/raid1/www/Hosts/bankrupt/TCR_Public/021028.mbx
T R O U B L E D C O M P A N Y R E P O R T E R
Monday, October 28, 2002, Vol. 6, No. 213
Headlines
ADELPHIA BUSINESS: Lucent Wants Equipment Sold to Pay for Debts
ADELPHIA COMMS: Committee Turns to Neilson for Accounting Advice
AMES DEPARTMENT: Court Approves New $100 Million Kimco Financing
ANC RENTAL: Consolidating Operations at Palm Beach Airport
ARMSTRONG: Junk Science Property Damage Claims Won't Survive
ASIA GLOBAL CROSSING: Will Restate Certain Financial Information
BCE INC: Q3 2002 Working Capital Deficit Tops CDN$247 Million
BETHLEHEM STEEL: Niagara Demands Prompt Decision on Power Deals
BRUSH ENGINEERED: Anticipates Covenant Default Under Credit Pact
CASTELLE: Operating Performance Improved in Third Quarter 2002
CHELL GROUP: Terminates Acquisition Talks With Emtec
COLLECTORS UNIVERSE: Fails to Meet Nasdaq Listing Requirements
COMDISCO INC: Bershire Entities Disclose 34.5% Equity Stake
CONTOUR ENERGY: Tapping Partners Commercial for Real Estate Work
CREDIT STORE: Secures Court Nod to Extend Lease Decision Period
DOMAN INDUSTRIES: Sept. 30 Equity Deficit Widens to $328 Million
ENRON CORP: Court Approves Settlement Pact with Kawasaki Motors
EOTT ENERGY: Retains Alvarez as Special Bankruptcy Advisor
FRIEDE GOLDMAN: Court Okays Offshore Unit Sale Bidding Protocol
FRIEDE GOLDMAN: Closes Halter Marine Sale to Vision Technology
GCI INC: Reports Improved Financial Results for Third Quarter
GENTEK INC: Seeks Court Nod to Pay $6MM of Foreign Vendor Claims
GLIMCHER REALTY: Third Quarter Revenues Up by 4.7% to $70.8 Mil.
HAYES LEMMERZ: Five Bondholders Petition for Rule 2004 Exam
HORSEHEAD INDUSTRIES: Has Until November 2 to Complete Schedules
IMC GLOBAL: S&P Says Improved Q3 Report Will Not Affect Ratings
INKTOMI CORP: Sept. 30 Working Capital Deficit Tops $36 Million
INDYMAC: Fitch Drops Ratings on 10 Pass-Through Note Classes
INTEGRATED INFO.: Gets Time Extension to Meet Nasdaq Guidelines
INTERLEUKIN GENETICS: Obtains $1.5-Million Interim Financing
INTERLIANT: Signs-Up Traub Bonacquist as Bankruptcy Counsel
I-STAT CORP: Sept. 30 Balance Sheet Upside-Down by $29 Million
ITC DELTACOM: Committee Wants to Tap Chanin Capital as Advisors
IT GROUP: Wants 3rd Extension to Remove Suits Until Jan. 3, 2003
J.P. MORGAN: Three Classes Affirmed with Low-B Ratings by Fitch
KMART: Wants to Assume Consignment Deal with Cardinal Health
LODGIAN: Seeks Nod to Assume Amended OCV Television Agreements
LTV CORP: Records Retention & Destruction Stipulation Approved
MDC CORP: Will Host Conference Call for Q3 Results on October 30
MICRO COMPONENT: Sept. 28 Balance Sheet Upside-Down by $2.7 Mil.
NORTEL NETWORKS: Declares Dividends on Series 5 Preferred Shares
NQL INC: Completes Sale of Delta Computec Assets to ViewCast.com
NTL INCORPORATED: Gets Nod to Engage Ernst & Young as Auditors
OWENS CORNING: Sues Shareholders to Recover Dividend Payments
PANACO: Obtains Court Authority to Hire Deloitte & Touche
PHOSPHATE RESOURCES: Sept. 30 Partners' Deficit Widens to $341MM
PINNACLE TOWERS: Securities Claim Bar Date Set for Dec. 13, 2002
PRECISION AUTO: Renegotiating Terms of Senior Debt Facility
PROVIDIAN FIN'L: Luzuriaga & Truelove Join Board of Directors
RELIANCE: Asking for Exclusivity Extension Until March 4, 2003
RUSSELL CORP: Posts Improved Performance for Third Quarter 2002
RUSSIAN TEA ROOM: Secures Court Nod to Use Cash Collateral
SAFETY-KLEEN: Unsecureds Seek Clarification After Cybergenics
SBC COMMS: Working Capital Deficit Narrows to $7BB at Sept. 30
SCIENTIFIC LEARNING: Posts Record Revenue of $6.4MM in Q3 2002
SLI INC: Secures Final Court Approval of $35-Mill. DIP Financing
SOLUTIA INC: Balance Sheet Insolvency Balloons to $269 Million
STATIONS HOLDING: Emerges from Chapter 11 Bankruptcy Protection
STRATEGIC DIAGNOSTICS: Bank Waives a Covenant Under Credit Pact
TYCO INT'L: September Quarter Working Capital Deficit Tops $82MM
UNIFORET: Gets Favorable Judgment from Montreal Superior Court
US AIRWAYS: Virginia Court Sets Claims Bar Date for Nov. 4, 2002
USG CORP: Third Quarter 2002 Net Sales Jump-Up to $903 Million
WARNACO: Begins Calvin Klein Store Closing Sales at 26 Locations
WORLDCOM: Carl McCall Asks for Stay Lift to Obtain Information
* Jefferies Group Will Repurchase Up to 1,500,000 Shares
* BOND PRICING: For the week of October 21 - October 25, 2002
*********
ADELPHIA BUSINESS: Lucent Wants Equipment Sold to Pay for Debts
---------------------------------------------------------------
Joseph Lubertazzi, Jr., Esq., at McCarter & English, LLP, in
Newark, New Jersey, informs the U.S. Bankruptcy Court for the
Southern District of New York that Adelphia Business Solutions,
Inc., and its debtor-affiliates currently owe Lucent
Technologies Inc. substantial sums of money stemming from the
parties' General Agreement executed prepetition and various
addenda, as modified by the parties' June 28, 2001 Settlement
Agreement. Pursuant to the Contract, Lucent agreed to provide
ABIZ telecommunication products, licensed materials and
services, in return for ABIZ's agreement to satisfy certain
specified purchase commitments and to timely pay its invoices.
According to Mr. Lubertazzi, Lucent presently warehouses
millions of dollars worth of equipment in a Lucent-controlled
warehouse in Grovesport, Ohio, related to purchase orders
submitted by ABIZ, but subsequently placed on hold by ABIZ.
Lucent has invoiced ABIZ for the Grovesport Equipment and ABIZ
has not paid for it. Lucent also presently warehouses millions
of dollars worth of equipment in a Lucent-controlled warehouse
located in Merrimack Valley, Massachusetts, related to purchase
orders submitted by ABIZ prepetition.
Accordingly, Lucent seeks relief from the automatic stay to sell
the Grovesport and Merrimack Valley Equipment.
Mr. Lubertazzi points out that ABIZ has not paid Lucent for the
Equipment and thus has no equity in it. If the Debtors were
interested in obtaining equipment of its kind, it could resubmit
purchase orders. Moreover, the continued storage of the
Equipment will only lead to the Equipment's depreciation and
eventual obsolescence. Storage costs associated with the
Equipment also continues to mount. (Adelphia Bankruptcy News,
Issue No. 21; Bankruptcy Creditors' Service, Inc., 609/392-0900)
ADELPHIA COMMS: Committee Turns to Neilson for Accounting Advice
----------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Adelphia Communications and its debtor-affiliates
sought and obtained authority to retain the firm of Neilson
Elggren as accountants to perform the forensic and investigative
accounting services that will be necessary during these Chapter
11 cases, nunc pro tunc to August 1, 2002.
The services of Neilson Elggren are necessary for the Committee
to:
-- understand the Debtors' businesses on an operational and
financial basis,
-- to investigate potential claims against insiders of the
Debtors and third parties, and
-- to investigate other potential courses of action within these
Chapter 11 cases.
The Committee is aware that the Debtors have sought to retain
the firm of PricewaterhouseCoopers to provide auditing and
forensic accounting services to the Debtors and that other third
parties may seek to employ forensic accounts to provide
additional services in these Chapter 11 cases. Neilson Elggren
has informed the Committee that it plans to work closely with
PwC in order to:
-- utilize the work product, which has already been produced by
PwC regarding the Debtors, and
-- minimize duplication of efforts between Neilson Elggren and
PwC.
Neilson Elggren is expected to:
A. analyze and determine the appropriateness of the
Debtors' accounting journal entries and other record keeping
methods relating to inter/intra company transactions between
its various legal entities and other entities which may be
related to the Debtors through the Rigas family and determine
whether the methodology used to charge or allocate
expenditures was and currently is reasonable;
B. obtain and analyze the Debtors' historical legal entity
financial statements and determine that those financial
statements fairly represent the financial performance of each
legal entity;
C. investigate the Debtors' accounting journal entries and
other financial records with respect to the fiscal year 2001
and the first quarter of 2002;
D. analyze the Debtors' historical financings and acquisitions
and determine the appropriateness of those transactions on a
legal entity-by-entity basis;
E. gain an understanding of the Debtors' operating procedures
and policies including:
1. Cash management system;
2. Inter/Intra company transactions;
3. Capital expenditure classification;
4. Significant accounting policies and procedures;
5. Acquisition accounting; and
6. Internal financial/tax restructuring programs.
F. provide litigation support, including testimony, to the
Committee as requested by counsel to the Committee;
G. report to the Committee from time to time regarding work
performed; and
H. interact with other financial, accounting, and other
professionals employed by the Debtors and related parties as
well as law enforcement accounting professionals.
R. Todd Neilson, a partner in the firm of Neilson Elggren LLP,
assures the Court that the firm has not otherwise provided
services to the Debtors, their creditors, equity security
holders, or any other parties-in-interest, or their respective
attorneys, in any matters relating to the Debtors or their
estates. In addition, Neilson Elggren:
-- does not hold or represent any interest adverse to the
Committee in the matters for which it has been retained,
-- Neilson Elggren is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code, and
-- has no connection with the Debtors, the creditors or any
other party-in-interest.
The professionals presently designated to represent the
Committee and their current standard hourly rates are:
Partners $375 - 475
Managers 230 - 275
Seniors 190 - 220
Consultants 170 - 180
Accounting Technicians 90 - 125
(Adelphia Bankruptcy News, Issue No. 21; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Adelphia Communications' 10.500% bonds
due 2004 (ADEL04USR1) are trading between 44 and 46. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL04USR1
for real-time bond pricing.
AMES DEPARTMENT: Court Approves New $100 Million Kimco Financing
----------------------------------------------------------------
In an effort to stave off another potential liquidity crisis
during the wind-down of their operations, Ames Department
Stores, Inc., and its debtor-affiliates negotiated for a new
$100,000,000 Revolving Credit, Guaranty, and Security Agreement
with Kimco Funding LLC. The Debtors ask Judge Gerber to approve
the new credit agreement.
Ames Senior Vice President and General Counsel, David H. Lissy,
explains that the additional DIP financing will enable the
Debtors to:
-- meet their ongoing payroll and other day-to-day ordinary
expense obligations;
-- make payment under the Employee Retention Program; and
-- pay the carrying costs of the Debtors' unexpired leases of
nonresidential real property during the Wind-Down Period.
Without the additional borrowings under the New Kimco DIP Credit
Agreement, Mr. Lissy believes that the Debtors will most likely
be unable to successfully wind down their affairs in an orderly
fashion. This would have a negative impact on the preservation
of value of their estates and any substantial recovery for
creditors.
Mr. Lissy elaborates that, going forward, the critical element
of recovery to the creditors lies in the value of the Debtors'
real estate. The Debtors have 324 store leases remaining, in
addition to their owned properties. To maximize the value in
the Unexpired Leases and their owned properties, the Debtors
must pay the carrying costs associated with the Unexpired Leases
and other real properties.
"It is imperative that the Debtors demonstrate to the commercial
real estate market that they possess sufficient liquidity during
the Wind-Down Period to pay all lease expenses," Mr. Lissy says.
Mr. Lissy points out that given their present status, the
Debtors would be unable to obtain additional financing by merely
offering a lender an administrative expense claim or a junior
lien on their assets. Any proposed lender would either seek
superpriority claims and senior or priming liens to those of
Kimco under the Kimco DIP Credit Agreement, or provide
sufficient financing to pay the Existing Kimco Obligations.
Existing Financing Agreements
The Debtors presently borrow under two financing agreements:
(1) DIP Credit Agreement with GE Capital Corporation
The GE DIP Credit Agreement provided the Debtors with a
$700,000,000 facility, consisting of:
-- a Tranche A revolver of up to $575,000,000, with a letter
of credit sublimit of $50,000,000;
-- a Tranche B revolver of up to $50,000,000; and
-- a term loan of up to $75,000,000.
All borrowings under the GE DIP Credit Agreement are subject
to a borrowing base. All obligations arising under the GE
DIP Credit Agreement are scheduled to be paid before the
Debtors may borrow under the New Kimco DIP Credit Agreement.
The GE DIP Lenders also assert that they are entitled to a
$14,000,000 prepayment penalty provided for under the GE DIP
Credit Agreement and an additional $11,500,000 reserve in
respect of the action by LFD Operating, Inc. against GE
Capital.
(2) DIP Credit Agreement with Kimco Funding LLC
The Kimco Credit Agreement provided the Debtors with a
$55,000,000 term loan facility. Currently, the outstanding
amount owed by the Debtors under the Kimco DIP Credit
Agreement is $53,700,000. On October 14, 2002, the
outstanding amount under the Kimco DIP Credit Agreement
became $23,700,000.
The Debtors also entered into a sale-leaseback transaction with
a Kimco affiliate, KRC Acquisition Corp., for the sale and
leaseback of the Debtors' fee-owned properties in consideration
for a $59,000,000 purchase price. The Debtors have received a
$20,000,000 advance payment to boost their coffers during the
back-to-school season. In consideration for the Advance, KRC
was afforded the identical protections granted to Kimco under
the Kimco DIP Credit Agreement. To date, the amount outstanding
under the KRC Agreement is $20,000,000.
The Revolving Credit Agreement
The Revolving Credit, Guaranty, and Security Agreement, dated
September 27, 2002, between Ames Realty II, Inc., as Borrower,
Ames Departments Stores, Inc. and its subsidiaries, as
guarantors, and Kimco Funding, LLC, as the Lender, provides up
to $100,000,000 in revolving loans. This loan amount is subject
to a Borrowing Base equal to 80% of the fair market value of the
Real Property Assets other than Excluded Real Property Assets.
The Borrowing Base will be reduced by the amount of the sale
proceeds from each Real Property Asset disposition.
The Excluded Real Property Assets are the Real Property Asset
that Kimco, in its sole discretion, will identify in writing
from time to time on 30 days' notice to the Debtors, that will
be excluded from the group of Real Property Assets for which
carrying cost funding is being provided. Kimco is given the
option to renew or extend the term of any existing lease
relating to any Real Property Asset, which, in its reasonable
business judgment, will not generate sufficient value in excess
of the asset's carrying costs.
The Revolving Credit Agreement provides for an 8.5% Interest
Rate per annum. Interest is payable monthly in arrears on the
first business day of each month. In case, an Event of Default
has occurred and is continuing, the interest rate will be
increased by 2-1/2% per annum.
The Debtors and Kimco agree that proceeds may be used solely:
A. for financing the carrying costs for the Borrower's Real
Property Assets, other than any Excluded Real Property Asset,
until the assets are sold or assigned;
B. to repay the Debtors' obligations under the existing
agreements with Kimco;
C. for funding of other miscellaneous costs in accordance with
the Debtors' budget provided to Kimco. The Budget covers:
(a) real estate carrying costs, like, rent, taxes, and
maintenance;
(b) payroll and related benefits;
(c) payments for the Employee Retention Program, professional
fees, agent's fees related to the GOB Sales;
(d) taxes, utilities, interest, and miscellaneous other
operating expenses.
Lender Proposes Prepayment,
Fees and Other Obligations
Immediately upon:
* the sale of any Collateral by any Credit Party; or
* the receipt by any Credit Party of any insurance or
condemnation proceeds,
the Credit Parties agree that the sale proceeds or insurance or
condemnation proceeds will be paid at closing or upon receipt,
as the case may be, and directed to Kimco as prepayment of the
outstanding Loans, any Fees due and payable at that time and any
other Obligations due and payable at that time.
The Proceeds will be net of:
(a) commissions and other reasonable and customary
transaction costs, fees and expenses properly
attributable to the transaction and payable by Borrower
or the Credit Party in connection;
(b) taxes legally required to be paid by the Credit Party;
and
(c) any amounts reasonably anticipated for use by any Credit
Party within five Business Days of the closing.
Kimco expects the Debtors to pay a variety of fees in
consideration for Kimco's commitment:
-- Loan Fees
The Debtors agree to pay Kimco:
* a Structuring Fee which is equal to 2% of the Commitment
in effect on the Closing Date;
* a six-month commitment fee equal to 1% of the Commitment
in effect on the Closing Date; and
* a 12-month commitment fee equal to 1% of the Commitment
in effect on the Closing Date.
The Loan Fees will not be payable by the Debtors until the
date when the aggregate Sale Proceeds exceed $70,000,000.
The Loan Fees will each be deemed earned, due and payable as
of the Termination Date; provided, that, the applicable Loan
Fee will be equal to the product of:
(a) the applicable percentage of that Loan Fee; and
(b) the aggregate Sale Proceeds as of the Termination Date.
In the event that either:
(i) the Closing Date will not have occurred by November 8,
2002; or
(ii) any of the Debtors have agreed to accept alternate
financing arrangements; or
(iii) have accepted offers to purchase substantially all of
the Real Property Assets for an amount exceeding the
Commitment,
the Structuring Fee will be deemed immediately earned, due
and payable. This time, the Structuring Fee will be equal to
2% of $100,000,000 upon closing of the other financing
arrangement or consummation of the sale.
-- Termination Fee
The Debtors promise to pay Kimco a termination fee equal to
2% of the Commitment in effect on the Closing Date. The fee
will be payable on the Termination Date. However, no
Termination Fee will be payable in the event that the
aggregate Sale Proceeds as of the Termination Date are not in
excess of $100,000,000.
-- Contingent Fee
The Debtors also will pay Kimco a loan fee contingent upon
the aggregate amount of the Sale Proceeds obtained from the
sale. The Contingent Fee will be payable on the date when the
aggregate Sale Proceeds equal or exceed $105,000,001.
Kimco also proposes that the Debtors' obligations will, at all
times:
(i) constitute allowed administrative expense claims in the
Cases having priority, subject to the carve-outs;
(ii) be secured by perfected first priority security interests
in and Liens on all property of the Credit Parties that is
not subject to valid, perfected and non-avoidable Liens
and the proceeds of that property; and
(iii) be secured by perfected junior security interests and
Liens upon all property of the Credit Parties in existence
on the Closing Date that is subject to valid, perfected
and non-avoidable Liens, including, the Liens granted in
connection with the Existing Kimco Obligations, and the
proceeds, junior only to those valid and perfected Liens.
The obligations will be subject to a Carve-out and will exclude
the cash on deposit in the GE Capital Prior Carve-Out Account in
connection with GE DIP Credit Agreement.
Kimco agrees to a $1,000,000 Carve-out to cover for:
(a) the allowed and unpaid professional fees and
disbursements incurred by the Debtors, the other Credit
Parties and any statutory committees; and
(b) the unpaid fees pursuant to 28 U.S.C. Section 1930 and to
the Clerk of the Bankruptcy Court.
There are no financial covenants. The Covenants include those
which affect the value of the real estate and the ability to
sell, assign or market the real estate assets, restrictions on
indebtedness and liens, obligation to deliver budget updates,
and other customary covenants.
The Closing of the transaction is hinged on the:
(1) evidence of the payment and discharge of all obligations
under the GE DIP Credit Agreement;
(2) payment of all obligations under the Existing Agreements;
(3) Bankruptcy Court approval; and
(4) delivery of the Borrower's anticipated cash receipts and
disbursements and borrowing requirements for the eight-week
period commencing on the Closing Date.
The Agreement may be terminated on the earlier of:
(i) October 29, 2004;
(ii) the date of the substantial consummation of a Chapter
11 plan confirmed pursuant to an order of the
Bankruptcy Court; or
(iii) the acceleration of the Loans and the termination of
the Commitments in accordance with terms contained in
the Agreement.
An Event of Default occurs when:
A. The Borrower:
(a) fails to make any payment of principal of, or interest
on, or the Fees owing in respect of, the Loans or any of
the other Obligations when due and payable; or
(b) fails to pay or reimburse the Lender for any expense
reimbursable within five business days following the
Lender's demand for reimbursement or payment of expenses;
B. Any Credit Party fails or neglects to perform, keep or
observe any of the negative covenants under the Agreement;
C. The Borrower or any Credit Party fails or neglects to
perform, keep or observe any other provision of the Agreement
or of any of the other Loan Documents;
D. Any representation or warranty in the Agreement or in any
Loan Document or in any written statement, report, financial
statement or certificate made or delivered to the Lender by
any Credit Party is untrue or incorrect in any material
respect as of the date when made, and the misrepresentation
remain unremedied for 30 days following notice by the Lender;
E. Any of the Cases will be dismissed or converted to a case
under Chapter 7 of the Bankruptcy Code or the Bankruptcy
Court will enter an order permitting any Credit Party to
dismiss any of the Cases under Section 1112 of the
Bankruptcy Code or otherwise;
F. A trustee under Chapter 7 or Chapter 11 of the Bankruptcy
Code, a responsible officer or an examiner with enlarged
powers relating to the operation of the business will be
appointed in any of the Cases;
G. The Court will grant any other Superpriority Claim in any of
the Cases which Claim is senior or equal to the claims of the
Lender against the Borrower or any other Credit Party;
H. The Court will enter an order granting relief from the
automatic stay to the holders of any security interest to
permit the foreclosure on any assets of the Borrower or any
of the other Credit Parties, which have a value exceeding
$500,000 in the aggregate;
I. The Court will enter an order reversing, staying for a period
in excess of 10 days, vacating or otherwise amending,
supplementing or modifying the DIP Order;
J. Any material provision of any Loan Document for any reason
ceases to be valid, binding and enforceable in accordance
with its terms;
K. Any Credit Party will challenge the enforceability of any
Loan Document or will assert in writing, or engage in any
action or inaction based on any assertion, that any provision
of any of the Loan Documents has ceased to be or otherwise is
not valid, binding and enforceable in accordance with its
terms; or
L. Any Lien created under any Loan Document ceases to be a valid
and perfected Lien with the priority intended to be granted
therein in any of the Collateral purported to be covered.
If any Default or Event of Default has occurred and is
continuing, Kimco may:
-- without notice, suspend the Debtors' right to request
additional advances of Loans. Any additional advances of
Loans will be made or incurred in Kimco's sole discretion;
-- without further order of the Court, by notice to:
(a) the Debtors;
(b) the counsel for the Creditors' Committee; and
(c) U.S. Trustee;
upon five business days' written notice to the Debtors:
(i) terminate the Commitments;
(ii) declare all or any portion of the Obligations,
including all or any portion of any Loan due and
payable, all without presentment, demand, protest or
further notice of any kind, all of which are expressly
waived by the Debtors and each other Credit Party;
(iii) exercise any rights and remedies provided to Kimco
under the Loan Documents; or
(iv) direct the Debtors to assume and assign any of the
leases to Kimco's designees;
-- on three business days' prior written notice to the Debtors,
the U.S Trustee and the Committee's council, compel any of
the Credit Parties to:
(a) assume and assign leases in connection with any Real
Property Asset -- other than Excluded Real Property
Assets; or
(b) convey the real property to any of Kimco's designees.
Kimco's failure to exercise any of its rights to remedy does not
constitute a waiver of any of its rights.
Objections
Several landlords and parties-in-interest object to the terms of
the DIP financing agreement:
A. Delta & Valley Properties
Delta & Delta Realty Trust, D.S.M. Realty, Inc., a division of
Demoulas Super Markets, Inc., and Valley Properties, Inc.
complain that, although the Debtors state that the funds will be
used to pay, inter alia, obligations under their unexpired
leases, the motion does not assure that the Debtors' various
landlords will receive the benefit of the borrowing.
"Due to the fact that the Lender controls which leases receive
the benefit of the borrowing and the Debtors are not required to
reject a lease if it is not a member of the group of leases that
receive postpetition rental payments from the funds provided by
the Lender, this leaves the strong possibility that Landlords
will be prejudiced," Leo Fox, Esq., in New York, argues. Mr.
Fox explains that Delta and Valley, as well as the other
landlords, will be left with administrative claims, which are
inferior to the proposed secured and superpriority claims of
Kimco and the Debtors will have no available funds to make the
postpetition payments due under the respective leases.
B. State Street Bank and Trust Company, as Owner Trustee
Unless the Debtors represent and the Court orders that the
Debtors will use the proceeds of the New DIP Facility to pay
long overdue administrative rent and all administrative rent
claims relating to the period before the rejection of a
particular lease, State Street objects to the request.
Julie A. Manning, Esq., at Shipman & Goodwin LLP, in Hartford,
Connecticut, notes that the provisions contained in the New DIP
Agreement that give Kimco the ability to prevent the Debtors
from paying their obligations is in violation of:
-- Section 365(d)(3) of the Bankruptcy Code. Section 365(d)(3)
requires the timely payment of all obligations arising under
unexpired nonresidential real property leases; and
-- the Original DIP Order, which required the lenders to pay
landlords all postpetition rent and other charges incurred
under unexpired nonresidential real property leases if the
Debtors defaulted on their obligations under a lease.
State Street leases six retail store premises and one
distribution center to the Debtors pursuant to a September 16,
1994 Master Lease agreement. On January 31, 2002, the Debtors
rejected the lease relating to the Distribution Center. To
date, the Debtors continue to use and occupy the six retail
stores.
These are:
Store No. Location
--------- --------
1089 West Mifflin, Pennsylvania
1093 Cranberry, Pennsylvania
1094 Butler, Pennsylvania
1101 Pittsburgh, Pennsylvania
1110 Cicero, New York
1127 Lockport, New York
C. Altoona Mall, Inc.
Lori M. Willis, Esq., at Messinger, Flaster & Levitz, P.C., in
New York, tells Judge Gerber that proposed financing agreement
violates Section 365(f)(2) of the Bankruptcy Code. The proposed
financing agreement grants Kimco extraordinary rights. The
Debtors seemingly have assigned the leases and their foregoing
enumerated rights under the leases to Kimco; this is not
allowed. "A debtor [cannot] assign certain rights under an
unexpired lease to another before it assumes the lease, and
further it may not "cherry pick" the unexpired lease, assuming
it in part and rejecting it in part," Ms. Willis asserts.
Altoona leases the premises for Ames Store No. 1059 located at
Station Mall in Altoona, Pennsylvania. The Ames Store occupies
the largest retail space in the Mall, and is the Mall's sole
anchor tenant. The Debtors' department store business operation
is critical to the financial vitality of the other businesses in
the Mall and the Mall itself. The Lease provides for a minimum
annual base rent of $220,000 per year, payable in monthly
installments of $18,333, and a percentage rent of 1 and 1/2% of
the amount of annual net sales exceeding $11,000,000.
Altoona also objects to the extent Kimco is given an unwarranted
degree of control over the Debtors' ability to reject, confirm
or assign the unexpired leases so as to maximize the benefit of
the Debtors and their creditors. Ms. Willis further argues that
there is no basis for Kimco's proposed right to compel the
Debtors to assume and assign leases to whomever Kimco
designates, especially where the Premises are located in a
shopping center and the lessor is entitled to greater
protections under the Bankruptcy Code. The proposed provisions
affect the Debtors' ability to fulfill their obligations to
Altoona under the Lease, and their ability to provide the
adequate assurances of future performance required under Section
365(f)(2) by the contemplated assignees.
"Kimco is in the real estate business, and does not operate
department stores. Thus, it cannot provide the required
assurances of performance to Altoona and the Lease cannot be
assigned to Kimco," Ms. Willis contends.
Additionally, Altoona wants the provision, which renders the
conversion to Chapter 7 liquidation an event of default under
the Financing Agreement, deleted. "Since it is clear that the
Debtors are liquidating and that no Chapter 11 plan will be
forthcoming, this clause has the effect of a back-dated
assignment to Kimco, without the required marketing and billing,
thus failing to maximize the Debtor's estate," Ms. Willis says.
D. Harbor Holdings, et al
Harbor Holdings, Ltd., MART Limited Partnership, and Martin
Financial Associates Limited Partnership echo the same arguments
presented by Altoona Mall, Inc.
The three interested parties are landlords to the Debtors:
-- Harbor Holdings subleases the premises located at 8107
Ritchie Highway, Pasadena, Maryland;
-- Martin Financial leases the premises located in the Martin
Plaza Shopping Center, in Baltimore County, Maryland; and
-- MART Limited leases the premises located within the Wayne
Heights Mall in Waynesboro, Pennsylvania.
E. One Step Up, Ltd.
One Step complains that the motion lacks further financial
detail to support the Debtors' assertions that borrowing another
$100,000,000 would be beneficial for them. In particular, One
Step requires the Debtors to conduct an analysis setting forth
the recovery to holders of prepetition unsecured claims and
postpetition administrative claims.
F. Pyramid et al
Seven landlords:
1) Carousel Center Company, L.P.;
2) Pyramid Mall of Ithaca, L.L.C.;
3) Pyramid Company of Watertown;
4) Pyramid Champlain Company;
5) Lanesborough Enterprises LLC;
6) Associates of Lebanon; and
7) TP Associates Limited Partnership;
dispute the Debtors' motion because Kimco is granted unwarranted
control over the disposition of the Leases, to which it is not a
party, under the Credit Agreement:
-- Kimco is granted the irrevocable right to exercise any option
to renew or extend the term of any lease either in its own
name and behalf or in the Debtors' names and behalf; and
-- during any event of default under the Credit Agreement, Kimco
may, on three-business days notice to the Debtors, compel the
Debtors to assume and assign leases to Kimco's designees.
Kevin M. Newman, Esq., Menter, Rudin & Trivelpiece, P.C., in
Syracuse, New York, observes that despite the control Kimco is
allowed to exercise with respect to the disposition of the
Leases, it is not proposing to guarantee all postpetition rent
and charges that must be timely paid under the Leases and
Section 365(d)(3) of the Bankruptcy Code following any default
under the Credit Agreement.
Mr. Newman asserts that any order entered on the Motion should
require Kimco to pay all postpetition rent and other charges
incurred under the Leases in the event the Debtors default in
its obligations under the Leases.
* * *
On October 23, 2002, Judge Gerber convened a final hearing to
consider the terms of the new Credit Amendment and the
objections. After hearing the arguments, Judge Gerber
determined that another postpetition financing is necessary for
the Debtors' wind-down operations. Accordingly, Judge Gerber
permits the Debtors to borrow up to an aggregate amount of
$100,000,000, in accordance with the terms of the postpetition
Revolving Credit Agreement and the Amendment and Waiver
Agreement with Kimco. The Debtors are also allowed to pay the
fees provided under the Agreements.
Judge Gerber also directs the GE DIP Agent and the lenders party
to the GE Capital DIP Credit Agreement:
a) to promptly turn over to the Debtors -- for payment to Kimco
consistent with the terms of the Postpetition Loan Agreement
-- all cash collateral received or held by them other than
the amounts maintained in the GE DIP Agent Accounts; and
b) to take no action to foreclose on or otherwise exercise any
remedies in respect of, their liens in any Collateral other
than the GE DIP Agent Accounts, in each case to the extent
not authorized by an order of this Court, so long as there
are any borrowings under the Postpetition Loan Agreement, or
Kimco has any Commitment under the Postpetition Loan
Agreement.
With regards to the objections raised against the Kimco DIP
financing, Martin J. Bienenstock, Esq., at Weil, Gotshal &
Manges LLP, relates that the Debtors have entered into
stipulations with various objectors to resolve the concerns.
(AMES Bankruptcy News, Issue No. 27; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
ANC RENTAL: Consolidating Operations at Palm Beach Airport
----------------------------------------------------------
In order to secure significant cost savings at the Palm Beach
International Airport in Palm Beach County, Florida, ANC Rental
Corporation and its debtor-affiliates seek the U.S. Bankruptcy
Court for the District of Delaware's authority to:
-- assume the National Concession Agreement and the National
Service Facility Lease and to assign them to South Florida
Transport, doing business as Thrifty, and
-- assume the Alamo Concession Agreement, the National
Development Site Lease, the National Lease and the Alamo
Lease and assign them to ANC Rental Corporation.
Mark J. Packel, Esq., at Blank Rome Comisky & McCauley LLP, in
Wilmington, Delaware, tells the Court that the assignment of
National's concession agreement and service facility lease will
allow National and Alamo to avoid:
(a) the burden and expense of operating the contracts that
are no longer beneficial to them, and
(b) incurring rejection damages.
The Alamo Concession Agreement, the National Development Site
Lease, and the National and Alamo Leases do not prohibit dual
branding by the concessionaire.
To date, National owes the County $100,320 in prepetition rent.
Alamo, meanwhile, owes the County $168,643 in prepetition rent.
No postpetition amounts are owed.
South Florida Transport will assume responsibility for payments
due under the National Concession Agreement, but will not assume
responsibility for payments under the National Service Facility
Lease until the facility is vacated. South Florida Transport
has agreed to post the necessary performance bonds required
under the National Concession Agreement and the National Service
Facility Lease.
After receipt of payment from National for all amounts due and
owing under the National Concession Agreement and the National
Service Facility Lease, the airport authority will return to
National its performance bonds marked "cancelled."
Mr. Packel believes that the relief requested is warranted
because it will result in $1,302,000 per year in savings to the
Debtors in fixed facility costs and other operational cost
savings. (ANC Rental Bankruptcy News, Issue No. 21; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
ARMSTRONG: Junk Science Property Damage Claims Won't Survive
------------------------------------------------------------
U.S. Bankruptcy Judge Randall J. Newsome has issued a major
ruling in Armstrong World Industries' favor regarding the "type
of science" plaintiffs can use in trying to prove their property
damage claims related to asbestos-containing flooring in homes
and public buildings.
Following a two-day Daubert hearing that began on September 26th
in Wilmington, DE, Judge Newsome granted Armstrong's motion to
exclude evidence presented by the plaintiffs' expert witnesses.
Judge Newsome's ruling, announced Wednesday, is a second setback
for the plaintiffs. On July 2nd, Judge Newsome denied the
plaintiffs' request to file a class action lawsuit.
"Judge Newsome's ruling represents another big step forward for
Armstrong in the Chapter 11 process," said Ken Jacobs,
Armstrong's deputy general counsel for litigation. "The court
has accepted Armstrong's argument that a significant group of
asbestos claims are based on speculation and not sound science."
Armstrong requested the Daubert hearing, which is used to
determine what type of expert testimony regarding scientific
testing is allowable under the Federal Rules of Evidence. The
issue at the hearing was to decide what expert opinions could be
used to prove or disprove claims that asbestos-containing
flooring cause building contamination. Judge Newsome ruled that
the methodology offered by the Asbestos Property Damage
Committee in support of its claims is not a scientifically valid
method of quantifying the level of asbestos contamination in a
building.
The Asbestos Property Damage Committee alleges that asbestos-
containing floor tile presents a health risk and, at Armstrong's
expense, the flooring should be removed from the buildings of
property damage claimants. The committee asked the court to
approve "settled dust sampling" as the appropriate measure for
establishing that asbestos-containing floor tile releases
asbestos fibers. The test is designed to count asbestos fibers
in dust found inside buildings and to extrapolate those findings
to determine how much asbestos is in the air people breathe.
Armstrong argued that settled dust sampling produces wholly
inflated and unreliable results. Armstrong's expert witnesses
told Judge Newsome that "air monitoring," which measures the
number of asbestos fibers actually found in the air, is the most
scientifically valid method of determining whether the presence
of asbestos-containing floor tile poses a health risk.
Armstrong maintains that air monitoring results in claimants'
buildings accurately reflect very low or no levels of asbestos
which are equivalent to "background levels" (the amount of
asbestos normally in the air).
Armstrong maintains its floors meet all safety regulations and
that properly maintained, in place, asbestos-containing floors
are non-friable, which means they will not release asbestos
fibers under normal use. Armstrong stopped making asbestos-
containing floors in the U.S. in 1982.
Prior to filing Chapter 11, Armstrong had only six unresolved
property damage claims pending based on asbestos in floor
products. Since filing Chapter 11, Armstrong now faces about
600 individual property damage claims, filed mostly by a handful
of law firms. The claims allege more than $852 million dollars
in damage related to asbestos-containing flooring. Armstrong
believes these claims are opportunistic and have no merit.
Resolving these property damage claims is part of the effort to
move Armstrong toward a plan of reorganization, which details
how the company will emerge from Chapter 11 bankruptcy
protection. Armstrong filed for Chapter 11 reorganization in
December 2000 to resolve the tens of thousands of claims
alleging personal injury from exposure to asbestos insulation.
Armstrong World Industries, Inc., a subsidiary of Armstrong
Holdings, Inc., (NYSE: ACK) is a global leader in the design and
manufacture of floors, ceilings and cabinets. In 2001,
Armstrong's net sales totaled more than $3 billion. Founded in
1860, Armstrong has more than 16,000 employees worldwide. More
information about Armstrong is available on the Internet at
http://www.armstrong.com
DebtTraders reports that Armstrong Holdings Inc.'s 9.000% bonds
due 2004 (ACK04USR1) are trading between 58.5 and 60. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ACK04USR1for
real-time bond pricing.
ASIA GLOBAL CROSSING: Will Restate Certain Financial Information
----------------------------------------------------------------
Asia Global Crossing will be restating financial results
contained in its filings previously made with the Securities and
Exchange Commission. These filings cover the period to
September 30, 2001.
As discussed in the company's previous news releases, Asia
Global Crossing entered into a number of transactions in which
it provided capacity, services or facilities to other
telecommunications carriers and, concurrently, purchased or
leased capacity, services or facilities from these same
telecommunications carriers. The company refers to such
transactions as "reciprocal transactions." Asia Global
Crossing's restatements will record exchanges of
telecommunications capacity from reciprocal transactions at
historical carryover basis rather than at fair value, which was
used in reporting prior results. This restatement reflects
discussions between the company and the SEC on the appropriate
accounting for reciprocal transactions.
There will be no change in previously reported revenue, expenses
or net income for the periods ended September 30, 2001 as a
result of the restatements. Total Assets and Total Liabilities
as recorded on the September 30, 2001 balances sheet of the
company will be reduced by approximately $141 million, from
$4.144 billion to $4.003 billion. Cash flows from operating
activities for the nine months ended September 30, 2001 will be
reduced by approximately $68 million, from $479 million to $411
million, with a corresponding reduction in cash used in
investing activities. Net cash flow will not be affected.
Asia Global Crossing also announced that revenues for the fourth
quarter of 2001, as disclosed in the company's February 26, 2002
press release, will be reduced by the $8.4 million described in
that release as being related to reciprocal transactions.
Asia Global Crossing provides city-to-city connectivity and data
communications solutions to pan-Asian and multinational
enterprises, ISPs and carriers. Asia Global Crossing's largest
shareholders are Global Crossing, Softbank and Microsoft.
BCE INC: Q3 2002 Working Capital Deficit Tops CDN$247 Million
-------------------------------------------------------------
For the third quarter of 2002, BCE Inc. (TSX, NYSE: BCE)
reported total revenue of $4.8 billion, EBITDA(1) of $2.0
billion, and net earnings applicable to common shares of $368
million ($0.43 per common share). Net earnings before non-
recurring items(2) were $393 million ($0.45 per common share).
"The communications industry continues to face many challenges,
and in this environment the prudent management of costs and the
implementation of productivity initiatives is essential," said
Michael Sabia, President and Chief Executive Officer of BCE Inc.
"Although, we have experienced weakness in the business
wholesale and enterprise retail data markets, our efforts in
cost management have resulted in EBITDA growth of 4% compared to
the third quarter of 2001."
OVERVIEW
Total revenue at BCE was $4.8 billion, essentially flat when
compared to the same period last year. Excluding the impact of
regulatory changes, revenue growth at BCE was at 2%. Local and
access service revenues decreased as a result of the impact of
regulatory decisions while data revenue growth weakened due to
lower business wholesale and enterprise demand. Additionally,
BCE Emergis reported lower revenues due to a decline in non-
recurring and recurring revenues. These decreases were offset by
the underlying growth in key areas: a 14.5% increase in wireless
revenues, increased DTH (Direct-to-Home) satellite entertainment
services revenues of 33% and an 11% increase in revenues at Bell
Globemedia. EBITDA increased by $75 million or 4% compared to
the same period last year, mainly due to careful cost management
across all areas.
Consolidated net earnings applicable to common shares were $368
million, a significant improvement from the loss of $144 million
reported last year. During the third quarter, BCE recorded an
after-tax charge of $37 million relating to the pay equity
settlement at Bell Canada as well as a $12 million dilution gain
from the issuance of common shares by BCE Emergis to third
parties. Excluding these items, net earnings applicable to
common shares were $0.45 for the quarter.
OUTLOOK
On October 7, 2002, the Company confirmed the lower end of its
financial guidance for the full year 2002, excluding
discontinued operations (Teleglobe and BCI), at approximately
$19.5 billion in revenue, $7.5 billion in EBITDA and net
earnings per share (before non-recurring items) of $1.80.
THIRD QUARTER REVIEW
(Q3 2002 vs. Q3 2001, unless otherwise indicated)
BELL CANADA
The Bell Canada segment includes Bell Canada, Aliant, Bell
ExpressVu and Bell Canada's interests in other Canadian telcos.
- Total revenue in the third quarter decreased slightly over
last year mainly as a result of the effects of recent CRTC
decisions and slower data revenue growth.
- Excluding the impact of the regulatory changes, revenues
for the quarter increased by 2%.
- Reported local and access revenues decreased by 7% to $1.5
billion. Excluding the effects of the 2001 CRTC local
contribution and May 30, 2002 CRTC Price Caps decisions,
local and access revenues decreased by 1%.
- Although long distance market share is stable, revenue
decreased by $12 million. Competitive pressures more than
offset the effects of a 6% increase in conversation
minutes.
- Wireless revenue was up 14.5% to $561 million due to
continued growth in cellular and PCS subscribers.
- Data revenue increased 5% to $926 million, due to higher
IP/Broadband and Sympatico ISP revenues. Data revenue
growth has slowed when compared to the growth of 14% in
the first quarter and 8% in the second quarter as a result
of lower demand from business wholesale and enterprise
retail data customers.
- Total Internet (High-speed and dial-up) subscribers
reached 1,987,000 as at September 30.
- Bell ExpressVu revenue increased by 33% as a result of the
increase in the subscriber base.
- Bell Canada's EBITDA grew by $73 million or 4% in the
third quarter to reach $1.9 billion due to continued cost
management.
- Productivity gains at Bell Canada were $145 million for
the quarter.
- Year-to-date capex intensity (capital expenditures to
revenue) improved from 28% as of September 30, 2001 to 19%
as of September 30, 2002.
BELL GLOBEMEDIA
Bell Globemedia includes CTV, The Globe and Mail and Bell
Globemedia Interactive.
- Total revenue was $273 million in the quarter compared
with revenue of $246 million for the same period last
year. This increase includes organic growth of 7% as well
as the impact of the acquisitions of CFCF-TV, CKY-TV and
ROB TV, which were purchased in the latter part of 2001.
- Advertising revenue was $180 million in the quarter, an
increase of 10% compared to the third quarter of 2001. A
stronger economic climate in the advertising sector as
well as higher interactive revenues contributed to the
increase.
- Subscriber revenues increased by 13% to reach $72 million
due to higher subscription to the new digital specialty
channels and an increase in print circulation revenues.
- EBITDA was $17 million in the third quarter compared with
a shortfall of $6 million for the same period last year,
reflecting the increase in revenues and management's cost
control efforts.
BCE EMERGIS
- BCE Emergis' sequential quarter over quarter revenues
decreased by $7 million mainly due to lower recurring
revenues. Revenue was $135 million in the quarter,
compared with $173 million for the same period in 2001.
- Third quarter EBITDA of $19 million compared favorably to
the second quarter EBITDA of $11 million. The improvement
in sequential quarter over quarter EBITDA was mainly
related to cost savings resulting from the restructuring
plan BCE Emergis implemented in the second quarter. Year-
over-year quarterly EBITDA decreased by 46% to $19
million, reflecting the shortfall in revenues.
- In the quarter, 43% of BCE Emergis' total revenue was from
its U.S. operations.
BCE VENTURES
BCE Ventures includes the activities of CGI, Telesat and other
investments.
- BCE Ventures' revenue was $258 million in the quarter, a
decrease of 2% when compared with the same period of 2001.
Revenues at CGI were higher, offset by lower revenues at
the other Ventures' businesses.
- EBITDA was $67 million in the quarter compared with $73
million in the third quarter of 2001.
BELL CANADA STATUTORY RESULTS
Bell Canada "statutory" includes Bell Canada, Bell Canada's
interests in other Canadian telcos, and Bell Canada's 39%
interest in Aliant (equity-accounted).
Bell Canada's reported revenue was $3.6 billion in the third
quarter, 2% lower when compared to the same quarter of 2001. The
net earnings applicable to common shares were $478 million in
the quarter, compared to $410 million for the same period last
year.
BCE is Canada's largest communications company. It has 24
million customer connections through the wireline, wireless,
data/Internet and satellite services it provides, largely under
the Bell brand. BCE leverages those connections with extensive
content creation capabilities through Bell Globemedia which
features some of the strongest brands in the industry - CTV,
Canada's leading private broadcaster, The Globe and Mail, the
leading Canadian daily national newspaper and Sympatico.ca, a
leading Canadian Internet portal. As well, BCE has extensive e-
commerce capabilities provided under the BCE Emergis brand. BCE
shares are listed in Canada, the United States and Europe.
As of September 30, 2002, BCE reported a total working capital
deficit of about $247 million.
BETHLEHEM STEEL: Niagara Demands Prompt Decision on Power Deals
---------------------------------------------------------------
Niagara Mohawk Power Corporation and Bethlehem Steel
Corporation, together with its debtor-affiliates, are parties to
two power agreements, under which the Debtors receive
electricity at a price that is significantly below market rate:
-- The November 30, 1962 Replacement Power Agreement
The Debtors were permitted to receive up to 37,500 kilowatts
of replacement power from Niagara at a price that is
significantly below market rate. Effective February 1, 2002,
the Debtors reduced their allocation of replacement power to
25,750 kilowatts.
-- The December 18, 1967 Expansion Power Agreement
The Debtors were permitted to receive up to 45,800 kilowatts
of expansion power at a price that is significantly below
market rate. The Debtors are currently under contract for
10,400 kilowatts under the Expansion Power Agreement.
As of the Petition Date, the Debtors were in default of their
obligations under the agreements for failing to pay $583,071 in
overdue amounts.
By letter dated December 21, 2001, Niagara informed the Debtors
that it would be willing to forego adequate assurance payments
at that time if the Debtors agreed immediately to assume both
the Replacement and Expansion Power Agreements and promptly pay
the cure amount. However, the Debtors never agreed to assume
the Replacement or Expansion Power Agreements.
Joseph Koczko, Esq., at Thompson Hine LLP, in New York, reminds
the Court that about a year has passed since the Debtors filed
for bankruptcy. Obviously, the Debtors already had ample time
to evaluate the agreements in the context of their restructuring
efforts. Mr. Koczko believes that the Debtors will ultimately
assume both Power Agreements. "It would be highly unfair for
the Debtors to continue on enjoying the benefits of Niagara's
below market rates, which is in excess of the prepetition
amounts they owe to Niagara, while the decision to assume or
reject the Agreements are put on hold," Mr. Koczko maintains.
Accordingly, Niagara asks the Court to require the Debtors to
immediately decide whether to assume or reject the two power
agreements.
Mr. Koczko points out that the Debtors have realized savings
exceeding $6,000,000 from having the below-market-rate
Replacement and Expansion Power Agreements. This postpetition
savings is over ten times the amount of the Debtors' prepetition
debt to Niagara. Aside from the savings benefit of paying below
market rates, the Debtors have admitted in a letter addressed to
Niagara in January 2002 that the agreements are vital to their
Galvanized Product Division at Lackawanna, New York. But if the
Debtors choose to reject the Power Agreements, Mr. Koczko
informs the Court that Niagara will assert an administrative
expense claim for the difference between the market rate and
contract rate for the postpetition period. (Bethlehem Bankruptcy
News, Issue No. 24; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
BRUSH ENGINEERED: Anticipates Covenant Default Under Credit Pact
----------------------------------------------------------------
Brush Engineered Materials Inc., (NYSE:BW) reported
significantly lower losses on weaker sales in the third quarter
2002 as compared to the third quarter of 2001.
Third quarter 2002 sales declined 12% to $93.5 million from
$106.2 million in the third quarter of 2001. Sales in the
quarter continued to be adversely affected by the overall
economic environment and the prolonged weak demand from computer
and telecommunications, the Company's largest market.
The Company reduced its third quarter 2002 net loss by 62% to
$2.9 million from a net loss of $7.8 million in the same quarter
of 2001. Earnings per share diluted was a loss of $0.18 compared
to a loss of $0.47 in the third quarter of 2001. The improvement
versus the third quarter of 2001 was driven by improved margins
and lower costs. Operating margins continued to improve due to
the Company's lean manufacturing and Six Sigma initiatives. The
lower costs resulted from a number of overhead reduction actions
taken since the third quarter of 2001. As a result of a
favorable court ruling, the Company was able to increase the
recovery portion on insured legal claims that were previously
subject to apportionment. This, plus other favorable
developments, resulted in a reduction in legal exposure and a
$0.07 per share benefit to net income in the quarter.
Sales for the nine months were $283.8 million, down 25% compared
to the first nine months of 2001 sales of $380.2 million. The
net loss for the first nine months of 2002 was $8.8 million, or
$0.53 per share diluted compared to a net loss of $0.3 million
or $0.02 per share diluted for the same period last year.
The Company's cash flow remained positive in the quarter. Cash
flow from operations was $6.2 million in the quarter bringing
the total cash provided by operating activity to $11.8 million
for the first nine months of 2002. Balance sheet debt decreased
$5.3 million in the third quarter and is down 14% or $10.6
million for the year to date. The Company's balance sheet debt
has decreased in each of the five most recent quarters.
Business Segment Reporting
Metal Systems Group
The Metal Systems Group consists of Alloy Products, Technical
Materials, Inc., and Beryllium Products.
The Metal Systems Group's third quarter 2002 sales were $57.0
million, down 8% from 2001 third quarter sales of $61.8 million.
Year-to-date sales were $176.4 million, down 28% from sales of
$243.8 million for the same period last year.
The third quarter operating loss for the Metal Systems Group was
$10.0 million versus a loss of $9.4 million for the third
quarter of 2001. The year-to-date operating loss was $23.6
million versus a loss of $4.4 million for the same period last
year.
Alloy Products' third quarter sales of $37.8 million and year-
to-date sales of $117.1 million were down 20% and 36%,
respectively, versus the same periods last year. Alloy third
quarter sales were negatively affected in part by customer
manufacturing maintenance shutdowns and the continued weakness
in the computer and telecommunications markets both domestically
and in Europe. Although the automotive electronics and appliance
markets remain steady, it is anticipated that fourth quarter
sales in Alloy Products may be flat to down as compared to the
third quarter due to the continued weakness in the computer and
telecommunications markets, expected inventory adjustments in
automotive, weakness in Europe and slower growth in Asia.
Alloy Products is broadening its market focus to include
utilizing strip form materials in nontraditional markets such as
oil and gas, while developing several new alloys for the
electronics sector. In addition, Alloy is also expanding its
bulk form products market applications with non-beryllium
spinodal alloys that are used in bearings and other industrial
components.
TMI's third quarter sales of $10.9 million were up 29% over 2001
third quarter sales of $8.4 million while year-to-date sales of
$34.8 million were down 16% from the same period last year.
Order rates have slowed and sales may be flat to down in the
fourth quarter of 2002 as compared to third quarter sales.
Beryllium Products' third quarter 2002 sales of $8.3 million and
year-to-date sales of $24.5 million were up 41% and 19%
respectively over the same periods last year. Beryllium Products
has been experiencing strong growth in all segments of defense
throughout 2002. This strength should continue through the
fourth quarter and into 2003.
Microelectronics Group
The Microelectronics Group includes Williams Advanced Materials
Inc., and Electronic Products. (Electronic Products includes
Zentrix Technologies Inc. and Brush Ceramic Products Inc.)
The Microelectronics Groups' sales for the third quarter of
$34.3 million were down 18% from third quarter 2001 sales of
$41.7 million. Year-to-date 2002 sales of $102.3 million were
down 22% from the same period last year.
Third quarter operating profit for the Microelectronics Group of
$1.3 million was up $1.1 million versus $0.2 million for the
third quarter of 2001. Year-to-date operating profit of $5.0
million was up approximately 40% over the same period last year.
WAM's third quarter 2002 sales of $27.1 million were down 20%
from the third quarter of 2001. However, third quarter value
added sales (sales less the cost of metal) were down only 2%
from 2001 value added sales. Year-to-date 2002 sales were $80.1
million, down 21% versus $101.9 million for the same period in
2001. Value added 2002 year-to-date sales were down
approximately 4% from 2001. WAM's value added sales, although
slightly down from last year, should remain steady for the
remainder of the year supported by continued strength in optical
media and magnetic storage product applications.
Electronic Products' third quarter 2002 sales of $7.2 million
were down 8% from 2001 third quarter sales of $7.8 million.
Year-to-date sales of $22.2 million were down 23% from 2001
year-to-date sales of $28.9 million. Sales continue to be
affected by the depressed wireless infrastructure market. The
fourth quarter order entry rate level appears to be about equal
to the third quarter. This weakness is expected to continue into
2003.
Company Issues Related to the Economic Environment
The Company is currently addressing three issues that have
surfaced due to the difficult conditions in both the economic
environment and the U.S. equity markets.
First, the decline in the U.S. equity markets has affected the
value of the Company's pension assets during 2002. Accounting
regulations require the recognition of an additional liability
when the market value of pension plan assets is less than the
accumulated benefit obligation at the end of a plan year. As a
result, the Company may be required to record a significant non-
cash charge to equity in the fourth quarter of 2002. The extent
of any charge will be determined based upon actual year-end
pension valuations.
Second, the Company has a $22.7 million net deferred tax asset.
While the nature of this asset is such that it does not expire
for a number of years, if current economic conditions continue,
a significant portion or all of this may be considered to be
impaired under certain accounting guidelines. Therefore, it is
possible that a non-cash charge may be taken in the future. The
charge would not affect the Company's pre-tax earnings or cash
flow. The charge would also not affect the Company's ability to
utilize the deferred tax assets in future periods.
Finally, if an impairment charge for the net deferred tax assets
is deemed necessary in the future, a default may occur under
certain bank covenants. The Company's current sales and related
earnings outlook for the fourth quarter may also adversely
affect performance versus certain covenants. Thus, the Company
has initiated discussions with its lenders to resolve any issues
that may surface in the event that these circumstances do lead
to a default.
Outlook
The demand for the Company's products in the computer and
telecommunications markets seemed to have bottomed in fourth
quarter of 2001 and recovered slightly during the first half of
2002. During the third quarter, additional softness began to
appear. The Company continues to see no distinct signs of
economic recovery, especially in the computer and
telecommunications segments of its markets. Demand is sluggish,
lead times are short, and limited visibility remains.
Forecasting revenue and thus earnings in this volatile economic
environment is difficult, especially when attempting to forecast
out more than a quarter. Order entry following the seasonal
summer shutdowns in the Company's business has been weaker than
previously expected. Assuming no further weakness, it is
currently expected that fourth quarter 2002 sales will be down
5% to 10% from the third quarter 2002.
Chairman, President and Chief Executive Officer, Gordon D.
Harnett stated, "while the economic environment remains
volatile, I'm encouraged by the fact that we're realizing
tangible benefits from the aggressive operating improvements our
businesses have been putting in place over the past year. These
are very visible in the quarter's results. We're confident that
once the economic environment begins to improve, our leaner
structure, coupled with our lean manufacturing and Six Sigma
strategies will deliver greater value going forward."
"Given the continued uncertain and volatile economic
environment, we will continue to execute our manufacturing
initiatives, reduce working capital intensity, further reduce
costs where appropriate, focus our marketing efforts to grow
sales in new markets, simplify our distribution system and
consider other strategies to improve performance."
Brush Engineered Materials Inc., is headquartered in Cleveland,
Ohio. The Company and its subsidiaries supply worldwide markets
with beryllium products, alloy products, electronic products,
precious metal products, and engineered material systems.
CASTELLE: Operating Performance Improved in Third Quarter 2002
--------------------------------------------------------------
Castelle (Nasdaq:CSTL), whose securities are presently subject
to delisting from Nasdaq for failure to maintain minimum listing
requirements, announced financial results for the Company's
third fiscal quarter ended September 30, 2002.
Net sales for the third quarter of fiscal 2002 were $2.54
million, compared to $2.50 million for the same period in 2001,
and up sequentially from $2.26 million in the second quarter of
2002. Sales in the quarter were the highest in the past seven
quarters, since the fourth quarter of 2000.
Net income for the third quarter of 2002 was $228,000, up from a
net income of $53,000 for the same period in 2001. Sequentially,
third quarter 2002 net income was up from $62,000 in the second
quarter of 2002. The Company has now reported a profit in each
of the past five quarters.
Net sales for the first nine months of 2002 were $7.17 million,
compared to $7.10 million for the same nine-month period of
2001. Net income for the nine-month period in 2002 was $322,000
compared to a net loss of $623,000 for the same period in 2001.
The loss for the first nine months of 2001 included non-
recurring charges of $243,000.
Scott C. McDonald, President & CEO, stated, "We are extremely
pleased with our third quarter financial results as they point
to the focus the Company has had over the past several quarters
on improving operational efficiencies, cost improvements and
most importantly on increasing our top-line sales growth. The
consistent profits and rising sales show the impact of staying
focused on our primary market niche, Fax Network Server
Appliances. The improved profit results are primarily due to the
sales growth in the third quarter and demonstrate the continued
strong demand for Castelle products."
Company Strengthens Balance Sheet
McDonald also noted that the Company continues to have a very
strong balance sheet with cash and cash equivalents of $4.84
million, an increase from $4.31 million at the end of the second
quarter of 2002. "We believe long-term shareholder value must be
built on consistent profitability and financial soundness.
Castelle has been delivering on both counts over the past five
quarters, a continuation of the work by Donald L. Rich, our
former CEO and current Chairman of the Board."
Company Reports on Status of Stock Buyback Program
McDonald provided an update on the status of the Company's Stock
Buyback Program, which was announced on October 16, 2002. "We
are commencing our Stock Buyback Program on Monday, October 28,
2002. As previously noted, under current market conditions, we
have an opportunity to buy back shares of Castelle stock at what
we believe are attractive levels. We believe repurchasing shares
at current market prices is a productive use of capital that
will help increase earnings per share," concluded McDonald.
Castelle develops office automation systems that allow
organizations to easily implement faxing and printing over local
area networks and the Internet. It is a market leader in fax
solutions for small to medium sized workgroups. Castelle's
FaxPress fax servers provide a simple way to integrate fax with
email, desktop and back-end applications. The Company also
manufactures LANpress print servers, which enable users to
locate printers anywhere on the network. Castelle products are
designed to be easy to use and maintain, and provide an
economical way for companies to share resources over the
network.
Castelle was founded in 1987 and is headquartered in Morgan
Hill, Calif. Its products are utilized by Fortune 1000 companies
as well as small to medium-sized businesses and are available
through a worldwide network of distributors, value-added
resellers, systems integrators, e-commerce retailers, and the
Castelle Online Store. Visit Castelle online at
http://www.castelle.com
CHELL GROUP: Terminates Acquisition Talks With Emtec
----------------------------------------------------
Chell Group Corporation's negotiations to acquire Emtec Inc.
(Nasdaq: ETEC.OB) have been terminated. Stephen McDermott,
Chell Group CEO noted, "I remain confident there is a deal to be
done between our companies and that once we are trading, we hope
to be able to re-engage with Emtec. I have a lot of respect for
Emtec's CEO John Howlett and his team and trust we will be able
to resume our merger discussions sometime down the road."
Chell Group Corporation is a technology holding company in
business to acquire and grow undervalued, synergistic technology
companies. Chell Group's portfolio includes Logicorp --
http://www.logicorp.ca, NTN Interactive Network Inc. --
http://www.ntnc.com, GalaVu Entertainment Network Inc. --
http://www.galavu.com, Engyro
Inc. (investment subsidiary) -- http://www.engyro.com, and
cDemo Inc. (investment subsidiary) -- http://www.cdemo.com.
For more information on Chell Group, please
visit http://www.chell.com.
* * *
As previously reported in the June 1, 2002 issue of the Troubled
Company Reporter, Chell Group Corporation announced that
pursuant to an April 18, 2002 oral hearing before a Nasdaq
Listing Qualifications Panel, a determination was made to
delist the Company's securities from The Nasdaq Stock Market.
The Company vehemently disagrees with the Determination and
intends to appeal the Determination to the extent available by
law. The Company has chosen not to seek another listing at this
time, and its securities will remain halted while the Company
pursues the appeal process.
COLLECTORS UNIVERSE: Fails to Meet Nasdaq Listing Requirements
--------------------------------------------------------------
Collectors Universe, Inc. (Nasdaq: CLCT), the leading provider
of value-added grading and authentication services and products
to dealers and collectors of high-end collectibles, has received
a Nasdaq Stock Market Staff Determination letter, dated October
18, 2002, informing it that it has failed to comply with the
minimum closing bid price requirement of $1.00 contained in
Nasdaq Marketplace Rule 4450(a)(5). That letter stated that, as
a result, the Company's shares are subject to delisting from the
Nasdaq National Market effective as of the opening of trading on
October 29, 2002.
The Company has requested a hearing before a Nasdaq Listing
Qualifications Panel to review the Staff determination, which
will give the Company the opportunity to present its position to
Nasdaq as to why it believes continued listing of its shares on
the Nasdaq National Market System is warranted. The hearing
request will stay the delisting pending the outcome of the
hearing, which is expected to be held within the next 30 to 45
days.
The Company cannot predict the outcome of the appeal. As a
result, at the Company's upcoming Annual Meeting to be held on
December 4, 2002, the Board of Directors will be seeking
stockholder approval of a proposal that would empower the Board
to implement a reverse stock split of the Company's outstanding
shares should the Board determine implementation of a reverse
stock split to be advisable and in the interests of the Company
and the stockholders. If that proposal is approved by the
stockholders, and the appeal is unsuccessful, the Board would be
able to implement a 1-for-3, a 1-for-4 or a 1-for-5 reverse
stock split, as it determines to be appropriate, to effectuate a
reduction in the number of its outstanding shares that would
result in an increase in the bid price of the Company's shares
above the $1.00 bid price requirement. Such a price increase
would bring the Company back into compliance with the $1.00 bid
price requirement of Marketplace Rule 4450(a)(5), thereby
enabling the Company to retain its Nasdaq National Market
listing. The Proxy Statement for the Annual Meeting, which
includes a description of the reverse stock split proposal, is
being mailed to stockholders this week.
Collectors Universe, Inc., is the leading provider of products
and essential services to the high-end collectibles market. The
Collectors Universe brands, including Professional Sports
Authenticator are among the strongest and best known in their
respective markets. The company grades and authenticates
collectible coins, sports cards, stamps, and autographs. The
company engages in collectibles commerce, selling coins,
currency, sportscards and sports memorabilia, and entertainment
memorabilia through direct sales, auctions, catalogs, and the
Internet. The company also compiles and publishes authoritative
information about collectible sportscards and sports
memorabilia, United States and world coins, and entertainment
memorabilia. This information is accessible to collectors and
dealers at the company's Web site http://www.collectors.comand
is also published in print.
Collectors Universe's financial statements for the year ending
June 30, 2002, show eroding shareholder equity after two years
of losses. The Company's balance sheet at June 30, 2002, shows
that the company is both solvent and liquid.
COMDISCO INC: Bershire Entities Disclose 34.5% Equity Stake
-----------------------------------------------------------
The Berkshire Entities, together with Warren E. Buffett,
Chairman and Chief Executive Officer of Berkshire, filed before
the Securities and Exchange Commission its Schedule 13D in
connection with the issuance of 1,471,852 shares of common
stock, par value $0.01 per share, of Comdisco Holding Company,
Inc.
The Equity stake of each is:
Shares Equity
Shareholder Owned Stake
----------- ------ ------
Warren E. Buffet 1,471,852 34.58%
Berkshire Hathaway, Inc. 1,471,852 34.58%
OBH, Inc. 1,471,852 34.58%
BH Columbia, Inc. 286,060 6.81%
Columbia Insurance Company 286,060 6.81%
BH Finance, LLC 286,060 6.81%
National Indemnity Company 1,150,233 27.38%
National Fire & Marine Insurance Co. 16,255 0.39%
The Shares were issued to Finance, NICO and NFMIC pursuant to
the First Amended Joint Plan of Reorganization of Comdisco, Inc.
and its Affiliated Debtors and Debtors in Possession under
Chapter 11 of the Bankruptcy Code.
Finance was a creditor of Debtors through its ownership of
interests in certain credit agreements of Debtors, and NICO and
NFMIC were creditors of Debtors through their ownership of
certain corporate debt of Debtors. The aggregate claims of
Finance, NICO and NFMIC totaled approximately $1.4 billion. The
U.S. Bankruptcy Court entered a confirmation order with respect
to the Plan on July 30, 2002, and the Plan became effective on
August 12, 2002. Pursuant to the Plan, on or about October 1,
2002, the Company initiated the distribution of shares of its
Common Stock, cash and other securities to its creditors,
including Finance, NICO and NFMIC, in satisfaction, discharge
and release of the claims of its creditors.
Finance, NICO and NFMIC's purpose in acquiring the Debt
Interests was to obtain the opportunity to profit from a
restructuring of Debtor. The Shares issued under the Plan (as
well as the other securities issued to Finance, NICO and NFMIC
under the Plan) in satisfaction, discharge and release of the
claims of creditors, including the Debt Interests, are being
held for investment purposes.
One or more entities within the Berkshire group of companies may
determine to purchase additional shares of the Company's Common
Stock or other securities in the open market or otherwise,
depending upon price, market conditions, availability of funds,
evaluation of alternative investments and other factors. While
none of the persons filing this Schedule has any present plans
to sell any of the Shares or other securities of the Company
held by it, one or more of them could determine, based upon the
same set of factors listed above with respect to purchases, to
sell some or all of the Shares or other securities of the
Company held by them.
The Berkshire Entities have no plans or proposals that relate to
or would result in: an extraordinary corporate transaction
involving the Company or any of its subsidiaries; a sale or
transfer of a material amount of assets of the Company or any of
its subsidiaries; a change in the present board of directors or
management of the Company; a material change in the present
capitalization or dividend policy of the Company; any other
material change in the Company's business or corporate
structure, changes in the Company's charter or bylaws or other
actions that might impede the acquisition of control of the
Company by any other person; causing securities of the Company
to be delisted from a national securities exchange or to cease
to be authorized to be quoted in an interdealer quotation system
of a registered national securities association; causing
securities of the Company to be eligible for termination of
registration pursuant to the Securities Exchange Act of 1934; or
any other similar action.
Warren E. Buffett may be deemed to control Berkshire, which
controls each of Finance, NICO and NFMIC. Both Mr. Buffett and
Berkshire thus may be considered to have beneficial ownership of
the entire 1,452,548 shares of Common Stock owned of record by
Finance, NICO and NFMIC. OBH, a direct subsidiary of Berkshire
and the direct parent company of NICO, NFMIC and BH Columbia,
may also be considered to have beneficial ownership of the
entire 1,452,548 shares of Common Stock owned of record by
Finance, NICO and NFMIC. BH Columbia and its direct subsidiary,
Columbia, which is the direct parent company of Finance, may
also be considered to have beneficial ownership of the 286,060
shares of Common Stock owned of record by Finance.
Each of Finance, NICO and NFMIC has both voting and investment
power with respect to the Shares indicated as owned of record.
However, Warren E. Buffett, Chairman of the Board of Berkshire,
who may be deemed to control these companies, directs the
investments and voting of each of these companies. Thus, Mr.
Buffett, Berkshire and the subsidiaries of Berkshire that
directly or indirectly control Finance, NICO and NFMIC share
voting power and investment power with respect to the Shares
owned by each of these companies. (Comdisco Bankruptcy News,
Issue No. 38; Bankruptcy Creditors' Service, Inc., 609/392-0900)
CONTOUR ENERGY: Tapping Partners Commercial for Real Estate Work
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of Texas
gave its stamp of approval to Contour Energy Co., and its
debtor-affiliates to employ Partners Commercial Realty, LP as
their real estate consultant in connection with negotiations
with the Company's landlord with respect to their principal
executive offices located at 1001 McKinney Street, Suite 900,
Houston, Texas 77002.
Partners Commercial specializes in commercial real estate.
Partners Commercial's services include needs analyses, market
studies, property tours, proposal solicitations, financial
analyses and comparisons, economic and contract negotiations and
supervision of architectural or construction process.
The Lease covers approximately 27,167 per square foot. Given
Contour's current business plans, Contour does not have a need
for the premises covered by the Lease. Contour needs Partners
Commercial to assist them in negotiating a favorable amendment
to the Lease or in obtaining office space more appropriate to
Contour's current needs.
Partners Commercial will:
a) Analyze Contour's needs including space, parking,
construction, budget, timing, location, amenities,
resources, etc.;
b) Utilize the needs developed through the foregoing analysis
to search the marketplace to identify facilities that meet
the defined needs, including the Premises;
c) Schedule and coordinate tours of selected facilities;
d) Solicit detailed proposals from selected facilities,
including the Premises, to identify responses to key
economic and non-economic issues;
e) Complete financial analysis of proposals received and
comparison of each facility's features, including the
Premises; and
f) Conduct business term and lease contract negotiations
regarding the facilities including the Premises.
Partners Commercial will be paid:
i) a standard commission equal to 4% of the rent to be paid
by Contour during the initial term of the lease; or
ii) $350 per hour.
In an affidavit, Brad Marnitz, a principal of Partners
Commercial Realty, LP in Houston, Texas, states that his firm
has no connection with the Debtors, their insiders, and known
creditors or other parties in interests. Mr. Marnitz asserts
that Partners Commercial is a "disinterested person" as defined
in the Bankruptcy Code.
Contour Energy Co., a company engaged in the exploration,
development acquisition and production of oil and natural gas
primarily in south and north Louisiana, the Gulf of Mexico and
South Texas, filed for chapter 11 protection on July 15, 2002.
John F. Higgins, IV, Esq., and Porter & Hedges, LLP represents
the Debtors in their restructuring efforts. When the Company
filed for protection from its creditors, it listed $153,634,032
in assets and $272,097,004 in debts.
CREDIT STORE: Secures Court Nod to Extend Lease Decision Period
---------------------------------------------------------------
By order of the U.S. Bankruptcy Court for the District of South
Dakota, The Credit Store, Inc., obtained an extension of its
lease decision period. The Court gives the Debtor until the
earlier of:
i) December 15, 2002, or
ii) the confirmation of a Plan of Reorganization
to decide whether to assume, assume and assign, or reject
unexpired nonresidential real property leases.
The Credit Store, Inc., is primarily in the business of
providing credit card products to consumers who may otherwise
fail to qualify for a traditional unsecured bank credit card.
The Company filed for chapter 11 protection on August 15, 2002.
Clair R. Gerry, Esq., at Stuart, Gerry & Schlimgen, LLP and Mark
E. Andrews, Esq., Patrick J. Neligan Jr., Esq., at Neligan
Stricklin, LLP represent the Debtor in its restructuring
efforts. When the Company filed for protection from its
creditors, it listed $68 Million in assets and $69 Million in
debts.
DOMAN INDUSTRIES: Sept. 30 Equity Deficit Widens to $328 Million
----------------------------------------------------------------
Rick Doman, President & CEO of Doman Industries Limited,
announced the Company's third quarter results.
Earnings for the third quarter were impacted very significantly
firstly by the weaker Canadian dollar which resulted in a
foreign exchange loss of $47.8 million on the Company's U.S.
dollar denominated debt and secondly by softwood lumber duties
of $8.5 million. Together these two items, which are described
more fully below, contributed $56.3 million to the $73.8 million
third quarter loss.
Sales
Sales in the third quarter of 2002 were $175.6 million compared
to $174.1 million in the third quarter of 2001. Sales in the
first nine months of 2002 were $465.5 million compared to $608.8
million for the same period in 2001.
Sales in the solid wood segment decreased to $119.8 million in
the current quarter from $138.1 million in the same period of
2001 as a result of lower sales volumes for both lumber and
logs. For the nine months year to date, sales in the solid wood
segment were $345.2 million compared to $413.6 million for the
same period in 2001. Pulp sales in the third quarter of 2002
increased to $55.8 million from $36.0 million in the same period
of 2001 as a result of a higher sales volume of NBSK pulp and
higher pulp prices. (The Company's Squamish pulpmill, which
produces NBSK pulp, did not operate in the third quarter of 2001
because of weak market conditions). For the nine months year to
date, pulp sales were $120.3 million compared to $195.2 million
for the same period in 2001.
EBITDA
EBITDA in the third quarter of 2002 was $20.7 million compared
to $22.9 million in the immediately preceding quarter and $0.6
million in the third quarter of 2001. EBITDA for the solid wood
segment in the third quarter of 2002 was $19.3 million compared
to $32.7 million in the second quarter of 2002 and $18.1 million
in the third quarter of 2001. EBITDA for the third quarter of
2002 was negatively impacted by softwood lumber duties on
shipment to the U.S. totaling $8.5 million whereas EBITDA for
the second quarter of 2002 included a recovery of $13.7 million
representing the reversal of accruals for duties which were not
required following a ruling by the U.S. International Trade
Commission in May. As a result of the softwood lumber trade
dispute and to manage inventory and working capital levels, the
Company has continued to take extensive downtime in the third
quarter in its sawmill and logging operations. The average
lumber price was $542 per mfbm in the third quarter compared to
$530 per mfbm in the previous quarter and $548 per mfbm in the
third quarter of 2001.
EBITDA for the pulp segment in the third quarter of 2002 was
$4.7 million compared to a negative $7.0 million in the
immediately preceding quarter and a negative $16.3 million in
the third quarter of 2001. The Squamish pulpmill produced 71,064
ADMT in the third quarter of 2002 compared to 33,143 ADMT in the
second quarter as a result of an improvement in NBSK prices.
Prices for dissolving sulphite pulp were stable to marginally
down in the third quarter of 2002 and, as a result, our Port
Alice mill continued to take extensive downtime, producing
10,958 ADMT in the third quarter of 2002 compared to 15,089 ADMT
in the immediately preceding quarter.
Cash flow from operations in the third quarter of 2002, before
changes in non-cash working capital, was a deficit of $10.3
million compared to a deficit of $26.0 million in the third
quarter of 2001. An increase in non-cash working capital used
cash of $7.3 million in the third quarter of 2002 compared to a
reduction in non-cash working capital in the third quarter of
2001 which generated cash of $3.2 million. As a result, cash
provided by operating activities in the third quarter of 2002
was a deficit of $17.6 million compared to a deficit of $22.8
million in the third quarter of 2001. After financing and
investing activities, the Company's cash balance at the end of
the third quarter of 2002 was $24.3 million. At September 30,
2002 the Company had drawn down $5.4 million under its revolving
credit facility.
In October 2002 and within the applicable grace period, the
Company made the semi-annual interest payment on its outstanding
8.75% US $388 million senior unsecured notes initially due on
September 15, 2002.
Earnings
In the third quarter of 2002, the Company reported a net loss of
$73.8 million compared to a net loss of $50.3 million in the
third quarter of 2001.
Earnings were impacted very significantly in the third quarter
of 2002 by the new accounting standard recommended by the
Canadian Institute of Chartered Accountants, requiring that
unrealized foreign exchange gains and losses on long-term debt
be included in earnings in the period incurred rather than being
amortized to earnings over the remaining life of the debt. As
the Canadian dollar weakened between June 30 and September 30,
the new accounting standard resulted in an exchange loss of
$47.8 million, which was charged to interest expense. 2001
amounts for interest expense have been restated to reflect the
adoption of the new accounting standard that is more fully
explained in the accompanying notes to the financial statements.
The Company continues to examine ways to rationalize its sawmill
operations and during the third quarter incurred restructuring
costs of $4.2 million, which are included in Other expense.
For the nine months year to date, the net loss was $77.2 million
compared to a net loss of $90.2 million for the same period in
2001.
Markets and Operation Review
Lumber prices in the U.S. as measured by SPF 2 x 4 lumber,
averaged approximately US $223 per mfbm in the third quarter of
2002 compared to US $287 per mfbm in the same period of 2001 and
US $263 per mfbm in the second quarter of 2002. This drop in
prices reflects an oversupplied market for structural lumber
since demand remains strong with U.S. housing starts in
September at a seasonally adjusted annual rate of 1,843,000. It
remains vital that the softwood lumber trade dispute with the
U.S. be resolved, in a satisfactory manner, as soon as possible.
Discussions with the British Columbia provincial government on
forest policy reforms continued during the quarter. The timing
and impact of such changes on the Company cannot be measured or
predicted with certainty at this time.
NBSK pulp markets improved in the third quarter with list prices
to Europe averaging US $490 per ADMT compared to US $460 in the
second quarter. Prices, however, have weakened in the fourth
quarter especially in the spot market. Norscan producers' pulp
inventories have increased from 1.3 million tons at June 30,
2002 to 1.6 million tons at September 30, 2002. Prices for
dissolving sulphite pulp, manufactured at the Company's Port
Alice pulpmill, remain weak and continuing production
curtailments will be necessary in order to keep inventories in
line with customer orders.
The company is continuing discussions with representatives of
its unsecured noteholders to restructure its indebtedness.
Doman Industries' September 30, 2002 balance sheets show a total
shareholders' equity deficit of about $328.6 million, as
compared to $240.8 million recorded at December 31, 2001.
DebtTraders reports that Doman Industries Ltd.'s 12.000% bonds
due 2004 (DOM04CAR2) are trading between 17 and 21. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=DOM04CAR2for
real-time bond pricing.
ENRON CORP: Court Approves Settlement Pact with Kawasaki Motors
---------------------------------------------------------------
Neil Berger, Esq., at Togut, Segal & Segal LLP, in New York,
relates that on December 5, 2000, Enron Energy Services North
America, Inc. entered into an agreement with Kawasaki Motors
Corp., U.S.A. for the purchase of three Kawasaki Model GPBX-15X
combustion turbine generator package worth $3,372,951. The
generators are gas powered electrical generators that were
specifically designed for the VA New England Healthcare Systems
Hospital Project Facility.
The Kawasaki Agreement required four payments:
-- the first 30% due upon the execution of the purchase
order;
-- the next 30% due upon the submission of the necessary and
complete specification drawings;
-- another 30% due upon complete delivery of the equipment;
and
-- 10% of the Purchase Price is due 30 days after successful
commissioning.
A total of $2,090,014 has been paid to Kawasaki and a balance of
$1,282,937 remains.
Upon review of their ongoing contracts, the Debtors decided to
reject that the Agreement for the VA New England Healthcare
Systems Hospital Project Facility on February 22, 2002, because
it was burdensome to their estates.
As a result, EESNA will have no use of the generators. EESNA
then extensively marketed the Generators to at least six vendors
and manufacturing companies. Only Kawasaki made an offer to buy
back the generators by returning $1,000,000 of the Milestone
Payments and waiving any and all other claims arising in
relation to the Kawasaki Agreement including the Deficiency
Amount.
Mr. Berger explains that the generators were uniquely designed
for application at certain VA facilities and extensive
modification would be required to enable them to be used at any
other facility. Moreover, Kawasaki has asserted that the
Generators have not been properly stored or maintained during
their period of storage. Consequently, Kawasaki has
demonstrated that substantial costs for mechanical overhaul and
repairs of $570,000 per generator will be required to reinstate
the warranties that cover the generators.
Furthermore, Mr. Berger informs Judge Gonzalez, the Generators
employ experimental technology and are equipped with catalytic
combustion systems, which is a type of advance emission control
technology. Kawasaki is the only supplier of the necessary
spare parts for these systems and it is likely the only party
qualified to perform necessary start-up work and warranty
services on the generators.
Judging the offer to be the best and in the best interest of the
Debtors' estate, the Parties entered into a Termination and
Settlement Agreement on these terms:
(a) Kawasaki will pay $1,000,000 to EESNA;
(b) Kawasaki will waive all of their claims against EESNA's
estate and of the other Debtors;
(c) The Kawasaki Agreement will be deemed rejected and
terminated; and
(d) Title to the generators will vest in Kawasaki.
Accordingly, Enron Energy Services North America, Inc. sought
and obtained the Court's authority to enter into the Termination
and Settlement Agreement with Kawasaki Motors Corp., U.S.A. and
reject the Kawasaki Agreement.
Judge Gonzalez further takes note of Mr. Berger's arguments that
warranted the approval under Section 105 of the Bankruptcy Code
and Rule 9019 of the Federal Rules of Bankruptcy Procedure:
1. the generators will continue to lose value the longer they
remain in an outdoor storage facility;
2. without Kawasaki's knowledge and expertise, the generators
would likely have nothing more than scrap metal value of
$5,400 to the Debtors if not sold; and
3. the Debtors will receive a $1,000,000 return from the
payments made and a possible prepetition claim for $1,282,937
is eliminated.
Judge Gonzalez also finds Kawasaki to be a good faith purchaser
of the generators and should be accorded the protections of
Section 363(m) of the Bankruptcy Code.
The Court orders that the generators are transferred to Kawasaki
"as is, where is" and free and clear of all claims, liens and
encumbrances pursuant to Section 363(f) of the Bankruptcy Code.
(Enron Bankruptcy News, Issue No. 46; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
EOTT ENERGY: Retains Alvarez as Special Bankruptcy Advisor
----------------------------------------------------------
EOTT Energy Partners, L.P., and its debtor-affiliates sought and
obtained the U.S. Bankruptcy Court for the Southern District of
Texas' authority to employ and retain Alvarez & Marsal, Inc. as
their Special Advisors in these bankruptcy cases.
Dana R. Gibbs, President and CEO of EOTT Energy Corp., tells
Judge Schmidt that the Debtors chose Alvarez & Marsal because of
their extensive experience and knowledge and excellent
reputation in corporate reorganizations and debt restructuring
under Chapter 11 of the Bankruptcy Code. The Debtors believe
that Alvarez & Marsal possesses the requisite resources and is
both highly qualified and uniquely able to act as the Debtors'
Special Advisors in these cases going forward. In addition, Ms.
Gibbs relates, Alvarez & Marsal have valuable institutional
knowledge of the Debtors' operations and restructuring efforts
due to its pre-bankruptcy representation of the Debtors. On the
other hand, Ms. Gibbs points out, the cost and delay of
obtaining and educating new Special advisors who do not possess
the extensive knowledge of the Debtors' financial history would
be detrimental to the Debtors' reorganization efforts.
Ms. Gibbs informs the Court that as Special Advisor, Alvarez &
Marsal will provide:
(a) assistance in the evaluation and implementation of
restructuring options;
(b) assistance in preparing for these Chapter 11 proceedings;
(c) assistance in complying with reporting and other
requirements of the Bankruptcy Code including the
preparation of schedules of assets and liabilities,
statements of financial affairs, monthly operating
reports, a disclosure statement and a plan of
reorganization;
(d) assistance in preparing and developing information
necessary to accomplish the Debtors' restructuring goals,
including responding to informational requests from their
creditors; and
(d) other assistance as the Debtors may request that is
acceptable to Alvarez & Marsal relative to the nature and
scope of the requested assistance and compensation.
As Special Advisors, Alvarez & Marsal will bill the Debtors for
the services provided on these hourly rates:
Managing Directors $450 to 525
Directors 325 to 450
Associates 250 to 350
Analysts 180 to 225
In addition, Alvarez & Marsal will seek reimbursement of its
reasonable out-of-pocket expenses incurred in connection with
this engagement including travel, lodging, duplicating, computer
research, messenger and telephone charges.
Dean E. Swick, at Alvarez & Marsal, Inc., tells Judge Schmidt
that prepetition, the Debtors paid Alvarez & Marsal a retainer
amounting $100,000, which Alvarez & Marsal holds in trust and
which will be credited against any amounts due at the
termination of this engagement and returned on the payment of
all fees and expenses incurred by Alvarez & Marsal in connection
with this engagement. Also, the Debtors paid Alvarez & Marsal
$204,263 for pre-bankruptcy workout and restructuring services.
Mr. Swick assures the Court that, to the best of his knowledge,
Alvarez & Marsal is a "disinterested person" as that term is
defined in Section 101(14) of the Bankruptcy Code in that the
firm and its professionals:
(a) are not creditors, equity security holders or insiders of
the Debtors;
(b) are not and were not investment bankers for any
outstanding security of the Debtors;
(c) have not been within three years before the Petition date
investment bankers for a security of the Debtors or an
attorney for an investment banker in connection with the
offer, sale or issuance of a security of the Debtors;
(d) are not and were not, within two years before the
Petition Date, a director, officer, or employee of the
Debtors or of any investment banker; and
(e) do not have an interest materially adverse to the
interest of the estate or of any class of creditors or
equity security holders, by reason of any direct or
indirect relationship to, connection with, or interest
in, the Debtors or an investment banker. (EOTT Energy
Bankruptcy News, Issue No. 3; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
DebtTraders reports that Eott Energy Partners' 11.000% bonds due
2009 (EOT09USR1) are trading between 57 and 59. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=EOT09USR1for
real-time bond pricing.
FRIEDE GOLDMAN: Court Okays Offshore Unit Sale Bidding Protocol
---------------------------------------------------------------
Friede Goldman Halter, Inc., (OTCBB:FGHLQ) announced that the
United States Bankruptcy Court for the Southern District of
Mississippi, Southern Division, approved certain bidding
procedures for an auction sale of Friede Goldman Offshore, a
major business unit of the company. An auction will take place
on November 5, 2002, and if bidding achieves a satisfactory
price, a sale hearing will take place on November 25, 2002.
The Restructuring Committee of the Board of Directors and the
Unsecured Creditors' Committee are prepared to reorganize this
business unit through a Plan of Reorganization if the auction
does not yield the desired return. A number of interested buyers
have surfaced during an extended marketing process.
Interested parties are encouraged to contact the company's
financial advisor, Jim Decker, Director of Houlihan Lokey Howard
Zukin at 404/495-7012, to secure information concerning the
auction.
"This business unit has performed above all expectations during
the bankruptcy process and has a bright future ahead, whether it
is sold or reorganized," said Decker.
"As with all of the company's business units, the support of its
customers, employees and suppliers has kept the enterprise value
intact and a short window is now approved by the Court to
determine if a satisfactory sales price can be realized," said
Jack Stone, Chief Restructuring Advisor of Friede Goldman
Halter, Inc.
The Friede Goldman Offshore business unit provides new
construction, upgrade and repair of all types of offshore
drilling rigs, floating production units, and inland and
offshore drilling and derrick barges.
FRIEDE GOLDMAN: Closes Halter Marine Sale to Vision Technology
--------------------------------------------------------------
Friede Goldman Halter, Inc., (OTCBB:FGHLQ) has completed the
previously announced sale of Halter Marine to Vision
Technologies Systems, a Delaware Corporation, for approximately
$65 million.
"This is an important step," said Jack Stone, Chief
Restructuring Advisor of Friede Goldman Halter, Inc. "The
completion of this transaction provides the funding necessary to
repay the primary secured creditor and opens the path to a
resolution of the bankruptcy case."
Friede Goldman Halter, Inc., has one remaining business unit,
Friede Goldman Offshore. The Restructuring Committee of the
Board of Directors is working closely with the Unsecured
Creditors Committee to determine whether this business unit will
be sold or reorganized. Under either scenario, however, the
company believes it is unlikely there will be any recovery to
the equity holders.
The Friede Goldman Offshore business unit provides new
construction, upgrade and repair of all types of offshore
drilling rigs, floating production units, and inland and
offshore drilling and derrick barges.
GCI INC: Reports Improved Financial Results for Third Quarter
-------------------------------------------------------------
GCI (Nasdaq: GNCMA) -- whose $325 million senior secured credit
facility and corporate credit rating are rated by Standard &
Poor's at BB+ and BB, respectively -- announced that for the
third quarter of 2002 the Company recorded revenues totaling
$94.6 million, an increase of 7.5 percent as compared to $88.0
million in the third quarter of 2001. Earnings before interest,
taxes, depreciation, and amortization (EBITDA) increased to
$30.3 million for the third quarter of 2002, an increase of $6.0
million or 24.7 percent when compared to third quarter 2001
EBITDA of $24.3 million. Revenues for the third quarter
increased sequentially 2.0 percent to $94.6 million as compared
to revenues of $92.7 million in the second quarter of 2002.
Third quarter EBITDA of $30.3 million compares to EBITDA of
$18.7 million in the second quarter of 2002.
EBITDA of $30.3 million for the third quarter of 2002 includes
an expense deduction of $1.2 million to increase the reserve for
bad debts for third quarter accounts receivable that were
uncollected prior to WorldCom's filing for reorganization under
Chapter 11 of the Federal Bankruptcy Code on July 21, 2002.
Including the second quarter 2002 increase, GCI's bad debt
reserve now totals $11.6 million against WorldCom's pre-petition
accounts receivable of approximately $12.9 million.
"GCI achieved another record high quarter with EBITDA surpassing
the $30 million mark," said Ron Duncan, GCI president. "In spite
of the major turmoil surrounding WorldCom, which is our largest
customer and shareholder, we have remained focused on providing
high quality service to all of our customers. WorldCom traffic
is stable and is up significantly over the prior year's levels.
We are now focused on reaffirming our long term contract with
WorldCom."
The company's local services business grew to an estimated 20
percent share of the total access line market in Alaska during
the third quarter of 2002. GCI's statewide dial-up Internet
platform remained steady at approximately 71,200 customers.
More than 33,000 Internet customers are using GCI cable modem
service, an increase of 1,800 over the second quarter of 2002.
GCI cable television services now pass 195,923 homes and serve
134,581 basic subscribers. Basic subscribers decreased
sequentially by 541 subscribers from the second quarter of 2002
due to seasonality. GCI added 2,100 digital customers during the
third quarter and now serves 28,500 digital customers in
Anchorage, Fairbanks, Juneau and Kenai.
The third quarter 2002 net income is $5.1 million. The third
quarter 2002 net income compares to net income of $1.5 million
for the third quarter of 2001. For the nine months ended
September 30, 2002, GCI recorded net income of $6.2 million. GCI
recorded net income of $4.1 million for the nine months ending
September 30, 2001.
The third quarter 2002 revenues of $94.6 million are in line
with the company's guidance for third quarter 2002 revenues of
$94 to $96 million. The third quarter 2002 EBITDA of $30.3
substantially exceeded guidance of $22.0 million due to the
collection of $3.5 million of pre-petition accounts receivable
as announced on September 19, 2002 and due to lower than
expected distribution costs.
GCI recently received loan syndication commitments for a $225
million bank facility to refinance debt totaling approximately
$180 million. Upon closing, the new facility will refinance
existing senior debt of approximately $120 million and $60
million of debt outstanding for the company's Alaska United
Fiber System. The $225 million facility will be priced at LIBOR
plus 650 basis points. The company is working diligently to
close the facility in the next several weeks. However, external
events outside the company's control could prevent the
successful closing of the facility, therefore no assurances can
be drawn from the receipt of loan commitments until the facility
is actually closed.
Further detailed results and financial tables for the third
quarter of 2002 will be released on November 6, 2002. GCI will
also hold an institutional investor and analyst conference call
on November 7, 2002 at 2 p.m. Eastern time.
To access the briefing on November 7, dial 888-455-3612
(international callers should dial 630-395-0018) and identify
your call as "GCI." In addition to the conference call, GCI will
make available net conferencing. To access the call via net
conference, log on to http://www.gci.comand follow the
instructions.
Based on revenues, GCI is the largest Alaska-based and operated
integrated telecommunications provider. The company provides
local, wireless, and long distance telephone, cable television,
Internet and data communication services. More information about
the company can be found at http://www.gci.com
GENTEK INC: Seeks Court Nod to Pay $6MM of Foreign Vendor Claims
----------------------------------------------------------------
In the ordinary course of GenTek Inc., and its debtor-
affiliates' businesses, the Debtors transact business with
numerous foreign vendors in countries including, but not limited
to, Canada, Germany, Mexico, Australia, China, Hong Kong and
Guyana. The Debtors call on the Foreign Vendors to perform
services and provide materials, goods, services and equipment
that they use at their manufacturing plants in all of their
business segments.
Acknowledging the importance of the Foreign Vendors' continued
services in the operation of their businesses and in their
restructuring attempts, the Debtors seek to honor and pay the
prepetition claims of these Foreign Vendors. All payments,
nonetheless, will be subject to these conditions:
(a) Before making any payment of a Foreign Claim, the Debtors
may, in their absolute discretion, settle all or some of the
prepetition claims of that Foreign Vendor for less than
their face amount without further notice or hearing;
(b) If the proposed payment to any single Foreign Vendor exceeds
$175,000, the Debtors must seek approval from JPMorgan Chase
Bank, the administrative agent to the Debtors' senior
secured lenders, or its financial advisor; and
(c) If the Debtors submit to JPMorgan the request for approval
of a particular Foreign Claim payment, JPMorgan will approve
or reject the request by 12:00 p.m. on the next business
day. Absent receipt of the approval or rejection, the
Debtors' request to make the particular Foreign Claim
payment will be deemed approved and may be made by the
Debtors; provided, however, that the payments will not
exceed the maximum aggregate Foreign Vendor payment
authority set by the Court.
"Without prompt and full payment, the Foreign Vendors are likely
not to provide the goods, services and equipment the Debtors
require to maintain the uninterrupted production of their
performance products, manufacturing, and communications
products," according to Jane M. Leamy, Esq., at Skadden, Arps,
Slate, Meagher & Flom LLP. Many of these Foreign Vendors are
the sole source, or difficult to replace providers, of raw
materials used in the Debtors' manufacturing operations.
"Even if they do not take such drastic action, it is likely that
the Foreign Vendors will delay providing such materials, goods,
services and equipment and thereby jeopardize the Debtors' cash
flow and expose the Debtors' estates to significant economic
harm," Ms. Leamy adds.
The Debtors expect to pay $6,000,000 in Foreign Vendor Claims.
(GenTek Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)
GLIMCHER REALTY: Third Quarter Revenues Up by 4.7% to $70.8 Mil.
----------------------------------------------------------------
Glimcher Realty Trust, (NYSE: GRT)-- whose corporate credit and
preferred stock ratings are rated by Standard & Poor's at BB and
B, respectively -- reported results for its third quarter and
nine months ended September 30, 2002.
Funds From Operations per diluted share was $0.59 for the third
quarter of 2002 and $1.80 for the first nine months compared to
$0.66 and $2.06 for the comparable periods in 2001. Excluding
one-time charges of $693,000, FFO per diluted share for the
third quarter and nine months ended September 30, 2002 would
have been $0.61 and $1.82, respectively. FFO increased 1.2% for
the third quarter to $22.2 million, but was lower on a per share
basis due to the dilution from the Company's equity offering in
July 2002. FFO is an industry standard for evaluating operating
performance defined as net income, plus real estate
depreciation, adjusted for gains or losses from sales of
depreciable property, discontinued operations, extraordinary
items and the cumulative effect of accounting changes.
Quarterly revenues increased 4.7% to $70.8 million primarily due
to the Company including the operating results of Dayton Mall
and SuperMall of the Great Northwest, two malls reported as
joint ventures in the third quarter of 2001; increased average
rents and higher average occupancy in the mall portfolio also
contributed to the increase, offset by declining community
center revenues due to asset sales and anchor tenant
bankruptcies.
"Asset sales in 2002 were $172.5 million, enabling the Company
to reduce the amount of outstanding debt and to acquire the
third party ownership interest in several of our joint venture
mall properties," said Michael P. Glimcher, President. "At
September 30, 2002, regional malls comprise over 80% of our
portfolio revenues and debt to market capitalization stood at
58.1%, representing a 10% decline from third quarter 2001. With
approximately $100 million of asset sales under contract and our
strengthened balance sheet, we can focus on FFO growth."
Third Quarter 2002 Results
Revenues for the quarter as compared to 2001 increased 4.7% or
$3.2 million to $70.8 million. Primarily contributing to this
increase is $2.7 million related to core operations and $5.5
million associated with the acquisition of the Company's joint
venture interests in two regional malls, Dayton Mall and
SuperMall of the Great Northwest. These increases were offset
by a reduction of $3.4 million resulting from asset sales and a
reduction of $1.4 million related to anchor tenant bankruptcies.
For the 2002 third quarter, the Company reported FFO of $22.2
million, compared with $22.0 million for the third quarter 2001.
The decline in quarterly FFO per share on a year over year basis
is attributable to dilution resulting from the Company's
offering in July 2002 of 3.45 million common shares of
beneficial interest. Net income available to common
shareholders was $4.7 million for the third quarter of 2002
compared to $3.8 million for the same period of 2001. In the
third quarter the Company recorded in general and administrative
expenses $693,000 in severance charges related to reorganization
of the development department. Excluding these one-time charges,
reported FFO would have been $22.9 million and net income
available to common shareholders would have been $5.4 million.
Comparable mall store occupancy increased to 88.1% from 85.3% at
September 30, 2001, and comparable mall store average rents
increased 0.7% to $22.09 per square foot. Mall store average
rents, including Polaris Fashion Place, which opened in the
fourth quarter of 2001, continue to be substantially higher at
$23.24 per square foot. Average mall store rents at Polaris are
in excess of $42.00 per square foot. Polaris occupancy at the
2002 third quarter was 87.8% and is anticipated to be
approximately 91% by the end of the year. During the quarter
the Company realized a 0.4% rise in same store revenue and an
increase in same store NOI of 0.5% in the regional mall
portfolio. The mall operating results reflect vacancies of
approximately 242,000 square feet related to three former Ames
locations whose leases had been rejected at March 2002,
approximately 109,000 square feet related to two former Phar-Mor
stores for leases rejected in November 2001, and approximately
52,000 square feet related to a former Homeplace lease rejected
in the third quarter of 2001.
In the community center portfolio third quarter same store
revenue and NOI declined 9.5% and 13.7%, respectively.
Community center statistics reflect eight former Ames store
vacancies of approximately 604,000 square feet for leases
rejected through September 30, 2002, approximately 164,000
square feet of vacancy for two Kmart store leases rejected in
the second quarter of 2002 and one Phar-Mor vacancy of
approximately 42,000 square feet for a lease rejected in the
fourth quarter of 2001. The 810,000 square feet of anchor
vacancy related to these leases represents approximately 9.9% of
the community center portfolio, representing the decline in
total community center occupancy to 81.6% at September 30, 2002,
compared to 93.5% at September 30, 2001.
Year to Date Results
FFO increased 1.7% to $63.3 million for the first nine months of
2002. Excluding the one-time charges, FFO and FFO per diluted
share for the nine months would have been $64.0 million and
$1.82 per diluted share, respectively.
Net income available to common shareholders was $13.4 million
for the first nine months of 2002, compared to $29.9 million in
2001, and diluted earnings per share were $0.42 and $1.10 for
the respective periods. Prior year nine month results include a
gain of $22.4 million ($0.75 per diluted share) related to the
Company's redemption of preferred shares and the write-off of a
$3.2 million ($0.11 per diluted share) investment in a
development project, both recorded in the second quarter of
2001. Excluding these items, income per diluted share was $0.46
in the first nine months of 2001 compared with $0.42 in 2002.
Dilution from the Company's offering of 3.45 million common
shares of beneficial interest in July 2002 contributed to the
year over year decrease in FFO per diluted share.
Common Stock Issuance and Acquisition
of Joint Venture Interests
On July 2, 2002, the Company completed a follow-on equity
offering of 3.45 million of its common shares of beneficial
interest at a price of $17.82 per share. Net proceeds of
approximately $58.4 million were used to purchase the equity
interests of joint venture partners in two regional malls and to
reduce the Company's outstanding borrowings.
The Company completed the acquisition of joint venture interests
in Dayton Mall in Dayton, OH and SuperMall of the Great
Northwest in Seattle, WA, which at September 30, 2002 are
consolidated for financial reporting purposes.
Asset Sales
During the third quarter the Company sold Loyal Plaza, a 293,270
square foot Kmart co-anchored community center in Williamsport,
PA for $18.3 million.
As previously announced, the Company entered into a contract on
June 6, 2002 for the sale of 22 community center and single
tenant assets for a purchase price of approximately $200
million. The sale of 13 of these properties for $106 million
was completed in the third quarter. Gains on the 13 properties
sold are being deferred until the total transaction is
completed. The sale proceeds from this transaction are being
used to pay down debt and fund additional investments in the
regional mall properties.
During 2002, the Company sold 17 community centers and 3 single
tenant assets for $172.5 million.
Debt-to-Market Cap
At September 30, 2002, debt to market capitalization was 58.1%
compared with 64.5% at September 30, 2001 and 61.5% at December
31, 2001. Debt reduction of $57.5 million during 2002 and the
Company's issuance of 3.45 million common shares of beneficial
interest in the third quarter more than favorably offset a
slight decline in the share price of GRT.
Financing Activities
The Company completed, during the third quarter, a mortgage
financing on four community center assets for $8.0 million at a
rate of LIBOR plus 1.95%, resulting in an initial interest rate
of 3.79%. The new debt matures on August 1, 2004, and includes
a one-year extension option. In addition, in August 2002 the
Company entered into a two-year interest rate swap agreement
which adjusted the interest rate on the Jersey Gardens mortgage
to a fixed rate of 5.44%.
Portfolio Overview
As of October 24, 2002, the Company's mall portfolio gross
leasable area totaled 19.7 million square feet. Additionally,
the community center and single tenant portfolio totaled 8.2
million square feet. Glimcher owns or has a joint venture
interest in a total of 85 properties in 24 states. At September
30, 2002, regional malls comprised 70.6% of the Company's gross
leasable area as compared to 61.4% a year earlier.
Outlook
The Company continues to maintain a cautious outlook. The
Company expects FFO in the range of $2.48 to $2.50 per diluted
share for full year 2002. As a result of asset sales, the
dilution in FFO will be greater in 2002 than previously
expected, as the Company has not been able to redeploy a portion
of the sales proceeds into the acquisition of joint venture
interests as quickly as originally anticipated. The additional
joint venture acquisitions are now expected to close later in
the fourth quarter.
The Company's previous guidance reflected the rejection of 11 of
its 13 Ames leases. The Company now anticipates that its two
remaining Ames leases, which represent $240,000 of annual
minimum rent, will be rejected during the fourth quarter of
2002. As of September 30, 2001, two Kmart store leases were
rejected representing $834,000 of Kmart annualized minimum
rents. The Company's Kmart exposure for its remaining nine
stores is approximately $3.7 million in annual minimum rents.
The current guidance anticipates no additional rejections of
Kmart leases in 2002, however the Company estimates that an
additional 50% of this income may be at risk in early 2003. The
Company anticipates downtime of 12-24 months before the Ames and
Kmart spaces are retenanted.
The Company is introducing guidance for 2003 in the range of
$2.52 to $2.60 per diluted share. Incorporated in this guidance
are additional asset sales in 2003 of $50 million. The
incremental FFO from redeployment of those proceeds into
regional mall investments and the additional revenue from re-
tenanting vacant anchor spaces is expected to be more than
offset by additional Kmart vacancies and increased floating rate
borrowing costs.
Dividend Performance
For the third quarter of 2002, the Company declared a cash
dividend of $0.4808 per common share, which was paid on October
15, 2002, to common shareholders of record as of September 30,
2002. The cash dividend is equivalent to $1.9232 on an
annualized basis. The Company also paid a cash dividend of
$0.578125 on its 9.25% Series B Preferred Shares on October 15,
2002, to shareholders of record on September 30, 2002. On an
annualized basis, this is the equivalent of $2.3125 per
preferred share.
Glimcher Realty Trust, a real estate investment trust, is a
recognized leader in the ownership, management, acquisition and
development of enclosed regional and super-regional malls, and
community shopping centers.
Glimcher Realty Trust's common shares are listed on the New York
Stock Exchange under the symbol "GRT." Glimcher Realty Trust is
a component of both the Russell 2000(R) Index, representing
small cap stocks, and the Russell 3000(R) Index, representing
the broader market.
HAYES LEMMERZ: Five Bondholders Petition for Rule 2004 Exam
-----------------------------------------------------------
Stuart M. Grant, Esq., at Grant & Eisenhofer P.A., in
Wilmington, Delaware, informs the Delaware Bankruptcy Court that
Pacholder High Yield Fund, Inc., Copernicus Euro CDO-I B.V.,
Topsail CBO Ltd., TCW INC III CBO Ltd., and TCW Leveraged Income
Trust IV, L.P., are holders of certain bonds issued by Hayes
Lemmerz International, Inc., and its debtor-affiliates.
On September 5, 2001, the Debtors announced that it would
restate its financial results for the fiscal year ended January
31, 2001 as well as for the quarter ended April 30, 2001 to
correct errors that the Debtors and its auditors had identified
in the accounting for certain items.
The Audit Committee of the Debtors' Board of Directors was
directed to investigate the facts and circumstances relating to
the restatement. To assist them with the investigation, the
Audit Committee engaged the law firm of Skadden Arps Slate
Meagher & Flom LLP to provide legal advice. Skadden then
engaged the accounting firm of Ernst & Young LLP to assist it in
the investigation.
According to Mr. Grant, Skadden and Ernst & Young jointly
prepared and submitted to the Audit Committee a report regarding
the information gathered during the Audit Committee
investigation. Thereafter, the Audit Committee prepared and
submitted it own report to the Debtors' Board of Directors.
The Official Committee of Unsecured Creditors has advised the
Debtors that it intends to undertake an investigation into the
facts and circumstances relating to the restatement to determine
whether the Debtors' estates possess any causes of action. The
Committee and the Debtors have entered into a stipulation
agreeing to share documents and other information relating to
the restatement and information reviewed, prepared or generated
in connection with the Audit Committee investigation or the
Committee investigation, including, but not limited to the
Skadden Report and the Audit Committee Report.
Mr. Grant tells the Court that the Bondholders, as the Debtors'
creditors, share a common interest in determining whether the
Debtors' estates possess any causes of actions related to the
restatement as those claims are assets of the estates. Counsel
for the Bondholders asked for information from the Debtors'
counsel. But that request was denied on the basis of attorney-
client privilege, thereby necessitating this motion.
Mr. Grant explains that that the information requested is within
the Debtors' possession and is not available without a Court
order. Rule 2004 of the Federal Rules of Bankruptcy Procedure
provides for a broad scope of examination, including "acts,
conduct, or property or to the liabilities and financial
condition of the debtor." Moreover, examination under
Bankruptcy Rule 2004 has specifically been allowed for the
express purpose of discovering assets and for unearthing frauds.
Mr. Grant argues that there is no basis for the Debtors'
assertion that the information requested is protected by the
attorney-client privilege. In Garner v. Wolfinbarger, the Fifth
Circuit found that a corporation cannot assert the attorney-
client privilege against shareholders in a derivative action who
have shown good cause for obtaining the requested information.
The Court reasoned that in the context where the corporation is
asserting the privilege against those in whose interest the
entity functions, the rationale for the privilege is not
applicable. The same reasoning applies here. Mr. Grant
contends that the Bondholders are creditors and the Debtors owe
them a fiduciary duty to protect the assets of the estate. The
Bondholders have shown that the information is needed to
determine what potential causes of action might belong to the
Debtors' estate and that the information is unavailable from any
other source. There is no logical justification for allowing
the Debtors to assert the attorney-client privilege against
those to whom it owes a fiduciary duty.
Moreover, Mr. Grant adds that even if the Debtors could validly
assert the attorney-client privilege against the Bondholders, by
disclosing the Skadden and Audit Committee Reports to the
Committee, the Debtors have waived any applicable privilege, not
just as to the Committee, but also as to third parties. The
Debtors' attempt to selectively waive the privilege by entering
into the Stipulation with the Committee is ineffective under
both Sixth Circuit and Third Circuit laws.
The Bondholders seek the Court's authority to examine a member
of the Audit Committee of the Debtors' Board of Directors with
knowledge related to the investigations of both the Audit
Committee and the Committee of Unsecured Creditors. The
Bondholders also ask the Court to compel the Debtors to
produce, prior to examination, any and all documents related to,
reviewed or prepared in connection with the Audit Committee
investigation including the Skadden Report and the Audit
Committee Report in order to evaluate any potential causes of
action that might provide a source of recovery to the estate for
the creditors' benefit.
Mr. Grant asserts that the information sought is clearly within
the scope of a Bankruptcy Rule 2004 examination.
The Bondholders, in accordance with Bankruptcy Rules, will
reimburse the Debtors for any costs associated with the
attendance of its representatives at depositions and the
reproduction of documents. (Hayes Lemmerz Bankruptcy News, Issue
No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)
DebtTraders reports that Hayes Lemmerz Intl Inc.'s 11.875% bonds
due 2006 (HLMM06USS1) are trading between 45 and 47. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=HLMM06USS1
for real-time bond pricing.
HORSEHEAD INDUSTRIES: Has Until November 2 to Complete Schedules
----------------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave Horsehead Industries, Inc., and its debtor-affiliates for a
second extension to file comprehensive schedules and statements
required under 11 U.S.C. Sec. 521(1). The Debtors have until
November 2, 2002 to file their Schedules of Assets and
Liabilities and Statement of Financial Affairs.
Horsehead Industries, Inc. d/b/a Zinc Corporation of America,
the largest zinc producer filed for chapter 11 protection on
August 19, 2002. Laurence May, Esq., at Angel & Frankel, PC
represents the Debtors in their restructuring efforts. When the
Company filed for protection from its creditors, it listed
$215,579,000 in assets and $231,152,000 in debts.
IMC GLOBAL: S&P Says Improved Q3 Report Will Not Affect Ratings
---------------------------------------------------------------
Standard & Poor's Ratings Services said that IMC Global Inc.'s
(BB/Negative/--) announcement that its third-quarter earnings
improved year over year does not affect its ratings or negative
outlook on the company. The earnings improvement is primarily
the result of higher DAP prices, lower idle phosphate plant
costs, and higher phosphate and potash volumes. Still, higher
sulphur and ammonia raw material costs were a partial offset in
the third quarter and could negatively affect fourth-quarter
margins. Although fourth-quarter results may be softer than
originally anticipated, the company remains confident of ongoing
results, due in part to increased DAP exports to China and
favorable conditions in the domestic market.
Ratings are supported by leading global market shares and
expectations of better earnings. Still, ratings could be lowered
if an expected improvement in the fertilizer sector fails to
materialize or other strategic actions impair the firm's ability
to restore credit protection measures to targeted levels. In
addition, a deterioration in liquidity and in bank line
availability would raise the likelihood of a downgrade.
INKTOMI CORP: Sept. 30 Working Capital Deficit Tops $36 Million
---------------------------------------------------------------
Inktomi Corp., (Nasdaq:INKT) reported financial results for the
fourth fiscal quarter and year ended September 30, 2002.
Revenues for the fourth fiscal quarter were $20.4 million. Pro-
forma net loss was $8.2 million. For fiscal year 2002, Inktomi
reported revenues of $112.7 million. Pro forma net loss for the
fiscal year was $41.5 million.
Pro-forma amounts exclude real estate and asset impairment
charges, amortization of goodwill and other intangibles,
restructuring charges, all commerce division activity, and non-
cash deferred stock compensation costs and rent related to a
lease residual value guarantee provision. The GAAP loss for the
fourth fiscal quarter was $131.6 million, or a loss of $0.87 per
share, and $500.8 million or a loss of $3.51 per share for the
fiscal year ended September 30, 2002.
For the fourth fiscal quarter, Inktomi reported revenues of
$11.5 million from its Web search business. The company recorded
$4.2 million in software license revenues and $4.7 million in
related services revenues. Inktomi ended the quarter with total
cash, cash equivalents and short-term investments of $45.4
million.
At September 30, 2002, the Company's total current liabilities
exceeded its total current assets by about $36 million.
"Inktomi met its overall revenue goal in a very challenging
environment," said David Peterschmidt, president and CEO of
Inktomi. "In the coming quarters, our concentration on search
markets, careful financial management, and tenacious execution
on winning customers and delivering new products sets us on a
path to deliver value to our stakeholders and the marketplace."
In the fourth quarter, the company's Web search business
continued to provide search services to companies such as MSN,
the highest trafficked site on the Internet today. Inktomi's
paid inclusion program expanded its footprint with the addition
of new content providers including Art.com, eLibrary,
HotelClub.net, MobilePlanet and Trails.com. The company expanded
its agreement with Amazon.com to include its full product
catalog into the Inktomi search engine, enabling millions of
Inktomi-powered portal users to find highly relevant content
deep within the Amazon.com site, while at the same time driving
highly qualified traffic to Amazon.com.
Inktomi's enterprise search business added new customers in the
quarter including ChevronTexaco, GE Mortgage Insurance, Nextel
Communications and Volvo of North America. Inktomi had repeat
business from companies including Autodesk, Cable & Wireless,
Deutsche Bank, Nokia and SAS Institute for its search products.
Based in Foster City, Calif., Inktomi is a leading provider of
Web search and enterprise information retrieval products. The
company that pioneered Web search, Inktomi is the market-leading
OEM provider of search and services such as paid inclusion
programs for leading consumer portals, Internet destinations and
e-commerce sites worldwide. In addition more than 2,500 global
enterprise customers depend on Inktomi to rapidly find the right
information within applications, portals, systems and networks.
Inktomi's customer and strategic partner base includes such
leading companies as BEA Systems, Documentum, Hewlett-Packard,
IBM, Microsoft, Sun Microsystems and Yahoo! The company has
offices in North America, Europe and Asia. For more information,
visit http://www.inktomi.com
INDYMAC: Fitch Drops Ratings on 10 Pass-Through Note Classes
------------------------------------------------------------
Fitch Ratings downgrades the following ten classes of IndyMac
Manufactured Housing Contract Trusts:
-- Series 1997-1 class M to 'A' remains on Rating Watch Negative
from 'AA' ;
-- Series 1997-1 class B-1 to 'CCC' from 'B' ;
-- Series 1997-1 class B-2 to 'D' from 'CCC' ;
-- Series 1998-1 class M to 'A' remains on Rating Watch Negative
from 'AA' ;
-- Series 1998-1 class B-1 to 'CCC' from 'B' ;
-- Series 1998-1 class B-2 to 'D' from 'CCC' ;
-- Series 1998-2 class M-1 to 'A' remains on Rating Watch
Negative from 'AA';
-- Series 1998-2 class M-2 to 'BBB-' remains on Rating Watch
Negative from 'A';
-- Series 1998-2 class B-1 to 'CCC' from 'BB';
-- Series 1998-2 class B-2 to 'C' from 'CCC';
These actions are a result of the continued poor performance of
the underlying collateral in the transactions.
Additionally, Fitch Ratings affirms the following eleven classes
of IndyMac Manufactured Housing Contract Trusts.
-- Series 1997-1 classes A-2 to A-6 at 'AAA'
-- Series 1998-1 classes A-3 to A-5 at 'AAA'
-- Series 1998-2 classes A-2 to A-4 at 'AAA'
Although the company exited the manufactured housing lending
business in mid 1999, it continues to service its loans from
Pasadena where the company's mortgage loan servicing operation
is located. The lack of dealer relationships (as a result of
exiting the origination business) coupled with the oversupply of
repossessed homes in the marketplace, continues to put
significant pressure on recovery rates.
Since IndyMac exited the manufactured housing lending business,
Fitch Ratings has taken numerous rating actions on the company's
manufactured housing bonds (see releases dated Mar. 1, 2001 and
Feb. 12, 2002). These actions are a result of the continued poor
performance of the underlying manufactured housing loans in the
transactions. The higher than expected losses, has led to the
complete depletion of over-collateralization on all three
transactions. As of the September 2002, distribution date, the
cumulative loss percentages on series 1997-1, 1998-1 and 1998-2
are 13.98%, 12.86% and 11.15% respectively.
INTEGRATED INFO.: Gets Time Extension to Meet Nasdaq Guidelines
---------------------------------------------------------------
Integrated Information Systems Inc., (Nasdaq SmallCap: IISX) a
leading provider of secure integrated information solutions,
announced that its common stock will continue to be listed on
The Nasdaq SmallCap market pursuant to an exception granted by a
Nasdaq Qualifications Panel to give IIS time to continue to
implement its plan to regain compliance with requirements for
continued listing.
As part of this plan, on Oct. 16, 2002, IIS announced that it
had finalized and funded a comprehensive financial
restructuring. In addition, pursuant to its plan, IIS continues
to aggressively develop internal business initiatives, improve
operating efficiencies and pursue consolidative acquisitions of
like-minded peer consultancies. Pursuant to IIS' conditional
listing status, effective with the open of business on Oct. 25,
2002, the common stock trading symbol will be changed from IISX
to IISXC.
The plan IIS presented included a request for additional time to
consider a reverse stock split and hold a special meeting of
shareholders for approval. The exception granted by the Nasdaq
Qualifications Panel requires IIS to file a proxy statement, on
or before Nov. 14, 2002, evidencing its intent to seek approval
of a reverse stock split. IIS is also required by the exception
to attain a closing bid price of at least $1.00 per share on or
before Dec. 31, 2002 and maintain a closing bid price of at
least $1.00 per share for a minimum of 10 consecutive trading
dates immediately thereafter.
In addition, on or before Nov. 14, 2002, IIS is required to file
its Form 10-Q for the period ended Sept. 30, 2002 evidencing
shareholders' equity of $2.5 million or more, including pro
forma adjustments for any significant events or transactions
occurring on or before the filing date. On or before Dec. 17,
2002, IIS is required to demonstrate a market value of publicly
held shares of $1.0 million or more. Immediately thereafter, IIS
is required to evidence a market value of publicly held shares
of $1.0 million or more for a minimum of 10 consecutive trading
days, and on or before March 31, 2003, IIS is required to file
its Form 10-K for the fiscal year ending Dec. 31, 2002 with the
SEC and Nasdaq evidencing shareholders' equity of $2.5 million
or more. There can be no assurance that IIS will meet all of the
panel's requirements. If at some future date the company's
securities should cease to be listed on The Nasdaq SmallCap
Market, its securities may be listed in the OTC Bulletin Board.
However, IIS believes that if its shareholders are presented
with and approve a reverse stock split and grant the board of
directors authority to determine the ratio of the split, IIS can
meet the panel's requirements.
IIS' continued listing is a result of the panel's response to a
Sept. 26, 2002 oral hearing in which IIS outlined its plan for
meeting the requirements for continued listing. In the panel's
written notice to IIS, the panel stated: "The panel was of the
opinion that the company presented a definitive plan that will
enable it to evidence compliance with the requirements for
continued listing on The Nasdaq SmallCap Market within a
reasonable period of time and to sustain compliance with those
requirements over the long term."
Integrated Information Systems(TM) is a leading provider of
secure integrated information solutions. IIS specializes in
securely optimizing, enhancing and extending information
applications and networks to serve employees, partners,
customers and suppliers. Founded in 1988, IIS employs more than
200 professionals, with offices in Boston; Denver; Madison;
Milwaukee; Phoenix; Portland, Oregon and Bangalore, India.
Integrated Information Systems' common stock is traded on The
Nasdaq SmallCap Market under IISX. For more information on
Integrated Information Systems, please visit its Web site at
http://www.iis.com
Integrated Information's June 30, 2002, balance sheet shows that
the Company's total liabilities exceed total assets by $1.1
million. The Company's liquidity is strained the company
continued to lose money quarter-by-quarter.
INTERLEUKIN GENETICS: Obtains $1.5-Million Interim Financing
------------------------------------------------------------
Interleukin Genetics, Inc., (NASDAQ:ILGN) has entered into an
agreement for interim financing of up to $1.5 million from the
same consumer products company with which the Company has an
outstanding Letter of Intent per the news release on September
3, 2002. The financing is in the form of three $500,000
promissory notes to be issued and sold by the company, the first
of which has already been closed. The final closing is at the
option of the consumer products company. With this latest
financing, the Company expects to have sufficient cash to meet
its operating requirements through January 2003. Interleukin
Genetics is continuing negotiations with that same consumer
products company towards a definitive strategic alliance and is
seeking further financing from other third parties to fund its
operations through 2003 and beyond.
"This additional round of interim financing strengthens both the
position of Interleukin Genetics to continue our basic science
research and clinical studies and our relationship with this
potential strategic partner," said Philip R. Reilly, CEO of
Interleukin Genetics. Reilly adds, "On-going discussions with
this company and other interested organizations reinforces our
confidence in the Company's long-term outlook."
Interleukin Genetics is a biotechnology company focused on
inflammation. The company uses functional genomics to develop
diagnostic, therapeutic and nutraceutical products based on the
genetic variations in people to help prevent or treat diseases
of inflammation. Interleukin's TARxGET (Translating Advanced
Research in Genomics into more Effective Therapeutics) programs
focus on the areas of cardiovascular disease, rheumatoid
arthritis and osteoporosis and include the development of tests
to assess a person's risk for heart disease and osteoporosis as
well as a test to help doctors and patients choose the best
course of therapy for rheumatoid arthritis. These products will
improve patient care and produce better allocation of healthcare
resources. In addition to its research partnerships with
numerous academic centers in the U.S. and Europe, Interleukin's
corporate collaborators include the leading healthcare
organizations, Kaiser Permanente and UnitedHealth Group. For
more information about Interleukin and its ongoing programs,
please visit http://www.ilgenetics.com
* * *
As reported in Troubled Company Reporter's October 11, 2002,
edition, Interleukin Genetics received a letter from NASDAQ
stating that the Company had not met the $1 minimum bid price
and the $2.5 million stockholders' equity requirements for
continued listing of its common stock on the NASDAQ SmallCap
Market (Marketplace Rules 4310(C)(4) and 4310(C)(2)(B)).
Interleukin Genetics has requested a hearing before the NASDAQ
Listing Qualifications Panel to appeal the ruling by NASDAQ.
During the appeals process, which the Company expects will take
between 30 and 60 days, the Company's common stock will continue
to trade on the NASDAQ SmallCap Market. There can be no
assurance that the Panel will grant the Company's request for
continued listing. In the event that the Panel does not grant
continued listing, the Company expects that its common stock
would trade on the OTC Bulletin Board (OTCBB). The OTCBB is a
regulated quotation service that displays real-time quotes,
last-sales prices, and volume information for more than 3,600
equity securities.
Quarter-by-quarter losses have caused shareholder equity to
erode to $698,000 at June 30, 2002, from $3.5 million a year
earlier.
INTERLIANT: Signs-Up Traub Bonacquist as Bankruptcy Counsel
-----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave its nod of approval to the Official Committee of Unsecured
Creditors of Interliant, Inc., to retain Traub, Bonacquist & Fox
LLP as its counsel in this chapter 11 case.
The Committee anticipates Traub Bonacquist will:
i) provide legal advice to the Committee with respect to
its duties and powers in this case;
ii) assist the Committee in its investigation of the acts,
conduct, assets, liabilities, and financial condition of
the Debtors, the operation of the Debtors business, the
disposition of the Debtors assets, and any other matter
relevant to the case or to the formulation of a plan;
iii) participate in the formulation of a plan of liquidation;
iv) assist and advise the Committee in its examination and
analysis of the conduct of the Debtors affairs and the
causes of its insolvency;
v) assist the Committee in requesting the appointment of a
trustee or examiner, should such action become
necessary;
vi) review and analyze all applications, orders, statements
of operations and schedules filed with the Court by the
Debtors or other third parties and advise the Committee
as to their propriety, and, after approval by the
Committee, object or consent on its behalf; and
vii) perform other legal services as may be required and in
the interest of the creditors, including the
commencement and pursuit of such adversary proceedings
as may be authorized.
Traub Bonacquist agrees to provide services at its current
hourly rates:
partners $375 - $600 per hour
of counsel $365 per hour
associates $210 - $325 per hour
paraprofessionals $135 per hour
Interliant, Inc. is a provider of Web site and application
hosting, consulting services, and programming and hardware
design to support the information technologies infrastructure of
its customers. The Company filed for chapter 11 protection on
August 5, 2002. Cathy Hershcopf, Esq., and James A. Beldner,
Esq., at Kronish Lieb Weiner & Hellman, LLP represent the
Debtors in their restructuring efforts. When the Company filed
for protection from its creditors, it listed $69,785,979 in
assets and $151,121,417 in debts.
I-STAT CORP: Sept. 30 Balance Sheet Upside-Down by $29 Million
--------------------------------------------------------------
i-STAT Corporation (Nasdaq: STAT), the leading manufacturer of
point-of-care diagnostic systems for blood analysis, reported
net revenues of $14.8 million for the third quarter of 2002,
compared with $14.6 million in the same period in 2001.
Cartridge shipments (a barometer of the technology's acceptance
and adoption by users) increased 23.0 percent, to 3.2 million
units during the third quarter ended September 30, 2002, from
2.6 million units in the same period in 2001. The Company
shipped 3.4 million units during the second quarter ended June
30, 2002. Non-cartridge sales declined by 23.7% during the
third quarter over the same period in 2001. The average price
of a cartridge sold to distributors during the third quarter of
2002 was $3.36, compared with $3.30 during the second quarter of
2002 and $3.55 in the third quarter of 2001, all primarily
functions of the pricing arrangements in the Abbott Laboratories
("Abbott") distribution alliance.
Gross profit in the third quarter, excluding the write-off of
certain production assets, was $5.0 million or 33.6% of net
revenues, compared with $3.0 million or 20.7% of net revenues in
the third quarter of 2001.
Charges resulting from the Company's decision not to extend its
distribution alliance with Abbott beyond 2003 are being
recognized this quarter. Management believes that the Company
is capable of meeting these obligations from cash on hand and
cash generated from operations after the expiration of the
alliance. These payments include a $5.0 million one-time
termination fee and $5.0 million for the unrecognized portion of
a prepayment from Abbott, both due in December 2003; payments of
approximately $2.0 million, for the repurchase of equipment
early in 2004 and an estimated $47.0 million in residual
payments due in unequal installments at the end of each year
from 2004 to 2008. Consequently, the net loss to common
shareholders for the three months ended September 30, 2002 of
$56.0 million includes a charge of $52.0 million consisting of a
termination fee of $5.0 million and an estimate of the cost of
residual payments of $47.0 million.
Additionally, the net loss for the third quarter includes the
$1.2 million impact of a decision to abandon certain projects at
our production facility in Canada and a charge of $1.0 million
arising out of a review of the valuation of intangible assets
following changes in the Company's trademark and patent
strategies.
The net loss for the third quarter of 2002 is $56.0 million, and
is after negative accretion of Preferred Stock of $0.1 million
and accrued dividends on Preferred Stock of $0.2 million,
compared with a net loss to common shareholders of $5.2 million
for the same period in 2001.
In the September 30, 2002 balance sheets, the Company recorded
having a total shareholders' equity deficit of about $29
million.
"Our results for the third quarter are dominated by the cost of
ending our distribution agreement with Abbott Laboratories. We
are confident that we will meet our obligation to pay these
charges over the next six years," said William P. Moffitt, i-
STAT president and chief executive officer. "Our business is
solid and we have reduced our cash outflow for the quarter to
$0.9 million, consistent with our goal, as previously discussed,
to use less than $3.0 million in cash during the second half of
2002.
"We are well underway in implementing our transition plan, led
by Bruce Basarab, our new executive vice president of commercial
operations, and will be working closely with Abbott through 2003
to assure continued support of our mutual customers, which will
also insure continued growth for i-STAT," concluded Mr. Moffitt.
Nine-Month Results
For the nine months ended September 30, 2002, net revenues
increased 6.6 percent to $44.0 million, compared with $41.3
million for the same period in 2001. Cartridge shipments
increased 11.2 percent, to 9.3 million units in the first three
quarters of 2002, up from 8.4 million units in the same period
in 2001.
Gross profit increased to $9.2 million or 20.9% of net revenues
in the first nine months of 2002, compared with $7.1 million or
17.3% of net revenues for the nine months ending September 30,
2001.
Net loss available to common shareholders for the nine months
ended September 30, 2002, was $64.3 million after negative
accretion of Preferred Stock of $0.3 million and accrued
dividends on Preferred Stock of $1.0 million, compared with net
loss of $23.3 million for the same period in 2001. The net loss
for the first nine months of 2002 includes the $1.2 million
impact of a decision to abandon certain projects at our
production facility in Canada and a charge of $1.0 million
arising out of a review of intangible assets following changes
in the Company's trademark and patent strategies. The net loss
for the nine months ending September 30, 2001 includes an
expense of $10.5 million in settlement of the patent
infringement litigation with Nova Biomedical Corporation.
i-STAT Corporation develops, manufactures and markets diagnostic
products for blood analysis that provide health care
professionals critical diagnostic information accurately and
immediately at the point of patient care. Through the use of
advanced semiconductor manufacturing technology, established
principles of electrochemistry and state-of-the-art computer
electronics, i-STAT developed the world's first hand-held
automated blood analyzer capable of performing a panel of
commonly ordered blood tests on two or three drops of blood in
just two minutes at the patient's side.
ITC DELTACOM: Committee Wants to Tap Chanin Capital as Advisors
---------------------------------------------------------------
The Official Committee of Unsecured Creditors of ITC Deltacom,
Inc., asks permission from the U.S. Bankruptcy Court for the
District of Delaware to engage the services of Chanin Capital
Partners LLC as financial advisor in the Company's on-going
chapter 11 case. The Committee further asks the Court for
authority to employ Chanin Capital nunc pro tunc to
August 9, 2002.
With over 55 restructuring professionals, Chanin Capital has one
of the largest dedicated restructuring practices in the country.
The employees of Chanin Capital has advised numerous
telecommunications companies over the last few years on a
variety of corporate finance matters, the Committee tells the
Court.
As Financial Advisors to the Committee, Chanin Capital will
provide:
a) Analysis of the Debtor's operations, business strategy, and
competition in each of its relevant markets as well as an
analysis of the industry dynamics affecting the Debtor;
b) Analysis of the Debtor's financial condition, business
plans, capital spending budgets, operating forecasts,
management, and the prospects of its future performance;
c) Financial valuation of the ongoing operations and/or assets
of the Debtor;
d) Assisting the Official Committee in developing, evaluating,
structuring, negotiating, and implementing the terms and
conditions of a Restructuring Transaction; and
e) Providing the Official Committee with other and further
financial advisory services with respect to the Debtor and
a Restructuring Transaction as may be requested by the
Official Committee and agreed to by Chanin Capital.
Chanin Capital has informed the Official Committee that it is a
"disinterested person" as that term is defined in the Bankruptcy
Code. Chanin Capital believes that it does not represent or
hold an interest adverse to the interest of the Debtor's estate.
Chanin agrees to provide services in exchange for:
a) a $125,000 monthly cash advisory fee, provided that,
50% of the Monthly Fee after the 6th month of engagement
shall be credited against the Deferred Fee;
b) a Deferred Fee equal to 0.50% of Total Consideration
received by holders of the Notes.
ITC Delatacom, Inc., an exempt telecommunications company and a
holding company, filed for chapter 11 protection on June 25,
2002. Rebecca L. Booth, Esq., Mark D. Collins, Esq. at Richards,
Layton & Finger, P.A. and Martin N. Flics, Esq., Roland Young,
Esq. at Latham & Watkins represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $444,891,574 in total assets and
$532,381,977 in total debts.
DebtTraders reports that ITC Deltacom Inc.'s 11.000% bonds due
2007 (ITCD07USR1) are trading between 15 and 20. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=ITCD07USR1
for real-time bond pricing.
IT GROUP: Wants 3rd Extension to Remove Suits Until Jan. 3, 2003
----------------------------------------------------------------
Gregg M. Galardi, Esq., at Skadden, Arps, Slate, Meagher & Flom
LLP, in Wilmington, Delaware, explains that IT Group, Inc., and
its debtor-affiliates continue to remain parties to over 100
different judicial and administrative proceedings currently
pending in various courts or administrative agencies throughout
the country. These Actions involve a wide variety of claims,
some of which are extremely complex. The Actions consist of all
forms of environmental, commercial, tort, employment-related,
trademark and patent litigation.
Thus, for the third time, the Debtors ask Judge Walrath to
extend the deadline to remove and transfer pending proceedings
to the Bankruptcy Court, to and including:
(a) January 13, 2003; or
(b) 30 days after entry of an order terminating the automatic
stay with respect to any particular action sought to be
removed.
According to Mr. Galardi, another extension of the removal
period will give the Debtors sufficient opportunity to make
fully informed decisions concerning the possible removal of
actions. This will help protect the Debtors' valuable right to
economically adjudicate lawsuits, if the circumstances warrant
removal.
Mr. Galardi reports that the Debtors' have made significant
achievements to date. After initially devoting their efforts to
the marketing of their businesses and the solicitation of
competitive bids, the Debtors worked to resolve environmental
issues relating to the Northern California Sites. They have
also analyzed about 6,000 claims filed in these cases. The
Debtors have also implemented procedures to comply with the
substantial reporting and disclosure requirements imposed on
them.
Mr. Galardi assures Judge Walrath that the Debtors' adversaries
will not be prejudiced by an extension because the adversaries
may not prosecute the Actions absent relief from the automatic
stay.
A hearing on the Debtors' request is scheduled on November 6,
2002 at 11:30 a.m. By application of Delaware Local Rule 9006-
2, the Debtors' removal period is automatically extended through
the conclusion of that hearing. (IT Group Bankruptcy News, Issue
No. 19; Bankruptcy Creditors' Service, Inc., 609/392-0900)
J.P. MORGAN: Three Classes Affirmed with Low-B Ratings by Fitch
---------------------------------------------------------------
J.P. Morgan Commercial Mortgage Finance Corp.'s mortgage pass-
through certificates, series 1998-C6, $47.8 million class B has
been upgraded to 'AA+' from 'AA' and $39.8 million class C has
been upgraded to 'A+' from 'A' by Fitch Ratings. Fitch also
affirms the following certificates: $32.5 million class A-1,
$220.4 million class A-2, $245.9 million class A-3 and interest-
only class X at 'AAA'; $47.8 million class D at 'BBB'; $15.9
million class E at 'BBB-'; $39.8 million class F at 'BB'; $19.9
million class G at 'B'; and $6 million class H at 'B-'. Fitch
does not rate the $13.9 million class NR certificates. The
affirmations follow Fitch's annual review of the transaction,
which closed in March 1998.
The upgrades are primarily attributable to increases in
subordination levels due to loan payoffs and amortization,
coupled with the stable performance of the pool. As of the
October 2002 distribution date, the pool's certificate balance
has been reduced by 8.4% to $729.7 million from $796.4 million
at issuance. Five loans have paid off since issuance and none
have realized losses. Midland Loan Services, the master
servicer, L.P., collected year-end (YE) 2001 financials for 98%
of the pool. The pool's weighted average debt service coverage
ratio (DSCR) increased to 1.99 times (x) as of YE 2001 from
1.69x at issuance.
The certificates are currently collateralized by 86 fixed-rate
mortgage loans, consisting primarily of office (34%),
multifamily (23%), and retail (18%) properties, with significant
concentrations in Virginia (22%), California (15%), and New
Jersey (10%).
Two loans (1.5% by balance) are currently 90-day delinquent and
in special servicing. The largest specially serviced loan
(0.98%) is secured by a 1.2 million square foot refrigerated
warehouse facility in Dallas, TX. The borrower is in bankruptcy
and the property is currently only 10% occupied. CRIIMI MAE
Services, LP (CRIIMI), the special servicer, continues
negotiations with the borrower to either sell the property
within bankruptcy or accept a discounted payoff from the
borrower. The property's recent appraised value was $11.4
million, while the total exposure on this loan is $7.9 million,
and therefore, only limited losses are expected.
The second specially serviced loan (0.45%) is secured by a
limited service hotel in Salt Lake City, UT. The property's
performance has deteriorated since issuance due to the soft
market conditions in Salt Lake City. The YE-2001 DSCR was 0.80x;
current occupancy as of June 2002 was 64%. While CRIIMI is
working with the borrower regarding a possible resolution, a
foreclosure complaint and a motion for receiver have been filed.
The property was appraised at $3.2 million in July 2002. Some
losses are likely in case of foreclosure, as the total exposure
on this loan is $3.5 million.
Fitch reviewed the performance and underlying collateral of the
deal's four loans (30% of pool), which Fitch considered as
having investment grade credit assessments at issuance, The
Kilroy Portfolio (10.5%), The Crystal Gateway Marriott (8.1%),
Four and Five Skyline Drive (6.6%), and The Shannon Portfolio
(4.7%). Of these loans, Fitch no longer considers the Shannon
Portfolio to have investment grade credit assessment. Fitch's
stressed DSCR for these loans was calculated using the
borrowers' reported NOI adjusted for the Fitch underwriting
guidelines, required reserves, and a stressed amortized debt
service amount.
The Kilroy Portfolio is secured by three office and 10
industrial properties in Southern California. The YE 2001 DSCR
was 2.04x, down slightly from 2.12x at YE 2000 but up from 1.61x
at issuance. The weighted average occupancy was 92% as of YE
2001 and 93% as of June 2002, compared to 97% at issuance;
occupancy has declined to approximately 88% during the third
quarter of 2002 as several tenants vacated. Still, the largest
property in this portfolio, Kilroy Airport Center (47% of
portfolio by balance) is currently 95% occupied.
The Crystal Gateway Marriott is a 697 room full-service hotel in
Arlington, VA. The YE 2001 DSCR declined to 2.09x from 2.36x at
YE-2000. However, it was up from 1.59x at issuance. Occupancy
was 74% as of year-to-date June 2002, slightly up from 73% as of
YE 2001, but down from 80% at issuance.
Four and Five Skyline Drive are two office buildings in Falls
Church, VA, with a total of 509,808 square feet. The YE 2001
DSCR was stable, at 1.51x, unchanged from YE-2000 and up from
1.35x at issuance. Occupancy increased to 84% as of June 2002
from 79% as of YE 2001, although it was down from 95% at
issuance.
The Shannon Portfolio is secured by 11 multifamily properties in
North Carolina. The property's performance has deteriorated
since issuance due to economic factors and soft market
conditions. The YE 2001 DSCR has decreased to 1.12x compared to
1.46x at issuance. Average occupancy has declined to 81% as of
June 2002 from 87% as of YE 2001 and 93% at issuance.
Fitch will continue to monitor this transaction, as surveillance
is ongoing.
KMART: Wants to Assume Consignment Deal with Cardinal Health
------------------------------------------------------------
Kmart Corporation and its 37 affiliate debtors ask the U.S.
Bankruptcy Court for the Northern District of Illinois for
authority to assume a Pharmaceutical Services Agreement and
Purchase and Consignment Agreement with Cardinal Health, Inc,
and certain of its affiliates.
Pursuant to the Agreements, the Debtors:
-- obtain on consignment all of their prescription
pharmaceutical products from Cardinal, except those for
the Puerto Rico stores; and
-- at their option, purchases certain non-prescription
products from Cardinal.
The Debtors and Cardinal also agree to extend the Agreement
termination date into 2007. The Agreements were to expire on
August 1, 2004. After the modifications, the Agreements will
expire 54 months after the entry of an order authorizing
assumption of the Agreements; if an order is entered on October
30, 2002, the new term of the Agreements will therefore be April
2007.
J. Eric Ivester, Esq., at Skadden, Arps, Slate, Meagher & Flom,
explains that the Agreements have been modified so that either
party may terminate without cause upon 120 days notice instead
of 180 days. Cardinal, however, may not exercise this right
until after confirmation and consummation of a plan of
reorganization in these cases. In contrast, the Debtors may
exercise this termination right at any time. But in the event
the Debtors terminate within the first 18 months following Court
approval of the assumption, they will have to pay a termination
fee. The fee diminishes on a straight line basis over the
course of the 18 months from $7,000,000 to $0, thereby
significantly reducing the risks to these estates by virtue of
the be assumption.
Far more important than that, according to Mr. Ivester, Cardinal
has agreed to waive a portion of its prepetition claim and to
substantially reduce the future cost of goods provided to the
Debtors. This will result in substantial savings to the Debtors
over the new 54-month term of the Agreements. The Debtors
estimate Cardinal's valid prepetition claim amount may be
$23,648,217 -- a significant portion of the Claim may be
secured. The Prepetition Claim will be reduced by:
* $4,079,467 as a setoff against amounts owed by Cardinal to
the Debtors prepetition;
* $2,786,410, which is equal to Cardinal's allowed
reclamation claim. Cardinal has agreed to participate in
the Debtors' Reclamation Payment Program. As a result,
Cardinal's reclamation claim will be reduced by $696,603 to
$2,089,808 and paid on November 30, 2002.
* $3,640,000 -- Cardinal, as a concession, has agreed to
reduce the Claim by that amount.
Therefore, the agreed prepetition outstanding cure amount is
$13,142,340.
As a condition to assumption, the Debtors will also pay Cardinal
$3,833,323 for certain postpetition amounts outstanding in full
and complete satisfaction of all of their outstanding
obligations under the Agreements as of August 31, 2002.
Ultimately, the cure amount is $16,975,663, representing an
overall reduction of $3,640,000.
Mr. Ivester also contends that the assumption of the Agreements
is vital as the Debtors' pharmaceutical division is a core,
profitable component of their business. Since August 1, 1996,
Cardinal has been the Debtors' sole provider of Rx Products
except for stores in Puerto Rico. Cardinal also has provided,
upon the Debtors' request, certain Non Rx Products, including
primarily diabetic supplies. In fiscal year 2001 alone,
Cardinal provided 99% of the more than $3,000,000,000 of
pharmaceutical products sold by the Debtors.
Adversely, Mr. Ivester reckons that a change in pharmaceutical
suppliers would entail:
(1) making significant changes to the Debtors' information
technology in order to exchange pricing files, sales data,
and inventory data with the new supplier; and
(2) enduring the typical transition interruptions attributable
to developing a working relationship with a new supplier.
Cardinal Health affiliates include:
* RedKey, Inc.;
* Cardinal Distribution, L.P.;
* James W. Daly, Inc.;
* Whitmire Distribution Corporation;
* Cardinal Southeast, Inc.;
* Bindley Western Industries, Inc.;
* Bindley Western Industries II of Maine, Inc. and
* any other subsidiary of Cardinal Health, Inc. (Kmart
Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
LODGIAN: Seeks Nod to Assume Amended OCV Television Agreements
--------------------------------------------------------------
Lisa A. Thompson, Esq., at Cadwalader Wickersham & Taft, in New
York, informs the New York Bankruptcy Court that prior to the
Petition Date, Lodgian, Inc., together with its debtor-
affiliates entered into Television Entertainment Agreements with
On Command Video Corp., whereby On Command provided television
and cable services for 38 Hotel Properties.
Subsequent to the Petition Date, the Debtors entered into
extensive negotiations with On Command in an effort to upgrade
the Agreements by providing enhanced services to the Debtors'
hotel guests. In September 2002, the OCV Agreements were
amended and restated by the Master Services Agreement to provide
the Debtors with substantial benefits. The Master Services
Agreement will expand the number of channels for viewing for the
Debtors' hotel guests. In addition, in consideration for
assuming the OCV Agreements and entering into the Master
Services Agreement, On Command will provide the Debtors with a
$1,266,475 capital assistance, which the Debtors will use to
replace 5,000 television sets to bring the Hotel Properties into
compliance with certain industry standards as proscribed by
certain of the Debtors' franchise agreements. Finally, the
Master Services Agreement will enable the Debtors to reduce
their operating costs by $341,000 annually, as Guest Services
Fee per room will be reduced to $6 from $7.81.
Ms. Thompson admits that the Debtors owe On Command $398,879 in
outstanding prepetition obligations in connection with the OCV
Agreements. The Master Services Agreement provides for the
payment of a portion of the Cure Claim, $292,052, to be paid in
connection with the Debtors' assumption of the OCV Agreements.
On Command has agreed to waive the balance of the Cure Claim,
which is $106,827, in consideration for the Debtors' assumption
of the OCV Agreements, as amended and restated by the Master
Services Agreement.
The Master Services Agreement does not include the Hotel
Properties related to the CCA Debtors and the Liquidating
Debtors, as defined by the Plan. The CCA Debtors and the
Liquidating Debtors will proceed separately with respect to the
OCV Agreements that relate to their Hotel Properties.
By this motion, the Debtors seek the Court's authority pursuant
to Section 365(a) of the Bankruptcy Code to assume the OCV
Agreements, as amended and restated by the Master Services
Agreement.
Ms. Thompson insists that the Master Services Agreement is
beneficial to the Debtors as it will allow them to benefit from
state-of-the-art technology and services offered by On Command,
and which are necessary to the conduct of the Debtors'
businesses. Furthermore, On Command's agreement to modify the
OCV Agreements provides immediate benefit to the Debtors'
estates and is conditioned upon the assumption of the OCV
Agreements. The Master Services Agreement will also allow the
Debtors to compete with other hotel chains, many of which have
long since enhanced their hotel properties by adding larger
televisions with enhanced cable access.
Ms. Thompson believes that the Master Services Agreement, and
the television programming and services supplied to the Debtors
are critical to the conduct of the Debtors' businesses. The
Debtors would not be able to compete successfully in the highly-
competitive lodging industry without the benefit of the state of
the art technology and services supplied by On Command.
The OCV Agreements, as amended and restated by the Master
Services Agreement, provides the Debtors with significant
benefits, including:
-- substantial cost savings to the estates; and
-- access to On Command's proprietary system to provide in-room
movies, music and Internet services for the Debtors' hotel
guests.
The Debtors will also realize an additional savings by not being
required to pay the full Cure Claim due to On Command in
connection with the assumption of the OCV Agreements.
Because the Master Services Agreement provides television
entertainment services for the vast majority of the Hotel
Properties, the Debtors must reject certain executory contracts
with Lodgenet, which provided similar services to certain of the
Debtors' hotels. The Debtors anticipate that Lodgenet may
assert a rejection damages claim associated with the rejection
of its contracts. Ms. Thompson contends that the benefits of
assuming the OCV Agreements far outweigh any concomitant
liability associated with any allowed Lodgenet rejection damages
claim. (Lodgian Bankruptcy News, Issue No. 18; Bankruptcy
Creditors' Service, Inc., 609/392-0900)
LTV CORP: Records Retention & Destruction Stipulation Approved
--------------------------------------------------------------
The LTV Corporation, and its debtor-affiliates have formulated a
policy designed to:
(a) effectively manage and streamline the storage of voluminous
records that the Debtors maintain in the ordinary course of
business; and
(b) eliminate records unnecessary to:
-- ongoing business operations;
-- current or anticipated investigations or audits by
governmental units; or
-- pending or anticipated litigation with respect to
claims of or against the Debtors.
For the past several months, the Debtors have:
(1) catalogued the general types and locations of records
maintained at their various facilities; and
(2) identified records that:
-- are necessary to ongoing business operations and
to the administration of the Debtors' estates; and,
conversely,
-- relate to idled assets or provide no benefit, or
are of inconsequential value, to the Debtors' estates.
The Debtors have determined that the Necessary Records should be
consolidated and stored, primarily at Andrews Records
Management, a third-party storage facility.
As to the Obsolete Records, the Debtors have determined that
these records:
(a) have little or no value due to, among other things:
-- the passage of time (more than 100 years for some
records); or
-- their relationship to entities that no longer exist;
(b) are not necessary to any plan confirmation or the wind
down of their estates;
(c) are cost-prohibitive to maintain or are otherwise
burdensome to the Debtors' estates; and
(d) should be abandoned or destroyed in accordance with a
schedule.
The Debtors want to implement procedures that would allow them
to destroy additional records that are not currently obsolete,
but that may become obsolete at some future date, but only on
notice to the parties on the General and Supplemental Service
Lists used in these cases, but without further Court order. Due
to staffing reductions, the Debtors' estates would be best
served if, prior to the currently scheduled expiration of the
APP, the Debtors finalize the transfer of all Necessary Records
to Andrews, and the destruction of Obsolete Records.
The Debtors intend to maintain 42,000 boxes of records at
Andrews and plan to destroy 20,000 boxes of Obsolete Records at
a one-time cost of $50,000 to $75,000.
The Debtors also store information on a total of 90,000 magnetic
tapes in Alpharetta, Georgia, and in Cleveland, Ohio. The
Debtors will not destroy any Magnetic Tapes under this Records
Retention and Destruction Policy, but will relocate the Magnetic
Tapes to Andrews at a one-time cost of $15,000 to $20,000.
The Debtors will maintain a total of 4,000 boxes of employment,
payroll, safety, medical, workers' compensation, pension, labor
relations, and other similar records at their idled facilities,
and at the Technology Center. The Debtors will destroy the
Obsolete Records located at the idled facilities and the
Technology Center at a one-time cost of $20,000 to $40,000, and
will transfer to Andrews the remaining Necessary Records located
at the idled facilities and the Technology Center at a one-time
cost of $15,000 to $20,000.
Colliers International, the Debtors' real estate broker,
maintains 42 boxes of real estate records related to the idled
facilities. The idled facilities include:
(1) Pittsburgh Works;
(2) Aliquippa Tin Mill;
(3) Chicago Coke Plant; and
(4) LTV Steel Mining Company.
Neither the Debtors nor Colliers will destroy any real estate
records under the Records Retention and Destruction Policy, but
instead Colliers will continue to store the real estate records
at a nominal cost until the Debtors sell, or otherwise transfer
title to, any idled facility.
Records located at the Cleveland Works, Indiana Harbor Works,
Hennepin Plant, and Warren Coke Plant belong to International
Steel Group, Inc., under the terms of the APA between WLR
Acquisition Group and LTV Steel, the River Terminal Railway
Company, the Chicago Shirt Line Railway Company, and Cuyahoga
Valley Railway.
This Records Retention and Destruction Policy does not apply to
records maintained by the Debtor Copperweld Corporation or its
affiliates.
The Official Committees appointed in these cases and the
Debtors' postpetition lenders do not object, and support the
approval of this Stipulation.
The Debtors estimate that the first-year savings under this
Records Retention and Destruction Policy, due to reduced
transportation and storage costs, will be $44,000. The Debtors
further estimate that, after the first year, annual savings
under the Records Retention and Destruction Policy, due to
reduced storage costs, will be $144,000.
* * *
Convinced it is in the Debtors' best interests, the Court
approves the Stipulation. (LTV Bankruptcy News, Issue No. 38;
Bankruptcy Creditors' Service, Inc., 609/392-00900)
DebtTraders reports that LTV Corporation's 11.750% bonds due
2009 (LTVC09USR1) are trading between 0.5 and 1.5 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=LTVC09USR1
for real-time bond pricing.
MDC CORP: Will Host Conference Call for Q3 Results on October 30
----------------------------------------------------------------
MDC Corporation Inc. ("MDC") of Toronto will announce its third
quarter results on October 30th, 2002. On that day, MDC will
conduct a conference call with media and the investment
community to detail the company's financial performance.
The conference call will begin at 4:00pm EST, and will be
accessible by dialing 416-640-4127 or Toll Free 1-888-881-4892.
Please ask the operator for the "MDC Conference with Miles S.
Nadal". To ensure proper connection, it is advised to call ten
minutes prior to start time.
A recording of the conference call will be available until
November 6th, 2002, by dialing 416-640-1917 or 1-877-289-8525
(Code No. 217854), or by visiting the company's Web site at
http://www.mdccorp.com
MDC is a publicly traded international business services
organization with operating units in Canada, the United States,
United Kingdom and Australia. MDC provides marketing
communication services, through Maxxcom, and offers security
sensitive transaction products and services in four primary
areas: Personalized Transaction Products such as personal and
business cheques; Electronic Transaction Products such as
credit, debit, telephone & smart cards; Secure Ticketing
Products, such as airline, transit and event tickets, and
Stamps, both postal and excise. MDC shares are traded on the
Toronto Stock Exchange under the symbol MDZ.A and on NASDAQ
National Market under the symbol MDCA.
Maxxcom, a subsidiary of MDC Corporation, is a multi-national
business services company with operating units in Canada, the
United States and the United Kingdom. Maxxcom is built around
entrepreneurial partner firms that provide a comprehensive range
of communications services to clients in North America and the
United Kingdom. Services include; advertising, direct marketing,
database management, sales promotion, public relations, public
affairs, investor relations, marketing research and consulting,
corporate identity and branding, and interactive marketing.
Maxxcom shares are traded on the Toronto Stock Exchange under
the symbol MXX. reserved.
* * *
As previously reported in the May 31, 2002 issue of the Troubled
Company Reporter, Standard & Poor's revised its outlook on
marketing communication and secure transaction services provider
MDC Corp. Inc. to negative from stable following asset sales and
a shift in long-term strategy.
At the same time, the double-'B'-minus long-term corporate
credit rating and single-'B' subordinated debt rating on the
Toronto, Ontario-based company were affirmed. MDC has C$350
million of pro forma lease-adjusted debt outstanding.
MICRO COMPONENT: Sept. 28 Balance Sheet Upside-Down by $2.7 Mil.
----------------------------------------------------------------
Micro Component Technology, Inc., (Nasdaq:MCTIC) reported
results for its third quarter ended September 28, 2002. Net
sales for the quarter were $2.7 million, a decrease of 37.7%
from the quarter ended September 29, 2001 and 28.3% below net
sales of the prior quarter. Net loss for the quarter ended
September 28, 2002 was $2.5 million versus a net loss of $20.8
million in the prior year period. Excluding non-recurring and
restructuring charges in each quarter, net loss for the quarter
ended September 28, 2002 was $2.2 million as compared to a net
loss of $2.4 million in the prior year period, which as noted
above, was at a revenue level of 37.7% above the current
quarter.
At September 28, 2002, the Company recorded a total
shareholders' equity deficit of about $2.7 million.
MCT's President, Chairman and Chief Executive Officer, Roger E.
Gower, commented, "Although our revenue was lower than the
previous quarter, it continued to track closely to the industry
wide booking levels as recently reported by SEMI. More
importantly, the equipment shipped this quarter went to existing
customers while our bookings were dominated by new customers who
will be receiving our Solution Products in the fourth quarter of
2002. Further, a major customer has indicated to us that they
will be expending in excess of $2.0 million for our equipment
and others' complimentary products despite being in the midst of
one of the longest and deepest downturns in the semiconductor
capital equipment market. Given that this customer has no
current requirements for additional capacity, this decision
reflects the significant cost savings that can be achieved with
our products."
"Operationally, the significant cost improvement measures we
have implemented were very evident both in the gross margin and
expense levels experienced in the recent quarter of 2002 as
compared to the prior year quarter (without restructuring and
non-recurring charges included). Gross margins actually improved
on lower revenue while expenses were reduced by 18.4%. This type
of aggressive cost reduction will continue into the fourth
quarter of 2002 and the first quarter of 2003 as we complete our
manufacturing move to Malaysia and lower our overhead costs as a
result of our newly implemented ERP system. We will continue to
proactively pursue all possible actions relative to containing
costs and managing cash flows during this prolonged downturn."
"Lastly, we are committed to maintaining our leadership position
in strip handling and back end automation and are actively
developing several new and improved Solution Products. We firmly
believe that this provides MCT with an excellent platform for
revenue and earnings growth as the upturn occurs in the future"
concluded Gower.
Micro Component Technology, Inc., 2340 West County Road C, St.
Paul, MN 55113 U.S.A.
MCT is a leading manufacturer of test handling and automation
solutions satisfying the complete range of handling requirements
of the global semiconductor industry. MCT has recently
introduced several new products under its Smart Solutions line
of automation products, including Tapestry, SmartMark(TM), and
SmartSort(TM), designed to automate the back-end of the
semiconductor manufacturing process. MCT has the largest
installed IC test handler base of any manufacturer, with over
11,000 units worldwide. Headquartered in St. Paul, Minnesota,
the Company has sales and support offices worldwide. MCT is
traded on the Nasdaq SmallCap Market System under the symbol
MCTIC. For more information on the Company, visit its Web site
at http://www.mct.com
NORTEL NETWORKS: Declares Dividends on Series 5 Preferred Shares
----------------------------------------------------------------
The board of directors of Nortel Networks Limited declared a
dividend on the outstanding Cumulative Redeemable Class A
Preferred Shares Series 5 (TSX:NTL.PR.F), the amount of which
will be calculated by multiplying (a) the average prime rate of
Royal Bank of Canada and Toronto-Dominion Bank during November
2002 by (b) the applicable percentage for the dividend payable
for October 2002 as adjusted up or down by a maximum of 4
percentage points (subject to a maximum applicable percentage of
100 percent) based on the weighted average trading price of such
shares during November 2002, in each case as determined in
accordance with the terms and conditions attaching to such
shares. The dividend is payable on December 12, 2002 to
shareholders of record at the close of business on November 29,
2002.
The board of directors of Nortel Networks Limited also declared
a dividend on the outstanding Non-cumulative Redeemable Class A
Preferred Shares Series 7 (TSX:NTL.PR.G), in the amount of
Cdn$0.30625 per share. The dividend is payable on December 2,
2002 to shareholders of record at the close of business on
November 11, 2002.
Nortel Networks is an industry leader and innovator focused on
transforming how the world communicates and exchanges
information. The company is supplying its service provider and
enterprise customers with communications technology and
infrastructure to enable value-added IP data, voice and
multimedia services spanning Wireless Networks, Wireline
Networks, Enterprise Networks, and Optical Networks. As a global
company, Nortel Networks does business in more than 150
countries. More information about Nortel Networks can be found
on the Web at http://www.nortelnetworks.com.
* * *
As previously reported in the Troubled Company Reporter,
Nortel's revenues are falling and the rating agencies have
assigned their low-B ratings to Nortel's rated debt obligations.
NQL INC: Completes Sale of Delta Computec Assets to ViewCast.com
----------------------------------------------------------------
NQL Inc., (NQLIQ.pk) announced that NQL's wholly owned
subsidiary, Delta Computec Inc., completed the sale of
substantially all of the assets of Delta to a wholly owned
subsidiary of ViewCast.com, Inc., on October 11, 2002.
The United States Bankruptcy Court for the District of New
Jersey in NQL's bankruptcy case previously authorized NQL to
cause Delta to sell its assets to ViewCast. Delta has been a
provider of professional information technology and customized
network support services to Fortune 500 and Fortune 1000
corporations, mid-sized companies, hospitals, health care
facilities and financial institutions primarily in the
northeast.
Pursuant to the acquisition, substantially all of Delta's
assets, including operating assets, vendor and customer
contracts, property and customer lists, were transferred or
assigned to, and, together with certain of Delta's liabilities,
were assumed by, the ViewCast subsidiary. In consideration for
the acquisition of the Delta assets and the assumption of
Delta's liabilities, an aggregate of $500,000 was paid in cash
on the October 11, 2002 closing. In addition, subject to
adjustment as set forth in the Asset Purchase Agreement, an
additional $250,000 is payable six months after the closing and
a final $250,000 is payable twelve months after closing. The
ViewCast subsidiary also agreed to assume Delta liabilities in
the approximate aggregate amount of $2,562,000.
ViewCast also agreed to issue to Delta up to 150,000 shares of
ViewCast's Class D Preferred Stock, of which 95,500 shares were
issued at the closing. Subject to adjustment as set forth in the
Asset Purchase Agreement, the remaining 54,500 shares are
issuable in the future. For the purposes of the acquisition, the
Asset Purchase Agreement valued the 150,000 shares of ViewCast
Class D Preferred Stock at $10.00 per share, or $1,500,000. The
150,000 shares of the Class D Preferred Stock are convertible
into 1,000,000 common shares of ViewCast at $1.50 per share. The
ViewCast common stock is subject to a Registration Rights
Agreement whereby ViewCast has agreed to a registration of the
ViewCast common stock. The shares of common stock of ViewCast
are traded on the OTC Bulletin Board under the symbol VCST.
The Class D Preferred Stock is also required to be redeemed at
the stated value of $1,500,000, at the option of the holders of
that stock, at any time after the second anniversary of the
closing. ViewCast also has the right to redeem the 150,000
shares of Class D Preferred Stock at the stated value of
$1,500,000 at any time from and after the third anniversary date
of the closing, or prior to the third anniversary date of the
closing if the ViewCast common stock has traded at $3.75 per
share for a period of ten consecutive trading days.
NQL is a registered trademark of NQL Inc. Network Query
Language, NQL ContentAnywhere and all names of NQL Inc.'s other
services or products are trademarks of NQL Inc., in the U.S.,
and certain other countries.
NTL INCORPORATED: Gets Nod to Engage Ernst & Young as Auditors
--------------------------------------------------------------
NTL Incorporated and its debtor-affiliates sought and obtained
approval from the U.S. Bankruptcy Court for the Southern
District of New York to hire Ernst & Young as auditors and tax
service providers, nunc pro tunc to May 8, 2002.
In connection with NTL's chapter 11 cases, E&Y will provide:
a) audits and reviews examinations of the financial
statements of NTL as required;
b) analyzes accounting issues and advised NTL's management
regarding the proper accounting treatment of events;
c) assistance in the preparation and filing of NTL's
financial statements and disclosure documents required
by the Securities and Exchange Commission;
d) advice to NTL's management on the preparation of various
aspects of NTL's Disclosure Statement including, but not
limited to, the application of fresh start accounting in
accordance with AICPA Statement of Position 90-7;
e) other audit-related services for NTL as necessary;
f) advice and assistance regarding tax planning issues,
including, but not limited to, assistance in estimating
net operating loss carryforwards, international taxes,
and state and local taxes;
g) assistance regarding transaction taxes, state and local
sales and use taxes;
h) assistance and advice on tax issues in NTL's bankruptcy
restructuring objectives and post-bankruptcy operations;
and
i) consulting, advice, research, planning, and analysis of
tax issues as requested.
E&Y's hourly rates are:
May 8, 2002 - July 1, 2002 -
June 30, 2002 June 30, 2003
------------- --------------
Partners and Principals EUR575 - EUR630 EUR360 - EUR750
Senior Manager EUR450 - EUR550 EUR475 - EUR575
Manager EUR300 - EUR400 EUR325 - EUR425
Junior EUR130 - EUR250 EUR120 - EUR200
NTL is the largest cable television operator and a leading
provider of business and broadcast services in the UK, and the
owner of 100% of Cablecom in Switzerland and Cablelink in
Ireland. Kayalyn A. Marafioti, Esq., Jay M. Goffman, Esq., and
Lawrence V. Gelber, Esq., at Skadden, Arps, Slate, Meagher &
Flom LLP represent the Debtors in their U.S. Bankruptcy
proceedings and Jeremy M. Walsh, Esq. at Travers Smith
Braithwaite serves as U.K. Counsel. At December 31, 2001, the
Company's books and records reflected, on a GAAP basis,
$16,834,200,000 in total assets and $23,377,600,000 in
liabilities.
OWENS CORNING: Sues Shareholders to Recover Dividend Payments
-------------------------------------------------------------
J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington,
Delaware, tells the U.S, Bankruptcy Court for the District of
Delaware that from June 1996 until the Petition Date, Owens
Corning declared quarterly dividends on its common stock on 16
separate occasions, paying out over $61,000,000 in dividends to
shareholders of Owens Corning's common stock. Each shareholder,
continuously holding Owens Corning common stock since 1996, has
been paid a total of $1.15 per share in dividends. The
dividends were paid to the 55,000,000 outstanding shares of
Owens Corning common stock.
On July 29, 2002, Ms. Stickles recounts that the Court issued an
opinion in Official Committee of Asbestos Personal Injury
Claimants v. Sealed Air Corporation (In re: W.R. Grace & Co.),
2002 Bankr. LEXIS 766 (Bankr. D. De., July 29, 2002) (Wolin,
U.S.D.J.), that provided guidelines for determining the
insolvency of an entity facing asbestos-related tort liability.
Given the latency periods inherent in the continuing development
of asbestos-related injuries, Ms. Stickles says, the Grace
opinion makes clear that entities subject to these claims may
have been insolvent far earlier than previously understood and
earlier than the entities themselves reasonably believed.
Applying the holding and rationale set out in Grace, Ms.
Stickles asserts that the Debtors were insolvent at the time of,
or was rendered insolvent by, or had unreasonably small assets
or capital in relation to its business or the transaction at the
time or as a result of, the declaration and payment of each of
the dividends.
The Shareholders include:
Dividends
Stockholder Received
----------------------------------- -----------
Sanford C. Bernstein & Co. LLC $5,877,918
Cede & Company 52,739,255
Franklin Advisers Inc. 5,263,506
Fidelity Management & Research 4,822,865
MSDW Advisors, Inc. 3,402,934
Wellington Management Co. LLP 2,476,951
Fayez Sarofim & Company 1,845,100
Barclays Bank PLC 1,711,261
Grantham Mayo Van Otterloo & Co. 1,228,001
Prudential Insurance Company Of America 1,062,211
J. P. Morgan Investment Management Inc. 1,031,768
State Street Bank And Trust Company 987,439
Taunus Corporation 907,533
Vanguard Group 905,384
College Retirement Equities Fund 804,647
Mellon Private Asset Management 621,601
Schafer Capital Management Inc. 586,539
Bear Stearns & Co. Inc. 562,952
Cambiar Investors Inc. 558,536
Suffolk Capital Management LLC 468,795
Montana Board Of Investments 357,099
Croft-Leominster Inc. 340,677
T. Rowe Price Associates Inc. 304,449
Merrill Lynch & Company Inc. 293,531
N.Y. State Teachers Retirement System 292,320
Nicholas Applegate Capital Management 265,754
New York State Common Retirement 264,476
Florida State Board Of Administration 259,574
Great Lakes Advisors Inc. 257,134
Frank Russell Capital Inc. 244,011
Massachusetts Mutual Life Insurance Co. 233,310
Bank Of America Corporation 223,283
Glickenhaus & Company 219,289
King Investment Advisors Inc. 215,583
Teacher Retirement System Of Texas 214,168
Numeric Investors LP 197,309
American Century Companies 196,440
Merrill Lynch Balance Capital Fund 196,166
Strong Capital Management Inc. 176,545
Chubb Corporation 174,993
Northern Trust Company 159,878
California Public Employees Retirement System 159,855
Boone County National Bank 153,802
SIT Investment Associates Inc. 150,144
California State Teachers Retirement System 147,601
Oppenheimer Fund Inc. 146,700
Haven Capital Management Inc. 137,235
State Of Wisconsin Investment Board 136,550
LSV Asset Management 127,910
Gruss & Co. Inc. 127,125
AXA Financial Inc. 126,158
Reams Asset Management Company LLC 120,071
Virginia Retirement System 118,805
Aeltus Investment Management 112,035
Schafer Cullen Capital Management Inc. 107,417
Fleet Boston Corporation 104,977
University Of Pennsylvania Retirement 104,550
Ivan Radman 103,221
According to Ms. Stickles, the Debtors bring this action against
each of the named Defendants and as a class action against the
named Defendants and all other shareholders or beneficial owners
similarly situated who received at least $100,000 in total
dividends paid by Owens Corning to the shareholder or beneficial
owner from 1996 through the Petition Date. There have been more
than 6,000 persons or entities that have held legal and
beneficial title to Owens Corning's common stock during the
period 1996 through the Petition Date. However, Owens Corning
does not know the identity of many of these persons.
Of the 55,000,000 outstanding shares of Owens Corning common
stock on which dividends were paid from 1996 through the
Petition Date:
-- 50,000,000 shares were recorded on Owens Corning's books
in the name of Cede & Co., which held record title to the
shares on behalf of brokerages and other financial or
securities-related institutions, which in turn held such
shares for their own interests or on behalf of other legal
or beneficial owners of Owens Corning common stock; and
-- the legal or beneficial title to an unknown number of such
shares was held in "street name" by brokerages and other
financial or securities-related institutions on their own
behalf or for the benefit of customers, to whom the Owens
Corning dividends were ultimately paid.
Owens Corning does not know the number or identity of:
-- the persons who are beneficial owners of Owens Corning
common stock for which Cede & Co. has held record title;
and
-- all such brokerages and other financial or securities-
related institutions; the number of shares held by each
throughout the relevant time period; the identity or
number of customers who received Owens Corning dividends
through these institutions during the relevant time
period; or the amounts of such dividends.
For these and other reasons, the Defendant Class is so numerous
that joinder is impracticable.
Questions of law and fact common to the members of the class
predominate over questions, if any, which may affect individual
members only, because Owens Corning acted on grounds applicable
to all recipients in the declaration and payment of dividends
during the period 1996 through the Petition Date. Among the
questions of law and fact common to all members of the class
are:
a. whether Owens Corning was insolvent at the time of, or
rendered insolvent by, or had unreasonably small assets or
capital in relation to its business or the transaction at
the time or as a result of, the declaration and payment of
one or more dividends during the period 1996 through the
Petition Date; and
b. whether Owens Corning received any value, reasonably
equivalent value or fair consideration in exchange for the
dividends declared and paid during the period 1996 through
the Petition Date.
Owens Corning's claims against Sanford C. Bernstein & Co. LLC
are typical of the claims against the class as a whole, because
Sanford C. Bernstein & Co. LLC is an entity that held legal or
beneficial ownership of 7,000,000 Owens Corning common shares,
and received $5,877,918.00 in dividends, during the period 1996
through the Petition Date.
The interests and defenses of Sanford C. Bernstein & Co. LLC are
coincident with, and not antagonistic to, those of the class as
a whole. It is anticipated that Sanford C. Bernstein & Co. LLC
will fairly and adequately represent the interests of the class
as a whole.
Ms. Stickles contends that this class action is maintainable
pursuant to:
-- Rule 23(b)(1)(A) of the Federal Rules of Civil Procedure
in that separate actions against each of the individual
defendants and the defenses asserted by each defendant
risk inconsistent or varying adjudications establishing
incompatible standards of conduct and results for Owens
Corning;
-- Rule 23(b)(1)(B) in that separate actions against each of
the individual defendants and the defenses asserted by
each would, as a practical matter, be dispositive of the
interests of other members who are not parties or
substantially impair or impede their ability to protect
their interests; and
-- Rule 23(b)(3) because the questions of law and fact common
to the members of the class predominate over any questions
affecting only individual members, and because class
action treatment is superior to other available methods of
fair and efficient adjudication of the controversy.
Ms. Stickles asserts that the dividends declared and paid
between June 1996 and the Petition Date:
-- constitute avoidable fraudulent transfers and should be
avoided pursuant to Section 548 of the Bankruptcy Code.
-- are voidable as fraudulent transfers by Owens Corning,
among others, and should be avoided, pursuant to Section
544 of the Bankruptcy Code and applicable state law,
including but not limited to the Uniform Fraudulent
Conveyance Act and the Uniform Fraudulent Transfer Act as
adopted by the relevant states.
Furthermore, pursuant to Section 550 of the Bankruptcy Code,
Owens Corning is entitled to recover from each of the Defendants
the dividend payments.
Accordingly, the Debtors ask Judge Fitzgerald to certify this
action as a class action and designate Sanford C. Bernstein &
Co. LLC as representative of the Defendant Class.
Owens Corning further asks the Court to:
-- find that the dividends declared and paid by Owens
Corning to the Defendants from June 1996 to the Petition
Date are voidable as fraudulent transfers;
-- order that Defendants repay to Owens Corning the dividends
received by each of the Defendants from June 1996 through
the Petition Date, together with interest thereon; and
-- award Plaintiff, if and as appropriate, its attorneys fees
and the costs of this action. (Owens Corning Bankruptcy
News, Issue No. 39; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
DebtTraders reports that Owens Corning's 7.700% bonds due 2008
(OWC08USR1) are trading between 30 and 35. See
http://www.debttraders.com/price.cfm?dt_sec_ticker=OWC08USR1for
real-time bond pricing.
PANACO: Obtains Court Authority to Hire Deloitte & Touche
---------------------------------------------------------
Panaco, Inc., sought and obtained authority from the U.S.
Bankruptcy Court for the Southern District of Texas to retain
Deloitte & Touche LLP to serve as accountants, reorganization
consultants, and financial advisors in matters related to the
Debtor's reorganization efforts.
The Debtor believes that the size of their operations and the
complexity of their attendant financial difficulties required
them to employ an accountant, reorganization consultant, and
financial advisor to assist them in gathering and analyzing
financial information and to perform other services.
Deloitte & Touche is expected to:
a) assist the Debtor in connection with its identification,
development, and implementation of strategies related to
the Debtor's business plan and other matters, as agreed to
by Deloitte & Touche, relating to the restructuring of the
Debtor's business operations;
b) review the Statement of Financial Affairs and Supporting
Schedules that will be filed by the Debtor on or before
August 9, 2002;
c) assist the Debtor in understanding the business and
financial impact of various operational, financial, and
strategic restructuring alternatives;
d) assist the Debtor in their negotiations and due diligence
efforts with other parties-in-interest;
e) assist the Debtor in their financial restructuring process,
including the development of plans of reorganization and
related disclosure statements;
f) assist the Debtor in their preparation of appropriate
contingency plans to reflect the impact of restructuring
alternatives, and assist the Debtor in their revision of
relevant cash flow projections and business plans;
g) provide advice and recommendations designed to assist the
Debtor in the refinement of their cash management and cash
flow forecasting process, including the monitoring of
actual cash flow versus projections;
h) assist management of the Debtor with its development and
execution of other restructuring-related activities (e.g.,
development of standardized external reporting package,
development of communications plans, and interface with
other constituencies);
i) assist the Debtor in preparing various financial reports
for submission to the applicable Court, including the
Debtor's monthly operating reports, Statement of Financial
Affairs and Supporting Schedules and, as agreed to by
Deloitte & Touche, such other reports that may be requested
by parties-in-interest;
j) assist the Debtor in their assessment of executory
contracts, including assume versus reject considerations;
k) assist management of the Debtor with its development and
execution of operationally oriented improvement
opportunities;
l) assist the Debtor in evaluating and reconciling claims
asserted, including potential reclamation claims;
m) attend and participate in hearings and meetings on matters
within the scope of the services to be performed;
n) provide advice concerning employee retention and
compensation issues and plans; and
o) provide advice and recommendations with respect to other
related matters as the Debtor or their professionals may
request from time to time and agreed to by Deloitte &
Touche.
Deloitte & Touche's hourly rates range from:
partners, principals and directors $350 to $620
senior managers $275 to $500
managers $240 to $450
senior associates $185 to $350
associates, analysts and staff $140 to $275
paraprofessionals $75 to $125
The Deloitte engagement team will be led by:
Mr. John Tittle Partner $385 per hour
Mr. Joe Wilkinson Managing Director $395 per hour
Mr. Campbell Griffin Senior Manager $350 per hour
Panaco, Inc. is in the business of selling oil and natural gas
produced on properties it leases to third party purchasers. The
Company filed for chapter 11 protection on July 16, 2002. Monica
Susan Blacker, Esq. at Neligan Stricklin LLP represents the
Debtor in its restructuring efforts. When the Debtor filed for
protection from its creditors, it listed $130,189,000 in assets
and $170,245,000 in debts.
PHOSPHATE RESOURCES: Sept. 30 Partners' Deficit Widens to $341MM
----------------------------------------------------------------
Phosphate Resource Partners Limited Partnership (NYSE: PLP)
reported a loss of $0.7 million for the third quarter ended
September 30, 2002, compared to a loss of $18.8 million,
excluding special charges, in the year-ago quarter. Including a
special charge of $2.7 million, 2001 third quarter results were
a loss of $21.5 million.
At September 30, 2002, the Company's balance sheets show a
Partners' deficit of about $341 million.
The improved third quarter results were impacted by IMC
Phosphates Company's higher diammonium phosphate prices, a
favorable price adjustment related to prior periods and lower
idle plant costs, partially offset by significantly higher
sulphur raw material prices and increased costs from a sulphur
supply shortage in July. A decline in PLP's interest expense to
$7.7 million from $8.4 million a year ago also favorably
impacted results.
PLP also said it will not make a cash distribution for the
quarter ended September 30, 2002. As referred to in the PLP
Form 10-K for the year ended December 31, 2001, PLP anticipates
that for the foreseeable future cash will be used to reduce
outstanding debt with IMC Global Inc. (NYSE: IGL), the 51.6
percent owner and administrative managing general partner of
PLP. As a result, no PLP cash distributions are planned in the
foreseeable future. IMC Phosphates is a joint venture
partnership between PLP, which has a 41.5 percent ownership, and
IMC Global.
PLP's equity in the earnings of IMC Phosphates for the third
quarter was $9.5 million versus a share in the losses of IMC
Phosphates of $7.3 million, excluding special charges, in the
prior year period. Including special charges, PLP's share in
the losses of IMC Phosphates in the third quarter of 2001 was
$10.0 million.
IMC Phosphates' average price realization for DAP in the current
quarter of $145 per short ton, the highest quarterly level in
three years, improved $26 versus last year and $10 from the
second quarter. The $145 average price represented the fourth
consecutive sequential quarterly increase, providing further
evidence of the early stages of a recovery from bottom-of-the-
cycle conditions a year ago.
Total concentrated phosphate shipments of 1.4 million short tons
increased 15 percent versus the year-ago level of 1.3 million
short tons as IMC Phosphates reduced idle capacity to meet
improved global demand. Domestic volumes improved 32 percent
while export shipments rose 5 percent due to higher Chinese
volumes. Despite inflationary pressures, rock production costs
in the quarter improved versus prior year and sequentially from
the second quarter of 2002. Approximately 30 percent of IMC
Phosphates' Louisiana concentrated phosphate output continued to
be idled to balance supply and current market demand, an
operating rate projected to be maintained well into 2003.
For the nine months of 2002, PLP reported a loss of $14.8
million, compared to a loss, excluding special charges, of $45.4
million a year earlier. Including special charges of $4.9
million for severance and related costs, 2001 nine month results
were a loss of $50.3 million. The improvement was driven by
higher phosphate prices and reduced idle plant costs, partially
offset by increased operating costs. Phosphate shipments
improved 14 percent in the nine months as both export and
domestic volumes increased. The average DAP price per short ton
of $138 per short ton rose 5 percent from $131 in the prior
year.
"The third quarter continued to support industry consultants'
forecasts that global phosphate market fundamentals are in the
early stages of a multi-year recovery," said Douglas A. Pertz,
Chairman and Chief Executive Officer of IMC Global. "IMC
Phosphates showed significant sequential and year-over-year
improvement, primarily from the average DAP selling price that
reached its highest quarterly level in three years. Prices and
volumes strengthened considerably in both export and domestic
markets.
"We still expect improved second half IMC Phosphates prices
versus the first half and certainly compared to the prior year,
although not nearly as much as originally anticipated," Pertz
added. "As we saw briefly last spring, DAP prices to date in
the fourth quarter are reflecting an expected seasonal softness
due to an anticipated thin export demand period, as well as the
dampening effect of a competitor's announcement of its
resumption of idled DAP production coupled with an unexpected
inventory liquidation by Farmland-Hydro ahead of its planned
Florida phosphate plant sale.
"While current fourth quarter pricing is being temporarily
impacted by these events, we expect pricing to firm again later
this year," Pertz said. "PhosChem is sold out of DAP/MAP for the
rest of the year. Strong PhosChem and other U.S. shipments to
China resume in November and December, while U.S. industry
inventories remain very low and increased domestic fall demand
is anticipated. Increased Chinese DAP imports have materialized
as projected, and it appears certain that China will import at
least 4 million metric tons in 2002, if not more, versus
slightly over 3 million tons in 2001."
Pertz said phosphate market conditions appear poised for further
improvement in 2003, in line with previous long-term forecasts.
As supply gradually becomes more closely balanced with demand,
operating rates will improve and pricing should build upon its
strong gains in 2002. He added that PhosChem and overall U.S.
DAP/MAP exports should grow again in 2003, led by solid Chinese
demand, and the resumption of a competitor's idled DAP
production in the first quarter should be absorbed by the global
market.
Prospects for a strong rebound in North American fertilizer
consumption are much brighter given higher grain prices, lower
corn and wheat ending stocks, and a likely increase in planted
corn and wheat acreage, the two leading fertilizer-intensive
crops. Pertz noted that U.S. corn ending stocks may fall to the
second lowest level in nearly four decades at under 8 percent of
total use, with global corn stocks expected to decline to the
lowest level in more than 25 years. The total world grain
stocks-to-use ratio of below 20 percent also is now at a 25-year
low, as grain consumption is exceeding production in 2002 for
the fourth consecutive year.
"All in all, much tighter domestic and global grain markets,
including higher crop prices, are providing a very firm backdrop
for stronger domestic and international fertilizer demand over
the next several years," Pertz said.
PLP is engaged in the production and sale of phosphate crop
nutrients and animal feed ingredients. For more information,
visit the PLP Web site at http://www.phosplp.com
PINNACLE TOWERS: Securities Claim Bar Date Set for Dec. 13, 2002
----------------------------------------------------------------
Pursuant to an Order of the U.S. Bankruptcy Court for the
Southern District of New York, all holders of Securities Claims
against Pinnacle Towers III Inc., and its debtor-affiliates, are
required to file their proofs of claims on or before
December 13, 2002 or be forever barred from asserting their
claims.
The Honorable Burton R. Lifland directs that Proofs of Claims
need not be filed on account of:
(i) Claims for which a proof of claim has already been
properly filed with the Court; and
(ii) Claims previously allowed by Order of the Court.
Proofs of Claim must received before 5:00 p.m. on the Dec. 13
and addressed to:
U.S. Bankruptcy Court
Southern District of New York
Re: Pinnacle Towers III, Inc., et al.
P.O. Box 106, Bowling Green Station
New York, NY 10274
Pinnacle Towers III, Inc., the leading independent providers of
wireless communications site space in the United States, filed
for chapter 11 protection on May 21, 2002. Peter Alan Zisser,
Esq., and Sandra E. Mayerson, Esq., at Holland & Knight, LLP
represent the Debtors in their restructuring efforts. As of May
31, 2002, the Debtors listed $1,002,675,000 in assets and
$931,899,000 in liabilities.
PRECISION AUTO: Renegotiating Terms of Senior Debt Facility
-----------------------------------------------------------
Precision Auto Care, Inc., (OTC Bulletin Board: PACI) announced
for the fiscal year ending June 30, 2002, a loss of $7.7 million
on revenues of $20.6 million, compared with a loss of $18.9
million on revenues of $23.1 million, for the prior year. For
the quarter ending June 30, 2002, the Company incurred a loss of
$128,000 on revenues of $5.2 million, compared to a loss of
$13.3 million on revenues of $5.6 million for the comparable
quarter in 2001.
The Company's CEO, Louis M. Brown, Jr., stated, "Although the
bottom line was still negative, we are pleased that we are
reducing the operating losses and especially pleased about the
fourth quarter results. We were able to resolve and settle a
previously reported judgment against the Company without having
to spend money out of pocket. This was a huge plus given our
cash situation. In FY03, the Company will turn its focus to
strategies that will make the company grow profitably both
domestically and internationally in the franchise arena."
Robert Falconi, the Company's CFO stated, "The Company is
currently renegotiating the terms of its Senior Debt and is
confident that a deal can be struck that will significantly
reduce future interest expense and will be a major step forward
towards profitability. In FY03, cash flow will still be very
tight as we try to liquidate obligations from the past and at
the same time increase sales and reduce operating costs."
Although the Company has negotiated extensions of Senior Debt,
in the event that the Company is unable to consummate the
renegotiation of its Senior Debt, accomplish its strategic
objectives or is otherwise unable to generate revenues
sufficient to cover operating expenses and pay other debt, the
Company would not be able to sustain operations at the current
level. This would require the Company to further reduce expenses
and liquidate certain assets.
Precision Auto Care, Inc.'s affiliate, Precision Franchising
LLC, is one of the world's largest franchisor of auto care
centers, with 444 operating centers as of June 30, 2002. The
Company franchises and operates Precision Tune Auto Care centers
around the world.
PROVIDIAN FIN'L: Luzuriaga & Truelove Join Board of Directors
-------------------------------------------------------------
Providian Financial Corporation (NYSE: PVN) announced the
addition of Francesca Ruiz de Luzuriaga and Jane A. Truelove to
its Board of Directors.
Ms. de Luzuriaga, currently a business development consultant in
southern California, previously spent eighteen years working for
Mattel, Incorporated, including serving in a variety of senior
management positions, including Controller, Chief Financial
Officer and, from 1999 to 2000, Chief Operating Officer of
Mattel Interactive. Prior to her tenure with Mattel, de
Luzuriaga spent four years with the Xerox Corporation. Ms. de
Luzuriaga also currently serves as a member of the board at
Boise Cascade Corporation.
Ms. Truelove currently serves as the Development Chair of the
Board of Governors for New Hampshire Public Television. From
July 2001 until July 2002, she was the Chair of the Board of
Governors. Previous to that, Ms. Truelove held senior positions
for financial companies, including from 1990-1999 for FMR
Corporation (Senior Vice President and Regional General Manager
for Fidelity Investments), and spent seven years at the Bank of
New England (Senior Vice President of Corporate Training and
Compensation). She has also held positions at Union Carbide
Corporation, Yale University, Manus Associates, and Cole
Surveys, Inc., a subsidiary of Wyatt Co.
"I'm extremely pleased that these two prominent individuals are
joining our board. I believe it's a further reflection of the
progress we are making to build the new Providian," said
Providian Chairman and CEO Joseph Saunders."
Mr. Saunders also announced that Leonard Schaeffer is stepping
down from the Providian Board. "On behalf of the Board, I want
to thank Mr. Schaeffer for his leadership -- especially during
our restructuring," said Saunders.
San Francisco-based Providian Financial is a leading provider of
credit cards and deposit products to customers throughout the
U.S. By combining experience, analysis, technology and
outstanding customer service, Providian seeks to build long-
lasting relationships with its customers by providing products
and services that meet their evolving financial needs. One of
America's largest bankcard issuers, Providian has approximately
$20 billion in managed receivables and 13 million customer
accounts.
* * *
As reported in Troubled Company Reporter's May 27, 2002 edition,
Fitch Ratings lowered the senior debt rating of Providian
Financial Corp., to 'B' from 'B+' and senior debt rating of
Providian National Bank to 'B+' from 'BB-.' The ratings remain
on Rating Watch Negative where they were placed on December 20,
2001.
Fitch's downgrade of Providian's ratings primarily reflects
heightened concerns regarding performance of the Providian
Gateway Master Trust, where excess spread levels have fallen
over the past few months. The decline in excess spread has been
driven by a sharp rise in net chargeoffs of these assets. The
increase in loss rates reflects weakness in the economy that
began in 2001, limitations in growth, but it is also indicative
of the high-risk nature of Providian's customer base, a high
percentage of which would be considered subprime under bank
regulatory definitions.
RELIANCE: Asking for Exclusivity Extension Until March 4, 2003
--------------------------------------------------------------
Reliance Group Holdings, Inc. and Reliance Financial Services
ask the U.S. Bankruptcy Court for the Southern District of New
York's Judge Arthur Gonzalez to extend their exclusive periods
to file a plan of reorganization until March 4, 2003 and to
solicit acceptances of that plan through May 6, 2003.
Steven R. Gross, Esq., at Debevoise & Plimpton, reminds the
Court that the Debtors are confronted with several obstacles.
First, there is the ongoing and various disputes with the
Pennsylvania Insurance Department. This stop-and-go litigation
has consumed considerable resources of the estate. The Debtors
have spent much time responding to the Department's barrage of
litigation, they have had little time to engage in meaningful
discussions with its Committees and other interested parties.
Second, the Debtors recently concluded serious negotiations with
the Internal Revenue Service. The Debtors were able to settle
its multi-year issues with the IRS. With over $400,000,000 at
stake, it was an important matter to the estate and occupied
significant time for all involved.
Last, Carl Icahn has been a thorn in the Debtors' side. Mr.
Icahn has attempted to appear patient and accommodating. But in
truth, Mr. Gross says, Mr. Icahn has proven to be disruptive and
inflexible. "Considering his large stake in the Debtors'
restructuring, Mr. Icahn's positions and views have to be taken
seriously," Mr. Gross explains. However, Mr. Gross notes that
this posture has not provided the Debtors with much progress
towards a plan of reorganization. "Now, I understand why Mr.
Icahn's investment vehicle is named High River: the Debtors have
to pull up their pant cuffs to wade through all the fodder Mr.
Icahn has provided," Mr. Gross remarks.
Mr. Gross tells Judge Gonzalez that the Debtors are in a very
crucial phase of negotiations with the two Committees and other
parties-in-interest. Only now have the Debtors been given
sufficient breathing room to engage in good-faith negotiations
with a realistic chance of consensus. Indeed, the Debtors
believe that they have reached agreement on several issues that
previously were contentious. To derail this progress now would
jeopardize the first chance the Debtors have truly had to
formulate a plan of reorganization. Mr. Gross notes that
although this is the Debtor's fifth request for extension, it is
really the first request where the negotiations had reached a
critical mass and an opportunity to emerge from Chapter 11 is
within grasp.
Mr. Gross assures the Court that the requests for exclusive
period extensions are not negotiating tactics or meant to
prejudice creditors. The Debtors have engaged in good faith
negotiations from the start, but have simply been hamstrung by
extraneous issues. In this environment, genuine negotiation was
impossible. "That period is now past and the Debtors look
forward to achieving further consensus and articulating a plan
of reorganization," Mr. Gross says. (Reliance Bankruptcy News,
Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900)
RUSSELL CORP: Posts Improved Performance for Third Quarter 2002
---------------------------------------------------------------
Russell Corporation (NYSE: RML) announced double-digit sales and
EPS growth in its fiscal 2002 third quarter results. For the
quarter, the Company had earnings of $.72 per share, which
included an after-tax charge of $3.1 million, or $.10 per share,
related to increasing the Kmart bad debt reserve to 90% on its
pre-chapter 11 accounts receivable balance. Excluding this
charge, earnings would have been $.82 per share for the quarter.
"With the ongoing success of our Six-Point Profit Growth Plan,
the 2002 third quarter results exceeded last year's sales by 10%
and surpassed last year's EPS by 29%, before 2001 restructuring
charges," said Jack Ward, chairman and chief executive officer.
"Our business building and cost saving efforts have been key
elements in improving our financial results. Additionally, our
inventories are $99.4 million, or 23%, lower than this time last
year. More efficient manufacturing and lower cost sourcing have
also led to an improvement of 360 basis points, or 3.6
percentage points, in our third quarter ongoing gross margin."
Sales for the 2002 third quarter were up $35.7 million to $387.0
million, a 10% increase over last year's third quarter sales of
$351.3 million. The increase in sales was primarily driven by
new and expanded fall programs such as a national expansion of
men's and boys' fleece at JCPenney and a national men's fleece
program at Sam's Club. Other new and expanded programs include
Vintage Varsity(TM) by Russell Athletic(R), the rollout of no-
show socks, a broadened product offering for Mossy Oak(R), the
introduction of Discus(R) at Sears, and women's fleece at
Kohl's.
EBITDA, defined as net income before interest, taxes,
depreciation and amortization, for the 2002 third quarter was
$55.3 million versus a loss of $5.3 million in the comparable
period last year. Excluding restructuring charges, EBITDA in
the 2001 third quarter was $48.5 million.
Net income for the 2002 third quarter was $23.4 million versus a
net loss of $15.4 million in the comparable period last year.
Excluding the 2001 restructuring charges, net income in the 2002
third quarter was up 30% to $23.4 million from $18.0 million in
the 2001 third quarter.
Year-to-date Results
For the nine months ended September 29, 2002, sales were up $9.7
million to $855.9 million, a 1% increase over the prior year's
sales of $846.2 million. For the first nine months of fiscal
2002, net income was $19.8 million versus a net loss of $24.7
million in the comparable period last year.
Excluding the extraordinary charge associated with the early
retirement of debt in the 2002 second quarter and the 2001
restructuring charges, net income for the first nine months of
fiscal 2002 was $32.5 million versus $26.8 million in the
comparable nine month period of fiscal 2001. Excluding the
extraordinary charge associated with the early retirement of
debt in the 2002 second quarter and the charge related to
increasing the bad debt reserve on its pre-chapter 11 accounts
receivable balance for Kmart in the 2002 third quarter, earnings
would have been $1.10 per share for the first nine months of
fiscal 2002.
Outlook
For the 2002 fiscal year, the Company projects sales to be in
the range of $1.180 billion to $1.190 billion as compared to
$1.160 billion in 2001. Excluding the extraordinary charge for
the early retirement of debt and the charge related to
increasing the bad debt reserve on its pre-chapter 11 accounts
receivable balance for Kmart, the Company anticipates EBITDA to
be in the range of $152 million to $156 million and earnings of
$1.52 to $1.56 per share for the full year.
"For the 2002 fourth quarter, we are forecasting sales to be up
3% to 6% due to the strength of our new fall programs," said
Ward. "We anticipate that our fourth quarter earnings will be
in the range of $0.42 to $0.46 per share."
"As we look ahead to next year, we are approaching our business
with conservatism given the current economic environment and the
uncertainty in consumer spending," added Ward. "For the 2003
fiscal year, we are preliminarily forecasting sales to be in the
range of $1.210 to $1.230 billion, EBITDA to be in the range of
$160 to $180 million and earnings of $1.60 to $1.80 per share."
Russell Corporation is a leading branded apparel company
marketing activewear, casualwear and athletic uniforms under
widely-recognized brands, including: Russell Athletic(R),
JERZEES(R), Mossy Oak(R), Cross Creek(R), Discus(R) and Moving
Comfort(R). The Company's common stock is listed on the New
York Stock Exchange under the symbol RML and its Web site
address is at http://www.russellcorp.com
* * *
As reported in Troubled Company Reporter's April 4, 2002
edition, Standard & Poor's assigned a corporate credit rating of
'BB+' to apparel manufacturer Russell Corp. It also assigned
ratings to the company's proposed $375 million senior secured
credit facility and proposed $200 million senior unsecured note
issue at 'BB+' and 'BB' respectively.
The ratings reflect Atlanta, Georgia-based Russell's
participation in the highly competitive and volatile apparel
industry, which is subject to changing consumer preferences and
a consolidating retailer base. Somewhat mitigating these factors
are the company's well known brand name, its strong market
position, and its moderate financial profile.
RUSSIAN TEA ROOM: Secures Court Nod to Use Cash Collateral
----------------------------------------------------------
The U.S. Bankruptcy Court for the Southern District of New York
gave authority to Russian Tea Room Realty LLC to use JP Morgan's
Cash Collateral.
As of the Petition Date, the Debtors are indebted to JPMorgan
Chase:
i) with respect to the Building Loan, $11,799,000 in
principal, and $85,714 in interest; and
ii) with respect to the Equipment Loan, $619,040 in
principal, and $3,052 in interest.
JPMorgan Chase has a perfected, senior secured interest in all
Cash Collateral in accordance with the Loan Documents -- to the
extent that the Debtors assert JPMorgan Chase is oversecured.
The Court determined that an immediate need exists for the
Debtors to use cash collateral to pay for the actual and
necessary expenses to maintain and preserve the estates.
The cash collateral that the RTRR Debtor seeks to use is
essentially comprised of cash on hand at the Petition Date and
proceeds derived from collections on the Debtors' accounts
receivable.
The Court allows the Debtors to utilize Cash Collateral in
accordance with a Budget detailing these maintenance and other
expenses for the next six months:
Expense Item
------------
Security $ 8,736
Gas 867
Electric 8,667
Water 867
Repairs & Maintenance 8,017
Liability Insurance 31,398
Property Insurance 64,819
Sales Taxes due 8/20/02 47,764
--------
Total $171,135
The Debtor is a Delaware limited liability company, the owner of
the Russian Tea Room, one of New York City's most famous and
distinguished restaurants. As of the Petition Date, the Debtor
believes that its aggregate unsecured debt - comprised mostly of
trade debt, banquet deposits, and unsecured loans - is
approximately $6,000,000. Jordan A. Kro, Esq., and Thomas J.
Salerno, Esq., at Squire, Sanders & Dempsey LLP represent the
Debtors in their restructuring efforts.
SAFETY-KLEEN: Unsecureds Seek Clarification After Cybergenics
-------------------------------------------------------------
The Official Committee of Unsecured Creditors in the Chapter 11
cases of Safety-Kleen Corp. and its debtor-affiliates,
represented by Luc A. Despins, Esq., Susheel Kirpalani, Esq.,
and James C. Teece, Esq., at Milbank Tweed Hadley & McCloy LLP,
and Robert J. Dehney, Esq., Gregory W. Werkheiser, Esq., and
Donna L. Harris, Esq., at Morris Nichols Arsht & Tunnell, seeks
limited relief from the Debtors' prior DIP financing order to
clarify its binding effect on successors to the debtors-in-
possession, in light of the holding of the Court of Appeals for
the Third Circuit in Cybergenics.
Just as Safety-Kleen has begun to show prospects for emergence
from Chapter 11, the creditors represented by the Committee find
themselves faced with a sudden turn of events. The Court of
Appeals for the Third Circuit unexpectedly ruled that unsecured
creditors' committees cannot be authorized by bankruptcy courts
as the proper plaintiff to challenge claims of secured
creditors. In Cybergenics, the Third Circuit took away the
discretion and well-established authority that bankruptcy courts
have relied on for a century. Specifically, the Court of
Appeals held that only a trustee in bankruptcy or a debtor-in-
possession could act as a representative plaintiff in avoiding
improper transactions under the avoidance powers of the
Bankruptcy Code.
Putting aside the merits of the lenders' position that no
actions may be brought or sustained against them by the
Committee after the Cybergenics holding, Safety-Kleen's
unsecured creditors are now faced with uncertainty -- and the
looming threat of a cramdown plan -- stripped of their
bargained-for rights to assert the estates' challenges to the
validity of almost $2,000,000,000 of LBO debt.
One of the Court's "core powers" is the ability to ensure that
its orders are faithfully carried out. When an unforeseen
circumstance threatens the validity of an order, the Court has
broad discretion to modify it. Invoking this power is
particularly appropriate when, as here, a narrowly tailored
remedy is readily available to prevent injustice.
The Solution: Modify and Clarify
The Committee's solution to the need to prevent forfeiture and
injustice is simple: the Court should modify the prior DIP
financing order.
Although the Committee believes that the holding in Cybergenics
does not apply when lenders agree to the possibility of suit,
the Committee asks Judge Walsh to modify the financing order to
clarify that the Debtors' admissions and waivers with regard to
the lenders' claims are not binding on any successor trustees or
any duly appointed representative of the estates under a Chapter
11 plan. Neither Judge Walsh nor any of the parties in these
cases intended that these admissions and waivers would be the
final adjudication of the lenders' claims. Everyone, including
Judge Walsh, intended to preserve these challenges -- not
forfeit them -- and to permit the fiduciary for the unsecured
creditors to bring them to light, while the Debtors acceded to
the lenders' demands. Judge Walsh should not permit the lenders
to enjoy an undeserved windfall based on the Third Circuit's
unexpected departure from well-established law. (Safety-Kleen
Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service,
Inc., 609/392-0900)
SBC COMMS: Working Capital Deficit Narrows to $7BB at Sept. 30
--------------------------------------------------------------
SBC Communications Inc., (NYSE:SBC) reported earnings for the
three months ended Sept. 30 of $1.8 billion, compared with $2.1
billion in the third quarter of 2001. Excluding special items,
SBC's third-quarter earnings were $1.7 billion, compared with
$2.0 billion in the prior-year period. Special items affecting
this quarter's results were charges related to work-force
reductions and the company's proportionate shares of gains and
charges from international investments. Special items in both
quarters are described in detail below.
In accordance with generally accepted accounting principles
(GAAP), 2001 results include the amortization of goodwill and of
FCC cellular licenses, which beginning with 2002, are no longer
amortized in accordance with the adoption of the Statement of
Financial Accounting Standards No. 142.
Third-quarter revenues - together with proportionate revenues
from Cingular Wireless, the nationwide wireless company that is
60 percent owned by SBC - were $12.8 billion, compared with
$13.5 billion in the year-ago period.
In its September 30, 2002 balance sheets, SBC recorded a working
capital deficit of about $7 billion, as compared to $12 billion
at December 31, 2001.
"Our results continue to reflect the destructive effects of UNE-
P pricing in some states, as well as continued economic softness
and increased competition including technology substitution,"
said Edward E. Whitacre Jr., chairman and CEO. "We continue to
respond aggressively by reducing costs. But no amount of cost-
cutting can offset the effects of rules that require us to sell
our lines and related services to competitors below cost.
"While we will continue our prudent cost management, long-term
health in the telecommunications industry will require a
balanced regulatory environment that encourages investment and
results in sustainable, facilities-based competition, not
artificial or arbitrage-based competition," said Whitacre. "We
and other concerned companies are working with regulators to
develop an industrywide solution that will encourage investment
in our nation's networks and help America maintain its leading-
edge telecommunications infrastructure."
In the third quarter, SBC lost 751,000 retail lines to
competitors using unbundled network element platform (UNE-P)
lines, primarily to AT&T and WorldCom. Competitors have now
obtained more than 4.2 million UNE-P lines from SBC, with more
than one-third of those lines being added in the second and
third quarters of 2002.
SBC Adds 226,000 DSL Subscribers During Quarter,
Passes 2-Million Mark in October
"Despite a tough regulatory and economic environment, we
delivered exceptional results adding DSL Internet subscribers,
primarily as a result of effective marketing initiatives and the
introduction of SBC Yahoo! DSL service," Whitacre noted.
SBC added 226,000 DSL Internet subscribers during the third
quarter, bringing its total to 1.95 million, up 65 percent from
year-ago levels. This is the third consecutive quarter of
sequential growth. This momentum continued into the fourth
quarter, as SBC became the first DSL provider to surpass the 2-
million subscriber mark in October. During the third quarter,
SBC and Yahoo! launched SBC Yahoo! DSL, an innovative, "built
for broadband" Internet service that features new levels of
personalization and ease of use, rich content, superior
interactivity and a bundle of valuable premium services. SBC
Yahoo! DSL is available to more than 28 million customer
locations in SBC's 13 states.
Other Highlights
SBC also achieved the following operational highlights during
the quarter:
-- Added 318,000 long-distance lines, increasing its total
to 5.9 million - up 28 percent from a year ago. SBC
expects to gain regulatory approvals to offer long-
distance service in California - the nation's largest
long-distance market - by year's end and in the five SBC
Ameritech states in 2003.
-- Cingular Wireless ended the quarter with 22.1 million
subscribers, an increase of 3.7 percent over the same
period last year.
-- Data transport revenues increased 3.3 percent from the
prior-year period.
-- Cash operating expenses before special items decreased
3.0 percent, marking the fourth consecutive quarter with
a year-over-year decline.
Special Items
SBC's third-quarter reported results include an after-tax charge
of $125 million for severance and related costs from force-
reduction programs, and equity income of $212 million for a
proportionate share of the gains at TDC and Belgacom related to
the disposition of their Netherlands wireless operations, net of
valuation and restructuring adjustments at TDC affiliates.
SBC's reported 2001 third-quarter results included after-tax
pension settlement gains of $73 million related to management
employees, primarily resulting from a year 2000 voluntary
retirement program net of costs associated with that program.
Outlook
SBC continues to target full-year 2002 earnings of $2.26 per
diluted share, before special items. Changes in directory
publishing schedules have had the effect of reducing earnings
contributions from directory operations in the third quarter,
while increasing expected directory contributions to earnings in
the fourth quarter. This year, SBC anticipates a sequential
increase in earnings per share from its directory operations of
about $0.15, fourth quarter compared with the third. The company
also said it expects to record capital expenditures of about
$7.5 billion in 2002, down from $11.2 billion in 2001.
SBC Communications Inc. -- http://www.sbc.com-- is one of the
world's leading data, voice and Internet services providers.
Through its world-class network and its subsidiaries' trusted
brands - SBC Southwestern Bell, SBC Ameritech, SBC Pacific Bell,
SBC Nevada Bell, SBC SNET and Sterling Commerce - SBC companies
provide a full range of voice, data, networking and e-business
services, as well as directory advertising and publishing. A
Fortune 30 company, America's leading provider of high-speed DSL
Internet Access services, and one of the nation's leading
Internet Service Providers, SBC companies currently serve 58
million access lines nationwide. In addition, SBC owns 60
percent of America's second-largest wireless company, Cingular
Wireless, which serves more than 22 million wireless customers.
Internationally, SBC has telecommunications investments in 25
countries.
For more detailed information on SBC's third-quarter results,
visit http://www.sbc.com/investor_relations
SCIENTIFIC LEARNING: Posts Record Revenue of $6.4MM in Q3 2002
--------------------------------------------------------------
Scientific Learning (OTCBB: SCIL) announced its revenue for the
quarter ended September 30, 2002 was $6.4 million, compared to
$5.6 million for the quarter ended September 30, 2001, an
increase of 14%.
During the quarter, booked sales totaled $8.2 million, an
increase of 95% over the same quarter of 2001. K-12 sector sales
rose 135% compared to the third quarter of last year and
represented over 85% of total sales. Sales in the private
sector, primarily practitioners in private practice and
independent schools, declined 8%. Booked sales exceeded
expectations in both sectors.
"Our growth this quarter was exceptional. Three school districts
purchased more than $750,000 of our Fast ForWord(R) family
educational software, products and services, expanding their use
of our reading intervention products," said Robert C. Bowen,
Chairman and CEO of Scientific Learning. "Schools implementing
our products continue to see substantial improvements in their
students' performance. The independent research of John Gabrieli
of Stanford University, recently featured in the Wall Street
Journal, corroborates those results. Dr. Gabrieli's studies have
shown marked changes in the brains of the students studied
before and after their use of Fast ForWord."
Deferred revenue was $14.2 million at quarter-end, compared to
$5.5 million on September 30, 2001. Approximately 90% of
deferred revenue is expected to be recognized as revenue in the
next four quarters.
The net loss for the quarter in accordance with Generally
Accepted Accounting Principles ("GAAP") was $450,000 and $.03
per share compared to a net loss of $4.1 million and $.35 per
share in the third quarter of 2001.
Gross margins were 84% in the third quarter of 2002 compared to
77% in the same quarter of 2001. Pro forma operating expenses in
the third quarter of 2002 totaled $5.5 million compared to $6.7
million in the third quarter of 2001. Pro forma operating
expenses exclude restructuring charges of $1.4 million in the
third quarter of 2001. The pro forma operating loss for the
quarter was $113,000 compared to $2.3 million for the third
quarter of 2001.
"We were very pleased with results for the quarter, which
exceeded our expectations for booked sales, revenue and expense
control," said Mr. Bowen, "We are making progress in getting to
profitability and achieved our second consecutive cash positive
quarter."
Revenue for the nine months ended September 30, 2002 was $14.0
million, a 2% increase compared to $13.8 million reported in the
same period last year. Booked sales were $20.7 million, an
increase of 40% compared to $14.8 million for the first nine
months of 2001. K-12 sector sales increased 60% and private
sector sales declined 17% for the first nine months of 2002
compared to the same period last year. The net loss in
accordance with GAAP was $7.2 million and $.46 per share
compared to $14.9 million and $1.31 for the same period last
year.
Business Outlook
For the year ended December 31, 2002, the Company expects booked
sales to be in the range of $26.0 to $26.5 million compared to
$20.9 million in 2001. Revenue for the year is expected to be in
the range of $19.9 to $20.1 million compared to $17.9 million in
2001. Pro forma operating expenses are expected to be in the
range of $22.6 to $22.8 million compared to $29.4 million in
2001. The Company expects to report a pro forma operating loss
in the range of $6.1 to $6.3 million compared to $15.6 million
in 2001.
For the fourth quarter of 2002, Scientific Learning expects
booked sales to be in the range of $5.4 to $5.9 million compared
to $6.1 million in the fourth quarter of 2001. Revenue for the
three months ending December 30, 2002 is expected to be in the
range of $5.9 to $6.1 million compared to $3.6 million in the
same period of 2001. Gross margins are expected to be in the
range of 82% to 84%. Pro forma operating expenses are expected
to be in the range of $5.7 to $5.9 million, compared to $5.9
million in the fourth quarter of 2001. Pro forma operating
expenses exclude a restructuring charge of $1.3 million in the
fourth quarter of 2001. The Company expects to report a pro
forma operating loss of $0.7 to $0.9 million in the fourth
quarter of 2002, compared to a pro forma operating loss of $2.7
million in the same period of 2001.
The above targets represent the Company's current sales, revenue
and earnings goals as of the date of this release and are based
on information current as of October 24, 2002. Scientific
Learning does not expect to update the business outlook until
the release of its next quarterly earnings announcement;
however, the Company may update the business outlook or any
portion thereof at any time for any reason.
As of September 30, 2002, Scientific Learning's total working
capital deficit tops $4.7 million and the Company's balance
sheet shows a total shareholders' equity deficit of $5.3
million.
Headquartered in Oakland, CA, Scientific Learning (OTCBB: SCIL)
sells the Fast ForWord(R) patented family of products, which
develop and enhance cognitive abilities critical to language and
reading for learners of all ages. Significant gains are
frequently achieved in as few as 20 to 40 instructional
sessions. To learn more about Scientific Learning's
neuroscience-based products, visit the Company's Web sites at:
http://www.ScientificLearning.comand
http://www.BrainConnection.com
or call toll-free 888-665-9707.
SLI INC: Secures Final Court Approval of $35-Mill. DIP Financing
----------------------------------------------------------------
SLI, Inc., obtained from the U.S. Bankruptcy Court of the
District of Delaware final approval of a $35 million debtor-in-
possession financing facility provided by a consortium of banks,
including lead lender and administrative agent, Fleet National
Bank.
The facility provides for $25 million of committed financing for
obligations of the Company's United States subsidiaries and $10
million of discretionary financing that, following lender
approval, may be used to fund the Company's foreign operations.
The facility will be used to, among other things, fund
continuing operations, pay employees and purchase goods and
services during the restructuring period. As previously
announced, the facility requires that the Company pursue a
possible sale of one or more lines of its business.
The Company's Chairman and Chief Executive Officer, Frank M.
Ward, stated, "We are pleased with the outcome of today's
hearing and believe the final approval of the financing facility
will allow us to continue providing high quality services and
products to our customers as well as adequate funding for our
post-petition suppliers while we explore viable restructuring
options."
In light of the Company's financial situation, the Company does
not anticipate any recovery for holders of its common stock.
SLI, Inc., based in Canton, MA, is a vertically integrated
designer, manufacturer and seller of lighting systems, which are
comprised of lamps and fixtures. The Company offers a complete
range of lamps (incandescent, fluorescent, compact fluorescent,
high intensity discharge, halogen, miniature incandescent, neon,
LED and special lamps). We also offer a comprehensive range of
fixtures. The Company serves a diverse international customer
base and markets, has 35 plants in 11 countries and operates
throughout the world. The Company also believes that it is also
the #1 global supplier of miniature lighting products for
automotive instrumentation. For more information, visit its Web
site at http://www.sliinc.com
SOLUTIA INC: Balance Sheet Insolvency Balloons to $269 Million
--------------------------------------------------------------
Solutia Inc., (NYSE: SOI) reported sales and earnings for the
third quarter of 2002.
"Solutia's sales have shown modest improvement over third
quarter of 2001, and are down only slightly from a relatively
strong second quarter 2002. However, the strength of recent
pricing initiatives and relatively stable demand are being
tested by volatility in petrochemical based raw material markets
and initial signs of wavering consumer demand," said John
Hunter, chairman and chief executive officer.
"In spite of the challenging economic environment over the past
two years, we have remained focused on our portfolio strategy.
The clarity provided by the strategy has allowed us to reduce
our costs to operate in this uncertain environment and to
bolster our financial flexibility going forward," he said.
At September 30, 2002, Solutia's balance sheets show a total
shareholders' equity deficit of about $269 million.
Net Sales and Net Income
Excluding net charges of $11 million, Solutia reported $11
million of net income on net sales of $718 million. Underlying
earnings include a previously reported $5 million, or 5 cents
per share, charge for the temporary shutdown of an Integrated
Nylon facility as a result of storms on the Gulf Coast. This
compares to pro-forma net income for the third quarter of 2001
of $16 million on net sales of $690 million. Pro-forma net
income for the third quarter of 2001 includes 9 cents per share
increase in earnings from lower amortization expense associated
with the adoption of SFAS No. 142.
Net charges in the quarter are comprised of two events. Solutia
has agreed to settle a contract disagreement with Fluor
Corporation for $20 million to be paid over a three-year period.
The third quarter's after tax earnings impact was $3 million.
In addition, as required by SFAS No. 88, Solutia recorded a non-
cash pension settlement loss of $8 million after tax in the
third quarter. The pension settlement was triggered by an
unusually high level of year-to-date lump sum distributions from
the Company's defined benefit plan, primarily related to
headcount reductions attributed to the $100 million cost
reduction initiative and the first quarter 2002 sale of the
Company's 50 percent interest in the AES joint venture. The
accounting rules required the Company to recognize a portion of
the unrealized loss of the Plan as a non-cash charge in the
third quarter. The plan has an unrealized loss because the
actual returns of the plan have deviated from expected returns.
For the nine months ended September 30, 2002, Solutia reported
net income of $45 million, excluding an after tax gain of $3
million from the sale of its interest in the AES joint venture,
an after tax charge of $167 million associated with the adoption
of SFAS No. 142 and an after tax charge of $11 million
associated with third quarter charges for a legal settlement and
a non-cash pension settlement charge. This compares to pro-
forma net income of $49 million, for the nine-month period ended
September 30, 2001, excluding a $17 million gain from an
insurance settlement, and including a $24 million increase in
earnings from lower amortization expense associated with the
adoption of SFAS No. 142.
For the nine months ended September 30, 2002, including net
charges and gains, Solutia reported a net loss of $130 million,
compared to as reported net income of $42 million for the first
nine months of 2001.
Solutia's net income for the third quarter versus the year-ago
period was positively impacted by improved sales volumes,
strengthening foreign currencies, slightly higher sales prices
and continued benefits from the cost reduction program. These
benefits were offset by elevated raw material costs, the
aforementioned outage at a nylon manufacturing facility and
increased interest expense.
On a sequential basis, Solutia's sales revenue decreased 2
percent and underlying earnings per share decreased 50 percent
from second quarter earnings per share, due principally to
weakening sales volumes, higher average raw material costs and
elevated interest expense.
Segment Data
Performance Films' net sales for the third quarter of 2002
increased 5 percent compared to the same period of 2001
primarily because of higher volumes and strengthened foreign
currencies. Strong window film sales and increased demand in
Asia and North America helped offset lost volume with a large
Saflex customer.
Performance Films' profitability increased 33 percent versus the
prior-year quarter primarily due to lower raw material costs,
lower amortization expense and lower personnel expense.
Net sales for the Specialty Products segment increased 10
percent from the third quarter of 2001 due to stronger foreign
currencies and higher sales volumes.
Specialty Products' segment profitability increased greater than
100 percent over the prior-year quarter primarily because of
lower amortization expense, lower raw material costs and lower
personnel expense.
Integrated Nylon's net sales for the third quarter of 2002 were
on par with third quarter 2001. Lower sales volumes offset
higher average selling prices in the quarter. Improved sales
volumes in nylon plastics and polymers as well as acrylic fibers
were offset by sales volume decreases in nylon intermediates,
industrial nylon and nylon carpet fiber.
Excluding a charge of $5 million for a legal settlement,
Integrated Nylon's segment profitability decreased 85 percent
over the prior-year quarter driven by elevated raw material
costs and the aforementioned manufacturing outage, offset
partially by improved selling prices and cost reduction
initiatives.
Operating Income
Operating income for the third quarter of 2002 was $17 million
compared with $24 million in the third quarter of 2001.
Excluding the $13 million pension settlement loss, and the $5
million charge for a legal settlement in the third quarter of
2002, and adjusting third quarter 2001 earnings to account for
the $9 million of lower amortization expense associated with the
adoption of SFAS No. 142, operating income in the third quarter
of 2002 increased $2 million from the prior year. The increase
is primarily attributed to higher sales volumes, higher average
sales prices, favorable currency fluctuations and higher
capacity utilization, mostly offset by higher raw material costs
and the manufacturing outage at an Integrated Nylon facility.
Cash Flow
Solutia reported free cash flow of $18 million for the quarter
ended September 30, 2002, after funding $20 million of capital
expenditures and a pension contribution of $17 million. Free
cash flow during the quarter compares favorably to the same
period of the prior year primarily due to strong working capital
management.
Pension Funded Status
As a result of the decline in the fair value of our pension plan
assets, and, to a lesser extent, higher benefit obligations,
principally due to interest rate changes, the amount of pension
plan underfunding in the qualified pension plan increased as of
an interim measurement date. In accordance with SFAS No. 87,
Solutia recorded a non-cash minimum pension liability, which
resulted in an after tax charge to shareholders' deficit of $123
million, as of September 30, 2002.
Legal Issues
The Alabama Supreme Court has stayed the Abernathy v. Monsanto
lawsuit awaiting a decision on the outstanding recusal motion.
A ruling from the lower court is needed before the Alabama
Supreme Court will consider this issue and make a final
decision.
Outlook
The Company experienced slowing growth rates in September and
expects the current uncertainty in global markets to continue
into the fourth quarter. In addition, key raw material prices
are projected to remain at their current elevated levels, as
pricing is not being driven by market fundamentals.
Traditionally, the Company's fourth quarter earnings are
seasonally weaker than third quarter's. In light of this
seasonal change and the current outlook, the Company expects a
modest loss for the fourth quarter.
Corporate Profile
Solutia -- http://www.Solutia.com-- uses world-class skills in
applied chemistry to create value-added solutions for customers,
whose products improve the lives of consumers every day.
Solutia is a world leader in performance films for laminated
safety glass and after-market applications; resins and additives
for high-value coatings; process development and scale-up
services for pharmaceutical fine chemicals; specialties such as
water treatment chemicals, heat transfer fluids and aviation
hydraulic fluid and an integrated family of nylon products
including high-performance polymers and fibers.
STATIONS HOLDING: Emerges from Chapter 11 Bankruptcy Protection
---------------------------------------------------------------
The U.S. Bankruptcy Court for the District of Delaware confirmed
the Second Amended Plan of Reorganization of Station Holding
Company, Inc. on September 30, 2002. The Effective Date of the
Debtors' Plan was Friday, October 25, 2002.
As set forth in the Court's Confirmation Order, all executory
contracts and unexpired leases of the Debtor will be deemed
rejected except (a) the Employment Agreement dated December 31,
2000 between K. James Yager and Benedek Broadcasting and those
executory contracts and unexpired leases that (i) have been
assumed by the Court, (ii) are the subject of a motion to assume
pending an effective date, or (iii) as to which agreement of an
alternative effective date for rejection has been reached.
Stations Holding Company, Inc. is a holding company with minimal
operations other that from its non-debtor, wholly-owned
subsidiary, Benedek Broadcasting Corporation. Benedek
Broadcasting owns and operates 23 television stations located
throughout the United States. The Company filed for chapter 11
protection on March 22, 2002. Laura Davis Jones, Esq., at
Pachulski, Stang, Ziehl Young & Jones and James H.M. Sprayregen,
Esq., at Kirkland & Ellis represent the Debtor in its
restructuring efforts. When the Company filed for protection
from its creditors, it listed estimated debts and assets of more
than $100 million.
STRATEGIC DIAGNOSTICS: Bank Waives a Covenant Under Credit Pact
---------------------------------------------------------------
Strategic Diagnostics Inc. (Nasdaq: SDIX) -- a leading provider
of antibody products and analytical test kits for the food
safety and water quality markets -- reported financial results
for the third quarter and nine months ended September 30, 2002.
Revenue for the third quarter of 2002 was $6.1 million, compared
with $8.5 million in the third quarter of 2001, which included
record levels of StarLink(TM) test kit sales which have declined
significantly as StarLink(TM) is being removed from the nation's
grain supply. Net income in the third quarter totaled $121,000
compared to net income of $896,000 in the prior year quarter.
For the nine months ended September 30, 2002, revenues were
$17.4 million, versus $22.8 million in the prior year (a
decrease of 23 percent), which prior year included higher levels
of StarLink(TM) sales. Net loss for the nine months totaled
$799,000 down from net income of $1.9 million in the prior year.
Revenues increased by approximately $543,000 or 10% over the
second quarter of 2002 due primarily to increases in food safety
product sales and antibody revenues.
Food safety revenues totaled $1.6 million in the third quarter
of 2002 versus $3.3 million in the third quarter of 2001 which
included the higher levels of StarLink(TM) sales and $1.2
million in the second quarter of 2002. The Company believes its
leadership position in GMO testing is continuing to grow. The
Company believes that the reliance on GMO technology continues
to grow both in the U.S. and abroad, and the demand for the
Company's testing products is increasing as well. Sales of GMO
tests for cottonseed increased during the quarter over the
second quarter of 2002 and SDI believes it now supplies every
major cottonseed company (in terms of seed sales) in the U.S.
and Australia (two principal regions in the world where GMO
technology is utilized). Overall, sales of GMO tests to the seed
industry, which includes the cottonseed sales, are expected to
grow throughout the rest of the second half of 2002 over the
prior year. In addition, the Company believes the outlook for
GMO sales in South America is strengthening. One major
distributor is expecting as much as a 30% increase in sales to
as many as 400,000 tests in South America during 2003 from more
than 300,000 tests expected in 2002. The drivers behind this
increase include increased concern, particularly in Brazil, over
the importation of Roundupr Ready seeds from other South
American growing regions. Certain state governments in Brazil
have begun creating legislation to address these concerns. The
state of Parana, an important agricultural state in Brazil, has
created legislation requiring that all soy seed and beans grown
in Parana or transported through its ports, be tested for the
presence of GMOs.
Since the launch of RapidChek(R) lateral flow test for E. coli,
several companies with large testing requirements have initiated
validation studies, and initial results are favorable. In one
such evaluation, the customer conducted tests on more than 400
samples performing side-by-side comparisons against each of four
competing products. SDI's RapidChek(R) lateral flow test for E.
coli outperformed the competing products in both sensitivity and
specificity. In another evaluation, Mr. Kurt Westmoreland,
Division Vice President for business operations of Silliker
Laboratories had the following comment, "RapidChek(R) is easier
to read than other visually-read immunoassay on the market that
we have evaluated. Cleaner and clearer lines mean fewer
questionable results that have to undergo confirmation, which
saves time for our clients and minimizes lab costs." The Company
expects certain of these evaluations to be completed during the
fourth quarter of 2002 and increased sales thereafter. In
addition, the Company has participated in an evaluation of its
proprietary RapidChek(R) Media against other enrichment media
and RapidChek(R) Media was shown to support and accelerate
growth better in samples of E. Coli O157:H7.
Additionally, the Company's research and product development
efforts are continuing toward the completion of new products,
including tests for the additional food pathogens salmonella and
listeria, as well as for proteins in animal feed that are linked
to the transmission of BSE, or mad cow disease. The method for
animal feed has been designed with multiple tests per strip to
address the various analytical requirements throughout the
world. In one evaluation, SDI's product was shown to detect as
little as 0.1% bovine meat-and-bone meal in feed as well as the
same sensitivity for poultry meal in feed. These product
features are important to comply with customer specifications
and governmental regulations throughout the U.S., Europe and
Japan.
The development of the method for salmonella is complete and the
Company is proceeding with the submission for a third party
validation by the AOAC. Concurrently, the Company is preparing
for commercial launch and scaling-up production of the reagents
(production in commercial quantities under standard operating
procedures) as well as the production of the test kit under
SDI's standard manufacturing practices and completing the
enrichment protocol. The Company is also completing a licensing
agreement of a lateral flow reading instrument to read and
record test results from its lateral flow strip tests. The
Company is also developing a test for listeria that are expected
to reach the marketplace in the first quarter of 2003.
Revenues for the water quality category totaled $1.8 million in
the third quarter, a decrease from the $2.2 million in the prior
year quarter when the events of September 11, 2001 resulted in a
spike in sales of the Microtox(R) toxicity screening methods and
is about the same as the $1.8 million reported in the second
quarter of 2002. Sales of the Microtox(R) systems have been
steadily increasing in 2002 with more than 30 North American
cities utilizing the system for drinking water. Reagent sales
have increased by 500% since the second quarter of 2001 before
the events of September 11, 2001 and are estimated to continue
to grow at more than 25% per year. The Company continues to work
with customers as they assess their vulnerability to threats of
intentional contamination as currently required under U.S. law
and is expanding its efforts in the food and beverage industry.
The increase in Microtox(R) sales has offset a decrease in sales
of tests in the remediation market. Sales in this category have
been slower due to weak general economic conditions.
Revenues in the antibody segment totaled $2.6 million in the
third quarter of 2002 versus $2.8 million in the third quarter
of 2001 and were up 6% from the $2.4 million reported in the
second quarter of 2002. Several new or expanded customer
relationships were established during the quarter as customers
and prospects had the opportunity to validate manufacturing and
quality procedures at the expanded manufacturing facilities in
Maine. These relationships will develop into increasing sales,
as the antibody division earns additional projects under these
relationships. The Company's project to develop a point-of-
treatment diagnostic test for Bayer's new product Repinotan(TM)
is continuing with Bayer's Phase III clinical trials, expected
to complete during 2003.
Third quarter manufacturing expenses, which include costs of
goods sold, were $2.7 million in the third quarter of 2002
compared to $3.7 million in the prior year third quarter. For
the nine months, these expenses totaled $8.7 million in 2002
down from $10.2 million in 2001. The decrease for the quarter
and nine months is primarily attributable to the lower
StarLink(TM) related lower sales volume in 2002. Gross margins
were slightly lower in the third quarter of 2002 than the prior
year quarter as the Company's utilization of its manufacturing
capacity was less on the StarLink(TM) related lower sales volume
in the third quarter of 2002. These margins have improved over
the second quarter of 2002 as the Company's efforts to control
expenses and consolidate its antibody manufacturing operations
as well as the utilization of its capacity at the higher level
of activity all have had a positive impact on gross margins.
Research and development expenses increased slightly to $804,000
in the third quarter of 2002 compared to $718,000 in the prior
year third quarter. For the nine months these expenses totaled
$2.4 million in 2002 versus $2.1 million in 2001. These
increases are primarily due to continued investment in the
previously announced animal feed test for McDonald's Corporation
and the lateral flow food pathogen tests. Selling, general and
administrative expenses decreased to $2.4 million in the third
quarter of 2002 from $2.7 million in the prior year third
quarter primarily due to the Company's efforts to lower its
expenses, including the consolidation of its antibody facilities
in Maine. For the nine months, these expenses totaled $7.9
million in 2002 up from $7.3 million in 2001. These increases in
prior quarters were necessary primarily to plan and prepare for
the commercial launch of new products including the RapidChek(R)
lateral flow test for E. coli.
President and CEO Richard C. Birkmeyer commented, "We are
pleased to return to profitability and positive cash flow from
operations. We have accomplished this with revenue increases and
reductions in expenses and we believe we are well on our way to
increased sales and profits performance for the second half of
2002. In the food safety category, the industry response to our
first food pathogen test kit, the RapidChek(R) lateral flow test
for E. coli, has been exciting. Never in our history have we
been able to enter a market with leaders of the food
manufacturing industry conducting product validations of the
scale currently underway. Our product is performing well and we
expect these programs to result in revenue opportunities for the
fourth quarter and beyond. We remain optimistic concerning our
additional product developments. In the water quality category,
our market penetration continues to expand and we are now making
inroads to introduce new product applications of Microtox(R) to
include food and beverage customers. These prospective customers
utilize significant volumes of water in the course of their
production and we are demonstrating the benefits of testing
these supplies throughout the manufacturing process.
"Furthermore, in an effort to stimulate international sales, we
have recruited Ms. Anne Cavanaugh, a cofounder of SDI, to run
the European sales office. Anne will manage many key distributor
relationships from this office. In addition, Anne will oversee
our efforts to expand our base water quality business to include
our GMO, food pathogen and antibody products throughout the
world. Anne is thoroughly acquainted with the Company and its
products, and we are excited to see her resume a key management
role. In summary, across all of our markets, we believe we are
well positioned to grow our business.
"In other news, I am pleased to report that Mr. Stanley J.
Musial has accepted the position of Chief Financial Officer
effective November 1, 2002. Stan brings a wealth of business,
finance and management experience to our team and we are looking
forward to his contribution as we continue to build SDI. Stan
joins our Company from Continuum Healthcare where he held the
CFO's position and his prior experience includes other emerging
businesses in healthcare, environmental services and five years
with KPMG, where his responsibilities increased to audit manager
in the Philadelphia office. Stan holds a MBA in Finance from
Temple University, a B.S. degree in Accounting from The
Pennsylvania State University, and is a Certified Public
Accountant. We are delighted to have attracted an individual of
this caliber to our management team."
In another development, the Company reported that its commercial
bank waived the loan covenant covering the required level of
EBITDA for the third quarter of 2002 and is presently drafting
an amendment to establish minimum EBITDA requirements of
$700,000 for the fourth quarter of 2002 and $650,000 for the
first quarter of 2003 after which the loan agreement will revert
to the original loan convents. The Company reported cash and
working capital of $1.3 million and $12.7 million respectively
at September 30, 2002.
SDI is a leading provider of biotechnology-based diagnostic
tests for a broad range of agricultural, industrial, and water
treatment applications. Through its antibody business, Strategic
BioSolutions, Strategic Diagnostics also provides antibody and
immunoreagent research and development services. SDI's test kits
are produced in a variety of formats suitable for field and
laboratory use, offering advantages of accuracy,
cost-effectiveness, portability, and rapid response. Trait
Check(R), GMO QuickCheck(TM), and GMO Check(TM) are pending
trademarks for SDI.
TYCO INT'L: September Quarter Working Capital Deficit Tops $82MM
----------------------------------------------------------------
Tyco International Ltd. (NYSE: TYC; BSX: TYC; LSE: TYI) reported
that revenues from continuing operations for the fourth quarter
ended September 30, 2002 were $9.36 billion, an increase of 9.9%
as compared to $8.52 billion for the quarter ended September 30,
2001, and an increase of 3.0% as compared to the $9.09 billion
for the Company's fiscal third quarter. Revenues from
continuing operations for 2002 increased by 4.8% to $35.67
billion from $34.04 billion last year.
Including impairment, restructuring and other unusual charges
from continuing operations of $1.15 per share, which are
discussed below, the loss for the fourth quarter from continuing
operations was 85 cents per share, as compared to earnings of 61
cents for the same quarter last year. The loss per share from
continuing operations for 2002 after all charges was $1.40 per
share, compared to income from continuing operations of $2.40 a
year ago.
Diluted pro forma earnings from continuing operations for the
fourth quarter were 30 cents per share as compared to 82 cents
per share for the fourth quarter of fiscal 2001. Pro forma
results from continuing operations for the fourth quarter of
fiscal 2002 are presented excluding the discontinued operations
of CIT, are before impairment, restructuring and other unusual
charges, which are discussed below, and reflect a tax rate of
35.9%. Assuming a 22.0% tax rate, which is the effective rate
on pro forma earnings from continuing operations for the full
fiscal year, fourth quarter 2002 pro forma earnings were 36
cents per share. Pro forma earnings per share for 2002 were
$1.79 compared to $2.88 for fiscal 2001.
"Tyco's operations generated strong cash flow and revenues that
exceeded the expectations we outlined in our September 25th
conference call. Considering the difficult economic environment
and the issues facing the Company, this performance reflects our
leading market positions, the strength of the products and
services we offer, and the dedication and hard work of our
employees. We will continue to build these businesses and
leverage their strengths over time," said Ed Breen, Tyco's
Chairman and Chief Executive Officer.
CASH AND LIQUIDITY
Free cash flow was approximately $1.3 billion in the quarter.
The primary drivers behind the strong quarterly cash flow were
strong collections of accounts receivable and reduced inventory
levels.
Tyco refers to the net amount of cash generated from operating
activities, less capital expenditures, spending on the Tyco
Global Network (TGN), changes
due to the Company's accounts receivable securitization program,
and dividends, as "free cash flow." Free cash flow is not a
substitute for cash flow from operating activities as determined
in accordance with GAAP. Included as a reduction of operating
cash flows in the fourth quarter of fiscal 2002 is $191 million
related to cash spending on restructuring and other unusual
items, compared with $102 million in the fourth quarter last
year. Cash flow from operating activities was approximately
$1.8 billion in the quarter.
The Company paid $431 million in cash for acquisitions in the
quarter, including $326 million for the acquisition of dealer
accounts, $93 million relating to purchase accounting
liabilities and $10 million related to contingent deferred
purchase price on prior acquisitions. Free cash flow is
calculated before these expenditures.
Tyco's debt-to-capitalization ratio was 49.4% at September 30,
2002 compared to 49.0% at June 30, 2002. The net debt-to-
capitalization ratios were 36.2% and 43.8%, respectively, for
the same periods.
IMPAIRMENT, RESTRUCTURING AND OTHER UNUSUAL CHARGES
The Company recorded impairment, restructuring and other unusual
charges from continuing operations of $2.8 billion pre-tax, or
$1.15 per share after-tax (EPS), of which approximately $2.2
billion is non-cash and $600 million is cash. The charges are
as follows:
Tyco Telecommunications (formerly TyCom) related:
Total charges associated with TyCom were approximately $2.2
billion pre-tax, or 88 cents EPS, of which approximately $1.72
billion is non-cash and approximately $460 million is cash. The
non-cash portion relates primarily to the impairment of goodwill
and intangibles ($663 million), impairment of TGN and other
fixed assets ($592 million) and the write-down of certain
investments, accounts receivable and inventory. The cash
portion is primarily related to severance, facility
consolidations and the termination of certain lease commitments.
All Other Charges:
The Company took additional charges of approximately $600
million pre-tax, or 27 cents EPS, of which approximately $470
million is non-cash and approximately $130 million is cash. The
non-cash charge is comprised primarily of $109 million related
to the impairment of goodwill in the Engineered Products and
Services segment; $111 million related to the impairment of
intangible assets associated with the Security business outside
of the United States; and $224 million related to inventory and
long-lived assets at Electronics. The cash portion relates
primarily to severance and facility consolidations.
PRO FORMA QUARTERLY RESULTS FROM CONTINUING OPERATIONS
For the quarter ended September 30, 2002, revenues for Tyco's
electronics businesses, decreased approximately 3% from the same
period a year ago to $2.52 billion. Pro forma profit at Tyco's
electronics businesses, excluding Tyco Telecommunications, was
$306.5 million, or 12.1% margin, for the quarter ended September
30, 2002, compared to $703.1 million, or 26.9% margin for the
quarter ended September 30, 2001. On a sequential quarterly
basis, revenues were flat and pro forma profit declined 16%.
The Electronics business continued to be negatively impacted by
further softening of demand in the telecommunications end
markets the company serves. These decreases were partially
offset by revenue growth in automotive products and revenues
from companies acquired in fiscal 2002. Pro forma margins were
impacted primarily as a result of continuing pricing pressure,
operating inefficiencies and the impact of reduced volume on a
fixed cost base.
Revenues at Tyco Telecommunications decreased year over year
76%, and sequentially 71%, to $40.7 million, as the Company is
winding down the construction of undersea systems for third
parties. Tyco Telecommunications had a pro forma loss of $72.1
million for the fourth quarter compared to pro forma profit of
$94.0 million in the fourth quarter a year ago and a pro forma
loss of $23.2 million in the third quarter of fiscal 2002. The
Company expects that this business will generate operating
losses of approximately $200 million in fiscal 2003 as it does
not anticipate any new construction contracts or sale of
capacity on its systems. Restructuring actions commenced during
the fourth quarter are anticipated to reduce those losses to a
run rate of $125 million to $150 million by the end of 2003.
Healthcare and Specialty Products
Tyco Healthcare revenues increased year over year 14% to $2.12
billion, and 4% from the previous sequential quarter. Pro forma
profit was $498.6 million for the fourth quarter of fiscal 2002,
or down 1% compared with the prior year and up 10% sequentially.
Within Tyco Healthcare, the revenue increase was driven
primarily by the acquisition of Paragon Trade Brands in January
2002. International growth continued to be strong, and in the
United States, growth at Kendall, Mallinckrodt and U.S. Surgical
was partially offset by the divestiture of SDI in the fourth
quarter. Pro forma margins decreased as compared to the same
period last year in the healthcare business primarily due to the
acquisition of Paragon, which has margins lower than the segment
average, product mix and higher selling costs associated with
the introduction of new products. Sequentially, improvement
came from Paragon, the divestiture of SDI and product mix.
Tyco Plastics' revenues were down slightly from the both the
previous year and previous sequential quarter, to $476.9
million. The impact of acquisitions offset an organic decline
in this business. The decline is a result of decreased volumes
in the hanger business and unfavorable pricing in the adhesives
business. Pro forma margins were down year over year in the
group as a result of volume shortfalls and pricing issues, as
well as expenses associated with inventory management and
accounts receivable.
Fire and Security Services
Tyco Fire and Security revenue increased 27% year over year and
6% from the previous sequential quarter. The increase is
primarily the result of acquisitions, such as Sensormatic,
Security Link, Edison and the ADT Authorized Dealer sales
programs, slightly offset by a decline in the North American
Fire Protection business. The Company expects revenue growth in
Security to slow as it scales back its dealer sales program, and
Fire Protection revenue to moderate as well. The Company's fire
businesses performed well in 2002 due to strong backlog, but
weakness in industrial construction markets are expected to
negatively impact the segment in 2003.
Pro forma margins in the segment have declined from the prior
year primarily as a result of the acquisition of Sensormatic, as
well as pricing and competitive pressures in the contracting
businesses worldwide.
Engineered Products and Services
At Tyco Engineered Products and Services (formerly Tyco Flow
Control), revenues increased 17% over the prior year and 9% from
the previous sequential quarter. At Tyco Flow Control (formerly
Valves & Controls), revenues increased due to several large turn
key heat tracing projects and acquisitions, partially offset by
pricing pressure and market conditions. Within Tyco Electrical
and Metal Products, revenues increased primarily as a result of
increased selling prices as steel prices rose significantly
during the quarter, a trend that is expected to continue in the
first quarter of fiscal 2003. Tyco Infrastructure revenues
increased slightly, as a result of acquisitions, and Tyco Fire
and Building Products revenues were flat. Pro forma profit was
down from last year due to reduced royalty payments from
divested businesses as well as market and competitive pressures
on selling prices within the Flow Control and Fire and Building
Products divisions. Sequentially, these pressures were partially
offset by the impact of cost savings programs and favorable
pricing at Electrical and Metal Products.
FISCAL 2003 GUIDANCE
Earnings per share from continuing operations are expected to be
in a range of 30 cents to 33 cents for the first quarter of
fiscal 2003, and $1.50 to $1.75 for the full fiscal year. Free
cash flow is expected to approximate $0 to $300 million in the
first quarter of fiscal 2003 and $2.5 billion to $3.0 billion
for the full fiscal year.
Tyco International Ltd.'s total working capital deficit as at
September 30, 2002 amounts to $82 million.
Tyco International Ltd. is a diversified manufacturing and
service company. Tyco is the world's largest manufacturer and
servicer of electrical and electronic components; the world's
largest designer, manufacturer, installer and servicer of
undersea telecommunications systems; the world's largest
manufacturer, installer and provider of fire protection systems
and electronic security services and the world's largest
manufacturer of specialty valves. Tyco also holds strong
leadership positions in medical device products, and plastics
and adhesives. Tyco operates in more than 100 countries and had
fiscal 2002 revenues from continuing operations of approximately
$36 billion.
UNIFORET: Gets Favorable Judgment from Montreal Superior Court
--------------------------------------------------------------
Uniforet Inc. and its subsidiaries, Uniforet Scierie-Pate Inc.
and Foresterie Port-Cartier Inc. announced that the Superior
Court of Montreal has, on October 23, 2002, dismissed the
proceedings instituted by a group of US Noteholders who were
contesting the composition of the class of US Noteholders-
creditors and has authorized the Company to call the meeting of
that class to vote on the Company's amended plan of arrangement.
The Company intends to call the meeting of the class of US
Noteholders-creditors as soon as possible and will have a new
press release issued once the details of the meeting will have
been finalized.
In the meantime, the Company continues to benefit from the Court
protection afforded to the Company under the "Companies'
Creditors Arrangement Act" and intends to keep on its current
operations and its customers are not affected by the judgment.
Suppliers who will provide goods and services necessary for the
operations of the Company will continue to be paid in the normal
course of business.
Uniforet Inc. is an integrated forest products company which
manufactures softwood lumber and bleached chemi-thermomechanical
pulp. It carries on its business through its subsidiaries
located in Port-Cartier (pulp mill and sawmill) and in the
Peribonka area in Quebec (sawmill). Uniforet Inc.'s securities
are listed on The Toronto Stock Exchange under the trading
symbol UNF.A, for the Class A Subordinate Voting Shares, and
under the trading symbol UNF.DB, for the Convertible Debentures.
US AIRWAYS: Virginia Court Sets Claims Bar Date for Nov. 4, 2002
----------------------------------------------------------------
By Order of the U.S. Bankruptcy Court for the Eastern District
of Virginia, November 4, 2002, is set as the Claims Bar Date for
creditors of US Airways Group, Inc., and its debtor-affiliates,
to file their proofs of claims or be forever barred from
asserting that claim.
The Governmental Claims Bar Date is set for February 7, 2003.
Proofs of claims must be received by the Debtors' Claims Agent
before 4:00 p.m. on the General Bar Date. All proofs of claims
must be addressed to:
Logan & Company
Attn: US Airways Group, Inc.
546 Valley Road
Upper Montclair, NJ 07043
US Airways Group, Inc. owns the common stock of US Airways,
Inc., Allegheny Airlines, Inc., Piedmont Airlines, Inc., PSA
Airlines, Inc., MidAtlantic Airways, Inc., US Airways Leasing
and Sales, Inc., Material Services Company, Inc. and Airways
Assurance Limited, LLC. The primary business activity of the
Wholly-Owned Subsidiaries is the transportation of passengers,
property and mail. The Debtors filed for Chapter 11 protection
on August 11, 2002. Alexander Williamson Powell Jr., Esq., David
E. Carney, Esq., at Skadden, Arps, Slate, Meagher & Flom and
Lawrence E. Rifken, Esq., at McGuireWoods LLP represent the
Debtors in their restructuring efforts. When the Debtors filed
for protection against its debtors, it listed total assets and
total debts of about $7.8 billion.
USG CORP: Third Quarter 2002 Net Sales Jump-Up to $903 Million
--------------------------------------------------------------
USG Corporation (NYSE: USG) reported third quarter 2002 net
sales of $903 million and net earnings of $44 million. This
compares favorably with net sales of $842 million and net
earnings of $27 million in the third quarter last year. Diluted
earnings per share for the third quarter of 2002 were $1.03,
compared with $0.61 a year ago. Results in the third quarter of
last year benefited from the reversal of certain restructuring-
related charges. Those accounting adjustments increased last
year's net earnings and earnings per share by $7 million and
$0.16, respectively.
All three of USG's core businesses achieved improved net
operating results during the quarter. Speaking to the recent
performance of USG's businesses, William C. Foote, USG
Corporation Chairman, CEO and President stated, "Despite the
softness in the economy this year, our businesses have become
stronger due to their focus on fundamentals. This includes
efforts to improve customer service, reduce production costs and
use working capital more efficiently. Through the first nine
months of the year, we are exceeding our goals in essentially
all areas, and that success has contributed to USG's improving
levels of profitability."
The outlook for USG's markets during the balance of the year is
mixed. The company expects demand for gypsum wallboard to remain
strong, primarily due to the continued high demand for new
homes. At the same time, non-residential building, the
principal market for USG's ceiling products, is likely to remain
quite weak. In addition, recent increases in waste paper prices
are causing wallboard production costs to rise.
"We continue to face a very uncertain economic environment,"
said Foote. "The effect of this uncertainty, including the
recent declines in consumer confidence, could negatively affect
our businesses. We will closely monitor developments in this
soft economy while remaining focused on our operating
fundamentals in order to deliver the best possible performance."
Net sales for the first nine months of 2002 were $2,617 million,
versus net sales of $2,474 million for the same period in 2001.
Net earnings for the first nine months were $22 million compared
to $25 million for that period last year. Diluted earnings per
share for the first nine months of 2002 were $0.51, compared to
$0.57 for the first nine months of 2001.
Net earnings and diluted earnings per share for the first nine
months of 2002 include the impact of a $96 million, non-cash,
non-taxable goodwill impairment charge. There was not a
comparable charge in the 2001 results. The charge is related to
the company's adoption of Statement of Financial Accounting
Standards (SFAS) No. 142, "Goodwill and Other Intangible
Assets." Excluding the charge, pro forma net earnings were $118
million, and earnings per share were $2.73 for the first nine
months of 2002.
North American Gypsum
USG's North American gypsum business recorded net sales of $552
million and operating profit of $63 million in the third
quarter. This compares with net sales and operating profit of
$504 million and $27 million, respectively, in the third quarter
last year. Most of the improvement in the results for this core
business was due to significantly higher realized prices for
Sheetrockr Brand gypsum wallboard. This more than offset the
unfavorable effects of lower shipments and higher production
costs for that product line.
United States Gypsum Company realized third quarter 2002 net
sales of $502 million and operating profit of $50 million.
These figures compare with net sales and operating profit of
$459 million and $13 million, respectively, in the third quarter
last year.
U.S. Gypsum's nationwide average realized price of wallboard was
$101.03 per thousand square feet during the third quarter, 23
percent higher than the average of $82.25 in the third quarter
last year. The average realized price was about $103 per
thousand square feet in September.
U.S. Gypsum shipped 2.6 billion square feet of Sheetrock Brand
gypsum wallboard in the third quarter. This is the same level
of shipments as in the preceding quarter, but 4 percent lower
than in the third quarter of 2001. For the first nine months of
this year, shipments totaled 7.7 billion square feet, up 4
percent from the same period last year.
U.S. Gypsum's wallboard plants operated at 94 percent of
capacity in the third quarter compared to 97 percent in the
third quarter last year. The company estimates that the
industry as a whole operated at 85 percent of capacity during
the quarter.
Wallboard manufacturing costs were higher in the third quarter
compared to the same period last year, primarily due to
increases in waste paper prices. Waste paper prices in the third
quarter of this year were up 60 percent compared to the same
period last year.
Offsetting this cost increase and contributing to the company's
increased profitability in the quarter were strong results in
U.S. Gypsum's other product lines. Shipments of both Sheetrock
Brand joint compounds and Durockr Brand cement board set records
for a third quarter.
The gypsum business of Canada-based CGC Inc. reported third
quarter 2002 net sales of $56 million, which is $3 million
higher than last year's third quarter. Operating profit of $7
million increased from $6 million in last year's third quarter.
Most of the improvement in CGC's results was due to higher
shipments and pricing in its Sheetrock Brand line of joint
treatment products and lower raw material costs.
Worldwide Ceilings
USG's worldwide ceilings business recorded net sales of $162
million and operating profit of $15 million in the third
quarter. This compared with net sales and operating profit of
$168 million and $10 million, respectively, in the third quarter
of 2001. Results in this business continue to reflect the weak
market conditions that exist for ceiling products worldwide.
USG's domestic ceilings subsidiary, USG Interiors, had operating
profit of $13 million in the third quarter, compared with $9
million for the same period last year. Lower manufacturing
costs were the primary reason for the increase in operating
profit. USG International had an operating profit of $1
million, compared to a loss of $1 million in the third quarter
of 2001. The ceilings business of Canada-based CGC contributed
$1 million in operating profit, $1 million lower than last year.
Building Products Distribution
L&W Supply, USG's building products distribution subsidiary,
reported third quarter 2002 net sales of $317 million, compared
to $294 million in the same period a year ago. The increase in
revenues was primarily due to record wallboard shipments in the
quarter and increased selling prices. Operating profit for L&W
Supply was $18 million in the quarter versus $16 million in the
third quarter of 2001.
Profitability increased largely due to increased sales of
complementary building products and cost controls, which offset
the impact of lower margins on wallboard. As of September 30,
2002, L&W operated 180 locations in the U.S., distributing
gypsum wallboard, metal studs, ceiling panels, grid and other
related building materials.
Other Consolidated Information
Third quarter 2002 selling and administrative expenses increased
$7 million, or 10 percent, year over year, principally due to
higher levels of incentive compensation associated with
attainment of profit and other performance goals. Selling and
administrative expenses were 8 percent of net sales in the third
quarter, which was the same level as in the third quarter of
2001.
Capital expenditures for the third quarter and first nine months
of 2002 were $26 million and $64 million, respectively.
Expenditures for the same periods last year were $18 million and
$75 million, respectively.
For the third quarter, USG's Chapter 11 reorganization expenses
of $3 million reflected $5 million of legal and financial
advisory fees, partially offset by $2 million of interest income
earned by the USG companies in Chapter 11. Under SOP 90-7,
interest income earned on cash accumulated as a result of the
Chapter 11 filing is recorded as an offset to Chapter 11
reorganization expenses.
As of September 30, 2002, USG had $748 million of cash, cash
equivalents and marketable securities on a consolidated basis,
up from $615 million as of June 30, 2002, and $493 million as of
December 31, 2001. In the third quarter of 2002, the
Corporation began investing a portion of its cash in marketable
securities under investment guidelines that were approved by the
Bankruptcy Court. As of September 30, 2002, $152 million was
invested in marketable securities.
As of September 30, 2002, USG had $338 million of borrowing
capacity under a debtor-in-possession (DIP) financing facility.
Of this total, $323 million of borrowing capacity was unused and
$15 million supported standby letters of credit. The DIP
facility has a maximum borrowing capacity of $350 million;
however, actual capacity varies depending on certain asset
levels.
Chapter 11 Reorganization
USG and its principal domestic subsidiaries filed voluntary
petitions for reorganization under Chapter 11 of the U.S.
Bankruptcy Code in Delaware on June 25, 2001. This action was
taken to resolve asbestos-related claims in a fair and equitable
manner, protect the long-term value of these businesses and
maintain market leadership positions.
Last week, on October 17, a hearing on proposals for case
management regarding asbestos personal injury claims was held
before the federal judge assigned to USG's bankruptcy case.
Attorneys for USG and various other parties presented their
views on protocols for determining United States Gypsum's
liability for asbestos personal injury claims. The Court has
not indicated when a ruling or further proceedings on the matter
may be forthcoming.
USG Corporation is a Fortune 500 company with subsidiaries that
are market leaders in their key product groups: gypsum
wallboard, joint compound and related gypsum products; cement
board; gypsum fiber panels; ceiling panels and grid; and
building products distribution. For more information about USG
Corporation, visit the USG home page at http://www.usg.com
WARNACO: Begins Calvin Klein Store Closing Sales at 26 Locations
----------------------------------------------------------------
Store closing sales started Friday, October 25, 2002, at all 26
Calvin Klein Jeans Outlet Stores located in: Alabama,
California, Colorado, Connecticut, Florida, Georgia, Maine,
Massachusetts, New Jersey, Nevada, New York, Oregon and Texas.
On Tuesday, October 22, 2002, the United States Bankruptcy Court
for the Southern District of New York, approved Warnaco Group
Inc.'s (the ultimate parent company of Calvin Klein Jeans Outlet
Stores) selection of Hilco Merchant Resources to conduct the
Store Closing sale at the 26 outlets.
The Calvin Klein Jeans Outlet Stores are filled with an
assortment of Calvin Klein products for the entire family:
jeans, shirts, tops, outerwear, underwear, fragrances, eyewear
and accessories. Over $30 million of inventory is now being
liquidated during the store-closing sale. This sale will provide
an excellent opportunity to stock up on holiday gifts at
outstanding savings.
Currently, signs are being hung in the stores and deep discounts
are being taken on all merchandise in these 26 closing stores.
Consumers will be able to take advantage of extraordinary values
on merchandise from one of the world's best-known designers.
Joe Goldstein, President for Warnaco's Retail Division stated:
"I want to thank all of our staff for their hard work over the
years. Their contributions and hard work over the years is
recognized and appreciated."
Michael Keefe, President of Hilco Merchant Resources stated: "We
are extremely pleased to have been selected to participate in
this important project. Hilco Merchant Resources has tremendous
expertise that will help achieve maximum results for Warnaco
while protecting the brand. We expect this to be a very short
sale because of the brand and the very desirable merchandise and
outstanding values."
Based in Northbrook, IL, Hilco Merchant Resources provides high
yield strategic retail inventory liquidation and store closing
services. Over the years, Hilco principals have disposed of
assets valued in excess of $30 billion. Hilco Merchant Resources
is part of the Hilco Organization, a provider of asset
valuation, acquisition, disposition and financing to an
international marketplace through eight specialized business
units. Hilco serves retailers, manufacturers, wholesalers,
distributors and importers, direct and through their financial
institutions and consulting professionals. Services include:
retail store, warehouse and factory closings, and inventory
liquidations, through sales and auctions; asset appraisals
covering retail and industrial inventory, machinery, equipment,
accounts receivables and real estate; disposition of commercial
and industrial real estate and leaseholds; purchase and
liquidation of distressed accounts receivables portfolios;
acquisition and re-marketing of excess wholesale consumer goods
inventories; and secured debt and equity financing. The Hilco
organization, headquartered in Chicago, has offices in Boston;
New York; Los Angeles; Miami; Atlanta; Flagstaff; Detroit; and
London, England. For more information please visit its Web site
at http://www.hilcotrading.com
WORLDCOM: Carl McCall Asks for Stay Lift to Obtain Information
--------------------------------------------------------------
H. Carl McCall, Comptroller of the State of New York, as
Administrative Head of the New York State and Local Retirement
Systems and as Trustee of the New York State Common Retirement
Fund, asks Judge Gonzalez for a limited modification of the
automatic stay as to WorldCom, Inc. to permit the New York
Retirement Fund to obtain from WorldCom these materials:
A. a copy of all documents and materials WorldCom has produced
or provided, in connection with any inquiries or
investigations relating to the Company's accounting practices
or business affairs, related to:
-- any committee of the Legislative branch of the United
States Government,
-- the Executive branch of the United States Government, or
-- Wilmer Cutler & Pickering in connection with its
representation of the Special Investigative Committee of
WorldCom's Board of Directors; and
B. copies of all transcripts of witness interviews or
depositions in WorldCom's possession, custody or control that
were taken or conducted in connection with:
-- inquiries or investigations by any governmental bodies, or
-- inquiry or investigation conducted by Wilmer Cutler &
Pickering.
Michael S. Etkin, Esq., at Lowenstein & Sandler P.C., in New
York, informs the Court that New York Retirement Fund is a
creditor, equity holder and party-in-interest in the bankruptcy
case by virtue of the fact that it lost more than $300,000,000
as a result of its purchases of WorldCom common stock and debt
securities. On August 15, 2002, District Court Judge Denise L.
Cote appointed New York Retirement Fund as the lead plaintiff in
the consolidated securities class action captioned In re
WorldCom, Inc. Sec. Litig., Master File No. 02 Civ. 3288 (DLC)
(S.D.N.Y.).
According to Mr. Etkin, the securities class action, and
WorldCom's bankruptcy filing, were occasioned by what has been
exposed as the largest accounting fraud in history. In total,
WorldCom has to date reversed more than $9,000,000,000 in
income. The disclosures led to the indictments of former Chief
Financial Officer Scott D. Sullivan and former Director of
General Accounting Buford D. Yates for securities fraud and
conspiracy, and spurred a host of federal and state
investigations into the fraud.
Mr. Etkin believes that WorldCom has maintained a complete set
of all documents that have been provided in the investigations,
and can easily provide a copy of these documents to the New York
Retirement Fund with minimal burden. Further, on June 24, 2002,
the WorldCom Board of Directors commenced an investigation
relating to certain capital expenditure accounting issues and
other matters. On July 21, 2002, the Board appointed a Special
Investigative Committee to oversee the independent internal
investigation relating to these matters. The investigation is
being conducted by the law firm of Wilmer, Cutler & Pickering.
The New York Retirement Fund is aware that, in the securities
and ERISA actions relating to the highly publicized fraud at
Enron, lead plaintiffs in both those actions made applications
to the Court similar to the one made here by the New York
Retirement Fund, i.e., for a limited modification of the
automatic stay to allow Enron to produce to plaintiffs documents
that it had already provided to the federal government in
connection with Enron-related investigations. Mr. Etkin
recounts that on February 25, 2002, the Court granted the motion
filed by the ERISA plaintiffs in Enron, and on May 22, 2002, the
Court granted the motion filed by the lead plaintiff in the
Enron securities class action. In addition, the Court ordered
Enron to produce copies of all transcripts of witness interviews
taken or conducted by Wilmer, Cutler & Pickering in connection
with its representation of the Special Investigative Committee
of Enron's Board of Directors.
The New York Retirement Fund anticipates that, as was the case
in Enron, the Debtors may interpose an objection based on the
stay of discovery set forth in the Private Securities Litigation
Reform Act of 1995. Although the New York Retirement Fund does
not believe that the discovery stay applies in the circumstances
of this case, assuming that an objection is raised, the New York
Retirement Fund will move before Judge Cote, who is presiding
over the securities action, for an order lifting the discovery
stay so as to allow WorldCom to produce the documents requested.
The New York Retirement Fund notes that, in Enron, after the
Court granted plaintiffs relief from the automatic stay, lead
plaintiff in the securities action made a similar motion in the
District Court, which the Court granted. (Worldcom Bankruptcy
News, Issue No. 11; Bankruptcy Creditors' Service, Inc.,
609/392-0900)
DebtTraders reports that Worldcom Inc.'s 7.875% bonds due 2003
(WCOM03USN1) are trading between 16.625 and 17.125 . See
http://www.debttraders.com/price.cfm?dt_sec_ticker=WCOM03USN1
for real-time bond pricing.
* Jefferies Group Will Repurchase Up to 1,500,000 Shares
--------------------------------------------------------
The Board of Directors of Jefferies Group, Inc., (NYSE: JEF) has
authorized the repurchase, from time to time, of up to 1,500,000
shares of the Company's common stock.
Jefferies Group, Inc., (NYSE: JEF) is a holding company whose
affiliated companies, including its principal operating
subsidiary, Jefferies & Company, Inc., offer a variety of
services for institutional investors and growth companies.
Subsidiaries of Jefferies Group, Inc., together, comprise a
full-service investment bank and institutional securities firm
focused on the middle market. Jefferies offers financial
advisory, capital raising, mergers and acquisitions, and
restructuring services to small and mid-cap companies. The firm
provides outstanding trade execution in equity, high yield,
convertible and international securities, as well as fundamental
research and asset management capabilities, to institutional
investors. Additional services include correspondent clearing,
prime brokerage and securities lending. The firm's leadership in
equity trading is recognized by numerous consulting and survey
organizations, and Jefferies' subsidiary, Helfant Group, Inc.,
executes approximately ten percent of the daily reported volume
on the NYSE.
Through its subsidiaries, Jefferies Group, Inc., employs more
than 1,300 people in 20 offices worldwide, including Atlanta,
Boston, Chicago, Dallas, Hong Kong, London, Los Angeles, New
York, Paris, San Francisco, Tokyo and Zurich. Further
information about Jefferies, including a description of
investment banking, trading, research and asset management
services, can be found at http://www.jefco.com
* BOND PRICING: For the week of October 21 - October 25, 2002
------------------------------------------------------------
Issuer Coupon Maturity Price
------ ------ -------- -----
Adaptec Inc. 3.000% 03/05/07 67
Adelphia Communications 3.250% 05/01/21 7
Adelphia Communications 6.000% 02/15/06 7
Adelphia Communications 9.875% 03/01/05 35
Adelphia Communications 9.875% 03/01/07 33
Adelphia Communications 10.875% 10/01/10 34
Advanced Energy 5.000% 09/01/06 69
Advanced Micro Devices Inc. 4.750% 02/01/22 53
Advanstar Communications 12.000% 02/15/11 66
AES Corporation 4.500% 08/15/05 19
AES Corporation 9.375% 09/15/10 41
AES Corporation 9.500% 06/01/09 40
Aether Systems 6.000% 03/22/05 72
Agere Systems 6.500% 12/15/09 53
Akamai Technologies 5.500% 07/01/07 31
Allegheny Generating Company 6.875% 09/01/23 69
Allmerica Financial 7.625% 10/15/25 75
Alternative Living Services (Alterra) 5.250% 12/15/02 3
Alkermes Inc. 3.750% 02/15/07 47
Alexion Pharmaceuticals Inc. 5.750% 03/15/07 61
Amazon.com Inc. 4.750% 02/01/09 72
American Tower Corp. 2.250% 10/15/09 47
American Tower Corp. 6.250% 10/15/09 39
American Tower Corp. 9.375% 02/01/09 53
American & Foreign Power 5.000% 03/01/30 55
American West Air 6.930% 01/02/08 52
American West Air 7.120% 01/02/17 48
Americredit Corp. 9.875% 04/15/06 75
Amkor Technology Inc. 5.000% 03/15/07 25
Amkor Technology Inc. 9.250% 05/01/06 68
Amkor Technology Inc. 9.250% 02/15/08 67
Amkor Technology Inc. 10.500% 05/01/09 47
AnnTaylor Stores 0.550% 06/18/19 62
ANR Pipeline 9.625% 11/01/21 71
Arco Chemical Company 9.800% 02/01/20 75
Armstrong World Industries 9.750% 04/15/08 42
AMR Corporation 9.000% 09/15/16 41
AMR Corporation 9.750% 08/15/21 75
AMR Corporation 9.800% 10/01/21 43
AMR Corporation 10.000% 04/15/21 43
AMR Corporation 10.200% 03/15/20 45
Asarco Inc. 8.500% 05/01/25 35
Aspen Technology 5.250% 06/15/05 36
Atlas Air Inc. 9.057% 01/02/14 43
AT&T Corp. 6.500% 03/15/29 75
AT&T Wireless 8.750% 03/01/31 71
Aurora Foods 9.875% 02/15/07 61
Avaya Inc. 11.125% 04/01/09 62
Axcelis Technologies 4.250% 01/15/07 66
Barrett Resources Corp. 7.550% 02/01/07 68
Best Buy Co. Inc. 0.684% 06?27/21 65
Bethlehem Steel 8.450% 03/01/05 14
Borden Inc. 7.875% 02/15/23 57
Borden Inc. 8.375% 04/15/16 62
Borden Inc. 9.250% 06/15/19 65
Borden Inc. 9.200% 03/15/21 63
Boston Celtics 6.000% 06/30/38 65
Brocade Communication Systems 2.000% 01/01/07 67
Brooks Automatic 4.750% 06/01/08 71
Browning-Ferris Industries Inc. 7.400% 09/15/35 73
Budget Group Inc. 9.125% 04/01/06 17
Burlington Northern 3.200% 01/01/45 49
Burlington Northern 3.800% 01/01/20 69
CSC Holdings Inc. 7.625% 07/15/18 73
Calpine Corp. 4.000% 12/26/06 37
Calpine Corp. 4.000% 12/26/06 37
Calpine Corp. 8.500% 02/15/11 34
Capital One Financial 7.125% 08/01/08 68
Case Credit 6.750% 10/21/07 75
Case Corp. 7.250% 01/15/16 70
Cell Therapeutic 5.750% 06/15/08 44
Centennial Cell 10.750% 12/15/08 57
Century Communications 8.875% 01/15/07 34
Champion Enterprises 7.625% 05/15/09 32
Charter Communications, Inc. 4.750% 06/01/06 23
Charter Communications, Inc. 5.750% 10/15/05 27
Charter Communications Holdings 8.250% 04/01/07 54
Charter Communications Holdings 8.625% 04/01/09 53
Charter Communications Holdings 9.625% 11/15/09 53
Charter Communications Holdings 10.000% 04/01/09 54
Charter Communications Holdings 10.000% 05/15/11 52
Charter Communications Holdings 10.250% 01/15/10 54
Charter Communications Holdings 10.750% 10/01/09 55
Charter Communications Holdings 11.125% 01/15/11 54
Ciena Corporation 3.750% 02/01/08 57
Cincinnati Bell Telephone (Broadwing) 6.300% 12/01/28 63
Cincinnati Bell Inc. (Broadwing) 7.250% 06/15/23 72
CIT Group Holdings 5.875% 10/15/08 74
CNET Inc. 5.000% 03/01/06 55
Coastal Corp. 6.375% 02/01/09 74
Coastal Corp. 6.500% 05/15/06 69
Coastal Corp. 6.500% 06/01/08 73
Coastal Corp. 6.950% 06/01/28 45
Coastal Corp. 7.420% 02/15/37 55
Coastal Corp. 7.500% 08/15/06 73
Coastal Corp. 7.750% 10/15/35 53
Coeur D'Alene 6.375% 01/31/05 73
Coeur D'Alene 7.250% 10/31/05 70
Cogentrix Energy 8.750% 10/15/08 73
Comcast Corp. 2.000% 10/15/29 18
Comforce Operating 12.000% 12/01/07 58
Commscope Inc. 4.000% 12/15/06 74
Computer Associates 5.000% 03/15/07 72
Computer Network 3.000% 02/15/07 66
Conexant Systems 4.000% 02/01/07 28
Conexant Systems 4.250% 05/01/06 34
Conseco Inc. 8.750% 02/09/04 8
Conseco Inc. 10.750% 06/15/09 23
Constellation Energy Group 7.600% 04/01/32 74
Continental Airlines 4.500% 02/01/07 45
Corning Inc. 3.500% 11/01/08 51
Corning Inc. 6.300% 03/01/09 55
Corning Inc. 6.750% 09/15/13 44
Corning Inc. 6.850% 03/01/29 36
Corning Inc. 7.000% 03/15/07 66
Corning Inc. 8.875% 08/15/21 47
Corning Glass 7.000% 03/15/07 66
Corning Glass 8.875% 03/15/16 50
Cox Communications Inc. 3.000% 03/14/30 35
Cox Communications Inc. 0.348% 02/23/21 70
Cox Communications Inc. 0.348% 02/23/21 70
Cox Communications Inc. 0.426% 04/19/20 42
Cox Communications Inc. 7.750% 11/15/29 26
Critical Path 5.750% 04/01/05 63
Critical Path 5.750% 04/01/05 63
Crown Castle International 9.000% 05/15/11 62
Crown Castle International 9.375% 08/01/11 63
Crown Castle International 9.500% 08/01/11 63
Crown Castle International 10.750% 08/01/11 69
Crown Cork & Seal 8.375% 01/15/05 68
Cubist Pharmacy 5.500% 11/01/08 41
Cummins Engine 5.650% 03/01/98 58
Cypress Semiconductor 3.750% 07/01/05 69
Cypress Semiconductor 4.000% 02/01/05 69
Dana Corp. 7.000% 03/01/29 68
Dana Corp. 7.000% 03/15/28 68
DDI Corporation 6.250% 04/01/07 16
Delhaize America 9.000% 04/15/31 72
Delta Air Lines 7.900% 12/15/09 64
Delta Air Lines 8.300% 12/15/29 49
Delta Air Lines 9.000% 05/15/16 58
Delta Air Lines 9.250% 03/15/22 56
Dillard Department Store 7.000% 12/01/28 70
Dobson Communications Corp. 10.875% 07/01/10 72
Dobson/Sygnet 12.250% 12/15/08 74
Documentum Inc. 4.500% 04/01/07 74
Dresser Industries 7.600% 08/15/96 60
DVI Inc. 9.875% 02/01/04 73
Dynegy Holdings Inc. 6.875% 04/01/11 41
EOTT Energy Partner 11.000% 10/01/09 67
Echostar Communications 4.875% 01/01/07 74
Echostar Communications 5.750% 05/15/08 73
Edison Mission 7.330% 09/15/08 71
El Paso Corp. 7.000% 05/15/11 58
El Paso Corp. 7.750% 01/15/32 56
El Paso Natural Gas 7.500% 11/15/26 55
El Paso Natural Gas 8.625% 01/15/22 64
Emulex Corp. 1.750% 02/01/07 72
Enron Corp. 9.875% 06/15/03 16
Enzon Inc. 4.500% 07/01/08 67
Equistar Chemicals 7.550% 02/15/26 64
E*Trade Group 6.000% 02/01/07 62
E*Trade Group 6.750% 05/15/08 74
Extreme Networks 3.500% 12/01/06 67
FEI Company 5.500% 08/15/08 74
Ferro Corporation 7.125% 04/01/28 75
Finisar Corp. 5.250% 10/15/08 55
Finova Group 7.500% 11/15/09 30
Fleming Companies Inc. 5.250% 03/15/09 38
Fleming Companies Inc. 10.625% 07/31/07 47
Food Lion Inc. 8.050% 04/15/27 64
Ford Motor Co. 6.500% 08/01/18 71
Ford Motor Co. 6.625% 02/15/28 66
Ford Motor Co. 7.125% 11/15/25 72
Ford Motor Co. 7.500% 08/01/26 74
Fort James Corp. 7.750% 11/15/23 64
Foster Wheeler 6.750% 11/15/05 58
GCI Inc. 9.750% 08/01/07 60
General Physics 6.000% 06/30/04 52
Geo Specialty 10.125% 08/01/08 72
Georgia-Pacific 7.375% 12/01/25 61
Georgia-Pacific 7.700% 06/15/15 71
Georgia-Pacific 7.750% 11/15/29 62
Georgia-Pacific 8.125% 06/15/23 67
Georgia-Pacific 8.250% 03/01/23 68
Georgia-Pacific 8.625% 04/30/25 70
Georgia-Pacific 8.875% 05/15/31 70
Georgia-Pacific 9.125% 07/01/22 74
Globespan Inc. 5.250% 05/15/06 74
Goodyear Tire 7.000% 03/15/28 63
Gulf Mobile Ohio 5.000% 12/01/56 63
Hanover Compress 4.750% 03/15/08 67
Hasbro Inc. 6.600% 07/15/28 74
Health Management Associates Inc. 0.250% 08/16/20 72
Health Management Associates Inc. 0.250% 08/16/20 72
HealthSouth Corp. 7.000% 06/15/08 62
HealthSouth Corp. 8.375% 10/01/11 64
HealthSouth Corp. 8.500% 02/01/08 74
HealthSouth Corp. 10.750% 10/01/08 67
Hertz Corp. 7.000% 01/15/28 65
Human Genome 3.750% 03/15/07 64
Human Genome 5.000% 02/01/07 71
Huntsman Polymer 11.750% 12/01/04 67
I2 Technologies 5.250% 12/15/06 57
ICN Pharmaceuticals Inc. 6.500% 07/15/08 63
IMC Global Inc. 7.300% 01/15/28 72
IMC Global Inc. 7.375% 08/01/18 74
Ikon Office 6.750% 12/01/25 66
Ikon Office 7.300% 11/01/27 71
Imcera Group 7.000% 12/15/13 73
Imclone Systems 5.500% 03/01/05 56
Inhale Therapeutic Systems Inc. 3.500% 10/17/07 43
Inland Steel Co. 7.900% 01/15/07 57
International Rectifier 4.250% 07/15/07 75
Interpublic Group 1.870% 06/01/06 64
JL French Auto 11.500% 06/01/09 54
Juniper Networks 4.750% 03/15/07 69
Kaiser Aluminum & Chemicals Corp. 9.875% 02/15/49 62
Kmart Corporation 8.125% 12/01/06 16
Kmart Corporation 8.250% 01/01/22 22
Kmart Corporation 8.375% 07/01/22 22
Kmart Corporation 9.375% 02/01/06 18
Kulicke & Soffa Industries Inc. 5.250% 08/15/06 42
LSI Logic 4.000% 11/01/06 75
LSP Energy LP 8.160% 07/15/25 74
LTX Corporation 4.250% 08/15/06 60
Lehman Brothers Holding 8.000% 11/13/03 63
Level 3 Communications 6.000% 09/15/09 30
Level 3 Communications 6.000% 03/15/09 33
Level 3 Communications 9.125% 05/01/08 57
Liberty Media 3.500% 01/15/31 58
Liberty Media 3.500% 01/15/31 59
Liberty Media 3.750% 02/15/30 47
Liberty Media 4.000% 11/15/29 50
LSI Logic 4.000% 11/01/06 72
LSI Logic 4.000% 11/01/06 72
Lucent Technologies 5.500% 11/15/08 25
Lucent Technologies 6.450% 03/15/29 27
Lucent Technologies 6.500% 01/15/28 17
Lucent Technologies 7.250% 07/15/06 42
Magellan Health 9.000% 02/15/08 16
Mail-Well I Corp. 8.750% 12/15/08 38
Mail-Well I Corp. 9.625% 03/15/12 66
Mastec Inc. 7.750% 02/01/08 74
MCI Communications Corp. 7.500% 08/20/04 29
MCI Communications Corp. 7.750% 03/15/24 30
Medarex Inc. 4.500% 07/01/06 57
Mediacom Communications 5.250% 07/01/06 66
Mediacom LLC 7.875% 02/15/11 67
Mediacom LLC 8.500% 04/15/08 75
Mediacom LLC 9.500% 01/15/13 72
Metris Companies 10.000% 11/01/04 75
Metris Companies 10.125% 07/15/06 75
Mikohn Gaming 11.875% 08/15/08 64
Mirant Corp. 5.750% 07/15/07 34
Mirant Americas 7.200% 10/01/08 47
Mirant Americas 7.625% 05/01/06 63
Mirant Americas 8.300% 05/01/11 42
Mirant Americas 8.500% 10/01/21 35
Mirant Americas 9.125% 05/01/31 59
Mission Energy 13.500% 07/15/08 43
Missouri Pacific Railroad 4.750% 01/01/20 71
Missouri Pacific Railroad 4.750% 01/01/30 68
Missouri Pacific Railroad 5.000% 01/01/45 54
Motorola Inc. 5.220% 10/01/21 52
Motorola Inc. 6.500% 11/15/28 71
MSX International 11.375% 01/15/08 64
National Vision 12.000% 03/30/09 60
Natural Microsystems 5.000% 10/15/05 57
Navistar Financial 4.750% 04/01/09 71
Nextel Communications 5.250% 01/15/10 66
Nextel Communications 6.000% 06/01/11 71
Nextel Partners 11.000% 03/15/10 67
NGC Corp. 7.625% 10/15/26 57
Noram Energy 6.000% 03/15/12 65
Northern Pacific Railway 3.000% 01/01/47 48
Northern Pacific Railway 3.000% 01/01/47 48
NTL (Delaware) 5.750% 12/15/09 14
NTL Communications Corp 6.750% 05/15/08 16
Nvidia Corp. 4.750% 10/15/07 75
ON Semiconductor 12.000% 05/15/08 73
ONI Systems Corporation 5.000% 10/15/05 74
OSI Pharmaceuticals 4.000% 02/01/09 64
Owens-Illinois Inc. 7.800% 05/15/18 69
PG&E National Energy 10.375% 05/16/11 36
Panamsat Corp. 6.875% 01/15/28 71
Paxson Communications 10.750% 07/15/08 75
Pegasus Satellite 12.375% 08/01/06 49
Penney (JC) Company 7.625% 03/01/97 73
Phelps Dodge 7.125% 11/01/27 74
Photronics Inc. 4.750% 12/15/06 68
PMC-Sierra Inc. 3.750% 08/15/06 65
Polaroid Corp. 11.500% 02/15/06 5
Primedia Inc. 7.625% 04/01/08 67
Primedia Inc. 8.875% 05/15/11 73
Providian Financial 3.250% 08/15/05 64
PSEG Energy Holdings 8.500% 06/15/11 70
Public Service Electric & Gas 5.000% 07/01/37 70
Photronics Inc. 4.750% 12/15/06 73
Quanta Services 4.000% 07/01/07 50
Quantum Corp. 7.000% 08/01/04 75
Qwest Capital Funding 7.000% 08/03/09 44
Qwest Capital Funding 7.250% 02/15/11 44
Qwest Capital Funding 7.625% 08/03/21 47
Qwest Capital Funding 7.750% 08/15/06 62
Qwest Capital Funding 7.900% 08/15/10 44
Qwest Communications Int'l 7.250% 11/01/06 48
RF Micro Devices 3.750% 08/15/05 74
RF Micro Devices 3.750% 08/15/05 74
Redback Networks 5.000% 04/01/07 32
Rite Aid Corp. 4.750% 12/01/06 67
Rite Aid Corp. 7.125% 01/15/07 65
Rockwell Int'l 5.200% 01/15/98 73
Royster-Clark 10.250% 04/01/09 69
Rural Cellular 9.625% 05/15/08 49
Rural Cellular 9.750% 01/15/10 50
Ryder System Inc. 5.000% 02/25/21 72
SBA Communications 10.250% 02/01/09 40
SCI Systems Inc. 3.000% 03/15/07 57
Saks Inc. 7.375% 02/15/19 74
Sepracor Inc. 5.000% 02/15/07 50
Sepracor Inc. 7.000% 12/15/05 62
Service Corp. Int'l 6.750% 06/22/08 74
Silicon Graphics 5.250% 09/01/04 53
Simula Inc. 8.000% 05/01/04 73
Skechers USA, Inc. 4.500% 04/15/07 70
Solutia Inc. 7.375% 10/15/27 70
Sonat Inc. 6.625% 02/01/08 60
Sonat Inc. 6.750% 10/01/07 62
Sonat Inc. 7.625% 07/15/11 52
Sonic Automotive 5.250% 05/07/09 73
Sotheby's Holdings 6.875% 02/01/09 74
Sprint Capital Corp. 6.000% 01/15/07 74
Sprint Capital Corp. 6.875% 11/15/28 64
Sprint Capital Corp. 6.900% 05/01/19 63
Sprint Capital Corp. 8.375% 03/15/28 66
Sprint Capital Corp. 8.750% 03/15/32 74
TCI Communications Inc. 7.125% 02/15/28 74
TECO Energy Inc. 7.000% 05/01/12 73
Tenneco Inc. 10.000% 03/15/08 74
Tenneco Inc. 11.625% 10/15/09 68
Tennessee Gas PL 7.000% 10/15/28 52
Tennessee Gas PL 7.500% 04/01/17 60
Tennessee Gas PL 7.625% 04/01/37 55
Teradyne Inc. 3.750% 10/15/06 72
Tesoro Pete Corp. 9.000% 07/01/08 51
Tesoro Pete Corp. 9.625% 11/01/08 52
TIG Holdings Inc. 8.125% 04/15/05 74
Time Warner Inc. 6.625% 05/15/29 74
Transwitch Corp. 4.500% 09/12/05 59
Trenwick Capital I 8.820% 02/01/37 73
Tribune Company 2.000% 05/15/29 70
Triton PCS Inc. 8.750% 11/15/11 69
Triton PCS Inc. 9.375% 02/01/11 74
Trump Atlantic 11.250% 05/01/06 74
Turner Broadcasting 8.375% 07/01/13 74
TXU Corp. 6.375% 06/15/06 75
US Airways Passenger 6.820% 01/30/14 70
US Airways Passenger 9.010% 01/20/19 48
US Airways Inc. 7.960% 01/20/18 74
Ugly Duckling 11.000% 04/15/07 60
United Air Lines 10.670% 05/01/04 20
United Air Lines 11.210% 05/01/14 28
Universal Health Services 0.426% 06/23/20 70
US Timberlands 9.625% 11/15/07 54
US West Capital Funding 6.250% 07/15/05 63
US West Capital Funding 6.375% 07/15/08 45
US West Capital Funding 6.875% 07/15/28 67
US West Communications 7.250% 10/15/35 66
US West Communications 7.500% 06/15/23 71
Utilicorp United 7.625% 11/15/09 69
Utilicorp United 7.950% 02/01/11 70
Utilicorp United 8.000% 03/01/23 56
Utilicorp United 8.270% 11/15/21 58
Veeco Instrument 4.125% 12/21/08 68
Vertex Pharmaceuticals 5.000% 09/19/07 73
Vesta Insurance Group 8.750% 07/15/25 74
Viropharma Inc. 6.000% 03/01/07 35
Vitesse Semiconductor 4.000% 03/15/05 72
Weirton Steel 10.750% 06/01/05 66
Western Resources Inc. 6.800% 07/15/18 72
Westpoint Stevens 7.875% 06/15/08 21
Williams Companies 6.625% 11/15/04 65
Williams Companies 7.125% 09/01/11 73
Williams Companies 7.875% 09/01/21 65
Williams Holding (Delaware) 6.250% 02/01/06 70
Williams Holding (Delaware) 6.500% 12/01/08 56
Wind River System 3.750% 12/15/06 69
Witco Corp. 6.875% 02/01/26 67
Witco Corp. 7.750% 04/01/23 75
Worldcom Inc. 6.400% 08/15/05 12
XM Satellite Radio 7.750% 03/01/06 32
Xerox Corp. 0.570% 04/21/18 59
Xerox Credit 7.200% 08/05/12 66
*********
Monday's edition of the TCR delivers a list of indicative prices
for bond issues that reportedly trade well below par. Prices
are obtained by TCR editors from a variety of outside sources
during the prior week we think are reliable. Those sources may
not, however, be complete or accurate. The Monday Bond Pricing
table is compiled on the Friday prior to publication. Prices
reported are not intended to reflect actual trades. Prices for
actual trades are probably different. Our objective is to share
information, not make markets in publicly traded securities.
Nothing in the TCR constitutes an offer or solicitation to buy
or sell any security of any kind. It is likely that some entity
affiliated with a TCR editor holds some position in the issuers'
public debt and equity securities about which we report.
A list of Meetings, Conferences and Seminars appears in each
Wednesday's edition of the TCR. Submissions about insolvency-
related conferences are encouraged. Send announcements to
conferences@bankrupt.com.
Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at http://www.debttraders.com/
Each Friday's edition of the TCR includes a review about a book
of interest to troubled company professionals. All titles are
available at your local bookstore or through Amazon.com. Go to
http://www.bankrupt.com/books/to order any title today.
For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.
*********
S U B S C R I P T I O N I N F O R M A T I O N
Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter
A. Chapman, Editors.
Copyright 2002. All rights reserved. ISSN: 1520-9474.
This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
prior written permission of the publishers. Information
contained herein is obtained from sources believed to be
reliable, but is not guaranteed.
The TCR subscription rate is $625 for 6 months delivered via e-
mail. Additional e-mail subscriptions for members of the same
firm for the term of the initial subscription or balance thereof
are $25 each. For subscription information, contact Christopher
Beard at 240/629-3300.
*** End of Transmission ***