TCR_Public/020131.mbx         T R O U B L E D   C O M P A N Y   R E P O R T E R

           Thursday, January 31, 2002, Vol. 6, No. 22     


AMC ENTERTAINMENT: Wants to Acquire Gulf States Theatres Assets
ANC RENTAL: Panel Hires Berger & Epstein as Forensic Accountant
ACTUANT: S&P Affirms Low-B Ratings Over Plans to Sell 3M Shares
ADVANCED MICRO: S&P Rates New $500 Million Debt Issue at B
AMES DEPT.: Court Okays Jaspan as Committee's Special Counsel

ARMSTRONG HOLDINGS: Future Claimants Want to Hire Kaye Scholer
ATLANTIC HARDWARE: Chapter 11 Case Summary
BETHLEHEM STEEL: Court Okays Reimbursement of Union's Expenses
BEYOND.COM: Chapter 11 Case Summary
COVENTRY HEALTH: Fitch Assigns BB Rating to New $175MM Notes

COVENTRY HEALTH: Commences Offering of $175MM 8.125% Sr. Notes
CYPRESS BIOSCIENCE: Fails to Meet Nasdaq NTA Listing Requirement
ELITE TECHNOLOGIES: Existing Working Capital Fund Running Dry
ENRON CORP: Committee Seeks Court Approval to Trade Securities
ENRON CORP: Severed Employees Ask Trustee to Appoint Committee

FEDERAL-MOGUL: Court Okays W.Y. Campbell as Divestiture Advisor
GENEVA STEEL: Seeks Court's Permission to Use Cash Collateral
GLOBAL CROSSING: S&P Cuts Ratings to D After Bankruptcy Filing
GLOBAL CROSSING: 5 Largest Secured Claims
GLOBAL CROSSING: CIBC Discloses $130 Million in Credit Exposure

HARTMARX: Full-Year Net Loss Stands at $13.9M on $601M Revenues
HEXCEL CORP: Net Debt Slides-Down By $3.3 Million in Q4 2001
ICG COMMUNICATIONS: Court Further Extends Exclusive Periods
IT GROUP: Seeks Okay to Pay $41M in Critical Trade Vendor Claims
JFK IN'TL: Fitch Slashes Special Project Bonds Series 6 to BB+

KEY TECHNOLOGY: Completes Domestic Credit Facility Restructuring
KMART CORP: Gets Okay to Continue Using Existing Bank Accounts
KMART CORP: Joseph L. Harrosh Discloses 6.215% Equity Stake
KMART CORP: Will Pay $60MM Pre-Petition Balance to Handleman
KRAMONT REALTY: Fitch Affirms BB- Ratings with Negative Outlook

LTV CORP: Gets OK to Access $15M Interim Loans for Tubular Div.
LOUISIANA-PACIFIC: Q4 Net Loss Jumps to $71MM on Decreased Sales
MCCRORY CORP: Buxbaum/Century to Auction Assets on February 12
MCWATTERS MINING: Court Ratifies CCAA Plan in Canada
NATIONSRENT INC: Wins Nod to Hire Richards Layton as Co-Counsel

NTELOS: S&P Lowers Ratings, Citing Financial Covenant Concerns
PEN HOLDINGS: S&P Drops Ratings to D After Filing Chapter 11
PHILIPS INT'L: Kmart Bankruptcy Likely to Delay Asset Sales
PHOENIX INT'L: Working Capital Insufficient to Fund Operations
PILLOWTEX CORP: Gets Approval to Expand Scope of KPMG's Work

PROBEX CORP: Bechtel Group, et. al. Disclose 6.9% Equity Stake
REGAL CINEMAS: Court Confirms Prepackaged Plan of Reorganization
SERVICE MERCHANDISE: Proposes De Minimis Asset Sale Procedures
STATIA TERMINALS: Adjusted EBITDA Slides-Down 7% in Q4 2001
SYSTEMS XCELLENCE: Workout Talks with Bank & Debtholder Continue

TCT LOGISTICS: Court Appoints KPMG as Interim Receiver in Canada
U.S. STEEL CORP: Fourth Quarter Net Loss Doubles to $121 Million
UNIVERSAL AUTOMOTIVE: Sells Interests in Hungarian Foundry
VSOURCE INC: Commences Conversion of Preferred Stock into Shares
W.R. GRACE: Posts Improved Results in 2001 Fourth Quarter

WARNACO GROUP: Pushing for Second Extension of Exclusive Periods
ZANY BRAINY: Delaware Court Approves Joint Disclosure Statement

* DebtTraders Real-Time Bond Pricing


AMC ENTERTAINMENT: Wants to Acquire Gulf States Theatres Assets
AMC Entertainment Inc., one of the world's leading theatrical
exhibition companies, said that it has executed a letter of
intent to acquire the operations of Gulf States Theatres.

In a related transaction, AMC will execute lease agreements with
Entertainment Properties Trust (NYSE:EPR) for the Gulf States
theatre real estate. AMC expects to complete both transactions
by March 1.

Gulf States Theatres operates five stadium-style megaplex
theatres with 68 screens in the New Orleans area, where it is
the market share leader. All five of the Gulf States theatre
complexes have been built since 1997.

"The acquisition of Gulf States Theatres exemplifies our
strategy of acquiring high-quality assets in major markets,"
said AMC chairman and chief executive officer Peter Brown. "It
will be an excellent fit and a great addition to our industry-
leading circuit."

The Gulf States transaction is the second acquisition planned by
AMC. In December 2001, AMC announced it had signed a letter of
intent to acquire GC Companies, Inc., parent company of General
Cinema Theatres, pursuant to a plan of reorganization filed in
the GC Companies bankruptcy proceedings. The GC acquisition is
subject to bankruptcy court approval and other conditions.

AMC Entertainment Inc. is a leader in the theatrical exhibition
industry. Through its circuit of AMC Theatres, the Company
operates 177 theatres with 2,836 screens in the United States,
Canada, France, Hong Kong, Japan, Portugal, Spain, Sweden and
the United Kingdom. Its Common Stock trades on the American
Stock Exchange under the symbol AEN. The Company, headquartered
in Kansas City, Mo., has a web site at

                         *  *  *

As reported in the January 15, 2002 edition of the Troubled
Company Reporter, Standard & Poor's assigned its triple-'C'
rating, with stable outlook, to AMC Entertainment Inc.'s
proposed Rule 144A $150 million senior subordinated notes due

The international rating agency cited that AMC's credit measures
remain weak on a lease-adjusted basis as a result of the
company's heavy reliance on off-balance sheet financing.
According to the report, EBITDAR coverage of interest plus rent
was 1.25 times for the 12 months ending September 2001 and lease
adjusted debt to EBITDAR was more than 5.5x. AMC continues to
generate negative discretionary cash flow, which is a rating
concern, although it has moderated as a result of improved
profitability and reduced capital expenditures.

DebtTraders reports that AMC Entertainment Inc.'s 9.500% bonds
due March 15, 2009 (AMC1) are trading slightly below par,
between 96 and 98. For real-time bond pricing, see

ANC RENTAL: Panel Hires Berger & Epstein as Forensic Accountant
The Statutory Committee of Unsecured Creditors of ANC Rental
Corporation and its debtor-affiliates asks permission from the
Court to retain Berger & Epstein P.A., nunc pro tunc to December
4, 2001, as its forensic accountant to conduct investigations
into certain clearly defined, affirmative claims and causes of
action that the Debtors' bankruptcy estates may have against
certain third parties.

Duncan M. Robertson, Chairman of the Statutory Committee of
Unsecured Creditors, relates that the Firm was chosen during the
Committee's first official meeting and was selected because of
the Firm's experience and knowledge on the financial issues
arising out of reorganizations under Chapter 11 cases. Over the
past 23 years, the Firm has provided various services, including
forensic accounting services to parties-in-interest in
bankruptcy and other restructuring proceedings.

Mr. Roberston informs the Court that Berger & Epstein will
conduct forensic investigations on certain delineated
affirmative claims and causes of action the Debtors' estates may
have against third parties arising from AutoNation Inc.'s spin-
off of ANC on June 30, 2000 and other future tasks.

Morris I. Berger, shareholder of the firm of Berger & Epstein
P.A., informs the Court that the firm will charge the Debtors as
compensation for its services in accordance with the regular
hourly rates of its professionals plus reimbursement of actual
necessary expenses incurred in connection with this engagement.
The current hourly rates of the firm's professionals are:

                 Partner             $230-$250
                 Senior Manager      $190-$210
                 Manager             $180
                 Senior Accountant   $160
                 Para-professional   $175

Mr. Berger assures that court that his firm does not have any
relationship with any of the parties-in-interest in these cases
and is a "disinterested person" in these cases as defined in the
Bankruptcy Code. (ANC Rental Bankruptcy News, Issue No. 7;
Bankruptcy Creditors' Service, Inc., 609/392-0900)

ACTUANT: S&P Affirms Low-B Ratings Over Plans to Sell 3M Shares
Standard & Poor's affirmed its double-'B'-minus corporate credit
and senior secured debt ratings on Actuant Corp. In addition,
the single-'B' subordinated debt rating on the company was
affirmed. The outlook is stable.

Total debt as of November 30, 2001, was about $330 million.

The rating affirmations follow Actuant's announcement that it
plans to sell three million shares of its class A common stock.
Proceeds from the sale, which would total about $90 million
based on the closing share price on January 23, 2002, will be
used to reduce debt, including up to $70 million of the
company's 13% senior subordinated notes due 2009. Pro forma for
the transaction, Actuant's financial profile will improve, with
total debt to EBITDA declining to about 3.0 times from 4.0x and
EBITDA interest coverage increasing to about 3x from 2x.
Nevertheless, Standard & Poor's expects the company to pursue
acquisition opportunities that could result in increased
debt levels and higher financial risk. Over time, total debt to
EBITDA is expected to average about 3.5x and EBITDA interest
coverage is expected to average 2.5x.

The ratings on Actuant reflect its below-average business risk
profile, with leading niche positions in small, cyclical
industrial markets, combined with a heavy debt burden and modest
cash flow protection.

Actuant is a diversified provider of industrial products and
systems to a variety of end markets. The company's tools and
supplies segment (60% of sales) is the world's leading provider
of high-force hydraulic industrial tools to various end markets,
and North America's largest supplier of electrical tools and
consumables through the retail do-it-yourself channel. The
engineered solutions segment (40%) is the world's leading
supplier of hydraulic cab-tilt systems for heavy-duty trucks and
electrohydraulic automotive convertible top actuation systems,
and North America's largest supplier of recreational vehicle
slide-outs and leveling systems.

The company's business strengths include leading market shares,
with 70% of sales generated by products holding number-one
positions, and strong operating profitability, with EBITDA
margins of about 18%-19%. Challenges come from competitive
market conditions and cyclical demand in certain end
markets, including heavy-duty truck, recreational vehicle,
automotive, and construction, all of which account for about
one-half of Actuant's revenues. Nevertheless, Actuant's good
geographic, customer, product, and end-market diversity should
limit earnings and cash flow volatility.

High financial risk results from an aggressively leveraged
capital structure and thin cash flow protection. Operating
results during fiscal 2001 were affected by the sharp decline in
production of recreational vehicles and the slowing U.S.

Challenging end-market conditions are expected to continue
during fiscal 2002. Nevertheless, Actuant's solid operating
margins, low working capital intensity, and modest capital
expenditure requirements should allow the company to generate
modest free cash flow in the next few years. Free cash flow,
combined with potential additional borrowings, is expected to be
used to support the company's strategic growth objectives.
Financial flexibility is fair, provided by discrete, salable
business units and ample availability under a revolving credit

                       Outlook: Stable

High debt leverage, exposure to cyclical end markets, and
potential future acquisitions restrict upside ratings potential.
Downside risk is limited by Actuant's leading market positions,
good profitability, and fair business diversity

ADVANCED MICRO: S&P Rates New $500 Million Debt Issue at B
Standard & Poor's assigned its single-'B' rating to Advanced
Micro Devices Inc.'s new $500 million convertible senior
unsecured note issue due 2022. At the same time, Standard &
Poor's affirmed its ratings on the company.

The ratings on AMD reflect the challenges the company faces in
executing its business plan in a very competitive market.
Sunnyvale, California-based AMD manufactures personal computer
microprocessors and "flash" memory chips.

The company's more recent microprocessors have established good,
but second-tier, positions in the consumer and small business
personal computer market. However, the company continues to lack
presence in the enterprise customer market and has only a modest
position in the high-performance server market. Dominant
competitor, Intel Corp., continues to cut its prices very
aggressively on mainstream products, pressuring AMD's margins,
however, AMD's manufacturing performance remains good.

Furthermore, some PC makers have consolidated their purchases on
Intel-based platforms to reduce manufacturing costs and simplify
branding. AMD's financial performance will fluctuate, depending
on the timing of new product introductions and pricing practices
by the two competitors, while AMD has far lesser product
development resources than Intel. Still, marketplace forces are
expected to support AMD's continued presence as a microprocessor

Flash memories are non-volatile, rewritable chips used to
provide long-term storage of information, such as frequently
called numbers, in cell phones and networking equipment. Despite
the company's solid position in the flash memory industry, near-
term prospects are weak due to continued stress in the
communications markets.

Although AMD generated record revenues of $4.6 billion and
EBITDA of $1.9 billion in 2000, conditions weakened materially
in 2001, and the company reported net losses from operating
sources in the second half of the year. Still, a newly
introduced microprocessor chip has raised AMD's average unit
prices and helped the company trim its losses in the fourth
quarter of 2001. AMD expects to return to profitability in the
second of quarter 2002. Cash balances at December 31, 2001, were
$870 million, adequate for near to intermediate term needs. The
new debenture offering has enhanced financial flexibility,
however, industry conditions remain challenging.

                        Outlook: Stable

AMD is expected to continue to be a significant participant in
the personal computer microprocessor industry, and to remain a
major supplier of flash memory chips, however, its financial
flexibility is expected to remain limited.

                        Rating Assigned

     Advanced Micro Devices Inc.
       $500 million senior unsecured debt rating    B

                       Ratings Affirmed

     Advanced Micro Devices Inc.
       Corporate credit rating                      B
       Senior secured bank loan                     B+

AMES DEPT.: Court Okays Jaspan as Committee's Special Counsel
The Official Committee of Unsecured Creditors of Ames Department
Stores, Inc., and its debtor-affiliates sought and obtained
approval from the Court to retain Jaspan Schlesinger Hoffman LLP
as substitute special counsel to the Committee, effective as of
November 1, 2001.

According to Art Tuttle, Co-Chairperson of the Official
Committee of Unsecured Creditors, Harold Jones, Esq., who was
the attorney providing services as the Committee's special
counsel, left the firm of Gersten Savage & Kaplowitz LLP, and is
now a member of Jaspan Schlesinger Hoffman LLP.

Mr. Tuttle submits that the Committee seeks to retention of
Jaspan as substitute special counsel because of the firm's
extensive experience in and knowledge of business
reorganizations under Chapter 11 of the Bankruptcy Code and to
continue the services that have been provided by Mr. Jones.  The
Committee believes that Jaspan is qualified to represent it in
these Cases in a cost-effective, efficient and timely manner.

Specifically, the Committee will look to Jaspan:

A. to undertake any investigation, litigation, or any other
     action on the Committee's behalf concerning matters that
     will not be addressed by the Committee's Counsel,
     Otterbourg, Steindler, Houston & Rosen, P.C.;

b. to appear, as appropriate, before this Court, the Appellate
     Courts, and the United States Trustee, and to protect the
     interests of the Committee before said Courts and the
     United States Trustee; and

c. to perform all other necessary legal services in these Cases.

Harold D. Jones, Esq., advises that Jaspan Schlesinger Hoffman
LLP, will bill at its customary hourly rates:

           Partner                        $250-$410
           Associate                      $170-$250
           Paralegal/Legal Assistant      $ 85

Mr. Jones asserts that the members and associates of JSH do not
have any connection with the Debtors, their creditors or any
other party in interest, or their respective attorneys.  The
Committee is also satisfied that Jaspan represents no adverse
interest to the Committee which would preclude it from acting as
counsel to the Committee in matters upon which it is to be
engaged, and that its employment will be in the best interest of
the estates. (AMES Bankruptcy News, Issue No. 12; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

                         *   *   *

DebtTraders reports that Ames Department Stores' 10.000% bonds
due 2006 (an issue in default) (AMES1) are trading between 1 and
3. See
for real-time bond pricing.

ARMSTRONG HOLDINGS: Future Claimants Want to Hire Kaye Scholer
Dean M. Trafelet, as legal representative for future claimants
in the chapter 11 cases of Armstrong Holdings, Inc., and its
debtor-affiliates, asks Judge Newsome to authorize and approve
his employment of the law firm of Kaye Scholer LLP nunc pro tunc
to December 20, 2001, as his lead counsel.

Subject to the Court's Orders, Kaye Scholer will assist Mr.
Trafelet by:

       (a) Providing legal advice with respect to the Future
Representative's powers and duties as Future Representative for
the Future Claimants;

       (b) Taking any and all action necessary to protect and
maximize the value of the Debtors' estates for the purpose of
making distributions to Future Claimants and to represent Future
Claimants in connection with negotiating, formulating, drafting,
confirming and implementing a plan of reorganization and
performing such other functions as are set out in Code section
1103(c) or as are reasonably necessary to effectively represent
the interests of Future Claimants;

       (c) Preparing, on behalf of the Future Representative,
necessary applications, motions, objections, answers, orders,
reports and other legal papers in connection with the
administration of these estates in bankruptcy; and

       (d) Performing any other legal services and other support
requested by the Future Representative in connection with these
chapter 11 cases.

The attorneys presently designated to represent the  Future
Representative and their current standard hourly rate are:
Name                            Position          Rate
----                            --------          -------
Michael J. Crames               Partner           $690
Andrew A. Kress                 Partner           $605
Benjamin Mintz                  Associate         $415
Scott I. Davidson               Associate         $395
Nicholas J. Cremona             Associate         $335

Other Kaye Scholer attorneys and paraprofessionals will, from
time to time, serve the Future Representative in connection with
the services described in the Application.  The hourly rate for
Kaye Scholer attorneys and paraprofessionals are within the
following ranges:

                    Partners           $425 to $690
                    Counsel            $385 to $475
                    Associates         $215 to $430
                    Paraprofessionals  $100 to $175

Michael J. Crames, Esq., a partner with Kaye Scholer, avers that
Kaye Scholer does not hold or represent an interest adverse to
the Debtors' estates; is a disinterested person within the
meaning of the Bankruptcy Code; and has no connection with the
Debtors, their creditors or other parties in interest in these
cases.   However, Mr. Crames advises that Kaye Scholer has
represented, represents, or may represent certain of the
Debtors' creditors in other matters unrelated to the Debtors or
these cases, or have had other dealings with creditors of the
Debtors which are also wholly unrelated to these cases.  Kaye
Scholer has represented and may continue to represent defendants
in the asbestos-liability litigation unrelated to the Debtors or
these chapter 11 cases.  Kaye Scholar has not represented such
entities in matters involving the Debtors and will not do so
during the term of Kaye Scholer's engagement.

Specifically, from November 1999 to December 2001, Kaye Scholer
represented PPG Industries, Inc., in certain New York City
asbestos litigation in which PPG has been named as a party in
approximately 6,000 personal injury asbestos lawsuits involving
approximately 12,000 named plaintiffs.  PPG's insurance carriers
have transferred the cases to another law firm which has been
substituted for Kaye Scholer.

Kaye Scholer also represented one or more of the following
welding industry group members in approximately 40 asbestos
cases pending in the New York State Supreme Court: The Lincoln
Electric Company, Hobart Brothers Company, BOC Group, and
Eutectic Court.

From time to time, Kaye Scholer has represented, may currently
represent, and may in the future represent various entities for
the purposes of providing advice and counsel in connection with
asbestos-related liabilities in matters wholly unrelated to the

Kaye Scholer has represented, may currently represent, or may in
the future represent certain parties in interest or their
affiliates in matters wholly unrelated to the Debtors' cases.  
These parties are: JPMorgan Chase Bank; Deutsche Bank; Barclays
Bank, PLC; Wells Fargo Bank Minnesota, N.A.; Mellon Bank, N.A.;
Bankers Trust Company; Occidental Chemical Corporation; Fleet
National Bank; Morgan Guaranty Trust Company of New York; Bank
of America National Trust & Savings Association; Citibank, N.A.;
First Union National Bank; HSBC Bank; Marine Midland Bank;
Societe Generale Finance Limited; Fortis; Banque Nationale de
Paris; PNC National Bank, N.A.; Westdeutsche Landesbank; The
Bank of New York; and The Principal Mutual Life Insurance

Kaye Scholer also serves as co-counsel to the Southwest
Recreational Industries, Inc., in connection with its claims
against Nitram, and Armstrong as guarantor, relating to
Southwest's purchase of Nitram's artificial surface; i.e.,
Astroturf, business under a contract from June 1999.  
Southwest's motion for entry of an order shortening Nitram's
time to assume or reject that agreement has been pending since
the spring of 2001, and an evidentiary hearing has not yet been

Finally, Kaye Scholer also assisted in the preparation and
filing of proofs of claim on behalf of Quigley Company, Inc.,
and Pfizer, Inc., but does not intend to represent these
entities in connection with these chapter 11 cases. (Armstrong
Bankruptcy News, Issue No. 16; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   

ATLANTIC HARDWARE: Chapter 11 Case Summary
Debtor: Atlantic Hardware & Supply Corporation
        5-20 54th Avenue
        Long Island City, NY 11101

Bankruptcy Case No.: 02-11150

Chapter 11 Petition Date: January 28, 2002

Court: Eastern District of New York (Brooklyn)

Judge: Carla E. Craig

Debtor's Counsel: Sanford P Rosen & Associates
                  747 Third Ave
                  3rd Floor
                  New York, NY 10017-9998

BETHLEHEM STEEL: Court Okays Reimbursement of Union's Expenses
After due deliberation, Judge Lifland authorizes Bethlehem Steel
Corporation, and its debtor-affiliates to reimburse the United
Steelworkers of America for its reasonable professional costs
and expenses in an aggregate amount not to exceed $1,400,000
exclusive of any Success Fee, provided, however, that the United
Steelworkers of Letter is deemed amended.

The Court further authorizes the Debtors to pay to Keilin &
Company, the investment banker employed by the United
Steelworkers of America, a Success Fee of up to $5,000,000, but
only upon the service and filing of an application for the
payment of such Success Fee, and the occurrence of:

  (a) confirmation of a plan of reorganization for the Debtors
      or consummation of a sale of all or substantially all of
      the Debtors' assets which is, in any case, supported by
      the United Steelworkers of America; and

  (b) review and determination of the application by the Court
      pursuant to Section 330 of the Bankruptcy Code, after
      the confirmation or sale.

Judge Lifland emphasizes that the indemnification provisions of
the Keilin Letter, are subject to:

  (a) All requests of Keilin for indemnity, contribution or
      otherwise pursuant to the indemnification provisions of
      the Keilin Letter, shall be by means of an application and
      shall be subject to review by the Court to assure that
      such payment conforms to the terms of the Keilin Letter,
      and is reasonable based upon the circumstances of the
      litigation or settlement as to which indemnity is
      requested; provided, however, that in no event shall
      Keilin be indemnified or receive contribution if it is
      determined that Keilin acted in bad faith, engaged in
      self-dealing or breached its fiduciary duty, if any, or
      committed gross negligence or willful misconduct; and

  (b) In no event shall Keilin be indemnified or receive
      contribution or other payment under the indemnification
      provisions of the Keilin Letter, if the Debtors, their
      estates, or the Creditors' Committee, asserts a claim for,
      and the Court determines by final order that such claim
      arose out of, Keilin's own bad faith, self-dealing, breach
      of fiduciary duty, if any, gross negligence or willful
      misconduct; and

  (c) If Keilin seeks reimbursement for attorneys' fees from the
      Debtors pursuant to the Keilin Letter, the invoices and
      supporting time records for such attorneys shall be
      included in Keilin's Application for indemnification and
      such invoices and time records shall be subject to the
      United States Trustee's Guidelines for Compensation and
      Reimbursement and Expenses and the approval of the
      Bankruptcy Court under the standards of sections 330 and
      331 of the Bankruptcy Code without regard to whether such
      attorneys have been retained under section 327 of the
      Bankruptcy Code; and

  (d) To the extent this order is inconsistent with the Keilin
      Letter, the terms of this order shall govern. (Bethlehem
      Bankruptcy News, Issue No. 9; Bankruptcy Creditors'
      Service, Inc., 609/392-0900)

BEYOND.COM: Chapter 11 Case Summary
Debtor: Corp.
        dba Corp.
        dba Corp.
        dba Cybersource Corp.
        3200 Patrick Henry Dr.
        Santa Clara, CA 95054

Bankruptcy Case No.: 02-50441

Chapter 11 Petition Date: January 24, 2002

Court: Northern District of California (San Jose)

Judge: Marilyn Morgan

Debtor's Counsel: Amy E. Wallace, Esq.
                  Gray, Cary, Ware and Freidenrich
                  1755 Embarcadero Rd.
                  Palo Alto, CA 94303-3340

Total Assets (as of Sept. 30, 2001): $43,500,000   

Total Debts (as of Sept. 30, 2001): $49,695,000

COVENTRY HEALTH: Fitch Assigns BB Rating to New $175MM Notes
Fitch, Inc. assigns a preliminary rating of 'BB' to Coventry
Health Care Inc.'s proposed $175 million 10-year, senior
unsecured notes. The Rating Outlook is Stable.

Coventry has agreed to purchase the remaining 7.1 million shares
of its common stock currently owned by Principal Financial Group
for $141 million. Coventry also agreed to purchase a warrant
owned by The Principal, currently exercisable for 3.1 million
shares of common stock of Coventry, for $35 million. Coventry
intends to finance the stock and warrant repurchase with the
proceeds of the proposed note issuance and additional cash on

The rating is based on Coventry's high quality balance sheet,
good operating performance, and established competitive position
in the health insurance business. The rating also considers the
company's aggressive acquisition strategy and the moderate level
of risk-based capitalization of its operating subsidiaries.
Coventry currently does not have any debt outstanding. On a pro
forma basis as of September 30, 2001, Coventry's debt to capital
is 26%, which Fitch considers to be moderate. Based on financial
results through the first nine months of 2001, Fitch estimates
pro forma EBIT/interest coverage to be in the 9x to 10x range.

Coventry is a publicly traded managed healthcare company serving
approximately 1.85 million members primarily in the Mid-
Atlantic, Midwest and Southeast regions. Coventry reported total
revenue of $2.3 million, and stockholders equity of $668.7
million at September 30, 2001.

COVENTRY HEALTH: Commences Offering of $175MM 8.125% Sr. Notes
Coventry Health Care, Inc. (NYSE:CVH) said that it has agreed to
sell $175.0 million original principal amount of its 8.125%
Senior Notes due 2012 in a private placement.

In addition, Coventry announced that Principal Financial Group,
Inc., has agreed to sell 7,000,000 shares of Coventry common
stock in an underwritten public offering pursuant to the
registration statement filed by Coventry on November 30, 2001.
The offering was priced at $19.50 per share.

The Principal has granted the underwriters a 30-day option to
purchase up to an additional 1,050,000 shares of common stock to
cover over-allotments. In the event the underwriters do not
fully exercise their over-allotment option, Coventry has agreed
to purchase from The Principal any shares the underwriters do
not purchase at the public offering price.

Coventry will not receive any proceeds from the offering of
common stock.

Coventry also announced that on February 1, 2002 it expects to
complete its previously announced purchase from The Principal of
the remaining approximately 7.1 million shares of Coventry
common stock owned by The Principal and a warrant owned by The
Principal, currently exercisable for approximately 3.1 million
shares of Coventry common stock.

The aggregate purchase price for the remaining shares of common
stock and the warrant is approximately $176.1 million. Coventry
intends to finance the stock and warrant repurchase with the
proceeds of the sale of its senior notes and cash on hand.

The completion of the offering of senior notes is conditioned
upon the substantially concurrent closing of the secondary
offering of Coventry common stock owned by The Principal. The
completion of the secondary offering of Coventry common stock
owned by The Principal is conditioned on the substantially
concurrent closing of the senior notes offering and the stock
and warrant repurchase by Coventry.

The shares and warrant of Coventry owned by The Principal were
acquired by The Principal in connection with the merger of
Coventry and Principal Health Care in April 1998. Following the
completion of the secondary share offering and the stock and
warrant repurchase, The Principal will no longer own any shares
or warrants of Coventry.

Salomon Smith Barney Inc. is acting as sole bookrunning lead
manager of the public offering of common stock, and Goldman,
Sachs & Co., Lehman Brothers Inc. and CIBC World Markets Corp.
are acting as co-managers of that offering.

Copies of the prospectus relating to the secondary share
offering may be obtained from Salomon Smith Barney Inc.,
Brooklyn Army Terminal, 140 58th Street, 8th Floor, New York, NY

Coventry Health Care is a managed health care company based in
Bethesda, Maryland operating health plans and insurance
companies under the names Coventry Health Care, Coventry Health
and Life, Carelink Health Plans, Group Health Plan,
HealthAmerica, HealthAssurance, HealthCare USA, Southern Health
and WellPath.

The Company provides a full range of managed care products and
services including HMO, PPO, POS, Medicare Risk and Medicaid to
1.9 million members in a broad cross section of employer and
government-funded groups in 13 markets throughout the Midwest,
Mid-Atlantic and Southeast United States. More information is
available on the Internet at

CYPRESS BIOSCIENCE: Fails to Meet Nasdaq NTA Listing Requirement
Cypress Bioscience Inc. (Nasdaq:CYPB) announced that it received
a Nasdaq Staff Determination notice indicating that the company
is not in compliance with the minimum tests for net tangible
assets or stockholders' equity for The Nasdaq SmallCap Market as
set forth in Marketplace Rule 4310(c)(2)(8), Accordingly, the
company's securities are subject to delisting from the Nasdaq
SmallCap Market.

Cypress has requested a hearing with the Nasdaq Listing
Qualifications Panel to review the staff determination. There is
no assurance the Panel will grant the company's request for
continued listing, however, the company is exploring a number of
possible avenues to preserve the listing of its securities on
the Nasdaq SmallCap Market. The company's securities will
continue to be listed on the Nasdaq SmallCap Market pending a
final ruling.

Cypress is committed to be the innovator and commercial leader
in providing products that improve the diagnosis and treatment
of patients with Fibromyalgia Syndrome or FMS. In January 2001,
the company began a strategic initiative focusing on FMS. In
August 2001, Cypress licensed its first product for clinical
development, milnacipran, to treat the widespread pain
associated with FMS. In January of 2002, the company's
Investigational New Drug application (IND) was opened to
commence a Phase II clinical trial to treat FMS with milnacipran
in the United States. For more information about Cypress, please
visit the company's Web site at   

ELITE TECHNOLOGIES: Existing Working Capital Fund Running Dry
Regarding their review of Elite Technologies, Inc., the Report
on Review by Independent Accountants, dated January 17, 2002,
from Atlanta, Georgia, states, . .........."Our report dated
August 17, 2001 on the consolidated financial statements of
Elite Technologies, Inc., and subsidiaries as of and for the
year ended May 31, 2001 contains an explanatory paragraph that
states that the Company's recurring losses from operations and
net capital deficiency raise substantial doubt about the
entity's ability to continue as a going concern."  Then, in
regard to their review of the financial information of the
Company for the three months ended August 2001, and the six
months ended November 2001 they state: "The accompanying
consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed
further in the financial information, the Company has suffered
recurring losses from operations that raise substantial doubt
about its ability to continue as a going concern.  The
consolidated  financial statements do not include any
adjustments that might result from the outcome of this

Revenues from operations for the first quarter ended August 31,
2001 increased by $378,368 from  $3,630,818 for the same period
August 31, 2000. This increase is primarily from increased
market penetration.  Net losses decreased by $1,176,637 from
$2,118,344 for the same period ended August 31, 2000.

Revenues from operations for the first six months ended November
30, 2001 decreased by $569,790 over the same period of the
previous year.  This decrease is substantially due to the
reorganization of  operations of International Electronic
Technologies of Georgia, Inc.  The revenues of Icon Computer
Parts, Inc. remain strong and the company expects them to
increase.  Net loss increased by $150,463 for the above six-
month  period.

Elite's operating results to date have been net losses and have
required cash from investors and loans from third parties and
from related parties.  The Company's ability to raise capital to
fund future operations is limited and cannot be relied upon if
present working capital funds are depleted.  Additional capital
may not be available on terms favorable to the Company, or at
all.  If Elite is unable to raise additional capital when it is
required, business could be harmed.  In addition, any additional
issuance of equity or equity-related securities to raise capital
will be dilutive to stockholders.

The Company has incurred significant losses since inception in
1996 and expects to incur losses in the future.  It has not
achieved profitability on a quarterly basis. The Company will
need to generate significantly greater revenues while containing
costs and operating expenses to achieve  profitability.  Its
revenues may not continue to grow, and it may never generate
sufficient  revenues to achieve profitability.

ENRON CORP: Committee Seeks Court Approval to Trade Securities
Enron Corporation's Official Committee of Unsecured Creditors
seeks an order determining that:

  "The Committee members, acting in any capacity, will not
  violate their duties as Committee members by trading in the
  Debtors' stock, notes, bonds, debentures, participations in,
  or any derivatives based upon or relating to any of the
  Debtors' debt obligations or other claims or equity interests
  during the pendency of the Debtors' cases, provided that any
  Committee member executing such trades must establish and
  effectively implement the policies and procedures set forth,
  such as a Fire Wall to prevent the misuse of non-public
  information obtained through its activities as a Committee

A Committee member who is in the business of trading in
securities or providing advisory services has a fiduciary duty
to maximize returns for its clients through the buying and
selling of securities.  At the same time, such Committee members
and their affiliates also owe a fiduciary duty to other
creditors not to divulge any confidential or "inside"
information regarding the Debtors.

Dennis F. Dunne, Esq., at Milbank, Tweed, Hadley & McCloy LLP,
in New York, New York, relates that many financial institutions
have been faced with this dilemma in various chapter 11 cases.  
To get around this predicament without sacrificing either duty,
Mr. Dunne explains, a "Fire Wall" is implemented to insulate its
trading activities from its committee-related activities.

Accordingly, the Committee proposes that:

  (1) such Committee member and its affiliates who makes trading
      decisions in the Debtors' Securities shall cause all
      Securities Trading Committee Member's designated personnel
      who shall sit or serve on the Committee to execute a
      letter acknowledging that they may receive non-public
      information and that they are aware of this order and the
      Fire Wall procedures, which are in effect with respect to
      the Securities;

  (2) Committee Personnel will not share non-public Committee
      information with any other employees of such Securities
      Trading Committee Member other than in compliance with the
      Fire Wall procedures, except:

      (a) senior management of such Securities Trading Committee
          Member, who due to its duties and responsibilities,
          has a legitimate need to know such information,
          provided that such individuals:

             (i) otherwise comply with the Fire Wall, and

            (ii) use such information only in connection with
                 their senior managerial responsibilities, and

      (b) regulators, auditors, and designated legal personnel
          for the purpose of rendering legal advice to Committee
          Personnel and who will not share such non-public
          information generated from Committee activities with
          other employees and will keep such non-public
          information in files inaccessible to other employees;

  (3) Committee Personnel will keep non-public information
      generated from Committee activities in files inaccessible
      to other employees;

  (4) Committee Personnel will receive no information regarding
      the Securities Trading Committee Member's trades in
      Securities in advance of such trades, except that
      Committee Personnel may receive the usual and customary
      internal and public reports showing the Securities Trading
      Committee Member's purchases and sales and the amount and
      class of securities owned by such Securities Trading
      Committee Member, including the Securities; and

  (5) the Securities Trading Committee Member's compliance
      department personnel or internal counsel shall review from
      time to time the Fire Wall procedures employed by the
      Securities Trading Committee Member as necessary to ensure
      compliance with this Order and shall keep and maintain
      records of their review.

Mr. Dunne argues that any current or future members of the
Committee that are engaged in the business of trading securities
should not be precluded from trading in the Debtors' Securities.
"If the Court denies the relief requested, it will discourage
the largest creditors with expertise and experience in
reorganizations from joining other creditors' committees," Mr.
Dunne says.

According to Mr. Dunne, creditors that perform investment
advisory and trading services should not be forced into the
choice of serving on a committee and risking the loss of
beneficial investment opportunities for their institutions and
clients or foregoing service and possibly compromising those
same responsibilities by taking a less active role in the
reorganization. (Enron Bankruptcy News, Issue No. 10; Bankruptcy
Creditors' Service, Inc., 609/392-0900)

ENRON CORP: Severed Employees Ask Trustee to Appoint Committee
Attorneys for the Severed Enron Employees Coalition (SEEC) are
requesting that the U.S. Trustee responsible for administering
the Enron (OTC: ENRNQ) bankruptcy appoint an Official Committee
of Severed Enron Employees.  The move is designed to give former
Enron employees greater input into the ongoing bankruptcy

"These Chapter 11 cases have the potential to tear the fabric of
the nation's employee retirement system," says Scott Baena, an
attorney for SEEC. "Undoubtedly, and by no choice of their own,
the severed employees are at the forefront of a battle likely to
rage in the courts and in Congress for a long time.  The Severed
Employees are entitled to full and complete representation in
every forum where their fate is being decided."

Currently, there is a single former employee on a 15-member
Official Committee of Unsecured Creditors.  The remainder of the
committee is comprised of five banks, three indenture trustees,
two investment management companies, three trade creditors and
one insurance company.

Michael Patrick Moran, the single former Enron employee
representative, was an in-house attorney for Enron.  SEEC
believes that besides being outnumbered, principles of attorney-
client privilege, coupled with the numerous investigations of
Enron, may undermine Mr. Moran's ability to adequately represent
the interests of former employees.

According to attorney Baena, severed Enron employees represent
one of the largest constituencies to be impacted by the

"This is not just a matter of preserving their rights," says
Baena. "These victims of the Enron debacle offer valuable
insights and a 'human face' to these proceedings.  Their
participation is critical to determining what is fair and just
as the bankruptcy process evolves."

The SEEC legal team is made up of the following attorneys and
law firms:

-- George Whittenburg, Whittenburg Whittenburg & Schachter, P.C.

-- Randy McClanahan and Scott Clearman, McClanahan & Clearman,

-- Martin Dies, III and Richard Hile, Dies & Hile, L.L.P.

-- Broadus Spivey, Spivey & Ainsworth, P.C.

-- Scott Baena, Bilzin Sumberg Dunn Baena Price & Axelrod LLP

According to the SEEC statement of principles, filed along with
today's motion, "SEEC will be non-partisan and will strive to
represent the legitimate interests of all former Enron employees
affected by Enron's bankruptcy."

Last week, SEEC filed a class action in Houston federal court
asking a jury to "make good" the staggering losses suffered by
employees who contributed to Enron's 401(k) Corporate Savings

Named defendants include past and present Enron executives,
Northern Trust Company, the retirement plan's trustee, and
Arthur Andersen, L.L.P., the accounting and consulting firm
engaged by Enron as independent auditor to provide the outside
audit report as well as Enron's required internal audit

DebtTraders reports that Enron Corp.'s 7.375% bonds due 2019
(ENRON7) are trading between 16 and 18.5. See  
real-time bond pricing.

FEDERAL-MOGUL: Court Okays W.Y. Campbell as Divestiture Advisor
Federal-Mogul Corporation and its debtor-affiliates obtained
Court approval to employ and retain W.Y. Campbell & Company as
investment banker and financial advisor to the Debtors in
connection with the potential divestiture of the Camshaft Group
Operations, nunc pro tunc to October 1, 2001. Specifically, W.Y.
Campbell will provide such services as the Firm and the Debtors
shall deem appropriate and feasible in order to advise the
Debtors in the Transaction, including:

A. advising the Debtors in developing their strategic objectives
   with regard to the value and terms of the Transaction;

B. identifying and demonstrating the Camshaft Group Operations'
   proprietary attributes;

C. assisting in analyzing the financial effects of the proposed

D. assisting in a valuation analysis of the Camshaft Group

E. identifying and soliciting appropriate merger partners or
   potential buyers, as approved by the Debtors;

F. assisting in the preparation and distribution of
   confidentiality agreements and appropriate descriptive
   selling materials regarding the Transaction;

G. advising the Debtors in their preparation for due diligence
   and their management of a data room;

H. initiating discussions and negotiations with merger partners
   or prospective buyers and advising the Debtors in
   negotiations regarding the Transaction;

I. assisting the Debtors in coordinating management
   presentations and site visits, as appropriate;

J. structuring any proposed Transaction;

K. providing expert advice and testimony concerning any
   financial matters related to the Transaction;

L. providing other services necessary to the completion of a
   successful transaction, as mutually agreed upon by W.Y.
   Campbell and the Debtors; and

M. providing other financial or ancillary services in connection
   with the potential divestiture of the Camshaft Group
   Operations in the event that not all of the assets of the
   Debtors' estates or Transaction are sold. (Federal-Mogul
   Bankruptcy News, Issue No. 10; Bankruptcy Creditors' Service,
   Inc., 609/392-0900)

GENEVA STEEL: Seeks Court's Permission to Use Cash Collateral
Geneva Steel LLC asks the U.S. Bankruptcy Court for the District
of Utah, to allow the Debtor to use cash collateral and grant
adequate protection to the Debtor's prepetition lenders. The
Debtor also requests the Court to schedule a final hearing on
the Debtor's use of cash collateral. With the final hearing
still pending, the Debtor asks the Court to allow them to use
cash collateral on an interim basis to prevent immediate and
irreparable harm to the estate.

Although a substantial portion of the steel plant will be shut
down for a time, the Debtor still needs to use cash collateral
to fund its reduced operations and to help fund the corporation.

The Debtor projects that anticipated funding from the use of
cash collateral and collection of receivables will be
approximately $14.77 million. The Debtor says that it will use
certain of the funds to pay current interest to the ESLGA
Lenders and pay schedules principal payments on the ESLGA Loan.

As adequate protection, the Debtor proposes to Citicorp current
interest on the ESLGA Loan. The Debtor also intends to make
schedules amortization payments relating to the collateral, and
will grant Citicorp replacement liens in any postpetition
inventory and receivables generated in connection with the
continued operation of the pipe mill.

Without the use of cash collateral, the Debtor reminds the Court
that it will be unable to implement the Business Plan and could
be forced to face liquidation or turn the Geneva mill over to
the ESLGA Lenders. The Debtor believes that the true value of
the company is tied to its continuing operations than the
liquidation value of the real and personal property.

Geneva Steel owns and operates an integrated steel mill located
near Provo, Utah. The Company filed for chapter 11 protection on
January 25, 2002. Andrew A. Kress, Esq., Keith R. Murphy, Esq.
and Stephen E. Garcia, Esq. at Kaye Scholer LLP represent the
Debtor in its restructuring efforts. When the Company filed for
protection from its creditors, it listed $264,440,000 in total
assets and $192,875,000 in total debts.

GLOBAL CROSSING: S&P Cuts Ratings to D After Bankruptcy Filing
Standard & Poor's lowered its ratings on Global Crossing Ltd.
and certain related entities to 'D'. At the same time, the
ratings were removed from CreditWatch negative, where they had
been placed Aug. 13, 2001.

The rating action follows the company's filing of bankruptcy

In addition, the ratings on Asia Global Crossing Ltd. remain on
CreditWatch with negative implications because the 58.8%-owned
subsidiary was not part of the bankruptcy filing.

         Ratings Lowered, Removed from CreditWatch

     Global Crossing Ltd.                          TO     FROM
       Corporate credit rating                     D      CCC-
       Preferred stock                             D      C

     Global Crossing Holdings Ltd.
       Corporate credit rating                     D      CCC-
       Senior unsecured debt                       D      C
       $800 million 9.625% senior unsecured notes
       (Guaranteed by Global Crossing Ltd.)        D      C
       Senior secured bank loan                    D      CCC-
       Preferred stock                             D      C

     Frontier Corp.
       Corporate credit rating                     D      CCC-
       Senior unsecured debt                       D      C     
       Preferred stock                             D      C

               Ratings Remain on CreditWatch Negative

     Asia Global Crossing Ltd.
       Corporate credit rating                     CCC+
       Senior unsecured debt                       CCC-

DebtTraders reports that Asia Global Crossing's 13.375% bonds
due 2010 (AGX1) currently trade from 34.5 to 38.5. See  
real-time bond pricing.

GLOBAL CROSSING: 5 Largest Secured Claims

Entity                      Type of Collateral    Claim Amount
------                      ------------------    ------------
JPMorgan Chase              Secured by pledge of  $2,250,000,000
Bank, as Agent              Capital Stock of
Barbara Daniels             certain subsidiaries
Edmond Deforest             of Global Crossing
270 Park Avenue,            Holdings Ltd.
36th Floor                  guaranteed by Global
New York, NY 10017          Crossing Ltd. and
Citibank, as Agent          certain of its
Mark Wilson                 subsidiaries
One Sansome Street,
25th Floor
San Francisco, CA 94104

JP MorganChase              Secured ratably with  $300,000,000
Bank, Trustee               Senior Secured Debt
Ken Fowlerd                 with respect to the
Corporate Trust             pledge of capital
Services                    stock of certain
2001 Bryan Street,          subsidiaries of Global
9th Floor                   Crossing North
Dallas, TX 75201            America, Inc.

JP MorganChase              Secured ratably with  $200,000,000
Bank, Trustee               Senior Secured Debt
Ken Fowlerd                 with respect to the
Corporate Trust             pledge of capital
Services, 9th Floor,        stock of certain
2001 Bryan Street,          subsidiaries of Global
Dallas, TX 75201            Crossing North
214-468-6105                America, Inc.

MSGW New Jersey LLC         Equipment              $35,827,000
Gale and Wentworth LLC
200 Campus Drive
Florham Park, NJ 07932

De Lage Landen              Equipment              $11,804,022
Financial Services
Paul Zehner
111 Old Eagle School
Road, Wayne, PA 19087

GLOBAL CROSSING: CIBC Discloses $130 Million in Credit Exposure
Following the announcement on January 28th that Global Crossing
Ltd., has filed for Chapter 11 bankruptcy protection in the
United States, CIBC released the following information:

     - CIBC has US$130 million (CDN$207 million) in credit
exposure to Global Crossing entities.

     - CIBC has US$112 million (CDN$179 million) in Global
Crossing preferred shares.

     - CIBC will realize revenue of approximately CDN$320
million from the closing out of hedge contracts and related sale
of 10 million Global Crossing shares in the first quarter ending
January 31, 2002.

On November 29, 2001, CIBC disclosed that it had credit exposure
to Enron Corporation entities of approximately US$215 million
(CDN$342 million).

CIBC expects that its total loan loss provision for the first
quarter will be approximately CDN$540 million, which will
include significant provisions on the Enron and Global Crossing
loans. Based on anticipated future trends, CIBC expects that its
total loan loss provision for the 2002 fiscal year will fall in
the range of CDN$1,250 to $1,350 million.

CIBC is a leading North American financial institution with more
than eight million personal banking and business customers. CIBC
offers a full range of products and services through its
comprehensive electronic banking network, branches and offices
across Canada, the United States and around the world. You can
find other news releases and information about CIBC in our Media
Centre on the Internet at

HARTMARX: Full-Year Net Loss Stands at $13.9M on $601M Revenues
Hartmarx Corporation (NYSE: HMX) reported full year operating
results for its fourth quarter and full year ended November 30,
2001.  Full year revenues were $601.6 million in 2001, compared
to $680.6 million in 2000.  The net loss for the current year,
which was significantly impacted by previously announced
restructuring actions, was $13.9 million compared to net income
of $8.6 million in 2000, before a small extraordinary item in
each year.

Excluding the non-recurring items in 2001 related to the
restructuring, proforma earnings before interest and taxes
(EBIT) were $16.8 million in 2001, compared to EBIT of $29.9
million in 2000.  The non-recurring items in 2001 aggregated
approximately $25 million, and included charges for employee
severance, facility closings and consolidating certain operating
units, as well as operating losses of operations being
eliminated as part of Hartmarx's restructuring.  Hartmarx moved
decisively in 2001 to restructure its operations, reducing its
non-production headcount by more than 20 percent, and more
evenly positioning the Company's products between sportswear and
tailored apparel.

Consistent with its ongoing actions to lower costs, Hartmarx
also announced salary reductions for all of its mid-level to
senior-level employees.  This action, to be implemented
immediately and affecting those earning more than $50,000 per
annum, will range from 3% for the lowest-paid members of the
group to 7% for the highest-paid members.  These salary
reductions will save Hartmarx a substantial amount immediately,
and are expected to mitigate the need for additional workforce
reductions in the near-term.

Elbert O. Hand, Hartmarx chairman and chief executive officer,
stated, "Hartmarx took a number of necessary, albeit difficult,
steps in 2001, reflecting the realities of our business, the
weak sales of apparel at retail and the economy in general.  
Having put a large number of challenges behind us during a very
rough year, we expect to be profitable in 2002."

Mr. Hand summarized several previously announced actions that
Hartmarx had taken during the year:

     *  Hartmarx closed several production facilities and
administrative offices, thus eliminating more than 20% of its
non-manufacturing positions during fiscal 2001.  This reduced
general and administrative expense base salaries by more than
$12 million on an annualized basis. "Our cost structure is
currently at a level that should translate into improved margins
and profitability even without a revenue increase."

     *  Despite the difficult retail environment, Hartmarx took
several steps to build its presence in both the tailored and
sportswear product categories.  "The opening of the Company's
Hickey-Freeman retail store in New York City has been well
received, showcasing to both consumers and retailers the
distinctive tailored clothing, dress furnishings and sportswear
apparel marketed by Hickey-Freeman and Bobby Jones."  The
acquisition of the Consolidated Apparel Group has significantly
increased the Company's sportswear offerings.  On an annualized
basis, men's sportswear, slacks and womenswear currently
represent approximately 40% of aggregate revenues.

     *  In December, Hartmarx took the next step in its
succession plan, and announced that Homi Patel, currently
president and chief operating officer, would become its chief
executive officer at Hartmarx's annual meeting on April 11,

     *  In January, 2002, the Company successfully concluded an
exchange of its senior subordinated notes for newly issued
senior unsecured notes, which provided Hartmarx additional
liquidity with which to execute its business plan.  A
considerable debt reduction is anticipated to be achieved during
2002 from improved operating earnings and reduced working
capital requirements.

     *  The Company continues to work with its advisor, Bear
Stearns, in the evaluation of business plans, financing and
strategic alternatives.

Hartmarx reported that revenues for the fourth quarter were
$154.7 million in 2001, compared to $169.7 million in the fourth
quarter of 2000.  The net loss for 2001 was $2.2 million
compared to net income of $3.2 million in 2000.   Excluding the
impact of non-recurring items discussed above, fourth quarter
proforma EBIT was $9.0 million in 2001, compared to EBIT of $9.4
million in 2000.

Hartmarx produces and markets business, casual and golf apparel
under its own brands including Hart Schaffner & Marx, Hickey-
Freeman, Palm Beach, Coppley, Cambridge, Keithmoor, Racquet
Club, Naturalife, Pusser's of the West Indies, Royal, Brannoch,
Riserva, Sansabelt, Barrie Pace and Hawksley & Wight. In
addition, the Company has certain exclusive rights under
licensing agreements to market selected products under a number
of premier brands such as Austin Reed, Tommy Hilfiger, Kenneth
Cole, Burberrys men's tailored clothing, Pringle of Scotland,
Bobby Jones, Jack Nicklaus, Claiborne, Evan-Picone, Pierre
Cardin, Perry Ellis, KM by Krizia, and Daniel Hechter. The
Company's broad range of distribution channels includes fine
specialty and leading department stores, value-oriented
retailers and direct mail catalogs.

                            *   *   *

As previously reported in the Troubled Company Reporter,
Standard & Poor's lowered its corporate credit rating on
Hartmarx Corp., to 'SD' (selective default) from double-'C' and
the senior subordinated debt rating to single-'D' from single-
'C'. According to the report, the ratings were removed from
CreditWatch, where they were placed on October 4, 2001.

Subsequently, S&P said, the single-'D' rating on Hartmarx'
senior subordinated 10.875% notes due January 15, 2002 was

S&P cited that the downgrade reflects the completion of an
exchange offer on the 10.875% notes due January 15, 2002 with
bonds maturing in 2003 plus an amount of cash and common stock.
In December 2001, Hartmarx claimed in an 8-K filing that, if the
company is unsuccessful in completing the exchange or obtaining
additional financing, it would need to restructure its debt.
Standard & Poor's considers the completion of the exchange to be
tantamount to a default, given the coercive nature of the offer.

HEXCEL CORP: Net Debt Slides-Down By $3.3 Million in Q4 2001
Hexcel Corporation (NYSE/PCX: HXL) reported results for the
fourth quarter and full year 2001. Net loss for the 2001 fourth
quarter was $413.8 million compared to net income of $1.0
million for the fourth quarter of 2000. Fourth quarter 2001
results include business consolidation and restructuring
expenses of $51.1 million and impairments of goodwill, other
purchased intangibles, an equity investment and U.S. deferred
tax assets totaling $349.5 million. Excluding business
consolidation and restructuring expenses and the impairment
charges, the Company's pretax loss for the 2001 fourth quarter
was $12.4 million. This compares to pretax income, excluding
business consolidation expenses, of $5.4 million in the fourth
quarter of 2000.

For the year, the Company's net loss was $433.7 million compared
to net income in 2000 of $54.2 million. Results for 2000
included a gain on the April 26, 2000 sale of the Bellingham
aircraft interiors business of $68.3 million ($44.3 million on
an after tax basis). Excluding business consolidation and
restructuring expenses, impairments of goodwill and other
purchased intangibles, and the gain on the sale of the
Bellingham business, the Company's pretax loss in 2001 was $13.5
million, as compared to pretax income in 2000 of $17.6 million.

Adjusted EBITDA for the fourth quarter of 2001 was $19.9 million
as compared to $37.1 million for the fourth quarter of 2000.
Adjusted EBITDA for the 2001 year was $119.2 million as compared
to $144.0 million on a pro forma basis for 2000. Pro forma
results give effect to the April 26, 2000 sale of the Bellingham
aircraft interiors business as if the transaction had occurred
on January 1, 2000. The Company reports Adjusted EBITDA as this
is used as a measure in the financial covenants in its Senior
Credit Agreement.

               Chief Executive Officer Comments

Commenting on Hexcel's fourth quarter results, Mr. David E.
Berges, Chairman, President and Chief Executive Officer, said,
"In the fourth quarter, the Company began to dramatically
reshape itself to adapt to the new business realities of the
post September 11th world. We are well on our way to removing
$60.0 million in cash fixed costs. Also during the quarter, we
completed the closure of one of the two plants targeted for
elimination, reduced inventories by 20%, reduced our capital
spending to approximate 60% of depreciation and reassessed the
value of all of our assets resulting in several impairments.
While the personnel cuts are particularly painful, it is
important to note that they are well targeted. Four of the top
eleven executive positions have been eliminated (36%), over 30%
of the corporate staff has been reduced and almost 20% of all
other fixed and indirect positions are being eliminated. R&T,
sales and customer service functions were the least affected by
the fixed cost actions, and direct labor will only be impacted
by customer demand and productivity initiatives. Critical
customer programs, growth markets, and strategic research
projects have been well funded and staffed."

Mr. Berges continued, "I am particularly pleased with our
ability to reduce inventory ahead of the decline in customer
sales. Our vertical integration allowed us to take immediate
action from composite structures, through prepregs and fabric
operations, and all the way down to fiber manufacturing once we
had visibility to aerospace customer build rate adjustments.
While this quick action had a serious impact on absorption and
the resultant gross margin, it minimizes the risk of
experiencing the kind of multi-tiered inventory glut that the
entire electronics industry supply chain suffered from in 2001.
With the benefit of lower fixed costs and more normalized
inventory to sales tracking, we anticipate recovering from the
anomalous fourth quarter gross margins as 2002 progresses."

Mr. Berges noted, "We are also pleased with the solid support
the banks behind our Senior Credit Facility have continued to
provide. I am convinced that in addition to our strong share
position and the long-term growth prospects for our markets, our
aggressive restructuring actions demonstrated that Hexcel does
not intend to be a victim of the external challenges 2001

Mr. Berges concluded, "The impact of this radical reshaping
obviously had a devastating impact on the final quarter of 2001.
I trust that those who follow us will recognize that the tragedy
of September gave us little choice. We cannot always control
events, but we can control how we react to them."

               Senior Credit Facility Amendment

Yesterday, the Company's bank syndicate approved an amendment to
its Senior Credit Facility. The amendment provides for, among
other matters, revised financial covenants that accommodate the
Company's anticipated financial performance through the year
2002 in return for the grant of additional collateral and a 100
basis point increase in the interest spread payable over LIBOR
for advances under the facility. With the reduced capital
requirements that results from the commercial aerospace
slowdown, the Company has also agreed to a moderate reduction in
the size of the revolving credit facility provided under the
agreement. The Company is appreciative of the continuing support
it is receiving from its Senior Credit Facility syndicate banks.
This amendment will permit the Company to focus on best serving
its customers during 2002 and executing its cost reduction and
performance improvement plans.

                         Revenue Trends

Consolidated revenue for the fourth quarter of 2001 of $239.1
million was 6.9% lower than 2000 fourth quarter revenue of
$256.9 million. Year on year revenue for Hexcel's space and
defense and industrial markets grew in aggregate by $15.0
million in the quarter. Commercial aerospace revenues were
marginally higher by $1.7 million compared with last year's
fourth quarter results. However, the growth of these three
markets could not offset the $34.5 million decline in revenues
from the electronics market for the same period. Had the same
U.S. dollar, British pound and Euro exchange rates applied in
the fourth quarter of 2001 as in the fourth quarter of 2000,
revenue for the 2001 quarter would have been $237.1 million.

     --  Commercial Aerospace. Sales of composite materials and
reinforcement products to Airbus, Boeing and regional aircraft
producers began to decline as the quarter progressed due to the
anticipated supply chain inventory correction associated with
the scheduled 2002 decline in commercial aircraft build rates.
Revenues for the 2001 fourth quarter were $124.2 million, 3.9%
lower than 2001 third quarter revenue of $129.2 million. For the
full year, Hexcel experienced 8.0% revenue growth in this market
from higher aircraft build rates in 2001.

     --  Space & Defense. Revenues for the 2001 fourth quarter
of $39.7 million were 12.5% higher than the prior quarter and
19.9% higher than the fourth quarter of 2000. Revenues for 2001
were $143.3 million, up 11.1% from 2000.

     --  Electronics. Sales for the 2001 fourth quarter were
$11.6 million, down 74.8% from the fourth quarter of 2000. The
2001 fourth quarter revenues remained depressed reflecting the
continued impact of the severe industry downturn and inventory
correction working through the global electronics market, as
well as intense competition for the remaining low levels of
customer demand.

     --  Industrial Markets. Sales were $63.6 million in the
2001 fourth quarter compared to $55.2 million in the fourth
quarter of 2000. The 15.2% increase in revenues year over year
is evident in both the Company's reinforcement products and
composite materials segments and reflects, among other things,
continued strength in soft body armor, wind energy and new
automotive applications. Revenues from recreational applications
declined in line with the softening of the global economy.

For the year, the Company's consolidated revenues were $1,009.4
million, compared with consolidated revenues on a pro forma
basis of $1,036.8 million for 2000. Revenues declined 2.6% year
over year reflecting the severe industry downturn and inventory
correction in the electronics market, with sales to that market
down $104.2 million or 57.5% year on year. Commercial aerospace
revenues were up $40.1 million or 8.0% year on year. Revenues in
the space & defense and industrial markets were up 11.1% and
9.8%, respectively, and reflect continuing strengths in these
markets. Pro forma revenues give effect to the sale of the
Bellingham business as if the transaction had occurred on
January 1, 2000.

          Gross Margin and Adjusted Operating Income

Gross margin for the fourth quarter of 2001 was $35.2 million,
or 14.7% of sales, compared with $57.0 million, or 22.2% of
sales, for the fourth quarter of 2000. Adjusted operating income
for the 2001 fourth quarter was $2.8 million, or 1.2% of sales,
compared to $22.5 million, or 8.8% of sales, for the 2000 fourth

Gross margins were impacted by the company-wide focus on
dramatically reducing inventories ahead of 2002's anticipated
fall-off in commercial aerospace revenues and by the continued
depressed demand in the electronics market. Inventories declined
by $32.3 million during the quarter to $131.7 million. This
repositioning impacted both production efficiencies and the
absorption of manufacturing costs across the Company. As in the
prior quarter, the significant underutilization of capacity led
to an EBITDA loss on electronics sales in the quarter. Hexcel's
previously announced fixed cost reduction initiative started
during the quarter, but was not yet sufficiently advanced to
offset the impact of the inventory reduction.

For the year, gross margin was $190.8 million, or 18.9% of
sales, compared with $231.4 million, or 21.9% of sales for 2000.
Performance for the year of 2001 was significantly impacted by
the lower fourth quarter gross margin. Adjusted operating income
for the 2001 year was $56.0 million, or 5.5% of sales, compared
to $86.3 million, or 8.2% of sales, for 2000. Gross margin and
adjusted operating income for 2000 included $4.5 million and
$0.3 million, respectively, related to the operations of the
Bellingham aircraft interiors business from January 1 to April
26, the date of its sale.

                     Restructuring Plan

To respond to the forecasted reductions in commercial aircraft
production and the continued weakness in electronics, Hexcel
announced a major restructuring plan on November 7, 2001. The
plan targets a 20% reduction in cash fixed overhead costs, or
$60.0 million, as compared to then current spending rates and
results should be visible in the Company's second quarter 2002
performance. The plan also provides for the reduction of direct
manufacturing employment as customer orders decline. The cash
fixed cost reductions are primarily being achieved through
company wide reductions of managerial, professional, indirect
manufacturing and administrative employees along with
organizational rationalization. The majority of the actions
necessary to effect this cost reduction had been taken by the
end of the quarter and the Company will complete virtually all
of these actions in the first quarter of 2002. As a result, at
the end of 2001, Hexcel employed 5,376 people, down almost 15%
from September, and we expect to reduce that number to
approximately 4,500 by the end of 2002. The fourth quarter 2001
restructuring plan has resulted in a $47.9 million charge to
earnings for the Company with cash costs expected to approximate
$35.0 million. Cash costs of approximately $3.0 million were
incurred in the fourth quarter. The balance will be incurred
over the next four quarters. The Company also incurred business
consolidation expenses of $3.2 million during the quarter
primarily relating to its previously announced actions to close
its Gilbert (AZ) and Lancaster (OH) pre-preg manufacturing
plants. The closure of the Gilbert plant was completed during
the quarter ahead of schedule and it is anticipated that the
Lancaster plant closure will be completed in the second quarter
of 2002.

            Impairment of Goodwill and Intangible Assets

During the fourth quarter of 2001, Hexcel reviewed the carrying
values of its long-lived assets, particularly goodwill and other
intangible assets acquired in recent years. The review was
undertaken in response to changes in market conditions and the
Company's outlook as a result of the announced reductions in
commercial airline production following the tragic events of
September 11th, the unprecedented decline in demand for the
Company's woven glass fabrics, and the overall weakness in the
U.S. economy. These adverse changes in business conditions in
recent months have led to the lowering of revenue forecasts
associated with certain business segments. As a result of the
review, the Company determined that the goodwill and other
purchased intangibles acquired from Clark Schwebel in 1998, and
acquired from Fiberite in 1997 were not fully recoverable. Based
upon this review, the Company recorded non-cash charges of
$292.1 million and $17.0 million to impair substantial portions
of the goodwill and other intangible assets acquired in these
transactions, respectively. The Company has determined fair
value of the impaired assets using discounted future cash flow
models, market valuations and third party appraisals, where
appropriate. There were no tax benefits recognized on the


As previously disclosed at the time of our second quarter
earnings release, in light of its business outlook at that time,
Hexcel determined to increase its tax provision rate through the
establishment of a non-cash valuation allowance attributable to
currently generated U.S. net operating losses until operations
have returned to consistent profitability. The significant
events that have occurred since that time including the delay in
the anticipated recovery in the electronics market, anticipated
reductions in future commercial aircraft production, and a
general weakening of the economy have reduced expectations of
future operating performance of the Company, and along with the
recognition of the non-recurring charges in the fourth quarter,
have lowered estimates of U.S. taxable income during the carry-
forward period. Based upon these estimates, the Company has
included in its tax provision a charge of $32.6 million, which
represents all of its previously reported U.S. deferred tax

               Equity In Losses of Affiliated Companies
                    and Write-Down of an Investment

During the fourth quarter, the Company wrote down the carrying
value of its equity investment in Interglas Technologies AG.
Interglas Technologies has also been impacted by the
unprecedented decline in the electronics industry and its share
price has declined significantly. The Company has recorded a
non-cash write-down of $7.8 million. There was no tax benefit
recognized on the write-down.

Excluding this write-down, the equity in losses of affiliated
companies was $2.3 million for the fourth quarter 2001,
reflecting the on-going impact of the electronics market decline
on the Company's Asian reinforcement products joint venture and
start-up losses associated with the engineered products ventures
in China and Malaysia. The Company anticipates reporting
comparable equity in losses in the first quarter of 2002. These
losses by our affiliates did not affect the Company's cash

                         Debt and Cash Flow

The Company's total debt, net of cash, decreased by $3.3 million
to $674.3 million at December 31, 2001 as compared to September
30, 2001. The decrease in net debt in the quarter reflects the
benefits of a $13.1 million reduction in net working capital
during the quarter.

Hexcel Corporation is the world's leading advanced structural
materials company. It develops, manufactures and markets
lightweight, high-performance reinforcement products, composite
materials and engineered products for use in commercial
aerospace, space and defense, electronics, and industrial

ICG COMMUNICATIONS: Court Further Extends Exclusive Periods
U.S. Bankruptcy Court Judge Walsh granted ICG Communications,
Inc., and its subsidiaries and affiliate Debtors' motion further
extending the exclusive periods during which the Debtors may
file a reorganization plan and solicit acceptances of such plan.
The Plan Proposal Period was further extended for approximately
three months through and including March 8, 2002 and the
Solicitation Period stretched further through and including May
7, 2002. The entry of the order was made without prejudice to
the Debtors' right to seek further extensions of the Exclusive
Periods. (ICG Communications Bankruptcy News, Issue No. 16;
Bankruptcy Creditors' Service, Inc., 609/392-0900)  

IT GROUP: Seeks Okay to Pay $41M in Critical Trade Vendor Claims
The IT Group, Inc., and its debtor-affiliates move for an order
authorizing the Debtors to pay the prepetition claims of service
providers, suppliers and vendors, and all others providing
goods, services and support that the Debtors determine, in their
discretion, to be necessary or critical to the Debtors' ongoing
operations, estimated to be no more than $41,000,000. In return
for receiving payment of their prepetition claims, the Critical
Trade Creditors shall be deemed to have agreed to continue to
extend current trade credit terms to the Debtors through the
earlier of the consummation of a sale transaction or of a plan
of reorganization.

Harry J. Soose, the Debtors' Senior Vice President, Chief
Financial Officer and Principal Financial Officer, relates that
in the ordinary course of business, the Debtors rely on hundreds
of different vendors to supply the various goods, supplies, and
equipment utilized in the course of the Debtors' businesses. In
addition, the Debtors rely upon numerous service providers and
others to support the operating activities of the Debtors.

Mr. Soose informs the Court that the Debtors do business with
the vast majority of their Critical Trade Creditors without
benefit of contracts and, therefore, the Critical Trade
Creditors generally are not obliged to do business with the
Debtors or to honor particular trade terms for future orders. As
such, failure to pay the Prepetition Claims would likely result
in a disruption or cancellation of deliveries of goods and
services and, thus, undermine the Debtors ongoing projects. Even
if the Debtors were able to locate suitable replacement
suppliers or service providers, or renegotiate with existing
Critical Trade Creditors, Mr. Soose points out that the
disruption in the flow of goods and services to or at the
Debtors' job sites and projects would seriously prejudice the
Debtors' efforts to receive revenue and, thus, reduce the value
of the Debtors' businesses. Even if the Debtors were able to
convince Critical Trade Creditors to continue to supply goods
and services to the Debtors absent payment of the Prepetition
Claims, the Critical Trade Creditors will likely agree to do so
only on trade terms much less favorable than customary. Mr.
Soose believes that payment of the Prepetition Claims is
necessary to preserve the value of their business, the
underlying projects and their ongoing business, and to ease the
administrative burden on the Debtors' estates.

In return for payment of the Critical Trade Creditors' claims in
the ordinary course of business during this case, Mr. Soose
submits that the Debtors will require that the Critical Trade
Creditors provide the Debtors' estates with the concomitant
economic benefit of agreeing to provide goods and services on
normal or customary trade terms or such other terms that the
Debtors deem beneficial to their estates, until the Debtors
consummate a sale transaction or a reorganization plan,
whichever is earlier. To this end, the Debtors request that the
Court deem any payments made pursuant to this Motion
postpetition payments subject to disgorgement, if a Critical
Trade Creditor does not continue to extend Trade Credit. (IT
Group Bankruptcy News, Issue No. 2; Bankruptcy Creditors'
Service, Inc., 609/392-0900)  

JFK IN'TL: Fitch Slashes Special Project Bonds Series 6 to BB+
Fitch downgrades $934,100,000 Port Authority of New York and New
Jersey, JFK International Air Terminal L.L.C. Project, special
project bonds, series 6, to 'BB+' from 'A'. On Oct. 2, 2001,
Fitch placed the 'A' rating on Rating Watch Negative and under
review for a possible downgrade reflecting, among other things,
the uncertainty surrounding international air travel after the
events of Sept. 11. The Rating Outlook is now Evolving, since
lease negotiations with New York City and discussions with the
Port Authority continue and the outcome of each will materially
impact the credit rating of the outstanding debt. The bonds
received credit enhancement from, MBIA, a bond insurer whose
insurer financial strength is rated 'AAA' by Fitch.

The rating downgrade reflects lower than expected enplanement
figures pre-Sept. 11 and a significant decline since that date
-- approximately 22%. Increased competition from the newly
opened Terminal One (rated 'A-') at JFK and from existing
terminals with large national carriers have effected demand. JFK
IAT utilizes compensatory lease agreements, fixing the rates
charged to lessees at a specific amount per passenger thereby
restricting the ability to cover costs in periods of
significantly decreased passenger traffic. Therefore, resulting
financial margins are significantly below both the original
estimates and the updated projections prepared by JFK IAT's
independent feasibility consultant during 2000. Cost overruns
necessitated the need for additional financing, which the Port
Authority provided on a subordinate basis. However, this loan
further restricts JFK IAT's financial flexibility. Lastly,
various carriers operating at IAT are restructuring in
bankruptcy, thus creating additional credit uncertainty.

However, it is important to note that JFK International Airport
is the top international passenger gateway in the U.S. and IAT
serves approximately 20% of the airport's total international
passengers. In addition, JFK IAT is a consortium of three
companies formed specifically for this project. Included in the
consortium is Schiphol USA Inc., a subsidiary of Schiphol
International, whose parent, Schiphol Group N.V. operates
Amsterdam Schiphol Airport in the Netherlands. Schiphol's level
of expertise and worldwide reputation for managing international
airports and developing retail is critical to the success of
this terminal. Currently, there are 44 airline tenants utilizing
the newly opened and most modern international terminal at JFK.

IAT management is aware of the difficulties it faces with regard
to narrowing financial margins, which are exacerbated by the
short tenor of the lease with the Port Authority and the
resulting high annual debt service costs. Discussions with New
York City are underway and management expects to reach a
resolution in the short-term, either a memorandum of
understanding (MOU) or a lease extension through 2025.
Currently, the lease expires in 2015, which mandated that the
bonds contain special mandatory redemption provisions starting
in 2001. Between these additional debt service costs and the
loan from the Port Authority, current projected cash flows are
not adequate to support operations and debt service without
violating the rate covenant and dipping into the debt service
reserve account through fiscal year 2005. However, if the lease
is extended, negating the need for rapid amortization, then the
financial viability of the project will improve.

KEY TECHNOLOGY: Completes Domestic Credit Facility Restructuring
Key Technology, Inc. (Nasdaq:KTEC) announced sales and operating
results for the first fiscal quarter of 2002 ended December 31,

Sales for the three-month period ended December 31, 2001 totaled
$13.9 million, compared with $18.8 million in the same quarter
last year. The Company reported a net loss from continuing
operations of $323,000 for the most recent quarter compared to a
net loss from continuing operations of $391,000 in the
corresponding quarter last year. The net loss reported from all
operations for the quarter ended December 31, 2001 was $284,000,
compared to a net loss of $290,000, for the same quarter last
year. Except where noted, sales, expenses and operating results
for both periods exclude the activities of a discontinued
operation, Ventek, Inc., the divestiture of which was completed
in the quarter ended December 2001.

Commenting on the quarterly results, Thomas C. Madsen, Chairman
and CEO said, "As previously announced, we expected to report a
loss for the first quarter of fiscal 2002. Although we incurred
a loss, we were pleased with the improvements in both margins
and cost management."

The Company's backlog at the close of the December 31, 2001
quarter totaled $15.3 million compared to $12.2 million at the
close of the same period last year, a year-over-year increase of
25%. New orders received during the first quarter totaled $16.7
million compared to $16.8 million for the same quarter last
year. Orders from customers in the United States for the quarter
ended December 31, 2001 increased by 29% compared to the same
quarter last year.

Madsen commented, "While the domestic fruit and vegetable
markets continue to experience difficult economic conditions, we
are hopeful that reductions in inventory positions and increased
prices for our customers' products in certain key sectors will
lead to increased capital equipment spending. We also anticipate
continued strong orders for tobacco inspection systems in the
China and Asia-Pacific markets."

Gross profit for the first quarter of fiscal 2002 was $5.4
million compared to $7.2 million in the corresponding period
last year. As a percentage of sales, gross profit improved to
39% compared to 38.1% in the first quarter of fiscal 2001, due
to decreased overhead resulting from the move of manufacturing
operations of SRC Vision products to Walla Walla in the second
quarter of fiscal 2001 and the streamlining of the service
organization. In addition, the parts and service business
experienced significant improvements in margins over the same
quarter last year to a level which the Company expects to
continue throughout this fiscal year.

Operating expenses for the quarter ended December 31, 2001
decreased 25% to $5.7 million compared to $7.6 million in the
same quarter last year. During the second half of fiscal 2001
and the first quarter of fiscal 2002, Company management
implemented a number of business adjustments to respond to a
changing economic climate. The reductions in programs and
workforce resulted in significant savings in all areas of the
Company's operating expenses. This reduced level of spending is
expected to continue in future quarters. Additionally,
amortization expenses decreased as a result of the Company's
early adoption of SFAS No. 142, Goodwill and Other Intangible
Assets, which allows for the discontinuance of amortization on
goodwill and certain other intangible assets.

Key Technology also announced that it has completed the
refinancing and restructuring of its domestic credit facility
with its principal lender. The credit accommodation includes a
term loan and a revolving credit facility that allows for
borrowing up to $16.5 million. Additionally, the Company has
retained a financial advisor to evaluate long-term financing and
alternative strategies related to the Series B Convertible
Preferred Stock issued in connection with the AMVC merger, which
becomes redeemable by holders in July 2002.

"In order to achieve our financial targets for fiscal 2002, we
are focused on excellence in serving our customers, controlling
expenses and managing our assets. We feel that we have made the
necessary adjustments over the past year to align our business
with the opportunities available in the current business
environment," said Madsen.

Key Technology, Inc., headquartered in Walla Walla, Washington,
is a worldwide leader in the design and manufacture of process
automation systems for the food processing and industrial
markets. The Company's products integrate electro-optical
inspection and sorting, specialized conveying and product
preparation equipment, which allow processors to improve
quality, increase yield and reduce cost. Key has manufacturing
facilities in Washington, Oregon and the Netherlands, and
worldwide sales and service coverage.

KMART CORP: Gets Okay to Continue Using Existing Bank Accounts
J. Eric Ivester at Skadden, Arps, Slate, Meagher & Flom,
representing Kmart Corporation, and its debtor-affiliates,
reminds the Court that the Office of the United States Trustee
has established certain operating guidelines for debtors-in-
possession in order to supervise the administration of chapter
11 cases.  These guidelines require chapter 11 debtors to, among
other things:

    (a) close all existing bank accounts and open new debtor-in-
        possession bank accounts;

    (b) establish one debtor-in-possession account for all
        estate monies required for the payment of taxes,
        including payroll taxes; and

    (c) maintain a separate debtor-in-possession account for
        cash collateral.

Kmart CEO Charles C. Conaway tells the Court that the U.S.
Trustee's guidelines won't work in these chapter 11 cases.  
Kmart maintains approximately 300 deposit accounts located
throughout the United States, a concentration account at one
bank and disbursement accounts at four other banks  The Debtors
routinely deposit, withdraw and otherwise transfer funds to,
from and between such accounts by various methods including
check, wire transfer, automated clearing house transfer and
electronic funds transfer.  In addition, the Debtors generate
thousands of accounts payable and payroll checks per month from
the Bank Accounts, along with various wire transfers.

The Debtors seek a waiver of the United States Trustee's
requirement that the Bank Accounts be closed and that new
postpetition bank accounts be opened.  If the Guidelines were
enforced in these cases, these requirements would cause enormous
and unnecessary disruption in the Debtors' businesses and would
significantly impair their efforts to reorganize.

Mr. Conaway explains that the Debtors' Bank Accounts are part of
a carefully constructed and highly automated Cash Management
System that ensures the Debtors' ability to efficiently monitor
and control all of their cash receipts and disbursements.
Consequently, closing the existing Bank Accounts and opening new
accounts inevitably would result in delays in payments to
administrative creditors and employees, severely impeding the
Debtors' ability to ensure as smooth a transition into chapter
11 as possible and, in turn, jeopardizing the Debtors' efforts
to successfully confirm a plan in a timely and efficient manner.
Additionally, as a result of the Debtors' diminished staff which
is responsible for the cash management system, requiring the
Debtors to replace their Bank Accounts would impose a daunting
administrative burden.  Finally, because the Debtors'
disbursement systems are integrated with their banks to allow
for automatic bank reconciliations, replacing the Bank Accounts
would require systemic changes which would be difficult to

Accordingly, the Debtors request that their pre-petition Bank
Accounts be deemed to be debtor-in-possession accounts, and that
the Company be permitted to maintain and continue use, in the
same manner and with the same account numbers, styles and
document forms as those employed prepetition, be authorized,
subject to a prohibition against honoring prepetition checks
without specific authorization from this Court.

Recognizing the need for relief from the U.S. Trustee's
Guidelines in a billion-dollar chapter 11 case, and noting that
in other cases of this size, courts have routinely recognized
that the strict enforcement of bank account closing requirements
does not serve the rehabilitative purposes of chapter 11, Judge
Sonderby granted the Debtors' Motion in all respects. (Kmart
Bankruptcy News, Issue No. 2; Bankruptcy Creditors' Service,
Inc., 609/392-0900)   

KMART CORP: Joseph L. Harrosh Discloses 6.215% Equity Stake
Joseph L. Harrosh of Fremont, California has reported the
beneficial ownership of 1,106,400 shares of the common stock of
Kmart Corporation, which represent 6.2157% of the outstanding
common stock of the Corporation.  Mr. Harrosh has sole voting
and dispositive power over the shares.

Kmart Corporation is the nation's second largest discount
retailer and the third largest merchandise retailer. Kmart
Corporation currently operates approximately 2,114 stores,
primarily under the Big Kmart or Kmart Supercenter format, in
all 50 United States, Puerto Rico, the U.S. Virgin Islands and
Guam. Kmart Corporation's general merchandise retail operations
are located in approximately 321 of the 31 Metropolitan
Statistical Areas in the United States. The company filed for
Chapter 11 Reorganization under U.S. Bankruptcy Code on January
22, 2002, in the U.S. Bankruptcy Court for the Northern District
of Illinois (Eastern Division). It is being represented in its
Chapter 11 cases by John Wm. "Jack" Butler, Jr., Esq., of
Skadden, Arps, Slate, Meagher & Flom, LLP 333 West Wacker Drive
Chicago, IL 60606 (312) 407-0700.

KMART CORP: Will Pay $60MM Pre-Petition Balance to Handleman
Handleman Company (NYSE: HDL) --  
said it has resumed shipping music product to all of Kmart's
more than 2,100 stores. Having been designated a "critical
vendor" to Kmart, Handleman Company expects its pre-petition
accounts receivable balance, of approximately $60 million, will
be paid in accordance with previously agreed upon payment terms.
Handleman Company will receive its first payment from Kmart
against its pre-petition balance this week.

Anchor Bay Entertainment, a subsidiary of Handleman Company, has
an accounts receivable from Kmart of approximately $3.5 million
and will submit a claim as an unsecured creditor.  Both
Handleman Company and Anchor Bay Entertainment are shipping to
Kmart under terms and conditions that were in place prior to
Kmart's Chapter 11 filing.

Stephen Strome, Chairman and Chief Executive Officer of
Handleman Company said, "We are pleased with the progress that
has been made by Kmart and the Bankruptcy Court this past week.  
We are working closely with Kmart to continue promoting music
product, which has been increasing steadily over the past
several years, in all of their stores.  Handleman Company
supports Kmart's efforts to return to profitability and will
work with the Kmart team to help them accomplish its

Handleman Company is comprised of two operating divisions:
Handleman Entertainment Resources and North Coast Entertainment.

H.E.R. is a category manager and distributor of prerecorded
music to mass merchants in the United States, United Kingdom,
Canada, Mexico and Brazil.  As a category manager, H.E.R.
manages a broad assortment of titles required to optimize sales
in retail stores and provides direct-to-store shipments,
marketing of the selections and in-store merchandising.  In
addition to its core category management business, the Company
also provides both traditional and online retailers with an
array of e-commerce related products and services through its
Handleman Online business unit.

NCE has three companies in its portfolio.  Anchor Bay
Entertainment is a leading North American independent home video
label, which markets a vast collection of popular titles that
range from children's classics to exercise to suspense/horror.  
Madacy Entertainment, a major independent record label, markets
an exciting range of music and video products with a catalog
spanning all genres.  The itsy bitsy Entertainment Company is a
provider of preschool entertainment, both on and off the screen,
for the youngest of children and their caregivers.

KRAMONT REALTY: Fitch Affirms BB- Ratings with Negative Outlook
Fitch has affirmed its 'BB-' rating for Kramont Realty Trust's
outstanding $41.3 million 9.5% series D perpetual preferred
stock, $11.2 million increasing rate series A-1 cumulative
convertible preferred stock and $29.6 million 9.75% series B-1
cumulative convertible preferred stock. The Rating Outlook has
been revised to Negative from Stable.

The revision of Kramont's Rating Outlook to Negative reflects
the diminishing credit quality of the company's underlying
tenant base as indicated by a rising number of dark anchor
stores and increased exposure to bankrupt retailers, including
K-mart (3% of base rental revenues), Ames (1%) and Cub Foods
(1%). While the Kramont portfolio is currently 89% leased, which
is down from 91% as of year-end 2000, dark tenants reduce
physical occupancy to approximately 80%. Although substantially
all of the existing dark anchor tenants continue to meet their
full leasehold obligations, Fitch believes that their presence
within a center is ultimately detrimental to sales, rents, and
leasing prospects for in-line tenants, thereby increasing the
probability of additional store closings and tenant defaults in
the near future.

Of additional concern to Fitch is Kramont's ability to fund
capital expenditures required to reposition or re-lease any
dark-anchored centers, which remains constrained by limited bank
line availability and a nearly fully encumbered asset base.
Kramont's ability to self-fund these capital expenditures
through retained cash flow is limited by dividend payout and
principal amortization requirements. The company currently
reports $12 million available in cash or escrow with another $7
million available under two separately secured credit
facilities. Management estimates 2002 capital expenditure
requirements at $9 million, excluding reserves for eventual
re-tenanting of dark-anchored centers which could be
considerable. Additional near-term sources of liquidity may
include $8 million from land sales and an $18.5 million
revolving credit line backed by Kramont's equity interest in the
REMIC discussed below, which is expected to close in February

Prepayment and substitution restrictions under a majority of the
company's mortgages further weaken Kramont's ability to create
liquidity through early refinancing and asset recycling
activities. Fitch notes that improved liquidity could result
from either renegotiation or replacement of the company's
outstanding $66 million non-revolving acquisition sub-facility
or refinancing of the $182 million REMIC, both of which mature
in mid-2003. However, the company's aforementioned liquidity
constraints are not expected to impair payment of preferred
dividends, which are supported by a 1.5 times fixed-charge
coverage ratio and common equity representing 31% of total
market capitalization.

Fitch's rating reflects favorably on Kramont's seasoned senior
management team and the local expertise of its regional
managers, which are well suited to successful repositioning of
underperforming properties. Also, minimal ground-up development
exposure and low usage of unconsolidated joint venture
partnerships result in a relatively transparent earnings stream.

Kramont Realty Trust (NYSE: KRT) is a $853 million (market)
self-advised real estate investment trust (REIT) that owns and
operates community and neighborhood shopping centers in the Mid-
Atlantic and Southeastern regions. Its portfolio of fully owned
properties, totaling 10.7 million square feet of gross leaseable
area (GLA), consists of 81 shopping centers and two low-rise
office properties located across 16 states. Based on
contribution to property-generated net operating income (NOI),
Kramont's largest market concentrations are in Philadelphia
(26%), Allentown (9%), New York (9%) and Atlanta (7%).

LTV CORP: Gets OK to Access $15M Interim Loans for Tubular Div.
Judge Bodoh enters a final Order finding that The LTV
Corporation has an immediate need to obtain financing to fund
operations of the Tubular Business, and is unable to obtain
adequate unsecured credit allowed as an administrative expense.    
The Ability of the Debtors to obtain sufficient working apital
and liquidity through the incurrence of new indebtedness for
borrowed money and other financial accommodations is vital to
the Debtors.  The preservation and maintenance of the going-
concern values of the Debtors' Tubular Business is said by Judge
Bodoh to be integral to maximizing the value for the Debtors'
estates.  Judge Bodoh finds that the terms of the proposed
financing are fair and reasonable, reflect the Debtors' exercise
of prudent business judgment consistent with their fiduciary
duties, and are supported by reasonably equivalent value and
fair consideration.  Having made these findings, he grants the
Motion by final Order on the terms and with the security stated
in the Motion. (LTV Bankruptcy News, Issue No. 23; Bankruptcy
Creditors' Service, Inc., 609/392-00900)

LOUISIANA-PACIFIC: Q4 Net Loss Jumps to $71MM on Decreased Sales
Louisiana-Pacific Corporation (LP) (NYSE:LPX) reported a fourth
quarter net loss of $71 million on sales of $516 million.

In the fourth quarter of 2000, the net loss was $52 million on
sales of $569 million. For the full year of 2001, LP reported a
net loss of $172 million on sales of $2.4 billion compared to a
net loss of $14 million on sales of $2.9 billion in 2000.

For the fourth quarter of 2001, results were a loss of $25
million excluding other operating credits and charges of $54
million ($33 million after tax) and the non-cash charge
associated with the write down on the investment in assets and
liabilities transferred under contractual arrangement of $21
million ($13 million after tax). Also included in fourth quarter
results is a year-to-date tax benefit adjustment of $13 million.
In the fourth quarter of 2000, LP's loss, excluding other
operating credits and charges of $33 million ($20 million after
tax) and LP's share of a restructuring charge of an equity
investment of $5 million ($3 million after tax), was $28

For the full year of 2001, results were a loss of $105 million
excluding other operating credits and charges of $67 million
($41 million after tax) and the non-cash charge associated with
the write down on the investment in assets and liabilities
transferred under contractual arrangement of $43 million ($26
million). Sales declined in 2001 to $2.4 billion from $2.9
billion from the prior year due almost entirely to lower
commodity pricing and LP's exit from the pulp business. For
2000, excluding other operating credits and charges of $71
million ($43 million after tax) and LP's share of a
restructuring charge of an equity investment of $5 million ($3
million), LP's income was $32 million.

"Weak commodity pricing reduced our operating earnings by about
$200 million in 2001 compared to the prior year," said Mark A.
Suwyn, LP's chairman and CEO. "Fortunately, in our largest
product line, oriented strand board, the low prices have
accelerated substitution and there are early signs that supply
and demand may come into better balance this year. Predicting
exactly when those improved prices will become sustainable is
difficult, but we do not see any significant new capacity coming
on stream this year."

"In addition, our exit from the pulp business has been very
costly with reported losses of over $100 million this year. We
are no longer running any pulp mills and remaining exit costs,
other than ongoing carrying costs, have been reserved," said Mr.

During the fourth quarter, LP responded to market conditions by
curtailing production at a number of mills across all its
businesses and indefinitely closing its Chetwynd pulp mill.
Also, LP announced a corporate restructuring program targeted at
significantly reducing selling and administrative expenses.
These actions resulted in the elimination of more than 260 mid-
to-upper level management positions that will reduce payroll
costs by $18 million annually.

While noting that on-going industry consolidation and signs of
an improving economy are positive for the industry, Suwyn
cautioned that low pricing could continue for the next several

"Cost reduction and maximizing cash flow continue to be the
primary focus of LP management," said Suwyn. "In 2001, despite
the challenging environment, net cash flow for the year was
approximately $25 million. The organization has demonstrated
that it can weather down cycles and we expect to come out of the
cycle stronger than ever."

LP is a premier supplier of building materials, delivering
innovative, high-quality commodity and specialty products to its
rapidly growing retail, wholesale, homebuilding and industrial
customers. Visit LP's Web site at http://www.lpcorp.comfor  
additional information on the company.

                              *   *   *

As reported on December 28, 2001, in the Troubled Company
Reporter, Standard & Poor's lowered its low-B ratings on
Louisiana-Pacific Corp., by one notch and removed them from
CreditWatch where they were placed with negative implications
October 17, 2001. S&P says that the current outlook is negative.

S&P, as cited in the report, says that the downgrade reflects
expectations that oversupply and seasonal softness in Louisiana-
Pacific's primary markets are likely to keep cash flow
protection measures very weak for the next year or so. During
the next several months, debt levels could rise somewhat in
order to fund seasonal operating needs. On the positive side,
the company has initiated considerable operating cost
reductions, lowered capital expenditures substantially, and
eliminated all dividend payments. In addition, Louisiana-Pacific
and others have taken significant production downtime to manage
inventories (although this does raise unit costs). The company
has also completed a debt refinancing that should provide the
necessary flexibility during this cyclical trough and pushed all
major debt maturities beyond 2003.

MCCRORY CORP: Buxbaum/Century to Auction Assets on February 12
The Buxbaum/Century affiliate of Buxbaum Group will hold an
auction of McCrory Corporation's distribution center and office
equipment, rolling stock and other assets in York on February

The auction is scheduled to begin at 10:00 a.m. at McCrory's
distribution center, located at 2955 East Market Street.  
Bidders can preview the items being offered on February 11, from
8:00 a.m. to 8:00 p.m.

Assets being offered include highway tractors, dry van trailers,
warehouse and materials handling equipment, shop tools and
equipment, reach-in coolers, office furniture, computers, truck
parts, shopping carts and other items. Buyers can pay by Visa,
Mastercard, certified check, bank draft or cash, with all
payments due by noon on February 13.

For a detailed list of items being offered and other
information, visit  

McCrory continues to market and sell its real estate and leases,
as well as other remaining assets.

As previously announced, Encino, CA-based Buxbaum Group was
retained by McCrory Corp. to assist in the bankruptcy sale of
the company's merchandise inventories, store fixtures and
equipment, and the assets being offered in the February auction.  
The privately held discount store operator filed for protection
under Chapter 11 of the Federal Bankruptcy Code on

September 11, 2001, in the U.S. Bankruptcy Court in Wilmington.  
The bankruptcy filing covered the York-based corporation and
nine subsidiaries.

Going-out-of-business sales began at McCrory's 200 remaining
stores in early December.  More than 190 of the stores operate
under the Dollar Zone name, with all items priced at $1 or less.  
Other locations operate under the McCrory, McCrory Dollar, TG&Y,
TG&Y Dollar, GC Murphy and JJ Newberry banners. The latter group
includes units that had been converted to the 'dollar store'
format, as well as several larger locations that also included
higher-priced merchandise.

McCrory traces its roots to a company founded by John Graham
McCrorey, who opened his first store in Pennsylvania's
Westmoreland County around 1880. That single store grew into a
national chain that, at its peak, exceeded 1,300 units.

Buxbaum Group provides inventory appraisals, turnaround and
crisis management and other consulting services for banks and
other financial institutions with retail, wholesale/distribution
and consumer-product manufacturing clients.  The firm also
provides liquidation services on consumer-product inventories,
machinery and equipment, and buys and sells consumer-product

MCWATTERS MINING: Court Ratifies CCAA Plan in Canada
McWatters Mining Inc. (TSE: MCW) said that its Plan of
Compromise and Arrangement and Reorganization of Indebtedness
and Liabilities and of Share Capital pursuant to the Companies'
Creditors Arrangement Act and the Companies Act (Quebec) was
ratified by the Quebec Superior Court at a hearing held Monday.
Subject to receiving satisfactory discretionary relief from the
relevant securities authorities and the satisfaction of
waiver of all other conditions precedent to the implementation
of the Plan including the entering into of several contracts,
the Company expects that implementation of the plan will occur
on or about February 28, 2002.

This Plan had previously received overwhelming approval from
secured and unsecured creditors as well as shareholders of
McWatters at meetings held on January 23, 2002.

McWatters is an important Canadian gold producer, with reserves
of 1.7 million ounces of gold and total resources of 6.8 million
ounces of gold. McWatters is also involved in developing an
extensive portfolio of exploration properties.  For additional
information, visit the Company Web site at

NATIONSRENT INC: Wins Nod to Hire Richards Layton as Co-Counsel
NationsRent Inc., and its debtor-affiliates obtained Court
approval authorizing them to retain Richards, Layton & Finger,
P.A. as bankruptcy co-counsel, nunc pro tunc to the Petition
Date, to perform the extensive legal services that will be
necessary during the Debtors' chapter 11 cases.

Specifically, NationsRent will look to Richards Layton:

A. to advise the Debtors of their rights, powers and duties as
   debtors and debtors in possession;

B. to take all necessary action to protect and preserve the
   Debtors' estates, including the prosecution of actions on
   the Debtors' behalf, the defense of any actions commenced
   against the Debtors, the negotiation of disputes in which
   the Debtors are involved, and the preparation of objections
   to claims filed against the Debtors' estates;

C. to prepare on behalf of the Debtors all necessary motions,
   applications, answers, orders, reports, and papers in
   connection with the administration of the Debtors' estates;

D. to negotiate and prepare on behalf of the Debtors a plan of
   reorganization and all related documents; and

E. to perform all other necessary legal services in connection
   with the Debtors' chapter 11 cases. (NationsRent Bankruptcy
   News, Issue No. 4; Bankruptcy Creditors' Service, Inc.,

NTELOS: S&P Lowers Ratings, Citing Financial Covenant Concerns
Standard & Poor's lowered its ratings on diversified
telecommunications provider NTELOS Inc. The ratings remain on
CreditWatch with negative implications because of concerns about
the company's ability to meet certain financial covenants under
its senior secured bank facility.

The downgrade is based on the expectation that, with termination
of the company's acquisition of incumbent local exchange carrier
(ILEC) Conestoga Enterprises, NTELOS's financial profile will be
significantly weaker in 2002 than if it had closed on Conestoga.

Standard & Poor's expects EBITDA interest coverage to be less
than 1 time through 2002 and only about 1x in 2003. The company
experienced operating cash flow losses in its wireless business
through the third quarter of 2001, in part due to the aggressive
conversion of its prepaid wireless customers in its Virginia
East market (former PrimeCo. property) to postpaid services,
coupled with heightened competition from the larger national
carriers in all of its wireless markets. This has resulted in
high cost per gross customer addition, which was $373.15 for the
third quarter of 2001. Accompanying operating cash losses for
the wireless business totaled about $15 million for the nine
months ended September 30, 2001, though these losses declined
on a quarterly basis over this nine-month period.

NTELOS grew its postpaid wireless subscriber base considerably
in 2001, and in the latter half of the year introduced an
advanced billing product in order to grow the subscriber base
with limited credit risk. The company has also added several
retail stores in its region and plans to open additional stores
in 2002. However, NTELOS's business plan is predicated on its
ability to substantially improve operating cash flow performance
of the wireless business in 2002. To accomplish this, it must
continue to significantly grow the customer base while
containing overall operating expense levels.

The company benefits from a wholesale agreement with Horizon
Wireless PCS, which provides for minimum revenues of $27.4
million in 2002 and $38.6 million in 2003 in exchange for
NTELOS's upgrade to 1XRTT of the portion of its CDMA-based
network serving Horizon. 1XRTT is a 2.5-generation wireless
technology that supports advanced wireless services.

NTELOS derives some limited flexibility from its holdings of
excess personal communications services (PCS) spectrum. The
company has already sold some selected licenses, and Standard &
Poor's expects it will sell additional spectrum in the 2002 to
2003 time frame to fund potential operating and capital
requirements. NTELOS also derives some flexibility from its bank
facility, under which it had $100 million available as of
December 31, 2001. However, problematic to the company's near-
term liquidity is the minimum operating cash flows required
under the bank facility covenants in 2002. Absent a demonstrated
ability to meet this covenant over the next few quarters,
ratings could be lowered further.

The senior secured bank loan rating is one notch higher than the
corporate credit rating. This reflects the fact that the value
ascribed to the company's incumbent local exchange operations,
which consist of about 52,000 access lines, coupled with the
value ascribed to the company's PCS licenses in a distressed
scenario provide adequate coverage of the fully drawn $325
million in secured bank facilities.

       Ratings Lowered and Remaining on CreditWatch Negative

     NTELOS Inc.                        TO        FROM
       Corporate credit rating          B         B+
       Senior secured bank loan         B+        BB-
       Senior unsecured debt            CCC+      B-
       Subordinated debt                CCC+      B-

PEN HOLDINGS: S&P Drops Ratings to D After Filing Chapter 11
Standard & Poor's lowered its corporate credit and senior
unsecured ratings on Pen Holdings Inc. to 'D' from double-'C'
and removed them from CreditWatch where they were placed on
December 20, 2001. The downgrade follows the company's
announcement that it has filed for voluntary Chapter 11
bankruptcy protection to restructure its businesses along with
its subsidiaries.

PHILIPS INT'L: Kmart Bankruptcy Likely to Delay Asset Sales
Philips International Realty Corp. (NYSE-PHR), a real estate
investment trust, said that Kmart's Chapter 11 bankruptcy filing
is likely to delay the sales of the Company's five remaining
properties pursuant to the Company's plan of liquidation, and
may result in a reduction of the remaining projected liquidating
distributions of $3.00 per common share.

Kmart leases a significant portion of the space in each of the
Company's five remaining shopping center properties, of which
four stores are currently operating and one Kmart store in
Reedley, California is closed. While operating in bankruptcy,
Kmart has announced that it will seek immediate cancellation of
all leases at closed locations. In addition, Kmart stated that
additional store closings will be announced by the end of the
first quarter of 2002, and it will seek cancellation of the
related leases. Therefore, in addition to the likely termination
of the Reedley lease, one or more additional Kmart leases may be
voided in the bankruptcy proceedings.

At the Reedley property, Kmart subleased approximately one-third
of its leased space to Factory 2-U Stores, Inc. on terms and
conditions similar to the master lease on a pro rata basis.
Although the sublease will be voided if the master lease is
cancelled in bankruptcy, the subtenant has expressed interest in
leasing the space directly from the Company.

As a result of the uncertainty pertaining to the ultimate status
of the Kmart leases, the Company expects a delay in the
completion of its plan of liquidation. Also, the potential
impact on the proceeds from sales of the remaining five
properties cannot currently be evaluated.

On October 10, 2000, the Company's stockholders approved the
plan of liquidation, which at that time was estimated to
generate approximately $18.25 in the aggregate in cash for each
share of common stock in two or more liquidating distributions.
To date, a total of $15.25 per share has been distributed, which
resulted partly from the August and October 2001 sales of two
shopping centers in which Kmart was a major tenant, including
one property with a closed Kmart store. The Company's five
remaining assets are currently being offered for sale.

PHOENIX INT'L: Working Capital Insufficient to Fund Operations
In the Auditors Report dated January 17, 2002, external auditors
for Phoenix International Industries stated:  "..... the Company
has accumulated losses of approximately $21 million as of
November 30, 2001, has insufficient working capital and will
continue to incur selling, general and administrative
expenses.  Realization of certain assets is dependent upon the
Company's ability to meet its future financing requirements, the
success of future operations and the continued funding of the
parent Company's operations by its chief executive officer and
sale of common stock.  The conditions raise substantial doubt
about the Company's ability to continue as a going concern."

The Company reported revenues of $1,750,264 for the three-month
period ended November 30, 2001 compared to revenues of $698,736
for the comparable three-month period of the preceding year.  
These revenues resulted from telecommunication service sales
generated by Phoenix's affiliates, EPICUS, Inc. and Moye &
Associates, Inc. (dba "The Best.Net").

During the Company's three month period ended November 30, 2001,
the Company incurred net losses of $4,036,109 compared to net
losses of $1,460,250 for the comparable three month period for
the preceding year.

The Company's net losses for the three month period ended
November 30, 2001, continue to be the result of expenses
involved with supporting the day to day operation of EPICUS, the
expenses of expanding its affiliates sales operations, including
the posting of additional deposits to long distance carriers on
behalf of EPICUS. Also contributing to the Company loss during
the period are the continued expenses associated with continuing
to operate and maintain its offices, professional fees and
expenses associated with being a reporting public company, which
include: legal, accounting and EDGAR/printing preparation. The
Company also incurred non-cash expenses associated with the
issuance of 2,000,000 shares of stock to the former owners of
Moye & Associates as a payment on the balance of the note issued
for the purchase of that company.

In order for the Company to pay its operating expenses,
including office rents, communication expenses, accounting and
bookkeeping fees, printing and EDGAR preparation costs,
publication costs, and other general and administrative
expenses, the Company continues to be dependent upon the funds
provided by non-interest bearing loans and agreements to defer
payments due, from the Company's executive officers, directors
and shareholders, and the sale of stock under the terms of
Regulation "S" of the Securities Act of 1933.

During this reporting period as it has previously, the Company
has raised a portion of its operating capital through the sale
of restricted stock, however in future there can be no assurance
of any additional sale of restricted stock. Further, there can
be no assurance, based upon present market price of the shares,
that it will be able to raise additional private placement
funding, at terms and conditions satisfactory to the Company.

PILLOWTEX CORP: Gets Approval to Expand Scope of KPMG's Work
Judge Robinson finds the application of Pillowtex Corporation,
and its debtor-affiliates to expand the scope of KPMG as tax
advisors in the best interests of the Debtors and their estates.  
Thus, the Court authorizes the Debtors to retain and employ KPMG
nunc pro tunc as of September 17, 2001.

Pursuant to the Supplemental Engagement Letter, KPMG, as tax
advisors to the Debtors, will be:

    (a) assisting in the formulation of employment tax planning

    (b) tailoring any employment tax planning opportunities to
        meet the Debtors' post-bankruptcy needs;

    (c) evaluating income, franchise, real estate, personal
        property and sales/use tax issues related to the
        implementation of the Fieldcrest Employee Restructuring;

    (d) evaluating and providing advice on non-tax issues
        related to any employment tax planning opportunities,
        including accounting, operational, technology or
        regulatory issues related to the implementation of the
        Fieldcrest Employee Restructuring;

    (e) preparing an economic cost study regarding sustainable
        intercompany pricing levels in connection with the
        implementation of the Fieldcrest Employee Restructuring;

    (f) performing a post-implementation review of the
        employment tax planning actions taken to evaluate
        whether those actions are achieving the intended
        benefits and to determine additional recommendations to
        strengthen the tax planning strategy;

    (g) communicating with taxing jurisdictions affected by the
        implementation of the employment tax planning strategy;

    (h) assisting in any defense of the employment tax planning
        opportunities in the unlikely event of an audit.
        (Pillowtex Bankruptcy News, Issue No. 21; Bankruptcy
        Creditors' Service, Inc., 609/392-0900)

PROBEX CORP: Bechtel Group, et. al. Disclose 6.9% Equity Stake
Bechtel Group, Inc. and United Infrastructure Company, LLC share
voting and dispositive powers over 2,119,716 shares of the
common stock of Probex Corporation, representing 6.9% of the
total outstanding common stock of that Company.  Bechtel Group,
Inc. disclaims any beneficial ownership of any of the shares of
common stock of Probex issued to United Iintrastructure Company,
LLC, Bechtel's indirect wholly-owned subsidiary.

Probex is probing the prospects for ProTerra, the company's
proprietary technology for purifying, recycling, and upgrading
used lubricating oils collected from auto oil-change centers.
With construction group Bechtel, the company is developing a
plant on a 22-acre site in Ohio where it plans to use the
technology to upgrade the waste oil into three products:
ProLube, a base lube oil; ProPower, a distillate for off-road
use; and ProBind, an asphalt thickener. The company expects to
get 80% of its sales from upgraded lube oil, which is designed
to comply with new standards for oils used in cars. Probex owns
three waste oil collection companies in the southeastern US,
which supply its recycling plants. At June 30, 2001, the company
had a working capital deficiency of close to $13 million.

REGAL CINEMAS: Court Confirms Prepackaged Plan of Reorganization
Regal Cinemas, Inc., the nation's largest film exhibitor, said
that it has emerged from its voluntary prepackaged Chapter 11
proceeding.  Regal Cinemas' plan of reorganization, which was
accepted by holders of more than 95 percent of the Company's
creditors that voted on the plan, was confirmed by the U.S.
Bankruptcy Court for the Middle District of Tennessee in
Nashville on December 7, 2001, clearing the way for emergence.

To complete its restructuring initiatives, Regal filed voluntary
petitions for reorganization under Chapter 11 of the Bankruptcy
Code along with a prepackaged plan of reorganization on October
12, 2001, following a solicitation of votes of its subordinated
debt holders and other general unsecured creditors on a
restructuring of the Company's debt.

"The consensual plan of reorganization that became effective
[Wednes]day creates a significantly deleveraged Regal Cinemas
with sufficient cash to fund its operations and a sound
financial structure," said Regal Chairman and Chief Executive
Officer Michael L. Campbell.  "The successful completion of the
Company's reorganization provides the maximum recovery to our
creditors, and at the same time will enable Regal to maintain
its position as the largest theatre circuit in the nation."

Mr. Campbell noted the important role its employees, vendors and
the studios played in the completion of Regal's restructuring
initiatives.  "The hard work of our employees and the support of
the studios, along with that of our vendors, made it possible
for our theatres to continue to operate without interruption
during the brief course of the case."

Under the terms of the plan, certain senior bank debt holders
will receive payment of accrued and unpaid interest and 100
percent of reorganized Regal's common stock, subject to dilution
by a new management incentive plan.  Certain of these investors
will also receive payment of certain costs and expenses incurred
as a result of the restructuring of Regal.  Other holders of
allowed claims arising under Regal's senior credit facility will
be paid in full with interest.

All holders of the Company's Subordinated Notes will receive
their pro rata share of cash in the aggregate amount of
$181,031,250.  General unsecured creditors will receive payments
of cash equal to 100 percent of their allowed claim.

Founded in November 1989, Regal Cinemas, Inc. is the largest
film exhibitor in the United States and has maintained the
largest box office and market share for U.S. theatres during the
past two years.  The Company primarily shows first run movies
and currently has 3,655 screens in operation at 302 theatres.

SERVICE MERCHANDISE: Proposes De Minimis Asset Sale Procedures
Service Merchandise Company, Inc., and its debtor-affiliates
seek Court approval for procedures to sell certain assets in
connection with the wind-down of their business operations.

Paul G. Jennings, Esq., at Bass, Berry & Sims, in Nashville,
Tennessee, relates that the Debtors are referring to procedures
for assets that have a value of less than $250,000 per item or
the "De Minimis Assets".  The Debtors believe it is in the best
interests of the estates, creditors and other stakeholders to
immediately commence the winding down of their businesses and
dispose of their assets in an orderly fashion so as to maximize
recoveries for their creditors.  "The Debtors have determined
that the sale of the De Minimis Assets will maximize the
realizable value for such assets," Mr. Jennings adds.

Mr. Jennings explains that aside from the potential loss of
value to the Debtors' estates if these procedures are not
approved, obtaining court approval of each sale of the De
Minimis Assets would result in undue administrative expenses.  
The Debtors propose that for the sale of De Minimis Assets
outside the ordinary course of business, these procedures should
be approved in lieu of a hearing for each sale:

    (i) the Debtors will give notice of each proposed sale to:

        (a) the United States Trustee;

        (b) counsel to the Committee;

        (c) counsel for the post-petition lenders; and,

        (d) any known holder of a lien, claim or encumbrance
            against the specific property to be sold.

        The sale notice shall be served by facsimile, so as to
        be received by 4:00 p.m. on the date of service.  The
        sale notice shall specify:

        (a) the assets to be sold;

        (b) the identity of the proposed purchaser, including a
            statement of any connection between the proposed
            purchaser and the Debtors; and,

        (c) the proposed sale price.

   (ii) the notice parties shall have 5 business days after the
        notice is sent to object to, or request additional time
        to evaluate the proposed transaction.  If counsel to the
        Debtors receive no written objection or written request
        for additional time prior to the expiration of such
        five-day period, the Debtors shall be authorized to
        consummate the proposed sale transaction and to take
        such actions as are necessary to close the transaction
        and obtain the sale proceeds.

  (iii) if a notice party timely objects to the proposed
        transaction within 5 business days after the notice is
        sent, the Debtors and such objecting notice party shall
        use good faith efforts to consensually resolved the
        objection.  If the Debtors and the objecting notice
        party are unable to achieve a consensual resolution, the
        Debtors will not take any further steps to consummate
        the proposed transaction without first obtaining
        Bankruptcy Court approval of the proposed transaction
        upon notice and a hearing;

   (iv) any valid and enforceable liens shall attach to the net
        proceeds of the sale, subject to any claims and defenses
        the Debtors may possess with respect thereto, and any
        amounts in excess of such liens shall be utilized by the
        Debtors in accordance with the terms of the Debtors'
        post-petition financing agreement; and,

    (v) nothing in these procedures shall prevent the Debtors,
        in their sole discretion, from seeking Bankruptcy Court
        approval at any time of any proposed transaction upon
        notice and a hearing.

Mr. Jennings asserts that the proposed procedures provide an
efficient process for disposing of assets of lesser value and at
the same time affording parties with a particular interest in
such assets or the proceeds with an opportunity to object.  The
expedited procedure permits the Debtors to be responsive to the
needs of interested purchasers thus preventing lost sales due to
delay.  "Without an expedited process for closing these sales,
these estates will be deprived of significant recovery," Mr.
Jennings adds. (Service Merchandise Bankruptcy News, Issue No.
25; Bankruptcy Creditors' Service, Inc., 609/392-0900)

STATIA TERMINALS: Adjusted EBITDA Slides-Down 7% in Q4 2001
Statia Terminals Group N.V. (NASDAQ: STNV) reported earnings
before interest expense, income taxes, depreciation, and
amortization adjusted for certain non-recurring items, a measure
of operating cash flow, of $9.0 million for the fourth quarter
ended December 31, 2001. Adjusted EBITDA includes a $0.7 million
non-cash impairment charge incurred during the fourth quarter.
As previously announced on January 22, 2002, after considering
the Company's fourth quarter results, available cash, and future
cash requirements, the Board of Directors has declared a
distribution of $0.45 per class A common share payable on
February 14, 2002, to shareholders of record on January 31,

On Thursday, January 24, 2002, the Company began mailing
definitive proxy material (to shareholders of record at the
close of business on Tuesday, January 22, 2002) related to a
special general meeting of shareholders to be held on Friday,
February 22, 2002, in Curacao, Netherlands Antilles. At the
special general meeting, shareholders will be asked to approve
(i) the sale of substantially all of the assets of the Company
consisting of the capital stock of its three subsidiaries
(Statia Terminals International N.V., Statia Technology, Inc.,
and Statia Marine, Inc.) to Kaneb Pipe Line Operating
Partnership, L.P., a limited partnership affiliated with Kaneb
Pipe Line Partners, L.P. (NYSE: KPP), (ii) an amendment to the
Company's Articles of Incorporation implementing a distribution
mechanism for the proceeds of the sale, and (iii) the subsequent
liquidation of the Company. The sale transaction was approved by
the Board of Directors of Statia, which also recommends that the
holders of the Company's class A and class B shares vote to
amend the Articles of Incorporation, approve the proposed
distribution of the sale proceeds and approve the liquidation of
the Company.

Shareholders are encouraged to promptly mail their voting
instruction card and proxy so that their shares may be voted in
accordance with their wishes. Assuming shareholders approve
these matters, it is anticipated that distributions will be paid
shortly after closing to shareholders of record on the date of
the closing of the sale. Shareholders seeking additional
information on these matters may contact the Company's proxy
solicitation agent, Morrow & Co., Inc., located at 445 Park
Avenue, New York, NY 10022; Telephone: (212) 754-8000; Call
Toll-Free: (800) 654-2468.

The fourth quarter results represent a decrease of 7% from the
Adjusted EBITDA of $9.7 million for the fourth quarter of 2000.
Adjusted EBITDA for the year ended December 31, 2001, was $38.8
million, an increase of $7.1 million or 22% compared to the 2000
annual results of $31.7 million. Adjusted EBITDA for the fourth
quarter of 2001 and the full year 2001 includes an impairment
charge of $0.7 million related to an investment in a technology
company. Excluding the impairment charge, Adjusted EBITDA for
the three and twelve months ended December 31, 2001, would have
been $9.7 million and $39.5 million, respectively. The higher
Adjusted EBITDA for the fourth quarter of 2001 (excluding the
impairment charge) as compared to the same period of 2000, is
primarily due to increased throughput of crude oil and clean
products. In conjunction with increased throughput, Statia had
more vessels working cargo at its terminals than during the same
quarter last year. The improved Adjusted EBITDA for the year
ended December 31, 2001, as compared to the prior year, is
mainly attributable to increases in storage, throughput, and
ancillary services revenues in the Company's terminaling
services segment. As a result of favorable market conditions and
Statia's strategic initiative to attract long-term customers,
the Company saw improved leasing of its available capacity,
additional barrels of throughput, and increased vessel calls
working cargo than during the prior year. Terminaling services
revenues were $18.7 million and $73.7 million for the three and
twelve months ended December 31, 2001, respectively, compared to
$16.9 million and $61.5 million for the same periods of 2000. A
reconciliation of EBITDA to operating income and Adjusted EBITDA
to net income is attached.

Total revenues for the fourth quarter of 2001 were $47.0
million, down $9.4 million from total revenues of $56.4 million
for the fourth quarter of 2000. Total revenues for the year
ended December 31, 2001, were $202.2 million, down $8.3 million
from total revenues of $210.5 million for the 2000 year. The
decreases in total revenues for these periods are primarily due
to lower average selling prices in the product sales segment,
partially offset by increases in terminaling services revenues.

Gross profit from the product sales segment for the year ended
December 31, 2001 was $8.1 million, up 5% from the 2000 year.
This increase in gross profit from product sales is primarily
due to greater quantities of bunker fuels delivered and higher
margins realized primarily as a result of improved purchasing of
products sold.

Operating income for the three and twelve months ended December
31, 2001, was $4.5 million and $24.3 million, respectively, as
compared to $7.1 million and $19.4 million for the same periods
of 2000. Operating income for the three and twelve months ended
December 31, 2001, includes costs related to the proposed sale
of the Company's operating subsidiaries to Kaneb of $1.2 million
and $1.5 million, respectively, and the impairment charge of
$0.7 million. Had the Company not incurred these costs and the
charge, operating income for the three and twelve months ended
December 31, 2001, would have been $6.4 million and $26.5
million, respectively. Operating income for the three and twelve
months ended December 31, 2000, includes one-time increases of
$0.95 million. Had the Company not realized these items,
operating income for the three and twelve months ended December
31, 2000 would have been $6.1 million and $18.5 million,

For the quarter ended December 31, 2001, net income was $1.2
million, compared to $3.8 million for the fourth quarter of
2000. For the year ended December 31, 2001, net income was $10.9
million compared to $6.1 million for the 2000 year. Had the
Company not incurred the costs related to the sale of its
subsidiaries and the impairment charge, net income for the three
and twelve months ended December 31, 2001, would have been $3.0
million and $13.1 million, respectively. Had the Company not
realized certain one-time increases in operating income of $0.95
million during the three and twelve months ended December 31,
2000, net income for these periods would have been $2.8 million
and $5.1 million, respectively, corresponding to $0.27 and $0.48
diluted earnings per common share, respectively.

The Company has scheduled a conference call to discuss its
operations and financial results for 10:00 a.m. EST on Thursday,
January 31, 2002. All interested parties may listen to the
conference call live by calling toll-free 888-428-4474.

Statia provides storage, blending, processing, and other marine
terminaling services for crude oil, refined products, and other
bulk liquids to crude oil producers, integrated oil companies,
traders, refiners, petrochemical companies, and others at its
facilities located on the island of St. Eustatius, Netherlands
Antilles, and at Point Tupper, Nova Scotia, Canada. The
Company's facilities, with their deep-water ports, can
accommodate substantially all of the world's largest oil
tankers. In connection with its terminaling activities, Statia
also provides value-added services, including delivery of bunker
fuels to vessels, other petroleum product sales, emergency and
spill response services, and ship services. The Company is
headquartered in Curacao, Netherlands Antilles, and maintains an
administrative office in Deerfield Beach, Florida.

SYSTEMS XCELLENCE: Workout Talks with Bank & Debtholder Continue
Systems Xcellence Inc. (TSE: SXC), a leading provider of
healthcare information technology solutions throughout the
pharmaceutical supply chain, announced financial results for its
third-quarter of fiscal 2002, ended November 30, 2001.

Highlights of the quarter include:

- Revenue increase of 59% over the third-quarter of fiscal 2001;

- EBITDA increase of 239% over the third-quarter of fiscal 2001;

- Income before goodwill amortization of $403,618, or $0.01 per

- Near break-even cash flow, with positive cash flow from
  operations of $1.5 million;

- New licensed software contracts and ASP renewals totalling
  US$2.75 million; and

- Revenue backlog of $58 million at the end of the third-quarter
  of fiscal 2002.

"SXC continues to deliver on our promises, realizing positive
results from ongoing efforts to successfully integrate ComCoTec
and improve our financial position," said Gordon S. Glenn,
President & CEO of SXC. "SXC is nearing its cash flow positive
milestone, is profitable on an EBITDA basis, and is benefiting
from substantially higher recurring revenues, which for the
second consecutive quarter remain in excess of 50%. As per our
strategy, a large recurring revenue stream can provide stability
and visibility going forward. SXC appears ready to meet our
year-end revenue goal as we prepare for solid growth initiatives
in fiscal 2003."

SXC is a key player in the U.S. pharmaceutical benefit IT
market, which is valued at approximately US$2.1 billion
annually. Factors driving growth in this industry include: a
rising percentage of Americans who take prescription drugs on a
daily basis; the rise in direct-to-consumer advertising; the
Bush Administration's pledge to provide drug benefits to senior
citizens; and the fact that U.S. healthcare providers and payers
must generally be HIPAA- compliant by October 2002. These forces
combined are fuelling demand from healthcare payers in
particular, as they look to control the escalating costs of
delivering healthcare benefits.

                         Financial Results

Revenue for the three-month period ended November 30, 2001
increased 59.0% to $10.6 million from $6.7 million as of
November 30, 2000. This growth is largely the result of
increased ASP/switching and maintenance revenue. During the
third-quarter recurring revenue accounted for 52.5% of
consolidated revenue versus 16.4% for the corresponding period
in fiscal 2001. This percentage increase is primarily the result
of the acquisition of ComCoTec, Inc. in the first-quarter of
fiscal 2002.

Revenue for the nine-month period ended November 30, 2001 rose
by 39.8% to $27.7 million from $19.8 million as of November 30,
2000, also driven by substantially higher ASP/switching and
maintenance revenue. Recurring revenue accounted for 55.0% of
consolidated revenue for the first nine-months of fiscal 2002,
compared to 15.2% for the corresponding period in fiscal 2001.
General economic uncertainty, and a preference amongst mid-size
payers of healthcare benefits for outsourced ASP solutions,
resulted in offsetting declines in licensed software revenue
during the current quarter and the year- to-date period.

The Company recorded earnings before interest, taxes,
depreciation and amortization (EBITDA) of $1.8 million during
the third quarter, an increase of 239% over $544,764 for the
same period of fiscal 2001. This also represents a 174% increase
in EBITDA compared to the second quarter of fiscal 2002, marking
the second consecutive quarter of positive EBITDA as SXC
continues its drive toward improved financial stability. For the
nine-month period ended November 30, 2001, the Company reported
negative EBITDA of $1.2 million -- less than half the EBITDA
loss reported for the six months ended August 31, 2001.

For the third-quarter of fiscal 2002, the Company reported a net
loss of $2.4 million compared to a net profit of $95,721 for the
corresponding period in fiscal 2001. On a sequential quarter-
over-quarter basis, in the third quarter of fiscal 2002, the
Company earned $403,618, before goodwill amortization, compared
with a loss of $952,277, before goodwill amortization in the
second quarter of fiscal 2002.

For the first nine-months of fiscal 2002, the Company reported a
net loss of $14.2 million compared to a net profit of $737,176
for the corresponding period in fiscal 2001. This change is
largely attributable to a decline in licensed software revenue
and goodwill amortization charges in connection with the
ComCoTec acquisition.

The Company is continuing discussions with its bank and primary
debt-holder to obtain more favorable financing terms for its
existing debt. During the quarter, the Company and its bank
entered into a forbearance agreement with respect to the breach
of certain financial covenants that occurred prior to and during
the quarter. One of the conditions of this forbearance was the
repayment of the Company's revolving line of credit. Management
expects bank scrutiny to continue for the near future, however,
with the Company's improved operating results, management
believes that it will be able to secure an alternative banking
relationship to enhance its borrowing capacity.

Subsequent to the quarter-end, the Company also entered into a
temporary forbearance agreement with its primary debt-holder in
connection with certain missed financial covenants that occurred
prior to and during the quarter. The purpose of this agreement
is to facilitate discussions for a more extensive agreement that
addresses the Company's long-term financial objectives.
Discussions relating to the more extensive agreement have been
ongoing and management expects a mutually satisfactory outcome.

At the end of the third quarter of fiscal 2002, the Company's
contract order backlog remained steady at $58 million.
Management anticipates that this contracted order backlog will
be realized over a three-year period.

Systems Xcellence (SXC) is headquartered in Milton, Ontario with
offices and processing centres in Lombard, Illinois, Scottsdale,
Arizona and Victoria, British Columbia. SXC is a leading
provider of healthcare information technology solutions and
services to the healthcare benefits management industry. The
company's product offerings and solutions combine a wide range
of software applications, application service provider (ASP)
processing services and professional services, designed for many
of the largest organizations in the pharmaceutical supply chain,
such as pharmacy benefit managers, managed care organizations,
retail pharmacy chains and other healthcare intermediaries.

The company's products offer its customers comprehensive
pharmacy benefits management, claims switching and processing,
drug dispensing, data warehousing and analysis, and rebate
contract management systems. SXC delivers these solutions to its
customers as software products bundled with systems
implementation and consulting services, or on an ASP basis from
its data centres in Scottsdale, Arizona and Lombard, Illinois.
The Company's shares are traded on the Toronto Stock Exchange
under the symbol SXC. SXC can be found on the Internet at

TCT LOGISTICS: Court Appoints KPMG as Interim Receiver in Canada
TCT Logistics Inc. (TSE-TLI) announced that KPMG Inc., has been
appointed interim receiver of the company and its affiliates by
order of the Ontario Superior Court of Justice, under the
Bankruptcy and Insolvency Act.  

Effective with this appointment, the board of directors of the
company has resigned.

U.S. STEEL CORP: Fourth Quarter Net Loss Doubles to $121 Million
United States Steel Corporation (NYSE: X) reported an adjusted
fourth quarter 2001 net loss of $121 million compared with an
adjusted net loss of $57 million in fourth quarter 2000.  For
full-year 2001, the adjusted net loss was $257 million compared
with adjusted net income of $77 million in the prior year.

U. S. Steel recorded a fourth quarter 2001 net loss of $174
million, including the net effect of special items, which in
total reduced net income by $53 million.  In fourth quarter
2000, the net loss of $139 million included special items having
a net unfavorable after-tax effect of $82 million.

For the year 2001, U. S. Steel had a net loss of $218 million,
which included special items with a net favorable after-tax
effect of $39 million.  A full-year 2000 net loss of $21
million, included special items having a net unfavorable after-
tax effect of $98 million.

"While our results are disappointing, they largely reflect the
devastating impact that global excess steel capacity and several
years of surging imports have had on domestic steel prices,
which are at the lowest levels in decades, and on shipments and
utilization rates, which are the lowest since the early 1990's,"
said Thomas J. Usher, chairman, CEO and president.

In fourth quarter 2001, U. S. Steel recorded a loss from
reportable segments of $175 million, or $57 per ton, on steel
shipments of 3.1 million tons.

U. S. Steel's Domestic Steel segment recorded a loss from
operations of $177 million for the fourth quarter 2001, or $80
per ton. Domestic Steel shipments in fourth quarter 2001 were
2.2 million net tons, down 5 percent from fourth quarter 2000
and the lowest quarterly level since the third quarter of 1992.  
The average realized domestic steel price was $419 per ton in
fourth quarter 2001 compared with $459 per ton in the fourth
quarter 2000 and $420 per ton in the third quarter 2001.  
Domestic raw steel capability utilization in fourth quarter 2001
dropped to 67 percent, down from 75 percent in fourth quarter
2000 and 83 percent in third quarter 2001.  As a result, fourth
quarter production costs rose due to lower, less efficient
operating rates at steel and raw material facilities.  Tubular
markets, which had been strong earlier in the year, also
weakened markedly.

U. S. Steel Kosice, s.r.o. (USSK) reported fourth quarter 2001
segment income from operations of $2 million, or $2 per ton.  
USSK's segment income in 2000 was $2 million, or $6 per ton, for
the period following acquisition.  For full-year 2001, USSK had
segment income of $123 million, or $33 per ton.

USSK shipments in fourth quarter 2001 were 0.9 million net tons,
and raw steel capability utilization was 66 percent.  Full-year
2001 shipments totaled 3.7 million net tons, with a utilization
rate of 81 percent.

Commenting on USSK's segment results, Usher said, "A difficult
European economic environment contributed to lower fourth
quarter shipments, but average realized prices remained about
flat with the third quarter.  USSK completed several planned
outages during the quarter, which increased repair and
maintenance expenses, and temporarily idled most operations for
about two weeks at year-end due to low order levels and seasonal
curtailments by customers.

"We are extremely pleased with the performance of USSK in the
first full year of operation as a U. S. Steel facility.  USSK
results should be enhanced by the completion of the tin mill
expansion and vacuum degasser projects."

Commenting on U. S. Steel's domestic outlook, Usher said, "We
are encouraged that spot sheet prices are climbing from the
extremely depressed levels of late 2001 and our order book has
been improving.  In the first quarter 2002, domestic shipments
are expected to improve and average realized prices are expected
to be slightly lower, largely due to product mix, when compared
to fourth quarter 2001.  For full-year 2002, domestic shipments
are expected to be approximately 11 million net tons."

USSK first quarter shipments and average realized prices are
expected to be lower than fourth quarter 2001.  USSK shipments
are expected to be approximately 3.8 million net tons in 2002.

United States Steel Corporation (United States Steel), through
its Domestic Steel segment, is engaged in the production, sale
and transportation of steel mill products, coke, taconite
pellets and coal; the management of mineral resources; real
estate development; and engineering and consulting services and,
through the U. S. Steel Kosice (USSK) segment, in the production
and sale of steel mill products and coke primarily for the
central European market. Prior to December 31, 2001, United
States Steel was a wholly owned subsidiary of USX Corporation,
now named Marathon Oil Corporation (Marathon). Marathon had two
outstanding classes of common stock: USX-Marathon Group common
stock, which was intended to reflect the performance of
Marathon's energy business, and USX-U. S. Steel Group common
stock (Steel Stock), which was intended to reflect the
performance of Marathon's steel business. On December 31, 2001,
Marathon distributed the common stock of United States Steel to
holders of Steel Stock in exchange for all outstanding shares of
Steel Stock on a one-for-one basis.

UNIVERSAL AUTOMOTIVE: Sells Interests in Hungarian Foundry
Universal Automotive Industries, Inc. (Nasdaq: UVSL), is pleased
to announce that it has sold its interest in its Csepel, Hungary
foundry, to Euro-Industrial Limited L.L.C., whose principal
shareholder, Tad M. Ballantyne, also holds interests in several
other U.S. foundries, effective as of December 31, 2001.  The
aggregate consideration of $828,000 for the sale is evidenced by
two promissory notes, the first of which, in the amount of
$100,000 is interest free and is payable in four quarterly
installments beginning in April 2002. The second promissory
note, in the amount of $728,000, relates to the repayment of
advances made by Universal to its Hungarian subsidiary.  This
note bears interest at the rate of 6.5% and is payable in 36
monthly installments beginning in November 2003. Universal had
previously elected to treat the foundry as a discontinued
operation, subject to a plan of liquidation to be completed by
December 31, 2000, and has been carrying the asset on its books
at a value of $800,000, as of September 30, 2001, including
$972,800 of reserves for cost of liquidation.

The Company continued to operate the foundry as a going concern
through the date of sale in order to enhance its ultimate
disposition price and avoid the costs of shut down and carrying
of a shuttered facility.  This resulted in additional operating
losses of approximately $925,000 being incurred by the foundry
in calendar year 2001, which were accounted for as part of
Universal's consolidated operations and reduced Universal's
profitability accordingly (under AICPA standards, if a
discontinued operation continues beyond the scheduled
liquidation date, subsequent losses must be taken into ordinary
operations of the company).

According to Universal's Chief Financial Officer, Robert W.
Zimmer, "The sale of the foundry removes a large burden from
Universal's core business activities.  The continued losses at
the foundry distracted from management's ability to fully
concentrate its resources and attention on its core brake parts
business.  We believe that the sale of the foundry, coupled with
the recent capital investment of $2,800,000 by Wanxiang America
Corporation and the restructuring of the FINOVA Mezzanine
Capital, Inc. subordinated debt, provides a significant
enhancement to Universal's balance sheet and debt to equity

The Company incurred substantial operating losses as a result of
the foundry operations.  The following chart reflects the
operating losses incurred by the foundry since 1998:

           Year                   Amount

           1998                   $   642,000
           1999                   $ 1,254,000
           2000                   $   640,000
           2001                   $   925,000 (estimated

In addition, the Company incurred a charge to earnings in 1999
of $3,083,000 which included a write-down of the foundry's
property and equipment of $1,583,000, to an estimated Net
Realizable Value of $800,000, and a provision for estimated cost
of disposition of $1,500,000.

Over the five-year holding period of the foundry, Universal
incurred operating losses totaling an estimated $3,772,000 in
addition to the $1,583,000 write-down of fixed assets but prior
to the gain to be recognized from the sale of the asset or
amounts charged against the estimated cost of disposition
reserve.  However on a net cash basis since 1998, Universal
limited its out-of-pocket cash exposure to a $250,000 loan and
payments of the annual salary, benefits and expenses of the
Hungarian based managing director of approximately $175,000 per
year (such amounts are included in the operating results noted

Universal Automotive Industries, Inc. is a manufacturer and
distributor of brake rotors, drums, disc brake pads, relined
brake shoes, wheel cylinders and brake hoses for the automotive

VSOURCE INC: Commences Conversion of Preferred Stock into Shares
On January 16, 2002, Vsource, Inc., filed an amendment to its
certificate of incorporation to increase its number of
authorized shares of common stock from 100,000,000 shares to
500,000,000 shares with the Secretary of State of the State of
Delaware. The Amendment was adopted by the Company's Board of
Directors on January 14, 2002, and had been approved by
stockholders of the Company at the Annual Meeting of
Stockholders held on November 20, 2001.

As a result of the adoption of the Amendment, the conditions
permitting conversion of shares of the Company's Series 3-A
Convertible Preferred Stock into shares of the Company's common
stock, and exercise of the warrants issued under the
Exchangeable Note and Warrant Purchase Agreement dated July 12,
2001 between Vsource and the Purchasers, have been satisfied. In
addition, under the terms of  the Company's Certificate of
Incorporation, the conversion price of its Series 1-A
Convertible Preferred Stock has been reduced to $0.65 per share,
and under the terms of its Certificate of Designation relating
to the Company's Series 2-A Convertible Preferred Stock, the
conversion price of the Series 2-A Convertible Preferred Stock
has been reduced to $1.54 per share.

Vsource is struggling to keep its head above water, and it's
looking for a lifeboat. Plagued by losses and trouble finding
customers, the company is restructuring. Vsource has stopped
marketing its Virtual Source Network (VSN) product line, an
Internet-based application suite for managing procurement.
Instead, the company is focusing on business process outsourcing
services, a business it entered through its 2001 acquisition of
Asia-based NetCel360, and its LiquidMarketplace e-commerce
transaction and procurement tools, which it also acquired in
2001 when it bought Online Transaction Technologies. Vsource has
laid off about 80% of its workforce.

W.R. GRACE: Posts Improved Results in 2001 Fourth Quarter
W. R. Grace & Co. (NYSE: GRA) reported that 2001 fourth quarter
pre-tax income from core operations was $47.2 million compared
with $35.6 million in the fourth quarter of 2000, a 32.6%
improvement.  Sales totaled $429.1 million compared with $391.9
million in the prior year quarter, a 9.5% increase.  The fourth
quarter was favorably impacted by strong demand for catalysts
and building materials, augmented by revenue and earnings from
bolt-on acquisitions in silica products and construction
chemicals.  Currency translation had minimal overall impact in
the fourth quarter.  Fourth quarter net income was $21.2
million, compared to a loss of $182.6 million in the fourth
quarter of 2000.  The prior year fourth quarter included a net
charge of $283.0 million for asbestos-related litigation and a
pending tax matter. The 2001 fourth quarter included net income
effects of $3.7 million for Chapter 11 expenses.

"All business lines contributed to sales and profit improvement
in the fourth quarter, with accretive acquisitions and strong
sales in catalysts and construction products leading the way,"
said Grace Chairman, President and Chief Executive Officer Paul
J. Norris.  "Core results were significantly better than last
year's fourth quarter when we were battling a surprise downturn
in the economy and high energy costs.  We concluded a difficult
year, marked by a decision to seek Chapter 11 protection from
escalating asbestos- related lawsuits, with core operating
profit about even with last year and our businesses in a
stronger competitive position."

For full year 2001, Grace reported sales of $1,723.2 million, a
7.9% increase versus 2000.  Excluding currency translation
impacts, sales were up 10.4%.  Pre-tax income from core
operations for 2001 was $187.5 million, about even with 2000.  
The full year pre-tax operating margin was 10.9%, down 0.8
percentage points from the prior year due primarily to higher
costs of natural gas in the first half of 2001 and the negative
effects of foreign currency translation.  Net income was $78.6
million in 2001 compared to a loss of $89.7 million for the full
year 2000.

                         Core Operations

                        Davison Chemicals
                 (Catalysts and Silica Products)

Fourth quarter sales for the Davison Chemicals segment were
$218.1 million, up 10.7% from the prior year.  Excluding
currency translation impacts, sales were up 9.6%.  Operating
income of $33.9 million was 22.8% higher than the 2000 fourth
quarter; operating margin of 15.5% was a 1.5 percentage point
improvement.  Operating income and margins were favorably
impacted by lower energy costs in the fourth quarter of 2001
compared to the fourth quarter of 2000.  For the full year 2001,
sales were $874.1 million, up 11.5% from 2000 (excluding
currency translation impacts, sales were up 13.6%), with
operating income of $128.7 million versus $131.6 million for the
prior year.

Sales of catalyst products, which include refining catalysts and
additives, polyolefin catalysts and other chemical catalysts,
were up 10.3% (9.3% excluding currency translation impacts)
compared to the 2000 fourth quarter.  Higher demand for refining
catalysts and additives to meet increased gasoline demand and
more stringent environmental regulations were the primary
drivers.  Sales of chemical catalysts increased from the fourth
quarter of 2000 despite soft demand for polyolefin catalysts.  
Sales of silica products were up 11.7% compared to the fourth
quarter 2000 (10.3% before currency translation impacts),
primarily from two acquisitions completed in the past year which
expanded the silicas product line into precipitated silicas,
chromatography columns and separations media.

                    Performance Chemicals
          (Construction Chemicals, Building Materials,
                    and Sealants & Coatings)

Fourth quarter sales for the Performance Chemicals segment were
$211.0 million, up 8.3% from the prior year, despite a softening
of construction activity in the U.S. and certain other
countries.  Excluding currency translation impacts, sales were
up 9.2%.  Operating income was $22.2 million, 51% higher than
the prior year quarter.  Operating margin was 10.5%,
approximately 3.0 percentage points higher than the 2000 fourth
quarter.  Full year 2001 sales were $849.1 million, up 4.4% from
2000 (7.1% before currency translation impacts), while operating
income was $101.1 million versus $95.5 million for full year
2000, a 5.9% increase.

Sales of specialty construction chemicals, which include
concrete admixtures, cement additives and masonry products, were
up 13.1% versus the year-ago quarter (13.9% excluding currency
translation impacts).  Volume increases were experienced in
every region, with the Pieri S.A. acquisition, completed in
July, favorably impacting European sales.  Sales of specialty
building materials, which include waterproofing and fire
protection products, were up 9.6% for the quarter (9.8%
excluding currency translation impacts), reflecting strong
waterproofing sales in North America and Europe.  Sales of
specialty sealants and coatings, which include container
sealants, coatings and polymers, were about even with the fourth
quarter of 2000 (up 1.7% before the effect of currency
translation).  These results reflect a continued decline in
demand for metal food packages in favor of plastic and paper

                      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 a part of the Filing.  
In November 2001, Grace's Chapter 11 case, as well as the
Chapter 11 cases of four other companies with asbestos-related
claims, was reassigned.  Judge Alfred M. Wolin, a senior federal
judge who sits in Newark, New Jersey will preside over the
asbestos-related matters affecting all five companies.  Judge
Judith Fitzgerald, a U.S. Bankruptcy judge from the Western
District of Pennsylvania, sitting in Wilmington, Delaware, will
preside over Grace's other bankruptcy matters.  Since the
Filing, all motions necessary to conduct normal business
activities have been approved by the Bankruptcy Court.

                         Other Matters

The decline in value of the U.S. and global equity markets
coupled with a decline in interest rates, all in the second half
of 2001, has created a shortfall between the accounting
measurement of Grace's U.S. qualified pension obligations and
the market value of dedicated pension assets.  This condition
requires a balance sheet adjustment in shareholders' equity at
December 31, 2001 and will increase Grace's pension expense by
approximately $20 million in 2002.  No funding is required in
2002 and no additional pension charge was required in 2001.

Grace projects that 2002 will be another challenging year with
the first half continuing to be affected by the weak global
economy, improving somewhat in the second half.  Grace has taken
steps to improve productivity and manage costs and, at this
time,  projects 2002 cash flow from core operations comparable
to 2001.  Grace's balance under its $250 million debtor-in-
possession credit facility was zero at year end compared to a
high of $75 million in the second quarter.

Grace is a leading global supplier of catalysts and silica
products, specialty construction chemicals, building materials
and sealants & coatings. With annual sales of approximately $1.7
billion, Grace has over 6,000 employees and operations in nearly
40 countries.  For more information, visit Grace's Web site at  

At the end of the fourth quarter, the company's total
shareholders' equity deficit doubles to $141.1 million.

WARNACO GROUP: Pushing for Second Extension of Exclusive Periods
For the second time, The Warnaco Group, Inc., and its debtor-
affiliates ask Judge Bohanon to extend their exclusive period
during which to file a plan and solicit acceptances of that
plan.  Specifically, the Debtors ask that their exclusive period
during which to propose and file a plan of reorganization be
extended until May 8, 2002 and that the exclusive period within
which to solicit acceptances of that plan until July 8, 2002.

J. Ronald Trost, Esq., at Sidley Austin Brown & Wood LLP, in New
York, gives 3 reasons in support of the Debtors' request:

  (a) the 38 chapter 11 cases are extremely complex with
      thousands of creditors and debts exceeding $2,000,000,000;

  (b) the Debtors have made significant progress in their
      business planning process that will facilitate the
      expeditious filing of a plan or plans of reorganization;

  (c) to date, the Debtors have worked cooperatively and
      constructively with their key constituencies with the goal
      of achieving a consensual resolution of these cases.

Mr. Trost adds that the Debtors have already taken several steps
to resolve these chapter 11 cases successfully and consensually,

  (a) obtaining adequate liquidity to fund their operations
      going forward;

  (b) implementing significant management changes, including the
      hiring of a new President and Chief Executive Officer with
      recognized experience in turnaround situations;

  (c) implementing extensive cost-cutting measures;

  (d) completing the business plan reviews and developing a
      business plan, the implementation of which will lead to
      the formulation of the Debtors' overall restructuring
      plan; and

  (e) starting to implement the Debtors' business plan by
      commencing the sale process with respect to some of the
      Debtors' business units, or the Company as a whole.

This progress, the Debtors contend, warrants a a second
extension of the Exclusive Periods. (Warnaco Bankruptcy News,
Issue No. 18; Bankruptcy Creditors' Service, Inc., 609/392-0900)  

ZANY BRAINY: Delaware Court Approves Joint Disclosure Statement
On January 15, 2002, the United States District Court for the
District of Delaware approved the Joint Disclosure Statement
Pursuant to Section 1125 of the Bankruptcy Code Relating to the
Joint Consolidated Liquidating Plan of Reorganization of Zany
Brainy, Inc., Children's Products, Inc., Children's Development,
Inc., Noodle Kidoodle, Inc., Children's Distribution, LLC and
Zany Brainy Direct LLC and an order was signed and entered by
the Court on January 18, 2002. The Court has scheduled a hearing
on confirmation of the Debtors' proposed Plan for March 6, 2002
at 5:00 p.m. Eastern Standard Time.  Pursuant to the terms of
the Proposed Plan, shareholders will not receive any cash or
shares of common stock of the Right Start, Inc., in connection
with the liquidation.

Zany Brainy, Inc., retailer of toys, games, books and multimedia
products for kids, filed for chapter 11 protection on May 15,
2001. Mark D. Collins, Esq. and Daniel J. DeFranceschi, Esq. at
Richards Layton & Finger, P.A. represent the Debtors in their
restructuring efforts. When the Company filed for protection
from its creditors, it listed $200,862,000 in assets and
$131,283,000 in debts.

* DebtTraders Real-Time Bond Pricing

Issuer               Coupon   Maturity   Bid - Ask Weekly change
------               ------   --------   --------- -------------
Crown Cork & Seal     7.125%  due 2002    81 - 83       +6
Federal-Mogul         7.5%    due 2004  16.5 - 18.5     +1.5
Finova Group          7.5%    due 2009  37.75 - 38.75   +0.25
Freeport-McMoran      7.5%    due 2006    75 - 78       +0
Global Crossing Hldgs 9.5%    due 2009  5.75 - 6.75     -4.25
Globalstar            11.375% due 2004     8 - 10        0
Levi Strauss & Co     11.625% due 2008    98 - 100      +2
Lucent Technologies   6.45%   due 2029  67.5 - 69.5     -0.5
Polaroid Corporation  6.75%   due 2002     7 - 9        -2
Terra Industries      10.5%   due 2005    85 - 88       +5
Westpoint Stevens     7.875%  due 2005    29 - 32       +2
Xerox Corporation     8.0%    due 2027    59 - 61       +3

Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson
at 1-212-247-5300. To view our research and find out about
private client accounts, contact Peter Fitzpatrick at
1-212-247-3800. Real-time pricing available at


Bond pricing, appearing in each Monday's edition of the TCR, is
provided by DLS Capital Partners in Dallas, Texas.

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

Bond pricing, appearing in each Thursday's edition of the TCR,
is provided by DebtTraders in New York. DebtTraders is a
specialist in global high yield securities, providing clients
unparalleled services in the identification, assessment, and
sourcing of attractive high yield debt investments. For more
information on institutional services, contact Scott Johnson at
1-212-247-5300. To view our research and find out about private
client accounts, contact Peter Fitzpatrick at 1-212-247-3800.
Real-time pricing available at

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 Go to order any title today.

For copies of court documents filed in the District of Delaware,
please contact Vito at Parcels, Inc., at 302-658-9911. For
bankruptcy documents filed in cases pending outside the District
of Delaware, contact Ken Troubh at Nationwide Research &
Consulting at 207/791-2852.


S U B S C R I P T I O N   I N F O R M A T I O N

Troubled Company Reporter is a daily newsletter co-published by
Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard
Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette
C. de Roda, Ronald P. Villavelez and Peter A. Chapman, Editors.

Copyright 2002.  All rights reserved.  ISSN: 1520-9474.

This material is copyrighted and any commercial use, resale or
publication in any form (including e-mail forwarding, electronic
re-mailing and photocopying) is strictly prohibited without
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contained herein is obtained from sources believed to be
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                     *** End of Transmission ***