PRESS

EX-NEWSDAY, HOY WORKERS CHARGED IN CIRCULATION FRAUD

Three former employees of Tribune Company’s Newsday and Hoy newspapers were arrested and charged with cheating advertisers by inflating circulation figures.

Edward Smith, Robert Garcia, and Richard Czark were accused of overstating paid circulation at the newspapers, resulting in millions of dollars in inflated fees for advertisers between 2002 and 2004, according to a statement yesterday by Roslynn Mauskopf, the U.S. Attorney in Brooklyn.

“The schemes uncovered to date cheated advertisers out of millions of dollars paid for ads in papers that were dumped or never paid for,” Ms. Mauskopf said in the statement. The arrests “are intended to restore transparency and fairness to the newspaper and magazine advertising marketplace,” she said.

The arrests are the first in what Ms. Mauskopf called an “ongoing investigation into fraudulent circulation schemes by executives and employees at Newsday and Hoy.” If convicted, the three men face a maximum of 20 years in prison, a $250,000 fine and five years’ probation, according to the statement.

– Bloomberg News

AVIATION

AIRBUS, BOEING PILE UP ORDERS AS ASIA SPURS GROWTH

Airbus and Boeing won half as many orders at the Paris Air Show this week as they have all year, spurred by a rise in demand from Asian airlines.

“There’s no question we’re seeing a much more robust market than we’ve seen in a while,” Boeing Chairman Lewis Platt said at the show yesterday. “We’re still in an upswing. Traffic has recovered and now well ahead of post 9/11 even in the U.S., where airlines are struggling.”

Airbus and Boeing’s combined $34.3 billion in orders at the show more than equals the annual economic output of Luxembourg. It’s a sign of industry growth that should continue for several years as a rising middle class in China and India adopts air travel and as U.S. airline demand improves, said analysts including JB Groh of D.A. Davidson & Company in Portland.

“If you look at India and China, you have two countries with massive populations, a growing middle class and very little air infrastructure, so demand from these markets is going to be sustainable for the foreseeable future,” Mr. Groh said.

Buyers included India’s Kingfisher Airlines, which yesterday said it will spend $3 billion for 15 Airbus aircraft, including five A380 double-decker planes.

– Bloomberg News

ACCOUNTING

SEC RECOMMENDS REVISING PENSION, LEASE ACCOUNTING RULES

WASHINGTON – A long-awaited report from the Securities and Exchange Commission calls for rethinking accounting for leases, pensions, and other retirement benefits, and for accounting for derivatives and other financial instruments at fair market value.

The report, issued yesterday by the SEC staff, was sought by Congress after Enron went bankrupt in 2001.

Stricter accounting rules for special purpose entities adopted by the Financial Accounting Standards Board in the wake of Enron’s collapse have been helpful, the report found. Nevertheless, the SEC staff said there is “room for improvement” in other areas, including pensions, leases, and other liabilities that may not be shown on corporate books. American public companies have $1.25 trillion of operating lease obligations and $535 billion pledged for retirement benefits, much of which may not be shown on the balance sheet, SEC staffers estimate. Their report recommends the Connecticut-based FASB revisit accounting rules for leases, pensions and other retirement benefits.

In a bold move, the SEC staff study endorses the idea of reporting financial instruments such as derivatives at fair value. Requiring companies to value financial assets based on market prices would eliminate the need for complex hedge accounting and lessen reliance on transactions that can obscure a company’s true financial picture, the staff said.

– Dow Jones Newswires