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Executive Business Briefing

  |   April 4, 2003 at 2:08 PM
Here is a look at some of Friday top business stories:


SEC accuses Scrushy of insider trading

BIRMINGHAM, Ala., April 4 (UPI) -- The attorney for embattled HealthSouth Corp. founder Richard Scrushy said his client has done nothing wrong, despite the Securities and Exchange Commission charging Scrushy of unfairly profiting from $170 million in stock sales going back to 1991.

Scrushy on Thursday hired Donald Watkins, of Birmingham, to defend him in the case.

"Richard Scrushy has done nothing wrong at HealthSouth," Watkins told the Birmingham News Friday. "I don't like how the SEC investigation is causing collateral damage to this state and community."

Ken Livesay, one of five HealthSouth executives who pleaded guilty Thursday, told investigators the company inflated earnings by $635 million in 1998 and $440 in 1997. The new figures are on top of the $1.4 billion in overstated earnings the SEC identified between 1999 and mid-2002.

Livesay, an assistant controller at HealthSouth from 1989 to 1999, also helped identify new details in the fraud scheme, according to his plea agreement.

Livesay, 42, said the gap between actual earnings and the false earnings reported to Wall Street were growing so large around 1998 that the company's actual profits were not enough to pay taxes on the phony profits. He said the company had to borrow money to make the payments.

Livesay's attorney, Thomas Spina told the News that Livesay faced pressure ay HealthSouth to go along with the accounting scheme. Spina added that Livesay, a father of two, wanted to put the matter behind him by acknowledging his guilt.

Spina along with Angela Ayers, 33, Cathy Edwards, 39, Kay Morgan, 55, and Virginia Valentine, 33, pleaded guilty Thursday to accounting fraud charges in federal court and are cooperating in the investigation. The guilty pleas bring the total to eight in the government's investigation of HealthSouth's accounting fraud.

Sentencing has not been set. They all face between five and 15 years in prison and fines of between $250,000 and $1 million. The five were released on their own recognizance.


CCA to raise $200M in offering

NASHVILLE, April 4 (UPI) -- Corrections Corp. of America has announced a public offering of its common stock and increased earnings expectations for the first quarter and fiscal year 2003.

The Nashville-based company intends to make a public offering of its common stock and $200 million of its new senior note due 2011. The majority of the 7.6 million shares offered will come from the company with the balance, 1.2 million, coming from a selling stockholder.

Proceeds will be used to finance the purchase of up to 90 percent of the company's Series B Preferred Stock related to a tender offer commenced April 2 at $26 per share.

The company also expects to exceed the first quarter and fill year 2003 earnings guidance of $49 million to $51 million it announced Feb. 12. CCA is now expecting first quarter earnings to be in the range of $54 million to $55 million.

For the full year 2003, the company previously announced earnings guidance of $206 million to $210 million. CCA now expects earnings for the full year to fall in the range of $215 million to $220 million.

CCA President and Chief Executive Officer John Ferguson credited the change to "cost containment efforts" in the areas of food and medical expenses and an increase in occupancy levels at its prison facilities.


Cathay Pacific announces further flight reductions

LOS ANGELES, April 4, (UPI) -- Cathay Pacific Airways announced Friday it will make further temporary reductions to flight schedules in response to weakening passenger demand. The adjustments will take effect from April and are planned to remain in effect until end of May 2003.

The majority of the changes will affect services within the Asia region. Cities affected are Bangkok, Denpasar, Jakarta, Kuala Lumpur, Manila, Seoul, Singapore, Taipei and Tokyo.

Most of these destinations will continue to be served by more than one service daily, the airline said.

London services will be reduced by two flights a week as will those to Melbourne, and Los Angeles will move form a double daily service to one flight a day.

On March 31, Cathay Pacific announced a 4 percent reduction in weekly passenger capacity, or a 10 percent reduction in the number of flights.

The combined total adjustment now represents a 14 percent reduction in system-wide weekly passenger capacity, or a 23 percent reduction in the number of flights operated by the airline each week. Some 108 flights have been withdrawn from the airline's weekly schedule.

"The combination of atypical pneumonia and war in the Middle East has had a severe impact on our passenger bookings," said Cathay Pacific Director Corporate Planning Augustus Tang. "These are temporary reductions and we will continue to monitor the market and make adjustments to meet passenger demand."


U.S./Ukraine sign poultry export agreement

WASHINGTON, April 4 (UPI) -- The United States and Ukraine have signed an agreement, which ends a 16-month ban on U.S. poultry exports to that country, the U.S. Department of Agriculture said Friday. The deal establishes a revised veterinary certificate for poultry exports to Ukraine.

"I am very pleased that we have resolved this issue in a mutually beneficial manner," said Agriculture Secretary Ann M. Veneman. "American producers will once again be able to provide high-quality poultry products to Ukrainian consumers."

The agreement was agreed to following two days of discussions that concentrated on specific wording of the veterinary certificate that is issued by the USDA Food Safety and Inspection Service for each shipment of exported poultry.

The certificate will be issued by FSIS if the product complies with the conditions agreed upon with Ukraine. FSIS will begin certifying product for export upon finalization of the bilingual certificate.

The United States exported poultry and poultry products worth $11 million to the Ukraine in 2001, the last year that market was open.

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