10A - THE UNIVERSITY DAILY KANSAN
WEDNESDAY JAN. 23,2002
Trent Graphics Poster Sale Jan. 16-18, 22-25
College Bowl Jan. 26 Committee Meetings
Tuesday Nights
6:00 pm Feature Films
Forums
Live Music
Fine Arts
7:00 pm Spectrum Films
Public Relations
Recreation & Travel
Special Events
The battle of KU's biggest and brightest brains takes place January 26, 2002 For locations call the SUA Office at 864-SHOW Final Round at 5.00
Other events at the Union
The KU School of Fine Arts and the Kansas Union Present:
Brown Bag Classics
Pirates of Penzance preview Wednesday 23 January Aldershot Auditorium, Laval 4, Kansas University 12:30 pm to 1:15 pm
Thursday Afternoon Tea 3:00-5:00
Traditions Area, Level 4, Kansas Union.
Free sweets and tea.
Questions about these or other SUA events? Call the SUA Office at 864- SHOW
BUSINESS NEWS
Kmart files for bankruptcy
The Associated Press
DETROIT—Kmart Corp., the discount chain that gave America the BlueLight Special and introduced Martha Stewart home fashions at cut-rate prices, filed for Chapter 11 bankruptcy yesterday.
Kmart became the biggest retailer in history to seek court protection from creditors.
The nation's No. 3 discounter had long struggled to compete with Wal-Mart and Target, and went into an alarmingly steep slide after a disappointing holiday season. Last weekend, it failed to pay its top food supplier $78 million.
Analysts said they expected Kmart to close about 300 of its 2,114 U.S. stores. Kmart said that it would close only weak stores and that it expected to emerge from Chapter 11 next year.
"We are determined to complete our reorganization as quickly and smoothly as possible," chief executive Chuck Conaway said.
On the New York Stock Exchange, Kmart closed down $1.04 at 70 cents. Its stock had traded as high as $13.55 last summer.
By the time Kmart figures out its business strategy, customers may have found somewhere else to shop. Analysts said filing for bankruptcy meant the shelves were not going to be fully stocked, something Kmart was already struggling with.
"You're going to frustrate customers and they're going to go and it's going to be hard to get them back," said Emme Kozloff with Bernstein Sanford.
Hutchison, 51, was most recently chief financial officer of Advantica Restaurant Group Inc., where he and Adamson were instrumental in the company's reorganization.
Kmart, which has 275,000 employees, said it had secured $2 billion in financing to keep going.
The first Kmart discount store was founded in 1962 and the chain got its official badge in 1977, when the S.S. Kresge Co. changed its name to Kmart Corp.
Kmart introduced the Blue-
The Martha Stewart Everyday brand, which includes sheets, towels, paints and kitchenware, is Kmart's largest volume-producing label, generating about $1 billion in sales last year.
Light Special in 1965, flashing blue police lights in the aisles to lure customers to discounted items.
Stewart has a provision in her contract that allows her to exit Kmart in case of bankruptcy, but such a move has to be approved by a bankruptcy judge. Martha Stewart officials did not return calls for comment.
The bankruptcy filing in federal court in Chicago was good news for Kmart's suppliers, including food wholesaler Fleming Cos. The company cut off shipments Monday, saying it was owed $78 million.
Kmart has nearly $16.3 billion in assets, making it the largest retailer ever to declare bankruptcy. Federated Department Stores, with $9.1 billion in assets, was the biggest when it filed for bankruptcy in 1990.
Last week, Kmart ousted its president and named a new chairman, James Adamson, to replace Conaway, who remains as chief executive. On Tuesday, named Ronald Hutchison as the
Fleming said Tuesday it intended to resume deliveries to Kmart "upon receiving satisfactory assurances from Kmart, via the bankruptcy court."
head of its restructuring.
Other suppliers have delayed or stopped shipments to Kmart, but the bankruptcy filing is expected to restore their confidence.
still, "the one thing Chapter 11 can't solve is the quality of actual merchandise and sales," said bankruptcy expert Martin Zohn of Proskauer LLP.
FBI investigates document shredding at Enron
The Associated Press
HOUSTON — FBI agents arrived at Enron's headquarters yesterday to investigate allegations of document shredding, while shareholders suing the fallen energy giant asked a federal judge to bar the company and its former auditor from destroying any more records.
Enron's former auditor, Arthur Andersen, acknowledged this month that its Houston office had shredded Enron-related documents. The office is already under a court order not to destroy any more Enron files.
Enron said it had posted security guards to block employees from floors holding accounting and finance records.
"The company has done everything you'd expect under these circumstances," Enron attorney Kenneth Marks told U.S. District Judge Melinda Harmon.
The judge urged attorneys for both sides to come up with a plan to protect company documents and get back to her today.
Enron slid into the biggest bankruptcy in U.S. history last month after investigators began
Andersen attorney Rusty Hardin also told the judge the company has Enron-related documents under guard.
Marks, the Enron attorney, said company officials late Monday seized a trash can filled with shredded documents after learning of the allegations. The company said the FBI was called in at its request.
looking at a series of complex partnerships that were used to keep hundreds of millions in losses off the books. Thousands of employees lost their jobs and their retirement nest eggs when Enron stock crashed.
"This is the shredded evidence that we got out of Enron," Lerach said as he entered court.
Shareholders are suing Enron executives and directors over more than $1 billion they gained from selling Enron stock from 1998 through last November.
One of the shareholder attorneys, William Lerach, carried a box of shredded paper into court yesterday, saying it came from a former Enron executive who saw Enron employees destroying documents as recently as last week.
The allegations that Enron employees were shredding documents at the 50-story headquarters were made public in a court brief released Monday by Lerach's law partner, Paul Howes.
She said the shredding continued through at least Jan. 14 and involved thousands of documents.
In it, Maureen Raymond Castaneda, who was laid off last week as Enron's director of foreign exchange and sovereign risk, said a "gather-reviewshred" process involving finance and accounting employees began Oct. 31, when the Securities and Exchange Commission announced a formal investigation into Enron's finances.
"The shredding is over," he said.
Lerach said Castaneda took boxes of shredded documents home, intending to use it as packing material. She gave Lerach's team the shreds, which Howes said were clearly marked as related to the partnerships that led to the company's downfall.
The lawyers welcomed the arrival of the FBI.
"I'd be surprised if there's any more shredding after that," Lerach said. He said he was satisfied 'the FBI can watch over them."
Robert Bennett, a Washington lawyer representing Enron, said the company told employees after coming under investigation that they were not to destroy relevant documents. He said the company was looking into charges that papers were destroyed despite that directive. In other developments yesterday:
The White House disclosed that President Bush's mother-in-law, Jenna Welch, had invested in Enron and lost $8,100. Bush, a friend of Enron chairman Kenneth Lay, said again he had no intention of releasing details of Enron contacts with White House aides who developed his energy plan, saying if "somebody has an accusation of wrongdoing, let me know."
Congressional investigators said they would subpoena senior officials at Arthur Andersen, including the chief executive and a fired auditor, to force their testimony tomorrow.
NEW YORK The third consecutive monthly gain in a key gauge of U.S. economic activity signaled that the nation's recession may soon be over, but investors continued to fret about the timing of a recovery.
Investors skeptical despite economic gains
The Associated Press
The New York-based Conference Board said yesterday that its Index of Leading Economic Indicators rose a strong 1.2 percent in December following a revised rise of 0.8 percent in November and an increase of 0.1 percent in October. It was the largest monthly gain since February 1996.
Analysts had been expecting a December increase of about 0.7 percent.
Three upward movements in the index generally indicate that the economy will expand in the next three to six months. The economy has been contracting since March.
The Conference Board, a business-funded research group, said the November-December gains were the largest for two consecutive months since November December 1992 following the 1990-91 recession.
"The strong signal from the indicators means that the recession could be over soon," the
board's economist, Ken Goldstein, said in a statement accompanying the report. "Three successive monthly increases, each larger than the one before, bring the level of the leading series above the pre-recession peak."
He attributed the latest rises to Federal Reserve cuts in short-term interest rates and strong growth in the nation's money supply.
He said he believed that the recession would end in the first quarter this year, but that the recovery would be lackluster.
The Dow Jones industrial average closed-58.05 at 9713.80 falling back from an earlier advance of 70.
But the report failed to impress investors.
Gary Thayer, chief economist at A.G. Edwards & Sons Inc. in St. Louis, called the December report "a very positive sign for the economy."
The technology-oriented Nasdaq composite index fell 47.81 to 1882.53 — a level last seen in early December. The Standard & Poor's 500 index lost 8.27 to 1119.31.
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