WestCoast reports loss

WestCoast Hospitality Corp. reported a 2004 loss of $6.6 million, or 51 cents per share Thursday, a figure company officials attributed to the recent marketing of 11 hotel and office properties.

Under accounting rules, the company was required to list an “impairment” charge for the properties, said Art Coffey, president and chief executive officer. WestCoast expects to make up the charge when the hotels and offices sell later this year, he said.

Without the impairment, the company would have recorded a 2004 loss of $890,000, or 7 cents per share. The company lost 10 cents per share in 2003.

WestCoast reported a fourth quarter loss of $8.2 million, or 63 cents per share, including the accounting charge. Without the charge, the company reported a loss of $2.1 million, or 20 cents per share.

In November, WestCoast announced that it would spend $40 million updating its current hotels, and sell off what it deemed “non-strategic” assets. On a per-room basis, hotel occupancies and room rates rose during the fourth quarter, according to Coffey.

Disclosure worries derailed talks

New York The former finance chief of WorldCom Inc. testified Thursday that the company called off 2001 merger talks with Verizon after he and CEO Bernard Ebbers worried Verizon officials would discover WorldCom’s cooked books.

Scott Sullivan testified there were concerns that Verizon Communications Inc. would uncover the fraud during a process called due diligence, in which companies considering a merger examine each others books.

“I said to Bernie, ‘If we get to the next step with Verizon where we start to exchange nonpublic information, the details of our financial statements, I have concerns … because of the adjustments we have made,’ ” Sullivan testified.

“He said, ‘You’re right,’ ” Sullivan continued, referring to Ebbers. “This probably isn’t a good time to be talking to Verizon anyhow because our stock price isn’t where it needs to be.”

WorldCom and Sprint Corp. had a potential merger voided by the Justice Department in 2000, but the talks with Verizon came in 2001, when WorldCom’s $11 billion accounting fraud was well under way.

Earlier Thursday, Sullivan testified that Ebbers ordered him to remove information about out-of-control expenses from an internal budget document in 2001.

Recordings reveal CEO’s meeting

Birmingham, Ala. As agents closed in on fraud at HealthSouth Corp. two years ago, then-CEO Richard Scrushy told an aide “everybody goes down” if problems with the rehabilitation giant’s financial statements become public, according to a secretly made recording played at Scrushy’s trial Thursday.

Later the same day, amid what prosecutors describe as more discussions of the scheme, Scrushy reminded the same executive there were eight children in the Scrushy family.

“They need their daddy,” said Scrushy, whose wife has since had another child.

The recordings were made in March 2003 by former HealthSouth chief financial officer Bill Owens, who was cooperating with the FBI and has since pleaded guilty in the fraud. Jurors listened to recordings through headphones during Owens’ seventh day on the witness stand.

While prosecutors contend the recordings prove Scrushy was behind a scheme to overstate earnings by some $2.7 billion over seven years beginning in 1996, the defense claims they demonstrate Scrushy’s innocence by revealing Owens as the mastermind.

GM recalling 200,000 vehicles

Detroit General Motors Corp., the world’s biggest automaker, is recalling nearly 200,000 vehicles because of various safety defects, federal regulators said Thursday.

The largest recall is of 155,465 pickups, vans and sport utility vehicles – including the Hummer H2 – because of possible brake malfunctions, GM and federal safety regulators said.

All of the affected vehicles are from the 2004 and 2005 model years and have Bosch hydro-boost brake assemblies. They are the Chevrolet Avalanche, Express, Silverado and Suburban; the GMC Savana, Sierra and Yukon XL; two commercial trucks, the GMC Topkick and Chevrolet Kodiak; and the Hummer H2, according to the National Highway Traffic Safety Administration.

NHTSA said a pressure accumulator in the braking system could crack during normal driving and fragments could injure people if the hood was open.