several months, after certain procedural issues are resolved. At the
appropriate time, the Company's defendants intend to move to dismiss
the consolidated complaint for failure to state a claim. On October 8,
2002, the Company's executive officers were dismissed as defendants in
the complaint.
The Company believes it has meritorious defenses and intends to defend
this action vigorously; however, it could be forced to incur material
expenses in the litigation, and in the event there is an adverse
outcome, its business could be harmed.
UNITED STATES: Rights Groups Sue To Bar Arrests Of Middle Eastern Men
---------------------------------------------------------------------
Civil rights groups recently sued the government to stop future
detentions of Middle Eastern men under a new anti-terrorism policy that
led to hundreds of arrests of visa holders last week, Associated Press
Newswires reports. The lawsuit seeks class action status and asks the
court to prevent the detention without bond or a bond hearing or the
deportation of detainees who "have avenues available to legalize their
status." Attorney General John Ashcroft and the Immigration and
Naturalization Service (INS) are named as defendants.
Groups representing Muslims and Arab-Americans, Iranian-Americans and
Pakistani-Americans sued in federal court in Los Angeles, seeking an
injunction to bar future arrests under rules adopted in the aftermath
of the September 11, 2001, terror attacks.
At least 400 men were arrested in Southern California for visa
violations when immigrants from Iran, Iraq, Syria, Libya and Sudan went
to the INS offices last week to register as required under the new
policy. Many claimed the violations were due to slow paperwork
processing by the INS.
About 3,000 temporary visa holders, ages 16 and older, were required to
register nationwide. Most of those arrested were in Southern
California, where all but 23 had been released by Friday of last week.
However, many of those released still face immigration hearings and
some could face deportation.
The arrests prompted outrage and protests, especially by Iranian-
Americans, who charged that many of those held were in the process of
becoming legal residents and were arrested without warrants or access
to legal help.
"They are doing everything that the government wants them to do . and
they are being detained. There is no due process," said Jason Erb of
the Washington, D.C.-based Council on American-Islamic Relations, one
of the groups that filed the lawsuit.
"We are not challenging the right of the government to keep track of
people who visit the country. We are critical of the way it is being
done," said Mr. Erb. "We are critical of mass arrests of people who
are trying to follow all the rules."
Jorge Martinez, spokesman for the INS, said most of the detentions
occurred in Southern California, which has a large Iranian-American
population, because many people waited until the day of the deadline to
register, and they had to be detained for background checks.
"It is the responsibility of the INS to do this under statutory
authority. That is our job," Mr. Martinez said of the background
checks. "We are doing what the American want us to do (their
representatives enacted the statute), and we are doing what the law
wants us to do."
In the next phase of the program, about 7,200 male visa holders from 13
countries, including Afghanistan, Algeria, Lebanon and North Korea,
will be required to register by January 10, males from Saudi Arabia and
Pakistan must register by February 21.
VODAFONE PLC: Chief Executive Faces Damaging Securities Lawsuit In US
---------------------------------------------------------------------
Arun Sarin, the newly appointed chief executive of Vodafone PLC, faces
a potentially damaging lawsuit in the United States over allegations of
Enron-type accounting practices, The Observer reports.
According to the class action filed in the United States, telecoms
company InfoSpace, once run by Mr. Sarin, has been accused of
overstating its revenues and issuing false predictions for its earnings
potential. The lawsuit alleges that the Nasdaq-listed infrastructure
firm, which Mr. Sarin headed between April 2000 and January 2001,
concealed its "true operating performance in order to artificially
inflate the market price of (its) securities."
The lawsuit, filed by New York-based Wolf, Haldenstein, Adler, Freeman
& Herz, the same firm which earlier this year filed a claim against
Vodafone, further says that between January 2000 and January 2001,
InfoSpace "disseminated false and misleading information concerning
(its) actual full year 1999 and 2000 financial performance.
The lawsuit also alleges that InfoSpaces's accounts had not been
prepared in conformity to generally agreed accounting policies and that
the firm had understated the true size of its expenses. The suit says
as well that the company failed to pay 200 employees up to $5 million
in overtime in a bid to mask the true cost of its workforce. The
lawsuit claims that on December 13, 2000, Mr. Sarin reiterated his
confidence in InfoSpace's future, at a time when, it is alleged, the
company was experiencing a downturn. Mr. Sarin said, "InfoSpace
continues to experience momentum across all of our areas of focus, and
we remain very confident with the financial guidance we previously have
provided."
However, alleges the lawsuit, in fact, InfoSpace was "not experiencing
strong demand," and once Mr. Sarin stood down in January 2001, the
firm "confirmed the worst nightmare of the investors." The lawsuit
concludes that InfoSpace overstated revenues for the "quarter and year
ended December 31, 1999, the quarters ended March 31, 2000, June 30,
2000, September 30, 2000 and the quarter and year ended December 31,
2000."
Vodafone chairman Lord MacLaurin said, "The whole of the industry had a
bad time, and we all got legal actions in the United States. It is a
very litigious society." He added that Vodafone would not be funding
Mr. Sarin's defense.
A Vodafone spokesman said Mr. Sarin's background had been thoroughly
vetted before he was appointed. "Vodafone takes the issue of corporate
governance very seriously. If there were any outstanding issues, we
would have taken them into account," he said.
Asbestos Alert
ASBESTOS LITIGATION: Defendants Make Progress in Various Suits, Claims
----------------------------------------------------------------------
Several companies plagued by asbestos litigation and related bankruptcy
filings are getting the gift they may have most hoped for Christmas.
Babcock & Wilcox Co., which filed for Chapter 11 protection in April
2000 as asbestos lawsuits mounted, filed a settlement with asbestos
plaintiffs with the US Bankruptcy Court in New Orleans, while Honeywell
International Inc., in an attempt to get its asbestos problem behind
it, on the same day announced it was taking a $900 million charge for
the fourth quarter related to those liabilities. Meanwhile,
Pittsburgh-Corning Inc. told Judge Judith Fitzgerald of the US
Bankruptcy Court in Pittsburgh that it will file a reorganization plan
in January based on an asbestos settlement announced in May.
Those three events followed Halliburton Co.'s announcement Wednesday
that it entered into a $4 billion settlement with its asbestos
plaintiffs. All the settlements are designed to end the threat of
asbestos litigation against the current or former units of these
companies. In each case, too, the settlements will be paid after so-
called 524(g) trusts are created to fund present and future asbestos
claims. Those trusts will be funded with cash, insurance proceeds and,
in some cases, company stock.
Honeywell hasn't yet announced the details of its settlement with
asbestos plaintiffs, but on Thursday it said it expects to take the
charge against earnings. It has a January 17 court date at which it
may present a settlement with asbestos plaintiffs, according to
plaintiffs' lawyers. A Honeywell spokesman declined to comment.
Barberton, Ohio-based Babcock & Wilcox, a unit of New Orleans-based
McDermott International, actually announced a settlement in August.
However, it said that it filed a "substantially complete" plan of
reorganization based on the deal in the US Bankruptcy Court in New
Orleans.
The Babcock & Wilcox settlement offers asbestos claimants all of the
equity in the company, 4.75 million shares of McDermott, worth $18.76
million based on Friday's closing price of $3.95 and $92 million in
unsecured promissory notes. In return, McDermott and all its past and
present directors, officers and affiliates would benefit from the
protection the 524(g) trust would afford against any present and future
asbestos lawsuits. McDermott said finalizing the settlement in
bankruptcy court could take up to nine months. Babcock & Wilcox didn't
return calls.
For bankrupt Pittsburgh-Corning, a maker of glass and paints that is
half-owned by PPG Industries, a settlement with its asbestos claimants
could bring an end to its stay in Chapter 11. It would also bring
closure for PPG. Pittsburgh-Corning said in May its settlement is
worth $3.2 billion, including $2.7 billion in insurance payments and
$500 million in cash and PPG shares.
Although bankruptcy courts have yet to approve the three settlements,
and Honeywell's settlement is yet to come, the deals are the first to
resolve a new wave of asbestos-related bankruptcies filed over the last
three years.
ASBESTOS LITIGATION: Firms Unite to Resolve Asbestos Related Litigation
-----------------------------------------------------------------------
A solution to the 20-year-long asbestos mess may finally be in the
works. Trial lawyers have pitted plaintiffs who aren't sick against
businesses that never made asbestos. Now, as companies like Honeywell
and Halliburton negotiate private settlements, leaders of the largest
business groups have decided to cooperate, which increases the odds of
a global settlement within the next two years.
Recently, representatives of such groups as the US Chamber of Commerce,
the National Association of Manufacturers, and the Business Roundtable
met to urge companies beset by suits to unite. Soon talks began
between the warring factions, one mostly composed of companies ravaged
or bankrupted by asbestos suits (Owens Corning, W.R. Grace) and a
second representing companies like GE, GM, Ford, and Dow Chemical that
fear rising asbestos liabilities. If the negotiations lead to a single
proposal, and insiders assert that they will, Congress will be more
willing to step into the morass and legislate.
The term "morass" is an understatement. Claims for asbestos-related
illnesses reached 600,000 in 2000 and have been rising by 50,000 a
year. The cost so far is $54 billion and the total could reach $275
billion. Sixty-one companies have been bankrupted, one-third in the
past two years. Most new claims are coming from people who aren't yet
sick.
The business factions disagree on who should pay. Bankrupt or near-
bankrupt companies want to put off claims and reduce the number of
suits by using American Medical Association criteria to determine who
is ill. Sick workers would be eligible for a payout, those who aren't
could sue if they do get sick, with no statute of limitations. The
group including GE and GM favors capping asbestos liability, paying now
to create a trust fund, and putting the mess behind them. Because
devising a trust fund will be hard--how large is large enough, the
medical-criteria proposal will likely be the starting point.
The new chairman of the Senate Judiciary Committee, Orrin Hatch, has
made curtailing asbestos lawsuits a priority James Sensenbrenner, who
chairs the House panel, says he'll "hot line" whatever the Senate
passes. One reason Congress may act is that during the midterm
elections, insurers helped bankroll $2 million in TV, radio, and print
ads that decried runaway asbestos litigation. The ads ran in states
like Nebraska, Wisconsin, and Washington, where business interests
hoped to win over moderate Democrats whose votes will be crucial to
curtailing the lawsuits. The insurers also hired Democratic lobbyists
John Podesta and Harold Ickes, late of the Clinton White House, to
convince labor unions that their interests aren't with their usual
allies, the trial lawyers.
ASBESTOS LITIGATION: Halliburton Achieves $4.1Billion Global Settlement
-----------------------------------------------------------------------
Halliburton Co. (NYSE: HAL) reached an agreement in principle to settle
all of the present and future personal injury asbestos claims against
the company, while avoiding a bankruptcy filing for it and most of its
subsidiaries. The settlement--which was reached with attorneys
representing more than the 75 percent of the known present claimants
required to achieve resolution on all of the cases--would put to rest
an issue that has plagued the company's stock for some time.
The company expects to file the plan in the latter part of the first
quarter of 2003, and said it should be concluded in 90 days. Final
agreement and completion are subject to resolution of issues including
financing, Halliburton board approval and final court approval.
"If this transaction is completed, it will resolve a major issue that
has been clouding our future," said Dave Lesar, chairman, president and
chief executive officer of Halliburton.
"Not only have we taken care to responsibly provide for those affected
by asbestos, this settlement will allow us to concentrate all our
efforts on increasing shareholder value, and our total focus can return
to Halliburton's core businesses."
The settlement would be implemented through a pre-packaged Chapter 11
filing of two Halliburton subsidiaries --DII Industries LLC (formerly
Dresser Industries Inc.) and Kellogg Brown & Root Inc. (KBR)--as well
as certain other DII and KBR subsidiaries with U.S. operations. The
bankruptcy filing would be used to create a trust for the asbestos
claimants and protect the parent company from claims.
Halliburton would put up to $2.775 billion in cash, 59.5 million shares
of Halliburton stock (worth about $1.2 billion) and an expected $100
million or less in notes into the trust. Halliburton calculated that
the cost would come out to $3,000 per claimant based on the 328,000
existing claims as well as an estimated 1 million possible future
claims.
Halliburton will retain 100 percent ownership of all its subsidiaries,
including DII and KBR, and all of the company's existing contracts and
obligations will be honored and creditors paid in full. There will be
no employee layoffs resulting from the plan, and all salaries and
benefits will remain unchanged. "In other words, outside of the global
asbestos settlement, it will be business as usual while the plan is
implemented," Lesar said.
James D. Crandell, who covers Halliburton for Lehman Brothers, said
that after the trust is completed, and assuming that the cash
contribution is financed entirely with debt, the company's debt-to-
capitalization ratio would be 45 percent. The company's shares
outstanding would increase 14 percent to 494 million. Crandell
reiterated his $24 price target and his equal-weight investment stance.
"While it is uncertain how much insurance would reimburse, Halliburton
would keep the first $2.3 billion in insurance proceeds, the trust
would get any amount between $2.3 billion and $3 billion (or the next
$700 million), and Halliburton would keep any additional amount over $3
billion," Crandell said.
Grant Borbridge of Prudential Securities maintained his Hold rating and
price target of $20. "We anticipate that Halliburton will be forced to
take on additional debt due to our expectation of the requirement of a
more immediate, substantial payment into the [trust]. However, the
question remains over the timing of Halliburton's insurance proceeds
and consequently the timing of the repayment of the debt," he said.
Moody's Investors Service placed Halliburton's ratings under review for
possible downgrade, including its senior unsecured debentures, notes
and medium- term notes rated Baa2. In its review, Moody's will consider
the effect of the almost $2.8 billion in cash payments on Halliburton's
financial position, including the potential timing of such payments and
the extent to which they could be recovered through insurance.
ASBESTOS ALERT: Aearo Pegs Asbestos, Other Liabilities at $4.8 Million
----------------------------------------------------------------------
Aearo Corporation may be contingently liable with respect to numerous
lawsuits involving respirators sold by its predecessors, American
Optical Corporation and Cabot Corporation, arising out of agreements
entered into when the AOSafety(R) Division was sold by American Optical
Corporation to Cabot in April 1990 and when later sold by Cabot to the
Company in 1995.
These lawsuits typically involve plaintiffs alleging that they suffer
from asbestosis or silicosis, and that such condition results in part
from respirators which were negligently designed or manufactured. The
defendants in these lawsuits are often numerous, and include, in
addition to respirator manufacturers, employers of the plaintiffs and
manufacturers of sand (used in sand blasting) and asbestos.
At September 30, 2002, the Company has recorded liabilities of
approximately $4.8 million, which represents reasonable estimates of
its probable liabilities, for product liabilities substantially related
to asbestos and silica-related claims as determined by the Company in
consultation with an independent consultant. The accrual does not
include estimates for insurance recoveries. This reserve is re-
evaluated periodically and additional charges or credits to operations
may result as additional information becomes available.
Responsibility for legal costs, as well as for settlements and
judgments, is shared contractually by the Aearo, Cabot, American
Optical Corporation and a prior owner of American Optical Corporation.
Liability is allocated among the parties based on the number of years
each Company owned the AOSafety Division and the alleged years of
exposure of the individual plaintiff. The Company's share of the
contingent liability is further limited by an agreement entered into
between the Company and Cabot on July 11, 1995, as amended in 2002.
This agreement provides that, so long as the Company pays to Cabot an
annual fee of $400,000, Cabot will retain responsibility and liability
for, and indemnify the Company against, asbestos and silica-related
legal claims asserted after July 11, 1995 and alleged to have arisen
out of the use of respirators while exposed to asbestos or silica prior
to January 1, 1997.
To date, the Company has elected to pay the annual fee. The Company
could potentially be liable for these exposures if the Company elects
to discontinue its participation in this arrangement, or if Cabot is no
longer able to meet its obligations in these matters. With these
arrangements in place, however, the Company's potential liability is
limited to exposures alleged to have arisen from the use of respirators
while exposed to asbestos or silica on or after January 1, 1997.
The Company also may be responsible for certain claims relating to
acquired companies other than the AOSafety(R) Division that are not
covered by, and are unrelated to, the agreement with Cabot. The
Company retains responsibility and liability for all other product
liability claims and accordingly maintains insurance protection for
claims other than asbestosis and silicosis.
Consistent with the current environment being experienced by companies
involved in asbestos and silica-related litigation, there has been an
increase in the number of asserted claims that could potentially
involve the Company. Various factors increase the difficulty in
determining the Company's potential liability, if any, in such claims,
including the fact that the defendants in these lawsuits are often
numerous and the claims generally do not specify the amount of damages
sought. Additionally, the bankruptcy filings of other companies with
asbestos and silica-related litigation could increase the Company's
cost over time.
In light of these and other uncertainties inherent in making long-term
projections, the Company has determined that the five-year period
through fiscal 2007 is the most reasonable time period for projecting
asbestos and silica-related claims and defense costs. It is possible
that the Company may incur liabilities in an amount in excess of
amounts currently reserved.
However, taking into account currently available information,
historical experience, and the Cabot agreement, but recognizing the
inherent uncertainties in the projection of any future events, it is
management's opinion that these suits or claims should not result in
final judgments or settlements in excess of the Company's reserve that,
in the aggregate, would have a material effect on the Company's
financial condition, liquidity or results of operations.
COMPANY PROFILE
Aearo Corporation
5457 W. 79th St.
Indianapolis, IN 46268
Phone: 317-692-6666
Fax: 317-692-3088
http://www.aearo.com
Employees :1,510
Revenue :$ 286,900,000
Net Income :$ 9,300,000
Assets :$ 270,200,000
Liabilities :$ 248,600,000
(As of September 30, 2002)
Description: Through subsidiary Aearo Company, Aearo Corporation makes
and sells personal protection equipment in about 85 countries under the
brand names AOSafety, E-A-R, and Peltor. Products include earplugs,
goggles, face shields, respirators, hard hats, safety clothing, first-
aid kits, and communication headsets. The firm also sells safety
prescription eyewear and makes energy-absorbing foams that control
noise, vibration, and shock for use in its own and other manufacturers'
products. Aearo's former parent, specialty chemicals maker Cabot
Corporation, owns about 40% of the company; Vestar Capital Partners and
Aearo executives own the rest.
ASBESTOS ALERT: Coca-Cola Co. Challenges Asbestos Related Litigation
----------------------------------------------------------------------
The Coca-Cola Company (Coke) asked a judge to toss out a claim by a
water filtration company it owned more than 20 years ago that is
seeking $10 million from Coke to pay for legal expenses related to an
asbestos lawsuit. The world's largest beverage maker said it has no
past, present or future responsibility to pay for expenses incurred by
Milwaukee-based Aqua-Chem Inc.
Coke filed the complaint against Aqua-Chem in Fulton County Superior
Court. Atlanta-based Coke bought Aqua-Chem in 1970 because it was
interested in the company's water filtration technologies. Coke sold
the business in 1981 to focus on its core business.
A division of Aqua-Chem made a boiler that contained gaskets purchased
from outside suppliers, Coke said. Several years after Coke sold the
company, Aqua-Chem was sued because there was asbestos in some of the
gaskets. Aqua-Chem has demanded that Coke reimburse it for about $10
million for legal costs incurred over the last 18 years and acknowledge
liability for certain future expenses.
"Aqua-Chem's asbestos claimants are and should continue to be covered
by existing insurance," Coke said in a statement. "Further, regardless
of the outcome of this litigation, the Coca-Cola Co. believes that any
uninsured financial liability is not material to the financial position
of the company."
COMPANY PROFILE
The Coca-Cola Company (NYSE: KO)
1 Coca-Cola Plaza
Atlanta, GA 30313
Phone: 404-676-2121
Fax: 404-676-6792
http://www.cocacola.com
Employees : 38,000
Revenue : $20,092,000,000
Net Income : $3,969,000,000
Assets : $22,417,000,000
Liabilities : $11,051,000,000
(As of December 31, 2001)
Description: The Coca-Cola Company brackets the #2 soft drink, Pepsi,
with #1 Coca-Cola classic and #3 diet Coke. Among its other brands are
Barq's, Fruitopia, Minute Maid, POWERaDE, Sprite, and Dasani water. It
also sells Evian water in North America and Danone's spring water
brands in the US. Coca-Cola sells Crush, Dr Pepper, and Schweppes
outside of Australia, Europe, and North America. The firm, which does
no bottling, sells about 300 drinks brands, including coffees, juices,
sports drinks, and teas, in some 200 nations. Coca-Cola commands about
50% of the global soft-drink market.
ASBESTOS ALERT: CSK Discloses Asbestos Related Litigation, Other Claims
-----------------------------------------------------------------------
CSK Auto Parts reports that, together with other automobile
manufacturers, automotive parts manufacturers and other retailers, it
has been named as defendant in several asbestos related lawsuits.
The Company responds to the controversy by saying that currently and
from time to time it is involved in other litigation incidental to the
conduct of its business, including asbestos and similar product
liability claims, slip and fall and other general liability claims,
discrimination and employment claims, vendor disputes, and
miscellaneous environmental and real estate claims.
The damages claimed in some of this litigation are substantial. Based
on internal review, the Company accrues reserves using its best
estimate of probable and reasonably estimable contingent liabilities.
COMPANY PROFILE
CSK Auto Corporation (NYSE: CAO)
645 E. Missouri Ave., Ste. 400
Phoenix, AZ 85012
Phone: 602-265-9200
Fax: 602-631-7321
http://www.cskauto.com
Employees : 13,750
Revenue : $ 1,438,600,000
Net Income : $ (17,200,000)
Assets : $1,068,600,000
Liabilities : $914,400,000
(As of January 31, 2002)
Description: CSK Auto is a retailer of automotive parts and
accessories. It sells mainly to do-it-yourselfers but also to auto
professionals. CSK Auto owns about 1,130 stores in about 20 states
under the names Checker Auto Parts, Schuck's Auto Supply, and Kragen
Auto Parts. The stores carry products for domestic and imported
vehicles. The company's purchases of the Big Wheel/Rossi and Al's and
Grand Auto Supply chains netted it about 280 stores in 1999.
PartsAmerica.com, an online parts retailer run by CSK Auto, Advance
Auto Parts, and Sequoia Capital, has ceased operations. Investcorp owns
25% of CSK Auto.
ASBESTOS ALERT: Hartford Faces Various Asbestos Indemnity Charges
-----------------------------------------------------------------
In October 2002, an action was filed in the Superior Court in Alameda
County, California, against Hartford Accident and Indemnity Company, a
subsidiary of The Hartford Financial Services Group, Inc., and two
other insurers. The principal plaintiffs are Mac Arthur Company and
its subsidiary, Western Mac Arthur Company, both former regional
distributors of asbestos products. Mac Arthur seeks a declaration of
coverage and damages for asbestos bodily-injury claims. Five asbestos
claimants who allegedly have obtained default judgments against Mac
Arthur also are joined as plaintiffs; they seek to recover the amount
of their default judgments and additional damages directly from the
defendant insurers and assert a right to an accelerated trial.
Hartford A&I issued primary general liability policies to Mac Arthur
during the period 1967-76. Mac Arthur sought coverage for asbestos-
related claims from Hartford A&I under these policies beginning in
1978. During the period 1978 to 1987, Hartford A&I paid out its full
aggregate limits under these policies plus defense costs. In 1987,
Hartford A&I notified Mac Arthur that its available limits under these
policies had been exhausted, and Mac Arthur ceased submitting claims to
Hartford A&I under these policies.
In its complaint, Mac Arthur alleges that it has approximately $1.8
billion of unpaid asbestos liability judgments against it to date. It
seeks additional coverage from Hartford A&I on the theory that Hartford
A&I has exhausted only its products aggregate limit of liability, not
separate limits available for non-products liability. The ultimate
amount of Mac Arthur's alleged non-products asbestos liability,
including any unresolved current and future claims, is currently
unknown. Mac Arthur indicates in its complaint that it will seek to
have the full amount of its current and future asbestos liability
estimated in its anticipated bankruptcy proceeding. If such estimation
is made, Mac Arthur intends to seek a judgment against the defendants
for the amount of its total liability, including estimated claims.
Hartford A&I intends to defend the Mac Arthur action vigorously. Based
on the information currently available to it, management believes that
Hartford A&I's liability, if any, to Mac Arthur will not be finally
resolved for at least a year and most probably not for several years.
In the opinion of management, the ultimate outcome is highly uncertain
for many reasons. It is not yet known, for example, in which venue
Hartford A&I's liability, if any, will be determined; whether Hartford
A&I's defenses based on Mac Arthur's long delay in asserting claims for
further coverage will be successful; how other significant coverage
defenses will be decided; or the extent to which the claims and default
judgments against Mac Arthur involve injury outside of the products and
completed operations hazard definitions of the policies. In the
opinion of management, an adverse outcome could have a material adverse
effect on the Company's results of operations, financial condition and
liquidity.
COMPANY PROFILE
The Hartford Financial Services Group, Inc. (NYSE: HIG)
Hartford Plaza, 690 Asylum Ave.
Hartford, CT 06115-1900
Phone: 860-547-5000
Fax: 860-547-2680
http://www.thehartford.com
Employees : 27,400
Revenue : $15,147,000,000
Net Income : $507,000,000
Assets : $181,238,000,000
Liabilities : $172,225,000,000
(As of December 31, 2001)
Descripton: The Hartford Financial Services Group, Inc. (NYSE: HIG)
offers a variety of personal and commercial property & casualty
insurance products, including homeowners, auto, and workers'
compensation. The Hartford Financial Services Group owns Hartford Life,
which offers individual and group life insurance, annuities, employee
benefits administration, asset management, and mutual funds (managed
both in-house and by Wellington Management Group). The Hartford sells
its investment products through a distribution network consisting of
about 1,500 broker-dealers and approximately 500 banks.
ASBESTOS ALERT: IPALCO Downplays Subsidiary's Asbestos-Related Suits
--------------------------------------------------------------------
A regulated utility unit of IPALCO, Indianapolis Power & Light, has
been named as a defendant in around 50 pending lawsuits alleging
personal injury or wrongful death stemming from exposure to asbestos
and asbestos containing products formerly located in IPL power plants.
IPL has been named as a "premises defendant" in that IPL did not mine,
manufacture, distribute or install asbestos or asbestos containing
products. These suits have been brought on behalf of persons who
worked for contractors or subcontractors hired by IPL. Many of the
original primary defendants the asbestos manufacturers have filed for
bankruptcy protection. IPL has insurance coverage for many of these
claims; currently, these cases are being defended by counsel retained
by various insurers who wrote policies applicable to the period of time
during which much of the exposure has been alleged.
Although we do not believe that any of the pending asbestos suits in
which IPL is a named defendant will have a material adverse effect on
our business or operations, the Company is unable to predict the number
or effect any additional suits may have. Accordingly, the Company
cannot assure that the pending or any additional suits will not have a
material effect on its business or operations.
While the Company cannot predict the outcome, it does not believe that
the suit will have a material adverse effect on IPALCO's financial
condition, results of operations or liquidity. In addition to the
foregoing, the Company is a defendant in various actions relating to
various aspects of its business. While it is impossible to predict the
ultimate disposition of any litigation, the Company does not believe
that any of these lawsuits, either individually or in the aggregate,
will have a material adverse effect on its financial condition, results
of operations or liquidity.
COMPANY PROFILE
IPALCO Enterprises, Inc.
1 Monument Circle
Indianapolis, IN 46204
Phone: 317-261-8261
Fax: 317-630-5726
Toll Free: 888-261-8222
http://www.ipalco.com
Employees : 38,000
Revenue : $ 9,327,000,000
Net Income : $ 273,000,000
Assets : $ 36,736,000,000
Liabilities : $ 31,197,000,000
(As of December 31, 2001 of The AES Corp)
Description: IPALCO generates, transmits, and distributes electricity
to more than 440,000 customers in central Indiana. The company has
3,100 MW of generating capacity; most of its power is generated from
coal-burning plants. IPALCO has sold its steam generation and
distribution assets and the metropolitan cooling system assets of its
non-regulated subsidiary, Mid-America Capital Resources. IPALCO is a
subsidiary of AES, one of the world's largest independent power
producers; AES has announced plans to sell a minority interest in
IPALCO.
ASBESTOS ALERT: ITT, Subsidiary Continue to Face Asbestos Suits
-----------------------------------------------------------------
ITT and its subsidiary Goulds Pumps, Inc. have been joined as
defendants with numerous other industrial companies in product
liability lawsuits alleging injury due to asbestos. These actions
against the Company have been managed by the historic product liability
insurance carriers. All claims paid to date, including all defense and
settlement costs, have been covered by those same carriers.
These claims stem primarily from products sold prior to 1985 that
contained a part manufactured by a third party, e.g., a gasket, which
allegedly contained asbestos. The asbestos was encapsulated in the
gasket (or other) material and was non-friable. In certain other
cases, it is alleged that ITT companies were distributors for other
manufacturers' products that may have contained asbestos.
Frequently, the plaintiffs are unable to demonstrate any injury or do
not identify any ITT or Goulds product as a source of asbestos
exposure. During the past 12 months, ITT and Goulds resolved
approximately 800 cases through settlement or dismissal. The average
amount of settlement per claim has been nominal.
Based upon past claims experience, available insurance coverage, and
after consultation with counsel, management believes that these matters
will not have a material adverse effect on the Company's consolidated
financial position, results of operations, or cash flows.
COMPANY PROFILE
ITT Industries, Inc. (NYSE: ITT)
4 W. Red Oak Ln.
White Plains, NY 10604
Phone: 914-641-2000
Fax: 914-696-2950
http://www.ittind.com
Employees : 38,000
Revenue : $4,675,700,000
Net Income : $276,700,000
Assets : $4,508,400,000
Liabilities : $3,132,600,000
(As of December 31, 2001)
Description: ITT Industries gets more than half of its sales from fluid
technology (pumps, mixers, heat exchangers, valves) and motion & flow
control (automotive tubing and lines, boat pumps, shock absorbers,
friction pads) products. ITT's fluid technology brands include Flygt,
Goulds, and Vogel; applications range from water and wastewater
treatment to chemical production and processing. Motion & flow control
brand names include KONI shocks and Flojet pumps. ITT's less-fluid
offerings include defense electronics (combat radios, night-vision
devices, airborne electronic-warfare systems) and electronic components
(connectors, cable assemblies, switches).
ASBESTOS ALERT: Metso Says Asbestos Accusations in the US Immaterial
--------------------------------------------------------------------
Due to the ongoing public debate, Metso Corporation (NYSE: MX; HEX:
MEO) has conducted a study on possible asbestos claims brought against
it. Claims have been brought against Metso's U.S. subsidiary Neles-
Jamesbury Inc., part of the Metso Automation business area, relating to
valves previously manufactured by Neles-Jamesbury.
Out of the total of 270 claims, 75 claims have been dismissed in the
relevant court and 51 claims have been settled for an average
compensation of US$551 per person. The remaining 137 claims are still
pending but their outcome is not expected to materially deviate from
the outcome of the previous claims. In the remaining claims, Metso is
one of numerous defendants.
Two claims have been brought against Metso's U.S. subsidiary Metso
Minerals Industries Inc. (formerly, Svedala Industries Inc.), which is
part of the Metso Minerals business area. One of the claims has been
dismissed. In the remaining claim, Metso is one of the 22 defendants
and the claim is not expected to have a material adverse economic
effect on Metso.
COMPANY PROFILE
Metso Corporation (NYSE: MX)
Fabianinkatu 9 A, PO Box 1220
FIN-00101 Helsinki, Finland
Phone: +358-20-484-100
Fax: +358-20-484-101
http://www.metsocorporation.com
Employees : 30,242
Revenue : $ 3,866,000,000
Net Income : $ 126,000,000
Assets : $ 4,488,000,000
Liabilities : $ 3,180,000,000
(As of December 31, 2001)
Description: Formed by the merger of Valmet (paper machines) and Rauma
(fiber and flow-control technology), Metso makes fiber and paper
machinery, rock crushers, and automation and control products for the
paper and packaging, construction, and mining industries. It also
manufactures equipment for processing fiber and making panelboard and
other products. Metso bolstered its mining equipment business by
acquiring most of Svedala Industri AB (Sweden). Its Valmet Automotive
provides contract manufacturing of autos and is one of Europe's largest
manufacturer of automobiles.
New Securities Fraud Cases
CYTYC CORPORATION: Charles Piven Commences Securities Suit in MA Court
----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of Cytyc Corp. (Nasdaq:CYTC)
between July 25, 2001 to June 25, 2002, inclusive, in the United States
District Court for the District of Massachusetts against the Company
and certain of its officers.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven, PA by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
DIVERSA CORPORATION: Milberg Weiss Commences Securities Suit in S.D. NY
-----------------------------------------------------------------------
Milberg Weiss Bershad Hynes & Lerach LLP, initiated a securities class
action on behalf of purchasers of the common stock of Diversa Corp.
(Nasdaq:DVSA) between February 14, 2000 and December 6, 2000,
inclusive, in the United States District Court, Southern District of
New York, against the Company and:
(1) Jay M. Short,
(2) Karin Eastham,
(3) James H. Cavanaugh,
(4) Bear Stearns Co., Inc.,
(5) J.P. Morgan Securities, Inc. (as successor-in-interest to
Chase H&Q),
(6) Chase H&Q,
(7) Deutsche Banc Alex. Brown,
(8) Credit Suisse First Boston (as successor-in-interest to DLJ),
(9) ABN Amro Securities (as successor-in-interest to ING Baring
Furman Selz),
(10) ING Baring Furman Selz,
(11) Merrill Lynch Pierce Fenner & Smith, Inc.,
(12) Morgan Stanley,
(13) Robertson Stephens, Inc. (as successor-in-interest to
FleetBoston Robertson Stephens Inc.),
(14) Salomon Smith Barney, Inc.,
(15) SG Cowen Securities Corp.,
(16) Warburg Dillon Read,
(17) RBC Dain Rauscher (as successor-in-interest to Dain Rauscher
Wessels),
(18) Dain Rauscher,
(19) Needham & Company, Inc.,
(20) Pacific Growth Equities, Inc.,
(21) RBC Dain Rauscher (as successor-in-interest to Tucker Anthony)
and
(22) Tucker Anthony
The complaint alleges violations of Sections 11 and 15 of the
Securities Act of 1933 and Section 10(b) and 20(a) of the Securities
Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. On
February 14, 2000, Diversa commenced an initial public offering of
7,250,000 of its shares of common stock at an offering price of $24 per
share. In connection therewith, Diversa filed with the SEC a
registration statement, which incorporated a prospectus.
The complaint further alleges the Prospectus was materially false and
misleading because it failed to disclose, among other things, that:
(i) the Underwriter Defendants had solicited and received
excessive and undisclosed commissions from certain investors
in exchange for which the Underwriter Defendants allocated to
those investors material portions of the Diversa shares issued
in connection with the Diversa IPO; and
(ii) the Underwriter Defendants had entered into agreements with
customers whereby the Underwriter Defendants agreed to
allocate Diversa shares to those customers in the Diversa IPO
in exchange for which the customers agreed to purchase
additional Diversa shares in the aftermarket at pre-determined
prices.
In addition, the complaint alleges that certain of the Underwriter
Defendants improperly utilized their analysts, who were compromised by
undisclosed conflicts of interest, to artificially inflate or maintain
the price of Diversa stock.
For more details, contact Ariana J. Tadler or Christian P. Siebott by
Mail: One Pennsylvania Plaza, 49th fl., New York, N.Y., 10119-0165 by
Phone: 800/320-5081 or visit the firm's Website: http://www.milberg.com
eFUNDS CORPORATION: Charles Piven Commences Securities Suit in E.D. WI
----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of eFunds Corporation (Nasdaq:EFDS)
between February 2, 2001 and October 24, 2002, inclusive, in the United
States District Court for the Eastern District of Wisconsin against the
Company and certain of its officers and/or directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
SEACHANGE INTERNATIONAL: Marc Henzel Commences Securities Suit in MA
---------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court, District of Massachusetts, on
behalf of all persons other than defendants who purchased the common
shares of SeaChange International, Inc. (Nasdaq:SEAC) in or traceable
to the offering conducted by SeaChange on or about January 29, 2002.
The action, is pending the Company, certain of its directors and
officers and the lead underwriters of the Offering.
The suit alleges that defendants violated Sections 11, 12(a)(2) and 15
of the Securities Act of 1933 by issuing a false and misleading
prospectus on or about January 29, 2002. As alleged in the Complaint,
at all relevant times, SeaChange purported to be a leading developer,
manufacturer and marketer of video storage systems which purportedly
automate the management and distribution of video streams, such as
movies and other feature presentations and advertisements.
The suit further alleges that the Prospectus was materially false and
misleading because it failed to disclose, among other things, that the
Company was unable to compete effectively due to its inability to
provide server systems large enough to meet the needs of cable
companies located in major metropolitan areas and that the Company's
products were dependent on technology, developed and patented by a key
competitor, as to which SeaChange did not have proprietary rights.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave,
Suite 202 Bala Cynwyd, PA 19004-2808, by Phone: (888) 643-6735 or
(610) 660-8000, by Fax: (610) 660-8080 by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
SEPRACOR INC.: Charles Piven Launches Securities Fraud Suit in MA Court
-----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of Sepracor, Inc. (Nasdaq:SEPR)
between April 14, 2000 and March 6, 2002, inclusive, in the United
States District Court for the District of Massachusetts against the
Company and certain of its officers and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 by E-mail: hoffman@pivenlaw.com
SPIEGEL INC.: Charles Piven Commences Securities Fraud Suit in N.D. IL
----------------------------------------------------------------------
The Law Offices Of Charles J. Piven, PA initiated a securities class
action on behalf of shareholders who purchased, converted, exchanged or
otherwise acquired the common stock of Spiegel, Inc. (Pink
Sheets:SPGLA) between April 24, 2001 and April 19, 2002, inclusive, in
the United States District Court for the Northern District of Illinois,
Eastern Division, against the Company, Spiegel Holdings, Inc. and
certain officers and directors.
The action charges that defendants violated federal securities laws by
issuing a series of materially false and misleading statements to the
market throughout the class period which statements had the effect of
artificially inflating the market price of the Company's securities.
For more details, contact Charles J. Piven by Mail: The World Trade
Center-Baltimore, 401 East Pratt Street, Suite 2525, Baltimore,
Maryland 21202 by Phone: 410-986-0036 or by E-mail:
hoffman@pivenlaw.com
SYNCOR INTERNATIONAL: Marc Henzel Commences Securities Suit in C.D. CA
----------------------------------------------------------------------
The Law Offices of Marc S. Henzel initiated a securities class action
in the United States District Court for the Central District of
California, Western Division on behalf of all persons who purchased
Syncor International Corp. (Nasdaq:SCOR) common stock during the period
March 30, 2000 through and including November 5, 2002.
The suit charges defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder,
by issuing a series of press releases and public filings trumpeting
significant sales growth in the Company's international business. These
press releases and public filings were materially false and misleading
in that they failed to disclose that throughout the class period, the
Company's Chairman of the Board and the director of its Asian division
were making illegal payments to Syncor's overseas customers.
Before the market opened on November 6, 2002, the Company shocked the
market by announcing that it was conducting an internal investigation
into illegal payments to its overseas customers and had contacted the
Justice Department and the Securities Exchange Commission, and that its
previously announced acquisition by Cardinal Health, Inc. was in doubt.
As a result of this news, Syncor's stock price dropped sharply in pre-
market trading to $22.50 per share, down $13.42 per share from its
previous closing price of $35.92, and NASDAQ halted trading of Syncor's
stock pending a satisfactory response to its request for additional
information from the Company.
For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave,
Suite 202 Bala Cynwyd, PA 19004-2808, by Phone: (888) 643-6735 or
(610) 660-8000 by Fax: (610) 660-8080, by E-mail: Mhenzel182@aol.com or
visit the firm's Website: http://members.aol.com/mhenzel182.
TENET HEALTHCARE: Gold Bennett Files Securities Fraud Suit in C.D. CA
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Gold Bennett Cera & Sidener LLP initiated a securities class action in
the United States District Court for the Central District of California
on behalf of purchasers of Tenet Healthcare Corporation (NYSE: THC)
securities during the period October 3, 2001 through and including
November 11, 2002.
The suit alleges that, throughout the class period, defendants
represented that the Company's favorable financial results were
attributable to among other things, increased admissions, a shift to
higher acuity services, and improved operating processes, and that the
company was consistently achieving record results. However, it is
alleged that Tenet's profits and financial condition were inflated by,
among other things:
(1) the Company's policy of charging what it ultimately conceded
was "too aggressive" pricing for its payor charges which
enabled it to obtain Medicare "outlier payments" in amounts
far exceeding that which was justified for several Tenet
Hospitals; and
(2) wrongfully inducing patients into undergoing unnecessary
invasive coronary procedures at Tenet's key profit center at
Redding Medical Center (RMC).
On October 28, 2002, disclosures of overcharging began to surface when
a UBS Warburg analyst challenged the Company's exposure to charges of
Medicare violations in connection with its outlier payments policy.
Thereafter, on October 30, 2002, the Company's RMC facility was raided
by the FBI, and on November 7, 2002, Tenet announced that two of its
top executives - David L. Dennis (the chief financial officer and chief
corporate officer) and Thomas B. Mackey (the chief operating officer) -
would leave the Company amidst revelations that a federal investigation
was being launched into allegations that Tenet obtained unjustifiable
Medicare reimbursements through over-aggressive pricing policies.
Following these disclosures, Tenet's stock price fell 72%, and lost
approximately $16 billion in market value.
For more details, contact Gwendolyn R. Giblin by Mail: 595 Market
Street, Suite 2300, San Francisco, California 94105 by Phone:
(800) 778-1822 or (415) 777-2230 by Fax: (415) 777-5189 or by E-mail:
tenet@gbcsf.com.
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