/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040723.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, July 23, 2004, Vol. 8, No. 152 Headlines A.B. DICK COMPANY: Wants Jaspan Schlesinger as Delaware Counsel ABITIBI-CONSOLIDATED: Declares Dividend Payable on September 2 ADELPHIA COMMS: Asks Court to Stay 144 Adversary Proceedings ADVANTA CORP: Fitch Revises Rating Outlook to Positive AIR CANADA JAZZ: Discloses New Senior Executive Appointments AK STEEL CORP: S&P Revises Outlook to Stable from Negative AMERICAN ENERGY: Retains Investor Relations & Corporate Dev't Firm AMERICAN STEAMSHIP: S&P Lowers Counterparty Credit Rating to BB+ AMERICAN WAGERING: Bankr. Judge Stalls Chapter 11 Plan Progress APPLIED DIGITAL: Shareholders Meet Tomorrow in Delray Beach, Fla. AQUILA: S&P Revises CCC+ Corp. Credit Rating to Watch Developing ARMSTRONG HOLDINGS: Plans to Sell Wave Facility to Marine Venture ATMI INC: Second Quarter 2004 Net Income Nears $8 Million BANC OF AMERICA: Fitch Affirms 8 Classes' Low-B Ratings BANK OF AMERICA: Fitch Affirms Low-B Ratings of 6 Classes BMC: Agrees to Sell Buckbee-Mears Assets to International Electron C-BASS SECURITIZATIONS: Fitch Affirms Low-B Ratings of 3 Classes CANDESCENT TECH: Signs-Up Sonsini Goodrich as Corporate Counsel CATHOLIC CHURCH: Wants to Maintain Existing Investment Practices CE SOFTWARE: Reports Q1 Results & Proceeds with Liquidation Plan CENTERPOINT ENERGY: Inks Pact to Sell Texas Genco for $3.65 Bil. CITIZENS COMMUNICATIONS: S&P Lowers Coporate Credit Ratings To BB+ COMMERCIAL CORP: Case Summary & 20 Largest Unsecured Creditors COOPERHEAT-MQS: Team Inc. $35 Mil. Bid Wins in Bankruptcy Auction CORNING INC: Board Approves $750 Million Capital Expenditure Plan COVANTA: Court Directs Covanta Tampa To Issue Status Reports COVANTA ENERGY: Attacks Travelers Insurance's $205 Million Claim CRITICAL HOME: Recurring Losses Trigger Going Concern Doubts CROMPTON CORP: S&P Cuts Outstanding Senior Notes Rating to B+ DEVLIEG BULLARD: Case Summary & 20 Largest Unsecured Creditors DRYDEN VII: S&P Assigns Class B-2L Preliminary Ratings at BB EMERGING VISION: Fog Clears in Board of Directors' Election ENRON CORP: Asks Court to Disallow and Expunge 433 Big Claims FLEMING: C&S Insists on Immediate Performance under Sale Agreement FLINTKOTE COMPANY: Committee Looks to Tersigni for Fin'l Advice FUELNATION: Grants Yugra Holding Exclusive Distribution Rights FURNAS COUNTY: Selling Assets to AFA Acquisition for $50,000,000 GALEY & LORD: Wants Board to Okay Patriarch's Acquisition Plan GEARS LTD: Fitch Assigns Preliminary Low-B Ratings to 2 Classes GENTEK INC: Richard R. Russell Discloses Owns 45,661 Shares GLOBAL WATER: Stock Begins Trading Under New 'GWTR' Symbol HARRAH'S ENTERTAINMENT: Issues 2nd Quarter Financial Results HEXCEL CORP: Reports $89 Million Stockholders' Deficit at June 30 INTERACTIVE MOTOR: Completes Mall Conversions with Checker Flag JOSTENS HOLDING: S&P Places Ratings on CreditWatch Negative JP MORGAN: Fitch Affirms Low-B Ratings of 6 2002-CIBC5 Classes JP MORGAN: Fitch Affirms Low-B Ratings of 6 2002-CIBC4 Classes JP MORGAN: Fitch Affirms Low-B Ratings of 6 2001-CIBC2 Classes KAISER ALUMINUM: Wants Court to Okay Wash. State Condemnation Pact LAM RESEARCH: Net Income Doubles to $52 Million in Second Quarter LOUDEYE CORP: Reports 16 New Customer Contracts to Thwart Piracy LUCENT TECHNOLOGIES: Records $387 Million Net Income in Q3'04 LUCENT TECHNOLOGIES: Fitch Upgrades Sr. Unsecured Debt Rating to B MAC HOUSE: Case Summary & 11 Largest Unsecured Creditors MEDICALCV: Announces Senior Management Shake-Up & Shuffle METROPOLITAN MORTGAGE: Fitch Downgrades Class B-1 Rating to B MICRO EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors MIRANT: Wants to Complete Phase I Key Employee Retention Program MISSION RESOURCES: S&P Places Ratings on CreditWatch Developing NATIONAL CENTURY: Amedisys Takes an Appeal to the District Court NATIONWIDE HEALTH: Appoints Don Bradley Chief Investment Officer NEW HEIGHTS: Committee Hires Lowenstein Sandler as Attorneys NEW WORLD PASTA: Employs KPMG as Accountants and Tax Advisors NOMURA ASSET: Fitch Affirms Low-B Ratings of 2 1996-MDV Classes NORTHERN BERKSHIRE: Fitch Assigns BB+ Ratings to Series 2004 Bonds NORTHWEST AIRLINES: Stockholders' Deficit Widens to $2.4 Billion NORTHWEST AIRLINES: Expands Major Flights from Indianapolis NRG ENERGY: Asks Court's Permission to Assign 15 Contracts to OG&E ORBITAL SCIENCES: Q2'04 Operating Income Rose to $14.5 Million PACIFIC MAGTRON: Ability to Operate Profitably Uncertain PARMALAT: Milk Products Proposes $600,000 Sale Pact Break-Up Fee PEAK ENTERTAINMENT: Revenues Insufficient to Ensure Viability PG&E NATIONAL: Court Approves Tax Agreement Between NEG & USGen PRESIDENT CASINOS: Court Denies Golf Course Re-Zoning Appeal QWEST COMMS: Will Release 2nd Quarter Results on August 3 RCN CORP: Creditors Committee Wants to Retain Chanin as Advisor REDBACK NETWORKS: Reports 45% Net Revenue Increase in 2nd Quarter RELIANCE GROUP: Pension Plan Terminated as of January 31, 2004 RIVIERA HOLDINGS: Reports Record EBITDA Results for 2nd Quarter SAXON ASSET: Fitch Takes 3 Actions on Securities Trust Ratings SIRIUS SATELLITE: Records $136.8 Million Net Loss in 2nd Quarter SK GLOBAL AMERICA: Wants Court to Approve John Roberts Settlement SOLUTIA INC: Court Approves Key Employee Retention Program STELCO INC: Plans to Close Rod Mill in September STILLWATER MINING: S&P Corp Credit Rating Taken Off Watch Negative TAYLOR CAPITAL: Fitch Withdraws BB- Preferred Stock Ratings TEEKAY SHIPPING: Reports $98.5 Million Net Income in 2nd Quarter TERRA INDUSTRIES: To Webcast Q2 Results & Conference on July 29 TESORO PETROLEUM: S&P Raises Corporate Credit Rating to BB+ TRW AUTOMOTIVE: Meets Gov't Regulations on Occupant Vision System U STREET DEVELOPMENT: Voluntary Chapter 11 Case Summary UNIFLEX: Retains Budd & Demaria as Labor & Employment Counsel UNITED AIRLINES: Wants Disallowance of Various Mega Claims USG CORPORATION: Wants to Assume Libertyville Property Lease VIASYSTEMS INC: S&P Affirms Corporate Credit Rating at B VITAL BASICS: Panel Gets Nod to Hire Drummond Woodsum as Counsel W.R. GRACE: Asks Court to Extend Removal Period to December 31 W.R. GRACE: Reports $21.3 Million Net Income in Second Quarter WEIRTON STEEL: Plans To Settle with Independent Guards Union WESTERN PACIFIC: First Creditors Meeting Slated for August 4 WESTPOINT STEVENS: Sells 400 Looms to Coker Ashland for $725,000 WOMEN FIRST: Files Liquidating Chapter 11 Plan in Delaware WORLDCOM INC: Demands Full Payment of Debts from Former CEO * Nixon Peabody Forms New Beverage Alcohol Team * Newman Rejoins Morgan Lewis as Energy Practice Group Partner * BOOK REVIEW: Macy's For Sale ********* A.B. DICK COMPANY: Wants Jaspan Schlesinger as Delaware Counsel --------------------------------------------------------------- A.B. Dick Company, Multigraphics LLC, Interactive Media Group, Inc., and Paragon Corporate Holdings, Inc., ask the U.S. Bankruptcy Court for the District of Delaware for permission to employ Jaspan Schlesinger Hoffman, LLP, as their Delaware counsel. The Debtors selected Jaspan as their Delaware counsel because of the Firm's knowledge and general experience in the field of debtor protection, creditor's rights and business reorganization under Chapter 11 of the Bankruptcy Code. The Debtors are confident that Jaspan has the necessary background to deal effectively with many of the potential legal issues and problems that may arise in the context of their Chapter 11 cases. The Debtors believe that Jaspan is well-qualified and able to represent them in these chapter 11 cases in the most efficient and timely manner. Specifically, Jaspan will: (1) take all actions necessary to protect and preserve the Debtors' estates, including the prosecution of actions on their behalf, the defense of any action commenced against them, the negotiation of disputes in which they are involved, and the preparation of objections to claims filed against their estates; (2) assist the Debtors in all aspects of the disposition of the Debtors' assets, including inventory, leasehold interests and other assets; (3) represent the Debtors at all hearings on matters pertaining to its affairs as debtors-in-possession; and (4) prepare on behalf of the Debtors, all necessary motions, applications, answers, orders, reports, and all other papers in connection with the administration of the their estates. Jaspan will coordinate with the Debtors' primary counsel, Benesch, Friedlander, Coplan & Aronoff, LLP, to avoid duplication of legal services. Jaspan's current customary hourly billing rates are: Partners $350 Associates $250 Paraprofessionals $140 Frederick B. Rosner, Esq., billing $350 per hour, and Laurie Schenker-Polleck, Esq., billing $250 per hour, are the principal attorneys who'll work on A.B. Dick's cases. Headquartered at Niles, Illinois, A.B. Dick Company and its debtor affiliates and subsidiaries -- http://www.abdick.com/-- are presently leading global suppliers to the graphic arts and printing industry, manufacturing and marketing equipment and supplies for the global quick print and small commercial printing markets. The Debtors filed for Chapter 11 protection on July 13, 2004 (Bankr. Del. Case No. 04-12002). Frederick B. Rosner, Esq., at Jaspen Schlesinger Hoffman represents the Debtors in their restructuring efforts. The Debtors reported during its bankruptcy filing that it holds an estimated $10 million to $50 million in assets and more than $100 million in estimated debt. ABITIBI-CONSOLIDATED: Declares Dividend Payable on September 2 -------------------------------------------------------------- Abitibi-Consolidated Inc.'s (NYSE: ABY, TSX: A) Board of Directors has approved a dividend payment to shareholders of record on August 2, 2004, amounting to 2.5 cents per common share, payable on September 2, 2004. Abitibi-Consolidated is a global leader in newsprint and uncoated groundwood (value-added groundwood) papers as well as a major producer of wood products, generating sales of $5.4 billion in 2003. With over 15,000 employees, excluding PanAsia, the Company does business in approximately 70 countries. Responsible for the forest management of 17.5 million hectares, Abitibi-Consolidated is committed to the sustainability of the natural resources in its care. The Company is also the world's largest recycler of newspapers and magazines, serving 17 metropolitan areas with more than 11,200 Paper Retriever(R) collection points and 14 recycling centres in Canada, the United States and the United Kingdom. Abitibi-Consolidated owns or is a partner in 27 paper mills, 22 sawmills, 4 remanufacturing facilities and 1 engineered wood facility in Canada, the U.S., the UK, South Korea, China and Thailand. * * * As reported in the Troubled Company Reporter's June 15, 2004 edition, Standard & Poor's Ratings Services assigned its 'BB' rating to Montreal, Quebec-based Abitibi-Consolidated Co. of Canada's US$200 million floating rate notes due 2011, and US$200 million 7.75% notes due 2011. The notes are unconditionally guaranteed by Abitibi-Consolidated Inc. At the same time, Standard & Poor's affirmed its 'BB' long-term corporate credit rating on Abitibi. The outlook is negative. "The note issue modestly improves Abitibi's liquidity and maturity profile, as it increases availability under the company's revolving credit facility and lengthens the debt repayment schedule," said Standard & Poor's credit analyst Daniel Parker. The ratings reflect Abitibi's high debt levels, heavy exposure to cyclical commodity-oriented groundwood papers, and weak financial performance in the wake of unfavorable industry conditions. The negative outlook reflects the risks to the company of a stronger Canadian dollar, a potential labor dispute if contracts are not successfully renegotiated, and greater-than-expected pressures from structural changes to the newsprint industry. Any of these factors could further impair Abitibi's cash flow protection. Abitibi could be challenged to average the targeted EBITDA interest coverage of 4x and FFO to total debt of 20% through the cycle. Failure to make progress toward these targets in the near term will result in a downgrade. ADELPHIA COMMS: Asks Court to Stay 144 Adversary Proceedings ------------------------------------------------------------ Paul Traub, Esq., at Traub Bonacquist & Fox, in New York, reports that the Adelphia Communications Corporation Debtors diligently obtained tolling agreements from 245 potential avoidance action defendants, thus obviating the need to commence adversary proceedings against these entities. However, despite their efforts, the ACOM Debtors still failed to secure acceptable tolling agreements with numerous other potential avoidance action defendants. Before the passage of the applicable statute of limitation, the ACOM Debtors commenced 144 Adversary Proceedings, hoping to recover more than $500,000,000 of transfers. The ACOM Debtors ask the U.S. Bankruptcy Court for the Southern District of New York to temporarily stay all activity in the 144 Adversary Proceedings. A complete list of the 144 Adversary Proceedings is available at no charge at http://bankrupt.com/misc/AvoidanceActionList.pdf Pending the disposition of their request, the ACOM Debtors deferred completing service of the complaints and related summons to the defendants of the 144 Adversary Proceedings. Based on the correspondence exchanged during the tolling agreement solicitation phase, the ACOM Debtors reasonably expect a deluge of discovery and document requests as soon as service is completed covering a broad range of issues. According to Mr. Traub, imposing a stay on all proceedings in the avoidance actions until the ACOM Debtors determine that it is either necessary or prudent to prosecute the actions, or pending further Court order, is entirely appropriate in the context of ACOM's Chapter 11 cases. Imposing the stay will save the estates from the expense associated with, among other things, responding to the numerous discovery requests. Apart from the incalculable savings that the stay will yield, the ACOM Debtors also believe that the stay will result in administrative and other efficiencies in their Chapter 11 cases. In the event the Court imposes the stay, the ACOM Debtors will put in place appropriate safeguards for the Avoidance Action Defendants: * The ACOM Debtors will serve the complaints and related summons, together with a copy of the subject stay order, on all Avoidance Action Defendants; * During the duration of the stay, all Avoidance Action Defendants would have their answer deadlines extended indefinitely, with the extension terminated only on the ACOM Debtors' delivery of a written notice advising the Avoidance Action Defendants of the termination of the stay and fixing a new answer deadline, which in no event will be less than 30 days after service of the subject termination notice; and * During the duration of the stay, the ACOM Debtors will continue their efforts to evaluate potential available defenses and other matters relating to the Adversary Proceedings. The ACOM Debtors would also use the hiatus to formulate a comprehensive, uniform series of discovery procedures to be employed in all Adversary Proceedings. The ACOM Debtors assure the Court that no Avoidance Action Defendant will be prejudiced by the imposition of the stay. The Defendants will: (i) be spared the necessity of defending the Adversary Proceedings until determined necessary or prudent by the ACOM Debtors; and (ii) benefit from the establishment of a comprehensive, uniform series of discovery procedures to be employed in all Adversary Proceedings. Adelphia Communications Corporation and its more than 200 affiliates filed for Chapter 11 protection in the Southern District of New York on June 25, 2002. Those cases are jointly administered under case number 02-41729. Willkie Farr & Gallagher represents the ACOM Debtors. (Adelphia Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) ADVANTA CORP: Fitch Revises Rating Outlook to Positive ------------------------------------------------------ Fitch Ratings has revised the Rating Outlook on Advanta Corp. to Positive from Stable and affirmed the long-term rating of 'B+'. In conjunction with this action, Fitch has assigned new ratings to Advanta Bank Corp. and has affirmed and withdrawn ratings on Advanta National Bank. A detailed list of affected ratings is available at the end of this release. The affirmation and Outlook revision recognize the improvement in Advanta's core operating performance, which if sustained, could result in a future upgrade of the company's ratings. Since refocusing the company on small business credit card lending, Advanta has been able to achieve stable and improving core- operating results. This improvement can be attributed to Advanta's conscious effort to target more creditworthy customers, which has resulted in lower credit losses on both a coincident and lagged basis. Fitch also views Advanta's capital levels as solid at the current rating level with an expectation that the company will maintain sound risk-adjusted capitalization. While Advanta has established a solid niche in small business credit card lending, Fitch does expect the competitive environment will become more intense in this business segment. Advanta's ability to maintain its business focus and further improve its financial profile will be partly determined by its ability to appropriately adjust to the changes in the competitive environment. Fitch remains concerned with Advanta's outstanding litigation with J.P. Morgan Chase surrounding the sale Advanta's mortgage business in February 2001. While the outcome of this lawsuit remains uncertain, Fitch believes that even an adverse outcome would be manageable from both a capital and liquidity perspective within the current ratings. Fitch is encouraged that Advanta has taken steps to improve the structure of its corporate governance framework. Changes such as adopting new charters for board level committees and comprising audit, compensation and nominating committees solely of independent directors move Advanta toward establishing standards that are more consistent with industry norms. While corporate governance is not currently viewed as a restraint on Advanta's ratings or preventing consideration of an upgrade, Fitch would expect to see additional enhancements in corporate governance structure and evidence that the framework produces functionality that provides benefits to its stakeholders before more meaningful changes in ratings would be considered. Ratings affirmed with Positive Outlook Advanta Corp. --Senior debt 'B+'; --Short-term 'B'. Advanta Capital Trust I --Trust preferred stock 'B-'. Ratings assigned with Positive Outlook Advanta Bank Corp. --Long-term deposits 'BB-'; --Senior debt 'B+'; --Short-term 'B'. Ratings affirmed and withdrawn Advanta National Bank --Long-term deposits 'BB-'; --Senior debt 'B+'; --Subordinated debt 'B'; --Short-term 'B'. AIR CANADA JAZZ: Discloses New Senior Executive Appointments ------------------------------------------------------------ Joseph D. Randell, President and Chief Executive Officer of Air Canada Jazz, announced executive appointments which are effective August 1, 2004. "Our focus during our restructuring process has been to strengthen Jazz and make it a significant competitor in the North American market," said Joseph Randell. "Major milestones like the expansion of our regional jet fleet, our emergence from CCAA and the probability of outside investment makes this the right time to proceed to the next step in Jazz's development. To ensure continued success, we are enhancing our leadership team." Mr. Bill Bredt, Senior Vice President and Chief Operating Officer Mr. Bredt has held many senior leadership positions within the Air Canada organization. He most recently served as Vice President, Network and Revenue Management at Air Canada until he was appointed as President of ZIP Air Inc. last April. Mr. Allan Rowe, Senior Vice President and Chief Financial Officer Mr. Rowe has significant experience as a senior financial executive and has a solid track record of achievement in multibillion-dollar publicly traded companies. Mr. Rowe recently held the position of Chief Financial Officer with Fishery Products International Limited. Prior to this period, Mr. Rowe served in various senior executive roles, including Executive Vice President and Chief Financial Officer, with the Empire Company Inc. (Sobeys Corporation). Mr. Scott Tapson, Vice President, Customer Experience Mr. Tapson has held many senior positions within the former regional carriers of AirBC and Air Ontario. Mr. Tapson's in-depth knowledge of the aviation industry made him a key contributor to the integration of the four regional carriers that created Air Canada Jazz. Mr. Tapson recently held the position of Vice President, Operations and Customer Service with Air Canada Jazz. Ms. Jolene Mahody, Vice President, Corporate Strategy Ms. Mahody began with Air Nova in her role as Finance Controller, and has held various Director level positions within Jazz including Director, Finance, Director Six Sigma and her most recently held position of Director, Commercial and Resource Planning. Mr. Colin Copp, Vice President, Employee Relations Mr. Copp held several key roles at AirBC such as Manager, Flight Dispatch and Regulatory Affairs, Director, Operations, and Vice President, Flight Operations. At Air Canada Jazz, Colin held the position of Director, Flight Operations, Vice President Labor Relations and Corporate Safety, and then during the downsizing associated with the CCAA process, Colin accepted the position of Director, Labour Relations. Headquartered in Saint-Laurent, Quebec Canada, Air Canada -- http://www.aircanada.ca/-- represents Canada's only major domestic and international network airline, providing scheduled and charter air transportation for passengers and cargo. The Company filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and Section 304 petition with the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. AK STEEL CORP: S&P Revises Outlook to Stable from Negative ---------------------------------------------------------- Standard & Poor's Ratings Services revised its outlook on integrated steel producer AK Steel Corp. to stable from negative. Standard & Poor's also affirmed its 'B+' corporate credit and senior unsecured debt ratings on the company and its parent, AK Steel Holding Corp. The Middleton, Ohio-based company has about $1.3 billion in total debt. "The outlook revision reflects the expectation that improved steel industry conditions will remain sustainable well into 2005, which, together with management actions to reduce financial risk, have somewhat reduced pressures on the company as it seeks to renegotiate with its large unions," said Standard & Poor's credit analyst Paul Vastola. Although Standard & Poor's remains concerned that union issues are still in flux at AK Steel, these improvements have reduced the likelihood that management could be pressured to take more drastic actions to close a gap with its peers, most of whom have substantially improved their financial profiles by shedding onerous legacy liabilities in bankruptcy. The ratings on AK Steel reflect its challenged business position due to its relatively small and high-cost position as an integrated steelmaker; its limited diversity and high exposure to the automotive market; its challenge to offset rapidly escalating input costs under its fixed-price contracts; and burdensome legacy costs. These factors overshadow the company's good position in its markets, its high concentration of value-added products and its fair liquidity. AK Steel is a manufacturer of flat-rolled carbon, stainless, and electrical steel that competes in cyclical, capital-intensive markets. AMERICAN ENERGY: Retains Investor Relations & Corporate Dev't Firm ------------------------------------------------------------------ American Energy Production, Inc. (OTCBB:AMEP) retained Consulting For Strategic Growth 1, Ltd. (CFSG), of New York City, an investor relations and corporate development consulting firm, to coordinate the company's corporate and investor communications. "We look forward to working together with CFSG because of their understanding of early stage public companies. CFSG has an outstanding track record of working side-by-side with new and emerging public companies. Our relationship with CFSG is a perfect fit for both our short and long term objectives," said Charles Bitters, Chief Executive Officer of AMEP. Gerald Franz, President of CFSG stated, "We are excited by the market opportunity addressed by the AMEP conversations with senior management and a review of the business plan, we are now convinced that AMEP has the knowledge and specialty products to become a full success." About American Energy Production, Inc. American Energy Production, Inc. -- March 31, 2004 balance sheet shows a stockholders' deficit of $350,914 -- is an oil and gas lease acquisition company. The Company will specialize in acquiring oil and gas leases that have potential for increased oil and natural gas production utilizing new technologies, well work- overs and fracture stimulation systems. American Energy Production, Inc. will acquire oil and gas leases that have proven reserves. The Company will initiate developmental drilling programs to drill new wells on these leases and, if successful, will add oil and gas reserves to the acquired property. American Energy Production, Inc. is involved in three areas of oil and gas operations: Leasing Programs, Production Acquisitions and Drilling with new technologies. American Energy Production, Inc.'s main objective is to find oil and gas leases with upside potential for enhanced production. The Company does this by utilizing the following rules: 1) leases, 2) geology, 3) engineering and 4) mapping from 3-D seismic. * * * Going Concern Uncertainty In its Form 10-Q for the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, American Energy Production, Inc. reports: "As reflected in the accompanying financial statements, the Company has a net loss of $3,011,680 and net cash used in operations of $215,696 for the three months ended March 31, 2004 and a working capital deficiency of $336,687, deficit accumulated during the development stage of $4,722,074 and a stockholders' deficiency of $350,914 at March 31, 2004. The Company is also in default on certain notes to banks and is in the development stage with minimal revenues. The ability of the Company to continue as a going concern is dependent on the Company's ability to further implement its business plan, raise capital, and generate revenues. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. "The time required for us to become profitable is highly uncertain, and we cannot assure you that we will achieve or sustain profitability or generate sufficient cash flow from operations to meet our planned capital expenditures, working capital and debt service requirements. If required, our ability to obtain additional financing from other sources also depends on many factors beyond our control, including the state of the capital markets and the prospects for our business. The necessary additional financing may not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock. "We cannot assure you that we will generate sufficient cash flow from operations or obtain additional financing to meet scheduled debt payments and financial covenants. If we fail to make any required payment under the agreements and related documents governing our indebtedness or fail to comply with the financial and operating covenants contained in them, we would be in default. The financial statements do not include any adjustments to reflect the possible effects on recoverability and classification of assets or the amounts and classification of liabilities which may result from the inability of the Company to continue as a going concern." AMERICAN STEAMSHIP: S&P Lowers Counterparty Credit Rating to BB+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its counterparty credit and financial strength ratings on American Steamship Owners Mutual P&I Assn. Inc. to 'BB+' from 'BBB-' and then removed the ratings from CreditWatch. The outlook is stable. "The downgrade reflects the company's recent operating performance, which was below Standard & Poor's expectations," said Standard & Poor's credit analyst Jason Jones. "Results on policy years 2001 and 2002 deteriorated in 2003, resulting in substantial underwriting losses before the beneficial effects of unscheduled supplementary calls that were made in June 2004." The ability of American Club to make unscheduled calls lends some strength to its capitalization and enabled it to prevent erosion of capital in 2003; however, American Club has recently been over-reliant on this mechanism. The company's growth strategy in recent years has the potential to improve American Club's competitive position in time, but also increases risk in the interim due to high operating leverage and the difficulties of developing infrastructure suitable for a company of larger scale. The recent delay in providing year-end 2003 financials that due to technical problems when new IT systems were implemented illustrates this. Standard & Poor's expects American Club to demonstrate improved operating performance based on maintenance of the modest profit so far on policy year 2003 and reasonable prospects for improvement in policy year 2004. The rating on American Club was placed on CreditWatch with negative implications on May 4, 2004, due to the delay of 2003 financial statements caused by implementation difficulties from the Club's new IT system. The Club has made substantial progress toward correcting the situation. American Club has now filed year- end 2003 statutory financials and has provided Standard & Poor's with draft GAAP financials. Although statutory financials show the Club's risk-based capitalization to be slightly below authorized control levels, Standard & Poor's believes year-end 2003 GAAP capitalization will be substantially higher than statutory surplus because GAAP accounting allows the full amount of assessments announced in June 2004 to be booked in 2003--unlike statutory accounting. The Club is expected to substantially improve its statutory capitalization by year-end 2004, as revenue from the June 2004 supplemental call becomes recognized in statutory revenue and as improved operating performance helps to build retained earnings. AMERICAN WAGERING: Bankr. Judge Stalls Chapter 11 Plan Progress --------------------------------------------------------------- On July 25, 2003, American Wagering, Inc. and its wholly owned subsidiary, Leroy's Horse and Sports Place, Inc., filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code (Bankr. Case No. 03-52529) in the United States Bankruptcy Court for the District of Nevada, Northern Division in Reno, Nevada. Chapter 11 Plan Progress On February 20, 2004, the Debtors filed a Plan of Reorganization and a Disclosure Statement explaining their with the Bankruptcy Court. Bankruptcy Court approval of the applicable Disclosure Statement relating to the Plan was required in order for the Plan to be submitted to impaired creditors and stockholders for approval. On April 8, 2004, the Bankruptcy Court considered the Debtors motion to approve the Disclosure Statement and Plan, and to begin soliciting acceptances of the Plan; the Bankruptcy Court approved the Debtors motion but determined that a competing plan could also be filed. On April 14, 2004, the Debtors filed an Amended Plan and an Amended Disclosure Statement in order to mitigate the effects of any competing plan of reorganization that might be submitted by other parties-in-interest. Copies of the Amended Plan and Amended Disclosure Statement are annexed to the Company's Annual Report for the fiscal year ending January 31, 2004, filed with the Securities and Exchange Commission and available at no charge at: http://www.sec.gov/Archives/edgar/data/1005214/000125529404000141/mainbody.htm Exclusivity Terminated On April 22, 2004, the Bankruptcy Court denied the Debtors' request to preserve their exclusive rights granted under 11 U.S.C. Sec. 1121 to file and solicit acceptances of their Plan. The Bankruptcy Court based its ruling on a representation from a party-in-interest that a competing plan of reorganization and accompanying disclosure statement would be filed. The decision of the Bankruptcy Court will continue to allow competing plans of reorganization to be filed. The Debtors have taken an appeal from the Bankruptcy Court's decision to the Ninth Circuit Bankruptcy Appellate Panel. The Bankruptcy Court has not set any date to consider confirmation of the Debtors' Amended Plan. No competing plan has appeared at the Bankruptcy Court to date. The Debtors' Business Strategy American Wagering, Inc.'s core businesses are: * operating race and sports books through Leroy's; * developing, selling and maintaining race and sports books systems through Computerized Bookmaking Systems, Inc. ("CBS"); and * leasing self-service wagering kiosks through AWI Manufacturing, Inc. ("AWIM"). The Company intends to continue these businesses. The self-service sports wagering kiosk allows the Company to operate profitably in smaller casinos where labor costs have been prohibitive and to achieve improved efficiency at larger casinos. The Company is also developing a non-gaming version of the kiosk that it anticipates will be ready in this fiscal year ending January 31, 2005. In preparation for the kiosk operations, AWI Keno, Inc., a subsidiary of the Company, was renamed AWI Manufacturing, Inc. and Mega$ports, Inc., a subsidiary of CBS, was renamed Contest Sports Systems, Inc. Kiosk operations will be accounted for under either AWIM or CSS depending on whether the particular kiosk is the gaming or non-gaming version. The Company will continue to explore possible new locations for sports and race book facilities, including foreign jurisdictions. It will also continue its review of existing locations in order to close those locations that are not operating efficiently. Based on its strategy, the number of sports and race books operated by Leroy's may decrease in the future due to the closures of unprofitable locations, host properties, or other factors beyond Company control or increase due to the opening of new locations with greater potential for profitability. There is no assurance that the Company will be able to add new locations and/or that any new locations added will be profitable. Liquidity and Capital Resources Management believes that the Company will be able to satisfy its operating cash requirements for at least the next 12 months from existing cash balances and anticipated cash flows assuming resolution of: * a $1.3 million claim asserted by Michael Racusin arising from a judgment he obtained in jury trial; and * a $1.2 million claim asserted by Las Vegas Gaming, Inc., ("LVGI") pursuant to a Feb. 23, 2004, Settlement Agreement; under the terms of the Amended Plan. The Company plans to accumulate cash liquidity during this current year ended fiscal 2005 to fund the purchase of kiosks, possible effects of litigation, seasonality of sports betting, timing of system sales, and the possible effects of legislation to ban wagering on amateur athletic events. The Company has possible negative cash flow exposures due primarily to the Racusin and LVGI judgments. A final claim in the Racusin matter significantly in excess of amount accrued could have a significant negative impact on the Company's existing cash balances and anticipated cash flows. The final claim in the Racusin matter could be determined within the next twelve months and is material to the financial viability of the Company. The Company has minimum cash flow from operations and exposures due to the claims against the Company resulting from two lawsuits referred herein as the Racusin case and the LVGI case and the Chapter 11 Cases. The ultimate disposition and payment of the Racusin claim and the LVGI claim will be determined in the Chapter 11 cases. Payment of claims at accrued amounts and final claims significantly in excess of amounts accrued could have a significant negative impact on the Company's existing cash balances, anticipated cash flows and ability to continue as a going concern. For these reasons, the Company's independent auditors, Piercy Bowler Taylor and Kern, have indicated in their report dated April 15, 2004, included in the 10-KSB for the fiscal year ended January 31, 2004, that they had substantial doubt as to the Company's ability to continue as a going concern. Thomas H. Fell, Esq., at Gordon & Silver, Ltd., in Las Vegas, represents the Debtors in their chapter 11 restructuring. APPLIED DIGITAL: Shareholders Meet Tomorrow in Delray Beach, Fla. ----------------------------------------------------------------- The Annual Meeting of Shareholders of Applied Digital Solutions, Inc., which will be held on July 24, 2004, at 9:00 a.m., Eastern Daylight Savings Time, at the Delray Beach Marriott Hotel, 10 North Ocean Boulevard, Delray Beach, Florida 33483. Shareholders will consider: 1. Election of two directors to hold office until the 2007 Annual Meeting of Shareholders and ratification of the appointment of one director to hold office until the 2006 Annual Meeting of Shareholders and until their successors have been duly elected and qualified; 2. Ratification of the appointment of Eisner LLP as independent auditors of the Company for the year ended December 31, 2004; 3. Approval of an amendment of the Company's 2003 Flexible Stock Plan to increase the number of authorized shares of common stock issuable under the plan from 1,400,000 to 2,600,000 shares; 4. Ratification of options granted to a new director of the Company; and 5. To transact such other business as may properly come before the Meeting or at any adjournment thereof. The Board of Directors has fixed the close of business on May 28, 2004 as the record date for the determination of shareholders entitled to receive notice of the meeting and vote, or exercise voting rights through a voting trust, as the case may be, at the meeting and any adjournments or postponements of the meeting. * * * In its Form 10-K for the fiscal year ended December 31, 2003 filed with the Securities and Exchange Commission, Applied Digital Solutions, Inc., reports: "We are a Missouri corporation and were incorporated on May 11, 1993. Our business has evolved during the past few years. We grew significantly through acquisitions and since 1996 have completed 51 acquisitions. During the last half of 2001 and during 2002, we sold or closed many of the businesses we had acquired that we believed did not enhance our strategy of becoming an advanced technology development company. These companies were primarily telephone system providers, software developers, software consultants, networking integrators, computer hardware suppliers or were engaged in other businesses or had customer bases that we believed did not promote or complement our current business strategy. As of December 31, 2003, our business operations consisted of the operations of five wholly-owned subsidiaries, which we collectively refer to as the Advanced Technology segment, and two majority-owned subsidiaries, Digital Angel Corporation (AMEX:DOC), and InfoTech USA, Inc. (OTC:IFTH) (formerly SysComm International Corporation). As of December 31, 2003, we owned approximately 66.9% of Digital Angel Corporation and 52.5% of InfoTech USA, Inc. "Historically we have suffered losses and have not generated positive cash flows from operations. Excluding the effects of a gain on the extinguishment of debt of $70.1 million, we incurred a consolidated loss from continuing operations of $66.5 million for the year ended December 31, 2003. We incurred consolidated losses from continuing operations of $113.9 million and $188.6 million, respectively, for the years ended December 31, 2002 and 2001, and as of December 31, 2003, we had an accumulated deficit of $413.9 million. Our consolidated operating activities used cash of $11.4 million, $3.9 million and $18 million during 2003, 2002 and 2001, respectively. Digital Angel Corporation has suffered losses and has not generated positive cash flows from operations. Digital Angel Corporation incurred losses during 2003, 2002 and 2001, which are presented below. In addition, its operating activities used cash of $4.7 million, $2.7 million and $3.2 million during 2003, 2002 and 2001, respectively. "The reduced settlement payment of our debt obligations to IBM Credit LLC, the conversion to equity of our obligations under our 8.5% Convertible Exchangeable Debentures, and the sale of 3 million shares of our common stock under our 3 million share offering, have been major factors mitigating concerns that existed about our ability to continue as a going concern. Our profitability and liquidity depend on many factors including the success of our marketing programs, the maintenance and reduction of expenses and our ability to successfully develop and bring to market our new products and technologies. We have established a management plan intending to guide us in achieving profitability and positive cash flows over the twelve months ending December 31, 2003, however, no assurance can be given that such plan will be realized." AQUILA: S&P Revises CCC+ Corp. Credit Rating to Watch Developing ---------------------------------------------------------------- Standard & Poor's Ratings Services said that its 'CCC+' corporate credit rating on Aquila Inc. remains on CreditWatch, but that it is revising the CreditWatch implications to developing from negative. The rating action follows Aquila's announcement that it has initiated the termination process of three prepaid natural gas supply contracts in its unregulated business portfolio. The CreditWatch developing listing indicates that ratings may be raised, lowered, or affirmed. Kansas City, Missouri-based energy provider Aquila has about $2.7 billion of debt. "The revision of the CreditWatch listing to developing from negative reflects the potential for a ratings upgrade depending on the success of Aquila's efforts to settle disputes related to surety bonds with Chubb Corp., St. Paul Travelers Cos Inc., and the successful termination of prepaid gas contracts to municipal utilities in Nebraska and Mississippi," noted Standard & Poor's credit analyst Rajeev Sharma. However, the developing implications also reflect the pending status of the successful termination of the prepay contracts. "Without the successful termination of these gas prepay obligations, ratings remain vulnerable," he continued. Aquila has agreed to pay $485 million to Chubb and $90 million to St. Paul Travelers to settle disputes related to surety bonds covering four prepaid natural gas supply contracts. The settlement further requires that Aquila will provide $25 million in support of the surety bond executed by St. Paul Travelers on another contract and take additional actions in the coming months to support the remaining position under this bond. Due to weak cash flow generation from operations, asset sales have been necessary for Aquila to reduce its debt levels and shore up its balance sheet. Management has executed more than $3.3 billion of asset sales over the past two years. Still, cash flow generation relative to total debt will remain weak and not exceed 10% in the near term. Standard & Poor's will resolve the CreditWatch listing following a meeting with the management of Aquila and a full review of the company's financial profile. ARMSTRONG HOLDINGS: Plans to Sell Wave Facility to Marine Venture ----------------------------------------------------------------- Armstrong Holdings, Inc., and its debtor-affiliates, propose to sell, free and clear of liens, claims and encumbrances, their interest in the land located at 5301 North Point Boulevard in Baltimore County, Maryland, to Marine Venture Properties, LLC, a Maryland limited liability company, and pay a 6% commission to CB Richard Ellis, as real estate broker, out of the sales proceeds. The Property AWI purchased the property in November 1985 for the purpose of building a manufacturing facility. The property is comprised of: (1) 10.43 acres of land that contains a 114,000-square foot manufacturing facility and other improvements; and (2) a 6.56-acre vacant lot located at the north end. The vacant property has never been used or leased by AWI. The improved property is currently leased by AWI to Worthington Armstrong Venture, a joint venture owned by AWI and Worthington Industries, Inc. Wave has outgrown the facility and consequently did not renew the lease on the improved property. The lease will terminate in the fourth quarter of 2004. In January 2004, AWI concluded that it did not anticipate any future need for the property and determined to sell it. Accordingly, in March 2004, AWI employed CB Richard Ellis to provide brokerage services in connection with the sale of the property. Headquartered in Lancaster, Pennsylvania, Armstrong World Industries, Inc. -- http://www.armstrong.com/-- the major operating subsidiary of Armstrong Holdings, Inc., designs, manufactures and sells interior finishings, most notably floor coverings and ceiling systems, around the world. The Company filed for chapter 11 protection on December 6, 2000 (Bankr. Del. Case No. 00-04469). Stephen Karotkin, Esq., Weil, Gotshal & Manges LLP and Russell C. Silberglied, Esq., at Richards, Layton & Finger, P.A., represent the Debtors in in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,032,200,000 in total assets and $3,296,900,000 in liabilities. (Armstrong Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATMI INC: Second Quarter 2004 Net Income Nears $8 Million --------------------------------------------------------- ATMI, Inc. (Nasdaq: ATMI), a supplier of materials and materials packaging to the world's leading semiconductor manufacturers, reported revenues of $61.0 million for the second quarter of 2004, an increase of 52.5% from $40.0 million in the second quarter of 2003, and an increase of 8.9% over $56.0 million in the first quarter of 2004. Continuing operations in the second quarter generated income of $5.8 million. In the second quarter of 2003, income from continuing operations was $0.1 million including a $2.2 million pre-tax asset impairment charge related to the Company's strategic investment portfolio and a $0.4 million charge related to transitioning product lines to a new manufacturing facility. In the first quarter of 2004, continuing operations generated income of $4.0 million. Overall, net income for the second quarter was $7.9 million, which includes $0.06 per diluted share from the performance of discontinued operations, and a gain of $0.01 per diluted share from sale of the life safety systems and fab services operations that closed during the quarter. For the second quarter of 2003, net loss was $2.8 million, or $0.09 per diluted share, which included a loss of $0.09 per diluted share from discontinued operations. Net income for the first quarter of 2004 was $6.1 million, or $0.19 per diluted share, including $0.04 per diluted share from the performance of discontinued operations and a gain of $0.03 per diluted share related to the sale of the gallium nitride business. For the six months ended June 30, revenue from continuing operations totaled $117.0 million, an increase of 51.9% compared with $77.0 million for the first half of 2003. Income from continuing operations was $9.8 million compared with $1.0 million in the same period last year. Overall net income for the first six months of 2004 was $14.0 million which includes $0.09 per diluted share from the performance of discontinued operations, and a gain of $0.04 per diluted share from sale of three of the six discontinued operations. Gene Banucci, ATMI Chairman and Chief Executive Officer, said, "The semiconductor industry continues to increase production of wafers with a second quarter sequential increase of approximately 4% worldwide. This is again slightly higher than ATMI's projections and as a result our revenues continued to ramp aggressively for the third consecutive quarter. It is our expectation that wafer starts will continue to grow in the third quarter, but at a moderated pace." Doug Neugold, ATMI President and Chief Operating Officer, said, "This quarter, our copper businesses continued to perform well and we again achieved strong results in our implant materials and photoresist packaging products. At Semicon West, we introduced several new products and process efficiency solutions in which customers expressed a high level of interest, especially SDS3. Looking forward, we see no slowdown in the pace of technology development. Given our recent qualifications and joint development activities at the 65 nm technology node, we are well positioned to capture future generation advanced interconnect opportunities." Dan Sharkey, ATMI Chief Financial Officer, said, "The second quarter stood out because of record sales of sub-atmospheric gas storage and delivery products, and equally strong flat panel display demand for our materials packaging products. Combined with the resolution of our first quarter expedited delivery issues, this had the expected effect of increasing gross margins to above 50%. On the divestiture front, the second quarter was very busy with deals completed for the sale of our life safety system business, our fab services business, and our epitaxial services business, which closed on July 19th. We are presently engaged in active discussions with multiple parties concerning our remaining discontinued operations, our abatement systems business and our Emosyn smart card venture. We believe we are still on track to have divested all 6 discontinued operations before the end of 2004." ATMI provides specialty materials and materials packaging to the worldwide semiconductor industry. As the Source of Semiconductor Process Efficiency, ATMI helps customers improve wafer yields and lower operating costs. For more information, please visit http://www.atmi.com/ * * * Liquidity and Capital Resources In its Form 10-Q for the quarterly period ended March 31, 2004, filed with the Securities and Exchange Commission, ATMI, Inc. reports: "The Company finances its activities principally through cash from operations, the sale of equity, the issuance of convertible debt securities and various lease and debt instruments. All of the assets and liabilities associated with the discontinued operations are classified as held for sale in the consolidated balance sheets. The Company's working capital increased to $254.5 million at March 31, 2004 from $244.9 million at December 31, 2003, primarily as a result of increased accounts receivable and inventory balances associated with the increased sales in the First Quarter-2004. "ATMI believes that the Company's existing cash and cash equivalents and marketable securities balances, existing sources of liquidity, available lines of credit and anticipated proceeds from disposal of assets and liabilities held for sale will satisfy the Company's projected working capital and other cash requirements through at least the end of 2004. However, management also believes the level of financing resources available to ATMI is an important competitive factor in its industry, and management may seek additional capital prior to the end of that period. Additionally, management considers, on a continuing basis, potential acquisitions of strategic technologies and businesses complementary to ATMI's current business. There are no present definitive agreements with respect to any such acquisitions. However, any such transactions may affect ATMI's future capital needs. In addition, the activities the Company is currently undertaking to exit non-core businesses and reduce its exposure to the cyclical capital equipment spending environment may generate additional sources of liquidity and also affect ATMI's future capital needs." BANC OF AMERICA: Fitch Affirms 8 Classes' Low-B Ratings ------------------------------------------------------- Fitch Ratings affirms Banc of America Securities LLC's commercial mortgage pass-through certificates, series 2003-1, as follows: --$327.7 million class A-1 'AAA'; --$506.2 million class A-2 'AAA'; --$34.9 million class B 'AA'; --$12.9 million class C 'AA-'; --$24.5 million class D 'A'; --$11.6 million class E 'A-'; --$11.6 million class F 'BBB+'; --$11.6 million class G 'BBB'; --$10.3 million class H 'BBB-'; --$21.9 million class J 'BB+'; --$7.7 million class K 'BB'; --$6.5 million class L 'BB-'; --$6.5 million class M 'B+'; --$5.2 million class N 'B'; --$3.9 million class O 'B-'; --$5.9 million class ES-A 'AA'; --$4.3 million class ES-B 'AA-'; --$4.6 million class ES-C 'A+'; --$4.9 million class ES-D 'A'; --$3.4 million class ES-E 'A-'; --$3.4 million class ES-F 'BBB+'; --$3.4 million class ES-G 'BBB'; --$10.4 million class ES-H 'BBB-'; --$1.3 million class SB-A 'BBB+'; --$4.9 million class SB-B 'BBB'; --$11.4 million class SB-C 'BBB-'; --$3.6 million class SB-D 'BB+'; --$7.7 million class SB-E 'BB'. Fitch does not rate the $18.1 million class P, $17.1 million class WB-A, $8.6 million class WB-B, $1.9 million class WB-C or $1.9 million class WB-D certificates. The rating affirmations are the result of stable pool performance and limited paydown since issuance. As of the June 2004 distribution date, the pool's aggregate certificate balance has decreased 1.12% to $1,132.3 million from $1,125.7 million. To date, there have been no loan payoffs or realized losses within the transaction. Fitch reviewed the credit assessments of the Emerald Square Mall (12.7%), Sotheby's Building (11.5%) and the Wellbridge Portfolio (2.9%) loans. Each credit assessed loan is divided into an A and a B note. The A notes, which contribute to the pooled proceeds, remain investment grade. The B-notes, which were structured as stand alone rake classes, are affirmed for the Emerald Square and the Sotheby's Building loans. Fitch does not rate the rake classes for the Wellbridge Portfolio. The Fitch stressed DSCRs are based on a stressed refinance constant using both the current pooled balance (A), and the current whole loan (A+B). The Emerald Square Mall is the largest loan in the pool. It is secured by 563,715 square feet of retail space in North Attleboro, MA. As of year end 2003, the Fitch stressed debt service coverage ratio for the A-note has increased to 1.81 times (x) from 1.69x at issuance. The Fitch stressed DSCR for the whole loan has increased to 1.32x from 1.21x at issuance. Occupancy at YE 2003 was 94%. Sotheby's Building is secured by a 406,110 sf. office building in New York City, NY. As of YE 2003, the Fitch stressed DSCR for the A-note has increased to 1.38x from 1.47x at issuance. The Fitch stressed DSCR for the whole loan has increased to 1.19x from 1.14x at issuance. Occupancy as of YE 2003 was 100%. The Wellbridge portfolio is secured by high-end health and fitness clubs in Minnesota and New Mexico totaling 1,649,751 sf. As of YE 2003, the Fitch stressed DSCR for the A-note has increased to 3.11x from 2.81x at issuance. The Fitch stressed DSCR for the whole loan has increased to 2.05x from 1.86x at issuance. Occupancy at YE 2003 was 99%. The A-note of this credit assessment has been divided into two pari passu notes A1 ($25.5 million) and A2 ($32.9 million). Although the Fitch stressed DSCR is calculated using the whole A-note balance ($58.4 million), only A1 is held in the trust. Currently, there are no delinquent loans or loans in special servicing. BANK OF AMERICA: Fitch Affirms Low-B Ratings of 6 Classes --------------------------------------------------------- Fitch Ratings affirms Bank of America-First Union commercial mortgage pass-through certificates, series 2001-3 as follows: --$194.8 million class A-1 'AAA'; --$608.6 million class A-2 'AAA'; --$50.0 million class A-2F 'AAA'; --Interest-only classes XC and XP AAA'; --$42.6 million class B 'AA'; --$17.1 million class C 'AA-'; --$17.1 million class D 'A+'; --$14.2 million class E 'A'; --$17.1 million class F 'A-'; --$17.1 million class G 'BBB+'; --$14.2 million class H 'BBB'; --$14.2 million class J 'BBB-'; --$29.8 million class K 'BB+'; --$8.5 million class L 'BB'; --$8.5 million class M 'BB-'; --$14.2 million class N 'B+'; --$5.6 million class O 'B'; --$5.6 million class P 'B-'. Fitch does not rate $21.7 million class Q and the subordinate component classes V-1, V-2, V-3, V-4, and V-5 certificates. The rating affirmations reflect consistent performance of the pool and limited paydown of the overall collateral balance. As of the July 2004 distribution date the pool has paid down 3.14% to $1.10 billion from $1.13 billion at issuance. Wachovia, the master servicer, has collected year-end 2003 financials for 88.5% of the loans in the pool. The YE 2003 comparable weighted debt service coverage ratio was 1.36 times (x), a decrease from 1.52x at YE 2002. However, the YE 2003 performance has increased since the 1.34x DSCR reported at issuance. One loan (0.54%) is currently in special servicing. The loan is secured by an apartment complex in Riverdale, GA, and the special servicer is currently working with the borrower to stabilize the property through a forbearance agreement. BMC: Agrees to Sell Buckbee-Mears Assets to International Electron ------------------------------------------------------------------ BMC Industries, Inc. (Pink Sheets:BMMI), has entered into an agreement to sell the assets of its Cortland, N.Y.-based Buckbee- Mears aperture mask and medical stent businesses to International Electron Devices (USA), LLC, a New York limited liability company. Completion of the transaction is subject to approval of the bankruptcy court in connection with BMC's reorganization under Chapter 11 of the United States Bankruptcy Code and satisfaction of certain closing conditions. "This is an exciting opportunity for IED to participate in the aperture mask industry utilizing some of the finest manufacturing technology available in the world," said Sudhir Kaura, managing director of IED. "Despite the recent success of alternative display technologies, we see a significant opportunity to participate in the continued growth of the CRT industry in the developing regions of the world, especially India and China." Mr. Kaura also stated, "Our management team looks forward to working with local community organizations, vendors and customers to reestablish the Cortland facility's previous business position. In the future, we plan to develop other hi-tech photochemically etched parts for automotive, medical and filtration applications." IED has indicated that the company will continue to operate under the trade name Buckbee-Mears, which carries global recognition as a leader in the photochemical machining industry. "Cortland County and the City of Cortland were pleased to work with local management on this project," said Linda Hartsock, executive director of the Cortland County Business Development Corporation. "The BDC salutes the hard work of the local management team that put this deal together. It's been a real team effort, and we were happy to be part of the process. We look forward to continuing to work together to put talented, hard- working employees and a great facility back to work." Previously, in December 2003, BMC announced that it would close the Buckbee-Mears aperture mask business and sell the related assets. BMC continues to operate its Vision-Ease Lens subsidiary. BMC announced on June 23, 2004, that the company and its domestic subsidiaries had filed voluntary petitions for relief under Chapter 11 of the United States Bankruptcy Code in the U.S. Bankruptcy Court for the District of Minnesota, and that BMC had reached an agreement to sell the Vision-Ease Lens business. As previously announced, BMC will use net proceeds from asset sales to repay any outstanding debtor-in-possession financing and a portion of the outstanding indebtedness under its senior secured credit facility. Headquartered in Ramsey, Minnesota, BMC Industries Inc. -- http://www.bmcind.com/-- is a multinational manufacturer and distributor of high-volume precision products in two business segments, Optical Products and Buckbee Mears. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. D. Minn. Lead Case No. 04-43515) on June 23, 2004. Clinton E. Cutler, Esq., at Fredrikson & Byron, P.A., represents the Company in their restructuring efforts. When the Debtor filed for protection from its creditors, it listed $105,253,000 in assets and $164,751,000 in liabilities. C-BASS SECURITIZATIONS: Fitch Affirms Low-B Ratings of 3 Classes ---------------------------------------------------------------- Fitch Ratings has affirmed the following classes from two Credit Based Asset Servicing and Securitization LLC issues: Series 1999-CB2 Group 1 --Classes IA & IA-PO 'AAA'; --Class IM-1 'AA'; --Class IM-2 'A'; --Class IM-3 'BBB'; --Class IB-1 'BB'; --Class IB-2 'B'. Series 1999-CB2 Group 2 --Classes IIA-1 & IIA-2 'AAA'; --Class IIM-1 'AA'; --Class IIM-2 'A'; --Class IIB-1 'BBB+'; --Class IIB-2 'BBB-'; --Class IIB-3 'BB'. Series 2000-CB3 --Class A1-A 'AAA'; --Class M-1 'AA'; --Class M-2 'A'; --Class B 'BBB'. The affirmations on these classes reflect credit enhancement consistent with future loss expectations. Fitch will continue to closely monitor these bonds. CANDESCENT TECH: Signs-Up Sonsini Goodrich as Corporate Counsel --------------------------------------------------------------- Candescent Technologies Corporation wants to employ Sonsini Goodrich & Rosati PC as its special corporate counsel. The Debtor says Sonsini has particular expertise in corporate and securities. The Firm has also served as corporate and securities counsel to the Company for approximately 13 years and is generally familiar with the Company's history, business, and operations. Sonsini Goodrich's will: a. advise the Debtor with respect to securities law and general corporate matters; and certain other matters as the Debtor and Firm deem appropriate, such as labor, commercial litigation, and/or tax matters; and b. advise the Debtor with respect to trademark, copyright, and related intellectual property matters, including the Sale. The Debtor will monitor and manage the distribution of work among their professionals to avoid any unnecessary duplication of effort. The Sonsini Goodrich attorneys that are currently expected to perform these services are: Professional Billing Rate ------------ ------------ Daniel Weiser, Esq. $460 per hour Michael Murphy, Esq. $500 per hour Lawrence Venick, Esq. $335 per hour Headquartered in Los Gatos, California, Candescent Technologies Corp. -- http://www.candescent.com/-- is a supplier of flat panel displays for notebook computers, communications and consumer products. The Company filed for chapter 11 protection on June 16, 2004 (Bankr. N.D. Calif. Case No. 04-53803). Ramon Naguiat, Esq., at Pachulski, Stang, Ziehl, Young, Jones, & Weintraub, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it estimated debts and assets of over $100 million each. CATHOLIC CHURCH: Wants to Maintain Existing Investment Practices ---------------------------------------------------------------- Section 345(a) of the Bankruptcy Code authorizes deposits of investments of money of estates so as to "yield the maximum reasonable net return on such money, taking into account the safety of such deposit or investment." Section 345(b), on the other hand, provides that, with respect to investments other than investments "insured or guaranteed by the United States or by a department, agency, or instrumentality of the United States or backed by the full faith and credit of the United States," the estate, unless the court for cause orders otherwise, must require a bond in favor of the United States secured by the undertaking of a court-approved corporate surety conditioned on, among other things, a proper accounting for and prompt repayment of any money invested. The Archdiocese of Portland in Oregon intends to use its available cash to fund its Chapter 11 case and reorganization. Susan S. Ford, Esq., at Sussman Shank LLP, in Portland, Oregon, argues that investment of the Debtor's cash in strict compliance with the requirements of Section 345(b) is inconsistent with the mandate of Section 345(a). The Debtor believes that as long as investments are restricted in accordance with its current practice, no corporate surety is necessary or required to afford protection to creditors. Under the Debtor's existing cash management practices, the Debtor maintains cash in commercial bank accounts and a separate investment account. Substantially all of the cash in the Debtor's bank accounts earn money market rates of interest or are swept each night into the money market account that earns money market rates of interest. In addition, the Debtor maintains an account that holds short-term investments like commercial paper, government securities, repurchase agreements, auction rate preferred stock, and money market funds rated by Standard and Poor's at A1P1, and Government Securities rated by Standard & Poor's at AAA or greater. Section 345 was amended in 1994 to allow the bankruptcy courts to approve investments other than those strictly permitted by Section 345(b)(1) or (2). Ms. Ford asserts that the continued investment in accordance with the Debtor's historical practices will provide the protection required by Section 345 notwithstanding the absence of a "corporate surety" requirement. Moreover, a bond secured by the undertaking of a corporate surety would be unduly expensive, even if the bond were available, and could off set much of the financial gain derived from investing in private as well as federal or federally-guaranteed securities. Therefore, Ms. Ford contends, cause exists to waive the requirement of a bond or undertaking. Hence, the Debtors seeks the authority of the U.S. Bankruptcy Court for the District of Oregon to maintain existing investment practices. The Archdiocese of Portland in Oregon filed for chapter 11 protection (Bankr. Ore. Case No. 04-37154) on July 6, 2004. Thomas W. Stilley, Esq. and William N. Stiles, Esq. of Sussman Shank LLP represent the debtor in its restructuring efforts. When the debtor filed for chapter 11 protection, it listed estimated assets of $10,000,000 to $50,000,000 and estimated debts of $25,000,000 to $50,000,000. (Catholic Church Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service, Inc., 215/945-7000) CE SOFTWARE: Reports Q1 Results & Proceeds with Liquidation Plan ---------------------------------------------------------------- CE Software, Inc. (OTC:CESF) reported results for its first quarter ended December 31, 2003. CE Software reports a net profit of $99,000 for its first quarter of fiscal 2004 on revenues of $259,000. For the same quarter a year ago, the company reported a net loss of $118,000 on operating revenues of $345,000. "Our net profit for the quarter was primarily the result of the sale of one of our software products," said John S. Kirk, president of CE Software, Inc. "On December 31, 2003 we sold our QuickMail software product to Outspring Software. We announced this sale on January 2, 2004." John S. Kirk continued, "We are continuing to work on the proposed liquidation that was discussed in our press release of April 13, 2004. The company's operations were sold on April 1, 2004 to Startly Technologies, LLC, subject to shareholder approval. For prior press releases, more information, and to ask questions, set your Web browser to http://www3.cesoft.com/home/pressrelease-all.html or write to CE Software, Inc., Shareholder Relations, P.O. Box 65580, W. Des Moines, IA 50265, and ask to be put on the 'shareholder news' mailing list. We have also set up a Web page for shareholder questions and our responses." CE Software, Inc., an Iowa corporation, develops computer software products that enhance communications, connectivity and productivity for businesses and home-based personal computer users for both Windows and Macintosh operating systems. CENTERPOINT ENERGY: Inks Pact to Sell Texas Genco for $3.65 Bil. ---------------------------------------------------------------- CenterPoint Energy, Inc. (NYSE: CNP) and Texas Genco Holdings, Inc. (NYSE: TGN) signed a definitive agreement under which GC Power Acquisition LLC, a newly formed entity owned in equal parts by affiliates of The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group, will acquire Texas Genco, a wholesale electric power generation company, for approximately $3.65 billion in cash. The agreement includes a buy-out of Texas Genco's public shareholders. The transaction, subject to customary regulatory approvals, will be accomplished in two steps. The first step, expected to be completed in the fourth quarter of 2004, involves Texas Genco's purchase of the 19 percent of its shares owned by the public for $47 per share, followed by GC Power Acquisition's purchase of a Texas Genco unit that will be formed to own its coal, lignite and gas-fired generation plants. In the second step of the transaction, expected to take place in the first quarter of 2005 following receipt of approval by the Nuclear Regulatory Commission, GC Power Acquisition will complete the acquisition of Texas Genco, the principal remaining asset of which will then be Texas Genco's interest in the South Texas Project nuclear facility. Total cash proceeds to CenterPoint Energy from both steps of the transaction will be approximately $2.9 billion for its 81% interest in Texas Genco. The transaction has been approved by the board of directors of CenterPoint Energy and by the board of directors of Texas Genco acting upon the unanimous recommendation of a special committee composed of independent members of the Texas Genco Board. "We believe that the sale of Texas Genco is beneficial for both companies," said David M. McClanahan, president and chief executive officer of CenterPoint Energy. "The sale enables CenterPoint Energy to reduce its debt and concentrate on its energy delivery businesses. "I am also pleased that Texas Genco's new owner is backed by some of today's strongest private equity investment firms, which should allow it to build on the firm foundation that the management and employees of Texas Genco have established over the years. Of course it's hard for us at CenterPoint Energy to let go of a business that has been a part of our company for so many years. But under the plan we developed in response to the 1999 Texas electric restructuring law, it is time for CenterPoint Energy to take this step," said Mr. McClanahan. The Blackstone Group, Hellman & Friedman LLC, Kohlberg Kravis Roberts & Co. L.P. and Texas Pacific Group said in a statement: "We have focused extensively on the energy sector and we are excited to purchase Texas Genco, one of the nation's largest independent electric generating companies. Through Texas Genco, we are acquiring high quality coal, nuclear and gas power plants in the rapidly growing Houston market. We look forward to joining with the dedicated employees of a newly-independent Texas Genco to continue to provide outstanding service to Texas Genco's customers while developing the nation's premier independent power generation business." CenterPoint Energy was advised on the transaction by Citigroup Global Markets Inc. and Baker Botts L.L.P., and the special committee of independent directors of Texas Genco was advised by RBC Capital Markets Corporation and Haynes and Boone, LLP. GC Power Acquisition LLC was advised by Goldman Sachs, Deutsche Bank and Morgan Stanley and the law firms Simpson Thacher & Bartlett LLP, Stroock & Stroock & Lavan LLP and Vinson & Elkins LLP. Texas Genco Holdings, Inc., based in Houston, Texas, is one of the largest wholesale electric power generating companies in the United States with over 14,000 megawatts of generation capacity. It sells electric generation capacity, energy and ancillary services in one of the nation's largest power markets, the Electric Reliability Council of Texas (ERCOT). Texas Genco has one of the most diversified generation portfolios in Texas, using natural gas, oil, coal, lignite, and uranium fuels. The company owns and operates 60 generating units at 11 electric power- generating facilities and owns a 30.8 percent interest in a nuclear generating plant. For more information, visit our web site at http://www.txgenco.com/ The Blackstone Group, a private investment and advisory firm with offices in New York, Atlanta, Boston, London and Hamburg, was founded in 1985. The firm has raised a total of approximately $32 billion for alternative asset investing since its formation. Over $14 billion of that has been for private equity investing, including Blackstone Capital Partners IV, the largest institutional private equity fund at $6.45 billion. Blackstone has made private equity investments throughout the energy sector including petroleum refining, oil and gas exploration and coal mining. In addition to Private Equity Investing, The Blackstone Group's core businesses are Private Real Estate Investing, Corporate Debt Investing, Marketable Alternative Asset Management, Corporate Advisory, and Restructuring and Reorganization Advisory. For more information, visit http://www.blackstone.com/ Hellman & Friedman LLC is a San Francisco-based private equity investment firm with additional offices in New York City and London. Since its founding in 1984, the Firm has raised and managed approximately $5 billion of committed capital and invested in over 45 companies. Hellman & Friedman recently completed raising its fifth fund, Hellman & Friedman Capital Partners V, L.P., a $3.5 billion fund. Representative investments include Axel Springer AG (ASV GR), ProSieben Sat.1 AG (PSM GR), Formula One Holdings, Ltd, Arch Capital Group Limited (ACGL), the NASDAQ Stock Market, Inc. (NDAQ), Young & Rubicam, Inc., Western Wireless Corporation (WWCA), Franklin Resources, Inc. (BEN), and others. For more information, visit http://www.hf.com/ Kohlberg Kravis Roberts & Co. L.P. is one of the world's oldest and most experienced private equity firms specializing in management buyouts, with offices in New York, Menlo Park, California, and London, England. For more information, please visit http://www.kkr.com/ Texas Pacific Group, founded in 1993 and based in Fort Worth, TX, San Francisco, CA, and London, is a private investment partnership managing over $13 billion in assets. Over the past several years, TPG has built an industry practice focused on the energy and power sectors (Denbury Resources, Portland General Electric (pending)). Additionally, the firm seeks to invest in world- class franchises across a range of other industries, including airlines (Continental, America West), branded consumer franchises (Burger King, Del Monte, Ducati), leading retailers (Petco, J.Crew, Debenhams - UK), healthcare companies (Oxford Health Plans, Quintiles Transnational), and technology companies (ON Semiconductor, MEMC, Seagate). About the Company CenterPoint Energy, Inc. (Fitch, BB+ Preferred Securities and Zero-Premium Exchange Notes' Ratings, Negative), headquartered in Houston, Texas, is a domestic energy delivery company that includes electric transmission and distribution, natural gas distribution and sales, interstate pipeline and gathering operations, and more than 14,000 megawatts of power generation in Texas, of which nearly 3,000 megawatts are currently in mothball status. The company serves nearly five million customers primarily in Arkansas, Louisiana, Minnesota, Mississippi, Oklahoma, and Texas. Assets total $21 billion. With more than 11,000 employees, CenterPoint Energy and its predecessor companies have been in business for more than 130 years. Visit http://www.CenterPointEnergy.com/for more information. CITIZENS COMMUNICATIONS: S&P Lowers Coporate Credit Ratings To BB+ ------------------------------------------------------------------ Standard & Poor's Ratings Services lowered its ratings on Citizens Communications Co. The corporate credit rating was lowered to 'BB+' from 'BBB'. All ratings are removed from CreditWatch, where they were placed with negative implications on Dec. 11, 2003, following Citizens' announcement of its decision to explore strategic alternatives. The outlook is negative. "The downgrade is based on the concern that Citizens' initiation of a substantial dividend, indicating a distinct shift toward a more shareholder-oriented financial policy, will limit further deleveraging and reduce the company's financial flexibility," explained Standard & Poor's credit analyst Eric Geil. "The smaller resulting financial cushion might hamper Citizens' ability to address rising competitive pressure on its mature local telephone operations." The ratings on Citizens reflect mature industry growth rates, modest access line losses, rising competition from cable TV companies for data and voice services, and declining network access revenue, all of which could exacerbate financial risk given the company's shareholder orientation and commitment to a high dividend payout. Business risk pressures are most apparent in the Rochester, New York market, which accounts for about 20% of total access lines and has suffered from economic softness. Additional concerns include possible longer-term declines in regulatory support and potential increases in rural wireless penetration. Factors mitigating much of this risk include the company's position as a near-monopoly telephone carrier with a relatively stable, high-margin incumbent local exchange carrier business serving about 2.4 million access lines, largely in less competitive rural areas; a currently favorable regulatory environment, which includes subsidies for high-cost, rural carriers; and strong free cash flow generation capability. On July 12, 2004, Citizens announced that it completed its strategic review and will pay a one-time cash dividend of $2 per share, totaling about $676 million, which will be paid on Sept. 2, 2004 from Citizens' cash balance. Based the company's March 31, 2004 cash of $648 million, plus roughly $115 million in quarterly net free cash flow and proceeds forthcoming from the August sale of stock related to the equity unit debt, the company has ample liquidity for this payment. Citizens will also pay a regular $1 per share annual dividend totaling about $338 million, which represents about 73% of the company's expected 2004 free cash flow. In addition, Citizens indicated that it may consider share repurchases, further emphasizing the company's increased shareholder orientation. A commitment to such a substantial dividend could limit meaningful financial profile improvement and give the company minimal cushion to weather potential increases in competitive pressure. COMMERCIAL CORP: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Commercial Corporation fka Kids' Habitat Company 405 Glenn Drive, Suite 9 Sterling, Virginia 20164 Bankruptcy Case No.: 04-13062 Chapter 11 Petition Date: July 19, 2004 Court: Eastern District of Virginia (Alexandria) Judge: Stephen S. Mitchell Debtor's Counsel: Donald F. King, Esq. Odin, Feldman & Pittleman 9302 Lee Highway, Suite 1100 Fairfax, VA 22031 Fax: 703-218-2160 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ David J. Chin $392,517 1051 Northfalls Court Great Falls, VA 22066 Access National Bank $232,000 14006 Lee Jackson Mem. Hwy. Chantilly, VA 20151 Bed Time Inc. $81,095 Rockville Pike Rocca Prop., LLLP $79,000 Lea Industries $32,505 Fair Lakes Center Assoc. LP $27,000 Commonwealth of Virginia $25,000 College Woodwork $24,622 Verizon Information Services $21,864 Capital One $18,805 Md. Dept. of Taxation $12,000 AP Industries $11,525 Capital One $11,000 South Shore Industries $10,940 Brazil Furniture Group, Inc. $10,000 Verizon $7,785 American Woodcrafters $6,233 Central Transport Intl. Inc. $5,946 The Washington Post $5,927 Campbell, Veltri & Clark PLC $4,500 COOPERHEAT-MQS: Team Inc. $35 Mil. Bid Wins in Bankruptcy Auction ----------------------------------------------------------------- Team Inc. (AMEX:TMI) was the successful bidder at an auction to acquire substantially all of the assets of Cooperheat-MQS Inc. and its parent company, International Industrial Services Inc. (together, Sellers) for $35 million in cash, subject to an adjustment for working capital changes to the date of closing. Team expects financing provision through a senior secured financing commitment offered by its primary lender. Team's successful bid is subject to Bankruptcy Court approval at a hearing expected to be held on Aug. 9, 2004, and is subject to certain other customary conditions. Closing is expected to occur within 30 days following Bankruptcy Court approval. Each Team and Sellers may elect to terminate the transaction if closing has not occurred by Sept. 10, 2004. Team is a professional, full-service provider of specialty industrial services. Team's current industrial service offering encompasses on-stream leak repair, hot tapping, fugitive emissions monitoring, NDT inspection, field machining, technical bolting, field valve repair and field heat treating. All these services are required in maintaining high temperature, high pressure piping systems and vessels utilized extensively in the refining, petrochemical, power, pipeline and other heavy industries. Headquartered in Alvin, Texas, Team operates in over 40 customer service locations throughout the United States. Team also serves the international market through both its own international subsidiaries as well as through licensed arrangements in 14 countries. References in this news release to Team include its subsidiaries. Team's common stock is listed on the American Stock Exchange and trades under the ticker symbol "TMI". Cooperheat-MQS is a leading provider of non-destructive testing (NDT) inspection and field heat treating services throughout the U.S., and its projected 2004 revenues are estimated to be approximately $80 million. CORNING INC: Board Approves $750 Million Capital Expenditure Plan ----------------------------------------------------------------- Corning Incorporated's (NYSE: GLW) board of directors has approved a $750 million capital expenditure plan to further expand its liquid crystal display (LCD) glass substrates manufacturing capacity. The majority of the investment will be used to fund the first phase of the new Corning facility in Taichung, Taiwan. In April of this year, Corning announced that its board had approved preliminary funding to develop the facility plans. This first phase of the Taichung facility will add glass melting and finishing capacity capable of producing Generation 5.5 and Generation 6 glass substrates. Corning expects to begin initial manufacturing in Taichung during the third quarter of 2005, with additional capacity continuing to come online through 2006. "Total worldwide flat panel glass demand could triple over the next four years if LCD monitor penetration continues and LCD television emerges as we expect," Wendell P. Weeks, president and chief operating officer, said. "We are increasing capacity to provide our customers with state-of-the-market large-size LCD glass substrates toward which the industry is quickly moving," he said. "We are closely monitoring consumer demand for LCD television, as well as supply chain inventory levels, and we will pace our manufacturing expansions accordingly," Weeks said. As part of this capital expenditure plan, Corning's board also approved preliminary funding for two additional expansion projects: -- Preparation for a second phase of construction at the Taichung facility, which would begin in 2005 and would double the facility's large-generation production. -- Preliminary funding for the expansion of the company's Shizuoka, Japan LCD glass facility. This will add significant capacity capable of producing Generation 5.5, Generation 6 and larger glass substrates. Wednesday's announcement is Corning's third major LCD capital expansion in the past 12 months to support the customer requirements of this growing business. The 2004 portion of this plan is included in Corning's previously announced capital spending forecast of $950 million to $1 billion for this year. Ongoing capacity expansions are also underway at Samsung Corning Precision Glass Co., Ltd., Corning's equity affiliate in South Korea, but are not part of Wednesday's announcement. Worldwide Market Growth Continuing The company continues to believe annual market volume growth for LCD glass could range from 30 percent to 50 percent over the next several years, with 2004 volume growth likely to be at the high end of this range. Weeks said that Corning expects that the LCD glass growth rate will increasingly be driven by LCD television penetration, with total televisions sold in 2004 expected to double over last year's sales of 4.5 million sets. With LCD television prices expected to continue to decline, worldwide LCD television penetration may reach 16 percent of the total television market in 2006. Donald B. McNaughton, senior vice president, Display, said, "Our new Taichung facility will produce large-generation substrates designed to meet the emerging demand for LCD televisions, and larger-size flat-screen desktop monitors and notebook computers which are becoming the choice in both homes and offices." Customer Supply Agreement In a separate announcement Wednesday, Corning said that it has entered into a long-term LCD glass supply agreement with Chi Mei Optoelectronics Corp. of Taiwan to provide Generation 5.5 LCD glass substrates. As part of the agreement, Chi Mei will prepay $510 million to Corning in several installments in 2004 and 2005 for a portion of the contracted purchases. Chi Mei will be able to use the prepayments in the form of credits against glass purchases over the life of the contract. Corning said it will account for the prepayment as a customer deposit liability on the company's balance sheet and has no restrictions on the use of the cash. James B. Flaws, Corning's vice chairman and chief financial officer, said, "The prepayment feature of the contract helps Corning as we are constructing substantial additional capacity to meet the growing industry demand. At the same time, it provides Chi Mei with an assured supply of larger size glass for their new LCD fabrication facility." About Corning Incorporated Corning Incorporated -- http://www.corning.com/-- is a diversified technology company that concentrates its efforts on high-impact growth opportunities. Corning combines its expertise in specialty glass, ceramic materials, polymers and the manipulation of the properties of light, with strong process and manufacturing capabilities to develop, engineer and commercialize significant innovative products for the telecommunications, flat panel display, environmental, semiconductor, and life sciences industries. * * * As reported in the Troubled Company Reporter's March 11, 2004 edition, Standard & Poor's Rating Services assigned its 'BB+' rating to Corning Inc.'s proposed $400 million senior unsecured notes, consisting of a $200 million 10-year and a $200 million 12- year offering under the company's existing shelf registration. At the same time, Standard & Poor's affirmed its 'BB+' corporate credit rating and its other ratings on Corning. Proceeds of the issuance are expected to be used primarily to repay existing debt and for other corporate purposes. The ratings outlook is stable. "While the debt offering is viewed as a mild positive by improving the term structure of Corning's debt profile in addition to already substantial debt reduction, we remain mainly focused on cash flow and earnings improvement by Corning," said Standard & Poor's credit analyst Robert Schulz. Fitch Ratings also assigned a 'BB' rating to Corning Inc.'s proposed debt offering of $400 million of senior unsecured notes, consisting of two tranches of $200 million due 2014 and 2016. The 'B' convertible preferred stock rating is affirmed. According to Fitch, Corning's ratings reflect the strained but improved credit protection measures, negative free cash flow, and stabilizing but still challenging telecommunications end-markets which still comprised 46% of revenue as of December 31, 2003. Also recognized are the company's improved balance sheet and liquidity and leading positions in diverse markets. COVANTA: Court Directs Covanta Tampa To Issue Status Reports ------------------------------------------------------------ Judge Blackshear of the U.S. Bankruptcy Court for the Southern District of New York holds that the Reorganized Covanta Energy Corporation Tampa Debtors -- Covanta Tampa Bay, Inc. and Covanta Tampa Construction, Inc. -- are responsible under the confirmed Covanta Tampa Plan to inform the Bankruptcy Court of the progress made toward: (1) the consummation of the Plan under Section 1101(2) of the Bankruptcy Code; (2) the entry of a final decree under Rule 3022 of the Federal Rules of Bankruptcy Procedure; and (3) the closing of the cases under Section 350. Judge Blackshear directs the Covanta Tampa Debtors -- or another party as the Court may instruct -- to: (a) file within 45 days from July 16, 2004, a status report detailing the actions the Covanta Tampa Debtors took and the progress they made toward the consummation of the Covanta Tampa Plan. Reports will be filed thereafter every January 15, April 15, and October 15 until a final decree has been entered. Following the First Post- Confirmation Status Report, the Covanta Tampa Debtors may, at their option, file the reports together with the reports required to be filed on behalf of Covanta Energy Corporation and certain of its debtor affiliates; (b) file (i) a closing report in accordance with Rule 3022-1 of the Local Bankruptcy Rules for the Southern District of New York and (ii) an application for a final decree, within 15 days after the distribution of any deposit required by the Covanta Tampa Plan or, if no deposit is required, upon the payment of the first distribution required under the Covanta Tampa Plan; and (c) submit the Closing Report, including a final decree closing the case, within six calendar months from the date of the Confirmation Order. Failure to comply with the Order, Judge Blackshear warns, will cause him to convene a post-confirmation status conference on January 19, 2005 at 2:00 p.m. Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 61; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVANTA ENERGY: Attacks Travelers Insurance's $205 Million Claim ---------------------------------------------------------------- Covanta Energy Corporation and its debtor-affiliates have found 58 proofs of claim that assert amounts exceeding what was the company thinks the claimant is owed. Thus, the Debtors ask Judge Blackshear of the U.S. Bankruptcy Court for the Southern District of New York to allow the Overstated Claims in their reduced amounts. The Overstated Claims include: Asserted Reduced Claimant Claim No. Amount Amount -------- --------- -------- -------- AT&T Corporation 4599 $28,879 $14,176 Brown, George 2925 480,906 400,000 DGF Industrial Innovations 898 unspecified 20,248 Juran, David 22 58,120 50,755 Patent Scaffolding Co. 4481 96,319 1,475 Pioneer Communications 1411 22,849 22,241 Public Service Elec. & Gas 3711 20,497 16,837 Shick Tube-Veyor Corp. 3850 32,583 6,300 Travelers Insurance Co. 4412 205,497,534 8,727,526 Transport Int'l Pool 1376 12,521 1,949 Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. (Covanta Bankruptcy News, Issue No. 60; Bankruptcy Creditors' Service, Inc., 215/945-7000) CRITICAL HOME: Recurring Losses Trigger Going Concern Doubts ------------------------------------------------------------ At March 31, 2004, Critical Home Care Inc. had a working capital deficiency of $1,930,000, an accumulated deficit of $11,030,000 and had incurred net losses for the three and six months ended March 31, 2004 of $2,771,000 and $3,077,000, respectively. The Company's recurring losses from operations and its difficulty in generating sufficient cash flow to meet its obligations and sustain its operations raise substantial doubt about its ability to continue as a going concern. The Company's business plan and growth strategy are dependent on working capital. Management has been aggressively seeking to raise additional capital through accounts receivable financing and private sector loans and obtained a loan of $250,000 from a private individual on February 3, 2004, and a bridge loan of $1,500,000 on March 11, 2004. On May 7, 2004, the Company completed a total of $8,000,000 of a Regulation D Private Placement. The Company subsequently sold an additional $245,000 of securities and terminated the Offering. The Company sold an aggregate of 32,980,000 shares at $0.25 per share together with 3,298,000 Class A Warrants exercisable for 7 years at $0.50 per share. The Placement Agent received warrants to purchase 2,298,000 shares, exercisable on a cashless basis for 7 years at $0.50 per share. The Placement Agent also received a 10% sales commission, and reimbursement of out-of-pocket expenses. The Company advanced $5 million of the net proceeds to complete the RKDA Merger; approximately $164,000 of the proceeds was used for the repayment of indebtedness and the balance for working capital. CROMPTON CORP: S&P Cuts Outstanding Senior Notes Rating to B+ ------------------------------------------------------------- Standard & Poor's Ratings Services lowered the ratings on the existing senior notes and debentures of Middlebury, Connecticut- based Crompton Corp. to 'B+' from 'BB-'. The 'BB-' corporate credit rating of this specialty chemicals and polymer products producer is affirmed and the outlook remains negative. The existing notes, which are assigned a recovery rating of '3' and will become secured upon the close of the new revolving credit facility, are now rated one notch lower than the corporate credit rating. The lower rating reflects the notes' disadvantaged position since lenders under the new credit facility retain a first-priority distribution on the collateral in an amount equal to 10% of the company's consolidated net tangible assets. Standard & Poor's also assigned a 'B' rating to proposed tranches of senior unsecured debt totaling $600 million with maturity dates of 2010, 2011, and 2014. The new unsecured notes are rated two notches lower than the corporate credit rating, reflecting the priority of secured debt as well as substantial subsidiary obligations relative to total assets. Standard & Poor's assigned a 'BB-' bank loan rating and its '2' recovery rating to a new secured $250 million revolving credit facility maturing in 2009. The 'BB-' rating is the same as the corporate credit rating; this and the '2' recovery rating indicate that bank lenders can expect a substantial recovery of principal in the event of default. "The ratings on Crompton reflect the vulnerability of its operating margins and earnings to competitive pricing pressures, raw materials costs, and the cyclicality of its markets; and weak cash flow protection measures," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings also incorporate the company's sizable unfunded pension and retirement medical benefit obligations and rubber chemicals litigation. These aspects are somewhat tempered by an array of complementary specialty and industrial chemical products, substantial geographic diversity of sales, improved liquidity, and a manageable debt maturity schedule. Key products include PVC additives, polymerization inhibitors, aluminum alkyl catalysts, EPDM, castable urethane, lubricant additives, and miticides. Markets served include automotive, construction, agriculture, packaging, and industrial rubber. DEVLIEG BULLARD: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: DeVlieg Bullard II, Inc. 10100 Forest Hills Machesney Park, Illinois 61115 Bankruptcy Case No.: 04-12097 Type of Business: The Debtor is a world class provider of a comprehensive portfolio of proprietary machine tools, aftermarket replacement parts, field service and premium workholding products. See http://www.devliegbullard.com/ Chapter 11 Petition Date: July 21, 2004 Court: District of Delaware Judge: Mary F. Walrath Debtor's Counsel: James E. Huggett, Esq. Flaster Greenberg 913 Market Street, 7th Floor Wilmington, DE 19801 Tel: 302-351-1910 Fax: 302-351-1919 Estimated Assets: $10 Million to $50 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ KA-Wood Gear & Machine Special Gear $114,553 Supplier Don E. Ballard Landlord: Rockford $108,688 Facility Lamcam, Inc. Special Precision $103,622 Machine Parts AON Consulting, Inc. Pension Actuaries $96,684 Corporate Property Landlord Frankenmuth $94,484 Facility Oak Leaf II Co. Landlord Twinsburg $79,900 Premium Assignment Corp. Insurance Premium $74,808 Financer Rite Machine Products, Inc. Acme Parts Vendor $73,010 SPZ Machine Parts Supplier $72,031 Blue Cross Blue Shield of MI Group Health $63,989 Insurance The Timken Corp. Bearing Supplier $60,904 SKF Special Bearing Supplier of $58,288 Specialty Bearings Weldex Fabricating, Inc. Components Supplier $53,868 MP Tool & Engineering Co. Tooling Supplier $53,183 Sugar River Machine Shop Supplier of Small $52,343 Machine Precision Parts Abrasive Machinery Co. Precision Ground $40,221 Parts Supplier Rockwell Mfg. Supplier $40,212 Arrow Gear Co. Machine Parts $36,785 Supplier Logan Clutch Corp. Machine Clutch $34,035 Gleason Works Certified Supplier $32,858 of Specialty Gears and Curvic Couplings DRYDEN VII: S&P Assigns Class B-2L Preliminary Ratings at BB ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its preliminary ratings to Dryden VII-Leveraged Loan CDO 2004/Dryden VII-Leveraged Loan CDO 2004 Corp.'s $416.626 million floating- and fixed-rate secured notes due September 2016. The preliminary ratings are based on information as of July 21, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect: -- The expected commensurate level of credit support in the form of subordination to be provided by the notes junior to the respective classes; -- The cash flow structure, which is subject to various stresses requested by Standard & Poor's; -- The experience of the collateral manager; and The legal structure of the transaction, which includes the bankruptcy remoteness of the issuer. Preliminary Ratings Assigned Dryden VII-Leveraged Loan CDO 2004/Dryden VII-Leveraged Loan CDO 2004 Corp. Class Rating Amount (mil. $) X* AAA 4.000 A-1LA AAA 150.000 A-1LB AAA 37.500 A-1L AAA 126.500 A-2L AA 26.000 A-3F A 22.000 B-1L BBB 22.000 B-2L BB 7.500 U combination** AAA 21.126 Preferred shares N.R. 37.600 *Class X note represents fees and expenses owed to the underwriter, with a set payment amount each payment date. **Class U note is rated to return of principal only. The class U note is a combination security of a U.S. government strip CUSIP number 912833 KJ 8 and preferred shares. N.R.-Not rated. EMERGING VISION: Fog Clears in Board of Directors' Election ----------------------------------------------------------- Based on preliminary voting information provided to EVI by its independent inspectors of election, IVS Associates, Inc., Emerging Vision, Inc.'s (OTCBB: ISEE.OB) nominees received 36,013,976 (approximately 56.6%) of the votes cast for the contested election of directors at EVI's 2004 Annual Meeting of Shareholders, held on July 14, 2004. There were 63,582,913 (approximately 90.3%) votes cast at the Annual Meeting out of a possible 70,422,217 outstanding voting shares. Accordingly, EVI reported that it appears that Seymour G. Siegel, Alan Cohen and Harvey Ross have been elected to serve as Class I directors of EVI, for a term of one year expiring in 2005, and Joel L. Gold, Robert Cohen and Christopher G. Payan have been elected as Class II directors of EVI, for a term of two years expiring in 2006. The preliminary results are subject to challenge and review, and the actual official voting results could differ. Christopher Payan, EVI's Chief Executive Officer and one of its directors, stated "Although the results have not yet been officially certified by IVS, we are gratified by what appears, preliminarily, to be a strong endorsement of management's operating strategy and EVI's performance over the past 12 months. We are excited about the industry knowledge and expertise that Messrs. Siegel and Ross, our two new independent directors, bring to the Board, and we look forward to the opportunity to build on EVI's renewed growth and to continue to build value for all shareholders of EVI." Horizons Investors Corp., a wholly-owned company of Benito R. Fernandez (a director of EVI) and owner of 23,726,531 (approximately 33.7%) shares of EVI, initiated the proxy contest for the election of directors and nominated its own slate of five nominees (which included Mr. Fernandez). Based on the preliminary results, Horizons received 27,523,456 (approximately 43.3%) of the votes cast at the Annual Meeting. Horizons has been afforded an opportunity to review the proxy cards and ballots, which review EVI believes will take place within the next few days. Details of the official outcome will be provided in a subsequent press release. About Emerging Vision Emerging Vision, Inc. operates one of the largest chains of retail optical stores, which includes one of the largest franchised optical chains in the United States, with approximately 166 franchised and Company-owned stores located in 19 states, the District of Columbia, Ontario, Canada and the U.S. Virgin Islands, principally operating under the names "Sterling Optical" and "Site for Sore Eyes". At March 31, 2004, Emerging Vision Inc.'s balance sheet showed a stockholders' deficit of $99,000 compared to a deficit of $762,000 at December 31, 2003. ENRON CORP: Asks Court to Disallow and Expunge 433 Big Claims ------------------------------------------------------------- Enron Corporation and its debtor-affiliates ask the U.S. Bankruptcy Court for the Southern District of New York to disallow and expunge 433 Claims because: (a) 317 Claims totaling $23,930,080 have no amount due based on the Debtors' books and records. Among the No Amount Due Claims are: Claimant Claim No. Amount -------- --------- ------ Varde Partners, Inc. 1363500 $1,000,000 Swift Energy Company 1851300 252,462 Lovells 2008100 517,522 Lee Office Products 2293500 218,485 Konkursamt Zurich (Altstadt) 410300 741,126 Kaydon Corporation 136900 3,119,000 JPD Financial Consultants, Inc. 498000 341,226 James Durbin 609100 496,125 IRS 769100 1,376,892 Hitachi Zosen USA, Ltd. 2209600 1,093,860 H Clarkson & Company Limited 2429800 1,138,511 Considar Metals Marketing, Inc. 1410800 1,597,458 Bureau of Customs and Border 2430000 5,991,066 Alcan Aluminum Corporation 1855400 1,307,497 (b) 14 Claims have no claimed amount and no amount is due under the Debtors' books and records; (c) the Claimants to 58 Claims, which aggregate $164,844,677, provided no proof of their claims, including those of: Claimant Claim No. Amount -------- --------- ------ Children's Memorial Hospital 1643500 $1,651,593 EcoElectrica, LP 2074500 100,000,000 Trinidat & Tobago Methanol Co. 557100 62,523,607 (d) 28 Claims, totaling $674,379, were already paid; and (e) 16 Claims, aggregating $13,213,474, were already settled pursuant to a Court Order, including the Claims filed by: Claimant Claim No. Amount -------- --------- ------ Patricia M. Key 2139700 $1,069,397 360 Fiber, Inc. 1401300 2,138,411 360 Networks (USA), Inc. 1401200 903,609 1401100 3,738,810 1401000 3,738,810 (Enron Bankruptcy News, Issue No. 118; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLEMING: C&S Insists on Immediate Performance under Sale Agreement ------------------------------------------------------------------ C&S Acquisition, LLC, and C&S Wholesale Grocers, Inc., represented by Megan N. Harper, Esq., at Landis Rath & Cobb, LLP, in Wilmington, Delaware, ask the U.S. Bankruptcy Court for the District of Delaware to compel Fleming Companies, Inc., and its debtor-affiliates to: (1) immediately pay them an allowed administrative expense claim for $1.4 million as of June 25, 2004, plus interest; and (2) comply with the terms of the Cure Escrow Agreement. C&S also seeks an award of attorney's fees and costs. Ms. Harper explains that C&S has, for an extended period of time, tried to resolve directly with the Debtors the payment issues. However, in the face of the Debtors' continued recalcitrance, C&S has no other option but to seek Court intervention. The Debtors are in breach of the Asset Purchase Agreement and Cure Escrow Agreement. They are, without legal justification, refusing to acknowledge and agree to written instructions to the Cure Escrow Agent, and to remit substantial business revenues rightfully owed to C&S. Most recently, the Debtors denied requests from C&S to issue withdrawal notices of assumption and assignment with respect to certain Acquired Assets, and to seek to reject the agreements as requested by C&S. The Debtors' course of conduct is nothing more than an unlawful attempt to gain leverage over C&S with respect to several disputes not presently before the Court. By this Motion, C&S seeks to "reaffirm its rights" under the Sale Order and the sale agreements, including the allowance and immediate payment of its claim for all amounts currently owed. Furthermore, C&S seeks to compel the Debtors to perform the withdrawal and other acts C&S has properly requested in the exercise of its rights under the sale documents. C&S also seeks to put an end to the Debtors' use of self-help to resolve certain disputes by improperly and prematurely affecting a set-off against amounts admittedly owed to C&S. Executory contracts and unexpired real property leases associated with the Wholesale Distribution Business were among the asset categories the Debtors sold to C&S. The Purchase Agreement requires the Debtors to pay Cure Costs with respect to each Acquired Contracts. The Cure Escrow, funded by $22 million of the Purchase Price, was established for that purpose. The Debtors must pay all Cure Costs "as soon as practicable" following the closing date on each Acquired Contract. Cure Costs are payable from the Cure Escrow only on written instructions from the Debtors to the Escrow Agent. C&S cannot direct the Escrow Agent to make any cure payments absent written instructions from the Debtors. The parties have also agreed that monetary damages will not suffice for a breach of the Cure Escrow Agreement. The fees and expenses of counsel for the prevailing party to any dispute relating to release of escrow property are to be borne by the non-prevailing party. Under letter agreements amending the Purchase Agreement, the parties also agreed that C&S could cause the Debtors to grant accounts receivable credits in an aggregate amount not to exceed $8 million. The FSA Accounts Receivable Compromised Limit was established for the purpose of allowing C&S to negotiate with any contract counterparty to a facility standby agreement for the payment or settlement of the payment of any Cure Costs associated with an FSA. Within two business days of receiving joint notice of an FSA settlement from the Debtors and C&S, the Cure Escrow Agent is required to release cash amounts from the Cure Escrow to be paid under the FSA settlement. The Purchase Agreement further provides that, if the Debtors receive any payment for accounts receivable or trade receivables that accrued after the Initial Closing Date with respect to any Acquired Asset, the Debtors must segregate those payments from their own assets and, within five business days of receipt of the funds, remit the payments to C&S. The Debtors acknowledge that they have no rights or interest with respect to any payments. The Purchase Agreement established an Option Period running from the Initial Closing Date up to six months after the closing during which C&S could elect to include or exclude any Acquired Asset from the sale. However, the Purchase Agreement provides that the Option Period will continue for the time necessary to seek and obtain any supplemental sale orders with respect to the Acquired Assets for which C&S has given an Option Notice. The Debtors have acknowledged this obligation in every "Notice of Assumption and Assignment" served on executory contract and unexpired lease counterparties. During the sale hearing, the Debtors signed a letter amendment to the Purchase Agreement, which gave C&S the right to revoke its request in an Option Notice to have an Acquired Asset transferred to it, its assignee, or a third party purchaser. Once C&S elects to exclude an Acquired Asset previously noticed for assumption and assignment, the Debtors must file and diligently prosecute a request seeking the Court's approval to reject the specified Acquired Asset. Each Notice of Assumption and Assignment, and each Notice of Withdrawal, has made clear that the Debtors have reserved their rights to remove contracts and leases from any given Notice of Assumption and Assignment. On June 18, 2004, C&S issued an Option Notice to the Debtors in accordance with the Purchase Agreement notifying the Debtors that C&S intended to exclude certain Acquired Assets. In part, the Option Notice identifies FSAs that the Debtors are bound by settlement agreement to reject. To date, the Debtors have taken action on the Option Notice only with respect to Strickland Foods, Inc. On July 2, 2004, after the expiration of the initial Option Period, the Debtors filed a Notice of Withdrawal with respect to the Strickland FSA under written instructions from C&S. The Debtors also filed a request seeking authority to reject the contract with Strickland Foods. However, the Debtors, without any legal justification and in violation of the Cure Escrow Agreement and the Purchase Agreement, refused to perform their obligations under the Purchase Agreement to issue written instructions to the Cure Escrow Agent to release funds from the Cure Escrow, and have refused to allow C&S to issue further account receivable credits to FSA contract counterparties from the FSA Accounts Receivable Compromised Limit. The Debtors have also refused to remit business revenues which, under the Purchase Agreement, they acknowledge they have no interest in and which rightfully belong to C&S. Furthermore, the Debtors have refused to act to reject Acquired Assets after appropriate notice from C&S. Ms. Harper tells Judge Walrath that the Debtors' actions have created a significant impediment to C&S's ability to negotiate settlements and close transactions on its Acquired Assets, and have also created "unnecessary tension among the parties." Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) FLINTKOTE COMPANY: Committee Looks to Tersigni for Fin'l Advice --------------------------------------------------------------- The Official Committee of Asbestos Personal Injury Claimants appointed in The Flintkote Company's Chapter 11 cases, sought and obtained approval from the U.S. Bankruptcy Court for the District of Delaware to retain L. Tersigni Consulting, PC, as its accountant and financial advisor. L. Tersigni will provide services including: a. development of oversight methods and procedures so as to enable the Committee to fulfill its responsibilities to monitor the Debtor's financial affairs; b. interpretation and analysis of financial materials, including accounting, tax, statistical, financial and economic data, regarding the Debtor and other relevant parties; c. analysis and advice regarding additional accounting, financial, valuation and related issues that may arise in connection with plan negotiations and otherwise in the course of these proceedings; d. analysis and valuation of prepetition transactions, solvency analysis and preparation of valuations of the Debtor at the time of prepetition transfers. Loreto T. Tersigni will lead the team in this engagement. Mr. Tersigni's billing rate is currently $500 per hour. His associates will bill for their time at these rates: Designation Billing Rate ----------- ------------ Managing Director $475 per hour Director $365 per hour Manager $275 per hour Senior Consultant $205 per hour Headquartered in San Francisco, California, The Flintkote Company is engaged in the business of manufacturing, processing and distributing building materials. The Company filed for chapter 11 protection on April 30, 2004 (Bankr. Del. Case No. 04-11300). Attorneys at Sidley Austin Brown & Wood LLP serve as lead counsel to the Company. James E. O'Neill, Esq., Laura Davis Jones, Esq., and Sandra G. McLamb, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub serve as local counsel to the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $100 million. FUELNATION: Grants Yugra Holding Exclusive Distribution Rights -------------------------------------------------------------- On May 28, 2004, FuelNation Inc. entered into a so-called Frame Agreement providing for: (1) Establishment of Relationship and Procedure for Agreeing Sale Contracts; and (2) the Grant of Exclusive Rights to Distribute Petroleum Products and Petrochemicals in the United States and Europe with Yugra Holding Yugra is a Russian joint stock company, active in the business of the exploration, extraction, refinement and distribution of petroleum products and petrochemicals in Russia. The Frame Agreement provides a basis and framework for the subsequent petroleum product or petrochemicals sale agreements during the term of the Frame Agreement. The initial term of the Frame Agreement is five years, subject to renewal for additional five years at the option of FuelNation. Further, on May 28, 2004, the Company entered into the Contract with Yugra Holding for the delivery of 500,000 MT of gas oil over the twelve months commencing July 2004. The total value of the Contract is approximately $163,500,000. FuelNation Inc. is a Florida-based development stage corporation which was incorporated in Florida in 1993. The company is planning to build and develop a portfolio of real estate assets with our concept of the "Super Store" of Travel Centers across The United States. It has also been engaged in the development of providing real-time e-commerce communications in petroleum marketing and energy services. At September 30, 2003, FuelNation's balance sheet shows a working capital deficit of close to $3 million, and a total shareholders' equity deficit of about $6 million. FURNAS COUNTY: Selling Assets to AFA Acquisition for $50,000,000 ---------------------------------------------------------------- Furnas County Farms and its debtor-affiliates sought and obtained approval from the U.S. Bankruptcy Court for the District of Nebraska to sell substantially all of their assets free and clear of liens, claims, and encumbrances to AFA Acquisition Co., LLC for $50,000,000. The Debtors report that, collectively, they generate $80,000,000 in annual sales; employ 375 workers; and, manage some 430,000 head of swine that require constant monitoring, feeding and care. The Debtors concluded that the best mechanism for maximizing the value of its assets on a going concern basis was through the sale of its assets pursuant to Section 363 of the Bankruptcy Code. Over the past year, the Debtors attempted to locate a qualified buyer for the assets. The Debtors used outside professionals to market their assets and investigated prospective purchasers for the assets. After a thorough investigation, the Debtors and their consultants determined that AFA Acquisition's offer was the highest and best. The Bankruptcy Court agrees. AFA also obtained the right to assume any or all rights under any executory contract or unexpired lease. Headquartered in Columbus, Nebraska, Furnas County Farms is engaged in owning, leasing, operating and managing swine operations. The Company, along with 4 of its debtor-affiliates filed for chapter 11 protection on May 3, 2004 (Bankr. D. Nebr. Case No. 04-81489). James Overcash, Esq., and Joseph H. Badami, Esq., at Woods & Aitken, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed both estimated debts and assets of over $50 million. GALEY & LORD: Wants Board to Okay Patriarch's Acquisition Plan -------------------------------------------------------------- Galey & Lord, Inc., a leading global supplier of denim, khaki and corduroy fabrics for the fashion apparel and uniform markets, has agreed to be acquired by Patriarch Partners, LLC, a New York-based financial firm with approximately $4 billion under management and significant investments in textile industry companies. Galey & Lord's board of directors approved the offer and the company is in the process of presenting the acquisition plan to stakeholders. Financial terms were not disclosed. Galey & Lord is privately held following its emergence from bankruptcy protection in March of 2004. The company's lenders must approve the transaction. "This transaction is an important milestone in the evolution of Galey & Lord, which has taken significant steps to compete in a changing market and amidst increased global competition," said John J. Heldrich, President & C.E.O. of Galey & Lord. "Patriarch Partners is a highly-regarded strategic investor with a proven track record of enhancing the value of companies in our industry," he continued. "They are committed to working with management to execute a long-term vision that will enable us to build toward a successful future. This sends a message to our customers, vendors, employees and strategic partners that the company is taking steps necessary to realize its strategic vision, allowing it to prosper as we move forward." "Galey & Lord has a long history of providing quality, innovation and reliability to a strong customer base that includes all of the major retailers and garment manufacturers in its markets," said Lynn Tilton of Patriarch Partners. "The company is an important player in an industry that continues to undergo major change. "We have held a significant stake in the company's equity and debt for some time. We know the company and feel comfortable with its market position and its strong management team," she continued. "During these challenging times, we are confident in our ability to make a difference. Our goal is not only to help the company achieve stability, but bring to bear the necessary resources for Galey & Lord to achieve long term success." Galey & Lord, Inc. operates domestically and in Canada under two divisions, Swift Denim and Galey & Lord Apparel, and internationally through joint ventures in Europe, North Africa, Asia and Mexico. Its customers include: Gap, Old Navy, Banana Republic, Polo Ralph Lauren, Abercrombie & Fitch, Levi's, Tommy Hilfiger, L.L. Bean, Nautica, Eddie Bauer, Liz Claiborne, Haggar, Land's End, and Tropical Sportswear / Savane, among others. The company is responding to increased low-cost competition by leveraging its historic core competencies as a differentiated, value-added product innovator, while improving production efficiencies and creating competitive advantage via speed to market. About Patriarch Partners Patriarch Partners, LLC manages seven CDOs, two CLOs, and a private equity fund and currently oversees lending to more than 400 companies. Patriarch's assets under management approximate $4 billion, including significant equity positions in over 50 companies. Patriarch has developed a strong reputation for investing in and improving the value of companies during periods of operational, industry and economic turmoil. About Galey & Lord Galey & Lord Apparel is a leading producer of innovative woven sportswear fabrics as a result of its expertise in sophisticated fabric finishing and close design partnerships with its customers. Swift Denim is a leading producer of differentiated and value- added denim products supplying top designers and retailers around the world. Galey & Lord, Inc. and its foreign subsidiaries employ approximately 3,200 employees in the United States in North Carolina, South Carolina, Georgia, and New York. It employs more than 200 employees in its owned foreign operations. The company and its joint venture interests operate in the U.S., Canada, Mexico, Asia, Europe and North Africa. At December 27, 2003, Galey & Lord Inc.'s balance sheet showed a stockholders' deficit of $234,914,000 compared to a deficit of $131,739,000 at December 28, 2002 and a deficit of $212,306,000 at September 27, 2003. GEARS LTD: Fitch Assigns Preliminary Low-B Ratings to 2 Classes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to GEARS Ltd. 2004-A's $2.0 billion asset-backed notes and preferred shares. The preliminary ratings are based on information as of July 21, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect initial credit support from subordination of 7.25% for class A, 5.0% for class B, 3.25% for class C, and 0.50% for class D; an initial reserve account deposit of 1.0% of the initial pool; and excess spread. Excess spread after covering losses will be used to build the reserve account. In addition, the preliminary ratings on the notes and preferred shares are based on the credit quality of the underlying pool of prime automobile loans originated by Bank of America N.A., credit enhancement commensurate with the ratings, and a sound legal structure. This transaction represents Bank of America N.A.'s second term deal in 2004. The first transaction was CARSS Finance L.P. 2004-A, which was a synthetic securitization of Bank of America N.A.'s auto receivables using a credit default swap. Preliminary Ratings Assigned GEARS Ltd. 2004-A Class Rating Amount (mil. $) ----- ------ --------------- A-IO* A-1+ N/A A-P AAA 105.0 A-1 A-1+ 375.4 A-2 AAA 521.7 A-3 AAA 547.2 A-4 AAA 305.7 B-1 AA 22.5 B-2 AA 22.5 C-1 A 17.5 C-2 A 17.5 D-1 BBB 27.5 D-2 BBB 27.5 E-1 BB 5.0 E-2 BB 5.0 * Class A-IO will receive certain fixed payments through March 2005. N/A - Not applicable. GENTEK INC: Richard R. Russell Discloses Owns 45,661 Shares ----------------------------------------------------------- In a regulatory filing with the Securities and Exchange Commission on June 30, 2004, GenTek, Inc.'s President and Chief Executive Officer, Richard R. Russell, disclosed that he directly and beneficially owns 45,661 shares of GenTek common stock at $0 par value per share. The shares include 40,513 restricted shares, which are subject to forfeiture under certain circumstances. Mr. Russell also acquired Stock Options for 2,905 shares at a $36 exercise price. The Options expire on March 19, 2014. Mr. Russell reported that one-third of the Stock Options will vest on March 19, 2005 and an additional one-third will vest on March 19, 2006. The remaining one-third will vest on March 19, 2007. (GenTek Bankruptcy News, Issue No. 35; Bankruptcy Creditors' Service, Inc., 215/945-7000) GLOBAL WATER: Stock Begins Trading Under New 'GWTR' Symbol ---------------------------------------------------------- Global Water Technologies, Inc. (OTC: GWTR), a full-service water treatment and purification company, now trades its securities under the symbol GWTR. Previously, the Company's securities had traded under the symbol GWTRQ, designating that the Company had been in chapter 11 bankruptcy. Due to our emergence from bankruptcy, the symbol reverts to GWTR. The Company's securities are traded on the OTC under the symbol GWTR. The Company further clarified that the bankruptcy proceedings did not affect its securities or shareholder's interests in their securities. About Global Water Technologies Global Water Technologies, Inc. (OTC: GWTRQ) is a water purification and services company with "clearly" innovative technologies, focused on the energy, oil and gas, process, HVAC and municipal markets. The company utilizes its proprietary technologies and services program to increase operating efficiencies, reduce water use and costs through its' comprehensive water management solutions. GWT's products treat over 10 billion gallons of water per day. GWT, through its former subsidiaries, has an established client base of over 500 customers in more than 25 countries worldwide and cumulative revenues in excess of $350 million. Some of these customers include: YORK International, Exelon, U.S. Air Force, DaimlerChrysler, General Electric. The Company filed for Chapter 11 protection on May 14, 2003 (Bankr. Colo. Case No. 03-19278). Robert Padjen, Esq., at Rubner Padjen and Laufer, LLC, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $60,023,000 in total assets and $55,544,553 in total debts. HARRAH'S ENTERTAINMENT: Issues 2nd Quarter Financial Results ------------------------------------------------------------ Harrah's Entertainment, Inc. (NYSE: HET) reported record second- quarter revenues of $1.13 billion, up 4.5 percent from revenues of $1.08 billion in the 2003 second quarter. Property Earnings Before Interest, Taxes, Depreciation and Amortization (Property EBITDA) rose 6.2 percent to a second- quarter record of $301.1 million from Property EBITDA of $283.6 million in the year-earlier period. Second-quarter Adjusted Earnings Per Share increased to a record 79 cents, up 6.8 percent from the 74 cents achieved in 2003's second-quarter. Property EBITDA and Adjusted EPS are not Generally Accepted Accounting Principles (GAAP) measurements but are commonly used in the gaming industry as measures of performance and as a basis for valuation of gaming companies. In addition, analysts' per-share earnings estimates for gaming companies are comparable to Adjusted EPS. Reconciliations of Adjusted EPS to GAAP EPS and Property EBITDA to income from operations are attached to this release. Second-quarter income from operations rose 10.4 percent to a record $202.4 million from $183.3 million in the year-earlier quarter. Second- quarter net income was a record $90.2 million, up 17.6 percent from $76.7 million in the 2003 second quarter. Diluted earnings per share from continuing operations for the 2004 second quarter was 79 cents, 14.5 percent higher than the 69 cents achieved in the 2003 second quarter. Strong Demand, Diversification Drive Growth "The second quarter proved the effectiveness of our unique loyalty strategy, which is focused on the delivery of superior service and recognition to more customers in more markets than any other casino operator," said Gary Loveman, Harrah's Entertainment's president and chief executive officer. "The marketing and technological capabilities we use to promote customer loyalty helped boost cross-market play that benefited our Southern Nevada operations in particular, leading to another quarter of same-store sales growth. We plan to apply these same capabilities to the properties we will add to our portfolio when we close on the Caesars transaction." On July 15, Harrah's signed a definitive agreement to acquire Caesars Entertainment, Inc., which operates 28 casinos, including 17 in the United States. Caesars has a significant presence in Las Vegas, Atlantic City and Mississippi. The transaction is expected to take about a year to complete. Second-quarter 2004 same-store revenues increased 4.6 percent over the year-ago period. Cross-market play -- gaming by customers at Harrah's properties other than their "home" casino -- rose 11.9 percent from the second quarter of 2003. Tracked play -- gaming by customers using the company's Total Rewards player cards -- increased 8.5 percent from the year-ago second quarter. For the 2004 first half, revenues rose 4.6 percent to $2.24 billion from $2.14 billion in the year-ago period. Property EBITDA increased to $588.6 million, up 3.8 percent from $567.3 million in the 2003 first half. Adjusted EPS was $1.55, 4.0 percent higher than the $1.49 achieved in the first six months of 2003. First-half income from operations was $390.4 million, up 4.5 percent from $373.7 million in the 2003 first half. Net income rose 9.0 percent to $172.0 million from $157.8 million in the first six months of 2003. First- half diluted earnings per share was $1.52, up 6.3 percent from $1.43 in the 2003 first half. Among second-quarter highlights: -- The company sold $750 million of unsecured 5.50 percent Senior Notes, due July 2010, in a private-placement transaction. Net proceeds were used to reduce outstanding debt and for general corporate purposes. As part of the transaction, Harrah's became the first major casino company to include a minority investment-banking firm in a debt offering. -- Harrah's also reduced the interest rate, extended the maturity date and increased the borrowing capacity of its bank credit facilities to $2.5 billion from $1.9625 billion; the agreement also allows an increase in the total borrowing capacity up to $3 billion if Harrah's and its bank lenders agree. -- Harrah's hosted the largest World Series of Poker ever, attracting more than 13,000 players who generated a total prize pool of nearly $50 million, more than double the 2003 total. On July 6, ESPN began airing an unprecedented 22 hours of original 2004 World Series programming that is expected to be repeated throughout the year. -- The new permanent casino at Louisiana Downs opened, raising the total number of slot machines at the facility to more than 1,400 and adding significantly enhanced non-gaming amenities for customers. -- Construction began on a $142 million, 450-room luxury hotel tower at Harrah's New Orleans. The 26-story tower is expected to open in early 2006. -- Harrah's received Pennsylvania regulatory approval to buy a 50 percent ownership interest in Chester Downs & Marina, L.L.C., which is licensed to develop a harness-racing facility near Philadelphia. Early in the third quarter, the Pennsylvania Legislature passed and the governor signed a bill allowing up to 3,000 slot machines at each of eight race tracks and four stand-alone slot parlors, with the potential for adding 2,000 more slots at each of those locations. -- The Rhode Island Legislature approved a November referendum on development of a Harrah's-owned casino venture with the Narragansett Tribe in West Warwick. The governor subsequently vetoed the bill, and Harrah's is awaiting further legislative developments. -- The National Indian Gaming Commission approved a seven-year extension of Harrah's management contract for Harrah's Cherokee, which is owned by the Eastern Band of Cherokee Indians. -- Market Metrix, LLC named Harrah's the top-ranked casino operator in the measurement firm's latest quarterly customer-satisfaction survey of 35,000 American consumers. The company's Web site, http://www.harrahs.com/ also received the No. 1 ranking in the Hotel Reservations Web Site category. On July 1, just after the end of the second quarter, Harrah's completed its approximately $1.45 billion acquisition of Horseshoe Gaming Holding Corp., which operates casino-entertainment facilities in Hammond, Indiana; Tunica, Mississippi; and Bossier City, Louisiana. The transaction raised Harrah's U.S. portfolio of owned or managed properties to 28. "Our second-quarter operating results were highlighted by stellar performances at several properties and a continuation of the positive same- store momentum that has gained steam since late last year," Mr. Loveman said. "Those gains were driven by the successful execution of the customer-loyalty strategy that distinguishes Harrah's from other operators. "In particular, continued refinements to our Total Rewards player- card program contributed to the increases in cross-market and tracked play," Mr. Loveman said. "And by the end of the second quarter, we'd completed conversions on almost 90 percent of the slot machines we plan to change to Fast Cash, the coinless slot system that has proven so popular with our players. "There were also several recent developments that position us better than ever to deliver sustainable long-term earnings growth through a variety of means," Mr. Loveman said. "The Horseshoe Gaming acquisition enhances our position as the leading distributor of casino entertainment in the United States -- a position that will benefit the customers of both enterprises. "We were delighted to welcome the more than 7,300 Horseshoe employees to the Harrah's family," Mr. Loveman said. "They've done a terrific job of delivering on the promises the Horseshoe brand makes to its customers, and we look forward to working with and learning from them. "During the second quarter, our industry-leading financial strength and investment-grade credit rating enabled us to sell $750 million of senior notes and increase our bank borrowing capacity," Mr. Loveman said. "We are continuing to grow our existing properties," he said. "During the second quarter, for example, we opened our permanent casino at Louisiana Downs and began construction on a 450-room luxury hotel at Harrah's New Orleans. And we are scheduled to open a 200-room hotel at Harrah's St. Louis later this quarter, adding to the substantially expanded food and beverage facilities that opened in the second quarter. Finally, Harrah's North Kansas City is developing a 206-room hotel tower and casino expansion that will include four new restaurants and a second parking garage. "We're extremely excited about the Caesars transaction, which will solidify our position as the preeminent distributor of casino entertainment," Mr. Loveman said. "We will gain first-class assets in three major markets -- Las Vegas, Atlantic City and Mississippi -- that have stable tax environments and casino-entertainment clusters that draw customers from other areas. "We will combine into one company three of the most storied brands in gaming -- Caesars, Horseshoe and Harrah's, all with a great tradition of success," Mr. Loveman said. "And we'll strengthen our reputation for customer- service excellence by uniting the best management and employee teams in the gaming industry. "We believe there is a big opportunity for us to apply our capabilities to enhance the value of the Caesars assets, deliver long-term gains to shareholders and provide rewarding careers to employees," Mr. Loveman said. "Our employees have enjoyed great successes using those tools, and we believe the Caesars team will be equally successful. "We admire what Caesars' management and employees have accomplished without having access to the industry-leading marketing and technological capabilities that have driven strong same-store sales gains at Harrah's over the past three years," Mr. Loveman said. "We're confident they'll find our capabilities will help them achieve similar results. "In the past three months, we have recorded continued same-store revenue growth, increased earnings, seen a number of potential development projects enter the pipeline, added three premier casinos to our portfolio and announced an acquisition that would double our size and provide superior growth opportunities," Mr. Loveman said. "I believe our future has never looked brighter." Continued strong cross-market play at Harrah's Las Vegas and the Rio and new entertainment attractions in Lake Tahoe propelled Harrah's West Region to record results. Southern Nevada revenues rose 23.2 percent, income from operations gained 54.6 percent and Property EBITDA increased 35.6 percent from the 2003 second quarter. Northern Nevada revenues rose 5.2 percent to a record level from the second quarter last year, while income from operations gained 18.3 percent and Property EBITDA was 14.7 percent higher. "With each Southern Nevada property posting record results and Lake Tahoe performing well, we continue to be enthusiastic about the West Region outlook," said Tim Wilmott, Harrah's chief operating officer. For the 2004 first half, West Region revenues were up 13.4 percent, income from operations rose 38.3 percent and Property EBITDA gained 24.2 percent from the first half of 2003. Results for Harrah's two Atlantic City properties fell due to competition from the city's first new hotel-casino in more than a decade. Second-quarter revenues declined 5.9 percent, income from operations fell 17.3 percent and Property EBITDA decreased 11.4 percent from the year-earlier period. "As the economy continues to improve and we reach the anniversary of the opening of the new competitor facility, we look forward to a return to growth in Atlantic City," Wilmott said. For the first half, East Region revenues declined 2.3 percent, income from operations fell 9.3 percent and Property EBITDA was 4.5 percent lower than in the year-earlier period. The North Central Region's second-quarter results benefited from legislation lowering the gaming-tax rate affecting the Bluffs Run racetrack casino in Iowa. The company had been accruing gaming taxes at a higher rate as it awaited the resolution of the rate issue, and recorded a $3.7 million adjustment of the first-quarter accrual due to the reduction in the tax rate. The company also adjusted its tax accrual for prior periods by $16.6 million, and recorded this component of the adjustment to the write-downs, reserves and recoveries account. The prior-periods component is excluded from Adjusted EPS. Second-quarter North Central Region revenues were flat, while income from operations rose 40.3 percent and Property EBITDA increased 11.3 percent. Strong gains at Harrah's East Chicago and Metropolis facilities offset lower results stemming from the revised operations model implemented at Harrah's Joliet following last year's Illinois tax increase. As a result, combined Illinois and Indiana second- quarter revenues fell 2.1 percent, but income from operations rose 9.3 percent, and Property EBITDA was 8.6 percent higher. The company's two Iowa properties posted record second-quarter results, with revenues 6.8 percent higher than in the year-ago period. Income from operations more than tripled and Property EBITDA increased 66.4 percent due in part to the tax-accrual adjustment. Combined second-quarter revenues at Harrah's two Missouri properties were about level with the 2003 second quarter's, but income from operations declined 21.1 percent and Property EBITDA decreased 10.1 percent. Improved results at St. Louis were more than offset by declines in Kansas City, which faced increased competition due to significant expansions by two of the three competitors in that market. For the 2004 first half, North Central Region revenues were flat, income from operations was 5.5 percent higher and Property EBITDA was down 3.0 percent from the 2003 first half. At Harrah's Louisiana and Mississippi properties, revenues rose 3.8 percent, income from operations increased 2.2 percent and Property EBITDA was 0.5 percent higher than in the year-ago second quarter. The 2004 second quarter included results from Harrah's Shreveport through May 19, when that property was sold to another operator, and from Louisiana Downs, where 900 slot machines were introduced in late May 2003; the total was increased to just over 1,400 in May 2004. "Combined, our New Orleans and Lake Charles, Louisiana, properties posted double-digit gains in revenues and income from operations," Wilmott said. First-half revenues for the South Central properties rose 7.9 percent, income from operations increased 2.3 percent and Property EBITDA was flat compared with the first half of 2003. Managed Properties And Other Items Second-quarter management-fee revenues were down 20.6 percent from the year-ago period due to lower fee schedules associated with contract extensions. Second-quarter development costs rose to $6.1 million from $3.6 million in the 2003 second quarter. Corporate expense was level with the 2003 second quarter. Interest expense was 1.2 percent higher than in the 2003 second quarter. During the second quarter, Harrah's Entertainment made a $10 million endowment to The Harrah's Foundation, a non-profit corporation that provides charitable contributions to qualifying organizations in communities served by Harrah's. The $10 million expense resulting from this action is recorded in write-downs, reserves and recoveries. Also included in write-downs, reserves and recoveries is the $16.6 million adjustment of the prior period gaming tax accruals for the Bluffs Run property resulting from the passage of legislation lowering the gaming-tax rate. The effective income tax rate after minority interest for the 2004 second quarter was 37.1 percent, similar to the full year 2003 and the first quarter of 2004. On July 1, the company's Horseshoe Gaming subsidiary called for redemption of all $535 million of its outstanding 8 5/8 percent Senior Subordinated Notes, due July 2009. Noteholders will receive a redemption price equal to 104.313 percent of the principal amount of the notes, plus accrued and unpaid interest through the redemption date of August 2, 2004. Founded 66 years ago, Harrah's Entertainment, Inc. owns or manages through various subsidiaries 28 casinos in the United States, primarily under the Harrah's brand name. Harrah's Entertainment is focused on building loyalty and value with its valued customers through a unique combination of great service, excellent products, unsurpassed distribution, operational excellence and technology leadership. * * * As reported in the Troubled Company Reporter's July 19, 2004 edition, Fitch Ratings has affirmed the following long-term debt ratings of Harrah's Entertainment and placed the long-term ratings of Caesars Entertainment on Rating Watch Positive. HET --Senior secured debt 'BBB-'; --Senior subordinated debt 'BB+'. CZR --Senior unsecured debt 'BB+'; --Senior subordinated debt 'BB-'. The action follows the July 15, 2004 announcement that HET has reached an agreement to purchase CZR for $9.44 billion comprised of $1.8 billion cash, 66.3 million shares of HET common stock ($3.3 billion), and the assumption of $4.3 billion in debt. This represents an 8.4 times (x) multiple of CZR's estimated 2004 EBITDA of $1.1 billion. One third of the purchase price will be paid in cash and two-thirds in stock. The combined entity will have the capacity to begin reducing debt from free cash flow and asset sales, with the pace of debt reduction contingent on the level of discretionary spending and timing of asset sales. Fitch's Positive Rating Watch of CZR is expected to be resolved by successful completion of the transaction. The rating(s)/ and of outlook would be adversely affected if HET is unable to reduce debt in a timely manner or chooses to pursue additional large- scale debt-financed acquisitions and/or growth projects. HEXCEL CORP: Reports $89 Million Stockholders' Deficit at June 30 ----------------------------------------------------------------- Hexcel Corporation (NYSE/PCX: HXL) reported results for the second quarter of 2004. Net sales for the second quarter of 2004 were $272.2 million as compared to $234.1 million for the second quarter of 2003. In constant currency, revenues for the second quarter of 2004 were $267.2 million, or 14.1%, higher than the second quarter of 2003. Operating income for the second quarter of 2004 was $27.4 million compared to $18.8 million for the same quarter last year. Depreciation expense for the quarter at $13.2 million was $0.3 million higher than the prior year, while business consolidation and restructuring expenses were $0.9 million compared to $0.7 million in the second quarter of 2003. Net income for the quarter was $8.8 million compared to $4.8 million for the same quarter of 2003. After reflecting deemed preferred dividends and accretion, net income available to common shareholders for the quarter was $5.7 million compared to net income of $1.8 million for the second quarter of 2003. Chief Executive Officer Comments Commenting on the quarter's results, Mr. David E. Berges, Chairman, Chief Executive Officer and President, said, "In the second quarter, we again demonstrated the earnings leverage we can obtain from higher sales revenues. Compared to the same period last year, operating income increased by $8.6 million on a revenue gain of $38.1 million and reached 10% of sales for the first time since the third quarter of 1998. Diluted earnings per share were $0.10 for the quarter reflecting not only our improved operating performance, but also lower interest expense and a net $0.9 million increase in equity in earnings due to the improving performance by our joint ventures." Mr. Berges observed, "Year-on-year revenue growth was again led by sales of ballistic reinforcement fabrics used in the manufacture of soft body armor. During the quarter, the Company's major customers received additional contract awards from the U.S. government. The supply chain for these materials is now capacity limited, but the significant order backlog held by the Company's customers suggests that strong production levels will continue for some time. We also had good revenue gains from commercial aerospace, space & defense, wind energy and electronics." Mr. Berges concluded, "With many of our markets on a growth track, we now expect our revenues to marginally exceed the high end of our $1 billion revenue guidance for 2004 and believe we are clearly on target to generate net income for the year." Revenue Trends As in recent quarters, the year-over-year shift in foreign exchange rates has continued to increase revenues compared to prior period actual results. To provide a better understanding of the real underlying trends, we have again provided constant currency revenues in our discussion of revenue trends by market. Actual sales by market segment are provided in Table A. In constant currency, Commercial Aerospace revenues were $112.9 million for the second quarter of 2004, an increase of $11.5 million, or 11.3%, over the revenues in the same quarter of 2003. The year-on-year increase reflects the stabilization in aircraft build rates, a favorable change in mix of aircraft, and the benefit of the new Airbus A380 program. Industrial market revenues for the quarter in constant currency were $90.6 million, an increase of $19.2 million, or 26.9%, compared to revenues of $71.4 million in the second quarter of 2003. The largest portion of this revenue increase came from sales of reinforcement fabrics used in military soft body armor applications. Ballistic revenues were up sharply compared to both the second quarter, 2003 and the first quarter, 2004. Sales to wind energy applications also increased year-on-year, and are expected to continue to contribute growth in the future. Space & Defense revenues in constant currency of $48.4 million were up $0.6 million, or 1.3%, from the second quarter of 2003, despite the termination of the Comanche program that contributed $4.0 million of revenue to the same quarter last year. Year-on- year growth continued to be driven by increased production of the F-22 Raptor, and higher demand for many U.S. and European helicopter and blade replacement programs. Electronics revenues for the quarter in constant currency were $15.3 million compared to the 2003 second quarter revenues of $13.5 million. As noted in previous releases, the Company's electronics product mix continues to shift towards higher-end applications. This focus on advanced technology materials and specialty applications, together with some recovery in industry demand, is contributing to enhanced performance in this market. Other Income/Expense Other expense was $2.0 million for the second quarter of 2004, as the Company recognized a loss on the early retirement of debt and recorded an accrual for certain legal matters. These expenses were partially offset by gains attributable to the sale of securities obtained through a de-mutualization of an insurance company and the sale of surplus land at one of its U.S. plants. In the second quarter of 2003, the Company recognized other income of $3.2 million due to a gain on the sale of certain assets and a gain resulting from the expiration of a contingent liability resulting from the prior sale of a business. Debt Total debt, net of cash, decreased in the quarter by $23.5 million to $422.8 million as of June 30, 2004. During the quarter, the Company received $6.5 million in net proceeds from the sale of surplus land and collected $1.5 million of dividends from an affiliated company, contributing to this net debt reduction. The Company used some of its excess cash on hand to repurchase $11.8 million principal amount of its 9.75% senior subordinated notes, due 2009 (see Table E for the components of net debt). Interest expense during the quarter was $11.9 million compared to $13.9 million in the second quarter of 2003. The decline in interest expense reflects the substantial reduction in total debt during 2003 and continued reductions during the first six months of 2004 (see Table C for details of the components of interest expense). The non-cash deemed preferred dividends and accretion expense relating to the mandatorily redeemable convertible preferred stock was $3.1 million and $3.0 million for the second quarter 2004 and 2003, respectively. Hexcel Corporation is a leading advanced structural materials company. It develops, manufactures and markets lightweight, high- performance reinforcement products, composite materials and composite structures for use in commercial aerospace, space and defense, electronics, and industrial applications. At June 30, 2004, Hexcel Corporation's balance sheet showed a stockholders' deficit of $89.2 million compared to a deficit of $94.1 million at March 31, 2004 and a deficit of $93.4 million at December 31, 2003. * * * As reported in the Troubled Company Reporter's July 12, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Hexcel Corp. to positive from stable. At the same time, Standard & Poor's affirmed its ratings, including the 'B' corporate credit rating, on the advanced structure manufacturer. The firm has approximately $465 million in rated debt outstanding. "The outlook revision reflects an improving financial profile due to lower debt levels and cost reductions, as well as brightening prospects for a recovery in the commercial aerospace industry," said Standard & Poor's credit analyst Christopher DeNicolo. In response to a difficult operating environment, Hexcel instituted a restructuring program, which has led to a $66 million reduction in cash fixed costs. As a result, operating margins have returned to the low teens percent area from low single digits in 2001. The issuance of $125 million in secured notes and $125 million of preferred stock in March 2003, with the proceeds used to reduce debt by a net $90 million, eliminated near-term liquidity concerns and improved the company's capital structure, which remains highly leveraged. Hexcel was able to reduce debt by a further $48 million in 2003 using free cash flows and proceeds from asset sales. As a consequence, debt to EBITDA declined to below 4.5x in 2003 from over 6x in 2002. The return to profitability in the first quarter of 2004 follows several years of losses. INTERACTIVE MOTOR: Completes Mall Conversions with Checker Flag --------------------------------------------------------------- Interactive Motorsports and Entertainment Corporation (OTCBB:IMTS) Chairman and CEO William R. Donaldson reports it completed five mall conversions with Checker Flag Lightning. The mall racing centers that have converted to Checker Flag Lightning, under the terms of the lease assignment and revenue share agreement, between Checker Flag Lightning and IMTS' wholly owned subsidiary Perfect Line, Inc. announced on March 23, are: Mall Location Completion Date ---- -------- --------------- Concord Mills Concord, N.C. May 20 Opry Mills Nashville, Tenn. June 11 Katy Mills Katy, Tex. June 25 Mall of Georgia Buford, Ga. July 13 Riverchase Galleria Birmingham, Ala. July 15 Of the remaining two mall racing centers to convert under the agreement, the company has notified Woodfield Mall in Schaumburg, Ill., of its right to terminate that lease on July 31, 2004, and six of the race simulators are scheduled to be installed in September into a new Checker Flag Lightning mall site at Gurnee Mills, Gurnee, Ill. (located off of I-94 between Chicago and Milwaukee, Wis.). Negotiations are still underway with regard to the final racing center conversion at the Palisades Center, West Nyack, N.Y. Checker Flag Lightning is also on schedule to open its mall merchandise and racing center on August 4 at the new Jordan Creek Town Center in West Des Moines, Iowa. The site will include 8 of the company's race cars simulators under a revenue share agreement. At March 31, 2004, Interactive Motorsports' balance sheet shows a stockholders' deficit of $2,656,988 compared to a deficit of $2,397,995 at December 31, 2003. JOSTENS HOLDING: S&P Places Ratings on CreditWatch Negative ----------------------------------------------------------- Standard & Poor's Ratings Services placed all its outstanding ratings on Jostens Holding Corp. and its indirect subsidiary Jostens Inc., including the companies' 'B+' corporate credit ratings, on CreditWatch with negative implications. Standard & Poor's also placed all its outstanding ratings on Von Hoffmann Corp., as well as those of AKI Holding Corp. and subsidiary AKI Inc., on CreditWatch with negative implications. Negative implications means that the ratings could be lowered or affirmed following the completion of Standard & Poor's review. The CreditWatch placement follows the recent announcement by private equity firm Kohlberg Kravis Roberts & Co. that it intends to recapitalize Jostens and combine it with Von Hoffman Corp. and AKI in a transaction valued at $2.2 billion. "Standard & Poor's expects that the combined entity will be highly leveraged, and that the proposed transaction could result in a weaker financial profile for the combined companies," said Standard & Poor's credit analyst David Kang. "We will continue to monitor developments and will meet with management to discuss the new entity's future capital structure and financial policies before resolving the CreditWatch listing." Minneapolis, Minnesotta-based Jostens is a leading supplier of yearbooks, class rings, graduation products, and photography services. St. Louis, Missouri-based Von Hoffman is a leading manufacturer of case-bound and softcover instructional materials in the U.S. Chattanooga, Tennessee-based AKI is the leading global marketer and manufacturer of cosmetic sampling products--including fragrance, skin care, and makeup samplers. JP MORGAN: Fitch Affirms Low-B Ratings of 6 2002-CIBC5 Classes -------------------------------------------------------------- Fitch Ratings affirms JP Morgan Chase Commercial Mortgage Securities Corporation's commercial mortgage pass-through certificates, series, as follows: --$290.5 million class A-1 'AAA'; --$487.2 million class A-2 'AAA'; --Interest-only classes X-1 and X-2 'AAA'; --$36.4 million class B 'AA'; --$13.8 million class C 'AA-'; --$27.6 million class D 'A'; --$13.8 million class E 'A-'; --$28.9 million class F 'BBB'; --$16.3 million class G 'BBB-'; --$18.8 million class H 'BB+'; --$12.6 million class J 'BB'; --$5.0 million class K 'BB-'; --$5.0 million class L 'B+'; --$8.8 million class M 'B'; --$2.5 million class N 'B-'. Fitch does not rate the $17.6 million class NR. The rating affirmations reflect the consistent loan performance and minimal reduction of the pool collateral balance since issuance. As of the June 2004 distribution date, the pool has paid down 1.9% to $984.8 million from $1.0 billion at issuance. As of year-end 2003, the weighted average debt service coverage ratio for the pool had increased to 1.56 times (x) from 1.52x as of YE 2002 for the same loans. The weighted average DSCR was calculated using financial statements collected by the master servicer, Wachovia Securities, for 68.9% of the loans remaining in the pool. Two loans (0.85%) are currently 30 days delinquent, including the one specially serviced loan (0.75%) in the pool. The delinquent and specially serviced loan is secured by a multifamily property located in Winston-Salem, NC. The special servicer is currently working with the borrower on a possible forbearance agreement. Fitch reviewed the two credit assessed loans in the pool, the Simon Mall Portfolio (10.5%) and the Avion Portfolio (4.7%). Both loans maintain investment-grade credit assessments. The DSCR for each loan is calculated using servicer-provided net operating income less required reserves divided by debt service payments based on the current loan balance using a Fitch-stressed refinance constant. The Simon Portfolio is secured by four regional malls ranging from approximately 390,000 to 1.1 million square feet and located in Ohio, Texas, Indiana, and Wisconsin. The subject loan consists of an A note with a total outstanding principal balance as of June 2004 of $105.0 million and a B note with a current outstanding principal balance of $17.5 million. The 2003 DSCR remains flat at 1.45 times (x). The weighted average in-line occupancy increased to 93.4% as of YE 2003, compared with 89.7% at issuance. The Avion Portfolio is secured by seven suburban office and flex buildings in Chantilly, VA, with a total of 586,466 square feet. The DSCR as of YE 2003 increased to 1.83x, compared with 1.71x at issuance. The weighted average occupancy increased to 95% from 89% during the same period. JP MORGAN: Fitch Affirms Low-B Ratings of 6 2002-CIBC4 Classes -------------------------------------------------------------- Fitch Ratings affirms J.P. Morgan Chase Commercial Mortgage Securities Corporation's commercial mortgage pass-through certificates, series as follows: --$35.2 million class A-1 'AAA'; --$165 million class A-2 'AAA'; --$403.2 million class A-3 'AAA'; --Interest-only classes X-1 and X-2 'AAA'; --$32 million class B 'AA'; --$34 million class C 'A'; --$10 million class D 'A-'; --$24 million class E 'BBB'; --$12 million class F 'BBB-'; --$14 million class G 'BB+'; --$12 million class H 'BB'; --$4 million class J 'BB-'; --$6 million class K 'B+'; --$8 million class L 'B'; --$4 million class M 'B-'. Fitch does not rate $16 million class NR. The rating affirmations reflect the consistent overall loan performance and minimal reduction of the pool collateral balance since closing. As of the July 2004 distribution date the pool has paid down 2.5% to $779.1 million from $798.9 million at issuance. As of year-end 2003, the weighted average debt service coverage ratio for the pool has increased to 1.57 times (x), from 1.51x as of YE 2002 for the same loans. However, the YE 2003 performance has decreased since the 1.85x DSCR reported at issuance. The weighted average DSCR was calculated using financial statements collected as of July 2004 by the master servicer, Midland Loan Services, Inc., for 61.67% of the loans remaining in the pool. Of concern in the transaction are three loans (2.54% of the pool) in special servicing. The first loan (1.09%) is secured by a multifamily property located in Chamblee, GA, a suburb of Atlanta. The special servicer is acquiring the property through a deed-in- lieu, with the transfer set to close at the end of July 2004. The second loan (0.81%), which is secured by a retail property located in Brooklyn Center, MN, became REO in November 2003. While Fitch expects losses associated with these loans, the non-rated Class N is sufficient to absorb them at this time. The third loan in special servicing (0.61%) is current and the special servicer is working resolve errors that caused the special servicing transfer. Fitch reviewed credit assessment of the Highland Mall loan (8.6%). The DSCR for the loan is calculated using borrower provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. Based on its stable to improved performance, the loan maintains an investment grade credit assessment. The Highland Mall loan is secured by a 407,170 square foot retail property located in Austin, TX. The stressed DSCR for the trailing twelve months ending December 2003 was 1.51x compared to 1.47 at issuance. JP MORGAN: Fitch Affirms Low-B Ratings of 6 2001-CIBC2 Classes -------------------------------------------------------------- Fitch Ratings affirms J.P. Morgan Chase Commercial Mortgage Securities Corporation's commercial mortgage pass-through certificates, series as follows: --$18 million class A-1 'AAA'; --$138.8 million class A-2 'AAA'; --$561.4 million class A-3 'AAA'; --Interest-only classes X-1 and X-2 'AAA'; --$38.5 million class B 'AA'; --$38.5 million class C 'A'; --$14.4 million class D 'A-'; --$28.9 million class E 'BBB'; --$12 million class F 'BBB-'; --$25.2 million class G 'BB+'; --$7.2 million class H 'BB'; --$7.2 million class J 'BB-'; --$12 million class K 'B+'; --$4.8 million class L 'B'; --$4.8 million class M 'B-'. Fitch does not rate $17.7 million class NR. The rating affirmations reflect the consistent overall loan performance and minimal reduction of the pool collateral balance since closing. As of the July 2004 distribution date the pool has paid down 3.36% to $929.4 million from $961.7 million at issuance. As of year-end 2003, the weighted average debt service coverage ratio for the pool has decreased to 1.48 times (x), from 1.54 at issuance. The weighted average DSCR was calculated using financial statements collected as of July 2004 by the master servicer, Midland Loan Services, Inc., for 67.3% of the loans in the pool. Of concern are two loans (0.93%) that are in special servicing. The first loan (0.51%) is secured by a retail property located in Ann Arbor, MI. The special servicer successfully bid for the property in a January 2004 foreclosure sale. The borrower, however, is challenging the title transfer, set for August 2004. The second loan (0.42%) is secured by a self-storage facility in Mesa, AZ. A forbearance agreement has been executed and the loan remains current. The largest loan in the pool, Collin Creek Mall (7.72%) maintains an investment grade credit assessment. It is secured by 332,055 square feet of in-line space of a regional mall in Plano, TX. As of year-end 2003, occupancy at the property is 95%. The Fitch stressed debt service coverage ratio has increased to 1.68 times (x) as of YE 2003 from 1.47x at issuance, an improvement of 14.3%. The DSCR for the loan was calculated using borrower provided net operating income less required reserves divided by debt service payments based on the current balance using a Fitch stressed refinance constant. KAISER ALUMINUM: Wants Court to Okay Wash. State Condemnation Pact ------------------------------------------------------------------ On July 13, 2001, the State of Washington, on behalf of the Washington State Department of Transportation, filed multiple condemnation actions in Spokane County Superior Court. The condemnation actions sought to obtain portions of seven different parcels of property owned by Kaiser Aluminum & Chemical Corporation in Mead, Spokane County, Washington for construction of a state highway. The dispute between the parties arose from Washington's condemnation of Parcel 6, comprising 35.2 acres of land. Kimberly D. Newmarch, Esq., at Richards, Layton & Finger, in Wilmington, Delaware, relates that due to the complexity of the issues and the size of the remaining parcel, the Kaiser Aluminum Corporation Debtors and Washington could not agree on the just compensation for the condemned portions of Parcel 6. On September 26, 2001, the parties entered into a stipulation whereby the Debtors, in exchange for $1,157,500, granted Washington possession of the condemned portion of Parcel 6 of the Debtors' property pending determination of just compensation for the condemned properties. Ms. Newmarch states that at the time of the Condemnation Action, Parcel 6 consisted of 452 acres of undeveloped vacant land located immediately to the north of Parcel 1 -- on which the Debtors' former Mead aluminum reduction facility is located -- and traditionally acted as a buffer to the Mead aluminum reduction smelter from other developed property in the vicinity of the smelter. The Debtors and Washington submitted the condemnation dispute regarding Parcel 6 to mediation on May 6, 2004. The mediation resulted in a settlement of the Condemnation Action. Under the Settlement Agreement, Washington will pay $3,921,250 -- in addition to the $1,157,500 previously paid -- to the Debtors for the condemned portions of Parcel 6 and the loss of access to the state highway from the remainder of Parcel 6, in full settlement of all claims for just compensation upon payment of the additional proceeds. Upon final payment and approval by the Court, Washington will become the owner of the condemned property and all related property rights. On May 26, 2004, subject to and pursuant to the Settlement Agreement, the Superior Court of the State of Virginia approved a stipulated judgment reflecting the settlement and the terms of the Settlement Agreement, including the requirement of Bankruptcy Court approval. Washington paid the additional compensation into the registry of the Court. The Debtors ask the U.S. Bankruptcy Court for the District of Delaware to approve the Settlement Agreement pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure. Ms. Newmarch maintains that the amounts to be paid pursuant to the Settlement Agreement are more than fair given the nature and location of the condemned property and the values obtained recently for various other parcels in the vicinity. In addition, the imposition of the Debtors' personnel and the immediate collection of the amounts upon consummation of the Settlement Agreement warrant settlement with Washington. Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 46; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAM RESEARCH: Net Income Doubles to $52 Million in Second Quarter ----------------------------------------------------------------- Lam Research Corporation (Nasdaq:LRCX) reported earnings for the quarter ended June 27, 2004. Revenue for the period was $329.6 million, and net income was $52.7 million compared to revenue of $231.1 million and net income of $19.2 million for the March 2004 quarter. Gross margin and operating expenses for the June 2004 quarter were $159.2 million and $90.7 million, respectively. The Company believes the presentation of ongoing results, which excludes certain special items, is useful for analyzing ongoing business trends. This presentation removes the effects of CMP impairment charges, net gains associated with the early retirement of the Company's 4% notes and the related interest rate swap, and prior period expense recognition connected with the Company's outsourcing strategy and consolidation. Tables that provide reconciliations of ongoing performance to results under U.S. Generally Accepted Accounting Principles (GAAP) are included at the end of this press release. Ongoing net income increased by 159 percent, driven by sequential revenue growth in excess of 42 percent combined with the leverage from the Company's business model. Ongoing gross margin for the June 2004 quarter was 49 percent of revenue due to volume growth, continued expense control, and improved utilization of factory and field resources. In the period, ongoing operating expenses increased to $90.1 million, primarily due to planned increases in variable compensation and investments in information systems. Ongoing net income of $51.5 million in the June 2004 quarter compares with ongoing net income of $19.9 million for the previous quarter. Continued growth in capital investment by semiconductor manufacturers resulted in new orders of $408 million, which represent a 17 percent increase over the prior period. The geographic distribution of new orders as well as revenue is shown in the following table: Region New Orders Revenue ------ ---------- ------- North America 18% 14% Europe 10% 16% Japan 10% 12% Asia Pacific 62% 58% Cash, short-term investments and restricted cash balances totaled $541.9 million at the end of June. Earnings leverage and the Company's continuing focus on working capital management generated cash flow from operating activities of approximately $82 million during the quarter. As planned, the Company settled its interest rate swap and repaid its 4% convertible notes in June 2004, two years prior to maturity, resulting in a net cash outlay of $292.1 million. Deferred revenue and profit balances were $196.9 million and $108.4 million, respectively, and backlog was $402.9 million at the end of the quarter. "The June quarter's financial results clearly indicate that our business model delivers the performance that we predicted, and this model will maximize our profit and cash generation over the course of an entire cycle," stated James W. Bagley, chairman and chief executive officer of Lam. "The growth in revenue and bookings substantiates the market position gains that we have described throughout the downturn. Our financial achievement and our success in the etch market are the products of outstanding performance by our employees," Bagley concluded. Lam Research Corporation is a major supplier of wafer fabrication equipment and services to the world's semiconductor industry. Lam's common stock trades on the Nasdaq National Market under the symbol LRCX. The Company's World Wide Web address is http://www.lamrc.com/ * * * As reported in the Troubled Company Reporter's June 24, 2004 edition, Standard & Poor's Ratings Services revised its outlook on Fremont, Calif.-based LAM Research Corp. to stable from negative. Ratings, including the 'BB-' corporate credit rating, were affirmed. The outlook change reflects recently improving operating performance, a function of cyclically recovering markets and stepped-up semiconductor capital investment. LAM's financial profile has also improved with the calling of the company's subordinated convertible bond for cash on June 7, eliminating its sole remaining piece of outstanding funded debt. LAM Research has a leading share of a niche segment of the semiconductor capital equipment market. The company's tools deposit, etch, and polish microscopically thin layers on the surface of silicon wafers. Competitors include the diversified Applied Materials Inc. and Tokyo Electron Limited. "The ratings reflect LAM's narrow business focus and limited profitability base within the highly volatile semiconductor capital equipment market, as well as the company's leveraged financial profile," said Standard & Poor's credit analyst Joshua Davis. "These factors are offset, in part, by LAM's leadership market position in its niche segment, combined with adequate financial flexibility deriving from its liquid financial profile." LOUDEYE CORP: Reports 16 New Customer Contracts to Thwart Piracy ---------------------------------------------------------------- Loudeye Corp. (Nasdaq: LOUD), the worldwide leader in business-to- business digital media solutions, reports 16 new customer contracts for its Overpeer services with estimated value worth several million dollars over the life of the contracts. The new contracts more than double the current revenue run rate of Loudeye's Overpeer business compared to the revenue run rate prior to Loudeye's acquisition of Overpeer, Inc. "There are billions of illicit transactions occurring every month on peer-to-peer networks around the world and this number is growing weekly. That translates into billions of dollars of lost revenue and signals a critical demand for content owners to take immediate action to protect their content," said Jeff Cavins, Loudeye's president and chief executive officer. "These recent customer wins, and the overall demand we've seen for our anti- piracy solutions among new customers, are significant endorsements to the strength of our Overpeer service in protecting copyrighted works from widespread illicit sharing." Loudeye's new customers in its Overpeer business represent major content owners across the music, film/video, game and software industries. The addition of new customers, as well as the expansion of current contracts, demonstrates the growing importance and urgency in deploying anti-piracy strategies among content owners. In response to the increasing demand, Loudeye has taken a number of steps in past months to enhance the capabilities and reach of its piracy protection solutions including: -- Supporting all of the most popular P2P protocols. Loudeye's Overpeer solutions cover more than 90% of traffic on the major peer-to-peer networks worldwide -- Tripling the infrastructure supporting its Overpeer service, to provide the highest level of protection in the industry -- Introducing guaranteed anti-piracy performance, including Overpeer Titanium, the industry's first anti-piracy service level agreement (SLA) guaranteed at 99% effectiveness -- Expanding marketing information and data mining available on password-protected customer extranet, and -- Providing geographic targeting and language service for non- English titles "Expanded piracy protection is rapidly becoming an integrated part of content owners' digital distribution strategies," said Marc Morgenstern, vice president and general manager of Loudeye's digital media asset protection and promotion business. "While a digital distribution strategy provides cost efficient, inventory- free, global reach to maximize revenue potential, content owners must also ensure their valuable assets are not illegitimately traded. This is an increasingly common belief among existing and new customers, which is fueling the continued growth in our piracy protection and promotion business." Through its Overpeer service offering, Loudeye offers digital media asset protection and promotion services for content owners across the music, film/video, game and software industries. The Overpeer Titanium service provides a service level agreement (SLA) that guarantees 99% effectiveness in preventing the illicit sharing of digital media across peer-to-peer networks. More information is available at: http://www.loudeye.com/services/protection Loudeye holds confidentiality agreements with customers in its piracy protection and promotion line of business, prohibiting the company from disclosing specific names of customers in this service area. About Loudeye Corp. Loudeye is a worldwide leader in business-to-business digital media solutions and the outsourcing provider of choice for companies looking to maximize the return on their digital media investment. Loudeye combines innovative products and services with the world's largest music archive and the industry's leading digital media infrastructure enabling partners to rapidly and cost effectively launch complete, customized digital media stores and services. For more information, visit http://www.loudeye.com/ * * * In its Form 10 Q For the quarterly period ended March 31, 2004 filed with the Securities and Exchange Commission, Loudeye Corp. reports: "We may need to raise additional capital in the future, and if we are unable to secure adequate funds on terms acceptable to us, we may be unable to execute our business plan. If we raise additional capital, current stockholders may experience significant dilution. "As of March 31, 2004, we had approximately $34.8 million in cash and cash equivalents, marketable securities, and restricted investments. In the first quarter of 2004, we completed a private placement that resulted in net proceeds of $18.9 million. We have, however, experienced net losses from operations and net losses are expected to continue into future periods. If our existing cash reserves prove insufficient to fund operating and other expenses, we may find it necessary to secure additional financing, sell assets or reduce expenditures further. In the event additional financing is required, we may not be able to obtain such financing on acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to pursue our business objectives. This inability could seriously harm our business, results of operations and financial condition. "If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of our current stockholders will be reduced and these securities may have rights and preferences superior to those of our current stockholders. If we raise capital through debt financing, we may be forced to accept restrictions affecting our liquidity, including restrictions on our ability to incur additional indebtedness or pay dividends. "We have never paid any dividends on our common stock and do not plan to pay dividends on our common stock for the foreseeable future. We currently intend to retain future earnings, if any, to finance operations, capital expenditures and the expansion of our business." LUCENT TECHNOLOGIES: Records $387 Million Net Income in Q3'04 ------------------------------------------------------------- Lucent Technologies (NYSE: LU) reported results for the third quarter of fiscal 2004, which ended June 30, 2004, in accordance with U.S. generally accepted accounting principles (GAAP). Lucent reported net income of $387 million or 8 cents per diluted share. These results compare with net income of $68 million or 2 cents per diluted share in the second quarter of fiscal 2004 and a net loss of $254 million or 7 cents per diluted share in the year-ago quarter. The company recorded revenues of $2.19 billion in the quarter, essentially flat sequentially and an increase of 11 percent from the year-ago quarter. The company recorded revenues of $2.19 billion in the second quarter of fiscal 2004 and recorded $1.96 billion in the year-ago quarter. The third quarter's earnings per share included the positive impact of certain items, including the revaluation of warrants that are expected to be issued as part of Lucent's global settlement of shareowner litigation, bad debt and financing recoveries, and a net reversal of certain business restructuring charges. The net effect of these items was a positive impact of about 4 cents per diluted share.1 The impact of similar items resulted in an unfavorable impact of about 1 cent per diluted share in the second quarter of fiscal 2004 and no impact in the year-ago quarter. Executive Commentary "We continued our profitable momentum this quarter and saw some positive signs in the key areas we have identified for growth," said Lucent Technologies Chairman and CEO Patricia Russo. "This quarter, we announced 35 customer wins and trials, spanning 20 countries around the world. We are seeing more progress in areas like VoIP, mobile high-speed data and broadband access, while tapping into new international markets. "Progress in our 3G wireless business was highlighted by a $5 billion agreement announced with Verizon Wireless last week and a number of network expansions and agreements in the quarter with existing CDMA customers such as China Unicom, U.S. Cellular, Tata Teleservices and Telecom New Zealand. Cingular announced a UMTS trial agreement with us this quarter as well," said Russo. "We now have announced more than 20 customers for our Accelerate(TM) VoIP portfolio, including an agreement with BellSouth. We continue to build our services business, highlighted by new professional and managed services contracts, including recent announcements with HOT Telecom in Israel and Nextel Peru. We are showing progress in our government and broadband access businesses, including two new deals with the U.S. Department of Defense and an agreement with Microsoft to develop IPTV for broadband networks. "With recent announcements from our customers, we are seeing more significant, multi-year plans being developed for next-generation networks that will deliver IP-based multimedia services, while managing network operating costs," said Russo. "We see these developments playing to our strengths in designing, deploying and servicing converged networks for our customers." Lucent Technologies Chief Financial Officer Frank D'Amelio said: "We have consistently generated profitable results as the market has stabilized and expect to report a full year of profitability when we talk to you again in October. At this point, we expect annual revenues to increase on a percentage basis in the mid- single digits for the 2004 fiscal year. We will continue to manage our cost and expense profile as we go forward, while making selective investments in areas like VoIP and mobile high-speed data to profitably grow the business." Gross Margin and Operating Expenses Gross margin for the quarter was 43 percent of revenues, which was the same as the gross margin rate for the second quarter of fiscal 2004. Operating expenses for the third quarter of fiscal 2004 were $598 million as compared with $623 million for the second quarter of fiscal 2004. Balance Sheet Update As of June 30, 2004, Lucent had about $4.7 billion in cash and marketable securities, which represents an increase of more than $100 million from the previous quarter. The increase was primarily driven by operating activities. Review of Operations - Three Months Ended June 30, 2004 On a sequential basis, revenues in the United States increased 7 percent to $1.4 billion, and revenues outside the United States decreased 10 percent to $785 million. Compared with the year-ago quarter, U.S. revenues and revenues outside the United States increased by 17 percent and 3 percent, respectively. Integrated Network Solutions (INS) Revenues for the third quarter of fiscal 2004 were $715 million, a decrease of 3 percent sequentially and 12 percent compared with the year-ago quarter. In the third quarter, Lucent made several important contract, product, partnership and acquisition announcements, including wins in areas such as voice over Internet protocol (VoIP), broadband access and optical: * Lucent continues to announce new customers for its Accelerate(TM) VoIP portfolio, including a three-year agreement with BellSouth that will enable the company to expand VoIP services throughout its nine-state territory, as well as other announcements with KPY Networks of Finland, FiberNet, Telscape, Rye Telephone, ALLTEL, Pac-West Telecomm and PAETEC. * Lucent announced an optical networking win with Jiangsu Telecom; network upgrades and expansions with KPN of the Netherlands and Hondutel of Honduras; broadband access deals with Telef'nica of Brazil and KT of South Korea; and a series of Personal Handyphone System (PHS) contracts with China Telecom. * In the area of new product development, Lucent introduced an IP/MPLS module, jointly developed with Juniper Networks, that extends the life and capability of the widely deployed CBX 500 Multiservice Switch; the company announced the new high-capacity CBX 3500(TM) Multiservice Edge Switch, which Choice One is trialing and China Unicom intends to trial; and it enhanced its metro optical portfolio with the Metropolis Wavelength Services Manager. * Lucent's partnership with Juniper Networks continues to gain momentum as part of a $35 million agreement with Xspedius, which will offer VoIP services to its business customers in the southern United States. * Lucent announced its acquisition of Telica, a provider of next-generation VoIP solutions, to allow it to address a much wider range of VoIP network buildouts. The acquisition is still expected to close in Lucent's fourth fiscal quarter. Mobility Solutions Revenues for the third quarter of fiscal 2004 were $986 million, an increase of 4 percent sequentially and 58 percent compared with the year-ago quarter. In the third quarter, Lucent continued to show its strength in 3G spread spectrum technology: * During the quarter, Lucent announced 3G network deployments and expansions with U.S. Cellular, China Unicom, Tata Teleservices, Telecom New Zealand and Bermuda Digital Communications, as well as its first wireless contracts in Pakistan and Vietnam. * Lucent and Novatel Wireless continued to make progress in Universal Mobile Telecommunications System (UMTS) wireless PC cards with a sale to 3, the global brand name for Hutchison Whampoa's 3G services, for its customers in Australia, Denmark, Italy and Sweden. * Lucent continues to build its mobile high-speed data business, highlighted in the third quarter by an announced trial of 3G UMTS technology with Cingular Wireless in Atlanta. * Lucent announced a successful CDMA450 trial with Anatel, Brazil's federal communications agency, and a 3G CDMA2000 1X-EVDO data network trial with VIVO in Brazil. Lucent Worldwide Services (LWS) Revenues for the third quarter of fiscal 2004 were $473 million, a decrease of 1 percent sequentially and an increase of 5 percent compared with the year- ago quarter. Lucent Worldwide Services continues to focus on broadening its business and leveraging its multivendor and network integration capabilities with new professional, managed and maintenance services wins, as well as contributions to several other major contracts: * Just last week, Lucent announced a $35 million contract with HOT Telecom for network integration and security services on its VoIP network in Israel. * During the quarter, Lucent announced that it had been selected by Nextel Peru, a leading provider of fully integrated wireless communications services in Peru, to provide managed services for its multivendor network. * In April, Lucent announced a contract with T-Systems International, the systems division of Deutsche Telekom, to provide multivendor maintenance and support services for IP equipment. * Lucent also signed a multiyear agreement with MoviStar P.R., a leading mobile communications operator in Puerto Rico, to provide operations and maintenance support for MoviStar's CDMA wireless network. * There were also services components in several other contract announcements this quarter, including BellSouth, ALLTEL, U.S. Cellular, Xspedius, Jiangsu Telecom and China Unicom. The quarterly earnings conference call will take place today at 8:30 a.m. EDT and be broadcast live over the Internet at http://www.lucent.com/investor/conference/webcast040721.html It will be maintained on the site for replay through Wednesday, July 28, 2004. About Lucent Technologies Lucent Technologies designs and delivers the systems, services and software that drive next-generation communications networks. Backed by Bell Labs research and development, Lucent uses its strengths in mobility, optical, software, data and voice networking technologies, as well as services, to create new revenue-generating opportunities for its customers, while enabling them to quickly deploy and better manage their networks. Lucent's customer base includes communications service providers, governments and enterprises worldwide. For more information on Lucent Technologies, which has headquarters in Murray Hill, N.J., USA, visit http://www.lucent.com/ * * * As reported in the Troubled Company Reporter's March 12, 2004 edition, Standard & Poor's Ratings Services raised its corporate credit rating on Murray Hill, New Jersey-based Lucent Technologies Inc. to 'B/Positive/--' from 'B-/Negative/--'. The action follows a Standard & Poor's review of the telecom equipment industry, as well as a review of Lucent's recent and anticipated performance. "Standard & Poor's believes industry revenues have stabilized in recent quarters, after declining steeply from their peak in 1999, while Lucent's cost reduction actions have enabled a return to moderate profitability in the past few quarters," said Standard & Poor's credit analyst Bruce Hyman. The ratings on Lucent reflect its high leverage, a dramatically smaller and more aggressive industry because of a substantial shift in service providers' buying patterns, and ongoing major changes in the industry's technology direction. These factors are only partly offset by Lucent's continued major role in that industry, its sufficient operational liquidity, and an appropriate expense structure for current business conditions after substantial restructurings. LUCENT TECHNOLOGIES: Fitch Upgrades Sr. Unsecured Debt Rating to B ------------------------------------------------------------------ Fitch Ratings has upgraded the senior unsecured debt of Lucent Technologies to 'B' from 'B-', and the rating of the subordinated convertible debentures and convertible trust preferred securities to 'CCC+' from 'CCC'. The Rating Outlook is revised to Positive from Stable. Approximately $6 billion of securities are affected by Fitch's action. The ratings upgrade reflects Lucent's continued improvement in quarterly operating performance driven by a stabilized and growing wireless telecommunications equipment end market, improved cost structure, and return to profitability. Lucent's strengthened balance sheet, as a result of the company's debt retirement efforts, and manageable near-term debt obligations also support the ratings action. The Positive Rating Outlook reflects Fitch's belief that if industry conditions improve further and, consequently, Lucent's operating metrics trend positively as they have done the past few quarters, then additional ratings improvement could occur. Also considered are Lucent's limited financial flexibility and relatively weak but improving credit protection measures. Additionally, while capital spending by communications carriers has stabilized and is experiencing modest growth in some areas, wireline and wireless spending will remain substantially down from high historical levels for the foreseeable future. However, Lucent has gone through significant restructurings during the past few years to align its cost structure with current spending trends. Revenues for 2004 are expected to be slightly up with expectations for an overall profit in 2004. For the third quarter ended June 30, 2004, Lucent's total revenue was $8.7 billion on an LTM basis compared to $8.4 billion and $12.3 billion for the fiscal years ended September 30, 2003 and 2002, respectively. For the same period, EBITDA of $1.2 billion was substantially higher than the break-even amount achieved for fiscal 2003 as the company has been able to rationalize its cost structure and improve margins. However, credit protection measures remain weak, as Lucent has only for the last few quarters reported positive pre-pension EBITDA, with leverage of 5.4x on an LTM basis as of June 30, 2004, and interest coverage of approximately 3.0x for the same period. Lucent's strengthened balance sheet is a direct result of preferred stock and debt retirement. Since June 2002, the company has repurchased $1.1 billion of its 8% convertible preferred stock, $598 million of its 7.75% convertible trust preferred securities, and $733 million of other senior debt obligations in exchange for approximately 643 million shares of common stock and $676 million in cash. Also, during the third quarter of 2003, the company sold series A and series B 2.75% convertible debentures for an aggregate of $1.6 billion in an effort to bolster liquidity and buy back debt. As of the quarter ended June 30, 2004, total debt was $6.2 billion, consisting primarily of approximately: $2.5 billion of senior unsecured debt; $1.6 billion in convertible debentures; $1.2 billion of convertible trust securities; and $817 million in convertible subordinated debentures. While Lucent has no significant long-term debt maturities until 2006, the 8% convertible subordinated debentures are redeemable at the option of the holders on various dates, the earliest of which is Aug. 2, 2004, followed by the next redemption date in August 2007. Lucent may satisfy this obligation using cash, common stock, or a combination of both. However, conversion looks unlikely considering the company's current common stock price. Although Lucent's financial flexibility remains limited, Fitch believes the company's current resources are adequate to meet near-term obligations, with cash and marketable securities of approximately $4.7 billion as of June 30, 2004. However, Fitch continues to monitor Lucent's operations as free cash flow has been inconsistent and a rating issue, although it has improved and was approximately a positive $285 million for the latest twelve months ended Jun. 30, 2004, compared to the more than $1 billion of annual cash burn the last few years. As of June 30, 2004, cash from operations was $440 million on an LTM basis including cash charges for restructuring. Remaining cash costs for restructuring currently total $250 million and will be paid over the next several years. While the company does not expect to make a cash contribution to its approximate $30 billion U.S. pension plans in fiscal 2004 through fiscal 2006, expected funding requirements for its post-retirement health care benefits are $60 million during the remainder of fiscal 2004 and approximately $300 million annually through fiscal 2006. MAC HOUSE: Case Summary & 11 Largest Unsecured Creditors -------------------------------------------------------- Debtor: MAC House 845 Fisher Houston, Texas 77018 Bankruptcy Case No.: 04-81306 Chapter 11 Petition Date: July 20, 2004 Court: Southern District of Texas (Galveston) Judge: Letitia Z. Clark Debtor's Counsel: Melissa Ann Botting, Esq. 1414 South Friendswood Drive Friendswood, TX 77546 Tel: 281-992-7600 Fax: 281-482-8088 Total Assets: $140 Total Debts: $1,138,800 Debtor's 11 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Medicare part A Overpayment from $1,000,000 Dept. of Treasury medicine Financial Mgt. Services Hyattsville, MD 20782 Internal Revenue Service Business taxes $50,000 Middle East Equipment Back rent $50,000 Ray Azirron Rental space $10,000 Luby's Provided meals all $10,000 Patients Reliant Energy - H L & P $10,000 Martha Wong Lease space for $6,000 clinic Southwestern Bell $1,000 Bank of America Overdraft $1,000 City of Houston Water $500 Reliant Energy - Entex Gas $300 MEDICALCV: Announces Senior Management Shake-Up & Shuffle --------------------------------------------------------- MedicalCV, Inc. (OTC Bulletin Board: MDCVU), a cardiovascular surgery device manufacturer, restructured its management to further reduce its operating losses in its heart valve division and to reposition itself to better support its new technologies. Richard Kramp, currently President of the New Technologies Division, will become President and Chief Operating Officer of the Company. As a result of the strategic change, the following executives will leave the Company to pursue other business opportunities, and their responsibilities will be absorbed by other current executives: Blair Mowery - President of the Heart Valve Division and Allan Seck - Vice President of Business Development. The Company hired Robert Clapp as Vice President of Manufacturing and that it is conducting a search for a Vice President of U.S. Sales to strengthen both the valve business and the new products of the Company. Larry Horsch, Chairman of the Board and Acting CEO, stated, "We are refocusing the Company toward higher growth products and adjusting our executive team to achieve this goal. Expenses are being materially reduced in the heart valve area. To support these efforts, we recently completed a private placement of securities generating approximately $3.5 million of net proceeds. Subject to receipt of regulatory approval, we continue to expect that we will be able to market our first atrial fibrillation product in September 2004." MedicalCV, Inc. -- whose January 31, 2004 balance sheet shows a $2,877,971 total shareholders' equity deficit -- is a Minnesota-based cardiothoracic surgery device manufacturer that launched its Omnicarbon(R) heart valve in the United States in early 2002. Led by a new management team, the company is focused on building a worldwide market in mechanical heart valves and other innovative products for the cardiothoracic surgical suite. The Omnicarbon heart valve has an established market position in a number of key regions of Europe, South Asia, the Middle East and the Far East. Although international markets will continue to play an important role in the company's results, the U.S. market offers tremendous growth potential for the Omnicarbon valve. In September 2003, the company acquired a technology platform for the treatment of atrial fibrillation, an exciting new growth opportunity. In addition, the company entered into an agreement with Segmed, Inc., to commercialize an annuloplasty product known as the Northrup Universal Heart Valve Repair System(TM). MedicalCV has a fully integrated manufacturing facility, where it designs, tests and manufactures its products. The company's securities are traded on the OTC Bulletin Board under the symbol "MDCVU". METROPOLITAN MORTGAGE: Fitch Downgrades Class B-1 Rating to B -------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Metropolitan Mortgage issues: Series 2000-B --Classes A1A, A1F affirmed at 'AAA'; --Class M-1 affirmed at 'AA'; --Class M-2 affirmed at 'A'; --Class B-1 downgraded to 'B' from 'BB'. The negative rating action taken on class B-1 reflects the poor performance of the underlying collateral in the transaction. The level of losses incurred has increased significantly and has resulted in the depletion of overcollateralization. As of the June 2004 distribution, series 2000-B has an OC amount of $ 1,425,854.74 remaining, compared to $2,191,329.4 in the February 2004 distribution when class B-1 was first downgraded. The 12-month average monthly loss for this deal is approximately $459,000. These deals are structured such that there is the ability in future periods for the bonds that were written down due to losses to be written back up. MICRO EQUIPMENT: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Micro Equipment Corporation 2900 Jones Mill Road Norcross, Georgia 30071 Bankruptcy Case No.: 04-95504 Type of Business: The Debtor is a wholesale distributor of computer products serving OEM, reseller, and dealer markets. See http://www.mec.net/ Chapter 11 Petition Date: July 19, 2004 Court: Northern District of Georgia (Atlanta) Judge: Paul W. Bonapfel Debtor's Counsel: Albert N. Remler, Esq. Remler Law Group, P.C. 4200 Northside Parkway Building One, Suite 200 Atlanta, GA 30327-3054 Tel: 404-365-6565 Fax: 404-365-6552 Estimated Assets: $0 to $50,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Alexander Remington $200,000 Cara Guri Personal Loan $150,000 Discover Card Platinum Credit card: $91,553 personal services / merchandise Euler Hermes ACI Collection Collection Agency $62,670 Services Coface North America Collection Agency $39,625 Avus System & Peripheral $28,609 MBNA America Gold Card Credit card: $27,000 personal services / merchandise ANIIC Past Due Rent $26,000 Hyundai ImageQuest America Consumer Merchandise $17,670 and Service First Union Visa Gold Credit card: $16,880 personal services / merchandise DynaPower $13,789 IRS/Insolvency $10,000 All Components Consumer Merchandise $9,208 and Service Tech Data Corp. Consumer Merchandise $8,209 and Service Behavior Tech. Comp. Corp. Consumer Merchandise $7,860 and Service Tripro Power Corp. Consumer Merchandise $7,015 and Service Ark PC Technology $5,741 TSR Inc. $5,587 Atlanta Foam Consumer Merchandise $5,438 and Service Wachovia Credit card: $4,730 personal services / merchandise MIRANT: Wants to Complete Phase I Key Employee Retention Program ---------------------------------------------------------------- Mirant Corporation and its debtor-affiliates say they've made substantial progress in the administration of their Chapter 11 cases: * the Business Plan and Intercompany Claims Report were completed and presented to the Committees for their review and comment; * various strategic initiatives, like the corporate overhead cost savings initiative and the operational performance initiative, have been launched; and * the long-term service agreements with General Electric, the Transition Power Agreements with Potomac Electric Power Company and the corporate headquarters lease have been restructured, and numerous executory contracts were rejected, resulting in the creation of literally hundreds of millions of dollars of value for their constituents. However, the Debtors identified key "gating items" that must be resolved to develop a plan of reorganization. Robin E. Phelan, Esq., at Haynes and Boone, LLP, in Dallas, Texas, relates that there are a number of employee compensation and benefit issues that have been the source of significant discord in these cases -- resulting in the distraction of both the Debtors and the Committees from the Debtors' successful reorganization and ultimate emergence from Chapter 11. Included among the contentious issues are not just the implementation of a key employee retention program but also the implementation of a severance program for Management Council members, the potential avoidance of annuities purchased prepetition to fund certain senior level employees' non-qualified retirement benefits, the existence of certain prepetition retention agreements, and potential claims against the Debtors under various change in control programs and agreements. Recognizing the detrimental impact these various employee compensation and benefit related issues were having in these cases, Mr. Phelan reports that the Examiner approached the Debtors to work out a global resolution among the Debtors and Committees. No consensual resolution has been reached yet. However, the Debtors and the Examiner continue to believe that a Court determination with respect to these issues is critical to focusing the various constituents on the Debtors' reorganization efforts. "It is unquestionable that the Chapter 11 process poses significant burdens on the Debtors' employees," Mr. Phelan remarks. In addition to their regular work duties, the Debtors' employees have to respond to many inquiries of their constituents, Court requirements and the additional demands associated with the Chapter 11 plan formulation. Most assuredly, the Debtors' employees are feeling the strain of these additional demands. Coincidentally, it is at this same juncture that it is most critical that the employees maintain their motivation and focus on the Debtors' primary goal of achieving a successful reorganization. Accordingly, the Debtors must provide a financial incentive for continued employment and assure those employees that they will be rewarded for dedicated service toward the Debtors' reorganization efforts. Mr. Phelan contends that providing an appropriate retention incentive to the Debtors' 90 Key Employees is particularly important because the Debtors' major employer competitors aggressively recruit qualified candidates. Indeed, employee attrition rates have materially increased in recent months as compared with prior periods. To demonstrate, at the end of June, the 2004 annualized domestic turnover of all non- union employees is 17%, and the annualized turnover of high performing employees for 2004 is 18%. In contrast, the 2003 annualized turnover of all non-union employees for the same time period was 11.5%, and the annualized turnover for high performing employees was less than 2%. Importantly, since the approval of the First Payment through June 15, 2004, only one Key Employee has resigned. However, since June 15, 2004, three additional Key Employees have resigned. In light of these concerns, on December 19, 2003, the Debtors asks the U.S. Bankruptcy Court for the Northern District of Texas to approve Phase I of the Key Employee Retention Program. Under Phase I, certain Key Employees were to be awarded stay bonuses designed to provide the employees an incentive to remain in their positions throughout the reorganization process. The Chief Executive Officer and Management Council members declined to participate in Phase I of the KERP, which permitted the Debtors to move the process of implementation of Phase I of the KERP forward in a deliberate manner. On February 13, 2004, the Court authorized the Debtors to make on or after June 30, 2004, the first stay bonus payment to each eligible Key Employee, but reserved judgment on the remaining payments under Phase I of the KERP. In addition, the Court instructed the Debtors to deposit $8,000,000 into a segregated, interest-bearing account from which the anticipated stay and performance-based payments under both phases of the KERP are to be paid. Mr. Phelan explains that the Debtors designed the KERP not as individual payments or isolated incentives but rather as a complete package that will provide the requisite incentives to retain and encourage the Key Employees. Accordingly, while the Key Employees thus far have been motivated by, and have been working toward, the First Payment, they have also relied on the expectation and assurances that the Remaining Payments would be forthcoming and that the Debtors would be granted shortly the authority to make the Remaining Payments. In fact, although the 2004 attrition rate for Key Employees has increased relative to prior periods, it had decreased since the approval of the First Payment, and the Debtors believe that the current attrition rates would be materially higher absent approval of the First Payment and expectation of the Remaining Payments. As the date of the First Payment has already occurred, the Debtors believe that it is critical for the Court to approve the Remaining Payments to ensure that the Debtors' Key Employees continue to be incentivized to remain employed by the Debtors. While the Debtors are seeking approval of the Remaining Payments, as part of the global resolution proposed by the Examiner, certain aspects of Phase I of the KERP have been modified from the version set forth in the Phase I Motion. Furthermore, the Examiner has identified the resolution of certain employee-related concerns and disputes raised by certain of the Committees as a high priority matter, which the Examiner intends to address. Although the Debtors were prepared to move forward with the KERP in May, the Debtors delayed seeking further protection with respect to the KERP to give the Examiner an ample opportunity to assess the Debtors' proposed KERP and formulate a plan for the resolution of the other outstanding employee-related issues. At the Examiner's suggestion and as a proposed global resolution of the issues, the Debtors made certain modifications to their original KERP and have added the resolution of certain employee-related disputes and issues. Although the Debtors and the Committees have worked together diligently with the Examiner as an active facilitator to reach a consensual resolution, to date, the Debtors were unable to gain the full support of the Committees to the Examiner's proposed global resolution. Nevertheless, the Debtors believe that the Examiner's proposed global resolution is fair and reasonable and in the best interest of the estates. The Debtors intend to continue to work with their Committees, with the Examiner's assistance, in an effort to reach a consensual resolution. By this motion, the Debtors seek the Court's authority to pay the Remaining Payments under Phase I of the KERP, pursuant to Section 363(b) of the Bankruptcy Code. The Debtors want to make the Remaining Payments under Phase I under this schedule: Percentage of Stay Bonus Tier Schedule of Payments Base Salary Award ---- -------------------- ------------- ---------- IV Earlier of December 31, 2004 18% 60% or plan filing Earlier of June 30, 2005 or 24% Plan effective date V Earlier of December 31, 2004 15% 50% or plan filing Earlier of June 30, 2005 or 20% Plan effective date VI Earlier of December 31, 2004 12% 40% or plan filing Earlier of June 30, 2005 or 16% Plan effective date Participants must be actively employed on the payment dates to receive the applicable Stay Bonus payment. With the exception of amounts payable on account of: (i) the participation of Curt Morgan, Executive-Vice President and Chief Operating Officer for Mirant, and (ii) the payment to M. Michele Burns, Chief Financial Officer for Mirant, the estimated aggregate cost of the Remaining Payments under Phase I is about $2,800,000. Mr. Phelan explains that the KERP is designed to reduce Key Employee turnover, which would otherwise result in significant cost to the Debtors at this critical time in their reorganization process. The implementation of the KERP will aid the Debtors' rehabilitative efforts by increasing the likelihood of retaining the services of valuable Key Employees. Mr. Phelan contends that the Remaining Payments under Phase I of the KERP will enable the Debtors to provide a financial incentive for the continued employment of the Key Employees and assure them that they will be rewarded for dedicated service. Mr. Phelan points out that with approximately 90 Key Employees, the potential cost of having to replace a significant number of these employees would be significant and detrimental to the Debtors' reorganization efforts. The KERP will enable the Debtors to retain the knowledge, experience and loyalty of the Key Employees who are crucial to their Chapter 11 efforts. If these employees were to leave their current jobs at this stage in the Debtors' Chapter 11 cases, it is virtually assured that the Debtors would not be able to attract replacement employees of comparable experience and knowledge, or could do so only at great expense and detriment to their estates. An even greater harm to the Debtors from the loss of Key Employees would be the loss of industry knowledge. Although a new manager may quickly learn the general job requirements, the manager cannot quickly assimilate the nuances of the internal management structure and gain the trust and respect of the workforce. Moreover, the existing management of the Debtors has built relationships with vendors and customers that are an integral part of the Debtors' ongoing efforts to maintain and improve business while keeping costs low. Furthermore, there exists the risk that the loss of Key Employees will result in the loss of additional employees who choose to leave with the Key Employees. Consequently, losing critical managers or employees would likely cause a decline in the Debtors' operating profitability. The Debtors have determined that the costs associated with the implementation of the KERP, which, excluding the addition of Curt Morgan, are approximately $8,000,000 in the aggregate for both Phase I and Phase II, are more than justified by the benefits that are expected to be realized by encouraging the Key Employees to continue working for the Debtors and vigorously assisting in the Debtors' restructuring efforts. Moreover, approval of the KERP will forestall the loss of value that would be attendant to resignations among the Key Employees. Headquartered in Atlanta, Georgia, Mirant Corporation -- http://www.mirant.com/-- together with its direct and indirect subsidiaries, generate, sell and deliver electricity in North America, the Philippines and the Caribbean. The Company filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex. 03- 46590). Thomas E. Lauria, Esq., at White & Case LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $20,574,000,000 in assets and $11,401,000,000 in debts. (Mirant Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) MISSION RESOURCES: S&P Places Ratings on CreditWatch Developing --------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'B-' corporate credit rating and 'CCC' senior unsecured debt rating on independent oil and gas exploration and production company Mission Resources Corp. on CreditWatch with developing implications. As of March 31, 2004, Houston, Texas-based Mission had roughly $175 million of debt. The CreditWatch listings follow Mission's announcement that it has retained Petrie Parker & Co. to assist the company in evaluating strategic alternatives designed to enhance shareholder value. The CreditWatch listings will be resolved when Mission announces the results of its strategic review. NATIONAL CENTURY: Amedisys Takes an Appeal to the District Court ---------------------------------------------------------------- Amedisys, Inc., and certain of its related affiliates inform Judge Calhoun of the U.S. Bankruptcy Court for the District of Ohio that they will take an appeal to the U.S. District Court for the Southern District of Ohio with respect to the Bankruptcy Court Order denying their request to enforce the Confirmation Order in the bankruptcy cases involving National Century Financial Enterprises, Inc. and its debtor-affiliates. Daniel A. Demarco, Esq., at Hahn, Loeser & Parks, in Columbus, Ohio, presents five issues for the District Court to review: (a) Whether the Bankruptcy Court erred in denying Amedisys' request to enforce the Confirmation Order; (b) Whether the Bankruptcy Court erred in enforcing the automatic stay in violation of Section 362(c) of the Bankruptcy Code; (c) Whether the Bankruptcy Court erred in enforcing the automatic stay as to claims and causes of actions that have no effect on the Debtors or their estates, as none of the Debtors is a party to the action commenced in the United States District Court for the Middle District of Louisiana nor has any property or assets at issue; (d) Whether the Bankruptcy Court erred in imposing an injunction without requiring the Debtors to commence an adversary proceeding as required under Rule 7001 of the Federal Rules of Bankruptcy Procedure; and (e) Whether the Bankruptcy Court erred in imposing a permanent injunction without the Debtors to comply with Rule 7065 of the Federal Rules of Bankruptcy Procedure. Headquartered in Dublin, Ohio, National Century Financial Enterprises, Inc. -- http://www.ncfe.com/-- is the market leader in healthcare finance focused on providing medical accounts receivable financing to middle market healthcare providers. The Company filed for Chapter 11 protection on November 18, 2002 (Bankr. D. Ohio Case No. 02-65235). Paul E. Harner, Esq., Jones, Day, Reavis & Pogue represents the Debtors in their restructuring efforts. (National Century Bankruptcy News, Issue No. 43; Bankruptcy Creditors' Service, Inc., 215/945-7000) NATIONWIDE HEALTH: Appoints Don Bradley Chief Investment Officer ---------------------------------------------------------------- Nationwide Health Properties, Inc. (NYSE: NHP) appointed Donald D. Bradley Senior Vice President and Chief Investment Officer, a position he has informally held since January 2004. Don was hired by NHP in March 2001 as Senior Vice President and General Counsel primarily to manage its portfolio restructuring efforts, which were substantially completed in December 2003 with the emergence of Alterra Healthcare Corporation, NHP's largest customer, from bankruptcy. Douglas M. Pasquale, NHP's President and CEO, said: "I am thrilled with Don's well-deserved promotion to Senior Vice President and Chief Investment Officer. Don's well-rounded background has already been instrumental to his many contributions to NHP. As he formally joins forces with our three talented investment Vice Presidents: David Boitano (Seattle, WA); Steven Insoft (Boston, MA) and John Sheehan (Cleveland, TN), I am confident this investment team will continue to close quality investments like the nearly $300,000,000 of accretive acquisitions they have already completed in 2004." Prior to joining NHP, Don was the General Counsel of Furon Company, a NYSE-listed international, high performance polymer manufacturer, with a principal role in the company's acquisitions, divestitures and risk management programs. Previously, he was a Special Counsel with the international law firm of O'Melveny & Myers LLP in its mergers, acquisitions and securities law department. Don was graduated from UCLA School of Law in 1982 and the University of Illinois in 1979. He also is a Certified Public Accountant (Illinois). Don and his wife, Eileen, reside in Laguna Niguel, California with their three sons. Nationwide Health Properties, Inc. is a real estate investment trust that invests in senior housing and long-term care facilities. The Company and its joint venture have investments in 401 facilities in 38 states. For more information on Nationwide Health Properties, Inc., visit our website at http://www.nhp-reit.com/ * * * As reported in the Troubled Company Reporter's April 14, 2004 edition, Fitch Ratings has affirmed the senior unsecured rating of 'BBB-' on approximately $541 million of senior unsecured notes of Nationwide Health Properties, Inc. due 2004 through 2038. Fitch has also affirmed the 'BB+' ratings on $100 million of outstanding preferred stock. The Rating Outlook is revised to Stable from Negative. The revision of Fitch's Rating Outlook to Stable reflects NHP's improved debt maturity schedule as well as access to capital. On May 19, 2003, Fitch reviewed NHP and kept its Rating Outlook at Negative due to the near-term maturities the company faced under its medium term notes (MTN) program. Since that time, the majority of NHP's 2003 debt maturities that had a putable feature in its bonds opted not to put the bonds back to the company and extended the maturities of these bonds out another five years to 2008. Additionally, NHP raised a combined total of approximately $250 million in common equity in two offerings (April 2003 and January 2004) improving the company's liquidity. NEW HEIGHTS: Committee Hires Lowenstein Sandler as Attorneys ------------------------------------------------------------ The Official Unsecured Creditors Committee appointed in New Heights Recovery & Power, LLC's chapter 11 case, wants to hire Lowenstein Sandler PC as its attorneys. The Committee says that Lowenstein Sandler's services are necessary to faithfully execute its duties as the fiduciary representative of the unsecured creditors in the administration of the Debtor's estate. Lowenstein Sandler is expected to: (a) provide legal advice as necessary with respect to the Committee's powers and duties as an official committee appointed under Section 1102 of the Bankruptcy Code; (b) provide legal advice as necessary with respect to any disclosure statement and plan filed in this case and with respect to the process for approving or disapproving disclosure statements and confirming or denying confirmation of a plan; (c) prepare on behalf of the Committee, as necessary, applications, motions, complaints, answers, orders, agreements, and other legal papers; (d) appear in Court to present necessary motions, applications, and pleadings and otherwise protecting the interests of those represented by the Committee; and (e) perform all of the legal services for the Committee that may be necessary and proper in these proceedings. Kenneth A. Rosen, Esq., a director of Lowenstein Sandler reports that the attorneys most likely to represent the Committee in this case bill between $150 and $525 per hour. Legal assistants bill for their services at $75 to $100 per hour. Headquartered in Ford Heights, Illinois, New Heights Recovery & Power, LLC -- http://www.tires2power.com/-- is the owner and operator of the Tire Combustion Facility and other tire rubber processing facilities. The Company filed for chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11277). Eric Lopez Schnabel, Esq., at Klett Rooney Lieber & Schorling represents the Debtor in its restructuring efforts. When the Company filed for chapter 11 protection, it listed both its estimated debts and assets of over $10 million. NEW WORLD PASTA: Employs KPMG as Accountants and Tax Advisors ------------------------------------------------------------- New World Pasta Company and its debtor-affiliates ask the U.S. Bankruptcy Court for the Middle District of Pennsylvania for permission to employ KPMG, LLP, as their auditors, accountants and tax advisors. The Debtors anticipate that KPMG will render these services: (a) Accounting and Auditing Services: i. audit and review examinations of the Debtors' consolidated financial statements as may be required from time to time, including the Debtors' consolidated financial statements as of December 31, 2003, 2002 and 2001 and for the years then ended, and review of quarterly financial statements; ii. report on management's assessment of the effectiveness of the Debtors' system of internal control over financial reporting; iii. audit the financial statements and supplemental schedules of the Debtors' employee benefit plans, including retirement plans, which are to be included in the employee benefit plans' Form 5500 filings with the Department of Labor; iv. analyze accounting issues and provide advice to the Debtors' management regarding the proper accounting treatment of events; v. read and comment on the Debtors' documents required to be filed with the Securities and Exchange Commission, if any; and vi. assist with the implementation of bankruptcy accounting procedures as required by the Bankruptcy Code and generally accepted accounting principles, including, but not limited to, Statement of Position 90-7. (b) Tax Advisory Services: i. review of and assist in the preparation and filing of any Federal and state tax returns, including the consolidated Federal Form 1120, state, and Canadian federal and provincial returns; ii. analyze net operating loss and ownership change issues; iii. assist in determining the tax bases of subsidiary stock and the tax bases of each the Debtors' assets and liabilities; iv. provide advice and assist the Debtors regarding tax planning issues, including, but not limited to, assistance in estimating net operating loss carrybacks and carryforwards, international taxes, and state and local taxes; v. provide advice regarding transaction taxes, state and local sales taxes, use tax and payroll taxes; vi. provide assistance regarding tax matters related to the Debtors' pension plans and other compensation arrangements; vii. provide assistance regarding tax matters arising from repatriation of earnings and other transactions with or relating to non-US affiliates; viii. provide assistance regarding tax-basis depreciation calculations; ix. provide assistance regarding any existing or future IRS, state and/or local tax examinations; and x. provide advice and assist with the tax consequences of proposed plans of reorganization, including, but not limited to, assistance in the preparation of Internal Revenue Service and state and local ruling requests regarding the future tax consequences of alternative reorganization structures. KPMG's customary hourly rates are: Information Level Audit Forensic Risk Manager Tax ----- ----- -------- ------------ --- Partner/Director $600-625 $700 $700 $575-625 Senior Manager $450-550 $475 Manager $350-425 $550-650 $500-600 $300 Senior $225-325 $350-450 $400-525 $275 Associate $175-225 $200-250 $230-300 $225 Headquartered in Harrisburg, Pennsylvania, New World Pasta Company -- http://www.nwpasta.com/-- is the leading dry pasta manufacturer in the United States. The Company filed for Chapter 11 protection on May 10, 2004 (Bankr. M.D. Pa. Case No. 04-02817). Eric L. Brossman, Esq., at Saul Ewing LLP represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, they listed both estimated debts and assets of over $100 million. NOMURA ASSET: Fitch Affirms Low-B Ratings of 2 1996-MDV Classes --------------------------------------------------------------- Fitch Ratings upgrades and removes from Rating Watch Positive Nomura Asset Securities Corp.'s commercial mortgage pass-through certificates, series 1996-MDV as follows: --$45 million class A-2 to 'AAA' from 'AA+'; --$52.4 million class A-3 to 'AAA' from 'A+'; --$48.7 million class A-4 to 'AA' from 'BBB'; --$11.2 million class A-5 to 'A+ from 'BBB-'. In addition, classes are affirmed as follows: --$28.9 million class A-1A 'AAA'; --$352 million class A-1B 'AAA'; --$7.5 million class A-1C 'AAA'; --Interest-only classes CS-1 and CS-2 'AAA'; --$48.7 million class B-1 'BB'; --$33.7 million class B-2 'B'; --$24.4 million class S-1 'BBB-'. Fitch does not rate class B-2H. The upgrades are due to the defeasance of three loans (44.8%) and the anticipated defeasance of a fourth loan, Barnes Mall, (6.7%) in August 2004. After accounting for the anticipated defeasance, 70.8% of the loans have an investment grade credit assessment compared to 43% at issuance. Although Fitch remains concerned with the decline in performance of the hotel loans (36.2 %) since issuance, Fitch is encouraged by the May 2004 year-to-date improvements reported in two of the four hotel loans (the other two have not yet reported) and the improvements in the hotel market generally. As of the July 2004 distribution date, the pool's total principal balance has been reduced by 15.7% to $652.6 million from $773.7 million at issuance due to the repayment of the First Industrial loan and amortization on eight of the nine remaining fixed-rate loans. After the Barnes Mall defeasance, four loans will be secured by defeasance collateral and the five non-defeased loans will be secured by 56 geographically diverse retail and hotel properties. Four loans are crossed pools and one loan is secured by single asset. As part of its review, Fitch analyzed the performance of each loan and the underlying collateral. Fitch compared each loan's stressed debt service coverage ratio for the year ended December 2003 to the DSCR at issuance. DSCRs are based on Fitch adjusted net cash flow and a stressed debt service based on the current loan balance. The overall Fitch stressed weighted average DSCR for YE December 2003 for the loans remaining in the pool decreased to 1.62 times (x) from 1.79x at last review and from 1.71x at issuance. The Marriott Residence Inn II loan (20.1%) is collateralized by 22 extended stay hotels, which are located in 16 states. Adjusted NCF for YE December 2003 declined significantly since issuance (36.8%). The corresponding DSCR is 1.23x compared to 1.43x at issuance. However, the borrower reports a significant improvement in house profit for year-to-date May 2004 over YTD May 2003 (10.3%). The borrower additionally reports that ten properties were renovated and six were refreshed in the past year. The Shaner loan is divided into two parts: the standard note, which is part of the overall pool and the junior flexible note, which is rated on a stand alone basis and forms its own separate tranche, class S-1. Adjusted NCF for YE December 2003 for the 21 properties remaining in the pool was flat compared to YE 2002, but has declined by 32.9% from issuance. The standard note benefits from the amortization of the whole loan applied entirely to the standard note and from the partial defeasance of the allocated loan balance of fourteen properties (20.5%) at 125%. The corresponding DSCR for the standard note is 2.46x compared to 2.38x at last review and 2.26x at issuance. The corresponding DSCR for the standard and junior flexible note together is 1.45x compared to 1.50x at last review and 1.76x at issuance. Although Fitch is concerned with the decline in net cash flow, the partial defeasance, eighteen year amortization schedule, and current low loan exposure of approximately $20,125 per room mitigate this risk. Buena Vista loan (6.6%) is a convention hotel located in Lake Buena Vista, FL. Although Fitch YE 2003 NCF declined approximately 11% since YE 2002, it remains considerably higher than at issuance (22.4%). In addition, the borrower reports a significant increase in May 2004 YTD total revenues (11.8%) and net operating income (23.6%) over YTD May 2003. The corresponding DSCR is 2.50x compared to 2.68x at last review and 1.62x at issuance. The Innkeepers Portfolio loan (3.9%) is collateralized by eight extended stay hotels. The adjusted NCF for YE December 2003 has declined 29.2% since issuance primarily due to the poor performance of three hotels located in the San Jose, CA market (39% of allocated loan balance). The corresponding DSCR fell to 1.91x compared to 2.41x at issuance. The credit assessment for this loan has been lowered, but it remains investment grade. The Horizon loan (9.1%) is collateralized by four factory outlet centers, in Wisconsin, Washington, and Indiana. Adjusted NCF for YE December 2003 has declined 16.8% since issuance. The corresponding DSCR is 1.48x compared to 1.53x at last review and 1.55x at issuance. The current overall occupancy of the pool is flat at 85.3% compared to last review. NORTHERN BERKSHIRE: Fitch Assigns BB+ Ratings to Series 2004 Bonds ------------------------------------------------------------------ Fitch Ratings has assigned a 'BB+' rating to the approximately $25 million Massachusetts Health and Educational Facilities Authority, Northern Berkshire Health Systems, revenue bonds, series 2004. In addition, Fitch has affirmed the 'BB+' rating on the outstanding $9.6 million Massachusetts Health and Educational Facilities Authority Revenue Bonds, North Adams Regional Hospital Issue, 1996 series C. The Rating Outlook is Stable. Bond proceeds will be used to fund various hospital renovation and expansion projects, restructure approximately $6 million of the outstanding bonds, fund a debt service reserve, fund capitalized interest, and pay costs of issuance. The bonds are expected to price the week of August 30 through negotiation by Ziegler Capital Markets Group. The 'BB+' rating is based on Northern Berkshire Health Systems' dominant market position, successful recruitment of new physicians, increasing outpatient volume, and demographics of the service area. NBHS's primary credit strength continues to be its dominant market position. With the hospital located in a rural, geographically isolated area, market share has remained above 70% over the past five years. The nearest competitor, Berkshire Medical Center, is approximately 25 miles away and had only 16.7% market share. NBHS has been successful in recruiting new physicians with a net increase of 11 physicians over the last three years. Fitch views this favorably especially due to the recent decline in inpatient volume and believes the continued ability to attract physicians will be a key driver in the return to profitability for the organization. Although inpatient volume has decreased, outpatient volume has increased. Fitch expects outpatient volume to continue to increase with the expansion of several services funded by this bond issuance. The service area has a large percentage of the elderly population with 19% of the primary service area over 65 years of age, which is viewed favorably due to the higher utilization of services by this age group. In addition, a senior living facility and nursing home were acquired by the system in 1999 due to the demographics of the service area, which should further aid revenue growth as occupancy grows. Credit concerns include NBHS's weak operating performance, declining liquidity, and future capital needs. NBHS's financial profile is weak with a history of large operating losses and declining liquidity position. Operating income has slightly improved to negative 2.8% operating margin through the six months ended March 31, 2004 from negative 7.2% in fiscal 2001. Operating losses have been due to difficult labor relations with the union, declining inpatient volume, and losses at the senior living facilities. Bottom line losses have led to a decline in liquidity with 77.9 days cash on hand and 38.4% cash to debt at March 31, 2004 compared to 97.3 days cash on hand and 42.6% cash to debt at fiscal year-end 2001. Due to NBHS's weak financial position, capital spending has been limited and totaled 44% of depreciation expense in fiscal 2003. However, historic capital investment in the areas of information technology and equipment has been greater than in the physical building. Fitch toured the facility and believes the current project is significantly needed due to the age of the plant. Future capital spending needs will place pressure on NBHS's financial position if profitability does not improve. The system has begun a capital campaign with the goal of raising approximately $12 million. Total pledges are approximately $9.0 million thus far, which Fitch views favorably. NBHS projects to attain operating profitability in fiscal 2005 and expects to achieve positive operating results in the near term. Fitch believes the System's forecast is reasonable due to the recent investment in plant, good physician recruitment and solid market position. Northern Berkshire Health Systems is located in North Adams, MA with North Adams Regional Hospital (66 staffed bed hospital), Sweetwood Continuing Care Retirement Community (70 independent living units), and Sweet Brook Care Centers (184 bed skilled nursing facility) as the main revenue generating components. With this bond issuance, a new obligated group will be formed that will comprise 100% of total revenue and 100% of total assets of the health system. Fitch's rating on the 1996 bonds was historically based on the hospital only. Total revenue of the health system was $64 million in fiscal 2003. NBHS covenants to provide quarterly disclosure to bondholders, which Fitch views favorably. Disclosure to Fitch has been good with the receipt of timely, comprehensive quarterly information. NORTHWEST AIRLINES: Stockholders' Deficit Widens to $2.4 Billion ---------------------------------------------------------------- Northwest Airlines Corporation (Nasdaq: NWAC), the parent of Northwest Airlines, reported a $182 million second quarter net loss. This compares to the 2003 second quarter when the company reported a net profit of $227 million. Northwest's 2004 second quarter included a $104 million charge to write-down previously parked 747-200 passenger aircraft and related inventory. Excluding these unusual items, Northwest reported a second quarter 2004 net loss of $78 million. Last year, Northwest's second quarter results included $387 million of unusual items, principally including a $209 million reimbursement of security fees received from the U.S. government and a $199 million gain from the sale of Northwest's interest in Worldspan. Excluding unusual items, Northwest reported a second quarter 2003 net loss of $160 million. "For the second consecutive quarter, our financial results were adversely affected by high aircraft fuel prices which are expected to remain at near record levels for the foreseeable future," said Richard H. Anderson, chief executive officer. "We continued to reduce non-labor costs throughout the organization and we maintained our revenue premium to the industry. However, our fundamental challenge remains constant: we must reduce our labor costs to address the new revenue environment in which we find ourselves." Mr. Anderson added, "Once we achieve labor cost restructuring, we believe Northwest has a strong business strategy for success that includes a flexible fleet that continues to be renewed, an extensive route network complemented by strong airline alliances, excellent hub airport facilities, and employees who strive to put our customers first." Operating Results Operating revenues in the second quarter increased by 18.5% versus the second quarter of 2003 to $2.87 billion. Passenger revenue per available seat mile increased by 12.7% on 6.4% more available seat miles (ASMs). Operating expenses in the quarter increased 17.1% versus a year ago to $2.92 billion. Unit costs, excluding fuel and unusual items, remained flat on higher ASMs. Fuel prices averaged 107.9 cents per gallon, excluding taxes, up 34% versus the second quarter 2003. Northwest's quarter-ending cash balance was $3.0 billion, of which $2.9 billion was unrestricted. Bernie Han, executive vice president and chief financial officer, said, "We maintained our strong cash position during the quarter in part by reducing our non-labor unit costs. These actions included the initiation of a ninth round of cost reductions designed to further trim costs." Other Commenting on labor discussions, Doug Steenland, president, said, "We have been meeting regularly with our pilots represented by the Air Line Pilots Association (ALPA). We have exchanged proposals on numerous issues and anticipate continuing our discussions." On Tuesday, July 20, Northwest announced a major expansion of its Indianapolis schedule that will more than double the number of daily departures it offers by Oct. 31. New nonstop service to Boston, Ft. Myers, Fla., Hartford, Conn., Las Vegas, Los Angeles, New York, Orlando, Fla., Philadelphia, Raleigh/Durham, N.C., and Washington will be offered in addition to current service to Northwest's three domestic hubs at Detroit, Minneapolis/St. Paul and Memphis. "Tuesday's announcement is yet another example of Northwest's continued commitment to provide America's Heartland with convenient service. The Indianapolis expansion builds on successful schedule enhancements that we have made in other key Midwestern markets including Milwaukee and Grand Rapids," Steenland said. SkyTeam announced during the quarter that it has formally invited Northwest Airlines, along with KLM and Continental Airlines, to join the SkyTeam network of carriers later this year. "Our SkyTeam entry will build on the successful alliance strategy we have developed over many years with major carriers including KLM, Continental, and Delta Air Lines. Entry into SkyTeam will allow us to significantly enhance the product that we can offer our global customers," Steenland added. Northwest continues to build its route network, adding new service to a number of international and domestic markets in recent months. On June 10, the airline began daily flights between Portland, Ore., and its Pacific hub at Tokyo. In addition, the carrier is increasing its presence in Hawaii. This month, Northwest resumed service between Los Angeles and Honolulu and added Kona, Hawaii to its network with daily service to Seattle. Northwest also plans to serve Portland and San Francisco from Honolulu, later this year. Northwest Airlines is the world's fifth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo, and Amsterdam, and approximately 1,500 daily departures. Northwest and its travel partners serve nearly 750 cities in almost 120 countries on six continents. Northwest Airlines will webcast its second quarter results conference call at 11:30 a.m. Eastern Daylight Time (10:30 a.m. Central) today. Investors and the news media are invited to listen to the call through the company's investor relations Web site at http://ir.nwa.com/ At June 30, 2004, Northwest Airlines' balance sheet showed a stockholders' deficit of $2.4 billion compared to a deficit of $2 billion at December 31, 2003. NORTHWEST AIRLINES: Expands Major Flights from Indianapolis ----------------------------------------------------------- Northwest Airlines (Nasdaq: NWAC) expands its Indianapolis schedule that will more than double the number of departures it offers by adding new nonstop service to Boston, Ft. Myers, Fla.; Hartford, Conn.; Las Vegas, Los Angeles, New York, Orlando, Fla.; Philadelphia, Raleigh/Durham, N.C. and Washington. All 19 of the new flights begin October 31, 2004. When combined with its existing schedule of 17 daily flights to its three domestic hubs of Detroit, Memphis and Minneapolis/St. Paul, the airline will offer an all-jet schedule from Indianapolis International Airport totaling up to 36 flights a day to 13 destinations, more jet aircraft departures than what's offered by any other airline. In addition, through its three hubs, Northwest and its marketing partners offer Indianapolis travelers connections to another 436 destinations. "Northwest is proud to be the leading choice of travelers in America's Heartland," said Fay Beauchine, vice president of sales and customer relations. "Our Indianapolis expansion builds on successful schedule enhancements we have made in other key Midwestern markets for Northwest such as Milwaukee and Grand Rapids." Northwest's new flights to Hartford and Raleigh/Durham will be the only nonstops offered to those destinations from Indianapolis. Flights to many of the new destinations are ideally timed for a one-day business trip. "Our new Indianapolis schedule will provide business and leisure travelers with a schedule, array of services and network reach that only a world-class airline can provide," Ms. Beauchine continued. "When combined with the scope of our domestic marketing partners, Continental Airlines and Delta Air Lines, Northwest offers Indianapolis travelers unmatched access to the world. In fact, we carry more international travelers from Indianapolis than any other airline." Northwest will offer daily flights from Indianapolis to Ft. Myers, Las Vegas, Los Angeles and Orlando. The Las Vegas and Los Angeles flights will be operated with a 124-seat Airbus A319, with 16 seats in first class and 108 seats in coach class. Northwest's new Ft. Myers and Orlando flights will be operated with a 100-seat DC9, with 16 seats in first class and 84 seats in coach class. Through its Northwest Airlink partner, Pinnacle Airlines, Northwest will offer two departures to Hartford, Philadelphia and Raleigh/Durham. Northwest Airlink will also offer three departures to the key business destinations of Boston, New York (LaGuardia Airport) and Washington (Ronald Reagan Washington National Airport). All of the Northwest Airlink flights will be operated with 44-seat Canadair Regional Jets (CRJs). Some of the Northwest Airlink flights will operate six days per week, with exceptions being Saturday or Sunday. Indianapolis travelers using Northwest's new nonstop service will also be able to take advantage of: -- WorldPerks. Northwest's WorldPerks program offers Indianapolis travelers a wider array of options to both earn and redeem frequent flyer miles. WorldPerks members can earn or redeem miles to any of the 236 cities served by Northwest and Northwest Airlink carriers worldwide, as well as the many hundreds of cities served by WorldPerks partner airlines such as KLM, Continental Airlines and Delta Air Lines. -- First class availability. Northwest offers more first class seats from Indianapolis than any other airline. The airline's new flights to Ft. Myers, Las Vegas, Los Angeles and Orlando will offer 16-seat first class cabins. WorldPerks members who achieve "Elite" status enjoy unlimited complimentary upgrades to first class. -- The most self-service functionality. Northwest's self- service check-in program is the most developed in the airline industry, offering customers more functionality including the option of checking-in, obtaining a boarding pass, changing seats, and performing many other functions over the Internet at nwa.com or through one of the airline's 903 self-service check-in kiosks in 193 airports, more than any other airline in the world. At Indianapolis International Airport, Northwest customers wishing to take advantage of the speed, convenience, and control of self- service check-in can use nwa.com to obtain their boarding pass, or visit one of 12 self-service check-in kiosks. Customers currently holding tickets for travel October 31 or beyond on connecting itineraries from Indianapolis will be able to change to Northwest's new nonstop services without paying an administrative change fee, provided changes are made by July 31, 2004. Northwest's new Indianapolis nonstops are currently open for sale via the Internet at http://www.nwa.com/by calling Northwest Airlines Reservations at 1-800-225-2525, or through some travel agencies. All of the flights will be widely available for sale on Saturday, July 24, 2004. Northwest Commemorates New Indianapolis Service With Frequent Flyer Mile Bonus Offer From October 31 through December 31, 2004, members of Northwest's WorldPerks frequent flyer program will receive a bonus of 1,000 WorldPerks miles for flying round-trip on the airline's new nonstop service between Indianapolis and Boston, Ft. Myers, Hartford, Las Vegas, Los Angeles, New York, Orlando, Philadelphia, Raleigh/Durham, or Washington. Registration is required prior to travel and must be completed no later than November 30, 2004. Fast and easy online enrollment in the WorldPerks program is available at http://www.nwa.com/freqfly/direct/enrolor by calling 1-888-955-7878. For a complete list of terms and conditions, and to register for this bonus offer, WorldPerks members should visit http://www.nwa.com/IND04 Northwest currently offers 17 jet flights per day from Indianapolis, including eight to its WorldGateway at Detroit hub, three to its convenient Memphis hub, and six to its hub at Minneapolis/St. Paul. Northwest Airlines is the world's fifth largest airline with hubs at Detroit, Minneapolis/St. Paul, Memphis, Tokyo and Amsterdam, and approximately 1,500 daily departures. Northwest and its travel partners serve nearly 750 cities in almost 120 countries on six continents. In 2003, consumers from throughout the world recognized Northwest's efforts to make travel easier. Northwest's WorldPerks program was named the most popular North American frequent flyer program by readers of TIME Asia in the 2003 TIME Readers' Travel Choice Awards. A 2003 J.D. Power and Associates study of airports ranked Minneapolis/St. Paul and Detroit, home to Northwest's two largest hubs, in second and fourth place among large domestic airports in overall customer satisfaction. At June 30, 2004, Northwest Airlines' balance sheet showed a stockholders' deficit of $2.4 billion compared to a deficit of $2 billion at December 31, 2003. NRG ENERGY: Asks Court's Permission to Assign 15 Contracts to OG&E ------------------------------------------------------------------ In connection with the sale of substantially all of the assets of NRG McClain, LLC, to Oklahoma Gas & Electric Company, NRG McClain will assume and assign 15 executory contracts and unexpired leases to Oklahoma Gas: (1) Settlement Agreement and Release, dated as of October 28, 2003, among NRG McClain, Duke/Fluor Daniel and Oklahoma Gas; (2) Amendment No. 1 to Settlement Agreement and Release, dated as of February 4, 2004, among NRG McClain, Duke/Fluor Daniel and Oklahoma Gas; (3) Purchase Order No. M-2357, dated September 22, 2003, issued to Alstom, amounting to $18,000; (4) Purchase Order No. M-2408, dated October 28, 2003, issued to Belger Cartage Service, Inc., amounting to $18,170; (5) Purchase Order No. M-2416, dated November 3, 2003, issued to Alstom, amounting to $36,000; (6) Purchase Order No. M-2417, dated November 3, 2003, issued to General Electric International, Inc., amounting to $104,348.78; (7) Purchase Order No. M-2368, dated November 3, 2003, issued to Vinson Process Controls, amounting to $11,000; (8) Release of Easement, dated as of October 22, 2003, executed by NRG McClain in favor of Donald L. Ward and Janette Ward; (9) Correction of Easement, dated as of October 24, 2003, between Donald L. Ward and Janette Ward, and NRG McClain; (10) Amendment to Confirmation to Master Power Purchase and Sale Agreement, dated as of March 31, 2004, between NRG McClain and Oklahoma Gas; (11) Base Contract for Sale and Purchase of Natural Gas, dated as of March 31, 2004, between Oklahoma Gas and NRG McClain, with Special Provisions thereto; (12) Purchase Order No. M-2662, dated April 19, 2004, issued to Crane Valve Services, amounting to $10,378; (13) Purchase Order No. M-2745, dated June 7, 2004, issued to ATS Express, LLC, amounting to $27,334; (14) Purchase Order No. M-2764, dated June 15, 2004, issued to Weir Valve & Controls, amounting to $23,648; and (15) Purchase Order No. MC-2579-8, dated July 7, 2004, issued to OG&E, amounting to $30,332. Six executory contracts and unexpired leases, which were listed on the original Schedule 3.8 to the Asset Purchase Agreement dated as of August 18, 2003 by and between Oklahoma Gas and NRG McClain, will not be assumed by NRG McClain and will not be assigned to Oklahoma Gas as part of the Sale: (1) Letter Agreement dated October 20, 2000 between Duke Energy McClain, LLC, and Aquatech International Corp. regarding system for minimizing cooling tower effluent; (2) Request for Services of ENSR Corporation made by Duke Energy North America dated May 30, 2001; (3) Letter Agreement between CH2M Hill Constructors, Inc., and Duke Energy McClain dated July 17, 2001 for additional monies for completion of construction of Phase II Surface Facilities; (4) Letter from Duke/Fluor Daniel to Duke Energy North America dated April 9, 2001 re City of Newcastle Request for McClain Soil; (5) Product Sale Agreement between Airgas Mid-South, Inc., and NRG McClain dated September 4, 2002; and (6) Assignment of Excluded Assets between Duke Energy North America and Duke Energy McClain dated as of August 31, 2001. NRG Energy, Inc. owns and operates a diverse portfolio of power- generating facilities, primarily in the United States. Its operations include baseload, intermediate, peaking, and cogeneration facilities, thermal energy production and energy resource recovery facilities. The company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 03-13024) on May 14, 2003. Debtors' counsel are James H.M. Sprayregen, P.C., Matthew A. Cantor, Esq., and Robbin L. Itkin, Esq. of Kirkland & Ellis. When the company filed for protection from its creditors, it listed total assets of $10,310,000,000 and total liabilities of $9,229,000,000. (NRG Energy Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) ORBITAL SCIENCES: Q2'04 Operating Income Rose to $14.5 Million -------------------------------------------------------------- Orbital Sciences Corporation (NYSE:ORB) reported financial results for the second quarter of 2004 and the first six months of the year, reporting significant improvements in revenue, operating income and net income relative to the same periods in 2003. Orbital reported second quarter 2004 revenues of $177.7 million, up 12% over second quarter 2003 revenues of $158.4 million. The company's second quarter 2004 operating income rose to $14.5 million as compared to second quarter 2003 operating income of $1.5 million. Net income was $11.1 million, or $0.17 diluted earnings per share in the second quarter of 2004, versus a $4.6 million net loss, or $0.10 net loss per share, in the second quarter of 2003. The company also reported positive free cash flow(1) of $5.5 million in the second quarter of 2004. During the quarter, Orbital repurchased approximately $5 million of its 9% senior notes due 2011 and $2 million of its common stock in connection with a $50 million securities repurchase program that was announced in April. Commenting on the second quarter's financial results, Orbital's Chairman and Chief Executive Officer, Mr. David W. Thompson, said, "We completed another very solid quarter, marked by outstanding execution of our operational programs and continued improvements in our financial performance. In the second quarter, our satellites and related space systems segment's revenues and profits continued to grow, our launch vehicles segment turned in another strong quarter and our transportation management systems segment continued on its path of steady improvement." Revenues Orbital's second quarter 2004 revenues were $177.7 million, up 12% over second quarter 2003 revenues of $158.4 million. This increase was primarily driven by the company's satellites and related space systems segment largely as a result of recent contract awards in its science, technology and defense satellite product line. For the first six months of 2004, Orbital reported $329.1 million in revenues, up 12% from $295.1 million in the same period last year. As in the second quarter, the increase in year-to-date revenues was primarily attributable to the company's satellites and related space systems segment. Operating Income Orbital reported operating income of $14.5 million in the second quarter of 2004, compared to operating income of $1.5 million in the same quarter of 2003. This increase was largely attributable to improved results in the satellites and related space systems segment and the transportation management systems segment, in addition to the absence in 2004 of $3.5 million in settlement charges related to litigation with the company's former affiliate, Orbital Imaging Corporation ("ORBIMAGE"), recorded in the second quarter of 2003. The improvement in operating income in the satellites and related space systems segment was due to a number of factors including profit derived from the revenue growth in the science, technology and defense satellites product line, favorable revenue and cost adjustments on certain contracts and the absence of a loss accrued in 2003 on the OrbView-3 satellite program. The transportation management systems segment's operating results improved largely due to the absence of contract cost increases and inventory- related charges recorded in the second quarter of 2003. Operating income in the launch vehicles segment decreased slightly in the second quarter of 2004 as compared to the same quarter last year. The launch vehicles segment's missile defense interceptor product line produced higher operating income, but this improvement was more than offset by lower quarterly results from the other product lines in this segment. Operating income for the first six months of 2004 was $28.7 million compared to $10.8 million in the same period in 2003. This increase was largely due to the same factors that drove the improvements in the second quarter as described above. In addition, Orbital recorded a $2.5 million non-recurring gain earlier this year on the sale of notes that the company had received from ORBIMAGE. Net Income Orbital's net income in the second quarter was $11.1 million, or $0.17 diluted earnings per share, as compared to a net loss of $4.6 million, or $0.10 loss per share, in the second quarter of 2003. The improvement in net income was due to the $13.0 million increase in operating income and a $3.3 million decrease in interest expense in the second quarter of 2004. The interest expense reduction is attributable to the company's third quarter 2003 debt refinancing transaction. The second quarter of 2004 includes $0.6 million, or $0.01 diluted earnings per share, in debt extinguishment expenses pertaining to the repurchase of approximately $5 million of the company's 9% senior notes. Orbital's net income for the first half of 2004 was $22.5 million, or $0.34 diluted earnings per share, compared to a net loss of $1.2 million, or $0.03 loss per share, in the same period of 2003. Cash Flow and Balance Sheet As of June 30, 2004, Orbital's unrestricted cash balance was $105.8 million. The company had positive free cash flow of $5.5 million in the second quarter of 2004 and $46.9 million for the first six months of 2004. New Business Highlights During the second quarter of 2004, Orbital booked approximately $110 million in new firm and option contracts. In addition, the company received approximately $60 million of option exercises under existing contracts. As of June 30, 2004, the company's firm contract backlog was approximately $870 million, up 36% over its value a year ago, while its total backlog (including options, indefinite-quantity contracts and undefinitized orders) was approximately $2.34 billion, down about 9% compared to this time last year. Operational Highlights In the second quarter of 2004, Orbital conducted two suborbital launches of its missile defense target vehicles and one space launch of its Taurus rocket. The target vehicles included the third launch of the "Coyote" Supersonic Sea-Skimming Target (SSST) vehicle for the U.S. Navy in May and the first launch of the Short-Range Air-Launched Target (SRALT) for the U.S. Army in June. Also in May, Orbital successfully launched the Taurus XL space launch vehicle that carried the Republic of China's ROCSAT-2 remote sensing satellite into low-Earth orbit. The mission was the inaugural flight of the enhanced performance "XL" version of the Taurus launch vehicle. In addition to these operational events, Orbital delivered three of its Orbital Boost Vehicle (OBV) long-range missile defense interceptors and five science and technology satellite systems to customers for upcoming launches or deployments. These included the delivery of the first two operational OBV interceptors for the U.S. Missile Defense Agency's (MDA's) Ground-based Midcourse Defense (GMD) system that are scheduled to be deployed in Alaska this month. Also delivered in the second quarter were five small scientific satellite platforms for the Republic of China's ROCSAT- 3 remote sensing satellite program. Orbital's third quarter 2004 operational mission plans and product delivery schedule remain very active. The company is scheduled to conduct the fourth test flight of its OBV interceptor vehicle to support MDA's Integrated Flight Test 13c, as well as to deliver four more interceptors to complete the initial deployments in Alaska. Orbital is also on track to conduct several additional flight tests of the "Coyote" SSST vehicle for the U.S. Navy and to carry out two medium-range target launches for MDA and the U.S. Army in the third quarter. 2004 Guidance Update Orbital reaffirmed its full-year 2004 forecast of revenues in the range of $660 to $670 million and operating income margin in the range of 7% to 8% of revenues. Based on estimated average diluted shares of 66 to 67 million for the year, Orbital continues to anticipate that its 2004 diluted earnings per share will be in the range of $0.60 to $0.65. The company increased its free cash flow guidance by $5 million to a new range of $45 to $55 million for the year. In addition, to date Orbital has received approximately $2 million from common stock warrant exercises and may receive up to $20 million from the exercise of common stock warrants that expire in the third quarter of this year. About Orbital Orbital develops and manufactures small space and rocket systems for commercial, military and civil government customers. The company's primary products are satellites and launch vehicles, including low-orbit, geosynchronous and planetary spacecraft for communications, remote sensing, scientific and defense missions; ground- and air-launched rockets that deliver satellites into orbit; and missile defense systems that are used as interceptor and target vehicles. Orbital also offers space-related technical services to government agencies and develops and builds satellite- based transportation management systems for public transit agencies and private vehicle fleet operators. As reported in the Troubled Company Reporter's June 14, 2004 edition, Standard & Poor's Ratings Services raised its ratings, including the corporate credit rating to 'BB-' from 'B+', on Orbital Sciences Corp. The outlook is stable. The company has $135 million in rated debt. "The upgrade reflects Orbital's improved credit profile, supported by adequate liquidity, better operating performance, and a sizable backlog," said Standard & Poor's credit analyst Christopher DeNicolo. PACIFIC MAGTRON: Ability to Operate Profitably Uncertain -------------------------------------------------------- The consolidated financial statements of Pacific Magtron International Corp. include its subsidiaries, Pacific Magtron, Inc. (PMI), Pacific Magtron (GA) Inc. (PMIGA) and LiveWarehouse, Inc. (LW). PMI and PMIGA's principal activity consists of the importation and wholesale distribution of electronics products computer components, and computer peripheral equipment throughout the United States. LW sells consumer computer products through the internet and distributes certain computer products to resellers. During the second quarter 2003, the Company sold substantially all the intangible assets of its majority owned subsidiary Frontline Network Consulting, Inc. (FNC) to a third party. The Company also sold all the intangible assets and certain tangible assets of its wholly owned subsidiary Lea Publishing, Inc. (Lea) to certain of Lea's employees. PMI Capital Corporation (PMICC), a wholly owned subsidiary, formed for the purpose of acquiring companies or assets deemed suitable for PMIC's organization, was dissolved in the third quarter of 2003. The Company incurred a net loss applicable to common shareholders of $319,200 for the three months ended March 31, 2004 and $2,896,600 and $3,110,100 for the years ended December 31, 2003 and 2002, respectively. During 2003, the Company also triggered a redemption provision in its Series A redeemable convertible preferred stock agreement and as a result, has increased the value of such stock to its redemption value and reclassified it as a current liability. In addition, the Company is in violation of certain of its debt covenants, which violations had been subsequently waived through June 30, 2004. Based on anticipated future results, it is probable that the Company will be out of compliance with certain of the covenants in future quarters. If this were to occur and waivers for the violations could not be obtained, the Company's inventory flooring line might be terminated and loan payments on its inventory flooring line and mortgage loan might be accelerated. Further, the Company's common stock was delisted from the NASDAQ SmallCap market effective April 30, 2003 as a result of the Company being out of compliance with the NASDAQ's minimum market value and minimum common stock bid price requirements. These conditions raise 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 it achieving profitability and generating sufficient cash flows to meet its obligations as they come due. Management believes that its downsizing through the disposal of its subsidiaries, FNC, Lea and PMICC, and its continued cost-cutting measures to reduce overhead at its remaining subsidiaries and an improving economy will enable it to achieve profitability. However, there can be no assurance that the Company will be able to achieve a profitable level of operations. If the Company were unable to do so, it would have to obtain additional equity or debt financing or sell a sufficient amount of its assets to retire the Textron and Wells Fargo credit facilities. There can be no assurance the Company will be able to obtain debt or equity financing or obtain it on terms acceptable to the Company. If the Company were forced to liquidate its assets, there can be no assurance that the Company could raise sufficient proceeds to meet its obligations. PARMALAT: Milk Products Proposes $600,000 Sale Pact Break-Up Fee ---------------------------------------------------------------- Parmalat Group North America, Milk Products of Alabama, LLC, and National Dairy Holdings, LP, have agreed that the Asset Purchase Agreement they executed will serve as a stalking horse deal to attract higher bids. In the event that Milk Products abandons the sale of the Alabama Business, terminates the Purchase Agreement under certain circumstances, or agrees to sell the Business to another successful bidder at the auction, Milk Products proposes to pay NDH a $600,000 break-up fee and reimburse NDH's expenses not to exceed $300,000. The payment of the Break-Up Fee and Expense Reimbursement is justified to compensate NDH: -- for the time and expense dedicated to the sale transaction and the value NDH added in: (1) establishing a bid standard or minimum for other bidders with respect to the Alabama Business; and (2) placing the Alabama Business in a "sales configuration mode" attracting other bidders to the Auction; and -- for serving, by its name and its expressed interest, as a catalyst for other potential or actual bidders for the Alabama Business. The Break-Up Fee and Expense Reimbursement will constitute a superpriority administrative expense claim against Milk Products' estate under Sections 364, 503(b), and 507(a)(1) of the Bankruptcy Code and will be paid immediately, without further Court order. Headquartered in Wallington, New Jersey, Parmalat USA Corporation -- http://www.parmalatusa.com/-- generates more than 7 billion euros in annual revenue. The Parmalat Group's 40-some brand product line includes milk, yogurt, cheese, butter, cakes and cookies, breads, pizza, snack foods and vegetable sauces, soups and juices and employs over 36,000 workers in 139 plants located in 31 countries on six continents. The Company filed for chapter 11 protection on February 24, 2004 (Bankr. S.D.N.Y. Case No. 04- 11139). Gary Holtzer, Esq., and Marcia L. Goldstein, Esq., at Weil Gotshal & Manges LLP represent the Debtors in their restructuring efforts. On June 30, 2003, the Debtors listed EUR2,001,818,912 in assets and EUR1,061,786,417 in debts. (Parmalat Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) PEAK ENTERTAINMENT: Revenues Insufficient to Ensure Viability ------------------------------------------------------------- Peak Entertainment Holdings, Inc, formerly Peak Entertainment Ltd. was formed on November 20, 2001, as an integrated media group focused on children. Its activities include the production of television entertainment, character licensing and consumer products development, including toy and gift manufacturing and distribution. Integration enables Peak Entertainment Holdings, Inc. to take a property from concept to consumer, in-house, controlling and coordinating broadcast, promotions and product launches (toys, apparel, video games, etc.) to build market momentum and worldwide brand quality. The Company's financial statements have been prepared assuming that the Company will continue as a going concern. The Company has sustained recurring operating losses and has a net capital deficiency as of March 31, 2004. The Company has developed a business plan to increase revenue by capitalizing on its integrated media products. However, the company must obtain funds from outside sources in fiscal 2004 to provide needed liquidity and successfully implement its business plan. Presently, the Company has no firm commitments from outside sources to provide these funds. These factors raise substantial doubt about the Company's ability to continue in existence. While the Company is optimistic that it can execute its revised business plan, there can be no assurance that; increased sales necessary to obtain profitability will materialize, and the Company will be able to raise sufficient cash to fund the additional working capital requirements. Peak Entertainment Holdings' revenues have been insufficient to cover its operating expenses. Since inception, it has been dependent on loans from the Company's officers and on private placements of the Company's securities in order to sustain operations. Management expects to satisfy its liquidity needs on a short-term basis through private placements of the Company's securities, including the issuance of debt. There can be no assurances that the proceeds from private placements or other capital transactions will continue to be available, that revenues will increase to meet cash needs, that a sufficient amount of securities can or will be sold, or that any common stock purchase options/warrants will be exercised to fund its operating needs. Management believes that the Company will need operating capital of approximately $3,000,000 in the next twelve months to maintain current operations, and operating capital of approximately $7,500,000 in the next twelve to twenty four months to complete planned entertainment projects already in the pre-production and production stages. As of March 31, 2004, the Company had commitments for capital and other expenditures aggregating $5,474,289 included in current and long term liabilities, payable over a maximum 20 year period. Peak Entertainment Holdings relies on short-term outside funding to meet its short-term liquidity needs, as the internal cash flows generated by sales of its toys and gift products have been insufficient to fully meet its short-term liquidity needs. The Company anticipates that in fiscal year 2005, it will be in position to meet its short-term and long-term liquidity needs through the internal cash flows generated from broadcast sales from its current entertainment projects, Monster In My Pocket and The Wumblers, which are scheduled for production in 2004. However, gross profit for the quarter ended March 31, 2004 represented only 0.2% of Company commitments as of March 31, 2004. Because current operations did not generate any significant revenues and principal planned products are still in production stages, the Company is in constant need of cash to pay for ordinary operating expenses, and more significantly, to pay for the production costs of three projects currently in various stages of production. Accordingly, until the entertainment projects can be funded and full television production activities commenced, Peak Entertainment Holdings will continue to rely on short-term outside funding. If unable to obtain funding for the projects, the Company has indicated that it may be forced to curtail or terminate operations. PG&E NATIONAL: Court Approves Tax Agreement Between NEG & USGen --------------------------------------------------------------- In settlement of previous tax sharing disputes between Debtors National Energy & Gas Transmission, Inc. and USGen New England, Inc., Judge Mannes of the U.S. Bankruptcy Court for the District of Maryland declares that at NEG's direction, USGen will either: (a) assign to NEG any affirmative claims or causes of action it may have against the parent company, PG&E Corporation, with respect to tax matters related to the period during which USGen was a member of the PG&E Corp. consolidated tax group; or (b) waive the affirmative claims or causes of action. Headquartered in Bethesda, Maryland, Lead Debtor PG&E National Energy Group, Inc. -- http://www.pge.com/-- develops, builds, owns and operates electric generating and natural gas pipeline facilities and provides energy trading, marketing and risk- management services. The Company filed for Chapter 11 protection on July 8, 2003 (Bankr. D. Md. Case No. 03-30459). Matthew A. Feldman, Esq., Shelley C. Chapman, Esq., and Carollynn H.G. Callari, Esq., at Willkie Farr & Gallagher represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $7,613,000,000 in assets and $9,062,000,000 in debts. (PG&E National Bankruptcy News, Issue No. 24; Bankruptcy Creditors' Service, Inc., 215/945-7000) PRESIDENT CASINOS: Court Denies Golf Course Re-Zoning Appeal ------------------------------------------------------------ President Casinos, Inc. (OTC:PREZQ.OB) reported that the re-zoning appeal related to the sale of its Biloxi President Broadwater Golf Course was denied in the Circuit Court of Harrison County, Mississippi. The Company had a contract to sell the golf course, which was contingent upon the proposed re-zoning. President Casinos, Inc. owns and operates dockside gaming facilities in Biloxi, Mississippi and downtown St. Louis, Missouri, north of the Gateway Arch. At May 31, 2004, President Casinos, Inc.'s balance sheet shows a stockholders' deficit of $52,899,000 compared to a deficit of $52,349,000 at February 29, 2004. QWEST COMMS: Will Release 2nd Quarter Results on August 3 --------------------------------------------------------- Qwest Communications International Inc. (NYSE:Q) will release second quarter 2004 earnings and operational highlights on Tuesday, August 3, 2004, at approximately 7:00 a.m. EDT. Qwest will host a conference call August 3, 2004, at 9:00 a.m. EDT. This call will feature Richard C. Notebaert, chairman and CEO, and Oren G. Shaffer, vice chairman and CFO, who will jointly provide the company's perspective on second quarter results. You may access a live audio webcast or a replay of the webcast at http://www.qwest.com/about/investor/meetings/ About Qwest Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 46,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com/ At March 31, 2004, Qwest Communications International, Inc.'s balance sheet shows a stockholders' deficit of $1,251,000,000 compared to a deficit of $1,016,000,000 at December 31, 2003. RCN CORP: Creditors Committee Wants to Retain Chanin as Advisor --------------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in RCN Corporation's chapter 11 cases wants to retain Chanin Capital Partners as its financial advisor, effective as of June 14, 2004. Committee Co-Chairman Eric L. Eddin relates that Chanin Capital has extensive experience in distressed transactions, including in Chapter 11 cases and representations of creditors. As the Committee's financial advisor, Chanin Capital will: (a) analyze (i) the Debtors' operations, business strategy, and competition in each of their relevant markets, and (ii) the industry dynamics affecting the Debtors; (b) analyze the Debtors' financial condition, business plans, capital spending budgets, operating forecasts, management, and the prospects for their future performance; (c) assist in the determination of an appropriate capital structure for the Debtors as part of their plan of reorganization; (d) determine a theoretical range of values for the Debtors on a going concern basis; (e) advise the Committee on tactics and strategics for negotiating with the Debtors and the holders of the existing senior debt obligations and other stakeholders, like the new financing sources, in the context of the Debtors' reorganization plan; (f) render financial advice to the Committee and participate in meetings or negotiations with the Debtors and other stakeholders in connection with any restructuring, modification or refinancing of the Debtors' existing debt obligations; and (g) provide the Committee with other and further financial advisory services with respect to the Debtors and a Restructuring Transaction as may be requested by the Committee. Chanin Capital will charge a $100,000 monthly fee, and will expect reimbursement of all out-of-pocket expenses. Chanin reserves the right to request a success fee. Indemnification Provisions The terms of Chanin Capital's engagement include the provision that the Debtors will indemnify and hold harmless Chanin Capital and its affiliates from and against any losses, claims, damages, judgments, assessments, costs and other liabilities, whether they be joint or several. The Debtors will also reimburse Chanin Capital and its affiliates for all fees and expenses, including: (i) the reasonable fees and expenses of counsel, arising out of, or in connection with advice or services rendered, or to be rendered by Chanin Capital on the Committee's behalf; (ii) the transactions contemplated in connection with the Chapter 11 cases; or (iii) any indemnified person's actions or inactions in connection with any advice, services or transactions. The Debtors will not be obligated to indemnify against losses or pay expenses that are determined by a final judgment by a court of competent jurisdiction to have resulted from an indemnified person's gross negligence or willful misconduct. In the event that the indemnification is unavailable, the Debtors will contribute to the losses or expenses payable by the indemnified party. Chanin Capital and its affiliates will be liable in respect of the services to be rendered to the Committee, only to the extent that any losses and expenses resulted solely from the gross negligence or willful misconduct of Chanin Capital or its affiliate. Rusell Belinsky, Senior Managing Director at Chanin Capital, assures the Court that the firm serves no interest adverse to the interests of the Committee or the Debtors' estate. Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- is a provider of bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Lead Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) REDBACK NETWORKS: Reports 45% Net Revenue Increase in 2nd Quarter ----------------------------------------------------------------- Redback Networks Inc. (Nasdaq:RBAK), a leading provider of broadband networking systems, reported its second quarter 2004 results for the period ended June 30, 2004. Net revenue for the second quarter of 2004 was $32.3 million, a 45 percent increase from $22.2 million in revenue for the second quarter of 2003. Net revenue was $30.2 million for the first quarter of 2004. The company achieved positive cash flow from operations, ending its second quarter of 2004 with $44.4 million of unrestricted cash. "We are pleased to achieve several important strategic and financial milestones this quarter as well as attaining significant wins with our next-generation SmartEdge platform in some of the world's largest broadband DSL networks for video and other advanced applications," said Kevin DeNuccio, president and chief executive officer, Redback Networks. "The second quarter of 2004 has been one of critical achievement and success." About Redback Networks Inc. Redback Networks Inc., a leading provider of broadband networking systems, enables carriers and service providers to build third- generation broadband networks that can profitably deliver simplified, personalized, portable subscriber services to consumers and businesses. The company's carrier-class, consumer- scale SmartEdge(R) Router and Service Gateway platforms for Consumer IP combine subscriber management systems and edge routing in conjunction with the NetOp(TM) element and policy management platform to provide a powerful, flexible infrastructure for managing both subscribers and value-added services. Founded in 1996 and headquartered in San Jose, Calif., with sales and technical support centers located worldwide, Redback Networks maintains a growing and global customer base of more than 500 carriers and service providers, including major local exchange carriers (LECs), inter-exchange carriers (IXCs), PTTs and service providers. The company emerged from Chapter 11 bankruptcy on January 2, 2004. Results for the period following our emergence from Chapter 11 reflect fresh-start accounting adjustments as required by generally accepted accounting principles (GAAP). * * * In its Form 10-Q for the quarterly period ended March 31, 2004, Redback Networks, Inc. reports: Liquidity "To date, the Company has funded its operations largely through the issuance of debt and equity securities. However, the Company has incurred substantial losses and negative cash flows from operations since inception. For the period from January 3, 2004 through March 31, 2004, the Company incurred a loss from operations of $16.1 million and negative cash flows from operations of $7.7 million. Management expects operating losses and negative cash flows to continue for at least the next 6 to 12 months. Management believes that its current cash and cash equivalent balances of $42.0 million are sufficient to meet its working capital requirements for at least the next 12 months. However, failure to generate sufficient revenue, potentially raising additional capital, or reduce discretionary spending could have a material adverse effect on the Company's ability to achieve its intended longer term business objectives. In addition, revenue generated from the sale of its products and services may not increase to a level that exceeds its operating expenses or could fluctuate significantly as a result of changes in customer demand or acceptance of future products. Accordingly, the Company may continue to incur negative cash flow from operations." RELIANCE GROUP: Pension Plan Terminated as of January 31, 2004 -------------------------------------------------------------- Reliance Group Holdings, Inc., and its debtor-affiliates sought and obtained authority from the U.S. Bankruptcy Court for the Southern District of New York to terminate the Reliance Group Holdings, Inc., Pension Plan. As previously reported in the Troubled Company Reporter, RGH reached an agreement with the Pension Benefit Guaranty Corporation to terminate the Pension Plan as of January 31, 2004. Pursuant to the Agreement, the PBGC will be appointed as trustee of the Pension Plan. Headquartered in New York, New York, Reliance Group Holdings, Inc. -- http://www.rgh.com/-- is a holding company that owns 100% of Reliance Financial Services Corporation. Reliance Financial, in turn, owns 100% of Reliance Reliance Insurance Company. The Company filed for chapter 11 protection on June 12, 2001 (Bankr. S.D.N.Y. Case No. 01-13403). When the Company filed for protection from their creditors, they listed $12,598,054,000 in assets and $12,877,472,000 in debts. (Reliance Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) RIVIERA HOLDINGS: Reports Record EBITDA Results for 2nd Quarter --------------------------------------------------------------- Riviera Holdings Corporation (Amex: RIV) reported financial results for the second quarter ended June 30, 2004. Net revenues for the quarter were $52.8 million, up $4.5 million (9.2%) from the second quarter of 2003. Income from operations was $7.6 million, up $3.1 million (70.6%) from the second quarter of 2003. EBITDA(1) was $10.9 million, up $2.3 million from the second quarter of 2003 and a record for any quarter in the Company's history. Net income for the quarter was $829,000 compared to a net loss of $2.4 million in the second quarter of 2003. Net revenues for the first half of 2004 were $103.3 million, up $7.4 million or 7.8% from the first half of 2003. Income from operations was $14.9 million, up $5.8 million (63.4%) from the first half of 2003. EBITDA was $21.6 million, up $4.1 million from the first half of 2003 and a record for any six-month period in the Company's history. Net income for the first half was $1.4 million compared to a net loss of $4.6 million in the first half of 2003. Second Quarter 2004 Highlights * Second quarter net income of $829,000 is a $3.3 million improvement from second quarter of 2003 * Riviera Black Hawk revenues were up 8.6% * Riviera Black Hawk EBITDA was up $755,000 (21.5) * Riviera Las Vegas revenues were up $3.4 million or 9.5% * Riviera Las Vegas EBITDA was up $1.7 million (26.3%) * Riviera Las Vegas occupancy was 95.3% compared with 93.4% in the second quarter of 2003, ADR (Average Daily Rate) increased $2.19 to $62.63 * The Company has $20 million in cash plus its $30 million revolver available Riviera Las Vegas Robert Vannucci, President of Riviera Las Vegas, said, "We are following the trend on the Las Vegas Strip with revenues increasing $3.4 million or 9.5% in the second quarter compared to the same period last year. EBITDA for the second quarter was up $1.7 million as EBITDA margins (2) increased from 17.7% to 20.4%. We were able to bring almost 50% of our revenue increase to the EBITDA line. "Casino revenues were up 8% over the second quarter of last year, as the business mix of customers in the hotel rooms and attending shows included more affinity groups (pool players and similar groups) with a better gaming profile. We have invested $2.8 million in new slot machines this year and we have our new slot monitoring system installed on approximately 80% of our machines as of the end of the quarter. We anticipate that the system will be connected to substantially all of our slot machines by the end of July 2004 and the that we will have approximately 560 machines (40%) converted to ticket-in, ticket-out technology by the end of the year. "Room occupancy was 95.3% up two percentage points from the same period last year. Average daily room rate (ADR) was $62.63, up $2.19, and revenue per available room (Rev Par) was $59.70 for the quarter compared with $56.43, for the second quarter last year. Convention rooms represented 34% of rooms sold for the quarter and 42% of the revenue, as the ADR was over $80 for this sector of our business. "Entertainment revenues increased 26.7% and we sold 50,000 more tickets this quarter than the same quarter last year. This additional traffic flow also enhanced casino revenues. "Our location on the Las Vegas Strip will continue to see more foot traffic as the Hilton Grand Vacations Club time shares, Wynn Las Vegas and recently announced luxury condominium projects draw more people to the north end. Riviera Las Vegas is located on 26 acres of prime real estate on the north end of the Las Vegas Strip. Recent land transactions on the Las Vegas Strip are indicators that the land in our financial statements has a fair market value well in excess of its $21 million recorded book value." Riviera Black Hawk Ron Johnson, President of Riviera Black Hawk, said, "The second quarter was another record breaking quarter for Riviera Black Hawk. We were able to achieve all time highs for gaming revenue, total revenue, EBITDA and market share. Net revenues reached a record $13.4 million during the quarter. EBITDA for the quarter grew by 21.5% to a record $4.3 million. EBITDA margin on net revenues increased to 31.9%. "The second quarter benefited from the continued strength of our marketing programs. We continue to invest our marketing dollars in areas that profitably build slot revenues and market share. We have also increased customer service by reducing the processing time for transactions in several key areas. Going forward we expect to see additional benefits as we take advantage of ticket- in, ticket-out technology. "We are also encouraged that gaming revenue in the Black Hawk/Central City Market continued to grow in the second quarter. Year-to-date the market has grown 3.7% over the first half of last year. Improved economic conditions in the Denver Metro area appear to be a driving force behind this growth. We are looking forward to the new access road expected to be open before yearend. This new road will provide additional access to the Black Hawk/Central City Market, expanding the capabilities of the market to handle additional weekend traffic." Consolidated Operations William L. Westerman, Chairman of the Board, said, "We are pleased the trend of increasing earnings continued and actually accelerated in the second quarter of 2004. Consolidated EBITDA increased by 27.2% for the second quarter and 23.5% for the first six months of 2004, respectively, as compared with 2003. The second quarter EBITDA of $10.9 million and first six months EBITDA of $21.6 million both set records for any quarter and semi- annual periods. Our cash flow for 2004 has been greater than budget and we are using the additional funds for investments in slot machines to accelerate our conversion to cashless operations. "The Missouri Gaming commission has indicated that it will need more time to evaluate the competing proposals for additional casino licenses in the St. Louis area and to render a decision on whether to select one or more applications as a priority for investigation. We believe that a more thorough evaluation of all current proposals will further differentiate our project from the other proposals. Studies have consistently shown that a casino entertainment complex in Jefferson County would provide the most incremental benefit to the State of Missouri and to the local host community. We are encouraged by the overwhelming support we continue to receive from Jefferson County residents and local government officials." About Riviera Holdings Riviera Holdings Corporation owns and operates the Riviera Hotel and Casino on the Las Vegas Strip and the Riviera Black Hawk Casino in Black Hawk, Colorado. Riviera is traded on the American Stock Exchange under the symbol RIV. Informal discussions with AMEX staff indicate that the Company may meet the standards of AMEX policy Sec. 1003(a). At June 30, 2004, Riviera Holdings Corporation's balance sheet showed a stockholders' deficit of $28,613,000 compared to a deficit of $30,037,000 at December 31, 2003. SAXON ASSET: Fitch Takes 3 Actions on Securities Trust Ratings -------------------------------------------------------------- Fitch Ratings has taken rating actions on the following Saxon Asset Securities Trust issues: Series 2000-1 group 1: --Class AF-5 affirmed at 'AAA'; --Class AF-6 affirmed at 'AAA'; --Class MF-1 affirmed at 'AA'; --Class MF-2 affirmed at 'A'; --Class BF-1 downgraded to 'BB' from 'BBB'. Series 2000-1 group 2: --Class MV-1 affirmed at 'AAA'; --Class MV-2 affirmed at 'A'; --Class BV-1 affirmed at 'BBB'. Series 2000-4 group 1: --Class AF-5 affirmed at 'AAA'; --Class AF-6 affirmed at 'AAA'; --Class MF-1 affirmed at 'AA'; --Class MF-2 affirmed at 'A'; --Class BF-1 downgraded to 'BB' from 'BBB' and removed from Rating Watch Negative. Series 2000-4 group 2: --Class MV-1 affirmed at 'AA'; --Class MV-2 affirmed at 'A'; --Class BV-1 affirmed at 'BBB'. Series 2001-1 group 1: --Class AF-5 affirmed at 'AAA'; --Class AF-6 affirmed at 'AAA'; --Class MF-1 affirmed at 'AA'; --Class MF-2 affirmed at 'A'; --Class BF-1 downgraded to 'CCC' from 'B'. Series 2001-1 group 2: --Class MV-1 affirmed at 'AA'; --Class MV-2 affirmed at 'A'; --Class BV-1 affirmed at 'BBB'. The affirmations on these classes reflect credit enhancement that is consistent with future loss expectations. The negative rating actions on class BF-1 of series 2000-1 group 1, class BF-1 of series 2000-4 group 1, and class BF-1 of series 2001-1 group 1 are due to the level of losses incurred and the high delinquencies in relation to the applicable credit support levels as of the June 2004 distribution. SIRIUS SATELLITE: Records $136.8 Million Net Loss in 2nd Quarter ---------------------------------------------------------------- SIRIUS (Nasdaq: SIRI), the premium satellite radio provider known for delivering the very best in commercial-free music and premier sports programming to cars and homes across the country, reported second quarter 2004 financial and operating results. As of June 30, 2004, SIRIUS had 480,341 subscribers. This reflects record-setting net additions of 128,678 subscribers during the quarter, which exceeds SIRIUS' previous record in the fourth quarter of 2003, and represents a 37% increase in subscribers over the first quarter of this year, as well as a 347% increase over the net subscriber additions of 37,127 reported on June 30, 2003. The company exceeded 500,000 subscribers on July 13, and expects to have one million subscribers by the end of this year. During the second quarter of 2004, SIRIUS continued to experience significant gains in the retail channel, fueled by increased product availability and growing consumer awareness. During the quarter, SIRIUS added 81,185 subscribers from the retail channel, 315% more than were activated in the second quarter of 2003. SIRIUS products, including in-dash receivers for vehicles and boats, receivers for the home market, transportable "Plug-&-Play" receivers for cars, trucks, RVs, boats and homes, as well as portable boomboxes, are currently available nationwide. "The second quarter was a strong one for SIRIUS, and is indicative of the excitement that we continue to generate for our premium programming," said Joseph P. Clayton, CEO of SIRIUS. "It's becoming clearer everyday that consumers are responding favorably to the quality, breadth and diversity of our content. With the start of our NFL play-by-play game coverage this coming football season, combined with the recent launch of Elvis Radio, yesterday's premiere of Tony Hawk's Demolition Radio, the upcoming launch of the Maxim Radio channel and our newly announced channel to be developed with Eminem, we are confident that we will continue to dazzle our listeners." During the second quarter of 2004, SIRIUS added 47,652 subscribers through its automotive, boating and trucking relationships, which is more than double the figure reported in the first quarter. Second Quarter 2004 Versus Second Quarter 2003 For the second quarter of 2004, SIRIUS recognized total revenue of $13.2 million, compared to $2.1 million for the second quarter of 2003. SIRIUS reported a loss from operations of $133.0 million for the second quarter of 2004, compared to a loss from operations of $109.8 million for the second quarter of 2003. Adjusted loss from operations for the quarter was $97.3 million compared to adjusted loss from operations of $86.5 million for the second quarter of 2003. SIRIUS reported a net loss applicable to common stockholders of $136.8 million for the second quarter of 2004, compared with a net loss applicable to common stockholders of $111.8 million for the second quarter of 2003. For the second quarter of 2004, average monthly revenue per subscriber, or ARPU, was $10.54. Excluding the effects of mail-in rebate programs, ARPU for the second quarter of 2004 was $10.90. SIRIUS maintains a strong cash position, ending the second quarter with $640 million in cash, cash equivalents, and marketable securities. Cash flow from operating activities for the quarter was $(64.8) million compared to cash flow from operating activities of $(64.6) million for the second quarter of 2003. SIRIUS defines adjusted loss from operations as loss from operations before depreciation expense, non-cash stock compensation expense, and expense for equity securities granted to third parties. Adjusted loss from operations is not a measure of financial performance under accounting principles generally accepted in the United States. SIRIUS believes adjusted loss from operations is useful to investors because it represents operating expenses of the company excluding the effects of non-cash items. Because adjusted loss from operations is not a measurement determined in accordance with accounting principles generally accepted in the United States and is thus susceptible to varying calculations, adjusted loss from operations as presented may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States. SIRIUS defines average monthly revenue per subscriber, or ARPU, as the total earned subscription revenue and activation revenue during the period, over the daily weighted average number of subscribers for the period. ARPU is not a measure of financial performance under accounting principles generally accepted in the United States and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with accounting principles generally accepted in the United States. SIRIUS defines subscriber acquisition costs, or SAC, as costs of incentives for the purchase, installation, and activation of SIRIUS radios, as well as subsidies paid to radio and chipset manufacturers, automakers and retailers and the negative margin on equipment sales. SAC is not a measure of financial performance under accounting principles generally accepted in the United States. About SIRIUS SIRIUS -- http://www.SIRIUS.com/-- is the only satellite radio service bringing listeners more than 100 streams of the best music and entertainment coast-to-coast. SIRIUS offers 61 music streams with no commercials, along with over 40 world-class sports, news and entertainment streams for a monthly subscription fee of only $12.95, with greater savings for upfront payments of multiple months or a year or more. SIRIUS is also the official satellite radio partner of the NFL. Stream Jockeys create and deliver uncompromised music in virtually every genre to our listeners 24 hours a day. Satellite radio products bringing SIRIUS to listeners in the car, truck, home, RV and boat are manufactured by Kenwood, Panasonic, Clarion and Audiovox, and are available at major retailers including RadioShack, Circuit City, Best Buy, Car Toys, Good Guys, Tweeter, Ultimate Electronics, Sears and Crutchfield. SIRIUS is the leading OEM satellite radio provider, with exclusive partnerships with DaimlerChrysler, Ford and BMW. Automotive brands currently offering SIRIUS radios in select new car models include BMW, MINI, Chrysler, Dodge, Jeep(R), Nissan, Infiniti, Mazda, Audi, Ford and Lincoln-Mercury. Automotive brands that have announced plans to offer SIRIUS in select models include Mercedes-Benz, Jaguar, Volvo, Volkswagen, Land Rover and Aston Martin. Genmar Holdings, the world's largest manufacturer of recreational boats, Formula Boats and Winnebago, the leading supplier of recreational vehicles and motor homes, also offer SIRIUS. Hertz currently offers SIRIUS in 29 vehicle models at 53 major locations around the country. * * * As previously reported, Standard & Poor's Ratings Services assigned its 'CCC-' rating to Sirius Satellite Radio Inc.'s new $250 million convertible notes due 2009. At the same time, Standard & Poor's affirmed its existing ratings, including its 'CCC' corporate credit rating, on the satellite radio broadcaster. The outlook is stable. The New York, New York- based firm has approximately about $450 million in debt. "The company is expected to use the proceeds for general corporate purposes, including expanding distribution and product development," according to Standard & Poor's credit analyst Steve Wilkinson. He noted, "The added liquidity is important to ratings stability given the considerable cash being consumed as Sirius works to accelerate subscriber growth." SK GLOBAL AMERICA: Wants Court to Approve John Roberts Settlement ----------------------------------------------------------------- SK Global America Inc. commenced an action against John Roberts, Inc., in the Supreme Court of the State of New York, County of New York, prior to filing for chapter 11 protection. In the State Court lawsuit, the Debtor asserted two separate causes of action based on: (a) payments made by Roberts to Blue Apparel, which violated the Debtor's security interests in Roberts' accounts receivable -- the First Claim; and (b) Roberts' receipt of certain goods from Blue Apparel, which constituted a conversion of those goods from the Debtor -- the Second Claim. The Debtor sought to recover $615,040 in damages on the First Claim and $484,109 on the Second Claim. On June 12, 2003, the Supreme Court entered a summary judgment in favor of the Debtor in connection with the First Claim. The ruling was subsequently affirmed on appeal. Roberts sought to reargue the appeal, while simultaneously appealing the Summary Judgment to the New York Court of Appeals. Subsequent to the Petition Date, the Debtor filed a motion seeking summary judgment on the Second Claim. That motion was denied in January 2004. In face of this contentious litigation, and as a result of extensive, arm's-length, and good faith negotiations, as well as an exchange of documentation, the parties decided to resolve their issues consensually, without further litigation. The Debtor and Roberts agreed to settle the Action pursuant to a settlement agreement. The salient terms of the Settlement Agreement are: (a) Roberts will deliver to the Debtor's counsel, Bingham McCutchen, LLP, $950,000, by certified check, bank check, or wire transfer made payable to Bingham McCutchen to be held by it in escrow pending Court approval of these provisions. The Debtor will cause Bingham McCutchen to provide written notice to Roberts' counsel via telecopier within three business days of Court approval. Upon receipt of the Court Approval Notice, Bingham McCutchen will release the Settlement Amount to the Debtor; (b) Each Party will deliver to counsel for the other executed General Releases, which will be held in escrow pending Court approval; and (c) The Debtor will cause its counsel to execute and deliver to Roberts' counsel a Stipulation of Discontinuance with prejudice, which Roberts' counsel will hold in escrow pending receipt of the Court Approval Notice, after which time Roberts will cause its counsel to file the Stipulation. Scott E. Ratner, Esq., at Togut, Segal & Segal, LLP, in New York, contends that in the event the disputes are not resolved through the proposed Settlement Agreement, continued litigation is likely to result in additional, unnecessary expense for the Debtor. Hence, the Debtor asks the Court to approve the Settlement Agreement. Mr. Ratner submits that the settlement and compromise between the parties is appropriate and highly favorable to the Debtor, and should be approved. (SK Global Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) SOLUTIA INC: Court Approves Key Employee Retention Program ---------------------------------------------------------- Judge Beatty of the U.S. Bankruptcy Court for the Southern District of New York authorizes the Solutia, Inc. Debtors to implement the 2004 Annual Incentive Program. The Debtors are also permitted to execute and perform under the separation agreements with Johnnie M. Foster, Susan E. Bevington and Glenn Ruskin, and to make required payments. Headquartered in St. Louis, Missouri, Solutia, Inc. -- http://www.solutia.com/-- with its subsidiaries, make and sell a variety of high-performance chemical-based materials used in a broad range of consumer and industrial applications. The Company filed for chapter 11 protection on December 17, 2003 (Bankr. S.D.N.Y. Case No. 03-17949). When the Company filed for protection from their creditors, they listed $2,854,000,000 in assets and $3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) STELCO INC: Plans to Close Rod Mill in September ------------------------------------------------ In recognition of a changing marketplace and in order to focus on sustainable and profitable product lines, Stelco Inc. (TSX:STE) announced that its Rod Mill will close in September of this year. There are 160 employees (140 hourly, 20 salaried) working at the facility, a number of whom are eligible to, and may elect to, retire. Stelco management will be working closely with the union and with the salaried employees on all workforce transition issues related to the closure. Courtney Pratt, Stelco's President and Chief Executive Officer, said, "This action reflects a changing marketplace, declining levels of rod production and our plan to focus a restructured Stelco on sustainable and profitable product lines. "We've said throughout our Court-supervised restructuring process that Stelco operates in more product lines than the business can support. This is an important step in the process of lowering our overall cost structure, reducing the number of product lines and focusing on our core business. As such, it moves us one step closer to our goal of becoming a viable steel producer with the ability to raise new capital, invest in plant and equipment, and focus on key markets in which it has competitive advantages. "The rod marketplace has become extremely competitive with the entry of new, high tech and low cost mills. As a result of this competition and our own ageing facility, our rod production has declined significantly, a trend that is expected to continue. By exiting this line of business now we can focus a restructured Stelco on those products for which there is increasing demand and in which we have a competitive advantage." The Rod Mill was constructed in 1966 and occupies a stand-alone facility near the Company's Hamilton works. It produces coiled wire rod products of varying diameters. Shipments reached a peak of more than 700,000 tons in 1980 but have declined since then. More recently, shipments have fallen from 354,000 tons in 2000 to an anticipated level of 160,000 tons in 2004 by the time the closure takes place in September. The Mill produces an inadequate return on capital invested and has been unprofitable in recent years. Stelco will be able to reallocate the steel to products that should increase its profitability in the short and long term. Approximately 70% of the Rod Mill's production is shipped to two of the Company's subsidiaries, Stelwire Ltd. and Stelfil Lt�e. Today's announcement will provide them with greater flexibility in the sourcing of raw materials. The search for alternate sources has been initiated and Stelco does not anticipate any disruption in supply to these subsidiaries. The Rod Mill's equipment and the land on which the Mill is located -- land that enjoys direct rail and harbour access -- will be listed for sale. Stelco Inc., which is currently undergoing CCAA restructuring proceedings, is a large, diversified steel producer. Stelco is involved in all major segments of the steel industry through its integrated steel business, mini-mills, and manufactured products businesses. Consolidated net sales in 2003 were $2.7 billion. STILLWATER MINING: S&P Corp Credit Rating Taken Off Watch Negative ------------------------------------------------------------------ Standard & Poor's Ratings Services removed its 'BB-' corporate credit rating and 'B' senior unsecured debt ratings on Columbus, Mont.-based platinum and palladium producer Stillwater Mining Co. from CreditWatch with negative implications, where they were placed on July 16, 2004, following a strike at the company's largest mine. The outlook is stable. "However, the ratings on Stillwater's bank loans remain on CreditWatch with negative implications due to uncertainty over the final terms and conditions of the proposed credit facility," said Standard & Poor's credit analyst Dominick D'Ascoli. As the proposed facility has not yet been fully syndicated, Standard & Poor's is concerned about language requiring that a portion of the proceeds from the sale of palladium, received as part of payment from MMC Norilsk Nickel for acquiring ownership of Stillwater, could be removed or altered, thus affecting recovery prospects and the assigned facility ratings. The removal of the corporate credit rating and unsecured debt ratings from CreditWatch follow the company's recent announcement that striking workers voted to accept a new three-year contract and are expected to return to work today. Although the strike shut down nearly three-quarters of Stillwater's production of palladium and platinum, its short duration should have only a minimal impact on the company's financial profile. The 'BB' bank loan rating, which is one notch above the corporate credit rating, and the '1' recovery rating indicate the likelihood of a full recovery of principal in the event of a default. Stillwater intends to use the proposed credit facility to refinance existing debt. The ratings on Stillwater reflect its majority ownership by Norilsk Nickel, limited mine diversity, volatile metal prices, and a high cost profile tempered by favorable supply contracts. Stillwater, with revenue of $240 million in 2003, produces palladium and platinum from two mines in Montana. TAYLOR CAPITAL: Fitch Withdraws BB- Preferred Stock Ratings ----------------------------------------------------------- Fitch Ratings-Chicago-July 21, 2004: Fitch Ratings has withdrawn the rating on Taylor Capital Group, Inc.'s preferred stock following its redemption. TAYC redeemed all of its outstanding preferred stock with the proceeds of its issuance of $40 million of trust-preferred securities from TAYC Capital Trust II. The Capital Trust II securities were issued through a private placement and placed in a trust preferred CDO rated by Fitch. Rating Withdrawn: --Preferred 'BB-'. TEEKAY SHIPPING: Reports $98.5 Million Net Income in 2nd Quarter ---------------------------------------------------------------- Teekay Shipping Corporation reported net income of $98.5 million for the quarter ended June 30, 2004, compared to net income of $96.9 million for the quarter ended June 30, 2003. The results for the second quarter of 2004 included an unrealized foreign currency translation loss of $5.2 million relating to long-term debt denominated in Euros. The results for the second quarter of 2003 included $4.7 million in write-downs to the carrying value and losses on the sale of certain older vessels. Net voyage revenues(1) for the second quarter of 2004 were $368.9 million compared to $353.1 million for the same period in 2003, and income from vessel operations decreased to $122.1 million from $127.7 million. The results for the second quarter of 2004 reflect the inclusion of the results from Naviera F. Tapias S.A. (renamed Teekay Shipping Spain S.A.) from May 1, 2004 and an increase in the Company's existing fixed-rate business, partially offset by the sale of certain older spot vessels over the past 12 months. Spot tanker rates during the second quarter of 2004 remained strong as Teekay's spot Aframax fleet averaged $27,567 per calendar-ship day, a slight increase from the average of $27,327 per calendar-ship day for the same period in 2003. However, unlike 2003 when the strength of spot tanker rates in the second quarter was amplified by the temporary disruption of oil supplies from Venezuela, which resulted in an increase in longer-haul West Africa and Middle East oil production, the strong market in 2004 has been primarily the result of fundamental oil demand growth. Net income for the six months ended June 30, 2004 was $287.6 million compared to $150.5 million for the same period last year. The results for the six months ended June 30, 2004 included a $5.2 million unrealized foreign currency translation loss relating to the above-mentioned Euro denominated debt. The results for the six months ended June 30, 2003 included $30.5 million in write-downs to the carrying value of certain older vessels, and a $4.9 million write-down in the carrying value of certain marketable securities. Net voyage revenues (1) for the six months ended June 30, 2004 were $816.5 million, compared to $566.0 million in the same period last year, while income from vessel operations increased to $330.7 million from $205.4 million. Expansion of Teekay's LNG Platform into Qatar On July 1, 2004, the Company announced that it had been awarded long-term contracts to charter three liquefied natural gas (LNG) carriers to Ras Laffan Liquefied Natural Gas Co. Limited (RasGas II), a joint venture company between Exxon Mobil Corporation and Qatar Petroleum. The vessels will be chartered to RasGas II for a period of 20 years (with options to extend up to 35 years), commencing in late 2006 and early 2007. Concurrently, the Company placed orders for three 151,700 m3 LNG carriers from Daewoo Shipbuilding and Marine Engineering Co. Ltd. for approximately $510 million. At this time, these are the largest LNG ships ever ordered. Qatar Gas Transport Company is expected to acquire a 30% interest in the vessels through a joint venture with Teekay. (1) Net voyage revenues represents voyage revenues less voyage expenses. Net voyage revenues is a non-GAAP financial measure used by certain investors to measure the financial performance of shipping companies. See the Company's website at http://www.teekay.com/for a reconciliation of this non-GAAP measure as used in this release to the most directly comparable GAAP financial measure. Fixed-Rate Tanker Segment For the quarter ended June 30, 2004, cash flow from vessel operations from the Company's fixed-rate tanker segment increased to $70.5 million from $56.2 million for the second quarter of 2003, primarily due to the addition of five conventional tankers on charter to ConocoPhillips and the inclusion of Teekay Shipping Spain's fixed-rate Suezmax tanker results from May 1, 2004. Fixed-Rate LNG Segment The acquisition of Tapias established Teekay's presence in LNG shipping, the fastest growing sector of sea-borne energy transportation. The LNG segment operating results for the second quarter of 2004 consists of Teekay Shipping Spain's two existing LNG carriers from May 1, 2004, which generated $5.5 million of cash flow from vessel operations. In July 2004, the Company took delivery of a third new building LNG carrier, which commenced service under a 25-year charter contract and a fourth new building LNG carrier is expected to deliver in the fourth quarter of 2004. In addition, the three LNG carriers ordered for the RasGas II project are expected to deliver in late 2006 and early 2007. Spot Tanker Segment Cash flow from vessel operations from the Company's spot tanker segment for the quarter ended June 30, 2004 decreased to $106.5 million from $126.0 million in the second quarter of 2003, primarily due to the sale of a number of older single-hull vessels during the last 12 months, partially offset by new building deliveries and additional in-chartered vessels. On a net basis, these fleet changes reduced the total number of calendar ship days for the spot tanker segment by 691 days in the second quarter of 2004 compared to the second quarter of 2003. Tanker Market Overview During the second quarter of 2004, tanker freight rates declined from the near record levels reached in the prior quarter, yet remained at relatively high levels when compared to historical averages due to continued favourable tanker market fundamentals. Global oil demand, an underlying driver of tanker demand, continued to be strong averaging 80.4 million barrels per day (mb/d) during the second quarter of 2004, a decline of 1.1 mb/d from the previous quarter but 3.9 mb/d higher than the second quarter of 2003. The year-on-year increase in global oil demand during the second quarter of 2004 was attributable mainly to the recovery of the global economy. On July 13, 2004, the International Energy Agency (IEA) raised its forecast for 2004 oil demand to 81.4 mb/d, which represents a 2.5 mb/d, or 3.2% increase over 2003 demand, the highest growth rate in 25 years. For 2005, the IEA forecasts a further increase in oil demand of 1.8 mb/d, or 2.2% over 2004, to 83.2 mb/d. Global oil supply grew by 0.1 mb/d to 81.9 mb/d in the second quarter of 2004 compared with the first quarter of 2004. OPEC production rose by 0.2 mb/d due to increased output from Saudi Arabia while non-OPEC production levels declined by 0.1 mb/d as a result of a decrease in North American and European output. At its June 3, 2004 meeting, OPEC raised its production quota by 2.0 mb/d to 25.5 mb/d, effective on July 1, 2004 in a bid to meet strong global oil demand. On July 15, 2004, OPEC announced that it would raise its output quota by a further 0.5 mb/d, effective on August 1, 2004. The size of the world tanker fleet increased to 324.0 million deadweight tonnes (mdwt) as of June 30, 2004, up 0.8% from the end of the previous quarter. Deletions totaled 2.8 mdwt in the second quarter of 2004 down from 4.1 mdwt in the previous quarter. Deliveries of tanker new buildings during the second quarter of 2004 totaled 5.6 mdwt compared to the 8.5 mdwt in the previous quarter. As of June 30, 2004, the world tanker order book stood at 84.9 mdwt, representing 26.2% of the total world tanker fleet compared to 81.6 mdwt or 25.4% at the end of the previous quarter. Teekay Fleet As at July 1, 2004, Teekay's fleet (excluding vessels managed for third parties) consisted of 168 vessels, including 51 chartered-in vessels and 20 new buildings on order. During the second quarter, the Company took delivery of three new buildings: the EVEREST SPIRIT (Aframax tanker) and the AXEL SPIRIT (Aframax tanker) which will trade in the spot market; and the NORDIC RIO (Suezmax tanker) which completed its conversion to a shuttle tanker and commenced on long-term charter to Petrobras Transporte S.A. During the second quarter, as part of its ongoing fleet renewal program, the Company entered into agreements to sell four of its single-hull vessels: the MUSASHI SPIRIT (1993-built VLCC), the PACIFIC SPIRIT (1988-built Aframax tanker), the SHILLA SPIRIT (1990-built Aframax tanker), and the ULSAN SPIRIT (1990-built Aframax tanker) for total gross proceeds of approximately $102 million. These vessels are expected to deliver to the buyers during the third quarter, at which time the Company expects to record a gain of approximately $25 million on the sale of the vessels. In addition, in July 2004 the Company took delivery of two newbuildings: the ESTHER SPIRIT (Aframax tanker) which entered the spot tanker fleet and the GALICIA SPIRIT (LNG carrier), acquired as part of the Tapias transaction, which commenced service under a 25-year fixed-rate charter contract to Union Fenosa Gas S.A. Liquidity and Capital Expenditures As at June 30, 2004, the Company had total liquidity of $540.8 million, comprising $215.7 million in cash and cash equivalents and $321.1 million in undrawn medium-term revolving credit facilities. As at July 1, 2004, including the RasGas II LNG new buildings, the Company had approximately $1,132 million in remaining capital commitments relating to its 20 new buildings on order. Of this, approximately $312 million was due during the second half of 2004, $378 million in 2005, $250 million in 2006 and $192 million due in 2007 and early 2008. For the remaining capital commitments, long- term financing arrangements totaling approximately $897 million exist for 15 of the 20 new buildings on order. Sale of A/S Dampskibsselskabet TORM Shares On July 16, 2004, the Company announced that it had sold its 16 percent stake in A/S Dampskibsselskabet TORM (TORM), acquired in July 2003 for a total cost of $37.3 million, for total proceeds of approximately $130.2 million. The Company has recognized a gain on sale of $2.2 million in the second quarter of 2004 and will recognize an additional gain of approximately $88 million in the third quarter of 2004, representing a total return of over 250% (including $5.7 million in dividends received in the second quarter of 2004). About Teekay Teekay Shipping Corporation transports more than 10 percent of the world's sea-borne oil and is also expanding its position in the rapidly growing liquefied natural gas shipping sector. With a fleet of over 160 tankers, offices in 14 countries and approximately 5,500 seagoing and shore-based employees, the Company provides a uniquely-wide range of marine services to the world's leading oil and gas companies, helping them seamlessly link their upstream energy production to their downstream processing operations. Teekay's reputation for safety, quality and innovation has earned it a position in the global energy industry as the premier marine midstream company. Teekay's common stock is listed on the New York Stock Exchange where it trades under the symbol "TK". * * * As reported in the Troubled Company Reporter's May 20, 2004 edition, Standard & Poor's Ratings Services affirmed its ratings on Teekay Shipping Corp., including the 'BB+' corporate credit rating, and removed all ratings from CreditWatch, where they were placed on March 18, 2004. The rating outlook is negative. At the same time, Standard & Poor's assigned a 'BBB-' rating to Teekay's $180 million senior secured bank loan, with a recovery rating of '1', indicating a high expectation of full recovery of principal in a default scenario. "The negative outlook is based on Teekay's increasingly aggressive growth strategy, which, with the current high level of debt, could delay anticipated improvements in credit measures," said Standard & Poor's credit analyst Kenneth L. Farer. Teekay completed its $810 million acquisition of Naviera F. Tapias S.A. on April 30, 2004. While the acquisition provides entrance to the attractive liquefied natural gas (LNG) market, the company's total debt burden and leverage have increased significantly. Pro forma for the transaction, lease-adjusted debt is $3.6 billion, with debt to capital of 65% at March 31, 2004. TERRA INDUSTRIES: To Webcast Q2 Results & Conference on July 29 --------------------------------------------------------------- Terra Industries Inc. (NYSE: TRA) has scheduled the webcast of its second quarter 2004 results conference call at 3:00 p.m. ET on July 29, 2004. During the call, Terra President and CEO Michael Bennett and Chief Financial Officer Frank Meyer will discuss Terra Industries Inc.'s second quarter results. Persons wishing to listen to the webcast may register at http://phx.corporate-ir.net/phoenix.zhtml?p=irol-eventDetails&c=105767&eve any time prior to the event. A recording of the webcast will be archived on Terra's web site for three months. Interested persons may listen to the archive by registering at the address above. The minimum requirement for listening to the broadcast is Windows Media Player software, -- downloadable free from http://www.microsoft.com/windows/windowsmedia/EN/default.asp-- and at least a 28.8 kbps connection to the Internet. Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading international producer of nitrogen products. * * * As reported in the Troubled Company Reporter's May 17, 2004 edition, Fitch Ratings has affirmed Terra Industries' ratings at 'B+' for the senior secured credit facility and 12.875% senior secured notes and 'B-' for the 11.5% senior secured second priority notes. The ratings have been removed from Rating Watch Negative status. A Stable Rating Outlook has been assigned. Terra's ratings were placed on Rating Watch Negative on Aug. 22, 2003 to capture the uncertainty in near term future performance, the potential for covenant violations and the possibility of further liquidity deterioration at that time. Poor volumes sold and the spike in natural gas cost in the spring of 2003 weakened Terra's financial position and the company had to draw on its credit facility during the second and third quarter of 2003 to meet cash needs. Revolver availability fell below $60 million subsequent to the end of the second quarter of 2003. Since then, Terra's liquidity position and financial performance have improved. At March 31, 2004, Terra's credit facility was undrawn and the availability after accounting for the minimum availability covenant was $114 million. Terra also had a cash balance of $160 million at the end of the first quarter. Seasonal needs indicate $80 million will be used for prepaid product and approximately $24 million will be required for note interest in the near term. Maturities in the next twelve months are negligible. Moreover, credit statistics have strengthened due to improved EBIT margins while debt levels remained relatively steady at approximately $402 million. EBIT margins improved to 5.0% for the trailing twelve months ended March 31, 2004 versus negative 2.7% in the prior year period. For the trailing twelve months ended March 31, 2004, EBITDA-to-interest incurred was 3.1 times (x) and total debt-to-EBITDA was 2.3x. These statistics compare favorably to the prior year period when EBITDA-to-interest was 1.5x and total debt-to-EBITDA was 5.1x. TESORO PETROLEUM: S&P Raises Corporate Credit Rating to BB+ ----------------------------------------------------------- Standard & Poor's Ratings Services raised its corporate credit rating on oil refiner and marketer Tesoro Petroleum Corp. to 'BB+' from 'BB-'. Standard & Poor's also raised its senior secured debt rating on the company to 'BBB-' from 'BB'. The outlook is stable. Pro forma the company's recent repayment of its $300 million 9% note issue due 2008, San Antonio, Texas-based Tesoro had about $1.3 billion of debt outstanding as of March 31, 2004. "The upgrade reflects the marked improvement in Tesoro's financial profile since 2002 when the company completed the second of two heavily debt-financed acquisitions," said Standard & Poor's credit analyst John Thieroff. "Management has displayed an almost single-minded focus in its effort to reduce debt through asset sales, capital discretion, cost reductions, and, more recently, abundant cash flow," continued Mr. Thieroff. Standard & Poor's also said that although near-term cash flow could continue to be exceedingly strong, it is the company's ability to generate borderline investment-grade financial measures at historical average refining margins and its significantly improved liquidity cushion to weather extended trough conditions that buttress the rating upgrade. The high speculative-grade ratings on Tesoro reflect its position as a leveraged, independent oil refiner and marketer operating in a very competitive, erratically profitable industry burdened by high fixed costs. These weaknesses are partly offset by strong asset quality, advantaged operating locations, and a limited degree of retail- derived margin stability. Tesoro owns and operates six refineries of varying complexity, with total throughput capacity of 558,000 barrels per day. Tesoro also has a network of 557 retail gasoline stations and convenience stores in the western U.S. TRW AUTOMOTIVE: Meets Gov't Regulations on Occupant Vision System ----------------------------------------------------------------- The occupant sensing vision system developed by TRW Vehicle Safety Systems Inc., TRW Automotive Holdings Corp.'s (NYSE: TRW), now meets the National Highway Traffic Safety Administration's (NHTSA) FMVSS 208 static test requirements for out-of-position occupant sensing, and is the first system of its type to have been recognized by TRW customers for this achievement. TRW's occupant sensing vision system can also perform dynamic out- of-position detection by identifying and tracking the position of an occupant's head in the vehicle; airbag deployment will be suppressed if the vision occupant sensor determines that the occupant is in the "keep out" zone with respect to the airbag. The system uses a stereo camera to monitor the vehicle passenger compartment from its mounting location in the overhead console. The camera circumference is roughly the size of a dime and is about 2 inches long. The TRW system is now a production-intent, embedded design utilizing a cost- effective, automotive-grade Digital Signal Processing (DSP) microprocessor. TRW Automotive has development contracts in North America and Asia for its occupant sensing vision system. "These are significant steps in our efforts to have production- ready vision systems for occupant sensing by the 2007 model year," said Doug P. Campbell, vice president, Engineering for TRW's Occupant Safety Systems business. "While TRW and other suppliers are currently supplying weight-based systems that indirectly infer occupant presence and size, the vision-based system can sense occupants in real-time and can accurately sense out-of- position situations, such as a passenger head or other part of the body, in close proximity to an airbag. It can also accurately recognize the size of the passenger or the presence of an infant seat -- all key parts of NHTSA's regulations." About TRW Automotive With 2003 sales of $11.3 billion, TRW Automotive ranks among the world's top 10 automotive suppliers. Headquartered in Livonia, Michigan, USA, the Company, through its subsidiaries, employs approximately 61,000 people in 22 countries. TRW Automotive products include integrated vehicle control and driver assist systems, braking systems, steering systems, suspension systems, occupant safety systems, electronics, engine components, fastening systems and aftermarket replacement parts and services. TRW Automotive news is available on the internet at http://www.trwauto.com/ * * * As reported in the Troubled Company Reporter's February 12, 2004 edition, following the completion of TRW Automotive's initial public equity offering, Fitch Ratings has affirmed the earlier indicative debt ratings of TRW Automotive Inc. The ratings of 'BB+' for senior secured bank debt, 'BB-' for senior notes, and 'B+' for senior subordinated notes are all affirmed. The Rating Outlook is Stable. TRW's ratings are reflective of the de-leveraging of the capital structure since the initial deal funding, the projected lower interest costs resulting from these lower debt levels and some refinancing activities, and relatively stable operating performance as a standalone company. Additionally, TRW's ratings are supported by its diversity of revenue which spans across all the major global vehicle manufacturers, good competitive positions in active and passive restraint systems which should continue to benefit from both regulatory and market dynamics, and a solid book of forward business which reflect these operating positives. Balancing out some of these positives are the risks associated with the continued severe pricing pressures and production volatility in the automotive environment which will challenge TRW to expand, if not maintain, margin performance. And, while TRW has been increasing its business with the ascendant Asian vehicle manufacturers, TRW still remains heavily levered to the traditional North American Big Three which have collectively been losing market share. Furthermore, TRW still remains highly levered in its capitalization and will have limited free cash flow for continuing principal reduction. U STREET DEVELOPMENT: Voluntary Chapter 11 Case Summary ------------------------------------------------------- Debtor: U Street Development, LLC 901 U Street, North West Washington, District of Columbia 20003 Bankruptcy Case No.: 04-01147 Chapter 11 Petition Date: July 21, 2004 Court: District of Columbia (Washington) Judge: S. Martin Teel, Jr. Debtor's Counsel: Jeffrey M. Sherman, Esq. Hall Estill Suite 700 North 1120 20th Street N.W. Washington, DC 20036 Tel: 202-973-1200 Estimated Assets: $1 Million to $10 Million Estimated Debts: $500,000 to $1 Million The Debtor did not file a list of its 20-largest creditors. UNIFLEX: Retains Budd & Demaria as Labor & Employment Counsel ------------------------------------------------------------- Uniflex, Inc., asks the U.S. Bankruptcy Court for the District of Delaware to approve its application to employ Budd & Demaria, LLP as its special labor and employment counsel. The Debtor reports that Budd & Demaria served as its labor and employment counsel before the Petition Date. The Debtor says Budd & Demaria brings a wealth of experience and knowledge in labor and employment matters. Additionally, the Firm has extensive familiarity with the Debtor's labor and employment issues. Uniflex tells the Court that negotiations with union employees under a Collective Bargaining Agreement are likely to be complex and will require counsel expert on these matters. Budd & Demaria intends to: (a) advise and counsel the Debtor in connection with all issues that arise with its non-union and union employees and all aspects that arise under the CBA; (b) advise and counsel the Debtor with respect to its general labor and employment matters arising in or outside of bankruptcy; and (c) perform the full range of services normally associated with the matters set forth above as the Debtor's special labor and employment counsel and which Budd & Demaria is in a position to provide. Thomas W. Budd, Esq., will lead team in this engagement. The normal hourly rates charged by Budd & Demaria are: Designation Billing Rate ----------- ------------ Partners $300 - $350 per hour Staff $180 - $290 per hour Administrative Staff $135 - $165 per hour Headquartered in Hicksville, New York, Uniflex, Inc. -- http://www.uniflexbags.com/-- makes custom-printed plastic bags and other plastic packaging for promotions and advertising. The Company filed for Chapter 11 protection on June 24, 2004 (Bank. Del. Case No. 04-11852). Peter C. Hughes, Esq., at Dilworth Paxson LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of over $10 million. UNITED AIRLINES: Wants Disallowance of Various Mega Claims ---------------------------------------------------------- As a bookkeeping matter, the United Airlines Inc. Debtors want to eliminate Duplicate Claims from their claims register. The Debtors ask the U.S. Bankruptcy Court for the Northern District of Illinois to disallow and expunge four Duplicate Claims. The Surviving Claims will not be affected. The Duplicate Claims are: Duplicate Surviving Claimant Claim Claim Claim Amount -------- -------- --------- ------------ County of Jefferson 42392 43005 $727 Van R. Millsap 42029 42015 Unspecified St. Mobile Aerospace 39965 39964 4,769,975 Daniel Ward 41974 41973 Unspecified Superseded Claims James H.M. Sprayregen, Esq., at Kirkland & Ellis, reports that 23 claims have been superseded by later-filed claims. As a result, the Superseded Claims, which aggregate $396,541,477, should be expunged. Surviving Claims will replace the claims expunged. The Superseded Claims include: Superseded Surviving Claimant Claim Claim Claim Amount -------- ---------- --------- ------------ Airbus North America 36806 43387 $66,464,304 General Services Admin 42840 43340 1,912,125 IBM Credit Corp 263 43317 4,702,000 U.S. Bank 35513 43320 22,864,482 35512 43322 23,707,686 35511 43323 23,705,764 35509 43319 23,705,764 35489 43334 25,248,504 Wells Fargo 31840 43228 68,379,629 36747 43291 111,121,173 No Supporting Documentation Claims The Debtors report that two creditors filed claims aggregating $600,000,210 without the requisite documentation, failing to comply with Rule 3001(c) of the Federal Rules of Bankruptcy Procedure. The Debtors ask the Court to disallow the No Supporting Documentation Claims: Claimant Claim No. Claim Amount -------- --------- ------------ Karen Bogusz 43351 $600,000,000 Wok & Roll of MSP 37060 210 Reduce Claims The Debtors object to 10 claims pursuant to Section 502(b)(1) of the Bankruptcy Code because the Claims are filed for amounts that differ from that reflected on the Debtors' Books and Records. After a thorough investigation, the Debtors tell the Court that each Claim is overstated: Original Reduced Claimant Claim No. Amount Amount -------- ---------- -------- ------- City of Denver 24123 $19,678,236 $19,214,549 Grapevine-Celleyville 290 32,512 30,463 Lancaster County 27942 4,717 4,421 State of Louisiana 476 151,005 141,500 State of Nebraska 7199 133,959 125,517 Sedgwick County 582 13,366 12,524 Shook, Hardy & Bacon 37957 13,423 9,470 County of Tarrant 295 10,340 9,689 County of Teton 2599 18,534 17,366 County of Travis 206 10,510 9,922 No Liability Claims The Debtors determined that their Books and Records do not support 43 No Liability Claims, aggregating $2,620,012. Moreover, the creditors failed to supply documentation to support the asserted liability. Accordingly, the Debtors ask the Court to disallow the No Liability Claims as not enforceable. The 10 largest No Liability Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ Ahmed Est of Nazir 41605 $100,000 County of Arapahoe 5049 102,493 Bosfuel Corp 40243 420,910 James Caliendo 1103 10,000 Department of the Treasury 447 566,594 GeoAccess 32542 71,737 Meta Group 1413 148,944 Olympic Properties 36782 795,762 A.P. Sharma 38895 26,727 USA.Net 1500 125,116 Wrong Debtor Claims Approximately 1,013 claims aggregating $204,666,466 were asserted against the wrong debtor. The Debtors ask Judge Wedoff to reclassify the Claims to the correct Debtor. The Wrong Debtor Claims include: Claimant Claim No. Claim Amount -------- --------- ------------ Argenbright Security 39939 $7,898,311 Tom Cherhoniak 9292 13,100,000 Cook County 43204 7,865,067 Barbara & Evan Williams 40570 20,000,000 Gate Gourmet 38913 19,139,081 JPMorgan Chase Bank 38074 11,500,000 City Los Angeles 36753 16,198,374 Miami-Dade County Aviation Dept 38501 8,516,020 Audrey Moses 376 10,000,000 SBC Operating Companies 43370 2,533,456 Non-Debtor Claims The Debtors ask the Court to disallow two claims that were filed against parties that are not debtors in their Chapter 11 cases: Claimant Claim No. Claim Amount -------- --------- ------------ Hymatic Engineering 5317 $3,518 Queens Transportation & Car Rental 41172 28,251 Redundant Claims The Debtors discovered four Redundant Claims, which arise when two or more parties file claims asserting the same liability. Because the claims filed by another claimant will survive, Redundant Claims, totaling $126,294, should be disallowed and expunged. The Redundant Claims are: Claimant Claim No. Claim Amount -------- --------- ------------ County of Adams 42979 $12,794 County of Arapahoe 5049 102,493 County of Eagle 2526 3,599 County of Gunnison 36654 7,408 Redundant Aircraft Claims The Debtors object to two Redundant Aircraft Claims filed by Wilmington Trust Company: Claim No. Claim Amount --------- ------------ 34125 $24,527,818 34124 25,731,976 Reclassify Claims The Debtors ask the Court to reclassify 27 claims that are not entitled to priority or secured status. The Reclassify Claims, which total $19,282,855, fail to provide a sufficient legal basis or other documentary support for the assertion of security or priority. The Claims should be reclassified as unsecured non- priority claims. The Claims include: Claimant Claim No. Claim Amount -------- --------- ------------ A-1 Auto Electric 7164 $2,579 Airtrans Chauffeured Transportation 5455 14,030 America Networking 494 11,929 Floyd Bost 968 2,000,000 K. Brown 8356 50,000 Chi Li Lin 42076 8,616 Carlos Plazos 39929 13,600,000 United Building Maintenance 5191 125,784 Jane Wolski 11146 40,000 Audrey Wright 5260 2,000,000 Goldman Claim David Goldman filed Claim No. 7157 for $644,000,000 to enforce the Debtors' obligation to provide frequent flier miles under the Mileage Plus Program. The Debtors assert that the rules of the Program do not constitute property of the participants. The Debtors may withdraw the Program benefits or terminate the Program at any time. The Debtors obtained Court authority to honor the Program, but this does not alter the conclusion that claims arising from the Program cannot exist. Thus, the Debtors ask Judge Wedoff to disallow the Goldman Claim. Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. the Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at KIRKLAND & ELLIS represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. (United Airlines Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) USG CORPORATION: Wants to Assume Libertyville Property Lease ------------------------------------------------------------ On December 22, 1993, Debtors USG Corporation, United States Gypsum Company, USG Interiors, Inc., and L&W Supply Corporation entered into an agreement with LaSalle National Trust, N.A. -- as trustee under a Trust Agreement dated December 22, 1993 -- for a certain non-residential real property lease, which comprises a research and development facility located in Libertyville, Illinois. The parties entered into these modifications to the Libertyville Lease: (a) Amendment to Lease Agreement dated June 8, 1995; (b) Second Amendment to Lease Agreement dated August 6, 1998; and (c) Third Amendment to Lease Agreement dated January 29, 1999. Paul N. Heath, Esq., at Richards, Layton & Finger, P.A., in Wilmington, Delaware, relates that the term of the Lease is through August 31, 2013. The Debtors have the option to extend the Lease for three successive periods of five years each, on 15 months notice to LaSalle, which notice must be provided no less than 20 months prior to the expiration of the Lease's term. Pursuant to the terms of the Lease, the base rent is $174,687 per month. If the Debtors exercise their option to extend the term of the Lease, the base rent is: (a) $120,000 per month for the first extension period; (b) $100,000 per month for the second extension period; and (c) equal to the fair market rent for the Leased Premises at the time of the extension for the third extension period. Mr. Heath explains that the Debtors are responsible for paying the cost of any services and utilities furnished to the Leased Premises and costs relating to its maintenance, taxes and insurance. Moreover, the Debtors are responsible for satisfying any environmental liabilities related to the Leased Premises. The payment of all amounts due under the Lease is guaranteed by non-debtor USG Foreign Investments, Limited, which is a wholly owned subsidiary of USG Corporation. Pursuant to the Lease, if LaSalle elects to sell the Leased Premises during, or at the end of, the Lease term, LaSalle must first offer to sell the Leased Premises to the Debtors. Furthermore, if it receives an unsolicited offer to purchase the Leased Premises, LaSalle must provide the Debtors with an opportunity to purchase the Leased Premises on the same terms of the offer. The Debtors have the option to purchase the Leased Premises, pursuant to the terms of the Lease. Mr. Heath contends that LaSalle financed the purchase of the Leased Premises with a $16,200,000 mortgage loan made with certain funds managed by Fidelity Management & Research Co., and, at the time of the First Amendment, refinanced the loan with a new loan amounting to $16,800,000 from Citicorp USA, Inc. At the time of the Second Amendment, LaSalle again refinanced the loan for $15,300,000 from Citicorp. It is the Debtors' understanding that Citicorp may require LaSalle to post collateral on the loan if the Lease is not assumed by the Debtors. To avoid the need to provide Citicorp with collateral, LaSalle has asked the Debtors to assume the Lease, and the Debtors are willing to do so. Accordingly, the Debtors ask permission from the U.S. Bankruptcy Court for the District of Delaware to assume the Lease. Mr. Heath relates that the Debtors conduct strategically important research and are in the process of locating certain of their main back-up computer systems at the Leased Premises. The Debtors believe that it would be extremely disruptive to their ongoing research activities to relocate to another place. Moreover, the Debtors maintain that the occupancy cost of the Lease is at or below fair market value. The occupancy cost is even lower during the first and second extension periods if the Debtors exercise their options to extend. Assuming the Lease ensures that the Debtors retain these valuable options. In addition, given the significant benefits the Lease provides to their estates, the Debtors have agreed to assume the Lease at this time, instead of seeking a further extension of the time to assume the Lease under Section 365(d)(4) of the Bankruptcy Code. To assume the Lease, Section 365(b)(1)(A) of the Bankruptcy Code requires that the Debtors cure, or provide adequate assurance that they will promptly cure, any outstanding defaults under the Lease. The Debtors do not believe that there is any prepetition arrearage owed on account of the Lease. Furthermore, the Debtors have reviewed their books and believe that all postpetition amounts under the Lease have been paid. Headquartered in Chicago, Illinois, USG Corporation -- http://www.usg.com/-- through its subsidiaries, is a leading manufacturer and distributor of building materials producing a wide range of products for use in new residential, new nonresidential and repair and remodel construction, as well as products used in certain industrial processes. The Company filed for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No. 01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at Jones, Day, Reavis & Pogue represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) VIASYSTEMS INC: S&P Affirms Corporate Credit Rating at B -------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B' corporate credit and other ratings for St. Louis, Missouri-based Viasystems Inc., and revised its outlook on the company to stable from positive. "The outlook revision reflects the withdrawal of the company's filing for an IPO of its common stock of up to $275 million, removing our previous expectation that credit protection measures would improve because of debt repayment with the planned IPO proceeds," said Standard & Poor's credit analyst Emile Courtney. Total debt was approximately $470 million as of March 2004. The ratings reflect Viasystems Inc.'s highly fragmented and competitive printed circuit board manufacturing market, volatile sales levels and profitability through the business cycle, and high debt leverage. These partly are offset by the company's low- cost manufacturing locations and its leading original equipment manufacturer customer base. Viasystems manufactures PCBs for electronics OEMs and wire harnesses for consumer appliance makers. Following Viasystems' voluntary reorganization, completed in January 2003, the company extinguished about $740 million in debt. Viasystems has closed and consolidated more than 50% of its manufacturing facilities since 2001, locating its remaining manufacturing sites primarily in China and Mexico, both low-cost areas. VITAL BASICS: Panel Gets Nod to Hire Drummond Woodsum as Counsel ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maine gave its stamp of approval to a request by the Official Unsecured Creditors Committee appointed in Vital Basics, Inc.'s Chapter 11 cases to retain Drummond Woodsum & MacMahon as its legal counsel. Benjamin Marcus, Esq., will be principally involved in this engagement. Mr. Marcus will: a) attend at Section 341 meetings and all scheduled hearings in these matters; b) prepare appropriate pleadings on behalf of the Committee; c) provide the Committee with legal advice in relation to all matters in these cases; and d) assist the Committee in negotiations with the Debtor regarding a plan of reorganization. Drummond Woodsum will bill the Debtors' estates for services rendered to the Committee at its current hourly rates, ranging from $75 to $320 per hour. Mr. Marcus' customary billing rate is $250 per hour. Headquartered in Portland, Maine, Vital Basics, Inc. -- http://www.vitalbasics.com/-- is engaged in the business of Sales, through direct consumer marketing and at retail, of nutraceutical and related products throughout the United States and Canada. The Company filed for chapter 11 protection along with its debtor-affiliate, Vital Basics Media, Inc., on May 10, 2004 (Bankr. D. Maine Case No. 04-20734). George J. Marcus, Esq., at Marcus, Clegg & Mistretta, P.A., represents the Debtor in its restructuring efforts. When the Debtors filed for protection from their creditors, Vital Basics, Inc., listed $6,291,356 in total assets and $16,314,589 in total debts; Vital Basics Media, Inc., listed total assts of $378,308 and total debts of $179,242. W.R. GRACE: Asks Court to Extend Removal Period to December 31 -------------------------------------------------------------- W.R. Grace & Co. and its debtor-affiliates ask the U.S. Bankruptcy Court for the District of Delaware to extend, to and including December 31, 2004, the period in which they can elect to remove a prepetition lawsuit to the U.S. District for the District of Delaware for continued litigation and resolution. David W. Carickhoff, Esq., at Pachulski Stang Ziehl Young & Jones, in Wilmington, Delaware, tells Judge Fitzgerald that the Debtors are named defendants in 65,000 asbestos-related lawsuits in various state and federal courts involving 232,000 different individual claims. The Debtors are also defendants in eight asbestos-related fraudulent conveyance actions in various state and federal courts that involve large numbers of individual claims. There are numerous other lawsuits, including, but not limited to environmental actions, in which one or more of the Debtors and their non-debtor affiliates are named defendants in various state and federal courts. Many of these Asbestos Actions, Fraudulent Conveyance Actions and Miscellaneous Actions were filed before the Petition Date. Since the Petition Date, a number of additional Asbestos Actions, Fraudulent Conveyance Actions and Miscellaneous Actions have been filed and continue to be filed. The Debtors and their non-debtor affiliates believe that the Postpetition Actions are void because they were filed in violation of the automatic stay. Mr. Carickhoff tells the Court that the Debtors have not had the time to address the pending actions because they were busy determining the true scope of their liability to asbestos claimants. Mr. Carickhoff further relates that the outcome of the decision regarding Judge Wolin's participation in their cases, and the appointment of Judge Buckwalter in lieu of Judge Wolin, has had an effect on the Debtors' ability to remove the prepetition lawsuits. The Debtors have worked diligently in conjunction with a number of constituencies in their Chapter 11 cases to advance their Chapter 11 cases. Substantial progress has been made in establishing a framework within which to resolve the Actions and various other claims against the Debtors. There have been a number of developments that have impeded the Debtors' progress toward establishing the framework to deal with asbestos-related Personal Injury Claims against the Debtors. A litigation protocol will streamline the claims adjudication process by providing a means of resolving the common legal issues through a fair and orderly process in a single forum while preserving legitimate personal injury claimants' rights to trial. While this litigation protocol will not completely eliminate the Debtors' need to preserve the option to remove actions to the Bankruptcy Court, it should minimize the need to do so. Nonetheless, until the claims arising from the Actions have been resolved, whether through the litigation protocol or otherwise, the Debtors must preserve the option of removing Actions to the Bankruptcy Court. The extension of the removal period will give the Debtors and their non-debtor affiliates an opportunity to make fully informed decisions and will ensure that they do not forfeit valuable rights of removal. Mr. Carickhoff assures the Court that the rights of the Debtors' adversaries will not be prejudiced by the extension because, in the event that a matter is removed, the other parties to those Actions to be removed may seek to have the Action remanded to the state court pursuant to Section 1452(b) of the Judiciary Procedures Code. Judge Fitzgerald will convene a hearing on August 23, 2004, to consider the Debtors' request. By application of Del.Bankr.LR 9006-2, the Debtors' removal deadline is automatically extended through the conclusion of that hearing. (W.R. Grace Bankruptcy News, Issue No. 66; Bankruptcy Creditors' Service, Inc., 215/945- 7000) W.R. GRACE: Reports $21.3 Million Net Income in Second Quarter -------------------------------------------------------------- W. R. Grace & Co. (NYSE:GRA) reported that 2004 second quarter sales totaled $572.4 million compared with $503.4 million in the prior year quarter, an increase of 13.7%. Revenue from higher volumes and improved product mix accounted for most of the increase, with the remainder primarily attributable to favorable currency translation and acquisitions. Grace reported second quarter net income of $21.3 million compared with $6.5 million in the second quarter of 2003. Pre-tax income from core operations in the second quarter of 2004 was $49.3 million compared with $33.6 million in the second quarter of 2003, a 46.7% increase, reflecting higher sales and cost structure improvements from productivity initiatives. "This is the fourth consecutive quarter with strong performance from our businesses," said Grace's Chairman and Chief Executive Officer Paul J. Norris. "Each business segment contributed sales and profit increases, capitalizing on stronger economic activity worldwide and delivering on our strategic growth and productivity initiatives." For the first six months of 2004, Grace reported sales of $1,090.9 million, a 15.0% increase over 2003. Favorable currency translation accounted for about one-third of the increase. Net income through June 2004 was $37.1 million or $0.56 per share, compared with net income of $4.2 million, or $0.06 per share, through June 2003. The year-to-date improvement in net income is primarily attributable to higher pre-tax income from core operations, which was $87.8 million in 2004 compared with $47.1 million in 2003 (with operating margins at 8.0% compared with 5.0% last year). The increase in operating profit and margins was principally attributable to strong sales growth, cost structure improvements from productivity initiatives and favorable foreign currency translation. Core Operations Davison Chemicals Refining Technologies and Specialty Materials Second quarter sales for the Davison Chemicals segment were $297.8 million, up 13.8% from the prior year quarter, reflecting improved economic conditions. Excluding the effects of favorable currency translation, sales were up 10.8% for the quarter. During the second quarter, Grace realigned its Davison product groups into "refining technologies" (which includes catalysts and other products and services used by petroleum refiners) and "specialty materials" (which includes silica and separations products, polyolefin and other chemical catalysts, and other products used in a broad range of industrial and consumer applications). All sales information for the Davison Chemicals segment has been restated to reflect this realignment. Sales of refining technologies products in the second quarter were $168.5 million, up 10.9% compared with the prior year quarter (9.0% after accounting for favorable currency translation). Most of the increase resulted from favorable product mix factors, including sales of higher performing catalysts, and added revenue from the pass-through of certain raw material costs. Sales of specialty materials products were $129.3 million, up 17.9% compared with the second quarter of 2003, with currency effects primarily from the stronger Euro contributing about 4.6 percentage points of the increase. Strong volume in all key regions from catalyst products and silica materials was the primary reason for the sales increase. Improvement was also attributable to growth programs for silica products used in separations and coatings applications. Operating income of the Davison Chemicals segment for the second quarter was $37.5 million, 37.4% higher than the 2003 second quarter. Operating margin was 12.6%, higher than the prior year quarter by 2.2 percentage points. The increase in operating income was driven primarily by improved sales in North America and in Europe, as well as foreign currency translation effects. Second quarter operating margin was enhanced by favorable product mix and lower manufacturing costs. Year-to-date sales for the Davison Chemicals segment were $568.7 million, up 13.6% from 2003 (excluding currency translation impacts, sales were up 8.9%). Year-to-date operating income was $69.5 million, compared with $47.6 million for the prior year, a 46.0% increase. Year-to-date operating results reflect similar economic conditions and cost factors to those experienced in the second quarter. Performance Chemicals Construction Chemicals, Building Materials, and Sealants and Coatings Second quarter sales for Performance Chemicals were $274.6 million, a record second quarter for this business segment and up 13.6% from the prior year quarter. Favorable currency translation accounted for 3.6 percentage points of the increase. Sales of specialty construction chemicals, which include concrete admixtures, cement additives and masonry products, were $138.0 million, up 21.1% versus the year-ago quarter (17.2% excluding favorable currency translation impacts). Revenues from an October 1, 2003 acquisition in Germany accounted for about one-third of the increase. Sales were up in all geographic regions, mainly reflecting the continued success of growth initiatives. Sales of specialty building materials, which include waterproofing and fire protection products, were $66.1 million, up 10.9% compared with the second quarter of 2003 (up 8.2% excluding favorable currency translation impacts). The second quarter results reflect strong sales of waterproofing materials, particularly underlayments for residential re-roofing and tapes for window/door flashing. Sales of fire protection products were about even with the prior year, leveling off after several quarters of decline caused by changes in building codes. Sales of specialty sealants and coatings, which include container sealants, coatings and polymers, were $70.5 million, up 3.4% compared with the second quarter of 2003 (about even with the prior year excluding favorable currency translation impacts). Higher sales in coatings and closure sealants, particularly outside North America, offset lower volumes of can sealants. Operating income for the Performance Chemicals segment was $38.9 million, compared with $25.8 million in the prior year quarter, a 50.8% increase and also a record for a second quarter. Operating margin of 14.2% was 3.5 percentage points higher than the 2003 second quarter margin. Improved operating income and margins reflect increased sales volume from all product lines and the success of productivity and cost containment programs across the business segment. Year-to-date sales of the Performance Chemicals segment were $522.2 million, up 16.7% from 2003 (excluding currency translation impacts, sales were up 11.6%). Year-to-date operating income was $66.5 million compared with $37.9 million for the prior year, a 75.5% increase, reflecting strong sales in all key regions, including sales from the German acquisition, and positive results from productivity and cost containment initiatives. Corporate Costs and Other Matters Second quarter corporate costs related to core operations were $27.1 million, a $7.6 million increase from the prior year quarter, and year-to-date corporate costs were $48.2 million, $9.8 million higher than last year. The second quarter and year-to-date increases are primarily attributable to performance-related compensation. In addition, effective in March 2004, Grace began accounting for currency fluctuations on a EUR 292 million intercompany loan between Grace's subsidiaries in the United States and Germany as a component of operating results, instead of as a component of other comprehensive income. In May 2004, Grace entered into a series of forward currency contracts designed to mitigate the financial exposure to this euro-based loan. The net change in currency value related to this loan was $8.8 million unfavorable in the second quarter and $10.4 million unfavorable year-to-date, and is included in pre-tax (loss) from noncore activities in Grace's segment basis presentation. During the second quarter, Grace completed an experience study of the assumptions and data that underlie its liability measurement for its U.S. qualified defined benefit pension plans. Based on that study, the accumulated benefit obligation of such plans as of the December 31, 2003 measurement date was increased by approximately $55.0 million (7% of the aggregate liability), mainly due to longer estimated life spans. This change has been accounted for within Grace's balance sheet as an increase to the recorded minimum pension liability and the accumulated comprehensive loss account (net of tax effects) reflected in shareholders' equity (deficit). At June 30, 2004, W.R. Grace's balance sheet showed a stockholders' deficit of $188.9 million compared to a deficit of $183.6 million at December 31, 2003. Cash Flow and Liquidity Grace's year-to-date cash flow provided by operating activities was $85.8 million for 2004, compared with $35.7 million for the comparable period of 2003. Year-to-date pre-tax income from core operations before depreciation and amortization in 2004 was $141.3 million, 45.5% higher than 2003. These results reflect the higher income from core operations described above. Cash used for investing activities was $22.1 million through June 2004, primarily for capital replacements. At June 30, 2004, Grace had available liquidity in the form of cash ($371.7 million), net cash value of life insurance ($96.6 million) and unused credit under its debtor-in-possession facility ($215.2 million). Grace believes that these sources and amounts of liquidity are sufficient to support its strategic initiatives and Chapter 11 proceedings for the foreseeable future. Chapter 11 Proceedings On April 2, 2001, Grace and 61 of its United States subsidiaries and affiliates, including its primary U.S. operating subsidiary W. R. Grace & Co.-Conn., filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware (the "Filing"). Grace's non-U.S. subsidiaries and certain of its U.S. subsidiaries were not part of the Filing. Since the Filing, all motions necessary to conduct normal business activities have been approved by the Bankruptcy Court. Recent developments in Grace's bankruptcy proceedings include: 1) The presiding district court judge, Alfred M. Wolin, was replaced by Judge Ronald L. Buckwalter of the U.S. District Court for the Eastern District of Pennsylvania. 2) Mr. David T. Austern, who currently also administers asbestos claims for the Manville Trust, was appointed legal representative for future asbestos personal injury claimants. 3) Grace's exclusive right to propose a plan of reorganization was extended through November 24, 2004. In connection with such extension, Grace is required to file a proposed plan of reorganization by October 14, 2004. Grace is in the process of developing a proposed reorganization plan to meet the October deadline. In such plan, Grace will propose how to resolve its pre-petition liabilities and contingencies, including undisputed trade-related, employee- related and financing-related claims, as well as claims associated with asbestos-related litigation, environmental remediation, tax matters and other claims filed with the Bankruptcy Court that Grace may dispute. The Chapter 11 proceedings, including the proposed plan of reorganization due in October or any revised plan, could result in allowable claims that differ materially from recorded amounts or amounts in Grace's proposed plan. Grace will continue to adjust its estimates of allowable claims as facts come to light during the Chapter 11 process that justify a change, and as Chapter 11 proceedings establish court-accepted measures of Grace's noncore liabilities. See Grace's recent Securities and Exchange Commission filings for discussion of noncore liabilities and contingencies. Grace is a leading global supplier of catalyst and silica products, specialty construction chemicals, building materials, and sealants and coatings. With annual sales of approximately $2 billion, Grace has over 6,000 employees and operations in nearly 40 countries. For more information, visit Grace's Web site at http://www.grace.com/ WEIRTON STEEL: Plans To Settle with Independent Guards Union ------------------------------------------------------------ At Weirton Steel Corporation's request, the U.S. Bankruptcy Court for the District of West Virginia permits Weirton to enter into an agreement with the Independent Guards Union, which resolves all claims or potential claims asserted or assertable by the IGU on behalf of its members and retirees against Weirton arising under or related to their collective bargaining agreements. Mark E. Freedlander, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, tells the Court that Weirton and the IGU have maintained a collective bargaining relationship since 1983. The IGU is the collective bargaining representative for approximately 20 guards at the Weirton facility. Weirton and the IGU were parties to collective bargaining agreements, as amended from time to time, including these benefit programs: (1) Agreement between Weirton and the IGU, effective as of September 26, 1996, as amended by: -- Settlement Agreement (Hourly Plant Guards), dated June 12, 2001; -- Settlement Agreement (Hourly Plant Guards), dated September 26, 2001; -- Settlement Agreement, dated November 13, 2002; -- Settlement Agreement, (Hourly Plant Guards), dated February 5, 2003; and -- Memoranda of Understanding between Weirton and the IGU, dated February 19, 2004 and April 22, 2004 (2) Insurance Agreement, effective September 26, 1993 (3) Supplemental Unemployment Benefits Plant (Hourly Plant Guards), effective September 26, 1993 (Plan 504) (4) Current CBAs may have provided for participation by members of the collective bargaining unit in: -- Weirton Steel Corporation Retirement Plan (Plan 001), terminated as of October 21, 2003; -- Weirton Steel Corporation 1984 ESOP (Plan 002); -- Weirton Steel Corporation 1989 ESOP (Plan 003); -- Weirton Steel Corporation Tax Deferred Savings Plan 401(k) (Plan 004); -- Program of Health Benefits, Prescription Drug, Dental, Orthodontics, and Vision Benefits (Plan 501); -- Sickness & Accident Benefits (Plan 502); -- Travel Accident Insurance (Plan 511); -- Weirton Steel Corporation Employee Assistance Program (Plan 516); and -- Life Insurance (Plan 517) The current collective bargaining agreements between Weirton and the IGU will expire after the expiration of Weirton's collective bargaining agreement with the Independent Steelworkers Union. In connection to Weirton's Sale Transaction with International Steel Group, Inc., and ISG Weirton, Inc., ISG may hire ISG's represented workforce from among IGU employees of Weirton. Whether or not IGU members are hired by ISG, ISG and the IGU have agreed to the terms and conditions of certain payment to be made to IGU members upon termination of service, including: (a) certain vacation payments to former Weirton employees hired by ISG which were earned by those former Weirton employees prior to the Closing; and (b) certain buy-out payments to be paid by ISG under the Transition Benefit Program. The IGU and ISG have agreed to a Transition Benefit Program to be funded entirely by ISG. A purpose of the Program is to induce voluntary attrition of the IGU-represented workforce at Weirton, thereby minimizing unemployment that would otherwise occur at the time of the Closing. To resolve all claims, Weirton and the IGU negotiated an Effects Agreement, which provides for: (a) Establishment of timeframes -- 45 or 60 days, as the case may be -- after the Closing in which Weirton is obligated to provide the IGU and IGU-represented employees: (1) reports relating to employees eligible for workers' compensation benefits; (2) access to records including but not limited to medical records, work records and personnel files; (b) Provisions for cooperation with respect to implementation of the Transition Benefit Program; (c) Limitations on the extent to which claims for benefits provided under the Weirton/IGU collective bargaining agreements will be paid; (d) Limitations on the extent to which claims for benefits formerly provided by Weirton to IGU-represented retirees will be paid; (e) Termination of the collective bargaining agreements and the collective bargaining relationship between Weirton and the IGU as of the Closing on the Sale Transaction; and (f) A waiver and release by the IGU on behalf of itself and to the greatest extent permitted by law, its bargaining unit employees, former bargaining unit employees and retirees of claims, known or unknown, liquidated or unliquidated including but not limited to: (1) claims under the collective bargaining agreements, including grievance claims; (2) claims under the National Labor Relations Act, the Labor Management Relations Act, the WARN Act, ERISA and any other federal, state or local law relating to employment, discrimination in employment, wages, benefits or otherwise; (3) claims filed with the Bankruptcy Court; and (4) claims for reimbursement of counsel fees. (Weirton Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 215/945-7000) WESTERN PACIFIC: First Creditors Meeting Slated for August 4 ------------------------------------------------------------ The United States Trustee will convene a meeting of Western Pacific Network Services, Inc.'s creditors at 1:00 p.m., on August 4, 2004 at 111 South Tenth Street, Sixth Floor, Suite 6.365A, St. Louis, Missouri 63102. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in St. Louis, Missouri, Western Pacific Network Services, Inc., is an Internet Service Provider offering both dial-up and broadband access to residential and business customers throughout Eastern Missouri and Central and Southern Illinois. The Company filed for Chapter 11 protection on June 29, 2004 (Bankr. E.D. Mo. Case No. 04-48324). David A. Warfield, Esq., at Blackwell Sanders Peper Martin LLP, represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $1 million to $10 million in total assets and total debts. WESTPOINT STEVENS: Sells 400 Looms to Coker Ashland for $725,000 ---------------------------------------------------------------- WestPoint Stevens Inc. discloses that it sold 400 Air Jet Looms (Dunson and Opelika) to Coker Ashland, LLC, for $725,000 in April 2004. Because the sale was for less than $1 million, prior Bankruptcy Court approval was not required under a de minimis asset sale protocol approved early in WestPoint Stevens' chapter 11 cases. (WestPoint Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) WOMEN FIRST: Files Liquidating Chapter 11 Plan in Delaware ---------------------------------------------------------- Women First Healthcare filed its Liquidating Chapter 11 Plan with the U.S. Bankruptcy Court for the District of Delaware. The Debtor asks the Court to allow it to file its Plan without a disclosure statement. The Debtor says it needs additional time to prepare and circulate the draft disclosure statement to interested parties for comment and finalize the terms of the Plan. The Debtor reasons that filing the plan without a disclosure statement will provide interested parties the opportunity to review and comment on the Plan. A full-text copy of the Debtor's Plan is available for a fee at: http://www.researcharchives.com/bin/download?id=040721020853 The Plan provides for these classifications of all claims and interests against the estates: Class Treatment ----- --------- 1A - Senior Impaired and entitled to vote whether to Secured accept or reject the Plan. The Holders Notes Claims will: (a) receive the net cash proceeds of the sale of their Collateral if sold prior to the Effective Date, (b) receive their Collateral, or (c) receive other treatment which the Debtor and the Holders agree to. 1B - Elan Claims Impaired and entitled to vote whether to accept or reject the Plan. Elan will: (a) receive the net cash proceeds of the sale of its Collateral if such Collateral is sold prior to the Effective Date, (b) receive its Collateral, or (c) receive other treatment which the Debtor and Elan agree to. 1C - Wyeth Claims Impaired and entitled whether to vote to accept or reject the Plan. Wyeth will: (a) receive the net cash proceeds of the sale of its Collateral if such Collateral is sold prior to the Effective Date, (b) receive its Collateral, or (c) receive other treatment which the Debtor and Wyeth agree to. 2A et seq. - Impaired and entitled to vote whether to Other Secured accept or reject the Plan. Each Allowed Claims Class 2A et seq. claim, will, in the discretion of the Debtor, receive any one or a combination of: (a) Cash in an amount equal to such Allowed Class 2A et seq. Claim; (b) deferred Cash payments totaling at least the Allowed amount of such Claim; (c) the Collateral securing such Holder's Allowed Class 2A et seq. Claim; (d) payments or Liens amounting to the indubitable equivalent of the value of such Holder's interest in the Collateral securing the Allowed Class 2A et seq. Claim; (e) Reinstatement of such Class 2A et seq. Claim; or (f) other treatment as the Debtor and the Holder have agreed upon. 3 - Priority Unimpaired and not entitled to vote for Non-Tax or against the Plan. The Liquidating Trust Claims will pay the Holder either: (a) Cash equal to the amount of such Allowed Priority NonTax Claim, or (b) other treatment which the Debtor and the Holder agree to. 4 - Unsecured Impaired and entitled to vote for or Claims against the Plan. The Liquidating Trustee will pay the Holder, a Pro Rata share of the Cash and Assets held in the Liquidating Trust from time to time. 5 - Senior To the extent that Holders of retain Convertible any property or Cash on account of the Redeemable Claims, Class 5 is impaired by the Plan Preferred and entitled to vote for or against the Stock Rights Plan. To the extent that Holders retain no property or Cash on account of Interests or Claims, Class 5 is impaired by the Plan and deemed to have rejected the Plan. To the extent that the security interest asserted by Holders of Senior Convertible Redeemable Preferred Stock is valid and enforceable, the Holders will receive either: (1) payment from the proceeds, if any, of their collateral plus a Deficiency Claim, if any or (2) a return of their collateral plus a Deficiency Claim, if any. To the extent that a party in interest successfully asserts or the Court determines that the security interest asserted by Holders is unperfected, invalid or unenforceable, Holders of Senior Convertible Redeemable Preferred Stock will have no Claim with and will receive the same treatment as Holders of Class 6 and Class 7 Interests. 6 - WFHC Common Impaired and deemed to have rejected the Stock and Plan. Each Holder of will not receive or Securities retain any property or Cash under the Plan Claims on account of such Interest or Claim. 7 - All Claims Impaired and deemed to have rejected the arising out Plan. Each Holder will not receive or of WFHC retain any property or Cash under the Plan Stock Rights on account of such Interest or Claim. Headquartered in San Diego, California, Women First HealthCare, Inc. -- http://www.womenfirst.com/-- is a specialty pharmaceutical company dedicated to improve the health and well- being of midlife women. The Company filed for Chapter 11 protection on April 29, 2004 (Bankr. Del. Case No. 04-11278). Michael R. Nestor, Esq., and Sean Matthew Beach, Esq., at Young Conaway Stargatt & Taylor represent the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $49,089,000 in total assets and $73,590,000 in total debts. WORLDCOM INC: Demands Full Payment of Debts from Former CEO ----------------------------------------------------------- Marcia L. Goldstein, Esq., at Weil, Gotshal & Manges, LLP, in New York, relates that in Fall 2000 and continuing through April 2002, the Worldcom Inc. Debtors loaned to former WorldCom Chief Executive Officer, Bernard J. Ebbers, funds to pay for Mr. Ebbers' personal debt from different institutions, including Bank of America, N.A., Citicorp USA, Inc., and Travelers Insurance Company. Mr. Ebbers borrowed hundreds of millions of dollars from these institutions for his business ventures. Mr. Ebbers pledged significant amounts of his shares of WorldCom stock as collateral for the debt. The Ebbers Loans In 2000 and 2002, the Debtors loaned money to Mr. Ebbers and guaranteed Mr. Ebbers' debt to prevent large forced sales of WorldCom Common Stock due to margin calls made by Bank of America. The Ebbers Loans were evidenced by demand notes. In connection with the 2000 Demand Note, Mr. Ebbers and the Debtors entered into a letter agreement dated November 1, 2000, whereby: (a) The Debtors agreed to provide a limited guaranty to Bank of America for certain of Mr. Ebbers' liabilities to Bank of America; (b) Mr. Ebbers indemnified the Debtors for all claims and expenses arising out of the 2000 Letter Agreement, the 2000 Demand Notes, and the guaranty; and (c) Mr. Ebbers pledged to the Debtors his current and future shares of WorldCom Common Stock and all proceeds derived from the Stock, as security for his obligations under the 2000 Letter Agreement and the Ebbers Loans. The Debtors and Bank of America entered into a First Modification and Reaffirmation of Limited Guaranty dated January 25, 2002, which expanded the Debtors' prior guaranty to include not only Mr. Ebbers' obligations to Bank of America, but also those of companies owned by Mr. Ebbers, and recognized his additional obligations under the Letter of Credit. In January 2002, the Debtors loaned directly to Mr. Ebbers an additional $65 million, as evidenced by the 2002 Demand Note, in exchange for Mr. Ebbers' promise to repay the loan. Under the Demand Notes, the Debtors had the right to demand immediate repayment of all principal and interest due at any time. As a result of the Guaranty and Letter of Credit, the Debtors ultimately paid Bank of America $235,227,055. Furthermore, the Debtors and Mr. Ebbers entered into: -- a letter agreement on April 2, 2002, which amended and restated the 2000 Letter Agreement; and -- a Pledge and Security Agreement on April 18, 2002. Under the 2002 Agreements, Mr. Ebbers pledged to the Debtors security interests in certain equity interests in privately held businesses he owned, including Joshua Holdings, Intermarine Companies, BCT Holdings, LLC, Douglas Lake Companies, Douglas Lake Land & Timber Company, LLP, and Douglas Lake Properties, Inc. The Debtors became entitled to exercise sole and exclusive control of the Ebbers Property Interests, including voting interests, upon notice to the relevant company. The Term Note On April 29, 2002, the Debtors agreed to consolidate Mr. Ebbers' financial obligations into a single promissory note. Under the Term Note, the Debtors relinquished their right to demand immediate repayment of all principal and interest due and allowed Mr. Ebbers to repay the Ebbers Loans at a below-market interest rate over a period of five years pursuant to this schedule: * $25 million on April 29, 2003, * $25 million on April 29, 2004, * $75 million on April 29, 2005, * $100 million on April 29, 2006, and * the remaining principal on April 29, 2007. As of April 29, 2002, the aggregate principal amount owed by Mr. Ebbers under the Term Note is $408,214,930, which consists of: * $165 million in principal amount owed by Mr. Ebbers under the 2000 Demand Notes and the 2002 Demand Note; * $198.7 million in payments made by the Debtors to Bank of America under the Guaranty; * $36.5 million deposit by the Debtors collateralizing the Letter of Credit; and * $8 million in interest accrued thereon through April 29, 2002. The Term Note provides: (a) for Mr. Ebbers' payment of interest on the outstanding balance under the Term Note, at a fluctuating interest rate equal to that for Eurodollar borrowings under the Revolving Credit Agreement among the Debtors, Bank of America and JPMorgan Chase Bank, dated as of June 8, 2001, as amended. The interest rate was 2.32% per year as of April 29, 2002; (b) that after any payment demand, Mr. Ebbers will pay a default rate of interest on demand on the unpaid balance under the Term Note, compounded monthly, at the applicable Normal Rate then in effect plus 3% per annum; (c) that all principal and accrued interest under the Term Note becomes immediately due and payable on demand by the Debtors: -- if Mr. Ebbers fails to pay any principal or interest under the Term Note when due; or -- if Mr. Ebbers defaults on the observance or performance of any agreement contained in the Term Note or in the Separation Agreement; and (d) that if any amount of the Term Note is not paid when due, Mr. Ebbers will pay all costs of collection, including the fees and expenses of counsel and court costs, in addition to the full amount due. The Separation Agreement On April 29, 2002, the Debtors and Mr. Ebbers also entered into a separation and mutual release agreement, pursuant to which Mr. Ebbers agreed to resign as the Debtors' CEO and Director. In turn, the Debtors agreed to: (a) pay Mr. Ebbers a $1.5 million lifetime pension annually, and upon his death, a $750,000 lifetime pension annually to his then current spouse; (b) provide Mr. Ebbers with lifetime medical and life insurance benefits; (c) allow Mr. Ebbers to use the Debtors' aircraft on a limited basis; (d) provide Mr. Ebbers with a computer; (e) lease Mr. Ebbers an office space; (f) accelerate the vesting of Mr. Ebbers' stock options and allow him up to five years to exercise them; (g) continue in effect the Debtors' indemnification of Mr. Ebbers; and (h) enter into a mutual release with Mr. Ebbers that would generally release the Debtors' claims against Mr. Ebbers except in connection with fraud, willful misconduct, gross negligence or criminal acts. The Debtors provided health benefits to Mr. Ebbers under the Separation Agreement until April 2003. The Ebbers Claims On January 22, 2003, Mr. Ebbers filed Claim No. 20659, asserting administrative expense claims and general unsecured claims for: -- amounts allegedly due or that allegedly become due under the Separation Agreement; -- the Debtors' indemnification and related expense reimbursement obligations under the Restated By-laws of WorldCom, Inc.; and -- the Debtors' obligations under a guaranty and related letter agreements. In addition, Mr. Ebbers asserted a set-off claim against the Debtors relating to the assets and interests he pledged to the Debtors and sold during the Chapter 11 cases. Claim No. 20659 also purports to reserve all other claims, counterclaims, defenses and other rights -- the Additional Claims. However, Claim No. 20659 does not specify an amount but rather, asserts claims to the extent of any liability of the Debtors. On October 20, 2003, Mr. Ebbers filed Claim No. 36383, asserting an unsecured non-priority claim for $12,166,752 on account of rejected stock options. Ms. Goldstein tells the U.S. Bankruptcy Court for the Southern District of New York that as of February 2004, the Debtors recovered $70.4 million from their collateral in respect of their $408.2 million loan to Mr. Ebbers. The Debtors received: -- $17.1 million from the sale of the Intermarine shipyard and two Intermarine yachts; -- $50.8 million from the sale of the Douglas Lake Ranch; and -- $2.5 million in excess collateral remitted by Bank of America. The Default On April 29, 2003, Mr. Ebbers defaulted on his first scheduled $25 million payment to the Debtors due under the Term Note. As a result, the Debtors demanded the immediate full payment of the loan. The default entitles the Debtors to exercise their rights and pursue remedies under Article 9 of the Uniform Commercial Code with respect to their collateral, including the Ebbers Property Interests. The Separation Agreement also provides that on a default on the Term Note, "payment of the pension benefits . . . will be permanently discontinued and all outstanding amounts due to the Company by the Executive will be accelerated as provided in the [Term] Note." Pursuant to Sections 542, 548 and 550 of the Bankruptcy Code, the Debtors ask the Court to: (a) compel Mr. Ebbers to turn over all amounts represented by the Term Note, including the $408,214,930 plus interest, including at the default rate, together with costs and interest, less an amount equal to the net proceeds realized by the Debtors from the sale of Mr. Ebbers' pledged collateral; (b) avoid the April 2002 Loan Restructuring as a fraudulent transfer under Section 548; (c) compel Mr. Ebbers to turn over all amounts represented by the Demand Notes; (d) avoid the Separation Agreement and Mutual Release as fraudulent transfers under Section 548, and order Mr. Ebbers to turn over to the Debtors the value of the Separation Agreement benefits paid to him by the Debtors, together with costs and interest; (e) avoid the 2002 Demand Note as a fraudulent transfer under Section 548, and order Mr. Ebbers to turn over to the Debtors the $65 million transferred to him, together with costs and interest; (f) disallow and expunge Mr. Ebbers' Claim No. 20659 and Rejected Stock Option Claim in their entirety or grant alternative protection with respect to Claim No. 20659 and the Rejected Stock Option Claim; (g) award them the costs and disbursements of the action, including reasonable fees and costs to their attorneys, accountants and experts; and (h) disallow any of Mr. Ebbers' claims until he has turned over and paid all amounts due and payable. Objection to the Ebbers Claims The Debtors also argue that the Separation Agreement Claim, the Indemnification and Reimbursement Claim, the Guaranty Claim and the Rejected Stock Option Claim are without merit. Accordingly, the Debtors ask the Court to disallow and expunge the Ebbers Claims. The Debtors reserve their rights with respect to the Set-off Claim and the Additional Claims. The Debtors also reserve their right to further object or modify their objection to Claim No. 20659 and the Rejected Stock Option Claim. In the alternative, the Debtors ask the Court to reject the Separation Agreement pursuant to Section 365. To the extent Mr. Ebbers asserts that the Separation Agreement Claim is an administrative expense claim, the Debtors ask the Court to recharacterize and calculate the Separation Agreement Claim as a rejection damage claim and classify it as a Class 6 WorldCom General Unsecured Claim. To the extent Mr. Ebbers is entitled to indemnification or reimbursement in connection with the securities-related actions, the Debtors ask the Court to reclassify the Indemnification and Reimbursement Claim as a Class 7 WorldCom Subordinated Claim, entitled to receive no distribution under the Plan. At best, Ms. Goldstein notes, the Indemnification and Reimbursement Claim should be classified as Class 6 WorldCom General Unsecured Claim, not an administrative expense claim, to the extent that the Court determines that the Indemnification and Reimbursement Claim: -- is not subject to disallowance pursuant to Section 502(e)(1)(B) of the Bankruptcy Code; and -- does not constitute a Class 7 WorldCom Subordinated Claim. Headquartered in Clinton, Mississippi, WorldCom, Inc., now known as MCI-- http://www.worldcom.com-- is a pre-eminent global communications provider, operating in more than 65 countries and maintaining one of the most expansive IP networks in the world. The Company filed for chapter 11 protection on July 21, 2002 (Bankr. S.D.N.Y. Case No. 02-13532). On March 31, 2002, the Debtors listed $103,803,000,000 in assets and $45,897,000,000 in debts. On April 20, 2004, the company (WCOEQ, MCWEQ) formally emerged from U.S. Chapter 11 protection as MCI, Inc. This emergence signifies that MCI's plan of reorganization, confirmed on October 31, 2003, by the U. S. Bankruptcy Court for the Southern District of New York is now effective and the company has begun to distribute securities and cash to its creditors. (Worldcom Bankruptcy News, Issue No. 58; Bankruptcy Creditors' Service, Inc., 215/945-7000) * Nixon Peabody Forms New Beverage Alcohol Team ----------------------------------------------- A dynamic team of leading beverage alcohol attorneys has joined Nixon Peabody LLP, providing the firm with a significant breadth and depth of experience in serving clients in this industry. Vincent O'Brien, a highly regarded industry attorney who has represented scores of major wine and spirits companies over the past 40 years, will lead the Beverage Alcohol Team and will be based in the New York office. Susan Cagann, a former Vice President and Counsel at Kendall Jackson, and Matthew Botting, the former Chief Counsel to the California Department of Alcoholic Beverage Control, will be based in the San Francisco office. "This beverage alcohol team has extensive experience dealing with every type of issue facing clients in this industry -- from the grape or grain to the glass," Mr. O'Brien said. "We can assist clients with issues including land use, development, acquisitions and environmental issues, as well as labor and employment and immigration matters. We can advise on OSHA issues, on new product development issues and on regulatory issues related to bottling, distributing and marketing. We work with manufacturers, distributors and retailers, dealing with jurisdictions across the United States and internationally and now are part of a firm that includes some of the country's leading attorneys in each of these fields." Harry P. Trueheart, III, Chairman, CEO, and Co-managing Partner of Nixon Peabody said: "Nixon Peabody has a substantial number of clients in the beverage alcohol industry to which we provide finance, mergers and acquisitions, labor and employment, intellectual property, real estate, taxation and other services. Vincent O'Brien, Susan Cagann, and Matthew Botting bring to Nixon Peabody an exceptional range of experience, knowledge and relationships within the beverage alcohol industry. With the addition of their regulatory expertise to our Beverage Alcohol Team, we now provide a complete array of services to our clients and the industry." Mr. O'Brien's practice focuses on alcohol beverage control law, licensing and regulation; international trade, import and export law; trade regulation; intellectual property issues relating to wines and spirits trademarks and appellations; and international, Federal and State licensing applications and transfers. Mr. O'Brien, formerly a partner in Buchman & O'Brien, also previously served as Executive Vice President and General Counsel of the Seagram Company for 11 years. In addition, he is the senior member of the U.S. delegation to the International Federation of Wines & Spirits and is an advisor to the Laws & Regulations Working Group of the International Wine Office. He is a founding member and President-elect of the International Wine Law Association and author of a chapter on Beverage Alcohol Law Practice for West's Guide to New York Practice. Mr. O'Brien received a J.D. from Fordham Law School, an MBA from New York University Graduate School of Business, and an LLM in taxation from the New York University Graduate School of Law. Ms. Cagann's practice focuses on providing innovative solutions and sound risk assessment to leaders in the wine, food, and retail industry. She has assisted a wide range of companies in compliance with the myriad regulations and laws impacting suppliers, distributors, and retailers of consumer products. Ms. Cagann received a J.D. from the University of Missouri School of Law and is admitted to practice in California and Illinois. Mr. Botting focuses on alcoholic beverage control law, beverage alcohol licensing and regulatory compliance. While at the California Department of Alcoholic Beverage Control, Mr. Botting advised on all aspects of the State's licensing and trade practice laws as well as new legislation. He received an LLB and Bachelor of Commerce from Otago University, Dunedin, New Zealand and is admitted to practice in California and New Zealand. Also joining the new Beverage Alcohol Team are Compliance Assistants Luke Williams and Alexandra Lawrence, who were also at Buchman & O'Brien and will be located in the San Francisco office, and Wanda Wuest, who previously served as head of compliance for Remy Martin Amerique and will be based in the Rochester, NY office. These individuals have extensive knowledge and experience navigating the complexities of international, Federal and State licensing applications and transfers, which is crucially important as companies seek to navigate the regulatory landscape around the globe. Nixon Peabody LLP is one of the 50 largest law firms in the United States with more than 650 attorneys working in 15 major practice areas. The firm's size, diversity, and state-of-the-art technological resources enable it to offer comprehensive legal services to individuals and organizations of all sizes in local, state, national, and international matters. Nixon Peabody's clients include emerging and middle-market businesses, national and multinational corporations, financial institutions, public entities, not-for-profit institutions, and individuals. * Newman Rejoins Morgan Lewis as Energy Practice Group Partner -------------------------------------------------------------- Karol Lyn Newman has rejoined Morgan Lewis as a partner in the Energy Practice Group, resident in the Washington, D.C., office. For more than 100 years, the Energy Practice at Morgan Lewis has occupied a prominent position in serving the domestic and international energy industry. Prior to rejoining Morgan Lewis, Ms. Newman was a partner at a leading Washington, D.C. firm. In that role, she represented and provided advice for leading integrated oil and gas companies, major distribution companies, interstate pipelines, and natural gas producers on FERC natural gas matters involving a wide range of regulatory and related business issues. These matters included: advise on regulatory issues and contracting matters related to natural gas storage projects, including salt dome storage and LNG, corporate restructuring alternatives; acquisitions and partnering arrangements; contract realignments; litigation, and regulatory strategies at the federal and state levels. "We are pleased to welcome back such a well-regarded FERC energy regulatory lawyer as Karol Lyn to our practice," said Jay Gutierrez, head of the Energy Practice at Morgan Lewis. "Karol Lyn's return boosts our federal natural gas and electric practice capabilities and also complements our strong state level natural gas practice. In addition, Karol Lyn's significant experience with major integrated oil and gas companies is a major asset to our existing clients and offers them a broader range of services in regulatory and transactional matters." Recently recognized as a leading gas lawyer in the 2004 edition of Chambers USA, America's Leading Lawyers for Business, Ms. Newman possesses over 25 years of experience in the energy area. A former Morgan Lewis partner and one of the first two women partners at the firm, she has also been actively involved in legislative efforts in the energy area, including the drafting of legislation and representation of clients on energy matters in the Congress. Ms. Newman has also handled cases in the United States Court of Federal Claims and the United States District Courts, in addition to her years of appellate practice handling appeals of agency action before the United States Courts of Appeal. Ms. Newman is an honors graduate of the University of Maryland School of Law, where she served as articles editor of the Maryland Law Review and was elected to the Order of the Coif. She is also a member of the American Bar Association, the District of Columbia Bar Association, the Maryland Bar Association and the Federal Energy Bar Association. About Morgan, Lewis & Bockius LLP With more than 1,200 lawyers in 18 offices worldwide, Morgan Lewis offers seamless service across practice areas and offices. A fully integrated, multipractice global law firm, Morgan Lewis assists clients with all of their legal needs, from day-to-day business decisions to the most complex global deals and litigation. * BOOK REVIEW: Macy's For Sale ------------------------------ Author: Isadore Barmash Publisher: Beard Books Softcover: 180 pages List Price: $34.95 Own your personal copy at http://www.amazon.com/exec/obidos/ASIN/1587981726/internetbankrupt Review by Henry Berry Isadore Barmash writes in his Prologue, "This book tells the story of Macy's managers and their leveraged buyout, the newest and most controversial device in the modern financial armament" when it took place in the 1980s. At the center of Barmash's story is Edward S. Finkelstein, Macy's chairman of the board and chief executive officer. Sixty years old at the time, Finkelstein had worked for Macy's for thirty-five years. Looking back over his long career dedicated to the department store as he neared retirement, Finkelstein was dismayed when he realized that even with his generous stock options, he owned less than one percent of Macy's stock. In the years leading up to his unexpected, bold takeover, Finkelstein had made over Macy's from a run-of-the-mill clothing retailer into a highly profitable business in the lead of the lucrative and growing fashion and "lifestyle" field. To aid him in accomplishing the takeover and share the rewards with him, Finkelstein had brought together more than three hundred of Macy's top executives. To gain their support for his planned takeover, Finkelstein told them, "The ones who have done the job at Macy's are the ones who ought to own Macy's." Opposing Finkelstein and his group were the Straus family who owned the lion's share of Macy's and employees and shareholders who had an emotional attachment to Macy's as it had been for generations, "Mother Macy's" as it was known. But the opponents were no match for Finkelstein's carefully laid plans and carefully cultivated alliances with the executives. At the 1985 meeting, the shareholders voted in favor of the takeover by roughly eighty percent, with less than two percent opposing it. The takeover is dealt with largely in the opening chapter. For the most part, Barmash follows the decision-making by Finkelstein, the reorganization of the national company with a number of branches, the activities of key individuals besides Finkelstein, Macy's moves in the competitive field of clothing retailing, and attempts by the new Macy's owners led by Finkelstein to build on their successful takeover by making other acquisitions. Barmash allows at the beginning that it is an "unauthorized book, written without the cooperation of the buying group." But as he quickly adds, his coverage of Macy's as a business journalist and his independent research for over a year gave him enough knowledge to write a relevant and substantive book. The reader will have no doubt of this. Barmash's narrative, profiles of individuals, and analysis of events, intentions, and consequences ring true, and have not been contradicted by individuals he writes about, subsequent events, or exposure of material not public at the time the book was written. Barmash does not limit himself to documenting the buyout of Macy's. While portraying the buyout as a momentous incident in American business history which sent ripples throughout the corporate world, he also places it in the context of the business environment of the time. The buyout took place in the aggressive, largely laissez-faire, capitalist business environment of the Reagan era. Without being judgmental, the author touches on both sides of this aggressiveness. While many corporations were awakened from their longtime inertia, this took a toll on many individuals in the way of felt betrayals, lost jobs, and uncertain futures. Besides focusing on Finkelstein and other factors at the center of the takeover, Barmash to some extent goes into the changes it brought to the American business world. He does this in a lucid style which gets right to the point of each subject at hand to present a multifaceted view of this watershed event in recent U. S. economic and corporate history. Isadore Barmash, a veteran business journalist and author, was associated with the New York Times for more than a quarter-century as business-financial writer and editor. He also contributed many articles for national media, Reuters America, and the Nihon Keizai Shimbun of Japan. He has published 13 books, including a novel, and is listed in the 57th edition of Who's Who in America. ********* 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. 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. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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, Emi Rose S.R. Parcon, Bernadette C. de Roda, Rizande B. Delos Santos, Paulo Jose A. Solana, Jazel P. Laureno, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. 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 ***