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/raid1/www/Hosts/bankrupt/TCR_Public/031124.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, November 24, 2003, Vol. 7, No. 232 Headlines AIR CANADA: Hargrove Urges Co. to Buy Made-in-Canada Aircraft AKORN INC: Three New Members Elected to Board of Directors ALANCO TECHNOLOGIES: Extends Credit Agreement Until July 1, 2005 ALASKA AIR GROUP: Dennis Madsen Elected to Board of Directors ALLIANCE COMMS: Disclosure & Confirmation Hearing Set for Dec. 3 AMERADA HESS: Prices $600MM Convertible Preferred Public Offering AMERICAN FINANCIAL: Completes Merger with American Fin'l Corp. AMERICAN NATURAL ENERGY: Issuing 100K Shares to Canaccord Capital AMES DEPARTMENT: Proposes to Buy Administrative Expense Claims AMPEX CORP: AMEX Will Not Grant Waiver & Will Halt Stock Trading ANIXTER INT'L: Completes Sale & Leaseback of Ill. Headquarters ARMSTRONG HOLDINGS: Asks Court to Modify Stay Re Promicom Claim ARVINMERITOR INC: LVA Business Realigns Management Structure BIOVAIL: SEC Initiates Informal Inquiry into Auditing Practices BROCADE COMMS: Reports Strong Growth for Fourth-Quarter 2003 CALPINE CORP: Closes $400M 9-7/8% Senior Secured Debt Offering CINCINNATI BELL: Completes $540M 8-3/8% Sr. Sub. Debt Offering CMS ENERGY: Sells CMS Marysville Gas Liquids Unit to Marysville COMDISCO: Will Make Payment on Contingent Distribution Rights CONE MILLS: Robinson Lerer Serves as Public Relations Specialist CONSTELLATION BRANDS: Names Georgia Lamb SVP of Human Resources DILLARD'S INC: Third-Quarter Net Loss Triples to $15 Million DOBSON: Enhancing Statewide Network with Up to $24MM Investment DOBSON COMMS: Shares Now Trading on Nasdaq National Market eB2B COMMERCE: Wants More Time to File Current Fin'l Information ENRON CORP: Northern Border Reaffirms 2004 Distribution Guidance ENRON: Wants Exclusive Solicitation Time Extended to April 30 ENTERTAINMENT TECH: Says Assets Insufficient to Satisfy Claims GAP INC: Third-Quarter 2003 Results Reflect Marked Improvement GENESIS HEALTH: Will Publish Fiscal Year-End Results on Dec. 10 G-FORCE CDO: S&P Assigns Prelim. Ratings to Series 2003-1 Notes GINGISS GROUP: Asks to Hire Houlihan Lokey as Investment Banker GOODYEAR TIRE: Inks New Long-Term Supply Pact with Volvo Trucks HEALTHSOUTH CORP: Expands Agreement with CIGNA Healthcare IMAGEMAX: Needs Additional Funds to Meet Near-Term Obligations INTEREP: Confirms New Employees Return to Katz Radio Group IVACO: Furloughing Staff in Canada as Restructuring Continues J.A. JONES: Bradley Arant Serves as Bankruptcy Attorneys JLG INDUSTRIES: Declares Regular Quarterly Cash Dividend KMART CORP: Asks Court to Fix Supplemental Claim Bar Dates KRONOS ADVANCED: Capital Infusion Needed to Continue Operations LATTICE SEMICON.: S&P Assigns B/CCC+ Credit & Sub Notes Ratings LEXAM EXPLORATIONS: Liquidity Issues Raise Going Concern Doubt LIBERTY MEDIA: Initiates $4.5-Billion Debt Reduction Program MARSH SUPERMARKETS: Will Hold 2nd Quarter Conference Call Today MDC CORP: Offering 3.4M Adjustable Rate Exchangeable Securities MEDIAWORX INC: Needs Additional Capital to Continue Operations MEDISOLUTION LTD: Sept. 30 Net Capital Deficit Widens $8 Million MERRILL LYNCH: Fitch Takes Rating Actions on 2003-KEY1 Notes METATEC INT'L: Selling Assets to MTI Acquisition for $10 Million MILLENNIUM CHEMS: Caps Price on $125MM of New Senior Debentures MIRANT: Seeks Prelim. & Permanent Injunctive Relief Against FERC MITEC: Second Quarter Results Conference Call Set for Dec. 4 MOLECULAR DIAGNOSTICS: Files SEC 10-QSB September Quarter Report MOLECULAR DIAGNOSTICS: Terminate Licenses With MonoGen, Inc. MONITRONICS INT'L: Sept. 30 Balance Sheet Upside-Down by $50MM NATIONAL COAL: Substantial Losses Raise Going Concern Doubts NEW SKEENA: Files for Court Protection Under CCAA in Canada NOBLE CHINA: Ontario Court Approves Amended CCAA Plan NORTHWESTERN CORP: Brian B. Bird Named Chief Financial Officer NRG ENERGY: CL&P Asks to Modify Stay to Pursue CDPUC Petition OM GROUP INC: Fails to Beat SEC Form 10-Q Filing Deadline ONESOURCE TECH.: September 30 Balance Sheet Upside-Down by $580K OWENS: Wants to Extend Lease Decision Period to June 4, 2004 PARTNERS MORTGAGE: Retains Hillis Clark as Avoidance Counsel PEREGRINE SYSTEMS: Gains Nod to Settle Subordinated Debt Claims PLAINS RESOURCES: Receives Buyout Proposal from Vulcan Capital PLAINTREE SYSTEMS: Getting an Additional Loan from Shareholder PORTLAND GENERAL: Fitch Says Planned Sale Won't Affect Ratings RADNOR HLDGS: Near-Term Liquidity Concerns Spur S&P's Neg. Watch RENAISSANCE ENTERTAINMENT: Losses Raise Going Concern Doubts RESOURCE AMERICA: Will Redeem All Outstanding 12% Senior Notes RESOLUTION PERFORMANCE: S&P Lowers Corporate Credit Rating to B SBARRO INC: S&P Junks Corp. Credit Rating over Poor Performance SCHWARTZ ELECTRO: Closes Sale of Remaining Assets to OSI Systems SK GLOBAL: Wants Plan-Filing Exclusivity Extended to March 18 SLATER STEEL: September Balance Sheet Upside Down by $133.8-Mil. SMITHFIELD FOODS: Reports Substantially Improved Q2 Results THRONBURG MORTGAGE: Fitch Gives Stable Outlook to BB Note Rating TOYS R US: Taps Hilco Merchant to Direct Kids 'R' Us Liquidation UNITED AIRLINES: Court Okays Extension of Bain's Engagement UNITED AIRLINES: Reports Strong Results for October 2003 US TIMBERLANDS: S&P Cuts Credit & Sr Unsec. Debt Ratings to CC VENTAS INC: Will Acquire ElderTrust in $184 Million Transaction WEIRTON STEEL: Court Approves Amended Disclosure Statement WESTAR ENERGY: Board of Directors Declares 4th-Quarter Dividend WESTPORT RESOURCES: Declares Dividend on 6.5% Conv. Preferreds WILLIAMS: Board Directors Declares Dividend Payable on Dec. 29 WINSTAR: Trustee Gets Court Nod to Make Interim Distributions WORLDCOM: Obtains Clearance to Assume 3 Wilmington Fiber Leases WORLD HEART: Will Hold Special Shareholders' Meeting Tomorrow * Richter Launches Strategy to Accelerate its Growth in Quebec * BOND PRICING: For the week of November 24 - 28, 2003 ********* AIR CANADA: Hargrove Urges Co. to Buy Made-in-Canada Aircraft ------------------------------------------------------------- The President of the Canadian Auto Workers union, Buzz Hargrove, has urged Air Canada's senior management to choose Canadian-made aerospace products in its upcoming major purchases of new aircraft. Media reports indicate that Air Canada plans to purchase up to 85 new aircraft (including mid-sized 100-seat jets, and smaller 50 to 70-seat regional jets or turboprops) upon its eventual emergence from bankruptcy protection. Hargrove has urged Air Canada to choose Canadian-made products in both categories. Wings for the Boeing 717 jet, which would fit the airline's desired mid-sized niche and offers superior fuel economy, are made at a Boeing facility in Toronto, and Boeing has several other major plants in Canada manufacturing components for the 717 and other Boeing products. Meanwhile, Bombardier produces both a Regional Jet and a new-generation Dash-8 turboprop which together would meet Air Canada's need for smaller aircraft. Competing products in both categories are produced by Europe's Airbus and Brazil's Embraer, neither of which maintain any significant Canadian operations. Hargrove warned that an Air Canada purchase from either of these firms would spark outrage among Canadians who have sacrificed to help Air Canada through its financial troubles. "I cannot emphasize enough the damage that would be done to that goodwill, and the potential loss of cooperation that would result, if Air Canada decides to purchase foreign-made aircraft instead of high-quality, competitive, Canadian-made products," Hargrove wrote. Hargrove also promised to raise the issue of Air Canada's purchase as a matter of high importance with incoming Prime Minister Paul Martin and his cabinet. AKORN INC: Three New Members Elected to Board of Directors ---------------------------------------------------------- Akorn, Inc. (AKRN) announced the election of Arthur S. Przybyl, Jerry Treppel and Arjun C. Waney to its Board of Directors. On November 6, 2003, the Board of Directors of Akorn held a meeting at Akorn's principal office to discuss, among other items, the composition of the Board of Directors. At the meeting, the Board of Directors increased the number of directors of Akorn from 5 to 6, accepted the resignations of Doyle Gaw and Dan Bruhl as directors of Akorn, and appointed Mssrs. Przybyl, Treppel and Waney to fill the vacancies on the Board of Directors until their earlier removal, resignation or the selection of their successors. Mr. Przybyl is the current President, Chief Operating Officer and Chief Executive Officer of Akorn, having served as President and Chief Operating Officer since September 2002. Mr. Przybyl joined Akorn in August 2002 as Senior Vice President of Sales and Marketing. Prior to joining Akorn, Mr. Przybyl served as President and Chief Executive Officer for Hearing Innovations Inc., a developer of medical devices for the profoundly deaf and tinnitus markets. Previously, he served as President and Chief Operating Officer for Bioject Medical Technology, Inc., a small- cap company specializing in medical devices for the needle-free injection of liquid medications. Mr. Przybyl is a current member of the Board of Directors of Novadaq Technologies, Inc., a privately held Canadian medical device company, and Advanced Spinal Devices LLC, a privately held U.S. medical device company. Mr. Treppel is the Managing Member of Wheaten Capital Management LLC, a capital management company focusing on investments in the health care sector. Over the past 15 years, Mr. Treppel was an equity research analyst focusing on the specialty pharmaceuticals and generic drug sectors at several investment banking firms including Banc of America Securities, Warburg Dillon Read LLC (now UBS), and Kidder, Peabody & Co. He previously served as a healthcare services analyst at various firms, including Merrill Lynch & Co. He also held administrative positions in the healthcare services industry early in his career. Mr. Treppel is a current member of the Board of Directors of Able Laboratories Inc., a generic drug company, and Cangene, a Canadian biotechnology company. Mr. Treppel holds a BA in Biology from Rutgers College in New Brunswick, N.J., an MHA in Health Administration from Washington University in St. Louis, MO, and an MBA in Finance from New York University. Mr. Treppel has been a Chartered Financial Analyst (CFA) since 1988. Mr. Waney is Managing Director and principal shareholder of Argent Fund Management Ltd., a UK-based fund management firm that manages First Winchester Investments, an offshore fund specializing in U.S. equities. Mr. Waney has over thirty years experience in the U.S. capital markets in connection with various investment funds. In 1965, he founded Import Cargo Inc. and Cost Less Imports Inc., multi-store retail operations in the U.S. and Europe, respectively, that were sold in succession to Pier 1 Imports Inc. In 1973, Mr. Waney founded Beeba's Creations Inc., now known as Nitches Inc., a U.S. apparel importer and wholesaler that went public in 1982. Mr. Waney is a shareholder of Akorn, and may be deemed to beneficially own more than 10% of the outstanding shares of Akorn's common stock. In other changes, Akorn appointed three new committees of the Board of Directors. Jerry Ellis, Jerry Treppel and Ron Johnson have been appointed to the Audit Committee, with Mr. Ellis named as Chairman; Mssrs. Waney, Treppel and Ellis have been appointed to the Compensation Committee, with Mr. Waney named as Chairman; and Mssrs. Ellis, Treppel, Johnson and Waney have been appointed to the Nominating and Corporate Governance Committee, with Mr. Ellis named as Chairman. Akorn, Inc. manufactures and markets sterile specialty pharmaceuticals, and markets and distributes an extensive line of pharmaceuticals and ophthalmic surgical supplies and related products. Additional information is available on the Company's Web site t http://www.akorn.com * * * Going Concern Uncertainty In Akorn's most recent Form 10-Q filed with SEC, the Company reported: "The [Company's] financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. Accordingly, the financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The Company experienced losses from operations in 2002, 2001 and 2000 and has a working capital deficiency of $29.4 million as of March 31, 2003. The Company also is in default under its existing credit agreement and is a party to governmental proceedings and potential claims by the Food and Drug Administration that could have a material adverse effect on the Company. Although the Company has entered into a Forbearance Agreeement with its senior lenders, is working with the FDA to favorably resolve such proceeding, has appointed a new interim chief executive officer and implemented other management changes and has taken steps to return to profitability, there is substantial doubt about the Company's ability to continue as a going concern. The Company's ability to continue as a going concern is dependent upon its ability to (i) continue to finance it current cash needs, (ii) continue to obtain extensions of the Forbearance Agreement, (iii) successfully resolve the ongoing governmental proceeding with the FDA and (iv) ultimately refinance its senior bank debt and obtain new financing for future operations and capital expenditures. If it is unable to do so, it may be required to seek protection from its creditors under the federal bankruptcy code. "While there can be no guarantee that the Company will be able to continue to generate sufficient revenues and cash flow from operations to finance its current cash needs, the Company generated positive cash flow from operations in 2002 and for the period from January 1 through April 30, 2003. As of April 30, 2003, the Company had approximately $400,000 in cash and equivalents and approximately $1.4 million of undrawn availability under its second line of credit described below. "There can also be no guarantee that the Company will successfully resolve the ongoing governmental proceedings with the FDA. However, the Company has submitted to the FDA and begun to implement a plan for comprehensive corrective actions at its Decatur, Illinois facility. "Moreover, there can be no guarantee that the Company will be successful in obtaining further extensions of the Forbearance Agreement or in refinancing the senior debt and obtaining new financing for future operations. However, the Company is current on its interest payment obligations to its senior lenders, management believes that the Company has a good relationship with its senior lenders and, as required, the Company has retained a consulting firm, submitted a restructuring plan and engaged an investment banker to assist in raising additional financing and explore other strategic alternatives for repaying the senior bank debt. The Company has also added key management personnel, including the appointment of a new interim chief executive officer and vice president of operations, and additional personnel in critical areas, such as quality assurance. Management has reduced the Company's cost structure, improved the Company's processes and systems and implemented strict controls over capital spending. Management believes these activities have improved the Company's profitability and cash flow from operations and improve its prospects for refinancing its senior debt and obtaining additional financing for future operations. "As a result of all of the factors cited in the preceeding paragraphs, management of the Company believes that the Company should be able to sustain its operations and continue as a going concern. However, the ultimate outcome of this uncertainty cannot be presently determined and, accordingly, there remains substantial doubt as to whether the Company will be able to continue as a going concern. Further, even if the Company's efforts to raise additional financing and explore other strategic alternatives result in a transaction that repays the senior bank debt, there can be no assurance that the current common stock will have any value following such a transaction. In particular, if any new financing is obtained, it likely will require the granting of rights, preferences or privileges senior to those of the common stock and result in substantial dilution of the existing ownership interests of the common stockholders." ALANCO TECHNOLOGIES: Extends Credit Agreement Until July 1, 2005 ---------------------------------------------------------------- Alanco Technologies Inc. (NASDAQ: ALAN) has reached agreement with its current lender to amend the company's existing $1.8 million line of credit, extending the agreement to July 1, 2005, and converting $250,000 of the outstanding line into common stock equity in accordance with the conversion terms of the original agreement. Robert R. Kauffman, Alanco's chairman and CEO, stated, "We are extremely pleased with our lender's continued support and confidence as indicated by this new equity investment in the company and credit line agreement extension to July 2005. These developments, along with our recently announced (Nov. 10, 2003) $1,000,000 institutional equity financing, significantly improve our balance sheet and working capital position." Alanco Technologies Inc., headquartered in Scottsdale, Ariz., is the developer of the TSI PRISM RFID continuous tracking system for the corrections industry, which tracks the location and movement of inmates and officers, resulting in significant prison operating cost reductions and dramatically enhanced officer safety and facility security. Utilizing RFID (Radio Frequency Identification) tracking technology with proprietary software and patented hardware components, TSI PRISM provides real-time inmate and officer identification, location and tracking capabilities both indoors and out. The TSI PRISM system is currently utilized in prisons in Michigan and California, and a new 2,000-bed medium- security prison in Illinois. The company also participates in the data storage industry through two subsidiary companies: Arraid Inc., a manufacturer of proprietary storage products to upgrade older "legacy" computer systems; and Excel/Meridian Data Inc., a manufacturer of Network Attached Storage systems. * * * At June 30, 2003 the Company's current assets exceeded current liabilities by $562,500, resulting in a current ratio of 1.20 to 1. At June 30, 2002, the Company's current assets exceeded current liabilities by $365,500, reflecting a current ratio of 1.18 to 1. The increase in current ratio was due primarily to increases in receivables at June 30, 2003 related to the sale of the Company's Series A Convertible Preferred Stock that occurred during the fourth quarter, which were collected subsequent to fiscal year end. The Company's cash position at June 30, 2003 was $97,700, compared to $328,400 at the end of the prior fiscal year. The decrease in the Company's cash position at June 30, 2003 resulted from cash operating losses offset by additional borrowing and financing activities. The Company believes that additional cash resources will be required for working capital to achieve planned operating results for fiscal year 2003 and anticipates raising capital through additional borrowing or sale of stock. The additional capital will supplement the projected cash flow from operations and the line of credit agreement in place at June 30, 2003. If the Company were unable to raise the required additional capital, it may materially affect the ability of the company to achieve its financial plans. Semple & Cooper LLP, Certified Public Accountants of Phoenix, Arizona, and the independent auditors for Alanco Technologies Inc., in its September 19, 2003 Auditors Report to the Board of Directors of the Company had this to say, in part: "[T]he Company has incurred significant losses from operations, anticipates additional losses in the next year and has insufficient working capital as of June 30, 2003 to fund the anticipated losses. These conditions raise substantial doubt as to the ability of the Company to continue as a going concern." ALASKA AIR GROUP: Dennis Madsen Elected to Board of Directors ------------------------------------------------------------- Alaska Air Group, Inc. (NYSE:ALK) has elected Dennis Madsen to the company's board of directors. Madsen is president and chief executive officer of Seattle-based Recreational Equipment, Inc., the nation's leading retailer and online merchant for outdoor gear and clothing. The company is also the largest consumer cooperative in the U.S. with more than 2.1 million active members. Often credited with championing REI's entrance into e-commerce and leading its growth and development in recent years, Madsen began working for the firm on its retail floor and in its mail order department. Since then he has held many positions within the organization, including executive vice president and chief operating officer. During the span of his 37-year career, REI has grown from one small store with a few dozen employees to 69 retail outlets in 24 states with more than 6,300 employees. Besides serving on the board of directors of REI, Madsen sits on the boards of the Western Washington University Foundation, the Bicycle Alliance of Washington, the Washington Roundtable, Islandwood, Rails to Trails Conservancy, and the Washington Wildlife and Recreation Coalition. Speaking for the Alaska Air Group board and its shareholders, Bill Ayer, chairman and chief executive of Alaska, said, "I know we will benefit from Dennis' wise counsel, his knowledge of and instinct for the marketplace and his extensive business background. It is both an honor and a point of pride to have the leader of a company with REI's outstanding reputation for customer service and quality join us." Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. As previously reported, Standard & Poor's Ratings Services lowered its ratings on Alaska Air Group Inc. and subsidiary Alaska Airlines Inc., including lowering the corporate credit rating on both to 'BB-' from 'BB.' Ratings were removed from CreditWatch, where they were placed March 18, 2003. The outlook is negative. ALLIANCE COMMS: Disclosure & Confirmation Hearing Set for Dec. 3 ---------------------------------------------------------------- On September 8, 2003, Alliance Communications, LLC and its debtor- affiliates filed their Joint Prepackaged Chapter 11 Liquidating Plan, along with an accompanying Disclosure Statement, in the U.S. Bankruptcy Court for the District of Delaware. A hearing to consider the approval of the Disclosure Statement and the confirmation of the Debtors' Plan is set for December 3, 2003, at 11:30 a.m. Eastern Standard Time, before the Honorable Mary F. Walrath. Objections to the Disclosure Statement and to the confirmation of the Debtors' Plan are due on Nov. 28, and must be filed with the Bankruptcy Court. Copies must also be sent to: 1. Tisdale & Associates LLC 1600 Broadway Suite 2600 Denver, CO 80202-4989 Attn: Douglas M. Tisdale, Esq. 2. Elzufon Austin Reardon Tarlov & Mondell, P.A. 300 Delaware Avenue Suite 1700 Wilmington, DE 19801 Attn: William D. Sullivan, Esq. 3. Office of the United States Trustee District of Delaware 844 King Street Rm. 2313 Wilmington, DE 19801 Attn: Mark Kenney, Esq. 4. Winston & Strawn LLP 35 West Wacker Drive Chicago, IL 60601-9703 Attn: Thomas F. Blackmore, Esq. 5. Morris Nichols Arscht & Tunnel 1201 Market Street PO Box 1347 Wilmington, DE 19899-1347 Attn: William H. Suddell, Esq. 6. Cequel III, LLC 12444 Powerscourt Drive Suite 450 St. Louis, MO 63131-3660 Attn: Martin Kerckhoff, Esq. 7. Paul, Hastings, Janofsky & Walker LLP 75 East 55th Street New York, NY 10022-3205 Attn: Stephen Z. Starr, Esq. 8. Pepper Hamilton LLP 1201 N. Market Street Suite 1600 Wilmington, DE 19801 Attn: Adam Hiller, Esq. 9. Alliance Communications LLC 360 S. Monroe Street Suite 600 Denver, CO 80209 Attn: Dale D. Wagner Headquartered in Denver, Colorado, Alliance Communications, LLC is a cable television operator. The Company filed for chapter 11 protection on September 8, 2003 (Bankr. Del. Case No. 03-12776). William David Sullivan, Esq., Charles J. Brown, III, Esq., at Elzufon Austin Reardon Tarlov & Mondell PA and Douglas M. Tisdale, Esq., at Tisdale & Associates LLC represent the Debtors in their liquidating efforts. When the Company filed for protection from its creditors, it listed estimated assets of more than $50 million and debts of over $100 million. AMERADA HESS: Prices $600MM Convertible Preferred Public Offering ----------------------------------------------------------------- Amerada Hess Corporation (NYSE: AHC) has priced a $600 million offering of its Mandatory Convertible Preferred Stock (12 million shares with a liquidation preference of $50 per share). As previously reported, Standard & Poor's assigned its 'BB+' rating on this preferred stock issue, with negative outlook. The Company also granted the underwriters an option to purchase up to an additional $75 million (1.5 million shares of preferred stock). The Mandatory Convertible Preferred Stock will be issued pursuant to Amerada Hess' shelf registration statement declared effective by the Securities and Exchange Commission on November 14, 2003. Shares of the Mandatory Convertible Preferred Stock have an annual dividend yield of 7.0 percent and a threshold appreciation price of $60.20, which is 24 percent above the $48.55 closing price of the common stock on November 19, 2003. The preferred stock will mandatorily convert into Amerada Hess common shares on December 1, 2006. Net proceeds from the offering will total approximately $581 million. Proceeds from the offering will be used for general corporate purposes, including reduction of debt. Separately, Amerada Hess has offered to purchase for cash up to an aggregate $594 million in principal amount of certain of its outstanding series of notes. Amerada Hess, headquartered in New York, is a global integrated energy company engaged in the exploration for and the production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. Goldman Sachs served as sole book-running manager for the offering. Copies of the prospectus and prospectus supplement related to the public offering may be obtained from Goldman, Sachs & Co., Prospectus Department, One New York Plaza, New York, NY 10004. Goldman Sachs is also serving as dealer manager for the Company's offer to purchase up to $594 million of its outstanding debt. AMERICAN FINANCIAL: Completes Merger with American Fin'l Corp. -------------------------------------------------------------- American Financial Group, Inc. (NYSE: AFG) has completed its merger with its subsidiary, American Financial Corporation. The merger significantly increases AFG shareholders' equity and simplifies the structure of the company and its subsidiaries. Holders of over 75% of AFC's shares of Series J Preferred Stock, voting at a special meeting of AFC shareholders, voted to approve the merger. As a result, AFC and its immediate parent company, AFC Holding Company, merged with and into AFG. AFC's Series J Preferred shareholders are now entitled to receive $26.00 per share in common stock of AFG, along with a cash payment of 10-1/2 cents per share representing accrued dividends on the Series J Preferred from November 1 to November 20, 2003. Cash will also be paid in lieu of fractional shares of AFG common stock. The exchange rate is 1.1434 shares of AFG common stock for each share of AFC Series J Preferred. Letter of transmittal forms were sent to all record holders of Series J preferred stock Thursday. Shareholders are asked to complete and return the forms to the Company along with the certificate(s) representing their shares. In the merger, approximately $72 million of AFC preferred stock was converted into approximately 3.3 million shares of AFG common stock. As previously reported, the conversion of AFC preferred stock to AFG common equity and the elimination of deerred tax liabilities associated with AFC's holding of AFG stock, will result in a 12% to 15% increase in AFG shareholders' equity. Through the operations of Great American Insurance Group, AFG is engaged primarily in property and casualty insurance, focusing on specialized commercial products for businesses, and in the sale of annuities, life and supplemental health insurance products. * * * The following rating American Financial Group, Inc., has been changed to align it with the revised notching established and presented in the criteria piece by A.M. Best. The revision of the rating does not reflect any change in A.M. Best's view of the overall quality, level of capitalization or expected operating performance of the company. From Revised to ---- ---------- American Financial Group, Inc. Preferred securities bbb- bb+ AMERICAN NATURAL ENERGY: Issuing 100K Shares to Canaccord Capital ----------------------------------------------------------------- American Natural Energy Corporation (TSX Venture: ANR.U) has agreed to issue to Canaccord Capital Corporation, 100,000 shares of its common stock in settlement of a capital raising engagement agreement with Canaccord terminated in the third quarter of 2003. ANEC also agreed that for a period of one year, Canaccord, together with Dundee Securities Corp., would have the right of first refusal for representation of ANEC in any future Canadian public financings. The issuance of the shares is subject to the acceptance for filing of the regulatory authorities. ANEC is a Tulsa, Oklahoma based independent exploration and production company with operations in St. Charles Parish, Louisiana. For further information please contact Michael Paulk, CEO at 918-481-1440 or Steven P. Ensz, CFO at 281-367-5588. * * * Liquidity and Capital Resources In its most recent Form 10-Q filed with the Securities and Exchange Commission, ANEC reported: The Company has sustained substantial losses in the first three quarters of 2003 and for the year 2002, totaling approximately $3.9 million and $8.6 million, has a stockholders' deficit of $3.9 million and $1.4 million at September 30, 2003 and December 31, 2002, a working capital deficiency of approximately $3.6 million all of which lead to questions concerning the ability of the Company to meet its obligations as they come due. The Company also has a need for substantial funds to develop its oil and gas properties. The Company's financial statements have been prepared on a going concern basis which contemplates continuity of operations, realization of assets and liquidation of liabilities in the ordinary course of business. As a result of the losses incurred and current negative working capital, there is no assurance that the carrying amounts of assets will be realized or that liabilities will be liquidated or settled for the amounts recorded. The ability of the Company to continue as a going concern is dependent upon adequate sources of capital and the ability to sustain positive results of operations and cash flows sufficient to continue to explore for and develop its oil and gas reserves. In the ordinary course of business, the Company makes substantial capital expenditures for the exploration and development of oil and natural gas reserves. Historically, the Company has financed its capital expenditures, debt service and working capital requirements with the proceeds of debt and private offering of its securities. Cash flow from operations is sensitive to the prices the Company receives for its oil and natural gas. A reduction in planned capital spending or an extended decline in oil and gas prices could result in less than anticipated cash flow from operations and an inability to sell more of its common stock or refinance its debt with current lenders or new lenders, which would likely have a further material adverse effect on the Company. The net proceeds of the Convertible Secured Debenture issuance, after the payment of various debt and payables obligations, are being used to fund the Company's exploration program on its ExxonMobil joint development area. To the extent additional funds are required to fully exploit and develop this area, it is management's plan to raise additional capital through the sale of its common stock, however, it currently has no firm commitment from any potential investors. AMES DEPARTMENT: Proposes to Buy Administrative Expense Claims -------------------------------------------------------------- Ames Department Stores, Inc., and its debtor-affiliates seek the Court's authority to purchase certain administrative expense claims pursuant to a Claims Settlement Program and Section 363(b) of the Bankruptcy Code. Contemporaneous with their decision to wind down their operations and conduct Going-Out-of-Business sales, the Debtors suspended the payment of administrative expenses to trade vendors. According to Martin J. Bienenstock, Esq., at Weil, Gotshal & Manges LLP, in New York, the decision was made to preserve the estates' assets and ensure a fair distribution to all creditors, including creditors holding administrative expense claims. The suspension of previous administrative expense payments continues to this day as the Debtors continue to marshal their assets. Since August 2002, the Debtors aggressively marketed their unexpired non-residential real property leases and fee-owned properties. During this time, the Debtors disposed of 300 Unexpired Leases and fee-owned properties and have fewer than 10 Unexpired Leases and fee-owned properties remaining, including several with substantial value. Mr. Bienenstock informs the Court that the Debtors are in the process of reconciling their administrative expense claims and pursuing avoidance actions. Although an exact number is not yet available, the Debtors anticipate that they will have $120,400,000 in administrative expense claims. However, Mr. Bienenstock relates that it is not possible for the Debtors to determine the full extent of their administrative obligations and the resources available to satisfy these obligations until they make substantial additional progress towards completing the process of liquidating their real property interests, prosecuting avoidance actions, and reconciling administrative expense claims. The Debtors are working on these matters in tandem with the Official Committee of Unsecured Creditors, Mr. Bienenstock says. Based on their most recent solvency analysis dated May 31, 2003, the Debtors anticipate that ultimate recoveries for administrative expense claimants will range from as low as 80.3% to as high as 99.4%. This estimate is based on the Debtors' assumption that administrative expense claims against their estates will not exceed $120,400,000 and that they will succeed in recovering substantial amounts from litigation. The timing of distributions is still uncertain. Also, Mr. Bienenstock says, the returns may be materially less than 80.3% if, for instance, preference recoveries do not meet expectations or if claims exceed expected amounts. The Debtors, in consultation with the Committee, believe that many administrative expense claimants may prefer to settle their debt immediately for less than its face amount rather than risk the uncertainty as to the timing and amount of their ultimate recovery. Administrative expense claimants who do not sell their claims may receive one or more distributions at future dates not currently determinable. The timing and amount of future distributions depend on a number of factors, including the Debtors' ability to successfully liquidate their remaining assets, litigate 2,000 preference actions, and collect outstanding obligations owed to them. By settling administrative expense claims pursuant to the proposed Claims Settlement Program, those creditors who want to obtain a significant cash distribution are given the opportunity to elect that option. Through the Claims Settlement Program, the amount of outstanding administrative expense claims against the Debtors' estates will be significantly reduced and their overall solvency may improve significantly. The Claims Settlement Program authorizes the Debtors to purchase administrative expense claims held by: -- trade vendors and landlords at 50% the amount of their administrative expense claims; and -- former employees at 40% the amount of their administrative expense claims. An offer to purchase administrative expense claims would only be made by a formal written offer from the Debtors signed by an Ames officer, identifying: * the holder of the administrative expense claim; * the amount of the administrative expense claim; and * the amount the Debtors are offering to pay for the administrative expense claim. To accept an Offer, the administrative expense claimants must sign a release form and return it to the Debtors before December 23, 2003. By signing the Release Form, the claimant: (i) releases the Debtors and their estates, the Committee, and Kimco from any liability should the ultimate recovery to the claimant exceed the amount paid by the Debtors for the claim they purchased; and (ii) forfeits the right to assert any additional administrative expense claims incurred in the Debtors' Chapter 11 cases before the date the Release Form is signed. Upon receipt of a signed Release Form, the Debtors will pay the claimant the amount indicated in the Offer by check, which will be mailed to the claimant. The holders of administrative expense claims that the Debtors want to purchase will receive a notice describing the Claims Settlement Program and certain other relevant disclosures. The Notice will disclose, inter alia, that: (a) The claimants are under no obligation to sell their claims to the Debtors, and the Debtors are under no obligation to offer to purchase administrative expense claims; (b) The sale of an administrative expense claim to the Debtors will release: -- the claimant from any liability with respect to the claim should the purchase amount vary from the actual claim amount; and -- the Debtors, the Committee and Kimco from any liability to the administrative expense claimholder should the ultimate recovery for the administrative expense claims exceed the amount paid by the Debtors; (c) An Offer will not be subject to further due diligence by the Debtors; (d) Claimants who do not sell their claims may ultimately recover more or less than those who choose to sell their claims to the Debtors and, in time, may ultimately recover up to 100% of their claims; (e) Claimants who do not sell their claims may receive one or more distributions at future dates not currently determinable. The timing and amount of future distributions depend on many factors, including the Debtors' ability to successfully liquidate their remaining assets and litigate preference actions, which litigation is expected to continue well into 2004. The Debtors intend to use the proceeds from the preference actions to satisfy claims against their estates, including administrative expense claims not purchased. Because the assets for distribution to administrative expense claimants include recoveries from litigation, the recoveries could be significantly less than 100%. Because judgments from preference actions might be appealed, there can be no certainty as to whether and when the Debtors will monetize the awards from the preference actions; (f) Because the Debtors' purchase of administrative expense claims will reduce the amount of outstanding claims, the recovery for administrative expense claimants who do not sell their claims will vary depending on the number of of claimants who sell their claims to the Debtors; and (g) Any administrative expense claim not sold to the Debtors will be treated in the course of the Chapter 11 cases in the same manner as other similarly situated administrative expense claims. The Debtors intend to mail the Notice, the Offer, and the Release Form immediately so that settlement payments can be transferred to the administrative expense claimholders who accept an Offer before the year ends. The Debtors believe that the implementation of the Claims Settlement Program is beneficial to the successful wind-down of the Debtors' business. Moreover, Mr. Bienenstock says that the Committee supports the Claims Settlement Program because: (1) it provides an opportunity for administrative creditors to receive cash in this calendar year if the creditors determine to participate; and (2) the Claims Settlement Program may increase the prospects for a distribution to general unsecured creditors. (AMES Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) AMPEX CORP: AMEX Will Not Grant Waiver & Will Halt Stock Trading ---------------------------------------------------------------- As previously announced, Ampex Corporation appealed a notice of proposed delisting from the American Stock Exchange, based on recent improvements in its financial performance. The Company has now been informed that the Amex will not grant a waiver of its Continued Listing Standards, and that it will suspend trading in Ampex's Common Shares as soon as practicable. Ampex anticipates that its shares will be quoted on the OTC Bulletin Board where they were traded prior to listing on the Amex. The Company believes that this will allow holders adequate opportunity to trade their Common Shares. Ampex Corporation -- http://www.ampex.com-- headquartered in Redwood City, California, is one of the world's leading innovators and licensors of technologies for the visual information age. At September 30, 2003, Ampex's balance sheet shows a total shareholders' equity deficit of about to $140 million. ANIXTER INT'L: Completes Sale & Leaseback of Ill. Headquarters -------------------------------------------------------------- Anixter International Inc. (NYSE: AXE), the world's leading distributor of communication products, electrical and electronic wire & cable and a leading distributor of fasteners and other small parts to Original Equipment Manufacturers, has completed the sale and leaseback of its Glenview, Illinois headquarters building. Under the terms of the deal, Anixter received proceeds equal to the amount expended for construction of the facility during 2002 and 2003. At the same time, Anixter entered into a 20-year lease agreement for the facility. Proceeds from the transaction will be used for general corporate purposes. Commenting on the transaction, Dennis Letham, Senior Vice-President - Finance said, "This transaction allows us to free up capital that we believe can be used in a more productive way to enhance shareholder value. With interest rates remaining at near historical low levels and investor demand for quality real estate at strong levels, the timing of this transaction seemed appropriate." Anixter International (Fitch, BB+ Convertible Senior Notes Ratings, Stable Outlook) is the world's leading distributor of communication products, electrical and electronic wire & cable and a leading distributor of fasteners and other small parts ("C" Class inventory components) to Original Equipment Manufacturers. The company adds value to the distribution process by providing its customers access to 1) innovative inventory management programs, 2) more than 220,000 products and nearly $500 million in inventory, 3) 151 warehouses with more than 4.5 million square feet of space, and 4) locations in 180 cities in 40 countries. Founded in 1957 and headquartered near Chicago, Anixter trades on The New York Stock Exchange under the symbol AXE. Additional information about Anixter is available on the Internet at http://www.anixter.com ARMSTRONG HOLDINGS: Asks Court to Modify Stay Re Promicom Claim --------------------------------------------------------------- In November 1999, Proxicom, Inc., and Armstrong World Industries Inc., signed a Professional Services Agreement, and followed that in February 2000 with entry into the Armstrong eBusiness Transformation Statement of Work under which Proxicom was employed to consolidate AWI's eleven websites into a single residential and commercial website to serve as an "umbrella" site, or gateway, to the full family of Armstrong products. In August 2001, Proxicom filed a proof of claim against AWI asserting a general, unsecured claim in the amount of $2,539,938.72 for services allegedly render to AWI under the Proxicom Contracts during the months of July 2000 through November 2000. AWI objected to allowance of this claim and pled a counterclaim against Proxicom for breach of contract. The parties point out that the Proxicom Contract provides that any and all disputes arising from or related to the Proxicom Contract are to be settled finally by arbitration by a single arbitrator according to applicable rules of the American Arbitration Association in Philadelphia, Pennsylvania. As a result of the filing of these chapter 11 cases, prosecution of the Proxicom Claim and the Objection and Counterclaim in arbitration is stayed. To resolve these matters, AWI, represented by Rebecca L. Booth, Esq., at Richards Layton & Finger in Wilmington, and Thomas G. Macauley, Esq., at Zuckerman Spaeder LLP in Wilmington, agree that: (1) Subject, of course, to Judge Newsome's approval, the automatic stay of the Bankruptcy Code is modified solely to permit Proxicom and AWI to prosecute the issues raised by the Proxicom proofs of claim, the Objection to them, and AWI 's Counterclaim in arbitration under the provisions of the Proxicom Contract for the purpose of liquidating the Proxicom claim by determining liability and damages, if any, of AWI to Proxicom. (2) Except for this stipulated modification of the automatic stay, all other matters remain stayed. (3) Nothing in this agreement prejudices the parties' rights to assert any claims, rights and defenses with respect to any litigation or arbitration on account of the Proxicom Claim or the Objection and Counterclaim. (4) Any arbitration award obtained by Proxicom against AWI on account of he Proxicom Claim shall constitute an allowed prepetition general, unsecured claim in AWI's bankruptcy case in the amount provided for in the arbitration award. (5) Notwithstanding the upcoming administrative claims bar date in AWI's case, Proxicom's right to assert an administrative expense claim for all costs of arbitration as allowed by the Proxicom contract is expressly preserved, and this Stipulation is without prejudice to AWI's right to object to any administrative expense claim on any ground whatsoever, including an objection before the Bankruptcy Court on the ground that any such claim is not entitled to administrative expense priority. (Armstrong Bankruptcy News, Issue No. 52; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARVINMERITOR INC: LVA Business Realigns Management Structure ------------------------------------------------------------ ArvinMeritor, Inc. (NYSE: ARM) announced that its Light Vehicle Aftermarket (LVA) business group, under the direction of President Dan Daniel, has realigned its upper management structure. The changes will provide increased focus on LVA's strategic customers, while strengthening development efforts outside North America. LVA provides exhaust, lift support, filter and ride control products to a full range of aftermarket customers, including retailers, distributors and installers. The role of Rob Malone -- vice president and general manager of Filters, Ride Control and Gas Springs for North America -- has been expanded and now includes responsibility for LVA's gas spring operations, as well as responsibility for sales of all of these products in North America. He reports directly to Daniel. Also reporting to Daniel is Ken Bush, vice president and general manager of Exhaust Systems for North America. In addition to his responsibilities for LVA's exhaust operations, Bush now assumes all sales responsibility for several key customers, including CARQUEST, Midas, Meineke and Canadian Tire, as well as for exhaust feeder accounts. Marlen Silverii, formerly vice president of LVA Sales and Marketing has been appointed vice president, Global Business Strategies. In this role, he will lead LVA's global sourcing and logistics activities and direct the group's global marketing and product management. Silverii will retain responsibility for LVA export sales, including Mexico, and continues to report to Daniel. ArvinMeritor, Inc. (S&P, BB+ Corporate Credit & Senior Unsecured Debt Ratings, Negative) is a premier $7-billion global supplier of a broad range of integrated systems, modules and components to the motor vehicle industry. The company serves light vehicle, commercial truck, trailer and specialty original equipment manufacturers and related aftermarkets. In addition, ArvinMeritor is a leader in coil coating applications. The company is headquartered in Troy, Mich., and employs 32,000 people at more than 150 manufacturing facilities in 27 countries. ArvinMeritor common stock is traded on the New York Stock Exchange under the ticker symbol ARM. For more information, visit the company's Web site at: http://www.arvinmeritor.com BIOVAIL: SEC Initiates Informal Inquiry into Auditing Practices --------------------------------------------------------------- Biovail Corporation (NYSE:BVF) (TSX:BVF) announced that it has received a letter from the United States Securities and Exchange Commission advising the Company that it has initiated an informal inquiry pertaining to Biovail's "accounting and financial reporting practices for the fiscal year 2002 and quarterly periods to date for fiscal 2003." Biovail intends to fully comply with SEC requests for information. The Company has posted a copy of the letter on its Web site at http://www.biovail.com/ Biovail Corporation is an international full-service pharmaceutical company, engaged in the formulation, clinical testing, registration, manufacture, sale and promotion of pharmaceutical products utilizing advanced drug delivery technologies. * * * As previously reported, Standard & Poor's Ratings Services revised its outlook on pharmaceutical company Biovail Corp. to stable from positive. At the same time, the ratings on the company, including the 'BB+' long-term corporate credit rating, were affirmed. The ratings on Biovail reflect the risks inherent in the company's growth strategy. These risks include managing and financing the manufacture, distribution, and marketing of an expanding product portfolio; integrating acquisitions and pricing; and implementing more conservative business practices, which are not without risks. Moreover, the company remains a net user of funds given its acquisitive strategy, and has been cash flow negative (prefinancing) for three of the past four years. These factors are partially offset by the strength and diversity of the company's current and future revenue streams, its track record of integrating acquisitions, and an increasingly broad sales and marketing infrastructure in the U.S. In addition, Biovail recently announced that it will be increasing transparency and disclosure, adopting more conservative financial reporting, and increasing its focus on organic growth. BROCADE COMMS: Reports Strong Growth for Fourth-Quarter 2003 ------------------------------------------------------------ Brocade Communications Systems, Inc. (Nasdaq: BRCD) reported financial results for its fourth quarter and fiscal year 2003 which ended October 25, 2003. Net revenue for Q4 03 was $137.8 million, an increase of three percent from $133.5 million reported in the third quarter of fiscal year 2003. Net revenue reported in the fourth quarter of fiscal year 2002 was $153.1 million. Net revenue for FY 03 was $525.3 million, as compared to net revenue of $562.4 million reported in fiscal year 2002. Non-GAAP net income for Q4 03 was $4.6 million, or $0.02 per share, as compared to a non-GAAP net income of $2.0 million, or $0.01 per share, in Q3 03. Non-GAAP net income for Q4 03 excludes gains related to repurchases of convertible subordinated debt, a gain on the disposition of private strategic investments, a reduction of previously recorded restructuring costs, and deferred stock compensation expense related to the acquisition of Rhapsody Networks, Inc. For FY 03, non-GAAP net income was $5.6 million, or $0.02 per share. Non-GAAP net income for FY 03 excludes gains related to repurchases of convertible subordinated debt, net gains on the disposition of private strategic investments, restructuring costs, and deferred stock compensation and in-process research and development expenses related to the Rhapsody acquisition. Q4 03 Financial Highlights -- Net revenue was $137.8 million, an improvement of three percent sequentially from Q3 03 -- Gross margin increased to 54.6 percent, an improvement from 54.1 percent in Q3 03 -- Non-GAAP operating income increased to 4.0%, an improvement from 1.5% in Q3 03 -- Non-GAAP earnings per share increased to $0.02, an improvement from $0.01 in Q3 03 -- Cash flow from operations increased to $17.0 million, an improvement from $6.7 million in Q3 03, reflecting the 17th consecutive quarter of positive operating cash flow -- Cash and investments in Q4 03 total $835.6 million -- Day sales outstanding were 50 days, an improvement from 52 days in Q3 03 Reporting on a Generally Accepted Accounting Principles (GAAP) basis, net income for Q4 03 was $14.8 million, or $0.06 per share. This compares to GAAP net income for Q3 03 of $1.9 million, or $0.01 per share, and GAAP net income for Q4 02 of $15.7 million, or $0.07 per share. For FY 03, GAAP net loss was $136.2 million, or $0.54 per share, as compared to GAAP net income of $59.7 million, or $0.25 per share, reported in FY 02. There was no difference between GAAP and non-GAAP net income in Q4 02 or FY 02. During Q4 03, Brocade purchased on the open market $107.1 million face value of its two percent convertible subordinated notes. Brocade paid an average of $0.88 cents on each dollar of face value for an aggregate cash purchase price of $94.4 million, which resulted in a pre-tax gain of $11.1 million. These repurchases will reduce future quarterly interest expense and related amortization by approximately $0.7 million. As of October 25, 2003, the remaining convertible debt outstanding was $442.9 million. "2003 has been a transformational year for Brocade and I'm pleased to report another solid quarter with continued improvement in revenue, gross margin, operating income and EPS," said Greg Reyes, Brocade Chairman and CEO. "The actions we have taken over the last several quarters have significantly improved our business model and organizational structure, strengthened our management team, and refined our product strategy, positioning us well for 2004." Brocade also announced that it has purchased a building located at its San Jose, California, headquarters for $106.8 million in cash. The 194,000 square foot facility, which houses a portion of the Company's engineering organization and development, test and interoperability laboratories, was previously leased. In the first quarter of fiscal year 2004, Brocade will record a non-recurring charge of approximately $75 to $85 million primarily related to lease termination, facilities consolidation and other associated costs. As a result of this transaction, Brocade expects to reduce its annual operating expenses by approximately $4 to $6 million. Q4 03 Business Highlights -- IBM qualified FICON support on the Brocade SilkWorm 12000 Director for IBM mainframe environments. Support for FICON extends connectivity options, enabling Brocade end-users to connect IBM mainframes to Brocade-based storage area network environments, allowing them to consolidate and leverage training, SAN management, and equipment across both open systems and mainframe environments. -- Announced general availability of SilkWorm Fabric Application Platform to OEM and software developer partners. The SilkWorm Fabric AP is the industry's first intelligent switching platform designed to host SAN fabric- based storage management applications-such as volume management, data migration, and data replication. Leading Brocade OEM partners including HP and EMC, and more than ten software developer partners, including VERITAS, have already selected the SilkWorm Fabric AP for developing next-generation, fabric-based storage management applications. -- Announced a unique set of multiprotocol fabric routing services that extends the functionality, scalability, and versatility of today's SANs. The fabric routing services will be delivered on the SilkWorm Fabric AP and will allow customers to logically consolidate and scale SANs, and seamlessly extend SAN functionality and benefits over multiple networks and across greater distances. The new multiprotocol fabric routing services include: -- Fibre Channel-to-Fibre Channel routing to consolidate and scale separate SAN islands into Logical Private SANs which offer the highest levels of configuration flexibility and system availability with the lowest risk and complexity for the end-user. -- iSCSI-to-Fibre Channel bridging for attaching low cost, Ethernet-connected hosts to the Fibre Channel SAN fabric via the iSCSI protocol. -- Fibre Channel to FC-IP translation, in order to extend existing Fibre Channel SANs over distance via IP networks. -- Expanded the strategic alliance with CNT in which Brocade will recommend the CNT Ultranet Edge Gateway as a solution for extending Brocade Fibre Channel SANs over distance. More than 300 mutual CNT and Brocade customers have already deployed this solution, which is designed for mission- critical, highest-performance applications that require metro and wide area network connection. Brocade (S&P, B+ Corporate Credit and B- Subordinated Debt Ratings, Stable Outlook) offers the industry's leading intelligent platform for networking storage. The world's leading systems, applications, and storage vendors have selected Brocade to provide a networking foundation for their SAN solutions. The Brocade SilkWorm(R) family of fabric switches and software is designed to optimize data availability and storage and server resources in the enterprise. Using Brocade solutions, companies can simplify the implementation of storage area networks, reduce the total cost of ownership of data storage environments, and improve network and application efficiency. For more information, visit the Brocade Web site at http://www.brocade.com CALPINE CORP: Closes $400M 9-7/8% Senior Secured Debt Offering -------------------------------------------------------------- Calpine Corporation (NYSE: CPN), a leading North American power company, has received funding on its $400 million 9-7/8% Second Priority Senior Secured Notes Offering Due 2011, offered at 98.01% of par. The net proceeds from this offering were used to purchase approximately $433.6 million face value of outstanding senior notes, including $200.0 million of 4% convertible senior notes, at a total cost of approximately $380.9 million. Remaining net proceeds will be used to repurchase other existing indebtedness. This offering is the second of the two offerings that were priced on November 6, 2003, the other being Calpine's offering of convertible notes due 2023. Calpine received funding on the convertible notes on November 14, 2003, and the initial purchaser's 30-day option to acquire additional convertible notes remains in effect to the extent not previously exercised. The 9-7/8% Second Priority Senior Secured Notes Offering Due 2011 were offered in a private placement under Rule 144A, have not been and will not be registered under the Securities Act of 1933, and may not be offered in the United States absent registration or an applicable exemption from registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy. Securities laws applicable to private placements under Rule 144A limit the extent of information that can be provided at this time. Calpine Corporation (S&P, CCC+ Senior Unsecured Convertible Note and B Second Priority Senior Secured Note Ratings, Negative Outlook) is a leading North American power company dedicated to providing electric power to wholesale and industrial customers from clean, efficient, natural gas-fired and geothermal power facilities. The company generates power at plants it owns or leases in 22 states in the United States, three provinces in Canada and in the United Kingdom. Calpine is also the world's largest producer of renewable geothermal energy, and it owns approximately 900 billion cubic feet equivalent of proved natural gas reserves in Canada and the United States. The company was founded in 1984 and is publicly traded on the New York Stock Exchange under the symbol CPN. For more information about Calpine, visit http://www.calpine.com CINCINNATI BELL: Completes $540M 8-3/8% Sr. Sub. Debt Offering -------------------------------------------------------------- Cincinnati Bell Inc. (NYSE:CBB) announced the completion of its placement of $540 million aggregate principal amount of 8-3/8% Senior Subordinated Notes due 2014 in a private placement under Rule 144A of the Securities Act of 1933. The net proceeds from the offering were used to purchase all of the Company's outstanding Convertible Subordinated Notes due 2009, which bore interest at 9 percent per annum, and to reduce outstanding borrowings under its revolving credit facility. The Notes will mature on January 15, 2014. Interest on the Notes will be payable semiannually on January 15 and July 15 of each year, beginning on July 15, 2004. In addition, the Company announced it has amended its existing Senior Credit Facilities to permanently repay all of its $327 million outstanding Term A, Term B, and Term C facilities, and $198 million of its revolving loan facility, with the proceeds of $525 million in new Term D borrowings. The Term D facility will fully mature in June 2008 and bear interest at 250 basis points over LIBOR. The Term A, Term B, and Term C facilities had been bearing interest at 375 basis points over LIBOR, while borrowings under the revolving credit facility bear interest at 425 basis points over LIBOR. This amendment therefore reduces the company's weighted average interest rate by 144 basis points on the $525 million. Cincinnati Bell Inc. (NYSE:CBB) (Fitch, BB- Senior Secured Bank Facility, BB- Senior Secured Notes, B+ Senior Unsecured Notes, B Senior Subordinated Discount Notes Ratings, Stable Outlook) is parent to one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence. The Company was recently ranked number one in customer satisfaction, for the third year in a row, by J.D. Power and Associates for residential long distance among mainstream users. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Cincinnati Bell is headquartered in Cincinnati, Ohio. For more information, visit http://www.cincinnatibell.com CMS ENERGY: Sells CMS Marysville Gas Liquids Unit to Marysville --------------------------------------------------------------- CMS Energy (NYSE: CMS) has sold its CMS Marysville Gas Liquids subsidiary to Marysville Hydrocarbons Inc. Details of the transaction weren't disclosed. CMS Energy will use the sale proceeds to reduce debt. The main asset of CMS Marysville Gas Liquids is its 51 percent interest in the Marysville Underground Storage Terminal, which stores propane and other hydrocarbon liquids in underground caverns. The terminal is south of Port Huron, Mich. Marysville Hydrocarbons is a new company formed by Everest Energy and Dart Energy Corporation. Dart Energy, based in Mason, Mich., has been in the energy business since the mid-1970s. Everest Energy is a diversified energy company based in Warren, Mich., active in energy marketing, oil and gas exploration and production and mid-stream business. CMS Energy (S&P, senior secured rated 'BB-', Rating Outlook Negative) is an integrated energy company, which has as its primary business operations an electric and natural gas utility, natural gas pipeline systems, and independent power generation. For more information on CMS Energy, visit http://www.cmsenergy.com COMDISCO: Will Make Payment on Contingent Distribution Rights ------------------------------------------------------------- Comdisco Holding Company, Inc.'s (OTC:CDCO) Board of Directors has declared a cash dividend of $12 per share on the outstanding shares of its common stock, payable on December 11, 2003 to common stockholders of record on December 1, 2003. Comdisco Holding Company has approximately 4.2 million shares of common stock outstanding. Comdisco Holding Company intends to treat the dividend distribution for federal income tax purposes as one in a series of liquidating distributions in complete liquidation of the company. Comdisco Holding Company will also make a cash payment of $.0514 per right on the contingent distribution rights (OTC:CDCOR), payable on December 11, 2003 to contingent distribution rights holders of record on December 1, 2003. Comdisco Holding Company has approximately 152.3 million contingent distribution rights outstanding. After giving effect to the Comdisco Holding Company, Inc. dividend announced today and the distribution from the disputed claims reserve in the bankruptcy estate of Comdisco, Inc. made on November 14, 2003, the present value of distributions to the initially allowed general unsecured creditors in the bankruptcy estate of Comdisco, Inc. is approximately $3.449 billion and the percentage recovery to such creditors is approximately 95 percent. Contingent Distribution Rights - Effect on Common Stock The plan of reorganization of the company's predecessor, Comdisco, Inc., entitles holders of Comdisco Holding Company's contingent distribution rights to share at increasing percentages in proceeds realized from Comdisco Holding Company's assets after the minimum percentage recovery threshold was achieved in May, 2003. The amount due contingent distribution rights holders is based on the amount and timing of distributions made to former creditors of the company's predecessor, Comdisco, Inc., and is impacted by both the value received from the orderly sale or run-off of Comdisco Holding Company's assets and on the resolution of disputed claims still pending in the bankruptcy estate of Comdisco, Inc. As the disputed claims are allowed or otherwise resolved, payments are made from funds held in a disputed claims reserve established in the bankruptcy estate for the benefit of former creditors of Comdisco, Inc. Since the minimum percentage recovery threshold has been exceeded, any further payments from the disputed claims reserve to former creditors of Comdisco, Inc. entitle holders of contingent distribution rights to receive payments from Comdisco Holding Company, Inc. The amounts due to contingent distribution rights holders will be greater to the extent that disputed claims are disallowed. The disallowance of a disputed claim results in a distribution from the disputed claims reserve to previously allowed creditors that is entirely in excess of the minimum percentage recovery threshold. In contrast, the allowance of a disputed claim results in a distribution to a newly allowed creditor that is only partially in excess of the minimum percentage recovery threshold. Therefore, any disallowance of the remaining disputed claims would require Comdisco Holding Company, Inc. to pay larger cash amounts to the contingent distribution rights holders that would otherwise be distributed to common shareholders. After the quarterly distribution on November 14, 2003, the remaining disputed claims in the bankruptcy estate of Comdisco, Inc. were $290 million. Comdisco emerged from chapter 11 bankruptcy proceedings on August 12, 2002. The purpose of reorganized Comdisco is to sell, collect or otherwise reduce to money in an orderly manner the remaining assets of the corporation. Pursuant to Comdisco's plan of reorganization and restrictions contained in its certificate of incorporation, Comdisco is specifically prohibited from engaging in any business activities inconsistent with its limited business purpose. Accordingly, within the next few years, it is anticipated that Comdisco will have reduced all of its assets to cash and made distributions of all available cash to holders of its common stock and contingent distribution rights in the manner and priorities set forth in the Plan. At that point, the company will cease operations and no further distributions will be made. CONE MILLS: Robinson Lerer Serves as Public Relations Specialist ---------------------------------------------------------------- Cone Mills Corporation and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to employ Robinson Lerer & Montgomery, LLC as Public Relations Specialists nunc pro tunc to the Petition Date. The Debtors retain Robinson Lerer as their public relations specialists with regard to developing a media strategy, issuing press releases and serving as the Debtors' media spokesperson. Robinson Lerer was engaged by Cone Mills prepetition and, since the time of its engagement, has become very familiar with the Debtors' business and the difficult political, operational and financial challenges they face. The Debtors anticipate Robinson Lerer will: a. issue press releases and develop a media strategy; b. manage the Debtors' public relations with its union and non-union employees, vendors and customers; c. monitor media coverage of the Debtors and their bankruptcy cases and serving as a media contact and spokesperson if advisable; d. assist with the Debtors' communications with their creditors and shareholders; and e. provide other general public relations services to and for the Debtors as needed. Robinson Lerer's standard hourly rates are: Partner $550 - $700 per hour Principal $425 - $475 per hour Executive Vice President $375 - $400 per hour Senior Vice President $310 - $340 per hour Vice President $250 - $285 per hour Director $225 - $240 per hour Senior Associate $200 - $215 per hour Associate $160 - $175 per hour Assistant $ 65 per hour The principal consultants presently designated to represent the Debtors and their current hourly rates are: W. Montgomery Partner $700 M. Gross Partner $650 A. Granfreld Senior Vice President $340 N. Tussing Vice President $285 Headquartered in Greensboro, North Carolina, Cone Mills Corporation is one of the leading denim manufacturers in North America. The Debtor also produces fabrics and operates a commission finishing business. The Company, with its debtor- affiliates filed for chapter 11 protection on September 24, 2003 (Bankr. Del. Case No. 03-12944). Pauline K. Morgan, Esq., at Young, Conaway, Stargatt & Taylor represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $318,262,000 in total assets and $224,809,000 in total debts. CONSTELLATION BRANDS: Names Georgia Lamb SVP of Human Resources --------------------------------------------------------------- Constellation Brands, Inc., a leading international producer and marketer of beverage alcohol brands, has promoted Georgia (Gigi) Lamb to senior vice president - human resources, Constellation Wines. Her primary responsibilities include providing strategic human resources direction, planning and execution for Constellation's Global Wines Division. Lamb will report directly to Steve Millar, chief executive officer, Constellation Wines and indirectly to Keith Wilson, chief human resources officer, Constellation Brands. Previously, she was vice president - human resources, Constellation Brands. "We believe that unifying our human resource functions across Constellation Wines will give us a distinct strategic advantage. In this role, the individual wine company human resource executives will have a reporting relationship to Gigi. Her passion and insight, as well as her management experience at Constellation, Canandaigua Wine Company and Franciscan Estates, renders her uniquely qualified to advance this effort," said Millar. Lamb joined Constellation Brands in 1995 at the Canandaigua Wine Company and held a number of positions including vice president - human resources before moving to Franciscan Estates to assume the role of senior vice president - human resources. In 2002, Lamb returned to Constellation Brands corporate office where she was responsible for managing several new corporate human resource initiatives. Constellation Brands, Inc. (S&P, BB Corporate Credit and Senior Unsecured Debt Ratings) is a leading international producer and marketer of beverage alcohol brands, with a broad portfolio across the wine, spirits and imported beer categories. The Company is the largest multi-category supplier of beverage alcohol in the United States; a leading producer and exporter of wine from Australia and New Zealand; and both a major producer and independent drinks wholesaler in the United Kingdom. Well-known brands in Constellation's portfolio include: Corona Extra, Pacifico, St. Pauli Girl, Black Velvet, Fleischmann's, Mr. Boston, Estancia, Simi, Ravenswood, Blackstone, Banrock Station, Hardys, Nobilo, Alice White, Vendange, Almaden, Arbor Mist, Stowells and Blackthorn. DILLARD'S INC: Third-Quarter Net Loss Triples to $15 Million ------------------------------------------------------------ Dillard's, Inc. (NYSE:DDS) announced operating results for its third quarter ended November 1, 2003. In lieu of a conference call, the Company has provided herein detailed information regarding its third quarter operating performance, financial position, ongoing strategies and senior management's current thoughts regarding the business. Income Net loss for the 13 weeks ended November 1, 2003 was $15.8 million ($0.19 per basic and fully diluted share) compared to a net loss of $5.1 million ($0.06 per basic and fully diluted share) for the 13 weeks ended November 2, 2002. During the 13 weeks ended November 1, 2003, the Company recorded $1.7 million ($1.1 million after-tax, or $0.01 per basic and fully diluted share) for asset impairment related to one store. Management is pleased with the following highlights regarding the Company's third quarter performance: -- Control of inventory - Inventory in comparable stores at November 1, 2003 was down 50 basis points in comparison to inventory at November 2, 2002. -- Control of advertising, selling, administrative and general expenses - These operating expenses declined $22.6 million during the third quarter of 2003 compared to the third quarter of 2002. Revenues Sales for the 13 weeks ended November 1, 2003 were $1.765 billion compared to sales for the 13 weeks ended November 2, 2002 of $1.794 billion, a decrease of 2%. Sales in comparable stores for the 13-week period decreased 2%. Management believes unseasonably warm temperatures hindered the Company's third quarter sales, particularly in October. Income from joint ventures is included in total revenues. The Company sold its interest in two mall joint ventures during the fourth and first quarters of 2002 and 2003, respectively. As a result of these sales, income from joint ventures decreased approximately $3.8 million during the third quarter of 2003 compared to the third quarter of 2002. Also included in revenues for the thirteen weeks ended November 2, 2002 is a charge of $2.2 million related to the amortization of the beneficial interests originally recognized on off-balance-sheet financing. Sales for the 39 weeks ended November 1, 2003 were $5.300 billion compared to sales for the 39 weeks ended November 2, 2002 of $5.523 billion, a decrease of 4%. Sales in comparable stores for the 39-week period decreased 4%. Gross Margin/Inventory Gross margin for the 13 weeks ended November 1, 2003 declined 160 basis points of sales. Management attributes the decline to sales pressure during the third quarter and the Company's resulting efforts to maintain effective control of inventory levels with increased markdown activity. Management believes competition among industry peers, partially driven by unseasonably warm fall temperatures, further necessitated its aggressive posture with regard to markdown activity, as customer response to cooler- weather merchandise was hampered during the third quarter. Inventory position at November 1, 2003 in comparable stores was down 50 basis points compared to inventory position at November 2, 2002. Having entered the third quarter of 2003 with comparable inventory position up 260 basis points and firmly committed to continued inventory management during the period, management is pleased with the overall level and quality of the Company's ending inventory at November 1, 2003. During the fourth quarter, Dillard's will continue to focus its efforts on inventory control, keeping abreast of sales trends and customer response to its merchandise mix during the important holiday selling season. Management is hopeful that its improved merchandise mix, which includes expanded and enhanced assortments of Dillard's exclusive brands, will be well received in a holiday selling environment hopefully bolstered by improving consumer confidence. As a matter of policy, the Company does not provide guidance regarding sales or gross margin performance. In an effort to improve its competitive position and merchandise mix, Dillard's has launched specific merchandise initiatives. Dillard's will continue the execution of these initiatives with management's ongoing confidence in their appropriateness based upon current industry factors and the Company's current position. The initiatives include: -- Increasing the penetration of Dillard's exclusive brand merchandise and building Dillard's brands as national destination brands. -- Evaluating performance of national "branded" vendor sources, de-emphasizing or replacing under-performers with more promising brands. Based upon continued disappointing performance of certain of the Company's largest national vendor sources, the Company has recently taken notable steps to reduce its exposure to certain over-distributed national brands. -- Following the "Product-first" buying philosophy through considering specific customer needs first, seeking the best source for that need and creating more market-right assortments with less duplication among merchandise lines. -- Executing the purchasing model encouraging vendors to provide more margin support at time of purchase, hopefully reducing the amount of margin assistance at end of the season. The Company treats such vendor allowances as a reduction of inventoriable product cost regardless of when received. Dillard's management reiterates their strong belief that merchandise differentiation by the Company is crucial to its future success in the marketplace. The Company will continue to build its exclusive brands as a means to deliver fashion to its customers at compelling prices - in an effort to set Dillard's apart from its peers as the store of choice for exclusive destination brands. At the same time, the Company will seek differentiation by considering new and unique presentations of assortments from national vendor sources, seeking to build exclusive relationships with promising vendors and designers where appropriate. Advertising, Selling, Administrative and General Expenses Advertising, selling, administrative and general expenses declined $22.6 million to $517.2 million for the 13 weeks ended November 1, 2003 from $539.8 million for the comparable period ended November 2, 2002. The improvement in SG&A expenses was driven by savings in payroll ($10.4 million), advertising ($7.2 million) and bad debt expense related to the Company's proprietary credit card ($3.7 million). The Company achieved savings in most other expense categories, as well. The Company is in the process of repositioning its advertising efforts, seeking the most appropriate media to reach new and existing Dillard's customers. Savings achieved in advertising expense during the quarter ended November 1, 2003 resulted from reduction in newspaper advertising. Dillard's will consider reallocation of funds saved in newspaper advertising to other media more appropriately matched to its customers' lifestyles. This reallocation includes expansion of advertising efforts in fashion magazines, regional magazines, billboards, broadcast, the Internet and alternative uses of newspaper circulation, such as insertion of preprinted material. Management is pleased with the progress regarding the quality of its accounts receivable portfolio and with the resulting reduction in bad debt expense during the thirteen weeks ended November 1, 2003. The Company has improved the scoring matrix used to manage its existing portfolio, incorporating a credit bureau bankruptcy score with its own custom credit bureau risk score. This has allowed the company to more accurately identify accounts that will likely become delinquent. Debt/Interest Expense As a result of the Company's continuing efforts to reduce debt, interest and debt expense declined to $37.3 million during the third quarter of 2003 from $42.6 million for the third quarter of 2002. Interest and debt expense for the 13 weeks ended November 1, 2003 includes $4.1 million received from the Internal Revenue Service as a result of the Company's filing of an interest netting claim related to previously settled tax years. Included in interest and debt expense for the 13 weeks ended November 2, 2002 is a pretax gain of $1.7 million related to the early extinguishment of debt. On Monday, November 3, 2003, the Company retired the remaining $130.0 million 6.13% notes maturing Saturday, November 1, 2003. The Company has adopted SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections" ("SFAS No. 145"). SFAS No. 145 rescinds SFAS No. 4 and 64, which required gains and losses from extinguishments of debt to be classified as extraordinary items. For the 13 weeks ended November 2, 2002, as a result of adopting SFAS No. 145, the Company has reclassified a pretax gain of $1.7 million (after-tax $1.1 million or $0.01 per basic and fully diluted share) to interest and debt expense from extraordinary gain on early extinguishment of debt. The Company utilizes securitizations of its credit card receivable portfolio as a financing vehicle. At November 1, 2003 and November 2, 2002, all financing associated with the securitizations of the Company's credit card portfolio was recorded on the balance sheet, with $400 million in related financing recorded in long-term debt. Prior to the quarter ended November 2, 2002, the Company accounted for these transactions as off-balance-sheet financing. In early May 2002, the Company amended its conduit financing agreement and as such future transfers of accounts receivable did not qualify for sale treatment. Based upon the expected average life of the credit card receivables, the final $160 million of $400 million of accounts receivable securitization were brought back onto the balance sheet at November 2, 2002. Accordingly, during the thirteen weeks ended November 2, 2002, the Company took a charge to its income statement of $2.2 million related to the amortization of the beneficial interests recognized upfront on the off-balance-sheet financing. At November 1, 2003 and November 2, 2002, the Company had $20.5 million and $285 million outstanding, respectively, in short-term borrowings under its accounts receivable conduit facilities related to its seasonal financing needs. Remaining available short-term borrowings under these conduit facilities at November 1, 2003 were $479.5 million. Management plans to meet peak borrowing demand in the fourth quarter of 2003 with additional borrowings under these accounts receivable conduit facilities. This peak demand is expected to be less than $400 million, compared to the peak of $465 million during the fall season of 2002. Since May of 2002, the Company has maintained a $400 million revolving credit facility to provide backup liquidity. At November 1, 2003, letters of credit totaling $72.5 million were issued under this facility. There has never been any funded debt outstanding under this facility since its inception. Store Openings/Closings - 2003 During the third quarter of 2003, Dillard's opened three new stores as planned: Open Dillard's at: City Month Sq. Feet ------------- ---- ----- -------- Stony Point Fashion Park Richmond, Virginia September 200,000 Short Pump Town Center Richmond, Virginia September 200,000 Memorial City Mall(1) Houston, Texas October 250,000 (1) Replacement store During the third quarter of 2003, the Company completed the closure of one store in Richmond, Virginia, where it opened two new locations. The store was located at The Shops at Willow Lawn and was a 65,000 square foot facility. The Company has announced the upcoming closure of its Pinellas Parkside location in Pinellas Park, Florida. This 105,000 square foot location is expected to close in January 2004. During the 39 weeks ended November 1, 2003, the Company has closed or has announced the upcoming closures of nine Dillard's locations. Since announcing its policy in late 2000 to close under-performing stores as conditions permit, the Company has closed 36 Dillard's stores. Store Opening Schedule - 2004 Scheduled store openings for the year ended January 29, 2005: Open Dillard's at: City Month Sq. Feet ------------- ---- ----- -------- The Shoppes at East Chase Montgomery, Alabama March 155,000 Coastal Grand Myrtle Beach, South Carolina March 155,000 Colonial University Village(1) Auburn, Alabama April 126,000 Greenbrier Mall(1) Chesapeake, Virginia April 160,000 Jordan Creek Town Center West Des Moines, Iowa August 200,000 Yuma Palms(1) Yuma, Arizona October 98,000 Eastern Shore Spanish Fort, Alabama October 126,000 (1) Replacement store Capital expenditures for fiscal year 2004 are expected to approximate $240 million. At November 1, 2003, the Company operated 330 stores spanning 29 states - all operating with one name - Dillard's. Supplemental Information Additional information regarding sales for the quarter is provided: Sales by Month Sales performance by month for the third quarter occurred as follows: Total Comparable -------------------------- August -4% -4% September +3% +3% October -5% -5% Quarter 3 -2% -2% Sales by Category Sales were strongest in the cosmetics and accessories, shoes and lingerie and men's areas during the third quarter of 2003, with those areas performing above the Company average trend for the period. Sales in the women's and juniors' categories were in line with the total Company sales performance. Sales were weakest in the home and children's areas, with sales in children's trending significantly below average. Sales by Region During the third quarter of 2003, sales were strongest in the western and eastern regions of the Company. Sales in the central region were slightly weaker than the average Company sales performance. Estimates for 2003 The Company is updating the following estimates for certain income statement items for the fiscal year ended January 31, 2004 based upon current conditions. Actual results may differ significantly from these estimates as conditions and factors change - See "Forward Looking Information". In Millions ----------- 2003 2002 Estimated Actual --------- ------ Depreciation and amortization $ 300 $ 301 Rental expense 68 68 Interest and debt expense 180 190 Capital expenditures 215 233 Dillard's (Fitch, BB- Senior Unsecured Notes and B- Capital Securities Ratings, Negative Outlook) is the third largest department store chain in the U.S., with 329 stores in 29 states in the southeast, central and southwestern U.S. All of the company's stores operate under the Dillard's nameplate. Women's clothing, shoes, accessories and cosmetics account for approximately 66% of the company's sales, while men's clothing accounts for 18% of the total, children's clothing 7% and home- related goods the remaining 9%. DOBSON: Enhancing Statewide Network with Up to $24MM Investment --------------------------------------------------------------- Dobson Communications Corporation (Nasdaq:DCEL) awarded approximately $10 million in contracts to support the overlay of its Alaska markets with 2.5-generation GSM/GPRS/EDGE technology. The GSM/GPRS/EDGE overlay is scheduled for completion by mid-2004. The Company plans to start selling GSM/GPRS wireless phones and other handsets in its Alaska markets in the second quarter next year, starting with the Anchorage market. Dobson announced that it also plans to invest another $3.5 million next year in Alaska to enhance further the capacity and efficiency of its statewide wireless network. With this capital expenditure, Dobson will have invested approximately $24 million in Alaska in 2003 and 2004 to improve wireless service statewide. In 2003 the Company's upgrades included installing a new telecommunications switch in Anchorage, installing 15 new cell sites in Anchorage and Alaska Rural Service Area (RSA) 2, and increasing network capacity throughout its coverage areas in Anchorage, AK RSA 1 (Fairbanks), AK RSA 2 and AK RSA 3 (Juneau). Dobson chose Ericsson (Nasdaq:ERICY) to supply the GSM/GPRS base station infrastructure for its Alaska project and Nortel Networks (NYSE:NT) to supply the new GSM/GPRS telecommunications switch in Anchorage. Dobson currently offers TDMA (Time Division Multiple Access) wireless service to markets that encompass 92 percent of the Alaskan population. Dobson also offers wireless services in 15 other states from New York to Arizona, and from Texas to Minnesota. With the overlay of the new technologies, Dobson will be the first telecommunications provider to offer voice services on GSM (Global System for Mobile Communications) and high-speed data services on GPRS (General Packet Radio Service) on a wireless network throughout Alaska. Enhanced Data for GSM Evolution (EDGE) is a software enhancement that supports high-speed data communications. "Dobson's GSM/GPRS overlay in Alaska will bring an entirely new universe of wireless services and value to the Alaska market," said Tim Duffy, senior vice president and chief technical officer for Dobson. "The biggest change will be in terms of wireless data services -- by mid-2004, we plan to be selling throughout Alaska the latest voice/data devices and picture phones, which will allow customers to receive e-mails and Internet-based services on their wireless handsets. "This investment demonstrates Dobson's commitment to dramatically improve the coverage and capabilities of our wireless network in Alaska to better serve customers throughout the state," he said. Dobson has served wireless customers in the Fairbanks and Juneau areas since 2000, and in June 2003 acquired its ownership in the Anchorage Metropolitan Service Area and Alaska RSA 2 from AT&T Wireless. Based on its market share in these four markets, Dobson is now the largest wireless services provider in Alaska, operating under the CellularOne(TM) brand. Dobson Communications (S&P, CCC+ Senior Debt and B- Corporate Credit Rating, Stable Outlook) is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 16 states, with markets covering a population of 11.1 million. The Company serves 1.6 million customers. For additional information on the Company and its operations, visit its Web site at http://www.dobson.net/ DOBSON COMMS: Shares Now Trading on Nasdaq National Market ---------------------------------------------------------- Dobson Communications Corporation's (Nasdaq:DCEL) Class A common stock has been approved for trading on the Nasdaq National Market. The Company moved from the Nasdaq SmallCap to the Nasdaq National Market effective at the opening of regular trading on Nov. 19, 2003. Dobson's Class A common stock will continue to trade under the symbol DCEL. "Moving to the Nasdaq National Market is another step in positioning the company to maximize shareholder value," said Everett R. Dobson, chairman, chief executive office and president of Dobson Communications. "The higher visibility and trading advantages of being on the National Market will benefit all our shareholders." Dobson Communications (S&P, CCC+ Senior Debt and B- Corporate Credit Rating, Stable Outlook) is a leading provider of wireless phone services to rural markets in the United States. Headquartered in Oklahoma City, the Company owns wireless operations in 16 states, with markets covering a population of 11.1 million. The Company serves 1.6 million customers. For additional information on the Company and its operations, please visit its Web site at http://www.dobson.net. eB2B COMMERCE: Wants More Time to File Current Fin'l Information ---------------------------------------------------------------- eB2B Commerce, Inc. reports to the Securities and Exchange Commission that additional time is needed to file the current financial information due to the departure of the controller of the Company, which person had the primary responsibility for filing of the Form 10-QSB, and the Company's inability to replace such person to date. The Company's operating results for the third quarter of 2003 are in the process of being finalized. Preliminary calculations indicate that revenues, net of discontinued operations, in the third quarter of 2003 are approximately equal to those in the third quarter of 2002. Net loss in the third quarter of 2003 was significantly less than in the comparable 2002 period. At June 30, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $4 million. ENRON CORP: Northern Border Reaffirms 2004 Distribution Guidance ---------------------------------------------------------------- In response to market concerns, Northern Border Partners, L.P. (NYSE:NBP) reaffirmed its guidance with respect to its 2004 distribution notwithstanding the disclosure in its third quarter Form 10-Q regarding the termination of Enron's pension plan. The 10-Q disclosure described the potential for costs related to the termination of the Enron Cash Balance Plan to be charged to the Partnership. Based on the Partnership's current expectations of net income and cash flows for 2004 for its existing businesses, the Partnership expects the distribution to remain at the current level of $0.80 per common unit per quarter throughout 2004. "Our businesses continue to provide the cash flow necessary to sustain our distribution level," said Bill Cordes, chairman and chief executive officer of Northern Border Partners. "We anticipate that the likely range of allocated costs which may be charged to the Partnership will not be large enough to impact our distribution level. Furthermore, these costs would be a one-time event and not reflect on the ongoing operations of the Partnership." Northern Border Partners, L.P. is a publicly traded partnership formed to own, operate and acquire a diversified portfolio of energy assets. The Partnership owns and manages natural gas pipelines and is engaged in the gathering and processing of natural gas. More information can be found at http://www.northernborderpartners.com ENRON: Wants Exclusive Solicitation Time Extended to April 30 ------------------------------------------------------------- On July 11, 2003, the Enron Corporation Debtors filed with the Court a proposed Chapter 11 plan and related disclosure statement. On September 18, 2003, the Debtors filed the Amended Plan and Disclosure Statement. A Second Amended Plan is now on the table. Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, recalls that the Court scheduled a hearing on November 18, 2003, to consider the adequacy of the information contained in the Disclosure Statement and scheduled a hearing to consider confirmation of the Plan on February 27, 2004. The Debtors ask the Court to extend their Exclusive Solicitation Period until April 30, 2004, pursuant to Section 1121(d) of the Bankruptcy Code. Mr. Rosen asserts that the Solicitation Period should be extended because: (a) the Debtors' cases are undisputedly large and complex where delays are inevitable due to the magnitude of the tasks as well as the magnitude of coordinating and organizing the tasks; (b) the Debtors anticipate further amendment to the Plan and the Disclosure Statement; (c) although the Debtors originally aimed for confirming the Plan before the end of 2003, based on the requisite time frames for voting, motions to consider the temporary allowance of claims, and the tabulation of claims, that target date has necessarily shifted to the end of February 2004; and (d) the Debtors have worked very hard with the major parties- in-interest in these cases to propose the Plan on file with the Court and are seeking the extension of the Solicitation Period to complete the solicitation of acceptances. * * * Judge Gonzalez will hear the Debtors' request for extension on December 4, 2003. To bridge the gap between the current November 29, 2003, expiration date and the date of the hearing, Judge Gonzalez entered a Bridge Order extending the solicitation period by 5 days. (Enron Bankruptcy News, Issue No. 87; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENTERTAINMENT TECH: Says Assets Insufficient to Satisfy Claims -------------------------------------------------------------- On November 6, 2003, Entertainment Technologies & Programs, Inc. filed for Bankruptcy protection under Chapter 7 of the Bankruptcy Code. Because the Company generated insufficient revenues to repay its outstanding debts and because the Company has been unable to secure additional funding to fund operations in 2003, the Company filed a Bankruptcy petition under Chapter 7 of the Bankruptcy Code in the U.S. Bankruptcy Court for the District of Texas, Case Number 03-46010-H5-7. The Company believes that its assets will be insufficient to satisfy the claims of all creditors and it is unlikely that the Company's shareholders will be eligible to participate in any distributions of the Company's assets as a result of the Bankruptcy. Upon liquidation, the Company will cease operations and wind up its business. On that basis, the Company expects that it will cease to file reports under the Securities Exchange Act of 1934. GAP INC: Third-Quarter 2003 Results Reflect Marked Improvement -------------------------------------------------------------- Gap Inc. (NYSE: GPS) reported that earnings for the third quarter, which ended November 1, 2003, rose 94 percent over last year to $263 million driven by increased sales, product acceptance and improved margins. Earnings per share for the third quarter on a diluted basis were $0.28, compared with $0.15 per share for the same period last year. Net income was $263 million, compared with $135 million for the same period last year. Third quarter net sales increased 8 percent to $3.9 billion, compared with $3.6 billion for the same period last year. Comparable store sales were up 6 percent, compared with a prior year increase of 2 percent. "We delivered a very solid performance for third quarter supported by better product assortments and more effective marketing to core customer segments, and a strong operational focus on flowing top- line gains through to bottom-line earnings growth," said Gap Inc. President and CEO Paul Pressler. "I'm pleased with how well our teams at Gap, Old Navy and Banana Republic are executing against our priorities. We continue to improve our customer focus and strengthen our foundation for longer-term growth." Store Sales Results By Division The company's third quarter comparable store sales by division were as follows: -- Gap U.S.: positive 5 percent versus negative 2 percent last year -- Gap International: positive 4 percent versus positive 2 percent last year -- Banana Republic: positive 11 percent versus positive 1 percent last year -- Old Navy: positive 6 percent versus positive 6 percent last year Net sales for the third quarter in each division were as follows: -- Gap U.S.: $1.3 billion versus $1.3 billion last year -- Gap International: $476 million versus $420 million last year -- Banana Republic: $512 million versus $456 million last year -- Old Navy: $1.6 billion versus $1.5 billion last year Year-to-Date Results Year-to-date sales of $11.0 billion for the 39 weeks ended November 1, 2003, represent an increase of 12 percent over sales of $9.8 billion for the same period last year. The company's year- to-date comparable store sales increased 9 percent compared with a decrease of 7 percent in the prior year. Year-to-date earnings are $674 million for the 39 weeks ended November 1, 2003, compared with earnings of $229 million for the same period last year. Updated 2003 and 2004 Outlook Capital Expenditures Year-to-date, through November 1, 2003, the company recorded $181 million in capital expenditures. For fiscal 2003, the company expects capital spending to be about $275 million, less than previous estimates of $300 million to $325 million. For fiscal 2004, the company expects capital expenditures of about $500 million. Inventory For the third quarter 2003, the company supported positive comparable store sales growth and margin improvement at lower inventory levels than prior year. The company ended the third quarter 2003 with a 7 percent decrease over prior year in inventory per square foot. The company remains focused on optimizing inventory productivity and will continue efforts to properly balance inventory with sales, while ensuring that stores are well stocked. At the end of the fourth quarter 2003, the company is planning inventory per square foot to be down on a percentage basis; the decrease is expected to be in the mid- to high-teens compared with a 13 percent increase last year. By the end of the first quarter of 2004, the company also is planning a decrease, expected to be in the high-single digits compared with a 17 percent increase in the prior year. Real Estate Year-to-date through November 1, 2003, the company opened 33 store locations and closed 75. Net square footage for the third quarter 2003 decreased by 2 percent from the same period last year. For fiscal 2003, the company expects to open about 35 store locations, weighted toward Old Navy, and close about 135 store locations, weighted toward Gap U.S. The company reiterated its guidance for 2003 of an expected 2 percent decline in net square footage for the full fiscal year. For fiscal 2004, the company expects to open about 125 store locations, weighted toward Old Navy, and expects to close about 125 store locations, weighted toward Gap U.S. Net square footage is expected to remain flat for fiscal 2004. Gap brand stores are reported based on concepts and locations. Any Gap Adult, GapKids, babyGap or GapBody that meets a certain square footage threshold has been counted as a store concept, even when residing within a single physical location that may have other concepts. Gap Inc. (Fitch, BB- Senior Unsecured Debt Rating, Stable Outlook) is a leading international specialty retailer offering clothing, accessories and personal care products for men, women, children and babies under the Gap, Banana Republic and Old Navy brand names. Fiscal 2002 sales were $14.5 billion. As of November 1, 2003, Gap Inc. operated 4,210 store concepts (3,075 store locations) in the United States, the United Kingdom, Canada, France, Japan and Germany. In the United States, customers also may shop the company's online stores at http://www.gap.com/ http://www.BananaRepublic.com/and http://www.oldnavy.com/ Convertible Bond Activity For a week or more now, Gap's $1.38 billion issue of 5.750% Convertible Notes due March 15, 2009 has hit the list of the 10 most active high yield bonds reported in the Bond Market Data Bank column in The Wall Street Journal. The convertible notes well above par, around 145. The securities' conversion price is around $16 and GPS common shares trade at $20+ today. GENESIS HEALTH: Will Publish Fiscal Year-End Results on Dec. 10 --------------------------------------------------------------- Genesis Health Ventures, Inc., will release operating results for its September 30, 2003 fiscal year-end after the close of trading on December 10, 2003. As previously announced, the Company's eldercare business is being spun-off into a separate publicly traded company, Genesis HealthCare Corporation. After the spin-off, the Company will change its name to NeighborCare, Inc. and ticker to NCRX. The 2003 fiscal year-end results will include consolidated Genesis Health Ventures results as well as proforma financials for Genesis HealthCare Corporation and NeighborCare, Inc. The Company will hold a conference call at 10:00 a.m. EST on December 11, 2003 to discuss results for the year on a consolidated basis as well as for both separate companies. Investors can access the conference call by phone at (888) 428- 4478 or live via webcast through the homepage of the Genesis web site at http://www.ghv.com where a replay of the call will also be posted. Genesis Health Ventures (Nasdaq: GHVI) provides healthcare services to America's elders through a network of NeighborCare pharmacies and Genesis ElderCare skilled nursing and assisted- living facilities. Other Genesis healthcare services include rehabilitation and respiratory therapy, group purchasing, and diagnostics. Visit http://www.ghv.comfor more information on the Company. Genesis HealthCare Corporation is trading on the NASDAQ when- issued market under the ticker (Nasdaq: GHCIV) through December 1, 2003. Post-spin, Genesis HealthCare Corporation's ticker will be "GHCI." G-FORCE CDO: S&P Assigns Prelim. Ratings to Series 2003-1 Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to G-Force CDO 2003-1 Ltd.'s $540.1 million collateralized debt obligations series 2003-1. The preliminary ratings are based on information as of Nov. 20, 2003. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the subordination provided by the lower classes of notes, the excess spread provided by the assets, the diversification of the collateral, the use of an interest rate hedge to mitigate the interest-rate risk and the legal structure of the transaction. The issuer will use the proceeds of the sale of securities to acquire the collateral from G3 Strategic Investments L.P., an affiliate of GMAC Commercial Mortgage Corp. The collateral will include CMBS certificates, a CDO note, and four subordinate loan participations. PRELIMINARY RATINGS ASSIGNED G-Force CDO 2003-1 Ltd. Collateralized debt obligations series 2003-1 Class Rating Amount (Mil. $) A AAA 190.0 B AA 55.0 C A 47.0 D A- 15.3 E BBB+ 27.7 F BBB 22.0 G BBB 18.0 H BBB- 20.0 J BB 40.0 K B 50.0 GINGISS GROUP: Asks to Hire Houlihan Lokey as Investment Banker --------------------------------------------------------------- The Gingiss Group, Inc., and its debtor-affiliates are seeking permission from the U.S. Bankruptcy Court for the District of Delaware to engage Houlihan, Lokey, Howard & Zukin Capital as their Investment Banker to assist them in the sale of substantially all of their assets. Houlihan Lokey is expected to: a. assist the Debtors in effectuating a sale, merger, joint or other combination or disposition of the Debtors, their assets and/or their stock, or any portion thereof, in one or more transactions with any person or entity; b. interact with potential purchasers to create interest in the Transaction; c. coordinate and distribute the offering memorandum prepared by HLHZ and the Debtors, and relevant due diligence information concerning the Debtors to interested purchasers; d. facilitate a coordinated sales effort and assisting in the negotiation and structuring of the financial aspects of the Transaction; e. coordinate with the Debtors, and other advisors, as well as the Debtors' secured lenders and any Committees of Unsecured Creditors appointed in these cases and any professionals retained by such a Committee in the negotiation process; f. actively participate in negotiations and otherwise reasonably assisting the Debtors in effectuating the Transaction; g. provide expert testimony in conjunction with the Debtors' efforts to consummate the Transaction and other financial valuation matters associated with the Debtors' Chapter 11 proceedings; and h. perform all other investment banking and financial advisory services that are desirable and necessary for the efficient and economic administration of these Chapter 11 Cases. David Rosen reports that the Debtors will pay Houlihan Lokey a retainer of $100,000. Upon the consummation of a transaction, a Transaction Fee will be paid to Houlihan Lokey in the amount of $750,000 plus: i) 3.0% of the amount by which the Transaction Value (up to $30 million) exceeds $25 million; and ii) 6.0% of the Transaction Value in excess of $30 million. Headquartered in Addison, Illinois, The Gingiss Group, Inc., a national men's formal wear rental and retail company, filed for chapter 11 protection on November 3, 2003 (Bankr. Del. Case No. 03-13364). James E. O'Neill, Esq., and Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young Jones & Weintraub represent the Debtors in their restructuring efforts. The Debtors listed debts of over $50 million in their petition. GOODYEAR TIRE: Inks New Long-Term Supply Pact with Volvo Trucks --------------------------------------------------------------- The Goodyear Tire & Rubber Company has signed a new agreement to make its commercial truck tires the standard equipment used on all Volvo trucks produced for North America over the next three years. "We are extremely pleased to have been chosen by this quality producer of premium commercial vehicles. Volvo trucks are manufactured with pride, technology and innovation. The trucking business is built upon relationships and reputations, and there is no better reputation in heavy-duty trucks than Volvo's," said Steve McClellan, Goodyear's vice president, commercial tire systems. Scott Kress, senior vice president - sales, for Volvo Trucks North America, Inc., said, "Our customers look to Volvo for a premium ownership experience. We are pleased to have a supplier partner like Goodyear who shares our dedication to meeting customer needs for quality, safety, reliability, fuel efficiency and overall cost of ownership." According to McClellan, "Volvo Trucks North America plans to continue to grow its share of the competitive truck equipment business. Obviously, this holds great opportunity for Goodyear to grow along with them, and to reap the benefits of sales of our replacement tires for the thousands of trucks that will need new or retreaded tires down the road. "After an extensive evaluation process, Volvo put its confidence in Goodyear because of our innovative production systems, technical investment, testing and development capabilities, reputation for product performance, and extensive network of commercial dealers to offer support to Volvo customers," he said. Goodyear truck tires for Volvo vehicles are produced at Goodyear's manufacturing facilities in Danville, VA, and Topeka, KS. Goodyear will supply Volvo with the new-generation G395 LHS, as well as the complete Goodyear commercial portfolio of line-haul, regional and vocational products. In addition to the new agreement with Volvo Trucks North America, Goodyear also has renewed its current standard agreement with Mack Trucks, Inc., a subsidiary of the Volvo Group. The Mack agreement will run concurrent with the Volvo pact; both agreements extend through October 2006. "We view this agreement as more than a transaction to supply a customer with a product. The relationship is built upon Goodyear's ability to supply quality tires, to deliver them when and where needed, and to make sure our role in supplying an important customer adds value to their end-users," said McClellan. Volvo Trucks North America is a member of the Volvo Group, a publicly held company headquartered in Gothenburg, Sweden. With 2002 sales of approximately $20 billion, Volvo's business areas include heavy trucks, buses, construction equipment, marine and industrial drive systems, aerospace, and financial services. In the U.S., Volvo shares are listed on NASDAQ, and are traded as ADRs (symbol: VOLVY). Goodyear Commercial Tire Systems offers complete products and services to the trucking industry, including a full range of original equipment and replacement tires, and the industry's most extensive sales, retreading and commercial services network. Additional information about Goodyear, the world's largest tire company, can be found at http://www.goodyear.com Goodyear (Fitch, B+ Senior Secured and B Senior Unsecured Debt Ratings, Negative) is the world's largest tire company. Headquartered in Akron, Ohio, the company manufactures tires, engineered rubber products and chemicals in more than 85 facilities in 28 countries. It has marketing operations in almost every country around the world. Goodyear employs about 92,000 people worldwide. HEALTHSOUTH CORP: Expands Agreement with CIGNA Healthcare --------------------------------------------------------- HealthSouth Corporation (OTC Pink Sheets: HLSH) has entered into a multi-year national agreement with CIGNA HealthCare (NYSE: CI) in which HealthSouth will provide outpatient physical therapy, occupational therapy and speech therapy to CIGNA HealthCare members in existing and additional locations under a simplified contract. The agreement, effective November 15, 2003, consolidates existing multiple arrangements into one three-year contract and adds more than 130 new HealthSouth locations to the CIGNA HealthCare network of participating providers. The agreement will not be applicable in states where CIGNA HealthCare contracts with other providers on a sole source basis. Financial terms of the agreement were not disclosed. "In addition to continuing our strong relationship with CIGNA HealthCare in previously established markets, HealthSouth now will be able to provide services to CIGNA HealthCare members in new locations," said HealthSouth Interim Chief Executive Officer Bob May. "In turn, CIGNA HealthCare's network of therapy service providers will expand through increased access to HealthSouth facilities." The contract illustrates the commitment of both organizations to provide access to quality, cost-effective health care services across the country. HealthSouth and CIGNA HealthCare have already worked closely to increase administrative efficiencies, which has resulted in improved accuracy in billing and the payment of claims. "With this new agreement, we've standardized our contract to enhance efficiency and, at the same time, we've expanded our network of participating providers," said Bill Lamoreaux, senior vice president of contracting for CIGNA HealthCare. "This will result in more choices and flexibility for our members and greater administrative ease for CIGNA HealthCare." CIGNA HealthCare, headquartered in Bloomfield, Connecticut, provides medical benefits through managed care and indemnity health care plans to approximately 11.8 million people, dental coverage to approximately 12.2 million, behavioral health coverage to approximately 14.3 million, and pharmacy benefits to approximately 9.2 million. "CIGNA HealthCare" refers to various operating subsidiaries of CIGNA Corporation (NYSE: CI). Products and services are provided by these operating subsidiaries and not by CIGNA Corporation. HealthSouth is the nation's largest provider of outpatient surgery, diagnostic imaging and rehabilitative healthcare services, with nearly 1,700 locations nationwide and abroad. HealthSouth can be found on the Web at http://www.healthsouth.com As reported in Troubled Company Reporter's November 5, 2003 edition, HealthSouth Corporation, which previously announced that it had initiated discussions and submitted term sheets to its creditors providing for the restructuring of the Company's outstanding indebtedness, said that it has received a notice of technical default purportedly from the requisite holders of certain of its senior notes and its senior subordinated notes. Once notice has actually been received, the notes provide for a cure period, following which these noteholders would have the right to accelerate payment of the outstanding principal amount of these notes. The Company stated that it is current on all interest payments due to its bank and noteholders. The Company also reiterated it intention to remain current on all upcoming interest payments. IMAGEMAX: Needs Additional Funds to Meet Near-Term Obligations -------------------------------------------------------------- ImageMax, Inc. is a national single-source provider of integrated document management solutions. The Company's revenues are derived from a broad range of media conversion, storage and retrieval services, the sale of third party document management software products which support digital imaging and indexing services and the sale and service of a variety of document management equipment. The Company's revenues consist of service revenues, which are generally recognized as the related services are rendered, and product revenues, which are recognized when the products are shipped to clients. Service revenues are primarily derived from media conversion, storage and retrieval, imaging and indexing of documents, and the service of imaging and micrographic equipment sold. Product revenues are derived from equipment sales and software sales and support. Cost of revenues consists principally of the costs of products sold and wages and related benefits, supplies, facilities and equipment expenses associated with providing the Company's services. Selling and administrative ("S&A") expenses include salaries and related benefits associated with the Company's executive and senior management, marketing and selling activities (principally salaries and related costs), and financial and other administrative expenses. Nine Months Ended September 30, 2003 Compared to Nine Months Ended September 30, 2002 Overview: For the nine months ended September 30, 2003, net loss amounted to $12.8 million or $1.85 per basic and diluted share compared to a net loss of $14.9 million or $2.19 per basic and diluted share for the nine months ended September 30, 2002. The Company recorded a goodwill impairment charge of $11.4 million in the third quarter of 2003 due to impairment indicators defined under SFAS 142 "Goodwill and Intangibles". As previously disclosed, in the first nine months of 2002 the Company recorded a non-cash goodwill charge of $15.1 million or $2.22 per share as a result of implementing SFAS 142. Revenues: For the nine months ended September 30, 2003, total revenues decreased $1.5 million or 4.6% as compared to the corresponding period in 2002. For the nine months ended September 30, 2003, services revenue and products revenue, respectively, comprised 88.5% and 11.5% of total revenues, as compared to 85.1% and 14.9% in the corresponding period in 2002. Service revenue decreased 0.8% or $0.2 million due primarily to a decrease in data entry and litigation coding service ($1.6 million) related to the loss of former customers that were part of the Digiscribe litigation disclosed in the Company's Form 10-Q filing dated May 15, 2003. This decrease was offset by increases in digital conversion services revenue as a result of higher volume, notably in southern California, a facility opened in the fourth quarter of 2002 ($1.0 million) and in litigation projects utilizing electronic data discovery services ($0.6 million). Conversion services revenue increased 6% as digitally based services increased over the prior period. There was a change in business terms, effective July 2003, in which the outsourced component of certain electronic data discovery services were directly billed by the provider to certain customers. The impact of this change was to reduce services revenue and cost of services revenue by $0.4 million. Products revenue decreased 25.9% or $1.2 million as a result of lower analog equipment and related supplies sales and lower third party software revenues. These declines were primarily attributable to volume and the Company believes that results related to software, coupled with delayed buying decisions, were indicative of the prolonged effects of the national economy and war in Iraq. Results related to equipment and supplies revenues are consistent with recent trends as the Company continues to focus its efforts on services based revenues. Gross Profit: For the nine months ended September 30, 2003, gross profit decreased by $1.4 million, or 11.7%. Gross profit percentage decreased from 37.7% to 34.9% in 2003 versus the same corresponding period in 2002. Gross profit declined $0.7 million on services revenue primarily due to: lower margins on projects utilizing electronic data discovery services resulting from lower prices accorded to large volume customers; the decline in data entry and litigation coding services noted above; and the impact of severe weather in the Mid- Atlantic and Northeast during the first quarter of 2003. These effects were partially offset by an increase in gross profit related to conversion services in the second and third quarters of 2003 as a result of higher volume and production capacity utilization. The impact of the change in business terms regarding electronic data discovery services discussed above was to increase gross profit percentage from 34.4% to 34.9%. Gross profit declined $0.7 million on products revenue due primarily to volume declines noted above. Selling and Administrative Expenses: For the nine months ended September 30, 2003, selling and administrative expenses increased $89,000 as compared to the corresponding period in 2002. The increase was related to a $53,000 charge incurred for telecom utilization and higher business insurance costs. In addition, administrative expenses included a benefit of $0.1 million related to the settlement of the Digiscribe litigation in the second quarter of 2003, which was more than offset by expenses incurred in the first quarter of 2003 related to the move of operations to more cost effective facilities within the Boston, Detroit and Philadelphia markets. Interest Expense: Interest expense remained constant as the company maintained relatively consistent debt levels at September 30, 2003 versus September 30, 2002. Liquidity and Capital Resources In the first, second and third quarters of 2003, the Company incurred net losses and failed to meet a required financial covenant under the Revolving Credit Line (which matures on January 15, 2004) and was therefore in default with respect to the Revolver and its subordinated debt agreements, which mature on February 15, 2004. The First Amendment of the Forbearance Agreement, in which the Company's senior lenders agreed to forbear certain of their rights in default, expired on October 31, 2003. The rights and remedies available to the senior lenders include acceleration of the Revolver balance to be due and payable. Further, at September 30, 2003, the Company resolved the over- advance position that existed at June 30, 2003 of $886,000, resulting from a reduction in its eligible accounts receivable, as defined in the credit agreement, as amended. There was no over- advance position at September 30, 2003. The Company will require additional working capital in order to continue to meet its current operating obligations. The combination of these factors indicates significant uncertainty about the Company's ability to continue as a going concern. Management continues to monitor its sales activity and implement certain short-term cost-deferral and cost reduction measures where possible. In addition, the Company has retained an investment- banking firm to act as its exclusive financial advisor to assist the Board of Directors and management in the exploration of strategic alternatives available to the Company. The Company is in negotiations with its subordinated debt holders to obtain necessary working capital and the Company is also in discussions to obtain forbearance from the senior lenders. There can be no assurance that these negotiations or discussions will be successful and any agreement with the subordinated debt holders would be subject to approval by the Company's senior lenders. In the event the Company is unable to secure additional working capital, negotiate any necessary forbearance agreements and/or obtain waivers of any covenant violations from its senior lenders or subordinated debt holders currently or in the future, or to be successful in its efforts to locate and consummate strategic alternatives that result in either the sale of the Company or a refinancing of the senior and subordinated debt, the Company may not have the ability to continue as a going concern, may not be able to pay its debts as they come due, its operations may be significantly curtailed and the Company may have to consider additional alternatives, which may include bankruptcy or liquidation. As of September 30, 2003, the Company had nominal cash and cash equivalents, and a working capital deficit of $11.2 million. The working capital deficit includes the outstanding balance of the Revolver of $5.4 million and subordinated convertible debt of $7.3 million, which are due January 15, 2004 and February 15, 2004, respectively. Working capital net of the senior and subordinated debt balances was approximately $1.6 million as of September 30, 2003. As of December 31, 2002 the Company had cash and cash equivalents of $0.9 million and working capital of $2.5 million. In addition, the Company made $0.8 million in principal payments on the Term Loan for the six months ended June 30, 2003 and reduced its Revolver balance by $0.3 million for the nine months ended September 30, 2003. INTEREP: Confirms New Employees Return to Katz Radio Group ---------------------------------------------------------- Interep announced (OTC Bulletin Board: IREP) that nearly all of the Katz Radio Group employees who joined Interep on Monday have returned to KRG. Their sudden departure Wednesday was prompted by an apparently untrue announcement by KRG that all major radio groups currently represented by Christal and Katz Radio had made the decision to retain representation with those firms. In subsequent conversations yesterday between Interep and the heads of several major groups under KRG's representation, each group head stated that they had not yet made any decision in their choice of representation firm. In a prepared statement, Ralph Guild, Chairman and CEO of Interep, said, "Interep is aware that Katz Radio Group took actions to interfere with the recent expansion of our staff and leadership team. Although Interep strongly questions the legitimacy of Katz's behavior, we are still gathering the facts. When we have all the information, we will take any and all necessary, lawful actions to stop any wrongful interference with our business that may have occurred." The three executives who recently left the Katz Radio Group to start two new independent rep firms at Interep include Steve Shaw, recently appointed co-COO/co-President of Interep, and senior executives Tucker Flood and Mark Gray. All have signed contracts with Interep which the company intends to enforce. Interep (OTC Bulletin Board: IREP) is the nation's largest independent advertising sales and marketing company specializing in radio, the Internet and complementary media, with offices in 17 cities. Interep is the parent company of ABC Radio Sales, Cumulus Radio Sales, D&R Radio, Infinity Radio Sales, McGavren Guild Radio, D&R/Susquehanna, SBS/Interep, as well as Interep Interactive, the company's interactive representation and web publishing division specializing in the sales and marketing of on- line advertising, including streaming media. Interep Interactive includes Winstar Interactive, Cybereps and Perfect Circle Media. In addition, Interep provides a variety of support services, including: consumer and media research, sales and management training, promotional programs and unwired radio "networks." Clients also benefit from Interep's new business development team, the Interep Marketing Group, as well as Morrison & Abraham, Interep's sales consulting division focusing on non-traditional revenue. Interep National Radio Sales' March 31, 2003 balance sheet shows a total shareholders' equity deficit of about $10.5 million. IVACO: Furloughing Staff in Canada as Restructuring Continues ------------------------------------------------------------- Gordon D. Silverman, President and CEO of Ivaco Inc., announced staff reductions-mostly in management and supervisory positions-at plants in Ontario and Quebec. Ivaco is eliminating 78 positions this week including 49 at its Marieville, Quebec plants, and 29 at its L'Orignal, Ontario facility, representing a total reduction of 17% of the staff groups in both locations. When added to those recently announced these reductions will bring the total positions eliminated to slightly over 200 since September 16, 2003. The Company is currently restructuring for a return to profitability under the Companies' Creditors Arrangement Act. Ivaco filed for protection under the CCAA on September 16, 2003, citing difficult market conditions for the entire North American steel industry, which included the high Canadian dollar, U.S. anti-dumping duty deposits and higher input, energy and transportation costs. Ivaco is a Canadian corporation and is a leading North American producer of steel, fabricated steel products and precision machined components. Ivaco's modern steel operations include Canada's largest rod mill, which has a rated production capacity of 900,000 tons of wire rods per annum. In addition, its fabricated steel products operations have a rated production capacity in the area of 350,000 tons per annum of wire, wire products and processed rod, and over 175,000 tons per annum of fastener products. Shares of Ivaco are traded on The Toronto Stock Exchange. J.A. JONES: Bradley Arant Serves as Bankruptcy Attorneys -------------------------------------------------------- The U.S. Bankruptcy Court for the Western District of North Carolina gave its stamp of approval to J.A. Jones, Inc., and its debtor-affiliates to employ Bradley Arant Rose & White LLP as their Attorneys. Bradley Arant has represented the Debtors as construction and litigation counsel for over 10 years. The engagement afforded Bradley Arant a knowledge of the Debtors' legal status and affairs that could not be replicated by other counsel. Bradley Arant is expected to: a. give the Debtors legal advice with respect to their duties as debtors-in-possession in the continued operation of their business and management of their assets; b. prepare on behalf of the Debtors necessary motions, applications, answers, contracts, reports and other legal documents; c. perform any and all legal services on behalf of the Debtors arising out of or connected with the bankruptcy proceedings; d. perform other legal services for the Debtors including, but not limited to, work arising out of labor, tax, environmental, corporate, litigation and other matters involving the Debtors; e. advise and represent the Debtors with respect to construction litigation matters, including the preparation of lien documents, issuing discovery requests relating to such matters and representing the Debtors in negotiations and trials; f. advise and consult with the Debtors for the preparation of all necessary schedules, disclosure statements and plans of reorganization; and g. perform all other legal services required by the Debtors in connection with the Debtors' chapter 11 cases. Patrick Darby reports that his firm will bill the Debtors in its current hourly rates, which range from: partners $245 to $400 per hour associates $180 to $250per hour legal assistants $115 to $170 per hour Headquartered in Charlotte, North Carolina, J.A. Jones, Inc. was founded in 1890 by James Addison Jones, J.A. Jones is a subsidiary of insolvent German construction group Philipp Holzmann and a holding company for several US construction firms. The Company filed for chapter 11 protection on September 25, 2003 (Bankr. W.D.N.C. Case No. 03-33532). John P. Whittington, Esq., at Bradley Arant Rose & White LLP and W. B. Hawfield, Jr., Esq., at Moore & Van Allen represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed debs and assets of more than $100 million each. JLG INDUSTRIES: Declares Regular Quarterly Cash Dividend -------------------------------------------------------- The Board of Directors of JLG Industries, Inc. (NYSE:JLG) declared its regular, quarterly cash dividend of $.005 per common share. The dividend is payable on January 5, 2004 to shareholders of record December 15, 2003. JLG Industries, Inc. (S&P, BB- Corporate Credit Rating) is the world's leading producer of access equipment and highway-speed telescopic hydraulic excavators. The Company's diverse product portfolio encompasses leading brands such as JLG(R) aerial work platforms; JLG, Sky Trak(R), Lull(R) and Gradall(R) telehandlers; Gradall excavators; and an array of complementary accessories that increase the versatility and efficiency of these products for end users. JLG markets its products and services through a multi- channel approach that includes a highly trained sales force, marketing, the Internet, integrated supply programs and a network of distributors. In addition, JLG offers world-class after-sales service and support for its customers in the industrial, commercial, institutional and construction markets. JLG's manufacturing facilities are located in the United States and Belgium, with sales and service locations on six continents. For more information, visit http://www.jlg.com KMART CORP: Asks Court to Fix Supplemental Claim Bar Dates ---------------------------------------------------------- In 2002, the Kmart Corporation Debtors learned that the names and addresses of 4,000 personal injury and related litigation claimants were omitted from their Schedules of Assets and Liabilities and Statement of Financial Affairs. Consequently, the claimants were not sent direct mail notices of the July 31, 2002 deadline for filing proofs of prepetition claims. The Debtors, thus, prepared and filed with the Court an amendment to their Schedules. At their request, the Court established January 22, 2003 as supplemental Bar Date for the personal injury and related litigation claimants. Despite their efforts, the Debtors recently learned that the names and addresses of claimants holding contingent, disputed, unliquidated claims were omitted from the Amended Schedules and Statements. As a consequence, these claimants did not receive the Original or Supplemental Bar Date Notice. The claimants failed to file proofs of claim. The Debtors also believe that certain personal injury and related litigation claimants may not have receive notice of the effective date of their reorganization plan and the June 20, 2003 Bar Date for filing administrative expense claims or the August 22, 2003 supplemental Administrative Bar Date. In accordance with the Plan, the Debtors sent a Notice of the Plan Effective Date to 150,000 potential claimants. The Debtors recently learned that some of the names and addresses of certain claimants were omitted from the service list for the Effective Date Notice. As a result, these claimants were not sent direct notice by mail of the Administrative Bar Date and the deadlines for submission of cure claims and rejection damage claims. For these reasons, the Debtors ask the Court to establish: (a) February 23, 2004 as the second Supplemental Bar Date for personal injury and related litigation claimants to file proofs of prepetition claims; and (b) March 8, 2004 as the second Supplemental Administrative Bar Date for filing administrative expense claims. The Debtors also ask the Court to set: (1) an additional Supplemental Bar Date of 33 days after notice of the Additional supplemental Bar Date is mailed to the Additional Personal Injury Claimants as the last date for the Additional Claimants to file prepetition claims; and (2) an additional Supplemental Administrative Bar Date of 48 days after notice of the Supplemental Administrative Bar Date is actually mailed to the Additional Administrative Expense Claimants as the last date for the Claimants to file postpetition claims. According to Andrew Goldman, Esq., at Wilmer, Cutler & Pickering, in New York, the Second Supplemental Bar Date applies only to all persons or entities who are personal injury claimants and who hold prepetition claims against the Debtors. Proofs of claim need not be filed by any person or entity: (a) who has already filed a proof of claim against the correct Debtor; (b) who asserts a Claim allowable under Sections 503(b) and 507(a) of the Bankruptcy Code as an administrative expense of the Debtors' Chapter 11 cases; and (c) whose Claim against a Debtor has previously been allowed by, or paid pursuant to, a Court order. The Second Supplemental Administrative Bar Date applies only to persons or entities who are administrative claimants and who hold postpetition claims against the Debtors. The Debtors will mail the Second Supplemental Bar Date and Administrative Bar Date Notices to potential claimants as soon as practicable, but not later than January 20, 2004. The Debtors will retain the right to dispute, or assert offsets or defenses against any filed Claim. Unless the Debtors object to any filed Claim by May 7, 2004, the Claim will be deemed allowed in the amount requested in accordance with Section 502. Pursuant to Rule 3003(c)(2) of the Federal Rules of Bankruptcy Procedure, Claimants who failed to timely file their Claim by the applicable Bar Date are forever barred from doing so. Mr. Goldman tells Judge Sonderby that the Second Supplemental Administrative Bar Date will afford the Debtors complete and accurate information regarding the nature, amount and status of all administrative expense claims and contract-related claims that will be asserted. (Kmart Bankruptcy News, Issue No. 65; Bankruptcy Creditors' Service, Inc., 215/945-7000) KRONOS ADVANCED: Capital Infusion Needed to Continue Operations --------------------------------------------------------------- Kronos Advanced Technologies, Inc. is a high technology industrial company focused on developing, marketing and selling products using the Company's proprietary air movement and purification technology. Kronos is pursuing commercialization of its patented technology in a limited number of markets; and if successful intends to enter additional markets in the future. To date, the Company's ability to execute its strategy has been restricted by its limited amount of capital. Recent Events: On October 6, 2003, Erik W. Black resigned as a member of the Board ofDirectors. On October 31, 2003, the Company entered into a 10-month consulting agreement with Joshua B. Scheinfeld and Steven G. Martin, principals of Fusion Capital, for consulting services with respect to operations, strategy, capital structure and other matters as specified from time to time. As consideration for their services, the Company issued 360,000 unregistered shares of its common stock. In accordance with EITF 96-18, the measurement date was established as the contract date of October 31, 2003 as the share grant was non-forfeitable and fully vested on that date. The stock was valued on that date at $0.22 a share (the closing price for the Company's common stock on the measurement date). The stock issuance has been recorded as a prepaid consulting fee and is being amortized to Professional Fee Expense ratably over the term of the contract. On November 7, 2003, the U. S. Army awarded Kronos a Small Business Innovation Research Phase II contract. The first year of the contract is worth $369,000 with an Army option on the second year worth $360,000. The contract is to develop Kronos' proprietary Electrostatic Dehumidification Technology. The objective of this Phase II effort is to implement and optimize dehumidification via Kronos electrostatic field technology. The objective is to be accomplished by: (1) prototype design and manufacturing, (2) prototype testing in the laboratory environment and field demonstration, (3) analytical and numerical modeling of Kronos' EDT process, and (4) project documentation and reporting including interim and final reports. However, the Company's net loss from continuing operations for the three months ended September 30, 2003 decreased by 7% to $550,000, compared with a net loss of $591,000 for the corresponding period of the prior year. The decrease in the net loss was primarily the result of an increase in gross profit of $31,000 and a decrease in selling, general and administrative expenses of $145,000, offset by an increase in interest expense of $135,000. Revenues are generated through sales of Kronos(TM) devices at Kronos Air Technologies, Inc. Revenue for the three months ended September 30, 2003 was $130,000. Revenue of $109,000 was recorded during the corresponding period of the prior year. These revenues were primarily from Kronos' HoMedics contract and U. S. Navy SBIR Phase II contract. Revenues in the corresponding period of the prior year were primarily from the Company's U. S. Army and U. S. Navy SBIR Phase I contracts and Alticorp contract. Cost of sales for the three months ended September 30, 2003 was $83,000 compared to $92,000 for the corresponding period of the prior year. Cost of sales in the current year is primarily development costs associated with Kronos' HoMedics and U. S. Navy SBIR contracts. Prior year cost of sales related to revenue from U. S. Army and U. S. Navy SBIR Phase I contracts and Alticorp contract. Gross profit for the three months ended September 30, 2003 increased 185% to $47,000 compared to $16,000 for the corresponding period of the prior year. This increase was primarily the result of the higher gross margin from Kronos' HoMedics contract in the current quarter compared with the gross margin from its Alticor contract in the corresponding period of the prior year. Selling, general and administrative expenses for the three months ended September 30, 2003 decreased 25% to $429,000 compared to $574,000 for the corresponding period of the prior year. This decrease is primarily the result of a decrease in professional services of $240,000, offset by an increase in compensation and benefits of $68,000. The decrease in professional services was the result of a reduction in business consulting of $153,000, and legal and auditing ($87,000) expenses. The reduction in business consulting included the benefit to the Company from converting its Chief Operating Officer from a consulting agreement to a full time employment contract. Kronos' total assets at September 30, 2003 and June 30, 2003 were $3.2 million. Total assets at September 30, 2003 were comprised primarily of $2.5 million of patents/intellectual property and $0.5 million of cash. Total assets at June 30, 2003 were comprised primarily of $2.5 million of patents/intellectual property and $0.6 million of cash. Total current assets at September 30, 2003 and June 30, 2003 were $0.7 million, while total current liabilities for those same periods were $2.2 million and $1.9 million, respectively, creating a working capital deficit of $1.4 million and $1.2 million at each respective period end. This working capital deficit is primarily due to accrued expenses for compensation, management consulting and other professional services and the current portion of notes payable. Shareholders' deficit as of September 30, 2003 and June 30, 2003 were $0.5 million and $1.2 million, respectively, representing a decrease of $0.7 million. The decrease in shareholders' deficit is primarily the result of a reclassification of $0.8 million in redeemable warrants to equity based on FAS 150 and the sale and issuance of $0.5 million of common stock, partially offset through incurring a $0.6 million loss from continuing operations for the three months ended September 30, 2003. Net cash flow used on operating activities was $521,000 for the current three month period. The Company was able to satisfy its cash requirements for this period through funding under the terms of its secured financing from HoMedics and from revenue on its HoMedics and U. S. Navy contracts. On May 9, 2003, Kronos closed on a $3.5 million secured financing from a strategic customer, HoMedics, Inc. $2.5 million was advanced to Kronos upon execution of the agreement and $1.0 million will be advanced upon the start of production for the Kronos-based air purification product line to be marketed and distributed by HoMedics. Kronos SBIR contracts with the U. S. Military, including the U. S. Army Phase I Option and Phase II and the U. S. Navy Phase II contracts, are potentially worth, if all options are exercised, up to $1.5 million in product development and testing support for Kronos Air Technologies. In November 2002, Kronos Air Technologies was awarded by the U. S. Navy for a Small Business Innovation Research Phase II contract worth $580,000, plus an option of $150,000. As of September 30, 2003, Kronos has received $150,000 in funding under the U. S. Navy SBIR Phase II contract. As stated above, on November 7, 2003, the U. S. Army awarded Kronos a Small Business Innovation Research Phase II contract. The first year of the contract is worth $369,000 with an Army option on the second year worth $360,000. In August 2003, Kronos Air Technologies obtained notice from the U. S. Army for the option of the SBIR Phase I contract worth $50,000. To earn these future amounts, Kronos will have to complete the required work. On June 19, 2001, Kronos entered into a common stock purchase agreement with Fusion Capital. Pursuant to this agreement, the Company has sold approximately 6 million shares of its common stock and has received $1.3 million. On August 12, 2002, Kronos terminated its common stock purchase agreement dated June 19, 2001 and entered into a new common stock purchase agreement with Fusion Capital. Pursuant to the 2002 common stock purchase agreement, Fusion Capital has agreed to purchase on each trading day during the term of the agreement, $10,000 of Kronos common stock or an aggregate of $6.0 million. The $6.0 million in common stock can be purchased over a 30-month period, subject to a six-month extension or earlier termination at Kronos' sole discretion and subject to certain events. The purchase price of the shares of common stock will be equal to a price based upon the future market price of the Company's common stock without any fixed discount to the then-current market price. Fusion Capital is obligated to purchase shares under the agreement as long as the share price exceeds a floor of $0.10. However, there can be no assurance of how much cash will be received, if any, under the common stock purchase agreement with Fusion Capital. Pursuant to this agreement, Kronos has sold approximately 8 million shares of its common stock and has received $1.1 million. Kronos' management estimates that achievement of the Company's business plan will require substantial additional funding. It is anticipated that the source of funding will be obtained pursuant to the senior debt funding from HoMedics, Fusion Capital transaction and/or the sale of additional equity in the Company, cash flow generated from government grants and contracts, which includes funding from the Small Business Innovation Research contracts sponsored by the U. S. Navy and Army awarded to Kronos Air Technologies, and cash flow generated from customer revenue. Pursuant to discussions with the companies that Kronos will be licensing its technology, Kronos anticipates generating cash flow in its 2004 fiscal year from advance funding from these companies for production development work. There are no assurances that these sources of funding will be adequate to meet Company cash flow needs. Kronos' independent auditors have included an explanatory paragraph to their audit opinions issued in connection with the Company's 2003 and 2002 financial statements which states that Kronos does not have significant cash or other material assets to cover its operating costs. The ability to obtain additional funding will largely determine Kronos' ability to continue in business. Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The Company makes no assurance that it will be able to successfully develop, manufacturer and sell commercial products on a broad basis. While attempting to make this transition, Kronos will be subject to all the risks inherent in a growing venture, including, but not limited to, the need to develop and manufacture reliable and effective products, develop marketing expertise and expand its sales force. LATTICE SEMICON.: S&P Assigns B/CCC+ Credit & Sub Notes Ratings --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to Lattice Semiconductor Corp. At the same time, Standard & Poor's assigned a 'CCC+' rating to the Hillsboro, Oregon-based company's $184 million zero-coupon convertible subordinated note issue. The outlook is stable. Lattice, which designs, develops and markets programmable logic devices, had approximately $218 million of operating lease- adjusted debt as of September 2003. "Rating upside is limited by the company's high debt leverage, likely breakeven free operating cash flow, and second-tier position in the programmable logic market," said Standard & Poor's credit analyst Ben Bubeck. "An adequate cash balance and the lack of any debt maturities until mid-2008 limit rating downside and provide resources to invest in growing its FPGA product position." Lattice faces constant pressure to develop new products and continually improve manufacturing processes to maintain and expand its business. The programmable logic device industry consists of two primary segments--complex programmable logic devices and field programmable gate array. Electronics manufacturers purchase these semiconductor components in a "blank" state and configure them as specific logic circuits, which enables shorter design cycles and reduced development costs compared to application-specific integrated circuits. Lattice has historically captured market share and entered new segments largely through acquisition. It has focused new product development on FPGA-based technology to gain market share in this segment. Its main competitors, however, have a strong hold in this segment, covering the full spectrum of performance capabilities, which could impede Lattice' ability to capture market share. LEXAM EXPLORATIONS: Liquidity Issues Raise Going Concern Doubt -------------------------------------------------------------- Lexam Explorations Inc. recorded a loss of $24,867 during the three months ended September 30, 2003, compared to a loss of $21,317 during the corresponding period in 2002. (All amounts in this news release are expressed in Canadian dollars.) During the nine months ended September 30, 2003, Lexam recorded earnings of $200,870 compared to a loss of $94,093 during 2002. Earnings during 2003 are largely the result of a gain on the sale of marketable securities of $219,718. During the second quarter a decrease in the provision for exploration and development commitments was recorded, and resulted in a gain of $66,804. During the first nine months of 2002, the Company realized a gain on the sale of marketable securities of $11,427, partially offsetting the loss for that period. At September 30, 2003, the Company had cash of $154,534, compared with $30,180 at September 30, 2002. Greenland Outstanding Work Commitments In 2000, Lexam recorded a charge of $750,000 related to unfulfilled work commitments in Greenland. Between 1996 and 1999, the Company held exploration licences in Greenland. The exploration licences required certain expenditures, which Lexam was unable to meet. As a result, pursuant to the laws governing mineral exploration in Greenland, the Company forfeited the licences and was required to pay 50% of the unfulfilled work commitments, which was estimated to be approximately $750,000. Discussions were held between the Company and the government in an attempt to extend the term of, or reach a settlement with respect to, the unfulfilled work commitment. An agreement was reached between the parties whereby, in exchange for $75,000, Lexam would be given a full and final release from the outstanding work commitments. The payment to the government of Greenland was made in April 2003. Financial Condition Lexam is currently not able to continue its exploration efforts and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. The Company is pursuing several alternatives to address these issues, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. At September 30, 2003, Lexam's balance sheet shows that its total current liabilities exceeded its total current assets by about $310,000. Going Concern Uncertainty The consolidated financial statements are prepared in accordance with generally accepted accounting principles and on the assumption that Lexam Explorations Inc., will be able to realize the carrying value of its assets and discharge its liabilities in the normal course of business. The Company has a significant working capital deficiency and is not currently able to continue its exploration programs and discharge its liabilities in the normal course of business, and may not be able to ultimately realize the carrying value of its assets, subject to, among other things, being able to raise sufficient additional financing to fund its exploration programs. There can be no assurance that the Company will be able to raise sufficient additional financing to fulfill its expenditure commitments or complete its exploration programs. During 2001, subsequent to receiving shareholder and regulatory approval, the Company issued 16,164,970 shares at $0.10 per share as part of a plan to settle outstanding payables and other liabilities. Various creditors accepted a total of 12,450,911 shares, reducing the Company's liabilities by $1,245,090, with a corresponding increase in share capital of the same amount. Goldcorp Inc., received 11,734,264 shares of Lexam in exchange for settlement of $1,173,426 in payables, which included an outstanding demand loan due to Goldcorp, along with accrued interest, totalling $1,070,337. Goldcorp's equity interest in Lexam, upon receiving shares for debt, increased from 30.8% to 47.0%. At September 30, 2003, Goldcorp had a 49.8% equity interest in the Company. Of the 16,164,970 shares issued, 3,782,678 were issued to Lexam as custodian for further distribution to additional creditors that had not yet accepted shares in exchange for payables. In 2002, the remaining undistributed shares that were being held by Lexam as custodian, totalling 3,714,059 shares, were cancelled. The Company is pursuing several alternatives to improve its financial position, including joint venturing certain properties, seeking additional sources of debt or equity financing and investigating possible reorganization alternatives. General The unaudited interim period consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles. The preparation of financial data is based on accounting policies and practices consistent with those used in the preparation of the audited annual consolidated financial statements. The accompanying unaudited consolidated financial statements should be read in conjunction with the notes to the Company's audited consolidated financial statements for the year ended December 31, 2002. These unaudited interim consolidated financial statements reflect all normal and recurring adjustments, which are, in the opinion of management, necessary for a fair presentation of the respective interim periods presented. Capital Stock At September 30, 2003, the Company had 38,107,436 common shares outstanding. A total of 40,957,436 shares would have been outstanding had all options been exercised. The Company accounts for all stock-based payments to non-employees granted on or after January 1, 2002, using the fair value based method. Stock options granted to employees are accounted for as capital transactions. The Company is also required to disclose the pro forma effect of accounting for stock option awards granted to employees subsequent to January 1, 2002, under the fair value based method. Lexam has not awarded any stock options subsequent to January 1, 2002. LIBERTY MEDIA: Initiates $4.5-Billion Debt Reduction Program ------------------------------------------------------------ Liberty Media Corporation (NYSE: L, LMC.B) will implement a significant debt reduction program. The plan calls for a reduction of $2.5 billion of consolidated debt before year-end, and another $2.0 billion over the next two years. Robert Bennett, Liberty Media President and CEO, stated, "Liberty Media has made significant progress this year in our efforts to acquire operating control of more of our affiliated companies. We are now addressing the short-term distortion of our balance sheet that resulted from these acquisitions. This initiative, by reducing our aggregate debt level and substantially eliminating debt maturities for the remainder of the decade, will give us the flexibility to continue to invest in growth businesses and in our own equity. We are pleased the credit rating agencies have endorsed this balanced strategy by affirming our investment grade rating." To effect the reduction planned for 2003, Liberty Media will (i) redeem the remaining $1.0 billion of three year floating rate notes issued to Comcast Corporation in connection with the QVC acquisition, (ii) repay over $900 million of outstanding bank debt of wholly-owned subsidiaries and (iii) retire approximately $600 million of other outstanding corporate indebtedness. The funds for the debt repayments will come primarily out of cash on hand. The $2.0 billion reduction planned for the next two years will be funded with a combination of free cash flow from existing businesses, cash on hand, proceeds from equity collar expirations, and other non-strategic asset dispositions. Liberty Media also plans to refinance $1.2 billion of approximately $1.9 billion of debt maturing in 2006 with longer term, asset backed financing. Upon completion of the reduction scheduled to occur by the end of 2003, the face amount of Liberty Media's consolidated debt (excluding debt of UnitedGlobalCom, Inc., which is expected to become a consolidated subsidiary in 2004) will stand at approximately $11.9 billion. The debt reduction plan calls for that amount to be reduced to $9.9 billion by the end of 2005. At that date, Liberty Media expects that the face amount of its publicly held debt, excluding its exchangeable debentures, will be approximately $3.3 billion. That debt will have a weighted average maturity of 13 years and will bear interest at a pre-tax weighted average interest rate of approximately 7.4%. At the same date, the face amount of Liberty Media's public exchangeable debt is expected to be approximately $4.6 billion. That debt will have a weighted average maturity of 16 years and a pre-tax weighted average interest rate of approximately 2.6%. Liberty Media Corporation (NYSE: L, LMC.B) owns interests in a broad range of electronic retailing, video programming, broadband distribution, interactive technology services and communications businesses. Liberty Media and its affiliated companies operate in the United States, Europe, South America and Asia with some of the world's most recognized and respected brands, including QVC, Encore, STARZ!, Discovery and Court TV. Liberty Media's 4.000% bonds due 2029 are currently trading at about 67 cents-on-the-dollar. MARSH SUPERMARKETS: Will Hold 2nd Quarter Conference Call Today --------------------------------------------------------------- Marsh Supermarkets, Inc. (Nasdaq:MARSA) (Nasdaq:MARSB) will release second quarter fiscal 2004 earnings today. Marsh's management will discuss the quarter results today at 3:00 p.m. eastern time in a conference call. The conference call will be simulcast on the internet and will be available for replay on the Marsh Web site at http://www.marsh.net or at http://www.irconnect.com/marsa Marsh is a leading regional chain, operating 66 Marsh(r) supermarkets, 36 LoBill Foods(r) stores, 1 Savin*$(r), 9 O'Malia Food Markets, and 167 Village Pantry(r) convenience stores in central Indiana and western Ohio. The Company also operates Crystal Food Services(tm), which provides upscale catering, cafeteria management, office coffee, vending and concessions; Primo Banquet Catering and Conference Centers; McNamara Florist and Enflora -- Flowers for Business(r). Marsh is a publicly held company whose stock is traded on the Nasdaq National Market System (MARSA and MARSB). * * * As previously reported, Standard & Poor's Ratings Services lowered its corporate credit rating on Indianapolis, Ind.-based Marsh Supermarkets Inc. to 'BB-' from 'BB' based on weak sales trends and declining EBITDA in recent quarters. The outlook is negative. Approximately $206 million of debt is affected by this action. MDC CORP: Offering 3.4M Adjustable Rate Exchangeable Securities --------------------------------------------------------------- MDC Corporation Inc. (TSX: MDZ.A; NASDAQ: MDCA) -- http://www.mdccorp.com-- operating as MDC Partners of Toronto, entered into an underwriting agreement with a syndicate of underwriters in connection with its offering of 3,400,000 Adjustable Rate Exchangeable Securities due December 31, 2028 at an offering price of C$8.75. MDC has also granted the underwriters an over-allotment option to purchase up to an additional 503,451 Exchangeable Securities at the same price, exercisable at any time until 30 days following closing. Net proceeds are expected to be C$27.5 million, or C$31.7 million if the over-allotment option is exercised in full, and will be used for general corporate purposes. The securities will pay interest monthly at a rate equal to the actual distribution by Custom Direct Income Fund in that month. Closing is expected to occur on or about December 8, 2003. A holder of an Exchangeable Security will have the right to exchange the security for a unit of the Fund once MDC is entitled to effectively exchange its 20% ownership of Custom Direct, Inc. into units of the Fund. MDC's shares of Custom Direct, Inc. are effectively exchangeable into units of the Fund once (a) the Fund has earned audited EBITDA of approximately US$22.2 million for the year ending December 31, 2003 or for any fiscal year subsequent to 2003, and (b) the Fund has made average monthly per unit cash distributions of at least C$0.1125 for the period from May 29, 2003 to December 31, 2003 or for any fiscal year subsequent to 2003. For purposes of determining whether the EBITDA target has been met, the audited financial statements for the year ending December 31, 2003 are anticipated to be prepared by March 2004. The Exchangeable Securities and units of the Fund have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. MDC Partners is one of the world's leading marketing communications firms. Through its partnership of entrepreneurial firms, MDC provides creative, integrated and specialized communication services to leading brands throughout the United States, Canada and the United Kingdom. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA. MDC Corporation Inc. (S&P, BB- Long-Term Corporate Credit Rating) is the 17th largest marketing communications firm in the world, providing services in Canada, the United States, and the United Kingdom. Through its network of entrepreneurial firms, MDC services include advertising and media, customer relationship management, and marketing services. MDC also offers security- sensitive transaction products and services through its Secure Transactions Division. MDC Class A shares are publicly traded on the Toronto Stock Exchange under the symbol MDZ.A and on the NASDAQ under the symbol MDCA. MEDIAWORX INC: Needs Additional Capital to Continue Operations -------------------------------------------------------------- MediaWorx, Inc., is a media production and management business. The services that the Company provides include print, audio/video, digital asset management, graphic design, production and fulfillment for traditional and web-based marketing and communications products and services. MediaWorx provides the Company's sales representatives with the support and leverage of a strong customer service culture, in-house pre-press capabilities, e-business solutions, and a base of production partners that can fulfill the complexity of any Customer order. The Company is a virtual printing company - it neither owns nor has its capital tied up in printing equipment or facilities but has access to an established network of the most capable, technologically advanced printers and production houses. The Company's financial statements have been prepared in conformity with accounting principles generally accepted in the United States, which contemplates the Company as a going concern. However, the Company has sustained substantial operating losses in recent years and has used substantial amounts of working capital in its operations. Realization of a major portion of the assets reflected on its balance sheet is dependent upon continued operations of the Company, which, in turn, is dependent upon the Company's ability to meet its financing requirements and succeed in its future operations. Management believes that actions presently being taken to revise the Company's operating and financial requirements provide them with the opportunity for the Company to continue as a going concern. NINE MONTHS ENDED SEPTEMBER 30, 2003 COMPARED TO NINE MONTHS ENDED SEPTEMBER 30, 2002 Year-to-date sales and gross profits were $69,415 and $17,139, respectively, the same as its quarterly results, as this was the Company's first quarter. Operating expenses for the nine months ending September 30, 2003, were $270,797, compared to $181,097 for the nine months ending September 30, 2002. Approximately $45,000 of the 2003 expenses were associated with a Merger transaction. Year-to-date other expenses were $294,056 compared to income of $438,906 for the same period in 2002. 2002 other income was primarily due to a gain on the forgiveness of debt and a gain on the settlement of a lawsuit. In 2003, the Company had a $947,637 gain on the forgiveness of debt and miscellaneous income of $8,745. However, this was more than offset by costs of the Merger ($1,190,583), a loss on marketable securities ($14,331), and interest expense ($45,524). LIQUIDITY The Company has a cash balance of $167,638. The Company will require additional capital to continue operations. There is no assurance that capital will be available. The Company engaged an offshore licensed brokerage firm to raise on a best efforts basis from $1.5 million to $3.0 million, depending on market price, for 11,000,000 of the Company's common stock. During the third quarter, the Company completed a placement of 1,110,304 shares of common stock with investors located outside of the United States in exchange for $403,011. The shares were offered pursuant to an exemption from registration afforded by Regulation S to the Securities Act of 1933. Shares sold pursuant to Regulation S are deemed restricted and may not be sold to any U.S. Person (as that term is defined in the Regulation) for a period of one (1) year from date of sale. Thereafter, the shares will be subject to the restrictions of Rule 144. MEDISOLUTION LTD: Sept. 30 Net Capital Deficit Widens $8 Million ---------------------------------------------------------------- MediSolution Ltd. (TSX: MSH), a leading Canadian healthcare information technology company, announced its second quarter results for the three-month period ended September 30, 2003. Revenue for the quarter ended September 30, 2003 totalled $10.1 million, an increase of $0.2 million or 2%, from the same period in 2002. On a comparable basis, excluding the decrease in revenue from businesses divested in 2002 of $0.3 million, revenue increased 6% over the prior year. This represents the fifth consecutive improvement in quarterly results year over year. On a segmented basis, Healthcare Resource Management revenue increased 8% to $5.6 million from $5.2 million on the strength of increased professional services on implementation of existing contracts. In the Healthcare Information Systems segment, revenues increased by 1% to $4.4 million compared to the prior year. "The second quarter is traditionally the weakest revenue producing quarter for MediSolution as Healthcare organizations typically defer all new software implementations during the summer holiday period. Our improved performance year over year confirms that our efforts to streamline our operations and improve our business processes are paying off", commented Allan D. Lin, President and Chief Executive Officer, MediSolution. The Company achieved EBITDA of $0.1 million during the quarter compared to negative EBITDA of $0.2 million reported in the prior year. This improvement is due to the increase in revenue and improvement in margins on operations. Gross margins increased to 37% in the current quarter compared to 33% last year, as the company operates with a leaner operations team with lower direct labor costs. The improved margins were somewhat offset by increased selling and marketing expenses incurred to achieve the Company's strategic objective to further penetrate the U.S. market. In particular, the expenses reflect an expanded US sales team and marketing resources required to enhance the Company's product strategies and develop new markets. Through revenue improvements and cost reductions, MediSolution incurred a reduced loss in the second quarter ended September 30, 2003 of $1.5 million, or $0.01 per share, which represents a reduction of 40% from $2.5 million, or $0.03 per share, reported in the prior year. The loss in the prior year included a $0.6 million restructuring charge comprised of $0.1 million related to the closure of the networking business and a write-down of $0.5 million in the carrying value of technology assets for the Practice Management business, which the Company divested in February 2003. MediSolution Ltd.'s September 30, 2003 balance sheet shows a working capital deficit of about $13 million, and a total shareholders' equity deficit of about $8 million. Second Quarter Highlights During the quarter, MediSolution undertook a number of initiatives to create value for shareholders, strengthen its balance sheet and position the Company for further growth. MediSolution signed a total of $2.5 million in new business, including contracts with the following customers - the revenue on these contracts is expected to be recognized over the next twelve to eighteen months: - Centre hospitalier Pierre-Le Gardeur, Repentigny (Quebec), for MediFinance(R), a financial and materials management information system and MediPatient+(R), a patient scheduling system; - Regie regionale de l'Abitibi-Temiscamingue (Quebec) for MediVisit(R), a regional master patient scheduling information management system and MediResult(R), an order entry and results information system; - Centre hospitalier regional de Rimouski (Quebec) for computer equipment; - Cornwall General Hospital, Cornwall (Ontario), for MediPharm+(R); a pharmacy management system. MediSolution also launched MPlex Solutions(R), a new division of the Company to market payroll and human resource solutions in select non-health markets such as government, municipalities and transportation. Building on the MediSolution expertise in this product category in the healthcare industry, MPlex Solutions will focus on employee scheduling, recruitment, training, benefits management and payroll solutions for complex environments with similar characteristics. MediSolution achieved a stronger balance sheet and financial position following the exercise by Brascan Financial Corporation of its right to convert outstanding long term debt of $14.5 million into equity. Consequently, the early conversion, including interest, resulted in the issuance of a total of 54,309,344 common shares of MediSolution, increasing the permanent equity base of the Company. The transaction was completed on October 10, 2003 and will be reflected in the financial statements for the quarter ended December 31, 2003. MediSolution has an aggregate of 155,732,066 common shares issued and outstanding following this transaction, of which 61% is owned by Brascan. MediSolution has two operating segments. The Healthcare Resource Management segment is comprised of administrative solutions such as human resource, staff scheduling, payroll processing and financial software. The Healthcare Information Systems segment is comprised of clinical solutions such as patient tracking, electronic patient health records, radiology, pharmacy and laboratory software for hospitals. Founded in 1974, MediSolution is a leading healthcare information technology company, providing software, solutions and services to healthcare customers across North America. More than 500 hospitals, home care facilities and other healthcare providers rely on MediSolution's systems to maximize their operational efficiencies, lower their costs, and improve the delivery of healthcare services. MediSolution is publicly traded (TSX: MSH), and has a staff of approximately 350 who operate from the Company's Montreal, Quebec headquarters and offices throughout Canada and the United States. For more information, visit http://www.medisolution.com MERRILL LYNCH: Fitch Takes Rating Actions on 2003-KEY1 Notes ------------------------------------------------------------ Merrill Lynch Mortgage Trust 2003-KEY1, commercial mortgage pass- through certificates are rated by Fitch Ratings as follows: -- $35,000,000 Class A-1, 'AAA'; -- $75,000,000 Class A-2, 'AAA'; -- $130,000,000 Class A-3, 'AAA'; -- $482,875,000 Class A-4, 'AAA'; -- $179,617,000 Class A-1A, 'AAA'; -- $34,305,000 Class B, 'AA'; -- $15,834,000 Class C, 'AA-'; -- $25,069,000 Class D, 'A'; -- $10,555,000 Class E, 'A-'; -- $1,055,546,925 Class XC,'AAA'; -- $1,026,249,000 Class XP,'AAA'; -- $11,875,000 Class F, 'BBB+'; -- $7,917,000 Class G, 'BBB'; -- $10,555,000 Class H, 'BBB-'; -- $5,278,000 Class J, 'BB+'; -- $5,278,000 Class K, 'BB'; -- $3,958,000 Class L, 'BB-'; -- $6,597,000 Class M, 'B+'; -- $2,639,000 Class N, 'B'; -- $1,320,000 Class P, 'B-'. Classes A-1, A-2, A-3, A-4, B, C, D, and E are offered publicly, while classes A-1A, XC, XP, F, G, H, J, K, L, M, N, and P are privately placed pursuant to rule 144A of the Securities Act of 1933. The certificates represent beneficial ownership interest in the trust, primary assets of which are 79 fixed rate loans having an aggregate principal balance of approximately $1,055,546,925 as of the cutoff date. METATEC INT'L: Selling Assets to MTI Acquisition for $10 Million ---------------------------------------------------------------- On October 17, 2003, Metatec, Inc., filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Ohio in Columbus, Ohio, Case No. 03-65902. The Company reported the Bankruptcy Case in a Current Report on Form 8-K (Item 3) filed with the Securities and Exchange Commission on October 20, 2003. During the pendency of the Bankruptcy Case, the Company will continue to operate its business and manage its properties as a debtor-in-possession under the jurisdiction of the Bankruptcy Court and in accordance with the applicable provisions of the Bankruptcy Code. In connection with filing the Chapter 11 petition, the Company filed motions with the Bankruptcy Court seeking orders for the approval of (1) the Company receiving post-petition financing of up to $5.0 million from MTI Acquisition Corp., (2) bidding procedures with respect to the sale of the Company's assets, and (3) the Company proceeding with the sale of its assets to MTI in accordance with the terms of an asset purchase agreement between the Company and MTI. MTI is a wholly owned subsidiary of ComVest Investment Partners II LLC, and an affiliate of Commonwealth Associates Group Holdings LLC. ComVest II is the Company's largest secured creditor. The MTI Bid provides that MTI would purchase substantially all of the assets of the Company for a purchase price of $10.0 million, consisting of a $9.0 million credit to ComVest II's secured-party creditor bankruptcy claim (subject to adjustment based on letter of credit obligations) and a $1.0 million cash payment to the bankruptcy estate, plus the assumption of certain indebtedness and executory contracts. If MTI is the successful bidder, it has agreed to assume the Company's obligations to repay the post- petition financing. The MTI Bid is subject to higher and better offers. On November 13, 2003, the Bankruptcy Court entered an Order which, among other things, (1) authorized the Company to proceed with a sale of its assets, (2) established bidding procedures to be employed in connection with the Sale, including the approval of a break-up fee and expense reimbursement to MTI, (3) approved form and notice of the Sale, and (4) set dates for a sale hearing and deadlines for the filing of all objections to the Sale and all objections to the assumption by the Company and assignment to the successful bidder of executory contracts and unexpired leases, including any objections to cure payments proposed to be paid in connection therewith. The Bankruptcy Court has also approved the post-petition financing to the Company described above. The Company is soliciting higher and better offers to the MTI Bid for the purchase of its assets. As further set forth in the Order, in order to be considered a "qualified offer," an offer must comply with the Bidding Procedures and be received on or before 5:00 p.m. (EST) on December 15, 2003. If a qualified offer is timely received, an auction will be conducted at the offices of the Company's attorneys beginning at 10:00 a.m. (EST) on December 17, 2003. A hearing to approve the purchase agreement of the successful bidder is scheduled to be held before the Bankruptcy Court on December 18, 2003, at 10:00 a.m. (EST). After the assets of the Company have been sold to the successful bidder, the Company will use the sale proceeds, together with any other (if any) remaining assets, to pay administrative costs, and any remaining proceeds would be distributed to creditors in accordance with the applicable provisions of the Bankruptcy Code. At this time, based upon the purchase price the MTI Bid, the Company does not believe that it will have any cash or other assets remaining to distribute to its shareholders after making payments to its creditors. Therefore, as previously disclosed in its filings with the Securities and Exchange Commission, the Company does not anticipated that its shareholders will realize any cash or other value for their common shares of the Company. Consequently, given the current conditions and circumstances, the Company believes that its financial statements on Form 10-Q cannot be prepared without unreasonable effort or expense, and the Company does not intend to file periodic reports until circumstances change such that periodic reports could be prepared and filed without unreasonable effort and expense. The Company does intend to continue to disclose other material information through filings on Current Reports on Form 8-K. The Company's management has not made a determination as to whether or not any of the Company's assets have been impaired as a result of the Bankruptcy Case, described above. However, given the amount of the purchase price of the MTI Bid in relation to book value of the Company's assets, it is likely that the Company's assets would be impaired as a result of the Bankruptcy Case and that the Company would be required to recognize a writedown of assets under United States generally accepted accounting principles. MILLENNIUM CHEMS: Caps Price on $125MM of New Senior Debentures --------------------------------------------------------------- Millennium Chemicals (NYSE:MCH) priced its offering of $125 million principal amount of 4% convertible senior debentures due 2023, plus up to an additional $25 million of debentures that may be issued at the option of the initial purchasers. The debentures will pay interest semi-annually. Holders may convert their debentures into shares of Millennium common stock at a conversion price of $13.63 per share, equivalent to a conversion rate of 73.3568 shares per $1,000 principal amount of debentures, subject to adjustment. The conversion privilege may be exercised during any fiscal quarter if the closing price of the common stock on a specified number of days in the prior quarter is greater than $17.04 per share, which is 125% of the conversion price, or under certain other limited circumstances. The debentures will rank equal in right of payment with all of Millennium's existing and future senior unsecured indebtedness and will be effectively subordinated to all existing and future liabilities of Millennium's subsidiaries other than Millennium America Inc., which is guaranteeing payments on the debentures. Millennium intends to use proceeds of the offering to repay the remaining balance of its term loan facility and to reduce borrowings under its revolving credit facility. The debentures are redeemable at Millennium's option beginning November 15, 2010 at a redemption price equal to 100% of the principal amount plus accrued interest, if any. Holders of the debentures will have the right to require Millennium to repurchase all or some of their debentures at a purchase price equal to 100% of the principal amount of the debentures, plus accrued and unpaid interest on November 15, 2010, November 15, 2013 and November 15, 2018. Millennium may choose to pay the purchase price in cash or shares of Millennium common stock or any combination of cash and Millennium common stock. Holders of the debentures will also have the right to require Millennium to repurchase all or some of their debentures for cash, upon the occurrence of certain events constituting a fundamental change. The debentures and the shares of common stock issuable upon conversion of the debentures have not been registered under the Securities Act of 1933 or any state securities laws and may not be offered or sold absent registration under, or an applicable exemption from, the registration requirements of the Securities Act of 1933 and applicable state securities laws. Any offers of the debentures will be made exclusively by means of a private offering memorandum. Millennium has obtained an amendment to its Credit Agreement to revise certain financial covenants, among other things. Upon the application of proceeds of the debentures, as described above, and certain other conditions, the amendment to the revolving credit facility will be effective. Millennium expects that the above requirements will be met, and that the amendment will become effective, on November 25, 2003. MIRANT: Seeks Prelim. & Permanent Injunctive Relief Against FERC ---------------------------------------------------------------- The Mirant Corp. Debtors seek a preliminary and permanent injunction from the U.S. Bankruptcy Court for the Northern District of Texas against the Federal Energy Regulatory Commission to restrain FERC from: (a) initiating or continuing, or encouraging any person or entity to initiate or continue, any proceedings seeking to require the Debtors to continue to perform any executory contract of the Debtors in a manner that would interfere with this Court's exclusive jurisdiction to hear and determine any motion pursuant to Section 365 of the Bankruptcy Code; and (b) seeking any manner of specific performance of any agreement. One or more of the Debtors is party to hundreds of executory contracts for: (a) the purchase or sale of electric energy, capacity, or ancillary service at wholesale interstate commerce, (b) the transmission of electric energy in interstate commerce, and (c) the transportation or storage of natural gas in interstate commerce Robin Phelan, Esq., at Haynes and Boone LLP, in Dallas, Texas, relates that the Wholesale Contracts are, under certain circumstances, subject to the jurisdiction of FERC under the FPA. In the aggregate, the Wholesale Contracts currently cost the Debtors a net present value of at least $50,000,000 in excess of market prices. The Debtors have sought to reject an executory contract with Perryville Energy Partners, LLC to which the Debtors project, using current market conditions, could cost the estates over $100,000,000. Mr. Phelan notes that this contract is subject to FERC's jurisdiction. Upon information and belief, FERC adopted a policy whereby it may seek to require any counterparty to a contract subject to its jurisdiction to perform under the contract absent a showing that a material breach of that contract is in the "public interest." Upon further information and belief, FERC adopted a further policy whereby it may seek to enforce the policy against a counterparty in Chapter 11 proceedings, notwithstanding any relief afforded to the counterparty by a Bankruptcy Court under Section 365. In this very case, Mr. Phelan points out that FERC resisted any arrangement, which would allow this Court to protect the Debtors' rights under Section 365, to seek authorization for an efficient breach of any contract over which FERC claims to have jurisdiction. Rather, FERC's view is that, when called upon to do so, the Debtors must satisfy FERC that the "public interest" standard is met before they may be relieved of any performance obligation under a particular contract. Mr. Phelan contends that if FERC carry through with its stated policies and views, this Court may be deprived of its jurisdiction to permit the Debtors to reject executory contracts utilizing a "burdensome to the estate" standard. In addition, the Debtors will lose fundamental rights under the Bankruptcy Code and each of the Debtors' general unsecured creditors will be harmed by the elevation of claims of one particular class of prepetition contracting parties to administrative expense priority without an opportunity for notice and hearing. This violates multiple provisions of the Bankruptcy Code. Mr. Phelan tells the Court that FERC will suffer no cognizable harm if the injunctive relief is granted. "The relief will simultaneously preserve both FERC's ability to issue emergency orders to safeguard the public health and safety as well as this Court's exclusive jurisdiction to hear and determine core bankruptcy matters," Mr. Phelan explains. (Mirant Bankruptcy News, Issue No. 12; Bankruptcy Creditors' Service, Inc., 215/945-7000) MITEC: Second Quarter Results Conference Call Set for Dec. 4 ------------------------------------------------------------ OPEN TO: Analysts, investors and all interested parties DATE: Thursday, December 4, 2003 TIME: 10:00 AM Eastern Time CALL: 514-807-8791 (FOR ALL MONTREAL AND OVERSEAS PARTICIPANTS) 1-800-814-4859 (FOR ALL OTHER NORTH AMERICAN CALLERS) THE PRESS RELEASE WILL BE PUBLISHED, THE SAME DAY BEFORE THE CONFERENCE CALL, THROUGH CNW. Please dial in 15 minutes before the conference call begins. If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 21027143(pound key) on your phone. This tape recording will be available on Thursday, December 4 as of 12:00 PM until 11:59 PM on Thursday, December 11. MEDIA WISHING TO QUOTE AN ANALYST SHOULD CONTACT THE ANALYST PERSONALLY FOR PERMISSION. NOTE TO FIRST-TIME ANALYSTS: Please contact Maison Brison at 514-731-0000 prior to the day of the conference call. Interested parties may also listen live at http://www.newswire.ca or at http://www.q1234.com . Mitec Telecom Inc., whose July 31, 2003 balance sheet shows a working capital deficit of about CDN$1.6 million, is listed on the Toronto Stock Exchange under the symbol MTM. On-line information about Mitec is available at http://www.mitectelecom.com MOLECULAR DIAGNOSTICS: Files SEC 10-QSB September Quarter Report ---------------------------------------------------------------- Molecular Diagnostics, Inc. (OTC Bulletin Board: MCDG) filed its 10-QSB report Thursday last week. The full report can be viewed at Edgar Online -- http://www.edgar-online.com The Company indicated that in line with the focus on the Company's financing and Balance Sheet restructuring, operations resulted in slightly lower revenues (11.9%) compared to the same quarter in 2002. At the same time the company reduced its operating expense for the period by 18.4%. The decrease not only represents the controlled Operational Plan the company is perpetuating, but the elimination of revenues in the same period a year earlier associated with a one-time license fee. The Company's September 30, 2003 balance sheet shows a working capital deficit of about $16 million and a total shareholders' equity deficit of about $8 million. Peter Gombrich, MDI Chairman, commented, "The reduction in revenues is entirely expected as a result of our focus on the financial structure of the company before we embark on expanded selling. Our plan is to complete the restructuring in conjunction with one or more strategic partners who in turn, assist in the rapid expansion of revenues on a global scale." Molecular Diagnostics develops cost-effective cancer screening systems, which can be utilized in a laboratory or at the point-of- care, to assist in the early detection of cervical, gastrointestinal, and other cancers. The InPath System is being developed to provide medical practitioners with a highly accurate, low-cost, cervical cancer screening system that can be integrated into existing medical models or at the point-of-care. Other products include SAMBAT Telemedicine software used for medical image processing, database and multimedia case management, telepathology and teleradiology. Molecular Diagnostics also makes certain aspects of its technology available to third parties for development of their own screening systems. More information is available at http://www.Molecular-Dx.com MOLECULAR DIAGNOSTICS: Terminate Licenses With MonoGen, Inc. ------------------------------------------------------------ Molecular Diagnostics, Inc. (OTC Bulletin Board: MCDG), together with its subsidiaries, AccuMed International, Inc., and Oncometrics Imaging Corp., announced that the licenses granted by AccuMed and Oncometrics to MonoGen, Inc., Vernon Hills, Illinois, for the limited use of certain technologies in the field of cancer detection, have been terminated by AccuMed and Oncometrics as a result of the licenses' invalidity. MDI believes that the termination of these licenses, which were entered into prior to its acquisition of AccuMed and Oncometrics, will eliminate the confusion promulgated by MonoGen's claims of rights to the technologies and will enhance MDI's business opportunities surrounding those technologies. Additionally, this action allows MDI to proceed with possible action against other parties that might be in violation of MDI patents. MDI and its subsidiaries are currently suing the former officer of AccuMed and Oncometrics whose responsibility it was to negotiate the licenses with MonoGen on behalf of those companies. This suit, which was filed in the Circuit Court of Cook County, Illinois, is predicated on the actions of the former officer, who left his positions with AccuMed and Oncometrics shortly after negotiating the MonoGen licenses to become the President of MonoGen. The suit alleges that, as part of the negotiations, MDI and the British Columbia Cancer Agency, which originally developed a portion of the technologies, believe the officer knowingly negotiated below-market license fees from MonoGen, and knew at the time that BCCA had not given its consent for the MonoGen transactions. It is the position of MDI and its subsidiaries that such behavior on the part of the former officer was a breach of his fiduciary duties to AccuMed and Oncometrics and created violations under the BCCA license agreements. Molecular Diagnostics -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $8 million -- develops cost-effective cancer screening systems, which can be utilized in a laboratory or at the point-of-care, to assist in the early detection of cervical, gastrointestinal, and other cancers. The InPath System is being developed to provide medical practitioners with a highly accurate, low-cost, cervical cancer screening system that can be integrated into existing medical models or at the point-of-care. Other products include SAMBA(TM) Telemedicine software used for medical image processing, database and multimedia case management, telepathology and teleradiology. Molecular Diagnostics also makes certain aspects of its technology available to third parties for development of their own screening systems. More information is available at: http://www.Molecular-Dx.com MONITRONICS INT'L: Sept. 30 Balance Sheet Upside-Down by $50MM -------------------------------------------------------------- Monitronics International, Inc., a leading national provider of security alarm monitoring services, announced its financial results for the first quarter ended September 30, 2003. First Quarter Results Total revenues increased $5.9 million, or 20% to $35.9 million in the three months ended September 30, 2003 from $30.0 million in the three months ended September 30, 2002. Earnings before interest, taxes, depreciation and amortization for the three months ended September 30, 2003 was $25.6 million, an increase of 22% from $21.0 million for the three months ended September 30, 2002. The Company reported a net loss of $4.4 million for the three months ended September 30, 2003 compared to net income of $1.1 million for the same period last year. The decrease in net income was attributable to the loss incurred in connection with our refinancing completed during the first quarter. On August 25, 2003, the Company issued $160.0 million of senior subordinated notes and entered into a new credit facility agreement comprised of a $175.0 million term loan and a $145.0 million revolving credit facility. Proceeds from the note issuance and borrowings under our new credit facility were primarily used to repay the $298.6 million outstanding under our prior credit facility, to repay our $12 million senior subordinated notes, and to repay $20.5 million of our subordinated notes. Operations Perspective "Monitronics perceives the residential security market at this point to be stable and growing at a steady rate. As a result of our refinancing this quarter, the Company feels well positioned to access the opportunities presented by the market," said James R. Hull, Chief Executive Officer of Monitronics. "The Company continues to focus on increasing customer satisfaction. We believe the continued progress we have made in this area combined with the aging of our portfolio has resulted in a continuing decrease in the attrition rate from 13.4% for the twelve months ended September 30, 2002 to 10.8% for the twelve months ended September 30, 2003," concluded Hull. EBITDA represents a non-GAAP (Generally Accepted Accounting Principles) financial measure. EBITDA is a key performance measure used in the security alarm monitoring industry and is one of the financial measures, subject to adjustments, by which our covenants are calculated under the agreements governing our debt obligations. EBITDA does not represent cash flow from operations as defined by GAAP, should not be construed as an alternative to net income, and is indicative neither of our operating performance nor of cash flows available to fund all of our cash needs. At September 30, 2003, Monitronics International, Inc.'s balance sheet shows a working capital deficit of about $14 million, and a total shareholders' equity deficit of about $50 million. NATIONAL COAL: Substantial Losses Raise Going Concern Doubts ------------------------------------------------------------ The intended principal activity of National Coal Corporation is surface coal mining. Since January 30, 2003 through June 30, 2003, the Company's activities have consisted of strategic, organizational, property acquisition and financing matters. As of June 30, 2003, production had not commenced and NCC had no proven reserves, as the term is defined by the Securities and Exchange Commission. Accordingly, the Company is considered to be in the exploration stage. The Company's unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The carrying amounts of assets and liabilities presented in the financial statements do not purport to represent realizable or settlement values. No operations were conducted and no operating revenue was realized from January 30, 2003 to June 30, 2003. As of June 30, 2003, the Company was totally illiquid and needed cash infusions from shareholders to provide capital, or needed loans from any sources available. At June 30, 2003, the Company had negative working capital of approximately $3,813,400 and a stockholders' deficiency of approximately $1,172,000. These factors raise substantial doubt about the Company's ability to continue as a going concern. The Company is seeking additional funding and believes that this will result in improved operating results. There can be no assurance, however, that the Company will be able to secure additional funding, or that if such funding is available, whether the terms or conditions would be acceptable to the Company. NEW SKEENA: Files for Court Protection Under CCAA in Canada ----------------------------------------------------------- New Skeena Forest Products Ltd., a Vancouver-based company that operates a pulp mill in Prince Rupert and sawmills in other communities, has sought and obtained creditors protection under the Companies' Creditors Arrangement Act, the Associated Press reported late last week. The B.C. Supreme Court appointed PricewaterhouseCoopers as monitor to assist in the bankruptcy process. The bankruptcy filing came a week after northern B.C. municipalities foreclosed on the Company's assets to cover years of unpaid property taxes. However, with the court-ordered CCAA injunction, these municipalities are now required to return the impounded equipment. The CCAA proceeding is being handled by Chief Justice Donald Brenner of the B.C. Supreme Court, who oversaw old Skeena's last bankruptcy process. NOBLE CHINA: Ontario Court Approves Amended CCAA Plan ----------------------------------------------------- Noble China Inc. announced that, pursuant to the Order of the Ontario Superior Court of Justice (Commercial List) obtained under the Companies' Creditors Arrangement Act (Canada), a meeting of Noble China's secured and unsecured creditors was held on November 4, 2003 to consider the amended plan of compromise and arrangement dated October 24, 2003. The Amended Plan was approved by the required majority of Noble China's secured and unsecured creditors. Furthermore, an Order of the Court sanctioning the Amended Plan was obtained on November 18, 2003. Pursuant to the Sanctioning Order, the creditor claims procedure was extended such that it requires that holders of certain unsecured debentures of Noble China must file Proofs of Claim asserting claims against Noble China by no later than December 31, 2003, and authorizes Noble China to effect distributions to any holder of its Debentures who file Proofs of Claim by December 31, 2003. Noble China will review all Proofs of Claim and will either accept the claims as filed or issue Notices of Revision or Disallowance by January 15, 2004. Creditors who receive a Notice of Revision or Disallowance will have until January 30, 2004 to appeal any such notice. In addition, pursuant to the Sanctioning Order, the other terms of the Amended Plan have been authorized. As such, among other things, Noble China's license from Pabst Brewing Company to produce, distribute and sell beer in China utilizing the Pabst Blue Ribbon trademarks is to be terminated; all of Noble China's assets are to be transferred to Mega Gain Investment Co. Ltd.; Inno Up Limited, a subsidiary of Mega Gain, is to receive a new exclusive license from Pabst (with the right to sub-license) to produce, distribute and sell beer in China utilizing the Pabst Blue Ribbon trademarks; articles of reorganization are to be filed to create class A preferred shares of Noble China; and 20,745,467 class A preferred shares of Noble China are to be issued to Mega Gain. Among other things, each class A preferred share entitles the holder to one vote at all meetings of shareholders of Noble China. The total number of shares of Noble China owned or controlled by Mega Gain following the transactions described above will be 2,033,400 previously acquired common shares and 20,745,467 class A preferred shares, representing approximately 19.60% of the total outstanding common shares and 100% of the outstanding class A preferred shares. The shares in Noble China were acquired for investment purposes and Mega Gain reserves the right to change its intention at any time. NORTHWESTERN CORP: Brian B. Bird Named Chief Financial Officer -------------------------------------------------------------- NorthWestern Corporation (Pinksheets: NTHWQ) announced that Brian B. Bird has been named its Chief Financial Officer, effective Dec. 1, 2003. Mr. Bird will report to Gary G. Drook, President and Chief Executive Officer of NorthWestern. In this new role, Mr. Bird will be responsible for overall financial plans, accounting policies, securities regulations and relationships with lending institutions while leading and directing accounting, tax, financial planning and treasury. "Brian is an excellent addition to our new management team," said Drook. "His extensive financial experience comes at a key time in our Chapter 11 reorganization. In addition, his extensive knowledge of the energy industry will ensure the sound management of our core electric and natural gas utility business." Mr. Bird added, "I look forward to joining NorthWestern's new management team to help develop and implement the company's restructuring plan which is focused on emerging as a much stronger, investment grade energy company." Mr. Bird has 17 years of experience within the fields of corporate finance, treasury, accounting, and mergers and acquisitions. Prior to joining NorthWestern, he was Chief Financial Officer and principal of Insight Energy, Inc., a Chicago-based independent power generation development company where he was responsible for corporate and project financing, bank and investor relations, accounting, tax and treasury. Prior to that, he was Vice President and Treasurer of NRG Energy, Inc., in Minneapolis. He also held financial management positions with Deluxe Corporation, Minnesota Viking Ventures, Inc., Northwest Airlines, Inc., and Land O' Lakes, Inc. Mr. Bird earned an MBA in finance from the University of Minnesota and a double major undergraduate degree in accounting and finance from the University of Wisconsin - Eau Claire. He is a Certified Public Accountant and a Certified Cash Manager. NorthWestern will be filing a motion with the U.S. Bankruptcy Court to formalize Mr. Bird's employment as Chief Financial Officer. NorthWestern Corporation is one of the largest providers of electricity and natural gas in the Upper Midwest and Northwest, serving more than 598,000 customers in Montana, South Dakota and Nebraska. NorthWestern also has investments in Expanets, Inc., a nationwide provider of networked communications and data services to small and mid-sized businesses, and Blue Dot Services Inc., a provider of heating, ventilation and air conditioning services to residential and commercial customers. NRG ENERGY: CL&P Asks to Modify Stay to Pursue CDPUC Petition ------------------------------------------------------------- Connecticut Light and Power Company asks the Court to modify the automatic stay to allow them to proceed with a petition for declaratory ruling currently pending before the Connecticut Department of Public Utility Control against NRG Energy, Inc. regarding station service charges incurred by the Debtors and its affiliates, Montville Power LLC, Middletown Power LLC, Norwalk Power LLC, Devon Power LLC and Connecticut Jet Power LLC -- the NRG Generators. John B. Nolan, Esq., at Day, Berry & Howard, in New York, recounts that CL&P and the Debtors are parties to an Interconnection Agreement dated July 1, 1999, where CL&P provides "station service" to the NRG Generators. Under the Interconnection Agreement, the Debtors agreed to pay for station power under CL&P's applicable retail rates. The Debtors' generating facilities, in turn, use the power to operate their plants in the ordinary course of their businesses. Since the inception of the Interconnection Agreement, Mr. Nolan reports, the Debtors refused to pay any amounts for the station service CL&P provides pursuant to the Interconnection Agreement. CL&P made good faith efforts to refer the dispute to senior management. However, the Debtors refused to make a senior management representative available to CL&P for this purpose. CL&P also made demand for arbitration, which demand was refused by the Debtors. In December 2002, FERC issued its Order, confirming that CL&P is and has been authorized to charge CDPUC-approved retail rates for station service provided to the NRG Generators. In January 2003, CL&P renewed its demand for payment from the Debtors. The Debtors again failed to pay CL&P the amounts owing under the Interconnection Agreement. As a result, CL&P submitted to CDPUC a petition for a ruling declaring that the Debtors and its various subsidiaries that own generating plants in Connecticut are subject to CL&P's retail rates for the provision of station power and delivery services and that all amounts accrued and unpaid are immediately due and payable. Mr. Nolan tells the Court that CL&P provides energy and delivery services, as applicable, to all of its retail customers under its CDPUC-approved retail rates. The Rates were designed with the understanding that retail customers may or may not obtain their energy from CL&P and that retail customers may also receive delivery service via a direct, transmission-level interconnection with CL&P. If a customer receives its energy supply from CL&P, the generation component of the Rate will apply. Conversely if the customer has selected a competitive energy supply, the generation component of the Rate will not apply. From December 1999 through June 1, 2002, the Debtors took station power supply pursuant to CL&P's standard offer, although it was not required to do so. Since June 2002, the Debtors procured station power from a third party, but has continued to incur charges under the Interconnection Agreement for the delivery of that power. CL&P has continuously provided retail delivery service to the Debtors at the transmission-level, which service included meter reading and reporting. Since August of 2000, however, the Debtors challenged CL&P's bills and refused to pay them on the ground that it is not subject to CL&P's CDPUC-approved retail Rates. As of the Petition Date, the Debtors owed CL&P $14,563,924 in accrued station service charges. Mr. Nolan asserts that cause exists to grant the CL&P's request because the applicability of the particular electricity rates is a matter over which the CDPUC has primary jurisdiction. Resolution of the parties' dispute will require a complete examination of the technical configuration of each NRG plant to determine the nature of the services being provided together with an analysis of the CDPUC-approved rate components. The configuration of power plants and the analysis of the CDPUC rate components are complex matters requiring specialized technical knowledge. The technical knowledge is within the CDPUC's particular field of expertise as the CDPUC is the Connecticut state regulatory body with the legislative mandate to "regulate and supervise public utilities, and to establish rates that are not unreasonable." (NRG Energy Bankruptcy News, Issue No. 13; Bankruptcy Creditors' Service, Inc., 215/945-7000) OM GROUP INC: Fails to Beat SEC Form 10-Q Filing Deadline --------------------------------------------------------- OM Group, Inc. (NYSE: OMG) will delay filing its Form 10-Q for the quarter ended September 30, 2003 with the Securities and Exchange Commission, pending the completion of its final review of the financial statements and disclosures. According to the Company, this quarter's review and verification process has been slowed by the number of complex events completed during the third quarter, including the sale of its Precious Metals business for cash proceeds of $814 million and recording restructuring and other charges in the period related to OMG's continuing operations. The Company intends to file the Form 10-Q promptly once its review is completed. OM Group, Inc. (S&P, B+ Corporate Credit Rating, Stable) is a leading, vertically integrated international producer and marketer of value-added, metal-based specialty chemicals and related materials. Headquartered in Cleveland, Ohio, OM Group operates manufacturing facilities in the Americas, Europe, Asia, Africa and Australia. For more information on OM Group, visit the Company's Web site at http://www.omgi.com ONESOURCE TECH.: September 30 Balance Sheet Upside-Down by $580K ---------------------------------------------------------------- OneSource Technologies, Inc., (OTCBB:OSRC) reported consolidated revenues of $802 thousand for the quarter ended September 30, 2003, a 6% increase over third quarter 2002 revenues of $760 thousand. Consolidated year-to-date revenues of $2.4 million were 9% greater than the $2.2 million reported for the first nine months of 2002. The Company reported Net Losses of $18 thousand (less than $0.00 per share) of $115 thousand (less than $0.00 per share) for the quarter-ended September 30 and year-to-date 2003 respectively, compared to Net Income of $37 thousand (less than $0.00 per share) and Net Loss of $20 thousand (less than $0.00 per share) respectively for the quarter ended September 30 and year-to-date 2002. "Revenues through the third quarter 2003 continued to show improvement over the prior year," said Michael Hirschey, CEO of the Company. "And both operating divisions continued to contribute positive cash flow," continued Hirschey. "As part of our focus on again growing the Company we initiated a relationship with a west coast toner remanufacturing supplier that gives the Company the ability to significantly extend its product mix and at the same time do so at lower cost," added Hirschey. "Consequently we elected to discontinue the Company's remanufacturing operations in Scottsdale and to focus on expanding our toner remanufacturing customer base as a distributor for this west coast remanufacturer. "Doing so will save the Company approximately $15 thousand a month in direct costs without sacrificing our ability to service both our existing customers as well as significantly expand our market penetration in that space," concluded Hirschey. OneSource is engaged in three closely related and complimentary lines of IT and business equipment support products and services, 1) equipment maintenance services, 2) equipment installation and integration services, and 3) value added equipment supply sales. Each segment also utilizes the Internet to facilitate distribution of its service and product offerings. OneSource is a leader in the technology equipment maintenance and service industry and is the inventor of the unique OneSource Flat-Rate Blanket Maintenance System(tm). This innovative patent pending program provides customers with a Single Source for all general office, computer and peripheral and industry specific equipment technology maintenance and installation services. OneSource's Cartridge Care division is a quality leader in remanufactured toner cartridge distribution in the southwest and is the supplier of choice for a number of Fortune 1000 companies in that region. OneSource has realigned this division and invested heavily in eCommerce initiatives to stage the division for substantial expansion over the next two years to enable Cartridge Care to extend its high quality reputation beyond its southwestern regional roots. During the quarter ended September 30, 2003, the Company entered into an agreement with a former service provider resulting in the issuance of 200,000 restricted shares of common stock. The negotiated settlement resulted in a loss of $7,000 being recorded in the quarter ended September 30, 2003. During the quarter ended September 30 2003, the Company settled a dispute with a former officer and board member. No legal action had been filed related to this dispute. A payment of $40,000 was made to this individual in exchange for a complete release of all current and future claims against the Company. His employment contract was terminated. The negotiated settlement resulted in a loss of $9,813 being recorded in the quarter ended September 30, 2003. During the quarter ended June 30, 2003, the Company entered into two separate settlement agreements with two current shareholders and former owners of companies acquired by the Company in 1999. These agreements end all disputes and litigation among the parties. As part of the settlements the Company agreed to compensate one of the parties with 925,694 restricted shares of common stock, $72,000 payable over 24 months and $42,500 payable in a lump sum on April 1, 2005 and convertible at the holder's option into shares of the Company's voting common stock in accordance with the settlement provisions. The other party was granted 1,000,000 restricted shares of common stock, $30,000 payable over 12 months and $30,000 payable in a lump sum on April 15, 2004 and convertible at the holder's into shares of the Company's voting common stock in accordance with the settlement provisions. As part of the settlement agreements both parties agreed to release and indemnify the Company, its officers and directors from any action or claim relating to the past matters now and in the future. The negotiated settlements resulted in a loss of $92,768 recorded in the second quarter ended June 30, 2003. Liquidity and Capital Resources At September 30, 2003, the Company's balance sheet shows a working capital deficit of about $1 million, and a total shareholders' equity deficit of about $580,000. Liquidity and capital resources continued to be closely monitored during the first nine months of 2003. Total costs exceeded revenues throughout the nine months ended September 30, 2003, but are expected to improve in the last quarter. If not for the loss from legal settlements of $109,581 and the associated legal fees, the Company would have been profitable and would have generated positive cash flow for the nine month ended September 30, 2003. With these legal issues now entirely behind the Company, management believes it can continue to improve both cash flow and profitability in the near-term through continued new business. In March 2001 the Company and holders of four of the Company's notes payable that were due in March and September of 2001 entered into Note Deferral and Extension Agreements wherein each note holder agreed to defer all principal payments until July 15, 2001. The Company agreed to make a twenty-five percent (25%) principal payment to each note holder on July 15, 2001. The notes' due dates were extend to July 15, 2002, but by that date the Company was unable to make the scheduled partial principle payment or commence making level monthly principal and interests payments over the remaining twelve-month period of the notes. As part of that agreement the Company also agreed to increase the interest rates of the notes from their stated twelve to fourteen percent (12% to 14%) to eighteen percent (18%). The Company has continued to make timely monthly interest payments to the holders. Further, the Company is in communication with the holders and management believes it will be able to negotiate an arrangement that will not adversely impact the Company's continuing operations. At September 30, 2003, the Company had accrued approximately $47,000 of unpaid payroll taxes, interest and penalties due the IRS. At the end of June 2002, the Company submitted required documentation in support of its "Offer In Compromise" previously filed in 2001 to the IRS. Management believes the Company will be able to successfully liquidate this liability and that the ultimate outcome will not have an adverse impact on the Company's financial position or results of operations. OWENS: Wants to Extend Lease Decision Period to June 4, 2004 ------------------------------------------------------------ Owens Corning and its debtor-affiliates ask Judge Fitzgerald to extend the time within which they must move to assume or reject their unexpired non-residential real property leases, through and including June 4, 2004, subject to the rights of each lessor under an Unexpired Lease to request, upon appropriate notice and motion, that the Court shorten the Extension Period and specify a period of time in which the Debtors must determine whether to assume or reject an Unexpired Lease. J. Kate Stickles, Esq., at Saul Ewing LLP, in Wilmington, Delaware, informs the Court that the Debtors are lessees under hundreds of unexpired non-residential real property leases. Most of the Unexpired Leases are for space the Debtors use for conducting the production, warehousing, distribution, sales, sourcing, accounting and general administrative functions that comprise the Debtors' businesses, and are important assets of the Debtors' estates. Thus, the Unexpired Leases are critical to the Debtors' continued operations as they seek to reorganize. Given the size and complexity of the Debtors' portfolio of Unexpired Leases, Ms. Stickles contends that the Debtors should not at this time be compelled to assume substantial, long-term liabilities under the Unexpired Leases or forfeit benefits associated with some Leases, to the detriment of their ability to preserve the going concern value of their business for the benefit of their creditors and other parties-in-interest. Ms. Stickles points out that lease decisions are an integral part of the reorganization process and, accordingly, should be dealt with globally through the plan confirmation process. As the Court is aware, the Debtors prepared and filed a Plan of Reorganization and Disclosure Statement. Among other things, the Plan addresses the assumption or rejection of the Unexpired Leases. Addressing lease decisions now, prior to plan confirmation, would compel the Debtors to make premature decisions as to their leases, and would cause the Debtors to run the risks, regarding the assumption of substantial long-term liabilities or the forfeiture of favorable leases. More fundamentally, requiring the Debtors to assume or reject the Unexpired Leases at this point in their cases may foreclose the Debtors or other parties from pursuing plan modifications or alternative plan structures that rely on different dispositions of some or all of the Unexpired Leases than is presently contemplated. The Debtors submit that this result would be inconsistent with the interests of creditors and inappropriate under the circumstances of these cases. Ms. Stickles tells the Court that since the Petition Date, the Debtors have remained, and will continue to remain, current on all of their postpetition rent obligations. Thus, the extension will not prejudice the landlords under the Unexpired Leases. In fact, through the operation of Section 365(d)(3) of the Bankruptcy Code, the landlords enjoy a preferred position that belies any notion that they could be prejudiced. Judge Fitzgerald will convene a hearing on December 15, 2003 to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' Lease Decision Period is automatically extended through the conclusion of that hearing. (Owens Corning Bankruptcy News, Issue No. 62; Bankruptcy Creditors' Service, Inc., 215/945-7000) PARTNERS MORTGAGE: Retains Hillis Clark as Avoidance Counsel ------------------------------------------------------------ Partners Mortgage Corporation and its debtor-affiliates seek permission from the U.S. Bankruptcy Court for the Western District of Washington to employ Hillis Clark Martin & Peterson, P.S. as special counsel. Partners is a corporation with assets of approximately $80,000,000. Partners needs special counsel to represent its interests in litigation concerning avoidance actions particular to Safeguard Mortgage Two LLC in this Chapter 11 case. Partners retained the law firm of Hillis Clark Martin & Peterson, P.S. in August and September 2003 to advise it regarding the possibility of a voluntary workout with creditors and the possibility of filing a Chapter 11 petition and related documents. Partners now wishes to employ Joseph A. Sakay, Jerry N. Evans and Joseph B. Genster of Hillis Clark Martin & Peterson, P.S. for special matters relating solely to a possible avoidance action regarding Safeguard. The firm's hourly rates are: Attorneys $150 to $375 per hour Paralegal $65 to $120 per hour Headquartered in Mercer Island, Washington, Partners Mortgage Corporation is a high-yield mortgage backed income fund. The Company filed for chapter 11 protection on September 26, 2003 (Bankr. W.D. Wash. Case No. 03-22404). Shelly Crocker, Esq., at Crocker Kuno LLC represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated its debts and assets of over $50 million each. PEREGRINE SYSTEMS: Gains Nod to Settle Subordinated Debt Claims --------------------------------------------------------------- Peregrine Systems, Inc. (OTC: PRGN), a leading provider of Consolidated Asset and Service Management software, announced that the U.S. Bankruptcy Court has approved a settlement that paves the way for distribution of stock to former Peregrine shareholders and securities claimants, as well as other subordinated claimants in Class 9 of the company's Plan of Reorganization. Approval by the Bankruptcy Court in the District of Delaware in Wilmington resolves issues regarding the relative value of the Class 9 claims to equity in the reorganized Peregrine business following its emergence from Chapter 11 last summer. Under Peregrine's Plan of Reorganization confirmed by the court on July 18, 2003, 63 percent of stock in the reorganized company was distributed to bondholders (Class 7), while at least 33 percent and potentially as much as 37 percent (Class 9 Reserve) was held for allocation to the Equity Class, the Securities Class and other subordinated claimants in Class 9, along with certain litigation claims and proceeds thereof. The Equity Class comprises those persons who held shares of old Peregrine common stock at the close of trading on Aug. 7, 2003. The Securities Class includes purchasers of old Peregrine common stock between July 22, 1999 and May 3, 2002 as more fully defined in the court's order approving the settlement. In addition, the settlement provides for resolution of claims made by the Indemnification Class, consisting of claims for reimbursement, contribution or indemnity by former officers and directors. "This court's approval of this agreement is a significant milestone in meeting the commitments in our Plan of Reorganization, allowing us to complete the distribution of stock in the reorganized Peregrine business," said John Mutch, Peregrine's CEO. "We are delighted that all parties involved in the final discussions for division of stock to equity holders and others have reached resolution." The agreement provides for the following terms and distribution of stock: The Indemnification Class receives 225,000 shares of the Class 9 Reserve, to be allocated by agreement of all members of the class or by court order, and in any event by prior notice. Following the distribution of shares to the Indemnification Class, the Equity Class receives a pro rata share of 85 percent of the Class 9 Reserve, which is at least 26.8 percent of Peregrine's outstanding common stock. The Equity Class will receive approximately one share of new stock for each 49 shares of old stock. The Securities Class receives a pro rata share of 15 percent of the remaining Class 9 Reserve, which is at least 4.7 percent of Peregrine's outstanding common stock. The settlement resolves all claims against Peregrine from these class-action lawsuits, but not claims against any other defendants. The Securities Class is eligible to receive the cash proceeds from potential litigation claims of the company against former Peregrine directors and officers, as well as third-party service providers, if any, initiated by the Litigation Trust, which was established under the Plan. The Equity Class and Indemnification Class waived their claims to any cash proceeds from the trust. The court also determined procedures for protecting any rights or interests that may be held by certain members of the indemnification Class in Peregrine documents that are to be turned over to the lead plaintiffs in the consolidated class action lawsuit pending against certain former offers and directors in San Diego Federal District Court. Peregrine is obligated to use reasonable efforts to fully cooperate in good faith with the successor litigation trustee in the prosecution of the litigation claims. In addition, the stipulation requires the company to give the trustee full and complete access to any and all Peregrine records and documents in its possession. An additional four percent of Peregrine's outstanding common stock (600,000 shares) is being held for the benefit of bondholders in Class 7 and/or the Securities Class and Equity Class in Class 9, with the allocation dependant on the liquidation of General Expense Claims (Class 8). To the extent that the additional stock is allocated to Class 9 under the Plan, the stock would be shared between the Equity Class (85 percent) and the Security Class (15 percent). Peregrine filed a voluntary Chapter 11 petition on Sept. 22, 2002 after accounting irregularities came to light, requiring a restatement of 11 quarters. On Aug. 7, Peregrine became the first enterprise software company to emerge from Chapter 11 protection. Founded in 1981, Peregrine Systems, Inc. develops and sells enterprise software to enable its 3,500 customers worldwide to manage IT for the business. The company's Consolidated Asset and Service Management offerings allow organizations to improve asset management and gain efficiencies in service delivery -- driving out costs, increasing productivity and accelerating return on in vestment. The company's flagship products -- ServiceCenter and AssetCenter -- are complemented by Employee Self Service, Automation and Integration capabilities. Peregrine is headquartered in San Diego, Calif. and conducts business from offices in the Americas, Europe and Asia Pacific. For more information, please visit: http://www.peregrine.com/ PLAINS RESOURCES: Receives Buyout Proposal from Vulcan Capital -------------------------------------------------------------- Plains Resources Inc. (NYSE: PLX) announced that on November 19, 2003, it received a proposal from Vulcan Capital, along with PLX's Chairman James C. Flores and its CEO and President, John T. Raymond, to acquire all of PLX's outstanding stock for $14.25 per share in cash. Vulcan Capital is the investment arm of Seattle-based investor Paul G. Allen. The offer indicates that commitments for all of the financing necessary to complete the transaction have been received. In response to receipt of the proposal, the PLX board has established a special committee comprised of board members William C. O'Malley and William M. Hitchcock. The special committee has been authorized to review, evaluate, negotiate and make recommendations to the full board of PLX with respect to the proposal from Vulcan Capital. In addition, the special committee may consider proposals from other parties relating to a transaction with the Company. The special committee will retain its own legal counsel and independent financial advisors. This announcement is neither an offer to purchase nor a solicitation of an offer to sell the Company's shares. There can be no assurance that the proposed transaction described in the press release will be accepted by the Company in its proposed form or any revised form or, that even if accepted, that the transaction will close. If the Company accepts the proposed transaction, the acquiror and the Company will be required to make certain other filings regarding the proposed transaction with the Securities and Exchange Commission. Because such filings will contain important information, investors are urged to read any such filings regarding the proposed transaction. Investors may obtain free copies of any such filings and other documents the Company has filed with the Commission at the Commission's website at http://www.sec.gov. Information concerning any participants in any solicitation of the Company's stockholders that is made in connection with the proposed transaction will be disclosed when available. Plains Resources is an independent energy company engaged in the acquisition, development and exploitation of crude oil and natural gas. Through its ownership in Plains All American Pipeline, L.P., Plains Resources has interests in the midstream activities of marketing, gathering, transportation, terminaling and storage of crude oil. Plains Resources is headquartered in Houston, Texas. At Sept. 30, 2003, the company's balance sheet reports a working capital deficit of about $20 million. PLAINTREE SYSTEMS: Getting an Additional Loan from Shareholder -------------------------------------------------------------- Plaintree Systems Inc.'s largest shareholder, Targa Group Inc. has agreed to loan it an additional $500,000 (net of related fees, see below). This amount is in additional to approximately $1,200,000 advanced to Plaintree over the past 12 to 18 months. The funds being advanced by Targa are the proceeds (net of the agency fees payable to IPC securities) received by Targa from the sale of a portion of its shares in Plaintree. The funds advanced to Plaintree will be used to fund Plaintree's operations. The Loan will be payable on demand and will earn interest at a rate of prime plus 5% per annum. The Loan will also be secured by an already existing General Security Agreement over Plaintree assets. "As all of our shareholders know, Plaintree has been very fortunate to have an involved shareholder like Targa who has funded us on an as needed basis over the last two years," said David Watson CEO. "However, this is a new step in our relationship. Now Targa has advanced a large sum, which given our minimal burn rate ensures survival for some time into the future, but more importantly allows us to make the necessary purchases in the event of a large order." Plaintree also notes that it continues to have the "e" designation attached to its trading symbol on the OTCBB. Plaintree has filed the missing information with the United Securities and Exchange Commission that triggered the "e" designation and such designation should have been removed. The Company will investigate this issue further and seek the removal of this designation as soon as possible. Plaintree continues to investigate sources of financing. However, if the Company is not successful in obtaining the necessary funding and/or if the Company does not meet its existing forecast, continuation of the existing business may not be viable. There can be no assurance that the Company will be able to raise additional capital or that anticipated revenues will materialize or be at a level sufficient to sustain Plaintree's operations. Ottawa-based, Plaintree Systems Inc. -- http://www.plaintree.com/ -- develops and manufactures the WAVEBRIDGE series of Free Space Optical wireless links using Class 1, eye-safe LED (Light Emitting Diode) technology providing high-speed network connections for ISPs, traditional telcos, GSM or cellular operators, airports and campus networks. Acting as a replacement for cable, fiber or radio frequency systems, the WAVEBRIDGE links offer broadband access with no spectrum interference problems, and same day installation for rapid network deployment. Plaintree also supports and manufactures its existing lines of robust and user friendly network switches. Plaintree is publicly traded in Canada on The Toronto Stock Exchange (Symbol: LAN) and in the U.S. on the OTC BB (LANPF), with 90,221,634 shares outstanding. The Company's March 31, 2003, balance sheet discloses a working capital deficit of about $1 million and a net capital deficit topping $905,000. PORTLAND GENERAL: Fitch Says Planned Sale Won't Affect Ratings -------------------------------------------------------------- Fitch Ratings does not anticipate changes to Portland General Electric's ratings or its Positive Rating Outlook until further details regarding the proposed sale of PGE by Enron Corp. to Oregon Electric Utility Company, LLC are available and prospects for its completion become more certain. Fitch rates PGE's secured, unsecured debt and preferred securities 'BBB-', 'BB' and 'B+', respectively. On Tuesday, November 18, 2003 Enron Corp. announced that it reached a definitive agreement to sell PGE to OE for $2.35 billion including the assumption of debt. Fitch believes the sale of PGE to OE would be a constructive development for PGE bond holders to the extent that it addresses concerns over ownership by a bankrupt parent. However, the proposed sale remains subject to execution risk. Two earlier proposals for the sale of PGE to Sierra Pacific Resources and Northwest Natural, respectively, failed. The current transaction is subject to bankruptcy court approval and an overbid process, in which other parties may put forward competing bids. In addition, regulatory approvals will be required from the OPUC, FERC, and SEC, a process that is likely to take approximately 12 months to complete. Any change to ratings would be heavily dependent upon the capital structure implemented as part of any acquisition. Although financing details are unavailable at the moment, the potential upgrade of PGE's ratings could be constrained if a highly leveraged capital structure is adopted at OE. Under the terms of the proposed agreement, OE will pay approximately $1.25 billion for 100% of PGE's outstanding equity and will assume debt totaling $1.1 billion. Fitch regards it as unlikely that consummation of an acquisition will lead to a direct increase in debt at the PGE level, given existing ring-fencing measures. Fitch notes that PGE's ratings remain below levels that would be justified on a stand alone basis due to contagion risk associated with its status as a subsidiary of a bankrupt parent, Enron. Recent positive developments include an improved liquidity position due to refinancing activity and settlement of FERC investigations related to wholesale power activities. The settlements require FERC approval, payment approximating $8.5 million and revocation market-based wholesale power tariffs for a twelve month period. Under the terms of the agreement, the settlement is not deemed to be an admission of fault or liability by PGE. RADNOR HLDGS: Near-Term Liquidity Concerns Spur S&P's Neg. Watch ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its ratings, including its 'B+/Negative/--' corporate credit rating, on Radnor Holdings Corp. on CreditWatch with negative implications based on concerns about Radnor's near term liquidity and sub-par financial profile, pending completion of a proposed initial public offering of stock. "The CreditWatch placement follows Radnor's announcement that it has acquired Polar Plastics Inc. Polar is engaged in the manufacturing and sale of plastic cutlery, tumblers, and injection molded thermoformed custom plastic products," said Standard & Poor's credit analyst Paul Blake. The predominantly debt-financed acquisition of Polar for $28.7 million will initially place additional pressure on the company's already stretched financial profile, and will likely result in a modest reduction of near term liquidity. As of Sept. 26, 2003, cash and availability after borrowing base calculations was approximately $13 million under its revolving credit facilities. However, the company recently filed a registration agreement for a proposed IPO with expected net proceeds of about $55 million to be used to pay down a portion of the term loan and revolving credit facility. The completion of the IPO is key for preserving sufficient liquidity and supporting Radnor's growth plans in the polypropylene drink cup segment. If Radnor successfully executes the proposed IPO in the next few months, Standard and Poor's will likely affirm its 'B+' corporate credit rating on the company and remove the ratings from CreditWatch. Based on current information, the outlook will likely be stable to reflect expectations for improved liquidity and operating performance beyond 2003. Standard & Poor's will monitor progress on the IPO plan and will resolve the CreditWatch listing following completion of the IPO. RENAISSANCE ENTERTAINMENT: Losses Raise Going Concern Doubts ------------------------------------------------------------ Renaissance Entertainment Corporation presently owns and produces four Renaissance Faires: the Bristol Renaissance Faire in Kenosha, Wisconsin, serving the Chicago/Milwaukee metropolitan region; the Northern California Renaissance Pleasure Faire, serving the San Francisco Bay and San Jose metropolitan areas; the Southern California Renaissance Pleasure Faire in Devore, California serving the greater Los Angeles metropolitan area; and the New York Renaissance Faire serving the New York City metropolitan area. The Company had a working capital deficit of $312,91 as of June 30, 2003. While the Company believes that it has adequate capital to fund anticipated operations for 2003, it believes it may need additional capital for future fiscal periods. Renaissance Entertainment has incurred operating losses in all fiscal periods since 1995 except fiscal 2000. For the six months ended June 30, 2003, the Company reported a net loss of $260,197. There is no assurance that the Company will be profitable in any subsequent period. The Company's working capital deficit widened during the six- months ended June 30, 2003, from $48,697 at December 31, 2002 to $312,917 at June 30, 2003. The Company's working capital requirements are greatest during the period from January 1 through May 1, when it is incurring start-up expenses for its first Faire of the season, the Southern California Faire. Since 1998, the Company's financial statements have contained a going concern clause. As mentioned, the Company has suffered recurring losses from operations, has a negative stockholders' equity and a working capital deficit that raise substantial doubts about its ability to continue as a going concern. RESOURCE AMERICA: Will Redeem All Outstanding 12% Senior Notes -------------------------------------------------------------- Resource America Inc. (NASDAQ:REXI) announced that its Board of Directors has authorized the redemption of all of the Company's outstanding $53.0 million 12% Senior Notes due August 2004. The Company issued $115.0 million of these notes on July 22, 1997, and since then has repurchased $62.0 million. The balance of the Senior Notes will be redeemed at 103% of principal plus accrued interest. It is anticipated that the redemption of the Senior Notes will occur on January 20, 2004. The Bank of New York will serve as the paying agent for this redemption. A notice of redemption containing information required by the terms of the Indenture governing the Senior Notes will be sent to all holders of the Senior Notes. This notice will contain details of the place and manner of surrender for the Senior Notes in order for holders to receive the redemption payment. Jonathan Cohen, President and COO of Resource America said, "I am pleased that our performance has enabled us to redeem the Senior Notes prior to maturity. The early repayment of these notes will lower the Company's cost of capital, reduce interest costs, and improve leverage ratios, all of which strengthens our Company and enhances shareholder value." Resource America Inc. (S&P, B Corporate Credit Rating, Negative) is a proprietary asset management company that uses industry specific expertise to generate and administer investment opportunities for its own account and for outside investors in the energy, real estate and equipment leasing industries. For more information please visit its Web site at http://www.resourceamerica.comor contact Investor Relations at pschreiber@resourceamerica.com RESOLUTION PERFORMANCE: S&P Lowers Corporate Credit Rating to B --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Resolution Performance Products LLC to 'B/Negative/--' from 'B+', citing continued weak earnings and a subpar financial profile. At the same time, Standard & Poor's lowered its senior subordinated debt ratings to 'CCC+' from 'B-' and its senior secured bank loan rating to 'B+' from 'BB-'. Houston, Texas-based Resolution is a leading producer of epoxy resins and has more than $800 million of debt outstanding, including payment-in-kind notes at a holding company level. "The downgrade reflects weakness in the company's operating results and deterioration in credit protection measures, as well as concerns that difficult business conditions will further delay the expected improvement in the company's financial profile," said Standard & Poor's credit analyst Peter Kelly. Profitability and cash flow have been negatively affected by continued soft demand, competitive markets, and high raw material and energy costs. Consequently, Resolution's financial profile will likely remain subpar longer than had been expected. Standard & Poor's said that its ratings on privately held Resolution continue to reflect high financial risk, somewhat offset by the company's decent business position as a leading producer of epoxy resins. Resolution produces base liquid epoxy resins (LER), solid epoxy resins, epoxy solutions, and other specialty products, such as curing agents and resin additives. Sales of epoxy resins and related products (including merchant sales of epichlorohydrin, a key epoxy raw material) account for almost 70% of revenues. Resolution also maintains leading global shares of versatic acids and derivatives, and Bisphenol A (BPA), another key epoxy raw material that is also sold into the fast- growing polycarbonate market. SBARRO INC: S&P Junks Corp. Credit Rating over Poor Performance --------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit and senior unsecured debt ratings on Sbarro Inc. to 'CCC' from 'B-'. The outlook is negative. Melville, New York-based Sbarro had $268 million of debt outstanding at Oct. 5, 2003. The downgrade is based on the company's continued poor operating performance, which has weakened cash flow protection measures, and very poor liquidity after the termination of its revolving credit facility. The facility was terminated after the company failed to comply with covenants. Same-store sales fell 4.6% in the first three quarters of 2003 after declining 4.8% in all of 2002; EBITDA margins for the 12 months ended Oct. 7, 2003, decreased to 12%, from 18% the year before. Higher cheese prices contributed to the decline. As a result, EBITDA fell 48% to $19 million in the first three quarters of 2003. "The ratings on Sbarro reflect the risks associated with operating in the highly competitive restaurant industry, the company's vulnerability to reduced mall traffic, a highly leveraged capital structure, and very limited liquidity," said Standard & Poor's credit analyst Robert Lichtenstein. These risks are partially offset by the Sbarro's established brand of Italian specialty foods. The company is very highly leveraged as a result of the Sbarro family's taking the company private in a $400 million LBO in 1999. Total debt to EBITDA was 8x as of Oct. 7, 2003, compared with 6x the year before. Liquidity is limited to only cash balances ($31 million as of Oct. 7, 2003), as the company's revolving credit facility was terminated. Sbarro had not been in compliance with its amended bank loan covenants in 2003. Maturities are light, as the company's senior notes do not mature until 2009 . Standard & Poor's believes the company will be challenged to service debt and fund capital expenditures. Moreover, the company has contingent liabilities of about $16 million relating to investments in other concepts. SCHWARTZ ELECTRO: Closes Sale of Remaining Assets to OSI Systems ---------------------------------------------------------------- OSI Systems, Inc. (Nasdaq:OSIS), has completed a $1.5 million acquisition of substantially all remaining assets of Schwartz Electro-Optics, Inc. These assets constitute a business in the design, manufacturing and sales of laser-based remote sensing devices. The acquisition was completed through a bankruptcy court supervised auction of SEO's assets. The newly acquired business will now operate as OSI Laserscan. OSI had previously acquired SEO's weapons simulation business, which currently operates as OSI Defense Systems, LLC. Both OSI Laserscan and OSI Defense Systems, LLC are based in Orlando, Florida. Current applications for Laserscan's precision remote sensing technology include traffic management, agricultural management, and mapping. Assets acquired include employees, equipment, all associated technologies including 11 issued U.S. patents, as well as a number of pending patents. Autosense(TM), OSI Laserscan's core product, a laser-based scanning system is used to detect and classify vehicles in toll and traffic management applications. It has quickly become one of the leading components in the toll and traffic management markets, replacing many other systems because of its unique non-invasive design. OSI Laserscan will continue to implement existing contracts for Autosense(TM) with the Florida Department of Transportation, Transcore LP, Raytheon TMS, 407ETR, and other system integrators in the Intelligent Transportation Systems marketplace. Autosense(TM) is installed at numerous toll crossings including those in Florida, Maine, New York, and California among other states; internationally Autosense(TM) products are also deployed in Canada, Korea, Italy, France, and Japan. Other products to be marketed by OSI Laserscan include a Robotic Sensor developed with General Dynamics Robotic Systems Division for use in the US Army's Future Combat Vehicle program; Treesense(TM), a precision farming sensor mounted to orchard spray machines to provide intelligent control of fertilizer and pesticide use; and Toposense(TM), a laser system utilized by topographical surveying companies for real time three dimensional mapping. Jeff Saunders, former President of SEO, will serve as the President of OSI Laserscan. "OSI's acquisition of this business opens an exciting new chapter for this technology, with the prospect of expanded opportunities in new markets," said Jeff Saunders, President of OSI Laserscan. Saunders continued, "SEO had been important in the development of Florida's high tech economic development efforts, and we are excited that OSI has decided to maintain the presence of both companies in Florida." "SEO's products and technologies fit perfectly into the strategic vision we have formulated for the continued growth of our optoelectronic product lines," said Deepak Chopra, Chairman and CEO of OSI Systems, Inc. "Our significant global manufacturing and distribution capabilities will provide them with leverage as they seek to enter new markets internationally." Chopra continued, "In addition to being complementary to our core optoelectronics focus, there is opportunity for using the Autosense(TM) technology to create an intelligent, semi-automated vehicular inspection checkpoint, one that is able to facilitate a higher throughput by pre-emptively defining the scan zone, anticipating mechanical scan rate, and potentially adjusting the intensity of the inspection source." Founded in 1984, Schwartz Electro-Optics, Inc., has achieved worldwide recognition as a pioneer in the design and manufacture of solid-state lasers. SEO produces a variety of laser systems for the commercial and government markets worldwide. Previous product lines included laser-based weapon simulation systems, laser sensors for traffic management, precision farming and art conservation. In addition, SEO was engaged annually in government and privately funded research and product development projects. The company is headquartered in Orlando, Florida. OSI Systems Inc. is a diversified global developer, manufacturer and seller of optoelectronic-based components and systems. The company has more than 30 years of optoelectronics experience, and through its family of subsidiaries, competes in four specific growth areas: OEM Manufacturing, Security, Medical and Fiber Optics. For more information on OSI Systems Inc. or any of its subsidiary companies, visit http://www.osi-systems.com/ SK GLOBAL: Wants Plan-Filing Exclusivity Extended to March 18 ------------------------------------------------------------- Since the Petition Date, SK Global America, Inc., its personnel and professionals have worked diligently in administering the Chapter 11 case and addressing a vast number of administrative and business issues. The Debtor expended substantial time and resources on issues relating to its orderly transition to operating in a Chapter 11 context. According to Scott E. Ratner, Esq., at Togut, Segal & Segal LLP, in New York, the Debtor's personnel and its professionals were also consumed during the first 120 days of its bankruptcy case with a myriad of issues that were complex and time-intensive, including, but not limited to: (a) responding to requests for information from the Parent, SK Networks Co. Ltd., formerly known as SK Global Co. Ltd, and others in connection with the consummation of the Foreign and Korean Exchange; (b) negotiating with Cho Hung Bank and Korea Exchange Bank representatives regarding the impact of the Chapter 11 case and the global restructuring on their alleged security interests and claims; (c) responding to information requests from the Debtor's creditors and the U.S. Trustee; (d) negotiating with Bank One regarding the release of more than $70,000,000 frozen by the bank pursuant to a prepetition restraining order; and (e) preparing and filing the Debtor's Schedules and Statement of Financial Affairs. The Debtor's latest progress includes the filing of its Schedules on September 30, 2003, and obtaining a Court order fixing today as its claims bar date. Because the Foreign Exchange and Korean Exchange were only recently consummated, the Debtor has not yet had a meaningful opportunity to assess its impact on its estate or to formulate an appropriate Chapter 11 plan. SK Networks now holds an exceedingly high percentage of the claims asserted against the Debtor. Thus, attempting to formulate a Chapter 11 plan as of this time, without SK Networks' participation, and without better understanding of the universe of outstanding claims, would be a wasteful exercise in futility, Mr. Ratner asserts. On the other hand, the Debtor believes that it will be in a better position to address claim classification, treatment and related issues, on the expiration of its Bar Date. Section 1121(b) of the Bankruptcy Code provides a debtor with the exclusive right to file a plan until 120 days after the date of the order for relief. Section 1121(b) authorizes the Court to extend the Debtor's exclusive periods to file a plan and solicit acceptances of the plan "for cause" after notice and a hearing. Accordingly, SK Global America asks Judge Blackshear to extend its exclusive period to file a Chapter 11 plan to March 18, 2004 and its exclusive period to solicit acceptances of that plan to and including May 18, 2004. Mr. Ratner argues that it is premature and unreasonable to expect the Debtor, at this early stage of its large and complex Chapter 11 case, to be in a position to promulgate a plan. Mr. Ratner points out that a court's decision to extend a debtor's exclusive period is based on the facts and circumstances of each particular case. The relevant factors considered in determining whether cause exists to extend the exclusive periods are: (a) The size and complexity of the Chapter 11 case; (b) The degree of progress that has been achieved by the debtor in the Chapter 11 process whether a viable plan of reorganization can be reasonably expected to be filed by the debtor in the foreseeable future; and (c) Whether the debtor has shown progress in attempting in good faith to formulate a viable plan of reorganization. Given the facts and circumstances surrounding the Debtor's Chapter 11 case, particularly the size, complexity and early stage of the case and the progress made so far, Mr. Ratner asserts, ample cause exists for the Court to extend the Debtor's exclusive periods. Cho Hung & Korea Exchange Support Extension Cho Hung Bank and Korea Exchange Bank believe that a 120-day extension of the exclusive periods is reasonable and should be approved. According to Robert N.H. Christmas, Esq., at Nixon Peabody LLP, in New York, Cho Hung Bank and Korea Exchange Bank are two of the Debtor's senior secured creditors holding valid and perfected claims in principal amounts of: -- $89,000,000 for Cho Hung Bank; and -- $77,276,8333 plus accrued interest to July 21, 2003 of $756,259, for Korea Exchange Bank. Both Banks are well aware of the status of the restructuring of the Debtor's Korean parent under the Korean restructuring law -- the Corporate Restructuring Promotion Act of 2001. Both Banks have also been advised by the Debtor's representatives of the Debtor's intent to implement a consensual liquidation. Cho Hung Bank and Korea Exchange Bank understand that the Debtor largely ceased operations postpetition and is already engaged in a de facto wind-down of its operations. Subject to actual agreement eventually reached by the parties-in- interest in the case on the terms of a consensual liquidating plan that appropriately gives effect to the senior secured status of their claims, Cho Hung Bank and Korea Exchange Bank are prepared to support, in principle, the prompt negotiation and implementation of the plan, Mr. Christmas says. Accordingly, Cho Hung Bank and Korea Exchange Bank support the Debtor's request to extend the exclusive periods. However, given that the Debtor already ceased operations and no longer intend to reorganize as an operating business, both Banks believe that the Debtor can and should be able to come to terms with its creditor body on a plan of reorganization within the requested four-month period. While the case is still large in terms of the magnitude of the Debtor's liabilities, it is no longer particularly complex. The Debtor advised the Banks that it holds $100,000,000 in cash and that it will be able to collect an additional $50,000,000 from existing accounts receivable and inventory. According to the Debtor, these amounts do not take into account claims or potential claims against its affiliates or its corporate parent, which represent an additional potential source of recovery for the creditors. "Resolving the plan issues in this case requires nothing more than agreeing how the existing cash and other assets will be divided, and what provision will be made for pursuing potential claims and causes of action," Mr. Christmas explains. There is nothing about these tasks that should require more than four months of negotiation. Hence, Cho Hung Bank and Korea Exchange Bank expect that both the negotiations and the drafting and filing of a plan of reorganization and disclosure statement should be completed within that time period. (SK Global Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945- 7000) SLATER STEEL: September Balance Sheet Upside Down by $133.8-Mil. ---------------------------------------------------------------- Slater Steel Inc. reported a loss before unusual items, interest, income taxes and discontinued operations (Renown Steel) of $74.1 million. Included in this amount is a $40.6 million provision related to the write-down of inventory and accounts receivable to net realizable value at Atlas Specialty Steels, Fort Wayne Specialty Alloys and Lemont. Approximately $67.5 million of the $74.1 million loss relates to these operations. This performance compares to operating earnings of $1.7 million in the corresponding quarter in 2002. Slater's stainless steel bar operations, Atlas Specialty Steels and Fort Wayne Specialty Alloys, are in the process of being temporarily idled as the Company does not have sufficient liquidity to fund the magnitude of losses that they were experiencing. In addition, Lemont has been idled as Slater does not have adequate liquidity to ramp up operations and fund working capital at the facility. The Company has initiated a process to solicit qualified buyers and/or investors for Atlas Specialty Steels and has commenced a process under section 363 of the U.S. Bankruptcy Code to sell Lemont. Slater expects to commence a similar process in the near term for the sale of Fort Wayne Specialty Alloys. "Slater continues to operate Hamilton Specialty Bar, Atlas Stainless Steels and Sorel Forge in the normal course of business and is making significant progress in developing a business plan for the restructuring or going concern sale of these operations," said Paul A. Kelly, president and chief executive officer, Slater Steel Inc. "Our current focus is on achieving significant labour savings at Hamilton Specialty Bar and Atlas Stainless Steels, which is critical to Slater's ability to complete the restructuring." Excluding unusual items and income tax, these operations recorded a loss of approximately $6.6 million in the third quarter. In order to allow the Company time to stabilize and develop a revised business plan, the Company has, in Canada, obtained a general stay under the Companies' Creditors Arrangement Act which has been extended to November 28, 2003. The Company intends to make application to the Ontario Superior Court of Justice on November 25, 2003 to extend the period of protection to January 30, 2004. In addition, the Company's debtor-in-possession (DIP) facility terminates, in accordance with its terms, on December 1, 2003 unless extended with the consent of the Company and the DIP lenders. The Company believes it will shortly reach an agreement with the DIP lenders to extend the DIP facility to January, 2004. The Company once again stated that it does not expect that shareholders will receive any value through the implementation of its business plan. Slater's net loss in the third quarter of 2003 was $247.5 million, or a loss of $16.37 per share ($16.37 per diluted share), versus net earnings from continuing operations of $3.5 million, or $0.23 per share ($0.23 per diluted share), in the same quarter a year earlier. In addition to the $40.6 million provision described above, Slater's third quarter net loss includes $173.2 million in unusual items related to the write-down of equipment and recording of costs connected with the idling of Atlas Specialty Steels, Fort Wayne Specialty Alloys and Lemont. The majority of these charges were non-cash items. In addition, $5.5 million in fees and expenses related to the creditor protection proceedings was also incurred in the quarter. For the nine months of 2003, Slater's loss before unusual items, interest, income tax and discontinued operations (Renown Steel) was $110.9 million. This amount includes the $40.6 million third quarter provision related to the write-down of inventory and accounts receivable to net realizable value at Atlas Specialty Steels, Fort Wayne Specialty Alloys and Lemont. These results compare to operating earnings of $10.8 million in the comparable period a year earlier. For the nine-month period ended September 30, 2003, Slater reported a net loss of $300.8 million, or a loss of $19.90 per share ($19.90 per diluted share), compared to net income of $7.4 million, or $0.53 per share ($0.51 per diluted share), in the comparable period in 2002. Third quarter and year-to-date 2002 earnings from discontinued operations are related to the results of Renown Steel, which was sold in the second quarter of 2002. Consolidated sales for the three months ended September 30, 2003 were $145.0 million, versus $169.2 million in the corresponding period a year earlier. The year-over-year decline in sales is attributed to a combination of weak market conditions and the effect of exiting the stainless steel bar business operations. For the three-month period ended September 30, 2003, operating cash flow from continuing operations, before changes in working capital, consumed $77.2 million. Working capital generated cash of $74.5 million, as a result of lower inventory levels and reduced accounts receivable balances. Cash from continuing operations, after working capital changes, consumed $2.7 million in the quarter. In the comparable quarter in 2002, cash from continuing operations, after working capital changes, consumed $10.2 million. At September 30, 2003, the Company's net debt was $188.6 million, including $24.6 million under the DIP facility, compared to net debt of $162.5 million at September 30, 2002. As at October 31, 2003, borrowings under the DIP facility stood at $16.6 million. For the quarter ended September 30, 2003, the stainless steel group reported a segmented loss of $66.1 million, before asset impairment charges. The loss is primarily related to the stainless steel bar business. Due to the temporary idling of Atlas Specialty Steels and Fort Wayne Specialty Alloys, the Company wrote down the facilities' assets to fair market value resulting in an asset impairment charge of $154.3 million in the third quarter. In addition, the segment recorded a $39.7 million provision to write down stainless steel bar receivables and inventory to net realizable value. A number of factors adversely impacted the segment's financial performance in the quarter including the decision to exit the stainless steel bar business, high input costs, reduced stainless steel bar volumes and a continued decline in average selling prices. In the corresponding quarter in 2002, the stainless steel group reported segmented earnings of $6.5 million, which included pre-tax income of $6.0 million related to the reversal of a provision accrued for an integration plan developed in conjunction with the acquisition of the Atlas Steels business in August 2000. For the third quarter of 2003, the specialty carbon steel group recorded a segmented loss of $5.8 million, before asset impairment charges related to Lemont. As a result of the idling of Lemont, the Company wrote down the facility's assets to fair market value resulting in an asset impairment charge of $18.9 million in the third quarter. In the comparable quarter a year earlier, the specialty carbon steel group reported segmented earnings of $1.8 million. The specialty carbon group's results were negatively impacted by lower volumes, the power blackout in August, as well as rising scrap costs. While the Company has scrap adjustment surcharges on a significant portion of its business, these surcharges did not fully offset the increase in scrap costs during the quarter. It should be noted that Lemont was acquired on September 7, 2002 and that start-up costs related to the facility were deferred and therefore were not included in third quarter 2002 financial results. Slater Steel Inc.'s September 30, 2003, balance sheet reports a working capital deficit of about $169.6 million and a net capital deficit topping $133.8 million. Slater Steel Inc. common shares are listed on The Toronto Stock Exchange and trade under the symbol SSI. At September 30, 2003, Slater Steel reported 15,114,895 common shares outstanding. Slater Steel is a mini mill producer of specialty steel products. The Company's mini mills are located in Fort Wayne, Indiana, Lemont, Illinois, Hamilton and Welland, Ontario and Sorel-Tracy, Quebec. The Fort Wayne, Illinois and Welland, Ontario facilities are in the process of being temporarily idled. The Lemont, Illinois facility is in the process of being sold. SMITHFIELD FOODS: Reports Substantially Improved Q2 Results ----------------------------------------------------------- Smithfield Foods, Inc. (NYSE: SFD)(S&P, BB+ Corporate Credit Rating, Negative), announced earnings for the second quarter of fiscal 2004, ended October 26, of $36.2 million, or $.33 per diluted share, versus net income of $4.1 million, or $.04 per diluted share, last year. Second quarter sales were $2.1 billion versus $1.8 billion last year. Net income from continuing operations, excluding Schneider Corporation results, was $31.9 million, or $.29 per diluted share, compared with breakeven results last year. On September 25, Smithfield announced a definitive agreement to sell Schneider, its wholly-owned Canadian subsidiary, to Maple Leaf Foods Inc. The sale, which is subject to regulatory approval, is expected to close before the end of the company's fiscal year. Following are the company's sales and operating profit from continuing operations by segment*: 13 Weeks Ended 26 Weeks Ended Oct. 26, Oct. 27, Oct. 26, Oct. 27, (in millions) 2003 2002 2003 2002 Sales Pork $1,157.2 $1,046.9 $2,290.2 $2,076.6 Beef 660.0 526.0 1,265.4 1,085.0 Hog Production 304.0 223.4 639.7 497.2 Other 192.6 165.4 366.1 314.9 2,313.8 1,961.7 4,561.4 3,973.7 Intersegment (254.1) (189.2) (520.1) (398.9) Total Sales $2,059.7 $1,772.5 $4,041.3 $3,574.8 Operating Profit (Loss) Pork $42.5 $51.5 $24.9 $52.9 Beef 40.1 20.0 72.0 41.9 Hog Production 3.4 (38.2) 61.5 (19.3) Other 2.1 3.3 (1.6) 7.6 Corporate (13.9) (15.1) (28.7) (30.0) Total Operating Profit (Loss) $74.2 $21.5 $128.1 $53.1 * Note: In connection with the sale of Schneider Corporation, the company's international meat processing operations, which were previously reported in the International segment, have been reclassified to Other, along with the company's turkey processing and Production operations. In the quarter and for the year to date, sales from continuing operations increased on higher pricing, both in beef and pork, reflecting the impact of higher raw material costs in pork and continued strong demand for beef. Operating profit in hog production improved substantially as a result of higher live hog prices. Fresh pork results improved in the quarter over the previous year, as market conditions improved somewhat. Processed meats margins were lower, reflecting the impact of substantially higher raw material costs that could not be fully passed through in product pricing. Processed meats and prepared foods volume rose seven percent. Overall volume was virtually flat, as fresh pork volume declined eight percent, as the company continues to shift more of its sales to further processed and value-added products. In the prepared foods categories, the company recorded double- digit volume increases in the following pre-cooked products: bacon, sausage, entrees and ribs. In the traditional processed meats categories, hot dogs, dry sausage and 4X6 sliced ham also grew at double-digit rates. This exceptional increase in processed meats volume reflects the company's continued focus on using its raw materials internally and growing the value-added sector of the business. Operating profit in the beef segment doubled as a result of continued strong demand for beef, in spite of record high cattle prices. Prices for live cattle reached record levels following the ban on Canadian cattle, combined with lower cattle supplies in the United States. Reflecting these lower supplies, beef volume was three percent below last year. Hog production operations reported a modest operating profit versus a loss of $38.2 million a year ago, as live hog market prices averaged about $39 per hundredweight, about $10 per hundredweight above last year. After allocation of interest costs, the company's live production operations were unprofitable. Live hog prices remained somewhat depressed because of higher shipments of live hogs from Canada to the United States. Raising costs were about the same as the first quarter, but somewhat above the same quarter a year ago, reflecting higher grain costs over the past year. Joseph W. Luter, III, chairman and chief executive officer, said that he was generally pleased with the results of the quarter. "Our pork and beef operations are healthy and our processed meats business is growing faster than the industry. The influx of Canadian hogs into the United States continues to alter the normal supply and demand effect on live hog prices, resulting in continued losses for hog producers and threatening the viability of many smaller producers. However, these conditions will not remain for an extended period of time. The longer that the lack of profitability lingers in the industry, the stronger it will rebound, just as we have seen in the beef industry," said Mr. Luter. The company recently announced the acquisition of Cumberland Gap, a premium-branded producer of hams. Farmland Foods was acquired from Farmland Industries effective October 28. The earnings from Farmland are expected to be immediately accretive and more than offset the earnings loss associated with the sale of Schneider, currently reflected as discontinued operations. The company also acquired the assets of Alliance Farms, with assets located in Colorado and Illinois. "We have major cost savings opportunities in some areas of these companies, which should provide an opportunity to improve near-term profitability," Mr. Luter said. Mr. Luter said that he was optimistic about the remainder of fiscal 2004. "Early indications are that we will have a good third quarter. Our beef operations continue to be strong and our processed meats business continues to show significant growth in several product categories. The futures market reflects improving prices for live hogs late in the third quarter and into our fiscal fourth quarter. Finally, the addition of Farmland looks to be a significant contributor to earnings immediately," said Mr. Luter. With annualized sales of $9 billion, Smithfield Foods is the leading processor and marketer of fresh pork and processed meats in the United States, as well as the largest producer of hogs. For more information, please visit http://www.smithfieldfoods.com/ THRONBURG MORTGAGE: Fitch Gives Stable Outlook to BB Note Rating ---------------------------------------------------------------- Fitch Ratings initiates coverage of Thornburg Mortgage, Inc.'s $255 million of senior unsecured notes at 'BB'. The Rating Outlook is Stable. The rating initiation includes the follow-on offering of $55 million that Thornburg priced on Nov. 17. Thornburg Mortgage's rating strengths focus on its high quality earning asset base, which consists of nearly 89% 'AAA'-rated residential mortgage backed securities. In addition, approximately 8% of the company's earning assets consist of unsecuritized whole loans with an average FICO score of 738 and a weighted average loan-to-value of under 70%. Thornburg Mortgage's asset base has among the lowest credit risk profiles in Fitch's finance company universe. Fitch also believes that Thornburg Mortgage's financial profile is less susceptible to prepayment risk than many companies operating in the mortgage business as a result of its lack of mortgage servicing rights and gains-on-sale. This level of asset quality has allowed the company to maintain leverage (debt divided by equity) in the 14x to 15x range. Thornburg Mortgage has a policy to operate with an equity-to-assets ratio of at least 8%. In calculating this ratio, the company excludes other comprehensive income (or loss) and assets financed with non-recourse debt and the related equity and includes the senior notes as an addition to equity. At Sept. 30, 2003, the adjusted equity-to-assets ratio was 9.7%. Asset quality also drives the company's solid risk-adjusted capitalization, as most of its assets do not require a high level of equity capital support. Thornburg Mortgage has carefully managed its interest rate risk profile by reducing its duration gap to 1.9 months through the use of short-term financing and a comprehensive hedging program. Management has recognized interest rate duration matching as one of the company's biggest challenges and has devoted substantial resources to managing it efficiently. This is particularly important given the potential for a rising interest rate environment in the near future. Rating concerns are focused on the company's reliance on reverse repurchase agreements for financing, which provided nearly 74% of total capital at Sept. 30, 2003. Fitch believes that the relatively short average reverse repurchase maturities of 6.4 months compared to much longer asset maturities leave the company exposed to roll-over risk. This is compounded by the absence of available committed back-up liquidity for MBS assets. Despite the enormous breadth and depth of the MBS and reverse repurchase markets, the absence of committed backup liquidity leaves Thornburg Mortgage exposed in the event of a disruption in the company's ability to access these markets. While Fitch estimates that Thornburg Mortgage has approximately $8 billion of available liquidity at Sept. 30, only about $500 million of this is committed or cash. Further, the committed liquidity is only available on a secured basis for whole loans and none is available for longer than one year. Thornburg Mortgage's nearly $2 billion inventory of 'AAA' agency MBS and $13 billion of private issuer MBS securities are generally highly liquid and widely held instruments. However, only a small component of these are unencumbered. Thornburg Mortgage has made progress towards diversifying its funding profile over the past 12 months. The company has completed over $2.4 billion of third party term securitizations, issued $250 million of senior unsecured debt, and increased its committed liquidity by $150 million. Thornburg Mortgage has also successfully diversified its sources of reverse repurchase financing, and now has a total of 24 providers with none providing an outsized proportion of capital. Fitch views these steps favorably and will continue to watch as management takes similar additional steps in the future. The company's rate of growth in 2002 and 2003 has exceeded 80% per annum. As a finance company, this level of expansion causes concerns as rapid growth can mask credit or operating issues, although none seem apparent at Thornburg Mortgage. Fitch will continue to monitor the portfolio as it seasons. This growth has driven the company's significant increases in net income over the last several years and, to a lesser degree, increases in leverage. Thornburg Mortgage's growth has been motivated in part by the strong mortgage market over the past two years as well as significant increased depth and diversity of the company's origination channels. Thornburg Mortgage is based in Santa Fe, NM and is the nation's largest mortgage real estate investment trust (REIT). The company is focused on underwriting, purchasing, and holding investments in adjustable-rate residential mortgages. Thornburg Mortgage originates and purchases adjustable-rate jumbo mortgages backed by single-family residential properties owned by predominantly high quality borrowers. The company is also an originator as well as purchaser of mortgage-backed securities from Freddie Mac, Fannie Mae, and a diverse range of private institutions. As of Sept. 30, 2003, the company was the nation's 14th largest jumbo mortgage originator and approximately the 81st overall originator of residential mortgages. As of Sept. 30, 2003, Thornburg Mortgage had $17.3 billion of assets and $1.1 billion of shareholders' equity. TOYS R US: Taps Hilco Merchant to Direct Kids 'R' Us Liquidation ---------------------------------------------------------------- Toys "R" Us is shuttering all 146 Kids "R" Us and 36 Imaginarium outlet stores. The company reports that the 180 store closings will result in a $280 million charge. Approximately 3,800 workers will lose their jobs. Kids "R" Us sales have steadily declined since 2000, resulting in significant losses at the chain. Hilco Merchant Resources has been selected to provide store- closing services to Kids "R" Us and Imaginarium freestanding stores. The services Hilco Merchant Resources will provide include store closing events and inventory liquidation. "We are pleased to have been chosen by Kids "R" Us and are confident that our background and expertise will result in a smooth transition period for the company," stated Michael Keefe, President of Hilco Merchant Resources. "The sales events, beginning today, will afford consumers the opportunity to take advantage of tremendous savings just in time for the holiday season." Sales will take place in 146 freestanding Kids "R" Us clothing stores and 36 freestanding Imaginarium stores, the majority of which are expected to close on or before January 31, 2004. A complete list of stores affected is available at the Investor Relations section of the Toys "R" Us, Inc. Web site at http://www.toysrusinc.com/ Toys "R" Us, Inc. remains committed to the apparel business and the learning and creativity toy businesses and will continue to support these businesses within Toys "R" Us, Babies "R" Us and Geoffrey stores, and at Toysrus.com. More than $200 million of Kids "R" Us current inventory will be liquidated during the holiday shopping season. Original prices will be reduced on items in every department, including apparel, shoes and accessories. Imaginarium stores, which feature creativity and learning toys, are also offering discounts on all store merchandise. Based in Northbrook, IL, Hilco Merchant Resources -- http://www.hilcomerchantresources.com-- 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; Oakland; Atlanta; Flagstaff; Charlotte; Detroit; and London, England. For more information please visit its Web site at http://www.hilcotrading.com/ The Wal-Mart Problem Joseph Pereira, writing for The Wall Street Journal, relates that Toys "R" Us and Wal-Mart compete fiercely at Christmas time. "A recent comparison of prices at the two chains by Bank of America Securities showed that shoppers would have to pay $784 [at Toys "R" Us] for a basket of 15 toys compared to $689 at Wal-Mart," Mr. Pereira notes. In late October, this year, Wal-Mart began cutting prices on its toy inventory -- two or three weeks earlier than usual. Some analysts, Mr. Pereira reports, think Wal-Mart cuts prices below their cost. As previously reported, Fitch Ratings affirmed its ratings of Toys 'R' Us' senior notes at 'BB+', and revised the company's Rating Outlook to Negative from Stable. Approximately $3.3 billion of debt was affected by the rating action. Separately, Fitch withdrew TOY's 'B' commercial paper rating. UNITED AIRLINES: Court Okays Extension of Bain's Engagement ----------------------------------------------------------- The United Airlines Debtors asked and obtained Court approval to extend the employment of Bain & Company as strategic consultants and negotiating agents in connection with the Express Carrier Agreements. The Debtors will expand Bain's services beyond that contemplated in either the First or Second Letter of Proposal. Also, the Debtors will compensate Bain under a different fee structure for five months, effective November 1, 2003. Bain will continue to support the detailed planning and implementation of the ACA transition plan and assist in finalizing other express carrier agreements. For the months November 2003 through March 2004, Bain's fees will be $423,000 per month, plus expenses. Fees are calculated using the same rates and discounts as in prior applications. (United Airlines Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED AIRLINES: Reports Strong Results for October 2003 -------------------------------------------------------- UAL Corporation (OTC Bulletin Board: UALAQ), the holding company whose primary subsidiary is United Airlines, filed its October Monthly Operating Report with the United States Bankruptcy Court. The Company reported a net income for October of $25 million, excluding reorganization expenses of $149 million. The majority of reorganization expenses were non-cash items resulting from the rejection of aircraft as the company aligns its fleet to the market. Operating profit for the month was $60 million. This is an improvement of about $300 million compared to October one year ago. Positive cash flow during the month was $7 million per day, excluding a quarterly retroactive wage payment to International Association of Machinists members of $63 million. UAL met the requirements of its debtor-in-possession (DIP) financing for the ninth straight month. "What these results point to is that United's restructuring has established a foundation for success -- it is back in the game, competing," said Glenn F. Tilton, chairman, president and chief executive officer. "We still have work to do, but United's steady progress shows that we are creating an airline that will be profitable and sustainable for the long term." "Month after month, United continues to generate solid financial results," said Jake Brace, United's executive vice president and chief financial officer. "Cash flow remains strong, and we ended the month with a cash balance of $2.5 billion. UAL's systemwide passenger unit revenue was up 9% year-over-year -_ well ahead of the industry average. We met the requirements of our DIP covenants and expect to meet them for November as well." UAL generated positive cash flow of about $206 million, excluding a quarterly retroactive wage payment to International Association of Machinists members of $63 million. UAL ended October with a cash balance of about $2.5 billion, which included $650 million in restricted cash (filing entities only). As part of its DIP financing agreements, UAL's lenders required the Company to achieve a cumulative EBITDAR (earnings before interest, taxes, depreciation, amortization and aircraft rent) of $46 million between December 1, 2002 and October 31, 2003. "United employees once again delivered strong operational performance in spite of the challenges presented by the wildfires in California and the increase in load factor over last year," said Pete McDonald, executive vice president _ Operations. "Systemwide, 77 percent of United flights departed exactly on time. On-time arrivals within 14 minutes was 86.2 percent." Separately, in response to a New York Times article from November 20, 2003, regarding pensions, Brace stated, "Some people are trying to confuse our situation. The facts are that we can fund our pension obligations on the standard, non-accelerated timetable; we intend to continue to fund our pension obligations; and we do not want to shift this burden to the Pension Benefit Guaranty Corporation and the American taxpayer. "The only issue we have is the significantly accelerated pension funding schedule currently mandated. United, along with many other companies, supports the efforts in Congress to modify this accelerated timeline and smooth out pension contributions in the short term. This would enable companies to protect the pension benefits of millions of American workers and retirees for the future. We are emphatically not seeking government aid or asking the government to take over our obligations." United and United Express operate more than 3,400 flights a day on a route network that spans the globe. News releases and other information about United may be found at the company's Web site at http://www.united.com/ US TIMBERLANDS: S&P Cuts Credit & Sr Unsec. Debt Ratings to CC -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating to 'CC/Developing/--' from 'CCC+/Negative/--' and senior unsecured debt ratings on U.S. Timberlands Klamath Falls LLC to 'CC' from 'CCC+'. "The downgrade was prompted by the company's failure to make a Nov. 17, 2003, scheduled interest payment on its $225 million 9.625% senior unsecured notes," said Standard & Poor's credit analyst Dominick D'Ascoli. The outlook is developing, which means that ratings could be raised or lowered. The developing outlook incorporates management's efforts to sell assets in order to raise enough funds to make the interest payment within the 30-day grace period allowed under the indenture. If successful, ratings will likely be raised to 'CCC'. If not, ratings will be lowered to 'D'. This is the second time the company has missed a scheduled interest payment. In 2002, the company was able to make the May 15 interest payment within the 30-day grace period, avoiding default. The ratings reflect the significant deterioration in the volume of merchantable timber on U.S. Timberlands Klamath Falls LLC's properties during the past few years. This has occurred as a result of aggressive harvest levels and transfers of property and cutting rights to an affiliate, U.S. Timberlands Yakima LLC. The company's principal operations consist of growing and harvesting timber and selling logs and standing timber to third- party wood processors. Log prices have fallen sharply during the past few years despite a high level of housing construction and remodeling. Price weakness can be traced to customer consolidation, technological improvements in sawmilling resulting in higher log yields, and an increase in low-cost imported logs and wood products. Consequently, in order to generate cash flow to meet the interest expense on its heavy debt load, the company has needed to harvest at levels well above the timber growth rate and its original harvest plans. Harvest restrictions contained in the indenture governing its $225 million senior unsecured notes have not meaningfully curtailed cutting to date. VENTAS INC: Will Acquire ElderTrust in $184 Million Transaction --------------------------------------------------------------- Ventas, Inc. (NYSE:VTR) and ElderTrust (NYSE:ETT) said that the two companies have entered into a definitive merger agreement for Ventas to acquire all of the outstanding common shares of ElderTrust for $12.50 per share, in an all cash transaction valued at $184 million. "We are delighted to announce this merger agreement with ElderTrust, another important step in our strategic diversification plan. The transaction should be accretive to Ventas's 2004 Funds From Operations, and ElderTrust's assets represent an attractive addition to our portfolio," Ventas Chairman, President and CEO Debra A. Cafaro said. "This merger meets our stated goals of acquiring high quality assets in preferred markets that generate sustainable cash flow and that are operated by care providers with good reputations. We are especially pleased that we will have Genesis as an important, new tenant and that we have begun to diversify our investments into assisted and independent living assets." Upon completion of the transaction, Ventas will own ElderTrust's 18 healthcare and senior housing assets. The principal tenant of these properties will be the eldercare and therapy business that is currently an operating unit of Genesis Healthcare Ventures (NASDAQ: GHVI), ElderTrust's primary tenant. ElderTrust Executive Chairman and acting President and CEO Michael R. Walker is the founder, former Chairman and CEO of Genesis. Walker commented that, "This transaction delivers on our assurances that we would maximize value for ElderTrust's shareholders. We look forward to completing this merger with Ventas." The net purchase price of $152 million (before transaction expenses) represents approximately a 10 percent capitalization rate on ElderTrust's expected annual cash net operating income from its properties of approximately $15 million. With the closing of the transaction, which is expected to occur in the first quarter of 2004, Ventas will add nine assisted living facilities, one independent living facility, five skilled nursing facilities, two medical office buildings and a financial office building to its portfolio. The ElderTrust properties are located in Pennsylvania, Massachusetts and New Jersey. A detailed schedule of the assets to be acquired is attached to this Press Release. The operators of the 15 senior housing and skilled nursing properties in the portfolio, in addition to Genesis, are expected to include Benchmark Assisted Living and Newton Senior Living, LLC, two high quality privately held senior living operators based in Massachusetts. Ventas said that, on a full year basis, the transaction should add five to seven cents to its fully diluted FFO per share. The Company also said it expects to fund the $101 million equity portion of the purchase price from: cash on ElderTrust's balance sheet; proceeds Ventas should receive later this year from its previously announced sale of 10 facilities to its primary tenant Kindred Healthcare, Inc. (Nasdaq: KIND); and/or draws on the Company's revolving credit facility. ElderTrust is projected to have approximately $26 million in unrestricted cash, and $6 million of restricted cash, on its balance sheet at the closing. Ventas's ownership of ElderTrust assets will be subject to approximately $83 million of property level debt and other liabilities. ElderTrust owns approximately 96 percent of the partnership units in ElderTrust Operating Limited Partnership, which, in turn, owns all of ElderTrust's properties. At the closing of the transaction, Ventas expects to acquire all of the limited partnership units in ETOP directly from their owners at $12.50 per unit, excluding 31,455 Class C Units in ETOP (which will remain outstanding). Successful completion of the merger, which is structured as a one- step merger, will require approval from two-thirds of the ElderTrust shareholders. As part of the transaction, Ventas has obtained agreements from certain current and former ElderTrust officers and directors, who own approximately twelve percent of the outstanding ElderTrust shares, to vote in favor of the merger. The transaction does not require the vote of Ventas shareholders. The merger agreement will also be subject to satisfaction of certain other conditions, including the completion of the previously announced Genesis spinoff, which is expected to occur in December 2003, and the implementation of agreements in place between Genesis, ElderTrust and other third parties. There can be no assurance that the merger will close or, if it does, when the closing will occur. Merrill Lynch is acting as Ventas's exclusive financial advisor, and Wachovia Securities is acting as ElderTrust's exclusive financial advisor, in the transaction. ElderTrust is a real estate investment trust that invests in real estate properties used in the healthcare services industry, principally along the East Coast of the United States. Ventas, Inc. -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $24 million -- is a healthcare real estate investment trust that owns 44 hospitals, 202 nursing facilities and nine other healthcare and senior housing facilities in 37 states. The Company also has investments in 25 additional healthcare and senior housing facilities. More information about Ventas can be found on its Web site at http://www.ventasreit.com WEIRTON STEEL: Court Approves Amended Disclosure Statement ---------------------------------------------------------- Judge Friend approves Weirton Steel Corporation's Amended Disclosure Statement, finding that it contains adequate information within the meaning of Section 1125 of the Bankruptcy Code and Rules 3017 and 3018 of the Federal Rules of Bankruptcy Procedure. (Weirton Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTAR ENERGY: Board of Directors Declares 4th-Quarter Dividend --------------------------------------------------------------- The Westar Energy, Inc. (NYSE:WR) Board of Directors declared a fourth-quarter dividend of 19 cents per share payable January 2, 2004, on the company's common stock. The board also declared regular quarterly dividends on the company's 4.25 percent, 4.5 percent and 5 percent series preferred stocks payable January 1, 2004. The dividends are payable to shareholders of record as of December 9, 2003. Westar Energy, Inc. (NYSE:WR) (S&P/BB+/Developing) is the largest electric utility in Kansas and owns interests in monitored security businesses and other investments. Westar Energy provides electric service to about 657,000 customers in the state. Westar Energy has nearly 6,000 megawatts of electric generation capacity and operates and coordinates more than 36,600 miles of electric distribution and transmission lines. The company has total assets of approximately $6.7 billion, including security company holdings through ownership of Protection One, Inc. (NYSE: POI). Through its ownership in ONEOK, Inc. (NYSE: OKE), a Tulsa, Okla.- based natural gas company, Westar Energy has, prior to completion of the ONEOK transaction described herein, a 27.5 percent interest in one of the largest natural gas distribution companies in the nation, serving nearly 2 million customers. For more information about Westar Energy, visit http://www.wr.com WESTPORT RESOURCES: Declares Dividend on 6.5% Conv. Preferreds -------------------------------------------------------------- The Board of Directors of Westport Resources Corporation (NYSE: WRC) declared the fourth quarter 2003 dividend of $0.40625 per share per quarter on the Company's 6.5% Convertible Preferred Stock, par value $0.01 per share (NYSE: WRCPR), payable December 15, 2003 to shareholders of record as of December 5, 2003. Westport (S&P, BB Corporate Credit and Senior Unsecured, and B+ Senior Subordinated Debt Ratings) is an independent energy company engaged in oil and natural gas exploitation, acquisition and exploration activities primarily in the Gulf of Mexico, the Rocky Mountains, Permian Basin/Mid-Continent and the Gulf Coast. WILLIAMS: Board Directors Declares Dividend Payable on Dec. 29 -------------------------------------------------------------- Williams' (NYSE: WMB) board of directors approved a regular dividend of 1 cent per share on the company's common stock, payable on Dec. 29 to holders of record at the close of business on Dec. 12. The company has paid a common stock dividend every quarter since 1974. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com As reported in Troubled Company Reporter's October 16, 2003 edition, Fitch Ratings affirmed The Williams Companies, Inc.'s outstanding senior unsecured notes and debentures at 'B+'. Also affirmed are outstanding credit ratings for WMB's wholly-owned subsidiaries Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp., and Williams Production RMT Co. The Rating Outlook for each entity has been revised to Positive from Stable. Details of the securities affected are listed below. The following is a summary of outstanding ratings affected by the action: The Williams Companies, Inc. -- Senior unsecured notes and debentures 'B+'; -- Feline PACs 'B+'; -- Senior secured debt 'BB'; -- Junior subordinated convertible debentures. 'B-'. Williams Production RMT Co. -- Senior secured term loan B 'BB+'. Northwest Pipeline Corp. -- Senior unsecured notes and debentures 'BB'. Transcontinental Gas Pipe Line Corp. -- Senior unsecured notes and debentures 'BB'. WINSTAR: Trustee Gets Court Nod to Make Interim Distributions ------------------------------------------------------------- Christine C. Schubert, the Winstar Communications, Inc. Debtors' Chapter 7 Trustee, sought and obtained the Court's authority to make a second interim distribution to the Debtors' postpetition lenders pursuant to Sections 105(a) and 726 of the Bankruptcy Code. The Trustee will distribute to the DIP Lenders $32,000,000 in cash and 1,782,346 IDT Corporation Class B common stock shares. The Trustee holds the cash and the shares for the benefit of the Debtors' creditors. The DIP Credit Agreement provided, inter alia, for a $75,000,000 initial commitment and could be increased up to $300,000,000. The DIP Financing Order dated May 14, 2001 provided that the advances made under the DIP Credit Agreement would bear interest at either 3% above the Alternate Base Rate or 4% above the Eurodollar Rate and provided for various fees to be charged to the Debtors in connection with the advances. The DIP Order provided the DIP Lenders with superpriority status pursuant to Bankruptcy Code Section 364(c)(1) and granted the DIP Lenders liens in substantially all the Debtors' assets. The DIP Lenders are presently owed more than $135,000,000 under the Credit Agreement. The Trustee believes that the Second Interim Distribution is appropriate. The Second Interim Distribution will reduce the interest burden on the DIP Loan. The Trustee is holding back sufficient funds to administer the Debtors' estates. Pursuant to Section 726(a)(1), the Trustee has authority to make the Second Interim Distribution. Section 726 states in pertinent part: "[P]roperty of the estate shall be distributed . . . in payment of claims of the kind specified in, and in the order specified in, Section 507 of [the Bankruptcy Code], proof of which is timely filed under Section 501 of [the Bankruptcy Code]or tardily filed before the date on which the trustee commences distribution. . . ." The Trustee will also have more than an adequate reserve to administer these cases -- $10,000,000 in estimate -- after making the Second Interim Distribution. The Trustee expects additional recoveries for the Debtors' estates as a result of the preference actions commenced. To facilitate the Second Distribution, the Court vacates the provisions of prior distribution orders. The Court rules that the distribution of the shares of the IDT Corporation common stock, which are readily convertible to cash, are deemed funds disbursed or turned over by the Trustee to parties-in-interest within the meaning of Section 326(a). But the Court clarifies that the Trustee will not use any estate funds in which Lucent Technologies Inc. has an interest pursuant to any Court order, stipulation, or settlement for any purpose without Lucent's prior written consent. To recall, on the Petition Date, the Debtors commenced an adversary proceeding against Lucent for, inter alia, breach of a supply agreement dated October 21, 1998 and a credit agreement dated May 4, 2000. The complaint was based on Lucent's alleged failure to fund purchases and provide goods and services under the Supply Agreement. The Debtors defaulted on one or more of the covenants under their postpetition credit agreement. As a result, the postpetition lenders declined to advance the Debtors any additional funds. With limited cash flow to pay administrative creditors, the Debtors commenced an expedited auction of substantially all their assets. Subsequently, IDT Winstar Acquisition, Inc. and the Debtors entered into an asset purchase agreement, where IDT acquired substantially all of the Debtors' assets and the Debtors received $55,000,000 in cash and stock. On December 19, 2001, the Court approved the IDT Purchase Agreement. Lucent asserted that it held a valid, properly perfected, first priority secured lien in a portion of the Sale Proceeds that arose from the security agreements executed in connection with the Supply Agreement and the Credit Agreement. Lucent filed numerous proofs of secured claim against the Debtors' estates pursuant to its alleged valid and perfected first priority lien. In December 2002, the Trustee sought to make an interim distribution to the DIP Lenders. Because Lucent's alleged lien was in an amount large enough to prevent the First Interim Distribution without resolution of Lucent's lien claims, the parties agreed to certain conditions governing the distribution, which were set forth in various court orders. The Previous Distribution Orders set forth these conditions: (i) Payments made by the Trustee pursuant to the Prior Distribution Orders would be subject to disgorgement in the event that the Bankruptcy Court subsequently determined that the payments were funded by the Lucent collateral proceeds; (ii) The Trustee would not use any estate funds in which Lucent asserts an interest without prior written consent or further Court order after appropriate notice and hearing. However, Lucent's written consent would not be required for the Trustee's use of estate funds to cover up to $100,000 in monthly expenses incurred in the ordinary course of the administration of the Debtors' estates commencing as of December 1, 2002; and (iii) To the extent that funds the Trustee disbursed pursuant to the Prior Distribution Orders were funded by cash held in the Debtors' accounts on December 18, 2001, up to $2,487,031, and in the event that the Court subsequently determined that Lucent has a security interest in the Cash Proceeds, the Trustee would be required to replenish the Cash Proceeds with the proceeds of the successful recoveries of preferences as defined in Section 547; provided, however, that the Cash Proceeds would still be subject to the Trustee's 3% commission. (Winstar Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLDCOM: Obtains Clearance to Assume 3 Wilmington Fiber Leases --------------------------------------------------------------- Worldcom Inc., and its debtor-affiliates sought and obtained the Court's authority to assume three Amended and Restated Master Lease Agreements dated December 27, 1986 and related agreements for the Leveraged Lease Financing of undivided interests in fiber- optic lightwave telecommunications systems with Wilmington Trust Company and William J. Wade, as Owner Trustee. The Debtors will also assume certain Guaranty and several Related Agreements, including: -- Participation Agreements, -- Tax Indemnification Agreements, -- Loan Agreements, -- Notes, -- Master Easement Agreements, -- Owner Trust Agreements, -- Easement Assignments, -- Facilities Management Agreements, and -- Other Operative Documents defined in the Participation Agreements. MCI WorldCom Network Services, Inc., as successor to MCI Telecommunications Corporation, contracted the Participation Agreements with Banque Paribas, as Agent, Mr. Wade and certain other parties as Loan Participants, including: (1) DaimlerChrysler Services North America LLC, as successor- in-interest to Chrysler Financial Corporation; (2) Dana Lease Finance Corporation; and (3) General Electric Capital Corporation, as successor-in- interest to D&K Financial. The original cost of the facilities subject to the Fiber Leases was $146,900,000. The Fiber Facility includes 1,591 miles of fiber optic cable, repeater shelters, splice boxes, conduit and other integral equipment, which the Debtors use to support their network operations. These systems comprise the Fiber Facility: -- Baldwin, Florida to Tallahassee, Florida; -- Columbia, South Carolina to Southover, Georgia; -- Southover, Georgian to Baldwin, Florida; -- Tallahassee, Florida to Pensacola, Florida; -- Fairfax, South Carolina to Austell, Georgia; -- Richmond, Virginia to Raleigh, North Carolina; -- Raleigh, North Carolina to Columbia, South Carolina; and -- Tracy, California to Palmdale, California. The Fiber Facility is integral to the Debtors' ability to provide telecommunication services to their customers. DaimlerChrysler, Dana and GE Capital own an undivided interest in the Systems and each have its own lease for its undivided share: * DaimlerChrysler owns and leases to the Debtors a 48.95% interest in the Fiber Facility; * GE Capital owns and leases to the Debtors a 34.03% interest in the Fiber Facility; and * Dana owns and leases to the Debtors a 17.02% interest in the Fiber Facility. MCI Communications Corporation guaranteed MCI WorldCom's obligations under the Fiber Leases. The Fiber Leases expire on January 2, 2012. There are no prepetition arrearages that will have to be paid as a cure payment under Section 365 of the Bankruptcy Code, upon assumption of the Fiber Leases and the Related Agreements. In addition, the Debtors have made all lease payments under the Fiber Leases on a current basis since the Petition Date. The Fiber Leases also provide the Debtors with the option to purchase the Leased Undivided Interests at the end of the term for a price equal to the fair market sale value. The Debtors evaluated the relative costs and benefits associated with the assumption and the rejection of the Fiber Leases, including the feasibility of migrating the traffic that utilizes the Fiber Facility in a limited time window. The Debtors determined that the best course of action was to attempt to negotiate an amendment of certain of the financial terms of the Fiber Leases, in particular, a capped purchase price option for the Leased Undivided Interests. On September 8, 2003, MCI WorldCom, MCI Communications and Mr. Wade executed Rider to Fiber Lease documents that modify the purchase option section of the Fiber Leases to establish a fixed purchase price for the Leased Undivided Interests, as well as amend the notification parties under the Fiber Lease. The Riders provide that upon expiration of the Fiber Leases, MCI WorldCom can exercise an option to purchase the Leased Undivided Interests for fair market sales value on the date of the expiration of the Fiber Leases, with the fair market sales value determination subject to a maximum purchase price equal to 10% of the purchase costs of the Leased Undivided Interests. The Riders eliminate the uncertainty associated with an appraisal or fair market sale value determination by setting a maximum purchase price cap. (Worldcom Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) WORLD HEART: Will Hold Special Shareholders' Meeting Tomorrow ------------------------------------------------------------- Shareholders, media and other interested parties are invited to join World Heart Corporation at their Special Meeting of Shareholders at the Royal York tomorrow. Meeting details are as follows: - Tuesday, November 25, 2003, 4:00 p.m. EST - Royal York Hotel, 100 Front Street West, Toronto ON - Confederation Room 3 This Special Meeting is being held to vote on: 1. Consolidation of the issued and outstanding common shares of the Corporation on a one for seven basis; 2. Conversion of certain preferred shares to common shares; and 3. Revisions to the Employee Stock Option Plan. The CEO will provide a general corporate update. To participate by video web cast, go to World Heart's homepage at http://www.worldheart.com, access the web cast link and follow the instructions. An archived version of the recording will be accessible on the home page five business days following the Meeting. The corporate update presentation will be accessible on the home page the following day. To participate in person, please register with Sharilyn Cyr prior to November 24th at: (613) 226-4278 x 2210, or (510) 563-4995, sharilyn.cyr@worldheart.com. Interviews on November 25th can be arranged by calling (613) 791-3433. Novacor LVAS is an implanted electromagnetically driven pump that provides circulatory support by taking over part or all of the workload of the left ventricle. With implants in over 1490 patients, no deaths have been attributed to device failure, and some recipients have lived with their original pumps for as long as four years - statistics unmatched by any other implanted mechanical circulatory support device on the market. Novacor LVAS is commercially approved as a bridge to transplantation in the U.S. and Canada. In Europe, the Novacor LVAS has unrestricted approval for use as a bridge to transplantation, an alternative to transplantation and to support patients who may have an ability to recover the use of their natural heart. In Japan, the device is commercially approved for use in cardiac patients at risk of imminent death from non- reversible left ventricular failure for which there is no alternative except heart transplantation. World Heart Corporation, a global medical device company based in Ottawa, Ontario and Oakland, California, is currently focused on the development and commercialization of pulsatile ventricular assist devices. Its Novacor LVAS (Left Ventricular Assist System) is well established in the marketplace and its next-generation technology, HeartSaverVAD(TM), is a fully implantable assist device intended for long-term support of patients with heart failure. World Heart Corporation's June 30, 2003 unaudited balance sheet shows a total shareholders' equity deficit of about CDN$53 million, while its June 30, 2003, Proforma balance sheet shows a total shareholders' equity deficit of about CDN$69 million. * Richter Launches Strategy to Accelerate its Growth in Quebec -------------------------------------------------------------- Richter, one of Canada's largest independent accounting, business advisory and consulting firms, announced a strategy aimed at enhancing its profile and presence in the Quebec business market. "We have been providing a full range of accounting and related consulting services for many years and in that span we have developed an outstanding reputation in helping entrepreneurial businesses succeed," said John Swidler, managing partner of the Montreal office. "Through the strategy we are announcing today, we look forward to further expanding our French-language clientele and help francophone entrepreneurs in the Greater Montreal region derive even more benefit from Richter's overall expertise, especially in tax, auditing, business advisory and restructuring services." Richter, which has 77 years of experience working mainly with mid- market companies, is the sixth largest accounting firm in Quebec and ninth largest in Canada. The firm is committed to a multi-faceted business strategy in its efforts to provide enhanced service to its current francophone clientele and encourage prospective clients to avail themselves of the firm's professional services. The business plan includes: - The hiring of more senior francophone professionals and partners, adding to a Montreal staff that is largely bilingual; - Increased recruitment of French-language university graduates; - Striking a partnership with top-level advisors, such as HEC Montreal professor Jacques Nantel, whose services were recently retained to provide strategic advice to Richter's retail clients; - A more active participation in Quebec business organizations and university communities; - The implementation of a marketing and communications campaign aimed mainly at mid-market companies. "Richter offers an excellent alternative to the country's "big four" accounting firms," added Robert Zittrer, a senior partner of the firm. "Not only do we provide the same range of business consulting services, we are the undisputed entrepreneurial mid- market company specialists. We have extensive knowledge of many sectors of activity, such as retail, real estate, automotive, textiles and apparel, and an international alliance that enables us to provide our clients with a strong springboard to develop their businesses worldwide. Our goal is to assist entrepreneurs, many of whom own their companies, to grow their businesses by providing a complete range of professional and personalized services that are perfectly tailored to their specific needs." Founded in 1926, Richter currently employs 550 people in its Montreal, Toronto and Calgary offices. The Montreal office has 330 professionals and 42 partners. Richter is well regarded for its excellence of advice in auditing, tax, financial reorganization, insolvency, management consulting, business valuations, corporate finance, litigation support, mergers and acquisitions and wealth management. * BOND PRICING: For the week of November 24 - 28, 2003 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia communications 6.000% 02/15/06 42 AK Steel Corp. 7.750% 06/15/12 67 American & Foreign Power 5.000% 03/01/30 67 AnnTaylor Stores 0.550% 06/18/19 72 Asarco Inc. 8.500% 05/01/25 49 Burlington Northern 3.200% 01/01/45 55 Calpine Corp. 8.625% 08/15/10 73 Coastal Corp. 6.950% 06/01/28 75 Comcast Corp. 2.000% 10/15/29 34 Cox Communications Inc. 0.348% 02/23/21 72 Cox Communications Inc. 2.000% 11/15/29 33 Cummins Engine 5.650% 03/01/98 71 CV Therapeutics 2.000% 05/16/23 69 Delta Air Lines 8.300% 12/15/29 63 Dynex Capital 9.500% 02/28/05 1 Elwood Energy 8.159% 07/05/26 73 Finova Group 7.500% 11/15/09 56 Gulf Mobile Ohio 5.000% 12/01/56 71 Level 3 Communications Inc. 6.000% 09/15/09 68 Level 3 Communications Inc. 6.000% 03/15/10 67 Levi Strauss 11.625% 01/15/08 70 Liberty Media 3.750% 02/15/30 63 Liberty Media 4.000% 11/15/29 67 Mirant Corp. 2.500% 06/15/21 54 Mirant Corp. 5.750% 07/15/07 54 Northern Pacific Railway 3.000% 01/01/47 53 NTL Communications Corp. 7.000% 12/15/08 19 Redback Networks 5.000% 04/01/07 53 Universal Health Services 0.426% 06/23/20 64 US Timberlands 9.625% 11/15/07 59 Viropharma Inc. 6.000% 03/01/07 56 Worldcom Inc. 6.250% 08/15/03 34 Worldcom Inc. 6.400% 08/15/05 34 Worldcom Inc. 6.950% 08/15/28 34 Worldcom Inc. 7.750% 04/01/07 34 Xerox Corp. 0.570% 04/21/18 65 ********* 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. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. 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., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. 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 $675 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 ***