Business Digest

BUSINESS DIGEST

December 20, 2006

Maryland: Courts

Judge reviewing U.S. Foodservice case

A federal judge is reviewing whether Deloitte & Touche LLP and Deloitte & Touche Accountants should go to trial for allegedly playing a role in an accounting scandal at Columbia-based U.S. Foodservice. Deloitte was the accounting and financial auditing firm for U.S. Foodservice, which is owned by Dutch food company Royal Ahold NV, when the company recorded false promotional allowances, which inaccurately reduced its cost of sales and inflated its earnings. U.S. Foodservice restated earnings by $800 million from 2000 to 2003. Attorneys in a class action lawsuit brought by shareholders argued before Judge Catherine C. Blake in Baltimore yesterday that Deloitte should have been aware of red flags pointing to accounting irregularities. Deloitte attorneys said the top management at U.S. Foodservice was hiding key financial documents from auditors, so they shouldn't be held responsible. Ahold agreed to pay shareholders a $1.1 billion settlement in June but it denied any wrongdoing. Blake didn't specify when she would make a decision on the matter.

Andrea K. Walker

Acquisitions

NFR Security to be purchased

Check Point Software Technologies Ltd., with headquarters in California and Israel, said yesterday that it has agreed to buy Rockville-based technology company NFR Security Inc. The deal is valued at $20 million, which includes the acquisition and closing costs, the company said. Last year, Check Point announced that it was acquiring a different Maryland technology company: Sourcefire Inc. But that deal raised national security issues and came under investigation by the Committee on Foreign Investment in the United States, and Check Point later pulled out of it. But Check Point said the NFR Security acquisition has already received regulatory approvals, including approval from the Committee on Foreign Investment in the United States, and is expected to close before the end of the year. NFR Security's 22 Maryland employees are expected to remain in Rockville working for Check Point after the deal goes through.

Stacey Hirsh

Defense

AAI wins Air Force pact

AAI Services Corp., a subsidiary of Hunt Valley-based United Industrial Corp., has received a contract from the Air Force worth $30.2 million to develop two aircraft maintenance trainers for the C-17 Globemaster III fleet. The contract includes an option worth $14.9 million to develop an aircraft engine maintenance trainer. AAI Services is part of AAI Corp., which makes drones for the mili- tary.

Allison Connolly

Biotechnology

Human Genome clears a hurdle

After 14 years in business, Human Genome Sciences Inc. has become a phase-three company, which means there's just one more hurdle to clear before it can commercialize its first product. The Rockville drugmaker announced yesterday that it had begun dosing in the last of three rounds of clinical trials testing its chronic hepatitis C treatment, Albuferon. The company has said it expects to put a second drug, this one a treatment for a form of lupus that affects 300,000 Americans, into phase three trials before year end.

Tricia Bishop

Delaware: Acquisitions

Valassis agrees to buy Advo

Valassis Communications agreed yesterday to acquire direct mail marketer Advo for $1.2 billion in a settlement ending a lawsuit over the planned acquisition. Under the settlement, Valassis will acquire all of Advo's outstanding common shares for $33 each, a discount of more than 10 percent from the $37 per share price to which Valassis agreed in July. The agreement brought an abrupt end to a trial that began last week in Delaware Chancery Court in Wilmington. Valassis filed the lawsuit in an effort to back out of a $1.3 billion acquisition of Advo.

Nation: Litigation

Sony to settle anti-piracy suits

Sony BMG Music Entertainment will pay $1.5 million and kick in thousands more in customer refunds to settle lawsuits brought by California and Texas over music CDs that installed a hidden anti-piracy program on consumers' computers. Not only did the program itself open up a security hole on computers, but the method Sony BMG originally recommended for removing the software also damaged computers.

This column was compiled from dispatches by Sun reporters, the Associated Press and Bloomberg News.

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