News Briefs: Sycamore, PepsiCo, UAL

Sycamore Networks to restate over stock-option accounting; Russian authorities open antitrust probe into PepsiCo; UAL gets extension to file reorg plan; California AG accuses drug companies of overbilling; former hospital CFO indicted on fraud charges.

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Sycamore Networks, a maker of optical networking products, announced that it will restate its financials for fiscal years 2000 through 2004 to correct its accounting for certain stock options granted during calendar years 1999 through 2001. The restatement will reflect $33.8 million in additional non-cash stock compensation expense amortized over the vesting period of the identified options, according to a company statement. The company added that the changes will not impact historical revenue, cash, or non-stock-option-related expenses for any prior periods. Sycamore will also adjust its previously issued fiscal year 2005 interim financials.

• Russian antitrust authorities reportedly launched a probe into PepsiCo Inc. over allegations that the soft-drink maker has blocked retailers from selling its competitor’s products. The Associated Press picked up the report from the newspaper Vedomosti, which cited an unnamed official from the Federal Antimonopoly Service. Coca-Cola Co. was subject to a similar Russian antitrust probe in July, according to the newswire, but it has since agreed to comply with Russian law. A spokesman for PepsiCo said that while the company has not yet been notified of the investigation by Russian authorities, the company will “do whatever we can to address their concerns.”

• A judge has granted United Airlines parent company, UAL Corp., until November 1 to file a reorganization plan as it attempts to emerge from bankruptcy. Judge Eugene Wedoff, who had previously granted an extension that was due to expire September 1, warned the company that he would not issue further extensions “in the absence of compelling and unforeseeable circumstances,” according to the Associated Press. UAL has been in Chapter 11 bankruptcy since December 2002. On Thursday, management disclosed in a court filing that the airline had received new commitments from Citibank, JPMorgan Chase, Deutsche Bank, and GE Commercial Finance for up to $3 billion in debt financing that should enable it to emerge from bankruptcy by late this year or early 2006.

• State Attorney General Bill Lockyer charged 39 drug makers with defrauding the California’s Medi-Cal system for at least the past decade, according to The New York Times. The lawsuits reportedly claim that for some drugs, the companies charged Medi-Cal — a state- and federal-funded version of Medicaid — as much as 10 times the price they charged private pharmacies and hospitals. Lockyer also reportedly claimed that the companies made as much as $40 million a year in illegal profits. Among those companies named in the suit, which amends one filed in 2003 against Abbott Laboratories and Wyeth Pharmaceuticals, are Amgen, Baxter Healthcare, Bristol-Myers Squibb, Glaxo SmithKline, Mylan Laboratories, Novartis, and Schering-Plough.

Provident Hospital’s former chief financial officer, Earl Bell, has been accused of conspiring to steal millions from Cook County, Illinois, residents. Bell was charged with filing false claims for payment and taking kickbacks from a contractor, according to the Chicago Sun-Times. Bell allegedly conspired with Mary Payne, a provider of clerical service to Provident, and her husband Anthony Payne; the three individuals were indicted in U.S. District Court on fraud charges. In addition to submitting phony claims, prosecutors reportedly allege that Mary Payne and her husband set up fake companies to convince outside investing firms that they were to receive $5.4 million from the county for work performed. Reportedly, Bell got the county to approve claims filed by Payne’s companies; four investing firms allegedly lost thousands of dollars by providing money to Payne’s company.

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