In the Region Southwest Airlines reports 65% spurt in...

BUSINESS DIGEST

January 17, 2001

In the Region

Southwest Airlines reports 65% spurt in 4th-quarter profit

Southwest Airlines Co.'s fourth-quarter profit jumped 65 percent, helped by a 13 percent increase in ticket sales and better control over fuel costs.

The low-cost carrier, the No. 1 airline at Baltimore-Washington International Airport, reported that its net income rose to $154.7 million, or 29 cents per share, from $93.8 million, or 18 cents per share, a year earlier. Revenue rose 22 percent to $1.47 billion from $1.20 billion.

For all of 2000, Southwest said, it earned $603.3 million, or $1.14 per share, up from $474.4 million, or 89 cents per share in 1999. The 2000 figure includes a $22.1 million charge for a change in accounting for sales in Southwest's frequent-flier program.

Operating revenue for the year rose 19.3 percent, from $4.74 billion to $5.65 billion, and Southwest's planes flew 70.5 percent full, the highest occupancy figure in the carrier's history.

Williams buying more of Corvis' equipment

Corvis Corp. said yesterday that Williams Communications Inc., a wholesale provider of voice, video and data products and services, will buy $300 million of Corvis' fiber-optic equipment.

The deal, announced in April, originally was for $200 million over two years. But after a successful field trial of Columbia-based Corvis' equipment, Williams agreed to buy $300 million of equipment over a longer period.

Corvis will begin delivering the products in the first quarter.

About $21 million more to Magellan Health

Magellan Health Services Inc. of Columbia said yesterday that it will receive about $21 million in additional payments this month from the federal program that provides health coverage for military dependants and retirees.

Daniel S. Messina, executive vice president and chief operating officer, said the company plans to use the money to improve working capital and reduce future borrowings on its revolving-credit facility, which in turn will reduce the company's future interest expense by about $2 million a year.

The Department of Defense periodically adjusts the payments based on changes in enrollment and the amount of care given in the program, called TRICARE. The additional payment to Magellan is based on its work as a subcontractor, providing mental health care in TRICARE's central region, which extends from Minnesota to Arizona.

Elsewhere

Northrop may amend terms of Litton deal to aid shareholder

Northrop Grumman Corp. may amend the terms of the company's $5.1 billion purchase of Litton Industries Inc. so that Litton's largest shareholder, Unitrin Inc., and other investors can get stock as well as cash.

No more than 14 million common shares and $350 million of convertible preferred stock will be included under the revised plan, Northrop said yesterday. Northrop agreed last month to pay $80 for each Litton common share and $35 for each Series B preferred share.

The stock plan would help Unitrin, a life and health insurer, defer the amount of taxes the company paid once the acquisition was complete, said Paul Goulekas, an analyst at Conning & Co., who has a "hold" rating on Unitrin, which owns about 28 percent of Litton.

Daewoo creditors to prune 2,800 jobs

Creditors of Daewoo Motor Co. disclosed plans yesterday to eliminate nearly 2,800 jobs, or 22 percent of its work force, by the middle of next month to make the automaker a more appealing takeover candidate.

The union representing Daewoo workers responded by voting to strike at a later date, saying management had promised to first consult with the union on layoff plans.

Daewoo, Korea's third-largest automaker, is operating under court receivership, and creditors are pushing for a sale to General Motors Corp. To improve chances for the sale, creditors pushed plans to eliminate 5,498 blue-collar jobs. About 2,704 workers quit voluntarily, and creditors said 2,794 more workers of the total work force of 12,844 would be gone by Feb. 16.

Inventories mount as sales fall again

Inventories of unsold goods at U.S. companies piled up in November as sales fell for the second consecutive month, adding to mounting evidence of a slumping economy.

The Commerce Department reported yesterday that stockpiles of goods on shelves and back lots nationwide rose by 0.5 percent to a seasonally adjusted $1.22 trillion in November. Sales dropped by 0.3 percent to $896.3 billion.

The inventory-to-sales ratio, which measures how long it would take businesses to exhaust their inventories at November's sales pace, rose to 1.36 months, the highest since April 1999. Inventories had risen sharply in October as well, up by 0.7 percent, and sales dropped by 0.5 percent, according to revised figures.

Chief technology officer resigns at Palm Inc.

Bill Maggs, chief technology officer of hand-held device maker Palm Inc., resigned late Monday "to pursue outside opportunities related to the next phase of the Internet," Palm said yesterday.

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