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/raid1/www/Hosts/bankrupt/TCR_Public/030507.mbx T R O U B L E D C O M P A N Y R E P O R T E R Wednesday, May 7, 2003, Vol. 7, No. 89 Headlines ACTERNA: Files for Chapter 11 Protection in S.D.N.Y. ACTERNA: Case Summary and Largest Unsecured Creditor Lists ADELPHIA COMMS: Kagan Media Okayed as Equity Committee's Analyst ADVOCAT INC: Annual Shareholders' Meeting Slated for June 4 AGROTECH GREENHOUSES: Unit Files for BIA Protection in Canada AGWAY: Muller & Muller Continues Serving as Litigation Counsel ALLIED HOLDINGS: Sets Annual Shareholders' Meeting for June 19 ALTERRA: Wants Lease Decision Deadline Moved to July 21, 2003 AMI SEMICONDUCTOR: March 29 Net Capital Deficit Widens to $254MM ANC RENTAL: Wants Until June 16 to File Creditors' Claims AVAYA INC: Commences Public Offering of $175M of Sr. Sec. Notes AVAYA INC: S&P Downgrades Corporate Credit Rating to B+ from BB- AVAYA INC: Moody's Affirms Ratings at Lower-B Level BACK BAY: Wins Okay to Use Cash Collateral to Operate Restaurant BANC OF AMERICA: Fitch Rates P-T Certs. Class B-4 & B-5 at BB/B BATTERSON PARK: Fitch Cuts Class A-5 & B Note Ratings to BB-/C BETHLEHEM STEEL: USWA Reaches Tentative Agreement with ISG BURLINGTON: Earns Nod to Extend Hilco's Engagement Until Oct. 8 CANNONDALE: Completes Sale of Certain Assets to Pegasus Partners CHAMPIONLYTE PRODUCTS: Unit Launches Reformulated Sports Drink CHASE MORTGAGE: Fitch Upgrades Class B-4 Notes' Rating to BB CHOICE ONE COMMS: March 31 Balance Sheet Upside-Down by $540MM CINEMARK USA: Moody's Confirms & Assigns Ratings at Low-B Level CONSECO INC: S&P Affirms B+ Ratings on Insurance Subsidiaries CONSOLIDATED FREIGHTWAYS: Selling Rock Hill Property at Auction CONSOLIDATED FREIGHTWAYS: Selling Milford Property for $1.4 Mil. CONSOLIDATED FREIGHTWAYS: Sacramento Assets Up for Sale for $13M CONSOLIDATED FREIGHTWAYS: Selling Rutland Facility at Auction CONSOLIDATED FREIGHTWAYS: Hattiesburg Facility On Auction Block CONSOLIDATED FREIGHTWAYS: Puts Simi Valley Facility to Auction CONSOLIDATED FREIGHTWAYS: Puts Evansville Property Up for Sale CONSOLIDATED FREIGHTWAYS: Selling Albany Prop. at May 21 Auction CONSOLIDATED FREIGHTWAYS: Selling Twin Falls & Pocatello Assets CONSOLIDATED FREIGHTWAYS: Selling Bismarck & Fargo Facilities COX COMMS: First-Quarter 2003 Net Loss Stands at $29 Million CROWN CASTLE: Narrows First Quarter 2003 Net Loss to $83 Million DAISYTEK INT'L: Names Dale A. Booth Interim President and CEO EAGLE FOODS: Seeks Extension for SEC Form 10-K Filing Deadline EB2B COMMERCE: Receives Balance of Escrowed Financing Proceeds EGAIN COMMS: Red Ink Continues to Flow in March 2003 Quarter ENRON CORP: Wants Equity Trades Restricted to Protect NOLs FAST FERRY: Committee Brings-In Broege Neumann as Attorneys FLEMING COS.: Roundy's Expect to Complete Acquisition in a Month FLEMING COMPANIES: Signs-Up PwC to Perform Forensic Accounting GE CAPITAL: Fitch Upgrades 6 Low-B-Rated Classes of P-T Certs. GEERLINGS & WADE: Obtains Waiver of Loan Covenant Violations GLOBAL CROSSING: Wants Approval for Intercompany Asset Transfer IMAX CORP: March 31 Balance Sheet Insolvency Narrows to $101MM INTERVOICE INC: Posts $18-Million Net Loss on $38-Million Sales IPCS INC: Committee Wants to Prosecute Action against Sprint PCS KAISER ALUMINUM: Wants Nod to Sell Surplus Calcined & Green Coke KANEB PIPE: Moody's Ratchets Sr. Unsec. Debt Rating Down to Ba1 KASPER A.S.L.: Special Committee Continues Evaluation of Options KMART CORP: Emerges from Chapter 11 Reorganization Proceedings KMART CORP: Court Approves Sale of Store No. 3334 Lease to Vons LEAP WIRELESS: Asks Court to OK Interim Compensation Procedures LIN TELEVISION: S&P Rates $200M Senior Subordinated Notes at B LIN TV CORP: Moody's Confirms and Assigns New Low-B Ratings MAIL-WELL INC: First-Quarter Results Show Marked Improvement META GROUP: March 31 Working Capital Deficit Widens to $9 Mill. MR. RAGS: Conducting GOB Sales at All 63 Remaining Stores MUTUAL RISK: Fitch Drops Long-Term Issuer and Debt Ratings to D NAVISITE INC: Appoints Larry W. Schwartz to Board of Directors NEENAH FOUNDRY: S&P Drops Rating to D Following Exchange Offer NORTEL NETWORKS: Resets Investor Analysts Conference for May 28 OLYMPIC PIPE LINE: Gets Court Nod to Hire Karr Tuttle as Counsel PENN TRAFFIC: Strikes Waiver and Forbearance Pact with Lenders PENN TRAFFIC: S&P Hatchets & Places Junk Rating on Watch Neg. PICCADILLY CAFETERIAS: Accepts Ronald A. LaBorde's Resignation POLYPHALT INC: Default Possible After License Pact Termination PORTLAND GEN. ELECTRIC: Fitch Revises Watch Status to Positive PREMIER LASER: BIOLASE Sues Diodem LLC for Patent Infringement PRIMUS TELECOMMS: Annual Shareholders Meeting Slated for June 17 PROMAX ENERGY: Seeks to Resolve Default Under Credit Agreement QWEST COMMS: Expanding DSL Availability in 14-State Region RELIANCE: Gets Blessing to Continue Paul Zeller's Engagement SEDONA CORP: Files Suit re Manipulation of Common Stock Trading SERVICE MERCHANDISE: Court OKs Brentwood HQ Sale for $9 Million SL INDUSTRIES: Commences Trading on AMEX Under New "SLI" Symbol SMTC CORP: Reports Weaker Financial Results for First Quarter SONICBLUE INC: Selling Modem Business Assets to Zoom Telephonics SPIEGEL INC: Announces More Layoffs, Cutbacks & Closings SPIEGEL INC: Enters into Long-Term Agreements with Alliance Data SPORTS CLUB: Kayne Anderson Capital Discloses 7.3% Equity Stake SUCCESSORIES: Likely Liquidity Issues Raise Going Concern Doubt SUMMIT CBO I: S&P Places Low-B and Junk Ratings on Watch Neg. SUN POWER: Names J. Roland Vetter as New CFO & Acting President TITAN CORP: S&P Assigns Low-B Level Ratings to Bank Loan & Notes TRAILMOBILE TRAILER: Court Confirms Liquidating Chapter 11 Plan TRANSTECHNOLOGY: Narrows Net Capital Deficit to $6MM at March 31 VARI-L CO.: Shareholders Okay Asset Sale to Sirenza Microdevices WHEREHOUSE ENTERTAINMENT: Court Fixes June 30 Claims Bar Date WORLDCOM INC: Asks Court to Clear MCI Noteholders Stipulation * Meetings, Conferences and Seminars ********* ACTERNA: Files for Chapter 11 Protection in S.D.N.Y. ---------------------------------------------------- Acterna Corporation (OTCBB: ACTR) successfully negotiated a term sheet with its key lenders to significantly reduce its debt through a reorganization of its capital structure designed to strengthen its financial and competitive position. To facilitate the restructuring outlined in that term sheet, Acterna, together with its domestic subsidiaries, voluntarily filed for chapter 11 bankruptcy court protection under the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of New York yesterday morning. Acterna has provided to the court proposed terms of its pre-negotiated reorganization that enable it to support its position as one of the world's leading providers of communication network test and management solutions. $30 Million DIP Facility Acterna also announced that it has arranged debtor-in-possession financing of $30 million from a group of banks led by JPMorgan Chase Bank and General Electric Capital Corporation. This financing, combined with the company's current cash, enables Acterna to continue to execute its business plan. This plan includes substantial investment in research and development to build on Acterna's leadership position in communications test and management solutions for optical, access and cable networks. Lender-Backed Plan Term Sheet Acterna's chapter 11 filing applies only to its subsidiaries in the U.S. and will not impact its operating subsidiaries in Europe, Latin America or the Asia-Pacific region. The terms of Acterna's debt restructuring plan, developed in collaboration with certain of its key lenders, include: -- reduction of Acterna's long-term debt by more than $750 million, or 78 percent of the company's existing debt; and -- reduction in annual cash interest expense by at least $45 million. Acterna offers its portfolio of communications test instruments, services and systems in 164 countries around the globe, and anticipates no disruption of orders or services to its customers. "Acterna's business remains fundamentally sound and, we believe, focused on the best growth opportunities in the communications test industry," said John Peeler, Acterna's president and chief executive officer. "In response to a prolonged industry downturn, we have taken aggressive steps to align the company's cost structure with the industry's reduced revenue outlook. Combined with our reorganization efforts, we believe these steps position Acterna to emerge as a strong, well-capitalized provider of communications test solutions." "It is important for our customers to know that our commitment to communications test innovation and the highest levels of customer service excellence is stronger than ever," Peeler added. Acterna's chapter 11 filing today includes a series of first-day motions that, if approved, allow Acterna to operate in the normal course, including meeting the normal employee payroll cycle, maintaining customer programs, satisfying tax obligations, and the ability to fund foreign operations. The reorganization will become final upon approval of the bankruptcy court and the affirmative vote of the lender group. Based in Germantown, Maryland, Acterna Corporation is the holding company for Acterna, da Vinci Systems and Itronix. Acterna is the world's second largest communications test and management company. The company offers instruments, systems, software and services used by service providers, equipment manufacturers and enterprise users to test and optimize performance of their optical transport, access, cable, data/IP and wireless networks and services. da Vinci Systems designs and markets video color correction systems to the video postproduction industry. Itronix sells ruggedized computing devices for field service applications to a range of industries. Additional information on Acterna is available at http://www.acterna.com ACTERNA: Case Summary and Largest Unsecured Creditor Lists ---------------------------------------------------------- Debtor affiliates filing separate chapter 11 petitions: Case No. Debtor Entity -------- ------------- 03-12836 Acterna WG International Holdings LLC 03-12837 Acterna Corporation 03-12838 Acterna LLC 03-12839 da Vinci Systems, Inc. 03-12840 Itronix Corporation 03-12841 TTC International Holdings, Inc. 03-12842 Acterna Business Trust 03-12843 TTC Federal Systems, Inc. Chapter 11 Petition Date: May 6, 2003 Bankruptcy Court: United States Bankruptcy Court Southern District of New York Alexander Hamilton Custom House One Bowling Green, 5th Floor New York, New York 10004-1408 Telephone (212) 668-2870 Bankruptcy Judge: Burton R. Lifland Debtor's Bankruptcy Counsel: Michael F. Walsh, Esq. Paul M. Basta, Esq. WEIL, GOTSHAL & MANGES LLP 767 Fifth Avenue New York, New York 10153 Telephone (212) 310-8000 Fax (212) 310-8007 Debtors' Financial Advisor: Henry S. Miller Marc D. Puntus Michael Kass C. Alex Ryerson MILLER BUCKFIRE LEWIS & CO., LLC 1301 Avenue of the Americas New York, New York 10019 Debtors' Restructuring Advisor: Shyam Gidumal AP SERVICES, LLC 9 West 57th Street, 34th Floor New York, New York 10019 - and - Bettina Whyte Montgomery Cornell Adam Marr Erik Post AP Services, Inc. 2000 Town Center, Suite 2400 Southfield, MI 48075 Debtors' Investment Banker: Robert Frost Glenn Gurtcheff Brian Schmidt U.S. BANCORP PIPER JAFFRAY INC. 800 Nicollet Mall, Suite 800 Minneapolis, Minnesota 55402 Debtors' Accountants: William Bishop PRICEWATERHOUSECOOPERS, LLC 1751 Pinnacle Drive McLean, Virginia 22102 Telephone (703) 918-3494 Claims Agent: Ron Jacobs BANKRUPTCY SERVICES LLC 70 East 55th Street, 6th Floor New York, New York 10022 Telephone (212) 376-8902 Fax (212) 376-8989 U.S. Trustee: Carolyn S. Schwartz Hollie T. Elkins, Esq. Office of United States Trustee 33 Whitehall Street, 21st Floor New York, NY 10004 Telephone (212) 510-0500 I. LIST OF THE DEBTORS' LARGEST UNSECURED CREDITORS The Debtors supply the Court with a list of their five largest secured creditors and descriptions of the collateral securing those creditors' claims: Creditor: JP Morgan Bank 270 Park Avenue New York , NY 10017 Attention Patrick Daniello Telephone 212-270-0313 Claim Amount: $583,654,000 Collateral: Substantially all of the assets of Acterna LLC Creditor: CD&R 375 Park Avenue New York, NY 10152 Attention Michael Babiarz Telephone 212-407-5224 Claim Amount: $86,377,250 Collateral: Substantially all of the assets of Acterna LLC Creditor: Key Equipment Finance 50 Fountain Plaza Buffalo, NY 14202 Attention Charles J. Lachiusa Claim Amount: $5,951,954 Collateral: Improvements on Acterna's Corporate Headquarters Creditor: CD&R VI (Barbados) 375 Park Avenue New York, NY 10152 Attention Michael Babiarz Telephone 212-407-5224 Claim Amount: $2,876,068 Collateral: Substantially all of the assets of Acterna LLC Creditor: Citizens Leasing One Citizens Plaza Providence, RI 02903 Attention Barry Bloom Telephone 617-994-7377 Claim Amount: $1,357,000 Collateral: Equipment II. LISTS OF THE DEBTORS' LARGEST UNSECURED CREDITORS (A) Acterna LLC Acterna LLC presents the Court with a list of its 20- largest unsecured creditors, excluding debts owed to insiders, as of the Petition Date: Nature Creditor of Claim Claim Amount -------- -------- ------------ US Bancorp, as Trustee for the 9-3/4% Senior Subordinated Notes due 2008 225 Asylum Street, 23rd Floor Note Hartford, CT 06103 Indenture $168,715,000 Benchmark Electronics-Winona PO Box 200621 Houston, TX 77216 Contract $2,374,743 Software House International Weston Canal Plaza 2 Riverview Drive Somerset, NJ 08873 Contract $2,024,075 Trilithic 9710 Park Davis Drive Indianapolis, IN 46235 Trade $1,297,342 SAP America PO Box 778-4024 Philadelphia, PA 19182 Contract $1,124,530 Comsonic 1350 Port Republic Road Harrisonburg, VA 22801 Trade $719,157 Benchmark Electronics 8500 Phoenix Drive Manassas, VA 20110 Trade $514,768 Keltech 7508 Hitech Road Roanoke, VA 24019 Trade $405,552 GSS Array Technology/Benchmark 94 Moo 1 Hi-Tech Ind Estate Banlgne Bang PA-IN, Ayudhaya 13160 THAILAND Telephone 011-6635-350-945 Trade $282,569 Siemens 200 Somerset Corporate Blvd. Bridge Water, NJ 08807 Trade $243,421 Benchmark East Kilbride 1 Singer Road East Kilbride, Glasgow SCOTLAND Lease $235,960 Motoyasu Kokubo ARDK Consulting 1-3-14 Seta Setagaya-kmu Tokyo, JAPAN Trade $189,750 AVNET Electronics Marketing P.O. Box 70390 Chicago, IL 60673 Trade $165,315 Plastic Moldings Company, LLC 2181 Grand Avenue Cincinnati, OH 45214 Trade $138,133 Arnold, Becker & Stevens Ltd. 246 Fifth Avenue - Ste. 200 New York, NY 10001 Trade $124,669 IMCO 858 North Lenola Road Moorestown, NJ 55440 Trade $112,599 PSOS 500 Wind River Way Alameda, CA 94501 Trade $105,443 BP Holdings, Inc. 63rd Avenue East Bradenton, FL 34203 Contract $105,117 Accenture LLP 5450 Explorer Drive, Suite 400 Mississauga, ON L4W5M1 CANADA Trade $101,070 First Campus Limited Partnership 702 Russel Ave, Suite 400 Gaithersburg, MD 20877 Contract $96,796 Willtech, Inc. 448-3 Seonge-Dong Seoul 134-030 SOUTH KOREA Trade $95,000 (B) da Vinci Systems, Inc. da Vinci presents the Court with a list of its 20- largest unsecured creditors, excluding debts owed to insiders, as of the Petition Date: Nature Creditor of Claim Claim Amount -------- -------- ------------ Avnet Electronics P.O. Box 70390 Chicago, IL 60673 Trade $51,013 HBM HB House Chalfont Rd. Beaconsfield Buckinghamshire, HP9 2QP ENGLAND Trade $40,000 Sony Electronics, Inc. 22471 Network Place Chicago, IL 60673 Trade $33,275 AMEX CPC 20002 N. 19th Avenue Phoenix, AZ 85027 Trade $30,362 Avnet Applied Computing P.O. Box 70390 Chicago, IL 60673 Trade $29,121 Arrow Electronics, Inc. P.O. Box 350090 Boston, MA 02241 Trade $8,938 Independent Electric 4502 W. Hacienda Ave. Las Vegas, NV 89118 Trade $8,700 Noritake Company, Inc. P.O. Box 6002, FDR Station New York, NY 10022 Trade $8,239 Sho-Air P.O. Box 19786 Irvine, CA 92683 Trade $8,000 Marcel Electronics International 130 W. Bristol Lane Philadelphia, PA 19170 Trade $7,224 Federal Express Corporation P.O. Box 1140 Memphis, TN 38101 Trade $7,056 John Galvin 48 Dendy Street Brighton, VIC 3186 AUSTRALIA Trade $6,620 Jolt Technology, Inc. 6801 NW 15th Ave Ft. Lauderdale, FL 33309 Trade $6,588 BEI Technologies, Inc. P.O. Box 51727 Los Angeles, CA 90051 Trade $6,090 AT&T (Long Distance AZ) P.O. Box 78522 Phoenix, AZ 85062 Trade $5,550 Mary Lee Parisi 12607 Darla Avenue Granada Hills, CA 91344 Trade $5,500 American Express 20002 N. 19th Ave. Mail Code A-21 Phoenix, AZ 85027 Trade $5,346 FP&L General Mail Facility Miami, FL 33188 Trade $5,300 Jim Mann 131 Oakland Avenue West Hempstead, NY 11552 Trade $5,250 AT&T Wireless P.O. Box 78224 Phoenix, AZ 85062 Trade $4,780 (C) Itronix Corporation Itronix Corporation presents the Court with a list of its 20-largest unsecured creditors, excluding debts owed to insiders, as of the Petition Date: Nature Creditor of Claim Claim Amount -------- -------- ------------ Twinhead International Corp. 10F, NO 550 Rueiguang RD Neihu Chiu Taipei 104 TAIWAN Trade $2,498,821 National Sales & Service Coord. 631 N. Elmwood Avenue Oak Parks, IL 60302 Trade $346,583 Wistron Corporation 21 F, 88, Sec 1, Hsin Tai Wu Rd Hsichih, Taipei Hsein 221 TAIWAN Trade $221,319 Sierra Wireless Data, Inc. PO Box 11626 Tacoma, WA 98411 Trade $198,800 HCL Technologies America 330 Potrero Avenue Sunnyvale, CA 94086 Trade $187,500 Gunze Electronics Bldg #5400 2113 Wells Branch Parkway Austin, TX 78728 Trade $175,050 Micro Power Electronics, Inc. 22995 NW Evergreen Pkw., Suite 101 Hillsboro, OR 97124 Trade $162,200 Universal Scientific Ind. Co. NO 141, LN 351, Taiping Rd Sec 1 Tsao Tuen, Nan Tou, TAIWAN R.O.C. Trade $153,886 Wireless Matrix 102, 1530 27th Ave. NE Calgary, Alberta, T2E 7S6 CANADA trade $103,870 Moltech Power Systems Ltd. Unti 20 Loomer Rd Chesterton, Newcastle-Under-Lyme Staffs, ENGLAND Trade $103,699 Sunrex Technology Corp. No. 188-1, Chung Cheng Rd. Ta Ya Shiang, Taishung Hsien TAIWAN Trade $92,183 Scientific Dimensions 2417 Aztec Road, NE Albuquerque, NM 87107 Trade $85,355 Global Wireless Data 3000-B Business Park Drive Norcross, GA 30071 Trade $75,202 Microsoft Services P.O. Box 844510 Bank of America Dallas TX 75284 Trade $72,000 Research in Motion 295 Phillip Street Waterloo, Ontario N2L3W8 CANADA Trade $58,986 EMC Test Systems LP 1301 Arrow Point Drive Cedar Park, TX 78613 Trade $57,135 West Coast Paper Company 1011 Western Avenue, Ste. 601 Seattle, WA 98104 Trade $47,726 Arrow Electronics Inc. PO Box 350090 Boston, MA 02241 Trade $46,440 Avnet Electronics Marketing 8214 154th Avenue NE Redmond, WA 98052 Trade $46,105 Spokane County Treasurer Personal Property Tax Dept. P.O. Box 199 Government Spokane, WA 99210 Contract $44,338 (C) Consolidated List of the Debtors' 51-Largest Creditors Without any explanation of the motivation or distinction, the Debtors collectively present the Court with a list of their 51-largest unsecured creditors, excluding debts owed to insiders, as of the Petition Date: Nature Creditor of Claim Claim Amount -------- -------- ------------ U.S. Bancorp, as trustee to the Senior Subordinated Notes due 2008 225 Asylum Street 23rd Floor Hartford, CT 06103 $168,715,000 Benchmark Electronics-Winona PO Box 200621 Houston, TX 77216 $2,707,788 Twinhead International Corp. 10f, No 550, Rueiguang Rd Neihu Chiu Taipei 104 TAIWAN $2,311,876 Software House International Weston Canal Plaza 2 Riverview Drive Somerset, NJ 08873 $2,024,075 Trilithic 1350 Port Republic Road Harrisonburg, VA 22801 $1,303,689 Sap America PO Box 7780-4024 Philadelphia, PA 19182 $1,124,905 Comsonic 9710 Park Davis Drive Indianapolis, IN 46235 $723,772 Benchmark Electronics 8500 Phoenix Drive Manassas, VA 20110 $560,027 National Sales & Service Coord. 631 N. Elmwood Ave. Oak Park, IL 60302 $516,971 Benchmark East Kilbride 1 Singer Road Kelvin Industrial Estate East Kilbride, G75 Oye SCOTLAND $490,141 GSS Array Technology/Benchmark 94 Moo 1 Hi-Tech Ind. Estate Banlane Bang Pa-In, Ayudhaya 13160 THAILAND $404,603 Keltech 7508 Hitech Road Roanoke, VA 24019 $337,745 Sierra Wireless Data, Inc. PO Box 11626 Tacoma, WA 98411 $266,800 Universal Scientific Ind. Co. No 141, Ln351, Taiping Rd. Sec 1 Tsao Tuen, Nan-Tou TAIWAN R.O.C. $257,437 Siemens 200 Somerset Corporate Blvd Bridge Water, NJ 08807 $239,461 Avnet Electronics Marketing 8214 154th Avenue NE Redmond, WA 98052 $235,473 Wistron Corporation 21f, 88, Sec 1, Hsin Tai Wu Rd Hsichih, Taipei Hsien 221 TAIWAN R.O.C. $228,478 Motoyasu Kokubo 1-3-14 Seta Setagaya-Kmu Tokyo, JAPAN $189,750 Microsoft PO Box 100430 Atlanta, GA 30384 $169,102 Micro Power Electronics Inc. Suite 101 22995 NW Evergreen Parkway Hillsboro, OR 97124 $162,200 Arrow Electronics, Inc. PO Box 350090 Boston, MA 02241 $138,681 Plastic Moldings Company, LLC 2181 Grand Avenue Cincinnati, OH 45214 $138,654 Imco 858 North Lenola Road Moorestown, NJ 08057 $134,428 United Parcel Service PO Box 894820 Los Angeles, CA 90189 $125,935 Arnold, Becker & Stevens Ltd. 246 5th Avenue Ste 200 New York, NY 10001 $124,669 Solaris 5866 E Naples Plaza Long Beach, CA 92869 $105,443 BP Holdings, Inc Rent 2501 63rd Avenue East Bradenton, FL 34203 $105,117 Transworld Connections, Ltd 260 Fastner Drive Lynchburg, VA 24502 $105,005 Partminer, Inc. 80 Ruland Road Melville, NY 11747 $104,100 Wireless Matrix 102, 1530 - 27th Ave NE Calgary, Alberta T2E 7S6 CANADA $103,870 HCL Technologies America 330 Potrero Avenue Sunnyvale, CA 94086 $103,500 Moltech Power Systems Ltd. Unit 20 Loomer Road Chesterton, Newcastle-Under-Lyme Staffs ENGLAND $102,449 Sprint PO Box 96028 Charlotte, NC 28296 $101,854 Accenture LLP 5450 Explorer Dr., Ste. 400 Mississauga, ON L4W 5M1 CANADA $101,070 Avnet Electronics PO Box 70390 Chicago, IL 60673 $98,458 First Campus Limited Partnership Rent 702 Russel Ave Gaithersburg, MD 20877 $96,796 Willtech, Inc. 448-3 Seonge-Dong Seoul, KO 134-030 SOUTH KOREA $95,000 Sunrex Technology Corp. No.188-1,Chung Cheng Rd. Ta Ya Shiang, Taishung Hsien TAIWAN $92,933 Intech Partners Twelve, LLC Rent 9777 North College Avenue Indianapolis, IN 46280 $92,369 Alexandria Packaging 135 S. La Salle Chicago, IL 60674 $91,190 Scientific Dimensions 2417 Aztec Road NE Albuquerque, NM 87107 $88,989 Corio, Inc 959 Skyway Road, Suite 100 San Carlos, CA 94070 $83,815 TW Telecom LP 10475 Park Meadows Drive Littleton, CO 80124 $81,777 Sussex Systems, Inc. 841 F Quince Orchard Blvd. Gaithersburg, MD 20878 $81,384 Ogilvyone Worldwide 309 W 49th Street New York, NY 10019 $80,800 Qualcomm 5775 Morehouse Drive San Diego, CA 92121 $80,124 Technigraphics of MD, Inc. PO Box 6737 Baltimore, MD 21285 $75,224 Global Wireless Data 3000-B Business Park Drive Norcross, GA 30071 $75,202 NCT, Inc. 11501 Georgia Ave., Suite 504 Wheaton, MD 20902 $72,048 Microsoft Services PO Box 844510 Dallas, TX 75284 $72,000 Derby Custom Cases 24350 State Road 23 South Bend, IN 46614 $70,059 The information contained in these lists does not constitute an admission of liability by, nor is it binding on, the Debtors. Further, the Debtors make it clear that all claim amounts are subject to customary reconciliation and adjustment. ADELPHIA COMMS: Kagan Media Okayed as Equity Committee's Analyst ---------------------------------------------------------------- The Official Committee of Equity Security Holders in the Chapter 11 cases of Adelphia Communications and its debtor-affiliates obtained permission from the Court to retain Kagan Media Appraisals, a division of Primedia, to provide expert analysis and testimony with respect to the valuation of the ACOM Debtors' enterprise, including its businesses and valuation trends within the cable television industry. The Equity Committee retains Kagan nunc pro tunc to February 25, 2003, the date that Kagan commenced performing services on the Equity Committee' behalf. Kagan will be compensated for providing expert analysis and testimony at its standard rate of $600 per hour with a minimum of $6,000 per day for days in which testimony is proffered. In addition, Kagan will seek compensation for preparation of testimony, including research, review of documents and preparation of any written reports or trial exhibits at these hourly rates: Senior Analyst $600 Analyst 400 Associate Analyst 325 Research Associate 250 Support/Assistants 150 Travel Time 300 In addition, Kagan will seek reimbursement of actual and necessary expenses incurred. The expenses charged to clients include telephone and telecopier toll charges, mail and express mail charges, special or hand delivery charges, document processing and photocopying charges, special research charges, report productions, travel expenses, expenses for "working meals" and computerized research costs. (Adelphia Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebTraders reports that Adelphia Communications' 9.875% bonds due 2005 (ADEL05USR2) are trading at 50 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ADEL05USR2 for real-time bond pricing. ADVOCAT INC: Annual Shareholders' Meeting Slated for June 4 ----------------------------------------------------------- The Annual Meeting of Stockholders of Advocat Inc. will be held at the offices of Harwell Howard Hyne Gabbert & Manner, P.C., 315 Deaderick Street, Suite 1800, Nashville, Tennessee 37238, on Wednesday, June 4, 2003, at 10:30 a.m. Central Daylight Time, for the following purposes: 1. To elect two Class 3 directors to hold office for a three year term until their successors are duly elected and qualified; 2. To vote on a stockholder proposal regarding the Company's shareholder rights plan, if the proposal is presented at the Annual Meeting; and 3. To transact such other business as may properly come before the meeting or any adjournment thereof. Stockholders of record at the close of business on April 21, 2003 will be entitled to vote at the meeting. The company operates some 65 owned or managed nursing homes with more than 7,000 beds, as well as about 55 assisted-living centers with nearly 5,500 units. The company focuses on rural areas, mainly in the Southeast and Canada. Advocat's facilities provide a range of health care services including skilled nursing, recreational therapy, and social services, as well as rehabilitative, nutritional, respiratory, and other specialized ancillary services. Payments from Medicare and Medicaid account for more than 80% of total revenues. At December 31, 2002, the Company's balance sheet shows a working capital deficit of about $59 million, and a total shareholders' equity deficit of about $34 million. AGROTECH GREENHOUSES: Unit Files for BIA Protection in Canada ------------------------------------------------------------- Agrotech Greenhouses Inc. (TSX-VEN:AGV) announces that the bank providing funding to the Company's operating subsidiary, Hazelmere Greenhouses Ltd., has made demand for repayment of amounts owing pursuant to demand credit facilities in the aggregate principal amount of $3,156,770.54. As a result, Hazelmere has filed a notice of intent to make a proposal under the Bankruptcy and Insolvency Act and is reviewing its options in connection with a potential refinancing and/or sales of assets. AGWAY: Muller & Muller Continues Serving as Litigation Counsel -------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of New York gave its stamp of approval to Agway, Inc., and its debtor- affiliates' application to employ Muller & Muller as their Litigation Counsel. Muller & Muller has represented the Debtors as their defense counsel in several personal injury actions since October 1999. In this engagement, Muller & Muller will provide services in defense of four bodily injury claims: a) Liberty Mutual v Avway, et al, - Washington Co - Index No. 2883E b) Nevins v Agway, et al. - Warren County - Index No. 42063 c) Miller v Agway, et al. - Clinton County - Index No. 02- 691 d) Geraghty v Agway, et al. - Washington County - Index No. 1748E The Firm's average hourly rate is $125 per hour. The Firm estimated its average monthly compensation based on its prepetition retention amounting to $1,000 per month. Muller & Muller assures the Court that it is a "disinterested person" as defined in the Bankruptcy Code. Agway, Inc., is an agricultural co-op that sells feeds, seeds, fertilizers, and other farm supplies to members and other growers. The Company filed for chapter 11 protection on October 1, 2002 (Bankr. N.D. N.Y. Case No. 02-65872). Menter, Rudin & Trivelpiece, P.C., represents the Debtors in their restructuring efforts. As of June 30, 2003, the Debtors listed $1,574,360,000 in total assets and $1,510,258,000 in total debts. ALLIED HOLDINGS: Sets Annual Shareholders' Meeting for June 19 -------------------------------------------------------------- The annual meeting of shareholders of Allied Holdings, Inc. will be held at the corporate offices of the Company, 160 Clairemont Avenue, 3rd Floor Conference Room, Decatur, Georgia 30030, on June 19, 2003 at 10:00 a.m., local time, for the following purposes: 1. To elect four directors for terms ending in 2006; 2. To amend the Company's Employee Stock Purchase Plan to increase the number of shares subject to the ESPP by 350,000 shares; and 3. To take action on whatever other business may properly come before the meeting. Only holders of record of common stock at the close of business on April 22, 2003 will be entitled to vote at the meeting. * * * As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its 'B' corporate credit rating on automobile transporter Allied Holdings Inc., and at the same time, removed the ratings from CreditWatch. The action reflected Allied Holdings' announcement that it had refinanced an unrated $230 million revolving credit facility and $40 million in unrated subordinated debt. Allied Holdings, based in Decatur, Ga., is the largest North American motor carrier of new and used automobiles and light trucks. The company has about $370 million in debt and operating leases. ALTERRA: Wants Lease Decision Deadline Moved to July 21, 2003 ------------------------------------------------------------- Alterra Healthcare Corporation wants to further extend its time period within which it must elect whether to assume, assume and assign or reject unexpired nonresidential real property leases. The Debtor wants its lease decision period extended through July 21, 2003. The Debtor points out that the value of its estate may be jeopardized if it loses the right to assume and assign any of the Unexpired Leases. Since the Petition Date, the Debtor's efforts have been focused on implementing the Debtor's restructuring initiatives and ensuring a smooth transition into this chapter 11 case. The Debtor has also been in discussion with its postpetition lenders and others regarding a possible equity or equity-linked investment in the Debtor upon the confirmation of a plan of reorganization. The anticipated Exit Equity Financing plays an important role in shaping the Debtor's plan of reorganization and the structure of its business after confirmation. Until these discussion have concluded and an appropriate marketing and auction process has been conducted, the Debtor will not be in a position to determine with finality which Unexpired Leases will have continuing value upon Debtor's emergence from chapter 11. Additionally, the real estate of the Debtor's residences is largely owned through a series of non-debtor subsidiaries or particular third-party landlords. As such, substantially all of the Debtor's residences are leased either directly from third parties or are leased or subleased from one of the Debtor's non- debtor subsidiaries. Thus, any decision about whether to reject or assume the Unexpired Leases is, necessary, a decision about the future direction of the Debtor's business and operations. Alterra Healthcare Corporation, one of the nation's largest and most experienced healthcare providers operating assisted living residences, filed for chapter 11 protection on January 22, 2003, (Bankr. Del. Case No. 03-10254). James L. Patton, Esq., Edmon L. Morton, Esq.. Joseph A. Malfitano, Esq., and Robert S. Brady, Esq., at Young, Conaway, Stargatt & Taylor LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $735,788,000 in assets and $1,173,346,000 in total debts. AMI SEMICONDUCTOR: March 29 Net Capital Deficit Widens to $254MM ---------------------------------------------------------------- AMI Semiconductor, a leader in the design and manufacture of application-specific integrated circuits, reported results for the first quarter ended March 31, 2003. Net income for the first quarter of 2003 was $1.8 million compared to a net loss of $1.1 million for the first quarter of 2002. First quarter revenues were $102.8 million, which compares with fourth quarter 2002 revenues of $102.5 million and first quarter 2002 revenues of $69.0 million. The first quarter of 2002 does not include the results from the June 2002 acquisition of the mixed-signal business activities of Alcatel Microelectronics and thus does not reflect what revenue would have been had the acquisition been part of AMI Semiconductor at that point in time. AMIS generated EBITDA of $22.1 million compared to $19.5 million for the fourth quarter of 2002 and $11.0 million for the first quarter of 2002. Additionally, the company's cash balance increased from $62.2 million to $76.3 million. At March 29, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $254 million. "Compared to the fourth quarter of 2002, gross margin is up, fab utilization has increased and we continue to win key designs at strategic customers across a broad spectrum of applications in our target markets," commented Chris King, president and CEO. "We are in the last stages of completion of the integration of the Alcatel mixed-signal business which has proven to be a great advantage as we strive to provide a total custom solution to the automotive, industrial, medical, and communication markets." "We are very pleased to have achieved our cost reduction goals in the first quarter," said Brent Jensen, senior VP and CFO of AMIS. "We also saw continued strength in our end markets during the quarter, especially with our European customers." AMI Semiconductor is a leader in the design and manufacture of silicon solutions for the real world. As a widely recognized innovator in state-of-the-art mixed-signal technologies and mid- range digital ASICs including ASIC conversion services, AMIS is committed to providing customers with the optimal value, quickest time-to-market ASIC solutions. Offering unparalleled manufacturing flexibility and dedication to customer service, AMI Semiconductor operates globally with headquarters in Pocatello, Idaho, European corporate offices in Oudenaarde, Belgium, and a network of sales and design centers located in the key markets of the United States, Europe and the Asia Pacific region. For more information, please visit the AMIS Web site at http://www.amis.com ANC RENTAL: Wants Until June 16 to File Creditors' Claims --------------------------------------------------------- ANC Rental Corporation and its debtor-affiliates ask the Court to further extend the period set forth in Rule 3004 of the Federal Rules of Bankruptcy Procedure within which they may file claims on a creditor's behalf from April 14, 2003 to and including June 16, 2003. Bonnie Glantz Fatell, Esq., at Blank Rome LLP, in Wilmington, Delaware, reports that as of the Bar Date, over 8,600 proofs of claim have been filed. In the brief time since the Bar Date, it has been impossible for the Debtors to have reviewed all the proofs of claim, which have been filed to determine whether there are any creditors for whom the Debtors believe that a proof of claim should be filed in order to have the claim addressed through the plan process. Notwithstanding, the Debtors have been diligently working to resolve and reconcile the numerous proofs of claims, which have been filed, and potential claims, which would require the Debtors to file a proof of claim on behalf of that potential claimant to properly and effectively resolve the claim. The extension requested will afford the Debtors sufficient opportunity to assess whether there are existing creditors on whose behalf the Debtors should file a proof of claim. The Court will convene a hearing today to consider the Debtors' request. By application of Rule 9006-2 of the Local Rules of Bankruptcy Practice and Procedure of the United States Bankruptcy Court for the District of Delaware, the time to file creditor claims is automatically extended until the conclusion of that hearing. (ANC Rental Bankruptcy News, Issue No. 31; Bankruptcy Creditors' Service, Inc., 609/392-0900) AVAYA INC: Commences Public Offering of $175M of Sr. Sec. Notes --------------------------------------------------------------- Avaya Inc. (NYSE: AV), a leading global provider of business communications networks and services to businesses, intends to initiate a public offering of approximately $175 million of senior secured notes. The note will form a single series with the company's outstanding 11-1/8% senior secured notes due 2009 (CUSIP: 053499AB5) and will have the same terms and conditions as those outstanding notes. The net proceeds from the transaction will be used for general corporate purposes including, but not limited to, the repurchase of the company's Liquid Yield Option(TM) Notes due 2021. The offering is being made pursuant to an effective shelf registration statement. Citigroup and Credit Suisse First Boston are acting as joint book-running managers for the offering. This offering may be made only by means of the prospectus and the related prospectus supplement, copies of which may be obtained, when available, from Citigroup Global Markets Inc., Brooklyn Army Terminal, 140 58th Street, 8th Floor, Brooklyn, New York 11220. Liquid Yield Option and LYON are trademarks of Merrill Lynch & Co., Inc. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $25 million. Avaya Inc.'s 11.125% bonds due 2009 (AV09USR1), DebtTraders reports, are trading above par at 110 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=AV09USR1for real-time bond pricing. AVAYA INC: S&P Downgrades Corporate Credit Rating to B+ from BB- ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Avaya Inc. to 'B+' from 'BB-', affirmed the existing senior secured debt rating at 'B+', assigned 'B+' to Avaya's proposed $175 million add-on sale of senior secured notes, and affirmed the senior unsecured debt rating at 'B'. With the reduction in the amount of first-priority debt contained in Avaya's revolving credit facility to $250 million, from $561 million, Standard & Poor's has determined that prospects for recovery for second-priority senior secured note and senior unsecured debt holders have improved, and the notching of these securities has been changed to reflect the new capital structure. The outlook is stable. Avaya had $886 million of funded debt outstanding as of March 31, 2003. Avaya, a leading provider of enterprise telephony systems and services, is based in Basking Ridge, New Jersey. "We expect Avaya's weakened profitability and debt protection metrics to continue, partially offset by its strong market position," said Standard & Poor's credit analyst Joshua Davis. "We expect enterprise customers to remain in a defensive posture with regard to capital spending in 2003." Demand is inhibited in part by cautiousness among customers in transitioning to Internet Protocol-based voice systems while at the same time avoiding further spending on legacy traditional PBX equipment. The proceeds of the sale of notes are expected to be used in part to retire portions of Avaya's LYONs and thus overall levels of funded debt are not expected to increase on a permanent basis. Avaya's leverage is also affected by unfunded pension and health benefits, which as of Sept. 30, 2002, amounted to an estimated $800 million, adjusted for the tax benefits of pension contributions. Avaya intends to use the $175 million-$200 million of net proceeds from the note sale for corporate purposes, including buying back or otherwise settling in cash the outstanding LYONs, which are puttable on Oct. 31, 2004. AVAYA INC: Moody's Affirms Ratings at Lower-B Level --------------------------------------------------- Moody's Investors Service affirmed the ratings for Avaya, Inc. Rating outlook for the senior unsecured LYONs is stable, outlook for the rest of the ratings is stable. Ratings Affirmed * Senior implied rating of B2 * Senior secured notes of B2 * Issuer rating of B3 * Senior unsecured notes (LYONs) of B3 * Senior unsecured shelf of (P)B3 * Preferred shelf of (P)Caa2 The ratings affirmation followed the company's announcement to commence a public offering of about $175 million in senior unsecured notes. The stable outlook mirrors Moody's belief that Avaya's increased cash position is sufficient to carry it through this year. On the other hand, the LYONs' negative outlook reflects the possibility of the notes' restructuring in the future. Avaya Inc., based in Basking Ridge, New Jersey, is a leading supplier of communications systems and software for enterprise customers. BACK BAY: Wins Okay to Use Cash Collateral to Operate Restaurant ---------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Massachusetts gave its nod of approval to Back Bay Brewing Company, Ltd.'s request to use its lender's cash collateral in its restaurant business. As of the Petition Date, the outstanding principal balance Bay Back owes to LQ Acquisition Company under its loan agreement is $453,207 plus accrued interest, fees and costs. Two other creditors hold security interests in Debtor's property junior to LQ: i) Idine $130,000 ii) Clever Ideas $ 22,000 The Debtor maintains that using LQ's cash collateral will minimize disruption of the business, will increase the possibility for a successful reorganization and is in the best interest of the Debtor, creditors and Debtor's estate. LQ Acquisition agrees to the Debtor's use of cash collateral pursuant to this Budget: 13-Apr 20-Apr 27-Apr 4-May ------ ------ ------ ----- Receipts 73,500 78,750 57,750 63,000 Cost of Goods 18,050 19,339 14,182 15,471 Payroll 17,603 18,645 14,474 15,517 Cumulative Profit 11,715 26,186 31,735 39,515 11-May 18-May 25-May 1-Jun ------ ------ ------ ----- Receipts 63,000 63,000 60,375 60,375 Cost of Goods 15,471 15,471 14,826 14,826 Payroll 15,517 15,517 14,995 14,995 Cumulative Profit 47,294 55,074 61,738 68,403 8-Jun 15-Jun 22-Jun 29-Jun ----- ------ ------ ------ Receipts 60,375 60,375 60,375 60,375 Cost of Goods 14,826 14,826 14,826 14,826 Payroll 14,995 14,995 14,995 14,995 Cumulative Profit 75,067 81,732 88,396 95,061 6-Jul ----- Receipts 60,375 Cost of Goods 14,826 Payroll 14,995 Cumulative Profit 101,725 Back Bay Brewing Company, Ltd., a restaurant and bar operating at 755 Boylston Street in Boston, filed for chapter 11 protection on April 15, 2003 (Bankr. Mass. Case No. 03-13022). John M. McAuliffe, Esq., at McAuliffe & Associates, P.C., represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $9,000,000 in assets and $1,202,000 in debts. BANC OF AMERICA: Fitch Rates P-T Certs. Class B-4 & B-5 at BB/B --------------------------------------------------------------- Banc of America Alternative Loan Trust 2003-3 mortgage pass- through certificates, classes A-1 through A-5, A-R, A-LR, A-WIO, and A-P (senior certificates, $285.8 million) are rated 'AAA' by Fitch Ratings. In addition, Fitch rates class B-1 ($6.8 million) 'AA', class B-2 ($3 million) 'A', class B-3 ($1.5 million) 'BBB', class B-4 ($1.5 million) 'BB' and class B-5 ($1.1 million) 'B'. The 'AAA' rating on the senior certificates reflects the 5% subordination provided by the 2.25% class B-1, 1% class B-2, 0.50% class B-3, 0.50% privately offered class B-4, 0.35% privately offered class B-5 and 0.40% privately offered class B- 6. Classes B-1, B-2, B-3, and the privately offered classes B-4, B-5 and B-6 are rated 'AA', 'A', 'BBB', 'BB', and 'B', respectively, based on their respective subordination. The ratings also reflect the quality of the underlying collateral, the capabilities of Bank of America Mortgage, Inc. as servicer (rated 'RPS1' by Fitch), and Fitch's confidence in the integrity of the legal and financial structure of the transaction. Approximately 42.56% of the mortgage loans were underwritten using Bank of America's 'Alternative A' guidelines. These guidelines are less stringent than Bank of America's general underwriting guidelines and could include limited documentation or higher maximum loan-to-value ratios. Mortgage loans underwritten to 'Alternative A' guidelines could experience higher rates of default and losses than loans underwritten using Bank of America's general underwriting guidelines. The collateral consists of recently originated, conventional, fixed-rate, fully amortizing, first lien, one- to four-family residential mortgage loans with original terms to stated maturity ranging from 180 to 360 months. The weighted average original loan-to-value ratio for the mortgage loans in the pool is approximately 68.21%. The average balance of the mortgage loans is $148,686 and the weighted average coupon of the loans is 6.253%. The weighted average FICO credit score for the group is 738. The states that represent the largest geographic concentration are California (49.95%), Florida (9.91%), and Massachusetts (2.92%). Approximately 1.82% of the mortgage loans are secured by properties located in the state of Georgia, none of which are governed under the Georgia Fair Lending Act, effective as of Oct. 2, 2002 and amended effective as of March 7, 2003. Banc of America Mortgage Securities, Inc. deposited the loans in the trust, which issued the certificates, representing undivided beneficial ownership in the trust. For federal income tax purposes, elections will be made to treat the trust as two separate real estate mortgage investment conduits. Wells Fargo Bank Minnesota, National Association will act as trustee. BATTERSON PARK: Fitch Cuts Class A-5 & B Note Ratings to BB-/C -------------------------------------------------------------- Fitch Ratings has affirmed and downgraded the ratings of the following classes of notes issued by Batterson Park CBO I, Ltd., as follows: -- $131,687,239 class A-3 notes 'AAA'; -- $24,443,107 class A-4 notes 'AAA'. -- $49,500,000 class A-5 notes to 'BB-' from 'BBB+'; -- $16,500,000 class B notes to 'C' from 'B'. Batterson Park CBO I, Ltd. is a collateralized bond obligation managed by General Re / New England Asset Management and is primarily backed by high yield bonds and loans. According to its March 26, 2003 trustee report, Batterson Park CBO I, Ltd.'s portfolio includes a par amount of $26.60 million (11.73%) in defaulted assets. The transaction's overcollateralization test is failing at 94.23% with a trigger of 108%. The weighted average rating factor has increased to approximately 68.88 ('B-/CCC+'); the initial WARF was 52.2 ('B'). In reaching these rating decisions, Fitch had conversations with GenRe regarding the performance of the portfolio and conducted several cash flow model runs utilizing various default and interest rate stress scenarios. Fitch will continue to monitor this transaction and the accuracy of the ratings. BETHLEHEM STEEL: USWA Reaches Tentative Agreement with ISG ---------------------------------------------------------- The United Steelworkers of America has reached tentative agreement on a Combined Company Collective Bargaining Agreement covering workers at the former Bethlehem Steel facilities being purchased by International Steel Group. "Built on our past success in bargaining with ISG, this historic agreement brings us another step closer to the urgent necessity of achieving a consolidation of the American steel industry, a restructuring that our Union has been strongly advocating since last September," said USWA President Leo W. Gerard. USWA negotiators from the former Bethlehem Steel facilities at Sparrows Point, MD; Burns Harbor, IN; Lackawanna, NY; Steelton, Conshohocken and Coatesville, PA reached the tentative agreement late last week. "We have made tremendous progress to ensure that these communities, which have been producing steel for the last century, will continue that proud tradition for generations to come," Gerard said. In September 2002, the union's Basic Steel Industry Conference established a set of principles that it said were necessary to bring about a humane consolidation of the American steel industry. Since then, the principles laid out by the BSIC have served as guideposts in negotiating a labor agreement with ISG that establishes reduced management staffing, provides workers a stronger voice in productivity improvements, secures industry- leading wages and incentives, and takes the historic step of securing commitments to invest in North American steel making facilities. "This contract is a testament to the wisdom and creativity displayed by both our members and ISG management in solving the numerous difficult issues left behind by the departing management of Bethlehem," said David McCall, Director of USWA District 1, who also served as chairperson of the USWA's ISG negotiating committee. The new agreement, if ratified, will be in place until September of 2008. Ratification votes by Steelworker members at the former Bethlehem facilities are being planned. Specifics of the tentative agreement will not be available until after the ratification vote, the Union said, in customary deference to its members' right to review agreements before their specifics are publicized. BURLINGTON: Earns Nod to Extend Hilco's Engagement Until Oct. 8 --------------------------------------------------------------- Burlington Industries, Inc., and its debtor-affiliates obtained permission from the Court to extend the Termination Deadline for the retention and employment of Hilco in these Chapter 11 cases, on the same terms and subject to the same conditions set forth in the Retention Documents to the earlier of the Effective Date, or October 8, 2003. Until such date, Hilco will continue to provide the Debtors with real estate consulting and advisory services in these Chapter 11 cases in connection with certain of the Debtors' properties identified for sale or divesture. To date, Hilco has assisted the Debtors in selling five Owned Properties, and a portion of another Owned Property, for approximately $5,102,840 in the aggregate. Hilco is continuing to assist the Debtors in the sale or divestiture of the remaining Owned Properties. (Burlington Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 609/392-0900) CANNONDALE: Completes Sale of Certain Assets to Pegasus Partners ---------------------------------------------------------------- An upbeat, optimistic Cannondale concluded its rapid transition through the Chapter 11 bankruptcy process with the closing on the sales of the assets of its bicycle and motorsports divisions to affiliates of Pegasus Partners II, L.P. The Company had filed for Chapter 11 protection in late January following mounting losses incurred by its motorsports division. Going forward, the bicycle business will be incorporated as the Cannondale Bicycle Corporation. Dan Alloway and Scott Montgomery will continue as senior executives of the Company as Vice President of Sales and Vice President of Marketing, respectively. In addition, the Company is recruiting a Chief Financial Officer and a Chief Operating Officer to bring additional stability to the business. Company founder Joe Montgomery will be a consultant to the Company. "We're extremely happy to have concluded the Chapter 11 process so quickly", said Scott Montgomery, who also provided some perspective. "We were in Chapter 11 for less than 100 days, but we've been a successful part of the bike industry for 32 years. We are back to our roots and it feels good to bring renewed focus to the bicycle business." Alloway echoed Montgomery's optimism. "Chapter 11 of the Bankruptcy Code is designed to help a company come back stronger and more competitive than before, and that's exactly what's happened with Cannondale," said Alloway. "Every day we're producing and shipping new bikes, apparel and accessories from our factory in Bedford, Pennsylvania. The products are selling through well at retail, and we've got a very strong line planned for 2004." Pegasus plans few changes to Cannondale's bicycle business, which remained profitable throughout the Company's motorsports efforts. Pegasus will move forward with Cannondale's existing staff, facilities, dealer network and overall strategy in the U.S. and at its European, Japanese and Australian subsidiaries. Pegasus plans to sell Cannondale's motorsports assets. David Uri, a Partner at Pegasus, explained why no other significant changes are planned. "Cannondale's difficulties were not related to its bicycle business," said Uri. "The problems came from its motorsports effort. The bicycle division has remained profitable, which is a stunning accomplishment given the burden and distraction that motorsports imposed." "We have no desire to disrupt a winning formula," continued Uri. "As we've said before, our job now is to support and supplement the existing Cannondale team to allow them to concentrate on what they do best - designing, manufacturing and marketing lightweight, high-performance bicycles for the specialty retail market." The sales of the assets of both divisions were conducted pursuant to an auction under Section 363 of the United States Bankruptcy Code in the U.S. Bankruptcy Court in the District of Connecticut (Bridgeport Division), and were sold free and clear of all liens, claims, interests and encumbrances. Cannondale filed a voluntary petition for Chapter 11 bankruptcy protection on January 29, 2003. Cannondale's largest secured creditor, Pegasus had agreed in late January to act as the "stalking horse" bidder in the auction, which took place on March 20, 2003. On March 28, 2003 the Bankruptcy Court approved the Asset Purchase Agreement by and between Cannondale and Pegasus. Pursuant to the terms of the Asset Purchase Agreement, substantially all of Cannondale's assets, including the Company's bicycle and motorsports divisions were purchased by affiliates of Pegasus. CHAMPIONLYTE PRODUCTS: Unit Launches Reformulated Sports Drink -------------------------------------------------------------- ChampionLyte Beverages, Inc., a wholly owned subsidiary of ChampionLyte Holdings, Inc. (OTC Bulletin Board: CPLY) announced that the inaugural production run of the reformulated ChampionLyte(R) will be shipped the week of May 12. ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market, is the only sports drink with no sugar, calories, sorbitol, saccharin, aspartame caffeine or carbonation. The reformulated product is now sweetened with Splenda(R), the trade name for Sucralose produced by McNeil Nutritionals, a Johnson & Johnson company. It has no label warnings. "Candidly, the original ChampionLyte(R) did not meet the superior quality taste profile we demand," said Donna Bimbo, president of ChampionLyte Beverages, Inc. "We did extensive research and found that Sucralose, while the most expensive artificial sweetener, was the best tasting and safest. "Because Splenda(R) is made from sugar, tastes like sugar, has no calories and is safe for diabetics, it was the perfect ingredient for ChampionLyte(R)," said Ms. Bimbo. "Splenda(R) has given ChampionLyte(R) a great taste without the ultra-sweet or bitter aftertaste sometimes associated with no- calorie sweeteners." Ms. Bimbo said that reaction to the newly formulated drink has been outstanding. "The results of both formal and informal taste tests have been exceptional," said Ms. Bimbo. "What's particularly gratifying is when individuals who said they didn't like the taste of the old product rave about the new ChampionLyte(R)," she said. "The progress that's been made in the last five months has been nothing short of incredible," said David Goldberg, president of ChampionLyte Holdings, Inc. "This company was on the verge of bankruptcy and now it has completed a major restructuring and is positioned to re-launch a superior product to a vast marketplace." "For consumers who are conscientious about diet and exercise, ChampionLyte(R) is a great tasting thirst-quenching beverage which replaces electrolytes without the negatives of sugar sweetened drinks," added Ms. Bimbo. Ms. Bimbo added that a vast majority of the first production run has been pre-sold. With the Centers for Disease Control reporting nearly 20 million diabetics in the United States and childhood obesity being linked to sugar- sweetened drinks; sugar-free ChampionLyte(R) is the healthy choice. "ChampionLyte(R) has all of the good and none of the bad," said Ms. Bimbo. "Our product is no guilt. It's a unique alternative to sugar sweetened drinks." ChampionLyte(R) is available in five flavors: orange, fruit punch and lemon-lime, pink lemonade and blue raspberry. Ms. Bimbo said that grape, which had been available in the original formulation, has been dropped because of inconsistency of the flavor. The major advantage of ChampionLyte(R) is that it replaces electrolytes, especially after exercise, without the ingredients, which would cause weight, gain -- particularly sugar. For example: if a man or woman runs on a treadmill for 30 minutes they would burn about 150 calories. By drinking one of the popular major brand sports drinks that contain 33 to 37 grams of sugar (that's 33 to 37 individual one-gram packs of sugar) after working out on the treadmill, they would either cancel out the calories they just burned off, or actually gain more calories than burned during the workout. ChampionLyte Holdings, Inc. is a fully reporting public company whose shares are quoted on the OTC Bulletin Board under the trading symbol CPLY. Its recently formed beverage division, ChampionLyte Beverages, Inc., a Florida corporation, manufactures, markets and sells ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market. ChampionLyte Holdings, Inc., is a fully reporting public company whose shares are quoted on the OTC Bulletin Board under the trading symbol CPLY. Its recently formed beverage division, ChampionLyte Beverages, Inc., a Florida corporation, manufactures, markets and sells ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market. At September 30, 2002, Championlyte Products' balance sheet shows a working capital deficit of about $1 million and a total shareholders' equity deficit of about $9 million. CHASE MORTGAGE: Fitch Upgrades Class B-4 Notes' Rating to BB ------------------------------------------------------------ Fitch Ratings has taken rating actions on the following Chase Mortgage Finance Trust mortgage pass-through certificate: Chase Mortgage Finance Trust, mortgage pass-through certificates, series 1998-S7 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AA' from 'A+'; -- Class B-3 upgraded to 'A+' from 'BBB+'; -- Class B-4 upgraded to 'BB' from 'B+'. Chase Mortgage Finance Trust, mortgage pass-through certificates, series 2000-S6 -- Class M affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AAA' from 'AA+'; -- Class B-3 upgraded to 'A+' from 'BBB'; -- Class B-4 affirmed at 'B'. Chase Mortgage Finance Trust, mortgage pass-through certificates, series 2000-S7 -- Class M affirmed at 'AAA'; -- Class B-1 affirmed at 'AAA'; -- Class B-2 upgraded to 'AAA' from 'AA'; -- Class B-3 upgraded to 'A+' from 'BB'; -- Class B-4 upgraded to 'BB+' from 'B'. Chase Mortgage Finance Trust, mortgage pass-through certificates, series 2000-S8 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA+'; -- Class B-2 upgraded to 'AAA' from 'AA-'; -- Class B-3 upgraded to 'AA-' from 'BB'; -- Class B-4 upgraded to 'BB+' from 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. CHOICE ONE COMMS: March 31 Balance Sheet Upside-Down by $540MM -------------------------------------------------------------- Choice One Communications (OTC Bulletin Board: CWON), an Integrated Communications Provider offering facilities-based voice and data telecommunications services, including Internet and DSL solutions, to businesses in 29 Northeast and Midwest markets, announced financial and operating results for first quarter 2003. "Our adjusted EBITDA improved for the ninth consecutive quarter, driven by a combination of top-line growth and improvements in our cost structure," commented Steve Dubnik, Chairman and Chief Executive Officer. First quarter revenue was $80.1 million, up 13% from first quarter 2002 revenue of $70.6 million and up 10% from fourth quarter 2002 revenue of $72.6 million. Revenue less network costs was $39.6 million, or 49.4% of revenue, compared with $28.4 million, or 40.2% of revenue a year ago and $31.6 million, or 43.5% of revenue in fourth quarter 2002. Network costs of $40.5 million were down $1.7 million from first quarter 2002, benefiting from network optimization initiatives completed during 2002. Network costs were also down 1% sequentially from fourth quarter 2002. Selling, general and administrative expenses for first quarter 2003 decreased by 3.9% and 15.4%, respectively, from fourth quarter 2002 and first quarter 2002, reflecting the company's focus on expense management. First-quarter 2003 SG&A expenses were $31.9 million, or 39.8% of revenue, compared with fourth quarter 2002 SG&A expenses of $33.2 million, or 45.8% of revenue. SG&A expenses were $37.7 million, or 53.4% of revenue a year ago. Adjusted EBITDA was $8.2 million in the first quarter, a $17.5 million improvement from first quarter 2002 adjusted EBITDA losses of $9.3 million, and more than double the fourth quarter 2002 adjusted EBITDA of $3.0 million. Capital expenditures were $1.9 million for the quarter, down $4.6 million from a year ago and down $6.9 million from fourth quarter 2002. Cash interest expense, which excludes interest payable in kind, was $7.5 million during first quarter 2003, compared with $7.2 million during first quarter 2002. At March 31, 2003 the company had total liquidity of $22.8 million, including $20.2 million of cash and $2.6 million available under its senior credit facility. Net loss applicable to common stockholders was $38.5 million, compared with a first quarter 2002 net loss of $57.8 million. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $540 million. Sales and Operating Highlights During the first quarter, Choice One completed the company-wide introduction of its new Select Savings plans. The Select Savings plans offer clients a full range of services (including basic telephone service, T-1 and DSL), local and long distance calling plans and features. Local and long distance calling plans, called 'Choice Call Packs,' are bundled in a variety of sizes, enabling clients to design calling plans that correspond with the specific calling patterns of their businesses. These Select Savings plans provide substantial incremental savings for clients who subscribe to multiple services or those with above- average usage. At March 31, 2003, the company's market penetration was estimated at 8.2% of addressable business lines compared with 6.6% a year ago. The company places great emphasis on client satisfaction and retention. Choice One's average monthly churn rate was 1.6% during first quarter 2003, consistent with fourth quarter 2002. And during the quarter, Choice One was recognized by the New York State Public Service Commission (NYSPSC) for providing excellent telephone service during 2002. Choice One recently activated intra-city metro fiber in its Columbus, Ohio market, bringing to 19 the total number of markets with intra-city fiber networks. The company invests in fiber networks to optimize its network costs, enhance the quality and reliability of its services and provide sufficient bandwidth to support the growth of its business. "We are pleased with our first quarter results," commented Mr. Dubnik. "We completed the company-wide rollout of our new Select Savings plans and our first quarter financial results demonstrate top-line growth and improved profitability." Headquartered in Rochester, New York, Choice One Communications Inc. (OTC Bulletin Board: CWON) is a leading integrated communications services provider offering voice and data services including Internet and DSL solutions, to businesses in 29 metropolitan areas (markets) across 12 Northeast and Midwest states. Choice One reported $290 million of revenue in 2002, has more than 100,000 clients and employs approximately 1,400 colleagues. Choice One's markets include: Hartford and New Haven, Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield and Worcester, Massachusetts; Portland/Augusta, Maine; Grand Rapids and Kalamazoo, Michigan; Manchester/Portsmouth, New Hampshire; Albany (including Kingston, Newburgh, Plattsburgh and Poughkeepsie), Buffalo, Rochester and Syracuse (including Binghamton, Elmira and Watertown), New York; Akron (including Youngstown), Columbus and Dayton, Ohio; Allentown, Erie, Harrisburg, Pittsburgh and Wilkes-Barre/Scranton, Pennsylvania; Providence, Rhode Island; Green Bay (including Appleton and Oshkosh), Madison and Milwaukee, Wisconsin. The company has intra-city fiber networks in the following markets: Hartford, Connecticut; Rockford, Illinois; Bloomington/Evansville, Fort Wayne, Indianapolis, South Bend/Elkhart, Indiana; Springfield, Massachusetts; Grand Rapids and Kalamazoo, Michigan; Albany, Buffalo, Rochester and Syracuse, New York; Columbus, Ohio; Pittsburgh, Pennsylvania; Providence, Rhode Island; Green Bay, Madison and Milwaukee, Wisconsin. For further information about Choice One, visit its Web site at http://www.choiceonecom.com CINEMARK USA: Moody's Confirms & Assigns Ratings at Low-B Level --------------------------------------------------------------- Moody's Investors confirmed the ratings for Cinemark USA, Inc. and assigned a B3 rating to the company's $210 million follow-on offering of 9% senior subordinated notes. Affected Ratings * $75 million Gtd Senior Secured Revolver due 2007 - Ba3 * $125 million Gtd Senior Secured Term Loan due 2008 - Ba3 * $360 ($150 originally plus $210 follow-on) million of 9% Gtd Senior Subordinated Notes due 2013 - B3 * $200 million of 9-5/8% Gtd Senior Subordinated Notes due 2008 - B3 (a portion of which will be redeemed) * $75 million of 9-5/8% Gtd Sr Sub Notes due 2008 - B3 (a portion of which will be redeemed) * Senior Implied Rating - B1 * Senior Unsecured Issuer Rating - B2 Outlook is stable. Moody's believes that, "The ratings broadly reflect the company's still high financial leverage after adjusting to account for off-balance sheet financing of theater operating leases; fairly modest fixed charge coverage; a higher level of international exposure due to the company's more extensive foreign operations (which reside outside of the Restricted Group); and, more generally, continued concerns about persistent excess screen capacity, box office volatility, dependence on Hollywood studios for hit releases, and the proliferation of alternative forms of entertainment for the theatrical exhibition industry as a whole." These matters are however offset by the company's large asset base, their relatively new theaters, and the advantages it gains from operating in less competitive suburban markets. Cinemark USA, Inc., headquartered in Plano, Texas, is one of the largest motion picture exhibitors in North America. CONSECO INC: S&P Affirms B+ Ratings on Insurance Subsidiaries ------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'B+' counterparty credit and financial strength ratings on Conseco Inc.'s insurance subsidiaries: Bankers Life & Casualty Co., Colonial Penn Life Insurance Co., Conseco Annuity Assurance Co., Conseco Health Insurance Co., Conseco Life Insurance Co., Conseco Life Insurance Co. of NY, Conseco Medical Insurance Co., Conseco Senior Health Insurance Co., and Pioneer Life Insurance Co. The outlook remains negative. The combined operating capital of the insurance group declined to $1.08 billion from $1.76 billion in 2002. However, operating capital at year-end 2002 was consistent with the current ratings, and Standard & Poor's believes that given the high degree of regulatory oversight already in place for the Conseco companies, the decline in operating capital in 2002 will not lead to a formal regulatory takeover of the insurance operations. "The negative outlook continues to reflect the level of uncertainty surrounding the insurance group's operations, the ability of the group to maintain/rebuild its operating capital, and the possibility of a more formal regulatory intervention," said Standard & Poor's credit analyst Jon Reichert. Management has developed--and is implementing--a multi-part action plan designed primarily to restore capital at the insurance operations. The plan includes stopping new sales of long-term care insurance out of Conseco Senior Health Insurance Co. and Conseco Life Insurance Co. of NY, slowing sales in other lines of business to minimize surplus strain, cutting expenses, and merging legal entities. The insurance operations' operating performance and business position have been significantly adversely affected over the last several years because of the negative publicity surrounding the holding company and the general economic weakness. Although insurance operations need to be rebuilt, Standard & Poor's believes successful resolution of parental issues will go a long way in jump-starting the companies. Uncertainties regarding the successful execution of the plan include the ultimate outcome of management's arbitration hearing regarding Conseco's investment in the General Motors building in Manhattan as well as the timing of Conseco Inc.'s emergence from bankruptcy and how the company's balance sheet will be structured after it emerges. It is currently anticipated that both of these issues should be significantly resolved by the end of May. Once these outcomes are known, Standard & Poor's will reassess the ratings on the insurance operations. DebtTraders says that Conseco Inc.'s 10.750% bonds due 2008 (CNC08USR1) are trading at about 13 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CNC08USR1for real-time bond pricing. CONSOLIDATED FREIGHTWAYS: Selling Rock Hill Property at Auction --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways announced that it is placing its South Carolina properties in Rock Hill and West Charleston individually for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Rock Hill property is located at US Hwy I-77 on 3.07 acres. A contract price of $120,000 has been established for the property. The West Columbia terminal is a 21-door cross-dock distribution facility located at 3225 Sunset Blvd and is situated on 5.81 acres. A contract price of $755,000 has been established for the CF facility. Both CF properties have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Milford Property for $1.4 Mil. ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Milford distribution facility located at 130 Woodmont Road for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Milford property is a 25-door cross-dock distribution facility situated on 5.6 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Fifty-seven CF employees formerly worked at the Milford terminal. A contract price of $1,391,750 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Sacramento Assets Up for Sale for $13M ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Sacramento and Stockton distribution facilities individually for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Sacramento distribution center is a 164-door cross-dock facility located at 918 Del Paso Road and is situated on 77.10 acres. Three hundred and sixty-one CF employees formerly worked at the Sacramento terminal. A contract price of $13,500,000 has been established for the property. The Stockton property is a 23-door cross-dock terminal located at 7611 South Airport Way. It is situated on 6.15 acres and 52 CF employees formerly worked there. A contract price of $1,275,000 has been established for Stockton terminal. Both facilities have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Rutland Facility at Auction ------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Rutland distribution facility located at 7 Randbury Road for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Rutland property is an 11-door cross-dock distribution facility situated on five acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Eight CF employees formerly worked at the Rutland terminal. A contract price of $223,100 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Hattiesburg Facility On Auction Block --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Hattiesburg distribution facility located at 6 Blackwell Blvd. for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Hattiesburg property is an 8-door cross-dock distribution facility situated on 2 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Nine CF employees formerly worked at the Hattiesburg terminal. A contract price of $105,000 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Puts Simi Valley Facility to Auction -------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Simi Valley distribution facility located at 91 West Easy Street for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Simi Valley property is an 18-door cross-dock distribution facility situated on 4.68 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Nineteen CF employees formerly worked at the Simi Valley terminal. A contract price of $2,750,000 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Puts Evansville Property Up for Sale -------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Evansville distribution facility located at 201 N. Congress Drive for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Evansville property is a 40-door cross-dock distribution facility situated on 4.19 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Seventeen CF employees formerly worked at the Evansville terminal. A contract price of $725,000 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Albany Prop. at May 21 Auction ---------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Albany distribution facility located at 845 Watervliet-Shaker Rd. for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Albany property is a 31-door cross-dock distribution facility situated on 6.44 acres and has been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Forty-one CF employees formerly worked at the Albany terminal. A contract price of $725,000 has been established for the CF property. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at 800/440-5155. CONSOLIDATED FREIGHTWAYS: Selling Twin Falls & Pocatello Assets --------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its Idaho properties in Twin Falls and Pocatello individually for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Twin Falls property is a 16-door cross-dock distribution facility located at 211 Freightways Street and is situated on 3.55 acres. Ten CF employees formerly worked at the Twin Falls terminal. A contract price of $280,000 has been established for the property. The Pocatello terminal is a 20-door cross-dock facility located at 866 West Cedar Street and is situated on 4.12 acres. Eight CF employees formerly worked at the Pocatello terminal. A contract price of $300,000 has been established for the property. Both facilities have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at (800) 440-5155. CONSOLIDATED FREIGHTWAYS: Selling Bismarck & Fargo Facilities ------------------------------------------------------------- As part of the largest real estate sale in transportation history -- 220 total properties with an appraised value over $400 million -- Consolidated Freightways is placing its North Dakota properties in Bismarck and Fargo individually for sale to the highest bidder, through an open auction process scheduled for May 21, 2003. The Bismarck property is a 12-door cross-dock distribution facility located at 1700 Commerce Drive and is situated on 2.1 acres. A contract price of $194,000 has been established for the CF property. The Fargo terminal is located at 601 24th Street North and is an 11-door cross-dock distribution facility situated on 2.2 acres. A contract price of $151,500 has been established for the property. Both facilities have been closed to operations since September 3, 2002 when the 74-year-old company filed for bankruptcy protection. Since then CF has been liquidating the assets of the corporation under orders of the bankruptcy court. Interested parties who would like to participate in the May 21 bankruptcy auction should submit the form Request to be Designated a Qualified Bidder at Auction. That form can be found at http://www.cfterminals.com/Overbidder.htmland must be submitted prior to the date of the auction. The indicated deposit must also be received, via wire or certified check, prior to the date of the auction. To date, 68 CF properties throughout the U.S. have been sold for $176 million. Potential bidders should direct any questions about the property and the bidding procedures that cannot be answered at the company's Web site http://www.cfterminals.com to Transportation Property Company at (800) 440-5155. COX COMMS: First-Quarter 2003 Net Loss Stands at $29 Million ------------------------------------------------------------ Cox Communications, Inc. (NYSE: COX) reported financial results for the three months ended March 31, 2003. "Cox Communications hit the ground running in 2003, with revenue growth of 16%, operating income growth of 44% and operating cash flow growth of 22%," said Jim Robbins, President and CEO of Cox Communications. "We are reporting excellent first quarter results and setting the pace for a year of continued growth and solid financial and operating performance despite today's increasingly competitive environment." "Total customer relationships grew approximately 2% compared to the first quarter of 2002, which includes solid basic video customer growth of 0.6%," Robbins continued. "We also added 154,000 high-speed Internet and 64,000 telephone customers in the first quarter, and penetration of digital cable to basic customers is nearing 30%, demonstrating unabated demand for Cox's digital service bundle." Robbins continued: "For years we've been preparing for increased competition and now that preparation is paying off. We're extremely well positioned to build on our superior platform and reap the benefits of our investments and the consistent strategy we've pursued." FIRST QUARTER HIGHLIGHTS During the first quarter of 2003, Cox: -- Ended the quarter with 6.3 million basic video customers, up 0.6% from March 31, 2002. -- Ended the quarter with 10.5 million total RGUs, up 3% for the quarter, driven by an 8% growth in advanced-service RGUs for the quarter. Total RGUs and advanced-service RGUs were up 13% and 38%, respectively, compared to March 31, 2002. -- Added 154,433 high-speed Internet customers, ending the quarter with 1.6 million high-speed Internet customers, representing year-over-year growth of 56%. -- Added 64,126 Cox Digital Telephone customers, ending the quarter with 782,546 telephone customers, representing year- over-year growth of 52%. -- Achieved Cox Digital Cable net additions of 76,808 customers, ending the quarter with 1.9 million digital cable customers. Cox Digital Cable is now available in 97% of the homes in Cox's service areas with penetration of our basic customer base nearing 30%. -- Generated $355.9 million in cash flows from operating activities and $30.2 million in free cash flow (cash flows from operating activities less capital expenditures). -- Reduced capital expenditures to $325.7 million for the quarter, down 37% from the first quarter of 2002. 2003 OUTLOOK Cox expects to maintain basic subscriber growth throughout 2003 with anticipated year-over-year growth of approximately 1%. The company expects to add 1.0 million to 1.1 million advanced- service RGUs in 2003 driven by bundled offerings, excellent customer service and increased product availability. Cox expects to achieve its previously stated 2003 financial guidance of revenue growth of 14% to 15%, operating cash flow (operating income before depreciation and amortization) growth of 15% to 16% (14% to 15% excluding the impact of the $9.8 million one- time charge taken in 2002 related to the continuation of Excite@Home high-speed Internet service following the bankruptcy of Excite@Home) and capital expenditures of approximately $1.6 billion. In addition, Cox expects to be free cash flow positive for the full year 2003. OPERATING RESULTS Total revenues for the first quarter of 2003 were $1,366.3 million, an increase of 16% over the first quarter of 2002. This was primarily due to increased customers for advanced services (including digital cable, high-speed Internet access and telephony), higher basic cable rates and a $5 price increase on high-speed Internet access adopted in certain markets in the fourth quarter of 2002 and in most of Cox's remaining markets in the first quarter of 2003. Also contributing to the increase was an increase in commercial broadband customers. Cost of services, which includes programming costs, other direct costs and field service costs, was $583.6 million for the first quarter of 2003, an increase of 15% over the same period in 2002. Programming costs increased 14% to $294.6 million, reflecting rate increases and customer growth. Other cost of services increased 16% to $289.0 million, reflecting 1.2 million in net additions of basic and advanced-service RGU's over the last twelve months, as well as increased labor costs due to the transition from upgrade construction and new product launches to maintenance and related customer costs directly associated with the growth of new subscribers. Selling, general and administrative expenses were $303.2 million for the first quarter of 2003, an increase of 9% over the comparable period in 2002. This was due to: -- a 13% increase in general and administrative expenses primarily relating to increased salaries and benefits and increased headcount; partially offset by -- a 5% decrease in marketing expense primarily due to differences in the timing of certain advertising and marketing promotions between 2002 and 2003. Operating income increased 44% to $95.1 million for the first quarter of 2003 and operating cash flow increased 22% to $479.5 million, reflecting the one-time non-recurring charge of $9.8 million in the first quarter of 2002 related to the continuation of Excite@Home high-speed Internet service following the bankruptcy of Excite@Home. Excluding this charge, operating cash flow increased 19% compared to the first quarter of 2002. The operating income margin (operating income as a percentage of revenues) for the first quarter of 2003 was 7%, and the operating cash flow margin (operating cash flow as a percentage of revenues) for the first quarter of 2003 was 35.1%. Depreciation and amortization increased to $384.3 million from $325.8 million in the first quarter of 2002. This was due to an increase in amortization resulting from a non-cash impairment charge of $25.0 million recognized upon completion of Cox's annual impairment test in accordance with Statement of Financial Accounting Standards (SFAS) No. 142, and an increase in depreciation from Cox's continuing investment in its broadband network in order to deliver additional programming and services. For the first quarter of 2003, Cox recorded a $2.5 million pre- tax loss on derivative instruments primarily due to the following: -- a $4.3 million pre-tax loss resulting from the change in the fair value of Cox's net settleable warrants; partially offset by -- a $1.6 million pre-tax gain resulting from the change in the fair value of certain derivative instruments embedded in Cox's zero-coupon debt and indexed to shares of Sprint PCS common stock that Cox owns. Net loss on investments of $1.8 million for the first quarter of 2003 was primarily due to a decline in the fair value of certain investments considered to be other than temporary and a pre-tax loss as a result of the change in market value of Cox's investment in Sprint PCS common stock classified as trading. The net loss on investments for the comparable period in 2002 was primarily due to a pre-tax loss related to the sale of 23.9 million shares of AT&T Wireless common stock and a pre-tax loss as a result of the change in market value of Cox's investment in Sprint PCS common stock classified as trading. Net loss for the current quarter was $29.2 million compared to net income of $135.6 million for the first quarter of 2002. LIQUIDITY AND CAPITAL RESOURCES Cox has included Consolidated Statements of Cash Flows for the three months ended March 31, 2003 and 2002 as a means of providing more detail regarding the liquidity and capital resources discussion below. In addition, Cox has included a calculation of free cash flow in the Summary of Operating Statistics to provide an additional measure of liquidity that Cox believes will be useful to investors in evaluating Cox's financial performance. Significant sources of cash for the three months ended March 31, 2003 consisted of the following: -- the net issuance of approximately $98.2 million of commercial paper borrowings; and -- the generation of cash from operating activities of approximately $355.9 million. Significant uses of cash for the three months ended March 31, 2003 consisted of the following: -- the repurchase of $422.7 million aggregate principal amount at maturity of Cox's convertible senior notes due 2021 that had been properly tendered and not withdrawn, for aggregate cash consideration of $304.2 million, which represented the accreted value of the repurchased notes; and -- capital expenditures of approximately $325.7 million. Please refer to the Summary of Operating Statistics for a break out of capital expenditures in accordance with industry guidelines. At March 31, 2003, Cox had approximately $7.1 billion of outstanding indebtedness (including cumulative derivative adjustments made in accordance with SFAS No. 133 which reduced reported indebtedness by approximately $1.4 billion). Cox Communications' March 31, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $300 million. USE OF OPERATING CASH FLOW AND FREE CASH FLOW Operating cash flow and free cash flow are not measures of performance calculated in accordance with accounting principles generally accepted in the United States. Operating cash flow is defined as operating income less depreciation and amortization. Free cash flow is defined as cash provided by operations less capital expenditures. Cox's management believes that presentation of these measures provides useful information to investors regarding Cox's financial condition and results of operations. Cox believes that operating cash flow, operating cash flow margin and free cash flow are useful to investors in evaluating its performance because they are commonly used financial analysis tools for measuring and comparing media companies in several areas of liquidity, operating performance and leverage. Both operating cash flow and free cash flow are used to gauge Cox's ability to service long-term debt and other fixed obligations and to fund continued growth with internally generated funds. In addition, management uses operating cash flow to monitor compliance with certain financial covenants in Cox's credit agreements and it is used as a factor in determining executive compensation. Operating cash flow and free cash flow should not be considered as alternatives to net income as indicators of Cox's aggregate performance or as alternatives to net cash provided by operating activities as a measures of liquidity and may not be comparable to similarly titled measures used by other companies. Cox Communications (NYSE: COX), a Fortune 500 company, is a multi-service broadband communications company serving approximately 6.3 million basic video customers nationwide. Cox is the nation's fourth-largest cable television provider, and offers both traditional analog video programming under the Cox Cable brand as well as advanced digital video programming under the Cox Digital Cable brand. Cox provides an array of other communications and entertainment services, including local and long distance telephone under the Cox Digital Telephone brand; high-speed Internet access under the brands Cox High Speed Internet and Cox Express; and commercial voice and data services via Cox Business Services. Cox is an investor in programming networks including Discovery Channel. More information about Cox Communications can be accessed on the Internet at http://www.cox.com CROWN CASTLE: Narrows First Quarter 2003 Net Loss to $83 Million ---------------------------------------------------------------- Crown Castle International Corp. (NYSE: CCI) reported results for the first quarter ended March 31, 2003. Total revenue for the first quarter of 2003 was $216.7 million, compared to $220.6 million for the first quarter of 2002. Site rental and broadcast transmission revenue for the first quarter of 2003 increased 15.4% to $185.0 million, up from $160.3 million for the same period in 2002. Net loss (after deduction of dividends on preferred stock and net of gains on repurchases of preferred stock of $3.3 million for first quarter 2003) improved to $83.4 million for the first quarter of 2003 from a net loss of $123.5 million for the same period in 2002. First quarter loss per share was $0.38 compared to a loss per share of $0.56 in last year's first quarter. Net cash from operating activities for the first quarter of 2003 was $5.9 million, down from $16.0 million for the same period in 2002. Capital expenditures for the first quarter were $52.8 million, down from $73.0 million for the same period in 2002. Free cash flow, defined as cash from operating activities less capital expenditures, for the first quarter of 2003 was a use of cash of $46.9 million, an improvement from a use of cash of $56.9 million for the same period in the prior year. OPERATING RESULTS US site rental revenue for the first quarter of 2003 increased 5.9% to $107.8 million, up from $101.8 million for the same period in 2002, and UK site rental and broadcast transmission revenue for the first quarter of 2003 increased 33.1% to $71.1 million, up from $53.5 million for the same period in 2002. These revenue results approximate same tower sales as a result of the fact that 97% of Crown Castle's sites on March 31, 2003 were in operation as of January 1, 2002. On a consolidated basis, site rental and broadcast transmission gross margin, defined as site rental and broadcast transmission revenue less site rental and broadcast transmission cost of operations, increased 13.6 percent to $111.6 million, up $13.4 million in the first quarter of 2003 from the same period in 2002. For the first quarter of 2003, US capital expenditures were $5.6 million, and UK capital expenditures were $46.2 million (including the $33.2 million payment to British Telecom as previously announced). Reflecting Crown Castle's strategic decision to de-emphasize non-core service revenues, network service revenue declined to $31.8 million for the first quarter of 2003 from $60.4 million for the same period last year. "Our operations exceeded our financial targets for the first quarter through our continued efforts to grow our recurring tower and broadcast business, reduce capital expenditures, and decrease working capital," stated W. Benjamin Moreland, CFO of Crown Castle. "As a result, we beat our targets for site rental and broadcast transmission revenue, net cash from operating activities and free cash flow for the first quarter. As we demonstrated at our Analyst Day on April 9th, we believe substantial tenant demand exists for our towers, which we expect will continue to drive additional long-term recurring revenue and cash flow to our existing tower portfolio. We believe organic leasing revenue will continue to be added during 2003 consistent with our previously announced expectations." During the first quarter of 2003, Crown Castle developed 34 sites, 31 of which were developed under our agreement with British Telecom in the UK. Also during the first quarter, Crown Castle repaid $22.9 million of senior credit facility debt (including $15.0 million in its CCA facility and $7.9 million in its UK facility). At March 31, 2003, Crown Castle had $851.4 million of total liquidity, comprised of $555.2 million of cash and cash equivalents and liquid investments, and total availability under its senior credit facilities of $296.2 million. CHANGES TO JOINT VENTURES WITH VERIZON On May 2, 2003, Crown Castle reached agreement with Verizon to extend certain termination rights relating to Verizon's interest in the Crown Castle Atlantic Joint Venture until July 2007 and exchange Verizon's ownership interests in the Crown Castle GT Joint Venture for additional ownership interests in CCA. Further, Crown Castle purchased from Verizon approximately 5.1 million shares of Crown Castle common stock previously held by CCGT, and CCA distributed 15.6 million shares of Crown Castle common stock previously held by CCA to Verizon. After giving effect to the agreements, Crown Castle owns 62.8% of CCA and 100% of CCGT. The purchase of the Crown Castle shares, along with a payment for working capital, resulted in the use of approximately $36.7 million in cash ($31.0 million for the shares and $5.7 million for the working capital). "We are extremely pleased with the commitment of Verizon, our largest US customer, to maintain its significant position in CCA for the foreseeable future," stated John P. Kelly, CEO of Crown Castle. "By extending Verizon's ownership in CCA until 2007, we have eliminated the near-term prospect of Verizon's election to exit the venture, which could have resulted in a significant near-term cash requirement on our business. Further, we are excited about continuing our cooperative partnership with Verizon in providing tower infrastructure." OUTLOOK Based in part on the results for the first quarter of 2003, Crown Castle has adjusted certain elements of its previously provided financial guidance for 2003, which results in expected free cash flow increasing from between a deficit of $35 million and $0 to between $20 million and $50 million for the full year 2003. The most significant adjustment relates to the removal of the remaining $45 million payment to British Telecom from the 2003 outlook. Crown Castle believes it will conclude negotiations with British Telecom to eliminate this final contractual obligation for site acquisition. Crown Castle's 2003 and 2004 projected net cash provided by operating activities assumes the effect of converting paid-in-kind interest to cash pay for the 10-5/8%, 10-3/8%, and 11-1/4% Senior Discount Notes and the 12-3/4% Senior Exchangeable Preferred Stock. Crown Castle International Corp. engineers, deploys, owns and operates technologically advanced shared wireless infrastructure, including extensive networks of towers and rooftops as well as analog and digital audio and television broadcast transmission systems. Crown Castle offers near- universal broadcast coverage in the United Kingdom and significant wireless communications coverage to 68 of the top 100 United States markets, to more than 95 percent of the UK population and to more than 92 percent of the Australian population. Crown Castle owns, operates and manages over 15,500 wireless communication sites internationally. For more information on Crown Castle, visit: http://www.crowncastle.com As previously reported in Troubled Company Reporter, Standard & Poor's lowered its corporate credit rating on wireless tower operator Crown Castle International Corp., to 'B-' from 'B+', and removed the rating from CreditWatch with negative implications. The outlook is negative. The downgrade was due to concerns that weak tower industry fundamentals would make it unlikely for Crown Castle to reduce its heavy debt burden in the foreseeable future and contribute to increased liquidity risk starting in 2004. Crown Castle Int'l Corp.'s 11.25% bonds due 2011 (CCI11USR5) are trading at about 83 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=CCI11USR5for real-time bond pricing. DAISYTEK INT'L: Names Dale A. Booth Interim President and CEO ------------------------------------------------------------- The Board of Directors of Daisytek International Corporation (Nasdaq:DZTK) has accepted the resignations of two Daisytek senior executives. James R. Powell stepped down as President and Chief Executive Officer, a position he had held since early 2000. Powell ceded his position on the Board of Directors as well. Ralph Mitchell, Executive Vice President and Chief Financial Officer, resigned for personal reasons. Dale A. Booth, who had been serving as Executive Vice President and Chief Operations Officer, was named Interim President and Chief Executive Officer. Booth is expected to name a new Chief Financial Officer within days. In addition, John D. (Jack) Kearney, previously Executive Vice President and Acting Chief Financial Officer, has accepted the newly created role of Executive Vice President and Chief Restructuring Officer, reporting to the Daisytek Board of Directors. "Although Daisytek faces significant financial and operational challenges, I am fortunate to be supported by great depth and breadth of experience in key leadership positions, and we are determined to take the steps necessary to achieve success," Booth stated. Booth has been a member of Daisytek's Board of Directors since 2000 and remained on the Board as an inside Director after joining the executive team in March of this year. Prior to joining Daisytek, he was Chairman and CEO of EngineX Networks and also spent 14 years with Fujitsu Network Communications in progressively responsible positions. Continuing in their Business Unit leadership roles are Bruce Robinson, President, ISA plc; Peter Wharf, President, International and George Babyak, President, US Subsidiaries. On Apr. 28, 2003, Daisytek announced that the company expected a significant loss for the fourth quarter of FY2003 and stated that financing options and reorganization alternatives were being evaluated, including the possibility of voluntary Chapter 11 filing under the U.S. Bankruptcy Code for one or more of the company's U.S. subsidiaries. Reductions in force are occurring in Daisytek's corporate headquarters in Allen, Texas as well as in distribution facilities located in Memphis, Tenn., Bakersfield, Calif., and Albany, NY. The company expects to release additional details as soon as possible. "We are working closely with our lenders, advisors and other interested parties around the world to ensure that we identify and explore every viable source of additional capital for the company," Booth continued. "Daisytek executives have taken voluntary compensation reductions and we continue to aggressively pursue other cost-savings plans that have been put into place." Daisytek is a global distributor of computer supplies, office products and accessories and professional tape media. Daisytek sells its products and services in North America, South America, Europe and Australia. Daisytek is a registered trademark of Daisytek, Incorporated. EAGLE FOODS: Seeks Extension for SEC Form 10-K Filing Deadline -------------------------------------------------------------- Eagle Food Centers, Inc., which owns and operates 60 supermarkets in Illinois and Iowa, intends to file today with the Securities and Exchange Commission pursuant to Rule 12b-25 to extend the filing date of its Annual Report on Form 10-K to Saturday May 17, 2003. On April 7, 2003 the Company filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code. The 15- day extension for the filing by the Company of its Annual Report on Form 10-K for the fiscal year ended February 1, 2003 is necessary to permit the Company to ensure that its consolidated financial statements to be included in the 2002 Annual Report on Form 10-K fairly present the Company's financial condition and results of operations. The extension will permit the Company to properly account for and assess the significant business changes affecting the Company. The conclusions that will result from the Company's ongoing assessment of these issues are not yet complete. The Company needs additional time to complete the disclosure in the annual report on Form 10-K as required by the Securities Exchange Act of 1934. Form 12b-25 requires the Company disclose any anticipated significant change in results of operations from the corresponding period for the last fiscal year. In accordance with this requirement, the Company expects to report a net loss of approximately $17.8 million for the fiscal year ended February 1, 2003 compared to a net loss of approximately $1.5 million for year ended February 2, 2002. The increased loss for the fiscal year ended 2003 was primarily due to a decrease in sales related to increased competition, an increase in health and welfare and wage costs and impairment charges on long- lived assets. Eagle operates 59 Eagle Country Markets and one Bogo's Food and Deals. The company employs approximately 3,550 at its stores and its headquarters and central distribution in Milan, Illinois. EB2B COMMERCE: Receives Balance of Escrowed Financing Proceeds -------------------------------------------------------------- On April 29, 2003, eB2B Commerce, Inc. received the balance of the proceeds held in escrow in connection with the Company's prior financing which initially closed in July 2002. All subscription proceeds from the Financing, aggregating $1,200,000, were initially held in escrow pursuant to the Escrow Agreement between the Company and the escrow agent and thereafter released as follows: $350,000 was released to the Company upon the initial closing of the Financing on July 15, 2002, $275,000 was released to the Company on September 11, 2002, $275,000 was released to the Company on November 4, 2002, and the balance of the proceeds held in escrow was released to the Company on April 29, 2003. As a result of the Financing, the Company has issued an aggregate of $1,200,000 principal amount of five-year 7% senior subordinated secured convertible notes. The release of funds from escrow triggered anti-dilution provisions affecting the conversion price of certain notes issued in the Company's private placement in January 2002, Series B preferred stock and Series C preferred stock and the exercise price of and number of shares issuable under various outstanding warrants. eB2B Commerce, which reported a working capital deficit of about $3.2 million at Sept. 30, 2002, is a leading provider of electronic business-to-business services that simplify trading partner integration and collaboration for order management and supply chain execution. The eB2B Trade Gateway and Outsourcing Services solutions provide enterprises large and small with low cost, high return methods for allowing trading partner relationships to be more productive and profitable. eB2B Commerce's December 31, 2002 balance sheet shows a working capital deficit of about $3 million, and a total shareholders' equity deficit of about $4 million. EGAIN COMMS: Red Ink Continues to Flow in March 2003 Quarter ------------------------------------------------------------ eGain Communications Corporation (Nasdaq:EGAN), a leading provider of eService software for the Global 2000, announced financial results for the third quarter of fiscal year 2003. Revenue for the quarter ended March 31, 2003 was $5.2 million, compared to $5.9 million for the quarter ended March 31, 2002 and $5.8 million for the quarter ended December 31, 2002. On a generally accepted accounting principles basis, including non-cash and restructuring charges, net loss was $4.2 million, or $0.11 per share, for the quarter ended March 31, 2003. For the quarter ended March 31, 2002, GAAP net loss was $20.6 million and for the quarter ended December 31, 2002, GAAP net loss was $2.4 million. Pro forma net loss was $120,000 for the quarter ended March 31, 2003, compared to a pro forma net loss of $7.1 million for the quarter ended March 31, 2002 and pro forma net income of $56,000 for the quarter ended December 31, 2002. Business Outlook: "In the face of an uncertain market, we executed in line with our long-term commitment to fiscal prudence, product innovation, and customer satisfaction," said Ashutosh Roy, CEO of eGain. "With two quarters of break-even EBDA performance under our belt, we are optimistic about our business prospects. Last quarter, we launched our 6th generation solution, eGain Service 6. Gartner rated our offering as visionary in their 2003 eService Magic Quadrant. We believe enterprises seeking to provide cost-effective, differentiated service are particularly attracted to our solution. It includes, what we believe to be, a powerful new capability for rapidly modeling business processes in the contact center across all interaction channels by leveraging a common knowledge base, visual workflow tools, and flexible adapters. "Our partner investments in international markets yielded encouraging results in the March 2003 quarter. In North America, we rebuilt our sales infrastructure and improved our business pipeline. In the March 2003 quarter, eGain signed 9 new customers worldwide, including Amatech, SA, Barclays Stockbrokers, Hitachi, ice.Com, Omron Corporation and Merkur Einbeck. We also expanded our relationship with several existing customers including Barclays Business Banking, BG Transco, Cheltenham and Gloucester, Monster.com, Morningstar.com, Teleperformance USA and Vodafone Ireland. "Looking ahead, we remain focused on the market opportunity for high-impact contact center and customer service software solutions. This need is fueled by fundamental globalization and infrastructure consolidation trends. We believe we are uniquely positioned to benefit from addressing this need through innovative, cost-effective solutions for our customers." March Quarter Financial Highlights Revenue: Revenue for the March 2003 quarter was $5.2 million, representing a decrease of 10% from the prior quarter and a decrease of 12% from the comparable year-ago quarter. Licensed Revenue was $983,000, representing a decrease of 46% from the prior quarter and a decrease of 21% from the comparable year-ago quarter. Hosting Revenue was $885,000, representing a decrease of 3% from the prior quarter and a 5% decrease from the comparable year-ago quarter. Support and services revenue was $3.4 million, representing an increase of 8% from the prior quarter and a decrease of 10% from the comparable year-ago quarter. International revenue accounted for 55%, and domestic revenue accounted for 45% of total revenue for the quarter, consistent with the prior quarter. International revenue accounted for 43% and domestic revenue accounted for 57% of total revenue for the comparable year-ago quarter. Pro forma Costs and Expenses (excluding amortization, accreted dividends and restructuring charges but including depreciation): In the March 2003 quarter, gross profit was $3.2 million, resulting in a gross margin of 62% versus a gross margin of 61% in the prior quarter and 39% in the comparable year-ago quarter. Total operating costs and expenses were $4.2 million, representing a decrease of $590,000 or 12% from $4.8 million in the prior quarter and a decrease of $6.6 million or 61% from $10.8 million for the comparable year-ago quarter. Research and development expense was $1.4 million for the quarter, remaining unchanged from the prior quarter and representing a decrease of 42% from the comparable year-ago quarter. Sales and marketing expense was $1.8 million for the quarter, representing a 17% decrease from the prior quarter and a decrease of 69% from the comparable year-ago quarter. General and administrative expense was $1.0 million for the quarter, representing a decrease of 17% from the prior quarter and a decrease of 58% from the comparable year-ago quarter. Other income was $9,000 for the quarter compared to other income of $262,000 in the prior quarter and other expense of $71,000 for the comparable year-ago quarter. Other income for the December 2002 quarter included a legal settlement of $357,000. Earnings: During the March 2003 quarter, pro forma EBDA net loss was $120,000 compared to pro forma EBDA net profit of $56,000 in the prior quarter and a pro forma EBDA net loss of $7.1 million in the comparable year-ago quarter. On a GAAP basis net loss for the March 2003 quarter was $4.2 million versus a net loss of $2.4 million in the prior quarter and $20.6 million in the comparable year-ago quarter. The March 2003 quarter included a total restructuring expense of approximately $512,000 related primarily to the closure of an international office, severance payments, and fixed assets write-offs. The December 2002 quarter included a net reduction of previously accrued restructuring charges of $1.3 million. Balance Sheet Cash: Total cash and cash equivalents at the end of the March 2003 quarter were approximately $4.3 million compared to approximately $5.9 million at the end of December 2002 and approximately $15.9 million at the end of March 2002. Included in the $4.3 million balance was $1.1 million of restricted cash compared to $1.4 million of restricted cash in the prior quarter. There was no restricted cash at the end of March 2002. eGain Communications' March 31, 2003 balance sheets shows that its accumulated deficit further widened to over $300 million due to recurring losses, while its total shareholders' equity continued to be depleted with about $6 million recorded at the same date, as compared to over $15 million recorded nine months ago. Days Sales Outstanding: DSO for the March 2003 quarter was 58 days compared to 62 days during the prior quarter and 89 days during the comparable year- ago quarter. eGain (Nasdaq:EGAN) is a leading provider of software and services for the Global 2000 that enable knowledge-powered multi-channel customer service. Selected by 24 of the 50 largest global companies to transform their traditional call centers into multi-channel contact centers, eGain solutions measurably improve operational efficiency and customer retention -- thus delivering a significant return on investment (ROI). eGain eService Enterprise -- the company's integrated software suite - - includes applications for knowledge management, self-service, email management, Web collaboration and productized integrations with existing call center infrastructure and business systems. Headquartered in Sunnyvale, Calif., eGain has an operating presence in 18 countries and serves over 800 enterprise customers on a worldwide basis -- including ABN AMRO Bank, DaimlerChrysler, and Vodafone. To find out how eGain can help you gain customers and sustain relationships, please visit http://www.eGain.com ENRON CORP: Wants Equity Trades Restricted to Protect NOLs ---------------------------------------------------------- Brian S. Rosen, Esq., at Weil, Gotshal & Manges LLP, in New York, relates that Enron Corporation and debtor-affiliates are in the process of developing a Chapter 11 plan. The process includes the creation of a model illustrating the distributions available, discussions with the Creditors' Committee, the Examiner and specific creditor constituencies. Pursuant to Section 172 of the Internal Revenue Code, a corporation may carry forward net operating losses and capital losses -- the NOLs -- to offset future income, thereby reducing the corporation's tax liability in future periods. The Debtors' 2001 federal income tax return claims NOLs as of December 31, 2001 to more than $7,500,000,000 of ordinary losses and $750,000,000 of capital losses. The Debtors expect that additional NOLs will be reflected on their federal income tax return for the year ended December 31, 2002. Based on current projections, the Debtors expect to recognize substantial amounts of taxable income and gains arising from asset sales and restructuring transactions pursuant to a Chapter 11 plan. Mr. Rosen notes that the Debtors' ability to use their NOLs to reduce the federal income tax liability will enhance their cash position and significantly contribute to their effort towards a successful Chapter 11 plan. However, Mr. Rosen points out that the Debtors' ability to utilize their NOLs is subject to certain statutory limitations. One limitation is that, a corporation that undergoes an "ownership change," limits the corporation's ability to use its NOLs to offset future income. Accordingly, by this motion, the Debtors seek the Court's authority to establish procedures to notify holders of each class of Enron's common stock and preferred stock of: (a) the injunction prohibiting the acquisition of Stock ownership above a certain threshold; and (b) the notification procedures that must be satisfied at least 20 days before the Stock transfer by shareholders who already own Stock above a certain threshold. Specifically, the Debtors to establish these procedures: A. Any person and any entity within the meaning of Section 382 of the Internal Revenue Code is stayed, prohibited, and enjoined, pursuant to Sections 362 and 105(a) of the Bankruptcy Code, (i) in the case of a person or Entity who does not own any class of Stock, or who owns less than 4.75% of each class of Stock, from purchasing, acquiring, or otherwise obtaining ownership of an amount of any class of Stock which, when added to that person's or Entity's total Ownership of that class of Stock, if any, equals or exceeds 4.75% of that class of Stock; or (ii) in the case of a person or Entity who owns at least 4.75% of any class of Stock, from Acquiring Ownership of any additional shares of Stock; B. In the event that a person or Entity who owns at least 4.75% of any class of Stock proposes to transfer Ownership of any share of that Stock, then that person or Entity, and any other person or Entity who by reason of that transaction would Acquire Ownership of the share of Stock, must, at least 20 days prior to the consummation of any of the transaction, file with the Court and serve on the Debtors and their attorneys a notice. The prospective transferee will join in the filing or may make a separate filing. The Debtors will have 20 days after receipt of a joint filing or, in the event of separate filings, the later of that filings to object to the transaction. In the event that the Debtors file an objection, then the transaction will not be effective unless approved by a final and non-appealable Court order. In the event that the Debtors do not object within the 20-day period, then the transaction may proceed solely as set forth in the notice. Further transactions within this scope must be the subject of additional notices with an additional 20- day waiting period. In the event that the Debtors voluntarily advise that person or Entity, in writing, prior to the 20th day that they do not object, the person or Entity may proceed with the proposed transaction; C. For purposes of this request, (i) "Ownership" of the Debtors' Stock will be determined in accordance with applicable rules under Section 382 and, thus, will include, but not be limited to, direct and indirect ownership, ownership by members of a person's family and persons acting in concert, and in certain cases, the creation or issuance of an option, and (ii) any variation of the term "Ownership" will have the same meaning; and D. The Debtors may waive, in writing, any restrictions and stays contained in this request. Mr. Rosen argues that the Debtors' request is well supported by law and should be granted because: (a) the Second Circuit held that the debtor's NOL was property of the estate under the broad language of Section 541 of the Bankruptcy Code; (b) the Second Circuit further held that the parent corporation's claiming of a worthless stock deduction in respect of stock of the debtor subsidiary would effectively eliminate the value of the debtor's NOL and thus would be an act to exercise control over estate property in violation of the automatic stay; (c) the proposed restrictions and notification requirements are necessary to preserve the Debtors' NOLs, which are valuable assets of the Debtors' estates, while providing latitude for trading in Stock below specific levels; (d) the Debtors expect that they will utilize their NOLs to eliminate a significant amount of income tax liability resulting from asset sales and restructuring transactions in connection with the Chapter 11 plan; (e) maintenance of the NOLs is critical to the Debtors' prospects for a successful emergence from Chapter 11, which warrants the Court's exercise of its equitable powers pursuant to Section 105(a) of the Bankruptcy Code; (f) it will prevent an irrevocable loss of the potential tax savings associated with the Debtors' NOLs; and (g) the relief requested is only for certain types of Stock trading which pose serious risk under the ownership change rules of the tax law. (Enron Bankruptcy News, Issue No. 64; Bankruptcy Creditors' Service, Inc., 609/392-0900) DebtTraders reports that Enron Corp.'s 9.875% bonds due 2003 (ENRN03USR3) are trading at about 18 cents-on-the-dollar. See http://www.debttraders.com/price.cfm?dt_sec_ticker=ENRN03USR3 for real-time bond pricing. FAST FERRY: Committee Brings-In Broege Neumann as Attorneys ----------------------------------------------------------- The Official Committee of Unsecured Creditors appointed in the Chapter 11 cases of Fast Ferry II Corp., asks for approval from the U.S. Bankruptcy Court for the District of New Jersey to engage the services of Broege, Neumann, Fischer & Shaver, LLC as its attorneys. The Committee expects Broege Neumann to: a) give advice to the Committee with respect to its powers and duties and to counsel it with regard to the Debtor's Chapter 11 proceedings; b) negotiate with the Debtor as to payment of unsecured claims and to formulate a plan of reorganization; c) prepare on behalf of the Committee, all necessary applications, answers, orders, reports, objections and other legal papers; d) appear before the Bankruptcy Court and to protect the interest of the Committee before the Bankruptcy Court and to represent the Committee in all matters pending before the Bankruptcy Court; and e) perform all other legal services for the Committee which may be necessary. The professionals expected to provide their expertise in this engagement and their current hourly billing rates are: Peter J. Broege $250 per hour Timothy E. Neumann $250 per hour David E. Shaver $250 per hour Joseph A. Casello $200 per hour Linda Oro, Paralegal $ 65 per hour Fast Ferry I Corp., and Fast Ferry II Corp., are affiliates of Lighthouse Fast Ferry Inc., which are in the business of operating high-speed, passenger ferry services in the greater New York City harbor area. The Company filed for chapter 11 protection on January 10, 2003 at the U.S. Bankruptcy Court for the District of New Jersey. Daniel Stolz, Esq., at Wasserman, Jurista & Stolz represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, Fast Ferry I listed $4,840,876 in assets and $5,318,028 in liabilities while Fast Ferry II listed $4,841,021 in assets and $5,391,172 in liabilities. FLEMING COS.: Roundy's Expect to Complete Acquisition in a Month ---------------------------------------------------------------- Roundy's, Inc. has signed an agreement to purchase the assets of 31 Rainbow Foods stores from the Fleming Companies, Inc. Thirty stores are located in the Minneapolis-St. Paul metropolitan area and one store is located near Schofield, Wisconsin. In addition, Roundy's will hire all of the employees currently employed at those 31 stores. The aggregate consideration to be paid for the transaction is $42.5 million, plus the value of store inventories (estimated at approximately $40 million) and the assumption of capitalized leases of approximately $36 million. "This acquisition represents a natural extension of our retail grocery business and we are pleased to have the opportunity to revitalize the Rainbow shopping experience for discerning customers in the Minneapolis-St. Paul market," commented Robert A. Mariano, Chairman and CEO of Roundy's. "We are happy to be able to join these stores with Roundy's 80 company owned stores, which will provide the associates of Rainbow with a stable platform on which to continue to grow the Rainbow business." The transaction, which is expected to be completed within the next 60 days, is subject to approval by the U.S. Bankruptcy Court in Wilmington, Delaware and other customary regulatory approvals and closing conditions. Roundy's, Inc. is one of the nation's oldest and largest food wholesale and retail companies. Founded in 1872, Roundy's, Inc. today is a company approaching $4 billion in annual sales, supplying over 800 supermarkets in fourteen states from eight distribution centers. In addition, Roundy's, Inc. is the leading retail supermarket chain in Wisconsin operating more than 80 stores as Pick 'n Save and Copps Food Centers. The company employs over 14,000 associates throughout its entire network and is owned by investment funds controlled by Willis Stein & Partners, which is based in Chicago. FLEMING COMPANIES: Signs-Up PwC to Perform Forensic Accounting -------------------------------------------------------------- Fleming Companies, Inc., and its debtor-affiliates seek to employ and retain PricewaterhouscCoopers LLP as forensic accountants for the audit committee of the Board of Directors. Christopher J. Lhulier, Esq., at Pachuksi Stang Ziehl Young Jones & Weintraub, P.C., in Wilmington, Delaware, tells the Court that the Debtors are familiar with the professional standing and reputation of PricewaterhouseCoopers. The Debtors understand that PricewaterhouseCoopers has a wealth of experience in providing forensic accounting services in restructurings and reorganizations and enjoys an excellent reputation for services it has rendered in large and complex Chapter 11 cases on behalf of debtors and creditors throughout the United States. According to Mr. Lhulier, the Debtors retained PwC in March 2003 for the discrete task of assisting the Audit Committee in response to the Shareholder Litigation and the SEC Investigation. Since its association with the Debtors, PricewaterhouseCoopers has developed a great deal of institutional knowledge regarding the Debtors' operations, finances and information systems. This experience and knowledge will be valuable to the Debtors in their efforts to research the allegations in tire Shareholder Litigation and in the SEC Investigation. Accordingly, the Debtors wish to retain PricewaterhouseCoopers to provide assistance with the Shareholder Litigation and the SEC Investigation. PricewaterhouseCoopers' services are necessary to enable the Debtors to maximize the value of their estate and to reorganize successfully. Further, PricewaterhouseCoopers is well qualified and able to represent the Debtors in a cost-effective, efficient and timely manner. PricewaterhouseCoopers will provide forensic accounting services for the Audit Committee, and as their attorneys or financial advisors, and PricewaterhouseCoopers deem appropriate and feasible in order to advise the Debtors in the course of this Chapter 11 case, including: A. Completion of the forensic investigation commenced prior to the bankruptcy. B. Assist Debtors in evaluating the impact of findings from the forensic investigation in the context of ongoing company accounting and reporting responsibilities. C. Identify documents relevant to issues within the scope of forensic investigation for further review by the Company or the Audit Committee counsel. D. Present findings to relevant parties of the results of the forensic investigation. E. Performance of other related forensic accounting services, as may be necessary or desirable. PwC Partner Lawrence F. Ranallo assures the Court that the Firm: (i) has no connection with the Debtors, their creditors or other parties-in-interest in this case; (ii) does not hold any interest adverse to the Debtors' estate; and (iii) believes it is a "disinterested person" as defined within Section 101(14) of the Bankruptcy Code. However, he admits that PwC currently provides, in the past has provided, or in the future may provide audit services to these parties in unrelated matters: A. Major Equity Holder: Allianz AG, Barclays Global Investors, Brandywine Asset Management Inc., Goldman Sachs & Co., Legg Mason Inc., Maverick Capital Ltd., Mellon Financial Corp., Royce & Association Inc., Southeastern Asset Management Inc., State Street Corp., Vanguard Group and Wasatch Advisors Inc.; B. Lenders: AIG, Bank of America, Barclays Venture Corp., BNP Paribas, CIT Business Credit, Conseco, Credit Agricole Indosuez, Deerfield, Eaton Vance Corp., FleetBoston Financial Corp., Fortis Financial Services LLC, Franklin Float Rate Trust, Highland, ING Investments LLC, JP Morgan Chase, Manufacturers & Traders Trust Co., New York Life Insurance Co., Nomura, Oppenheimer, Prudential, RZB AG, Strategic Advisor Inc., SunAmerica Life, and Travelers Property Casualty Corp.; C. Indenture Trustees: Bank One and Bankers Trust; and D. Underwriters: Citibank NA, Deutsche Bank AG, Deutsche Bank Alex Brown, M&T, Salomon Smith Barney, and UBS Warburg. PricewaterhouseCoopers will periodically review its files to ensure that no conflicts or other disqualifying circumstances exist or arise. If any new facts or circumstances are discovered, PricewaterhouseCoopers will supplement its disclosure to the Court. During its employment with the Debtors preceding the Petition Date, Mr. Ranallo informs the Court that PricewaterhouseCoopens was paid $1,237,672 in professional fees and in expenses in connection with the Audit Committee's investigation. PricewaterhouseCoopers has received $75,000 as a retainer and $163,359 as prepayment for professional services to be rendered to the Debtors in connection with the Audit Committee's investigation. In addition, the Retainer and the Prepayment, PricewaterhouseCoopers estimates that the fees for their services in completing the Initial Investigation are expected to be $500,000, excluding expenses. After the Initial Investigation has been completed, the Debtors and PricewaterhouseCoopers may agree to extend PricewaterhouseCoopers' forensic accounting cngagcmcnt at the same hourly rates set forth in thus Application. PricewaterhouseCoopers and the Debtors considered the following factors in fixing the Retainer and Prepayment: -- the possible continued services required as part of the Initial Investigation, -- the size and nature of the Debtors' operations, -- the time which PricewaterhouseCoopers will be required to devote to rendering services to the Debtors, and -- the time constraints in connection with the commencement of these Chapter 11 cases, the Shareholder Litigation, and the SEC Investigation. The customary hourly rates, subject to periodic adjustments, charged by PwC's personnel anticipated to be assigned to this case are: Partners $475 Directors $390 Managers $325 Senior Associates $250 Associates $175 Administration/Paraprofessionals $50 Mr. Ranallo states that the hourly rates are PwC's standard hourly rates for work of this nature. It is PwC's policy to charge its clients in all areas of practice for all direct out- of-pocket expenses incurred in connection with the client's case, including certain flat-rate amounts that reflect an allocation of estimated costs, including those associated with airline ticketing and general office services, including computer usage, telephone charges, facsimile transmissions, postage, and photocopying. (Fleming Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) GE CAPITAL: Fitch Upgrades 6 Low-B-Rated Classes of P-T Certs. -------------------------------------------------------------- Fitch Ratings has taken rating actions on the following GE Capital Mortgage Services mortgage pass-through certificate: GE Capital Mortgage Services, mortgage pass-through certificates, series 2000-6 -- Class M affirmed at 'AAA'; -- Class B-1 affirmed 'AAA'; -- Class B-2 upgraded to 'AA+' from 'AA'; -- Class B-3 affirmed at 'BBB+'; -- Class B-4 affirmed at 'BB'. GE Capital Mortgage Services, mortgage pass-through certificates, series 2000-7 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'BBB'; -- Class B-3 affirmed at 'BB'; -- Class B-4 affirmed at 'B'. GE Capital Mortgage Services, mortgage pass-through certificates, series 2000-9 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'A'; -- Class B-2 upgraded to 'AAA' from 'BBB'; -- Class B-3 upgraded to 'AA+' from 'BB'; -- Class B-4 upgraded to 'BBB-' from 'B'. GE Capital Mortgage Services, mortgage pass-through certificates, series 2000-10 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'A'; -- Class B-2 upgraded to 'AAA' from 'BBB'; -- Class B-3 upgraded to 'AA' from 'BB'; -- Class B-4 affirmed at 'B'. GE Capital Mortgage Services, mortgage pass-through certificates, series 2000-11 -- Class M affirmed at 'AAA'; -- Class B-1 upgraded to 'AAA' from 'AA'; -- Class B-2 upgraded to 'AAA' from 'A'; -- Class B-3 upgraded to 'AA' from 'BBB'; -- Class B-4 upgraded to 'BB+' from 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. GEERLINGS & WADE: Obtains Waiver of Loan Covenant Violations ------------------------------------------------------------ Geerlings & Wade, Inc. (Nasdaq SmallCap: GEER) -- http://www.geerwade.com-- the nation's largest direct mail and Internet retailer of premium wines and wine-related products to consumers, reported financial results for the first quarter of 2003. For the quarter ended March 31, 2003, sales were $5.0 million, a decrease of 32% from 2002 first quarter sales of $7.4 million. The Company had a net loss of $985,000, compared to a net loss of $741,000 for the first quarter of 2002. For the first quarter of 2003, the company reduced selling, general and administrative expense by $1.2 million. This was due in part from lower variable expense as a result of lower sales, and also marketing expense was reduced by $708,000 and salary expense by $258,000 as compared to the first quarter of 2002. Certain order fulfillment expenses increased during the first quarter of 2003 resulting from the conversion to a new, more efficient, fulfillment operation as well as from changes in promotional offers. As a result of switching to our new restructured fulfillment operation the timing of product flow was altered, resulting in our not shipping approximately $750,000 of orders received during the quarter. Those orders would have been shipped and recognized as sales under the old fulfillment system. The effect of these orders not shipping resulted in reducing net income by approximately $255,000. There will be additional transitional expenses associated with the shift to the new fulfillment operation, but in the long run it will reduce overall expenses and will result in a more variable cost model. Mr. Geerlings stated, "This was a challenging first quarter for direct marketers like Geerlings & Wade. On the positive side, we met our objectives for the rollout of a modified customer acquisition strategy and our new in- home events program is developing according to plan. Sales were negatively affected during the war with Iraq, which has resulted in orders being approximately 11% below plan for the quarter. We have seen sales levels pick up during the first weeks of the second quarter, and April sales are likely to exceed April's sales for 2002. If the performance of our new customer acquisition programs continues at the current levels, we will see sales volume stabilize and then improve on a year-over-year basis beginning sometime later this year. We will continue the process of improving our business methods, and we will maintain a course geared to achieving moderate revenue growth and positive cash flow by year-end." Richard Libby, Chief Marketing Officer stated, "In spite of the difficult and soft economic conditions late in the first quarter, we continue to increase the size of our customer file on a year-over-year basis at reasonable acquisition costs. New customer additions are critical to reach our target of top line sales growth for this year and beyond. We anticipate that our active customer file will be largely rebuilt by year-end." The Company as a result of the weaker than expected sales and higher expenses violated certain financial covenants of the credit agreement with its outside directors in the quarter ended March 31, 2003. The directors have agreed to waive these covenant violations and any future financial covenant violations through May 2003 and the Company intends to seek an amendment to the credit agreement to reflect new covenants based on revised financial projections. The Company believes it will have adequate cash flow to repay its loan to the directors upon the credit facility's scheduled termination without significant adjustments to its business plan in 2003. Geerlings & Wade, founded in 1986, is America's leading direct retailer of fine wine and wine accessories with retail locations in 15 states, home and office delivery to 27 states, and a devoted following of thousands of regular customers and wine club members. The Canton, MA-based Company has developed a unique, streamlined purchasing system that allows it to source quality wines directly from the world's greatest wineries. G&W has cultivated relationships with hundreds of renowned wineries and negotiants in France, Italy, Australia, Chile and California. For additional information visit http://www.geerwade.com GLOBAL CROSSING: Wants Approval for Intercompany Asset Transfer --------------------------------------------------------------- Michael F. Walsh, Esq., at Weil Gotshal & Manges LLP, in New York, recounts that on September 29, 2000, certain Global Crossing entities, including SAC Brasil Ltda., and Latin American Nautilus Ltd. entered into that certain Dim Fiber and Capacity Purchase Agreement, whereby, among other things, SAC Brasil agreed to: -- transfer to LAN dark and dim fiber IRUs on portions of the Network located in Brazil; and -- provide certain maintenance and other services. In exchange for the Brazil IRUs, LAN was obligated to pay SAC Brasil $29,000,000. In accordance with the Dim Fiber Agreement, LAN assigned its rights with respect to the Brazil IRUs to one of its affiliates, Latin American Nautilus Brasil Ltda. During the second, third and fourth quarters of 2001, Mr. Walsh reports that Global Crossing Europe Ltd. received $29,000,000 for the Brazil IRUs. As the Brazil IRUs were sold by SAC Brasil to LAN, these payments were, under the terms of the Dim Fiber Agreement, due SAC Brasil, not GC Europe. Brazilian Central Bank regulations generally require that payments owed to a Brazilian company must be remitted in Brazil and strictly delineate the permitted methods of remittance. The Debtors could incur substantial fines and penalties under Brazilian law if it were determined that they were not in compliance with the Regulations. Thus, the Debtors ask Judge Gerber to approve an agreement among GC Europe, SAC Brasil, LAN, LAN Brasil and Latin American Nautilus S.A. to restructure the Payment to avoid any doubt with respect to compliance with the Regulations. Pursuant to the Agreement, the Payment will be refunded by GC Europe to LAN SA. After receipt, LAN SA will transfer the Payment to LAN Brasil, which will then transfer the Payment to SAC Brasil as the consideration due and owing to SAC Brasil under the Dim Fiber Agreement. The Parties will appoint a bank to facilitate transfers contemplated under the Agreement. The salient terms of the Agreement are: A. LAN SA and GC Europe will irrevocably appoint a mutually agreeable bank to act as the Account Bank. The Account Bank will agree to establish an account in the name of LAN SA in the New York Branch of the Account Bank. B. GC Europe will deposit $29,000,000 into the Account. C. LAN SA and GC Europe will irrevocably instruct the Account Bank, after receipt of the LAN SA Payment, to immediately transfer these funds to LAN Brasil in a bank account opened by the Account Bank in a branch located in Brazil in LAN Brasil's name. D. The Account Bank is irrevocably instructed to transfer the LAN Brasil Payment as soon as feasible to a SAC Brasil account. E. The Account and the LAN Brasil Account will be operated by the Account Bank as provided in the Agreement and any amount in the Account will be paid out only in accordance with the Agreement. F. Any failure in SAC Brasil's timely receipt of the funds as specified in the Agreement will be deemed a material breach of LAN and LAN Brasil's obligations under the Dim Fiber Agreement and Global Crossing will have the right to suspend use of the Brazil IRUs until the payment is made in full, as well as any other remedies that Global Crossing has at law, including a drawdown on the Telecom Italia S.P.A. guaranty provided in connection with the Dim Fiber Agreement. Mr. Basta contends that these transfers will avoid any doubt with respect to SAC Brasil's compliance with the Brazilian Central Bank regulations and thus significantly reduce the risk of potentially substantial fines and penalties. The Debtors have determined, in the sound exercise of business judgment, that the transfers contemplated by the Agreement will best serve the Debtors, their creditors, and all parties-in-interest. The $29,000,000 transfer to SAC Brasil via LAN SA and LAN Brasil will allow SAC Brasil to better comply with the Regulations and avoid substantial fines and penalties. The Agreement contains these safeguards for GC Europe and SAC Brasil and is designed to minimize any risk to the Debtors: A. The Agreement contemplates irrevocable instructions to the Account Bank to make the LAN Brasil Payment; B. The Agreement contemplates irrevocable instructions to the Account Bank to make the SAC Brasil Payment, and this payment will be made with minimum delay; C. A default by the LAN Entities under the Agreement is deemed a default under the Dim Fiber Agreement, pursuant to which the Debtors may suspend the Brazil IRUs; and D. Telecom Italia's guaranty provided in connection with the Dark Fiber Agreement covers the repayment due from LAN and LAN Brasil. The Debtors believe that these safeguards will: (i) substantially reduce the likelihood that any LAN Entity would take deliberate actions to redirect the LAN SA Payment or the LAN Brasil Payment away from SAC Brasil; and (ii) induce cooperation from the LAN Entities should any unforeseeable problems arise prior to the SAC Brasil Payment. The Debtors believe that the benefits they will realize from the Agreement and the transfers contemplated are self-evident and clearly justified, particularly because of the substantial safeguards provided pursuant to the terms of the Agreement. (Global Crossing Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 609/392-0900) IMAX CORP: March 31 Balance Sheet Insolvency Narrows to $101MM -------------------------------------------------------------- IMAX Corporation (Nasdaq: IMAX; TSX: IMX) reported net earnings from continuing operations of $0.07 per share on a basic and fully diluted basis for the first quarter ended March 31, 2003. The first quarter results, which exceeded analyst estimates, compare to earnings from continuing operations of $0.06 per share in the prior-year period which excludes a $0.26 per share gain from the Company's 2002 repurchase of certain of its subordinated notes. Including the gain on the repurchase of the subordinated notes, the Company reported net earnings of $0.07 per share on a basic and fully diluted basis compared to net earnings of $0.32 per share in the first quarter of 2002. "We are very pleased with our quarterly results, which continue to demonstrate the fundamental positive change that our business has experienced over the last twelve months," said IMAX Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "The momentum in new theatre signings that began in the fourth quarter of 2002 has continued into the first quarter as we doubled the number of new theatre signings as compared to the first quarter of 2002. Given our strong first quarter and the developments in our commercial business, we are increasingly optimistic about our future and expect this momentum to continue in 2003." In early March, the Company introduced a new lower-cost IMAX(R) theatre system, IMAX(R) MPX(TM), designed specifically for use in multiplex theatres. The IMAX MPX is a new, lighter and easier to operate IMAX projection system with lower cost theatre geometries which should significantly reduce construction, installation, facility and operating costs. This new theatre system allows commercial exhibitors to add an IMAX theatre to an existing multiplex or to retrofit two existing multiplex auditoriums into one IMAX theatre. The IMAX MPX is optimized for the projection of IMAX(R) DMR(TM) films and is also capable of showing traditional 2D and IMAX(R) 3D films. On April 23, 2003, the Company announced that both The Matrix Reloaded and The Matrix Revolutions, the second and third chapters in Warner Bros. Pictures' Matrix trilogy, will be coming to IMAX theatres this spring and fall. Both films will be digitally re-mastered into the unparalleled image and sound quality of The IMAX Experience(R), using the revolutionary and proprietary IMAX DMR (Digital Re-mastering) technology. The Matrix Reloaded: The IMAX Experience will open shortly after the film's 35mm release on May 15th. Subsequently, on November 5th, The Matrix Revolutions: The IMAX Experience will be released simultaneously on giant IMAX screens in IMAX's 15/70 format and in conventional theatres in the standard 35mm format. This will mark the first time ever that a Hollywood live action event film is released concurrently, or "day-and-date", in 35mm and IMAX's format. The agreement with Warner Bros. marks the Company's first multiple IMAX DMR film commitment. Messers. Gelfond and Wechsler continued, "The introduction of the IMAX MPX theatre system and the agreement to release the next two Matrix films, including our first day-and-date release of an IMAX DMR film, are significant milestones in IMAX's history, and are critical elements of our commercial theatre strategy. We believe that the combination of IMAX DMR and IMAX MPX will drive financial returns for potential theatre operators and Hollywood studios, and is key to helping us realize our goal of becoming a new release window for event Hollywood films. Becoming a new release window for Hollywood films should help continue the growth of IMAX theatres around the world, translating into further financial success for IMAX." During the first quarter, the Company signed new theatre contracts for six IMAX theatre systems compared to contracts for three theatre systems in the first quarter of 2002. These signings included a three-theatre deal in India, a two-theatre deal with Regal Entertainment Group and the first contract for an IMAX MPX system, with Jack Loeks Theatres Inc. In the first quarter, the Company's revenues were $34.0 million as compared to $31.3 million in the prior year period. IMAX systems revenue was $22.3 million versus $20.4 million in the prior year period, as the Company recognized revenues on eight theatre systems in the first quarter of 2003 versus six theatre systems in the first quarter of 2002. Film revenue was $6.8 million versus $6.1 million in the first quarter of 2002, due primarily to the continued strong performance of the Company's film SPACE STATION. Other revenue was $4.8 million in the quarter, consistent with the first quarter of 2002. The Company reported net earnings from continuing operations of $0.07 per share on a basic and fully diluted basis for the quarter, compared to $0.06 in the prior-year period which excludes a $0.26 per share gain from the Company's 2002 repurchase of certain of its subordinated notes, which the Company presents to allow a more meaningful comparison of its operational performance. The Company reported net earnings of $0.07 per share on a basic and fully diluted basis compared to net earnings of $0.32 per share, including the gain on the repurchase of certain of its subordinated notes. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $101 million. Founded in 1967, IMAX Corporation is one of the world's leading entertainment technology companies. IMAX's businesses include the creation and delivery of the world's best cinematic presentations using proprietary IMAX and IMAX 3D technology, and the development of the highest quality digital production and presentation. IMAX has developed revolutionary technology called IMAX DMR (Digital Re-mastering) that makes it possible for any 35mm film to be transformed into the unparalleled image and sound quality of The IMAX Experience. The IMAX brand is recognized throughout the world for extraordinary and immersive family experiences. As of March 31 2002, there were more than 230 IMAX theatres operating in 34 countries. INTERVOICE INC: Posts $18-Million Net Loss on $38-Million Sales --------------------------------------------------------------- Intervoice, Inc. (Nasdaq: INTV) announced sales of $38.2 million for its fourth quarter fiscal 2003, which ended February 28, 2003. The Company announced on March 11, 2003 that it would review certain of its intangible assets acquired in its 1999 merger with Brite Voice Systems, Inc. for impairment. The review resulted in a $16.7 million non-cash impairment charge, which is included in the Company's $17.8 million net loss for the quarter. "Our systems backlog grew $6.7 million during the quarter to $36.8 million, driven primarily by new enterprise sales. The carrier portion of our business continues to be challenging," said David Brandenburg, the Company's Chairman and CEO. "We are pleased that our focus on cost control and balance sheet management allowed us to increase our cash balances by nearly $10.0 million during the quarter to $26.2 million while simultaneously reducing debt during the quarter by nearly $3.0 million. We will continue to focus on diversifying and expanding our pipeline of sales opportunities, as well as managing our balance sheet. As we look into our next fiscal year, we have many opportunities in front of us." With more than 21,000 systems deployed around the globe, Intervoice is a world leader in converged voice and data solutions. Intervoice provides the applications, tools and infrastructure that enable enterprises and carriers to attract and retain customers and promote profitability. Omvia(TM), our open, standards-based product suite, is transforming the way people and information connect. Omvia offers speech-enabled IVR applications, multimedia and network-grade portals, wireless application gateways, and enhanced services such as unified messaging, short messaging services, voicemail, prepaid services and interactive alerts. Intervoice is headquartered in Dallas with offices in Europe, the Middle East, South America, and Asia Pacific. For more information, visit http://www.intervoice.com The Company's February 28, 2003 balance sheet shows that its total current liabilities exceeded its total current asset by about $3 million, while total shareholders' equity dwindled to about $15 million from $75 million a year ago. IPCS INC: Committee Wants to Prosecute Action against Sprint PCS ---------------------------------------------------------------- The Official Committee of Unsecured Creditors of iPCS Inc. has asked the Court overseeing the iPCS bankruptcy case for permission to sue Sprint for causing iPCS's failure to satisfy its current debts and future obligations to its creditors. iPCS owes more than $430 million to its bondholders, banks and trade creditors. iPCS is the Sprint PCS affiliate that owns and operates the Sprint PCS network in four Midwestern states and serves more than 230,000 customers. However, the petition may hold significant implications for Sprint PCS's relationship with its nine other affiliates, which, like iPCS, may be effectively dominated and controlled by Sprint PCS. The Official Committee authorized the lawsuit, and the filing states that the Committee "has been examining the Debtors' relationship with (Sprint PCS) and whether claims exist against Sprint PCS for causing iPCS's failure to satisfy its current outstanding debts and future obligations." The filing states that iPCS "is simply an agent and/or alter ego corporation operating on behalf of Sprint PCS... The Committee and its professionals believe that a meritorious claim for repayment of all amounts due to iPCS's creditors exists against Sprint PCS stemming from Sprint PCS's domination and control over iPCS and iPCS's business activities." The filing states that "Sprint PCS ... has effectively transformed iPCS into a mere arm or department of Sprint PCS's own wireless communications business, while at the same time ensuring that all of the financial risk for 'building out' and operating the Sprint PCS network in iPCS's territories remains with iPCS and, more particularly, iPCS's creditors." "Not surprisingly," the filing continues, "Sprint PCS has completely misused its domination and control over iPCS. Sprint PCS has knowingly taken numerous actions -- including, among other things, abusing its contractual relationship with iPCS, refusing to timely pay iPCS sums due to iPCS, and engaging in self-dealing transactions which have benefited Sprint PCS on terms wholly unfavorable to iPCS -- that have caused substantial financial harm to iPCS and its creditors, resulting in iPCS's inability to satisfy its outstanding debts which total in the hundreds of millions of dollars. On February 23, 2003, as a direct result of these and other abuses by Sprint PCS, iPCS, Inc., iPCS Wireless, Inc. and iPCS Equipment, Inc. filed voluntary petitions for relief under Chapter 11 of the Bankruptcy Code." The filing states: "Because Sprint PCS so dominates and controls iPCS, the Committee believes that Sprint PCS should be found liable for the damages that the creditors have already sustained as a result of Sprint's wrongful acts and for iPCS's future obligations as they become due. Sprint's actions have cost iPCS's creditors hundreds of millions of dollars." In short, the complaint makes clear that Sprint's scheme was, in effect, to use other people's money to build out its PCS network without incurring debt or other costs on the Sprint balance sheet. Its actions have contributed to iPCS's severe financial condition and the breach of iPCS's creditor agreements. It is possible that Sprint PCS has acted the same way toward all of its affiliates, causing their creditors and shareholders damages and irreparable harm. The proposed action asks the Court to find that Sprint PCS's assets be made available to iPCS's bankruptcy estate for the repayment of iPCS's creditors. The Official Committee of Unsecured Creditors represents the interests of all unsecured creditors in the iPCS Chapter 11 case. The Committee's financial advisers are Chanin Capital Partners LLC, and its attorneys are Paul, Weiss, Rifkind, Wharton & Garrison LLP and Powell, Goldstein, Frazer & Murphy LLP. KAISER ALUMINUM: Wants Nod to Sell Surplus Calcined & Green Coke ---------------------------------------------------------------- As a result of the curtailment of the primary aluminum production at the Mead Facility in Spokane, Washington, Kaiser Aluminum Corporation and its debtor-affiliates accumulated surplus materials associated with the Facility's operation. These Surplus materials include 25,000 dry short tons of green coke and 14,250 short tons of Calcined Coke. Green coke is typically purchased by the Debtors, calcined and used to make anodes in the aluminum production process. There are no current plans to restart operations at the Mead Facility. Consequently, in the fall of the 2002, the Debtors commenced efforts to sell the Surplus Coke and contacted a number of interested companies. The Debtors received three offers for the Calcined Coke and four offers for the Green Coke. Among the offers, CII Carbon LLC topped the bids for the Calcined Coke while Alcan Inc. beat other offers for the Green Coke. The Debtors then entered into separate purchase and sale agreements with the Buyers. Pursuant to the CII Carbon Purchase Agreement, the Debtors would sell the Calcined Coke to CII Carbon for $1,539,000. The Debtors will bear the cost of loading the Calcined Coke into rail cars for delivery to CII Carbon. The Purchase Price will be paid in cash installments within 30 days after each monthly shipment of Calcined Coke. The Purchase Price does not include sales, use, excise or other taxes payable on account of the transaction. If payable, CII Carbon will shoulder these obligations. Under their Purchase Agreement with Alcan, the Debtors will sell the Green Coke for $1,300,000. The Green Coke will be delivered to Alcan in monthly shipments of 4,166 dry tons. The Debtors will bear the cost of loading the Green Coke into rail cars for delivery. The Purchase Price will be paid in cash installments within 30 days after each monthly shipment. The Purchase Price also does not include sales, use, excise or other taxes payable on account of the transaction. If payable, Alcan will pay for these obligations. The Debtors believe that their decision to sell the Surplus Coke is justified. They have no need for the Coke due to the indefinite curtailment of the Mead Facility and the sale will generate revenues for their estates. Should they later determine that it has become economical to restart the Mead Facility, the Debtors note that the Surplus Coke is easily replaceable. For these reasons, the Debtors ask the Court to approve the sale of the Surplus Coke pursuant to the Purchase Agreements. (Kaiser Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) KANEB PIPE: Moody's Ratchets Sr. Unsec. Debt Rating Down to Ba1 --------------------------------------------------------------- Kaneb Pipe Line Partners, L.P. (NYSE:KPP) responded to the Moody's Investor Services announcement Friday that it had downgraded the senior unsecured debt rating of Kaneb Pipe Line Operating Partnership, L.P. to Ba1 from Baa3 as a result of Moody's concerns caused by four acquisitions consummated during 2002. Kaneb is surprised by Moody's action and strongly disagrees with it. The downgrade appears to be based on three factors: (1) a decline in credit quality due to the acquisitions; (2) the lack of a track record in integrating the acquisitions; and (3) the probability of future acquisitions. Credit Profile Kaneb is a bigger, financially stronger company as a result of those acquisitions and the issuance of almost $300 million worth of equity during 2002 and early 2003. Moody's in fact noted that these equity offerings had restored Kaneb's debt to capital ratio to pre-acquisitions levels. These acquisitions have and are expected to continue to provide significant additional free cash flow, which has already led to an increase in cash distributions to Kaneb's partners. That Kaneb's financial ratios remain strong is evidenced by its execution last month of a new 3-year $400 million revolving credit agreement which was significantly oversubscribed. Track Record Commencing in 1993, Kaneb has completed over 20 acquisitions, all of which have been accretive to its cash flow and all of which have been successfully integrated into the existing partnership structure. Kaneb has little doubt that the four acquisitions acquired in 2002 will be similarly accretive and successfully integrated. Kaneb has a strong track record of growth and a history of improving acquisitions through its operating personnel. Additional Acquisitions Kaneb has grown through acquisitions and that growth has been beneficial to both its partners and its creditors, but Kaneb has never made an acquisition which in its opinion would negatively impact its credit worthiness and does not believe that these four acquisitions should have that effect. Kaneb values its credit ratings and will not make any acquisitions which would adversely affect its financial strength. Moody's concern with master limited partnerships seems to stem from their belief that a partnership's distribution is a commitment almost pari passu with debt. In point of fact, Kaneb, like other master limited partnerships, has a tremendous amount of available cash well beyond the needs of its debt service which, while being distributed to its partners, is in effect a safety net for its creditors. In summary, Kaneb believes Moody's actions were the result of undue negative emphasis on these four acquisitions which Kaneb believes will prove to be quite beneficial to both its creditors and partners. KASPER A.S.L.: Special Committee Continues Evaluation of Options ---------------------------------------------------------------- As previously announced, in December 2002, the Special Committee of the Board of Directors of Kasper A.S.L., Ltd. (OTC Bulletin Board: KASPQ.OB) engaged Peter J. Solomon Company to assist in the consideration of strategic alternatives, which might include a sale of the Company. The Special Committee, with the support and cooperation of the Creditors Committee, is continuing to develop and review various alternatives and, through its advisors, has been and is in discussions with several potential purchasers of the Company. However, given recent trading activity in its common stock, the Company points out that there can be no assurance that any sale, which is subject to, among other things, bankruptcy court approval, will be consummated. Moreover, if such sale is consummated, there is no assurance whatsoever that any such sale would result in a distribution to equity holders under any revised plan of reorganization submitted to the bankruptcy court. Kasper A.S.L., Ltd. is a leading marketer and manufacturer of women's suits and sportswear. The Company's brands include Albert Nipon, Anne Klein, Kasper and Le Suit. These brands are sold in over 3,900 retail locations throughout the United States, Europe, the Middle East, Southeast Asia and Canada. The Company also licenses its Albert Nipon, Anne Klein, and Kasper brands for various men's and women's products. KMART CORP: Emerges from Chapter 11 Reorganization Proceedings -------------------------------------------------------------- Kmart Corporation has emerged from the Chapter 11 reorganization process. The Company, and 37 of its domestic subsidiaries and affiliates, officially concluded its fast-track reorganization today after completing all required actions and satisfying all remaining conditions to its First Amended Plan of Reorganization, as modified, which was confirmed by the U.S. Bankruptcy Court for the Northern District of Illinois by order dated April 23, 2003. In conjunction with its emergence from Chapter 11, Kmart also closed on its new $2 billion exit financing facility provided by a syndicate led by GE Corporate Financial Services, Fleet Retail Finance Inc. and Bank of America, N.A. This credit facility, which is secured by inventory, replaces the Company's $2 billion debtor-in-possession facility and is available to Kmart to help meet its ongoing working capital needs, including borrowings for seasonal purchases of inventory. Julian C. Day, Kmart President and Chief Executive Officer, said, "This is a momentous day for Kmart. Although the last 15-1/2 months have been difficult and required sacrifice by all involved, the Company successfully used the Chapter 11 reorganization process for the purposes for which it was designed. Kmart emerges from Chapter 11 having accomplished all our major objectives for this process. We have strengthened our balance sheet and significantly reduced liabilities by $6 billion. We have secured $2 billion in exit financing, which will provide continued assurance to our vendors and landlords about our strong liquidity position. We have closed stores and renegotiated onerous lease agreements. Additionally, we have developed a more disciplined, efficient organization and lowered our overall operating costs." Day continued, "Kmart emerges from Chapter 11 as a new and vital enterprise focused on delivering value to customers and stakeholders alike. Our focus going forward will be on continuing to revitalize our business by driving profitable sales, identifying opportunities to further improve efficiency and reduce costs, and enhancing asset productivity. Our associates are facing the future with new energy and enthusiasm -- and a renewed commitment to providing our customers compelling promotional values, great private brands and excellent service." In accordance with the Plan of Reorganization, which became effective yesterday, the Company completed an internal corporate restructuring in which Kmart became an indirect subsidiary of a newly formed corporation, Kmart Holding Corporation. The Company's publicly traded shares will be shares of common stock of Kmart Holding Corporation. Effective upon yesterday's emergence, the members of the new Board of Directors of Kmart Holding Corporation, in addition to CEO Julian C. Day, are: E. David Coolidge III, William C. Crowley, William Foss, Edward S. Lampert, Steven T. Mnuchin, Anne Reese, Brandon Stranzl and Thomas J. Tisch. Also as part of the emergence, Al Koch and Ted Stenger, principals of AlixPartners who served as the Company's Chief Financial Officer and Treasurer, respectively, have left the Company. James F. Gooch has been named Vice President and Treasurer. The Company is in the final stages of an executive search for its post-emergence chief financial officer and expects to name a successor in the near future. Kmart's Plan Investors -- ESL Investments, Inc. and Third Avenue Value Fund -- received approximately 33 million shares of Kmart Holding Corporation's new Common Stock and a 9 percent convertible note with a principal amount of $60 million for their investment of approximately $387 million in the Company (including approximately $187 million they received in satisfaction of pre-petition claims they held). The holders of Kmart's pre-petition bank debt, other than ESL, received approximately $243 million in cash. The Company also issued approximately 25 million shares of the new Kmart Holding Corporation Common Stock for distribution to holders of the pre- petition notes (Class 4 claims under the Plan). Approximately 32 million shares of the new Common Stock will be distributed to trade vendor/lease rejection claimholders (Class 5 claims under the Plan), commencing no later than June 30, 2003. Under the Plan, the number of shares of Common Stock to be issued in respect of Class 5 claims is fixed and will not be affected by the total value of the claims that may ultimately be allowed as a result of the claims reconciliation process. Consistent with the Plan, Kmart's prior common stock and trust preferred securities were cancelled as of May 6, 2003. The new shares of Kmart Holding Corporation common stock being issued to certain Kmart creditors in accordance with the Plan and to the Plan Investors initially will be publicly traded on the over- the-counter market, until such time as the Company is able to satisfy the listing criteria for NASDAQ or a national securities exchange requiring a minimum number of record holders. Kmart does not expect to be able to satisfy these requirements until additional stock is distributed to trade creditors, service providers and landlords with lease rejection claims. The first distribution to such creditors is expected to occur no later than June 30, 2003. Financial Update At emergence, the Company's liquidity position is estimated to be $2.7 billion, including net borrowings available (after letters of credit) under the new $2 billion exit financing facility and cash of approximately $1.1 billion. After completing all remaining (estimated at $350 million) payments related to consummation of the Plan, including payments for cure claims related to leases and executory contracts, reclamation claims, retention bonuses for certain employees and financing facility commitment fees, the Company expects that its cash will approximate $750 million. Accordingly, the Company does not expect to borrow funds under the new exit financing facility until the planned seasonal inventory build occurs in the fall. In the Plan, the Company projected EBITDA (earnings before interest, taxes, depreciation and amortization) of $75 million for the full 2003 fiscal year. Subsequent to the preparation of this projection, Kmart announced that it had terminated its supply agreement with Fleming Companies, Inc., and that it had undertaken various reductions in Selling, General and Administrative expenses. In addition, at the confirmation hearings held by the Court in April 2003, representatives of the Company testified that for the first two months of fiscal 2003, the Company's EBITDA was $184 million ahead of the projection in the Plan, principally due to the success of the inventory clearance sales at the 316 closing stores. Accordingly, based on the Company's improved financial performance prior to emergence, the Company expects to implement an annual incentive compensation program for eligible employees that will target EBITDA performance at approximately $375 million for the 2003 fiscal year. Monthly Operating Results In its monthly operating report for the four-week period ended March 26, 2003, filed with the Bankruptcy Court and on Form 8-K with the Securities and Exchange Commission yesterday, Kmart reported a net loss of $483 million on sales of $1.896 billion. The net loss includes a non-cash charge of $385 million for the settlement of a contract rejection claim filed by Fleming, which will be treated as a general unsecured claim in accordance with the terms of the Plan. Same-store sales for the five-week period ended April 2, 2003 declined 7.4% compared to the same period in 2002. The comparable five-week period in 2002 included sales for the Easter holiday, while the same period in 2003 did not. Due in part to this holiday shift, Kmart's same-store sales for April 2003 increased 1.1% from the same period a year ago. Inventory clearance sales at the 316 closing stores, which were completed by April 13, 2003, are not included in the same-store sales comparisons. The information in the monthly operating report for March does not reflect the application of "fresh start" accounting, which the Company expects to be reflected in its report on Form 10-Q for the quarterly period ended April 30, 2003. This report is due to be filed with the SEC by June 16, 2003. After giving effect to "fresh start" accounting, Kmart's book equity value, or net worth, is expected to exceed $1.5 billion. Going forward, Kmart is no longer required to file detailed monthly operating reports with the Bankruptcy Court, and will instead file summary quarterly reports. In addition, the Company does not plan to issue earnings guidance or other information regarding its actual or projected financial results, other than that reported in its SEC filings. Kmart Corporation is a mass merchandising company that serves America through its Kmart and Kmart SuperCenter retail outlets. KMART CORP: Court Approves Sale of Store No. 3334 Lease to Vons --------------------------------------------------------------- Kmart Corporation and The Vons Companies Inc. are parties to a Designation Rights Agreement with respect to Store No. 3334 located at 160 East Foothill, Boulevard in Laverne, California. Vons purchased the Debtors' Designation Rights for the Lease. In view of the Designation Rights Agreement, the Debtors sought and obtained the Court's authority to assume and assign their interest under the Laverne Store Lease to Vons. Vons will use the Premises as a retail store. The Debtors lease the Store Premises under an October 22, 1975 agreement with Laverne Butterfield LLC. The Debtors have since halted their business operations at the Store. Additionally, the Debtors will assign to Vons certain reciprocal easement agreements related to the Laverne Store: (a) a Joint Access and Parking Lot Agreement dated June 23, 1976; and (b) a Joint Access and Parking Lot Agreement dated January 2, 1980. In inking the Assignment Agreement, the Debtors will receive $2,200,000 from Vons pursuant to the Designation Rights Agreement. At the same time, the Debtors will avoid continuing obligations under the lease as well as significant rejection claims against their estates. The Debtors intend to satisfy any outstanding obligations under the Lease. The Debtors estimate that the amount necessary to cure defaults totals $18,170. The Debtors are confident that the Assignment will not prejudice affected creditors, including the Landlord. The Michigan-based Vons is a wholly owned subsidiary of Safeway, Inc., which has a net worth of over $5,000,000,000 as of the most recent complete fiscal year. Hence, there is adequate assurance that Vons will continue to perform under the terms of the Lease. (Kmart Bankruptcy News, Issue No. 55; Bankruptcy Creditors' Service, Inc., 609/392-0900) LEAP WIRELESS: Asks Court to OK Interim Compensation Procedures --------------------------------------------------------------- Leap Wireless International Inc., and its debtor-affiliates ask the Court to establish procedures for the compensation and reimbursement of court-approved professionals on a monthly basis, on terms comparable to the procedures adopted in other large Chapter 11 cases. The Procedures will streamline the professional compensation process and enable the Court and all other parties to monitor the professional fees incurred in these Chapter 11 cases more effectively. The Professionals will be permitted to seek interim payment of compensation and reimbursement of expenses in accordance with these procedures: A. No earlier than the 20th day of each calendar month, each Professional seeking interim compensation will file a notice, pursuant to Section 331 of the Bankruptcy Code, for interim approval and allowance of compensation for services rendered and reimbursement of expenses incurred during the immediately preceding month and serve a copy of the Monthly Fee Notice and copies of the invoices for which fees and expenses are requested on: (i) counsel to the Debtors, Latham & Watkins LLP, 633 West Fifth Street, Suite 4000, Los Angeles, CA 90071, Attn: Robert A. Klyman, Esq.; (ii) counsel to any statutorily appointed committees in these cases; (iii) counsel to the Informal Vendor Debt Committee, Andrews & Kurth L.L.P., 805 Third Avenue, New York, NY 10022, Attn: Paul N. Silverstein, Esq.; and (iv) the United States Trustee, Office of the United States Trustee, 402 West Broadway, Suite 600, San Diego, CA 92101. B. Each Monthly Fee Notice will comply with the Bankruptcy Code, the Federal Rules of Bankruptcy Procedure, applicable Ninth Circuit law and the Local Rules of the United States Bankruptcy Court for the Southern District of California, except as otherwise expressly waived by the Court. Each Notice Party will have 10 days after service of a Monthly Fee Notice to file with the Court and serve on any affected Professional and the Notice Parties a written objection to the Monthly Fee Notice for the Professional. Fee Notice Objections must be filed with the Court and received by the affected Professional and the Notice Parties on or before the Objection Deadline. Any Fee Notice Objection will state the fees and expenses to which the objection is being made and the basis for the objection. Neither the United States Trustee nor any party-in-interest will be barred from raising objections to any charge or expense in any professional fee application filed with the Court on the ground that no objection was raised with respect to any invoice accompanying a Monthly Fee Notice. If, after the expiration of the Objection Deadline, no Fee Notice Objections have been served on the Notice Parties and the Professional, the Debtors will be authorized to pay the Professional 80% of the fees and 100% of the expenses requested in the Monthly Fee Notice. If a Fee Notice Objection is served in accordance with these provisions, the affected Professional may file with the Court, and serve by facsimile, messenger or overnight delivery on the Notice Parties, a certificate of undisputed fees and expenses, setting forth the difference between the amount of fees and expenses requested in its Monthly Fee Notice and the amounts disputed in the Fee Notice Objection, and the Debtors will be authorized to pay the Professional 80% of the fees and 100% of the expenses of the Undisputed Amounts, unless any Notice Party files with the Court and serves a written objection to the Certificate of Undisputed Amounts on the Debtors and the Professional within two business days after service of this certificate. The 20% holdback of fees may include any fees to which a Fee Notice Objection has been filed. C. A Notice Party filing a Fee Notice Objection and the affected Professional may consensually resolve the objection and file with the Court and serve on the Notice Parties a Notice of Resolution of Objection, which will state, with specificity, the resolution of the objection and any additional Undisputed Amounts determined by the parties. The Debtors will then be immediately authorized to pay the affected Professional 80% of the fees and 100% of the expenses included in the Additional Undisputed Amounts. If the parties are unable to reach a full resolution of the objection within 20 days after service of the Fee Notice Objection, the affected Professional may at any time thereafter either: (i) file with the Court copies of the Monthly Fee Notice and the Fee Notice Objection and request a hearing on the Fee Notice Objection; or (ii) forego payment of the difference between the Monthly Fee Notice Amount and the combined Undisputed Amounts and Additional Undisputed Amounts until the next interim or final fee application hearing, at which time the Court will consider and dispose of the Fee Notice Objection if requested by the parties. D. Beginning with the three-month period ending July 14, 2003, and thereafter at 120-day intervals or at any other intervals convenient to the Court, each of the Professionals must file with the Court and serve on the Notice Parties an application for interim Court approval and allowance of the compensation and reimbursement of expenses sought in the Monthly Fee Notices filed during the period. The Interim Fee Application must include a summary of the Monthly Fee Notices that are the subject of the request and any other information requested by the Court or required by the local rules. Each Professional must file their Interim Fee Application within 45 days after the end of the Interim Fee Period for which the request seeks allowance of fees and reimbursement of expenses. Each Professional must file its first Interim Fee Application on or before August 28, 2003, and the first Interim Fee Application should cover the Interim Fee Period from the Petition Date through and including July 14, 2003. Any Professional that fails to file an Interim Fee Application when due will be ineligible to receive further interim payments of fees or expenses pursuant to the Compensation Procedures until the Professional submits the Interim Fee Application. E. The Debtors will request that the Court schedule a hearing on the Interim Fee Applications at least once every six months, or at any other intervals as the Court deems appropriate. To the extent the Court approves a Professional's Interim Fee Application, the Debtors are authorized to pay the Professional 100% of the fees not previously paid to the Professional pursuant to the Professional's Monthly Fee Notice for the relevant Interim Fee Period. F. The pendency of an objection to payment of compensation or reimbursement of expenses will not disqualify a Professional from the future payment of compensation or reimbursement of expenses under the Compensation Procedures. G. Neither the payment of or the failure to pay, in whole or in part, monthly interim compensation and reimbursement of expenses under the Compensation Procedures nor the filing of or failure to file an objection will bind any party-in- interest or the Court with respect to the final allowance of applications for compensation and reimbursement of expenses of professionals. All fees and expenses paid to Professionals under the Compensation Procedures are subject to disgorgement until final allowance by the Court. The Debtors further request that each member of any statutorily appointed creditors' committee be permitted to submit statements of expenses and supporting vouchers to counsel to the creditors' committee, which will collect and submit the committee members' requests for reimbursement in accordance with the Compensation Procedures. The Debtors also request that the Court limit the notice of any hearing on Interim Fee Applications and Final Fee Applications to the Notice Parties and all parties that have filed a notice of appearance with the Clerk of this Court and requested the special notice. The Debtors further request that the Notice Parties be entitled to receive Interim Fee Applications and Hearing Notices and all other notice parties be entitled to receive only the Hearing Notices. "Providing notice of fee applications and any hearings in this manner will permit the parties most active in these Chapter 11 cases to review and object to professional fees and will save the expense of undue duplication and mailing," Mr. Klyman says. "The Debtors will include all payments made to Professionals in accordance with the Compensation Procedures in their monthly operating reports, identifying the amount paid to each of the Professionals." (Leap Wireless Bankruptcy News, Issue No. 3; Bankruptcy Creditors' Service, Inc., 609/392-0900) LIN TELEVISION: S&P Rates $200M Senior Subordinated Notes at B -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B' rating to LIN Television Corporation's proposed $200 million senior subordinated note issue due 2013. In addition, Standard & Poor's assigned its 'B' rating to the company's proposed $100 million exchangeable senior subordinated note issue due 2033. Proceeds are expected to be used to refinance existing debt. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on LIN Television, an operating subsidiary of LIN Holdings Corp. The outlook is stable. The Providence, R.I.-based television owner and operator had approximately $754.0 million of debt outstanding on March 31, 2003. "The proposed transaction reduces LIN's interest expense and extends its debt maturities, without materially increasing absolute debt levels," said Standard & Poor's credit analyst Alyse Michaelson. Favorable trends in television advertising were expected to continue into 2003. Broad-based local ad spending and spillover demand from tight network scatter time availability had been expected to contribute to TV ad demand in 2003. However, there appears to be some volatility in the market due to the situation in Iraq and soft economic outlook. The absence of political and Olympic advertising dollars also make comparisons difficult this year. Political advertising provided a boost in 2002, contributing approximately 6% of the company's total revenue. LIN converted approximately 26% of EBITDA to discretionary cash flow in 2002 because of its high margins and low capital spending requirements. Capital spending likely will be reduced in 2003, but cash interest payments are expected to increase pro forma for the refinancing of the noncash interest senior discount holding company notes, which could limit discretionary cash flow growth, particularly given election cycles. Maintenance of key credit ratios, covenant cushion, and de- leveraging financial policies are important to ratings stability. The ratings incorporate some room for modest increases in leverage because of advertising and election cycles. Debt-financed acquisition activity or a material reversal in operating momentum that causes credit metrics to deteriorate could destabilize ratings. LIN TV CORP: Moody's Confirms and Assigns New Low-B Ratings ----------------------------------------------------------- Moody's Investors Service confirmed the existing ratings and assigned new ones to LIN TV Corp. Outlook was revised to positive. The rating actions mirror the company's good operating performance which surpassed previous expectations. Moody's believes that this trend will continue for the next two years, despite uncertain market conditions. Ratings confirmed or assigned: * $192 million Senior Secured Revolver rated Ba2 * $175 million Term B rated Ba2 * $210 million of Senior Notes rated B1 * $200 million of Senior Subordinated Notes assigned a B2 * $100 million of Senior Subordinated Exchangeable Debentures assigned a B2 * Ba3 Senior Implied Rating * B1 Senior Unsecured Issuer Rating * SGL-1 Speculative Grade Liquidity Rating (unchanged) LIN TV Corp., operating 23 television stations in 17 markets, is headquartered in Providence, Rhode Island. MAIL-WELL INC: First-Quarter Results Show Marked Improvement ------------------------------------------------------------ Mail-Well, Inc. (NYSE: MWL) announced its results for the quarter ended March 31, 2003. The net income of the Company was $3.1 million, or $0.06 per share, on sales of $427 million during the first quarter of 2003, compared to a net loss of $133.4 million, on sales of $443 million during the same period of 2002. These results reflect a $0.7 million charge for restructuring in the first quarter of 2003 together with an after tax gain on disposition of discontinued operations of $2.5 million. In the three months ended March 31, 2002, Mail-Well's net loss included a charge for restructuring of $14.5 million, a loss of $7.7 million on debt refinancing, together with an after tax loss on disposal of discontinued operations of $8.0 million and the cumulative effect of a change in accounting principle of $111.7 million upon adoption of SFAS 142. EBITDA for the quarter was $30.7 million, an improvement of 5.5% over the $29.2 million achieved by ongoing operations in the same period in 2002. An explanation of the Company's use of EBITDA for comparative purposes is provided below. Paul Reilly, Chairman, President and CEO, stated, "The 5.5% year-over-year increase in EBITDA for the first quarter 2003 falls at the high end of the guidance we gave at the end of 2002. This was accomplished on slightly higher sales if you exclude the sales of the operations that we have divested since the first quarter of 2002. These results reflect the impact of the many actions we have taken over the past year to improve our operations and reduce costs. The year-over-year increase in sales in the Print Segment has continued as expected. The operating results of the Print segment continued to improve while, in both the Envelope and Printed Office Products segments, operating margins remain the best in the industry. We fully expect that Q2 of 2003 will show significant improvement over the same period in 2002 and we are comfortable with the previous EBITDA guidance range of $130 to $140 million for the full year, given the present economic environment." Reilly also stated, "The relative positions of our businesses in each of their chosen printing industry segments, together with the wide breadth of the services Mail-Well can offer to its customers, is allowing the company to grow sales both in absolute and relative terms even in trying economic times. Our renewed customer focus and our mobilization efforts within all of our units are expected to allow us to continue these trends." Mail-Well (NYSE: MWL) specializes in three growing multibillion- dollar market segments in the highly fragmented printing industry: commercial printing, envelopes and printed office products. It holds leading positions in each. Mail-Well currently has approximately 10,000 employees and more than 85 printing facilities and numerous sales offices throughout North America. The company is headquartered in Englewood, Colorado. * * * As previously reported, Standard & Poor's lowered its corporate credit rating on Mail-Well Inc., to double-'B'-minus from double-'B', its subordinated debt rating to single-'B' from single-'B'-plus, and its senior secured and senior unsecured debt ratings to double-'B'-minus from double-'B'. Standard & Poor's has also assigned its double-'B'- minus rating to Mail-Well I Corp.'s $300 million senior secured revolving bank facility due 2005, which is guaranteed by its holding company parent, Mail-Well Inc., and all non-borrower subsidiaries. The outlook, S&P says, is negative. META GROUP: March 31 Working Capital Deficit Widens to $9 Mill. --------------------------------------------------------------- META Group, Inc. (Nasdaq:METG), a leading information technology research and consulting firm, announced financial results for the first quarter ended March 31, 2003. First-Quarter Results Total revenues for the first quarter were $28.2 million, compared to revenues of $28.9 million in the year-ago period. Net income for the quarter was $0.11 million, or $0.01 per fully diluted share. This compares to a loss before cumulative effect of change in accounting principle of $1.4 million or $0.11 per fully diluted share in the year-ago period. The net loss in the year-ago period was $23.6 million or $1.84 per fully diluted share. A breakdown of the quarter's results is as follows: -- The Company's net cash position (cash including restricted balances, less bank debt and notes payable) was $25.7 million, up from $14.4 million in the fourth quarter of 2002, and up from $14.6 million in the year-ago period. -- Cash flow from operations was approximately $11 million, compared with $4.4 million in the year-ago period and a use of cash of approximately $0.7 million in the fourth quarter of 2002. -- Research and Advisory Services revenue in the first quarter was $18.4 million, down 1.4% from $18.7 million in the first quarter of 2002. -- Revenue from Strategic Consulting was down 5.4% to $7.5 million in the first quarter, compared to $7.9 million in the year-ago period. -- Revenue from Published Research Products was $1.8 million, flat with $1.8 million in the first quarter of 2002. -- The gross margin increased to 47.6% in the first quarter of 2003, compared to 46.4% in the year-ago period. -- Operating expenses for the first quarter were $28.3 million, a 6.4% improvement from $30.3 million in the year-ago period. -- Days sales outstanding (DSOs) for the first quarter were 97 days, compared to 107 days for the year-ago period. After adjusting for those accounts receivable with future payment terms related to multiyear contracts, DSOs were 57 days, compared with 62 days a year ago. At March 31, 2003, the Company's balance sheet shows that its total current liabilities exceeded its total current assets by about $9 million. Fred Amoroso, META Group Chief Executive Officer, commented, "We are pleased with the progress we're making in terms of our transformation. Results for the first quarter were generally in line with our expectations, with especially strong results in improving our cash position -- both on a year-over-year and sequential basis." "We anticipated undertaking a number of strategic initiatives and transformation steps in the first quarter to better position ourselves for long-term success," continued Amoroso. "The most significant of these was a major branding and advertising campaign, which is now well underway. We felt strongly that the first quarter was a critical time for us to begin aggressively driving our core message into the global marketplace -- that we provide higher-value IT research and advisory services." "We also recently completed the realignment of our technology research services, designed to promote a higher level of collaboration across our research areas and to improve the overall customer experience," said Amoroso. "We wanted to help our customers obtain more complete coverage of the IT topics most critical to them -- and help them avoid service restrictions that are often imposed by traditional IT research providers." 2003 Outlook "We are refraining from forecasting full-year revenues and profit. However, for the second quarter, we currently expect total revenues to be approximately between $29.5 and $30 million, with breakeven operating results," said Amoroso. META Group is a leading provider of information technology research, advisory services, and strategic consulting. Delivering objective and actionable guidance, META Group's experienced analysts and consultants are trusted advisors to IT and business executives around the world. Our unique collaborative models and dedicated customer service help clients be more efficient, effective, and timely in their use of IT to achieve their business goals. Visit http://www.metagroup.comfor more details on our high-value approach. MR. RAGS: Conducting GOB Sales at All 63 Remaining Stores --------------------------------------------------------- Going-out-of-business sales are now under way at all 63 remaining stores in the Mr. Rags specialty apparel chain, with 30%-off discounts offered on all merchandise. The mall-based chain's owner, Mr. Rags Acquisition, Inc., filed for Chapter 11 protection under the U.S. Bankruptcy Code in Santa Ana on January 28, 2003. After being unable to obtain new financing or sell the business, the company's management decided last week to proceed with an inventory liquidation in the remaining locations, which are situated in 21 states in an area spanning from Alaska to California on the Pacific Coast, to the Southwest, Rocky Mountains and Midwest, and from New Hampshire to Florida along the East Coast. California has the largest concentration in this final group, with 21 stores throughout the state. Averaging 2,000 square feet, the Mr. Rags stores carry a mixture of better urban and skateboard apparel for young men and women. Brands available during the liquidation sale include such top names as Ecko, Akademics, Phat Farm and Rocawear. Shoppers may pay with bankcards or cash during the sale; checks are no longer accepted. All sales are final. Mr. Rags was founded in Seattle in 1985 and expanded to approximately 150 stores at its peak. At the time of the Chapter 11 filing, 130 locations were in operation, with more than half subsequently closed in advance of the final sale. The company currently has approximately 315 full- and part-time employees in the stores and its Long Beach headquarters. Throughout the chain, management is working with state and local authorities to help place the employees in new positions. MUTUAL RISK: Fitch Drops Long-Term Issuer and Debt Ratings to D --------------------------------------------------------------- Fitch Ratings has downgraded Mutual Risk Management Ltd.'s long- term issuer rating, which provides an indication of MRM's credit quality at a senior unsecured level, to 'D' from 'C'. Fitch also downgraded the rating of MRM's convertible exchangeable subordinated debt to 'D' from 'C'. The rating actions follow creditor and judicial approval of MRM's plan to restructure its senior debt. Fitch Ratings considers the restructuring to be a distressed debt exchange since the alternative to the restructuring would have been liquidation. Fitch expects to withdraw the ratings on May 31, 2003 and no longer follow the company. Affected Ratings: Mutual Risk Management Ltd. -- Long-term issuer rating downgraded to 'D'; -- Conv. exch. sub. debt rating downgraded to 'D'. NAVISITE INC: Appoints Larry W. Schwartz to Board of Directors -------------------------------------------------------------- NaviSite, Inc. (Nasdaq: NAVI), a leading provider of Application and Infrastructure Management Services, has named Larry W. Schwartz to its Board of Directors. Schwartz has filled the board position vacated by Jim Pluntze, who was recently appointed NaviSite's CFO. Schwartz is currently Senior Vice President, Operations and Chief Restructuring Officer for Genuity Inc. and has recently led the planning, structuring and negotiations for the recently closed transaction between Genuity and Level 3 Communications. He has served as a member of Genuity's senior management committee and as an officer of the company's Office of Technology & Corporate Development. Prior to joining Genuity, Schwartz was an equity partner with the law firm of Choate Hall & Stewart, where he specialized in mergers, acquisitions, buyouts and venture capital transactions involving communications and media companies. "We are very pleased name Larry Schwartz to our Board of Directors, and we are looking forward to benefiting from his experience, background and integrity," said Andy Ruhan, chairman of Navisite's board of directors. NaviSite is a Service Company providing Application and Infrastructure Management Services for online operations of mid- sized enterprises, business units of larger companies and government agencies. With a world-class group of experienced professionals, NaviSite delivers excellence through a flexible, customizable suite of engineered solutions. NaviSite balances service-centric people and process with cost effective, innovative technology in areas such as Managed Applications, Application Development, Hosting, Security and Infrastructure. NaviSite Application Management Services deliver application development, integration and full-service management, at any of our data centers, a customer's location or even a third-party site. NaviSite manages critical online and enterprise applications through proactive technology and services, providing 24/7 application monitoring, management and maintenance: relieving customers of day-to-day application operations burdens. NaviSite's Infrastructure Management Services provide secure, reliable, high-performance hosting services at data centers serving: Boston, Chicago, Dallas, Las Vegas, Los Angeles, Milwaukee, New York, San Francisco, Syracuse (NY) and Washington, DC. Services include a full array of managed hosting to collocation, coupled with high-performance Internet access and high- availability server management solutions through load balancing, clustering, mirroring and storage services. Founded in 1997, NaviSite, Inc. is publicly traded on Nasdaq as NAVI. For more information, please visit http://www.NaviSite.com NaviSite is headquartered at 400 Minuteman Road, Andover, MA 01810, USA. * * * Liquidity and Going Concern Uncertainty As of January 31, 2003, the Company had approximately $11.2 million of cash and cash equivalents, working capital of $2.9 million and had incurred losses since inception resulting in an accumulated deficit of $366.9 million. NaviSite's operations prior to September 11, 2002 had been funded primarily by CMGI through the issuance of common stock, preferred stock and convertible debt to strategic investors, the Company's initial public offering during fiscal 2000 and related exercise of an over-allotment option by the underwriters in November 1999. Prior to the acquisition by NaviSite of CBTM on December 31, 2002, CBTM had been funded primarily by its parent company, ClearBlue, through various private investors. For the year ended July 31, 2002, consolidated cash flows used for operating activities totaled $27 million and for the six months ended January 31, 2003 and 2002 consolidated cash flows used for operating activities totaled $5.1 million and $16.5 million, respectively. During the six months ended January 31, 2003, the Company's cash and cash equivalents decreased by approximately $10.6 million. Included in this change was approximately $6.8 million in net cash expenditures that are non-recurring in nature. The $6.8 million in net non-recurring expenditures consists predominantly of: 1) a $3.2 million payment to CMGI for the settlement of intercompany balances reached in fiscal year 2002; 2) a $2.0 million purchase of a debt interest in Interliant, Inc.; 3) a $1.3 million interest payment to ClearBlue related to the $65 million of convertible notes then outstanding (see note 8 for ClearBlue waiver of interest from December 12, 2002 through December 31, 2003); 4) a $770,000 payment to purchase directors and officer's insurance for periods prior to September 11, 2002; 5) a $775,000 unsecured loan to ClearBlue for payroll related costs; 6) $1.3 million in severance payments; 7) a $600,000 settlement payment with Level 3, Inc.; 8) a $490,000 prepayment of directors' and officers' insurance; 9) $403,000 in bonuses related to fiscal year 2002 and 10) a $100,000 payment on behalf of ClearBlue for legal costs; partially offset by: 1) $2.5 million in customer receipts; 2) a $1.0 million receipt from Engage Technologies, Inc. related to a fiscal year 2002 settlement; and 3) a $637,000 reduction in restricted cash due to the decrease in our line of credit. The Company currently anticipates that its available cash at January 31, 2003 combined with the additional funds available, at Atlantic's sole discretion, under the Loan and Security Agreement between NaviSite and Atlantic, (approximately $5.3 million at February 28, 2003), will be sufficient to meet our anticipated needs, barring unforeseen circumstances for working capital and capital expenditures through the end of fiscal year 2003. However, based on our current projections for fiscal year 2004, we will have to raise additional funds to remain a going concern. The Company's projections for cash usage for the remainder of fiscal year 2003 are based on a number of assumptions, including: (1) its ability to retain customers in light of market uncertainties and the Company's uncertain future; (2) its ability to collect accounts receivables in a timely manner; (3) its ability to effectively integrate recent acquisitions and realize forecasted cash-saving synergies and (4) its ability to achieve expected cash expense reductions. In addition, the Company is actively exploring the possibility of additional business combinations with other unrelated and related business entities. ClearBlue and its affiliates collectively own a majority of the Company's outstanding common stock and could unilaterally implement any such combinations. The impact on the Company's cash resources of such business combinations cannot be determined. Further, the projected use of cash and business results could be affected by continued market uncertainties, including delays or restrictions in IT spending and any merger or acquisition activity. To address these uncertainties, management is working to: (1) quantify the potential impact on cash flows of its evolving relationship with ClearBlue and its affiliates; (2) continue its practice of managing costs; (3) aggressively pursue new revenue through channel partners, direct sales and acquisitions and (4) raise capital through third parties. The Company may need to raise additional funds in order respond to competitive and industry pressures, to respond to operational cash shortfalls, to acquire complementary businesses, products or technologies, or to develop new, or enhance existing, services or products. In addition, on a long-term basis, the Company may require additional external financing for working capital and capital expenditures through credit facilities, sales of additional equity or other financing vehicles. Its ability to raise additional funds may be negatively impacted by: (1) the uncertainty surrounding its ability to continue as a going concern; (2) the potential de-listing of the Company's common stock from NASDAQ; (3) its inability to transfer back to the NASDAQ National Market in the future from the NASDAQ SmallCap Market; and (4) restrictions imposed on the Company by ClearBlue and its affiliates. Under our arrangement with ClearBlue, the Company must obtain ClearBlue's consent in order to issue debt securities or sell shares of its common stock to affiliates, and ClearBlue might not give that consent. If additional funds are raised through the issuance of equity or convertible debt securities, the percentage ownership of the Company's stockholders will be reduced and its stockholders may experience additional dilution. There can be no assurance that additional financing will be available on terms favorable to the Company, if at all. If adequate funds are not available or are not available on acceptable terms, the Company's ability to fund its expansion, take advantage of unanticipated opportunities, develop or enhance services or products or respond to competitive pressures would be significantly limited and, accordingly, the Company might not continue as a going concern. NEENAH FOUNDRY: S&P Drops Rating to D Following Exchange Offer -------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Neenah Foundry Co. to 'D' from 'B-' and removed it from CreditWatch, where it was placed on March 5, 2003. At the same time, the senor secured debt rating was lowered to 'D' from 'B-', and the subordinated debt ratings was lowered to 'D' from 'CCC'. At Dec. 31, 2002, the Neenah, Wisconsin-based castings manufacturer had approximately $455 million of debt outstanding on its balance sheet. The rating actions followed the company's announcement that it has commenced an offer to exchange its 11-1/8% subordinated notes for either cash or new subordinated notes. The exchange would significantly impair the note holders relative to the par value of the instrument. In addition, Neenah did not make its interest payment on the notes on May 1, 2003. The financial restructuring is expected to be completed no later than Sept. 30, 2003. "The restructuring will eliminate a significant amount of debt and reduce cash interest payments, which had become onerous over the past couple of years relative to cash flow, because of depressed conditions in the heavy-duty truck and general industrial markets," said Standard & Poor's credit analyst Joel Levington. Neenah is a manufacturer of ductile and gray iron castings for the industrial and municipal markets. In addition, the company engineers, manufactures, and sells related products to other iron foundries. Some of the company's products include components for heavy-duty trucks, mining equipment, man-hole covers, and storm sewer frames and grates. NORTEL NETWORKS: Resets Investor Analysts Conference for May 28 --------------------------------------------------------------- Nortel Networks Corporation (NYSE:NT) (TSX:NT) announced that its Investor Analysts Conference scheduled for May 7, 2003 has been rescheduled to May 28, 2003. Frank Dunn, president and chief executive officer, Nortel Networks, recently underwent eye surgery which has temporarily prevented him from traveling. Details for the rescheduled conference will be made available shortly. Nortel Networks is an industry leader and innovator focused on transforming how the world communicates and exchanges information. The company is supplying its service provider and enterprise customers with communications technology and infrastructure to enable value-added IP data, voice and multimedia services spanning Wireless Networks, Wireline Networks, Enterprise Networks, and Optical Networks. As a global company, Nortel Networks does business in more than 150 countries. This press release and more information about Nortel Networks can be found on the Web at http://www.nortelnetworks.com OLYMPIC PIPE LINE: Gets Court Nod to Hire Karr Tuttle as Counsel ---------------------------------------------------------------- Olympic Pipe Line Company sought and obtained approval from the U.S. Bankruptcy Court for the Western District of Washington to hire Karr Tuttle Campbell as its Special Counsel. Before the Debtor filed for bankruptcy protection, it turned to Karr Tuttle for legal advice. As a result, Karr Tuttle has intimate knowledge about the Debtor's business. Accordingly, the Debtor wants to continue employing Karr Tuttle and William H. Beaver, Esq., to: - act as the outside general counsel for the Debtor; - manage all of its legal matters that arose as a result of a June 1999 pipeline release incident which resulted in 3 deaths and a sustained shutdown of a portion of the pipeline operated by the debtor; - represent the debtor in federal and state tariff matters, rights-of-way litigation and issues, employment relations issues, pension and benefit issues, negotiation of franchise agreements with municipalities, and general corporate matters including advising the board of directors at its meetings; and - act as lead litigation counsel in the debtor's action against GATX seeking a declaration of insurance coverage. Mr. Beaver's current hourly rate is $295. The Firm has billed the Debtor $240 per hour for Mr. Beaver's services since 1999 without a change in the rate and will continue to do so. The hourly billing rates of other individuals who will be doing work on behalf of the Debtor range from $150 to $285. Olympic Pipe Line Company, owns and operates a pipeline system transporting finished Petroleum products. The Company filed for chapter 11 protection on March 27, 2003 (Bankr. W.D. Wash. Case No. 03-14059). Edwin K. Sato, Esq., and Thomas N. Bucknell, Esq., at Bucknell Stehlik Sato & Stubner, LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $105,961,773 in total assets and $401,856,113 in total debts. PENN TRAFFIC: Strikes Waiver and Forbearance Pact with Lenders -------------------------------------------------------------- The Penn Traffic Company (Nasdaq: PNFT) announced that after the close of business on May 2, 2003, the Company entered into a Waiver and Forbearance Agreement with the lenders under its Revolving Credit and Term Loan Agreement. The Waiver and Forbearance Agreement (i) waives the events of default that would have arisen under the Credit Facility as a result of the failure by the Company to satisfy certain of the financial covenants contained in the Credit Facility as of the end of the Company's fiscal quarter ended May 3, 2003, and certain other specified defaults, (ii) states that the lenders under the Credit Facility will forebear from taking any action under the Credit Facility as a result of such defaults and (iii) permits Penn Traffic to borrow, repay and reborrow under the Credit Facility through and including May 9, 2003, subject to certain restrictions, including additional restrictions on borrowing availability under the Credit Facility. After giving effect to the Waiver and Forbearance Agreement, availability under the revolving portion of the Credit Facility will be approximately $52 million as of May 2, 2003. The Company is currently negotiating an amendment to the Credit Facility that will amend, among other things, the various financial covenants in the Credit Facility to make them less restrictive on the Company for future periods and to provide a permanent waiver of certain other defaults. However, there can be no assurance that the lenders under the Credit Facility will agree to any modifications or amendments to the Credit Facility or that any modifications or amendments will be acceptable to the Company. If the Company is unable to modify or amend the Credit Facility, it will be in default under the Credit Facility and its ability to make further borrowings under the Credit Facility may be terminated and the lenders under the Credit Facility may assert other rights and remedies. In light of the continuing negotiations with the lenders under the Credit Facility, the Company also announced that it was necessary for it to make use of the Exchange Act Rule 12b-25 extension period with respect to the Company's Annual Report on Form 10-K for the fiscal year ending February 1, 2003 in order to finalize and update its audit report and related disclosures. If the Company were to have filed the Form 10-K report on May 2, 2003, it is likely that the audit opinion contained in the report would have raised concerns over the Company's ability to continue as a going concern. The Company intends to file its Form 10-K report on or before the 15th calendar day following the prescribed date. The Penn Traffic Company operates 212 supermarkets in Ohio, West Virginia, Pennsylvania, upstate New York, Vermont and New Hampshire under the "Big Bear," "Big Bear Plus," "Bi-Lo," "P&C" and "Quality" trade names. Penn Traffic also operates a wholesale food distribution business serving 79 franchises and 62 independent operators. PENN TRAFFIC: S&P Hatchets & Places Junk Rating on Watch Neg. ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on regional supermarket operator The Penn Traffic Co. to 'CCC+' from 'B+' and placed the rating on CreditWatch with negative implications. Other ratings were also lowered and placed on CreditWatch with negative implications. Approximately $287 million of debt is affected by this action. The downgrade and CreditWatch listing are based on the company's announcement that it has obtained a waiver and forebearance agreement with its bank lenders only until May 9, 2003. This waives events of default that would have arisen under the credit facility as of the end of the company's first fiscal quarter (May 3, 2003). "Penn Traffic is currently in negotiations to amend the credit facility by the May 9, 2003 deadline. If the Syracuse, N.Y.- based company is unable to modify or amend its credit facility, it will be in default under the credit facility," stated Standard & Poor's credit analyst Patrick Jeffrey. The bank facility was previously amended on Oct. 31, 2002, waiving any defaults or events of default relating to accounting misstatements and the restatement of the company's financial statements. These rating actions also are based on recent weak operating trends which have reduced credit measures and liquidity. Penn Traffic's operations have been negatively affected by the weakened economy, more selective consumer spending patterns, and increased promotional activity from competitors. As a result, same-store sales declined 2.4% and EBITDA declined to $10.8 million from $21.4 million in the third quarter of 2002. Additionally, the company announced that it will delay filing its 10-K for fiscal year ending Feb. 1, 2003, until on or before May 15, 2003, in order to attempt to resolve these issues. If the company were to have filed the form 10-K for fiscal year ending Feb. 1, 2003, on May 2, 2003, it is likely that the audit opinion would have raised concerns over the company's ability to continue as a going concern. Standard & Poor's will monitor negotiations with the banks and if successful, will review business trends and the revised credit facility in assessing any further impact to the rating. If negotiations fail, the company will be in default on the credit facility and the ratings will be lowered. PICCADILLY CAFETERIAS: Accepts Ronald A. LaBorde's Resignation -------------------------------------------------------------- Piccadilly Cafeterias, Inc. (AMEX:PIC) announced that its Board of Directors has accepted the resignation of Ronald A. LaBorde as the Company's chief executive officer. Mr. LaBorde also resigned from the Company's Board of Directors. Both resignations are effective immediately. The Board of Directors has no immediate plans to fill the vacancy on the Board of Directors or to replace Mr. LaBorde with a permanent chief executive officer. The Board of Directors also announced that it has entered into an agreement with PMCM, LLC., an affiliate of Phoenix Management Services, Inc., of Chadd's Ford, Pennsylvania. Phoenix is an operationally-focused turnaround management firm. Under the agreement, PMCM has agreed to provide to the Company the services of Mr. Vincent Colistra, who will be in charge of the engagement and serve as the chief restructuring adviser to the Company, and Mr. John G. "Jack" McGregor, who will serve as the interim chief executive officer of the Company. PMCM has been engaged to provide financial advisory, management and restructuring services to the Company. The Company expects that PMCM will perform these services for the foreseeable future. Azam Malik, the Company's president and chief operating officer, and Mark Mestayer, the Company's treasurer and chief financial officer, will continue to serve in such capacities. J.H. Campbell, Jr., the Company's Chairman of the Board, said, "Ronnie LaBorde has been a loyal and dedicated Piccadilly executive for many years. We appreciate the many contributions he has made to this Company and wish him well in his future endeavors. We are pleased, however, that we have retained PMCM, given the proven track record of Phoenix as an experienced restructuring and turnaround firm. A core mission that the Board has assigned to PMCM is to evaluate the Company's existing business, financial projections, liquidity position and prospects, and present the Board in the near future with proposals for improving operations and shareholder value." Piccadilly is a leader in the family-dining segment of the restaurant industry and operates over 175 cafeterias in the Southeastern and Mid-Atlantic states. For more information about the Company visit the Company's Web site at http://www.piccadilly.com As reported in Troubled Company Reporter's February 20, 2003 edition, Standard & Poor's Ratings Services lowered its corporate credit rating on Piccadilly Cafeterias Inc. to 'B-' from 'B' based on the company's weak operating performance. Baton Rouge, La.-based Piccadilly had $36.5 million of debt outstanding at Dec. 31, 2002. The outlook is negative. POLYPHALT INC: Default Possible After License Pact Termination -------------------------------------------------------------- Polyphalt Inc., announced that one of its largest licensees provided notice that it was terminating its license agreement with the Company. The termination of the license agreement becomes effective in June, 2003. This license agreement provided the Company with $543,000 in revenue in 2002, an amount which represented approximately 22% of Polyphalt's licensing and royalty revenue for the year. The termination of this license agreement will have a significant effect on Polyphalt's operating results for 2003. Management is currently engaged in discussions with this licensee in an effort to reach a new agreement. Polyphalt is also currently in discussions with its majority shareholder, Grandwin Holdings Limited, in order to assess whether or not the termination of this license agreement constitutes an event of default under a loan agreement between Polyphalt, as borrower, and Grandwin, as lender. Polyphalt is a publicly traded, Canadian based, technology company that develops and commercializes novel Polymer Modified Asphalt products and technology to serve North American and international infrastructure markets. Polyphalt has a broad portfolio of proprietary technologies, several of which combine blends of plastics and rubbers, including recycled materials. These processes help to produce cost-effective and longer- lasting pavements, roofing materials and other bituminous building and industrial products. Polyphalt's international license network comprises thirteen leading Asphalt refiners and suppliers throughout the United States, Canada, Australia, Europe and China. In February 2001, Polyphalt acquired GH International, a leading Canadian producer of roof coatings, adhesives and pavement maintenance products. Polyphalt is a member of Cheung Kong Infrastructure group of companies. CKI is the largest publicly listed infrastructure company in Hong Kong with investment in power, infrastructure projects, infrastructure materials and infrastructure-related businesses. The company has operations in Hong Kong, mainland China, Australia, Canada and the Philippines. PORTLAND GEN. ELECTRIC: Fitch Revises Watch Status to Positive -------------------------------------------------------------- Fitch Ratings has revised Portland General Electric's Rating Watch status to Positive from Negative. PGE's securities were lowered to their current level on Aug. 1, 2002. Portland General's ratings are as follows: senior secured 'BB+'; senior unsecured 'BB-'; and, preferred 'B'. Revision of the Rating Watch status follows progress by PGE in successfully addressing a number of the challenges to the company's stand-alone credit profile following the bankruptcy of parent Enron Corp. Specifically, the revision to Rating Watch Positive status reflects greater clarity, since November 2002, with regard to potential ENE exposures for which the potential obligation of 'controlled group' members (including PGE) exists. The change in Rating Watch status to Positive also considers PGE's much improved liquidity position, bolstered most recently by the May 1, 2003 remarketing of $142 million of secured Pollution Control Revenue Refunding Bonds. Those contingent exposures which previously were subject to limited visibility, and potentially large amounts, include pension liability, income tax and, to a lesser degree, post retirement benefits, further details of which are outlined below. Finalization of bank revolver financing, which is expected to occur by the end of May 2003, would likely result in an upgrade of PGE's secured debt to investment grade. Further rating action beyond that point, either up or down, will be contingent upon Enron's ability to divest PGE in a timely fashion without negatively impacting PGE's financial position, and additional developments with regard to the FERC investigation of PGE into manipulation of western energy markets. The IRS proof of claim for taxes against the Enron estate was filed for $111 million and the IRS seeks to apply $63 million in tax refunds admittedly due Enron against the $111 million claim. Because of the ranking within the ENE bankruptcy process and the magnitude of the claim, the tax exposure to PGE, as a controlled group member, appears unlikely to be of any material size. In addition, controlled group exposure to Enron's pension plan has been mitigated by ENE management's plan to fully-fund and terminate the plan. With respect to exposure to post retirement benefits, it appears that few employees are likely to select the PGE group health plan as an alternate due to location and cost considerations. On PGE's stand-alone liquidity, the company intends to negotiate a $125-150 million bank line to replace its existing $222 million bank credit facilities, which are set to mature in June 2003 ($72 million) and July 2003 ($150 million). This would mark the final step in addressing immediate liquidity concerns, which initially arose with regard to collateral requirements and upcoming maturities during 2002. PGE's current ratings reflect the ongoing challenges arising from PGE's status as a subsidiary of an insolvent parent, ENE, PGE's hitherto constrained access to capital markets and FERC's investigation into the manipulation of western energy markets; however, Fitch also recognizes the potential strength of PGE's medium-term financial profile once near-term liquidity issues are successfully addressed. In this regard, despite its inability to issue unsecured debt at reasonable rates, PGE was able to issue $150 million of secured debt and $100 million in secured/insured debt in 2002 and $50 million in secured/insured debt in April 2003. This, combined with the 2002 expiry of above-market energy procurement contracts negotiated at the height of the energy crisis of 2000-01 has resulted in a significantly improved liquidity position at PGE. The closing of $142 million of remarketed pollution control revenue refunding bonds, on May 1, 2003, was a further positive development for debt holders. At year-end 2002, PGE had $51 million of cash on hand and just over $200 million of borrowing capacity. Mandatory maturities, excluding the upcoming bank facilities, are $40 million in August 2003 and just $92 million during 2004-2006. While there are 11 notches between the unsecured ratings of PGE and ENE, Fitch has not based its ratings for PGE on a view that the ratings of PGE are entirely de-linked from those of ENE. Some challenges related to the ENE bankruptcy still remain, exhibiting the pervasive nature of the complications induced by ENE's bankruptcy; however, Fitch expects greater clarity to emerge by the end of June 2003, the current deadline for ENE to file its plan of reorganization with the bankruptcy court. The Securities and Exchange Commission is conducting a review of ENE's PUHCA exemption. An SEC action revoking Enron's exemption could block PGE's access to its bank credit facilities. In order to draw under its revolvers PGE must make a representation and warranty that ENE is exempt from the PUHCA. In addition, PGE may have to apply for new regulatory approval to issue short term debt, which is anticipated to take between 30-60 days. While the uncertainty surrounding the PUHCA exemption is a concern, Fitch believes that PGE has sufficient liquidity to meet its near-term obligations in the temporary absence of access to its revolvers, and that the company's bank group is likely to grant a waiver to the technical violation of its bank credit agreement triggered by revocation of ENE's PUHCA exemption. The ratings also incorporate the recently released draft report issued by the Oregon Public Utility Commission Staff recommending that the PUC open a formal investigation into questionable trading activity during the energy crisis of 2000-2001. While the PUC has yet to decide if it will move forward with a formal inquiry, Fitch believes any potential rate reduction as a result of the proceeding is not likely to be meaningful. Of more concrete significance are the current FERC investigations and the question of PGE's longer-term ownership outside the ENE group. The FERC investigation into manipulation of western energy markets could result in significant penalties for PGE and is an ongoing source of concern for investors. An ALJ decision in the FERC investigation is expected in July 2003 and a final commission order could be issued by the end of the third quarter of 2003. At the same time, plans progress with regard to the future separation of PGE from the remaining ENE group. Fitch has discussed current plans with management and regards the options currently under consideration as likely to be generally supportive of further medium-term improvement in the credit ratings. As noted above, successful conclusion of a plan of separation, and a favorable resolution of the FERC investigation could therefore provide further triggers for rating improvement. PREMIER LASER: BIOLASE Sues Diodem LLC for Patent Infringement -------------------------------------------------------------- BIOLASE Technology, Inc. (Nasdaq: BLTI) filed suit against Diodem LLC on May 2, 2003 to reinforce BIOLASE's intellectual property position in the marketplace. Diodem, LLC is a small, recently formed entity purporting to hold some of the patents formerly held by Premier Laser Systems, Inc. which filed for bankruptcy in March 2000. In the LLC's Articles of Organization filed with the California Secretary of State, Diodem identifies Colette Cozean, Premier's former President and C.E.O., as agent, and as initial manager. BIOLASE previously sued Premier Laser Systems for patent infringement shortly before Premier's bankruptcy filing. This action is intended to further assert and protect certain BIOLASE intellectual property rights. "BIOLASE will continue to take affirmative measures to protect the interests of the Company and our stockholders and enforce our strong patent portfolio and position in the market," said Jeffrey W. Jones, BIOLASE President and Chief Executive Officer. BIOLASE Technology, Inc. -- http://www.biolase.com-- is a medical technology company that manufactures and markets advanced dental, cosmetic, aesthetic and surgical products, including Waterlase Hydrokinetic(TM) surgical cutting systems, LaserSmile(TM) and other advanced laser and non-laser products for the medical market. The Company's products incorporate patented and patent-pending technologies in the pursuit of painless surgery. BIOLASE is a leading provider of painless hard and soft tissue dental laser technology. PRIMUS TELECOMMS: Annual Shareholders Meeting Slated for June 17 ---------------------------------------------------------------- The 2003 Annual Meeting of Stockholders of Primus Telecommunications Group, Incorporated, a Delaware corporation, will be held at 10:00 a.m., local time, on June 17, 2003 at the McLean Hilton Tysons Corner, 7920 Jones Branch Drive, McLean, VA 22102 for the following purposes: 1. To elect three directors of the Company, each to serve a three-year term until the 2006 Annual Meeting of Stockholders. The current Board of Directors has nominated and recommended for such election as directors the following persons: David E. Hershberg, Nick Earle and Pradman P. Kaul. 2. To approve an amendment to the Company's Employee Stock Option Plan to increase the number of shares reserved for issuance upon exercise of options granted thereunder and to extend the expiration date of the Employee Stock Option Plan. 3. To transact such other business as may properly come before the Annual Meeting of Stockholders or any adjournment or postponement thereof. The Board of Directors has fixed April 30, 2003 as the record date for determining the stockholders entitled to receive notice of, and vote at, the Annual Meeting of Stockholders and any adjournments or postponements thereof. PRIMUS Telecommunications Group, Incorporated (NASDAQ: PRTL) is a global telecommunications services provider offering bundled voice, data, Internet, digital subscriber line (DSL), Web hosting, enhanced application, virtual private network (VPN), and other value-added services. PRIMUS owns and operates an extensive global backbone network of owned and leased transmission facilities, including approximately 250 points-of- presence (POPs) throughout the world, ownership interests in over 23 undersea fiber optic cable systems, 19 international gateway and domestic switches, a satellite earth station and a variety of operating relationships that allow it to deliver traffic worldwide. PRIMUS also has deployed a global state-of- the-art broadband fiber optic ATM+IP network and data centers to offer customer Internet, data, hosting and e-commerce services. Founded in 1994 and based in McLean, VA, PRIMUS serves corporate, small- and medium-sized businesses, residential and data, ISP and telecommunication carrier customers primarily located in the North America, Europe and Asia Pacific regions of the world. News and information are available at PRIMUS's Web site at http://www.primustel.com At December 31, 2002, Primus Telecommunications' balance sheet shows a working capital deficit of about $73 million, and a total shareholders' equity deficit of about $200 million. Primus Telecomms.' 12.75% bonds due 2009 (PRTL09USR2) are trading at about 95 cents-on-the-dollar, says DebtTraders. See http://www.debttraders.com/price.cfm?dt_sec_ticker=PRTL09USR2 for real-time bond pricing. PROMAX ENERGY: Seeks to Resolve Default Under Credit Agreement -------------------------------------------------------------- Promax Energy Inc. (TSE:PMY) announces that information contained in the press release of April 02, 2003 for a 31 day production test ending March 31, 2003 and in the 2003 President's Message to Shareholders under the heading "Outlook" incorrectly stated that the Corporation's current production from the shallow cretaceous (surface to Second White Specks) stood at 1000 BOEPD and production from the deep cretaceous (Viking to Banff) stood at 1550 BOEPD. In addition, the Corporation's Management's Discussion and Analysis for the fiscal year ended December 31, 2002 under the heading "Outlook and Strategy" incorrectly stated that the Corporation's current production consisted of approximately 1,000 BOEPD of longer life production and approximately 1,550 BOEPD of other production. The production figures announced on April 2, 2003 were based on field readings and not sales. For the 31 days ended March 31, 2003 Promax gross production from wells in which the Corporation has an interest was 2558 BOEPD (6:1). Of this, 77.3% or 1977 BOEPD accrued to Promax for satisfaction of its hedge and 1834 BOEPD was produced net of certain other minority interests. The amount accruing to Promax is 22.5% less than the 2550 BOEPD announced previously. The Corporation's credit facility with its principal lender requires the satisfaction by the Corporation of certain financial covenants, some of which have not been satisfied. The lender has waived some but not all of these covenants and therefore the Corporation is currently in default of certain terms of its credit facility. The Corporation has requested that the lender provide it with additional funds that would be used by the Corporation to conduct its 2003 exploration and development program and maintain its current operations. Though discussions are ongoing, the lender has indicated that no additional funds will be provided at this time. The Corporation is in good standing with respect to all principal and interest payments on the loans. The Corporation's management is vigorously pursuing a refinancing plan, which may include new debt financing, non-core asset sales and/or placement of new equity. As at this date and based on a foreign exchange rate of 70.1 cents/USD the Corporation owes its principal lender $76.3 Million CAD down $8.2 Million CAD since December 31, 2002. The Corporation will forward to its Shareholders revisions to its President's Message to Shareholders and it's Management's Discussion and Analysis for the fiscal year ended December 31, 2002. Promax will also file a Notice to Adjourn it's Annual General and Special Meeting of Shareholders scheduled for May 23, 2003. Promax Energy Inc. is a junior oil and gas company listed and trading on the Toronto Stock Exchange under the symbol "PMY". It has a high working interest in over 285,000 acres in a gas prone area of southeastern Alberta with multiple producing horizons including long life Medicine Hat/Milk River and Coal Bed Methane. QWEST COMMS: Expanding DSL Availability in 14-State Region ---------------------------------------------------------- Qwest Communications International Inc. (NYSE: Q) is investing an incremental $75 million to expand the availability of Qwest DSL in its 14-state region. Qwest's commitment to expand DSL services is in direct response to strong customer demand for faster Internet service, and ensures that more customers are able to receive a complete solution that includes local, long distance, wireless and DSL service. In Iowa, Qwest expects to deploy DSL later this year in Altoona, Boone, Burlington, Clinton, Indianola, Keokuk, Marshalltown and Spencer as part of the first phase of this expansion. Qwest will expand its current DSL service area by more than 20 percent, to nearly 1,550 new neighborhoods across its region. As a result, customers at approximately 900,000 additional homes and businesses will become eligible to purchase Qwest DSL. In addition to this expansion, Qwest also is making technological changes to many phone lines in its region, which is expected to make DSL services available where previously they were not. As a result, an additional 100,000 homes and businesses will have access to Qwest DSL service. "Our customers want reliable, affordable high-speed access to the Internet, and we're meeting this need by aggressively deploying additional DSL service throughout the Qwest territory," said Richard C. Notebaert, Qwest chairman and CEO. "Qwest DSL allows customers to experience the Internet the way it's meant to be experienced -- quickly and efficiently, with no long waits, saving customers time and helping to simplify their lives." Qwest DSL enables customers to access the Internet or corporate networks at speeds ranging from approximately 256 kilobits per second to 7 megabits per second, which -- at the highest DSL speed -- is approximately 125 times faster than a traditional 56K dial-up connection. As a result, customers can download movie clips and photos, play music and participate in online gaming with high-speed action. These features take a fraction of the time compared to dial-up, and customers can talk on the phone while surfing the Internet. Qwest Communications International Inc. (NYSE: Q), whose December 31, 2002 balance sheet shows a total shareholders' equity deficit of about $1 billion, is a leading provider of voice, video and data services to more than 25 million customers. The company's 50,000-plus employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at http://www.qwest.com RELIANCE: Gets Blessing to Continue Paul Zeller's Engagement ------------------------------------------------------------ Reliance Group Holdings and Reliance Financial Services obtained permission from the Court to continue the employment of Paul W. Zeller as President and Chief Executive Officer until September 30, 2003. Under the Agreement, Mr. Zeller will receive two weeks of vacation. Mr. Zeller shall not be entitled to receive any retention bonus. (Reliance Bankruptcy News, Issue No. 36; Bankruptcy Creditors' Service, Inc., 609/392-0900) SEDONA CORP: Files Suit re Manipulation of Common Stock Trading --------------------------------------------------------------- SEDONA(R) Corporation (OTCBB:SDNA) -- http://www.sedonacorp.com -- a leading provider of Internet-based Customer Relationship Management solutions for small and mid-sized financial services organizations, has filed a civil action lawsuit against numerous defendants in the United States District Court, Southern District of New York. SEDONA seeks damages from the defendants named, and other defendants yet to be named, in the complaint for allegedly participating in the manipulation of its common stock, fraud, misrepresentation, failure to exercise fiduciary responsibility, and/or failure to adhere to SEC trading rules and regulations, tortuous interference, conspiracy and other actions set forth in the complaint, including, but not limited to enforcement of settlement date and affirmative determination. The Company is represented in this action by the law firms of O'Quinn, Laminack, & Pirtle and Christian, Smith, & Jewell both of Houston, Texas. In September of 2001, SEDONA came into possession of a report alleging manipulation of over sixty publicly traded companies, one of which was SEDONA. After reviewing the report and its own trading history, the Company requested the Security and Exchange Commission investigate the trading of its stock. On February 27, of 2003, the SEC, in Litigation Release No. 18003, announced a settled civil action in the Southern District of New York against certain parties accused of manipulating SEDONA stock, and made public its' complaint detailing their allegations. In addition to alleged violation of the Commission's Order Lawfully Issued pursuant to Section 21 (a) of the Exchange Act, the SEC complaint details alleged violations of Section 10 (b) of the Exchange Act and Rule 10-b5, along with alleged violations of Section 17 (a)(1) of the Securities Act. Marco Emrich, President and CEO of SEDONA, commented, "In October of 2001, we took action that we felt was necessary to protect our shareholders and the future of our company. At that time, SEDONA placed a request and its faith in the SEC and other regulatory agencies to investigate this alleged manipulation. By their recent actions, the SEC has spoken very clearly, and their efforts are much appreciated. Now it is our responsibility to act upon that information for the protection of our shareholders. Our suit seeks to recover the tremendous damage that, in our opinion, has been done to our shareholders, and to our efforts to build SEDONA." Mr. Emrich continued, "It is the right of our shareholders, and the right of shareholders of all public companies, to expect the price of the shares they own to be determined by supply and demand, rather than an alleged manipulative and fraudulent trading scheme." James W. Christian, of Christian, Smith & Jewell commented, "In our opinion, we continue to see more and more occasions of small companies seeking capital to implement their business plans falling prey to predatory financing. It is our opinion that SEDONA is a prime example of this alleged illegal behavior. It is also our opinion that while seeking to build a sound business with a planned quality capital formation program, SEDONA instead was led into a maze of (i) its own financial advisor placing SEDONA with toxic funders, and (ii) manipulative short selling from hedge funds, fund managers, offshore funds, and broker- dealers, all of whom allegedly profit from their destruction, no matter how many employees, customers, and shareholders they left in their wake. The difficulty in capital formation and building a business, while a company's stock is continually manipulated downward, has, in our opinion, resulted in many good young companies disappearing. With the aggressive manipulation designed to bankrupt the 'victimized' companies, it is a testimony to SEDONA's business plan, products, and people, that SEDONA is still here today." Mr. Christian concluded, "It is further our opinion that this is a widespread problem in the financial markets today. The small start-up company is the foundation for many workers, and technological advancements, which are vital to economic growth. Predatory financing of companies threatens to destroy that backbone. Just because you are a small-cap company doesn't mean you are not entitled to the same protections from naked short selling as any Fortune 500 company. We seek to repair the damages done to SEDONA, and to attempt to prevent this type of behavior in the future." SEDONA(R) Corporation (OTCBB: SDNA) is a leading technology and services provider that delivers Customer Relationship Management solutions specifically tailored for small and mid-sized financial services businesses such as community banks, credit unions, insurance companies, and brokerage firms. By using SEDONA's CRM solutions, financial institutions can effectively identify, acquire, foster, and retain loyal, profitable customers. Leveraging SEDONA's CRM solution, leading financial services solution providers such as Fiserv, Inc., Open Solutions Inc., COCC, Sanchez Computer Associates, Inc., Financial Services, Inc. (FSI) and AIG Technologies offer best-in-market CRM to their own clients and prospects. SEDONA Corporation is an Advanced Level Business Partner of IBM Corporation. For additional information, visit the SEDONA Web site at http://www.sedonacorp.com As previously reported in the November 22, 2002 edition of Troubled Company Reporter, SEDONA(R) said it was aggressively pursuing several alternatives and anticipates this concern will be resolved. If such funding did not become available on a timely basis, however, the Board would explore additional alternatives to preserving value for its creditors and stockholders which might include a sale of all or part of the Company or a reorganization or liquidation of the Company. SERVICE MERCHANDISE: Court OKs Brentwood HQ Sale for $9 Million --------------------------------------------------------------- Service Merchandise Company, Inc., and its debtor-affiliates have obtained the Court's approval to sell their interest in their corporate headquarters in Brentwood, Tennessee. The Corporate Headquarters is one of the Debtors' last remaining assets to be monetized. It consists of a 347,539-square foot office complex located at 1700 Service Merchandise Drive in Brentwood. The Debtors will sell the Property for $9,000,000 subject to higher or better offers. The salient terms of the Agreement are: A. Property The Debtors will sell the land and building complex as well as certain personal property and fixtures used in connection with the Corporate Headquarters' operation. B. Excluded Personal Property There are certain personal property and fixtures that will not be included in the sale. The Debtors will engage a liquidator to sell these Excluded Personal Property. Under the Purchase Agreement, the Debtors will have until the later of the closing date of the transaction or April 26, 2003 to remove the Excluded Personal Property from the Corporate Headquarters. If the Excluded Personal Property is not removed by that target date, the Debtors will relocate the Excluded Personal Property to the Leased Space. C. Purchase Price -- $9,000,000 The Purchase Price included an initial $100,000 earnest money deposit that Kirkland paid three days after the Purchase Agreement was executed. Kirkland will pay another $300,000 earnest money deposit if it turns out as the successful bidder at the auction. D. Closing Kirkland is required to close the transaction five days after the Court issues a final order approving the sale. E. Title/Condition of Property The sale will be in an "as is, where is" basis, free and clear of any liens, claims, encumbrances and interests. All liens, claims, encumbrances and interests will attach to sale proceeds. The Property is being sold as is, where is, with no representations or warranties. F. Due Diligence Kirkland has an option to terminate the Purchase Agreement, in the event that the updated survey conducted on February 25, 2003 reveals a material impairment of the Property that was not identified on the existing survey of the Property previously delivered to Kirkland. G. Leaseback The parties will enter into the leaseback transaction at the Closing. During the term of the Lease, the Debtors have the right to terminate the Lease effective on the later of: -- the last day of the month in which the Debtors served a termination notice to Kirkland; or -- the date that the Debtors have removed all of their personal property from the Leased Space. Kirkland also has the right to terminate the Lease at any time during its term on 90 days' prior notice. H. Guaranty Robert E. Kirkland will guaranty his firm's payment and other obligations to the Debtors under the Purchase Agreement. The Court further orders the Debtors to: (a) pay Grubb & Ellis/Centennial Incorporated a $135,000 broker's commission, which is equal to 1.5% of the purchase price for the Property, only in the event that the sale of the Property is consummated with Kirkland Properties LLC; and (b) the sale of the Property to Kirkland does not and will not subject the successful bidder to any liability by reason of the transfer based, in whole or in part, directly indirectly, on any theory of law, including any theory of successor or transferee liability. (Service Merchandise Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 609/392-0900) SL INDUSTRIES: Commences Trading on AMEX Under New "SLI" Symbol --------------------------------------------------------------- Effective at the opening of trading on April 30, 2003, the common stock, $.20 par value per share, of SL Industries, Inc. commenced trading on the American Stock Exchange under the ticker symbol "SLI." The common stock had traded under the ticker symbol "SL" on the New York Stock Exchange through the close of trading on April 29, 2003. Additionally, effective at the opening of trading on April 30, 2003, the ticker symbol of the common stock on the Philadelphia Stock Exchange was changed to "SLI" from "SL." SL Industries, Inc. designs, manufactures and markets Power and Data Quality (PDQ) equipment and systems for industrial, medical, aerospace, telecommunications and consumer applications. For more information about SL Industries, Inc. and its products, please visit the Company's Web site at http://www.slpdq.com * * * In the Company's 2002 Annual Report filed on SEC Form 10-K, Grant Thornton LLP, the Company's independent auditors, issued this statement: "We have audited the accompanying [sic] consolidated balance sheet of SL Industries, Inc. and its subsidiaries as of December 31, 2002, and the related consolidated statements of operations, comperhensive income (loss), shareholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. The financial statements of SL Industries, Inc. and its subsidiaries as of and for the years ended December 31, 2001 and 2000, were audited by other auditors who have ceased operations and who's report dated March 15, 2002 included an explanatory paragraph that described certain uncertainties regarding the Company's ability to continue as a going concern." SMTC CORP: Reports Weaker Financial Results for First Quarter ------------------------------------------------------------- SMTC Corporation (Nasdaq: SMTX), (TSE: SMX), a global provider of electronics manufacturing services to the technology industry, reported first quarter revenue of $86 million, compared to $116 million for the previous quarter and $139 million for the same quarter last year. Net earnings on a Generally Accepted Accounting Principles basis for the first quarter of 2003 of $32,000, or $0.00 per share, includes restructuring charges of $0.2 million. The net loss on a GAAP basis for the previous quarter of $24.5 million, or $0.85 per share, include restructuring charges of $24.2 million ($0.2 million included in cost of sales) and other charges of $1.2 million ($1.0 million included in selling, general and administrative expenses and $0.2 million included in amortization expense). The net loss on a GAAP basis for the first quarter of 2002 of $68.2 million or $2.38 per share, includes the loss from discontinued operations of $10.2 million and the effects of a change in accounting policy related to goodwill, resulting in a charge of $55.6 million. The Company calculates adjusted net earnings (loss) as net earnings (loss) before discontinued operations, the effects of changes in accounting policies, restructuring and other charges and the related income tax effect. Adjusted net earnings(1) for the first quarter of 2003 are $169,000 or $0.01 per share compared to adjusted net earnings(1) of $1.0 million or $0.03 per share for the previous quarter and an adjusted net loss(1) of $2.5 million or $0.09 per share for the same period last year. Gross profit on a GAAP basis for the first quarter of 2003 was $8.1 million or 9.4% compared to $8.7 million or 7.5% for the previous quarter and $6.7 million or 4.9% for the same period in the prior year. Operating income on a GAAP basis for the first quarter of 2003 was $1.6 million compared to an operating loss on a GAAP basis of $22.7 million for the previous quarter and an operating loss of $0.8 million for the same period in the prior year. Effective January 1, 2002, the Company had unamortized goodwill of $55.6 million. In response to the implementation of new accounting standards, the Company completed its transitional goodwill impairment testing in the third quarter of 2002 and concluded that a write-off of the entire amount was required and recorded a charge as a cumulative change in accounting principle as at January 1, 2002. The Company achieved a net cash cycle of 39 days for the first quarter of 2003, compared to 31 days for the previous quarter and 52 days for the same period in 2002, and continues to generate cash flow from operations. During the past four quarters, the Company has reduced its debt levels by $31.6 million, or 28%, to $80.9 million from $112.5 million from the same period last year. SMTC Corporation's March 30, 2003 balance sheet shows that its total current liabilities exceeded its total current assets by about $7 million. Frank Burke, Chief Financial Officer of SMTC commented, "The Company continued to focus on its cost structures and liquidity management throughout this quarter. This has been a common theme for the Company for the past six quarters. The financial results indicate that these efforts have been rewarded with higher margins, lower bank debt and an improved balance sheet. The end markets, however, remain difficult. The Company is not seeing a general pick-up in economic activity or a return to more robust sales levels. To reflect this, the Company will continue to right size its business to the current economic environment. " SMTC's President and C.E.O., Paul Walker added, "Despite the difficult economic environment and continued weakness in end- market demand, we made significant progress during the quarter. Our gross profit margin and reduced operating expenses enabled us to report positive earnings, in excess of our guidance. We were pleased to announce during the quarter, our partnership with ALCO, a Hong Kong based EMS provider, which provides our customers with a cost effective manufacturing solution in China. Also, as we execute on our restructuring initiatives, we continued to redeploy capacity to lower cost regions." About the Company: SMTC Corporation is a global provider of advanced electronic manufacturing services to the technology industry. The Company's electronics manufacturing and technology centers are located in Appleton, Wisconsin, Boston, Massachusetts, Charlotte, North Carolina, San Jose, California, Toronto, Canada, and Chihuahua, Mexico. SMTC offers technology companies and electronics OEMs a full range of value-added services including product design, procurement, prototyping, printed circuit assembly, advanced cable and harness interconnect, high precision enclosures, system integration and test, comprehensive supply chain management, packaging, global distribution and after-sales support. SMTC supports the needs of a growing, diversified OEM customer base primarily within the networking, communications and computing markets. SMTC is a public company incorporated in Delaware with its shares traded on the Nasdaq National Market System under the symbol SMTX and on The Toronto Stock Exchange under the symbol SMX. Visit SMTC's Web site at http://www.smtc.comfor more information about the Company. SONICBLUE INC: Selling Modem Business Assets to Zoom Telephonics ---------------------------------------------------------------- SONICblue(TM) Incorporated has signed an asset purchase agreement with Zoom Telephonics, Inc. Under the terms of the agreement, Zoom Telephonics has agreed to acquire substantially all of SONICblue's modem business assets, including the trade names Diamond and Supra, for approximately $495,000, subject to adjustment. The asset purchase agreement also provides that Zoom will make certain firmware upgrades available and will provide certain technical support. The sale is subject to approval of the bankruptcy court, overbids in the bankruptcy court and customary closing conditions. SPIEGEL INC: Announces More Layoffs, Cutbacks & Closings -------------------------------------------------------- As part of its ongoing reorganization process, The Spiegel Group (Spiegel, Inc.) plans to close one of its customer sales and service centers, that its Eddie Bauer division has restructured its headquarters workforce and that it has realigned its corporate information services staff. Bill Kosturos, interim chief executive officer and chief restructuring officer of The Spiegel Group said, "We are transforming and repositioning our business for future success. These initiatives are an integral part of the reorganization process and are key steps toward streamlining our business processes and operations in each division as well as across The Spiegel Group to reduce costs and enhance productivity." The company's Spiegel Group Teleservices division, which handles the customer sales and service calls for The Spiegel Group merchant companies, will close a facility located in Bothell, Wash., which employs 365 associates. The facility is scheduled to close on July 6, 2003; associates will continue to be employed with the company through that date. Closing this facility will allow the company to better leverage the capacity in its other call centers, which are located in Rapid City, S.D., Hampton, Va., Saint John, New Brunswick, Canada, and Sydney, Nova Scotia, Canada. The company's Eddie Bauer division has restructured its organization to gain greater organizational and operational efficiencies. As a result, Eddie Bauer will reduce its headquarters workforce in Redmond, Wash., by approximately 180 associates, effective May 9, 2003. The new organizational structure will better support Eddie Bauer's multi-channel marketing strategies and bring even greater focus on serving customers, developing product and solidifying its brand positioning. Eddie Bauer associates were informed of this decision earlier today. The Spiegel Group realigned its corporate information services organization in response to the company's redefined systems strategy, which included a significant reduction in systems development initiatives. Corporate information services provides systems support to all the Group's operations. This realignment has resulted in a headcount reduction of approximately 90 associates. The majority of the associates affected were located at the company's headquarters and its data center, which are both in the Chicago area. The company will provide severance and other benefits to affected associates. The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, more than 550 specialty retail and outlet stores, and e-commerce sites, including eddiebauer.com, newport- news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com SPIEGEL INC: Enters into Long-Term Agreements with Alliance Data ---------------------------------------------------------------- Alliance Data Systems Corp. (NYSE: ADS), a leading provider of transaction services, marketing services and credit services, and The Spiegel Group will proceed with launching new private- label credit card programs for The Spiegel Group's merchant divisions -- Eddie Bauer, Spiegel Catalog and Newport News, as previously announced. Alliance Data's subsidiary, World Financial Network National Bank, will administer the new private-label credit card programs. On April 28, The Spiegel Group filed a motion with the Bankruptcy Court seeking approval to enter into a private label credit card agreement with Alliance Data Systems, and the court approved this motion on May 2. With this approval, Spiegel, Inc. and each of its three merchant divisions entered into separate but essentially identical 10-year agreements with Alliance Data. The new credit card programs for The Spiegel Group will be separate from and have no relation to The Spiegel Group's existing or prior credit card programs, and there will be no transfer of existing receivables. "We are pleased to be working with The Spiegel Group and are confident that our robust suite of marketing tools, including database, catalog and Internet capabilities will help their merchant divisions strengthen their relationships with their customers," said Ivan Szeftel, president, Retail Services, Alliance Data Systems. "I am confident that our retail heritage, strong credit and marketing services, and extensive experience in the direct marketing sector will help The Spiegel Group drive incremental sales across all three merchant divisions." "We are pleased to have established these new credit card programs, which we believe will help us enhance our customers' experience and build customer loyalty," said James M. Brewster, senior vice president and chief financial officer of The Spiegel Group. "We look forward to executing our targeted credit marketing programs aimed at reaching our existing customers and attracting new customers." Under terms of each of the agreements, Alliance Data will provide account acquisition and activation, issuance of new cards, receivables funding, card authorization, customer care, and billing and remittance services. Utilizing Alliance Data's marketing and database capabilities, the new credit card programs are expected to drive increased purchasing frequency, incremental sales and customer loyalty across all sales channels. Alliance Data's WFNNB will apply credit standards and underwriting policies that are consistent with its other retail client credit card programs for The Spiegel Group's new programs. Based in Dallas, Alliance Data Systems (NYSE: ADS) is a leading provider of transaction services, credit services and marketing services. The company assists retail, petroleum, utility and financial services clients in managing the critical interactions between them and their customers. Alliance Data manages over 72 million consumer relationships for some of North America's most recognizable companies and operates and markets the largest coalition loyalty program in Canada. Alliance Data Systems employs approximately 6,500 associates at more than 20 locations in the United States, Canada and New Zealand. For more information about the company, visit its Web site, http://www.alliancedatasystems.com The Spiegel Group is a leading international specialty retailer marketing fashionable apparel and home furnishings to customers through catalogs, more than 550 specialty retail and outlet stores, and e-commerce sites, including eddiebauer.com, newport- news.com and spiegel.com. The Spiegel Group's businesses include Eddie Bauer, Newport News and Spiegel Catalog. Investor relations information is available on The Spiegel Group Web site at http://www.thespiegelgroup.com. SPORTS CLUB: Kayne Anderson Capital Discloses 7.3% Equity Stake --------------------------------------------------------------- Kayne Anderson Capital Advisors, L.P., California limited partnership, is an investment adviser registered with the Securities and Exchange Commission under the Investment Advisers Act of 1940. It serves as sole general partner of and investment adviser to various investment funds, including Arbco Associates, L.P.; Kayne, Anderson Non-Traditional Investments, L.P.; Kayne Anderson Diversified Capital Partners, L.P.; Kayne Anderson Capital Partners, L.P.; and Kayne Anderson Capital Income Partners (QP), L.P., each of which is a California limited partnership. Kayne Anderson Investment Management, Inc., a Nevada corporation, is the sole general partner of KACALP. KAIM is owned by KA Holdings, Inc., a California corporation, the shareholders of which are Richard A. Kayne and John E. Anderson. Mr. Kayne, a U.S. citizen, is President, Chief Executive Officer and Director of KAIM. He also serves as Co-Management Chair and Chief Executive Officer of Kayne Anderson Rudnick Investment Management, LLC, a California limited liability company, and President and Director of KA Associates, Inc., a Nevada corporation. KARIM is a registered investment adviser. KAA is a registered broker/dealer. KACALP and Richard A. Kayne report beneficial ownership of 3,751,961 and 4,085,295 shares, respectively, of the common stock of The Sports Club Company, Inc., representing 7.3% and 8.0% of the shares outstanding. These amounts include 3,291,667 shares of common stock which may be acquired upon conversion of Series B Convertible Preferred Stock. Earlier, due to a mathematical error, the number of shares acquirable upon conversion of Series B Convertible Preferred Stock was erroneously reported to the SEC as 32,916,667. KACALP has shared voting and dispositve power (with Richard A. Kayne) over 3,751,961 shares. Richard A. Kayne has sole voting and dispositive power over 333,333 shares and shared voting and dispositive power (with KACALP) over 3,751,961 shares. The shares over which Mr. Kayne has sole voting and dispositive power are held by him directly or by accounts for which he serves as trustee or custodian. The shares over which Mr. Kayne and KACALP have shared voting and dispositive power are held by accounts for which KACALP serves as investment adviser and, in most cases, as general partner. KACALP disclaims beneficial ownership of the shares reported, except those shares attributable to it by virtue of its general partner interests in certain limited partnerships holding such shares. Mr. Kayne disclaims beneficial ownership of the shares reported, except those shares held by him or attributable to him by virtue of his limited and general partner interests in such limited partnerships and by virtue of his indirect interest in the interest of KACALP in such limited partnerships. On March 31, 2003, KACALP, on behalf of its affiliated accounts, executed a term sheet with Palisade Concentrated Equity Partnership, L.P., Rex Licklider, David Michael Talla and each of Millenium Partners LLC, Millenium Entertainment Partners L.P, MDP Ventures I LLC, MDP Ventures II LLC and Millenium Development Partners L.P. KACALP and the other parties above are referred to herein collectively as the "Term Sheet Parties". Licklider, Talla and the Millenium Parties are significant beneficial owners of The Sports Club's common stock. The Term Sheet sets forth a non-binding preliminary plan for the Term Sheet Parties to consummate a "going private transaction" whereby Palisade, certain of the Millenium Parties and Licklider would fund the acquisition of all of The Sports Club's outstanding common stock, other than shares of common stock held by the Term Sheet Parties and certain other specified stockholders. The Term Sheet provides that the "going private transaction" would be effectuated by means of a merger of a company formed by Palisade with and into The Sports Club, with The Sports Club being the surviving entity in the Merger. Concurrent with the Merger, (i) the Millenium Parties, Licklider, Talla and the Surviving Stockholders, if any, would exchange all of their shares of The Sports Club's common stock for shares of the Surviving Entity's common stock, and (ii) KACALP, MDP Ventures II LLC, Licklider and Talla will exchange all of their shares of The Sports Club's Series B preferred stock and Series C Preferred Stock for preferred stock of the Surviving Entity with the rights and privileges specified in the Term Sheet. Upon the Merger, the Term Sheet Parties and the Surviving Stockholders, if any, would beneficially own all of the outstanding shares of common stock of the Surviving Entity, and The Sports Club's common stock would cease to be authorized to be quoted and traded on the American Stock Exchange. The Term Sheet also sets forth certain rights and obligations of the Term Sheet Parties with respect to the Surviving Entity following the Merger. Most of the Term Sheet's provisions are non-binding, however, the Term Sheet Parties have agreed to certain binding provisions, including with respect to exclusivity, confidentiality and expense reimbursement. The transactions contemplated by the Term Sheet are subject to the satisfaction of a number of significant conditions precedent as set forth in the Term Sheet. None of the provisions of the Term Sheet is binding on The Sports Club, which previously formed a Special Committee of its Board of Directors to address any proposal to engage in a "going private transaction" by, among other actions, exploring alternatives to any such proposed transaction. As a result of executing the Term Sheet, the parties KACALP and Mr. Kayne may be deemed to have formed a "group" with the other parties to the Term Sheet for purposes of Section 13(d) of the Act and the rules promulgated thereunder. Accordingly, KACALP and Mr. Kayne may be deemed to be the beneficial owners of the shares of The Sports Club's common stock beneficially owned by such other parties as reported to the SEC, respectively. KACALP and Mr. Kayne expressly disclaim beneficial ownership of The Sports Club's common stock beneficially owned by such other parties. Additionally, KACALP and Mr. Kayne expressly disclaim any assertion or presumption that they and the other parties constitute "group". * * * As previously reported in Troubled Company Reporter, the amendment to Loan Agreement with Comerica Bank was made as a result of the Company's non-compliance with two of the financial covenants for the June 30, 2002, reporting quarter. The Bank had previously waived the Company's compliance with such covenants for that quarter. The Sports Club Company operates four sports and fitness clubs (the Clubs) under The Sports Club/LA name in Los Angeles, Washington D.C. and at Rockefeller Center and the Upper East Side in New York City. The Company also operates the Sports Club/Irvine, The Sports Club/Las Vegas and Reebok Sports Club/NY. SCC's Clubs offer a wide range of fitness and recreation options and amenities, and are marketed to affluent, health-conscious individuals who desire a service-oriented club. The Company's subsidiary, The SportsMed Company, operates physical therapy facilities in some Clubs. At December 31, 2003, the Company's balance sheet shows a working capital deficit of about $22 million, while total shareholders' equity continued to dwindle to about $33 million. SUCCESSORIES: Likely Liquidity Issues Raise Going Concern Doubt --------------------------------------------------------------- On May 2, 2003, Successories (OTCBB:SCES) filed its Annual Report on Form 10-K for the fiscal year ended February 1, 2003. The Company reported a net loss of $5,103,000. In fiscal 2001, the Company reported a net loss of $10,804,000. Of the $5,103,000 net loss in fiscal 2002, $2,826,000 was from discontinued operations. The Company closed all of its 100% owned retail stores in fiscal 2002. With respect to the previously announced merger between the Company and S.I. Acquisition LLC, preliminary proxy materials were filed with the Securities and Exchange Commission on March 7, 2003. The Company is in the process of responding to comments from the SEC and anticipates filing and mailing definitive proxy materials to shareholders in the second fiscal quarter of 2003. As of February 1, 2003, the Company was in compliance with all the debt covenant requirements of its credit facility agreement. The Provident Bank extended the term of the credit facility to June 30, 2003. The bank has not given indication that they intend to renew the credit facility agreement. The Company continues discussions with various financing sources for funding alternatives to its current credit facility, and to date has not been able to secure alternate financing. The Company is currently in discussions with two banks to obtain a credit facility in the event the pending merger transaction with S.I. Acquisition LLC closes. In each case, the banks are requiring a personal guarantee or pledge of assets from the Company's Chairman of the Board, Jack Miller. In the event the merger transaction does not close and the Company is unable to secure additional bank borrowings or alternative sources of capital, the Company will have liquidity issues and as such, the Company's auditors have raised substantial doubt about the Company's ability to continue to operate as a going concern. In such event, the Company may consider filing for protection under the United States bankruptcy laws. Successories, Inc. designs, manufactures, and markets a diverse range of motivational and self-improvement products, many of which are the Company's own proprietary designs, for business and for personal motivation. The Company's products are sold via the millions of catalogs it mails each year and through a network of over 21 franchise and 2 joint venture store operations. Additionally, the Company's products may be purchased online via its Web site at http://www.successories.com SUMMIT CBO I: S&P Places Low-B and Junk Ratings on Watch Neg. ------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' rating on the class A notes and 'CCC-' rating on the class B notes issued by Summit CBO I Ltd., an arbitrage high-yield CBO transaction, on CreditWatch with negative implications. The ratings on the class A and B notes were previously lowered on May 31, 2002. The CreditWatch placements reflect factors that have negatively affected the credit enhancement available to support the class A and B notes since the previous rating action. These factors include par erosion of the collateral pool securing the rated notes and continued deterioration in the credit quality of the performing assets within the pool. Standard & Poor's notes that $56.70 million (or approximately 25.69%) of the assets currently in the collateral pool are defaulted, $6.21 million of which has defaulted since the previous rating action. As per the March 31, 2003 trustee report the class A/B overcollateralization ratio test continues failing, with a current ratio of 91.1% versus the minimum required ratio of 120.0% and an effective date ratio of approximately 129.4%. The credit quality of the collateral pool has also deteriorated since the previous rating action. Currently, of the performing assets in the pool, $22.50 million (or approximately 13.72%) come from obligors with ratings in the 'CCC' range, and $10.45 million come from obligors with ratings of CC (or approximately 6.37%). Standard & Poor's will remain in contact with Summit Investment Partners LLC, the collateral manager for this transaction, and will be reviewing the results of the current cash flow runs generated for Summit CBO I Ltd. to determine the level of future defaults the rated tranches can withstand under various stressed default timing and interest rate scenarios, while still paying all of the interest and principal due on the notes. The results of these cash flow runs will be compared with the projected default performance of the performing assets in the collateral pool to determine whether the ratings assigned to the notes remain consistent with the credit enhancement available. RATINGS PLACED ON CREDITWATCH NEGATIVE Summit CBO I Ltd. Rating Class To From Balance (mil. $) A BB-/Watch Neg BB- 160.495 B CCC-/Watch Neg CCC- 37.000 SUN POWER: Names J. Roland Vetter as New CFO & Acting President --------------------------------------------------------------- Sun Power Corporation (OTCBB:SNPW) and (Berlin Stock Exchange:SJP) announce the appointment of Mr. J. Roland Vetter, CA, to the position Chief Financial Officer and acting President. Mr. Vetter replaces Andrew Schwab who held positions as President, Secretary and Treasurer during the corporation's formation and who will remain as Secretary. Mrs. Carol O'Shea, the corporations accounting technician for the last two years, has consented to the office of Treasurer. Mr. Roland Vetter, CA was the former Group Financial Services Director for the Zimco Group, part of the New Mining Business Division of Anglo American Corporation (South Africa's largest conglomerate) and a former Chairman of the Anglo American Audit Liaison Committee. Zimco comprised twelve distinct operations involved in mining and manufacturing. He is an executive with significant experience in growing start-up companies in mining, manufacturing and technology. He has diverse financial and operational ability at the executive level, including experience in completing due diligence, business plans, with hands on expertise of then assimilating operations and implementing projects, mergers, acquisitions and disposals. He has also been accountable for risk management, internal controls, corporate- governance, optimizing funding structures and corporate tax planning. Mr. Vetter, a Member of both the Canadian and South African Institute of Chartered Accountants, attended the University of the Witwatersrand in South Africa, where he obtained his Bachelor of Commerce and Bachelor of Accounting degrees. The Corporation recently announced that it had initiated a restructuring program involving a change of business, namely to seek out and acquire revenue producing mining assets through the use of project financing. By mitigating raw material supply risk, process risk and market risk, the Corporation believes that it can fund the acquisition of targeted mining properties without reliance upon a corporate equity issue. To qualify as a targeted acquisition, a mining property must demonstrate: a minimum of three years historic operations with positive cash flow; low cost production as a defense against lows in the market cycles; potential for expandable mineral reserves and the ability to increase production and cash flow through modern mining techniques. The Corporation is currently exploring the acquisition of certain mineral resource properties that fit its new focus. Although Sun Power believes that the plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such, plans, expectations or intentions will prove to be accurate. Readers should refer to the risk disclosures outlined in the Corporation's annual report filed on April 30, 2003 on Form 10 KSB for the year ending December 31, 2002 and the Corporation's other periodic reports filed from time-to-time with the Securities and Exchange Commission. Sun Power Corp.'s December 31, 2002 balance sheet shows a working capital deficit of about $400,000 and a total shareholders' equity deficit of about $2 million. TITAN CORP: S&P Assigns Low-B Level Ratings to Bank Loan & Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to Titan Corp.'s $50 million senior secured bank loan due 2009 and 'B' rating to the $200 million senior subordinated notes due 2011. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit and senior secured debt ratings on the company. The proceeds from the notes together will be used to redeem Titan's $250 million 5-3/4% "High Tides" convertible preferred securities. The outlook is stable. Titan, based in San Diego, California, develops and deploys communication and information technology solutions and services primarily for government customers. Pro forma total debt, including operating leases, exceeds $700 million. Titan's focus is primarily on national security solutions, with 2002 revenues of about $1.4 billion. Two-thirds of revenues derived from services, the other one-third comprised of systems integration and delivery of systems and products. Near-term revenue growth in the National Security business is expected to be in the low teens area, with EBITDA margins in the 8% area. "Titan's stable cash flow base limits downside credit risk," said Standard & Poor's credit analyst Philip Schrank. "Management is expected to structure and pace acquisitions to support current credit quality and reduce debt over time from free cash flow generation." Standard & Poor's expects Titan to generate moderate levels of free cash flow, which coupled with the proceeds of any asset sales from discontinued operations, is expected to be used primarily to reduce debt levels. TRAILMOBILE TRAILER: Court Confirms Liquidating Chapter 11 Plan --------------------------------------------------------------- The U.S. Bankruptcy Court for the Northern District of Illinois approved Trailmobile Trailer LLC's disclosure statement and confirmed the Debtor's Joint Liquidating Chapter 11 Plan with the Official Committee of Unsecured Creditors. The Debtor's Disclosure Statement explaining its Plan of Reorganization is available for a fee at: http://www.researcharchives.com/bin/download?id=030504221956 The Court has determined that the Debtor's Joint Liquidating Plan complies with each of the 13 standards articulated in Section 1129 of the Bankruptcy Code: (1) the Plan complies with the Bankruptcy Code; (2) the Debtors have complied with the Bankruptcy Code; (3) the Plan was proposed in good faith; (4) all plan-related cost and expense payments are reasonable; (5) the Plan is a liquidating plan, no insider will be employed or retained by a reorganized debtor; (6) no rate changes are all provided for in the Plan that would require governmental regulatory commission approval; (7) creditors receive more under the plan than they would in a chapter 7 liquidation; (8) all impaired creditors have voted to accept the Plan, or, if they voted to reject, then the plan complies with the absolute priority rule; (9) the Plan provides for full payment of Priority Claims; (10) at least one non-insider impaired class voted to accept the Plan; (11) the Plan is feasible and confirmation is unlikely to be followed by a liquidation or need for further financial reorganization; (12) all amounts owed to the Clerk and the U.S. Trustee will be paid; and (13) the Plan provides for the continuation of all retiree benefits in compliance with 11 U.S.C. Sec. 1114. On the Effective Date, all property of the Debtor's estate will be vested in and will be transferred to the Liquidating Trust. The Court approved the appointment of Nancy Ross as the Trustee under the Liquidating Trust. Any executory contracts or unexpired leases, which have not expired by their own terms shall be deemed rejected by the Debtor on the Effective Date. Trailmobile Trailer, a leading manufacturer of dry vans, refrigerated vans, and platform trailers, filed for chapter 11 protection on December 12, 2001 (Bankr. N.D. Ill. Case No. 01- 43820). John W. Costello, Esq., at Wildman, Harrold, Allen & Dixon represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed debts and assets of over $10 million each. TRANSTECHNOLOGY: Narrows Net Capital Deficit to $6MM at March 31 ---------------------------------------------------------------- TransTechnology Corporation (NYSE:TT) reported that sales from continuing operations for the fiscal year ended March 31, 2003, increased 15% to $55.0 million from $47.8 million in the prior fiscal year. Exclusive of non-recurring or unusual charges and gains associated with derivatives, income from continuing operations before interest and taxes increased 84% to $8.0 million from $4.3 million in the prior year. The reported loss for fiscal 2003 from continuing operations was $3.9 million, or $0.61 per share inclusive of $8.3 million of non-recurring or unusual charges and a $2.0 million, non-cash gain from financial derivatives associated with a change in the value of warrants to purchase the company's stock during the year. This compared with a reported loss from continuing operations of $2.2 million, or $0.36 per share, for fiscal 2002 that included $3.0 million in non-recurring or unusual pre-tax charges associated with forbearance fees, the corporate office restructuring and a gain on the sale of real estate. Reported net income for fiscal 2003, including a gain from discontinued operations of $13.1 million, or $2.08 per share, was $9.2 million, or $1.47 per share. For the prior fiscal year, the company reported a net loss of $71.8 million, or $11.61 per share, including a loss from discontinued operations of $69.6 million, or $11.25 per share. Non-recurring and unusual items included in the full-year results for fiscal 2003 were comprised of: $2.7 million in charges associated with the reorganization of the corporate office staff; $3.7 million in prepayment penalties and the write-off of previously capitalized fees related to the early payment of subordinated debt; $0.8 million of forbearance fees paid to the company's former senior lenders; $0.7 million of costs associated with the company's efforts to restructure its balance sheet; and $0.4 million associated with a product liability claim from a business sold several years ago. The latter two items are included in fiscal 2003's corporate office expenses. Income from continuing operations before interest, taxes, depreciation and amortization (EBITDA) rose 42% to $9.4 million from last year's $6.7 million. Interest expense allocated to continuing operations, the largest non-operating use of cash, increased to $9.2 million in fiscal 2003 from $4.9 million in fiscal 2002. Total interest expense, including that portion allocated to discontinued operations, decreased from $25.1 million in fiscal 2002 to $15.4 million in fiscal 2003. Fiscal fourth-quarter 2003 revenues of $13.7 million were up 11.6% from $12.3 million in the fourth quarter a year ago. Income from continuing operations, before interest and taxes and non-recurring or unusual charges and gains associated with derivatives, decreased 61% to $0.8 million for the quarter from $2.2 million in the prior-year period. The decline was attributable to the inclusion of $1.4 million of gross profit from inventory adjustments in the fourth quarter of fiscal 2002 and the recognition of $1.1 million of non-recurring costs included in corporate office expense in the recently completed fourth quarter. Excluding the impact of these unusual items in both periods, fourth-quarter 2003 income from continuing operations before interest and taxes was level with last year's fourth quarter. The loss from continuing operations for the fourth quarter of fiscal 2003 was $3.5 million, primarily the result of the non-recurring or unusual charges discussed above, compared to income from continuing operations of $1.7 million in the prior year's fourth quarter. Interest expense allocated to continuing operations in the fourth quarter of fiscal 2003 rose to $2.6 million from $0.7 million in last year's fourth quarter, even though total interest expense paid in the quarter declined to $3.7 million from $4.3 million in the prior year. Net income for fiscal 2003's fourth quarter was $18.0 million or $2.71 per share, including a gain from discontinued operations of $21.4 million, primarily from the sale of Norco. Last year's fourth quarter net loss of $11.8 million included a loss from discontinued operations of $13.4 million which was the result of losses realized or anticipated on business units being sold through the divestiture program. Income from discontinued operations in fiscal 2003 of $13.1 million included operating income from discontinued businesses of $7.0 million and a $28.5 million gain from the sale of the company's Norco subsidiary. These gains were partially offset by an allocated interest expense of $6.3 million; a $1.4 million non-cash charge to recognize increased loss reserves associated with units previously divested; a $4.6 million non-cash adjustment to the Cumulative Translation Adjustment account associated with foreign currency translation losses of formerly owned subsidiaries (previously accounted for as a reduction to equity); and a tax expense of $3.1 million. The $69.6 million loss from discontinued operations reported for fiscal 2002 included losses anticipated upon the sale of the various retaining rings businesses (the last of which were sold in the second quarter of fiscal 2003), and the operating income and interest expense associated with the industrial products segment through the anticipated closing dates of the divestitures of those units, and the accrual of certain phase-out costs through the completion of the restructuring process. At March 31, 2003, the Company's balance sheet shows a total shareholders' equity deficit of about $6 million. Divestiture Program Completed The sale of substantially all of the assets and business of the Norco Inc. subsidiary on February 24, 2003, for $52 million completed the divestiture program. Proceeds from the sale were used to retire all of the debt outstanding under the company's senior credit lines and to substantially reduce its outstanding subordinated debt. As a result of the divestiture program, total debt as of March 31, 2003 was $53.5 million, less than half of the $107.6 million outstanding at the start of the fiscal year while the cash position had increased to $7.0 million from less than $0.1 million twelve months earlier. Aftermarket and New Products Drive Growth in Continuing Operations A favorable mix of repair and overhaul business to new equipment deliveries and shipments of the HLU-196 Munitions Hoist to the U.S. Navy resulted in strong sales growth for the fiscal year. Almost 95% of the company's sales in fiscal 2003 were to the U.S. or foreign military or government agencies on a sole-source basis. New orders received during the fourth quarter were $17.1 million, resulting in full fiscal year bookings of $67.3 million compared with $52.4 million in the prior fiscal year and $9.1 million in last year's fourth quarter. The company's book-to- bill ratio for the fourth quarter was 1.25, compared with just 0.74 in last year's fourth quarter, while full-year book-to-bill improved to 1.22 for fiscal 2003 from 1.10 in fiscal 2002. The company's backlog increased by 8% or $3.4 million during the final three months of fiscal 2003 to $46.2 million, 37% or $12.4 million above the $33.8 million of a year earlier. Robert L. G. White, Chief Executive Officer of the company, said, "Refocusing our resources solely upon our Breeze-Eastern division has provided strong operating results. Fiscal 2003 yielded our fourth consecutive year of growth in revenues and operating income at the business unit level and generally gave us a year that exceeded our expectations A stronger than forecast aftermarket sales component combined with our anticipated strong sales of the new HLU-196 Bomb Hoist and other new equipment combined to give us a gross margin far greater than originally budgeted. The record volume of new orders received is the result of our focus on the development of new products and innovative enhancements to existing ones coupled with an absolute commitment to superior customer service. This strength in new orders allows us to enter fiscal 2004 with an all-time high backlog, a strong indicator of our outlook for the future." Mr. White continued, "Fourth-quarter results continued to reflect the success of efforts to reduce our selling, general and administrative expenses, especially at the corporate office level. Corporate office expenses for the final three months of the fiscal year, adjusted to exclude the previously noted costs of a product liability claim for a business disposed of several years ago and the costs of our restructuring, were less than $1.0 million, right on plan. As the final changes in our corporate office staffing are realized in fiscal 2004, we expect to achieve a corporate office expense level of $0.7 million per quarter, or approximately $3.0 million per year." Joseph F. Spanier, Vice President and Chief Financial Officer, said, "Our divestiture program has succeeded in substantially de-leveraging our company. At March 31, 2003, we had no outstanding senior debt, held approximately $7.0 million in cash, and had subordinated debt of $53.3 million outstanding. Our total leverage at the end of the year, net of cash, was approximately 4.9 times EBITDA, compared to our peak leverage ratio which approached 7 times EBITDA earlier in our restructuring efforts. "Under the required accounting treatment with regard to the financial derivatives associated with the outstanding warrants held by our subordinated debt holders and a related put, we recognized $2.0 million of non-cash non-taxable income during the fourth quarter and full fiscal year of 2003. The provisions of the amended warrants that provide their holders the ability to 'put' the warrants to the company for $5 per share will expire during the first quarter of fiscal 2004 ending June 30, 2003. Therefore, we do not anticipate that any further gains or losses will be recognized as a result of this derivative." Mr. Spanier continued, "The maximum cash exposure of the company related to these warrants and their put rights, if any, is $2.1 million. The interest rate on our subordinated debt increased to 18.25% effective March 31, 2003, with cash interest remaining at 13% and the payment in kind (PIK) rate going to 5.25% from 5%. Until the subordinated debt is repaid in full, the PIK rate will increase 0.25% at the end of each quarter. "Our primary financial focus in the new fiscal year will be to reduce the impact of the high interest rates we are paying. At the rates required under our existing subordinated debt, which will average 18.5% for fiscal 2004, we will incur approximately $10 million in interest expense during fiscal 2004. We are continuing to work with a new group of prospective lenders and our advisors in order to restructure our balance sheet in a way that will enhance our earnings and free cash flow per share and significantly improve the strength of our balance sheet. With the strong operational targets established by our management team, we are confident we will be successful," Mr. Spanier concluded. Fiscal 2004 Targets Mr. White stated, "Now that we have completed the restructuring of our operations and our divestiture program, we can address the future of our company in a more focused fashion. Our vision for the future is that TransTechnology will be recognized as the pre-eminent designer, manufacturer and service provider of sophisticated lifting equipment for the Aerospace and Defense markets. Our business model is to command market leadership through design, engineering and superior customer service; to maintain operating agility with a focus on cash generation; and to keep our high-quality people challenged as to personal growth and sustained performance. We will measure our success by our ability to achieve our goal, to double sales and EBITDA over the next five years, initially through organic growth, and, in later years, including acquisitions of niche products and technologies." Mr. White continued, "We are entering the new fiscal year with a record backlog and a number of new programs in negotiation. As a result, we have established a sales target of $64 million for fiscal 2004, a 16% increase from fiscal 2003. Although we expect aftermarket sales to be at the same level as 2003, because we will be shipping a significantly higher amount of new equipment we anticipate a shift in our more profitable aftermarket sales from 53% of total revenues in fiscal 2003 to 43% in fiscal 2004. As a result, we expect to see our gross margin decline from the 44% level of the past two fiscal years to 38% in fiscal 2004. While the shift in mix will have a negative impact on the gross margin in the short term, the shipment of substantial amounts of new product into the market lays the foundation for increased aftermarket sales in the future. The decline in our gross margin, however, should be more than offset by a significant reduction in corporate office expenses, yielding targeted fiscal 2004 operating income of $11 million, a 57% increase from fiscal 2003. Since we have a $52 million net operating loss carry- forward, we will not be required to pay federal income taxes on any fiscal 2004 profits, but we will recognize, for EPS purposes, a full federal and state income tax burden of 38%. Our fiscal 2004 capital spending program, budgeted at $1.3 million, is higher than in past years as we expect to implement a new ERP system during fiscal 2004 and 2005. Although depreciation and amortization of $1.9 million for fiscal 2004 are expected to be significantly less than in 2003, targeted EBITDA for fiscal 2004 is approximately $13 million, a 38% increase when compared with fiscal 2003's reported $9.4 million." Mr. White continued, "As Mr. Spanier noted previously, our current credit agreements would require fiscal 2004 interest expense of approximately $10 million, or $0.98 per share. As a result of our focus on reducing the impact of this high-interest burden in a way that would be highly additive to both earnings and cash flow per share, we cannot at this time establish an EPS target. As our refinancing efforts crystallize, we will be able to offer more insight. All-in-all, however, we are looking forward to a very good year in fiscal 2004, and we hope to deliver a significant improvement in shareholder value as a result." Separately, the company reported that the New York Stock Exchange (NYSE) has notified it that the company has fallen below the NYSE continued listing standards requiring total market capitalization of not less than $50 million over a 30-day trading period and total stockholders' equity of not less than $50 million. The company will be submitting to the NYSE a plan to comply with the listing standards. If the NYSE accepts the plan, the company will be subject to quarterly monitoring for compliance with the plan goals and targets. If the NYSE does not accept the plan, the company will be subject to delisting from the NYSE. In the event of delisting from the NYSE, the Company believes an alternate trading venue would be available. TransTechnology Corporation, operating as Breeze-Eastern, is the world's leading designer and manufacturer of sophisticated lifting devices for military and civilian aircraft, including rescue hoist, cargo hooks, and weapons-lifting systems. The company employs approximately 180 people at its facility in Union, New Jersey. VARI-L CO.: Shareholders Okay Asset Sale to Sirenza Microdevices ---------------------------------------------------------------- Vari-L Company, Inc. (OTC Bulletin Board: VARL), a leading provider of advanced components for the wireless telecommunications industry, has received shareholder approval for the sale of substantially all of Vari-L's tangible and intangible assets to a wholly owned subsidiary of Sirenza Microdevices, Inc. (Nasdaq: SMDI) and the subsequent dissolution of Vari-L. Of the 3,793,526 votes cast at the Special Shareholder meeting, over 97 percent were in favor of the asset sale and subsequent dissolution. "We are pleased that the overwhelming majority of our shareholders who chose to vote on the proposals recognized the value of completing this transaction," said Chuck Bland, CEO of Vari-L Company. The transaction was closed Monday. On December 2, 2002, Vari-L announced a definitive agreement to sell substantially all of its assets to Sirenza. The transaction is subject to several closing conditions, including the approval of Vari-L shareholders. The boards of both companies have approved the transaction. Sirenza Microdevices, Inc., an ISO 9001:2000-certified manufacturer headquartered in Sunnyvale, California, with design centers throughout the U.S., is a leading supplier of high- performance RF components for the wireless and wireline telecommunications markets. The company's product lines include amplifiers, power amplifiers, discrete devices, RF signal processing components, fiber optic components, and high- performance multi-component modules (MCMs) for transmit and receive applications. Product information may be found on Sirenza's Web site at http://www.sirenza.com Headquartered in Denver, Vari-L designs, manufactures and markets wireless communications components that generate or process radio frequency (RF) and microwave frequency signals. Vari-L's products are used in commercial infrastructure equipment (including GSM/cellular/PCS base stations and repeaters, fixed terminal point to point/multi-point,) consumer subscriber products (advanced cellular/PCS/satellite handsets), and military/aerospace platforms (satellite communications/telemetry, missile guidance, electronic warfare, electronic countermeasures, battlefield communications). Vari-L serves a diverse customer base of the world's leading technology companies, including Agilent Technologies, Ericsson, Harris, Hughes Network Systems, Lockheed Martin, Lucent Technologies, Microwave Data Systems, Marconi, Motorola, Netro, Nokia, Raytheon, Textron, Siemens, and Solectron. WHEREHOUSE ENTERTAINMENT: Court Fixes June 30 Claims Bar Date ------------------------------------------------------------- The U.S. Bankruptcy Court for the District of Delaware fixes June 30, 2003 as the General Claims Bar Date for all creditors of Wherehouse Entertainment, Inc., to file their proofs of claim or be forever barred from asserting that claim against the Debtors' estates. Four classes of claims are exempt from the General Claims Bar Date requirement: a) claims that has been properly filed a proof of claim; b) claims not listed in the Schedules as disputed, contingent, or unliquidated; c) claims previously allowed by an order of this Court; and d) claims by any of the Debtors and their affiliated entities against one or more of the Debtors. The Governmental Units' Bar Date is scheduled on July 20, 2003. Additionally, any entity holding a Rejection Damages Claim arising from the rejection of an executory contract or unexpired lease is required to file a Rejection Damage Claim on the later of: a) the General Bar Date, or b) 30 days after the date of the applicable Rejection Order. Wherehouse Entertainment, Inc., sells prerecorded music, videocassettes, DVDs, video games, personal electronics, blank audio cassettes and videocassettes, and accessories. The Company filed for chapter 11 protection on January 20, 2003, (Bankr. Del. Case No. 03-10224). Mark D. Collins, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $227,957,000 in total assets and $222,530,000 in total debts. WORLDCOM INC: Asks Court to Clear MCI Noteholders Stipulation ------------------------------------------------------------- Lori R. Fife, Esq., at Weil Gotshal & Manges LLP, in New York, relates that on June 24, 1996, MCI Communications Corporation issued $500,000,000 in principal amount 7-1/8% Debentures due June 15, 2027 pursuant to that certain indenture, dated February 17, 1995, as amended, between MCI and Citibank, N.A., as trustee. Law Debenture Trust Company of New York is the successor indenture trustee to Citibank, N.A. The Notes provide that they are subject to redemption on June 15, 2003 by holders of Notes that have exercised the option to redeem by delivering, no earlier than April 16, 2003 and no later than May 15, 2003, the Notes to be redeemed and notice of the exercise of the redemption option in accordance with applicable provisions of the Notes. Ms. Fife reports that recently, a dispute arose between MCI and the unofficial committee formed by certain holders of the Notes and other bonds and debentures issued by MCI, regarding the applicability of the automatic stay to the redemption of the Notes. MCI believes that the exercise of the redemption option, including the delivery of Redemption Notices, during the pendency of MCI's Chapter 11 case would constitute a violation of the automatic stay imposed by Section 362(a) of the Bankruptcy Code. The MCI Noteholders Committee, which the Debtors understand comprises holders of more than 50% of the Notes, contends that these actions would not violate the automatic stay, and if the automatic stay were implicated, the implication would be technical and good cause would exist for modification of the automatic stay to permit the exercise of the redemption option. MCI, the MCI Noteholders Committee, and the Trustee do agree, however, that the issue of the applicability of the automatic stay to the exercise of the redemption option and delivery of Redemption Notices need not be adjudicated at this time. Therefore, to postpone adjudication of the applicability of the automatic stay, MCI, the MCI Noteholders Committee, and the Trustee have agreed, subject to Bankruptcy Court approval, to toll the Notice Period Commencement, the Notice Period Deadline, and the Redemption Date. In that regard, MCI, the MCI Noteholders Committee, and the Trustee have entered into a Stipulation and Order, under which the parties have greed to toll: A. the Notice Period Commencement to June 16, 2003; B. the Notice Period Deadline to July 15, 2003; and C. the Redemption Date to the earlier of August 15, 2003 and the date that is 10 days prior to the scheduled date of commencement of a hearing to consider confirmation of a plan of reorganization in the Debtors' cases that provides for reinstatement of the Notes. (Worldcom Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 609/392-0900) * Meetings, Conferences and Seminars ------------------------------------ May 8-10, 2003 ALI-ABA Fundamentals of Bankruptcy Law Seattle Contact: 1-800-CLE-NEWS or http://www.ali-aba.org May 14, 2003 NEW YORK INSTITUTE OF CREDIT Factoring Panel Luncheon Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 4, 2003 NEW YORK INSTITUTE OF CREDIT 24th Credit Smorgasbord Contact: 212-629-8686; fax 212-629-7788; info@nyic.org June 19-20, 2003 RENAISSANCE AMERICAN MANAGEMENT, INC. & BEARD GROUP Corporate Reorganizations: Successful Strategies for Restructuring Troubled Companies The Fairmont Hotel Chicago Contact: 1-800-726-2524 or fax 903-592-5168 or ram@ballistic.com June 26-29, 2003 NORTON INSTITUTES ON BANKRUPTCY LAW Western Mountains, Advanced Bankruptcy Law Jackson Lake Lodge, Jackson Hole, Wyoming Contact: 1-770-535-7722 or http://www.nortoninstitutes.org July 10-12, 2003 ALI-ABA Partnerships, LLCs, and LLPs: Uniform Acts, Taxation, Drafting, Securities, and Bankruptcy Eldorado Hotel, Santa Fe, New Mexico Contact: 1-800-CLE-NEWS or http://www.ali-aba.org December 3-7, 2003 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference La Quinta, La Quinta, California Contact: 1-703-739-0800 or http://www.abiworld.org April 15-18, 2004 AMERICAN BANKRUPTCY INSTITUTE Annual Spring Meeting J.W. Marriott, Washington, D.C. Contact: 1-703-739-0800 or http://www.abiworld.org December 2-4, 2004 AMERICAN BANKRUPTCY INSTITUTE Winter Leadership Conference Marriott's Camelback Inn, Scottsdale, AZ Contact: 1-703-739-0800 or http://www.abiworld.org The Meetings, Conferences and Seminars column appears in the Troubled Company Reporter each Wednesday. Submissions via e-mail to conferences@bankrupt.com are encouraged. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Bond pricing, appearing in each Thursday's edition of the TCR, is provided by DebtTraders in New York. DebtTraders is a specialist in global high yield securities, providing clients unparalleled services in the identification, assessment, and sourcing of attractive high yield debt investments. For more information on institutional services, contact Scott Johnson at 1-212-247-5300. To view our research and find out about private client accounts, contact Peter Fitzpatrick at 1-212-247-3800. Real-time pricing available at http://www.debttraders.com/ Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Trenton, NJ USA, and Beard Group, Inc., Washington, DC USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2003. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***