HealthSouth cuts jobs, more execs plead guilty

Birmingham, Ala.-based HealthSouth Corp. cut 20 percent of its headquarters staff Thursday as five more executives agreed to plead guilty in an accounting fraud that has the health care giant teetering on bankruptcy.

The layoffs of 165 people was HealthSouth’s first mass personnel cut since the government accused it of overstating earnings by at least $1.4 billion since 1999 to make it appear the company was meeting Wall Street forecasts.

In court, five more HealthSouth executives admitted taking part in a scheme that already had resulted in guilty pleas from three top executives and a criminal probe of founder Richard Scrushy, ousted this week as chairman and chief executive office.

Among the five is chief information officer Kenneth Livesay, 42, who agreed to plead guilty to charges of conspiracy to commit wire fraud and falsifying corporate records.

Distributor

Fleming stock suspended from exchange trading

Fleming Cos. stock moved to the Pink Sheets after the New York Stock Exchange, the Chicago Stock Exchange and the Pacific Stock Exchange suspended trading its stock.

The Securities and Exchange Commission is considering an application to delist Fleming common stock from the NYSE, pending certain procedures such as a possible appeal.

Though Fleming, which was founded in Topeka and still employs about 150 people at a warehouse there, plans to ask the over-the-counter Bulletin Board to review its trading eligibility, the company believes it won’t be eligible for trading until it files its Form 10-K for the year ended Dec. 28, the company said in a news release Thursday.

Finance

Mortgage rates drop

Mortgage rates around the country fell this week, after climbing for two weeks in a row, reflecting gyrations in financial markets over the war in Iraq.

The average interest rate on a fixed-rate 30-year mortgage dropped to 5.79 percent, from 5.91 percent last week, Freddie Mac, the mortgage company, reported Thursday in its weekly nationwide survey.

This week’s decline in mortgage rates was influenced by recent worries in financial markets that the war in Iraq might be prolonged, economists said.

For 15-year fixed-rate mortgages, a popular option for refinancing, rates went down to 5.06 percent this week, compared with 5.21 percent last week.

Earnings

Borders warns of loss

Borders Group Inc. issued a second earnings warning in the past month, saying it now expects a loss in the first quarter, citing sluggish sales across all its businesses.

“Traffic and sales have slowed as the nation focuses on the ongoing Iraq conflict,” Greg Josefowicz, Borders Group chief executive, said Thursday.

On March 13, the nation’s second-largest bookseller behind Barnes & Noble Inc., announced that it would only break even in the first quarter, falling short of analysts’ expectations, which called for a profit of 4 cents per share.

Borders did not specify the loss on Thursday but said that the shortfall likely would affect its previously announced full-year earnings of $1.50 to $1.60 per share.

Shares of Borders fell 40 cents, or 2.7 percent, to close Thursday at $14.30 in trading on the New York Stock Exchange.