ArtistDirect Buying Back Stock
ArtistDirect Inc., the financially struggling Los Angeles dot-com music firm, said it would buy back more than 7.5 million shares of its common stock and unexercised options to satisfy regulatory requirements.
The company's stock price closed below $1 a share for the 30th consecutive day last week, triggering an automatic warning that it is in jeopardy of being delisted from Nasdaq.
ArtistDirect provides music and multimedia content through its myriad Web sites and builds e-commerce shops for dozens of well-known acts, such as the Backstreet Boys, Rolling Stones and No Doubt.
ArtistDirect said it is offering to repurchase 585,724 shares it issued to artists and managers, and another 7 million in unexercised stock options.
The company which recently fired 30 people, or 12 percent of its staff, as part of a corporate restructuring estimates that the buyback will cost about $10.2 million if all targeted shares are repurchased.
The company's stock price has plummeted more than 93 percent since its initial public offering in March.
Taxing Times for Travolta
Actor John Travolta will pay $607,400 in back taxes to settle an Internal Revenue Service dispute dating back more than five years.
Under a two-page settlement filed in U.S. Tax Court, Travolta will pay more than half the $1.1 million in back taxes and penalties sought by the IRS for the years 1993 through 1995.
Travolta agreed to pay only back taxes, not any penalties, records show. The amounts are $150,547 for 1993, $248,096 for 1994 and $208,757 for 1995.
The dispute stemmed from $2.27 million in unspecified losses that Travolta claimed from 1993 to 1995 for a company called ATLO Inc., according to court records. ATLO is a so-called S corporation, a common device wealthy people use to gain tax breaks by having earnings and losses flow through the companies.
CarsDirect Sues Software Maker
CarsDirect.com filed a lawsuit claiming KPMG Consulting Inc. knowingly misled it about untested customer-tracking software that has cost the online auto store more than $50 million.
The suit, filed in Los Angeles Superior Court, offers a look at closely held CarsDirect.com, which dismissed 90 of its 750 employees in November. KPMG said the suit is without merit and it plans to vigorously defend itself.
The suit says that in late 1999, KPMG advised CarsDirect to replace its customer-tracking software with a more sophisticated system that could better handle increased online traffic. The system did not work as well as CarsDirect's old software, which had been developed by outside programmers, according to the lawsuit.
The new system's performance allegedly degraded when 20 people used it simultaneously, though CarsDirect needs a system that can support up to 150 users. CarsDirect said it paid KPMG $1.25 million for the software about twice the original budget of $610,000 and refused to pay $1.2 million more demanded by KPMG.
WellPoint Ups Bid for Cerulean
WellPoint Health Networks Inc., one of California's largest managed care companies, has raised its offer for Cerulean Cos., Georgia's largest health insurer, to $680 million to top a rival all-cash bid from Trigon Healthcare Inc.
Trigon, a managed heath care company, offered $675 million, WellPoint said in a statement. Cerulean notified Thousand Oaks-based WellPoint on Nov. 24 that it planned to accept Trigon's offer and cancel a planned sale to WellPoint, the statement said.
WellPoint, the parent of Blue Cross of California, agreed to buy Cerulean, the Atlanta-based parent of Blue Cross & Blue Shield of Georgia, in July 1998 for $500 million in cash and stock. Cerulean's shareholders approved the sale on Oct. 10 after it was delayed by litigation.
Acquiring Cerulean would give WellPoint 1.6 million more customers and allow it to expand beyond California, where it has its strongest presence.
CRA Inquiry Expanded
The Los Angeles City Council has expanded its inquiry into the troubled Community Redevelopment Agency to include the payment of $1.57 million more for properties than the agency's own appraisals showed they were worth.
The council set Dec. 15 as the date for a meeting with CRA administrator Jerry Scharlin, at which council members also will discuss concerns that he hired a private investigator to look into his own agency.
Councilman Mark Ridley-Thomas formally proposed that the council assume direct control of the agency. He cited a city controller's office audit that disclosed the overpayments.
The audit, commissioned by City Controller Rick Tuttle, found that the Community Redevelopment Agency failed to disclose the extra cost to the City Council. In addition, it said the CRA often failed to use competitive bidding in awarding contracts from 1996 through 1999.
Tuttle said the audit did not find evidence that any specific CRA employee benefited financially from agency activities.
Detour Accedes to SEC
Detour Magazine Inc. agreed to redo its 1997 and 1998 financial statements in an agreement settling regulators' charges that the reports were "materially false and misleading," the Securities and Exchange Commission said.
The SEC said the filings made by the Los Angeles-based fashion and entertainment magazine used estimated numbers and also failed to fully record the cost of issuing corporate stock options to consultants.
Detour had disclosed this year that SEC investigators planned to seek a case against the company. In settling the charges, Detour neither admitted nor denied them.
The SEC alleged that rather than recording the actual financial results of Detour's operations, the 1997 and 1998 quarterly filings simply used fractions of previously stated results for longer periods and carried them forward.
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