In the Region Boeing joins effort by Lockheed on...

BUSINESS DIGEST

March 29, 2002

In the Region

Boeing joins effort by Lockheed on air-traffic control net

Boeing Co. has joined a consortium led by Lockheed Martin Corp. to improve its chances of participating in a $1 billion government effort to modernize the nation's strapped air-traffic-control system.

The government hopes to alleviate stress on the primary air-traffic computer system at 20 air-traffic centers nationwide by overhauling the software to minimize chances for flight delays.

The Federal Aviation Administration reportedly had intended to hand a sole-source contract to Bethesda-based Lockheed before Raytheon Co. said it also wanted to compete for the lucrative project.

Essex fiber-optics firm saw loss triple in 2001

Essex Corp. yesterday reported a net loss of $3.6 million for its 2001 fiscal year, compared with a net loss the year before of $1.2 million.

The Columbia optical and communications engineering company is developing products that use lasers, lenses and mirrors to increase bandwidth in fiber-optic lines. President and CEO Leonard E. Moodispaw attributed the year's loss primarily to the development and marketing costs of those products, which "require a diversion of labor resources from revenue generation and are expected to do so over the next several quarters."

Development costs of the new products increased from $771,000 in the 2000 fiscal year to $2.4 million in the most recent fiscal year, which ended Dec. 30. The company received $4.7 million in development funding from an investor group the last two years, and expects another $1.25 million this year.

Elsewhere

HCA proposes $250 million to settle fraud claims

HCA Inc., the nation's largest for-profit hospital chain, said yesterday that it has agreed to repay the federal government $250 million to settle a continuing dispute over fraudulent Medicare and Medicaid billing. The resolution is subject to approval by the Department of Justice and a final written agreement.

Two years ago, HCA pleaded guilty to defrauding government health care programs and agreed to pay more than $840 million in criminal fines, civil penalties and damages.

The agreement would settle outstanding appeals and more than 2,600 cost reports HCA sent to government programs between 1993 and 2001, some of which the government has yet to audit. It resolves the difference between what HCA and the government would owe each other had the audits and appeals been pursued, but does not settle civil allegations that HCA inflated charges to the government and paid kickbacks to doctors so they would refer Medicare and Medicaid patients to its facilities.

U.S. court OKs summons for tax haven Visa records

A federal judge in San Francisco has ruled that the IRS reasonably suspects people are evading taxes by using Visa cards issued by foreign banks, and approved a summons for revenue agents to obtain Visa records from 30 offshore tax havens.

The Internal Revenue Service wants to examine records from Dec. 31, 1999, through Dec. 31, 2001, for Visa International credit and debit cards issued by banks or other financial institutions in Switzerland, the Cayman Islands, Bermuda, Hong Kong, Liechtenstein, Malta, Panama and more than two dozen other jurisdictions.

The government estimates that 2 million U.S. citizens may hold cards from offshore banks. While the cards are not illegal, bank secrecy laws in tax-haven countries frequently enable people to hide large incomes - and escape U.S. income taxes - while using their plastic to live lavishly.

Contract worth $2 billion is won by Solectron

Solectron Corp., the biggest maker of electronics for brand-name companies, will produce optical-networking equipment for Lucent Technologies Inc. under a contract valued at up to $2 billion.

The three-year agreement, announced yesterday, calls for Solectron to buy inventory and factory equipment from Lucent's North Andover, Mass., plant for $125 million. About 400 Lucent employees will get jobs at Solectron and more than 200 may work there temporarily, Lucent said.

Solectron will become the main producer of a new line of optical equipment that's expected to help Lucent boost sales and restore profitability.

Nissan buys 13% share of major partner Renault

Nissan Motor Co. will buy a 13.5 percent stake in French partner Renault SA for $1.6 billion as part of a plan to strengthen their alliance, the Japanese automaker said yesterday.

Nissan has returned to profitability under a partnership with Renault that began in 1999 and has closed plants, cut jobs and sold off property and stakes in affiliates.

Renault, which originally took a 36.8 percent stake in the Japanese automaker, increased its stake to 44.4 percent this month.

Lipper to close bond fund that lost 45% in 2001

Lipper & Co., the investment firm run by former New York City Deputy Mayor Kenneth Lipper, told investors it is closing its convertible bond fund, a month after it disclosed that the fund had lost almost half its money.

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