Business briefs for May 17, 2004

Monday, May 17, 2004 | 10:28 a.m.

Vegas pizza chain operator sued

SAN DIEGO -- Pizza Hut restaurants were falsely advertising low prices and then tacking a 50-cent energy surcharge on pizzas sold in the San Diego area, a county prosecutor said Friday.

The San Diego District Attorney's office filed a consumer protection lawsuit against RLLW Inc., which owns 62 Pizza Hut restaurants in San Diego County, accusing it of false advertising. Las Vegas-based RLLW reported sales of more than $50 million last year.

The company's restaurants stopped charging for energy in summer 2003, but prosecutors sued Thursday after settlement talks with RLLW broke down. The lawsuit seeks civil penalties of at least $1 million.

RLLW attorney Dan Ayala said "the company agrees there may have been a mistake," but contends prosecutors are exaggerating the issue.

The complaint alleges there was "a corporate policy of some nefarious nature, which is not the case," he said. The surcharge affected only a handful of customers, he said.

Ayala said the company only operates Pizza Huts in San Diego County and doesn't operate any in the Las Vegas area.

PeopleSoft offer cut

SAN FRANCISCO -- Oracle announced on Friday that it was reducing its cash offer to acquire PeopleSoft to $7.7 billion, from $9.4 billion.

Oracle executives said the decision reflected the decline in the share price of PeopleSoft since it first announced its hostile takeover bid last June. Oracle said its new offer of $21 a share for PeopleSoft represents a 21 percent premium over PeopleSoft's closing price on Friday of $17.30. The earlier offer, made in February, was $26 for each share of PeopleSoft.

Oracle announced the reduced offer after the close of regular trading. Shares of PeopleSoft fell to as low as $16.90 in after-hours trading.

"Our revised offer reflects changes in market conditions and in PeopleSoft's market valuation," said Jeffrey O. Henley, Oracle's chairman and chief financial officer. He noted that the new price was "a higher premium than our previous offer was on the date made, calculated on both a single-day and 30-day-moving-average basis."

Oracle's decision to lower its bid comes as lawyers for Oracle and the Justice Department prepare to square off in U.S. District Court in San Francisco on June 7, after the agency's decision to sue to block the deal.

Loss widens as sales fall

WAYNE, N.J. -- Toys "R" Us Inc., the No. 2 U.S. toy seller, said its first-quarter loss widened to $28 million after U.S. toy sales fell. The shares declined as much as 10 percent.

The net loss increased to 13 cents a share from $26 million, or 12 cents, a year earlier, the Wayne, N.J.-based company said in a statement. Sales in the period ended May 1 fell 2.6 percent to $2.06 billion, the first drop in two years.

Sales at the company's U.S. toy stores open at least a year fell 5.6 percent in the quarter as its Toys "R" Us chain was hurt by industry leader Wal-Mart Stores Inc.'s low prices.

Retailer posts profit again

DETROIT -- Kmart Holding Corp. earned $93 million in its second straight profitable quarter since emerging from bankruptcy protection, but the discount retailer's same-store sales continued to fall.

The company today reported net income of 94 cents per share in the 2004 fiscal first quarter ended April 28. For the same period a year ago, while in bankruptcy and before its reorganization, its predecessor company lost $862 million, or $1.65 per share.

First-quarter sales at Kmart's stores open at least a year decreased 12.9 percent for the period compared with the 13 weeks ended April 30, 2003. Same-store sales comparisons take new stores and store closings out of the mix and are considered the best measure of a retailer's health.

LV office to grow in reorganization

DEARBORN, Mich -- Ford Motor Co., which is reducing costs to boost profit, today said its consumer-credit unit will close 85 offices that work with dealers to arrange customer loans.

The company's Ford Motor Credit will cut the number of offices handling Ford, Volvo and other brands to 78 from 163.

A spokeswoman said a Las Vegas field operations office, which handles loan sales, will remain open and increase its loan offerings to include luxury lines, such as Jaguar, Range Rover and Aston Martin. The local office will receive 50 percent of the business from a Phoenix office that will be closed, she said.

Ford Credit's Henderson service center, which handles customer payment processing and service, will not be affected by the change in the company's loan centers.