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/raid1/www/Hosts/bankrupt/TCR_Public/040206.mbx T R O U B L E D C O M P A N Y R E P O R T E R Friday, February 6, 2004, Vol. 8, No. 26 Headlines 3D SYSTEMS: Settles All Disputes and Litigation with EOS GmbH AES CORP: Will Redeem 8% Senior Notes & 10% Secured Senior Notes AIR CANADA: Asks for Court Nod to Amend CCAA Lender Definition AIR CANADA: ALPA Air Canada Jazz Unit Re-Elects Pilot Officers ALASKA AIR GROUP: Reports January Passenger Traffic for Units ALLEGHENY ENERGY: Receives SEC Approval for $1.6BB Debt Issuance ALLIANCE HEALTHCARD: Miller Ray Airs Going Concern Uncertainty AMERADA HESS: Declares Quarterly Preferred Share Dividend AMERCO: Resumes Regular Quarterly Preferred Share Dividend AMERICA WEST: Reports 8.1% Increase in January 2004 Traffic AMERICA WEST: Reports Outstanding Operating Performance for Dec. AMERICAN TOWER: Closes 7.25% Sr. Debt Offering & Calls 6.25% Notes AMERICAN TOWER: S&P Assigns Junk Rating to $225MM 7.5% Sr. Notes AMNIS SYSTEMS: Inks LOI to Purchase Corridor Communications Corp. ARGOSY GAMING: S&P Rates $350 Mil. Sr. Subordinated Notes at B+ ATA HOLDINGS: S&P Revises CreditWatch Implications to Positive AURORA FOODS: Court Okays Miller Buckfire as Financial Advisor AVADO BRANDS: Files for Chapter 11 Reorganization in N.D. Texas AVADO BRANDS INC: Case Summary & 50 Largest Unsecured Creditors BEAUTYCO INC: Signs-Up Tomlins & Goins as Bankruptcy Counsel BIONOVA HOLDING: Enters Financial Restructuring Pact with Savia BOYD GAMING: Reports Improved 4th-Quarter 2003 Financial Results BROOKLYN NAVY: Fitch Cuts Sr. Debt Rating to Speculative Grade BUDGET GROUP: Claims Classification/Treatment Under Amended Plan CHINA WORLD: Losses & Capital Deficit Raise Going Concern Doubt COMMSCOPE INC: S&P Affirms Low-B Level Credit & Sub. Debt Ratings CROMPTON CORP: S&P Cuts Rating to BB on Ongoing Earnings Weakness CWMBS INC: Fitch Hacks Class B3 Notes' Rating to Junk Level DELTA AIR: Sets Annual Shareholders' Meeting for April 23, 2004 DELTA AIR: January 2004 Traffic Increases By 0.3% DII INDUSTRIES: Receives Final Nod for $350 Million DIP Facility DIRECTV: Raven Media Asks Court to Subordinate Hughes' Claims EL PASO CORP: Agrees to Sell Aruba Refinery to Valero for $465MM EL PASO CORP: Valero Confirms Purchase of Aruba Refinery & Assets ENRON CORP: EMI Wins Nod to Sell Partnership Interest to VF II EXD ACQUISITION: Case Summary & 20 Largest Unsecured Creditors FACTORY 2-U: Brings-In Hennigan Bennet as Reorganization Counsel GARDEN HOLDINGS: Case Summary & Largest Creditor GASEL TRANSPORTATION: Goff Backa Replaces Van Krevel as Auditors GENCORP INC: Will Pay Quarterly Cash Dividend on February 27, 2004 GLOBE METALLURGICAL: February 20 Fixed as Admin. Claims Bar Date GMAC COMM'L: S&P Takes Rating Actions on Series 1996-C1 Notes HARDWOOD: Nixes Proposed Amalgamation with Rogers Associate HARNISCHFEGER: Look for First-Quarter Results by February 25, 2004 HEADWATERS: S&P Ups Ratings to BB after Closing of Equity Offering HEARTLAND COMM: Case Summary & 20 Largest Unsecured Creditors HOLLINGER INC: Sets Retraction Price for Retractable Common Shares HW AVIATION LLC: Voluntary Chapter 11 Case Summary IMC GLOBAL: Board of Directors Declares Preferred Share Dividend INTERFACE INC: Completes $135 Million Debt Refinancing Transaction INTERNET CAPITAL: Will Publish Fourth-Quarter Results on Feb. 19 JACKSON PRODUCTS: Seeks Okay to Tap Gallop Johnson as Attorneys KAISER ALUMINUM: Gets Conditional Nod for Various Labor Agreements KAISER ALUMINUM: Wants Nod to Sell Stake in Alpart to Glencore KMART CORP: Objects to 45 Florida Tax Claims Totaling $1.4 Million LENNOX INT'L: Fourth-Quarter Results Reflect Significant Growth MAIL-WELL INC: Unit Completes $320-Million Senior Debt Offering MAIL-WELL: Wins Consents to Amend 8-3/4% Senior Debt Indenture MANITOWOC CO.: Red Ink Continues to Flow in Fourth-Quarter 2003 METROPOLITAN INVESTMENT: Voluntary Chapter 7 Case Summary METROPOLITAN MORTGAGE: Case Summary & 50 Unsecured Creditors MINORPLANET SYSTEMS: Commences Nasdaq Trading Under MNPLQ Symbol MIRANT CORP: Wants Court to Clear Pepco Energy Settlement Pact MOODY'S CORP: Reports Improved Year-Over-Year 4th Quarter Results MORGADO WINE: Case Summary & 20 Largest Unsecured Creditors NATIONAL CENTURY: Balks at Network Pharmaceuticals' $8.5MM Claim NEW CENTURY FINANCIAL: Annual Shareholders' Meeting Set for May 5 NORTHWESTERN: Otter Tail Wants to Acquire South Dakota-Based Ops. OWENS-ILLINOIS: S&P Downgrades Corporate Credit Rating to BB- OWENS CORNING: Plans to Divest Its Vytec Vinyl Siding Operation PAC-WEST TELECOMM: Will Publish Q4 and YE 2003 Results on Feb. 18 PC LANDING CORP: Secures Exclusivity Extension through May 31 PENN FINANCIAL: Bankruptcy Court Establishes Claims Bar Dates PERKINELMER INC: Says Products Affected by FDA Action are Safe PG&E NATIONAL: Court Clears Cash Management System Modification PLAYTEX PRODUCTS: Prices $460MM 8% Senior Secured Debt Offering POLYONE CORP: Fourth-Quarter 2003 Net Loss Tops $183 Million REPTRON ELECTRONICS: Plan of Reorganization Declared Effective RESMED INC: Fourth-Quarter 2003 Results Show Marked Improvement RIVAL TECHNOLOGIES: Brings-In Dohan & Company as New Accountants ROGERS COMMS: Reports Weaker Performance for Fourth-Quarter 2003 SLATER STEEL: Universal Stainless Submits Bid for Fort Wayne Plant SLATER STEEL: Fort Wayne Asset Auction Set for February 11, 2004 SLATER STEEL: Union and Pinnacle Want Liquidation Slowed Down STAR ACQUISITION: Appel & Lucas Serving as Bankruptcy Attorneys STONE & WEBSTER: 3rd Amended Chapter 11 Plan is Now Effective TIDEMARK PARTNERS: Case Summary & 20 Largest Unsecured Creditors UNITED COMPANIES: Fitch Takes Rating Action on Various Contracts UNITED RENTALS: Will Host 4th-Quarter Conference Call on Feb. 25 UNIVERSAL COMMS: Auditors Express Going Concern Uncertainty UNUMPROVIDENT CORP: Fourth-Quarter 2003 Results Sink into Red Ink US AIR: Enters Stipulation Settling US Bank & State Street Claim WATERLINK INC: Court Approves Asset Sale to Calgon Carbon Corp. WEIRTON STEEL: Wants Approval for Temporary Low Earnings Program WELLMAN: S&P Rates Planned $185M Sec. First-Lien Term Loan at B+ WICKES INC: Taps Sitrick & Company as Communications Consultants WILLIS GROUP: Posts Flat 4th-Quarter Results & Increased Dividend WORLDCOM: Court Approves Modified Scully Scott Engagement Terms XM SATELLITE: Will Redeem 7.75% Convertible Subordinated Notes XO COMMS: Intends to File Application to Trade Shares on Nasdaq * Harold Kaplan is New Chairman of Gardner Carton & Douglas LLP * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles and Other Disasters ********* 3D SYSTEMS: Settles All Disputes and Litigation with EOS GmbH ------------------------------------------------------------- 3D Systems Corporation (Nasdaq:TDSC) has entered into an agreement with EOS GmbH that settles all worldwide disputes and litigation between 3D Systems and EOS GmbH. Under the terms of this settlement agreement, 3D Systems and EOS waived all claims for damages with respect to their pending disputes and litigation. In addition, both companies licensed various patents to each other. As part of this settlement, EOS is to pay 3D Systems certain royalties for its patent license, and 3D Systems expects to begin selling under its own brand certain laser sintering equipment and related products produced by EOS under an OEM supply arrangement. "We are very pleased that we have been able to conclude this settlement successfully," said Abe N. Reichental, 3D Systems' Chief Executive Officer. "The closure of this chapter enables us to concentrate our resources on developing and delivering to our customers valuable solid imaging solutions designed to improve their bottom line. Our ability to expand the range of customer solutions by adding certain EOS-produced sintering systems to our own product line enables us to deliver to our customers a broader range of value-based solutions." Founded in 1986, 3D Systems(R), the solid imaging company(SM), provides solid imaging products and systems solutions that reduce the time and cost of designing products and facilitate direct and indirect manufacturing. Its systems utilize patented proprietary technologies to create physical objects from digital input that can be used in design communication, prototyping, and as functional end-use parts. 3D Systems offers a wide range of imaging, communication rapid prototyping and on-demand manufacturing systems, including the MJM product line (InVision(TM) 3-D printer and ThermoJet(R) solid object printer), SLA(R) (stereolithography) systems, SLS(R) (selective laser sintering) systems, and Accura(R) materials (including photopolymers, metals, nylons, engineering plastics, and thermoplastics). More information on the company is available at http://www.3dsystems.com/ * * * Going Concern Uncertainty The Company's condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company incurred operating losses totaling $14.4 million and $21.4 million for the nine months ended September 26, 2003 and the year ended December 31, 2002, respectively. In addition, the Company had a working capital deficit of $4.4 million and an accumulated deficit in earnings of $35.8 million at September 26, 2003. These factors among others raise substantial doubt about the Company's ability to continue as a going concern. Management's plans include raising additional working capital through debt or equity financing. In May 2003, the Company sold approximately 2.6 million shares of its Series B Convertible Preferred Stock for aggregate consideration of $15.8 million and the Company repaid $9.6 million of the U.S. Bank term loan balance with a portion of the net proceeds. Management intends to obtain debt financing to replace the U.S. Bank financing, and in July 2003, management accepted a proposal from Congress Financial, a subsidiary of Wachovia, to provide a secured revolving credit facility of up to $20.0 million, subject to its completion of due diligence to its satisfaction and other conditions. In October 2003, Congress determined not to extend a commitment of financing to the Company. In October 2003, management accepted a proposal from Silicon Valley Bank to provide a revolving line of credit up to $12.0 million. In October 2003, Silicon Valley Bank preliminarily approved this credit facility. Any credit facility will be subject to completion by Silicon of its due diligence and other customary closing conditions. Management continues to pursue alternative financing sources. Additionally, management intends to pursue a program to improve its operating performance and to continue cost saving programs. However, there is no assurance that the Company will succeed in accomplishing any or all of these initiatives. AES CORP: Will Redeem 8% Senior Notes & 10% Secured Senior Notes ---------------------------------------------------------------- The AES Corporation (NYSE: AES) called for redemption $155,049,000 aggregate principal amount of its outstanding 8% Senior Notes due 2008, which represents the entire outstanding principal amount of the 8% Senior Notes due 2008, and $34,174,000 aggregate principal amount of its outstanding 10% secured Senior Notes due 2005. The 8% Senior Notes due 2008 and the 10% secured Senior Notes due 2005 will be redeemed on March 8, 2004 at a redemption price equal to 100% of the principal amount plus accrued and unpaid interest to the redemption date. The mandatory redemption of the 10% secured Senior Notes due 2005 is being made with a portion of AES's "Adjusted Free Cash Flow" (as defined in the indenture pursuant to which the notes were issued) for the fiscal year ended December 31, 2003 as required by the indenture and will be made on a pro rata basis. AES -- whose senior unsecured debt is rated at 'B' by Fitch -- is a leading global power company comprised of contract generation, competitive supply, large utilities and growth distribution businesses. The company's generating assets include interests in 118 facilities totaling over 45 gigawatts of capacity, in 28 countries. AES's electricity distribution network sells 89,614 gigawatt hours per year to over 11 million end-use customers. For more general information visit http://www.aes.com/ AIR CANADA: Asks for Court Nod to Amend CCAA Lender Definition -------------------------------------------------------------- The Initial CCAA Order currently defines "CCAA Lender" as "General Electric Capital Canada Inc. or GE Canada Finance Inc. together with any participation in a syndication of the CCAA Credit Facility. . . ." By this motion, the Air Canada Applicants ask Mr. Justice Farley to amend the definition of "CCAA Lender" under the Initial CCAA Order. Due to an internal corporate restructuring involving GE Canada Finance Inc., which completed at the end of January 2004, GE Canada Finance will transfer and assign its assets to another Canadian resident corporate entity, which ultimately will be wholly owned by General Electric Co. The Applicants want to add the words "or their respective successors and assigns" after "GE Canada Finance Inc." in the present definition. (Air Canada Bankruptcy News, Issue No. 26; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: ALPA Air Canada Jazz Unit Re-Elects Pilot Officers -------------------------------------------------------------- Leaders of the Air Line Pilots Association, International (ALPA) unit representing Air Canada Jazz pilots have re-elected pilot officers to serve two-year terms beginning this week. Following a vote by the representatives on the Air Canada Jazz pilots' union governing body, the Master Executive Council (MEC), Captain Nick DiCintio was re-elected to a second term as chairman, Captain Monty Allan was re-elected as vice-chairman, Captain Terry McTeer was re-elected as secretary and Captain Rod Lypchuk was re-elected treasurer. Captain DiCintio is a Montreal based pilot with 15 years of service at Air Canada Jazz. Captain Allen is based in Toronto and has 21 years of service with the airline. Captain McTeer is based in Victoria, and has 19 years of service with Jazz, and Captain Lypchuk is based in Vancouver and has 15 years of service with the carrier. "I look forward to continuing to serve the Air Canada Jazz pilots during these challenging times," said Captain DiCintio. "I thank the MEC for their continued support of not only myself, but their support for the entire slate of incumbent officers. The continuity in leadership will allow the MEC leadership to reinforce on behalf of the Jazz pilots that we endorse business oriented solutions to the ongoing Air Canada bankruptcy restructuring process," added Captain DiCintio The Air Canada Jazz pilots have been working cooperatively with Air Canada and Air Canada Jazz throughout the restructuring with a view to realigning fleet and costs to ensure Air Canada's continued success in the increasingly competitive North American market, including the ultimate objective of maximizing shareholder value and economic return for all stakeholders. The Air Canada Jazz pilots Master Executive Council is comprised of four MEC officers and 14 status representatives who act on behalf of the 1400 Air Canada Jazz pilots. ALPA, the oldest and largest pilots union in North America, represents 66,000 pilots at 43 carriers in the United States and Canada. ALPA's Web site is http://www.alpa.org/ ALASKA AIR GROUP: Reports January Passenger Traffic for Units ------------------------------------------------------------- Alaska Air Group, Inc. (NYSE: ALK) reported January passenger traffic for its subsidiaries, Alaska Airlines and Horizon Air. January traffic includes the effect of the severe winter storm that negatively impacted operations in Seattle and Portland. More than 1,500 flights, or 5.3 percent of scheduled departures for the month, were cancelled. ALASKA AIRLINES Alaska Airlines' January traffic increased 11.6 percent to 1.127 billion revenue passenger miles (RPMs) from 1.010 billion flown a year earlier. Capacity during January was 1.674 billion available seat miles (ASMs), 4.3 percent higher than the 1.605 billion in January 2003. The passenger load factor (the percentage of available seats occupied by fare paying passengers) for the month was 67.3 percent, compared to 62.9 percent in January 2003. The airline carried 1,122,200 passengers compared to 1,049,000 in January 2003. HORIZON AIR Horizon Air's January traffic increased 11.1 percent to 128.1 million RPMs from 115.3 million flown a year earlier. Capacity during January was 203.6 million ASMs, 2.9 percent lower than last year's 209.7 million. The passenger load factor for the month was 62.9 percent, compared to 55.0 percent last January. The airline carried 372,300 passengers compared to 356,200 in January 2003. Seattle-based Alaska Air Group is the parent company of Alaska Airlines and Horizon Air Industries. As previously reported, Standard & Poor's Ratings Services lowered its ratings on Alaska Air Group Inc. and subsidiary Alaska Airlines Inc., including lowering the corporate credit rating on both to 'BB-' from 'BB.' Ratings were removed from CreditWatch, where they were placed March 18, 2003. The outlook is negative. ALLEGHENY ENERGY: Receives SEC Approval for $1.6BB Debt Issuance ---------------------------------------------------------------- Allegheny Energy, Inc. (NYSE: AYE) announced that the Securities and Exchange Commission has approved the Company's request to issue up to $1.6 billion of indebtedness for it and its subsidiary, Allegheny Energy Supply Company, LLC, in order to refinance existing debt. There is no assurance that Allegheny will be able to consummate a refinancing on terms satisfactory to it. The SEC also approved the Company's request to issue certain guarantees that will allow the release of approximately $76 million currently held in escrow. These funds are expected to be used for reduction of existing debt. In addition, the SEC approved Allegheny Energy, Inc.'s request for issuance of up to $350 million in equity, although the Company has no immediate plans to do so. "This is very positive news for Allegheny Energy," said Paul J. Evanson, Chairman and CEO. "The SEC's approval will allow us to move forward with steps for improving our liquidity and strengthening our balance sheet. We appreciate the fine efforts of the SEC staff and others with respect to this prompt approval." Allegheny Energy is an integrated energy company with a portfolio of businesses, including Allegheny Energy Supply, which owns and operates electric generating facilities, and Allegheny Power, which delivers low-cost, reliable electric and natural gas service to about four million people in Pennsylvania, West Virginia, Maryland, Virginia and Ohio. More information about the Company is available at http://www.alleghenyenergy.com/ * * * As reported in Troubled Company Reporter's October 3, 2003 edition, Fitch Ratings downgraded Allegheny Energy Inc., and its subsidiaries. In addition, the Rating Watch status for all related entities is revised to Negative from Evolving, with the exception of West Penn Funding LLC and insured bonds of Allegheny Energy Supply Co. LLC. Ratings downgraded and on Rating Watch Negative by Fitch: Allegheny Energy, Inc. --Senior unsecured debt to 'BB-' from 'BB'; --Bank credit facility maturing in 2005 to 'BB-' from 'BB'; --11 7/8% notes due 2008 lowered to 'B+' from 'BB-'. Allegheny Capital Trust I -- Mandatorily trust preferred stocks to 'B+' from 'BB-'. Allegheny Energy Supply Company LLC --Unsecured bank credit facilities to 'B-' from 'B'; --Senior unsecured notes lowered to 'B-' from 'B'. Allegheny Generating Company --Senior unsecured debentures lowered to 'B-' from 'B'. Rating Watch revised to Negative from Evolving for the following ratings: Allegheny Energy Supply Company LLC --Secured bank credit facilities with first priority lien 'BB-'; --Secured bank credit facilities with a second priority lien 'B+'. Allegheny Energy Statutory Trust 2001-A Notes --Senior secured notes 'B+'. West Penn Power Company --Medium-term notes 'BBB-'. Potomac Edison Company --First mortgage bonds 'BBB'; --Senior unsecured notes 'BBB-'. Monongahela Power Company --First mortgage bonds 'BBB'; --Medium-term notes/pollution control revenue bonds (unsecured) 'BBB-'; --Preferred stock 'BB+'. Ratings affirmed; Rating Outlook Stable: West Penn Funding LLC --Transition bonds 'AAA'. Allegheny Energy Supply Company LLC --Pollution control bonds (MBIA-insured) 'AAA'. ALLIANCE HEALTHCARD: Miller Ray Airs Going Concern Uncertainty -------------------------------------------------------------- Alliance HealthCard, Inc. specializes in creating, marketing and distributing value added healthcare savings programs, services, and products. Alliance gives individuals and families access to healthcare providers offering up to 16 major healthcare services at significantly discounted fees for a low annual fee. Alliance markets to predominantly underserved markets where individuals either have limited health benefits, or no insurance. These markets may vary widely from senior populations with Medicare (no prescription benefits), part-time employees, to pockets of the over 40 million uninsured looking for lower cost medical services and access to providers. The Company was founded in September 1998 as a limited liability company and reorganized into a Georgia corporation in February 1999. The Company is not an insurance provider, but is a provider of an innovative membership organization that receives discounts for healthcare-related products and services from networks of providers. Alliance offers its programs to consumers who are underinsured, uninsured and to individuals who participate in employer sponsored health plans that provide primary health insurance, but do not provide insurance coverage for certain healthcare-related services and products. The Company began sales of its membership cards in November 1999. The Company has financed its operations to date through the sale of its securities and a line of credit obtained in May 2000. The Company reported a net loss of $1,042,536 in 2003 compared to a net loss of $1,632,811 for the prior year. The decrease in the net loss is principally a result of the increase in revenue and gross profit increase from CVS and State Farm contracts. The Company's net working capital decreased $1,028,377 to a negative $2,289,615 during the 12 months ended September 30, 2003 from a negative $1,261,238 at September 30, 2002. The decrease in working capital was attributable to the following: (a) a decrease in cash due to the Company's net loss; (b) an increase of $370,451 in accounts payable related to the CVS contract; (c) an increase in accrued compensation due to salary deferrals for certain officers and employees; (d) an increase in deferred revenue primarily relating to annual membership payments received from members related to the CVS contract. On May 22, 2003 the Company extended its credit agreement with SunTrust Bank in Atlanta, Georgia. The agreement provided the Company with a $500,000 working capital facility secured by personal guaranties from certain officers and directors of the Company who received common stock options in exchange for their guaranties. The credit agreement matured on July 31, 2003. The principal balance of $484,272, plus accrued interest, was repaid in full on August 13, 2003. The Company secured a new working capital facility on July 10, 2003 with Branch Banking And Trust Company. The agreement provides the Company with a $650,000 working capital facility secured by personal guaranties from certain officers and directors of the Company. The credit agreement matures on July 9, 2004 and bears an interest rate of the bank's prime rate plus 0.9% per annum to be adjusted daily. The Company has $525,000 available under its credit agreement as of September 30, 2003. The new working capital facility will continue to be used to provide on-going capital to fund the implementation of new contracts and general corporate operations. The Company's future profitability, liquidity and capital requirements will depend upon numerous factors, including the success of its product offerings and competing market developments. The Company has not yet achieved, and may never achieve, profitable operations. Miller Ray & Houser, LLP, of Atlanta, Georgia, stated in their Auditors Report dated November 25, 2003: "The accompanying financial statements have been prepared assuming that the Company will continue as a going concern...[T]he Company's significant operating losses and lack of equity raise substantial doubt about its ability to continue as a going concern." AMERADA HESS: Declares Quarterly Preferred Share Dividend --------------------------------------------------------- The Board of Directors of Amerada Hess Corporation (NYSE: AHC) declared a quarterly dividend of $0.9333 cents per share payable on the 7.00% Mandatory Convertible Preferred Stock of the Corporation on March 1, 2004 to holders of record at the close of business on February 15, 2004. Amerada Hess (S&P, BB+ Mandatory Convertible Preferred Shares Rating, Negative Outlook), headquartered in New York, is a global integrated energy company engaged in the exploration for and the production, purchase, transportation and sale of crude oil and natural gas, as well as the production and sale of refined petroleum products. AMERCO: Resumes Regular Quarterly Preferred Share Dividend ---------------------------------------------------------- On February 4, 2004, the Board of Directors of AMERCO, the holding company for U-Haul International, Inc., and other companies, declared a regular quarterly cash dividend of $0.53125 per share on the Company's Series A, 8-1/2 percent Preferred Stock (NYSE: A0+A). The dividend will be payable March 1, 2004 to holders of record on February 16, 2004. The Board anticipates the resumption of cash dividends on a quarterly basis going forward. The Company will address the deferred dividend payments subsequent to emergence from Chapter 11. For more information about AMERCO, please visit http://www.amerco.com/ AMERICA WEST: Reports 8.1% Increase in January 2004 Traffic ----------------------------------------------------------- America West Airlines (NYSE: AWA) reported traffic statistics for the month of January 2004. Revenue passenger miles (RPMs) for January 2004 were a record 1.7 billion, an increase of 8.1 percent from January 2003. Capacity for January 2004 was a record 2.5 billion available seat miles (ASMs), up 4.9 percent from January 2003. The passenger load factor for the month of January was a record 67.9 percent versus 65.9 percent in January 2003. "We are pleased to report our tenth consecutive month of record load factors in January, which is typically one of our slower months," said Scott Kirby, executive vice president, sales and marketing. "We're happy to have maintained flat unit revenues with a five percent increase in both stage length and available seat miles." The following summarizes America West's January traffic results for 2004 and 2003: Jan. 2004 Jan. 2003 % Change Revenue Passenger Miles (000) 1,676,418 1,550,805 8.1 Available Seat Miles (000) 2,467,891 2,352,492 4.9 Load Factor (percent) 67.9 65.9 2.0 pts. Enplanements 1,553,072 1,475,951 5.2 America West Airlines is the nation's second largest low-fare airline and the only carrier formed since deregulation to achieve major airline status. America West's 13,000 employees serve nearly 55,000 customers a day in 93 destinations in the U.S., Canada, Mexico and Costa Rica. As previously reported, Fitch Ratings initiated coverage of America West Airlines, Inc., a subsidiary of America West Holdings Corp., and assigned a rating of 'CCC' to the company's senior unsecured debt. The Rating Outlook for America West is Stable. AMERICA WEST: Reports Outstanding Operating Performance for Dec. ---------------------------------------------------------------- America West Airlines (NYSE: AWA) ranked second among the major airlines in three out of four categories of operational performance as reported in the Department of Transportation's Air Travel Consumer Report for December 2003. The airline's on-time performance, completion factor and customer complaints were the second best among the major airlines, earning employees a fifth $50 performance bonus in seven months. The airline's customer complaints decreased by 67 percent year- over-year to just 0.36 complaints per 100,000 customers, which is the lowest number of complaints the airline has reported since 1995. "We're thrilled that our customer complaints have reached an eight-year low," said Jeff McClelland, chief operating officer. "Our 13,000 employees are focused on providing friendly and helpful service all the time and these latest statistics show that their hard work is definitely paying off. So, we're quite pleased to be making our fifth operating performance payment in the last seven months." America West's on-time performance in December 2003 was 79.4, which was well above the industry average and the airline's performance in December 2002. The airline's completion factor was 98.8 and the number of mishandled bags was just 4.12 per 1,000 passengers, which is a 20 percent year-over-year improvement. America West Airlines is the nation's second largest low-fare airline and the only carrier formed since deregulation to achieve major airline status. America West's 13,000 employees serve nearly 55,000 customers a day in 93 destinations in the U.S., Canada, Mexico and Costa Rica. America West Holdings Corporation is an aviation and travel services company. Wholly owned subsidiary America West Airlines is the nation's second largest low-fare carrier, serving 93 destinations in the U.S., Canada, Mexico and Costa Rica. As previously reported, Fitch Ratings initiated coverage of America West Airlines, Inc., a subsidiary of America West Holdings Corp., and assigned a rating of 'CCC' to the company's senior unsecured debt. The Rating Outlook for America West is Stable. AMERICAN TOWER: Closes 7.25% Sr. Debt Offering & Calls 6.25% Notes ------------------------------------------------------------------ American Tower Corporation (NYSE: AMT) closed its sale of $225.0 million principal amount 7.50% senior notes due 2012 as previously announced. The Company will use the net proceeds to redeem all its outstanding $212.7 million principal amount 6.25% convertible notes due 2009. The remaining proceeds are expected to be used to repurchase a portion of its other outstanding notes. The Company also announced the call for redemption of its 6.25% convertible notes. The redemption date has been set for February 24, 2004. The redemption price is 102.083% of the principal amount of the notes, together with accrued interest to and including February 24, 2004. The 6.25% convertible notes are convertible into shares of Class A common stock at a conversion price of $24.40 per share (the closing price of the Class A common stock on February 4, 2004 was $11.19 per share). Holders of the 6.25% convertible notes will be able to convert any or all of their notes into 40.9836 shares of Class A common stock per $1,000 principal amount of the notes until close of business (5:00 p.m., Eastern Daylight Time) on February 24, 2004. As previously reported, Standard & Poor's affirmed its 'B-' corporate credit rating on the company. AMERICAN TOWER: S&P Assigns Junk Rating to $225MM 7.5% Sr. Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to the $225 million 7.5% senior notes due 2012 issued under Rule 144A with registration rights by Boston, Massachussets-based wireless tower operator American Tower Corp. Simultaneously, Standard & Poor's affirmed its existing ratings on American Tower, including the 'B-' corporate credit rating. The outlook remains positive. Proceeds from the 7.5% notes will be used to refinance the company's 6.5% convertible notes due 2009, and thereby eliminate the possibility of these notes to be put to the company in late 2006. The new notes are rated two notches below the corporate credit rating due to the substantial amount of priority obligations, which include approximately $700 million of bank debt, more than $90 million of payables and accrued liabilities, and more than $800 million of notes, relative to asset value. Pro forma for the refinancing, total debt was about $3.2 billion after adjusting out about $284 million of restricted cash escrowed for reducing debt ($3.6 billion after adjusting for operating leases and the restricted cash) at Sept. 30, 2003. "The ratings reflect significant financial risk associated with American Tower's high leverage, which stemmed from its aggressive debt-financed tower acquisition activities during the 1999-2001 time frame," said Standard & Poor's credit analyst Michael Tsao. Net of restricted cash, debt to annualized EBITDA was high at 7.9x, including about $14 million of annual interest income from the company's Mexican subsidiary (8.1x after adjustment for operating leases) for the quarter ended in September 2003. American Tower incurred over $3 billion of debt during 1999-2001 to finance the acquisition and building of about 13,000 towers, based on the company's expectations that growth in wireless services would strongly bolster demand for limited tower space. However, largely in response to capital market conditions, wireless carriers scaled back their capital spending plans starting in 2001, preventing American Tower from reducing its acquisition-related debt. Somewhat mitigating American Tower's aggressive financial risk profile are several favorable characteristics of the tower leasing business, the company's modest free cash flow prospects, and management's demonstrated commitment to reduce debt. The tower leasing business has significant barriers to entry, such as real estate zoning, high customer switching costs, and long-term leasing contracts with provisions for 3%-5% annual rental rate increases. Towers are also relatively immune to technology risk because they are not dependent on the type of transmission/reception technologies used by carriers and they do not face any economically viable alternative. The leasing business enjoys strong operating leverage, as towers have mostly fixed costs relating to ground leases, taxes, and maintenance. Over time, this factor is likely to improve the consolidated EBITDA margin to greater than 60%, from about 54% in third-quarter 2003. American Tower is among the largest wireless tower operators, with about 15,000 towers, mostly in the U.S. The tower leasing business accounted for about 85% of revenues and 98% of EBITDA in third- quarter 2003. In its small network services operation, the company serves as a consultant to wireless carriers in site acquisition, network planning, radio frequency engineering, and construction. AMNIS SYSTEMS: Inks LOI to Purchase Corridor Communications Corp. ----------------------------------------------------------------- Amnis Systems Inc. (OTC Bulletin Board: AMNM), until it recently ceased operations was a provider of networked streaming video systems, entered into a letter of intent to acquire Corridor Communications Corporation. The terms of the acquisition will be disclosed once a formal agreement is reached between the companies. At this time we cannot provide any guarantee that we will be able to complete the transaction as the transaction is subject to extensive due diligence and the negotiation and finalizing of a definitive agreement. Corridor Communications is a Wireless Fidelity (WiFi) Internet Service Provider located in Salem, Oregon. "The WiFi market holds great promise for an operation with the right business model," said Scott Mac Caughern, Chairman of Amnis Systems. "By providing Corridor Communications with a public vehicle to raise the funds necessary to execute their business plan, we believe that we will be able to capitalize on potential growth in this market sector." In addition, the Company also intends to acquire Quik Internet, an Internet Service Provider also located in Salem, Oregon. The terms of the acquisition will be disclosed once a formal agreement is reached between the companies. At this time we cannot provide any guarantee that we will be able to complete the transaction as the transaction is subject to extensive due diligence and the negotiation and finalizing of a definitive agreement. "We have developed the systems and capabilities to overlay our WiFi 'hot zone' coverage with an existing service provider," said J. Michael Heil, President of Corridor Communications. "We started working in partnership with Quik Internet several months ago. Over the past several months we have had the opportunity to hone our strategy. We believe the merger with Amnis Systems will allow us to execute our business plan on a larger scale." Amnis Systems Inc., which acquired Optivision, Inc. in 2001, is engaged in the networked streaming video market. The company develops, manufactures and delivers MPEG network video products for high-quality video creation, management and distribution worldwide both directly and through leading industry partners. Based in Palo Alto, California, Amnis Systems products are used in diverse applications such as such as surveillance, distance learning, content distribution, corporate training, telemedicine, video-on-demand and high-quality video conferencing. To find out more about Amnis Systems Inc., visit its Web site at http://www.amnisinc.com/ Amnis Systems is not affiliated or related to Amnis Corporation of Seattle, Washington. At September 30, 2003, Amnis Systems' balance sheet shows a total shareholders' equity deficit of about $8 million. ARGOSY GAMING: S&P Rates $350 Mil. Sr. Subordinated Notes at B+ --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating to Argosy Gaming Co.'s proposed $350 million senior subordinated notes due 2014. Together with availability under the company's existing revolving credit facility, proceeds will be used to fund the planned repurchase of Argosy's outstanding 10.75% senior subordinated notes due 2009. At the same time, Standard & Poor's affirmed its existing ratings, including its 'BB' corporate credit rating. The outlook is stable. The Alton, Illinois-based casino owner and operator had total debt outstanding of approximately $870 million at Dec. 31, 2003. The ratings reflect Argosy's relatively small portfolio of casino assets, cash flow concentration in two of its assets, and the company's exposure to recent legislative actions. These factors are offset by a somewhat geographically diverse portfolio of casino assets, adequate credit measures for the rating, and expected higher free cash flow generation. "The stable outlook reflects the expectation that Argosy will maintain its good market positions and that the company's overall financial profile will remain around current levels in the near term," said Standard & Poor's credit analyst Michael Scerbo. In the intermediate term, Standard & Poor's expects Argosy to pursue growth opportunities within the sector. However, any potential transaction is expected to be financed in a manner consistent with the rating. ATA HOLDINGS: S&P Revises CreditWatch Implications to Positive -------------------------------------------------------------- Standard & Poor's Ratings Services revised the implications of its CreditWatch review on ATA Holdings Corp. and subsidiary ATA Airlines Inc. to positive from developing. The corporate credit rating on both entities is 'CCC'. The ratings were initially placed on CreditWatch March 18, 2003, and subsequently lowered to current levels July 29, 2003. At the same time, 'CC' ratings were assigned to ATA Holdings Corp.'s $163.1 million 13% senior notes due 2009 and $110.2 million of 12-1/8% senior notes due 2010, exchange offers for outstanding notes. Standard & Poor's placed the ratings on these notes on CreditWatch with positive implications. "The revised CreditWatch implication reflects the company's Jan. 30, 2004, completion of exchange offers for $260.3 million of notes due in 2004 and 2005," said Standard & Poor's credit analyst Betsy Snyder. "The successful conclusion of the exchange offers, which were voluntary for bondholders, plus other actions to defer near-term cash obligations, should alleviate somewhat ATA's liquidity problems," the analyst continued. ATA received the consent of the Air Transportation Stabilization Board pursuant to its government-guaranteed loan. In addition, ATA completed a restructuring of various aircraft operating leases, with a portion of the payments rescheduled until later in the terms of the leases. Standard & Poor's will review the effect of the debt restructuring on ATA's financial profile to resolve the CreditWatch. Ratings on ATA Holdings Corp. reflect its substantial debt and lease burden and the price-competitive nature of the markets it serves. ATA Holdings is the parent of ATA Airlines Inc., the 10th- largest scheduled air carrier in the U.S. ATA offers low fares to value-oriented passengers out of hubs located at Chicago's Midway Airport and Indianapolis. ATA is also the largest charter airline in North America, providing charter airline services primarily to U.S. and European tour operators, as well as to U.S. military and government agencies. Lower-fare, leisure carriers have been less affected than the large network carriers have by the industry downturn that began in late 2000, as passengers have sought low fares. ATA has been replacing its old aircraft with new Boeing planes, giving it one of the youngest airline fleets in the industry and aiding its operating costs. However, the company's revenues have suffered from continuing price competition, which is not expected to abate over the near term. ATA has a heavy operating lease burden due to acquisition of the new aircraft. In November 2002, ATA closed on a $168 million loan that was 90% backed by the federal government, one of only a few airlines that have been granted a loan guarantee thus far. The company's profitability has improved, with earnings of $20.4 million in 2003 (including a $37 million federal government refund) versus a loss of $169.2 million in 2002. Review of ATA's financial profile following the exchange offers and lease reschedulings could result in a modest upgrade. Standard & Poor's expects to complete its review within the next several weeks. AURORA FOODS: Court Okays Miller Buckfire as Financial Advisor -------------------------------------------------------------- The Aurora Foods Debtors obtained the Court's authority to employ Miller Buckfire Lewis Ying & Co., LLP as their financial advisor, nunc pro tunc to December 8, 2003. Judge Walrath rules that: (a) The Transaction Fee further reduced to: -- $6,100,000 in the event that the transactions contemplated by the Merger Agreement are consummated by February 9, 2004; and -- $6,000,000 as Modified Transaction Fee, in the event that the transactions contemplated by the Merger Agreement are consummated after February 9, 2004; (b) Miller Buckfire will file fee applications for interim and final allowance of compensation and reimbursement; (c) In the event that the transactions contemplated by the Merger Agreement are not consummated, and the Amendment becomes null and void, Miller Buckfire may, at its sole discretion: (1) continue to be retained on the terms and conditions in accordance with these provisions, provided that the Transaction Fee will be permanently reduced to the Modified Transaction Fee; or (2) file a modified retention application seeking to be engaged on different terms. In the event that Miller Buckfire files a Modified Retention Application, all parties-in-interest will have all permitted rights to object to the Modified Retention Application, including that the Modified Retention Application should not be approved pursuant to Section 328(a) of the Bankruptcy Code; (d) Miller Buckfire and its professionals will not be required to: (1) maintain time records for services rendered postpetition, in half-hour increments; and (2) provide or conform to any schedule of hourly rates; and (e) The indemnification provisions of the Engagement Letter are approved, with these modifications: (1) The Debtors are authorized to indemnify and will indemnify, Miller Buckfire, in accordance with the Engagement Letter, for any claim arising from, related to, or in connection with the firm's performance of the services described in the Engagement Letter; (2) Miller Buckfire will not be entitled to indemnification, contribution, or reimbursement under the Engagement Letter for services other than the financial advisory and investment banking, unless the services and the indemnification, contribution, or reimbursement are approved by the Court; (3) Notwithstanding anything to the contrary in the Engagement Letter, the Debtors will have no obligation to indemnify any person, for any claim or expense that is either: (i) judicially determined, as the determination has become final, to have arisen primarily from that person's gross negligence or willful misconduct; or (ii) settled before a judicial determination as to that person's gross negligence or willful misconduct, but determined by the Bankruptcy Court, after notice and a hearing, to be a claim or expense for which that person should not receive indemnity, contribution, or reimbursement under the terms of the Engagement Letter, as modified; and (4) If, before the earlier of (i) the entry of an order confirming a Chapter 11 Plan, the order having become a final order is no longer subject to appeal; and (ii) the entry of an order closing these Chapter 11 cases, Miller Buckfire believes that it is entitled to the payment of any amounts by the Debtors on account of the Debtors' indemnification, contribution, and reimbursement obligations under the Engagement Letter, as modified, including without limitation the advance of defense costs, Miller Buckfire must file an application before the Court. The Debtors may not pay any of the amounts before the entry of an order approving the payment. * * * Miller Buckfire provides strategic and financial advisory services in large-scale corporate restructuring transactions. The firm's professionals possess extensive experience in providing financial advisory and investment banking services to financially distressed companies, and to creditors, equity constituencies, and government agencies in reorganization proceedings and complex financial restructuring, both in and out of court. Miller Buckfire likewise has significant experience in marketing and selling companies that are experiencing financial distress. Scope of Services Miller Buckfire will continue to render financial advisory and investment banking services contemplated by an engagement letter between the Debtors and Miller Buckfire, dated as of April 2, 2003, and amended on December 2, 2003, throughout the course of the Debtors' Chapter 11 cases. Among the specific tasks are: A. Case Administration The Debtors expect Miller Buckfire to play a significant role in the administration of their Chapter 11 cases. Miller Buckfire will assist the Debtors in complying with certain administrative obligations arising out of the Chapter 11 filing, including preparing management for any organizational meeting of creditors and reviewing regulatory and other filings that may be required to be made. In addition, Miller Buckfire will assist the Debtors in seeking relief on various matters and in preparing for hearings. The hearings will include the Debtors' disclosure statement hearing and confirmation hearing as well as a hearing on the Debtors' request for approval of the DIP Credit Facility and the hearing on the breakup payment contemplated by the Merger Agreement. To the extent necessary, Miller Buckfire will provide litigation support and testimony in connection with these hearings and other matters. Miller Buckfire will also participate in meetings and discussions with the Debtors and their professionals and other parties-in- interest regarding the status of the Chapter 11 cases. B. Creditor Contacts Miller Buckfire will continue to participate in discussions with the prepetition bank group and the Official Committee of Unsecured Creditors, as well as their legal and financial advisors who are in constant contact with Miller Buckfire regarding due diligence and other matters. Subsequent to the Petition Date, the discussions will likely focus on: (a) the status of these Chapter 11 cases; (b) the Debtors' request for relief on various matters, including obtaining debtor-in-possession financing and making critical vendor payments; (c) the performance of the Debtors relative to their 2003 operating plan; (d) the Debtors' strategic business plan for 2004 and beyond; and (e) the Debtors' liquidity position and financing needs. In addition, Miller Buckfire will work with the Debtors to keep: -- the prepetition bank group, the lenders under the debtor- in-possession credit facility, and the Committee and their legal and financial advisors apprised of the Debtors' operational performance as well as their ability to stabilize operations subsequent to the filing of these Chapter 11 cases; and -- the major parties-in-interest informed about the Debtors' progress in consummating the transaction contemplated by the Merger Agreement by March 31, 2004. C. Merger Agreement The Debtors expect Miller Buckfire to: -- take an active role in assisting them to consummate the transaction contemplated by the Merger Agreement; -- work with the Debtors in ensuring that the conditions precedent to the merger transaction are fulfilled, including the condition regarding the Debtors' EBITDA performance for 2003; -- assist in reviewing and analyzing what adjustments are required to be made to the consideration being paid to the holders of the Notes under the terms of the Merger Agreement. The adjustments relate to the Debtors' working capital and net debt position as of the closing date for the merger transaction and to the election of cash or equity by the holders of the Notes in the merger transaction; -- assist the Debtors in their transition planning and in determining how to retain and motivate their workforce pending the closing of the transaction contemplated by the Merger Agreement; -- work with the Debtors to respond to any information requests from J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and CDM Investor Group LLC or other parties-in-interest in connection with the merger transaction; and -- continue to play a key role in helping the Debtors resolve business issues that may potentially develop with respect to the Merger Agreement. D. Evaluation of Alternative Proposals If requested, Miller Buckfire will: -- assist the Debtors' board of directors in fulfilling their fiduciary duties by reviewing and evaluating from a financial standpoint any Alternative Proposal, as defined in the Merger Agreement, received by the Debtors; -- advise the board of directors regarding their strategic alternatives, including performing an extensive analysis of the valuation and other underlying fundamentals contained in the Alternative Proposal; -- advise the board of directors with respect to the strategic implications of any Alternative Proposal; and -- coordinate with the party submitting the Alternative Proposal, if required, to negotiate a definitive agreement and reach a successful closing. E. Contingency Planning Miller Buckfire will also: -- continue monitoring the financial results of the Debtors and advise senior management and the board of directors with respect to the development of a contingency plan in the event the transaction contemplated by the Merger Agreement is abandoned or terminated; and -- provide assistance in soliciting alternative proposals from third parties, in the event that the merger transaction is terminated or abandoned. Specifically, Miller Buckfire would be needed to: (1) identify and contact potential strategic and financial buyers; (2) assist in drafting and distributing an information memorandum describing the Debtors' business; (3) evaluate and negotiate proposals received by the Debtors; (4) facilitate any due diligence investigation of the Debtors by potential strategic and financial buyers; and (5) prepare senior management for meetings with the potential buyers. If the transaction contemplated by the Merger Agreement is terminated or abandoned, the Debtors would also require Miller Buckfire's assistance in structuring a transaction that has the support of the prepetition bank group. The prepetition bank group has amended its prepetition credit agreement to support the transaction contemplated by the Merger Agreement if: -- the prepetition credit facility is paid in full by March 31, 2004; and -- the prepetition lenders receive $15,000,000 in certain fees under the prepetition credit agreement. The Financial Advisory and Investment Banking Services that Miller Buckfire will provide to the Debtors are necessary to enable the Debtors to maximize the value of their estates and to reorganize successfully. Miller Buckfire will coordinate with the Debtors and the Debtors' other retained professionals to ensure that the Financial Advisory and Investment Banking Services do not duplicate the services rendered by other professionals. Aurora Foods Inc. -- http://www.aurorafoods.com/-- based in St. Louis, Missouri, produces and markets leading food brands, including Duncan Hines(R) baking mixes; Log Cabin(R), Mrs. Butterworth's(R) and Country Kitchen(R) syrups; Lender's(R) bagels; Van de Kamp's(R) and Mrs. Paul's(R) frozen seafood; Aunt Jemima(R) frozen breakfast products; Celeste(R) frozen pizza; and Chef's Choice(R) skillet meals. With $1.2 billion in reported assets, Aurora Foods, Inc., and Sea Coast Foods, Inc., filed for chapter 11 protection on December 8, 2003 (Bankr. D. Del. Case No. 03-13744), to complete a pre-negotiated sale of the company to J.P. Morgan Partners LLC, J.W. Childs Equity Partners III, L.P., and C. Dean Metropoulos and Co. Sally McDonald Henry, Esq., and J. Gregory Milmoe, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP provide Aurora with legal counsel, and David Y. Ying at Miller Buckfire Lewis Ying & Co., LLP provides financial advisory services. (Aurora Foods Bankruptcy News, Issue No. 6; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVADO BRANDS: Files for Chapter 11 Reorganization in N.D. Texas --------------------------------------------------------------- Avado Brands, Inc. (OTC Bulletin Board: AVDO.PK), parent company of Don Pablo's Mexican Kitchen and Hops Grillhouse & Brewery, filed voluntary petitions in the U.S. Bankruptcy Court for the Northern District of Texas for relief under Chapter 11 of the U.S. Bankruptcy Code. The Company will continue to operate its restaurants while it restructures. The Company has filed various first-day motions with the Bankruptcy Court intended to allow the continued operation of its business. In addition, the Company has arranged and sought Bankruptcy Court approval for a $60 million debtor-in-possession credit facility to be provided by a group of lenders led by DDJ Capital Management, LLC. With this facility, the Company will have sufficient liquidity to operate its business. "This is an important step for Avado Brands, and is part of a process that will result in a stronger company," said Avado Brands' interim chief executive officer Kevin Leary of AlixPartners LLC. "Our goals are simple: to reduce Avado Brands' debt burden and put the company in a position to invest in its business and grow. The management team is confident in the future of Avado Brands and its Don Pablo's and Hops restaurants, and we appreciate the continued support of our customers, dedicated employees and business partners." Prior to Wednesday's filing, the Company had successfully negotiated forbearance agreements with its secured lenders and holders of Avado's 9-3/4% Senior Notes due 2006. The Company will continue to negotiate with these and other creditors to develop a long-term financial restructuring plan. The case number for Avado's filing with the U.S. Bankruptcy Court for the Northern District of Texas is 04-31555, and further information will be available online at http://www.txnb.uscourts.gov/ Avado Brands owns and operates two proprietary brands comprised of 106 Don Pablo's Mexican Kitchens and 62 Hops Grillhouse & Breweries. Additional information about Avado Brand is available at http://www.avado.com/ AVADO BRANDS INC: Case Summary & 50 Largest Unsecured Creditors --------------------------------------------------------------- Lead Debtor: Avado Brands, Inc. Hancock at Washington Madison, Georgia 30650 Bankruptcy Case No.: 04-31555 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Don Pablo's of Texas, L.P. 04-31554 Canyon Cafe of Texas, LP 04-31556 HNEF Area Manager II, Ltd. 04-31557 Hops of Altamonte Springs, Ltd. 04-31558 Hops of Atlanta, Ltd. 04-31559 Hops of Atlanta II, Ltd. 04-31560 Hops of Bowling Green, Ltd. 04-31561 Hops of Boynton Beach, Ltd. 04-31562 Hops of Bradenton, Ltd. 04-31563 Hops of Cherry Creek, Ltd. 04-31564 Hops of Colorado Springs, Ltd. 04-31565 Hops of Connecticut, Ltd. 04-31566 Hops of Coral Springs, Ltd. 04-31567 Hops of Florida Mall, Ltd. 04-31568 Hops of Greater Detroit, Ltd. 04-31569 Hops of Greater Orlando II, Ltd. 04-31570 Hops of Idaho, Ltd. 04-31571 Hops of Indiana, Ltd. 04-31572 Hops of Lakeland, Ltd. 04-31573 Type of Business: The Debtor is a restaurant brand group that grows innovative consumer-oriented dining concepts into national and international brands. See http://www.avado.com/ Chapter 11 Petition Date: February 4, 2004 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtors' Counsels: Deborah D. Williamson, Esq. Thomas Rice, Esq. Cox & Smith Incorporated 112 East Pecan Street, Suite 1800 San Antonio, TX 78205 Tel: 210-554-5500 Total Assets: $228,032,000 Total Debts: $263,497,000 Debtor's 50 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Suntrust - as 9 3/4 % Senior Notes $105,318,000 Indenture Trustee Due 2006 Jack Ellerin 25 Park Place P.O. Box 105036 Atlanta, GA 30303 Suntrust - as 11 3/4% Senior $47,625,000 Indenture Trustee Subordinated Notes Jack Ellerin Due 2009 25 Park Place P.O. Box 105036 Atlanta, GA 30303 Wachovia Bank - as Trustee $3.50 Term $3,179,500 Paul Henderson Convertible 999 Penchtree Plaza Securities, Series A Atlanta, GA 30309 COI Trade Debt $1,419,390 c/o Fleet Bank P.O. Box 538135 Atlanta, GA 30353-8135 Westwayne, Inc. Trade Debt $794,192 Lisa Cuscaden 401 East Jackson St-Ste 3600 Tampa, FL 33602 Dallas Basketball Ltd. Trade Debt $177,267 Walt Disney Parks & Resorts Trade Debt $162,067 Briargrove Tollway Ltd. Trade Debt $131,083 Sedgwick Claims Mgmt Service Professional fees $107,174 AFCO Trade Debt $104,509 Palace Resorts, Inc. Trade Debt $95,000 Curtis 1000, Inc. Trade Debt $86,697 Beltram Foodservice Group Trade Debt $80,455 Cushman and Wakefield, Inc. Trade Debt $78,053 Sirna & Sons Produce Trade Debt $71,092 Piazza Produce Trade Debt $66,303 Unifirst Corporation Trade Debt $60,693 Benchmarc Meetings & Trade Debt $60,650 Incentives, Inc. Brothers Produce, Inc. Trade Debt $57,164 J.D. Edwards & Company Trade Debt $50,888 Brains on Fire Trade Debt $50,335 Dunedin Fish Co. Trade Debt $48,733 The Invironmentalists Trade Debt $48,505 Dunbar Armored Trade Debt $47,946 Floyd, Isgur, Rios & Professional Fees $47,890 Wahrlich, PC J. Ambrogi Food Distribution Trade Debt $46,663 Inc. Ecolab Trade Debt $43,131 Minnesota Vikings Trade Debt $42,514 Bix Produce Co. Trade Debt $40,386 Venture Construction Co. Trade Debt $39,379 Service Management Group Trade Debt $37,179 Pelican Aire Trade Debt $37,106 The Graphic Cow Trade Debt $35,438 Dimension Construction Trade Debt $34,719 SRE, Inc. Trade Debt $33,724 Joe Lasita & Sons, Inc. Trade Debt $33,684 Trimark Foodcraft Trade Debt $31,196 Weyand Food Distributors, Trade Debt $29,611 Inc. Abacus Business Computers Trade Debt $26,477 Tensaw Land & Timber, Inc. Trade Debt $25,900 Equiptech Trade Debt $25,705 Johnson Brothers - St. Paul Trade Debt $25,196 What They Think Research, Trade Debt $24,500 LLC The Boelter Co., Inc. Trade Debt $24,172 Weyland East Trade Debt $23,695 First Data Corp. Trade Debt $23,229 Tarantino Foods, LLC Trade Debt $23,131 Quality Refrigeration, Inc. Trade Debt $23,060 Servicecheck, Inc. Trade Debt $22,131 BEAUTYCO INC: Signs-Up Tomlins & Goins as Bankruptcy Counsel ------------------------------------------------------------ Beautyco, Inc., asks the U.S. Bankruptcy Court for the Northern District of Oklahoma for permission to employ Tomlins & Goins, a Professional Corporation, as its attorneys in its chapter 11 restructuring. The Debtor reports that the Tomlins & Goins' professionals who will be working on this case, and their hourly rates, are: Neal Tomlins $235 per hour Ronald E. Goins $235 per hour Janna Nichols (Legal Assistant) $70 per hour Tomlins & Goins has licensed attorneys who: i) are well-qualified in bankruptcy matters; ii) do not hold or represent an interest adverse to the estate; iii) are disinterested persons; iv) have not served as examiners in this case; and v) do not, in connection with this case, represent a creditor. Consequently, the Debtor submits that Tomlins & Goins is the best professional to represent it in this case. Headquartered in Oklahoma City, Oklahoma, Beautyco, Inc. -- http://www.beautyco.com/-- one of the leading retailers of professional beauty supplies in the United States, filed for chapter 11 protection on December 31, 2003 (Bankr. N.D. Okla. Case No. 03-07621). Neal Tomlins, Esq., and Ronald E. Goins, Esq., at Tomlins & Goins represent the Debtor in their restructuring efforts. When the Company filed for protection from their creditors, it listed: Total Assets Total Debts ------------ ----------- Beautyco, Inc. $3,309,400 $8,703,200 Beautyco Investments, Ltd. $5,250,000 $50,000 BIONOVA HOLDING: Enters Financial Restructuring Pact with Savia --------------------------------------------------------------- Bionova Holding Corporation (Pink Sheets: BVAH) entered into an "Agreement in Principle" with Savia, S.A. de C.V. dated as of February 2, 2004 that provides for a financial restructuring of the company. In conjunction with this financial restructuring Bionova Holding will become a private company through a merger in which public stockholders will be paid $0.09 per share for each share they hold of the Company's common stock. Bionova Holding's management stated there were two principal reasons for undertaking the restructuring at this time. First, Bionova Holding's debt with Savia, which amounted to $79.8 million, became due and payable to Savia on December 31, 2003. As a consequence, the Company currently is in default on this debt obligation, as well as certain other debt obligations. Second, as the Company has continued to sustain operating losses and its cash position has continued to deteriorate, it will not be able to afford the high, and ever-increasing costs of remaining a public company. The financial restructuring of the Company generally involves four transactions, as follows. First, the Company will issue 26,959,097 shares of the Company's common stock to its parent company, Savia, in satisfaction of part of the principal amount of the debt the Company owes to Savia. Second, Savia will then consolidate these new shares with the indirect equity interest held in the Company by its wholly-owned subsidiary, Ag-Biotech Capital LLC (18,076,839 shares) in a new subsidiary, Newco. Newco's holding of 45,035,936 shares will then represent 90.1% of all authorized shares of the Company. Third, Savia will forgive the balance of the $79.8 million of its debt with Bionova Holding. And finally, immediately after the Debt Forgiveness, Newco will effect a short-form merger with the Company. In the Merger public stockholders will be paid $0.09 per share for each share of the Company's common stock they hold. Though the Company's cash resources are severely limited and the Company is not able to repay its debt to Savia, Savia has agreed in principle to these transactions and to the cash payment to the stockholders in the Merger. The Company's unaffiliated stockholders will not have any right to vote on the Merger, but will have the right to dissent from the Merger and exercise their statutory right to appraisal in accordance with Delaware law. Bionova Holding's Board of Directors unanimously approved the Exchange and determined not to oppose the Merger. The Board engaged the services of AgriCapital Securities Inc., an investment banker with significant experience in the agriculture business, to act as a financial advisor to the Board to advise and assist the Board as the Board considered the desirability of, and developed a general strategy for, effecting the Exchange, the Debt Forgiveness and the Merger taking into consideration the best interests of the unaffiliated minority stockholders of the Company. AgriCapital rendered an opinion to the Board that (i) the $0.09 per share Merger consideration to be paid to the Company's stockholders (other than Savia and its affiliates), is fair, from a financial point of view, to such stockholders and (ii) the issuance of shares of the Company's common stock in connection with the Exchange is fair, from a financial point of view, to the Company. Savia and the Company filed Wednesday a Transaction Statement on Schedule 13E-3 with the Securities and Exchange Commission and hope to complete the transactions prior to the end of the first quarter of 2004. However, due to potential delays associated with complying with applicable legal requirements, and because the closing is subject to conditions to closing, the exact date of the closing, or whether the transactions will close at all, cannot be predicted with certainty. The conditions to the closing of the transactions include the approval by the Board of Directors of Savia of the Exchange, the Debt Forgiveness and the Merger; the passing of 20 days from the date of the mailing of the Schedule 13E-3 Statement to shareholders of the Company; the negotiation and execution of a definitive Exchange Agreement mutually acceptable to the Company and Savia; the absence of any law or order or other event which would prevent the Exchange, the Debt Forgiveness or the Merger; there not having occurred any event that, in Savia's good faith judgment, resulted in an actual or threatened material adverse change in the business or condition of the Company since the date of the Agreement in Principle; the absence of any threatened or pending litigation or other legal action relating to the Exchange, the Debt Forgiveness or the Merger; AgriCapital's fairness opinion not being withdrawn prior to the consummation of the Exchange, the Debt Forgiveness and the Merger; not more than 10% of the unaffiliated stockholders elect to exercise their statutory dissenters' rights in connection with and prior to the effectiveness of, the Merger; and neither the Company nor Savia incurring significant expenses associated with the Exchange, the Debt Forgiveness or the Merger, other than approximately $650,000 of professional fees and other expenses that the Company contemplates will be incurred by the filing parties in connection with the preparation and dissemination of the Schedule 13E-3 Statement and the closing of the Exchange, the Debt Forgiveness and the Merger in an efficient and prompt manner. Upon the closing of the transactions, Bionova Holding will become a privately-held company. Accordingly, upon closing, the registration of the Company's stock under the Securities Exchange Act of 1934 will terminate, Bionova Holding's reporting obligations under that Act will terminate, and there will no longer be a public market for Bionova Holding's shares. Bionova Holding Corporation is a leading fresh produce grower and distributor. Its premium Master's Touch(R) and FreshWorld Farms(R) brands are widely distributed in the NAFTA market. Bionova Holding Corporation is majority owned by Mexico's Savia, S.A. de C.V. BOYD GAMING: Reports Improved 4th-Quarter 2003 Financial Results ---------------------------------------------------------------- Boyd Gaming Corporation (NYSE: BYD) reported its financial results for the fourth quarter 2003. The Company reported adjusted earnings(1) of $.19 per share in the fourth quarter versus adjusted earnings of $.24 per share reported in the fourth quarter 2002. Adjusted earnings in the fourth quarter 2002 exclude preopening expenses of $.03 per share, loss on assets held for sale of $.04 per share and loss on early retirement of debt of $.11 per share. There were no adjustments for the fourth quarter 2003. Per share amounts are reported on a diluted basis. The principal reason for the decline in adjusted earnings per share in the fourth quarter 2003 versus the fourth quarter 2002 was increased gaming taxes in Illinois, Indiana, and Nevada. This decline was partially offset by an earnings contribution from Borgata of $.03 per share. Revenues for the fourth quarter were $308 million versus $306 million reported in the fourth quarter 2002. Total property EBITDA in the quarter was $79.3 million versus $72.2 million in the fourth quarter 2002. Included in this year's results is the Company's 50% share of Borgata's EBITDA. The Company's fourth quarter 2003 EBITDA, which includes corporate expense, was $75.1 million, up from $65.6 million in the comparable quarter in 2002. Net income in the fourth quarter was $12.3 million, or $.19 per share, versus $3.9 million, or $.06 per share, reported in the fourth quarter 2002. Borgata The Company reported results for Borgata, the Company's joint venture property in Atlantic City, which opened on July 3, 2003. Borgata reported $176 million of gross revenue and $142 million of net revenue in the quarter. Gaming revenue in the quarter was $122 million, the second highest gaming win in the Atlantic City market, behind only the much larger Bally's Park Place. Borgata's EBITDA in the quarter was $33.9 million, for an EBITDA margin of 23.9%, an improvement of $3.4 million from third quarter EBITDA of $30.5 million with an EBITDA margin of 20.4%. William S. Boyd, Chairman and Chief Executive Officer of Boyd Gaming, commented, "Many of the revenue trends experienced during Borgata's opening quarter continued and even strengthened in the fourth quarter while our operating expenses have decreased as we fine-tune our operations. We continue to achieve significant market share premiums in table games, slots and poker. Our non- gaming revenue increased in the fourth quarter over the seasonally stronger third quarter as our percentage of non-gaming revenue to gross revenue grew from 26% in the third quarter to 30% in the fourth quarter. Our goal was to offer more than just gaming, and we are already achieving that goal in our opening months." Table game win was $48.6 million in the quarter, placing Borgata number one in the Atlantic City market in table games. The property reported table game win per unit per day of $4,350 in the fourth quarter. Bob Boughner, Borgata's Chief Executive Officer, commented on these results, "Our table game results represented a 70% premium to fair share, which is computed by comparing the percentage of table game win in Atlantic City that we earned versus our percentage share of table games in the market. The 70% premium was a remarkable 43 percentage points above the number two property in the market. We are attracting players who did not visit Atlantic City before the opening of Borgata, achieving one of our goals to expand the Atlantic City gaming market." Slot win was $73.7 million in the fourth quarter, representing $222 win per unit per day. Bob Boughner continued, "Our slot results represent a 9% premium to fair share, one of five properties to have a fair share premium in the quarter. Reflecting aggressive promotional spending by competitors in this area, Borgata ranked fifth in slot win per unit per day in the fourth quarter. We believe that if the cost of coin-to-customer promotional give-aways were netted out of the slot win computation, our rank would be a few places higher." Hotel occupancy for the quarter was 90%. This compares to 80% occupancy in the third quarter. The average daily room rate for the fourth quarter was $126. Bob Boughner added, "We continue to improve how we utilize our hotel rooms. Weekend business continues to remain strong even after the summer season has ended. With our growing customer database and strong demand by the meeting and convention sector, good weekday business in the hotel is building nicely." Wholly-owned Properties The Company's nine wholly-owned operating units reported total property EBITDA in the fourth quarter of $62.4 million versus $72.2 million reported in the comparable quarter of 2002. After corporate expense, fourth quarter EBITDA for these units was $58.1 million as compared to $65.6 million reported in the fourth quarter 2002. The principal cause of the EBITDA decline was higher gaming taxes in three states which affected EBITDA by $6.5 million in the fourth quarter. In Illinois, higher tax rates enacted in July 2003 impacted EBITDA by $3.4 million in the quarter, accounting for most of the quarterly EBITDA decline at Par-A-Dice. In Indiana, Blue Chip's EBITDA in the quarter was reduced by $2.4 million due to higher gaming taxes enacted in 2002. In the Company's Nevada operations, higher taxes enacted in 2003 reduced EBITDA by $0.7 million in the quarter. Highlighting the performance at two operating units, Sam's Town Las Vegas reported an increase in fourth quarter revenue of 5.7%. Sam's Town reported EBITDA of $8.7 million, the property's second highest quarterly EBITDA in nearly six years. In addition, the Company's Downtown Las Vegas properties reported EBITDA of $11.7 million for the fourth quarter, the unit's highest quarterly EBITDA of the year. The Downtown group's fourth quarter EBITDA decline of 17.2% from the same period in the prior year resulted partly from increased operating costs in the Company's Hawaiian air charter operations and partly from negative comparisons to the very strong record fourth quarter results of 2002. Full Year Results of Operations The Company reported revenue of $1.25 billion for the full year 2003, up from $1.23 billion in 2002. The increase was principally the result of a full period of dockside operations at Blue Chip, which commenced in August 2002, and a full period of slot operations at Delta Downs, where slot operations commenced in February 2002. Partially offsetting this revenue increase was a 5.1% decline in 2003 revenue at Par-A-Dice as compared to 2002 due mainly to increased competition from the property's outer-markets. The Company's EBITDA (before a one-time Indiana retroactive gaming tax charge in the second quarter 2003 of $3.5 million) for the full year was $280 million, including its 50% share of Borgata's EBITDA, versus $274 million reported for 2002. On a same-store basis, EBITDA (before the retroactive tax) was $248 million in 2003 versus $274 million in 2002. One of the primary causes of the decline in EBITDA was the higher taxes enacted in Illinois, Indiana and Nevada, the combination of which accounted for approximately $24 million in increased expenses during 2003 as compared to 2002. Stardust's EBITDA declined 37% during 2003 due mainly to an increase in marketing and promotional costs as a response to the competitive environment on the Las Vegas Strip. Increased air charter and jet fuel costs in the Company's Hawaiian air charter operations were the primary causes for a decline in the Downtown properties' 2003 EBITDA. Partially offsetting these EBITDA declines were a $7.3 million increase in Delta Downs' EBITDA due to a full period of slot operations and higher operating margins and an 11.0% increase in EBITDA at Sam's Town Las Vegas. The $34.4 million EBITDA for the year is the highest annual EBITDA ever for Sam's Town Las Vegas. Adjusted earnings for 2003 were $.83 per share as compared to $1.06 per share for 2002. Net income for 2003 was $40.9 million, or $.62 per share, versus $40.0 million, or $.61 per share, reported last year. Prior year net income includes a charge for the cumulative effect of a change in the accounting for goodwill, which amounted to $.12 per share. Financial Statistics The Company provided the following additional information for the fourth quarter ended December 31, 2003: * December 31 debt balance: $1.101 billion * Debt increase in quarter: $27.6 million * December 31 cash: $88.2 million * Dividends paid in the quarter: $4.9 million * Shares repurchased in fourth quarter: None * Capital spending in fourth quarter: $43 million, $33 million of which related to normal maintenance items and $10 million of which related to expansion work at Delta Downs and Blue Chip * Cash contributed in the fourth quarter to the joint venture that owns Borgata: $17 million Headquartered in Las Vegas, Boyd Gaming Corporation (NYSE: BYD) is a leading diversified owner and operator of 13 gaming entertainment properties located in Nevada, New Jersey, Mississippi, Illinois, Indiana and Louisiana. Boyd Gaming recently opened Borgata Hotel, Casino and Spa at Renaissance Pointe (AOL keyword: borgata or http://www.theborgata.com/), a $1.1 billion entertainment destination hotel in Atlantic City, through a joint venture with MGM MIRAGE. The Company also is awaiting regulatory approval of its acquisition of Harrah's Shreveport, which is expected in the second quarter 2004. Additional news and information on Boyd Gaming can be found at http://www.boydgaming.com/ Fitch currently rates senior secured debt 'BB+', senior unsecured 'BB-', and subordinated debt 'B+'. Ratings reflect BYD's geographically diverse asset base, solid operating performance, free cash flow generation, and focused balance sheet management. While the Borgata is a non-recourse entity, Boyd's 50% stake in the property further enhances the company's risk profile by providing asset support, and the potential for future dividend payments. Concerns include limited same store growth potential due to competitive market conditions in a number of markets and significant vulnerability to gaming tax increases. The Outlook is Stable. BROOKLYN NAVY: Fitch Cuts Sr. Debt Rating to Speculative Grade -------------------------------------------------------------- Fitch Ratings has downgraded Brooklyn Navy Yard Cogeneration Partners senior debt to 'BB' from 'BBB-'. Several factors have had a negative effect on project cash flow as debt service coverage ratios have averaged 1.1 times over the last two years. Fitch expects that there will be a partial recovery in 2004, and that all operational issues should be resolved in a few years. However, Fitch believes BNY's margins in the long term could face downward pressure due to the upward shift in the long term price for natural gas, the primary fuel consumed by the project. The rating action applies to the taxable debt issued by BNY and the tax-exempt debt issued by the New York City Industrial Development Agency on behalf of BNY. BNY owns a nominal 286 MW cogeneration facility that delivers its output primarily to Consolidated Edison of New York under a long- term energy services agreement. Under the ESA, ConEd purchases essentially the entire output of the facility in the form of electricity and steam. Electrical deliveries are proportionately greater in the summer and steam deliveries are proportionately greater in the winter. BNY's senior debt obligations are payable in April and October. BNY's seasonal profitability is correlated to the market price of natural gas. The prices that ConEd pays for delivered steam and electricity are indexed to the NYMEX natural gas price, which is also the basis for BNY's fuel purchases. However, only 35% of the electricity price is indexed to NYMEX; the remaining 65% is indexed to inflation. Steam sales are generally profitable to BNY regardless of natural gas prices, but are more profitable when prices are higher. In contrast, electricity sales are profitable for BNY when natural gas prices are lower but can be a drain on cash flow when natural gas prices are higher. The draining effect is a result of an inconsistency between the 35/65 weighting and BNY's cost structure when natural gas prices are high. For example, over the first nine months of 2003, fuel commodity costs represented 80% of BNY's operating expenses. Fitch estimates that BNY's fuel costs were roughly $11 million greater than the corresponding revenues from delivering steam and electricity. Under the ESA, BNY also receives capacity payments, which are adjusted downward if summer, winter, or annual availability targets are not achieved. As expected, BNY did not achieve the annual targets in 2001 and 2002 as a result of planned overhauls in the fall of each year. However, due to a variety of unplanned forced outages, BNY did not achieve the winter or summer targets in 2002 and 2003. The corresponding reduction in capacity payments was $3.4 million in 2001, $4.6 million in 2002, and roughly $250,000 in 2003. The project has also experienced tube leaks in both steam generators that are not scheduled for permanent repair until the next gas turbine overhaul. Until the permanent repairs are implemented the project's ability to produce steam, and therefore the project's available capacity, will be limited. Although the reduction is not severe, it does increase the probability that future availability targets will not be achieved. More importantly, the project will not be able to sell the same quantities of steam and electricity as before. Since the summer of 2001, DSCRs for each six-month period prior to a debt service payment ranged between 1.4x and 0.8x, with an average of 1.1x. During the same six-month periods, Henry Hub natural gas prices ranged between $2.50 per MMBtu to $5.30 per MMBtu, with an average of $4.00 per MMBtu. Had the reduction in capacity payments not occurred, the coverage ratios would have ranged between 1.5x and 0.8x, with an average of 1.3x. Due to the requirements of its bond indenture, BNY has been restricted from making distributions to its partners or paying subordinate obligations since late 2001. Trapped cash allowed BNY to reduce the outstanding balance of a working capital facility, which was drawn by $5 million in 2001. The facility was fully repaid in the spring of 2003. Other events that could affect BNY's future liquidity are a $7.3 million tax charge currently under appeal by BNY and the remaining $13.2 million settlement payment with the facility's construction contractor. Edison Mission Energy, one of BNY's partners, has indemnified BNY's obligation for the contractor settlement payment. BUDGET GROUP: Claims Classification/Treatment Under Amended Plan ---------------------------------------------------------------- Edmon L. Morton, Esq., at Young, Conaway, Stargatt & Taylor, LLP, in Wilmington, Delaware, informs the Court that the Budget Group Debtors' classification and treatment of claims and interests is revised under the First Amended Plan to reflect: U.S. Debtor Group A. Administrative Claims The Debtors estimate that the total amount of Administrative Claims is $11,412,000. B. Priority Tax Claims The Debtor estimate that the total amount of Priority Tax Claims is $11,840,000. C. Class 1A: Priority Non-Tax Claims Class 1A is unimpaired and deemed to accept the Plan. However, the Debtors believe that there is no Priority Non- Tax Claims to be asserted against the U.S. Debtor Group. D. Class 2A: Miscellaneous Secured Claims The U.S. Debtor Group Miscellaneous Secured Claims are Secured Claims against the U.S. Debtor Group that are not Cherokee Assumed Liability Claims. This Class is unimpaired and deemed to accept the Plan. The Debtors estimate that the total amount of Class 2A Claims is $81,000. E. Class 3A: Cherokee Assumed Liability Claims Cherokee Assumed Liability Claims are claims that have been assumed by Cherokee pursuant to the terms of the ASPA or the North American Sale Order. From Cherokee, this Class will receive: (i) the amount to which the Holder of the Cherokee Assumed Liability Claim is entitled under applicable non-bankruptcy law; or (ii) other amount Cherokee and the Holder of the Cherokee Assumed Liability Claim agree. This Class is impaired and allowed to vote on the Plan. F. Class 4A: General Unsecured Claims This Class is impaired and allowed to vote on the Plan. The Debtors estimate that the total amount of Class 4A Claims is $444,594,000. This class will receive an amount of Cash equal to: (i) each Holder's Initial Pro Rata Share of the Initial U.S. Debtor Group Unsecured Claim Available Amount; plus (ii) each Holder's Pro Rata share of the Final U.S. Debtor Group Unsecured Claim Distribution Amount; plus (iii) if the Holder is the Holder of an Allowed Senior Notes Claim or the Holder of the Allowed Rosenthal Note Claim, the amount, which the Holder is entitled to receive under Sections 3.3(c) and (d) of the Plan. The estimated percentage recovery: -- for Holders of Class 4A Claims other than Holders of Allowed Senior Notes Claims and the Holder of the Allowed Rosenthal Note Claim is 8.17%; and -- for Holders of Allowed Senior Notes Claims and the Holder of the Allowed Rosenthal Note Claim is 15.47%. G. Class 5A: Convertible Subordinated Notes Claims This Class is impaired and allowed to vote on the Plan. The Debtors estimate that Class 5A Claims will reach $45,770,000. Class 5A Claimants are expected to recover 0.85% of their Claims. If Class 4A, Class 5A and Class 6A accept the Plan, each Holder, other than the Convertible Subordinated Notes Indenture Trustee, will receive an amount of Cash equal to each Holder's Pro Rata share of the Class 5A Retention Amount. In addition, if Class 4A, Class 5A and Class 6A accept the Plan, the Convertible Subordinated Notes Indenture Trustee will receive the Convertible Subordinated Notes Indenture Trustee Fee Amount. H. Class 6A: High Tides Claims U.S. Debtor Group High Tides Claims are Claims of the Holders of the High Tides and the High Tides Indenture Trustee under the High Tides Indenture. If Class 4A, Class 5A and Class 6A accept the Plan, each Holder, other than the High Tides Indenture Trustee, will receive an amount of Cash equal to each Holder's Pro Rata share of the Class 6A Retention Amount. In addition, if Class 4A, Class 5A and Class 6A accept the Plan, the High Tides Indenture Trustee will receive the High Tides Indenture Trustee Fee Amount. This Class is impaired and allowed to vote on the Plan. The Debtors estimate that the total amount of Class 6A Claims is $341,739,000. Class 6A Claimants are expected to recover 0.32% of their Claims. I. Class 7A: Intercompany Claims The U.S. Debtor Group Intercompany Claims consist of: (i) any accounts reflecting intercompany book entries by one member of the U.S. Debtor Group with respect to any other member of the U.S. Debtor Group; and (ii) any Claims that are not reflected in the book entries and are held by a member of the U.S. Debtor Group against any other member of the U.S. Debtor Group. The U.S. Debtor Group Intercompany Claims will be eliminated and the Holders of the Claims will receive no recovery. This Class is impaired and allowed to vote on the Plan. Class 5 Claimants are not expected to receive any distributions. J. Class 8A: Equity Interests and Subordinated Claims U.S. Debtor Group Equity Interests and U.S. Debtor Group Subordinated Claims are: (i) the Old Common Stock and the Interests of the BGI Subsidiary Debtors, together with any other rights to acquire or receive any Old Common Stock or other ownership interests in BGI, and any contracts, subscriptions, commitments or agreements pursuant to which the non-debtor party was or could have been entitled to receive shares, securities or other ownership interests in BGI; and (ii) Claims against the U.S. Debtor Group, which are subordinated pursuant to Sections 510(b) or (c) of the Bankruptcy Code. The U.S. Debtor Group Equity Interests will be canceled and the Holders of U.S. Debtor Group Equity Interests and U.S. Debtor Group Subordinated Claims will receive no recovery. BRACII A. Administrative Claims The Debtors estimate that the total amount of Administrative Claims is $2,750,000. B. BRACII Priority Tax Claims The Debtors estimate that the total amount of BRACII Priority Tax Claims is $250,000. C. Class 1B: Priority Non-Tax Claims The Debtors believe that there is no Priority Non-Tax Claim that will be asserted against BRACII. D. Class 2B: Preferential Claims The Debtors believe that there is no Preferential Claim that will be asserted against BRACII. E. Class 3B: Miscellaneous Secured Claims The Debtors believe that there is no Miscellaneous Secured Claim that will be asserted against BRACII. F. Class 4B: General Unsecured Claims The Debtors estimate that the total amount of General Unsecured Claims is $47,000,000. This Class is impaired and allowed to vote on the Plan. Headquartered in Daytona Beach, Florida, Budget Group, Inc., operates under the Budget Rent a Car and Ryder names -- is the world's third largest car and truck rental company. The Company filed for chapter 11 protection on July 29, 2002 (Bankr. Del. Case No. 02-12152). Lawrence J. Nyhan, Esq., and James F. Conlan, Esq., at Sidley Austin Brown & Wood and Robert S. Brady, Esq., and Edward J. Kosmowski, Esq., at Young, Conaway, Stargatt & Taylor, LLP, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $4,047,207,133 in assets and $4,333,611,997 in liabilities. (Budget Group Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) CHINA WORLD: Losses & Capital Deficit Raise Going Concern Doubt --------------------------------------------------------------- China World Trade Corporation's business objective is to open and operate business clubs in the major cities of China in association with the World Trade Center Association in order to position itself as the platform to facilitate trade between China and the world market. The Company currently operates the Guangzhou World Trade Center Club. The Beijing World Trade Center Club, which is located at 2nd Floor, Office Tower II, Landmark Towers Beijing, 8 North Dongsanhuan Road, Beijing PRC, and consisting of 730 squaure meters (equivalent to approximately 8,000 square feet), is currently under renovations and is expected to be fully operational in the first quarter of 2004. Additionally, the Company expects to open world Trade Center Clubs in Shanghai and Shenzhen in 2005. Finally, it plans to create a Chinese/English internet portal to serve foreign and Chinese small to medium sized businesses. No assurances, however, can be given that it will be successful in its endeavors. The Company's executive office is located at 4th Floor, Goldlion Digital Network Center, 138 Tiyu Road East, Tianhe, Guangzhou, the PRC 510620. The Company's source of income consists of three primary revenue components - The World Trade Center business, value-added services, and strategic investments. Virtual Edge Limited, China World Trade Corporation's wholly owned subsidiary, underwent a capital restructuring in May 2000 in which long-term debt was partly reduced in the amount of US$2.5 million by new issuance of share capital in the same amount. China World Trade Corporation underwent a 30-to-1 reverse split of the shares of its common stock and was effective on 1 September 2002. Between September 1 and September 12, 2002, the Company entered into agreements with its subsidiaries whereas the Company would take on approximately $2.7 million in debt from subsidiaries to related parties, and in exchange, the subsidiaries became liable to the Company for the same amount of debt that was taken on by the Company. The Company issued a total of 4 million post-split shares in exchange for cancellation of approximately $380,000 in debt owed to related parties as well as approximately $2.3 million in debt and fees owed to third parties. On January 13, 2004, the firm of Moores Rowland Mazars, Chartered Accountants, Certified Public Accountants, of Hong Kong, stated in their Auditors Report: "The accompanying financial statements have been prepared assuming that the Group will continue as a going concern. As discussed in Note 3 to the financial statements, the Group has suffered losses from operations during the year and has a negative working capital that raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty." The management of China World Trade Corporation believes that the level of financial resources is a significant factor for its future development and accordingly may choose at any time to raise capital through debt or equity financing to strengthen its financial position, facilitate growth and provide the Company with additional flexibility to take advantage of business opportunities. COMMSCOPE INC: S&P Affirms Low-B Level Credit & Sub. Debt Ratings ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' corporate credit and 'B+' subordinated debt ratings on Hickory, North Carolina-based CommScope Inc. At the same time, Standard & Poor's removed the ratings from CreditWatch, where they were placed on Oct. 27, 2003, following the announcement that CommScope would acquire the Connectivity Solutions business of Avaya Inc. (B+/Stable/--). The outlook is stable. The rating actions follow CommScope's completion of the acquisition of Avaya Connectivity Solutions from Avaya, a structured cabling business, for $250 million in cash and 1.8 million shares of CommScope stock. Following the close of the acquisition, CommScope has approximately $283 million of funded debt outstanding. CommScope is the long-standing leading manufacturer of coaxial cables for the cable television industry. With the addition of ACS, CommScope will become the leading supplier of high-quality cable and connectivity products to enterprise and telecommunications customers for data and telecommunications networks. "We expect CommScope's leverage to improve somewhat on a pro forma basis, based on ACS' historical profitability," said Standard & Poor's credit analyst Joshua Davis. ACS has a leading market position, exceeding 20% of sales to the U.S. market, for structured cabling products used by enterprise customers to connect phones, workstations, personal computers, LANs, storage area networks, and other communications devices through buildings and across campuses. In combination with its own copper cabling business, CommScope will be the market leader, with a particular emphasis on the premium segment of the market, where ACS' SYSTIMAX Solutions product line is positioned. CommScope's combined cash balances and available revolving credit is estimated to be $100 million following the acquisition, down from $171 million of cash and $74 million of revolving credit available as of Sept. 30, 2003. Potential enhancements to liquidity include improvements to ACS' working capital turns, which are subpar. Significant other potential enhancements to liquidity include the put on the OFS Brightwave joint venture investment, which would provide $203 million of cash in 2006 if triggered, $173 million for the original investment, and $30 million of credit provided to the joint venture. CROMPTON CORP: S&P Cuts Rating to BB on Ongoing Earnings Weakness ----------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Middlebury, Connecticut-based specialty chemicals and polymer products producer Crompton Corp. to 'BB' from 'BB+', based on ongoing earnings weakness. The outlook remains negative. Standard & Poor's said the downgrade reflects the company's recent weak earnings performance, which is punishing its already depressed financial profile. "Credit quality measures will need to experience significant strengthening for maintenance of the revised ratings," said Standard & Poor's credit analyst Wesley E. Chinn. "On the plus side, earnings are expected to benefit from unit volume increases as end use demand in the housing, transportation, and consumer durable and nondurable sectors bolster domestic sales for the company's products. There also appears to be some opportunity to raise prices, but elevated energy and raw material costs remain a meaningful negative factor and the debt load remains onerous." The ratings on Crompton reflect the vulnerability of results to competitive pricing pressures, raw materials costs, the cyclicality of its markets, and weak cash flow protection measures. These aspects are somewhat tempered by an array of complementary specialty and industrial chemical products and substantial geographic diversity of sales (almost 50% of sales are outside the U.S.). A solid applications-driven technology base supports the company's leading market positions in many of the specialty chemical and plastic additives niches in which it competes. CWMBS INC: Fitch Hacks Class B3 Notes' Rating to Junk Level ----------------------------------------------------------- Fitch Ratings has taken rating actions on the following CWMBS (Countrywide Home Loans), Inc. residential mortgage-backed certificates: CWMBS (Countrywide Home Loans, Inc.) mortgage pass-through certificates, series 2001-10 (ALT 2001-6) -- Class A affirmed at 'AAA'; -- Class M affirmed at 'AA+'; -- Class B1 affirmed at 'A'; -- Class B2 affirmed at 'BBB'; -- Class B3 downgraded to 'CCC' from 'B'; -- Class B4 remains at 'C'. These actions are taken due to the level of losses incurred and the delinquencies in relation to the applicable credit support levels as of the January 2004 distribution. The affirmations on the above classes reflect credit enhancement consistent with future loss expectations. DELTA AIR: Sets Annual Shareholders' Meeting for April 23, 2004 --------------------------------------------------------------- Delta Air Lines' (NYSE: DAL) Board of Directors has set its Annual Meeting of Shareowners for April 23, 2004, in Atlanta. The meeting will be held at 9:00 a.m. EDT at The Renaissance Concourse Hotel, One Hartsfield Centre Parkway, Atlanta. The record date for determining shareowners entitled to notice of, and to vote at, the annual meeting will be the close of business on March 1, 2004. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. As the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, Delta offers 7,318 flights each day to 487 destinations in 82 countries on Delta, Song, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta currently utilizes the largest regional jet fleet and its Comair subsidiary was the first U.S. airline to operate with RJs. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ At Dec. 31, 2003, Delta Air Lines' balance sheet shows a total shareholders' equity deficit of about $862 million. DELTA AIR: January 2004 Traffic Increases By 0.3% ------------------------------------------------- Delta Air Lines (NYSE: DAL) reported traffic results for the month of January 2004. System traffic for January 2004 increased 0.3 percent from January 2003 on a capacity decrease of 1.7 percent. Delta's system load factor was 67.3 percent in January 2004, up 1.4 points from the same period last year. Domestic traffic in January 2004 increased 0.5 percent year over year while capacity decreased 0.1 percent. Domestic load factor in January 2004 was 65.5 percent, up 0.4 points from the same period one year ago. International traffic in January 2004 decreased 0.2 percent year over year on a 7.9 percent decrease in capacity. International load factor was 74.4 percent, up 5.7 points from January 2003. During January 2004, Delta operated its schedule at a 97.9 percent completion rate, compared to 98.9 percent in January 2003. Delta boarded 7,897,670 passengers during the month of January 2004, a decrease of 3.2 percent from January 2003. Delta Air Lines is proud to celebrate its 75th anniversary in 2004. As the world's second largest airline in terms of passengers carried and the leading U.S. carrier across the Atlantic, Delta offers 7,318 flights each day to 487 destinations in 82 countries on Delta, Song, Delta Shuttle, Delta Connection and Delta's worldwide partners. Delta currently utilizes the largest regional jet fleet and its Comair subsidiary was the first U.S. airline to operate with RJs. Delta is a founding member of SkyTeam, a global airline alliance that provides customers with extensive worldwide destinations, flights and services. For more information, please visit http://www.delta.com/ At Dec. 31, 2003, Delta Air Lines' balance sheet shows a total shareholders' equity deficit of about $862 million. DII INDUSTRIES: Receives Final Nod for $350 Million DIP Facility ---------------------------------------------------------------- On January 13, 2004, U.S. Bankruptcy Court Judge Fitzgerald authorized the DII Industries, LLC, and Kellogg, Brown & Root Debtors, on a final basis, to borrow funds from, and incur debts to, Halliburton Energy Services, Inc. and Halliburton Company in the amount of $350,000,000 in accordance with the terms and conditions set forth in the Revolving Credit Agreement. The Court also grants HESI and Halliburton allowed super-priority administrative claims for any amounts owed to them by the Debtors in connection with the indebtedness and the obligations. In addition to the rights and remedies set forth in the Revolving Credit Agreement, any and all obligations will be immediately due and payable on the occurrence of these Termination Events, with a five-day notice allowance by HESI and Halliburton to the Debtors and the U.S. Trustee: (a) One or more of the Debtors' Chapter 11 cases are either dismissed or converted to a case under Chapter 7 of the Bankruptcy Code; (b) A trustee or an examiner with the expanded powers of a trustee is appointed in any of the Debtors' Reorganization Cases; (c) Any Plan is confirmed in any of the Debtors' Reorganization Cases which does not provide for payment in full of the Obligations on the Effective Date without the written consent of HESI and Halliburton; (d) The Debtors cease operations of their businesses or take material action without the prior written consent of HESI or Halliburton; (e) The Final DIP Order is reversed, vacated, stayed, amended, supplemented, or otherwise modified in a manner that will, in the sole opinion of HESI and Halliburton, materially and adversely affect their rights or that will materially and adversely affect the priority of any or all of their claims; or (f) Non-compliance or default by the Debtors with any of the terms or conditions of the Final DIP Order. Headquartered in Houston, Texas, Kellogg, Brown & Root is engaged in the engineering and construction business, providing a wide range of services to energy and industrial customers and government entities in over 100 countries. DII has no business operations. The Company filed for chapter 11 protection on December 16, 2003 (Bankr. W.D. Pa. Case No. 02-12152). Jeffrey N. Rich, Esq., Michael G. Zanic, Esq., and Eric T. Moser, Esq., at Kirkpatrick & Lockhart LLP, represent the Debtors in their restructuring efforts. (DII & KBR Bankruptcy News, Issue No. 5; Bankruptcy Creditors' Service, Inc., 215/945-7000) DIRECTV: Raven Media Asks Court to Subordinate Hughes' Claims ------------------------------------------------------------- Raven Media Investments, LLC asks the Court to subordinate, in whole or in part, the claims asserted by Hughes Electronics Corporation against DirecTV Latin America, LLC to the claims and interests asserted by Raven. The Debtor is 75% owned by DirecTV Latin America Holdings, Inc., which in turn is a wholly owned subsidiary of Hughes. Darlene Investments, LLC owns 20% of the Debtor and Raven owns 4%. Raven is a wholly owned subsidiary of Grupo Clarin, Inc., an Argentine communications company. Gilbert R. Saydah, Jr., Esq., at Morris, Nichols, Arsht & Tunnell, in Wilmington, Delaware, relates that Hughes asserted claims against the Debtor for at least $1,345,000,000, which allegedly represent 70% of the aggregate claims against the Debtor. The Debtor's services are distributed in Argentina by Galaxy Entertainment Argentina, S.A. The Debtor owned directly and indirectly a 49% interest in Galaxy and the remaining 51% was owned by a wholly owned subsidiary of Grupo Clarin, Inc. In late 2000, the Debtor purchased that 51% of Galaxy in exchange for: -- the issuance of a 4% membership interest in DirecTV Latin America; and -- separate put rights under a put agreement dated November 10, 2000. Ultimately, the 4% interest and the separate rights under the Put Agreement were transferred to Raven. Under the Put Agreement, Raven believes that it has a valid general unsecured claim against the Debtor for not less than $189,000,000. By a ruling dated August 22, 2003, the Court held that Raven's claim should be subordinated pursuant to Section 510(b) of the Bankruptcy Code. That ruling is now on appeal. Hughes confirmed that it was the majority shareholder of DTVLA and that it understood the terms of the Stock Purchase Agreement and Put Agreement in a letter to Raven's lender, Chase Manhattan Bank, dated July 3, 2001. Hughes controlled the Debtor's business decisions, and it was important to Hughes that Raven sells its interest in Galaxy. The sale will enable Hughes to gain control of the Argentine market and obtain the maximum number of subscribers to secure a sale of either the Debtor and its affiliates in related businesses or Hughes itself, or otherwise to benefit Hughes or its other subsidiaries. To further this goal, Hughes was willing to make, and did make, decisions pertaining to DTVLA's business that were not in the best interest of DTVLA and were specifically harmful to Raven, as DTVLA's minority shareholder and creditor. Mr. Saydah points out that four of the five members of DTVLA's Executive Committee are Hughes employees. The Hughes employees on the Executive Committee are also senior officers of Hughes. Six out of the seven senior officers of DTVLA are Hughes employees providing services for DTVLA. Thus, Mr. Saydah says, the supposed representatives of DTVLA that Raven dealt with were in actuality employees and fiduciaries of Hughes. The incentive bonus and stock compensation of the Hughes employees "seconded" to DTVLA is tied to Hughes' performance, not DTVLA's. "Such an arrangement raises inherent conflicts in Hughes' interest in responsibly managing DTVLA," Mr. Saydah argues. Hughes represented to Raven that it operated DTVLA as an independent entity, not for the benefit of Hughes itself or other Hughes subsidiaries. "Such representations were false and misleading and to the detriment of Raven as a minority shareholder in DTVLA," Mr. Saydah tells Judge Walsh. Hughes operated the businesses at issue through both DTVLA, which was 75% owned by Hughes, and through DTVLA Holdings, which was 100% owned by Hughes. Various local operating companies and other companies whose services were crucial to the overall enterprise were owned by either DTVLA or DTVLA Holdings, with varying impact on Hughes, depending upon its level of ownership. On information and belief, Hughes has operated the business of DTVLA to maximize the corporate benefit to Hughes and other Hughes subsidiaries and affiliates to the detriment of DTVLA and its minority shareholders. Mr. Saydah notes that Hughes Electronics Corporation, Hughes Electronics Systems International, DirecTV Latin America Holdings, Inc., Surfin Ltd., White Holding Mexico, S. De R.L. De C.V., and White Holding, B.V. may have made agreements with programmers and suppliers on different bases for its different subsidiaries to increase benefit for Hughes rather than to serve the individual interests of the subsidiaries, including the indirect subsidiary, DTVLA. In like manner, Hughes took for itself, or for itself and Darlene, corporate opportunities that should have been offered to DTVLA, including its minority shareholder, Raven. To operate its business, DTVLA now spends approximately $75,000,000 annually for purchases or certain satellite communications services, including transmission and satellite capacity, from California Broadcasting Center LLC. DTVLA currently pays CBC $6,300,000 per month or over $75,000,000 per year for satellite services, which fees are above market rates. CBC is 100% owned by DirecTV Latin America Holdings and, therefore, is an affiliate of Hughes. Indirectly, then, Hughes receives the proceeds from this arrangement. On information and belief, DTVLA spent similar or greater amounts and benefited CBC in similar ways prior to the Petition Date. DTVLA delivers and has delivered its programming to subscribers through 16 local operating companies located throughout South America. A number of the LOCs are affiliates of Hughes. Hughes essentially controls all of these affiliates. SurFin, 75% of which is indirectly owned, and thus controlled, by Hughes, provides financing to the LOCs to purchase the boxes placed in subscribers' homes to receive broadcast signals. The boxes in turn are pledged to SurFin. Approximately $300,000,000 of that financing allegedly is guaranteed by DTVLA and other amounts are guaranteed by Holdings. Upon information and belief, SurFin overcharged local operating companies for the financing charges, and further, was in a position to compel a greater cash flow to SurFin than DTVLA from the local operating companies by virtue of the pledges it obtained. Indeed, to the Debtor's detriment, Hughes decided blatantly prepetition to have the LOCs favor payments to SurFin (and indirectly, Hughes) over payment of royalties due to DTVLA. As Hughes has a different ownership structure in connection with SurFin, where its sole partner is Darlene, than with DTVLA, Hughes has manipulated these financial arrangements to disfavor Raven and other DTVLA creditors. "Such action is a clear breach of fiduciary responsibility to Raven as minority shareholder and creditor," Mr. Saydah asserts. Also to the Debtor's detriment and in breach of Hughes' duties, Hughes required DTVLA to guaranty obligations of LOCs that DTVLA either did not own or that were insolvent. A number of the Hughes affiliated LOCs apparently require substantial funding to cover operating losses. Hughes has had DTVLA provide such funding in the past, causing the Debtor harm. In these and various other ways, Hughes has caused these businesses to be operated in the interest of maximizing Hughes' overall interests to the detriment of those entities like DTVLA in which Hughes' interests were less significant. Furthermore, pursuant to a Final Term Sheet for Equity Interests of Darlene and Hughes in a Restructuring of DTVLA, dated February 5, 2003, Darlene and Hughes agreed "to use all commercially reasonable efforts" to include these terms, among others, in a restructuring or chapter 11 plan for DTVLA: (a) a "roll-up" of DTVLA with a number of its affiliates that are owned by Hughes and Darlene; (b) a payment by DTVLA of Hughes and Darlene's fees and expenses incurred in such a "roll-up transaction"; (c) a provision "to cause DTVLA to release Darlene from those liens, guarantees, and liabilities as are set forth on Annex B" to the Term Sheet, with Hughes to "indemnify and hold harmless Darlene from any such lien, guarantee or liability not so released"; (d) an allocation of ownership in reorganized DTVLA on a specified "ratio" between Hughes and Darlene and the distribution to Hughes of "ownership or control of at least a majority of the voting equity interests of the reorganized DTVLA"; (e) a grant to Hughes and Darlene of rights to liquidate their equity holdings in reorganized DTVLA based on an equity value of not less than $1,250,000,000 and with Darlene to receive a minimum of $400,000,000 if News Corporation obtains control of Hughes or DTVLA; and (f) certain minimum representation for Darlene on the board of reorganized DTVLA. Mr. Saydah complains that the agreement entered into between Hughes and Darlene disadvantaged Raven. Hughes thus breached its fiduciary responsibility to Raven as a minority shareholder and creditor. Currently, Hughes is DTVLA's DIP financing lender, with corresponding control over the Debtor's budget and other key operating decisions. Hughes did not offer Raven, or any other creditors or equity holders the opportunity to participate in the benefits of the restructuring of DTVLA, as identified in the Term Sheet. Nor has Hughes offered Raven numerous other corporate opportunities which rightly belonged to DTVLA rather than Hughes itself or Hughes and Darlene. Additionally, through prepetition advances to the Debtor and by buying bank debt of the Debtor rather than having such debt paid by the Debtor, Hughes effectively made prepetition equity contributions to the Debtor that Hughes has attempted to disguise as simple debt. According to Mr. Saydah, Raven has been investigating its defenses against the claims asserted by Hughes and its affiliates, but has only recently received a large number of documents from DTVLA and Hughes, and expects to receive more in the near future, which relate to these defenses. Equitable Subordination of Hughes' Claims By virtue of their overreaching and unfair and deceptive trade practices and the utter domination and control of the Debtor, its business and its affairs, Hughes et al. acted to: -- benefit themselves at the expense of Raven in particular, as well as the Debtor's creditors and estate; and -- secure an unfair advantage to themselves. Mr. Saydah asserts that equitable subordination, in whole or in part, of the claims filed by Hughes et al. to those of Raven is consistent with the provisions of the Bankruptcy Code. Re-characterization of Hughes' Prepetition Loans or Assumed Loans as Equity Mr. Saydah argues that Hughes should not be permitted to use its unique position, as majority shareholder of DTVLA through Holdings, to disguise prepetition equity contributions as bank debt so as to infuse large amounts of capital into the Debtor while retaining its debt claims. "The principles of equity require, therefore, that these loans or assumed loans be re-characterized as equity capital and that any purported liens and security interests securing their repayment are declared void and of no effect," Mr. Saydah says. Hughes Et Al. Respond Hughes Electronics Corporation, Hughes Electronics Systems International, DirecTV Latin America Holdings, Inc., Surfin Ltd., White Holding Mexico, S. De R.L. De C.V., and White Holding, B.V. ask the Court to dismiss Raven's complaint. Rebecca L. Scalio, Esq., at Richards, Layton & Finger, PA, in Wilmington, Delaware, relates that the Complaint fails to state a claim upon which relief can be granted. Ms. Scalio contends that Raven lacks standing to seek the relief sought in the Complaint. Raven is not a creditor of the Debtor but is only an equity interest holder. Pursuant to the Debtor's Disclosure Statement, the statutory committee of the Debtor's unsecured creditors has already analyzed the effect of subordinating all of the claims held by Hughes against the Debtor and has determined that even under the circumstances, the Debtor would be unable to satisfy more than a small portion of the unsecured creditors' claims. Because the subordination of all of Hughes' claims would not provide the Debtor's unsecured creditors with full satisfaction of their claims, equity holders like Raven would be entitled to no recovery from the Debtor's estate. Accordingly, Ms. Scalio asserts that Raven's rights are not affected by whether Raven's claims against the Debtor are subordinated or re-characterized as equity. Thus, Raven has no standing to assert claims for subordination or re- characterization. Ms. Scalio also clarifies that: -- 74.6872% of the equity in DTVLA is owned by Holdings; -- 21.2187% of the equity in DTVLA is owned by Darlene Investments, LLC; and -- 3.9765% of the equity in DTVLA is owned by Raven. Hughes et al. reserve the right to assert additional defenses as they arise and become apparent. (DirecTV Latin America Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945- 7000) EL PASO CORP: Agrees to Sell Aruba Refinery to Valero for $465MM ---------------------------------------------------------------- El Paso Corporation (NYSE: EP) agreed to sell its Aruba refinery and related marine, bunkering, and marketing affiliates to Valero Energy Corporation (NYSE: VLO) for $465 million plus working capital of approximately $175 million as of December 31, 2003, resulting in total estimated gross proceeds of $640 million. The parties are working to close this transaction by the end of February 2004. In connection with closing, El Paso will retire a $370-million lease financing associated with the refinery. The estimated $265 million of remaining net cash proceeds, which reflects estimated closing costs of $5 million, will be used to reduce debt. "The sale of the Aruba refinery is another major step in the execution of our long-range plan," said Doug Foshee, president and chief executive officer of El Paso. "With the net proceeds from this transaction, we will have announced or sold approximately $636 million of petroleum assets since December 1, 2003, exceeding the $500-million to $600-million target established in our plan." This sale supports El Paso's recently announced long-range plan to reduce the company's total debt, net of cash, to approximately $15 billion by year-end 2005. So far, the company has announced or closed $2.5 billion of the $3.3 billion to $3.9 billion of asset sales targeted under the plan. El Paso Corporation's (S&P, B Corporate Credit Rating, Negative Outlook) purpose is to provide natural gas and related energy products in a safe, efficient, dependable manner. The company owns North America's largest natural gas pipeline system and one of North America's largest independent natural gas producers. For more information, visit http://www.elpaso.com/ EL PASO CORP: Valero Confirms Purchase of Aruba Refinery & Assets ----------------------------------------------------------------- Valero Energy Corporation (NYSE:VLO) executed a purchase agreement to acquire El Paso Corporation's (NYSE:EP) 315,000-barrel-per-day (BPD) refinery in Aruba for $365 million plus $100 million for the related marine, bunkering and marketing operations, and an estimated $250 million for working capital. "This acquisition represents a great value for Valero and its shareholders not only because the refinery has a replacement cost of $2.4 billion, but also because more than $640 million has been invested in the refinery in the last five years to improve the plant's safety, reliability and profitability," said Bill Greehey, Valero's chairman and CEO. "Valero is fortunate to acquire this refinery at an attractive price, which represents 15 percent of its replacement cost, and be in a position to quickly enhance the profitability of the refinery -- just like we did at our recently acquired St. Charles refinery in Louisiana. "The Aruba refinery has excellent logistics and it strengthens our geographic and product diversity. What's more, this refinery is a great fit for Valero because it processes heavy, sour crude oil, which typically sells at a big discount to sweet crude oil, and it produces a high yield of valuable intermediate feedstocks that can be used to back out third-party purchases at our other refineries. And, the acquisition includes El Paso's very profitable marine, bunkering and marketing businesses. "We expect this acquisition to be highly accretive to our earnings in 2004 and beyond. In fact, our estimates show that based on current First Call consensus figures and our planned improvements, these assets are expected to contribute approximately $80 million in net income or $.37 in earnings per share for the remainder of 2004 and $175 million in net income or $1 per share in 2005," Greehey said. The sale, which has been approved by the boards of both companies, will be financed with $200 million in cash, approximately $165 million in borrowings under existing credit facilities, and approximately $350 million in net proceeds from the issuance of common equity through a public offering. Closing of the transaction is anticipated at the end of February. "Because the majority of this acquisition is being funded with cash and equity, our debt-to-capitalization ratio should be virtually unchanged from its current ratio of 40.3 percent," said Greehey. Strong Relationship with Aruban Government "We have already forged a great relationship with the very pro- business Aruban government and will benefit from several favorable agreements," said Greehey. "We will benefit from an existing income tax holiday on all earnings, except retail, through 2011. And, as additional capital is committed to the refinery, we plan to work with the government on an extension to this agreement. "In addition, we will benefit from a very favorable environmental agreement. Since 1989, environmental liabilities have been covered by a Trust Agreement with the government where the refinery pays approximately $500,000 a year into the Trust, limiting our exposure to the amount that has been paid into the trust. What's more, we have no liability for environmental issues prior to July 1990," he said. A Great Refinery with Significant Benefits to the Valero System The substantial investments made in the refinery in recent years have enabled it to process lower-cost heavy sour crude oil and produce a high yield of finished distillate products and intermediate feedstocks, which can be marketed in the U.S. Gulf Coast, Florida, the New York Harbor and the Caribbean. "Because the product slate matches up so well with our system, we will be able to move these feedstocks, including vacuum gas oil and naphtha, to our refineries in the Gulf Coast and the West Coast, as well as our Paulsboro, N.J. refinery on the East Coast. As a result, we estimate that we'll be able to back out purchases of third-party feedstocks, providing a substantial economic benefit to our refining system," Greehey said. "This refinery is also perfectly in line with Valero's strategy of processing heavy sour crude oil that generally sells at a significant discount to sweet crude oil. In fact, one of the refinery's main feedstocks, Maya crude oil, is currently selling at a discount of about $9 a barrel. In addition, we believe that the refinery will benefit from Valero's significant expertise in sour crude processing and from our economies of scale and leverage in sour crude purchasing. "But obviously one of the biggest reasons we believe this refinery is a great acquisition is the opportunity it presents for Valero to immediately benefit from improved profitability by improving operations and reliability. Valero expects to benefit from the significant amount of investments that have already been made at the refinery," he said. The refinery's major units include two recently built delayed cokers that have a combined capacity of 64,000 BPD and two recently upgraded crude units that have a combined capacity of 315,000 BPD. In addition, there is a 160,000-BPD vacuum unit; a 42,000-BPD visbreaker; four hydrotreating units that have a combined capacity of 225,000 BPD; and a 129,000-BPD distillate fractionator. The refinery also has excellent logistics with two deepwater marine docks with capacity for ultra-large crude carriers, six docks for refined products, 63 storage tanks with almost 12 million barrels of storage capacity, and a truck rack for local sales. Highly Profitable Related Businesses The acquisition also includes marine transportation assets and operations. There are nine vessels, including tug boats, pilot boats, a 15,000-barrel bunker fuel barge and other related equipment. These vessels provide piloting services, docking and undocking for all ships at the refinery and at other local ports, and lightering services. In addition, Aruba Bunkering provides on- and off-shore fuel oil bunkering. The marketing operations include 10 retail outlets in Aruba, including two company-owned and operated sites and eight dealer- operated sites that represent 70 percent of the local market. Both wholesale and retail benefit from a government-regulated $.18 per gallon margin. The marketing operations also include aviation fuel sales, delivery and fueling services to the Aruba and Bonaire airports. The Timing Couldn't Be Better "The timing for this acquisition couldn't be better," Greehey said. "The industry fundamentals for gasoline, distillates and sour crudes are outstanding, so we believe that 2004 is going to be even better for Valero than last year, which was a record. "We believe we've entered a new margin environment where the highs are going to be higher and the lows will not be as low and will be shorter in duration. Because we're so confident that we have the best strategy, the best assets, the best geographic diversity and the best leverage to refining margins, we believe we're the best positioned independent refiner to benefit from this new era in our industry. "We are also excited about the enthusiasm of the Aruba workforce. We've already met with the union leadership and some of the employees, and they're committed to working with us to help this refinery reach its full potential. And, as we have always done in every acquisition, we plan to invest in the employees, the refinery and the community. "As soon as the acquisition closes, Valero plans to change the refinery's name to the Valero Aruba Refinery and re-brand all of the company's facilities. We want our employees to be proud of their facilities so we will invest in new signs, landscaping and other improvements at all of our Aruban business operations," he said. Valero Energy Corporation is a Fortune 500 company based in San Antonio, with approximately 20,000 employees and annual revenues of approximately $38 billion. The company currently owns and operates 14 refineries in 13 locations throughout the United States and Canada. Valero's refineries have a combined throughput capacity of over two million barrels per day, which represents approximately 10 percent of the total U.S. refining capacity. Valero is also one of the nation's largest retail operators with over 4,500 retail outlets in the United States and Canada under various brand names including Diamond Shamrock, Valero, Ultramar and Beacon. For more information about Valero, visit http://www.valero.com/ ENRON CORP: EMI Wins Nod to Sell Partnership Interest to VF II -------------------------------------------------------------- Enron affiliate Debtor EESO Merchant Investments, Inc. obtained the Court's permission for: (a) its assumption of an Amended and Restated Limited Partnership Agreement; (b) its subsequent assignment of the Partnership Agreement and sale of related limited partnership interest pursuant to a Purchase and Sale Agreement to VF II Holdings LLC; and (c) the Assignment and Assumption Agreement by and between EMI, VF II, Heartland Industrial Partners (E1) LP, Heartland Industrial Associates LLC, Heartland Industrial Partners LP and The Heartland Industrial Group LLC. The Sale Agreement After substantial negotiations, on December 3, 2003, EMI and VF II entered into the Sale Agreement, which provides for EMI's transfer of all of its right, title and interest in and to the Partnership Agreement, the LP Interest and the books and records related thereto. The salient terms of the Sale Agreement are: A. Purchase Price The purchase price for the Assets will be an amount equal to: (1) $10,250,000, minus (2) any distributions made or deemed made to EMI by the Partnership after June 30, 2003, plus (3) the assumption of the Assumed Liabilities, minus (4) the Cure Payment. B. Deposit and Payment of Purchase Price Contemporaneously with the execution of the Sale Agreement, VF II deposited with, and paid to, EMI $1,025,000 as a deposit. At the Closing, VF II will pay the Adjusted Purchase Price, less the Deposit, by wire transfer of immediately available funds to EMI and VF II will pay the Cure Payment to HIA by wire transfer of immediately available funds. C. Assumption of Liabilities Effective on the Closing, VF II will assume and agree to pay, perform and discharge all liabilities arising out of, in connection with, or related to the ownership of the Assets after the Closing Date. EMI will retain any and all liabilities arising out of, in connection with, or related to any breach by EMI on or before the Closing Date of any representations, warranties or covenants made by EMI for the benefit of HIA, the Partnership or any of the partners therein. D. Closing Conditions The parties' obligation to proceed with the Closing contemplated by the Sale Agreement is subject to the satisfaction on or prior to the Closing Date of certain conditions EMI and VF II must meet. E. Termination of Agreement The Sale Agreement and the transactions contemplated thereby may be terminated at any time prior to the Closing: * by the written consent of each of EMI and VF II; * by either party if the Closing has not occurred on or before 60 days after execution -- as may be extended by written agreement of the Parties -- provided that the terminating party is not in default of its obligations under the Sale Agreement in any material respect; * by any Party, upon written notice to the other Parties, if there will be an Applicable Law that makes the consummation of the transactions contemplated thereby illegal or otherwise prohibited or if any court of competent jurisdiction or other Governmental Authority will have issued a final and non-appealable order, decree or ruling or taken any other action permanently restraining, prohibiting or enjoining the consummation of the transactions contemplated by the Sale Agreement; or * by EMI, at any time after the Bankruptcy Court approves an Alternative Transaction, or VF II, upon, but not prior to, the financial closing of an Alternative Transaction. F. VF II's Remedies VF II's only remedy for EMI's breach of the Sale Agreement prior to the Closing Date, will be its option to terminate the Sale Agreement to the extent permitted by the terms thereof and to receive the Deposit to the extent permitted by the Sale Agreement. G. Auction Process Prior to the earlier of the Closing or the termination of the Sale Agreement in accordance with its terms, EMI will not solicit any inquiries, proposals, offers or bids from, negotiate with, or enter into any agreement with, any Person other than VF II relating to the direct or indirect sale, transfer or other disposition, in one or more transactions, of all or substantially all of the Assets, or otherwise take any other affirmative action to cause, promote or assist with any similar transaction with a third party -- an Alternative Transaction -- provided, however, that (i) EMI or its representatives may provide notice to third parties of the filing of the request with respect to the Sale Agreement, and (ii) if EMI receives an unsolicited bona fide proposal for an Alternative Transaction, EMI and its representatives may: (a) supply information relating to EMI, the Assets, and the Partnership to prospective purchasers who have executed a confidentiality agreement with EMI or the Partnership; (b) respond to any inquiries or offers made in connection with the Alternative Transaction; (c) engage in negotiations; and (d) if EMI determines in good faith that the proposal could reasonably be expected to result in a Superior Transaction, enter into, and seek Bankruptcy Court approval of, any definitive agreement with respect thereto. The Assignment Agreement With the Settlement Parties' desire to compromise and settle all issues regarding the Heartland Transactions, pursuant to the Assignment Agreement, they agree that on the Closing Date: (i) EMI will assign all of its right, title and interest in and to the LP Interest and the Partnership Agreement to VF II; (ii) VF II will assume all of the Assumed Liabilities; (iii) VF II will pay to HIA, as consideration for HIA's consent to the transfer of the LP Interest to VF II and the release of the HIA Claims -- the Cure Payment; (iv) Each of the Settlement Parties, for and on behalf of itself and each of its affiliates, will release, acquit and discharge each other party and each and every past and present affiliate of each other party from any and all claims, relating to the Heartland Transactions; (v) Each proof of claim filed by or on behalf of the Partnership, HIA and HIG against EMI in connection with the LP Interests, will be deemed irrevocably withdrawn, with prejudice, and to the extent applicable expunged and all claims set forth therein disallowed in their entirety; and (vi) The Energy Agreement will be terminated. (Enron Bankruptcy News, Issue No. 96; Bankruptcy Creditors' Service, Inc., 215/945-7000) EXD ACQUISITION: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Lead Debtor: EXD Acquisition, Inc. Attn: Raymond H. Kingsbury 2940 114th Street Grand Prairie, Texas 75050-8600 Bankruptcy Case No.: 04-31534 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Exhibit Dynamics, Inc. 04-31535 Cyclonics, Inc. 04-31536 Type of Business: The Debtor is a marketing and service-oriented company that provides Display Exhibit Design & manufacturing services. See http://www.exhibitdynamics.com/ Chapter 11 Petition Date: February 4, 2004 Court: Northern District of Texas (Dallas) Judge: Steven A. Felsenthal Debtor's Counsel: John Mark Chevallier, Esq. McGuire, Craddock & Strother 3550 Lincoln Plaza 500 North Akard Street Dallas, TX 75201 Tel: 214-954-6800 Fax: 214-954-6801 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ William Blaire Mezzanine Capital $21,858,197 Fund II, L.P. 303 West Madison St., Ste 2100 Chicago, IL 60606 Renaissance Mmgt. $663,252 2300 West Park Place, Ste 146 Stone Mountain, GA 30067 Hillwood Investment Prop. $642,090 Three Lincoln Centre 5430 LBJ Freeway Ste 800 Dallas, TX 75240 Transportation Solutions Inc. $411,955 49 Mountain Brook Rd. North Haven, CT 06473 Nth Degree $252,580 P.O. Box 845005 Boston, MA 02284-6005 Duke Weeks Realty Limited Part $236,159 Coastal International $187,642 Eclipse Freight Systems, Inc. $169,577 Zenith Labornet, Inc. $142,869 American Transportation/Atlas $142,525 Bohren's Moving & Storage Inc. $120,859 Townsend & Townsend & Crew $117,170 Wilentz Goldman & Spitzer $106,954 Exhibitor's Carpet Service, Inc. $96,084 Vista Color Lab $88,819 Airgroup Express $85,930 New York State Sales Tax $84,772 Mayflower Transit, LLC $82,640 United Intermode, Inc. $80,375 McCollister's $21,287 FACTORY 2-U: Brings-In Hennigan Bennet as Reorganization Counsel ---------------------------------------------------------------- Factory 2-U Stores, Inc., asks the U.S. Bankruptcy Court for the District of Delaware's approval of its application to employ and retain Hennigan, Bennet & Dorman LLP as Reorganization Counsel. The Debtor expects Hennigan Bennet to: a. assist the Debtor in the preparation of motions, pleadings, and such other documents as are required to be filed with the Bankruptcy Court and the Office of the United States Trustee to administer a chapter 11 case; b. advise the Debtor with respect to the sale of certain of the Debtor's assets, and with respect to the negotiation, preparation, and confirmation of a plan of reorganization; c. assist the Debtor in preparing and obtaining approval of a disclosure statement and other, appropriate motions and pleadings; d. appear at meetings of creditors and creditors' committees on behalf of the Debtor; e. represent the Debtor in litigation in the Bankruptcy Court where such litigation involves substantial and material issues of bankruptcy law; f. advise the Debtor regarding its legal rights and responsibilities as debtor in possession under the Bankruptcy Code, the Bankruptcy Rules, and the United States Trustee Guidelines and Requirements; and g. file reports as required under applicable law. Bennett J. Murphy, Esq., reports that Hennigan Bennet will bill the Debtor at its current hourly rate of: attorneys $190 to $655 per hour financial consultants $125 to $495 per hour paralegals and clerks $100 to $210 per hour Headquartered in San Diego, California, Factory 2-U Stores, Inc. -- http://www.factory2-u.com-- operates a chain of off-price retail apparel and housewares stores in 10 states, mostly in the western and southwestern US, sells branded casual apparel for the family, as well as selected domestics, footwear, and toys and household merchandise. The Company filed for chapter 11 protection on January 13, 2004 (Bankr. Del. Case No. 04-10111). M. Blake Cleary, Esq., and Robert S. Brady, Esq., at Young Conaway Stargatt & Taylor, LLP represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $136,485,000 in total assets and $73,536,000 in total debts. GARDEN HOLDINGS: Case Summary & Largest Creditor ------------------------------------------------ Debtor: Garden Holdings, Inc. 19411 Atrium Place, Suite 170 Houston, Texas 77084 Bankruptcy Case No.: 04-10365 Type of Business: Garden Holdings, Inc., is an affiliate of Garden Ridge Corporation, et al., Bankr. D. Del. Case Nos. 04-10323 through 04-10327, filed Feb. 2, 2004, and reported in the Feb. 4, 2003, edition of the Troubled Company Reporter. Garden Ridge is a megastore home decor retailer that offers decorating accessories like baskets, candles, crafts, home accents, housewares, party supplies, pictures and frames, pottery, seasonal items, and silk and dried flowers. The company operates more than 40 stores, located off major highways in 13 states. See http://gardenridge.com/ Chapter 11 Petition Date: February 4, 2004 Court: District of Delaware Judge: Louis H. Kornreich Debtors' Counsel: Joseph M. Barry, Esq. Young Conaway Stargatt & Taylor LLP The Brandywine Building 17th Floor, 1000 West Street Wilmington, DE 19801 Tel: 302-571-6600 Estimated Assets: More than $100 million Estimated Debts: $50 million to $100 million Garden Holdings, Inc.'s Largest Unsecured Creditor: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Allied Capital Corporation Bank Note $1,536,672 1919 Pennsylvania Ave., NW Washington, DC 20006 GASEL TRANSPORTATION: Goff Backa Replaces Van Krevel as Auditors ---------------------------------------------------------------- Van Krevel & Company, Dublin, Ohio has acted as Gasel Transportation Lines Inc.'s auditor since the Company began having its statements audited in 1995. Van Krevel & Company is a small firm comprised of two accountants, only one of which is approved to perform audits for companies registered with the SEC. When the Company was preparing to execute another engagement letter for Van Krevel & Company to audit the financials for 2003, Van Krevel & Company learned that its professional liability insurance premiums were going to be significantly increased, and then, while looking for an alternate insurer, that no insurance companies would underwrite its professional liability coverage for performing SEC compliant audits. The final decision of Van Krevel & Company not being able to perform the audit was made by it only when another accounting firm was found that would perform the audit, which was formalized on January 8, 2004. Until another principal accountant was found, Van Krevel & Company was examining alternatives that would allow it to perform the audit. On January 16, 2004, Van Krevel & Company provided written notice to the Company and the SEC that as far as it was concerned, the client-auditor relationship had ceased as of December 29, 2003. Van Krevel & Company's report on the financial statements for the year ended December 31, 2002, was modified to include a going concern uncertainty. The reason for this modification was that the Company had suffered recurring losses from operations and had a net capital deficiency which raised substantial doubt about its ability to continue as a going concern. Management's plans regarding those matters were disclosed in the notes to the financial statements. The financial statements did not include any adjustments that might result from the outcome of this uncertainty. Because of the circumstances and the availability of another accounting firm to undertake the audit of the Company financial statements for 2003, the Audit Committee approved the change in accounting firms. There have been no disagreements with Van Krevel & Company on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, from the time that it commenced to audit the Company financial statements until the determination that it could not perform the audit on the 2003 statements. Goff Backa Alfera & Company, LLC, Pittsburgh, Pennsylvania, has been engaged by the Company as the principal accountant to audit the Company's financial statements for the year 2003. This engagement was made on January 8, 2004, when the Company's Audit Committee executed an engagement letter with that firm. The Company has had no previous relationship with Goff Backa Alfera & Company, LLC, prior to the new engagement as principal accountant. GENCORP INC: Will Pay Quarterly Cash Dividend on February 27, 2004 ------------------------------------------------------------------ The Board of Directors of GenCorp Inc. (NYSE: GY) declared a quarterly cash dividend of three cents per share on the issued and outstanding ten cents par value common stock of the Company, payable February 27, 2004 to shareholders of record on February 16, 2004 at 5:00 p.m. Eastern Standard Time. GenCorp (S&P, BB Corporate Credit Rating, Negative) is a technology-based company with positions in the aerospace and defense, pharmaceutical fine chemicals and automotive industries. For more information, visit the Company's Web site at http://www.GenCorp.com/ GLOBE METALLURGICAL: February 20 Fixed as Admin. Claims Bar Date ---------------------------------------------------------------- The U.S. Bankruptcy Court for the Southern District of New York orders that February 20, 2004, is the deadline for filing administrative expense claims arising after April 2, 2003, against Globe Metallurgical Inc. Administrative claimants must file written requests for payment and file that request by mail, hand-delivery or courier before 5:00 p.m. Eastern Time on Feb. 20, with the Clerk of the Bankruptcy Court. Six classes of claims are exempted from the bar date: 1. claims already properly filed against the Debtor; 2. claims previously allowed by the Court; 3. claims of one debtor to another; 4. claims of professionals retained by the Debtor pursuant to Section 327 of the Bankruptcy Code; 5. administrative expense claims arising and payable in the ordinary course of the Debtor's business, or pursuant to Court-approved post-petition agreements or transactions entered into by the Debtor; 6. claims by Marco International Corporation, MI Capital, Inc., or Five Lakes Funding Corp. Globe Metallurgical Inc., the largest domestic producer of silicon-based foundry alloys and one of the largest domestic producers of silicon metal, filed for chapter 11 protection on April 2, 2003, (Bankr. S.D.N.Y. Case No. 03-12006). Timothy W. Walsh, Esq., at Piper Rudnick, LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $50 million both in assets and liabilities. GMAC COMM'L: S&P Takes Rating Actions on Series 1996-C1 Notes ------------------------------------------------------------- Standard & Poor's Ratings Services raised its ratings on classes D, E, and F of series 1996-C1 issued by GMAC Commercial Mortgage Securities Inc. At the same time, the rating on class G is lowered, and the ratings on the remaining classes are affirmed. The raised ratings reflect the increased credit support for the senior classes from a 69.9% paydown in certificates since issuance (26.4% since the last review in November 2002) as well as the improved financial performance of the loan pool. The weighted average debt service coverage ratio for the pool has increased to 1.66x from 1.51x at issuance, based on 85.3% reporting of the year-end 2002 financials, as collected by the master and special servicer, GMAC Commercial Mortgage Corp. In addition, losses have been minimal, with realized losses to date on five loans totaling $2.1 million. The lowered rating reflects the increased risk associated with the specially serviced and watchlist assets. As of January 2004, there were four specially serviced assets totaling $20.3 million. There is one mortgage categorized as REO totaling $13.9 million. Two mortgages are 90-plus days delinquent (totaling $4.3 million), and one specially serviced asset mortgage is current ($2.1 million). The second-largest mortgage in the pool is a $13.9 million REO mortgage secured by the Pigeon Forge Factory Outlet Center, a 195,000-sq.-ft. center in Pigeon Forge, Tennessee. The center is experiencing declining occupancy levels to 75% from 92% at issuance and continues to struggle to retain tenants who demand short-term leasing arrangements, while competing against the Tanger Factory Outlet Center, which is situated one mile away. In May 2002, the mortgage was transferred to the special servicer, where it was valued at $9.0 million as of September 2003, resulting in an appraisal reduction of $7.1 million. Advances for the mortgage total approximately $800,000. Standard & Poor's expects that the loss on the loan could be significantly higher than the appraisal indicates, and has factored this into its ratings. The remaining three mortgages total $6.4 million. A $2.5 million mortgage appearing on the list as 90-plus days delinquent secures a healthcare facility in Glendale, Arizona. GMACCM has agreed to a $1.9 million discounted payoff, with a closing date expected within the next few weeks. The $1.8 million mortgage is 90-plus days delinquent, and secures an office building in Charlotte, North Carolina. The mortgage was sent to the special servicer in July 2003 after management fell behind in its loan payments and following a fire that damaged the upper floor of the building. GMACCM plans to foreclose on the property. The December 2003 appraisal valued the property at $3.5 million. A $2.1 million mortgage is specially serviced, but current (30 days delinquent as of date of publication). The mortgage is secured by an assisted- living care facility. Currently, operating under receivership, occupancy stands at 51%. In April 2003, the property was appraised "as is" at $1.9 million. In January 2004, GMACCM reported 34 mortgages totaling $54.6 million on its watchlist, all for a variety of different reasons, generally related to declines in occupancy levels. Of some concern are two mortgages that remain on the watchlist from Standard & Poor's last review (in November 2002). The fourth-largest mortgage in the pool is a $5.6 million mortgage secured by a mixed-use property in Chula Vista, Calif. All of the occupants are month-to- month tenants. Occupancy levels currently stand at 71%; however, there are no leases out to be signed at the present time. Also on the list is the sixth-largest mortgage, a $4.8 million mortgage secured by a multifamily property in Gallatin, Tennessee. The borrower is in the final states of re-tenanting the property while simultaneously executing an aggressive marketing strategy. Current occupancy levels stand at 95%, with a DSCR of 0.62x. As of January 2004, the loan pool balance was $150.9 million (71 mortgages), down from $456.8 million with 136 loans at issuance. Geographic concentrations include California (21.2%), Florida (17.5%), New York (12.6%), Tennessee (12.4%), and Texas (6.6%), with the remaining mortgages (29.7%) located in a variety of states. The composition of the property pool includes retail (26.3%), multifamily (23.7%), self-storage (23.2%), office (15.9%), as well as an assortment of other properties (10.9%). The top 10 mortgages in the pool total $68.0 million (or 44.4% of the pool), with a weighted average DSCR of 1.47x as of year-end 2002. Standard & Poor's stressed the specially serviced loan in its analysis, and the stressed credit enhancement levels adequately support the rating actions. RATINGS RAISED GMAC Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 1996-C1 Rating Class To From Credit Support (%) D AAA AA 48.5 E AA A- 39.5 F BBB+ BB+ 24.3 RATING LOWERED GMAC Commercial Mortgage Securities Inc. Commercial mortgage pass-thru certs series 1996-C1 Rating Class To From Credit Support (%) G B- B 11.4 RATINGS AFFIRMED GMAC Commercial Mortgage Securities Inc. Commercial mortgage pass-thru cert series 1996-C1 Class Rating Credit Support (%) B AAA 84.1 C AAA 66.7 HARDWOOD: Nixes Proposed Amalgamation with Rogers Associate ----------------------------------------------------------- Hardwood Properties Ltd. (NEX:HWP.H) announces that conditions to the previously announced proposed amalgamation between Hardwood and Rogers Associate Financial Partners Inc. have not been met and that the transaction has therefore been terminated. The directors of the Corporation will seek other opportunities to vend control of the Hardwood corporate "shell". If unsuccessful, the directors will consider taking steps necessary to cause the Corporation to be dissolved. Hardwood Properties Ltd. is a Calgary based real estate company that specializes in the acquisition, re-construction, management and sale of multi-family residential properties. HARNISCHFEGER: Look for First-Quarter Results by February 25, 2004 ------------------------------------------------------------------ PR Newswire Feb 4 Joy Global Inc. (Nasdaq: JOYG) will release first quarter earnings results prior to the opening of business on February 25, 2004. A conference call is scheduled for 11:00 a.m. EST on Wednesday, February 25, 2004, to discuss the quarterly results. John Nils Hanson, Chairman, President and CEO of Joy Global Inc., Donald C. Roof, Executive Vice President and CFO, and Michael S. Olsen, Vice President, Corporate Controller and Chief Accounting Officer, will host the call. Interested parties can listen to the call by dialing 800-649-5127 in the United States or 706-679-0637 outside of the United States, access code #5108026, at least 15 minutes prior to the 11:00 a.m. EST start time of the call. A rebroadcast of the call will be available until the close of business on March 12, 2004, by dialing 800-642-1687 or 706-645-9291, access code #5108026. Alternatively, interested parties can listen to a live web cast of the call on the Joy Global Inc. Web site at http://www.joyglobal.com/investorrelations/confcalls.jsp/ To listen, please register and download audio software on the site at least fifteen minutes prior to the start of the call. A replay of the web cast will be available until the close of business on March 31, 2004. Joy Global Inc. is a worldwide leader in manufacturing, servicing and distributing equipment for surface mining through its P&H Mining Equipment division and underground mining through its Joy Mining Machinery division. HEADWATERS: S&P Ups Ratings to BB after Closing of Equity Offering ------------------------------------------------------------------ Standard & Poor's Ratings Services raised its corporate credit and senior secured ratings on Headwaters Inc. to 'BB-' from 'B+' and removed the ratings from CreditWatch, where they were placed on Dec. 9, 2003. The outlook is stable. The action follows the completion of Headwaters' $85 million equity offering, the proceeds of which were used to reduce debt. Total debt as of Dec. 31, 2004, was approximately $75 million. "The upgrade reflects Draper, Utah-based Headwaters' steady free cash flow generation and continued debt reduction, which has improved its financial profile," said Standard & Poor's credit analyst Paul Blake. The company reduced debt by over $60 million in its most recent quarter, including all of its high-interest subordinate debt. The efforts to strengthen the financial profile, and the underlying stability of the company's coal combustion products business, serve to offset inherent business and legislative risks associated with the chemicals reagents segment, and the financial risk associated with potential bolt-on acquisitions. With annual sales of about $390 million, Headwaters is a world leader in commercializing technologies that add value to energy. In 2002, the company purchased Industrial Services Group Inc. to significantly increase its capabilities in the coal value chain, diversify its source of cash flow, and to increase scale. The acquisition doubled the size of the company. Management is committed to further business risk diversification through the extension of its current operations. In addition to being a leader in the synthetic fuel industry, the company manages and markets coal combustion products, a majority of which is fly ash, through its ISG business. The largest use of fly ash is the replacement of portland cement in making concrete in the cyclical construction industry. The utilization of CCPs has been increasing in the U.S., bolstered by recognition of their performance and environmental benefits, and government mandates at both the federal and state level to promote CCP utilization. The company expects low double-digit EBITDA growth in its ISG business. The business benefits from relatively low-cost raw materials, minimal manufacturing costs, and an efficient distribution network. Fly ash, in particular, should benefit from the expansion and growth of new and existing markets, increased penetration as a substitute of portland cement, and the discovery of new uses. HEARTLAND COMM: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Heartland Communications Inc. P.O. Box 2547 Crystal Lake, Illinois 60039-2547 Bankruptcy Case No.: 04-70529 Type of Business: The Debtor is a telecommunications system that provides a business with national communications expertise and pricing. Chapter 11 Petition Date: February 3, 2004 Court: Northern District of Illinois (Rockford) Judge: Manuel Barbosa Debtor's Counsel: Stephen G. Balsley, Esq. Barrick, Switzer, Long, Balsley & Van Evera One Madison Street Rockford, IL 61104 Tel: 815-962-6611 Estimated Assets: $1 Million to $10 Million Estimated Debts: $10 Million to $50 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Jerry Nelson $5,207,497 275 Melrose Lane Crystal Lake, IL 60014 Steve Muir $4,610,195 758 Tyner Way Incline Village, NV 89451 Scott Nelson $765,420 6622 Eastside Drive, BMP 26 Tacorna, WA 98422 Janet Priez $665,420 6703 Colonel Holcomb Drive Crystal Lake, IL 600612 Pete Pavich $544,133 4660 Natome Boulevard #120-PMB104 Sacramento, CA 95835 Phil Leavitt $361,017 65 South Deere Park Drive Highland Park, IL 60035 Quest Communications $285,000 c/o Campbell, Bohn, Killian, et al. 47255 Monaco St., #210 Denver, CO 80237 Jerry Nelson/Crystal Leasing $130,000 Steve Muir $130,000 Brian Priesz $87,789 UUNET $60,750 Comtech Communications $48,111 Shughart, Thompson & Kilroy $44,242 Spacecom Systems, Inc. $13,968 Midwest Tower Partners, LLC $12,678 American Tower Corporation $11,616 ATS-The Beeper People $9,396 Spectrasite Communications $9,274 SBC $8,789 Woodward Communications $7,842 HOLLINGER INC: Sets Retraction Price for Retractable Common Shares ------------------------------------------------------------------ Hollinger Inc. (TSX: HLG.C) announces that the Retraction Price of the retractable common shares of the Corporation as of February 5, 2004 shall be $7.00 per share. Hollinger Inc.'s principal asset is its approximately 72.6% voting and 30.3% equity interest in Hollinger International Inc. Hollinger International is a global newspaper publisher with English-language newspapers in the United States, Great Britain, and Israel. Its assets include The Daily Telegraph, The Sunday Telegraph and The Spectator and Apollo magazines in Great Britain, the Chicago Sun-Times and a large number of community newspapers in the Chicago area, The Jerusalem Post and The International Jerusalem Post in Israel, a portfolio of new media investments and a variety of other assets. On June 30, 2003, the company's net capital deficit tops $442 million while working capital deficit is at $398.8 million. HW AVIATION LLC: Voluntary Chapter 11 Case Summary -------------------------------------------------- Debtor: HW Aviation LLC 440 South LaSalle Street Suite 3100 Chicago, Illinois 60605 Bankruptcy Case No.: 04-03878 Chapter 11 Petition Date: February 2, 2004 Court: Northern District of Illinois (Chicago) Judge: Susan Pierson Sonderby Debtor's Counsel: Glenn R Heyman, Esq. Dannen Crane Heyman & Simon 135 South Lasalle Suite 1540 Chicago, IL 60603 Tel: 312-641-6777 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million IMC GLOBAL: Board of Directors Declares Preferred Share Dividend ---------------------------------------------------------------- The Board of Directors of IMC Global Inc. (NYSE: IGL) declared a cash dividend of $0.9375 per share on the Company's 7.50% mandatory convertible preferred stock (NYSE: IGL.M) for the period January 1 through March 31, 2004. The dividend is payable on April 1, 2004 to mandatory convertible preferred stockholders of record at the close of business on March 15, 2004. With 2002 revenues of $2.1 billion, IMC Global (S&P, B+ Corporate Credit Rating, Stable) is the world's largest producer and marketer of concentrated phosphates and potash crop nutrients for the agricultural industry and a leading global provider of feed ingredients for the animal nutrition industry. For more information, visit IMC Global's Web site at http://www.imcglobal.com/ INTERFACE INC: Completes $135 Million Debt Refinancing Transaction ------------------------------------------------------------------ Interface, Inc. (Nasdaq: IFSIA) closed its private offering of $135 million aggregate principal amount of 9-1/2% senior subordinated notes due in 2014. The Company previously announced its intention to issue $125 million of notes through this transaction, but elected to increase the size of the offering to $135 million in response to favorable market conditions. Three investment banks participated as initial purchasers in the offering. The approximately $130.9 million of net proceeds from the sale of the 2004 Notes will be used to redeem the Company's currently-outstanding 9.5% senior subordinated notes due in 2005 and to reduce borrowings under the Company's revolving credit facility. In connection with the closing, the Company also announced its call of the Called Notes for redemption at a price equal to 100% of the principal amount of the Called Notes (which total $120 million), plus accrued interest to the redemption date. The redemption date for the Called Notes is March 5, 2004. An aggregate of approximately $123.5 million, which includes interest that will accrue by the redemption date, will be required to redeem all of the Called Notes. Wachovia Bank, National Association (as successor in interest to First Union National Bank of Georgia), trustee in respect of the Called Notes, is processing the transmittal of the redemption notice to all holders of record of Called Notes. The 2004 Notes were sold to qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons in reliance on Regulation S under the Securities Act. The 2004 Notes have not been registered under the Securities Act or any state securities laws. Therefore, the 2004 Notes may not be offered or sold in the United States absent registration under such laws or an applicable exemption from such registration requirements. Interface, Inc. is a recognized leader in the worldwide interiors market, offering floorcoverings and fabrics. The Company is committed to the goal of sustainability and doing business in ways that minimize the impact on the environment while enhancing shareholder value. The Company is the world's largest manufacturer of modular carpet under the Interface, Heuga, Bentley and Prince Street brands, and, through its Bentley Mills and Prince Street brands, enjoys a leading position in the high quality, designer-oriented segment of the broadloom carpet market. The Company is a leading producer of interior fabrics and upholstery products, which it markets under the Guilford of Maine, Toltec, Intek, Chatham and Camborne brands. The Company provides specialized carpet replacement, installation, maintenance and reclamation services through its Re:Source Americas service network. In addition, the Company provides specialized fabric services through its TekSolutions business and produces InterCell brand raised/access flooring systems. As reported in Troubled Company Reporter's January 28, 2004 edition, Standard & Poor's Ratings Services assigned its 'CCC' rating to Interface Inc.'s proposed $125 million senior subordinated notes due 2014. At the same time, Standard & Poor's affirmed its 'B-' corporate credit and senior unsecured ratings on Interface. The company's 'CCC' subordinated debt rating is also affirmed. Proceeds from the proposed debt offering will be used to repay the company's $120 million outstanding senior subordinated notes due 2005. (Upon repayment, Standard & Poor's will withdraw its existing ratings on the notes.) The outlook is negative. INTERNET CAPITAL: Will Publish Fourth-Quarter Results on Feb. 19 ---------------------------------------------------------------- Internet Capital Group (Nasdaq: ICGE) will release the financial results for its fourth quarter ended December 31, 2003 on Thursday, February 19th, 2004, before the market opens. The Company will host a conference call to discuss the fourth quarter results on Thursday, February 19th, 2004 at 10:00am ET. Participating on the conference call will be Walter Buckley, chairman and chief executive officer and Tony Dolanski, chief financial officer. The domestic dial-in number for the call is 877-211-0292. The international dial-in number is (706) 679-0702. The Company will also host a live web cast for the call with an attached slide presentation. To access the web cast, go to the ICG Web site at http://www.internetcapital.com/and click on the investor information tab and the icon for the fourth quarter conference call. The web cast will also be accessible at http://www.firstcallevents.com/service/ajwz398602646gf12.html/ Please log on to either web site approximately ten minutes prior to the call to register and download and install any necessary audio software. In an effort to address specific areas of interest, participants are encouraged to submit questions to the Internet Capital Group Investor Relations department at ir@internetcapital.com prior to February 19th. Every attempt will be made to respond to all questions either during the Question and Answer portion of the call or shortly thereafter. If you are unable to access the web site but would like a copy of the slide presentation sent to you after the call, please contact our Investor Relations Department, at (610) 727-6900. For those unable to participate in the conference call, a replay will be available beginning February 19th, 2004 at 11:00am until February 26, 2004 at 11:59pm. To access the replay dial 800-642- 1687 (domestic) or 706-645-9291 (international). The access code is 3675437. The replay and slide presentation can also be accessed on the Internet Capital Group web site: http://www.internetcapital.com/investors/presentations/ Internet Capital Group, Inc. -- http://www.internetcapital.com/-- is an information technology company actively engaged in delivering software solutions and services designed to enhance business operations by increasing efficiency, reducing costs and improving sales results. ICG operates through a network of partner companies that deliver these solutions to customers. To help drive partner company progress, ICG provides operational assistance, capital support, industry expertise, access to operational best practices, and a strategic network of business relationships. Internet Capital Group is headquartered in Wayne, Pa. At September 30, 2003, Internet Capital's balance sheet shows a total shareholders' equity deficit of about $47 million. JACKSON PRODUCTS: Seeks Okay to Tap Gallop Johnson as Attorneys --------------------------------------------------------------- Jackson Products, Inc., and its debtor-affiliates are asking for permission from the U.S. Bankruptcy Court for the Eastern District of Missouri to employ Gallop Johnson & Neuman LC as their Counsel. Gallop Johnson is a full-service legal firm with experience and expertise in legal areas that will be affected during this reorganization. Gallop Johnson is familiar with the Debtors' business operations and financial affairs, as well as many of the legal issues that are likely to arise in the course of their cases. If the Debtors were required to retain co-counsel other than Gallop Johnson, they would incur additional expense and delay. Accordingly, the Debtors believe Gallop Johnson will provide the most effective and efficient representation available to them. Gallop Johnson will: a) serve as co-counsel of record for the Debtors in all aspects of these Cases, to include any adversary proceedings commenced in connection with the Cases, and to provide representation and legal advice to the Debtors throughout the Cases; b) assist in confirmation of the Plan or, if necessary, the formulation and confirmation of another chapter 11 plan of reorganization and disclosure statement for the Debtors; c) consult with the United States Trustee, any statutory committee and all other creditors and parties-in- interest concerning the administration of the cases; d) take all necessary steps to protect and preserve the Debtors' estates; and e) provide all other legal services required by the Debtors and to assist the Debtors in discharging their duties as the debtors-in-possession in connection with these Cases. Peter D. Kerth, Esq., reports that Gallop Johnson bills at these rates: partners $215 to $325 per hour associates $150 to $220 per hour paraprofessional $120 per hour Headquartered in St. Charles, Missouri, Jackson Products, Inc. -- http://www.jacksonproducts.com-- designs, manufactures and distributes safety products of personal protective wear including hard hats, safety glasses, hearing protectors and welding masks. The Company filed for chapter 11 protection on January 12, 2004 (Bankr. E.D. Miss. Case No. 04-40448). Holly J. Warrington, Esq., and William L. Wallander, Esq., at Vinson and Elkins LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $100 million each. KAISER ALUMINUM: Gets Conditional Nod for Various Labor Agreements ------------------------------------------------------------------ Kaiser Aluminum announced that, in a special hearing on February 2, the U.S. Bankruptcy Court for the District of Delaware conditionally approved the company's previously announced agreement in principle with the United Steelworkers of America, and the recently concluded agreements in principle with the 1114 Committee, which represents salaried retirees, and the International Association of Machinists, which represents hourly employees at two Kaiser locations, regarding certain pension and post-retirement benefits. The USWA and the IAM represent the vast majority of the company's U.S. hourly employees. The agreements in principle are subject to various approvals, including ratification by union members, approval by the company's Board of Directors, and final approval by the Bankruptcy Court. The agreements are also conditioned upon the satisfactory resolution of certain intercompany claims. Separately, the company continues to have discussions with four additional unions concerning pension and post-retirement benefits. The agreements in principle conditionally approved by the Court provide for: -- The termination of existing post-retirement benefit programs such as retiree medical -- for current and future retirees who are or were salaried employees, members of the USWA, and members of the IAM (as well as surviving spouses and dependents). Under the agreements in principle, these participants would be provided an opportunity for continued retiree medical coverage through COBRA or a proposed Voluntary Employee Beneficiary Association. As previously disclosed, Kaiser would fund the VEBA with a combination of cash, profit- sharing, and other consideration, subject to certain caps and limits. -- The termination of existing pension plans for current and future retirees represented by the USWA and IAM. Under the agreements in principle, active employees who are represented by the USWA and the IAM would be provided with an opportunity to participate in one or more replacement pension plans and/or defined contribution plans. The Court's conditional approval of this agreement in principle came in conjunction with a ruling that Kaiser has satisfied the criteria for distress termination of its U.S. hourly pension plans. Vested benefits under defined benefit pension plans are guaranteed by the PBGC, up to certain limits. After all required approvals -- including final Court approval -- are obtained in connection with the agreements in principle, the company will advise participants of the termination dates for the post-retirement and pension benefit programs. On a related matter, as previously reported, the pension plan for salaried employees was terminated by the Pension Benefit Guaranty Corporation on December 17, 2003. Kaiser expects that current salaried employees will be provided with an opportunity to participate in a replacement plan. "These agreements in principle represent the best efforts of Kaiser and the other stakeholders to address this unfortunate situation and to provide employees and retirees with some level of ongoing coverage while at the same time helping Kaiser to advance toward a planned emergence from Chapter 11 at mid year," said Jack A. Hockema, president and chief executive officer. Kaiser Aluminum Corporation (OTCBB:KLUCQ) is a leading producer of fabricated aluminum products, alumina, and primary aluminum. KAISER ALUMINUM: Wants Nod to Sell Stake in Alpart to Glencore -------------------------------------------------------------- Alumina Partners of Jamaica is a Delaware general partnership that mines bauxite in Jamaica, processes it into alumina at a refinery located in Nain, Jamaica, and delivers the resulting alumina to its partners. The Kaiser Aluminum Debtors own a 65% interest in Alpart -- Kaiser Jamaica Corporation owns a 38.077% interest and Alpart Jamaica Inc. owns a 26.923% interest. Kaiser Jamaica and Alpart Jamaica are wholly owned subsidiaries of the Debtors. The remaining 35% interest in Alpart is owned by Hydro Jamaica, an unaffiliated third party that is a subsidiary of Hydro Aluminum a.s. Alpart conducts its mining and refining operations for the benefit of its partners in proportion to their partnership interests. Kaiser Jamaica and Alpart Jamaica sell their shares of Alpart's alumina production to the Debtors, and in turn, sells or otherwise transfers part of this production to a smelter in Wales in which the Debtors hold a 49% interest, and the balance to third-party customers. Until May 2003, the Debtors were also selling a portion of their alumina produced at Alpart to a smelter in Ghana in which the Debtors hold a 90% ownership interest. The smelter was curtailed in May 2003 due to an insufficient allocation of power at a reasonable price. That curtailment continues. The conduct of Alpart's business is governed by a Partnership Agreement, dated as of March 30, 1989, among Hydro Jamaica, Alpart Jamaica and Kaiser Jamaica. Pursuant to the Partnership Agreement and certain related agreements, the Alpart partners are unconditionally obligated to reimburse Alpart for their share -- based on the parties' proportional equity ownership -- of Alpart's cash requirements, including: * operating costs, * debt service, * working capital, and * capital expenditures In addition, the obligations of each Alpart partner are unconditionally guaranteed by their parents -- Kaiser Aluminum & Chemical Corporation in the case of Kaiser Jamaica and Alpart Jamaica. Hydro Jamaica's Right of First Refusal Daniel J. DeFranceschi, Esq., at Richards, Layton & Finger, PA, relates that the Partnership Agreement, as recently amended, provides that Hydro Jamaica has a right of first refusal with respect to a sale of the Debtors' interests in and related to Alpart. Pursuant to the RFR, if Kaiser Jamaica and Alpart Jamaica enter into a bona fide definitive agreement providing for the sale of their partnership interests in Alpart, before consummating a sale, Kaiser Jamaica and Alpart Jamaica must provide Hydro Jamaica with written notice of the Third-Party Agreement and the related alumina supply contract to be assigned in connection with the sale. Within 30 days after the receipt of a Notice, Hydro Jamaica has the right to elect to purchase the Alpart interests covered by the Third-Party Agreement. After Hydro Jamaica timely elects to purchase the interest, Hydro Jamaica, Kaiser Jamaica and Alpart Jamaica must enter into an agreement similar to the Third-Party Agreement. If Hydro Jamaica fails to timely make its election, Kaiser Jamaica and Alpart Jamaica are free to consummate the sale under the Third-Party Agreement within 90 days after the election period expires. Sale Process Overview The Debtors, with the support of the Official Committee of Unsecured Creditors, the Official Committee of Asbestos Claimants, and Martin J. Murphy, the legal representative of future asbestos claimants, have determined that their commodities business should be sold. Subsequently, the Debtors, through their investment advisors, Lazard Freres & Co. LLC, contacted 37 parties that might have an interest in purchasing the Debtors' interests in Alpart. Of those 37 parties, 22 agreed to execute a confidentiality agreement with the Debtors in order to receive confidential information regarding the Alpart assets. Each of the 22 parties was then asked to submit a non-binding expression of interest regarding the Alpart assets on August 6, 2003. At the conclusion of the analysis of the proposals and additional negotiations, and after consultation with the Creditors Committee, the Asbestos Committee and the Future Claimants Representative, the Debtors concluded that the proposal submitted by Glencore AG constituted the highest and best offer for the Alpart assets. Accordingly, the Debtors selected Glencore as the winning bidder. Thereafter, the Debtors and Glencore negotiated and entered into a purchase agreement dated January 21, 2004. The Purchase Agreement with Glencore Pursuant to the Glencore Purchase Agreement, the Debtors will sell to Glencore these particular assets: (a) All of Kaiser Jamaica's and Alpart Jamaica's partnership interests in Alpart; (b) All assets and property owned by Kaiser Jamaica and Alpart Jamaica as tenants in common for the use and benefit of Alpart; (c) Kaiser Aluminum & Chemical Company's and Kaiser Bauxite Company's equity interests in Alpart Farms (Jamaica), Ltd.; (d) Promissory notes evidencing loans made or to be made by the Debtors to Alpart consisting of: -- a loan in the original principal amount of $22,100,000 as evidenced by a promissory note, dated March 1, 2001; and -- a loan in an original principal amount equal to 65% of the amount required to redeem or defease in full the outstanding debt in respect of the bonds issued by the Caribbean Basin Projects Financing Authority under a loan agreement, dated as of December 1, 1991; (e) Amounts due to the Debtors from Alpart on account of funds advanced to Alpart to cover costs of operations -- including interest but excluding depreciation; (f) All rights under certain contracts of the Debtors either related to: -- the sale of alumina produced by Alpart, except to the extent the Debtors elect to exclude some or all of the contracts from the sale before it is consummated; or -- the business operations of Alpart and the Debtors' interests in Alpart, excluding certain contract rights under which the Debtors, before closing, were owed certain trade receivables, management fees and tax refunds or credits. The Purchase Agreement also requires Alpart to provide for the payment of the remaining balance owed on the CARIFA Debt before Closing. Mr. DeFranceschi explains that, for Alpart to do so, before the Closing, the Debtors expect to loan to Alpart funds equal to 65% of the outstanding CARIFA Debt -- $143,000,000 -- representing Kaiser Jamaica's and Alpart Jamaica's share of the funding obligations under the Partnership Agreement, to permit the redemption and defeasance of the CARIFA Debt. Hydro Jamaica has agreed to cooperate reasonably with Kaiser Jamaica and Alpart Jamaica to loan to Alpart funds equal to the remaining 35% of the CARIFA Debt before the Closing pursuant to its obligations under the Partnership Agreement. The Purchase Agreement further provides that the Debtors and Glencore will enter into an alumina supply agreement, pursuant to which the Debtors will purchase from Glencore, 200,000 MT of Alpart alumina in 2004 and 100,000 MT of Alpart alumina in 2005, at a price equal to a fixed percentage of the price set for certain aluminum metals on the London Metal Exchange. As consideration for the benefits obtained under the Purchase Agreement, Glencore will pay the Debtors $165,000,000, subject to certain adjustments contained in the Purchase Agreement. Glencore also will be required to assume certain liabilities related to the Alpart-Related Contracts and the business operations of Kaiser Jamaica and Alpart Jamaica. In accordance with the Purchase Agreement, Glencore, in advance of closing, will escrow $10,000,000, which will be credited to the purchase price paid to the Debtors at Closing. Postpetition Lender Approval Mr. DeFranceschi reminds the Court that the Debtors' postpetition credit agreement expressly prohibits the sale of Kaiser Jamaica's and Alpart Jamaica's interests in Alpart. In addition, the Credit Agreement contains other provisions that address or could be affected by the sale of the Purchased Assets, including provisions that: (a) address the use of proceeds from asset dispositions; (b) determine the extent of the borrowing base and the amount of commitments under the postpetition credit agreement; and (c) contain certain financial covenants. As a result, postpetition lender approval and amendments to the postpetition credit agreement will be necessary before the Debtors can consummate the sale of the Purchased Assets. The Debtors intend to seek the requisite consent and amendments to the postpetition credit agreement, as required, and to obtain approval of the amendments before February 23, 2004. Allocation and Use of Proceeds The gross proceeds from the Sale will be allocated as: (a) $36,400,000 will be allocated to the Debtors in respect of the Alpart Loans; (b) $600,000, representing the book value of the Debtors' and Kaiser Bauxite Company's equity interests in Alpart Farms, will be allocated to the Debtors and Kaiser Bauxite Company in proportion to their interests; (c) $6,000,000 will be allocated to the Debtors in respect of capital expenditures for Alpart funded by the Debtors from August 31, 2003 through December 31, 2003; and (d) the remainder of the gross proceeds, subject to any applicable purchase price adjustment, will be allocated to Kaiser Jamaica and Alpart Jamaica in proportion to their partnership interests in Alpart. Mr. DeFranceschi says that no portion of the proceeds will be allocated in respect of the Alpart-Related Contracts other than with respect to the management contract under which Kaiser Jamaica is a party and acts as the managing partner of Alpart. The Debtors are currently engaged in discussions with the Creditors Committee, the Asbestos Committee, the Future Claimants Representative and the Postpetition Lenders regarding the use of the proceeds pending confirmation of a reorganization plan. By this motion, the Debtors seek the Court's authority, pursuant to Sections 105, 363, and 365 of the Bankruptcy Code, to: (a) enter into the Glencore Purchase Agreement; (b) sell and transfer their interests in the Purchased Assets to Glencore or, in the event of the exercise of the RFR, to Hydro Jamaica; (c) assume and assign the Partnership Agreement, the Alpart- Related Contracts and other ancillary contracts contemplated by the Partnership Agreement; (d) enter into the Alumina Supply Agreement; and (e) consummate the remaining transactions set forth in or contemplated by the Purchase Agreement. The Debtors also seek Judge Fitzgerald's permission to file certain exhibits to the Purchase Agreement that contain confidential commercial information under seal. The Debtors ask the Court to hold an in camera hearing on the Sale Motion. Headquartered in Houston, Texas, Kaiser Aluminum Corporation operates in all principal aspects of the aluminum industry, including mining bauxite; refining bauxite into alumina; production of primary aluminum from alumina; and manufacturing fabricated and semi-fabricated aluminum products. The Company filed for chapter 11 protection on February 12, 2002 (Bankr. Del. Case No. 02-10429). Corinne Ball, Esq., at Jones, Day, Reavis & Pogue, represent the Debtors in their restructuring efforts. On September 30, 2001, the Company listed $3,364,300,000 in assets and $3,129,400,000 in debts. (Kaiser Bankruptcy News, Issue No. 38; Bankruptcy Creditors' Service, Inc., 215/945-7000) KMART CORP: Objects to 45 Florida Tax Claims Totaling $1.4 Million ------------------------------------------------------------------ The Kmart Corporation Debtors assert that 45 claims, aggregating $1,378,143, were filed by Florida Tax Collectors after the Claims Bar Date established by the Court: Type of Claim Claim Amount ------------- ------------ Secured $599,192 Priority 778,951 Thus, the Debtors ask the Court to disallow and expunge the late- filed claims. (Kmart Bankruptcy News, Issue No. 68; Bankruptcy Creditors' Service, Inc., 215/945-7000) LENNOX INT'L: Fourth-Quarter Results Reflect Significant Growth --------------------------------------------------------------- Lennox International Inc. (NYSE: LII) announced fourth quarter and full-year 2003 earnings. LII's sales for the fourth quarter of 2003 increased 11% to $779 million. In constant currencies, sales were up 6%. Operating income was $30 million, up from $13 million last year, with operating margin more than doubling to 3.9%. Net income was $16 million, or $0.27 per diluted share, compared with $5 million, or $0.08 per diluted share in the year-ago period. Foreign exchange rates benefited earnings per share in the fourth quarter by $0.04. Sales for full-year 2003 were $3.1 billion, up 7% from 2002, when adjusted for heat transfer revenue of $129 million included in the prior-year's sales -- essentially all of which is now part of LII's joint venture with Outokumpu and no longer reported by LII. Foreign exchange rates benefited revenue by 3%. Sales outside the U.S. and Canada accounted for 13% of total LII revenue. Operating income for the year grew 19% to $150 million, with operating margins expanding 70 basis points to 4.9% of sales. Before the cumulative effect of an accounting change in 2002, net income increased 31% in 2003 to $77 million, and diluted earnings per share rose from $1.00 to $1.28 on the same basis. LII also generated very strong free cash flow of $113 million in 2003. Free cash flow consists of cash from operations of $55 million, less capital expenditures of $41 million, and excludes a $99 million reduction in the balance of the company's asset securitization program. Over the past three years, LII has used its cash flow to reduce total debt by $328 million. In 2003, operational working capital improved to 18.9% of sales from 19.6% the prior year. "2003 was a very successful year for LII, with financial performance that exceeded our previous guidance," said Bob Schjerven, chief executive officer. "As we sharpened our focus on our three core businesses, we achieved a substantial improvement in our profitability, generated strong free cash flow and finished the year with a stronger balance sheet. Our businesses are well positioned for profitable growth and we are optimistic about 2004." For 2004, the company said it expects diluted earnings per share will be in the range of $1.38 to $1.48, an 8% to 16% improvement over this year's result. Cash flow is expected to continue to be strong, with cash flow from operations less capital expenditures, excluding the impact of changes in the asset securitization program balance, approaching net income. Fourth Quarter Segment Performance Heating & Cooling revenue rose 14% in the fourth quarter of 2003 to $455 million. In constant currencies, sales were up 11%. Segment operating income increased 71% to $57 million, reflecting higher sales volumes and improved factory performance. Operating margins for the quarter rose to 12.6% from 8.4% in 2002. Outperforming its market, the Residential Heating & Cooling segment increased revenue by 14% during the quarter to $323 million, driven by growth at LII's Lennox Industries and Armstrong units, as well as the company's hearth products business. Adjusting for foreign exchange, sales were up 11%. Operating income increased to $44 million from $28 million last year, with operating margins expanding to 13.5% from 9.7%. Revenue in the Commercial Heating & Cooling segment was up 15%, or 10% adjusted for foreign exchange, to $132 million. Strong growth was achieved in national accounts and through the company's dedicated commercial sales districts. While demand in Europe remains soft, LII's European sales increased modestly. Segment operating income more than doubled to $14 million from $6 million last year, and operating margins improved to 10.4% from 5.2%. Service Experts revenue rose 4% to $244 million. Adjusted for currency fluctuations, sales declined 1%. The segment posted an operating loss of $10 million for the quarter, compared with a loss of $2 million in the previous year. Although Service Experts maintained top-line sales, price-driven margin erosion continued, and labor inefficiencies further reduced profitability. Inventory valuations, percent-of-completion contract adjustments, bad debt expenses, and severance -- all primarily in the company's Canadian operations -- negatively affected segment earnings. The company has made a change in the leadership of the Canadian region and is moving ahead on the deployment of the STARS IT system in Canada to facilitate the consolidation of back-office accounting functions and improve the tracking of key business metrics. "While our manufacturing businesses are indeed running well, the performance of Service Experts remains unacceptable," Schjerven said. "We have already moved to address specific issues in our Canadian operations. But with weak results throughout 2003 and no improvement evident in the fourth quarter, we are taking a more aggressive posture on turning Service Experts around." The company will take action to refocus Service Experts on its original strategy, concentrating on profitable service, repair, and replacement opportunities in metropolitan markets. The company is in the process of closing four centers that were predominantly focused on longer-duration commercial new construction contracts and do not fit the original business strategy. These four centers incurred a combined operating loss of $4 million in 2003. "Our actions to move Service Experts to improved profitability will continue in 2004 and we will update our progress no later than our first quarter report in April of this year," Schjerven said. "We are committed to taking whatever actions are necessary to realize Service Experts' potential." Refrigeration segment revenue rose 14%, but was down 1% in constant currencies. Sales growth in Europe and North America was offset by a decline in the Asia Pacific region. Segment operating income was $7 million, down from $9 million from last year. Operating margins declined to 7.2% from 9.5% in fourth quarter 2002. End-market demand remained sluggish, and price concessions necessary to maintain domestic sales volumes pressured margins. A Fortune 500 company operating in over 100 countries, Lennox International Inc. (S&P, BB- Corporate Credit Rating, Stable) is a global leader in the heating, ventilation, air conditioning, and refrigeration markets. Lennox International stock is traded on the New York Stock Exchange under the symbol "LII". Additional information is available at http://www.lennoxinternational.com/ MAIL-WELL INC: Unit Completes $320-Million Senior Debt Offering --------------------------------------------------------------- Mail-Well I Corporation, a wholly owned subsidiary of Mail-Well, Inc. (NYSE: MWL), completed its private offering of $320 million principal amount of its 7-7/8% Senior Subordinated Notes due 2013. The company is using the proceeds from the offering to purchase all of its outstanding 8-3/4% senior subordinated notes due 2008, together with the premium and accrued interest payable to the holders of those notes, and to pay related fees and expenses. The notes initially will not be registered under the Securities Act of 1933 and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. 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 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. MAIL-WELL: Wins Consents to Amend 8-3/4% Senior Debt Indenture -------------------------------------------------------------- Mail-Well I Corporation, a wholly owned subsidiary of Mail-Well, Inc. (NYSE: MWL), announced, pursuant to its previously announced tender offer and consent solicitation for any and all of its $300,000,000 outstanding principal amount of its 8-3/4% Senior Subordinated Notes due 2008, CUSIP Number 56032E AB 9, that it has received the requisite consents to adopt the proposed amendments to the indenture governing the Notes. Adoption of the proposed amendments required the consent of holders of at least a majority of the aggregate principal amount of the outstanding Notes. The proposed amendments will eliminate substantially all of the restrictive covenants and certain events of default in the indenture. The consent solicitation expired at 5:00 p.m., New York City time, on Tuesday, February 3, 2004. The Company and U.S. Bank National Association, in its capacity as Trustee under the indenture, executed a supplemental indenture setting forth the proposed amendments on February 4, 2004. The proposed amendments will be of no effect if the Notes are not accepted for payment and paid for pursuant to the terms of the Offer. The proposed amendments to the indenture are binding upon the holders of the Notes, including those not tendered into the Offer. The Offer is scheduled to expire at 12:00 midnight, New York City time, on Wednesday, February 18, 2004, unless extended or earlier terminated. Credit Suisse First Boston LLC is serving as dealer manager and solicitation agent in connection with the Offer. Questions regarding the Offer may be directed to Credit Suisse First Boston LLC, Liability Management Group, at (800) 820-1653 (US toll-free) and (212) 538-4807 (collect). Requests for documentation may be directed to MacKenzie Partners, Inc., the information agent for the Offer, at (800) 322-2885 (US toll-free) and (212) 929-5500 (collect). 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 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. MANITOWOC CO.: Red Ink Continues to Flow in Fourth-Quarter 2003 --------------------------------------------------------------- The Manitowoc Company, Inc. (NYSE: MTW) reported record sales, cash from operations, and net debt reduction for the full year 2003. For the fourth quarter, the company reported net sales of $395.9 million, increasing from $386.0 million during the same period last year. Including special charges, the company reported a net loss of $5.5 million, or $0.21 per diluted share for the quarter, compared with a net loss of $25.1 million, or $0.94 per diluted share, in the year-ago period. Excluding special items totaling $0.32 per share in the fourth quarter of 2003, earnings were $0.11 per diluted share. Cash from operations for the fourth quarter totaled $57.1 million, up 40 percent from the same period last year. Fourth-quarter sales increased 3 percent despite continued weak demand for crawler cranes in U.S. markets and the impact of delays affecting the company's ship-construction business. The special charges primarily relate to the company's decision to rationalize its aerial work platform (AWP) business, restructuring costs, and costs associated with early debt retirement. These charges were partially offset by gains in curtailment of certain post-retirement benefits. For the full year, net sales were $1.6 billion, increasing 17 percent from $1.4 billion last year. Including special items, the company reported net earnings of $3.5 million, or $0.13 per diluted share, compared with a loss of $20.5 million, or $0.80 per diluted share, last year. Excluding special items, earnings for 2003 were $20.7 million, or $0.77 per diluted share, modestly above the company's previous guidance range. "Thanks to the strength of our diversified business model, we leveraged the strong performance from our Foodservice segment to help offset lower sales and earnings in some of our other businesses," said Terry D. Growcock, Manitowoc's chairman and chief executive officer. "In addition, an unyielding focus on cash generation in all three of our segments enabled us to generate $151 million in cash from operations and reduce our net debt by $126 million ($109 million reduction of debt and $17 million increase in cash) before the effect of currency translation. Both of these measures were substantially ahead of our targets of $100 million and $60 million, respectively." Full-year Highlights: -- Record cash from operations of $151 million, far exceeding the company's goal of $100 million -- Net debt reduction of $126 million, more than doubling the company's goal of $60 million -- Strong earnings performance in the Foodservice segment -- Growth in international crane sales and market penetration -- Successful development and introduction of more than 40 new crane and foodservice products -- Substantial increase in new ship construction projects for 2004, following the recent award of several commercial contracts -- Significant progress in achieving key strategic objectives Business Segment Results Net sales in the Crane segment were $254.7 million for the quarter, increasing 16 percent from $218.7 million in 2002, and operating earnings were $6.0 million compared with $7.8 million one year ago. At December 31, 2003, total crane backlog was $220.7 million. "While demand for U.S. crawler cranes is not rebounding, we are seeing increased activity internationally, especially in Asia and in certain parts of Europe," said Growcock. "Our recent acquisitions of Grove and Potain have positioned us to capitalize on these opportunities and to pursue new markets around the world. Nearly 70 percent of our 2003 crane sales came from international markets, which is a substantial increase from one year ago. We are also seeing enhanced market penetration from our efforts to consolidate our crane businesses geographically. In addition, during the fourth quarter we furthered our efforts to divest non- core crane businesses by rationalizing our aerial work platform business to focus on vertical mast products." Foodservice posted a 12 percent increase in earnings on a slight decrease in sales ($102.3 million versus $105.0 million) in the fourth quarter. "The improvement in earnings is consistent with what we've seen all year in this segment and is a result of the consolidation and operational improvements put in place over the past three years," said Growcock. "During 2003, we introduced 25 new Foodservice products -- including the first two models in our new S-series line-up of ice machines. In January 2004, we also announced our intent to build an expanded manufacturing and training facility in China to support the rapid growth we've experienced in that region and other parts of the world." Fourth-quarter net sales in the Marine segment decreased 38 percent to $38.9 million, from $62.4 million last year, and operating earnings decreased to $0.7 million from $3.9 million last year. This is due primarily to delayed start-ups following customer deferrals of new-construction projects. "Although new-construction remained slow during the quarter, our Marine group won a majority of the major contracts that it bid on during the year, creating a solid slate of work heading into 2004," said Growcock. During the quarter, Manitowoc was awarded a contract by Hornbeck Offshore Transportation to build a 110,000-barrel, double-hull tank barge. The contract also provides Hornbeck with options to purchase three additional barges within the next year. In 2003, the company generated a record $151 million in cash from operations, comprised of cash from earnings from each of its three businesses, working capital reductions, and income tax refunds. Manitowoc also reduced its net debt by $126 million before the impact of foreign currency. This reduced the company's net debt- to-capital ratio to 65 percent, significantly down from 68 percent at the end of 2002. Excluding the impact of the stronger Euro, the company's net debt-to-cap ratio would have dropped to 63 percent. Strategic Update "Looking back on 2003, we made significant progress against each of our five strategic objectives that we defined at the beginning of the year," said Growcock, "and we've updated those strategies as we move into 2004." -- The company greatly improved its crane marketing capabilities through consolidation of its crane businesses, offering all product lines with more efficient facilities in each geography. Now that the consolidation is essentially complete, Manitowoc will continue its focus on increasing sales and market penetration globally. -- Manitowoc also completed the integration of its internal Crane operations, which generated more than $30 million in synergies in 2003, with improved prospects for 2004. -- The company continues to excel in its core Foodservice operations. New-product introductions in all areas including ice, beverage, and refrigeration helped Manitowoc continue to gain market share throughout the year. Going forward, Manitowoc will focus on strengthening its business by gaining further market share with the new S-Series ice machines and other new-product introductions and investments. -- Manitowoc has positioned its Marine operations to excel in 2004 by leveraging the strengths and capabilities of its multiple shipyards to serve commercial and government customers. The company secured a majority of the major contracts that it bid on in 2003, and it will continue to actively pursue commercial opportunities for OPA-90 double-hull vessels as well as appropriate defense, homeland security, and government work. -- Manitowoc strengthened its financial structure by exceeding its goals in cash flow and net-debt reduction. In 2004, the company will continue to emphasize these two key financial measures and will once again target $100 million in cash from operations as an objective for the year. Earnings Guidance "While we expect weak demand for U.S. crawler cranes to continue well into 2004, we are beginning to see other signs of an upturn in the economy," said Growcock. "Although the landscape remains very competitive, international demand for crawler, tower, and mobile telescopic cranes is improving. The restaurant and hotel industries are beginning to recover, and the industry is expected to grow approximately 2 percent in 2004. We also see additional commercial shipbuilding activity, which indicates that the economy is beginning to improve. "Over the past two and one-half years, we invested in our businesses to position them to take full advantage of a recovery, and as the economy improves, we have high expectations," Growcock continued. "With this in mind, we are targeting consolidated sales growth of 7 to 8 percent in 2004, with earnings per share in the $1.30 to $1.50 range." The Manitowoc Company, Inc. (S&P, BB- Corporate Credit Rating, Stable Outlook) is one of the world's largest providers of lifting equipment for the global construction industry, including lattice- boom cranes, tower cranes, mobile telescopic cranes, and boom trucks. As a leading manufacturer of ice-cube machines, ice/beverage dispensers, and commercial refrigeration equipment, the company offers the broadest line of cold-focused equipment in the foodservice industry. In addition, the company is a leading provider of shipbuilding, ship repair, and conversion services for government, military, and commercial customers throughout the maritime industry. METROPOLITAN INVESTMENT: Voluntary Chapter 7 Case Summary --------------------------------------------------------- Debtor: Metropolitan Investment Securities, Inc. P.O. Box 2162 Spokane, WA 99210 Bankruptcy Case No.: 04-00756 Type of Business: The Debtor is a financial-based service company That operates mutual fund and others. It is a registered broker/dealer with approximately 160 independent representatives. The Debtor is affiliated with Metropolitan Mortgage & Securities Co., Inc. and Summit Securities, Inc. Chapter 11 Petition Date: February 4, 2004 Court: Eastern District of Washington Judge: William H. Williams Debtor's Counsel: Mary Ellen Gaffney-Brown, Esq. Attorney at Law 421 W. Riverside, Suite 900 Spokane, WA 99201-0413 Tel: 509-838-6055 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million METROPOLITAN MORTGAGE: Case Summary & 50 Unsecured Creditors ------------------------------------------------------------ Lead Debtor: Metropolitan Mortgage & Securities Co., Inc. P.O. Box 2162 Spokane, Washington 99210 Bankruptcy Case No.: 04-00757 Debtor affiliates filing separate chapter 11 petitions: Entity Case No. ------ -------- Summit Securities Inc. 04-00758 Type of Business: The Debtor is into the business of Insurance and Annuity Operations. Life and health insurance is domiciled in the State of Washington. The insurance segment also invests a substantial portion of the proceeds from the operations in real estate contracts & mortgage notes receivables, other receivables and investment securities. See http://www.metmtg.com/ Chapter 11 Petition Date: February 4, 2004 Court: Eastern District of Washington Judge: William H. Williams Debtors' Counsels: Bruce W. Leaverton, Esq. Mary Jo Heston, Esq. Susan Brye Jahnke, Esq. Lane Powell Spears Lubersky LLP 1420 Fifth Avenue, Suite 4100 Seattle, WA 98101-2338 Tel: 206-223-7000 - and - Doug B. Marks, Esq. Elsaesser, Jarzabek, Anderson, Marks, Elliot & McHugh, Chartered 123 South Lake Street, 2nd Floor P.O. Box 1049 Sandpoint ID 83864 Tel: 263-8517 Total Assets Total Debts ------------ ----------- Metropolitan Mortgage & Securities $420,815,186 $415,252,120 Summit Securities Inc. $151,480,138 $167,571,363 A. Metropolitan Mortgage's 25 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Trust National Assoc Indenture Trustee $357,099,877 1420 5th Avenue, 7th fl Seattle, WA 98101 Crithfield, Gary Rabbi Trust- Excess $1,030,826 162 S. Coeur D'Alene B 105 Deferral Plan Spokane, WA 99204 Sellen Construction Co. Inc. Debenture Holder $1,013,627 Attn: CFO P.O. Box 9970 Seattle, WA 98109-0970 Wockner, E. Irene Debenture Holder $776,110 21305 20th Ave SE Bothell, WA 98021-8491 DeYoung, Arlen J and Debenture Holder $735,946 Eileen G De Young 8656 Vinup Rd Lynden, WA 98264-9332 Holmes Family Trust Debenture Holder $730,955 Attn: Virginia D Holmes, TTEE 1212 E Christmas Tree Ln Spokane, WA 99203-3302 Hansen, Gerald H. Debenture Holder $703,989 2685 Firenze Sparks, NV 89434 O'Banion, Richard W. Debenture Holder $648,281 1915 N 18th Ave Pasco, WA 99301-3416 Reid, Brian Rabbi Trust -Excess $641,751 1657 Bruce Rd Deferral Plan Hayden Lake, ID 83835 Brown, Robert R. and/or Debenture Holder $636,312 Sandra D. Brown 19347 SW Brookside Way Bend, OR 97702 Ramm, Ronald R. Debenture Holder $594,462 P.O. Box 10 Otis Orchards, WA 99027-0010 Rankin Living Trust Dtd Debenture Holder $514,052 Jack L or June L Rankin TTEES 4409 E Greenbluff Rd Hiemstra, Sybout and Debenture Holder $504,958 Petronella Hiemstra 3720 Lake Washington Blvd N Renton, WA 98056-1506 Knoell, E Vern and Debenture Holder $475,275 Joanne F. Knoell 23417 N Whispering Pines Rd Colbert, WA 99005-9766 Saccomanno, Mario J Debenture Holder $468,090 3317 E Bridgeport Ave Spokane, WA 99217-6923 Camp, Maryette Y. Debenture Holder $464,669 9150 Occidental Rd Apt 6 Yakima, WA 98903-9691 Hazel D Holliday Residual Debenture Holder $453,470 Trust dated 11/16/93 509 E 4th Ave Ritzville, WA 99169-1570 Meyers, Timothy L and Debenture Holder $444,311 Janel R Meyers 729 Greenwood Loop Rd Kettle Falls, WA 99141-9579 Boardman, F Roger Debenture Holder $415,172 179 Arland Rd Montesano, WA 98563-9624 Bland, Deryl E and Debenture Holder $413,631 Beryl M Bland 8426 Heimbinger Rd Cashmere, WA 98815-9425 Richard & Lee Ann Tavis Fam Debenture Holder $410,808 Tr DTd 10/19/99 232 N Jefferson St Moscow, ID 83843-2743 Kays, Ellen A Debenture Holder $400,496 P.O. Box 876 Davenport, WA 99122-0876 Haase, Ella N Debenture Holder $398,880 P.O. Box 476 Odessa, WA 99159 Yoder, Albion M Debenture Holder $395,418 3415 Mayhew Rd #13 Sacramento, CA 95827 Meske, Hugo Debenture Holder $394,800 5102 E Ballard Rd Colbert, WA 99005-9322 B. Summit Securities Inc.'s 25 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ US Bank Trust National Assoc Indenture Trustee $112,867,018 1420 5th Ave, 7th Fl Seattle, WA 98101 Monroe, Buddie Lee and/or Investment Certificate $1,014,789 Orvetta E Monroe Holder 26525 Cottonwood Creek Rd Culdesac, ID 83524-6161 Ocwen Federal Bank FSB Outside Servicer $661,797 Attn: Secretary The Forum, Ste 1002 1675 Palm Beach Lakes Blvd West Palm Beach, FL 33401 Olesen, Thomas W. Note Holder $544,275 19203 N Holcomb Rd Investment Certificate $81,930 Mead, WA 99021-7725 Holder RSP Omega Irrev Trust Investment Certificate $572,476 D Russell Walker, Trustee Holder P.O. Box 505 Patterson, CA 95363 IMS Strategic Income Fund Investment Certificate $557,166 8995 Se Otty Rd Holder Portland, OR 97266-7365 Hansen, Gerald H Investment Certificate $519,182 2685 Firenze Holder Sparks, NV 89436-7469 Wockner, Betty L Note Holder $251,979 8919 160th St SE Investment Certificate $254,442 Snohomish, WA 98296-7013 Holder Protec Reserve LLC Investment Certificate $491,838 D Russell Walker, Trustee Holder P.O. Box 505 Patterson, CA 95363 Carlson, B Leonard Investment Certificate $438,444 516 W Snoqualmie River Rd SE Holder Carnation, WA 98014-8000 Archer Family Trust Note Holder $322,533 Kenneth or Bassie Archers, Investment Certificate $110,374 Trustees Holder 44 Rancho Manor Dr Reno, NV 89509-3956 Spyra, Theodore Frank Investment Certificate $411,369 8804 209th Pl SW Holder Edmonds, WA 98026-6912 William Pruys Declaration of Investment Certificate $372,272 Trust Holder %Bosch, Kuhr, Dugdale, Martin & Kaze P.O. Box 7152 Havre, MY 59501-7152 Walker, D Russell Investment Certificate $346,454 P.O. Box 505 Patterson, CA 95363 Lueck, Glen E Note Holder $40,317 and Lael J Lueck Investment Certificate $297,238 301 Laurmac Ln Laurel, MT 59044-1718 Nordahl, Howard E Investment Certificate $311,612 472 Wheat Basin Rd Holder Molt, MT 59057-2233 Spielman, Barney Investment Certificate $303,885 5844 Clubhouse Dr Holder Fort Mohave, AZ 86426-6738 Alvin J & Caroline C Note Holder $302,375 Schoenhals Char Rem UniTrust 10/29/96 909 S 15th E Salt Lake City, UT 84105-1638 Lemire, Wilfred E Investment Certificate $299,032 P.O. Box 338 Hot Springs, MT 59845 Murray, Robert W Investment Certificate $288,115 4011 Daggett Dr Holder Granite Bay, CA 95746-6473 Dutson, Brent V Note Holder $151,188 P.O. Box 1554 Investment Certificate $136,009 Longview, WA 98632 Holder Thomas M McCabe Trust Investment Certificate $272,246 106 Chestnut Ave FP Glendive, MT 59330 Wilson, Jerome Carter Investment Certificate $267,502 58-C Bell Rapids Rd Holder Hagerman, ID 83332-6038 Conway Living Trust Investment Certificate $266,852 Dtd 4/10/95 4612 NE 24th Ave Vancouver, WA 98663-2071 Clyde & Mildred Freeze Trust Investment Certificate $260,414 Dtd 5/20/97 Holder Joan Knight Trustee 3260 N 12th St Apt 324 Grand Junction, CO 81506-5436 MINORPLANET SYSTEMS: Commences Nasdaq Trading Under MNPLQ Symbol ---------------------------------------------------------------- Minorplanet Systems USA, Inc. (NASDAQ:MNPLQ), a leading provider of telematics-based management solutions for commercial fleets, announced that its common stock began trading under the symbol MNPLQ at the opening of business Wednesday on the Nasdaq SmallCap Market. The addition of the "Q" to the symbol results from the company's filing on Feb. 2, 2004, of a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code to restructure its debt. The company also received a letter from the Nasdaq Listing Qualifications Staff dated Feb. 2, 2004, indicating that, as a result of the bankruptcy filing in accordance with the Staff's authority under Nasdaq Marketplace Rules 4330(a)(1) and 4300, the company's securities will be delisted from The Nasdaq Stock Market at the opening of business on Feb. 11, 2004, unless the company requests a hearing in accordance with the Marketplace Rule 4800 Series. The company plans to request an oral hearing before the Nasdaq Listing Qualifications Panel to appeal the Staff's decision in accordance with Marketplace Rule 4800 Series. The Staff indicated that its decision was based on the following factors: -- The company's voluntary bankruptcy filing and associated public concerns raised by it; -- Concerns regarding the residual equity interest of the company's existing listed securities holders, and -- Concerns about the company's ability to sustain compliance with all requirements for continued listing on The Nasdaq Stock Market. The company's request for a hearing before the Panel will stay the delisting action until the Panel reaches a final decision on the company's appeal, but there can be no assurances that the Panel will grant the company's request for continued listing. If the company fails to maintain its listing on the Nasdaq Stock Market, the company's securities will not be immediately eligible to trade on the OTC Bulletin Board, since the company is the subject of bankruptcy proceedings. Although the company's securities would not be immediately eligible for quotation on the OTC Bulleting Board, the company's securities may become eligible to trade on the OTC Bulletin Board if a market maker submits an application to register in and quote the company's securities in accordance with SEC Rule 15c2-11, and such application is cleared. Minorplanet Systems USA undertook the voluntary bankruptcy action primarily to restructure $14.3 million in long-term debt. The company will remain in possession of its properties and assets as debtor-in-possession, and already has a commitment for $1.3 million of debtor-in-possession financing, subject to court approval. Minorplanet Systems USA, Inc. -- http://minorplanetusa.com/-- markets, sells and supports Vehicle Management Information(TM) (VMI(TM)), a state-of-the-art fleet management solution that contributes to higher customer revenues and improved operator efficiency. VMI combines the technologies of the global positioning system and wireless vehicle telematics to monitor vehicles, minute by minute, in real time. Based in Richardson, Texas, the company also markets, sells and supports a customized, GPS-based fleet management solution for large fleets like SBC Communications, Inc., which has approximately 32,800 installed vehicles now in operation. MIRANT CORP: Wants Court to Clear Pepco Energy Settlement Pact -------------------------------------------------------------- Pursuant to Rule 9019 of the Federal Rules of Bankruptcy Procedure and Section 365 of the Bankruptcy Code, the Mirant Corp. Debtors ask the Court to approve and authorize: (i) an Agreement and Release, dated December 24, 2003, with Pepco Energy Services, Inc.; and (ii) as part of the Settlement Agreement, the rejection of the GSA Confirmation, dated March 28, 2003, as amended and restated on May 6, 2003, between Pepco and Mirant Americas Energy Marketing LP. On March 28, 2003, Pepco and MAEM entered into a Master Power Purchase and Sale Agreement. The Power Agreement established the contract under which the GSA Confirmation was derived. Michelle C. Campbell, Esq., at White & Case LLP, in Miami, Florida, recalls that on August 27, 2003, the Debtors assumed the Power Agreement, exclusive of the GSA Confirmation. Pepco and the Debtors executed a counterparty assurance agreement that excluded the GSA Confirmation from the Final Trading Order, but acknowledged the disagreement between them regarding the status of the GSA Confirmation. Under the GSA Confirmation, MAEM agreed to sell and deliver wholesale full-requirements power, at a fixed price per megawatt hour, to over 120 General Services Administration accounts in Maryland and Washington D.C. areas. Pepco provided the information relating to the Customer Accounts to MAEM. Service pursuant to the GSA Confirmation began at the meter read date in April or May 2003 and was to expire on the last meter read date in May 2004. Pursuant to the GSA Confirmation, Ms. Campbell informs the Court that Pepco is currently holding $4,000,000 as cash collateral to secure the Debtors' obligations under the GSA Confirmation. Ms. Campbell explains that MAEM originally entered into the GSA Confirmation to mitigate the Debtors' exposure under the Transition Power Agreements with Potomac Electric Power Company. However, since entering into the GSA Confirmation, the pricing under the TPA Agreements has increased and the Court has approved the assumption of the revised TPA Agreements with the more favorable TPA Price. Pursuant to the pricing in the GSA Confirmation, the Debtors will receive $6,000,000 less during the period of January 2004 to May 2004 than they would receive pursuant to the TPA Price. In analyzing the GSA Confirmation to determine the best course with respect thereto, the Debtors ascertained that: (1) its assumption would not benefit the estate because the cost to service the GSA Confirmation postpetition is prohibitively high; and (2) outright rejection of the GSA Confirmation would also not benefit the estates because it would result in a significant prepetition claim against MAEM. In lieu of the lesser alternatives and to maintain a positive business relationship with Pepco going forward, the Debtors entered into negotiations with Pepco. The parties reached an agreement on these terms: * The Debtors will reject the GSA Agreement; * The Debtors will provide electric supply for the Customer accounts at process provided for in the GSA Confirmation through December 31, 2003. From January 1, 2004 through February 9, 2004, the Debtors will provide electric supply for the Customer Accounts at the TPA Price: (a) $32.60/MWh with respect to the Transition Product delivered to Customer Accounts in the State of Maryland; and (b) $35.70/MWh with respect to the Transition Product delivered to Customer Accounts in Washington, D.C.; * Pepco will coordinate the transition of the Customer Accounts to Potomac, the electric distribution company in which the Customer Accounts are located, in the most efficient and cost effective manner possible, to be completed no later than the conclusion of the Transition Period, with the limited exception of specified Customer Accounts that will remain with Pepco and for which the Debtors will have no obligation after the meter read dates for the two Customer Accounts; * Pepco's claims will be limited to these prepetition and rejection damages: -- the difference between the TPA Price applied during the Transition Period and the GSA Confirmation; plus -- $304,821 representing prepetition amounts due under the GSA Confirmation; * Pepco will also receive $1,150,000, representing its lost value from the GSA Transaction and costs that Pepco will incur as a result of the transition of the Customer Accounts to the EDC, not otherwise recoverable as rejection damages; * The Pepco Claim will be satisfied from the Cash Collateral after the expiration of the Transition Period. Pepco will return the remainder of the Cash Collateral -- which the Debtors expect to be approximately $1,450,000 -- to the Debtors upon full satisfaction of the PES Claims; * The parties will mutually release of all claims and potential claims, including avoidance action claims arising under the Bankruptcy Code, relating to or arising from any proposed amendment, rejection, breach of, or default under the GSA Confirmation; and * Any amounts owing to Pepco as a result of the Debtors' failure to make any payment to PES related to a True-up or Debtors' failure to perform any obligation under the GSA Confirmation prior to the date of rejection or under the Settlement Agreement after the date of the Settlement Agreement will be allowed as an administrative claim under Section 503(b) of the Bankruptcy Code. Ms. Campbell contends that the Settlement Agreement is warranted because: (a) rejecting the GSA Transaction could result in a net value impact to Mirant of negative $12,100,000 while the Settlement Agreement minimizes the loss to $5,700,000, and facilitates maintaining a favorable relationship between Pepco and the Debtors going forward; (b) the proposed Settlement Agreement minimizes the loss in regard to the GSA Confirmation when compared to the alternatives of assumption or outright rejection; (c) litigating the rejection damage claim would be costly and time consuming; (d) maintaining a working relationship with Pepco will assist the Debtors in maximizing the value of its services in the future; and (e) since Pepco is holding a $4,000,000 Cash Collateral, under the Settlement Agreement, Mirant anticipates the return of the remaining $1,450,000 cash collateral to the Debtors' estates. (Mirant Bankruptcy News, Issue No. 22; Bankruptcy Creditors' Service, Inc., 215/945-7000) MOODY'S CORP: Reports Improved Year-Over-Year 4th Quarter Results ----------------------------------------------------------------- Moody's Corporation (NYSE: MCO) announced results for the fourth quarter and full year 2003. Summary Results for Fourth Quarter and Full Year 2003 Moody's reported revenue of $350.7 million for the three months ended December 31, 2003, an increase of 29% from $271.9 million in the same period of 2002. Fourth quarter operating income of $176.1 million rose 37% from $129.0 million in the same period of 2002. The favorable impact of currency translation, mainly due to the strength of the Euro relative to the U.S. dollar, contributed approximately 250 basis points of revenue growth and 150 basis points of operating income growth. In addition, revenue for the fourth quarter included approximately $8.5 million for adjustments to accounts receivable reserves, of which approximately $5.5 million related to prior years as discussed below. Net income for the fourth quarter of 2003 was $85.5 million, an increase of 22% from $69.8 million in the prior year quarter. Diluted earnings per share for the fourth quarter of 2003 were $0.56 compared with $0.45 for the fourth quarter of 2002, an increase of 24%. Earnings per share for the fourth quarter of 2003 included a $0.01 impact related to the company's previously announced decision to begin expensing stock options and other stock-based compensation plans in 2003. In addition, fourth quarter earnings per share included a charge of $0.11 for increases in tax reserves related to legacy income tax exposures that were assumed by Moody's in connection with its separation from Dun & Bradstreet in 2000, which are described in Moody's annual and quarterly SEC filings. For the full year 2003, Moody's revenue totaled $1,246.6 million, an increase of 22% from $1,023.3 million for 2002. On a pro forma basis, assuming that Moody's April 2002 acquisition of KMV had occurred on January 1, 2002, revenue for 2002 would have been $1,038.4 million and revenue growth in 2003 would have been 20%. 2003 operating income of $663.1 million was up 23% from $538.1 million for 2002. The favorable impact of currency translation contributed approximately 200 basis points of revenue growth and 150 basis points of operating income growth. In addition, revenue for the full year 2003 included $5.5 million for adjustments to accounts receivable reserves related to prior years. Net income for 2003 was $363.9 million, an increase of 26% from $288.9 million for 2002. Diluted earnings per share for 2003 were $2.39, an increase of 31% from $1.83 for 2002. Earnings per share for 2003 included a $0.05 non-recurring gain on an insurance recovery in the first quarter, $0.04 in expense related to stock options and other stock-based compensation plans, and the $0.11 impact of increased reserves for legacy tax matters referred to above. In addition to its reported results, Moody's has included above and elsewhere in this earnings release certain adjusted results that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company's growth. These non-GAAP financial measures relate to presenting 2002 revenue and 2003 revenue growth as if Moody's April 2002 acquisition of KMV had taken place on January 1, 2002, presenting the effective tax rate for 2003 before the impact of the increase in reserves for legacy tax matters referred to above, and presenting 2003 results before the impact of adjustments to accounts receivable reserves that related to prior periods. In addition, the 2004 outlook presented below includes a discussion of 2004 EPS growth excluding the impacts of the 2003 insurance gain and legacy tax reserve increase, and before the impact of expensing stock-based compensation in 2003 and 2004. Attached to this earnings release is a table showing adjustments to Moody's fourth quarter and 2003 results to arrive at non-GAAP financial measures excluding the impacts of the insurance gain, the legacy tax reserve increase, the expensing of stock-based compensation and adjustments to accounts receivable reserves that related to prior periods. John Rutherfurd Jr., Chairman and Chief Executive Officer of Moody's Corporation said, "Moody's generated record revenue and earnings per share in 2003. Moody's produced excellent revenue and profit growth despite our expectations early in the year that we would encounter a difficult macroeconomic and capital markets environment. We benefited from better-than-expected revenues in a number of U.S. ratings sectors, including residential mortgage- backed securities, home equity loan securitizations and the high yield segment of the corporate bond market, from strong corporate issuance in Europe in the second half of the year and from the favorable impact of foreign currency translation. Our research business produced outstanding results and Moody's KMV also generated good growth. Looking ahead to 2004, we will continue a number of strategic initiatives aimed at improving the quality of our ratings, increasing our transparency, continuing our geographic expansion, and generating revenue from new products. We think these actions, taken together, will enable Moody's to provide increased value to the markets and our investors." Fourth Quarter 2003 Revenue at Moody's Investors Service for the fourth quarter of 2003 was $317.5 million, an increase of 31% from the prior year period. Ratings revenue totaled $281.0 million in the fourth quarter, an increase of 30% from $216.8 million in the fourth quarter of 2002. Within the ratings business, global structured finance revenue totaled $135.8 million for the fourth quarter, rising 32% from the prior year period. U.S. revenue grew over 30%, benefiting from strength in asset-backed securities, residential and commercial mortgage-backed securities and credit derivatives. International structured finance also rose over 30% reflecting strength in several sectors of the European market, including asset-backed securities, residential mortgage-backed securities and credit derivatives, and the favorable impact of foreign currency translation. Global corporate finance ratings revenue of $76.4 million in the fourth quarter of 2003 was up 43% from $53.6 million in the same quarter of 2002. U.S. revenue increased more than 25% principally due to strength in the high yield bond market where issuers continued to take advantage of low interest rates and narrow spreads. European corporate finance ratings revenue rose over 75% primarily as a result of robust issuance compared with relative weakness in the prior year period. Global financial institutions and sovereigns rating revenue was $46.6 million for the quarter, more than 20% higher than in the prior year period. U.S. revenue grew in the mid single-digit percent range as issuance was flat compared to the prior year period. European revenue increased more than 50% driven by a strong increase in the volume of issuance. Public finance revenue in the fourth quarter was $22.2 million, 1% lower than in the same period of 2002. Higher borrowing costs led to a year-over-year decline in refinancings. This was partially offset by growth in "new money" issuance as municipalities remained dependent on borrowing in light of weak tax receipts. Global research revenue grew 43% to $36.5 million, reflecting strong sales of new products to existing clients, new client acquisitions and growth in licensing of Moody's information to third party distributors. Internationally, research revenues also benefited from favorable foreign currency translation rates. Revenue at Moody's KMV totaled $33.2 million for the quarter, an increase of 13%. This growth was the result of higher subscription revenue related to quantitative credit risk assessment products and growth in licensing and maintenance fees for commercial lending decision-support software. Moody's U.S. revenue of $216.7 million for the fourth quarter of 2003 was 24% higher than in the fourth quarter of 2002. International revenue of $134.0 million increased 39% from the prior year period. For the fourth quarter, international revenue accounted for 38% of Moody's total compared with 36% for the fourth quarter of 2002. Revenue for the fourth quarter included approximately $8.5 million from adjustments to accounts receivable reserves, of which approximately $3.0 million related to prior quarters of 2003, $3.0 million related to 2002, and $2.5 million related to 2001. Expenses for the fourth quarter of 2003 totaled $174.6 million, 22% higher than in the prior year period. The quarter's expenses included $2.8 million related to stock-based compensation plans whereas no such expense was recorded in the prior year period. In each of the fourth quarter of 2002 and 2003, expenses included a $6 million contribution to the Moody's Foundation, which carries out philanthropic activities on behalf of Moody's Corporation. Moody's operating margin for the fourth quarter of 2003 was 50.2%, up from 47.4% in the fourth quarter of 2002. Full Year 2003 Revenue at Moody's Investors Service for the full year 2003 was $1,134.7 million, an increase of 20% from 2002. MIS ratings revenue was $1,007.8 million in 2003, 19% higher than in 2002. This growth was driven by strength in the structured finance, corporate and financial institutions ratings businesses and also included the favorable impact of currency translation. Global research revenue was $126.9 million, 36% higher than in 2002. For Moody's KMV, 2003 revenue was $111.9 million compared to $81.5 million for 2002. Assuming that Moody's had acquired KMV on January 1, 2002, revenue for MKMV in 2002 would have been $96.6 million and year-over-year growth in 2003 would have been 16%. For 2003, total Moody's U.S. revenue was $795.3 million, an increase of 17% from the prior year. International revenue rose 32% in 2003 to $451.3 million. Assuming that Moody's had acquired KMV on January 1, 2002, U.S. revenue growth for 2003 would have been 16% and international growth would have been 29%. International revenue rose to 36% of Moody's total revenue for the full year 2003 compared with 33% in 2002. Moody's revenue for the full year 2003 included $5.5 million from adjustments to accounts receivable reserves, of which approximately $3.0 million related to 2002 and $2.5 million related to 2001. Effective Tax Rate Moody's effective tax rate for the fourth quarter of 2003 was 50.6%, up from 42.4% for the first nine months of the year and 44.1% in the fourth quarter of 2002. The fourth quarter tax rate reflected an increase in reserves for legacy income tax exposures that were assumed by Moody's in connection with its separation from The Dun & Bradstreet Corporation in October, 2000. These legacy tax matters are described in Moody's annual and quarterly SEC filings. Excluding the impact of the reserve increase, Moody's effective tax rate for the fourth quarter of 2003 would have been 41.2%. This is below the 42.4% tax rate for the first nine months of the year primarily due to income attributable to jurisdictions with lower tax rates than New York. Moody's effective tax rate for the full year 2003 was 44.6%, up from 44.2% in the prior year. Excluding the impact of the increase in reserves for legacy tax matters, the 2003 effective tax rate would have been 42.1%. The decline from 2002 reflects continued operating growth in jurisdictions with lower tax rates than New York and benefits from the establishment of a New York captive insurance company during 2002. Share Repurchase Program During the fourth quarter of 2003, Moody's repurchased 1.0 million shares at a total cost of $57 million, including 0.8 million shares to offset the issuance of shares under employee stock plans. Since becoming a public company in October 2000 and through the end of 2003, the company has repurchased 23.0 million shares at a total cost of $881 million, including 9.3 million shares to offset shares issued under employee stock plans. Management continues to anticipate completing the current $450 million share repurchase program by mid-2004. Outlook for 2004 Moody's outlook for 2004 is based on assumptions about many macroeconomic and capital market factors, including interest rates, consumer spending, corporate profitability and business investment spending, and capital markets issuance activity. There is an important degree of uncertainty surrounding these assumptions and, if actual conditions differ from these assumptions, Moody's results for the year may differ significantly from the outlook presented in this press release. We expect interest rates in the United States to rise during 2004, with reduced refinancings of debt and continued weak demand for financing to support business investment. As a result, we expect to see lower issuance in the U.S. corporate bond market, both in the investment grade sector and in the high yield sector, which posted record issuance in 2003. Despite the issuance declines, revenue from new products and growth in relationship-based revenue should produce modest growth in both the U.S. corporate finance and financial institutions sectors. We are continuing to introduce our Enhanced Analysis Initiative, consisting of financial reporting, off-balance sheet risk transference and corporate governance assessment reports, and we plan to cover approximately 300 corporations and financial institutions in the U.S. by the end of 2004. We also expect good growth in consumer spending in 2004. As a result, we expect that revenue from rating asset-backed securitizations, together with moderate growth in the commercial mortgage securitization and credit derivatives segments of the business, will substantially offset an important decline in revenue from rating residential mortgage-backed securities as the very strong refinancing activity of the past two years declines. In the public finance ratings business we expect approximately 20% revenue decline in 2004, reflecting projected slowing of issuance related to both refinancings and "new money" borrowings. We expect continued strong growth in the research business. Outside the U.S. we expect to see double-digit revenue growth in the corporate and financial institutions ratings businesses. We are also projecting strong year-over-year growth for structured finance ratings revenue and in the research business, all producing approximately 20% ratings and research international revenue growth, including the effects of currency translation. Finally, we expect high teens percent revenue growth globally at Moody's KMV. Moody's expenses for 2004 will likely reflect continued investment spending on improving and increasing the transparency of our ratings practices, technology initiatives and product development and continued hiring to support growth areas of the business. We will continue our investment in the Enhanced Analysis Initiative. Moody's expects the operating margin to decline about 100 basis points in 2004 from the level achieved in 2003, reflecting the investments we are making and the faster growth of the lower margin MKMV business. Overall for 2004, Moody's expects that year-over-year revenue growth will be in the mid to high single-digit percent range. With the impact of a slightly lower effective tax rate and share repurchases, we expect that diluted earnings per share will grow in the high single-digit percent range. The expected earnings per share growth is before considering the impacts of the 2003 insurance gain and the legacy tax reserve increase referred to above, and before the impact of expensing stock-based compensation in both years. The impact of stock-based compensation expense is expected to be approximately $0.10 to $0.11 per share in 2004 compared with $0.04 in 2003. As previously discussed, Moody's implemented the expensing of stock options and other stock-based compensation on a prospective basis for options and other stock awards granted on or after January 1, 2003. The expected increase in related expense in 2004 reflects in part the phasing in of expense over the current four-year stock plan vesting period as new equity awards are granted. Moody's Corporation (NYSE: MCO) is the parent company of Moody's Investors Service, a leading provider of credit ratings, research and analysis covering debt instruments and securities in the global capital markets, and Moody's KMV, a credit risk management technology firm serving the world's largest financial institutions. The corporation reported revenue of $1,247 million in 2003. Further information is available at www.moodys.com. At September 30, 2003, Moody's Corporation's balance sheet shows a total shareholders' equity deficit of about $90 million. MORGADO WINE: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: Morgado Wine Importers & Distributors, Inc. 27 A Wooley Avenue Long Branch, New Jersey 07740-6110 Bankruptcy Case No.: 04-13472 Type of Business: The Debtor is an importer & distributor of wines from Portugal. Chapter 11 Petition Date: February 4, 2004 Court: District of New Jersey (Trenton) Debtors' Counsel: Eugene D. Roth, Esq. Law Office of Eugene D. Roth Valley Park East 2520 Highway 35, Suite 303 Manasquan, NJ 08736 Tel: 732-292-9288 Fax: 732-292-9303 Total Assets: $755,000 Total Debts: $1,113,286 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Caves Messias Apartado Supplier $154,975 Vinimport, Inc. Promissory Note D $80,000 State of NJ/Div of Taxation ABT Taxes $70,004 Int. Fidelity Insurance Co. Bond Claim $45,872 Roquevale Soc. Agricola Supplier $33,342 Casa Agricola Margaride Supplier $32,153 State of NJ/Div of Taxation ABT Tax Penalty $17,267 Cervesa Madeira Services Supplier $16,595 Saraiva Ent. Supplier $10,648 American Express Credit Card Purchases $9,101 Alpha Int. Broker Services $8,939 State of NJ/Div of Emp Accts Unemployment Tax $8,226 Talhao, SA Supplier $7,908 Mendonca & Suarex, LLC Accounting Services $5,988 Blue Cross/Blue Shield Insurance Premiums $5,652 Uruguay Imports Supplier $4,225 Verizon Phone Bills $4,016 Verizon Wireless Cellular Phone Bills $3,373 Majestic Distilling Co. Supplier $2,895 D'Andrea Wine Imports Supplier $2,855 NATIONAL CENTURY: Balks at Network Pharmaceuticals' $8.5MM Claim ---------------------------------------------------------------- Joseph M. Witalec, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, relates that 28 claims filed against the National Century Financial Enterprises Debtors do not represent a valid obligation of the Debtors or their estates. Based on a review of their books and records and their analysis of the underlying liabilities, the Debtors determined that each Claim is improperly asserted because: (a) the Claim already has been paid or otherwise satisfied; or (b) the Claim represents an alleged obligation that is not a valid liability of the Debtors or their estates or otherwise is not due and owing. The 28 No Liability Claims are: Creditor Claim Amt. Claim Amt. -------- ---------- ---------- Aqua Perfect of Central Ohio 28 $10,530 Arkansas Dept. of Human Service 80 57,093 Bryant Consulting Services, LLC 20 108,125 Comprehensive Addiction Program, Inc. 693 279,862 Emergystat, Inc.; Extended Emergency Medical Services, Inc.; MedExpress of Mississippi, LLC; Emergystat of Sulligent, Inc. 686 187,834 First Sierra Financial, Inc. 698 50,187 Freeman and Mills, Inc. 120 105,698 General Electric Capital Corporation 842 1,251 Gentiua Health Services 748 178,545 Glen Cavallo 35 580,000 Holdridgee Mechanical, Inc. 65 1,500 Jet Blast Aircraft Detailing 60 160 Kinko's 36 90 Koorsen Protection Services, Inc. 9 325 Mayle, Diana K. 10 650 National Bank of Arizona 7 304,859 Network Pharmaceuticals 314 8,500,000 Osage Financial, Inc. 356 379,350 Premeaux, Mary 840 936 Premier Courier, Inc. 109 636 Pride Staff 839 2,356 Protection One 95 160 Quere, Nancy Renee 135 2,430 Raytheon Aircraft Company 101 1,005 Raytheon Aircraft Company 102 4,722 Raytheon Aircraft Company 103 2,124 Safeguard Business Systems 34 435 Silver Moves, Inc., NuMed Rehabilitation, Inc. and Parke Home Health Care, Inc. 701 unliquidated Silver Moves, Inc., Numed Rehabilitation, Inc. and Parke Home Health Care, Inc. 702 unliquidated Silver Moves, Inc. Numed Rehabilitation, Inc. and Parke Home Health Care, Inc. 703 unliquidated Tamara Lowe, Union County Treasurer 44 3,159 Verizon 123 633 A. Aqua Perfect of Central Ohio Aqua Perfect filed Claim No. 28, seeking payment for the lease of a water machine for $10,530. This unit was returned and the Debtors only have one unit remaining with Aqua Perfect. The liabilities with respect to the unit are covered by Claim No. 27. B. Arkansas Department of Human Services The Arkansas Department of Human Services filed Claim No. 80 for $57,093, representing taxes. The taxes asserted are for quality assurance fees for Chenal RehaB & Healthcare Center, Dumas Nursing Center, Junction City Health & Rehabilitation and Piggot Nursing Center. The proof of claim indicates that all of these facilities are owned by Centennial Healthcare in Atlanta, Georgia. None of the Debtors has any connection to any of these entities. C. Bryant Consulting Services, LLC Bryant filed Claim No. 20 for consulting services allegedly rendered to the Debtors from January 2002 to September 2002 and for alleged damages resulting from lost business opportunities. The Debtors terminated the services of Bryant at the end of its original contract. On November 6, 2001, the Debtors settled all outstanding obligations with Bryant for $10,000. As indicated in its claim, Bryant worked for Rebecca Parrett, and not the Debtors, from January 2002 to September 2002. Bryant was not a party to a contract with any of the Debtors for the period in question. Thus, Claim No. 20 should be disallowed. D. Comprehensive Addiction Program, Inc. and Its Subsidiaries Comprehensive Addiction filed Claim No. 693 for $279,862 for payments allegedly due from their previous relationship with the Debtors as a provider. A review of the Debtors' books and records shows that no debt is due or owing to Comprehensive. E. Emergystat, Inc.; Extended Emergency Medical Services, Inc.; MedExpress of Mississippi, LLC; Emergystat of Sulligent, Inc. Emergystat, et al. filed Claim No. 686 for $187,834 for payments allegedly due from their previous relationship with the Debtors as a provider. A review of the Debtors' books and records shows that no debt is due or owing to Emergystat, et al. F. First Sierra Financial, Inc. First Sierra filed Claim No. 698 for $50,187 for certain alleged unpaid amounts under equipment leases. A review of the Debtors' books and records shows that no debt is due or owing to First Sierra, and First Sierra fails to attach any explanation of the claim amount. G. Freeman and Mills, Inc. Freeman and Mills filed Claim No. 120 for $105,698. Pursuant to a settlement entered into with Allegiant Physician Services, Ins. and certain other parties, however, the liabilities asserted in Claim No. 120 have been paid in full. Accordingly, Claim No. 120 should be disallowed. H. General Electric Capital Corporation General Electric filed Claim No. 842 for $1,251 with respect to an alleged equipment lease with Allied Medical, Inc. Allied was current on its lease payments as of the Allied Petition Date. Any postpetition payments on the equipment lease were either the responsibility of Viles Medical Supply, Inc., which operated Allied pending the sale of substantially all of the assets of Allied, or AmMed, Inc., which ultimately purchased the assets of Allied and was assigned the lease. Accordingly, the Debtors have no further liability under the lease at issue, and Claim No. 842 should be disallowed and expunged. I. Gentiua Health Services Gentiua Health filed Claim No. 748 for $178,545 for payments allegedly due from its previous relationship with the Debtors as a provider. The Debtors' books and records show that no debt is due or owing to Gentiua. J. Glen Cavallo Mr. Cavallo filed Claim No. 35, seeking payment under an alleged salary guarantee for $580,000. After filing his claim, Mr. Cavallo resigned, which vitiated any right he may have had to any salary guarantee under his agreements with the Debtors. K. Holdridge Mechanical, Inc. Holdridge filed Claim No. 65 for services performed for $1,500. No supporting documents were provided for the Claim, and the Claim also asserts liabilities that are asserted in Claim No. 84, filed by Lincoln Construction. L. Jet Blast Aircraft Detailing Jet Blast filed Claim No. 60 for $160 for certain alleged services performed. The invoice in support of the claim, however, is payable by Executive Management in Cincinnati, Ohio, not the Debtors. M. Kinko's Kinko's filed Claim No. 36, seeking payment for $90 for copy services performed in February 1998. Payment for those services was made by the Debtors on March 5, 1998 by Check No. 21325. N. Koorsen Protection Services, Inc. Koorsen filed Claim No. 9 for $325 for an inspection of the Debtors' sprinkler system. The Claim is the obligation of the Muirfield Square Owners Association, not the Debtors. O. Diana K. Mayle Ms. Mayle, a former employee of the Debtors, filed Claim No. 10 for an alleged quarterly bonus for $650 for the period from July 11, 2002 to September 12, 2002. The Debtors' prepetition quarterly bonus program was discretionary. The Debtors, decided in the exercise of their discretion, to deny Ms. Mayle a bonus. P. National Bank of Arizona The National Bank of Arizona filed Claim No. 7, seeking satisfaction of a mortgage loan on certain real property for $304,858. Prior to the Petition Date, the Debtors were parties to a land sale contract under which the purchaser was making the payments on the mortgage loan as they came due. The mortgage was paid in full, including interest due, by the purchaser on March 4, 2003. Q. Network Pharmaceuticals Network Pharmaceuticals filed Claim No. 314 for $8,500,000 based on a stipulated judgment in the Superior Court of California. None of the Debtors, however, was a party to that action, and none of the Debtors has any liability based on the stipulated judgment. Accordingly, Claim No. 314 should be disallowed and expunged. R. Osage Financial, Inc. Osage Financial filed Claim No. 356, seeking payment for $379,350 for a commission in respect of program fees arising from the Debtors' relationship with provider Doctors Community Healthcare Corporation. The Debtors' books and records show that no program fees were earned for the period to which the claim relates, and therefore, no commission is due and owing to Osage Financial. S. Mary Premeaux Ms. Premeaux filed Claim No. 840 for $936 for wages, salary and commissions. The Debtors' books and records show that no debt is due mid owing to Ms. Premeaux, and no supporting documentation was attached to the claim. T. Premier Courier, Inc. Premier filed Claim No. 109, seeking payment for delivery services for $636. No supporting documentation was attached to the claim, and no deliveries were made on behalf of the Debtors by Premier during the relevant time period. U. Pride Staff Pride Staff filed Claim No. 839 for $2,356 for services allegedly performed. Based on the Debtors' books and records, no debt is due or owing to Pride Staff, and no supporting documentation was attached to the Claim. V. Protection One Protection One filed Claim No. 95 for $161 for goods allegedly sold. The invoice submitted does not indicate the date of the sale, nor does it indicate the type of goods or services received by the Debtors. The Debtors know of no outstanding obligations to Protection One. W. Nancy Renee Quere Ms. Quere filed Claim No. 135, seeking payment for $2,430 for 401(k) account proceeds arising from the termination of the Debtors' 401(k) plan. The Debtors have no liability to Ms. Quere in respect of the plan termination. Moreover, the 401(k) plan administrator informed the Debtors that all payments arising from the termination of the 401(k) plan have been made. Thus, Claim No. 135 should be disallowed and expunged. X. Raytheon Aircraft Company Raytheon Aircraft filed Claim Nos. 101, 102 and 103 for $1,005, $4,722 and $2,124. All three proofs of claim assert liabilities that, according to the Debtors' books and records, are invalid. Accordingly, all three Raytheon Claims should be disallowed and expunged. Y. Safeguard Business Systems Safeguard Business filed Claim No. 24 for goods sold to the Debtors after the Petition Date for $434. This postpetition invoice was paid in full on January 6, 2003, by Check No. 100141. Z. Silver Moves, Inc., NuMed Rehabilitation, Inc. and Parke Home Health Care, Inc. Silver Moves, NuMed and Parke Home Health filed Claim Nos. 701, 702 and 703, each asserting claims in unliquidated amounts for payments allegedly due from their previous relationship with the Debtors as a provider. A review of the Debtors' books and records shows that no debt is due or owing to the Claimants. AA. Tamara Lowe, Union County Treasurer The Union County, Ohio Treasurer filed Claim No. 44 for real estate taxes allegedly owed on the Debtors' property at 8100 Corporate Boulevard, Plain City, Ohio for $3,159, as of February 12, 2003. The Plain City Property was sold by the Debtors to a third party on February 21, 2003, and the applicable real estate taxes were deducted and paid from the proceeds of the sale. BB. Verizon Verizon filed Claim No. 123 for $633 for a contract cancellation fee for service in New York City. Verizon asserts that the contract providing for the fee was signed by a consultant to the Debtors. Verizon, however, failed to provide the Court or the Debtors a copy of the contract. In addition, the consultant alleged to have signed the contract lacked the authority to bind any of the Debtors. Thus, Claim No. 123 should be disallowed and expunged. Pursuant to Section 101 of the Bankruptcy Code, a creditor holds a claim against a bankruptcy estate only to the extent that it has a "right to payment" for the asserted liability. Mr. Witalec asserts that the Claimants have no right to payment -- and therefore no claim -- to the extent that the asserted liability already has been paid or satisfied or otherwise is not due and owing by a debtor. Accordingly, the Debtors ask the Court to disallow and expunge the No Liability Claims in their entirety. (National Century Bankruptcy News, Issue No. 32; Bankruptcy Creditors' Service, Inc., 215/945-7000) NEW CENTURY FINANCIAL: Annual Shareholders' Meeting Set for May 5 ----------------------------------------------------------------- New Century Financial Corporation (Nasdaq: NCEN) announced that its 2004 Annual Meeting of Stockholders will be held on Wednesday, May 5, 2004, at 9:00 a.m. pacific time, at the Company's corporate offices located at 18400 Von Karman, Suite 1000, Irvine, California 92612. The Company's Board of Directors has designated the close of market on March 10, 2004 as the record date for the determination of stockholders entitled to notice of and to vote at the annual meeting. New Century Financial Corporation (Nasdaq: NCEN) (S&P, BB- Long- Term Counterparty Credit and B+ Convertible Senior Notes Ratings) is one of the nation's largest specialty mortgage companies, providing first and second mortgage products to borrowers nationwide through its operating subsidiaries. New Century is committed to serving the communities in which it operates with fair and responsible lending practices. To find out more about New Century, visit http://www.ncen.com/ NORTHWESTERN: Otter Tail Wants to Acquire South Dakota-Based Ops. ----------------------------------------------------------------- Otter Tail Power Company, a division of Otter Tail Corporation (Nasdaq: OTTR), will offer to purchase the South Dakota-based utility operations of NorthWestern Corporation, which filed for bankruptcy in September 2003. Otter Tail Power Company has retained Merrill Lynch as its financial advisor to negotiate with NorthWestern's unsecured creditors. The South Dakota-based operations of NorthWestern provides services to customers in South Dakota and Nebraska, and includes part ownership of three power plants at sites in North Dakota, South Dakota and Iowa. Otter Tail Power Company is a co-owner with NorthWestern in the North Dakota and South Dakota plants. It also operates both plants. Otter Tail Power Company currently serves an approximate 6,000-square-mile territory in South Dakota adjacent to NorthWestern's South Dakota distribution territory. The offer will not include NorthWestern's Montana operations. Otter Tail Power Company, headquartered in Fergus Falls, Minn., provides electricity and energy services to nearly a quarter million people in Minnesota, North Dakota, and South Dakota. For more information, visit the company's Web site at http://www.otpco.com/ Otter Tail Corporation is headquartered in Fergus Falls, Minn., and Fargo, N.D. It has interests in the electric utility, health services, plastics, manufacturing, construction, transportation, telecommunications, energy services and entertainment industries. Otter Tail Corporation stock trades on The Nasdaq Stock Marketr under the symbol OTTR. The latest investor and other corporate information are available at http://www.ottertail.com/ OWENS-ILLINOIS: S&P Downgrades Corporate Credit Rating to BB- ------------------------------------------------------------- Standard & Poor's Ratings Services lowered its corporate credit rating on Owens-Illinois Inc. to 'BB-' from 'BB' reflecting the company's announcement of additional asbestos reserve related charges and a goodwill impairment; its sub par financial profile relative to ratings expectations; and ongoing business challenges that have delayed the expected progress in reducing Owens- Illinois' sizable debt burden. The outlook is negative. Toledo, Ohio-based Owens-Illinois had outstanding debt of $5.4 billion at Dec. 31, 2003. The rating action factors in Owens-Illinois' announced charge of $450 million ($292.5 million after tax) to increase its reserve for estimated future asbestos-related costs to $803.7 million as of Dec 31, 2003. "The increase raises concern because the liability suggests that Owens-Illinois' obligations relative to asbestos may decline more slowly than previously expected. The company also expects to conduct an annual review of its asbestos- related liabilities and costs, which could necessitate further increases in reserves," said credit analyst Liley Mehta. Owens-Illinois expects that its asbestos-related cash payments in 2004 will be about 10% lower than 2003 payments and should continue to decline thereafter. While the declining trend in cash payments suggests that the asbestos issue is manageable, the increased reserve is reflective of the still significant drain on cash flows and overall obligations of the company in the long term. Still, Standard & Poor's differentiates Owens-Illinois' asbestos litigation from many other defendants, in that the company exited the business several years earlier, and has a much older claimant base (average age 77). The company also recorded goodwill impairment charges of $720 million, mainly related to the consumer products division of the plastic packaging segment. This disclosure, although a non-cash charge, substantially erodes Owens-Illinois' equity base A--and underscores the disappointing performance within the segment, and aggressive multiples paid for past acquisitions. More important, Standard & Poor's ratings were based on expectations that Owens- Illinois would remain cash flow positive (after asbestos payments and capital spending), and gradually delever the balance sheet. However, with disappointing operating results in 2003, the company likely will be free cash flow negative, and given continuing pressures on the plastic segment--would likely only be free cash flow neutral in 2004. As a result, the company is unlikely to have the capacity to reduce debt to expected levels in the near term, further delaying improvement to subpar credit measures. The company recently announced that it is considering strategic alternatives for its blow-molded plastic container operations, which were considered to be a complement to the mature glass container segment, and historically have offered relatively higher growth prospects. Standard & Poor's views the plastics business as a possible source of alternative liquidity, and proceeds from a potential transaction are expected to be applied to accelerate debt reduction. Still, the extent of improvement to the company's financial profile, timing, and potential negative impact on the company's business profile, remain uncertainties. OWENS CORNING: Plans to Divest Its Vytec Vinyl Siding Operation --------------------------------------------------------------- Owens Corning intends to divest its Vytec Vinyl Siding operation, a division of the company's Siding Solutions Business. The unit produces several lines of vinyl siding and accessories under the Vytec brand. Owens Corning remains committed to the Vinyl Siding business and it will retain its Owens Corning Homeside and Norandex Reynolds lines of vinyl siding and accessories. "This decision to divest the Vytec operation was reached after a strategic review of all of our Owens Corning vinyl siding assets," said Dan Dietzel, president of Owens Corning's Siding Solutions Business. "This move will enable us to focus on growing Owens Corning's Homeside and Norandex Reynolds vinyl siding brands and product offerings. We believe that our customers will be best served by focusing all of our energies on these brands," he added. Vytec's manufacturing operations are located in London, Ontario, employing approximately 233 employees. The company was founded in 1974, and was acquired by Owens Corning in 1997. Owens Corning is a world leader in building materials systems and composites systems. Founded in 1938, the company had sales of $4.9 billion in 2002. Additional information is available on Owens Corning's Web site at http://www.owenscorning.com/ PAC-WEST TELECOMM: Will Publish Q4 and YE 2003 Results on Feb. 18 ----------------------------------------------------------------- Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of broadband communications services to service providers and business customers in the western U.S., announced the date for its fourth quarter and year-end 2003 earnings release and conference call. Pac-West plans to announce its financial and operating results for the fourth quarter and year-end 2003 on Wednesday, February 18, 2004, after market close. An investor conference call will be held on Thursday, February 19, 2004, at 8:30 a.m. Pacific Time/11:30 a.m. Eastern Time. Investors are invited to participate by dialing 1-888-291-0829 or 706-679-7923. The call will be simultaneously webcast on Pac-West's web site at http://www.pacwest.com/investor/ An audio replay will be available through March 4, 2004, by dialing 1-800-642-1687 or 706-645-9291 (passcode #4861253). Founded in 1980, Pac-West Telecomm, Inc. is one of the largest competitive local exchange carriers headquartered in California. Pac-West's network carries over 100 million minutes of voice and data traffic per day, and an estimated 20% of the dial-up Internet traffic in California. In addition to California, Pac-West has operations in Nevada, Washington, Arizona, and Oregon. For more information, visit Pac-West's Web site at http://www.pacwest.com/ * * * As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit rating on Pac-West Telecomm Inc. to 'D' from 'CC'. The rating on the 13.5% senior notes due 2009 was lowered to 'D' from 'C'. S&P explained, "Given the company's significant dependence on reciprocal compensation (the rates of which the company expects to further decline in 2003) and its limited liquidity, Pac-West will likely find the implementation of its business plan continue to be challenging." PC LANDING CORP: Secures Exclusivity Extension through May 31 ------------------------------------------------------------- By order of the U.S. Bankruptcy Court for the District of Delaware, PC Landing Corp., and its debtor-affiliates obtained an extension of their exclusive periods. The Court gives the Debtors, until May 31, 2004, the exclusive right to file their plan of reorganization and until August 2, 2004 to solicit acceptances of that Plan. PC Landing Corporation and its debtor-affiliates, own and operate one of only two major trans-Pacific fiber optic cable systems with available capacity linking Japan and the United States. The Debtor filed for chapter 11 protection on July 19, 2002 (Bankr. Del. Case No. 02-12086). Laura Davis Jones, Esq., at Pachulski Stang Ziehl Young & Jones represents the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, it listed an estimated assets of over $10 million and estimated debts of more than $100 million. PENN FINANCIAL: Bankruptcy Court Establishes Claims Bar Dates ------------------------------------------------------------- On November 12, 2003, the Honorable Clarence C. Newcomer of the U.S. District Court for the Eastern District of Pennsylvania issued a decree affording protection to the customers of Penn Financial Group, Inc., pursuant to the Securities Investor Protection Act. The petitioner, Securities Investor Protection Corporation was appointed Trustee for the liquidation of the Debtor's business. Drinker Biddle & Reath LLP is the Trustee's Counsel. Creditor claims for protection against the Debtor under SIPA must be received by the Trustee within six months after Jan. 22, 2004. Persons who wish to avail themselves of the maximum protection afforded to Customers under SIPA must file their claims within 60 days after Jan. 22, while claims by broker-dealers for the completion of open contractual commitments must be filed within 30 days after the same date. Claims must be sent to: SIPC, as trustee for the Liquidation of Penn Financial Services, Inc. 805 15th Street, N.W., Suite 800 Washington, DC 20005-2215 PERKINELMER INC: Says Products Affected by FDA Action are Safe -------------------------------------------------------------- PerkinElmer, Inc. (NYSE: PKI), a global leader in health sciences, issued the following statement Wednesday. PerkinElmer said that it had been working for some time with the Food and Drug Administration regarding good manufacturing practices at its Norton, Ohio facility and that it believes the products affected by today's FDA action are safe. PerkinElmer believes it has made significant progress in addressing FDA concerns and intends to continue to work with the FDA to ensure that its manufacturing practices for regulated products are fully compliant with FDA regulations. PerkinElmer intends to help its customers find alternative sources of supply until it can resume shipment of its products. The company also noted that 2003 sales of the affected products were less than $10 million. The company said the action is not expected to have a material financial impact. Additionally, the company added that as part of its previously announced facility rationalization, it has been in the process for approximately a year of transferring the manufacture of the products made in the Norton site to another location. PerkinElmer, Inc. is a global technology leader focused in the following businesses - Life and Analytical Sciences, Optoelectronics and Fluid Sciences. Combining operational excellence and technology expertise with an intimate understanding of our customers' needs, PerkinElmer provides products and services in health sciences and other advanced technology markets that require innovation, precision and reliability. The Company serves customers in more than 125 countries, and is a component of the S&P 500 Index. Additional information is available through http://www.perkinelmer.com/ As previously reported, Fitch Ratings affirmed PerkinElmer, Inc.'s 'BB+' senior secured debt rating, 'BB+' bank loan rating, and 'BB-' senior subordinated debt rating. The ratings apply to approximately $570 million in senior secured and senior subordinated debt. The Rating Outlook is Stable. PG&E NATIONAL: Court Clears Cash Management System Modification --------------------------------------------------------------- The U.S. Bankruptcy Court authorizes the PG&E National Energy Group Debtors to continue the customary intercompany accounting and cash management procedures in the ordinary course of their businesses, pursuant to the NEG Debtors and the U.S. Trustee's agreed upon modifications to the Cash Management System. Judge Mannes orders that: (a) The NEG Debtors are prohibited from transferring funds to non-debtor affiliates outside the ordinary course of business unless authorized by the Bankruptcy Court; (b) Any claim of any Debtor or any Debtor-affiliate against a Debtor arising from a payment made on behalf of a Debtor, any cash transfer made to a Debtor or any transaction with a Debtor, occurring after the Petition Date, will be granted an administrative expense priority status pursuant to Sections 503(b)(1) and 507(a)(1) of the Bankruptcy Code, provided, that the administrative expense priority status will not apply to any transfer that constitutes a payment in satisfaction of a debt obligation to a Debtor arising after the Petition Date; (c) The NEG Debtors are authorized to maintain the existing bank accounts during the pendency of the Chapter 11 cases, and pay all fees and satisfy all other related obligations; (d) The NEG Debtors are authorized to open or close bank accounts in their discretion as they deem necessary in maintaining the Cash Management System, or as required under further Court order, provided, that all operating bank accounts comply with the provisions of Section 345(b); (e) Each bank at which the NEG Debtors have an account is authorized and directed to maintain and continue the existence of the account without interruption, provided that sufficient funds exist within the accounts to honor the checks; (f) Every bank at which the NEG Debtors maintain an account is authorized to continue to service and administer the accounts as debtor-in-possession without interruption and in the usual and ordinary course; (g) Every bank at which the NEG Debtors maintain an account is authorized to receive, process, honor and pay any and all checks and drafts drawn on, and electronic transfer requests made on the accounts on or after the Petition Date, provided, that except for those checks or drafts to be honored and paid under any Court order, no checks or drafts issued on the accounts before the Petition Date but presented for payment after the Petition Date will be honored or paid; (h) The NEG Debtors are authorized to make disbursements from their accounts other than by check, to the extent consistent with the NEG Debtors' existing cash management practices, notwithstanding any contrary provisions of the U.S. Trustee Guidelines, provided, that the NEG Debtors provide sufficient description of the payor, payee, and specific purpose of each non-check transaction in its Monthly Operating Reports; (i) The NEG Debtors are authorized to invest funds notwithstanding the requirements of Section 345(b) in "Institutionalized Money Market Funds" that: (i) conform with Rule 2a-7 of the Investment Company Act of 1940, which includes being in compliance regarding the use of derivative securities; (ii) have a $1,000,000,000 minimum total fund assets -- $500,000,000 for tax-exempt funds; (iii) are rated AAA or to be in operation for at least two years; and (iv) are limited -- except for U.S. Government funds that are AAA rated -- to $100,000,000 or 10% of the investment portfolio at the time of investment, per fund, whichever is greater; and (j) The NEG Debtors will inform each of the banks that maintain their accounts of the Bankruptcy Court's Order. (PG&E National Bankruptcy News, Issue No. 14; Bankruptcy Creditors' Service, Inc., 215/945-7000) PLAYTEX PRODUCTS: Prices $460MM 8% Senior Secured Debt Offering --------------------------------------------------------------- Playtex Products, Inc. (NYSE: PYX) priced an offering of $460 million of 8% senior secured notes due 2011 in a Rule 144A offering. In connection with the sale of senior secured notes, Playtex also intends to enter into a new senior secured credit facility in an aggregate amount of approximately $150 million. Playtex intends to use the proceeds from the offering of the senior secured notes and the borrowings under its new credit facility to repay and/or terminate commitments under its existing credit facility, to terminate its existing accounts receivables facility, to pay transaction fees and expenses and for general corporate purposes. The sale of senior secured notes and the other refinancing transactions are expected to close on February 19, 2004. The Company estimates that interest expense will increase in 2004 to reflect the pricing of these senior secured notes by approximately $.03 per share versus the previously issued guidance. Earnings per share including this additional interest are expected to be in the $.27 to $.30 range for the full year 2004. The securities to be offered will not be registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act. Playtex Products, Inc. (S&P, B+ Long-Term Corporate Credit and Senior Unsecured Bank Loan Ratings, Developing) is a leading manufacturer and distributor of a diversified portfolio of personal care and consumer products, including Playtex infant feeding products, Wet Ones, Baby Magic, Diaper Genie, Mr. Bubble, Playtex tampons, Banana Boat, Woolite rug and upholstery cleaning products, Playtex gloves, Binaca and Ogilvie. POLYONE CORP: Fourth-Quarter 2003 Net Loss Tops $183 Million ------------------------------------------------------------ PolyOne Corporation (NYSE: POL), a leading global polymer services company, reported sales from continuing operations of $474.0 million for the quarter ended December 31, 2003, an increase of $28 million, or 6 percent, over the fourth quarter of 2002. PolyOne also posted an operating loss from continuing operations of $7.9 million in the fourth quarter of 2003 compared with an operating loss from continuing operations of $17.3 million in the fourth quarter of 2002. Discussion of Results PolyOne reported a fourth-quarter 2003 net loss of $182.6 million, or $2.00 per share, compared with a fourth-quarter 2002 net loss of $17.5 million, or $0.19 per share. The 2003 fourth quarter net loss included no U.S. income tax benefit on domestic operating losses. PolyOne also reported a fourth-quarter 2003 loss before special items of $6.7 million, or $0.07 per share, compared with a fourth-quarter 2002 net loss before special items of $14.4 million, or $0.16 per share. The 2003 net loss per share before special items is within the range of Wall Street estimates found on Thomson Financial's First Call. "Our lower cost structure and an increase in customer demand compared with last year's fourth quarter were the key factors in our improved operational financial performance," said Thomas A. Waltermire, PolyOne president and chief executive officer. "While we will continue to reduce our cost structure, we are focused on improving our market positions to better leverage the benefits of a strengthening U.S. economy. We are encouraged by the comparatively and sequentially stronger daily shipment rates experienced throughout the quarter." The 2003 fourth quarter net loss of $182.6 million included special items before taxes of $169.5 million. The special charges relate largely to (a) personnel reductions; (b) the previously announced closing of the Burlington, New Jersey, Wynne, Arkansas, and DeForest, Wisconsin, plants; and (c) a pre-tax non-cash charge of $130.5 million associated with discontinued operations, which PolyOne announced on January 15, 2004, based on currently projected net proceeds from the disposition of three non-core business operations: Elastomers and Performance Additives, Specialty Resins and Engineered Films. The charge represents an estimated impairment in the net assets of the discontinued operations held for sale. For full-year 2003, PolyOne had sales from continuing operations of $1.965 billion, an improvement of nearly 4 percent compared with 2002 sales from continuing operations of $1.892 billion. The operating loss in 2003 was $4.0 million compared with operating income of $5.0 million in 2002. Before special items, however, operating income improved to $43.8 million in 2003 from $18.4 million in 2002. Fourth-Quarter 2003 Business Highlights Working capital management: PolyOne reduced total accounts receivable and inventories by approximately $69 million. Accounts payable declined by $32 million. Plans for debt reduction: In October, PolyOne identified three non-core operating units for divestment as part of its plan to reduce debt by $200 million to $300 million. PolyOne intends to use a substantial portion of the anticipated proceeds from the planned sale of these units to reduce debt and strengthen its balance sheet. The Company expects to complete all three dispositions in 2004. The non-core units employ approximately 2,270 people and had 2003 sales totaling $571.0 million. Overhead cost reductions: During the fourth quarter, management implemented a number of programs to improve the performance of the North American operations. As part of ongoing efforts to reduce PolyOne's selling and administrative cost to less than 10 percent of sales, approximately 200 positions were eliminated in a number of business operations and functional support departments during the quarter. Approximately 630 positions were eliminated in 2003. Restructuring actions: During the fourth quarter, PolyOne announced that it will close the Burlington, New Jersey, manufacturing plant in the first quarter of 2004. PolyOne projects that this restructuring action will yield an annualized pre-tax earnings improvement of $5.5 million. The Company anticipates total restructuring expense of approximately $15.5 million, of which approximately $7 million will be non-cash and related to asset write-offs. The fourth-quarter 2003 restructuring expense (included in special items) was $11.5 million. PolyOne also announced that it will close the DeForest, Wisconsin, and Wynne, Arkansas, manufacturing plants in early 2004. PolyOne projects that this restructuring action will yield an annualized pre-tax earnings improvement of $7.5 million. Total restructuring expense will approximate $12.5 million, of which approximately $5.0 million will be non-cash and related to asset write-offs. The fourth-quarter 2003 restructuring expense (included in special items) was $7.7 million. ResinDirect acquisition: In January 2004, PolyOne announced that it had acquired the North American distribution business of ResinDirect LLC, a wholly owned subsidiary of Louis Dreyfus Energy Services L.P. In North America, ResinDirect distributes approximately 60 million pounds of commodity plastic resins annually. ResinDirect's North American distribution business is being integrated into PolyOne's Distribution business segment, which had sales of $529 million in 2003. Tekno Polimer acquisition: In January 2004, PolyOne acquired the remaining 13 percent of its Turkish compounding operation, Tekno Polimer. Tekno Polimer is part of PolyOne's European Engineered Materials business. The compounder has provided successful PET recycling technology and has become the Center of Excellence for recycled products in PolyOne's International Engineered Materials business. Tekno Polimer sales were approximately $20 million in 2003. Business Segment Performance Highlights Performance Plastics: Fourth-quarter 2003 sales totaled $372.9 million, an increase of $29.6 million, or 9 percent, versus the fourth quarter of 2002. Shipment volume in the fourth quarter of 2003 improved 5 percent compared with prior-year results. Sales benefited from favorable foreign currency exchange rates and the Transcolor acquisition in December 2002. With the exception of the Formulators product group, each operating unit in Performance Plastics had improved shipment volumes. Contributing to the Formulators' volume decline were a key customer that lost share in its end market and the contribution to the BayOne equity joint venture of the former urethanes product line, for which PolyOne no longer separately reports sales. Distribution: Fourth-quarter 2003 Distribution shipment volumes reflected the overall improvement in the North American manufacturing economy. Shipment volumes in the United States and Canada improved 6 percent compared with fourth-quarter 2002 and 4 percent compared with third-quarter 2003. Due to PolyOne's exit of portions of the Distribution operations in Mexico, overall segment volumes were up 1 percent and 3 percent compared with the same periods. Resin and Intermediates: Equity income from joint ventures, net of allocated overhead support cost and costs associated with past operations, was $5.0 million in the fourth quarter of 2003, $1.3 million more than in fourth-quarter 2002. PolyOne's share of equity earnings increased $1.6 million from Oxy Vinyls, LP and $0.4 million from SunBelt Chlor-Alkali in the fourth quarter of 2003 compared with the same quarter in 2002. PolyOne's share of equity earnings from SunBelt and OxyVinyls decreased $1.6 million compared with the third quarter of 2003, due principally to higher feedstock costs and lower resin and chlor-alkali selling prices. First-Quarter 2004 Business Outlook Customer demand, which strengthened in September after a weak July and August, continued strong through early December. After a normal seasonal year-end slowdown, demand in January 2004 returned to September/October 2003 levels for most business units and geographic regions. While sales demand in February and March is difficult to predict, PolyOne estimates that if current trends continue, first-quarter 2004 sales from continuing operations would likely improve 5 percent to 8 percent over fourth-quarter 2003 levels and would exceed first-quarter 2003 levels. Demand for polyvinyl chloride resin in the 2004 first quarter is forecasted to be seasonally higher than in fourth-quarter 2003. Average industry PVC resin selling prices are projected to improve from the 2003 fourth quarter because most producers have announced $0.02-per-pound increases for both January and February. Consequently, PVC resin industry margins over raw materials are projected to improve compared with the fourth quarter of 2003, even though ethylene costs are expected to increase during the first quarter. The higher PVC resin industry margins, however, will be mostly offset by higher natural gas costs. Chlor-alkali prices are anticipated to be down in the 2004 first quarter compared with the fourth quarter of 2003. Caustic demand is expected to improve sequentially. The combination of these factors results in a projected decrease in operating income for PolyOne's Resin and Intermediates segment of $2 million to $4 million in the first quarter of 2004 compared with the fourth quarter of 2003. In addition, PolyOne's operating businesses (the Performance Plastics and Distribution business segments) anticipate that higher PVC resin prices and other natural gas-derived raw material costs will likely affect operating income negatively by $4 million to $6 million and offset a portion of the benefit from higher sales compared with the fourth quarter 2003. Restructuring expense in the first quarter of 2004 is projected at approximately $11.5 million before taxes for actions initiated to date, with approximately $5 million for continuing operations and $6.5 million for discontinued operations. The Company does not expect to recognize a U.S. income tax benefit on its loss in the first quarter. Taking all these factors into consideration, PolyOne's first- quarter 2004 performance should improve over first-quarter 2003 results. The Company anticipates a net loss between $0.09 and $0.17 per share, which includes a foreign income tax expense of $4 million to $4.5 million, no tax benefit on U.S. domestic losses and the $11.5 million restructuring expense. Before restructuring and after adjusting to reflect a tax benefit on domestic operating losses, PolyOne expects a small profit in the first quarter, driven by internal cost reduction actions and improved demand, versus a first-quarter loss in 2003. "Economic indicators suggest that the customer demand we saw in the fourth quarter should continue to improve in the first quarter, particularly in North America," said Waltermire. "Like our customers, we remain cautiously optimistic. We are confident that we have a solid strategy to improve performance. Our actions remain focused on lowering our cost structure, reducing debt through asset sales, reducing working capital and strengthening our market positions." Supplemental Information The Company publishes more details of its performance as well as information on key drivers of its operating results. This information will be posted today on its Web site at http://www.polyone.com/in the corporate investor relations section under the listing "Supplements." PolyOne Corporation (Fitch, B Senior Unsecured Debt and BB- Senior Secured Debt Ratings, Negative) with 2002 revenues of $2.5 billion, is an international polymer services company with operations in thermoplastic compounds, specialty resins, specialty polymer formulations, engineered films, color and additive systems, elastomer compounding and thermoplastic resin distribution. Headquartered in Cleveland, Ohio, PolyOne has employees at manufacturing sites in North America, Europe, Asia and Australia, and joint ventures in North America, South America, Europe and Asia. Information on the Company's products and services can be found at http://www.polyone.com/ REPTRON ELECTRONICS: Plan of Reorganization Declared Effective -------------------------------------------------------------- Reptron Electronics, Inc. (OTC Bulletin Board: REPT), an electronics manufacturing services company, announced that its Plan for Reorganization previously confirmed by the Bankruptcy Court has now become effective. The terms and conditions outlined in the Plan have now been completed and the Company has emerged from bankruptcy protection. The company has also entered into a new $25 million secured credit facility with Congress Financial pursuant to the terms of the Plan. This line of credit will be used to fund the Company's operations and obligations as outlined in the Plan. "Today is an important and exciting day for Reptron Electronics. The completion of our reorganization is the last significant piece of our strategy to position the Company for future success," stated Paul J. Plante, Reptron's President and Chief Executive Officer. Plante continued, "The reorganization, combined with the previous sales of our distribution business and memory module division, have eliminated unprofitable operations and helped us to significantly reduce debt." Plante concluded, "I want to thank our customers, suppliers, employees and others for their support in enabling a smooth and short reorganization process. With their continued support, we believe that Reptron is well positioned for future growth." Reptron Electronics, Inc. is an electronics manufacturing services company providing engineering services, electronics manufacturing services and display integration services. Reptron Manufacturing Services offers full electronics manufacturing services including complex circuit board assembly, complete supply chain services and manufacturing engineering services to OEMs in a wide variety of industries. Reptron Display and System Integration provides value- added display design engineering and system integration services to OEMs. For more information, please access http://www.reprton.com/ RESMED INC: Fourth-Quarter 2003 Results Show Marked Improvement --------------------------------------------------------------- ResMed Inc. (NYSE: RMD) announced record revenue and income results for the quarter and six months ended December 31, 2003. Revenue for the quarter was $82.3 million, an increase of 26% over the quarter ended December 31, 2002. Income from operations and net income for the December 31, 2003 quarter increased to $19.4 million and $14.2 million respectively, an increase of 21% and 36%. Earnings per share (on a diluted basis) for the quarter ended December 31, 2003 were $0.40, an increase of 33%, compared to the December 2002 quarter. Gross margin was 64%, consistent with the December 2002 quarter. Selling, general and administration costs for the quarter were $25.8 million, an increase of $4.8 million over the same period in fiscal 2003. The increase in gross SG&A related primarily to an increase in selling and administration personnel to meet expanding opportunities in the sleep-disordered breathing market. SG&A expenditure as a percentage of revenue was 31% in the December quarter, compared to 32% in the same period in fiscal 2003. Research and development expenditure, at approximately 8% of revenues, increased during the three months ended December 31, 2003 to $6.8 million from $4.8 million in the quarter ended December 31, 2002. The increase of 40% in R&D outlays reflects ResMed's continuing commitment to clinical research and product development, particularly in the evolving cardiovascular area, as well as a stronger Australian dollar. In constant currency terms, research and development expenditure increased by 14% compared to the December 2002 quarter. We expect to continue to spend approximately 8% of our revenues on R&D during the rest of the fiscal year. For the six months ended December 31, 2003 revenues were $155.2 million, an increase of 25% over the $123.9 million for the six months ended December 31, 2002. Net income for the six months was $26.4 million or $0.75 per share, compared with net income of $20.0 million or $0.58 per share for the same period in fiscal 2003. Net income increased by 32% over the prior year period. Inventory at $56.9 million, increased marginally compared to September 2003 levels. Accounts receivable days sales outstanding, at 63 days, improved by 5 days, compared to the December 2002 quarter. During the quarter, we repurchased 460,441 shares of our common stock at a cost of $18.6 million. The stock repurchase represents part of ResMed's ongoing capital management activities. During the quarter, we made a further commitment to donate $0.5 million to the ResMed Foundation. The foundation was established to promote awareness of and research into the serious medical consequences of untreated SDB. Peter C. Farrell PhD, Chairman and Chief Executive Officer, commented, "These record profit and revenue results for the December quarter of fiscal 2004 reflect ResMed's continuing strong sales and profit growth. This represents ResMed's 35th consecutive record quarter, in terms of quarter over quarter revenue and net income growth, since the Company went public in 1995. Our operating cash flow for the December quarter was an encouraging $13.4 million. Domestic sales increased by 27% over the December 2002 quarter to a record $41.1 million, reflecting continued healthy domestic demand for our sleep-disordered breathing products. International sales increased by 25%, over the December 2002 quarter to $41.2 million, reflecting encouraging growth in major markets, as well as a stronger Euro." Dr. Farrell further commented, "The sleep-disordered breathing market remains a vibrant one. Other medical specialties, in addition to the traditional ones, are finally beginning to see the need to address SDB/OSA in their patients. The trend is evolutionary rather than revolutionary but recognition of the need for treatment is finally dawning, particularly in the cardiovascular space." Dr. Farrell added, "ResMed has, once again, been included in the Forbes magazine 200 Best Small Companies in America for the 7th consecutive year. No other medical device company has been on the list for so many consecutive years, and only three companies have exceeded this time span. We welcome this recognition and attribute it to great teamwork. Overall ranking is calculated by giving weightings to growth in sales, earnings, and ROE for the most recent 12 months and over the past 5 years." ResMed (S&P, BB- Corporate Credit Rating, Stable Outlook) is a leading developer, manufacturer, and marketer of medical equipment for the diagnosis and treatment of sleep-disordered breathing. Further information can be obtained by visiting the Company's Web site at http://www.resmed.com/ RIVAL TECHNOLOGIES: Brings-In Dohan & Company as New Accountants ---------------------------------------------------------------- Grant Thorton has resigned and been replaced as principal independent accountant of Rival Technologies Inc. on December 23, 2003. The Company has engaged Dohan & Company as its principal independent accountant effective December 23, 2003.The decision to change principal independent accountants has been approved by the Company's Board of Directors. The Former Accountant's auditors' report dated March 28, 2003 on the Company's consolidated balance sheets as at December 31, 2001 and December 31, 2002 and the related consolidated statements of operations and deficit and cash flows for the years ended December 31, 2001 and December 31, 2002 contained a separate paragraph stating that "the accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the consolidated financial statements, the Company has not established a source of revenue, has a significant working capital deficiency, and is dependent on its ability to raise substantial amounts of equity funds. This raises substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty." The Former Accountant conducted a review of Company's quarterly results for the period ended March 31, 2003, but did not review the Company's quarterly results for the periods ended June 30, 2003 and September 30, 2003, nor to the date of their resignation on December 23, 2003. The quarterly results for the periods ended June 30, 2003 and September 30, 2003 have now been reviewed by the new auditor, Dohan and Company, who will also complete the year end audit for the year ended December 31, 2003. ROGERS COMMS: Reports Weaker Performance for Fourth-Quarter 2003 ---------------------------------------------------------------- Rogers Communications Inc. announced its consolidated financial and operating results for the fourth quarter and year ended December 31, 2003. Highlights of the fourth quarter of 2003 included the following: - Operating revenue grew 13.3% for the quarter, with all three operating companies contributing year-over-year growth, including 11.4% growth at Cable, 18.8% growth at Wireless and 4.7% growth at Media. - Consolidated quarterly operating profit grew 21.7% year- over-year, with all operating companies contributing double-digit year-over-year growth, with 13.1% growth at Cable, 35.5% growth at Wireless and 23.5% growth at Media. - Growth in quarterly operating profit, combined with a 21.1% reduction in spending on property, plant and equipment and lower interest costs, resulted in a $164.0 million year-over-year improvement in quarterly operating profit cash flow. - Cable had quarterly positive net basic subscriber additions of 8,600, growth in Internet subscribers of 35,400 and an increase in digital cable households of 43,200. During the fourth quarter, Cable also increased the download speed of its high-speed Internet service to 3Mbps, introduced the Company's first personal video recorder, launched 7 new high definition television channels and completed the rollout of its Rogers on Demand service in its Toronto market. - Wireless postpaid voice and data subscriber net additions of 166,200, an increase of 30.4% compared to the fourth quarter of 2002, driven by the combination of increased gross activations and reduced churn levels. Average monthly postpaid wireless churn for the fourth quarter declined to 1.99% while average monthly revenue per postpaid voice and data subscriber increased 2.4% to $57.77. - Results at Media were generally strong across the group, highlighted by continued growth at Sportsnet, improved results at the Radio division reflecting the success of recent reformatting initiatives, solid cost control and productivity gains at the Publishing group and continued sales growth at The Shopping Channel. Rogers Media also announced a partnership with CTV, each with a 50% interest, in Dome Productions, which will accelerate the production and distribution of HDTV content in Canada. - The Company recorded net income of $68.8 million in the quarter compared to net income of $698.2 million in the fourth quarter of 2002. This decrease primarily reflects a $904.3 million one time gain on disposition of the AT&T Canada Deposit receipts partially offset by the writedown of certain investments of $78.9 million, both of which occurred in 2002, while the fourth quarter of 2003 reflected operating income growth of $49.6 million combined with the recognition of $54.5 million of additional foreign exchange gains, primarily resulting from the translation of the unhedged portion of U.S. dollar-denominated long-term debt as the Canadian dollar strengthened against the U.S. dollar. - Early in 2004, Wireless will begin transitioning its branding to Rogers Wireless from Rogers AT&T Wireless, bringing greater clarity to the Rogers brand in Canada. As a result, the Company recorded a non-cash charge during the fourth quarter of 2003 of approximately $20.0 million to reflect the accelerated amortization of the associated brand licence costs. - On January 20, 2004, Cable and Yahoo! Inc. announced a multi-year alliance to provide a powerful new broadband Internet experience. The alliance combines the unique advantages of one of the industry's pioneers in high-speed Internet access in North America with one of the world's most recognized global Internet brands. - The Company declared a semi-annual dividend of $0.05 per share on each of its outstanding Class B Non-Voting shares, Class A Voting shares and Series E Preferred shares, which was paid on January 2, 2004 to shareholders of record on December 12, 2003. "The objective we articulated for 2003 was to deliver double-digit revenue and operating profit growth with a corresponding reduction in capital expenditures, and driven by both operational enhancements and a disciplined approach to our markets", said Ted Rogers, President and CEO of Rogers Communications Inc. "Once again, the teams across the Rogers Group of Companies delivered against the financial commitments while also providing unparalleled innovation, convenience and value for our customers. We enter 2004 with solid momentum and with all of our business are increasingly well-positioned for continued success". The consolidated revenue increase of 13.3% compared to the fourth quarter of 2002 was the result of all three operating segments reporting healthy year-over-year growth. Cable revenue increased 11.4%, driven by growth in its Internet and digital cable subscriber bases, as well as the impact of cable and Internet price increases implemented during the past year. Wireless revenue increased 18.8%, driven by a 15.2% increase in its postpaid subscriber base and continued improvements in both ARPU and customer churn. Revenue growth of 4.7% at Media was attributable to solid growth at its Sportsnet regional sports television network, the success of recent formatting initiatives at several of its radio stations, and continued sales growth at The Shopping Channel. The 21.7% consolidated year-over-year quarterly operating profit growth was driven by the 13.3% revenue growth combined with expense control in all operating segments. On a segment basis, operating profit increased at Cable by $20.4 million, or 13.1%, at Wireless by $43.7 million, or 35.5%, and at Media by $8.1 million, or 23.5%. Reconciliation to Net Income (Loss) On a consolidated basis, the Company recorded a quarterly net income of $68.8 million, compared to net income of $698.2 million in the fourth quarter of 2002. Depreciation and Amortization The increase in depreciation and amortization expense is directly attributable to the increased PP&E asset levels, primarily at Cable and Wireless, associated with PP&E investments over the past several years and the resultant increased fixed asset levels. During 2003, the Company announced that it would terminate its brand licence agreement in early 2004 and change its brand name to exclude the AT&T brand. Consequently, the Company accelerated the amortization on the brand licence to reduce the carrying value to nil. Interest on Long-Term Debt The $16.1 million decrease in interest expense in the fourth quarter of 2003, compared to the same period in 2002, is largely attributable to lower debt levels at December 31, 2003, compared to the previous year period. Long-term debt was $5.3 billion at December 31, 2003, and has decreased from approximately $5.7 billion at December 31, 2002, due to debt repayments and the effects of the continuing strengthening of the Canadian dollar and the related foreign exchange translation impact on the unhedged portion of the U.S. dollar-denominated long-term debt. Income (Losses) from Investments Accounted for by the Equity Method The Company records losses and income from investments that it does not control, but over which it is able to exercise significant influence, by the equity method. The equity loss for the quarter was $17.0 million, consisting primarily of a loss at the Toronto Blue Jays Baseball Club. On a cash basis, the Company received $24.3 million from the Blue Jays related to the repayment of notes payable. In total, the Company advanced $29.4 million of cash to the Blue Jays during 2003. The Blue Jays are expected to generate meaningfully lower operating losses in 2004 than in the prior year reflecting efficiencies in its operations and the benefit of the strengthened Canadian dollar. In 2004, cash funding by the Company to the Blue Jays is expected to be approximately $20-$25 million. In January 2004, the Company concluded a September 2000 agreement with Interbrew Breweries S.A. to purchase Interbrew's remaining 20% minority ownership in the Blue Jays. In 2000, Rogers had purchased an 80% interest in the Blue Jays from Interbrew. Under that agreement, Interbrew was granted the right to require Rogers to purchase its 20% interest at any time after December 15, 2003 for US$28.0 million, plus accrued interest. This obligation was recorded as a liability by Rogers at the time of the original agreement with Interbrew. As the result of an April 2001 agreement with Rogers Telecommunications Ltd., a company controlled by the controlling shareholder of Rogers, RTL acquired effective voting control of the Blue Jays. Rogers currently accounts for this investment by the equity method and records 100% of the operating losses of the Blue Jays. The agreement with RTL does not change as a result of Rogers' purchase of Interbrew's 20% minority interest, and accordingly Rogers' expects to continue to account for this investment by the equity method. Foreign Exchange In the fourth quarter of 2003, the Canadian dollar continued to strengthen against the U.S. dollar, giving rise to the $61.6 million foreign exchange gain related to both realized and unrealized foreign exchange gains, the largest portion arising from the translation of the unhedged portion of US dollar- denominated debt. Gain on Sale of Other Investments During the quarter, the Company disposed of shares that it held of certain publicly traded companies, triggering a gain on disposal of $5.0 million and providing cash proceeds of approximately $5.0 million. Income Taxes Income taxes in the fourth quarter include a current income tax reduction of $8.7 million related to Federal Large Corporations Tax and a $27.7 million future tax reduction. Non-Controlling Interest Non-controlling interest, representing 44.2% of Wireless' net income, was $1.8 million for the quarter, compared to $17.1 million in the fourth quarter of 2002, reflecting the corresponding net income (loss) levels at Wireless in the respective periods. The Company recorded a quarterly net income of $68.8 million, or $0.24 per share, compared to a net income of $698.2 million, or $3.22 per share, in the fourth quarter of 2002. Distributions on Convertible Preferred Securities and accretions on Preferred Securities, net of tax, of $13.3 million and $11.0 million in the fourth quarter of 2003 and 2002, respectively, had the impact of decreasing basic Earnings per Share by $0.06 and $0.05, respectively. Audited Consolidated 2003 Financial Statements The Company intends to file, with securities regulators in Canada and the U.S., its audited Consolidated Financial Statements and Notes thereto for the year ended December 31, 2003 and Management's Discussion and Analysis in respect of such annual financial statements in the latter portion of February 2004. Notification of such filing will be made by a press release by the Company and such statements will be made available on the Company's Website or upon request. Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RG) (S&P, BB+ L-T Corporate Credit Rating, Negative) is Canada's national communications company, which is engaged in cable television, broadband Internet access and video retailing through Rogers Cable Inc.; digital PCS, cellular, wireless data communications and paging through Rogers Wireless Communications Inc.; and radio, television broadcasting, televised shopping and publishing businesses through Rogers Media Inc. For more information about the Company and its products, visit http://www.rogers.com/ SLATER STEEL: Universal Stainless Submits Bid for Fort Wayne Plant ------------------------------------------------------------------ Universal Stainless & Alloy Products, Inc. (Nasdaq:USAP) submitted a bid, in accordance with procedures approved by the U.S. Bankruptcy Court, to purchase the assets of the idled Fort Wayne, Indiana specialty steel bar facility of Slater Steels Corporation, the U.S. subsidiary of Slater Steel Inc. (TSE:SSI), of Mississsauga, Ontario, Canada. The Company's bid of $3,190,000 has been submitted in order to participate in the auction scheduled for February 11. Both Slater Steel Inc. and Slater Steels Corporation filed for bankruptcy protection in 2003. The Company noted that because of its strong balance sheet, it has the flexibility to finance the proposed acquisition with its own cash, through borrowings or through other sources. Mac McAninch, President and Chief Executive Officer of Universal Stainless, commented: "Acquiring the Fort Wayne facility is a strategic opportunity for our company. It would expand our offering of specialty steel products, including round bar products up to 8 inches in diameter. If our bid is successful, we plan to use these assets in a manner consistent with our other acquisitions and the operating philosophy of our company." Universal Stainless & Alloy Products, Inc., headquartered in Bridgeville, Pa., manufactures and markets a broad line of semi- finished and finished specialty steels, including stainless steel, tool steel and certain other alloyed steels. The Company's products are sold to original equipment manufacturers, service centers, forgers, rerollers and wire redrawers. SLATER STEEL: Fort Wayne Asset Auction Set for February 11, 2004 ---------------------------------------------------------------- Slater Steel Corporation d/b/a Fort Wayne Specialty Alloys is soliciting offers for the purchase of substantially all of its assets related to its facility in Fort Wayne, Indiana. Slater Fort Wayne will hold an auction for the assets on February 11, 2004, at 10:00 a.m. Central Time, at the offices of the Debtors' Counsel, Jones Day, located at 77 West Wacker, Chicago, Illinois 60601. The Honorable Mary F. Walrath will convene a hearing to approve the sale of the assets to the highest and best bidder on Feb. 13, at 10:30 a.m. Eastern Time. Slater Fort Wayne is an affiliate of Slater Steel U.S., Inc. Slater Steel is a mini mill producer of specialty steel products. The Company manufactures and markets bar and flat rolled stainless steels, carbon and low alloy steel bar products, vacuum arc and electro slag remelted steels, mold, tool and die steels and hollow drill and solid mining steels. Slater Steel filed for Chapter 11 protection on June 2, 2003, (Bankr. Case No. Del. 03-11639). Daniel J. DeFranceschi, Esq., and Paul Noble Heath, Esq., at Richards Layton & Finger and Paul E. Harner, Esq., & Mark A. Cody, Esq. at Jones Day represent the Debtors in their liquidating efforts. SLATER STEEL: Union and Pinnacle Want Liquidation Slowed Down ------------------------------------------------------------- The United Steelworkers, together with a group led by US-based Pinnacle Steel, have jointly written to Slater Steel and its advisers, asking them to extend the timeframe of the planned liquidation of Hamilton Specialty Bar, a division of Slater Steel. The request is so that the union and Pinnacle can work out agreement on a plan to bring the specialty steel maker out of bankruptcy protection and result in it continuing to operate as a going concern. Marie Kelly, Steelworkers' Ontario/Atlantic Assistant District Director, said union representatives from the District and Local 4752 met with Pinnacle earlier this week. "We had a good discussion," she said. "Pinnacle indicated its desire to work with the union toward the purchase of Slater's Hamilton plant. We understand that Pinnacle has already approached the banks and, at this point, needs the banks' cooperation to successfully conclude the process." Tony De Paulo, the Steelworkers' Hamilton Area Coordinator, said being able to explore the possibilities with Pinnacle is in the best interest of the community. "Hamilton is reeling with the news about Stelco's situation," said De Paulo. "It's time for some good news for a change." STAR ACQUISITION: Appel & Lucas Serving as Bankruptcy Attorneys --------------------------------------------------------------- Star Acquisition III LLC wants to employ Appel & Lucas, PC as Counsel. The Debtor tells the U.S. Bankruptcy Court for the District of Colorado that it needs to employ Appel & Lucas to: a) advise the Debtor regarding its duties and obligations under the Bankruptcy Code; b) advise the Debtor regarding the preparation and filing of a Plan and Disclosure Statement and other matters in connection with its reorganization; c) negotiate with parties in interest in connection with the formulation of a Plan of Reorganization and other matters in connection with the case; d) assist, advise and represent the Debtor in connection with activities which the Debtor may pursue in connection with this case, including the prosecution and defense of any adversary proceedings or other litigation; and e) perform such other services for the Debtor as may be necessary or desirable in connection or related to the Debtor's Chapter 11 case. Currently, Appel & Lucas bills at: attorneys $250 to $275 per hour paralegal $85 per hour The current hourly rates for the professionals who may be expected to work on this case are: Peter J. Lucas $250 per hour Garry R. Appel $275 per hour John M. Nunnally $85 per hour Headquartered in Englewood, Colorado, Star Acquisition III, LLC filed for chapter 11 protection on January 5, 2004 (Bankr. Colo. Case No. 04-10121). Peter J. Lucas, Esq., at Appel & Lucas, P.C., represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and asset of over $10 million each. STONE & WEBSTER: 3rd Amended Chapter 11 Plan is Now Effective ------------------------------------------------------------- Stone & Webster, Incorporated (OTC: SWBIQ.PK) and Stone & Webster Engineers and Constructors, Inc., announced that the companies' Third Amended Joint Plan of Reorganization became effective on January 27, 2004. Stone & Webster equity holders as of the August 27, 2003 record date who voted to accept the Plan and have continuously held their shares through the effective date of the Plan will receive an initial distribution of $.62 per share in cash. In order to receive the initial distribution, eligible stockholders will need to tender their shares and otherwise comply with the procedures established by Stone & Webster. Instructions for tendering shares will be distributed shortly. Future distributions, if any, will be made if and when available in accordance with the terms of the Plan. All holders of Stone & Webster common stock as of the effective date of the Plan will be entitled to receive these distributions, if made. Holders tendering their shares to receive the initial distribution are urged to retain evidence of ownership in order to receive any future distributions. The companies cannot currently estimate the amount or timing of any future distributions, nor can there be any assurance that such distributions will be made. The Plan of Reorganization, which was confirmed on January 16, 2004 by the United States Bankruptcy Court for the District of Delaware, had the support of Federal Insurance Company and Maine Yankee Atomic Power Company, the companies' two largest unsecured creditors, as well as the Official Committee of Unsecured Creditors and the Official Committee of Equity Holders. The Plan provided for the creation of separate consolidated estates for Stone & Webster, Incorporated and certain of its debtor subsidiaries and Stone & Webster Engineers and Constructors, Inc. and certain of its debtor subsidiaries, with each estate to be separately funded and administered. The Plan of Reorganization was approved overwhelmingly by creditors and other parties in interest. On the effective date of the Plan, Stone & Webster, Incorporated and Stone & Webster Engineers and Constructors, Inc. were each substantively consolidated with their respective debtor subsidiaries, all of Stone & Webster's outstanding securities were cancelled and Stone & Webster then emerged from bankruptcy under the name "Reorganized SWINC, Inc." Pursuant to terms of the Plan, trading in Stone & Webster, Incorporated common stock ceased as of the close of business on the January 16, 2004 confirmation date of the Plan and Stone & Webster's stock transfer records were closed. There has been no further authorized trading in Stone & Webster securities since January 16, 2004 and Stone & Webster is not required to, and will not, recognize any person acquiring Stone & Webster securities after January 16, 2004 as the legal holder of such securities. Interested parties are urged to read the Plan and the related Disclosure Statement, copies of which have been filed with the Bankruptcy Court and the Securities and Exchange Commission. More information is available on the companies' Web site at http://www.stonewebinc.com/ TIDEMARK PARTNERS: Case Summary & 20 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Tidemark Partners LLC dba Tidemark Lodge & Marina 5325 Marina Drive Bradenton Beach, Florida 34217 Bankruptcy Case No.: 04-01153 Type of Business: The Debtor owns a full-service resort and hotel- condominium-marina. Chapter 11 Petition Date: January 21, 2004 Court: Middle District of Florida (Tampa) Judge: Alexander L. Paskay Debtor's Counsel: Stephen R. Leslie, Esq. Stitchter, Riedel, Blain & Prosser, P.A. 110 East Madison Street, #200 Tampa, FL 33602 Tel: 813-229-0144 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Louis Wolfson $200,000 Wilbur Boyd $100,000 Brenda Boyd May $68,000 Oertel, Hoffman, et al $60,436 Sam Evans $56,500 Manatee County Tax Collector $52,422 Greene & Schermer $42,950 D.L. Porter Constructors, Inc. $35,644 Mike Carter Construction $30,944 Stewart Engineering $21,713 Eatman & Smith $17,870 Banks Engineering $14,128 Denise Wilkinson $12,771 Ed Barber & Associates $11,034 Trigg, Catlett & Associates $6,841 Lea Jackson Interior Design $5,895 Gary's Hauling $5,792 Barretts Quality Electric $5,777 Scovanner & Whittaker $5,356 Coastal Living $5,161 UNITED COMPANIES: Fitch Takes Rating Action on Various Contracts ---------------------------------------------------------------- Fitch Ratings has performed a review of the United Companies Financial Corp., manufactured housing transactions. Eleven classes were affirmed and 20 classes were downgraded. The downgrades are a result of the poor performance of the underlying collateral. The loans were originated by United Companies Funding, Inc., which was formed in 1995 and was a wholly owned manufactured housing lending subsidiary of UCFC. In 1998, UCFI announced plans to close down its manufactured housing business (located in Minneapolis) and transfer the servicing of the remaining manufactured housing loans from Minneapolis to Baton Rouge, where the company's home equity loan servicing shop was located. On March 1, 1999 UCFC filed for Chapter 11 bankruptcy protection and in December 2000, the manufactured housing portfolio, servicing rights and residual interests were acquired by EMC, a wholly owned subsidiary of the Bear Stearns Companies Inc. Since 1998, Fitch has taken numerous negative rating actions on the portfolio. A focus of the acquisition by EMC was the servicing fee. The UCFC transactions were originally structured to pay the servicer 50 basis points, which is generally acknowledged to be insufficient to cover the costs of servicing a seasoned manufactured housing portfolio. As part of the bankruptcy settlement, funds were made available to compensate a servicer outside of the transactions' waterfall to cover the cost of servicing the loans. The additional funds, together with the 50 basis points from the waterfall, combine to pay EMC 100 basis points. Fitch expects at some point in the future the funds allocated by the bankruptcy settlement will be exhausted. EMC expects that as their compensation from outside of the waterfall is reduced, they will be able to increase their compensation from the waterfall to maintain their 100 basis point servicing fee. When Fitch valued the excess spread available for credit enhancement in these transactions, a 100 basis point senior servicing fee from within the waterfall was assumed. In addition to the issue of the servicing fee, Fitch considered the transaction's structure when taking rating action. Except for 1998-2 and 1998-3, the transactions pay interest and principal to the senior class prior to paying interest to mezzanine and subordinate classes. This structure has resulted in interest shortfalls to many of the non-senior classes. When taking rating action, Fitch assessed the likelihood of repayment of the interest shortfalls with interest on the unpaid amount. Based on the review, the following rating actions have been taken: Series 1996-1: -- Classes A-4, A-5 and A-6 are affirmed at 'AAA'; -- Class M is downgraded to 'B-' from 'BB-'; -- Class B-1 is downgraded to 'C' from 'CC'. Series 1996-2: -- Class A is affirmed at 'AAA'. Series 1997-1: -- Class A-4 is affirmed at 'AAA'; -- Class M is affirmed at 'B-'. Series 1997-2: -- Class A-4 is affirmed at 'AAA'; -- Class M is affirmed at 'B-'; -- Class B-1 is downgraded to 'C' from 'CC'. Series 1997-3: -- Classes A-3 and A-4 are downgraded to 'AA+' from 'AAA'; -- Class M is downgraded to 'CCC' from 'BB-'. Series 1997-4: -- Class A-3 is affirmed at 'AAA'; -- Class A-4 is downgraded to 'AA' from 'AAA'; -- Class M is downgraded to 'B-' from 'BBB-'; -- Class B-1 is downgraded to 'C' from 'CC'. Series 1998-1: -- Class A-3 is downgraded to 'AA' from 'AAA'; -- Class M is affirmed at 'B-'; -- Class B-1 is downgraded to 'C' from 'CC'. Series 1998-2: -- Class A-2 is affirmed at 'AAA'; -- Class A-3 is downgraded to 'AA' from 'AAA'; -- Class A-4 is downgraded to 'AA-' from 'AAA'; -- Class M-1 is downgraded to 'BB-' from 'A-'; -- Class M-2 is downgraded to 'B-' from 'BBB-'; -- Class B-1 is downgraded to 'C' from 'B-'. Series 1998-3: -- Class A-1 is downgraded to 'A+' from 'AAA'; -- Class M-1 is downgraded to 'BB-' from 'A'; -- Class M-2 is downgraded to 'B-' from 'BBB-'; -- Class B-1 is downgraded to 'C' from 'B-'. UNITED RENTALS: Will Host 4th-Quarter Conference Call on Feb. 25 ---------------------------------------------------------------- United Rentals, Inc. (NYSE: URI), will hold a conference call to discuss fourth quarter results and the 2004 outlook on Wednesday, February 25, 2004, at 11:00 a.m. Eastern Time. United Rentals, Inc. is the largest equipment rental company in North America, with more than 750 locations in 47 states, seven Canadian provinces and Mexico. The company serves 1.9 million customers, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others. The company offers for rent over 600 different types of equipment with a total original cost of $3.5 billion. This call is being webcast by CCBN and can be accessed at the United Rentals Web site at http://www.unitedrentals.com/where it will also be archived. The webcast is also being distributed over CCBN's Investor Distribution Network to both institutional and individual investors. Individual investors can listen to the call through CCBN's individual investor center at http://www.fulldisclosure.com/or by visiting any of the investor sites in CCBN's Individual Investor Network. Institutional investors can access the call via CCBN's password-protected event management site, StreetEvents at http://www.streetevents.com/ United Rentals, Inc. (S&P, BB Corporate Credit Rating) is the largest equipment rental company in North America, with an integrated network of more than 750 locations in 47 states, seven Canadian provinces and Mexico. The company serves 1.8 million customers, including construction and industrial companies, manufacturers, utilities, municipalities, homeowners and others. The company offers for rent over 600 different types of equipment with a total original cost of approximately $3.6 billion. UNIVERSAL COMMS: Auditors Express Going Concern Uncertainty ----------------------------------------------------------- On March 21, 2003, Universal Communications Systems Inc. acquired exclusive worldwide rights to patents held by J.J. Reidy & Co., relating to water production/generation system. In connection with this activity, two subsidiaries were formed, AirWater Corporation, to produce and market the system and AirWater Patents Corporation, to hold the Company's licensed patent rights. The Company completed an agreement to purchase all of the stock of Millennium Electric T.O.U. Ltd., an Israeli company, on September 29, 2003. Millenium specializes in development and installation of solar power systems worldwide. In connection with the Millenium acquisition, a new U. S. subsidiary, Solar One Corporation, was formed to market solar power products and systems. Universal Communications Systems is currently focusing its operations on the design, manufacture and sale of water production and generation systems along with solar power systems. The Company will require short-term outside investment on a continuing basis to finance its current operations and capital expenditures. If it does not obtain short term financing it may not be able to continue as a viable concern. The Company does not have a bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. As of September 30, 2003 the Company's total working capital was deficient in the amount of $1,390,556. This represents a $760,729 decrease over its September 30, 2002 deficiency of $2,151,285. Until revenues commence from the sale of its AirWater equipment, the Company will need to obtain funding from external sources to finance its current operations. Management of the Company anticipates revenues in the second quarter of fiscal year September 30, 2004. Since Universal Communications Systems began operations, it has generated minor revenues and has incurred substantial expenditures and operating losses. In view of this fact, its auditors have stated in their report for the fiscal year ended September 30, 2003 and 2002 that there is substantial doubt about the Company's ability to continue as a going concern, dependent upon its ability to meet future financing requirements, and the success of its future operations, the outcome of which cannot be determined at this time. In order to finance its working capital requirements, the Company has, and continues to negotiate equity investments with several sophisticated investors, but there can be no assurance that the Company will obtain this capital in the future, or that it will be obtained on terms favorable to it. If the Company does not obtain short term financing management indicates that the Company may not be able to continue as a viable concern. There is no bank line of credit and there can be no assurance that any required or desired financing will be available through bank borrowings, debt, or equity offerings, or otherwise, on acceptable terms. If future financing requirements are satisfied through the issuance of equity securities, investors may experience significant dilution in the net book value per share of common stock. On June 6, 2003, the Company defaulted on the January 6, 2003 12% notes in the amount of $60,000, which came due on that date. The holders of the Notes, who also hold a portion of the convertible debentures, did not take action to foreclose on the Notes. These notes have been included in a proposed negotiated settlement whereby the notes and the debentures will be converted into shares of common stock at a fixed conversion price. During the fiscal years ended September 30, 2003 and 2002, the Company received equity investments and advances of $1,054,577 and $383,291 respectively. These investments and advances were in the form of issuance of its common stock in various private placements. UNUMPROVIDENT CORP: Fourth-Quarter 2003 Results Sink into Red Ink ----------------------------------------------------------------- UnumProvident Corporation (NYSE: UNM) reported a net loss of $347.2 million ($1.18 per diluted common share) for the fourth quarter of 2003, compared to net income of $102.2 million ($0.42 per diluted common share) for the fourth quarter of 2002. The loss from continuing operations before cumulative effect of accounting principle change was $208.0 million ($0.71 per diluted common share) for the fourth quarter of 2003, compared to income of $98.7 million ($0.41 per diluted common share) for the fourth quarter of 2002. Included in the loss from continuing operations before cumulative effect of accounting principle change is an after tax increase in group income protection reserves of $286.0 million, or $440.0 million before tax. In January 2004, the Company completed its annual review of claim reserves to ensure that its claim reserves make adequate and reasonable provision for future benefits and expenses. Approximately $300.0 million of the reserve strengthening reflects implementation of a lower discount rate for its group income protection claim reserves. The discount rate was lowered to reflect the Company's expectation of future investment portfolio yield rates and the Company's new discount rate management approach of maintaining a wider spread between its group income protection portfolio investment yield rate and its average discount rate. The Company's new discount rate management approach is intended to better reflect the current investment environment and position the Company to be more responsive with discount rates on new incurred claims as changes to the investment environment emerge. Approximately $140.0 million of the reserve increase relates to a strengthening of the morbidity assumptions to reflect the impact of the continuing jobless economic recovery on claim incidence and severity. Claim incidence in the second half of 2003 was 8.4 percent higher than the first half of the year and 5.8 percent above the second half of 2002. Claim incidence is expected to continue at an elevated level for several quarters as the early indications of a recovering economy are not yet reflected in improved consumer confidence or job creation. The reserve increase represents a 5.4 percent increase in total net group income protection reserves as of December 31, 2003, which were $8.2 billion prior to this increase. This increase has no impact on the statutory reserves, statutory surplus, or risk- based capital of the Company. Also included in the loss from continuing operations before cumulative effect of accounting principle change are net realized investment losses of $36.4 million before tax and $23.9 million after tax in the fourth quarter of 2003 compared to $80.8 million before tax and $52.6 million after tax in the fourth quarter of 2002. In the fourth quarter of 2003, the Company entered into an agreement to sell its Japanese operations and recognized an impairment loss of $1.2 million before tax and $0.8 million after tax on this held for sale asset. The Company also recognized from this transaction a tax benefit of $6.8 million, for a net after tax gain of $6.0 million. The transaction closed in January of 2004. The Company has also announced the sale of a portion of its Argentina operations, with an expected closing date of March 2004. The Argentina operations is accounted for as an asset held for sale at December 31, 2003, and in conjunction with that classification, the Company recognized an impairment loss of $13.5 million before tax and $11.3 million after tax. Also during the fourth quarter of 2003, the Company entered into an agreement to sell its Canadian branch and is expected to close the transaction during the first half of 2004. The Canadian branch is accounted for as an asset held for sale at December 31, 2003 and also meets the accounting criteria for being reported as a discontinued operation. In conjunction with the classification of the Canadian branch as an asset held for sale, the Company tested the goodwill related to the Canadian branch for impairment and determined that the balance of $190.9 million was impaired. The Company also recognized a loss of $9.3 million before tax and $6.0 million after tax to write down the value of bonds in the Canadian branch investment portfolio to market value. These two charges, $200.2 million before tax and $196.9 million after tax, are included in the loss from discontinued operations. In addition, the Canadian branch reported net income from discontinued operations of $17.8 million in the fourth quarter of 2003 ($27.4 million on a before-tax basis), compared to $3.5 million in the fourth quarter of 2002. Effective October 1, 2003, the Company adopted the provisions of Statement of Financial Accounting Standards No. 133 Implementation Issue B36 (DIG Issue B36), Embedded Derivatives: Modified Coinsurance Arrangements and Debt Instruments That Incorporate Credit Risk Exposure That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor Under Those Instruments. DIG Issue B36 addresses financial accounting and reporting for embedded derivatives in modified coinsurance contracts that incorporate credit risk exposure unrelated to the credit risk of the counterparty to the reinsurance contract and requires the bifurcation of any such derivative from the host reinsurance contract. The adoption of DIG Issue B36 resulted in an increase as of October 1, 2003 in fixed maturity securities of $61.3 million to record the fair value of the embedded derivatives and a $39.9 million cumulative effect of accounting principle change, net of $21.4 million in tax. Thomas R. Watjen, UnumProvident's President and Chief Executive Officer, stated, "Our fourth quarter reported results reflect our continuing efforts to position UnumProvident to deliver better, more consistent performance. While we still have work to do, in 2003 we made great progress in strengthening our balance sheet and focusing on businesses which should generate attractive long-term returns. Our operating performance in the quarter was generally in line with our expectations, with the one exception being our group income protection results which is an area of intense focus within our Company. The actions taken last year have resulted in record levels of capital and surplus and position us to benefit more quickly from an improving economy and an increase in interest rates." Results by Segment Because the Canadian branch is now reported as discontinued operations, its results are not included in the current and prior period results in the segment information below. The Income Protection segment reported an operating loss of $355.7 million in the fourth quarter of 2003, compared to operating income of $147.3 million in the fourth quarter of 2002. Within the segment, the group income protection line reported an operating loss of $429.0 million in the fourth quarter of 2003 compared to operating income of $80.5 million in the prior year fourth quarter. Included in the operating loss was the reserve strengthening of $440.0 million. Excluding this reserve strengthening, the lower earnings in the quarter relative to a year ago are primarily the result of higher claim incidence and a reduction in the discount rate used for 2003 claim incurrals in the long-term income protection line of business, as well as lower operating income in the Company's short-term income protection line of business. Relative to the third quarter of 2003, earnings were lower due to lower overall net investment income and higher operating expenses in the Company's United Kingdom and Japan operations, as well as lower results for the group short-term income protection line. The Company's benefit ratio in the group income protection line, excluding the reserve strengthening, was 92.9% in the fourth quarter of 2003 compared to 92.8% in the third quarter of 2003, reflecting a reduction in the discount rate used for fourth quarter 2003 claim incurrals which offset relatively stable third quarter to fourth quarter of 2003 incidence and net claim recovery trends. Also within this segment, the individual income protection line of business reported operating income of $53.5 million in the fourth quarter of 2003, compared to operating income of $55.2 million in the fourth quarter of 2002. Claim trends in the individual income protection line remained relatively stable in the fourth quarter of 2003 with stable claim incidence trends and a higher level of net claim recoveries. In 2003, the Company began tracking separately the results of its recently issued individual income protection business and its closed block of individual income protection business. Operating income in the recently issued individual income protection business totaled $31.3 million in the fourth quarter of 2003 compared to $36.8 million in the fourth quarter of 2002. Operating income in the closed block of individual income protection business totaled $22.2 million in the fourth quarter of 2003 compared to $18.4 million in the fourth quarter of 2002. Also within this segment, the long-term care line, which includes the results of both the group and individual long-term care lines, reported operating income of $15.6 million in the fourth quarter of 2003, compared to $6.0 million in the fourth quarter of 2002. Finally, the disability services line of business reported operating income of $4.2 million in the fourth quarter of 2003, compared to $5.6 million in the fourth quarter of 2002. Premium income for the Income Protection segment increased 4.7 percent to $1,244.6 million in the fourth quarter of 2003, compared to $1,188.6 million in the fourth quarter of 2002. Within this segment, premium income for the group income protection line increased 10.3 percent to $779.0 million in the fourth quarter of 2003 from $706.3 million in the fourth quarter of 2002. Premium income for the individual income protection line declined 7.8 percent to $359.5 million in the fourth quarter of 2003 from $390.0 million in the fourth quarter of 2002. Included in the fourth quarter of 2003 results was a reinsurance transaction completed during the fourth quarter with an effective date of April 1, 2003, which reduced individual income protection premium income by approximately $16.1 million in the fourth quarter of 2003. Finally within this segment, premium income for the long-term care line increased 15.0 percent to $106.1 million in the fourth quarter of 2003 from $92.3 million in the fourth quarter of 2002. New annualized sales (submitted date basis) for group long-term income protection fully insured products declined 11.7 percent to $153.0 million in the fourth quarter of 2003, from $173.2 million in the fourth quarter of 2002. New annualized sales (submitted date basis) for group short-term income protection fully insured products increased 12.4 percent to $60.0 million in the fourth quarter of 2003, from $53.4 million in the fourth quarter of 2002. New annualized sales (paid for basis) for individual income protection declined 11.8 percent to $36.5 million in the fourth quarter of 2003 from $41.4 million in the fourth quarter of 2002. Premium persistency in the Company's long-term income protection block improved to 87.2 percent for 2003 compared to 86.5 percent in 2002 and 84.5 percent in 2001. Persistency also improved in the Company's short-term income protection line of business to 84.5 percent for 2003 compared to 81.5 percent in 2002 and 82.0 percent in 2001. The Life and Accident segment reported operating income of $72.6 million in the fourth quarter of 2003, compared to $86.0 million in the fourth quarter of 2002. The decline in results in this segment relative to the year ago quarter was driven by lower earnings in all three lines of business in this segment; group life, accidental death & dismemberment, and voluntary life and other. Premium income in this segment increased 7.5 percent to $482.4 million in the fourth quarter of 2003, compared to $448.7 million in the fourth quarter of 2002. New annualized sales (submitted date basis) in the group life line totaled $107.2 million in the fourth quarter of 2003, compared to $144.0 million in the fourth quarter of 2002. New annualized sales in the accidental death and dismemberment line of business totaled $11.4 million in the fourth quarter of 2003, compared to $18.6 million in the year ago quarter. New annualized sales in the brokerage voluntary life and other lines totaled $14.2 million in the fourth quarter of 2003 compared to $13.5 million in the fourth quarter of 2002. Premium persistency in the Company's group life line of business declined slightly to 83.2 percent for 2003 compared to 83.9 percent in 2002 and 84.6 percent in 2001. The Colonial segment reported operating income of $37.6 million in the fourth quarter of 2003, compared to $36.2 million in the fourth quarter of 2002. Premium income for this segment increased 8.7 percent to $177.2 million in the fourth quarter of 2003, compared to $163.0 million in the fourth quarter of 2002. New annualized sales in this segment increased 16.9 percent to $98.2 million in the fourth quarter of 2003, from $84.0 million in the fourth quarter of 2002. The Other segment, which includes results from products no longer actively marketed, reported operating losses of $2.3 million in the fourth quarter of 2003, compared to income of $8.6 million in the fourth quarter of 2002. The results for the fourth quarter of 2003 include the losses related to the Argentina operation totaling $13.5 million before tax. The Corporate segment, which includes investment earnings on corporate assets not specifically allocated to a line of business, corporate interest expense, and certain other corporate expenses, reported a loss of $46.6 million in the fourth quarter of 2003, compared to a loss of $51.0 million in the fourth quarter of 2002. The results for the fourth quarter of 2003 include the losses related to the Japanese operation totaling $1.2 million before tax. During the second quarter of 2003, the Company issued a total of 52,877,000 shares of common stock and 23,000,000 8.25% adjustable conversion-rate equity security units in a public offering. As a result, the weighted average number of shares used to calculate the per diluted common share results increased from 242,129,151 for the fourth quarter of 2002 to 294,822,409 for the fourth quarter of 2003. The actual number of shares outstanding as of December 31, 2003 was 296,143,422 compared to 241,587,260 as of December 31, 2002. At December 31, 2003, book value per common share was $24.55, compared to $28.33 at December 31, 2002. UnumProvident (S&P, BB+ Preferred Share Rating, Negative) is the largest provider of group and individual disability income protection insurance in the United States and United Kingdom. Through its subsidiaries, UnumProvident insures more than 25 million people and paid US$4.8 billion in total benefits to customers in 2002. With primary offices in Chattanooga, Tenn., and Portland, Maine, the company employs more than 13,000 people worldwide. For more information, visit http://www.unumprovident.com/ US AIR: Enters Stipulation Settling US Bank & State Street Claim ---------------------------------------------------------------- U.S. Bank National Association, successor-in-interest to State Street Bank and Trust Company, and State Street Bank and Trust Company of Connecticut, National Association, filed, against the US Airways Debtors, Claim No. 3372, which included claims relating to aircraft bearing Tail Nos. N507AU, N508AU and N510AU. U.S. Bank, State Street and the Reorganized Debtors agree that Claim No. 3372 is allowed in part as a general unsecured Class USAI-7 claim with respect to these Tail Nos.: Tail No. N507AU $12,362,579 Tail No. N508AU 12,169,464 Tail No. N510AU 12,362,579 All other claims of U.S. Bank and State Street relating to Tail Nos. N507AU, N508AU and N510AU are disallowed. (US Airways Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) WATERLINK INC: Court Approves Asset Sale to Calgon Carbon Corp. --------------------------------------------------------------- Waterlink, Inc. (OTCBB:WLKNQ) and its wholly owned operating subsidiary, Barnebey Sutcliffe Corporation, have agreed in principal to a purchase agreement with Calgon Carbon Corporation, a Delaware corporation, for the Buyer to purchase substantially all of the assets and business operations of Waterlink, including the operations of Barnebey Sutcliffe Corporation and the subsidiaries of Waterlink in the United Kingdom. The agreement will be for total cash consideration of approximately $35.2 million, subject to certain pre-closing and post-closing adjustments, and the assumption by the Buyer of certain liabilities. The purchase is subject to the terms and conditions of the purchase agreement, and the purchase price is subject to certain adjustments required under the agreement, which includes a provision for a working capital adjustment. The purchase agreement was approved by the U.S. Bankruptcy Court for the District of Delaware, at a hearing held on February 3, 2004. Subject to the satisfaction of other pre-closing conditions, Waterlink expects the transaction to close in the first quarter of 2004. Waterlink believes that all of the proceeds of the transaction that it receives will be used to partially satisfy the claims of creditors, and that no assets will remain for distribution to stockholders. Upon signing, a copy of the purchase agreement will be attached to the Company's report on Form 8-K, which will be filed on a timely basis with the U.S. Securities and Exchange Commission. The Company previously announced, on December 16, 2003, that it had executed a purchase agreement with a different buyer, and that such purchase agreement was subject to the approval of Bankruptcy Court and higher or better offers from other potential purchasers. Pursuant to the Bankruptcy Court's order, an auction was held on January 30, 2004, and the Buyer's offer was the highest and best offer. Waterlink is an international provider of integrated water and air purification solutions for both industrial and municipal customers. Waterlink's executive offices are located in Columbus, Ohio, USA. More information about Waterlink can be obtained on the Internet at http://www.waterlink.com/ WEIRTON STEEL: Wants Approval for Temporary Low Earnings Program ---------------------------------------------------------------- As of January 1, 2004, Weirton Steel Corporation employed approximately 422 salaried employees who were not represented by any collective bargaining unit. Since the Petition Date, in order to address declining prices and a declining market for "hot end" sheet products, and to assure compliance with financial covenants under its DIP credit facility, the Debtor continued to evaluate various cost-cutting measures, including, but not limited to: -- reducing salaries; -- laying off certain of the Salaried Employees; -- implementing a low earnings program; and -- seeking certain wage and benefit concessions from its represented workforce. Currently, the Debtor determined that it is imperative to implement a low earnings program impacting between 30 to 50 individuals, or approximately 7% to 12% of the Salaried Employees. Some or all of the Salaried Employees affected by the Temporary Low Earnings Program may be subject to future employment cost reduction programs by the Debtor. According to James H. Joseph, Esq., at McGuireWoods, in Pittsburgh, Pennsylvania, as of the Petition Date, the Debtor did not have a formal severance, layoff or low earnings program or policies with respect to the Salaried Employees, other than contractual severance obligations to eight individuals not impacted by the Temporary Low Earnings Program. Since 1999, a determination of severance, low earnings or layoff benefits has been made on a case-by-case basis within the Debtor's discretion. The Debtor undertook an extensive review of its Salaried Employees, and has identified certain job functions that can be temporarily curtailed, reduced or replicated by other job functions. The Debtor's senior management reviewed each job function to assure that the Debtor could continue to operate in a safe, efficient and legal manner. Job groups and individual jobs have been designated by senior management as those to be impacted, and then volunteers will be solicited from Salaried Employees whose job functions were identified as being subject to temporary curtailment or reduction. Requests for voluntary temporary low earnings are to be approved by the Debtor from each job function group in order of pension service seniority -- greatest pension service first -- up to the limit allocated to each job group or individual job. If volunteers for low earnings do not fill the number of impacted employees allocated to a particular job function, involuntary selection will be implemented to satisfy the number of necessary impacted employees. Involuntary selection will be determined in order of pension service -- least service first -- subject to restrictions for retention of sufficient employees with essential skills or knowledge, until the number of impacted employees allocated to a job function group is reached. Mr. Joseph relates that those Salaried Employees subject to the Temporary Low Earnings Program, either voluntarily or involuntarily, will be requested to execute a Waiver and Release. Those Salaried Employees subject to the Temporary Low Earnings Program who execute the Waiver and Release will receive the Enhanced Program Benefits, namely: (1) Low Earnings Payment, which is 60% of weekly base salary less $358 per week, less applicable federal and state payroll taxes and withholding for the first to occur of a period of 22 full calendar weeks or until the layoff ends; provided, however, that in no event will Low Earnings Payments be less than $125 per week; (2) Health care coverage at the Debtor's cost, including the same coverages as are provided under COBRA continuation coverage for the employee, spouse and eligible dependents for exempt Salaried Employees, not subject to change with respect to employee premium contributions only, for the first to occur of a period of five full calendar months or until the layoff period; and (3) Life insurance coverage consisting of the basic group term life insurance for the employee and dependents and the supplemental group term life insurance coverage, as provided by the Debtor for exempt Salaried Employees, with basic group term life to be paid by the Debtor and supplemental group term life to be shared by the Debtor and the Salaried Employee for the first to occur of a period of five full calendar months or until the layoff period ends. On the other hand, the Debtor will provide those impacted Salaried Employees who refuse to execute a Waiver and Release the Basic Program Benefits, including: (1) Low Earnings Payments for a period of six calendar weeks or until the layoff period ends, whichever comes first; provided, however, that in no event will Low Earnings Payments be less than $125 per week; (2) Health Coverage for three full calendar months or until the layoff period ends, whichever comes first; and (3) Life Insurance for three full calendar months or until the layoff period ends, whichever comes first. The Debtor contemplates that some impacted Salaried Employees may refuse to execute the Waiver and Release, and may, in fact, seek legal redress against the Debtor's senior management. Mr. Joseph asserts that the formulation and the implementation of the Temporary Low Earnings Program is an exercise of the Debtor's reasonable business judgment in response to unforeseen business developments. Accordingly, the Debtor asks the Court to fully indemnify and hold harmless its senior management from any causes of action against them that may arise by virtue of the Temporary Low Earnings Program. The Debtor estimates that its aggregate liability for the proposed salary continuation payments and benefits to the impacted Salaried Employees will be $360,000 assuming that 50 Salaried Employees are impacted and they all execute the Waiver and Release and receive Enhanced Program Benefits for the entire period for which they are entitled to receive Enhanced Program Benefits. Using the same assumptions, the Debtor estimates that it will realize approximately $845,000 in savings net of the cost of the Program Benefits. Accordingly, the Debtor sought and obtained the Court's authority to implement the Temporary Low Earnings Program. The Court further: (a) authorizes the payment of the Low Earnings Program Benefits and afford Low Earnings Program Benefits administrative priority claim status in accordance with Section 503(b) of the Bankruptcy Code; and (b) permits the Debtor to pay all reasonable costs of defense and otherwise hold harmless and indemnify management from all claims of impacted Salaried Employees that arise from or relate to the Temporary Low Earnings Program. The Court will also exercise jurisdiction over any claims that arise from or relate to the Temporary Low Earnings Program. Mr. Joseph adds that while participating in the Low Earnings Program, employees will: -- continue to accrue service; -- receive health and life insurance coverage under the same terms and conditions as any other Weirton employee; and -- be eligible to be paid for any vacation scheduled prior to being notified that they are impacted by the Low Earnings Program. Employees impacted by the Low Earnings Program will remain on the Debtor's payroll while participating in the Low Earnings Program, and are guaranteed earnings in excess of the statutory minimum of at least $61 per week. There will be no cessation or separation of employment of any Salaried Employee impacted by the Low Earnings Program and the impacted employees are not being laid off or discharged as the terms are used in the West Virginia Wage Payment and Compensation Act. (Weirton Bankruptcy News, Issue No. 19; Bankruptcy Creditors' Service, Inc., 215/945-7000) WELLMAN: S&P Rates Planned $185M Sec. First-Lien Term Loan at B+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Wellman Inc.'s proposed $185 million secured first-lien term loan due 2009 to 'B+' from 'BB-', following the company's indication that its pending financing plan was being revised to increase the size of the secured first-lien term loan to $185 million, from $125 million as originally proposed. At the same time, Standard & Poor's revised its recovery rating on the proposed term loan to '3' from '1', to address the lenders' somewhat weaker prospects for full recovery after considering the increased amount of secured first-lien claims. The 'B+' rating is at the same level as the corporate credit rating; this and the '3' recovery rating indicate that the first-lien term loan lenders can still expect meaningful (50% to 80%) recovery of principal in the event of default. At the same time, Standard & Poor's affirmed its other ratings on Shrewsbury, New Jersey-based Wellman, including the company's 'B+' corporate credit rating, which was lowered on Jan. 22, 2004, due to continued weaker-than-expected operating and financial performance. The outlook is negative. Pro forma for the refinancing transaction, Wellman, a producer of polyester staple fibers and polyethylene terephthalate resins, will have approximately $478 million in total debt outstanding. "The rating on the proposed $185 million first-lien term loan, which has been increased in size from $125 million, reflects the lenders' recovery prospects in the event of a default, after a review of Wellman's revised financing plan," said Standard & Poor's credit analyst Franco DiMartino. While the lenders' prospects of recovery of principal in a default scenario are still meaningful, the increased size of the term loan relative to a distressed asset valuation of pledged property, plant, and equipment suggests that the lenders no longer are assured full recovery of principal. In addition, the rating on the proposed $265 million second-lien term loan, which was reduced in size from $300 million, remains two notches lower than the corporate credit rating and continues to reflect the lenders' negligible recovery prospects after considering the priority claims of the revolving credit facility and first-lien term loan lenders. The overall amount of priority debt has now increased to $360 million from $300 million under the original refinancing proposal. The ratings on Wellman reflect a below-average business risk profile that recognizes its sizable positions in the polyester staple fiber and PET segments of the polyester market, offset by inherent industry cyclicality, considerable import pressure from foreign fiber producers, and diminished operating profitability measures. The ratings are supported by satisfactory availability under committed bank facilities and a manageable debt maturity profile following the expected completion of the proposed refinancing transaction. WICKES INC: Taps Sitrick & Company as Communications Consultants ---------------------------------------------------------------- Wickes, Inc., asks for permission from the U.S. Bankruptcy Court for the Northern District of Illinois, Eastern Division, to employ Sitrick & Company, Inc., as its Corporate Communications Consultants. Sitrick & Company will: a. develop and implement communications programs and related strategies and initiatives for communications with the Debtor's key constituencies (including customers, employees, suppliers and other stakeholders) and the media regarding the Debtor's operations and financial performance and the Debtor's progress through the chapter 11 process; b. develop public relations initiatives for the Debtors to maintain public confidence and internal morale during the Case; c. prepare press releases and other public statements for the Debtors, including statements relating to major chapter 11 events; d. prepare other forms of communication to the Debtor's key constituencies and the media, potentially including materials to be posted on the Debtor's website; and c. perform such other communications consulting services as may be requested by the Debtors. Sitrick & Company professionals who will be responsible for this engagement and their hourly rates are: Brenda Adrian $395 per hour Tammy Taylor $380 per hour Steven Goldberg $325 per hour Meaghan Repko $150 per hour Headquartered in Vernon Hills, Illinois, Wickes Inc. -- http://www.wickes.com/-- is a retailer and manufacturer of building materials, catering to residential and commercial building professionals, repairs and remodeling contractors and project do-it-yourself consumers. The Company filed for chapter 11 protection on January 20, 2004 (Bankr. N.D. Ill. Case No. 04- 02221). Richard M. Bendix Jr., Esq., at Schwartz Cooper Greenberger & Krauss represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed $155,453,000 in total assets and $168,199,000 in total debts. WILLIS GROUP: Posts Flat 4th-Quarter Results & Increased Dividend ----------------------------------------------------------------- Willis Group Holdings Limited (NYSE: WSH), the global insurance broker, reports record results for the quarter and year ended December 31, 2003. Separately, the Board of Directors approved a 15 percent increase in the regular quarterly cash dividend on the Company's common stock to $0.1875 per share, an annual rate of $0.75 per share. The dividend is payable on April 15, 2004 to shareholders of record on March 31, 2004. Joe Plumeri, Chairman and Chief Executive Officer said, "We are pleased to raise our quarterly cash dividend again - our second increase since initiating the dividend just one year ago. This action reflects our strong cash flow and confidence in the outlook for growth." The Board of Directors also approved increasing the Company's existing common share buyback authorization from $100 million to $300 million. The Company has not yet purchased any shares pursuant to the authorization. Commenting on the progress Willis has made over the last few years, Plumeri said, "Since our initial public offering in June 2001, we have infused a sense of teamwork, discipline and passion throughout the organization. And in the year just ended, we accomplished all of the goals we set for the year - to grow earnings at least 25 percent and organic revenues at least 15 percent, to expand margins, to obtain an investment grade rating and to refinance our debt. "We continued to build on our record results as we remain focused on our business - providing our clients with local delivery of our global risk management resources and insurance broking capabilities. Our double-digit revenue and earnings growth were fueled by the outstanding cooperative performance of all our Associates - across all geographic regions and practice groups. "With our growing sales culture and by running the company with great discipline and unyielding expense management the Willis model is being validated every day," Plumeri continued. "We are making steady progress toward building a great company." Net income for the quarter ended December 31, 2003 was $118 million, or $0.69 per diluted share, compared with $118 million, or $0.70 per diluted share, a year ago. Excluding non-cash compensation for performance-based stock options and net gain on disposal of operations, adjusted net income increased 45 percent to $119 million for the quarter ended December 31, 2003 from $82 million in the same period last year, while adjusted net income per diluted share rose 43 percent to $0.70 for the fourth quarter of 2003 from $0.49 a year ago. The impact of foreign exchange in the fourth quarter of 2003 was a benefit of approximately $0.04 per share. Net income for the year ended December 31, 2003 was $414 million, or $2.45 per diluted share, compared to $210 million, or $1.28 per diluted share, a year ago. For the year ended December 31, 2003, adjusted net income, which for the full year also excluded a one- time UK tax benefit on performance stock options, increased 43 percent to $386 million from $270 million in the year ended December 31, 2002, while adjusted net income per diluted share rose 41 percent to $2.28 from $1.62 in 2002. Total reported revenues for the quarter ended December 31, 2003 increased 19 percent to $577 million, from $483 million for the same period last year. Organic revenues, which exclude the effects of foreign exchange, acquisitions and disposals, rose 11 percent. The adjusted operating margin was 34 percent for the fourth quarter of 2003 compared with 31 percent for the same period last year. Total reported revenues for the year ended December 31, 2003 increased 20 percent to $2,076 million, up from $1,735 million for the corresponding period in 2002, or 15 percent on an organic basis. The adjusted operating margin was 30 percent for the year ended December 31, 2003, compared with 28 percent for the same period last year. Through September 30, 2003, the Company provided for a tax rate of 35 percent; however due to the actual geographic mix of our results, the full year's effective tax rate in 2003 declined to 34 percent. At December 31, 2003, total long-term debt was $370 million, down 35 percent from $567 million a year ago. During the quarter, the Company repaid the outstanding $78 million bank term loan and cancelled this facility and put in place a new $450 million bank credit facility and $150 million line of credit. On February 2, 2004, the Company redeemed all of its outstanding 9 percent senior subordinated debentures. Total stockholders' equity at the year end was approximately $1,290 million, up 51 percent from a year ago. The capitalization ratio (total long-term debt to total long-term debt and stockholders' equity) declined to 22 percent at year end December 31, 2003 (26 percent pro forma for the new $450 million bank credit facility) compared to 40 percent a year ago. There was approximately $247 million of immediately available cash at December 31, 2003, providing significant financial flexibility to support the cash needs of the Company. In January 2004, consistent with its growth strategy, Willis acquired the remaining 70 percent interest in Willis A/S, Denmark's largest insurance broker, with annualized revenues of approximately $50 million. Plumeri concluded, "Willis is in great shape. This is our sixteenth consecutive quarter of record earnings; we raised the dividend again and refinanced our debt on investment grade terms - all within six years of the 1998 leveraged buy-out. In addition to our strong organic growth efforts, we continue to recruit top industry talent. The caliber of professionals who have joined Willis is proof positive that we are challenging the conventions of the global insurance broking sector and are cutting a new path rather than following industry norms. We are confident in the outlook for future growth at Willis, and reaffirm our long-term goal to grow adjusted net income per diluted share by 15 percent or better each year." Willis Group Holdings (S&P, BB+ Counterparty Credit Ratings, Positive) is a leading global insurance broker, developing and delivering professional insurance, reinsurance, risk management, financial and human resource consulting and actuarial services to corporations, public entities and institutions around the world. With over 300 offices in more than 100 countries, its global team of 13,000 associates serves clients in some 180 countries. Willis is publicly traded on the New York Stock Exchange under the symbol WSH. Additional information on Willis may be found on its web site http://www.willis.com/ WORLDCOM: Court Approves Modified Scully Scott Engagement Terms --------------------------------------------------------------- On September 4, 2002, the Court authorized the Worldcom Debtors to employ professionals in the ordinary course of business. In this regard, the Court granted the Debtors interim authorization to employ Scully, Scott, Murphy & Presser, PC, as special counsel. Scully Scott was tasked to represent the Debtors in overseeing, managing and maintaining their foreign patent portfolio, including: -- the filing of new patent applications in foreign jurisdictions; -- prosecuting pending patent applications; and -- obtaining letters patent and thereon maintaining these patent applications and patents through the payment of yearly maintenance fees as required by various patent offices. Scully Scott's monthly fees exceeded the $100,000 monthly cap for professionals retained under the Ordinary Course Professionals Order in October and November 2002. On December 23, 2002, the Court entered a Second Supplemental Ordinary Course Order under which the Court granted the Debtors authority to employ Scully Scott under Section 327(e) of the Bankruptcy Code and compensate them in accordance with the August 18, 2002 Order Establishing Procedures for Interim Monthly Compensation and Reimbursement of Professionals by the filing of monthly fees statements and quarterly interim fee applications. However, while Scully Scott generally bills by the hour, before and during the Debtors' Chapter 11 cases, it charged the Debtors flat fees in lieu of hourly fees for certain routine services. This billing method afforded and continues to afford the Debtors a measure of predictability when they request services, and generally saves them money since the flat fees are, as a rule, less than what would be the hourly charges for the services. Service Basic Minimum Fee ------- ----------------- New Foreign Patent Application per country $700,000 (includes a PCT filing) Requesting examination 275 Requesting further prosecution 275 Reviewing and reporting Search Reports 225 Reporting publication of application 125 Effecting payment of a grant fee, publication Fee, final fee or issuance fee 275 Reviewing and responding to 51(4) EPC 300 Fulfilling formality requirements in each EPO national country 250 Reviewing and reporting Letters Patent 135 Preparing and filing Chapter 11 Demand 250 Preparing Assignment and submitting for recordal 200 Responding to a formal Office Action (Based on attorney time) 300 - 500 Responding to a substantive Office Action (Based on Attorney time) 800 - 3,000 Consequently, the Debtors seek to modify the employment of Scully Scott to permit them to compensate the firm pursuant to the hybrid hourly/flat fee billing scheme, nunc pro tunc to July 21, 2002. Alfredo R. Perez, Esq., at Weil, Gotshal & Manges LLP, in Houston, Texas, points out that the modification of the Final Order is appropriate because the flat fees Scully Scott offers result in (i) greater predictability for the Debtors in determining the cost of the firm's services, and (ii) generally reduced expenses. Accordingly, Judge Gonzalez approves the modification of Scully Scott's employment. (Worldcom Bankruptcy News, Issue No. 47; Bankruptcy Creditors' Service, Inc., 215/945-7000) XM SATELLITE: Will Redeem 7.75% Convertible Subordinated Notes -------------------------------------------------------------- XM Satellite Radio Holdings Inc. (Nasdaq: XMSR), issued a notice to redeem any of the approximately $45.7 million outstanding principal amount of the 7.75% Convertible Subordinated Notes due 2006 which are not converted prior to the close of business on March 2, 2004 and a notice to prepay the portion of its outstanding $89 million Series GM Senior Secured Convertible Note due 2009, which is not converted. XM will use a portion of the proceeds from its recent offering of Class A common stock, which closed on January 28, 2004, for the prepayment of the Series GM Convertible Note and the redemption of any 7.75% Convertible Notes. In the aggregate, XM expects to eliminate approximately $135 million in debt as a result of these redemptions and prepayments, or if holders otherwise convert their securities into XM Class A common stock. The redemption prepayment and any conversions into Class A common stock will be completed by March 3, 2004. The 7.75% Convertible Notes may be converted by the holders thereof into shares of XM's Class A common stock prior to the close of business on March 2, 2004 at a conversion price of $12.225 per share. Approximately $7.9 million of the outstanding principal amount of the Series GM Convertible Note may be converted into shares of XM's Class A common stock prior to 5:00 p.m. on February 19, 2004 at an average conversion price of $8.00 per share. XM Satellite Radio is America's #1 satellite radio service with more than 1.36 million subscribers today. Broadcasting live daily from studios in Washington, DC, New York City and Nashville, Tennessee at the Country Music Hall of Fame, XM's 2004 lineup includes more than 120 digital channels of choice from coast to coast: 68 commercial-free music channels, featuring hip hop to opera, classical to country, bluegrass to blues; 32 channels of premier sports, talk, comedy, children's and entertainment programming; and more than 20 channels of the most advanced traffic and weather information for major metropolitan areas nationwide. Affordable, compact and stylish XM satellite radio receivers for the home, the car, the computer and boom boxes for on the go are available from retailers nationwide. In addition, XM is available in more than 80 different 2004 car models. XM is a popular factory-installed option on more than 40 new General Motors models, as well as a standard feature on several top- selling Honda and Acura models. JetBlue Airways and AirTran Airways passengers will be able to listen to XM's programming in- flight later in 2004. For more information about XM, visit http://www.xmradio.com/ * * * As previously reported in Troubled Company Reporter, Standard & Poor's Ratings Services lowered its corporate credit ratings on satellite radio provider XM Satellite Radio Inc., and its parent company XM Satellite Radio Holdings Inc. (which are analyzed on a consolidated basis) to 'SD' from 'CCC-'. At the same time, Standard & Poor's lowered its rating on the company's $325 million 14% senior secured notes due 2010 to 'D' from 'CCC-'. These actions follow XM's completion of its exchange offer on the senior secured notes, at par, for new 14% senior secured notes due 2009. All ratings were removed from CreditWatch with negative implications where they were placed on Nov. 18, 2002. XO COMMS: Intends to File Application to Trade Shares on Nasdaq --------------------------------------------------------------- XO Communications, Inc. (OTCBB:XOCM.OB), one of the nation's leading providers of broadband telecommunications services, will begin the application process to list the company's common shares on the NASDAQ National Market. As part of the NASDAQ application and approval process, the company is required to meet certain eligibility criteria including meeting the Audit Committee membership standards as well as other qualitative and quantitative requirements. The company's stock has been trading in the over-the-counter market under the symbol XOCM.OB following XO's emergence from Chapter 11 on January 16, 2003. "By beginning the process to list XO's shares on the NASDAQ, we move closer to achieving another milestone set out for the company," Carl Grivner, chief executive officer of XO Communications. "The listing of XO's common stock on the NASDAQ will enhance the company's liquidity, providing benefits to both XO and its shareholders. It will also enhance our ability to meet our stated goals of expanding our company by acquisitions through the use of both cash and stock." XO Communications is a leading broadband telecommunications services provider offering a complete set of telecommunications services, including: local and long distance voice, Internet access, Virtual Private Networking, Ethernet, Wavelength, Web Hosting and Integrated voice and data services. XO has assembled an unrivaled set of facilities-based broadband networks and Tier One Internet peering relationships in the United States. XO currently offers facilities-based broadband telecommunications services within and between more than 70 markets throughout the United States. * Harold Kaplan is New Chairman of Gardner Carton & Douglas LLP --------------------------------------------------------------- Gardner Carton & Douglas LLP, a leading Chicago and Washington, D.C. law firm, announces the selection of Harold L. Kaplan as the firm's new Chairman. Mr. Kaplan is chair of Gardner Carton's Corporate Restructuring and Financial Institutions Group, as well as head of its Corporate Trust and Bondholder Rights practices. He is admitted to the Illinois and New York bars. "I am honored to be selected by my partners as the Chairman of Gardner Carton & Douglas, and excited about the opportunities as we approach our 100th anniversary," said Mr. Kaplan. "Gardner Carton & Douglas has long been known for serving our clients with integrity and professionalism, and we will continue to do so." Over the last two decades, Mr. Kaplan has developed a reputation as one of the leading financial, corporate restructuring and workout attorneys in the country, having represented financial institutions, debtors, and trustees under the Bankruptcy Code and the Securities Investors Protection Act, foreign liquidators in ancillary proceedings, creditors committees, and other creditor groups. He is particularly recognized for representing indenture trustees and bondholder interests in many of the largest national default and bankruptcy cases, including UAL, Conseco, Kmart, Loral, Mirant, HealthPartners, Fleming, PG&E, USGen New England and Safety-Kleen. Turnarounds & Workouts named Mr. Kaplan one of 12 Outstanding Bankruptcy Lawyers in the country for 2003, and as one of 13 Outstanding Bankruptcy Lawyers in 2001. He chairs the Annual Corporate Reorganization Conference, as well as the Annual Healthcare Transactions Conference held in Chicago each year. He is Chair of the American Bar Association Health Care-Related Bankruptcy Issues Working Group and served on the advisory drafting group of the ABA Subcommittee on Revision of the Model Simplified Indenture. He is also a member of the editorial board of the American Bankers Association Trust and Investments magazine, as well as a contributing editor to the American Bankruptcy Institute Journal's "Intensive Care" column on healthcare- related issues. He is also the immediate past Chair of the Chicago Bar Association Bankruptcy Committee. Gardner Carton & Douglas -- http://www.gcd.com/-- was established in Chicago in 1910. The firm's 240 attorneys practice in Chicago and Washington D.C. Firm practice areas address a wide variety of business, policy and financial issues. Diverse and extensive, the firm's client base includes major domestic and foreign manufacturing companies; universities; hospitals and other nonprofit organizations; commercial and investment banks; insurance companies and other financial service institutions; Native American tribes and municipalities; broadcasters, common carriers and private communication users; advanced technology businesses; and individuals. * BOOK REVIEW: The Sorcerer's Apprentice - Medical Miracles and Other Disasters ----------------------------------------------------------- Author: Sallie Tisdale Publisher: BeardBooks Softcover: 270 pages List Price: $34.95 Review by Henry Berry Order your own personal copy at http://www.amazon.com/exec/obidos/ASIN/1587981645/internetbankrupt An earlier edition of "The Sorcerer's Apprentice" won an American Health Book Award in 1986. The book has been recognized as an outstanding book on popular science. Tisdale brings to her subject of the wide nd engrossing field of health and illness the perspective, as well as the special sympathies and sensitivities, of a registered nurse. She is an exceptionally skilled writer. Again and again, her descriptions of ill individuals and images of illnesses such as cancer and meningitis make a lasting impression. Tisdale accomplishes the tricky business of bringing the reader to an understanding of what persons experience when they are ill; and in doing this, to understand more about the nature of illness as well. Her style and aim as a writer are like that of a medical or science journalist for leading major newspaper, say the "New York Times" or "Los Angeles Times." To this informative, readable style is added the probing interest and concern of the philosopher trying to shed some light on one of the central and most unsettling aspects of human existence. In this insightful, illuminating, probing exploration of the mystery of illness, Tisdale also outlines the limits of the effectiveness of treatments and cures, even with modern medicine's store of technology and drugs. These are often called "miracles" of modern medicine. But from this author's perspective, with the most serious, life-threatening, illnesses, doctors and other health- care professionals are like sorcerer's trying to work magic on them. They hope to bring improvement, but can never be sure what they do will bring it about. Tisdale's intent is not to debunk modern medicine, belittle its resources and ways, or suggest that the medical profession holds out false hopes. Her intent is do report on the mystery of serious illness as she has witnessed it and from this, imagined what it is like in her varied work as a registered nurse. She also writes from her own experiences in being chronically ill when she was younger and the pain and surgery going with this. She writes, "I want to get at the reasons for the strange state of amnesia we in the health professions find ourselves in. I want to find clues to my weird experiences, try to sense the nature of being sick." The amnesia of health professionals is their state of mind from the demands placed on them all the time by patients, employers, and society, as well as themselves, to cure illness, to save lives, to make sick people feel better. Doctors, surgeons, nurses, and other health-care professionals become primarily technicians applying the wonders of modern medicine. Because of the volume of patients, they do not get to spend much time with any one or a few of them. It's all they can do to apply the prescribed treatment, apply more of it if it doesn't work the first time, and try something else if this treatment doesn't seem to be effective. Added to this is keeping up with the new medical studies and treatments. But Tisdale stepped out of this problem- solving outlook, can-do, perfectionist mentality by opting to spend most of her time in nursing homes, where she would be among old persons she would see regularly, away from the high-charged atmosphere of a hospital with its "many medical students, technicians, administrators, and insurance review artists." To stay on her "medical toes," she balanced this with working occasional shifts in a nearby hospital. In her hospital work, she worked in a neonatal intensive care unit (NICU), intensive care unit (ICU), a burn center, and in a surgery room. From this combination of work with the infirm, ill, and the latest medical technology and procedures among highly-skilled professionals, Tisdale learned that "being sick is the strangest of states." This is not the lesson nearly all other health-care workers come away with. For them, sick persons are like something that has to be "fixed." They're focused on the practical, physical matter of treating a malady. Unlike this author, they're not focused consciously on the nature of pain and what the patient is experiencing. The pragmatic, results-oriented medical profession is focused on the effects of treatment. Tisdale brings into the picture of health care and seriously-ill patients all of what the medical profession in its amnesia, as she called it, overlooks. Simply in describing what she observes, Tisdale leads those in the medical profession as well as other interested readers to see what they normally overlook, what they normally do not see in the business and pressures of their work. She describes the beginning of a hip-replacement operation, the surgeon "takes the scalpel and cuts--the top of the hip to a third of the way down the thigh--and cuts again through the globular yellow fat, and deeper. The resident follows with a cautery, holding tiny spraying blood vessels and burning them shut with an electric current. One small, throbbing arteriole escapes, and his glasses and cheek are splattered." One learns more about what is actually going on in an operation from this and following passages than from seeing one of those glimpses of operations commonly shown on TV. The author explains the illness of meningitis, "The brain becomes swollen with blood and tissue fluid, its entire surface layered with pus...The pressure in the skull increases until the winding convolutions of the brain are flattened out...The spreading infection and pressure from the growing turbulent ocean sitting on top of the brain cause permanent weakness and paralysis, blindness, deafness...." This dramatic depiction of meningitis brings together medical facts, symptoms, and effects on the patient. Tisdale does this repeatedly to present illness and the persons whose lives revolve around it from patients and relatives to doctors and nurses in a light readers could never imagine, even those who are immersed in this world. Tisdale's main point is that the miracles of modern medicine do not unquestionably end the miseries of illness, or even unquestionably alleviate them. As much as they bring some relief to ill individuals and sometimes cure illness, in many cases they bring on other kinds of pains and sorrows. Tisdale reminds readers that the mystery of illness does, and always will, elude the miracle of medical technology, drugs, and practices. Part of the mystery of the paradoxes of treatment and the elusiveness of restored health for ill persons she focuses on is "simply the mystery of illness. Erosion, obviously, is natural. Our bodies are essentially entropic." This is what many persons, both among the public and medical professionals, tend to forget. "The Sorcerer's Apprentice" serves as a reminder that the faith and hope placed in modern medicine need to be balanced with an awareness of the mystery of illness which will always be a part of human life. ********* Monday's edition of the TCR delivers a list of indicative prices for bond issues that reportedly trade well below par. Prices are obtained by TCR editors from a variety of outside sources during the prior week we think are reliable. Those sources may not, however, be complete or accurate. The Monday Bond Pricing table is compiled on the Friday prior to publication. Prices reported are not intended to reflect actual trades. Prices for actual trades are probably different. Our objective is to share information, not make markets in publicly traded securities. Nothing in the TCR constitutes an offer or solicitation to buy or sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. For copies of court documents filed in the District of Delaware, please contact Vito at Parcels, Inc., at 302-658-9911. For bankruptcy documents filed in cases pending outside the District of Delaware, contact Ken Troubh at Nationwide Research & Consulting at 207/791-2852. ********* S U B S C R I P T I O N I N F O R M A T I O N Troubled Company Reporter is a daily newsletter co-published by Bankruptcy Creditors' Service, Inc., Fairless Hills, Pennsylvania, USA, and Beard Group, Inc., Frederick, Maryland USA. Yvonne L. Metzler, Bernadette C. de Roda, Donnabel C. Salcedo, Ronald P. Villavelez and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***