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Kit Menkin's Leasing News www.leasingnews.org Wednesday, July 17 2002 Accurate, fair and unbiased news for the equipment Leasing Industry ------------------------------------------------------------------------------------- Headlines---- Chicken Little Wednesday---Odds and Ends PinnFund investors sue audit company 24-year sentence overturned for convicted infomercial guru Earnings rise at four banks, despite sluggish economy Bank One, KeyCorp, Mellon, Wells Fargo U.S. Bancorp QII Net Income Rises 46 Percent Housing Market Index Rises One Point in July Options Must Be Treated as Expenses, Global Panel Says MicroFinanciald “Preannounces “ Second Quarter of $0.13 to $0.15 D&B plus Fair Issac Launch "Small Business Risk Insight" (New credit score program, eliminates more real people) Top Business Briefs ### Denotes Press Release Tomorrow--More African E-Mails ( Oh, no Mr. Bill, not Nigeria! ) Chicken Little One day Chicken Little was walking in the woods when -- KERPLUNK -- an acorn fell on her head. "Oh my goodness!" said Chicken Little. "The sky is falling! I must go and tell Congress." On her way to the king's palace, Chicken Little met Henny Penny. "I'm on my way to lower the interest rate again." "Oh no, don't go!" said Chicken Little. "I was there and the sky fell on my head! Come with me to tell the Congress." So Henny Penny joined Chicken Little and they went along and went along as fast as they could. Soon they met Cocky Locky, who said, "It's the Republicans who have stolen the lock box, and I must tell the New York Times to get my name in the newspapers." "Oh no, don't go!" said Henny Penny. "The sky is falling there! Come with us to tell Congress." So Cocky Locky joined Henny Penny and Chicken Little, and they went along and went along as fast as they could. Soon they met Goosey Poosey, who was planning to run for president. “This is the right time, and just because I’m from North Dakota doesn’t mean anything, so help me, McGovern! “ "Oh no, don't go!" said Cocky Locky. "The sky is falling there! Come with us to tell Congress." So Goosey Poosey joined Cocky Locky, Henny Penny and Chicken Little, and they went along as fast as they could. Then who should appear on the path but sly old Foxy Woxy. "Where are you going, my fine feathered friends?" asked Foxy Woxy. He spoke in a polite manner, so as not to frighten them. I've got some good stock here. Want some options. How about a Van Gogh?" "The sky is falling!" cried Chicken Little. "We must tell the Congress." "I know a shortcut to the palace," said Foxy woxy sweetly. "Come and follow me." But wicked Foxy Woxy did not lead the others to the palace. He led them right up to the entrance of his foxhole. Once they were inside, Foxy Woxy was planning to gobble them up! Just as Chicken Little and the others were about to go into the fox's hole, they heard a strange sound and stopped.
It was the Congressional investigation committee, growling and howling. How Foxy Woxy ran, across the meadows and through the forests, with the hounds close behind. He ran until he was far, far away and never dared to come back again. Later that day, Chicken Little always carried an umbrella with her when she walked in the woods. The umbrella was a present from Congress. And if -- KERPLUNK -- an acorn fell, Chicken Little didn't mind a bit. In fact, she didn't notice it at all. Congress went on vacation, too. -------------------------------------------------------------------------------------------------------- Wednesday---Odds and Ends National Association of Equipment Leasing Chicago Conference 2003 http://www.leasingnews.org/PDFFiles/NAELB.pdf ---- For the best reservations, great rates, available in other cities to via these links, plus they have availability when the hotel says they do not or other sources say they do not. -- Equipment Leasing Association “Member Only” Exception Correction about the registration policy for the ELA annual convention in October. The convention brochure states the following regarding attendance, which has been the conference registration policy in effect for a number of years: Please note that non-member registration is welcome, but is only available to a person who has not previously attended the ELA convention or to a person from a nonmember company that has never sent an attendee.
Ralph Petta VP-Industry Services Equipment Leasing Association (703) 516-8364 fax (703) 522-7099 http://www.elaonline.com/events/2002/AnnConv/ -- Should not be Apollo Eleven (11) not Apollo Two (II). President Kennedy was shot in 1963. Nixon was president in 1970. 1969-The launch of Apollo II, the first US man sent to the moon. This launch resulted in man's first moon landing, the first landing on any extraterrestrial body. (July 20th ). 1971- President John F. Kennedy appointed the first Air Force General who was a woman, Brigadier General Jeanne Marjorie Holm of Portland, OR. David Meyer The “II” was my typo. It should have been “11.” Richard M. Nixon was president in 1971. However the source book I took the information had President John Fitzgerald Kennedy, and perhaps I ,too, should have caught that. One of the reasons I have been getting footnotes to verify this information is by finding the person on the web. I could not find much information about General Holm, except that she is retired. I also note the book had the wrong date, as it was 1971, not 1970. However, I should have remember President Kennedy was assassinated November 22,1963. Many of us today can remember where we were, and what we were doing, when we heard the terrible news. Thank you, Mr. Meyer’s for your very bright mind and observations. If you are in credit or financial analysis, I bet you are really very good. editor ) PinnFund investors sue audit company By Dean Calbreath UNION-TRIBUNE STAFF WRITER In the latest assault on corporate accounting practices, investors in Carlsbad's defunct PinnFund USA are suing the PricewaterhouseCoopers accounting firm for failing to detect fraud at the company. PinnFund was doing business as a mortgage brokerage until it collapsed last year, after the Securities and Exchange Commission charged it with being a Ponzi scheme. PinnFund's former chief executive, Michael Fanghella, has since pleaded guilty to fraud and tax-evasion charges. About 160 investors lost $330 million in the company. Yesterday's lawsuit, filed by a handful of investors as well as the company's bankruptcy trustee, Richard Kipperman, claims that the fraud could have been prevented if the accountants had done a more thorough job. "From what I've seen, it appears that the accountants should have caught it," said Kipperman, whose previous experience includes serving as trustee for the now-defunct Pioneer Mortgage and American Mortgage. "If the accountants had found these problems, the investors would never have invested and would not have incurred their losses." Officials at PricewaterhouseCoopers could not be reached for comment. PinnFund was founded in 1993 purportedly to originate, buy and sell mortgages. It attracted backers who hoped to make money by investing in packages of mortgages and receiving a share of the mortgage payments. Instead, the company was a pyramid scheme. It paid early investors using money from later investors. In addition, it siphoned off millions of dollars to pay Fanghella and his associates, "who in turn loosed investor funds in a profligate downpour upon a host of grateful realtors, yacht brokers, jewelers, couturiers and restaurateurs," in the words of the lawsuit. In 1999, PricewaterhouseCoopers was hired to audit two PinnFund sister companies, Allied Capital Partners and Grafton Partners, that were allegedly directly involved in the fraud. According to the lawsuit, the auditors found "unmistakable evidence" of fraud during their audit, including three forged copies of PinnFund audit reports from 1997-98. The suit charges that the auditors initially considered telling investors of the forgeries – going so far as to prepare copies of the reports to mail to investors – but then changed their minds. PricewaterhouseCoopers later quit working for PinnFund, but allegedly never told investors of its concern. The lawsuit claims that the auditors' "neglect and malfeasance enabled the massive grift to continue unimpeded." More than $240 million was invested in PinnFund after PricewaterhouseCoopers' discovery. Two other accounting firms were named in the suit: Levitz, Sachs and Ciceric, which audited PinnFund from 1996 to 1998, and Rooney, Ida, Nolt & Ahern, which audited Allied and Grafton from 1998 to 2000. ( Full, unabashed story about PinnFund/PinnLeasing available at: http://www.leasingnews.org/docs/Pinn_1.htm This is long , but if you haven’t read it, you won’t put it down. Editor)
_________________________________________________________________ 24-year sentence overturned for convicted infomercial guru By Associated Press ATLANTA (AP) A federal appeals court dismissed Tuesday the 24-year prison sentences given to an informercial guru and his wife who swindled customers with a get-rich-quick real estate scheme. The 11th U.S. Circuit Court of Appeals, while upholding the convictions of William J. and Chantal McCorkle and two others, ruled that a judge erred in sentencing the McCorkles. The McCorkles, of Lake Mary, were convicted in November 1998 on 151 counts of fraud, money laundering and false statement charges. The case was returned to the trial court to determine whether, in conspiring to launder money, the McCorkles intended to promote or conceal their unlawful activity. If the trial court finds that the McCorkles' objective was to promote unlawful activity, they still face a minimum sentence of 24 years. But if the court determines the McCorkles' objective was to conceal their unlawful activity, they face a sentence of 17.5 years to almost 22 years. Prosecutors alleged the McCorkles deceived their customers by promising to put up his own money for customers who found property close to foreclosure or depressed property for sale at half its equity. The McCorkles sold tens of millions of dollars worth of videotapes, audio tapes and pamphlets explaining the dubious plan. McCorkle's associates, Brian Higgins and Herman Venske, are serving five-year sentences for fraud conspiracy. _______________________________________________________________ Earnings rise at four banks, despite sluggish economy Bank One, KeyCorp, Mellon, Wells Fargo By Associated Press Earnings at four large banks rose in the second quarter, as the companies navigated the hazards of the uncertain economy to meet or narrowly exceed analysts' expectations. Bank One Corp. Bank One, the nation's sixth-largest bank holding company, said second-quarter profits rose 27 percent as it benefited from lower expenses and improved results in its credit-card business. The results announced Tuesday reflect a continued steady recovery for the Chicago- based banking giant following a deep slump that began with troubles in its credit unit in 1999. Net earnings were $843 million, or 71 cents a share, compared with $664 million, or 56 cents a share, a year earlier. Excluding a $40 million tax gain from the reversal of prior restructuring charges, operating earnings were 68 cents a share, matching the consensus estimate of analysts surveyed by Thomson Financial/First Call. Revenue was $4.27 billion, up from $3.85 billion for the same period of 2001. The credit-card division, one of the nation's top card issuers with 53 million customers, recorded an increase of $103 million or 53 percent in operating income. Bank One attributed that to lower net credit losses, lower operating expenses and the addition of the Wachovia Corp. portfolio. The uncertain economy and fragile market affected credit quality, however. Bank One increased its provision for credit losses to $607 million from $540 million a year ago. Nonperforming assets were $1.52 billion, up $399 million, or 6 percent, from a year ago due to increases in home equity loans. But consumer banking operating income rose 11 percent due largely to lower non-interest expense. Chairman and chief executive officer James Dimon said the results ''reflect good progress in a challenging economic environment.'' For the first six months, net income was $1.63 billion, or $1.38 per share, up from $1.34 billion, or $1.14 per share, a year earlier. Revenue was $8.43 billion, compared with $7.64 billion in 2001. Bank One shares increased $1.60, or 4.5 percent, to close at $37.41 on the New York Stock Exchange. Wells Fargo & Co. Western-banking giant Wells Fargo & Co. on Tuesday said its second-quarter profit surged, propelled by a meat-and-potatoes approach that has enabled the bank to prosper during lean times. The San Francisco-based bank earned $1.42 billion, or 82 cents per share a turnaround from a loss of $87 million, or 5 cents per share, at the same time last year. Last year's loss stemmed from troubles in the bank's venture capital portfolio. This year's second-quarter profit matched the consensus estimate of analysts surveyed by Thomson Financial/First Call. Much of Wells' growth came from two bland but reliable staples simple banking accounts and home mortgages. The bank opened 13 percent more checking accounts and 15 percent more saving accounts in branches that had been open at least one year. Wells made $60 billion in mortgage loans during the second quarter, a 33 percent increase from last year. Outstanding home equity loans held by Wells' customers totaled $31.3 billion, a 54 percent increase from last year. Second-quarter loan losses totaled $387 million, less than 1 percent of the bank's total portfolio. At the same time last year, Wells' loan losses totaled $427 million, or about 1.1 percent of its portfolio. Through the first half of the year, Wells earned $2.52 billion, or $1.46 per share, up from net income of $1.08 billion, or 62 cents per share, at the same juncture in 2001. Wells' shares rose 5 cents on the New York Stock Exchange, closing at $47.20. KeyCorp Cleveland-based KeyCorp continued to rebound in the second quarter, reporting earnings Tuesday of $246 million, or 57 cents per share. The earnings matched the expectations of analysts surveyed by Thomson Financial/ First Call. In the second quarter a year ago, special charges linked to loan losses and leaving the auto leasing business contributed to a $160 million loss, or 38 cents per share. Aside from special charges, KeyCorp earned 7 cents per share then. For the first six months of the year, KeyCorp earned $486 million, or $1.13 per share, compared with earnings of $57 million, or 13 cents per share, for the January-June 2001 period. KeyCorp had $721 million in interest income for the most recent second quarter, up from $719 million in interest income for the April-June 2001 period. Shares in KeyCorp fell 50 cents Tuesday on the New York Stock Exchange, closing at $24.30. Mellon Financial Services Recent accounting scandals involving WorldCom Inc. hurt second-quarter earnings at Mellon Financial Services, but the company's performance still narrowly exceeded analysts' expectations. The Pittsburgh-based financial services company reported second-quarter earnings of $109 million, or 25 cents per share, compared with $55 million, or 17 cents per share, during the same period last year. Amended results include a special provision for credit losses of 23 cents per share associated with ''credit exposure related to customers that have been associated with recent allegations of accounting irregularities.'' Mellon said it had $100 million in outstanding, unsecured loans to WorldCom, the embattled telecommunications giant. As a result, nonperforming assets for Mellon jumped from $75 million last year to $176 million this year. Excluding the special charge of 23 cents, Mellon beat Wall Street expectations by a penny per share. Analysts surveyed by Thomson Financial/First Call had predicted earnings of 47 cents per share for the second quarter. Earnings also reflect a weak economy and equity markets, the company said. ''The special provision for credit exposure is appropriate in view of the continuing difficult and uncertain environment,'' said Martin G. McGuinn, chairman and chief executive officer. Mellon's shares fell 77 cents Tuesday on the New York Stock Exchange, closing at $27.13. On the Net: http://www.bankone.com http://www.wellsfargo.com http://www.key.com _______________________________________________________________ U.S. Bancorp QII Net Income Rises 46 Percent By Helen Stock and Scott Silvestri, Bloomberg U.S. Bancorp, the eighth- largest U.S. bank, said second-quarter profit rose 46 percent after acquisitions boosted fees from processing credit cards and selling mortgages. Net income was $823 million, or 43 cents a share, up from $562.3 million, or 29 cents, in the year-ago quarter. Merger costs lowered earnings by $46.7 million in the quarter and $256.3 million in the year-earlier period. The bank became the No. 3 U.S. processor of payments for merchants when it bought Nova Corp. last year. Fees from that business rose more than four-fold to $144.4 million. Mortgage revenue rose 32 percent to $75.4 million after the bank bought Cleveland-based Leader Mortgage Co. "The processing revenue is encouraging," said Scott Severs, an analyst at Safeco Asset Management Co. in Seattle, which owns shares of U.S. Bancorp. "I like U.S. Bancorp because it does have that diversity in the revenue stream." The bank, with 2,147 branches in 24 states, also said executive vice president and chief credit officer J. Robert Hoffmann will retire at the end of the year. Senior credit officer Michael Doyle will be promoted to his position. The bank set aside $335 million for expected loan losses, or 40 percent more than in the same period a year earlier, as it wrote off loans to transportation, manufacturing and technology companies. The cost of combining Firstar Corp. with U.S. Bancorp in February 2001 weighed on earnings this year and last year. Chief Executive Jerry Grundhofer's Firstar bought the former U.S. Bancorp from his older brother, John F. Grundhofer. Excluding merger-related costs and a change in accounting, profit rose 6.3 percent to $869.8 million, or 45 cents, in the three months ending in June. That matched the average estimate of analysts surveyed by Thomson First Call. -------------------------------------------------------------------------------------------
############### ############################# ###################### Housing Market Index Rises One Point in July Builder Confidence Holding Steady WASHINGTON, -- Indicating that builders generally see positive conditions in the market for new single-family homes, the National Association of Home Builders' Housing Market Index (HMI) rose one point to 61 in July from the previous month. The HMI has held within two points of a favorable 60 reading since the beginning of this year. "Low interest rates and the solid investment potential of homeownership are proving to be powerful incentives for new-home buyers, and builders are seeing solid demand for homes in most markets," said Gary Garczynski, NAHB president and a builder/ developer from Woodbridge, Va. "Emphasizing the market's stability, the component of the HMI that measures builder confidence in current sales hasn't budged from a very good 65 reading for the last five months." Garczynski added, however, that builders across much of the country continue to be concerned about shortages of lots available for development -- particularly in the Northeast, South and West. "Housing affordability suffers when demand exceeds the number of homes that can be built," he explained. The HMI is derived from a monthly survey of builders that NAHB has been conducting for nearly 20 years. Home builders are asked to rate current sales of single-family homes and sales expectations for the next six months as "good," "fair" or "poor." They are also asked to rate traffic of prospective buyers as either "high to very high," "average," or "low to very low." Scores for responses to each component are used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor. At 61, July's HMI was up a single point from June. The component index gauging current sales was unchanged at 65, where it has been since March of this year, while the index gauging sales expectations for the next six months rose one point, to 69. Registering the most movement this month, the index gauging traffic of prospective buyers rose four points to 48. "The single-family housing market should continue providing good support to the economy this year, particularly when the impacts of home price appreciation on household wealth and consumer spending are considered," said NAHB Chief Economist David Seiders. He noted that NAHB forecasts indicate new-home sales for 2002 should reach 934,000 units, up nearly 3 percent from last year's record pace. ABOUT NAHB: The National Association of Home Builders is a Washington- based trade association representing more than 205,000 members involved in home building, remodeling, multifamily construction, property management, subcontracting, design, housing finance, building product manufacturing and other aspects of residential and light commercial construction. Known as "the voice of the housing industry," NAHB is affiliated with more than 800 state and local home builders associations around the country. NAHB's builder members will construct about 80 percent of the almost 1.6 million new housing units projected for 2002, making housing one of the largest and most powerful engines of economic growth in the country. ############## ############################################## Options Must Be Treated as Expenses, Global Panel Says By T.R. Reid Washington Post Foreign Service LONDON -- The International Accounting Standards Board, which writes the accounting rules for many companies, decided unanimously Tuesday to require that executive stock options be treated as a cost of business, a move that increases the public pressure on American corporations and accountants to do the same. The new accounting rule will be mandatory for corporations in the European Union by 2005, as well as for Australia and several other developed nations that follow the IASB regulations. It does not apply to U.S. companies, which follow generally accepted accounting principles, or GAAP, which are written by the Financial Accounting Standards Board and do not include a similar requirement on options. Although a few U.S. corporations have decided to start treating executive stock options as an expense, many others have successfully lobbied Congress to prevent FASB from adopting such a requirement because the costs would severely reduce or even eliminate profits for many firms. But in this period of concern about the accuracy and honesty of corporate reporting, the question of expensing stock options has again come to the fore. Members of the international board, meeting in London today, were scathing about the U.S. approach to the question. "We know that the FASB has concluded that expensing options would be the right thing to do," noted Kimberley Crook, a staff accountant for the international board. "But it's not required, because the Americans have made this a political issue, not an accounting question." Mary Barth, a professor of accounting at Stanford University and a part-time member of the international board, said today's decision will put pressure on American businesses and regulators. "When this board makes a big decision, then the American board has to think about doing the same thing. "This puts moral pressure on FASB for two reasons," Barth explained. "First, there is enormous pressure these days for what is called convergence -- which means having all global accounting bodies use the same rules. And beyond that, everybody agrees that counting options as an expense is the right thing to do. Even FASB has said that; they encourage U.S. companies to do it, they just don't require it." But a representative of the American board suggested that the FASB will take its time before following the international group's example. "I would guess that the FASB will wait a while on this," said James Leisenring, the FASB's liaison with the international board. "This board has to go through a comment period now, and then it will take some time to issue the final text of the new standard. I think the American board will wait and see what reaction there is to today's decision before it does anything." The international standards board today set a rough schedule for a comment period and final implementation of its new rule on options. Members suggested the rule would officially take effect sometime in 2004. As part of the overall European Union effort to standardize financial and business regulation, corporations in every EU nation will be required to abide by the new accounting rule by Jan. 1, 2005. If current expansion plans go ahead, the EU by then will comprise 25 nations and half a billion people. When a U.S. corporation pays an employee in cash, or with shares of its stock, the cost of the compensation has to be treated as a cost of business, and thus subtracted from profits. But compensation in the form of stock options -- a promise that the executive can buy shares of stock in the future at a set price -- does not have to be treated that way. This means companies trying to lure a top-flight executive can offer compensation packages that may be worth tens or hundreds of millions of dollars, with no "cost" to the company to account for. But when the executive eventually claims the promised stock, diluting the value of the other outstanding shares, there is a cost borne by all the company's other stockholders. ---------------------------------------------------------------------------------------------- ######## ############################################### ############## MicroFinancial, Incorporated Preannounces Second Quarter EPS of $0.13 to $0.15 WALTHAM, Mass MicroFinancial Incorporated (NYSE-MFI), a leader in microticket leasing and finance, announced today that it expects its earnings per share for the quarter ended June 30, 2002 to be in the range of $0.13 to $0.15 on a fully diluted basis. Microfinancial expects to release final second quarter results on July 23, 2002. The Company also expects second quarter revenue to be approximately $33 million versus $38 million for the comparable quarter last year. The second quarter revenue decrease is primarily due to the more stringent credit quality standards resulting in a decline in originations. Originations are approximately 18 million below planned levels for the first six months of the year. Richard Latour, President and Chief Operating Officer, stated, "We clearly are disappointed with our preliminary second quarter results. Business has been more difficult than originally anticipated, exemplified by the decrease in originations. We believe the volume reductions come as a result of the company's decision to tighten credit standards and our decision to exit certain market segments." Mr. Latour continued, "We are pleased that we have started to see positive signs from some of our new ancillary businesses, and believe that the decrease in originations should be isolated to the balance of fiscal 2002." Based on these factors, the Company is reducing fiscal 2002 earnings per share guidance to be in the range of $0.70 to $0.75. MicroFinancial, Inc. (NYSE:MFI), headquartered in Waltham, MA, and with additional locations in Woburn, MA and Herndon, VA, is a financial intermediary specializing in leasing and financing for products in the $500 to $10,000 range. The company has been in operation since 1986 and has been profitable each year since 1987. MicroFinancial, Inc. Richard F. Latour, 781-890-0177 ############### ############################################33 D&B Small Business Risk Insight Gains Industry Support; Solution Debuts with Access to Market-Leading Decisioning Platforms D&B (NYSE: DNB), the leading provider of global business information and technology solutions, announced yesterday the launch of Small Business Risk Insight (SBRI(TM)). SBRI will offer participating financial institutions a means to share and access a new, independent database of highly predictive financial performance data about their existing and prospective small business customers. D&B announced its intention to build and offer SBRI in February 2002. Since that time more than 16 leading financial institutions and leasing companies have recognized the competitive advantage that SBRI provides to drive efficiency into their underwriting processes and enable them to make better, more confident small business risk management decisions. Some of the SBRI participants include: Banks and Credit Card Issuers Leasing Companies - MBNA - Wells Fargo Financial Leasing - Fleet Bank - CitiCapital - Wachovia Corporation - CIT Group - Huntington Bank - De Lage Landen Financial - Union Bank of California - Great American Leasing - First National Bank of Omaha - Marlin Leasing - Ikon Financial - IOS Capital - LeaseComm - John Deere Credit As part of D&B's agreement with Fair, Isaac announced last week, SBRI is currently the only database of its kind that will be accessible through Fair Isaac's market-leading decisioning platforms including its LiquidCredit(R) service, SEARCH(TM) and ScoreWare(R) software. Fair, Isaac's platforms, already utilized by most leading financial institutions, will provide customers with seamless access to SBRI beginning in September 2002. To provide customers with their choice of preferred method to integrate SBRI information into existing decision-making processes, access to SBRI is also available through other decisioning platforms including eCredit, via secure online transactions and through D&B Web-based data integration technology, such as the Data Integration Toolkit. The majority of leading financial institutions already utilize D&B when making small business lending decisions. Building on this foundation, SBRI offers many unique competitive advantages available only from D&B including: - D&B's patented matching technology and data integration expertise, built on the strength of the D&B D-U-N-S(R) Number, which drives a higher rate of matched records. - The ability to understand aggregate risk exposure across an enterprise by leveraging D&B's unique corporate linkage capability. This enables financial institutions to understand whether an applicant already has credit outstanding with another participating division of the same enterprise. D&B will continue to provide SBRI customers with access to the D&B global database, which contains information on more than 75 million businesses - 13 million of them U.S. small businesses(1), as well as D&B scores and behavior models to assess and predict a small business's risk potential. The D&B global database contains commercial trade and commercial public record data such as suits, liens, judgments and bankruptcy information. "Our ability to rapidly gain the trust and support from many leading financial institutions validates SBRI's unique and compelling value proposition. By participating in SBRI, financial institutions are virtually guaranteed to make better, more confident small business credit and risk decisions," said Allan Z. Loren, chairman and chief executive of D&B. "SBRI will enhance our current business and positions us for growth by allowing D&B to participate in more small business transactions." About D&B D&B (NYSE: DNB) provides the information, tools and expertise to help customers Decide with Confidence. D&B enables customers' quick access to objective, global information whenever and wherever they need it. Customers use D&B Risk Management Solutions to manage credit exposure, D&B Sales & Marketing Solutions to find profitable customers and D&B Supply Management Solutions to manage suppliers efficiently. D&B's E-Commerce Solutions are also used to authenticate and verify potential trading partners online, increasing trust and confidence in e-commerce transactions. Over 90 percent of the Business Week Global 1000 rely on D&B as a trusted partner to make confident business decisions. For more information, please visit www.dnb.com. Fair, Isaac, LiquidCredit, SEARCH and ScoreWare are trademarks or registered trademarks of Fair, Isaac and Company, Inc., in the United States and/or in other countries. CONTACT: D&B Joanne Carson (media) 908/665-5810 carsonj@dnb.com Sandy Parker (analysts/investors) 908/665-5098 parkerr@dnb.com ################### ####################################3 Top Business Briefs Corporate Wrongdoing Is the Focus on Two Fronts The Fed chairman blamed "infectious greed" for the breakdown in investor confidence as the House passed a bill that would toughen criminal fraud penalties. -- Fed chief says more corporate scandals could delay healthy economic recovery WASHINGTON (AP) The U.S. economy is poised to return to healthy growth, but the startling stream of accounting scandals that has rocked Americans' faith in corporate leaders could weaken the recovery, Federal Reserve Chairman Alan Greenspan told Congress on Tuesday. --- House passes penalties bill for business fraud: Jumping on the Senate bandwagon, the House reversed itself Tuesday and speedily approved new criminal penalties for corporate fraud in an attempt to shore up investor confidence and calm uneasy markets -- Harley-Davidson's earnings rise 25 percent MILWAUKEE (Dow Jones/AP) Harley-Davidson Inc. on Tuesday posted a stronger- than-expected 25 percent jump in second-quarter net income on strong sales across its product lines. Intel to reduce work force by 4,000: Intel Corp., which had avoided mass layoffs during technology downturn, said Tuesday it is cutting 4,000 workers as the chip-making giant posted lower-than-expected second- quarter earnings. -- . Wells Fargo Reports Record Quarterly Earnings Per Share of $.82 SAN FRANCISCO--Wells Fargo & Company (NYSE:WFC) In accordance with FAS 142, effective January 1, 2002, amortization of goodwill was discontinued. For comparability, all amounts for 2001 in the text and the tables in the text section of this release have been adjusted to exclude goodwill amortization. For 2002, the first quarter transitional goodwill impairment charge of $276 million is excluded. The table, "ADJUSTED" EARNINGS -- FAS 142 TRANSITIONAL DISCLOSURE, reconciles reported earnings to adjusted earnings. Second Quarter Highlights: -- Record diluted earnings per share of $.82, up 17 percent from prior year's $.70 per share(a) -- Record net income of $1.42 billion, up 17 percent from prior year's $1.22 billion(a) -- Return on assets of 1.83 percent -- Return on equity of 19.72 percent -- Core revenue (excludes market-sensitive revenue and acquisitions) up 15 percent from prior year -- Net credit losses down 21 percent from first quarter 2002 and down 9 percent from second quarter 2001 Second Quarter Six months ended June 30, ---------------------- ------------------------ % % 2002 2001(a) change 2002 2001(a) change ------ ------ ------ ------ ------ ------ Diluted EPS $ .82 $ .70 17% $ 1.62 $ 1.45 12% Net Income (in millions) 1,419 1,216 17 2,797 2,516 11 Return on Assets 1.83% 1.75% 5 1.81% 1.85% (2) Return on Equity 19.72 18.40 7 19.86 19.21 3 Efficiency Ratio 56.6 57.4 (1) 56.2 56.0 -- Net Interest Margin 5.66 5.31 7 5.67 5.26 8 of $1.16 billion (after tax), or $.67 per share, predominantly related to other-than-temporary impairment of publicly traded and private equity securities, primarily in the venture capital portfolio. Wells Fargo & Company (NYSE:WFC) reported record diluted earnings per common share of $.82 for the second quarter of 2002, compared with $.70 in the second quarter of 2001, up 17 percent. Net income was a record $1.42 billion, up 17 percent from $1.22 billion in the second quarter of 2001. For the first six months of 2002, net income was a record $2.80 billion, or $1.62 per share, compared with $2.52 billion, or $1.45 per share, for the first six months of 2001, an increase in earnings per share of 12 percent. All net income and per share data for 2001 described above exclude the impairment and other special charges recorded in second quarter 2001 of $1.16 billion after tax, or $.67 per share. "Before I comment on our performance, let me state very clearly that the Board of Directors, management, and all of us at Wells Fargo are outraged and appalled by what appears to be a serious breakdown in the corporate governance of some public companies in the United States," said chairman and CEO Dick Kovacevich. "This breakdown is not about a lack of formal structures and rules. It is not about accounting standards, outside auditors, the structure of boards of directors, audit committee meetings, FASB or the SEC. It is about honesty, trust and integrity. Management of Wells Fargo is accountable for the results of Wells Fargo. Our approach is conservative, and we, and we alone, are responsible for making sure these results are reported accurately. Period, no ifs, ands or buts. Now, about our outstanding performance. We've always believed, regardless of economic cycles, that the key to our bottom line really is the top line. Our 15 percent growth in core revenue compared with the same period last year, excluding market-sensitive revenue and acquisitions, shows Wells Fargo continues to focus successfully on its vision of satisfying all our customers' financial needs. The result is continued market share growth. We see ourselves as a financial services company, much more than a bank, in an industry five times larger than banking. Our continued double-digit revenue growth is the result of the outstanding efforts of our 134,000 team members to provide `needs-based' selling, outstanding service, and valuable advice to help our customers achieve their financial goals. Our recent ranking by Jupiter Research as the USA's #1 internet bank further underscores our ability to serve our 20 million customers when, where and how they want to be served. We're particularly proud of our progress during the quarter in satisfying the financial needs of our increasingly diverse communities, especially the estimated three million Mexican nationals who play such an indispensable role in our country's economy. As the USA's largest NAFTA bank and the first large financial services company to promote acceptance of the Matricula card, since last November Wells Fargo has enabled more than 30,000 Mexican nationals to open bank accounts, enter the mainstream of financial services and perhaps some day own a home of their own. Also during the quarter, we responded to the growing need for a cost-effective, safe and convenient way for customers to wire money to Mexico. We expanded our InterCuenta Express wire transfer service in this $9 billion a year segment by partnering with Bancomer, Mexico's largest bank, as the new receiving agent for our wire transfer business." Financial Performance "We're very pleased with our solid financial performance in the second quarter of 2002," said CFO Howard Atkins. "On a comparable basis of accounting for goodwill, diluted earnings per share were $.82, up 17 percent from the second quarter 2001 $.70 per share (excluding second quarter 2001 non-cash impairment and other special charges), and have grown steadily each quarter since second quarter 2001. Our second quarter performance reflected a continuation of double-digit core revenue growth (up 15 percent), prudent expense growth (up 10 percent), and reductions in net credit losses," said Atkins. Second quarter results included a net loss of $13 million in market-sensitive revenue (fixed income and equity investments) compared with a net gain of $86 million, or $.03 per share, in the same period last year (excluding the second quarter 2001 non-cash impairment). On the same basis, year-to-date diluted earnings per share of $1.62 were up 12 percent over the previous year. Revenue Excluding market-sensitive revenu |