TJX settles case on data breach

The retail firm, which last year said that 45.7 million credit cards were exposed to possible fraud, agrees to a federal settlement requiring it to undergo audits and to implement security programs.

WASHINGTON -- More than a year after millions of T.J. Maxx and Marshalls customers found out their credit card information had been hacked into, the discount stores' operator agreed to have its information audited but avoided paying federal fines.TJX Cos. was one of three firms that agreed to settle charges that each "failed to provide reasonable and appropriate security for sensitive consumer information," federal regulators said Thursday in two unrelated data-breach decisions.Data broker Reed Elsevier and its Seisint subsidiary also avoided fines but have agreed to obtain third-party audits biennially for 20 years under a separate settlement with the Federal Trade Commission.The agreements, which will be finalized after a 30-day public comment period, also require the companies to implement comprehensive information security programs."These cases bring to 20 the number of complaints in which the FTC has charged companies with security deficiencies in protecting sensitive consumer information," said Deborah Platt Majoras, outgoing chairwoman of the FTC.TJX said last March that at least 45.7 million credit cards were exposed to possible fraud in a breach of its computer systems. Court filings by banks that sued TJX estimated the number of cards affected at more than 100 million.In the other case, personal information about hundreds of thousands of people held by Reed Elsevier's LexisNexis unit may have been accessed in 2005 by unauthorized individuals using stolen passwords and IDs to access Seisint databases.Sherry Lang, TJX's senior vice president for investor and public relations, said the company disagreed with the FTC's allegations, but agreed to the settlement because it "is consistent with the agreements between the FTC and other retailers that have been victimized by cyber crime."The Framingham, Mass.-based company's 2,500 stores include the T.J. Maxx and Marshalls chains.The FTC cannot impose financial penalties against the companies because it lacks the authority to do so. The commission has asked Congress for such authority since 2005.

Autos

State air board may slash zero-emission mandate

Hoping to buy an emission-free vehicle in the next few years? Finding one might soon get much tougher.California's Air Resources Board will vote today on whether to cut, by nearly two-thirds, the number of electric-battery and hydrogen fuel-cell vehicles that major carmakers must sell here over the next decade.

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The proposed change to the state's Zero Emission Vehicle (ZEV) mandate has stirred up protests from environmentalists and alternative-transportation advocates, who say automakers have little incentive to produce such vehicles unless obligated. Others say the state will be unable to meet its own greenhouse gas-reduction targets without requiring more production of emission-free vehicles. Passenger vehicles emit about 30% of California's greenhouse gases."This is a very significant reduction," said V. John White, executive director of the Center for Energy Efficiency and Renewable Technologies in Sacramento."We need to look at getting car companies to push more technology than they want to, sooner than they want to, not making concessions to industry."Automakers argue that even the reduced mandate is too tough, considering the extremely high costs associated with developing new drivetrain technology. In a March 14 letter to the air board, the six largest automakers selling in California -- General Motors Corp., Toyota Motor Corp., Ford Motor Co., Chrysler, Honda Motor Co. and Nissan Motor Co. -- expressed concerns that parts of the mandate were "overly stringent" and that the changes "place an inordinate burden upon the resources" of the companies.The proposed revised mandate would require those carmakers to market 2,500 electric or fuel-cell vehicles here from 2012 to 2014, followed by 25,000 more from 2015 to 2017. (Smaller-volume carmakers are not required to make emission-free vehicles.)Those numbers are far below the existing requirement, which calls for 25,000 such vehicles in the earlier period and 50,000 more between 2015 and 2017. (The mandate for 2009-2011, which isn't up for a vote, requires 2,500 emission-free vehicles.) According to the Air Resources Board, the reduced numbers would save automakers as much as $1.3 billion a year.Board Chairwoman Mary Nichols said the panel would probably opt for an unspecified compromise on the number of vehicles and might consider a future overhaul of the program. She denied that automakers influenced the board's decision-making process. "This isn't about backing down under pressure from auto companies," Nichols said. "It's about what's feasible."The ZEV mandate, established in 1990, has long been controversial. Originally, the regulation called for 2% of all cars sold in California to be free of tailpipe emissions by 1998, ramping up to 10% by 2004, with stiff penalties for noncompliance. The goals pushed carmakers to try new technologies, and by the late 1990s, carmakers began testing electric vehicles such as the Chevrolet EV1.Green-car advocates embraced the vehicles, but the carmakers filed suits against the air board alleging that the mandate was a crushing financial burden. That prompted modifications of the ZEV mandate that in effect ended those electric-car programs while providing what the board calls an "alternative path" to compliance that called for far fewer emission-free vehicles.The successive revisions have created a mandate so complex that even board member Daniel Sperling acknowledges, "There's only a handful of people in the world who understand it."Almost 20 years after the ZEV mandate began, fewer than 5,000 highway-legal, electric and hydrogen fuel-cell vehicles have been produced for use in California by the six automakers, or about 0.33% of the roughly 1.5 million cars sold in California per year. The contentious series of decisions by the board leading to the reduced ZEV requirements were depicted in the 2006 film, "Who Killed the Electric Car?"With new reductions on the table, "it feels like deja vu," said Chris Paine, the film's director and a former EV1 driver, who will film today's meeting. "Five years later and we haven't learned a thing."Most carmakers have some combination of hydrogen fuel-cell vehicles and electric cars in development. But without a mandate calling for mass production, critics contend, automakers have little incentive to bring the expensive machines to market. A single fuel-cell vehicle can cost as much as $1 million when produced in small volumes.In addition to slowing technological development, critics say the proposed rollback would make it nearly impossible for the state to meet its goal of reducing greenhouse gas emissions by 80% before 2050.A study released this week by the Union of Concerned Scientists said California would need at least 379,000 zero-emission vehicles on the road by 2020 to reach that goal.Carmakers contend that having to make emission-free vehicles could cause significant financial distress. Many automakers have reported huge 2007 losses. The industry is facing deep sales drops and the prospect of the worst year, in terms of U.S. sales volume, in more than a decade."Certainly the state has played a role in helping encourage technology development," GM spokesman Dave Barthmus said. "But we clearly believe that if we're going to succeed, we have to develop our own energy alternatives on our own terms."Along with the six carmakers subject to the ZEV mandate, Volkswagen, Daimler (maker of Mercedes), BMW, Mitsubishi Motors Corp. and Hyundai Motor Co. all filed public comments with the air board, arguing, among other things, that if they someday do sell enough cars to be subject to the ZEV mandate, they should be given as long as 12 years to comply. Environmental organizations, plus Google Inc., electric carmaker Tesla, the mayor of San Francisco and the states of Vermont and Massachusetts (they and eight other states have signed on to the ZEV mandate) were among the groups filing comments calling on the board to step up its ZEV requirements.On Wednesday, activists, actors, environmentalists and political figures held a rally in Sacramento against the proposed changes.Board officials say they expect upward of 200 people to speak before the panel prior to its vote. With each given as long as three minutes, the session could last more than 10 hours. Among those planning to speak is Tim Carmichael, senior policy director at the Coalition for Clean Air."This proposal is 180 degrees from what we know the state needs to achieve our climate and air-quality goals," he said. "Without a strong ZEV, I don't see any real innovation coming from the big carmakers."

Corporate profits fall 3.3% in 4th quarter

WASHINGTON -- U.S. corporate profits fell 3.3% in the fourth quarter of 2007, according to government data that also confirmed U.S. economic growth slowed to a meager annual pace of 0.6% in the same period.A second government report showed the number of U.S. workers filing new claims for jobless benefits fell by 9,000 last week and that the number of people remaining on benefit rolls after receiving an initial week of aid also declined.Wall Street analysts surveyed before the reports had expected a 0.1% drop in corporate profits, despite a crisis in the sub-prime mortgage market that has hobbled U.S. economic growth.The drop in corporate profits was the first in a year, and the Commerce Department said profits of both financial and nonfinancial companies fell.The department said nonfinancial company labor costs rose but were partially offset by price increases.U.S. Treasury bond prices extended their retreat after stock index futures rose in response to the drop in new jobless claims. "With the light volume we've been having, any sort of headline is going to move [the market] sort of quickly," said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, N.J. However, "anyone who thinks we're not in a recession is living under a rock. Let's just get it over with."Profits rose just 2.6% for all of 2007, compared to a much-healthier 12.2% gain in the prior year.The Commerce Department's third and final reading of fourth-quarter U.S. gross domestic product, which measures total goods and services output within U.S. borders, was unchanged at a 0.6% increase, matching expectations before the report.The economy grew 2.2% for all of last year, the slowest rate since 2002, the Commerce Department said, as economists were forecasting a possible recession this year.Spending on new homes plunged 25.2% in the fourth quarter, the biggest drop since 1981, the department said.The housing market woes have rattled worldwide financial markets, forcing the Federal Reserve to aggressively cut its key interest rate by 3 percentage points since mid-September.The gloomy economic news continued into this year with data Wednesday showing that sales of new U.S. single-family homes fell to the slowest pace in 13 years while orders for durable goods tumbled unexpectedly last month.The personal consumption expenditures price index, which excludes food and energy and is the Fed's favored inflation measurement, increased 2.5% in the fourth quarter, compared with the previous estimate of a 2.7% rise.

Hearings set on BofA-Countrywide deal

WASHINGTON -- The Federal Reserve Board took the unusual step Thursday of scheduling public hearings to get comments on the pros and cons of Bank of America Corp.'s proposed $4-billion acquisition of mortgage giant Countrywide Financial Corp.The announcement comes amid high public sensitivities surrounding housing and mortgage markets and the effect that the merger might have on mortgage modifications, particularly in California.It comes the day after Sen. Christopher J. Dodd (D-Conn.), chairman of the Senate Banking Committee, invited regulators, including Federal Reserve Chairman Ben S. Bernanke, as well as the chief executives of JPMorgan Chase & Co. and Bear Stearns Cos. to testify at a hearing next week about JPMorgan's bid to buy Bear Stearns, which kept the investment bank from entering bankruptcy.The Fed said it would extend a 90-day public comment period on the proposed BofA-Countrywide deal by nearly a month, until the close of business on April 29.A public hearing is scheduled April 22 at the Federal Reserve Bank of Chicago's headquarters, with hearings on April 28 and 29 at the Los Angeles Branch of the Federal Reserve Bank of San Francisco.The Fed rarely holds public hearings on merger decisions, but it said the public hearings were intended to collect information relating to the factors the board is required to consider to determine whether the merger is acceptable under the Bank Holding Company Act.Some consumer groups have criticized BofA's response to the housing crisis, saying its balance sheet allowed it to do more for troubled borrowers.The acquisition of Calabasas-based Countrywide would hand BofA a bigger market share, creating a lender making one in four U.S. home loans and collecting payments on mortgages with a value of more than $1.9 trillion.

Long-term care can be costly

Dear Karen: I provide health and life insurance for my employees. Recently, an employee asked about long-term-care insurance. What is it?Answer: Long-term-care insurance pays for institutional or home care for chronically impaired seniors. Although only 13% of full-time employees in private industry are offered long-term-care insurance today, that number is expected to go up as the U.S. population ages, said Larry Hazzard, a senior vice president at Berkshire Life."These policies can be pricey because of how rich the benefits are when you receive them," Hazzard said. You can offer long-term-care insurance to your employees at their expense, or your firm can pay all or part of the cost. Either way, the coverage is discounted when offered through a company rather than being purchased by an individual, Hazzard said. Another perk: Long-term-care insurance benefits are generally tax-free, even for employer-paid policies.Experiment with effect of pricingDear Karen: Will my sales decline if I raise prices in this economy?Answer: You won't know for sure unless you try, said David Cochran, vice president of operations at QualPro, a consulting firm. "Increase prices on small customer segments, varying the amount of the increase, and measure the impact on sales. You can then determine what your optimum price is," he said.Despite popular belief, pricing is not always the most important factor affecting sales. "Often, the right advertising message can overcome the effects of raising prices and you can sell just as much product or even more at higher margins," Cochran said."While lower prices often do increase unit sales, the use of aggressive wording such as 'Great price!' in your advertising may be equally effective. The fact that the price may be higher than a price you've offered previously may not matter a lot," he said.Outsourcing's not just for big guysDear Karen: Can my small business cut expenses by outsourcing?Answer: Yes. Many small firms save on labor costs by outsourcing routine jobs rather than hiring full-time employees, which involves providing a work site and incurring salary, overhead and administrative costs. "Small businesses typically start out as one-man shows, with an entrepreneur working 12- or 14-hour days, seven days a week. They can't afford to hire help at $30,000 or $40,000 annually," said Chris Johns, chief executive of SupportSave Solutions, based in Alamo, Calif.His company trains and employs workers in the Philippines to answer telephones and do back-office work for small U.S. companies, he said."For $897 a month per full-time employee, we provide the infrastructure and the dedicated staff that are hired and trained specifically to become part of the small business," he said. "This enables start-ups to keep their overhead costs low so they can reinvest their revenues and grow to the point where they can hire staff in the U.S."An outsourcing firm also handles employee screening, hiring, training and supervising, freeing up the entrepreneur to concentrate on sales and planning. "We have a large talent pool, and we routinely screen and interview 100 applicants daily. Often, we can hire somebody for a small firm in a day or two days," Johns said. Got a question about running or starting a small enterprise? E-mail it to ke.klein@ latimes.com or mail it to In Box, Los Angeles Times, 202 W. 1st St., Los Angeles, CA 90012.

Google paid clicks data generate debate on Wall Street

New data confirming slowing growth in Google Inc.'s paid clicks renewed debate today on Wall Street over whether the Internet search company's revenue can quickly adjust to changes it made in how it generates clicks.Citing data that ComScore Inc. released after the market closed Wednesday, analysts said growth in Google's click-through rate has nearly ground to a halt.Shares of Google fell $14.11, or 3.1%, to $444.08.The click-through rate grew 3% in February compared to a year earlier, and January saw no increase compared to January 2007. Several months earlier, the rate was growing 25% to 40% compared to a year earlier. The new data is in line with click-through declines Google reported last quarter.Google, which gets paid when users click on a sponsored ad that comes up as the result of a Google search, has reported steadily rising per-click revenue.The Mountain View, Calif.-based company said in January that the drop in click-through rates is a result of its efforts to boost the usefulness of each click to its advertisers' sales performance. For instance, the company decreased the space around a word that would result in a click, so more clicks would be intentional.Analysts disagree on how long it will take Google's per-click revenue to adjust to any increased value per click it has created.Rob Sanderson, an analyst with American Technology Research, said per-click revenue would rise immediately if advertisers saw more value in each click, because they would pay more for them at auction."It's not clicks that advertisers are really buying, it's what those clicks get them, which is sales conversions," Sanderson said.Colin Gillis, an Internet analyst at Canaccord Adams, also was optimistic: "It's very difficult to spin this as positive data point, but it also doesn't mean the world is ending."The click-through rate is only one piece of the equation for Google, he said."The counter point is that Google is out there saying, 'We are trying to make our clicks more worthwhile.' They want to actually deliver relevant hot leads to their customers because that's what their customers want," Gillis said.Other analysts disagreed.Piper Jaffray analyst Gene Munster predicted that Google would fall short of Wall Street expectations in the current quarter because of the click-through rate.Lehman Brothers analyst Doug Anmuth cut his 2008 profit estimate for Google and reduced his price target to $580 per share from $644, citing the click-through rates.He also said advertisers may be trimming their budgets -- and not responding to the changes Google has made.Google, which will report first quarter earnings April 17, declined to comment on the ComScore data.

Kennywood Park has been sold to a Spanish company.

The West Mifflin amusement park, family-owned since 1906, now will be run by Parques Reunidos, which manages 61 amusement, animal and water parks in the U.S. and Europe.The Madrid-based company also acquired Kennywood's sister properties: Sandcastle Waterpark in West Homestead and Idlewild & SoakZone in Ligonier."The Kennywood experience, as visitors have come to love and expect, will continue," park chairman Harry Henninger said in a press release. "Nothing will seem different, even to the folks working at the parks. Existing management and staff will remain in place."In recent years, other companies offered to buy Kennywood, "but Parques Reunidos is the first one to share our vision and philosophy," said Henninger, a descendant of F.W. Henninger, who along with Andrew McSwigan bought the park from the Monongahela Railway Co. more than 100 years ago."This has been a very difficult decision for members of the founding families," Henninger said in the release.The sale price is being withheld.Parques Reunidos will assume ownership of the new concert venue at Sandcastle, which had replaced Chevrolet Amphitheatre at Station Square, according to Kennywood publicist Mary Lou Rosemeyer. The Spanish company also gets Kennywood Entertainment's two New England holdings, Lake Compounce Theme Park in Bristol, Conn., and Story Land in Glen, N.H."We have tremendous respect for the work of the Kennywood management team and are delighted to acquire such a quality organization," said Richard Golding, chief executive officer of Parques Reunidos, which owns U.S. parks such as Wet 'n Wild in Greensboro, N.C., and Wild Waters in Ocala, Fla.Kennywood President Peter J. McAneny said in a press release that he was confident the new owners recognize and appreciate "the deep affection that all of the Kennywood properties enjoy with their communities."He added, "They intend to preserve these connections and build upon the history and tradition existing at each of the parks."

Spanish company buys Kennywood

Kennywood Entertainment is selling its amusement park holdings, including Kennywood, Idlewild and Sandcastle, to Parques Reunidos, a company based in Madrid, Spain.
No financial terms were disclosed. A spokeswoman for Kennywood could not immediately be reached for comment.
Parques Reunidos manages 61 amusement, animal and water parks in the United States and Europe, with total annual visitors exceeding 22 million and revenue exceeding $570 million.
The Henninger and McSwigan families have owned Kennywood since 1906.
According to a news release, Parques Reunidos had the financial backing of the Candover investment fund, a private equity investor in London.
Candover approached Kennywood with a purchase offer as part of its plan to consolidate family entertainment venues around the globe, according to the release.
"The Kennywood experience -- as visitors have come to love and expect -- will continue," Kennywood Entertainment Chairman Harry Henninger said in a statement. "Nothing will seem different, even to the folks working at the parks. Existing management and staff will remain in place."
Henninger added, "This has been a very difficult decision for members of the founding families, now numbering over one hundred and residing all over the country. All of us are tremendously proud of what we created with Kennywood Entertainment. It has truly been a magical ride, managing Kennywood, starting Sandcastle, expanding and improving both Idlewild and Lake Compounce."
The transaction is expected to close in March.
Ann Dugan, executive director of the University of Pittsburgh's Institute for Entrepreneurial Excellence, said "anytime a region loses family ownership in a business, it loses a lot."
However, she is optimistic new ownership will help Kennywood.
"Parques Reunidos has the potential to add more resources to the park and further enhance it," she said.

Europeans buy landmark park, other properties; sale estimated at $200 million