T R O U B L E D C O M P A N Y R E P O R T E R Friday, October 28, 2005, Vol. 9, No. 256 Headlines AMF BOWLING: Completes Joint Venture Deal with Qubica SpA ANACONDA CAPITAL: Case Summary & 2 Largest Unsecured Creditors ANDERSON CLARK: List of Debtors' 20-Largest Unsecured Creditors ASARCO LLC: Court Extended Lease Decision Period to January 13 ASARCO LLC: Court Okays Rejection of Useless Equipment Leases ATA AIRLINES: Evelyn Spiller Allowed to Pursue Injury Lawsuit ATA AIRLINES: ExecuJet Wants to Walk Away from McGraw-Hill Pact ATHLETE'S FOOT: Plan Confirmation Hearing Set for December 8 B/E AEROSPACE: Earns $10 Million of Net Income in Third Quarter BANC OF AMERICA: Stable Performance Cues S&P to Lift Low-B Ratings BIOMETRICS 2000: Voluntary Chapter 11 Case Summary BOOKS-A-MILLION: Stock Resumes Trading at Nasdaq After Compliance BOWATER INC: Incurs $16 Million Net Loss in Third Quarter BOYDS COLLECTION: Gets Interim Order to Use Cash Collateral BRIAN MULLINS: Case Summary & 20 Largest Unsecured Creditors BRILLIANT DIGITAL: Extends Secured Debt Maturity Date to March 31 BROOKLYN HOSPITAL: Meeting of Creditors Rescheduled to Dec. 7 CENTURY ALUMINUM: Incurs $20.1 Million Net Loss in Third Quarter CHASE FUNDING: Moody's Downgrades Class IM-2 Cert.'s Rating to Ba3 CHASE MORTGAGE: Fitch Rates $2.6 Mil Certificate Classes at Low-B CLAIMNET.COM: Balance Sheet Upside-Down by $671,000 at Sept. 30 COMBUSTION ENGINEERING: Everest Ends Insurance Dispute for $17.9M COMMERCIAL MORTGAGE: S&P Upgrades Low-B Ratings on 2 Cert. Classes CONMED CORP: Earns $7.9 Million of Net Income in Third Quarter CORNING INC: Earns $203 Million of Net Income in Third Quarter COVAD COMMS: Sept. 30 Balance Sheet Upside-Down by $3.7 Million CROWN HOLDINGS: S&P Rates Proposed $1.1 Bil Sr. Unsec. Notes at B DATATEC SYSTEMS: Court Confirms 2nd Amended Liquidating Plan DATATEC SYSTEMS: TIS Challenges Ownership of Insurance Proceeds DAY INTERNATIONAL: Moody's Rates New $140 Million Term Loan at B2 DELPHI CORP: Gets Final Court Nod on $4.5 Billion DIP Financing DT INDUSTRIES: Panel Selects Greenwald as DT Creditor Trustee EASTGROUP PROPERTIES: Reports Operational Results for 3rd Quarter ENRON CORP: Bankruptcy Court Approves FERC Settlement Agreement FIBERMARK INC: Court Approves Revised Disclosure Statement FOAMEX INT'L: Gets Final Court Okay to Pay Critical Vendor Claims FOAMEX INT'L: Gets Final Order on Injunction vs. Utility Companies FOAMEX INT'L: Can Continue Hiring 37 Ordinary Course Professionals GENERAL MOTORS: SEC Probes Accounting Practices & Delphi Deals GRIFFETH BUILDERS: Voluntary Chapter 11 Case Summary GSI COMMERCE: Postpones Release of Fiscal 2005 3rd Quarter Results GUARDIAN TECHNOLOGIES: Talks About Financial Reporting Weaknesses HARTCOURT COMPANIES: Earns $31,534 of Net Income in 1st Quarter HELL'S BAY: Case Summary & 20 Largest Unsecured Creditors I2 TECHNOLOGIES: Sept. 30 Balance Sheet Upside-Down by $144 Mil. INTERMET CORP: Court Okays Rejection of Five Representative Pacts INTERNATIONAL PAPER: Earns $1.04 Bil. of Net Income in 3rd Quarter INTERSTATE BAKERIES: Delays Filing of Required Financial Reports JEROME-DUNCAN: Unsecured Creditors Will Recover 100% of Claims JEROME-DUNCAN: UST & Committee Want Chapter 11 Trustee Appointed JLG INDUSTRIES: Moody's Affirms B3 Rating on Senior Sub. Notes JOHN COOPER: Case Summary & 20 Largest Unsecured Creditors JOHN KIENOSKI: Case Summary & 20 Largest Unsecured Creditors JUSTIN ROBERTS: Case Summary & 11 Largest Unsecured Creditors KAISER ALUMINUM: Asks Court to Reduce Bonneville Power Claims KAISER ALUMINUM: Wants Scope of Ernst & Young's Services Expanded KENNETH MEAD: Section 341(a) Meeting Slated for November 29 KEY ENERGY: Asks Senior Lenders to Raise CapEx Limit Covenant KMART CORP: Philip Morris & HNB Slam Move on Multi-Million Claims KMART CORP: Withdraws Motion for Further Pleadings on GPS Claims KNOLL INC: Earns $8.2 Million of Net Income in Third Quarter LA QUINTA: Fitch Puts BB- Rating on Senior Unsecured Notes LEVITZ HOME: Wants Court Okay to Hire AlixPartners as Consultants LEVITZ HOME: Wants Court OK to Hire ADA as Disposition Advisors LEVITZ HOME: Gets Interim Okay to Hire Kurtzman as Claims Agent LIDO ISLAND: Case Summary & 14 Largest Unsecured Creditors LODGENET ENT: Sept. 30 Balance Sheet Upside-Down by $69 Million LONGYEAR HOLDINGS: S&P Puts Low-B Ratings on New $575M Lien Loans LUCENT TECHNOLOGIES: Fitch Lifts Ratings on $5.4-Bil Securities KELLY LINEHAN: Case Summary & 7 Largest Unsecured Creditors KENNETH MEAD: Can Employ Ronald Bergwerk as Bankruptcy Counsel KINETIC CONCEPTS: Incurs $1.2 Million Net Loss in Third Quarter NORTEL NETWORKS: Selling Brampton Site to Rogers for $100 Million NORTHWEST AIRLINES: Opts to Outsource Sr. Flight Attendant Jobs NORTHWEST AIRLINES: Files Prospectus on Resale of Notes Due 2023 NORTHWEST AIRLINES: Chromalloy Opposes Claims Resolution Process NVF COMPANY: Wants Exclusive Period Stretched to January 16 NVF COMPANY: Courts Extends Removal Period Until December 17 NVF CO: Forshee & Boardroom Approved as Accounting Consultants MERCURY INTERACTIVE: Noteholders Waive Default Until March 31 MMRENTALSPRO LLC: Wants Plan-Filing Period Stretched to Jan. 13 MMRENTALSPRO LLC: Lincoln Apartment Approved as Property Manager MOUNTAIN MAX: Case Summary & 15 Largest Unsecured Creditors MUZAK HOLDINGS: Strained Liquidity Cues S&P to Junk Credit Rating O'SULLIVAN IND: Gets Interim OK to Borrow $35-Mil. DIP Financing O'SULLIVAN IND: Taps FTI Consulting as Restructuring Advisor O'SULLIVAN INDUSTRIES: Hires Lazard Freres as Financial Advisor OPEN SOLUTIONS: S&P Rates $415-Mil. Sr. Secured Loans at Low-B PACIFIC COAST: Fitch Junks $29.52M Class Notes & $26M Pref. Shares PAN AMERICAN: Fitch Affirms BB- Int'l Foreign Currency Rating PATCH INTERNATIONAL: Posts $281,898 Net Loss in FY 2005 1st Qtr. PHILLIP COLLECTOR: Case Summary & 20 Largest Unsecured Creditors PLEJ'S LINEN: Case Summary & 20 Largest Unsecured Creditors PQ CORP: Moody's Affirms $275-Million Sr. Sub. Notes' B3 Rating PRESIDENT CASINOS: Earns $2MM of Net Income in FY 2005 2nd Quarter PRESIDENT CASINOS: Columbia Sussex Withdraws License Application QUALISTICS INC: Voluntary Chapter 11 Case Summary REFCO INC: Interest Grows in Sale of Regulated Subsidiaries RICHARD O'NEILL: Voluntary Chapter 11 Case Summary ROBERT WALSH: Case Summary & 20 Largest Unsecured Creditors ROGERS COMMS: Buying Nortel Network's Brampton Site for $100 Mil. ROUNDY'S SUPERMARKETS: Moody's Affirms $175 Mil. Notes' B3 Rating SAINT VINCENTS: Says There's No Reason to Terminate Policies SAINT VINCENTS: Asserts that Ventilators are Estate Property SAINT VINCENTS: Patsy Merola Seeks to Enforce $2.6 Mil. Judgment SAN JUAN CABLE: Moody's Pares Rating on Planned $125M Loan to B3 SEMGROUP L.P.: Fitch Assigns B+ Rating to $250MM Sr. Unsec. Notes SEPRACOR INC: Balance Sheet Upside-Down by $212.79M at Sept. 30 SIERRA HEALTH: Earns $28.4 Million of Net Income in 3rd Quarter SLOCUM LAKE: Chapter 9 Case Summary & 6 Largest Unsec. Creditors SS&C TECHNOLOGIES: S&P Junks Proposed $205 Mil Subordinated Notes STEPHEN GOETZ: Case Summary & 20 Largest Unsecured Creditors STEPHEN MCNERNEY: Voluntary Chapter 11 Case Summary STEWART ENTERPRISES: Delayed Reports May Trigger Nasdaq Delisting STRATUS SERVICES: Sells All Assets to Source One for $35,000 STRATUS SERVICES: Has Until November 4 to Comply with Credit Pact SUN CASTLE: Case Summary & 15 Largest Unsecured Creditors SYLVAN I-30 ENTERPRISES: Case Summary & 35 Known Creditors TOWER AUTOMOTIVE: Buys Herman Miller Facility for $10 Million TOWER AUTOMOTIVE: Wants Federal's Reconsideration Request Denied TOWER AUTOMOTIVE: Has Until June 30 to Remove Civil Actions UAL CORP: Battle Over Senior Notes with Wells Fargo Continues UAL CORP: Creditors Panel Clams $1.3 Billion Atlantic Coast Claim UAL CORP: Wants to Assume Modified PMCC Aircraft Financing Pact UAL CORPORATION: Files 19th Reorganization Status Report VARIG S.A.: GECAS & JP Morgan Respond to Court's Show Cause Order WCI STEEL: Bankruptcy Court Approves Two Disclosure Statements WINN-DIXIE: Court Okays Cash Payments to Settle Litigation Claims WINN-DIXIE: Court Okays Rejection of Four Leases & Four Subleases WORLDCOM INC: Court OKs $315MM Tax Settlement Pact with 16 States WORLDCOM INC: Has Until November 16 to Object to Tax Claims XYBERNAUT CORP: Court Okays $5 Million DIP Financing Facility YANGER INC: Case Summary & 2 Largest Unsecured Creditors * Robert de By Leads Dewey Ballantine's Int'l Arbitration Practice * BOOK REVIEW: OIL & HONOR: The Texaco Pennzoil Wars ********* AMF BOWLING: Completes Joint Venture Deal with Qubica SpA --------------------------------------------------------- AMF Bowling Worldwide, Inc., completed the formation of its joint venture with Italian-based Qubica, S.p.A. Both companies contributed the equity of their subsidiaries to the joint venture in exchange for 50% equity interest each in the partnership. In connection with its formation, the joint venture entered into a Credit Agreement with an unnamed lender which allows the company to access up to $30 million to fund its operations. If not repaid sooner, its obligations under the Credit Agreement will become fully due and payable on Oct. 7, 2010. Pursuant to the Credit Agreement, the joint venture granted the lender mortgages and security interests in a significant portion of the partnership's assets. John Walker, who was the President of AMF Bowling's Products Business, is the joint venture's chief executive officer. Headquartered in Richmond, Virginia, AMF Bowling Worldwide, Inc. is the largest operator of bowling centers in the world with roughly 370 centers. AMF Bowling Worldwide, Inc., filed for chapter 11 protection on July 3, 2001 (Bankr. E.D. Va. Case Nos. 01-61119 through 01-61143). Marc Abrams, Esq., at Willkie, Farr & Gallagher represented the operating subsidiaries. The corporate parent, AMF Bowling, Inc., filed for chapter 11 protection on July 31, 2001 (Bankr. E.D. Va. Case No. 01-61299). Lawrence H. Handelsman, Esq., at Stroock & Stroock & Lavan LLP, represented the parent company. The Debtors' Second Amended & Modified Chapter 11 Plan was confirmed on Feb. 1, 2002, and consummated on March 8, 2002. That plan deleveraged the company's balance sheet, and delivered a 92% equity stake in the reorganized subsidiaries to the company's secured lenders and a 7% equity stake in the operation to unsecured creditors. The old public parent company died. * * * As reported in the Troubled Company Reporter on July 19, 2005, Moody's Investors Service downgraded the ratings of AMF Bowling Worldwide, Inc., thus concluding the review of the ratings for possible downgrade initiated on March 10, 2005. These ratings were lowered: -- To Caa1 from B3, $150 million 10% senior subordinated notes, due 2010 -- To B2 from B1, approximately $120 million senior secured credit facility consisting of a $40 million revolver, maturing in 2009, and approximately $79 million term B loans, maturing in 2009 -- To B2 from B1, Corporate Family Rating (formerly known as the Senior Implied Rating) Moody's said the ratings outlook is stable. As reported in the Troubled Company Reporter on Feb. 9, 2004, Standard & Poor's Ratings Services assigned its 'B' rating to AMF Bowling Worldwide Inc.'s proposed $175 million senior secured credit facility due 2009. A recovery rating of '3' was also assigned to the proposed credit facility, indicating a meaningful recovery of principal (50%-80%) in the event of a default. In addition, a 'CCC+' rating was assigned to the $150 million senior subordinate notes due 2010. At the same time, Standard & Poor's affirmed its ratings on AMF Bowling, including its corporate credit rating of 'B', and removed them from CreditWatch. S&P said the outlook is stable. ANACONDA CAPITAL: Case Summary & 2 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Anaconda Capital, LP 730 Fifth Avenue New York, New York 10019 Bankruptcy Case No.: 05-60078 Type of Business: The Debtor is the general partner of Anaconda Opportunity Fund, LP, a private investment limited partnership, engaged in both public securities' markets and private equity investments. Chapter 11 Petition Date: October 26, 2005 Court: Southern District of New York (Manhattan) Debtor's Counsel: Joshua Joseph Angel, Esq. Angel & Frankel, P.C. 460 Park Avenue New York, New York 10022-1906 Tel: (212) 752-8000 Fax: (212) 752-8393 Financial Condition as of September 30, 2005: Total Assets: $5,938,418 Total Debts: $5,937,418 Debtor's 2 Largest Unsecured Creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ General Maritime Corp. Notes payable $250,000 299 Park Avenue New York, NY 10171-0002 Attn: Peter Georgiopoulos Tel: (212) 763-5620 Fax: (212) 763-5602 Bert Fingerhut Notes payable $130,000 1520 Silver King Drive Aspen, CO 81611-1049 Tel: (970) 920-1934 Fax: (970) 925-1820 ANDERSON CLARK: List of Debtors' 20-Largest Unsecured Creditors --------------------------------------------------------------- Anderson Clark, Inc., released a list of its twenty largest unsecured creditors: Entity Nature of Claim Claim Amount ------ --------------- ------------ Business Cards Tomorrow, Inc. Alleged past due $811,000 3000 N.E. 30th Place royalties Fort Lauderdale, FL 33306 Business Cards Tomorrow, Inc. Term notes $148,860 3000 N.E. 30th Place Fort Lauderdale, FL 33306 ComDoc, Inc. Equipment lease $143,471 P.O. Box 6434 AB Dick CXP3000 Carol Stream, IL 601976434 CXP - 46 payments left = $118,358.00 Copiers - 44 payments left = $25,113 Hahn Loeser & Parks Legal fees $64,619 Discovery Development, Ltd. Term notes $57,678 Jefferson Pilot Financial Loan against $52,709 insurance policy owned by Robert Apple James A. Tudas Note $45,860 James A. Tudas Consulting agreement $24,200 Jaguar Credit 2001 Jaguar S2001 $22,691 S-Type Value of security: $13,240 GE Capital Equipment lease $18,755 American Honda Finance 2004 Honda Civic $11,409 US DX Value of security: $9,115 BWC 2005 Premium - $3,339 first half Neopost Equipment lease - $2,550 postage meter GM Card Member Services Credit card $2,031 CIT Technology Lease on water cooler - $1,871 13 quarters left Impressive Labels, Inc. $1,127 IKON Office Solutions $9 Assist, Inc. Unknown BP Oil Unknown Braden Sutphin Ink Co. Unknown * * * Anderson Clark, Inc., aka BCT Ohio -- http://www.bctohio.com/-- is a wholesaler of thermographed and flat offset commercial stationery products. Anderson Clark also manufactures business cards, letterhead, envelopes, customer rubber stamps, labels, announcements, and invitations specialty products. The Debtor sought chapter 11 protection October 13, 2005 (Bankr. S.D. Ohio Case No. 05-73524). Susan L. Rhiel, Esq., at Rhiel & Associates Co., L.P.A., represents the Company. Anderson Clark reported $306,747 in assets and liabilities totaling $2,269,772 in its bankruptcy petition. ASARCO LLC: Court Extended Lease Decision Period to January 13 -------------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas extended ASARCO LLC's time until Jan. 13, 2006, to decide whether to assume, assume and assign, or reject unexpired non-residential real property leases. As previously reported in the Troubled Company Reporter on Sept. 27, 2005, the Debtors assure the Court that they are current on all of their postpetition obligations under the Leases and will remain so until the Leases are assumed or rejected. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000). ASARCO LLC: Court Okays Rejection of Useless Equipment Leases ------------------------------------------------------------- The Honorable Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas authorized ASARCO LLC to reject the unexpired equipment leases with Connecticut National Bank, effective as of Sept. 19, 2005. As previously reported in the Troubled Company Reporter on Sept. 27, 2005, the lease was for some mobile mining equipment and railroad rolling stock. ASARCO contends that the Contracts are of no material value to its estate. Moreover, it is unable to use the mobile mining equipment and railroad rolling stock, so incurring liability under the Contracts as an administrative expense is not in the best interest of the estate. Court Order Judge Schmidt gives the counterparties to the Contracts until March 6, 2006, to file a claim for any damages, including those arising from the rejection or use of the Railroad Rolling Stock. Failure to file a claim before the Rejection Claim Deadline will forever bar the counterparties from asserting a claim against ASARCO or its estate relating to the Contracts. Judge Schmidt further rules that the counterparties are entitled to possession of the Railroad Rolling Stock. ASARCO will cooperate with the counterparties to surrender the Railroad Rolling Stock, empty and otherwise as is, at locations in the United States mutually agreeable to the parties, and endeavor to cause all sublessees of the Railroad Rolling Stock to do the same, and that ASARCO will surrender any documentation in its possession related to the Railroad Rolling Stock immediately. Any subleases of the Railroad Rolling Stock to any of ASARCO's affiliates or third parties are terminated, except to the extent as may be required to accomplish the return of the units to the Government. Headquartered in Tucson, Arizona, ASARCO LLC -- http://www.asarco.com/-- is an integrated copper mining, smelting and refining company. Grupo Mexico S.A. de C.V. is ASARCO's ultimate parent. The Company filed for chapter 11 protection on Aug. 9, 2005 (Bankr. S.D. Tex. Case No. 05-21207). James R. Prince, Esq., Jack L. Kinzie, Esq., and Eric A. Soderlund, Esq., at Baker Botts L.L.P., and Nathaniel Peter Holzer, Esq., Shelby A. Jordan, Esq., and Harlin C. Womble, Esq., at Jordan, Hyden, Womble & Culbreth, P.C., represent the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors,it listed $600 million in total assets and $1 billion in total debts. The Debtor has five affiliates that filed for chapter 11 protection on April 11, 2005 (Bankr. S.D. Tex. Case Nos. 05-20521 through 05-20525). They are Lac d'Amiante Du Quebec Ltee, CAPCO Pipe Company, Inc., Cement Asbestos Products Company, Lake Asbestos of Quebec, Ltd., and LAQ Canada, Ltd. Details about their asbestos-driven chapter 11 filings have appeared in the Troubled Company Reporter since Apr. 18, 2005. Encycle/Texas, Inc. (Bankr. S.D. Tex. Case No. 05-21304), Encycle, Inc., and ASARCO Consulting, Inc. (Bankr. S.D. Tex. Case No. 05- 21346) also filed for chapter 11 protection, and ASARCO has asked that the three subsidiary cases be jointly administered with its chapter 11 case. (ASARCO Bankruptcy News, Issue No. 8; Bankruptcy Creditors' Service, Inc., 215/945-7000). ATA AIRLINES: Evelyn Spiller Allowed to Pursue Injury Lawsuit ------------------------------------------------------------- Evelyn Spiller filed a claim for personal injuries against ATA Holdings Corp., in the Circuit of Cook County, Illinois, County Department - Law Division. Ms. Spiller's claims for negligence are covered by the Debtors' insurance policy with AIG Aviation. Pursuant to a stipulation, ATA Holdings agrees to have the automatic stay under Section 362(d) of the Bankruptcy Code modified for the limited purpose of allowing Ms. Spiller to pursue the lawsuit. Ms. Spiller's recovery in the lawsuit will be limited to compensatory damages insured by AIG or any other insurers or reinsurers providing coverage for the recovery. Ms. Spiller agrees not to seek any punitive damages in the Lawsuit. She agrees not to pursue monetary claims against the Debtors or to collect any amounts from them. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATA AIRLINES: ExecuJet Wants to Walk Away from McGraw-Hill Pact --------------------------------------------------------------- American Trans Air ExecuJet, Inc., asks the U.S. Bankruptcy Court for the Southern District of Indiana to authorize the rejection of its agreement with McGraw-Hill Broadcasting Company, Inc., relating to a Bell LongRanger 206L-3 helicopter, with manufacturer's serial number 51199 and bearing U.S. registration number N116AT. ATA Airlines, Inc., entered into a lease agreement with Betaco, Inc., for the Helicopter before its filed for bankruptcy protection. ATA Airlines, in turn, subleased the Helicopter to ExecuJet. In January 2003, ExecuJet entered into an "Agreement for Helicopter Services" with McGraw-Hill under which ExecuJet provided McGraw Hill, operator of WRTV Channel 6, with use of the Helicopter, a pilot, maintenance services, a hanger, fuel, and related services. The Agreement was amended on February 21, 2003. Mr. Graham asserts that the rejection of the Agreement is warranted under Section 365(a) of the Bankruptcy Code. Jeffrey J. Graham, Esq., at Baker & Daniels, LLP, in Indianapolis, Indiana, relates that the Debtors have issued termination notices of their stipulation under Section 1110(b) of the Bankruptcy Code with Betaco regarding, among other aircrafts, the Helicopter. The Debtors have also filed a notice of rejection of the Lease and the Sublease. Because the Debtors are rejecting the Lease and the Sublease, the McGraw-Hill Agreement no longer has any value to ExecuJet and will be burdensome, as ExecuJet no longer has the right to use the Helicopter, Mr. Graham says. Headquartered in Indianapolis, Indiana, ATA Airlines, owned by ATA Holdings Corp. -- http://www.ata.com/-- is the nation's 10th largest passenger carrier (based on revenue passenger miles) and one of the nation's largest low-fare carriers. ATA has one of the youngest, most fuel-efficient fleets among the major carriers, featuring the new Boeing 737-800 and 757-300 aircraft. The airline operates significant scheduled service from Chicago- Midway, Hawaii, Indianapolis, New York and San Francisco to over 40 business and vacation destinations. Stock of parent company, ATA Holdings Corp., is traded on the Nasdaq Stock Exchange. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 26, 2004 (Bankr. S.D. Ind. Case Nos. 04-19866, 04-19868 through 04-19874). Terry E. Hall, Esq., at Baker & Daniels, represents the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $745,159,000 in total assets and $940,521,000 in total debts. (ATA Airlines Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) ATHLETE'S FOOT: Plan Confirmation Hearing Set for December 8 ------------------------------------------------------------ The U.S. Bankruptcy Court for the Southern District of New York approved the Second Amended Joint Disclosure Statement filed by The Athlete's Foot, LLC, and Delta Pace LLC, together with their Official Committee of Unsecured Creditors. The Court determined that the Disclosure Statement contained the right amount of the right kind of information to allow the creditors to make an informed decision about the chapter 11 plan filed along with the Disclosure Statement. The plan proponents are now authorized to solicit acceptances of the Plan. After selling substantially all of their assets and paying off their principal secured debt, the Debtors, in consultation with the Committee, focused on formulating a plan of liquidation that will enable them to make distributions to holders of Allowed Claims as soon as practicable and subsequently wind up and terminate the Debtors' business affairs. The Plan provides for the: i) creation of the Liquidation Trust, ii) compromise and settlement of claims; and iii) rejection of any remaining executory contracts and unexpired leases to which any Debtor is still a party. About the Plan The Debtors operations will be winded down after confirmation of their Plan. On the Plan's effective date, the Debtors' assets will be transferred to a Liquidation Trust. A Liquidation Trustee will make distributions to creditors, investigate and prosecute rights of action, and resolve claim disputes. Under the Plan, these claims are unimpaired: * priority non-tax claims, * secured claims, * allowed fee claims, * priority tax claims, and * administrative claims. General unsecured creditors owed approximately $30,284,629 will receive: i) beneficial interests in the Liquidation Trust entitling the holders to recover pro rata shares of any cash from a Distribution Fund; or ii) less favorable treatment that the Debtors or the Liquidation Trustee, the Committee and an unsecured claim holder will agree upon. General unsecured creditors are expected to recover 7% to 10% of their claims. Intercompany claims and equity interests will be cancelled. Creditors' Committee Survives The Official Committee of Unsecured Creditors will not be disbanded upon plan confirmation. The Committee will be given the power to prosecute all litigation causes of action and defenses. It will also continue the adversary proceeding commenced by the Debtors against GMAC Commercial Finance LLC seeking to recover $525,000. Plan Funding A summary of estimated proceeds that will be available for distribution to creditors: Source Estimated Proceeds ------ ------------------ Cash on Hand $2,300,000 to $2,700,000 Professional Fees Carve Out 525,000 525,000 ---------- ---------- Total Estimated Proceeds $2,825,000 $3,230,000 Application of Estimated Proceeds --------------------------------- Chapter 11 Professional Fees $750,000 to $600,000 Wind-down costs 100,000 75,000 -------- -------- Total Estimated Chapter 11 Costs $850,000 $675,000 Estimated Proceeds Available for Distribution $1,975,000 to $2,555,000 The Court will convene a hearing on December 8 to discuss the merits of the Plan. Objections to the Plan, if any, must be served by November 8 to: Counsel to the Debtors: John H. Drucker, Esq. Bonnie L. Pollack, Esq., Angel & Frankel, P.C. 460 Park Avenue New York, New York 10022-1906 Counsel to the Official Committee of Unsecured Creditors: Cathy Hershcopf, Esq. Gregory G. Plotko, Esq. Kronish Lieb Weiner & Hellman LLP 1114 Avenue of the Americas New York, NY 10036-7798 The United States Trustee: Office of the United States Trustee Southern District of New York Attn: Gregory M. Zipes, Esq., 33 Whitehall Street, 21st Floor New York, NY 10004 Headquartered in New York, New York, Athlete's Foot Stores, LLC -- http://www.theathletesfoot.com/-- operates approximately 125 athletic footwear specialty retail stores in 25 states. The Company and its debtor-affiliate filed for chapter 11 protection on December 9, 2004 (Bankr. S.D.N.Y. Case No. 04-17779). Bonnie Lynn Pollack, Esq., and John Howard Drucker, Esq., at Angel & Frankel, P.C. represents the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed total assets of $33,672,000 and total debts of $39,452,000. B/E AEROSPACE: Earns $10 Million of Net Income in Third Quarter --------------------------------------------------------------- B/E Aerospace, Inc. (Nasdaq: BEAV), reported its financial results for the three and nine-month periods ended September 30, 2005. Highlights: * reported third quarter revenues of $217.1 million, representing year-over- year organic growth of approximately 18%; * third quarter gross margin of 35.3 percent expanded by 250 basis points versus the same period in the prior year; * third quarter operating earnings of $25.4 million were 45% higher than the same period in the prior year. Third quarter operating margin of 11.7 percent expanded by 220 basis points versus the same period in the prior year. The 45 percent operating earnings growth rate was driven by continued revenue and earnings growth at each of B/E's commercial aircraft, business jet and distribution segments; * net earnings for the quarter were $10 million and represents increases of $12.7 million, versus the same period in the prior year; * record backlog at September 30, 2005, stood at over $1 billion, an increase of approximately 63 percent from backlog at September 30, 2004, and an increase of over $180 million or approximately 22 percent as compared to the immediately preceding quarter. Bookings for the three and nine month periods ended September 30, 2005, were in excess of $400 million and $900 million, respectively; and * management expects, for 2006, revenues of approximately $1 billion. Third Quarter Segment Sales & Operating Earnings For the third quarter, consolidated sales were $217.1 million, a $33.6 million or 18.3 percent increase over the third quarter of 2004. The commercial aircraft segment generated revenues of $140.6 million in the third quarter of 2005, up 11.6 percent versus the same period in the prior year, primarily due to a higher volume of commercial aircraft passenger cabin equipment and engineering, integration and certification services. The distribution segment delivered strong revenue growth of 17.5% in the third quarter of 2005, driven by a broad-based increase in aftermarket demand for aerospace fasteners and continued market share gains. In the business jet segment, revenues increased by 60.3 percent in the third quarter of 2005, reflecting the ongoing recovery of the business jet industry and initial shipments of super first class products. Operating earnings for the third quarter of 2005 of $25.4 million increased by 45 percent, as compared to the same period last year. The operating margin of 11.7 percent in the third quarter of 2005 was 220 basis points greater than the operating margin realized in the third quarter of 2004. The substantial increase in operating earnings was driven by continued revenue and earnings growth at each of B/E's commercial aircraft, distribution and business jet segments. Interest expense for the third quarter of 2005 of $14.8 million was $4.9 million lower than interest expense recorded in the same period in the prior year. Interest expense decreased in the third quarter of 2005 as a result of the early retirement of $200 million of senior subordinated notes during the fourth quarter of 2004. The interest coverage ratio, which is determined by dividing the sum of operating earnings plus depreciation and amortization by interest expense, was 2.2:1 for the third quarter of 2005, as compared to 1.3:1 in the third quarter of 2004. Net earnings for the third quarter were $10.0 million or $0.16 per diluted share, a $12.7 million or $0.23 per diluted share improvement as compared to the same period in the prior year. Liquidity, Balance Sheet and Cash Flows At the end of the quarter, the company's liquidity remained solid with cash balances totaling approximately $87 million, up $11 million from the December 31, 2004 balance. Net debt at the end of the third quarter stood at approximately $592 million, which represents total debt of approximately $680 million less cash and cash equivalents of approximately $87 million. The company has no debt maturities until 2008. Financial Guidance Financial guidance is now as follows: * for the full year 2005, notwithstanding any negative impacts from the Boeing strike and several hurricane related lost shipping days at the Company's distribution segment during the third quarter, management expects revenue in excess of $800 million; * for 2006, management expects revenue of approximately $1 billion and to report earnings of $1.10 per share for the full year. Orders and backlog are expected to continue to be strong in 2006 consistent with the new aircraft delivery cycle; and * 2007 earnings per share are expected to grow at a double digit rate (versus 2006) on a fully taxed (35% rate) basis, driven by strong revenue growth and additional margin expansion. Commenting on the company's outlook, Mr. Khoury stated, "The addressable aircraft cabin interior products market is expected to grow at a compounded annual growth rate of approximately 15% over the 2005 to 2010 period. The Company expects its CAS revenues to grow at a rate in excess of the expected compounded annual growth rate for the cabin interior products market." "The Company expects to generate revenues during 2006 of approximately $1 billion," Mr. Khoury continued. B/E Aerospace, Inc. -- http://www.beaerospace.com/-- manufactures aircraft cabin interior products, and distributes aerospace fasteners. B/E designs, develops and manufactures products for both commercial aircraft and business jets. B/E manufactured products include seating, lighting, oxygen, and food and beverage preparation and storage equipment. The company also provides cabin interior design, reconfiguration and passenger-to- freighter conversion services. Products for the existing aircraft fleet -- the aftermarket -- generate about 60 percent of sales. B/E sells its products through its own global direct sales organization. * * * As reported in the Troubled Company Reporter on March 4, 2005, Moody's Investors Service has upgraded the ratings of B/E Aerospace, Inc.'s senior subordinated notes, to Caa2 from Caa3. Also, the rating agency has confirmed B/E's Senior Implied and Speculative Grade Liquidity ratings of B3 and SGL-2, respectively, and has changed the rating outlook to positive. The ratings upgraded are: * $250 million senior subordinated notes due 2008, to Caa2 from Caa3 * $250 million senior subordinated notes due 2011, to Caa2 from Caa3 * Senior unsecured issuer rating to B3 from Caa2. The ratings confirmed are: * $175 million senior unsecured notes due 2010, rated B3 * Senior implied rating of B3 * Speculative Grade Liquidity Rating at SGL-2 BANC OF AMERICA: Stable Performance Cues S&P to Lift Low-B Ratings ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on 11 classes of Banc of America Commercial Mortgage Inc.'s commercial mortgage pass-through certificates from series 2002-2. At the same time, ratings are affirmed on 12 other classes from the same series. The raised and affirmed ratings reflect credit enhancement levels that adequately support the ratings, as well as loan defeasance and the stable performance of the transaction. According to the remittance report dated Oct. 12, 2005, the trust collateral consisted of 151 loans with an aggregate outstanding principal balance of $1.675 billion, down from 152 loans with a balance of $1.746 billion at issuance. The master servicer, Bank of America N.A., provided partial-year or full-year 2004 net cash flow debt service coverage figures for 99% of the pool, which excludes all defeased loans. Based on this information, Standard & Poor's calculated a weighted average DSC of 1.44x, which is the same as at issuance. There are no delinquent or specially serviced loans in the pool. The top 10 loan exposures have an aggregate outstanding balance of $572.4 million. The top 10 loan exposures reported a weighted average DSC of 1.70x, down slightly from 1.74x at issuance. Standard & Poor's reviewed recent property inspections provided by Bank of America for assets underlying the top 10 loan exposures, and all were characterized as "excellent" or "good." However, the fifth-, sixth-, and ninth-largest loans are on the watchlist and are discussed below. At issuance, the three largest loans in the pool had credit characteristics consistent with investment-grade obligations in the context of their inclusion in the pool. The two largest loans have maintained credit characteristics consistent with 'AAA' rated obligations, while the third-largest loan now has credit characteristics consistent with an 'A' category obligation, up from 'BBB-' at issuance. The largest loan is the mortgage on Crabtree Valley Mall in Raleigh, North Carolina. The loan includes the senior component portion, which is pooled, as well as a subordinate component debt amount of $20 million, which is raked to the CM-A, CM-B, CM-C, CM- D, and CM-E certificate classes. The performance of the collateral property has been stable since issuance. The second-largest loan in the pool is secured by the Bank Of America Plaza Building in Atlanta, Georgia. The collateral property for this loan has also displayed stable performance metrics since issuance. The third-largest loan is a mortgage on The Centre at Preston Ridge, a retail property in Frisco, Texas. Since issuance, the performance of this asset has improved moderately, with occupancy of 97% as of June 8, 2005, and DSC of 1.87x for the year ended Dec. 31, 2004. Bank of America reported 22 loans with an aggregate outstanding balance of $305.3 million on its watchlist. The fifth-largest loan in the pool, Bell Towne Centre, is secured by a 417,646-sq.- ft. retail center in Phoenix, Arizona. The DSC for the loan had declined to 0.92x for year-end 2004, from 1.30x at issuance, because Food 4 Less vacated the property due to bankruptcy. The Food 4 Less space has been leased to Sunflower Market, which was scheduled to begin paying rent in April 2005. The sixth-largest exposure consists of two cross-collateralized and cross-defaulted loans secured by student housing properties. The first loan is secured by Santa Fe Pointe Apartments, a 168- unit property in Gainesville, Florida, near Santa Fe Community College. DSC levels for the property have been low because of low occupancy resulting from poor enrollment at the college. The second loan is secured by Reflection of Tampa Apartments, a 168-unit property in Tampa, Florida, near the University of South Florida. Occupancy for the property as of July 2005 was 98%. For both properties, the borrower has hired new management that specializes in student housing. The weighted average DSC for the properties for the year ended Dec. 31, 2004, was 0.67x. The ninth-largest loan, Holly Hall Apartments, is secured by a 569-unit multifamily property in Houston, Texas. The loan is on the watchlist due to a low DSC caused by lower asking rents. The DSC for the property was 0.95x for the nine months ended Sept. 30, 2004. Based on discussions with the servicer, Standard & Poor's stressed various loans in the mortgage pool as part of its analysis. The resultant credit enhancement levels adequately support the raised and affirmed ratings. Ratings Raised Banc of America Commercial Mortgage Inc. Commercial Mortgage Pass-Through Certificates Series 2002-2 Rating Class To From Credit Support (%) ----- -- ---- ------------------ B AAA AA 15.27 C AAA AA- 14.23 D AAA A+ 13.44 E AA+ A 12.40 F AA A- 11.10 G AA- BBB+ 9.79 H A BBB 8.62 J A- BBB- 7.32 K BBB BB+ 5.10 L BBB- BB 4.32 M BB BB- 3.54 Ratings Affirmed Banc of America Commercial Mortgage Inc. Commercial Mortgage Pass-Through Certificates Series 2002-2 Class Rating Credit Support (%) ----- ------ ------------------ A-1 AAA 19.18 A-2 AAA 19.18 A-3 AAA 19.18 N B+ 2.52 O B 2.10 XC AAA N/A XP AAA N/A Crabtree Valley Mall Loan Class Rating Credit Support (%) ----- ------ ------------------ CM-A AA+ N/A CM-B AA N/A CM-C AA- N/A CM-D A+ N/A CM-E A N/A N/A -- Not applicable. BIOMETRICS 2000: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: Biometrics 2000 Corporation 2275 Swallow Hill Road, Building 2500 Pittsburgh, Pennsylvania 15220 Bankruptcy Case No.: 05-40324 Type of Business: The Debtor is s developer and reseller of unique biometric products for physical and network security. See http://www.biometrics2000.com/ Chapter 11 Petition Date: October 15, 2005 Court: Western District of Pennsylvania (Pittsburgh) Judge: M. Bruce McCullough Debtor's Counsel: Steven T. Shreve, Esq. Shreve & Pail 303 Pitt Building 213 Smithfield Street Pittsburgh, Pennsylvania 15222 Tel: (412) 281-6555 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million The Debtor's List of 20 Largest Unsecured Creditors is not yet available as of press time. BOOKS-A-MILLION: Stock Resumes Trading at Nasdaq After Compliance ----------------------------------------------------------------- Books-A-Million, Inc. (Nasdaq/NM:BAMME) received notice from Nasdaq that the Nasdaq Listing Qualifications Panel has determined that the Company's common stock is eligible for continued listing on the The Nasdaq National Market(R). On October 27, 2005, the Company's common stock resumed trading under its original trading symbol "BAMM." As reported in the Troubled Company Reporter on Sept. 23, 2005, the Company received notice from the staff of The Nasdaq Stock Market that, due to the Company's failure to file on a timely basis its quarterly report on Form 10-Q for the 13 weeks ended July 30, 2005, as required by Nasdaq Marketplace Rule 4310(c)(14), the Company's common stock is subject to potential delisting from The Nasdaq Stock Market at the opening of business on Sept. 29, 2005. As reported in the Troubled Company Reporter on Oct. 24, 2005, the Company filed with the Securities and Exchange Commission the quarterly report on Form 10-Q for the 13-week period ended July 30, 2005. The Company believes that, with this filing, it is current in its periodic reports with the SEC. Representatives of the Company attended a hearing before a Nasdaq Listing Qualifications Panel on Oct. 20, 2005, during which it notified the Panel that it had filed with the SEC the Second Quarter Form 10-Q, the sole deficiency previously cited by Nasdaq and the sole basis for the hearing. Books-A-Million -- http://www.booksamillion.com/-- presently operates 207 stores in 19 states and the District of Columbia. The Company operates four distinct store formats, including large superstores operating under the names Books-A-Million and Books & Co., traditional bookstores operating under the names Books-A- Million and Bookland, and Joe Muggs Newsstands. The Company's wholesale operations include American Wholesale Book Company and Book$mart, both based in Florence, Alabama. * * * Material Weakness In September 2005, during the course of its effort to implement Section 404 of the Sarbanes Oxley Act, management identified certain control deficiencies. After meeting with the Audit Committee of the Board of Directors, management determined that certain of these control deficiencies constituted significant deficiencies, which in the aggregate constituted a material weakness. The material weakness identified consists of a combination of the three significant deficiencies relating to accounts payable: (i) inadequate controls over the data used to perform cost of goods sold calculations; (ii) inadequate segregation of duties for accounts payable management; and (iii) inadequate independent verification of expense invoice payment supporting documentation. BOWATER INC: Incurs $16 Million Net Loss in Third Quarter --------------------------------------------------------- Bowater Incorporated (NYSE: BOW) reported a $16 million net loss on sales of $872.9 million for the third quarter of 2005. These results compare with a net loss of $18.1 million on sales of $834.0 million in the third quarter of 2004. Before special items, the net loss for the third quarter of 2005 was $9.5 million compared with the 2004 third quarter net loss before special items of $1.8 million. Third quarter 2005 special items, net of tax, consisted of a $6.1 million gain related to asset sales and a $12.6 million loss resulting from currency changes primarily related to the appreciation of the Canadian dollar. In addition to those special items, the company had a $3.7 million charge related to a tax adjustment. Before the gain on asset sales, operating income was $35.1 million, which is within the range indicated in the company's announcement dated October 4. Operating income was $45 million, including the gain on asset sales. "Bowater's product pricing has improved throughout the year," said Arnold M. Nemirow, Chairman, President and Chief Executive Officer. "However, we have experienced significant cost pressures, especially third quarter energy, chemicals and distribution costs, which were partially related to Hurricane Katrina, and the strong Canadian dollar. We do expect market fundamentals to continue to support Bowater's improved fourth quarter pricing." The company has initiated an $80 million cost reduction program, which will be fully implemented by the end of 2006. In addition to this program, the company intends to sell certain assets that are expected to generate net proceeds in excess of $300 million over the same time period. The assets consist mostly of North American timberlands. Bowater's average transaction price for newsprint rose $13 per metric ton in the third quarter compared to the second quarter. Inventory increased by 13,400 metric tons, primarily as a result of disruptions in export shipments due to the recent hurricanes. The company curtailed 56,000 metric tons of newsprint production in the third quarter. Of the curtailment, approximately 20,000 tons was related to a 19-day outage at the Thunder Bay, Ontario newsprint mill as a result of high wood fiber and energy costs. In the fourth quarter, the company expects to curtail approximately 53,000 metric tons representing maintenance outages and the continued idling of a machine at Thunder Bay. The company informed its North American customers of a $35 per metric ton price increase effective October 1. Consumption of coated mechanical papers in North America continues to be strong. Bowater's average transaction price for coated and specialty papers increased $30 per short ton compared to the second quarter, while the company's average operating costs increased $19 per ton, primarily as a result of rising energy related costs and the strong Canadian dollar. Due to escalating energy costs, the company announced in the fourth quarter various freight and energy surcharges for its coated and specialty grades. Bowater's average transaction price for market pulp decreased $28 per metric ton compared to the second quarter of 2005, while operating costs increased $6 per ton. The company curtailed 19,000 metric tons of market pulp due to maintenance outages in the third quarter and expects a similar amount in the fourth quarter. The company informed its North American customers of a $20 per metric ton price increase on softwood grades effective October 1. The company's average transaction price for lumber decreased $24 per thousand board feet compared to the second quarter of 2005. During the quarter, the company paid countervailing and antidumping duties of approximately $7.8 million. Headquartered in Greenville, South Carolina, Bowater Incorporated produces newsprint and coated mechanical papers. In addition, the company makes uncoated mechanical papers, bleached kraft pulp and lumber products. The company has 12 pulp and paper mills in the United States, Canada and South Korea and 12 North American sawmills that produce softwood lumber. Bowater also operates two facilities that convert a mechanical base sheet to coated products. Bowater's operations are supported by approximately 1.4 million acres of timberlands owned or leased in the United States and Canada and 30 million acres of timber cutting rights in Canada. Bowater is one of the world's largest consumers of recycled newspapers and magazines. Bowater common stock is listed on the New York Stock Exchange, the Pacific Exchange and the London Stock Exchange. A special class of stock exchangeable into Bowater common stock is listed on the Toronto Stock Exchange (TSX: BWX). * * * As reported in the Troubled Company Reporter on Oct. 14, 2005, Standard & Poor's Ratings Services placed its ratings on pulp and paper producer Bowater Inc. and subsidiary Bowater Canadian Forest Products Inc., including the 'BB' corporate credit ratings, on CreditWatch with negative implications. The CreditWatch placement reflects heightened concerns regarding the negative effect of an appreciating Canadian dollar and other cost pressures on the company's cash flow generation and earnings. As reported in the Troubled Company Reporter on Apr. 22, 2005, Moody's Investors Service affirmed Bowater Incorporated's senior implied, senior unsecured and issuer ratings at Ba3, and concurrently, also affirmed the speculative grade liquidity rating as SGL-2 (indicating good liquidity). Moody's says the outlook remains negative. Ratings affirmed: -- Bowater Incorporated * Outlook: negative * Senior Implied: Ba3 * Senior Unsecured: Ba3 * Industrial and PC revenue bonds: Ba3 * Issuer: Ba3 * Speculative Grade Liquidity Rating: SGL-2 -- Bowater Canada Finance Corp. * Outlook: negative * Senior unsecured guaranteed notes: Ba3 As reported in the Troubled Company Reporter on Mar. 30, 2005, Fitch has rated Bowater's senior unsecured bonds and bank debt 'BB-'. Fitch says the Rating Outlook is Stable. Nearly $2.5 billion of debt is subject to the rating. BOYDS COLLECTION: Gets Interim Order to Use Cash Collateral ----------------------------------------------------------- The U.S. Bankruptcy Court for the District of Maryland gave The Boyds Collection, Ltd., and its debtor-affiliates permission on an interim basis to use cash collateral securing repayment of loans to Bank of America, N.A., and D.E. Shaw Laminar Portfolios, L.L.C. The Court also granted the lenders adequate protection for the Debtors' use of the cash collateral. Prepetition Debt & Use of Cash Collateral Under various Prepetition Loan Documents, the Debtors owe: Prepetition Lender Amount Owed ------------------- ----------- BofA N.A. & D.E. Shaw $56,500,000 (under a senior secured Credit Agreement dated Feb. 23, 2005 BofA N.A. & D.E. Shaw $1,019,524 (under various prepetition Letters of Credit) ----------- $57,519,524 The Debtors will use the cash collateral as working capital for the continued operation of the Debtors' businesses. The Court authorizes the Debtors to use the cash collateral pursuant to the terms and provisions of its interim order, the Postpetition Credit Agreement and other Loan Documents for the Postpetition Financing and a Budget covering the period from Oct. 13, to Jan. 8, 2005. A full-text copy of that 13-week Budget is available for free at: http://bankrupt.com/misc/BoydsCollectionBudget.pdf Adequate Protection As adequate protection for the Debtors' use of the Cash Collateral, the Prepetition Lenders are granted valid, binding, enforceable and perfected liens in all of the Debtors' assets to secure the prepetition indebtedness equal to the sum owed. The Court will convene a hearing at 10:00 a.m., on Oct. 31, 2005, to consider the Debtors' request to use the Cash Collateral on a permanent basis. Headquartered in McSherrystown, Pennsylvania, The Boyds Collection, Ltd. -- http://www.boydsstuff.com/-- designs and manufactures unique, whimsical and "Folksy with Attitude(SM)" gifts and collectibles, known for their high quality and affordable pricing. The Company and its debtor-affiliates filed for chapter 11 protection on Oct. 16, 2005 (Bankr. Md. Lead Case No. 05-43793). Matthew A. Cantor, Esq., at Kirkland & Ellis LLP represents the Debtors in their restructuring efforts. As of June 30, 2005, Boyds reported $66.9 million in total assets and $101.7 million in total debts. BRIAN MULLINS: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------ Debtor: Brian Mullins Excavating Contractors, Inc. 929 Swan Pond Road Harriman, Tennessee 37748 Bankruptcy Case No.: 05-37297 Type of Business: The Debtor is an excavation contractor. Chapter 11 Petition Date: October 14, 2005 Court: Eastern District of Tennessee (Knoxville) Judge: Richard Stair Jr. Debtor's Counsel: Robert M. Bailey, Esq. Bailey, Roberts & Bailey, PLLC 708 South Gay Street, Suite 200 P.O. Box 2189 Knoxville, Tennessee 37901-2189 Tel: (865) 546-3533 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Brian Mullins $147,000 933 Swan Pond Road Harriman, TN 37748 Brian Mullins $60,000 933 Swan Pond Road Harriman, TN 37748 Kramer Rayson Leake Rodgers & Morga $43,168 P.O. Box 629 Knoxville, TN 37901 Roane County Trustee $37,022 Knoxville Utilities Board $33,869 Rocky Top Markets $22,127 IRS - District Director $20,254 BB&T $18,527 Consolidated Pipe & Supply, Inc. $15,000 East Tennessee Precast $15,000 Smith and Cashion $14,014 Brown, Jake & McDaniel PC $9,281 Curtis Equipment Sales $7,500 GCR Cobra Knoxville Tire Center $6,294 Stowers Machinery $6,012 Sherman Dixie Concrete $5,828 Kelso Oil Company $5,276 Contech Construction Products $5,047 BellSouth Claims $4,322 Tim's Tires $3,183 BRILLIANT DIGITAL: Extends Secured Debt Maturity Date to March 31 ----------------------------------------------------------------- Brilliant Digital agreed to extend the maturity date of certain secured indebtedness it originally issued in May and December 2001 to: * Harris Toibb, Europlay 1, LLC, * Preston Ford Inc., and * Capel Capital Ltd. In consideration of the holders' agreement to extend the maturity date of the Secured Indebtedness to March 31, 2006, Brilliant Digital agreed to: (a) adjust the conversion price from $0.07 to $0.02 per share effective upon the amendment of the company's Certificate of Incorporation to provide for a one-for-ten reverse stock split of the company's outstanding common stock; (b) adjust the purchase price of all warrants issued o the secured debtholders from $0.07 to $0.02 per share; (c) issue to the holders warrants dated Sept. 26, 2005, and expiring on Oct. 5, 2009, with an exercise price of $0.02 per share, to purchase an aggregate of 111,000,000 shares of the company's common stock; and (d) issue additional September warrants to purchase an aggregate of 152,738,125 common shares, which will vest and become exercisable effective upon the reverse split. Brilliant Digital Entertainment, Inc., is a company which, through its Altnet, Inc., subsidiary, operates a peer-to-peer-based content distribution network that allows us to securely and efficiently distribute a content owner's music, video, software and other digital files to computer users via the Internet. As of June 30, 2005, Brilliant Digital's balance sheet reflected a $3,383,000 stockholders' deficit. BROOKLYN HOSPITAL: Meeting of Creditors Rescheduled to Dec. 7 ------------------------------------------------------------- The U.S. Trustee for Region 2 rescheduled the meeting of The Brooklyn Hospital Center and its debtor-affiliate's creditors to 10:00 p.m., on Dec. 7, 2005. The meeting will be held at 111 Livingston Street, Suite 1102, in Brooklyn, New York. 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 Brooklyn, New York, The Brooklyn Hospital Center -- http://www.tbh.org-- provides a variety of inpatient and outpatient services and education programs to improve the well being of its community. The Debtor, together with Caledonian Health Center, Inc., filed for chapter 11 protection on September 30, 2005 (Bankr. E.D.N.Y. Case No. 05-26990). Lawrence M. Handelsman, Esq., and Eric M. Kay, Esq., at Stroock & Stroock & Lavan LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $233,000,000 in assets and $337,000,000 in debts. CENTURY ALUMINUM: Incurs $20.1 Million Net Loss in Third Quarter ---------------------------------------------------------------- Century Aluminum Company (NASDAQ:CENX) reported a $20.1 million net loss for the third-quarter of 2005. Reported third-quarter results were negatively impacted by an after-tax charge of $36.4 million for mark to market adjustments on forward contracts that do not qualify for cash flow hedge accounting. In the second-quarter of 2005, the company changed from the last-in first-out (LIFO) inventory valuation method to the first-in first-out (FIFO) method. Financial statements for periods prior to second-quarter 2005 have been restated to reflect this change. Third-quarter 2005 results benefited from the change by $3 million after-tax, or $0.09 a share. In the third-quarter of 2004, the company reported a net loss of $16 million. Before restatement, the company reported a net loss of $16 million, or $0.51 a share, fully diluted, which included an after-tax charge of $30.6 million, or $0.96 a share, for a loss on early extinguishment of debt. Sales in the third-quarter of 2005 were $270.8 million, compared with $274.3 million in the third-quarter of 2004. Shipments of primary aluminum for the quarter totaled 337.3 million pounds compared with 344.2 million pounds in the year-ago quarter. Net income for the first nine-months of 2005 was $32.4 million. This compares with net income of $8.8 million, in the year-ago period ($7.0 million). Sales in the first nine-months of 2005 were $839.5 million compared with $770.1 million in the same period of 2004. Shipments of primary aluminum for the 2005 period were 1.014 billion pounds compared with 971.4 million pounds in the year-ago period. Financial results and shipment data for 2004 include Nordural from April 27, 2004, the date of acquisition. "Lower operating results in the third-quarter of 2005 compared to the second-quarter of 2005 are attributable to lower price realizations, hurricane-related costs, power surcharges at Mt. Holly and the reduced pot count at Hawesville," said Craig Davis, chairman and chief executive officer. "While we are encouraged by the recent strengthening in aluminum prices, we remain concerned with the current energy environment in the United States and its impact on the company in the near term." Century Aluminum Co. owns 615,000 metric tons per year (mtpy) of primary aluminum capacity. The company owns and operates a 244,000-mtpy plant at Hawesville, Kentucky, a 170,000-mtpy plant at Ravenswood, West Virginia, and a 90,000-mtpy plant at Grundartangi, Iceland. Century also owns a 49.67-percent interest in a 222,000-mtpy reduction plant at Mt. Holly, South Carolina. Alcoa Inc. owns the remainder and is the operating partner. Century's corporate offices are located in Monterey, California. * * * As reported in the Troubled Company Reporter on Dec. 7, 2004, Moody's Investors Service assigned a B1 rating to Century Aluminum Company's $175 million senior unsecured convertible notes due 2024. These ratings were affirmed: * The Ba3 rating for Century's $100 million senior secured revolving credit facility, * The B1 rating for Century's $250 million 7.5% senior notes due 2014 * Century's B1 senior implied rating, and * Century's B3 senior unsecured issuer rating. As reported in the Troubled Company Reporter on Nov. 9, 2004, Standard & Poor's Ratings Services raised its rating on Century Aluminum Company's $150 million 1.75% convertible notes due 2024 to 'BB-' from 'B' and removed it from CreditWatch. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on the Monterey, California-based company. CHASE FUNDING: Moody's Downgrades Class IM-2 Cert.'s Rating to Ba3 ------------------------------------------------------------------ Moody's Investors Service downgraded the ratings of two certificates previously issued by Chase Funding Loan Acquisition Trust, Series 2001-C1. The securitization is backed by fixed-rate and adjustable-rate subprime mortgage loans that have multiple originators. The two subordinate and mezzanine certificates from the fixed-rate pool have been downgraded because existing credit enhancement levels may be low given the current projected losses on the underlying pools. The collateral has experienced cumulative losses of about 2.5% causing gradual erosion of the overcollateralization. As of September 25, 2005 there was only $223,332 of overcollateralization compared to a required floor of about $455,000. Chase Manhattan Mortgage Corporation and Wells Fargo Home Mortgage, Inc. are servicing the transaction. Moody's complete rating actions are: Issuer: Chase Funding Loan Acquisition Trust, Series 2001-C1 Downgrades: * Series 2001-C1; Class IM-1, downgraded to A3 from Aa2 * Series 2001-C1; Class IM-2, downgraded to Ba3 from A2 CHASE MORTGAGE: Fitch Rates $2.6 Mil Certificate Classes at Low-B ----------------------------------------------------------------- Chase Mortgage Finance Trust mortgage pass-through certificates, series 2005-S3, are rated by Fitch Ratings: -- $738.9 million classes A-1 through A-15, A-P, A-X and A-R senior certificates 'AAA'; -- $13.8 million class M certificates 'AA'; -- $5.0 million class B-1 certificates 'A'; -- $2.7 million class B-2 certificates 'BBB'; -- $1.5 million privately offered class B-3 certificates 'BB'; -- $1.1 million privately offered class B-4 certificates 'B'; -- $1.5 million privately offered class B-5 certificates are not rated by Fitch. The 'AAA' rating on the senior certificates reflects the 3.35% subordination provided by the 1.80% class M, the 0.65% class B-1, the 0.35% class B-2, the 0.20% privately offered class B-3, the 0.15% privately offered class B-4 and the 0.20% privately offered class B-5 certificate. Fitch believes the above credit enhancement will be adequate to support mortgagor defaults as well as bankruptcy, fraud and special hazard losses in limited amounts. In addition, the ratings also reflect the quality of the underlying mortgage collateral, strength of the legal and financial structures and the primary servicing capabilities of JPMorgan Chase Bank, N.A. The trust consists of 1,454 first-lien residential mortgage loans with stated maturity of not more than 30 years with an aggregate principal balance of $764,521,120, as of the cut-off date, Oct. 1, 2005. The mortgage pool has a weighted average original loan to value ratio of 68.10% with a weighted average mortgage rate of 5.943%. The weighted-average FICO score of the loans is 736. The average loan balance is $525,805 and the loans are primarily concentrated in California, New York and Florida. For additional information on Fitch's rating criteria regarding predatory lending legislation, see 'Fitch Revises Rating Criteria in Wake of Predatory Lending Legislation', available on the Fitch Ratings web site at http://www.fitchratings.com/ Wachovia Bank, N.A. will serve as trustee. Chase Mortgage Finance Corporation, a special purpose corporation, deposited the loans in the trust which issued the certificates. For federal income tax purposes, an election will be made to treat the trust fund as multiple real estate mortgage investment conduits. CLAIMNET.COM: Balance Sheet Upside-Down by $671,000 at Sept. 30 --------------------------------------------------------------- Claimsnet.com Inc. delivered its quarterly report on Form 10-QSB for the quarter ending September 30, 2005, to the Securities and Exchange Commission on October 25, 2005. As of September 30, 2005, the Company had a $369,000 working capital deficit and $671,000 stockholders' deficit. The Company reported a $48,000 net loss on $329,000 of net revenues for the quarter ending September 30, 2005. At June 30, 2005, the Company's balance sheet shows $354,000 in total assets and a $1,025,000 in total debts. The Company generated revenues of $943,000 for the nine months ended September 30, 2005, and $731,000 for the nine months ended September 30, 2004. The Company have incurred net losses since inception and had an accumulated deficit of $43,851,000 at September 30, 2005. The Company expects to continue to operate at a loss for the near future. A full-text copy of the regulatory filing is available at no charge at http://ResearchArchives.com/t/s?292 Headquartered in Dallas, Claimsnet.com Inc. provides Internet- based, business-to-business software for the healthcare industry, including distinctive, advanced ASP technology for online healthcare transaction processing. COMBUSTION ENGINEERING: Everest Ends Insurance Dispute for $17.9M ----------------------------------------------------------------- Combustion Engineering, Inc., asks the U.S. Bankruptcy Court for the District of Delaware for authority to enter into a settlement agreement and complete policy release with Everest Reinsurance Company, fka Prudential Reinsurance Company. The Debtor is a defendant in a large number of asbestos-related personal injury lawsuits pending in various parts of the United States. Approximately 409,000 asbestos-related claims have been filed against Combustion. Everest Reinsurance issued eleven excess general liability insurance policies to the Debtor. Combustion believes that the insurer has substantial obligations to pay liability incurred in connection with the asbestos claims subject to the aggregate limits of the policies. Also, the Debtor believes Everest has potential obligations to the extent there are Asbestos Claims against it not subject to the aggregate policy limits. To resolve coverage disputes, the Debtor commenced a lawsuit against various insurers in the Delaware Bankruptcy Court [Combustion Engineering, Inc., et al v. Allianz Ins. Co., et al., Adv. Proc. No. 03-57275]. The case is pending in the Bankruptcy Court. Settlement Agreement To avoid a costly and lengthy litigation, Everest and Combustion entered into a settlement agreement. Under the agreement, Everest will pay $17,900,000 to Combustion. Also, the Debtor has designated Everest as a Settling Asbestos Insurance Company. The Settlement Agreement will be nullified if any of these will occur, the entry of a final order: 1) confirming the Debtor's Plan of Reorganization; 2) declaring that Everest is not a Settling Asbestos Insurance Company or omitting Everest from the list of Settling Insurance Companies; or 3) prior to Plan Effective Date, finding that the Settlement Agreement is not sufficiently comprehensive to warrant treatment under Section 524(g) of the Bankruptcy Code; 4) denying the Settlement Agreement; 5) converting the chapter 11 reorganization into a chapter 7 liquidation proceeding; or 6) dismissing the chapter 11 case before a confirmation order is entered. Headquartered in Norwalk, Connecticut, Combustion Engineering, Inc., is the U.S. subsidiary of the ABB Group. ABB is a leader in power and automation technologies that enable utility and industry customers to improve performance while lowering environmental impact. The ABB Group of companies operates in more than 100 countries and employs about 103,000 people. Combustion Engineering filed for chapter 11 protection on Feb. 17, 2003 (Bankr. D. Del. Case No. 03-10495). Curtis A. Hehn, Esq., at Pachulski Stang Ziehl Young & Jones and Jennifer Mo, Esq., at Kirkpatrick & Lockhart Nicholson Graham represents the Debtor in its restructuring efforts. When the Debtor filed for protection from its creditors, it estimated more than $100 million in assets and debts. COMMERCIAL MORTGAGE: S&P Upgrades Low-B Ratings on 2 Cert. Classes ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on four classes from Commercial Mortgage Acceptance Corp.'s commercial mortgage pass-through certificates from series 1998-C2. Concurrently, the ratings on five other classes from the same transaction are affirmed. The rating actions reflect increased credit enhancement levels that support the raised and affirmed ratings through various stress scenarios, as well as the seasoning of the loan pool. As of Oct. 17, 2005, the trust collateral consisted of 389 loans with an aggregate outstanding principal balance of $2.1 billion, down from 512 loans amounting to $2.9 billion at issuance. The master servicer, Midland Loan Services Inc., provided mostly year-end 2004 financial data for 98.2% of the pool. Based on this information, Standard & Poor's calculated a weighted average net cash flow debt service coverage of 1.47x, up from 1.40x at issuance. The DSC figures exclude 12 defeased loans and nine credit tenant lease loans. To date, the trust has incurred 17 losses amounting to $37.7 million. The top 10 exposures in the pool, excluding defeased loans, have an aggregate outstanding balance of $577 million and a weighted average DSC of 1.58x, up from 1.39x at issuance. The third-largest exposure consists of two loans that are cross-collateralized and cross-defaulted, one of which is on the master servicer's watchlist. Similarly, the sixth-largest exposure consists of two cross-collateralized loans, one of which is one the watchlist. The seventh-largest exposure is also on the watchlist, and the ninth-largest exposure is in special servicing. As part of its surveillance review, Standard & Poor's reviewed recent property inspections provided by Midland for the properties securing the top 10 exposures, and all were characterized as "excellent" or "good." Seven delinquent assets with an aggregate balance of $44.2 million are currently with the special servicer, also Midland. The ninth-largest exposure has a $24.6 million outstanding loan balance, as well as servicer advances of $1.1 million. This loan is secured by a 423,000-sq.-ft. multi-use property in Hatboro, Pennsylvania, which is more than 90 days delinquent. In addition, this loan has been with the special servicer since May 2001 because a tenant that occupied 48.0% of the space filed for bankruptcy and vacated the property. This property is expected to become REO in the near future, as negotiations with a prospective tenant for much of the space ended unsuccessfully. Standard & Poor's anticipates a significant loss upon the eventual liquidation of this asset. Another specially serviced loan is 60-plus days delinquent and is secured by a 277-unit multifamily property in Dallas, Texas, with a $7.7 million outstanding balance. This property was recently appraised for an amount in excess of the loan balance, and the loan is expected to be paid off in full in the near future. None of the other five delinquent assets have balances in excess of $3 million. While a significant loss is expected upon the liquidation of a lodging property in Branson, Missouri, minimal losses, if any, are expected upon the eventual resolution of another multifamily property in Dallas, Texas, and an office property in Park City, Utah. A retail property in Greenwood, South Carolina, anchored by a Winn-Dixie store was transferred to the special servicer this month because Winn-Dixie Inc. rejected its lease and the loan is now 30-plus days delinquent. A multifamily property in Terrytown, La., is also 30-plus days delinquent and was damaged by Hurricane Katrina. Due to their recent transfer to special servicing, limited information is available on these two loans. There is one other loan with the special servicer that is current in its debt service payments. This loan has a $7.8 million outstanding balance and is secured by a 200,000-sq.-ft. retail property in Durham, North Carolina. This loan was transferred to special servicing in July 2005 and is expected to be paid off in the near future with no loss to the trust. Eighty-five loans with an outstanding balance of $353.5 million are on Midland's watchlist, including three of the top 10 exposures. The third-largest exposure consists of two multifamily loans that are cross-collateralized and cross-defaulted and which generated a DSC of 0.85x in 2004. One of these loans is secured by a 266-unit multifamily property in Sammamish, Washington, that has an outstanding balance of $17.2 million. This loan is on the watchlist because it reported a 2004 DSC of 0.36x, down from 1.26x at issuance. The sixth-largest exposure consists of two retail loans that are cross-collateralized and cross-defaulted and which generated a DSC of 1.26x in 2004. One of these loans is secured by a 245,000-sq.-ft. property in Lafayette, Indiana, that has an outstanding balance of $14.1 million. This loan is on the watchlist because it reported a 2004 DSC of 1.07x, down from 1.21x at issuance. The seventh-largest exposure consists of a $27.6 million loan secured by a 257,000-sq.-ft. office building in Edison, New Jersey. This loan is on the watchlist due to occupancy issues; the property was 76.0% occupied in 2004, down from 98.0% at issuance. However, the loan reported a 1.24x DSC in 2004, and the borrower is in the process of upgrading the vacant space. Most of the remaining loans on the watchlist have occupancy or DSC issues. Standard & Poor's stressed the loans with the special servicer, loans on the watchlist, and other loans with credit issues as part of its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. Ratings Raised Commercial Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certs Series 1998-C2 Rating Class To From Credit Enhancement (%) ----- -- ---- ---------------------- D AAA A+ 16.3 E AAA A- 14.2 F A- BB+ 8.3 G BBB+ BB 7.2 Ratings Affirmed Commercial Mortgage Acceptance Corp. Commercial Mortgage Pass-Through Certs Series 1998-C2 Class Rating Credit Enhancement (%) ----- ------ ---------------------- A-2 AAA 39.9 A-3 AAA 39.9 B AAA 33.0 C AAA 24.6 X AAA N/A N/A - Not applicable. CONMED CORP: Earns $7.9 Million of Net Income in Third Quarter -------------------------------------------------------------- CONMED Corporation (Nasdaq: CNMD) reported financial results for the third quarter and nine months ended September 30, 2005. Sales for the 2005 third quarter increased 13.4% to $150 million compared to $132.3 million in the third quarter of 2004. The Endoscopic Technologies product line acquired from C.R. Bard in September 2004 contributed $15.2 million to the $150 million in total sales for the quarter. Net income was $7.9 million in the quarter an increase from the $1.7 million recorded in the third quarter last year. Mr. Joseph J. Corasanti, President and Chief Operating Officer, noted, "We are pleased to see that the Endoscopic Technologies product line, acquired last year, continues to contribute to our top line and to gross margin improvements. Also, our international sales growth has met our expectations for the third quarter as well as for the nine months of 2005. However, our domestic sales growth in the third quarter was less than we had anticipated and less than the preceding seven quarters." He added, "Typically we see a seasonally reduced amount of business in the third quarter because patients and surgeons tend to postpone surgeries from the summer vacation time to other times of the year. This year the trend was even more pronounced. We believe that economic conditions in the United States, hurricanes in the southeast region of the United States, and reduced consumer confidence in general have caused a slowing in elective surgery procedures. Further, hospitals and surgery centers seem to be taking longer to reach buying decisions on capital equipment. We believe that the factors behind the slowdown in elective surgeries and longer equipment buying cycles will be short-lived and that we will return to normal domestic sales growth rates in 2006." On a pro forma basis, excluding transition charges related to an acquisition and other unusual charges, non-GAAP net income for the 2005 third quarter was $9.6 million compared to $11.5 million or $0.38 per diluted share in the comparable third quarter of 2004. For the nine months ended September 30, 2005, sales increased 16.8% to $464.1 million with net income of $29.2 million and diluted earnings per share of $0.98. This compares to the nine months ended September 30, 2004 with sales of $397.2 million, net income of $26.0 million and diluted earnings per share of $0.86. On a pro forma basis, excluding transition and other unusual charges, 2005 nine-month non-GAAP net income and diluted earnings per share were $36.5 million and $1.22, respectively. These compare to 2004 nine-month non-GAAP net income and diluted earnings per share of $35.8 million and $1.18, respectively. As previously disclosed, while year-to-date sales are generally meeting the Company's objectives, third quarter 2005 sales were below original expectations of $153 to $156 million, primarily due to lower-than-anticipated elective surgeries in the United States. Anecdotal information suggests that elective surgeries in many regions of the United States may have been particularly low in the summer of 2005. In the third quarter, sales of capital equipment appear to have also slowed as hospital customers appear to be taking longer to conclude the buying process. Outside the United States, the Company's rate of sales growth compared favorably to expectations, up 11%, year over year for the third quarter. This excludes the effects of the Endoscopic Technologies acquisition, which was acquired on Sept. 30, 2004. The effects of foreign exchange translation changes in the third quarter of 2005 were a benefit to sales in the amount of $0.9 million. CONMED's gross margin, excluding Endoscopic Technologies acquisition transition charges associated with moving manufacturing from C.R. Bard facilities to our own plants, has improved during 2005 to 52.7% and 51.9%, respectively, for the nine months and three months ended September 30, 2005. In 2004 the comparable gross margin percentages were 52.0% for the nine month and 51.0% for the three-month periods. The improving gross margin is a result of the inclusion in the Company's sales base of the Endoscopic Technologies product line, with gross margins that are higher than the Company's overall average. The positive impact of the gross margin was partly offset by the rising cost of petroleum-based plastic raw materials and transportation costs. The Company's selling and administrative costs have increased during the first nine months of 2005 as a result of the inclusion of the Endoscopic Technologies product line acquisition. Additionally, administrative costs for year-to-date and the third quarter 2005 were affected by increased litigation expenses associated with antitrust litigation initiated against a competitor. The Company expects these litigation expenses will increase in the fourth quarter of 2005 when we respond to the motion for summary judgment filed, as expected, on Oct. 21, 2005. Outlook The Company anticipates that sl