/raid1/www/Hosts/bankrupt/TCR

/raid1/www/Hosts/bankrupt/TCR_Public/040223.mbx T R O U B L E D C O M P A N Y R E P O R T E R Monday, February 23, 2004, Vol. 8, No. 37 Headlines ACTUANT CORP: Secures New $250 Million Revolving Credit Facility ADVANCED ENERGY: Will Present at Goldman Sach's Feb. 23 Conference ADVOCAT INC: Arkansas Files 6 Lawsuits Seeking $45MM+ Penalty AKAMAI: Broadens Joint Sales & Marketing Initiatives with Internap AIR CANADA: Restructures Unexpired Aircraft Leases & Contracts AIR CANADA: Inks Pact with Pension Beneficiaries over Deficit ALAMOSA HOLDINGS: Records $73.4 Million Net Loss for FY 2003 ALLEGIANCE TELECOM: Court Approves Proposed Sale to XO Comms AMAZON.COM: TCW Business Unit Discloses 8.7% Equity Interest AMC ENTERTAINMENT: Gets S&P's Junk Rating for $550MM Sub. Notes AMPLIDYNE: Phoenix Reports 100% Ownership of Series C Preferreds ANC RENTAL: Court Fixes March 18 as Administrative Claims Bar Date ARCH COAL: Board Declares Quarterly Dividends ARCHIBALD CANDY: Judge Approves Bid Procedures for Asset Sale ASPECT COMM: Comerica Bank-Led Group Extends $100M Credit Facility ATLANTIC COAST: S&P Assigns Junk Rating to $125 Million Notes AURORA FOODS: Court Okays Proposed Interim Compensation Protocol AVADO BRANDS: Asks Okay to Tap BSI as Claims and Notice Agent BAYOU STEEL: Emerges from Chapter 11 Protection BETHLEHEM: Court Says $11.8M Swiss Insurance Claim Was Timely BOISE CASCADE: State Street Bank Discloses 10.3% Equity Stake BOSTON CHICKEN: Trustee Prepares to Pay 2nd $1,000,000 Dividend BUFFETS INC: $310 Million Bank Loan Gets S&P's B+ Rating CHAMPIONLYTE: Prices Up to 51MM Stock Offering at $0.15 per Share CEDAR BRAKES II: S&P Hatchets Senior Secured Bond Rating to CCC+ CHARTER COMMS: Shareholders' Deficit Tops $175 Million in December CHET DECKER INC: Case Summary & 20 Largest Unsecured Creditors COEUR D'ALENE: 4th Quarter Net Loss Decreases to $13.5 Million COMM 2004-LNB2: S&P Assigns Prelim. Ratings to 2004-LNB2 Notes COMMSCOPE INC: Reports $1 Million Net Loss in Fourth Quarter COMPRESSION POLYMERS: S&P Assigns Stable Outlook to B Rating COVANTA ENERGY: Obtains Go-Ahead for New Covanta Lake Merger Deal CRESCENT: Incurs $300K Net Loss for the Year Ended Dec. 31, 2003 DEUTSCHE MORTGAGE: Fitch Ups & Affirms Series 2002-1 Ratings ENRON: Court Permits Cabazon Unit to Disburse FPL Sale Proceeds ENRON CORP: Inks Settlement Resolving Prudential Relocation Claims FEDERAL-MOGUL: Disclosure Statement Hearing Fixed for April 13 FIRST AMERICAN: Agrees to Acquire SNK Holdings & Units FLEMING COS: Court Approves PCI & Commercenter Claims Settlement FRESH CHOICE: Reports Losses & Working Capital Deficit for 2003 FRIENDLY ICE: Stockholders' Deficit Narrows to $98M at Dec. 28 GALAXY NUTRITIONAL: Issues Clarification about Loan Compliance GENCO REDI MIX: Case Summary & 16 Largest Unsecured Creditors GIHON REALTY CORP: Voluntary Chapter 11 Case Summary GLIMCHER REALTY: Posts Decreasing Net Income for Q4 and FY 2003 GOLD KIST: S&P Assigns B+ Senior Secured Bank Loan Rating GOODYEAR: Steelworkers Press for Investigation on Tire Production GS MORTGAGE: S&P Ups and Affirms Series 1999-C1 Note Ratings GUESS? INC: Reports Improved 4th Quarter and FY 2003 Results HERVAL CONSTRUCT: Case Summary & 20 Largest Unsecured Creditors HOMESTEADS COMMUNITY: Section 341(a) Meeting Fixed for March 8 INTEGRATED HEALTH: Court Approves Settlement Pact with Horizon INTERNET CAPITAL: December 2003 Deficit Narrows to $19 Million ISLE OF CAPRI: Sells Senior Subordinated Notes in Private Offering IW INDUSTRIES: Employing Piper Rudnick as Bankruptcy Counsel JAG MEDIA: Will Commence Resale of Class A Common Shares J.P. MORGAN: S&P Takes Rating Actions on Series 2001-CIBC1 Notes KMART CORP: Wants to Recover Transfers Made to 39 Trade Vendors KNOLOGY INC: S&P Says Junk Ratings Reflect High Financial Risk MEDCOMSOFT: Raises $1.2 Million from Private Placement Financing MIRANT: Canadian Court Extends CCAA Protection Until March 31 MONTE VISTA HOTEL: Case Summary & 10 Largest Unsecured Creditors MORTGAGE ASSET: Fitch Takes Rating Actions on 6 Securitizations MRS. FIELDS: S&P Rates $192 Million Senior Secured Notes at CCC+ MTS INCORPORATED: Asks to Continue Hiring Ordinary Course Profs. NATIONAL CENTURY: Wants Court to Nix 4 National Medical Claims NET PERCEPTIONS: Shareholders to Decide on Liquidating Plan NEWPOWER HLDGS: Wants Final Nod for Settlement Pact with Directors NEXTEL COMMUNICATIONS: Reports Record 2003 Financial Results NFIL HOLDINGS: S&P Assigns Stable Outlook to Low-B Ratings NVIDIA CORP: Will Present at Goldman Sachs' Symposium on Wednesday OAKWOOD HOMES: Files 2nd Amended Chapter 11 Plan & Disc. Statement OWENS-ILLINOIS: S&P Places Low-B Level Ratings on Watch Negative OWENS-ILLINOIS: ACI Packaging Subsidiary to Sell Plastics Assets PAK-A-SAK FOOD: Case Summary & 20 Largest Unsecured Creditors PACIFIC GAS: Asks Go-Signal for Cash-Collateralized L/C Program PAC-WEST TELECOM: Fourth Quarter Net Loss Widens to $9.8 Million PAC-WEST TELECOMM: Agrees to Acquire Sentient Group, Inc. PENTHOUSE INT'L: S&P Approves Listing in Market Access Program PG&E NATIONAL: CL Power Asks Court Nod to Set Off Cash Collateral PG&E CORP: Reports Improved Fourth Quarter 2003 Results PITTSBURGH, PA: S&P Revises Outlook on BB Bond Rating to Positive PLAINS RESOURCES: Accepts Vulcan's Revised Acquisition Proposal QWEST COMMS: Charles L. Biggs and K. Dane Brooksher Join Board RAILAMERICA: Posts $17M Working Capital Deficit at Dec. 31, 2003 READER'S DIGEST: S&P Assigns BB- Rating to $300M Sr. Unsec. Notes REDDY ICE: Q4 Earnings Release & Conference Call Set for Feb. 25 REPUBLIC ENGINEERED: Names George Strickler Chief Fin'l Officer ROOD TRUCKING CO: Case Summary & 20 Largest Unsecured Creditors RSTAR CORP: Shares Knocked Off Nasdaq, Now Trading on OTC BB SPECTRASITE: Stockholders Register 9-Mil. Shares for Sale SPIEGEL GROUP: Court Gives Clearance for New Fry Agreements SR TELECOM: Sets 4th Quarter Conference Call for Feb. 26, 2004 TRAVEL PLAZA: Seeks Okay to Tap Whiteford Taylor as Attorneys UNIFORET: Canadian Supreme Court Says No to US Noteholders' Appeal UNITED AIRLINES: Wants Court to Reduce Retroactive Pay Claims UNITED SALES: Case Summary & 20 Largest Unsecured Creditors UPC POLSKA: Plans to Issue 9% Senior Notes to Raise $105.4-Mil. US AIRWAYS: Agrees to Settle Three General Electric Claims VERTIS INC: December Balance Sheet Upside-Down by $342 Million WESTPOINT STEVENS: Plan-Filing Exclusivity Extended To March 29 WILLIAMS COMPANIES: 2003 Net Loss Pegged at $504 Million WILLIAMS PRODUCTION: Fitch Affirms Sr. Term Loan B Rating at BB+ WOLVERINE TUBE: Reports 2003 Fourth Quarter and Full-Year Losses * CLLA Headquarters Relocates to 70 East Lake Street * Jones Rogers in Toronto Looks for Associate with Sense of Humor * Retailers' 2004 Legislative Agenda Includes Bankruptcy Reform * SSG Capital Advisors & Resilience Capital Partners Join Forces * BOND PRICING: For the week of February 23 - 27, 2004 ********* ACTUANT CORP: Secures New $250 Million Revolving Credit Facility ---------------------------------------------------------------- Actuant Corporation (NYSE:ATU) entered into a $250 million five- year senior revolving credit facility. This Revolver replaces the current Senior Secured Credit Facility which included an outstanding $30 million term loan and an undrawn $100 million revolving credit facility. The Revolver is not secured by the Company's assets, and provides for guaranties and stock pledges by certain of the Company's significant subsidiaries. Borrowings under the Revolver are subject to a pricing grid, with initial borrowings priced at LIBOR plus 150 basis points, compared to LIBOR plus 200 basis points under the former facility. Andrew G. Lampereur, Actuant Chief Financial Officer, commented, "Securing a new senior credit facility was one of the last steps in replacing the Company's original spin-off financing. This past Fall, we successfully replaced a portion of our 13% Senior Subordinated Notes with proceeds from the issuance of 2% Senior Subordinated Convertible Debentures. The improved terms and structure of the new senior revolver result from the Company's significant deleveraging since the spin-off, and the increased capacity provides strong liquidity as we move forward in executing our growth strategies to enhance shareholder value." The replacement of the senior credit facility will result in a non-cash charge in the second quarter of approximately $2.3 million, $1.5 million net of tax, or approximately $0.06 per diluted share, representing the write-off of the remaining capitalized debt issuance costs associated with the former facility. Actuant (S&P, BB Corporate Credit Rating, Stable Outlook), headquartered in Milwaukee, Wisconsin, is a diversified industrial company with operations in over 20 countries. The Actuant businesses are market leaders in highly engineered position and motion control systems and branded hydraulic and electrical tools. Products are offered under such established brand names as Enerpac, Gardner Bender, Kopp, Kwikee, Milwaukee Cylinder, Nielsen Sessions, Power-Packer, and Power Gear. For further information on Actuant and its business units, visit the Company's Web site at http://www.actuant.com/ ADVANCED ENERGY: Will Present at Goldman Sach's Feb. 23 Conference ------------------------------------------------------------------ Management of Advanced Energy Industries, Inc. (Nasdaq: AEIS) will present at three investment conferences in February and March. These presentations will be webcast live over Advanced Energy's corporate Web site -- http://www.advanced-energy.com/-- in the Investor Relations section: * February 23, 2004 -- Goldman Sachs Technology Symposium 2004, Phoenix, AZ, 11:45 am Mountain Time/1:45 pm Eastern * March 2, 2004 -- Tenth Annual Wachovia Securities Convertible Conference 2004, Miami Beach, FL, 8:00 am Eastern Time * March 3, 2004 -- Morgan Stanley Semiconductor and Systems Conference, Dana Point, CA, 9:30 am Pacific Time/12:30 pm Eastern The webcasts will be available on the website for one week following each event. Advanced Energy (S&P, B+ Corporate Credit and B- Subordinated Debt Ratings, Negative) is a global leader in the development and support of technologies critical to high-technology manufacturing processes used in the production of semiconductors, flat panel displays, data storage products, compact discs, digital video discs, architectural glass, and other advanced product applications. Leveraging a diverse product portfolio and technology leadership, AE creates solutions that maximize process impact, improve productivity and lower cost of ownership for its customers. This portfolio includes a comprehensive line of technology solutions in power, flow, thermal management, plasma and ion beam sources, and integrated process monitoring and control for original equipment manufacturers and end-users around the world. AE operates in regional centers in North America, Asia and Europe and offers global sales and support through direct offices, representatives and distributors. Founded in 1981, AE is a publicly held company traded on the Nasdaq National Market under the symbol AEIS. For more information, visit AE's corporate Web site at http://www.advanced-energy.com/ ADVOCAT INC: Arkansas Files 6 Lawsuits Seeking $45MM+ Penalty ------------------------------------------------------------- On February 18, 2004, Advocat Inc. (Nasdaq: AVCA) and certain of its subsidiaries were served in six lawsuits filed by the State of Arkansas involving fifteen patients at five nursing homes operated by the Company in Arkansas. The complaint alleges violations of the Arkansas Abuse of Adults Act and violation of the Arkansas Medicaid False Claims Act. The complaints, in the aggregate, seek actual damages totaling approximately $250,000 and fines and penalties in excess of $45 million. The Company intends to vigorously defend itself against these allegations. However, the Company cannot currently predict with certainty the ultimate impact of the above cases on the Company's financial condition, cash flows or results of operations. Advocat Inc. -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $46 million -- provides long-term care services to nursing home patients and residents of assisted living facilities in 9 states, primarily in the Southeast, and three provinces in Canada. For additional information about the Company, visit Advocat's Web Site at http://www.irinfo.com/avc/ AKAMAI: Broadens Joint Sales & Marketing Initiatives with Internap ------------------------------------------------------------------ Internap Network Services Corporation (AMEX:IIP), a leading provider of high performance, managed Internet connectivity solutions to business customers, and Akamai Technologies, Inc. (Nasdaq:AKAM), the global leader in distributed computing solutions and services, announced that they have entered into an agreement that will allow the companies to drive additional content and applications delivery revenue for Akamai, and seize opportunities to capture additional IP services revenue for Internap. As part of the expanded relationship, Akamai will serve as the preferred content and applications delivery provider for Internap's customers, and will become Internap's only actively sold and marketed content and applications delivery provider. The agreement broadens the current relationship between the companies, which already provides for joint sales and marketing programs, including regional sales events, coordinated lead generation as well as sales and customer incentives. To date, the joint Internap-Akamai value proposition has yielded key contract wins, including e-business leaders Hollywood.com, Logitech, The Seattle Times Company, Travelocity, Value Line and WebMD. "Internap has consistently proven itself in the intelligent route control market," said Michael Ruffolo, Chief Operating Officer of Akamai. "Akamai and Internap have synergistic value propositions that utilize advanced technology to facilitate the delivery of premium Internet services to customers. Internap is one of our largest and most successful sales channels. This addition to our current relationship with Internap will allow us to more fully leverage our complementary strengths." The combination of Internap's high performance IP services and Akamai's edge computing solutions creates a holistic, edge-to-edge IP services solution designed to deliver maximum value to customers. Together, the coordinated service offering addresses the major challenges to deploying mission-critical, revenue generating applications over the Internet: predictability, reliability and security. Customers can cost effectively extend and control their e-business activities via Akamai's unique, globally-distributed computing infrastructure and gain detailed visibility and understanding of application usage and performance. Meanwhile, they can simultaneously leverage Internap's core intelligent route control and data center services to ensure improved performance and reliability of their IP network infrastructure. "Leveraging Akamai as the market leader in content and application delivery, with its extensive relationships with IP-centric businesses, will provide Internap with additional growth opportunities and a means to deepen our relationships with customers," said Dave Abrahamson, Internap's Chief Marketing Officer and Vice President of Sales. About Akamai Akamai -- whose September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $182 million -- is the global leader in distributed computing solutions and services, making the Internet predictable, scalable, and secure for conducting profitable e-business. The Akamai on demand platform enables customers to easily extend their Web operations -- with full control -- anywhere, anytime, without the cost of building out infrastructure. Headquartered in Cambridge, Massachusetts, Akamai serves hundreds of today's most successful enterprises and government agencies around the globe. Akamai is The Business Internet. For more information, visit http://www.akamai.com/ About Internap Internap provides high performance, managed Internet connectivity solutions to business customers who require guaranteed network availability and high performance levels for business-critical applications, such as e-commerce, video and audio streaming, voice over Internet Protocol, virtual private networks and supply chain management. Internap's proprietary route optimization technology monitors the performance of these Internet networks and allows us to intelligently route our customers' Internet traffic over the optimal Internet path in a way that minimizes data loss and network delay. Its service level agreements guarantee performance across the entire Internet in the United States, excluding local connections, whereas conventional Internet connectivity providers typically only guarantee performance on their own network. Internap provides services to customers in various industry verticals, including financial services, entertainment and media, travel, e-commerce retail, and technology. As of December 31, 2003, Internap provided its services to over 1,600 customers in the United States and abroad, including approximately 70 customers in the Fortune 1000 companies. AIR CANADA: Restructures Unexpired Aircraft Leases & Contracts -------------------------------------------------------------- Murray McDonald, President of Ernst & Young, Inc., the Court- appointed monitor, reports that the Air Canada Applicants reduced their total fleet size by 73 aircraft, including repudiated and returned aircraft as well as 20 parked F-28 aircraft, since the Petition Date. Of these 73 aircraft, only 50 aircraft were actually in use by the Applicants as at April 1, 2003. The remaining 23 aircraft comprised of: -- three aircraft already sub-leased to an external third party. The Applicants have since arranged for the third party to assume the lease obligation directly; and -- 20 F28s that were parked and not in use. The effective date on many of the repudiated aircraft leases has not yet passed. Thus, the Applicants may continue to use the aircraft up until the Effective Repudiation Date. To the extent the leasing agreements are arrived at subsequent to the issuance of repudiations, these may be retracted, with a resulting amendment to any proof of claim previously filed by the lessor. The Monitor tabulates the status of Air Canada's fleet reduction and re-negotiation efforts as of February 4, 2004: Air Canada Jazz ---------- ---- Total Number of Aircraft as at April 1, 2003 259 130 Less: owned and parked aircraft (19) (51) ------ ------ Number of Aircraft subject to re-negotiation 240 79 Status of Re-Negotiations: Repudiations 29 9 Consensual returns or lease expirations 13 2 Re-negotiated under the GECAS agreement 64 10 Re-negotiated under the ECA agreement 34 n/a Re-negotiated pursuant to other signed MOUs 87 29 Re-negotiated in principle, with MOUs pending 13 9 Other settled aircraft arrangements n/a 20 ------ ------ Lease remaining to be re-negotiated 240 79 ====== ====== Mr. McDonald notes that the Applicants accepted the delivery of three new aircraft from GE Capital Aviation Services since the Petition Date. The rental rates on the new aircraft reflect the Applicants' view of the current fair market lease rates. Accordingly, after considering the unused aircraft and the newly delivered aircraft, the Applicants will have made a net reduction in their operating fleet of 47 aircraft, assuming all repudiations become effective. The Applicants anticipate that further reductions will occur as certain re-negotiated leases provide for the early return of aircraft over the next 24 months. Since December 2003, and in light of the recently established February 23, 2004 final claims bar date for Restructuring Claims, the Applicants have issued additional lease repudiations covering 12 aircraft and successfully renegotiated 44 aircraft leases to complete their fleet restructuring process, including one renegotiated agreement that is subject to Court approval. The Applicants have yet to come to a financial arrangement with the equity participant for three ECA-related aircraft. Accordingly, those three aircraft leases, which were previously reported as having been completed pursuant to the ECA Agreement, were repudiated effective April 15, 2004. With respect to the 13 remaining Air Canada aircraft leases, including one previously reported ECA aircraft, the Applicants and the lessors have agreed that the lessors will file proofs of claim as if the Applicants had repudiated the aircraft leases notwithstanding that no repudiation has been issued. The agreement was completed for these reasons: (i) The constituency of the lessor group is composed by a very broad syndicate of North American and European-based financial institutions; and (ii) The lessors were concerned that the issuance of notices of repudiation would result in significant time consumed within the syndicates arising from the repudiations and the resultant impact on the structured leases rather than focusing on the completion of the lease negotiations. In most of the cases involving Deemed Repudiation, Mr. McDonald notes that the renegotiated lease terms have been agreed on critical items as leasing rates, the funding of substantial maintenance checks, return dates and return conditions. The nine outstanding Jazz leases consist of mortgage loans secured by the related aircraft, which are subject to ongoing negotiations. (Air Canada Bankruptcy News, Issue No. 27; Bankruptcy Creditors' Service, Inc., 215/945-7000) AIR CANADA: Inks Pact with Pension Beneficiaries over Deficit ------------------------------------------------------------- Air Canada and representatives of the Pension Beneficiaries Group representing unionized, non-unionized employees and retirees have come to an agreement with respect to the funding of the Air Canada pension deficit which includes a provision for a funding schedule over a 10-year period. The parties will jointly seek the approval of the Office of the Superintendent of Financial Institutions for the funding plan. Trinity Time Investments, Air Canada's equity plan sponsor, has advised that the agreement is satisfactory to Trinity only in the context of a proper restructuring of Air Canada's pension and benefit plans. No discussions have occurred to date with respect to Trinity's February 5, 2004 proposal including the transition to a defined contribution plan for certain employees. Court Approves Payment of Deposits Relating to Purchase of Regional Jet The Court approved payment of non-refundable deposits up to an aggregate amount of USD $55 million pursuant to the Bombardier and Embraer aircraft purchase agreements. The deposits are required to ensure the aircraft delivery timetable agreed upon will be adhered to. Both aircraft orders are subject to a number of conditions including financing on satisfactory commercial terms, final documentation and approvals by the Monitor, GE Canada Finance Inc. and Trinity. ALAMOSA HOLDINGS: Records $73.4 Million Net Loss for FY 2003 ------------------------------------------------------------ Alamosa Holdings, Inc. (OTC Bulletin Board: ALMO) reported financial and operational results for the fourth quarter and the full year ended December 31, 2003. Total revenue for the fourth quarter and full year of $168.2 million and $631.1 million, respectively, represented an increase of 13% and 14% over the same periods one year ago. Subscribers grew 34,000 and 105,000 during the fourth quarter and full year, respectively. This represents a 10% and 17% increase, respectively, over the same periods one year ago. Adjusted EBITDA* of $37.3 million for the fourth quarter represented a 208% increase over the fourth quarter of 2002. Full year Adjusted EBITDA* of $116.6 million grew 332% over Adjusted EBITDA* of $26.9 million for 2002 Net loss for the fourth quarter decreased to $6.7 million or $8.5 million and $0.09 per share after preferred stock dividends, compared to a net loss of $25.6 million or $0.27 per share for the fourth quarter of 2002. The net loss for the year of 2003 decreased to $73.4 million or $75.2 million and $0.80 per share after preferred stock dividends, compared to the net loss for 2002 of $403.3 million or $4.33 per share. As previously announced, the Company completed a debt exchange in November 2003, reducing its total debt outstanding by $238 million by acquiring $699 million in aggregate principal amount of senior notes in exchange for a package of securities which included $442 million in aggregate principal amount of new senior notes and preferred stock with a liquidation preference of $170 million. At year-end, the Company had cash of $100 million and an un- drawn revolver of $25 million. In January 2004, the Company issued $250 million of new senior notes, the proceeds of which were used to repay $200 million outstanding under a senior secured term loan, which was terminated along with the un-drawn revolver. Along with the subscriber growth, the Company also reported a decrease in average monthly churn to 2.5 percent for the fourth quarter, down from 2.9 percent in the third quarter of 2003, and 3.4 percent for the fourth quarter of 2002. For the year of 2003, average monthly churn was 2.7 percent compared to 3.4 percent in 2002. "2003 was a strategic year for Alamosa, with many notable successes in spite of very difficult industry conditions," said David E. Sharbutt, Chairman and Chief Executive Officer of Alamosa Holdings, Inc. "We addressed our capital structure and amended our affiliation agreements with Sprint to improve our financial position and future operating results. At the same time, we were able to grow by retaining our focus on operations and executing our business plan." Mr. Sharbutt continued, "Because of our accomplishments in 2003, we are positioned to capitalize on opportunities that arise as we continue to build value for all of Alamosa's stakeholders." BUSINESS OUTLOOK Alamosa is providing the following business outlook for 2004 which may be materially affected by competitive conditions, continued development and acceptance of new Vision products and services, changes in pricing plans, wireless number portability and general economic conditions, among other things: * Full year 2004 Adjusted EBITDA* of approximately $150 million * Fixed asset additions of $50-65 million * Penetration of Alamosa markets to be in the range of 6.6 to 6.8 percent by year-end 2004 * Average monthly churn averaging less than 3.0 percent for the year of 2004 with churn lower in the first half of the year and higher in the second half of the year Alamosa Holdings, Inc. (S&P, CCC+ Corporate Credit Rating, Developing Outlook) is the largest (based on number of subscribers) PCS Affiliate of Sprint (NYSE: FON, PCS), which operates the largest all-digital, all-CDMA Third-Generation (3G) wireless network in the United States. Alamosa has the exclusive right to provide digital wireless mobile communications network services under Sprint's PCS division throughout its designated territory located in Texas, New Mexico, Oklahoma, Arizona, Colorado, Utah, Wisconsin, Minnesota, Missouri, Washington, Oregon, Arkansas, Kansas, Illinois and California. Alamosa's territory includes licensed population of 15.8 million residents. ALLEGIANCE TELECOM: Court Approves Proposed Sale to XO Comms ------------------------------------------------------------ XO Communications, Inc. (OTCBB:XOCM.OB), one of the nation's leading providers of broadband telecommunications services, announced that Judge Robert Drain of U.S. Bankruptcy Court for the Southern District of New York has issued an order approving XO Communications' proposed purchase of substantially all of the assets of Allegiance Telecom, Inc. (OTCBB: ALGXQ.OB) for approximately $311 million in cash and 45.38 million shares of XO common stock. The transaction remains subject to, among other things, applicable federal and state governmental regulatory approvals and termination of applicable waiting periods. On February 13, 2004, XO Communications was selected as the winning bidder for Allegiance Telecom, which had filed for financial restructuring under Chapter 11 of the U.S. Bankruptcy Code on May 14, 2003. Under the terms of the purchase agreement, XO will purchase substantially all of the assets of Allegiance Telecom and its subsidiaries except for Allegiance's customer premises equipment sales and maintenance business (operated under the name of Shared Technologies), its managed modem business, and certain other Allegiance assets and operations. With the addition of Allegiance's network assets and customer base, XO will become the premier national facilities-based competitor to the regional Bell operating companies. The acquired assets are expected to add more than 100,000 customers and bring XO's total revenues to more than $1.6 billion. The company's network will have more nationwide connections to regional Bell operating companies' networks than any other CLEC, and double the Points of Presence (PoPs) within the 36 major metropolitan areas where both XO and Allegiance operate. XO believes that this extensive network will help XO improve delivery of service to customers, reduce network costs, improve operating results and better compete head to head with other companies in the nationwide local telecommunications services market. Allegiance Telecom (Bankr. S.D.N.Y. Case No. 03-13057) is a facilities-based national local exchange carrier headquartered in Dallas, Texas. As the leader in competitive local service for medium and small businesses, Allegiance offers "One source for business telecomT" -- a complete package of telecommunications services, including local, long distance, international calling, high-speed data transmission and Internet services and a full suite of customer premise communications equipment and service offerings. Allegiance serves 36 major metropolitan areas in the U.S. with its single source provider approach. Allegiance's common stock is traded on the Over the Counter Bulletin Board under the symbol ALGXQ.OB. 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 (VPN), 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. AMAZON.COM: TCW Business Unit Discloses 8.7% Equity Interest ------------------------------------------------------------ The TCW Group, Inc., on behalf of the TCW Business Unit, beneficially owns 34,817,815 shares of the common stock of Amazon.com, representing 8.7% of the outstanding common stock of that Company. The TCW Group holds sole power to vote and/or dispose of 30,407,504 such shares, and shared power to vote and/or dispose of 34,817,815 shares. Amazon.com, a Fortune 500 company based in Seattle, opened its virtual doors on the World Wide Web in July 1995 and today offers Earth's Biggest Selection. Amazon.com seeks to be Earth's most customer-centric company, where customers can find and discover anything they might want to buy online, and endeavors to offer its customers the lowest possible prices. Amazon.com and sellers list millions of unique new and used items in categories such as health and personal care, jewelry and watches, gourmet food, sporting goods, apparel and accessories, books, music, DVDs, electronics and office, kids and baby and home and garden. At September 30, 2003, Amazon.com's balance sheet shows a total shareholders' equity deficit of about $1.1 billion. AMC ENTERTAINMENT: Gets S&P's Junk Rating for $550MM Sub. Notes --------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to movie exhibitor AMC Entertainment Inc.'s proposed Rule 144A offering of up to $550 million in senior subordinated notes due 2014. Proceeds will be used to pay off existing subordinated notes and related call premiums, fees, and expenses. At the same time, Standard & Poor's affirmed its 'B' corporate credit rating on the company. The Kansas City, Missouri-based firm will have about $785 million in debt, on a pro forma basis. The outlook is positive. "The ratings reflect AMC's financial risk as its heavy reliance on lease financing result in high lease adjusted leverage, an elevated fixed cost structure, and modest cash flow," said Standard & Poor's credit analyst Steve Wilkinson. Ratings also reflect AMC's modern theater circuit and the mature and competitive nature of the industry. The potential for an upgrade depends on AMC's ability to improve key credit measures and maintain solid discretionary cash flow. The ultimate use of AMC's excess cash balances and liquidity will be important considerations, given its aggressive financial strategies in the past and its interest in acquisitions. The successful conversion of its preferred stock into common equity could also warrant an upgrade. AMPLIDYNE: Phoenix Reports 100% Ownership of Series C Preferreds ---------------------------------------------------------------- Phoenix Opportunity Fund II, L.P. and Phoenix Capital Holdings, LLC beneficially own 100% of the Series C Convertible Preferred Stock of Amplidyne Inc. by virtue of the beneficial holding of 54,325 such shares. On January 28, 2004, Amplidyne, Inc. entered into a Subscription Agreement with Phoenix Opportunity Fund II, L.P., pursuant to which Phoenix agreed to make an aggregate investment of $100,000 in the Company in exchange for 282,700 shares of Series C Convertible Preferred Stock, representing approximately 80% of the outstanding stock of the Company on a fully diluted basis. The investment came from the capital holdings of Phoenix. Phoenix has currently acquired 54,325 shares of Series C Convertible Preferred Stock, together with a proxy of Devendar Bains representing an additional 2,272,985 shares of common stock, giving Phoenix voting power of approximately 53% of the Company's common stock, pending completion of the full investment. The Company will need to amend its Certificate of Incorporation, or effect a reverse stock split, in order to have sufficient authorized shares to complete the equity financing. Phoenix has therefore made an initial investment of $20,000 in exchange for 54,325 shares of Series C Convertible Preferred Stock, with the remaining portion of the equity investment to be completed after the capitalization. Upon full investment, Phoenix will own 282,700 shares of Series C Convertible Preferred Stock, giving Phoenix voting control of 80% of the Company's equity stock. The Certificate of Designation of the Series C Convertible Preferred Stock of the Company provides that so long as any of the shares of Series C Preferred Stock are outstanding, the holders of Series C Preferred Stock shall have the special and exclusive right to elect three of the five directors of the Company. The special and exclusive right of the holders of Series C Preferred Stock may be exercised either at a special meeting of the holders of Series C Preferred Stock or at an annual meeting of the stockholders of the Company, or by written consent of such holders in lieu of a meeting. The Agreement further provides that the Company shall use its best efforts to effectuate the terms of Section 6(b) of the Agreement. Pursuant to the terms of the Agreement, Phoenix has designated three directors for election to the Board of Directors of the Company. Phoenix has the sole power to vote and to dispose of, or to direct the voting and disposition of, all 54,325 shares of the Company's Series C Convertible Preferred Stock that Phoenix beneficially owns. Upon full completion of the investment, Phoenix will have the sole power to vote and to dispose of, or to direct the voting and disposition of, all 282,700 shares of the Company's Series C Convertible Preferred Stock that Phoenix beneficially owns. Phoenix also entered into a stock restriction agreement with Devender Bains, pursuant to which Mr. Bains issued an irrevocable proxy to Phoenix until the recapitalization is completed, which, together with the shares received in connection with the initial investment, gives Phoenix effective control over 53% of the Company's voting stock. In connection with the investment, Phoenix III has agreed to loan to the Company up to $0.4 million. The loan is secured by substantially all of the assets of the Company. The Company has drawn down approximately $80,000 of the loan immediately, $30,000 of which is immediately available to the Company and $50,000 of which has been placed into an escrow fund to be made available at such time as the Company completes its recapitalization. Generally, the remaining portion of the commitment is reserved for specific, enumerated purposes, and Phoenix III retains substantial discretion over the availability of the funds. * * * As reported in the Dec. 8, 2004, edition of the Troubled Company Reporter, Amplidyne Inc.'s financial statements have been presented on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The liquidity of the Company has been adversely affected in recent years by significant losses from operations. The Company incurred losses of $364,542 for the nine months ended September 30, 2003, has no cash and has seen its working capital decline by $311,256 to $106,819 since the beginning of the fiscal year. Current liabilities exceed cash and receivables by $872,151 indicating that the Company will have difficulty meeting its financial obligations for the balance of this fiscal year. These factors raise substantial doubt as to the Company's ability to continue as a going concern. Recently, operations have been funded by loans from the Chief Executive Officer and costs have been cut through substantial reductions in labor and operations. Management is seeking additional financing and intends to aggressively market its products, control operating costs and broaden its product base through enhancements of products. The Company believes that these measures may provide sufficient liquidity for it to continue as a going concern in its present form. With little remaining cash and no near term prospects of private placements, options or warrant exercises and reduced revenues, management believes that the Company will have great difficulty meeting its working capital and litigation settlement obligations over the next 12 months. The Company is presently dependent on cash flows generated from sales and loans from officers to meet its obligations. Failure to consummate a merger with an appropriate partner or to substantially improve revenues will have serious adverse consequences and, accordingly, there is substantial doubt about the Company's ability to remain in business over the next 12 months. There can be no assurance that any financing will be available to the Company on acceptable terms, or at all. If adequate funds are not available, the Company may be required to delay, scale back or eliminate its research, engineering and development or manufacturing programs or obtain funds through arrangements with partners or others that may require the Company to relinquish rights to certain of its technologies or potential products or other assets. Accordingly, the inability to obtain such financing could have a material adverse effect on the Company's business, financial condition and results of operations. ANC RENTAL: Court Fixes March 18 as Administrative Claims Bar Date ------------------------------------------------------------------ ANC Rental Debtors and the Official Committee of Unsecured Creditors sought and got the Court to: (1) establish March 18, 2004 at 4:00 p.m. prevailing Eastern Time as the last day and time within which parties may file and serve requests for allowance of claims incurred after the Petition Date and on before January 30, 2004 for: (a) reimbursement of administrative expenses; and (b) compensation and expense reimbursement for substantial contribution to the Debtors' Chapter 11 cases; (2) approve the form and manner of notice of the Administrative Claims Bar Date; and (3) approve procedures for the adjudication of Administrative Claims. The March 18, 2004, Administrative Claims Bar Date will provide sufficient time for all administrative expense claimants to file a written request for allowance of their administrative expenses. Headquartered in Fort Lauderdale, Florida, ANC Rental Corporation, is the world's third-largest publicly traded car rental company. The Company filed for chapter 11 protection on November 13, 2001 (Bankr. Del. Case No. 01-11200). Brad Eric Scheler, Esq., and Matthew Gluck, Esq., at Fried, Frank, Harris, Shriver & Jacobson, represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $6,497,541,000 in assets and $5,953,612,000 in liabilities. (ANC Rental Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) ARCH COAL: Board Declares Quarterly Dividends --------------------------------------------- The board of directors of Arch Coal, Inc., declared a quarterly dividend of $.0575 per share on the company's common stock (NYSE: ACI). The dividend is payable March 15, 2004, to shareholders of record on March 5, 2004. The board also declared a quarterly dividend of $.625 per share on the company's preferred stock (NYSE: ACI_p). The dividend is payable April 30, 2004, to shareholders of record on April 16, 2004. Arch Coal (S&P, BB+ Corporate Credit Ratying, Negative) is the nation's second largest coal producer, with subsidiary operations in West Virginia, Kentucky, Virginia, Wyoming, Colorado and Utah. Through these operations, Arch Coal provides the fuel for approximately 6% of the electricity generated in the United States. ARCHIBALD CANDY: Judge Approves Bid Procedures for Asset Sale ------------------------------------------------------------- Archibald Candy Corporation announced that the U.S. Bankruptcy Court for the Northern District of Illinois has approved bid procedures that will enable the company to move forward with its proposed sale of selected assets, in accordance with Section 363 of Chapter 11 of the U.S. Bankruptcy Code. Alpine Confections, Inc. has agreed to purchase selected assets, including the Fannie May and Fanny Farmer brands, intellectual property and 31 company- owned retail stores for $18 million. The Alpine Confections offer is subject to higher or better offers. In addition, the bid procedures contemplate Alpine Confections receiving a $540,000 breakup fee if another bid is accepted. The bidding procedures set March 30, 2004 as the deadline for receipt of bids for an auction to be held on April 1, 2004. The date for the court hearing to approve the sale is April 2, 2004. The bidding procedures allow parties interested in purchasing selected assets of Archibald Candy Corporation to do so as long as Archibald will obtain greater value from such offers than under the offer submitted by Alpine Confections. As a result, parties interested in submitting a competing proposal will have the opportunity to bid for the Intellectual Property (i.e., the Fannie May and Fanny Farmer brand names), and the 31 company-owned retail stores, either as separate assets or as a combined package. In connection with the asset purchase agreement, Alpine Confections received an interim license to manufacture Fannie May candy and distribute it through third-party retailers such as supermarkets and drug store chains. The Fannie May product is being produced at Alpine facilities, according to Fannie May specifications, and first shipments of the licensed product are being delivered to Chicago-area retail stores this week. The Bankruptcy Court also approved settlement agreements entered into between Archibald and two if its unions -- SEIU Local 1 and International Union of Operating Engineers Local 399. The approved settlement will enable more than 400 union employees to receive expedited payments of claims that otherwise might not get paid due to Bankruptcy Code payment priorities. Jim Ross, Chief Restructuring Officer for Archibald, said, "Having established bid procedures and an opening bid for the Fannie May and Fanny Farmer businesses, our financial stakeholders are now assured that they will receive a fair and equitable price for the sale of those assets. We are also pleased that the Court has approved the union settlements that were negotiated for the benefit of our former employees. Our stakeholders have agreed to make expedited payments on claims that might not otherwise receive any payments under the Bankruptcy Code." New York-based merchant banking firm Paragon Capital Partners, LLC is advising Archibald Candy Corporation in connection with the Fannie May/Fanny Farmer transaction, and conducted a sale process that resulted in the agreement with Alpine Confections. In connection with the upcoming Auction, Paragon Capital Partners is orchestrating a process to solicit any and all competing bids for the company's intellectual property and 31 company-owned retail stores, either as separate transactions or as a combined transaction. Parties interested in exploring a potential acquisition of these assets are directed to contact Michael Levy of Paragon Capital Partners at 212.894.0275 or by email at mlevy@paragoncp.com . Paragon Capital Partners is located at 450 Park Avenue, Suite 300, New York, New York 10022. About Archibald Candy Corporation Chicago-based Archibald Candy Corporation, manufacturer and retailer of boxed chocolates and other confectionery items, filed for Chapter 11 protection (Bankr. N.D. Ill. Case No.: 04-03200) on January 28, 2004. John P. Sieger, Esq. of Jenner & Block LLC represents the debtor in its restructuring efforts. When it filed for bankruptcy, it listed estimated assets at $10-50 million and estimated debts at $50-100 million. ASPECT COMM: Comerica Bank-Led Group Extends $100M Credit Facility ------------------------------------------------------------------ Aspect Communications Corporation (Nasdaq: ASPT), a leading provider of enterprise customer contact solutions, announced that on Feb. 13, 2004, it entered into a $100 million revolving credit facility led by Comerica Bank, which is also administrative agent, and The CIT Group/Business Credit Inc., as collateral agent. Also participating in the facility are Fleet National Bank, GE Commercial Finance, Key Bank and US Bank. This new credit facility replaced Aspect's prior $50 million credit facility entered into on Aug. 9, 2002, with Comerica Bank and CIT. Simultaneously Aspect utilized the new facility to refinance its existing $39 million in long-term borrowings. Aspect Communications Corporation (S&P, B Corporate Credit Rating, Positive) is a leading provider of contact center software and services that enable businesses to manage and optimize customer communications. Aspect's global customer base includes more than two-thirds of the Fortune 50 and leading corporations in a range of industries including transportation, financial services, insurance, telecommunications, retail and outsourcing, as well as large government agencies. The company's leadership is based on 19 years of expertise. Aspect is headquartered in San Jose, Calif., with 24 offices in 11 countries around the world. For more information, visit Aspect's Web site at http://www.aspect.com/ ATLANTIC COAST: S&P Assigns Junk Rating to $125 Million Notes ------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC' rating to Atlantic Coast Airlines Holdings Inc.'s (B-/Negative/--) $125 million convertible notes due 2034, offered under Rule 144A with registration rights. "The ratings on Atlantic Coast reflect its relatively small size within the high-risk U.S. airline industry and substantial operating lease burden, mitigated to some extent by revenue stability that has been provided by fee-per-departure contracts with major airline partners," said Standard & Poor's credit analyst Betsy Snyder. Atlantic Coast currently operates two regional airlines that offer feeder service for both United Air Lines Inc. and Delta Air Lines Inc., primarily along the East Coast and in the Midwest and Canada, under fee-per-departure agreements. Fee-per-departure flying enables both United and Delta to take full control of the seats Atlantic Coast flies for them as well as responsibility for all risks, including fuel and the sale of seats. These agreements reduce operating and financial risks for a regional airline in periods of economic weakness, resulting in more stable earnings and cash flow. However, in July 2003, Atlantic Coast announced that it planned to establish a new low-fare, independent airline, to be called Independence Air, and based at Dulles, anticipating that its relationship with United will end when United exits from bankruptcy protection. The transition to a low-fare, independent airline from a regional feeder airline for a large network carrier will entail several risks. While the company does benefit from its large market presence at Dulles, where there is presently no low- fare competition, it could find itself competing against other low-fare carriers at relatively nearby airports (e.g., Southwest Airlines Co. at Baltimore), and potential replacement United Express partners, as well as United's low-fare Ted operation, at Dulles. In addition, there will be less stability in the company's revenues and cash flow than it enjoyed under the fee-per-departure agreement it had with United. Under bankruptcy rules, United has the option to assume the existing fee-per-departure agreement with Atlantic Coast by agreeing to honor all terms in full or to reject the agreement. Atlantic Coast expects United to reject those terms, when it emerges from bankruptcy in mid-2004. Whether the contract is rejected or not, Independence Air expects to begin operations by Nov. 1, 2004. Atlantic Coast has indicated that the Delta Connection partnership may be terminated as well due to its new operating strategy. Atlantic Coast's planned transition to an independent, low-fare airline entails significant risks. Failure to execute the new strategy successfully could result in a downgrade. AURORA FOODS: Court Okays Proposed Interim Compensation Protocol ---------------------------------------------------------------- Aurora Foods, Inc., and its debtor-affiliates filed applications to employ a number of Professionals whose services will be central to their restructuring efforts. The Debtors also anticipate that they may need to employ other professionals or special counsel as their Chapter 11 cases progress. In addition, the statutory committee of unsecured creditors appointed in these cases has retained counsel and other professionals to assist it in the performance of its official duties. At the Debtors' request, Judge Walrath approves uniform procedures for compensating and reimbursing bankruptcy professionals on a monthly basis. According to Eric M. Davis, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP, in Wilmington, Delaware, the interim compensation procedures are devised to: (a) permit the Court and other parties to more effectively monitor the professional fees incurred in the Debtors' Chapter 11 cases; (b) provide stability and predictability to the Debtors' cash flows; and (c) avoid imposing a financial burden on the Professionals. The monthly payment of compensation of fees and reimbursement of expenses of the Professionals is structured as: A. On or before the 25th day of each month following the month for which compensation is sought, each professional will submit a monthly statement to: * the Debtors and their counsel, * the Office of the U.S. Trustee, * the counsel for the Debtors' lenders, and * the counsel to the Creditors Committee. Each recipient will have 20 days after the filing of the Monthly Statement to review it. If none of the recipients objects, the Debtors will promptly pay an actual interim payment equal to the lesser of: -- 80% of the fees and 100% of the expenses requested in the Monthly Statement; or -- 80% of the fees and 100% of the expenses not subject to an objection; B. If any Notice Party objects to a Professional's Monthly Statement, the objecting party must file a written objection with the Court and serve this on the Professional and each of the Notice Parties so that it is received on or before the Objection Deadline. Then, the objecting party and the Professional may attempt to resolve the Objection on a consensual basis. If the parties are unable to reach a resolution within 20 days after the Objection was served, the Professional may either: (a) file a response to the Objection with the Court, together with a request for payment of the difference, if any, between the Maximum Payment and the Actual Interim Payment made to the affected Professional -- the Incremental Amount; or (b) forego the payment of the Incremental Amount until the next interim or final fee application hearing, at which time the Court will consider and dispose of the Objection, if requested by the parties; C. Beginning with the period ending on February 29, 2004, at three-month intervals, or at the other intervals convenient to the Court, each of the Professionals must file an interim fee application for compensation and reimbursement of expenses sought in the Monthly Statements filed during the period. Each Professional will serve: (a) its Interim Fee Application on the Notice Parties; and (b) notice of the Interim Fee Application on all parties that have entered their appearance under Rule 2002 of the Federal Rules of Bankruptcy Procedure. The Notice must: (i) identify the Professional seeking compensation; (ii) disclose the period for which the payment of fees and reimbursement of expenses are being sought; and (iii) describe the amount of the fees and expenses sought. The Interim Fee Application must include a summary of the Monthly Statements that are the subject of the request, but need not include the narrative discussion generally included in monthly fee applications. Each Professional must file Interim Fee Applications within 45 days after the end of the Interim Fee Period. The first Interim Fee Application should cover the Interim Fee Period from the Petition Date through and including February 29, 2004. Any professional who fails to file an Application when due will not be eligible to receive further payment of any fees or expenses until the Application is submitted; D. The Court will schedule a hearing on the Interim Fee Applications at least once every six months, or at other intervals as the Court deems appropriate. The Court, in its discretion, may approve an uncontested Interim Fee Application without the need for a hearing, upon the Professional's filing of a certificate of no objection. Upon the Court's allowance of a Professional's Interim Fee Application, the Debtors will promptly pay all the Professional's requested fees, including the 20% holdback and costs not previously paid; E. The pendency of an Objection to payment of compensation or reimbursement of expenses will not disqualify a Professional from the future payment of compensation or reimbursement of expenses; F. Neither the payment of nor the failure to pay, in whole or in part, monthly interim compensation and reimbursement of expenses, nor the filing of or failure to file an Objection, will bind any party-in-interest or the Court with respect to the allowance of interim or final applications for compensation and reimbursement of expenses; and G. All fees and expenses paid to Professionals are subject to disgorgement until final allowance by the Court. 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. 7; Bankruptcy Creditors' Service, Inc., 215/945-7000) AVADO BRANDS: Asks Okay to Tap BSI as Claims and Notice Agent ------------------------------------------------------------- Avado Brands, Inc., and its debtor-affiliates, ask permission from the U.S. Bankruptcy Court for the Northern District of Texas to appoint Bankruptcy Services, LLC, as their Claims and Noticing Agent in their bankruptcy proceedings. The Debtors identified about 40,000 creditors, potential creditors and other parties-in-interest to whom certain notices, including notice of the commencement of the chapter 11 cases and voting documents, must be sent. To relieve the Clerk's Office from the burden of receiving, docketing, maintaining, photocopying and transmitting proofs of claim in these cases, the Debtors bring-in BSI, an independent third party to act as an agent of the Court. The Debtors anticipate that BSI will: a) prepare and serve required notices in these chapter 11 cases, including: i) a notice of the commencement of these chapter 11 cases and the initial meeting of creditors under Section 341 (a) of the Bankruptcy Code; ii) a notice of the claims bar date; iii) notices of objections to claims; iv) notices of any hearings on a disclosure statement and confirmation of a plan or plans of reorganization; and v) such other miscellaneous notices as the Debtors or the Court may deem necessary or appropriate for an orderly administration of these chapter 11 cases; b) within five business days after the service of a particular notice, file with the Clerk's Office a certificate or affidavit of service that includes: i) a copy of the notice served, ii) a list of persons on whom the notice was served, along with their addresses, and iii) the date and manner of service; c) maintain copies of all proofs of claim and proofs of interest filed in these cases; d) maintain official claims registers in these cases by docketing all proofs of claim and proofs of interest in a claims database that includes the following information for each such claim or interest asserted; i) the name and address of the claimant or interest holder and any agent thereof, if the proof of claim or proof of interest was filed by an agent; ii) the date the proof of claim or proof of interest was received by BSI and/or the Court; iii) the claim number assigned to the proof of claim or proof of interest; iv) the asserted amount and classification of the claim; and v) the applicable Debtor against which the claim or interest is asserted; e) implement necessary security measures to ensure the completeness and integrity of the claims registers; f) mail a notice of bar date approved by the Court for the filing of a proof of claim and a form for filing of a proof of claim to each creditor notified of the filing; g) transmit to the Clerk's Office a copy of the claims registers on a weekly basis, unless requested by the Clerk's Office on a more or less frequent basis; h) maintain an up-to-date mailing list for all entities that have filed proofs of claim or proofs of interest and make such list available upon request to the Clerk's Office or any party-in-interest; i) provide access to the public for examination of copies of the proofs of claim or proofs of interest filed in these cases without charge during regular business hours; j) record all transfers of claims pursuant to Bankruptcy Rule 3001(e) and provide notice of such transfers as required by Bankruptcy Rule 3001(e), if directed to do so by the Court; k) comply with applicable federal, state, municipal and local statutes, ordinances, rules, regulations, orders and other requirements; l) provide temporary employees to process claims, as necessary; m) promptly comply with such further conditions and requirements as the Clerk's Office or the Court may at any time prescribe; and n) provide such other claims processing, noticing, balloting, and related administrative services as may be requested from time to time by the Debtors. BSI's professional hourly fees are: Professional Billing Rate ------------ ------------ Kathy Gerber $210 per hour Senior Consultants $185 per hour Programmer $130 to $160 per hour Associate $135 per hour Data Entry/Clerical $40 to $60 per hour Schedule Preparation $225 per hour Headquartered in Madison, Georgia, Avado Brands, Inc. -- http://www.avado.com/-- is a restaurant brand group that grows innovative consumer-oriented dining concepts into national and international brands. The Company filed for chapter 11 protection on February 4, 2004 (Bankr. N.D. Tex. Case No. 04-31555). Deborah D. Williamson, Esq., and Thomas Rice, Esq., at Cox & Smith Incorporated represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $228,032,000 in total assets and $263,497,000 in total debts. BAYOU STEEL: Emerges from Chapter 11 Protection ----------------------------------------------- Bayou Steel Corporation has completed all required transactions and satisfied all remaining conditions for its reorganization plan, allowing the Company to emerge from Chapter 11 bankruptcy protection on February 18, 2004. "Bayou's reorganization has addressed several areas," according to Jerry M. Pitts, President and COO. "Bayou was burdened with significant debt at a time when record high energy costs were incurred, steel imports surged, and the economy slumped over an extended period of time. The Chapter 11 provided Bayou and its management team with sufficient time to develop a comprehensive three-year business plan. Since finalizing the business plan in September 2003, Bayou has been successfully implementing the plan, as EBITDA and revenues have exceeded projections. Through the cooperation of our bondholders, our creditors and our employees, we have been able to reduce debt and control costs. We are emerging as a much more competitive and financially stronger company," Pitts said. Bayou Steel Corporation closed on $30 million in new bonds and a new $45-million working capital facility provided by Fleet Capital. The principal on the new bonds is due in 2011. The new three year working capital facility improves liquidity while providing significant flexibility. The reorganization removes approximately $105 million of debt in addition to eliminating over $25 million of potential litigation claims and cancels the old equity in Bayou. Pursuant to the Company's reorganization plan, the new equity of the company has been issued to the holders of the old Notes. In conjunction with emergence, the company's previous Board of Directors was replaced by a new Board of Directors. The Board members are: Charles W. McQueary, Christopher W. Parker, Jerry M. Pitts, Timothy A. Somers, and Thomas T. Thompson. Mr. Pitts is a carryover member from the previous Board. The senior management team in both LaPlace, Louisiana and Harriman, Tennessee remains in place. Pitts noted that "the benefit of a seasoned and experienced management team, as well as our management team's stability, together with the contributions from all our employees, were instrumental to Bayou's successful emergence from Chapter 11." Pitts expressed his appreciation to Bayou's 500 employees for their sacrifices, as well as the consistently outstanding customer service they delivered during the restructuring process. "The effort of our employees has been nothing short of phenomenal. I truly believe that our customers and the general public have been rooting for us to succeed, and that the groundswell of support was generated in large part by the professionalism and dedication of our employees," said Pitts. "Many other parties have also played key roles in making all of this possible and we would like to thank them for enabling us to reorganize and emerge a much stronger company," said Pitts. "Throughout the process, our customers, our vendors, our bondholders, and our communities have been steadfast in their support. Finally, we were gratified that all creditor groups voted overwhelmingly in support of our Plan of Reorganization." Pitts also emphasized that the new Bayou has a capital structure and adequate liquidity to succeed as it goes forward. "Bayou will remain a customer-focused steel company and will maintain its presence in all current product lines. Now that we have concluded this very difficult process, I look forward to working together with our employees and new Board of Directors to grow our business profitably." BETHLEHEM: Court Says $11.8M Swiss Insurance Claim Was Timely ------------------------------------------------------------- Amwest Surety Insurance Company issued a Workers' Compensation Self-Insurer Bond, Bond No. 1369901, for $13,800,000, on behalf of Debtors Lukens, Inc., Lukens Steel Company, Washington Steel Corporation, LI Service Company, and various related or predecessor corporations of the Bethlehem Steel Debtors, including Lukens Management Corporation and National Roll Company, on May 29, 1998. The Bond was issued in favor of the Bureau of Workers' Compensation of the Department of Labor and Industry of the Commonwealth of Pennsylvania. The Bureau subsequently limited Amwest's obligations under the Amwest Bond pursuant to a Termination of Principal Surety Bond Rider as to: (a) National Roll Company, as of August 1, 1987; (b) Washington Steel, as of December 29, 1996; and (c) Lukens Inc., as of May 29, 1998. Amwest secured Swiss Reinsurance America Corporation's reinsurance of its obligations under the Amwest Bond by means of a Reinsurance Agreement in favor of the Commonwealth of Pennsylvania, for $11,800,000. Amwest executed the Reinsurance Agreement pursuant to a limited power of attorney from Swiss. In consideration for Amwest's issuance of the Amwest Bond and Swiss' issuance of the Reinsurance Agreement, and as an inducement for the issuance, Debtor Bethlehem Steel Corporation executed a Commercial Surety General Indemnity Agreement. The Indemnity Agreement provides, among other things, that Bethlehem Steel will pay to Swiss, on demand, all losses, costs, damages, attorneys' fees and expenses of whatever kind or nature which arise by reason of, or in consequence of, Amwest's issuing a bond or Swiss' reinsuring a bond on behalf of Bethlehem Steel, or at Bethlehem Steel's request. On June 7, 2001, Amwest became the subject of liquidation proceedings in the District Court of Lancaster County, Nebraska. Pursuant to the Order of Liquidation and Nebraska's statutory scheme, all Amwest bonds were cancelled as of July 6, 2001. When the Debtors filed their voluntary Chapter 11 petition, they did not include Amwest or Swiss as creditors. Swiss, in particular, did not receive notice of the claims bar date. At the time of, or at any time prior to, the claims bar date, Swiss had no obligation to make any payments on the Debtors' behalf, and, thus, had no claim against the Debtors. The Debtors continued to make payments to honor their self-insured workers' compensation obligation until April 2003. On April 24, 2003, the Bureau notified Swiss that the Debtors had ceased honoring their Workers' Compensation obligations. After investigating the claim, Swiss began making payments on May 23, 2003, to cover the Debtors' self-insured workers' compensation obligations. As of August 1, 2003, Swiss has made $253,447 in payments. Swiss' projected ongoing and future payments consist of $80,000 in payments per month, up to the $11,800,000 amount of the Reinsurance Agreement. Marilyn Klinger, Esq., at Sedgwick, Detert, Moran & Arnold LLP, in Los Angeles, California, tells the Court that Swiss' $11,800,000 Claim must be deemed as timely filed since Swiss' obligation, as a surety guaranteeing the Debtors' self-insured workers' compensation obligations, arose postpetition and after the claims bar date had passed. The Bankruptcy Code provides that proofs of claim for surety obligations arising after the claims bar date are to be treated as timely filed, Ms. Klinger says. Accordingly, Judge Lifland deems Swiss' $11,800,000 Claim as timely filed. Headquartered in Bethlehem, Pennsylvania, Bethlehem Steel Corporation -- http://www.bethlehemsteel.com/-- is the second- largest integrated steelmaker in the United States, manufacturing and selling a wide variety of steel mill products including hot- rolled, cold-rolled and coated sheets, tin mill products, carbon and alloy plates, rail, specialty blooms, carbon and alloy bars and large diameter pipe. The Company filed for chapter 11 protection on October 15, 2001 (Bankr. S.D.N.Y. Case No. 01- 15288). Harvey R. Miller, Esq., Jeffrey L. Tanenbaum, Esq., and George A. Davis, Esq., at WEIL, GOTSHAL & MANGES LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $4,266,200,000 in total assets and $4,420,000,000 in liabilities. (Bethlehem Bankruptcy News, Issue No. 51; Bankruptcy Creditors' Service, Inc., 215/945-7000) BOISE CASCADE: State Street Bank Discloses 10.3% Equity Stake ------------------------------------------------------------- State Street Bank and Trust Company, Acting in Various Fiduciary Capacities, beneficially owns 6,500,341 shares (includes 3,308,962 shares CNV PFD STK-DISP RATIO-1 PFD =.80357 common shares), representing 10.3% of the outstanding common stock of Boise Cascade Corporation. The Bank and Trust Company holds sole voting power over 2,035,397 shares; shared voting power over 5,155,839 shares (includes 3,308,962 shares CNV PFD STK-voting ratio 1 PFD = 1 common shares); sole dispositive power over 2,152,317 shares; and shared dispositive power over 4,348,024 shares (includes 3,308,962 shares CNV PFD STK-dispositive ratio-1 PFD =.80357 common shares). The ownership of more than five percent of this stock is on behalf of Boise Cascade Corporation Savings and Supplemental Retirement Plan, ESOP Portion equals 6.9%. Boise (S&P, BB+ Corporate Credit Rating, Stable Outlook), headquartered in Boise, Idaho, provides solutions to help customers work more efficiently, build more effectively, and create new ways to meet business challenges. Boise is a major distributor of office products and building materials and an integrated manufacturer and distributor of paper, packaging, and wood products. Boise owns or controls more than 2 million acres of timberland, primarily in the United States, to support our manufacturing operations. Visit the Boise Web site at: http://www.bc.com/ BOSTON CHICKEN: Trustee Prepares to Pay 2nd $1,000,000 Dividend --------------------------------------------------------------- Gerald K. Smith, the Plan Trustee appointed under the chapter 11 plan confirmed by the Court for Boston Chicken, Inc., proposes to distribute $1,000,000 to holders of bonds and other unsecured claims against the failed restaurant chain's estates. In a Motion filed with the U.S. Bankruptcy Court in Phoenix last week, Mr. Smith asks Judge Case to rubber-stamp his plan to make a second distribution to holders of allowed claims. In late 2001, Mr. Smith made a $2,000,000 distribution to unsecured creditors, returning $2.74 to each holder of a $1,000 claim. Boston Chicken, Inc., filed for chapter 11 bankruptcy protection in October 1998. On January 6, 2000, the Company announced that it and its Boston Market-related subsidiaries had filed a joint Plan of Reorganization and related Disclosure Statement with the U.S. Bankruptcy Court for the District of Arizona (Bankr. Case Nos. 2-98-12547 through 2-98-12570). The basis of the Plan of Reorganization was an asset purchase agreement dated November 30, 1999 among the Debtors, as Sellers, Golden Restaurant Operations, Inc., a wholly-owned subsidiary of McDonald's Corporation, as Buyer, and McDonald's, as guarantor of certain of GRO's obligations under the Asset Purchase Agreement. Under the terms of the Asset Purchase Agreement, GRO purchased substantially all of the assets of the Debtors and assume certain liabilities of the Debtors for approximately $173.5 million. The Third Modified Plan provides that no distribution of less than $25.00 would be made to an allowed unsecured claimant unless so specifically requested. There was no bar date set as to when the request must be made. BUFFETS INC: $310 Million Bank Loan Gets S&P's B+ Rating -------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' rating, along with a recovery rating of '4', to Buffets Inc.'s amended and restated $310 million bank loan. The rating is at the same level as the corporate credit rating; this and the '4' recovery rating indicate the expectation of a marginal (25%-50%) recovery of principal in the event of a default. Proceeds will be used to refinance the company's existing credit facility, repurchase $50 million of its senior subordinated notes, and/or repay bank indebtedness, and redeem $18.6 million of Buffets Holdings' senior subordinated notes. At the same time, Standard & Poor's affirmed its outstanding ratings on Buffets, including the 'B+' corporate credit rating, and removed them from CreditWatch, where they were placed with negative implications on Jan. 27, 2004. The outlook is negative. "The ratings on Buffets reflect the company's participation in the highly competitive restaurant industry, poor operating performance, weak cash flow protection measures, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robert Lichtenstein. "These factors are somewhat offset by the company's established market position in the buffet/cafeteria segment of the restaurant industry." Eagan, Minnesota-based Buffets is the largest operator of buffet- style restaurants in the U.S. The company's two core brands, Old Country Buffet and Home Town Buffet, command a 25% share of the $4 billion buffet/cafeteria segment of the restaurant industry. Still, the sector is a small part of the $280 billion industry, with family dining, casual, and quick-service restaurants providing competition. A weak economy and an intensely competitive restaurant environment have negatively affected operating performance, though performance started to stabilize in the fiscal second quarter of 2004 ended Dec. 17, 2003. Same-store sales rose 2.3% in the second quarter after decreasing 2.1% in the first quarter of fiscal 2004 and 4.2% in all of fiscal 2003. Operating margins for the 12 months ended Dec. 17, 2003, dropped to 15% from 16% the year before, and are well below the more than 17% at the end of fiscal 2001. The margin decrease was due to a decline in sales leverage, an increase in food costs due to a change in menu offerings, and higher utility costs. CHAMPIONLYTE: Prices Up to 51MM Stock Offering at $0.15 per Share ----------------------------------------------------------------- ChampionLyte Products Inc. is offering 6,666,666 shares of its common stock at $0.15 per share. In addition, the Company's selling security holders are offering to sell 43,206,507 shares of the Company's common stock and 1,076,400 shares of its common stock issuable in connection with their conversion of ChampionLyte options and warrants. ChampionLyte Holdings, Inc., formerly ChampionLyte Products Inc., is a fully reporting public company whose shares are quoted on the OTC Bulletin Board under the trading symbol CPLY. Its recently formed beverage division, ChampionLyte Beverages, Inc., a Florida corporation, manufactures, markets and sells ChampionLyte(R), the first completely sugar-free entry into the multi-billion dollar isotonic sports drink market. Its The Old Fashioned Syrup Company subsidiary manufactures, distributes and markets three flavors of sugar-free syrups. The products are sold in more than 20,000 retail outlets including some of the nation's largest supermarket The company's June 30, 2003, balance sheet reports that its current debts exceed current assets by about $955,000 while total stockholders' deficit tops $1.3 million. CEDAR BRAKES II: S&P Hatchets Senior Secured Bond Rating to CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its rating on Cedar Brakes II LLC's $431.4 million senior secured bonds to 'CCC+' from 'B-'. The outlook is negative. The rating action follows the downgrade of El Paso Corp.'s corporate credit rating to 'B-' from 'B' and the related downgrade of the senior unsecured rating to 'CCC+' from 'B-'. "Cedar Brakes II obtains electricity from El Paso Merchant Energy L.P., under purchased-power agreements, which is then sold to Public Service Electric & Gas Co. (PSE&G; BBB/Stable/A-2)," noted Standard & Poor's credit analyst Michael Messer. "The obligations of EPM under the PPAs are guaranteed by El Paso. The rating on Cedar Brakes II is therefore constrained by the minimum of the senior unsecured rating on either El Paso as the mirror PPA guarantor or PSE&G (which has a 'BBB-' implied senior unsecured rating) as the offtaker," he continued. The rating action on Cedar Brakes II is solely a function of the El Paso rating action. There have been no other events that have changed Standard & Poor's opinion on the structure, which has operated as designed in the transaction documents. The negative outlook reflects that of El Paso as the mirror PPA guarantor. The rating on El Paso could further decline if management falls short on its reorganization plans or if weaknesses in operating cash flow from core businesses persist. El Paso's recent revision of its reserve estimates also raises corporate governance concerns, and the outcome of the company's internal investigation into the reserve reduction and any other repercussions from the write-down could result in further rating actions. CHARTER COMMS: Shareholders' Deficit Tops $175 Million in December ------------------------------------------------------------------ Charter Communications, Inc. (Nasdaq:CHTR) reported financial and operating results for the three months and year ended December 31, 2003. The Company's financial flexibility improved in 2003 through a disciplined, incremental approach to improving its balance sheet and liquidity, generating un-levered free cash flow for the first time in its history. Negative free cash flow was reduced from $1.479 billion in 2002, to $70 million in 2003, through disciplined capital spending and maintaining overall operating costs. While focused on improving the Company's balance sheet and liquidity, and reorganizing its operations, Charter posted 6% revenue growth and 7% adjusted EBITDA growth year over year. Charter Communication's December 31, 2003 balance sheet shows a shareholders' equity deficit of $175 million Financial Highlights -- Exchanged $1.866 billion of indebtedness for $1.572 billion of indebtedness, extending maturities and capturing approximately $294 million of debt discount. -- Issued $500 million of senior notes with proceeds used to repay bank debt, providing additional financial flexibility for use of the Company's credit facilities. -- Completed the sale of a cable television system in Port Orchard, Washington for $91 million, the first step in the Company's announced strategy to divest of geographically non- strategic assets. The sale generated a gain on the sale of assets in excess of $20 million, and the proceeds from this sale were used to repay bank debt. -- Entered into an agreement with Atlantic Broadband Finance, LLC to divest of other geographically non-strategic cable systems for approximately $765 million, subject to certain closing conditions, potential price adjustments and regulatory review. Cash proceeds from the sale are now expected to approximate $740 million, subject to the above conditions, adjustments and review, and will be used to repay bank debt. The Company now expects to close this transaction ahead of schedule in the first quarter of 2004. Operating Highlights -- Income from operations more than tripled from $43 million in the fourth quarter of 2002 to $138 million in the comparable period of 2003, excluding certain non-cash items. Income from operations grew approximately 41% from $316 million in 2002 to $444 million for the year ended December 31, 2003, excluding certain non-cash items. -- High-speed data revenues increased 65% year over year as a result of impressive unit growth of 437,400 customers in 2003, an increase of 39% as compared to the prior year. Bundled customers increased 35% in 2003 and represent 22% of our customer relationships as compared to 16% a year ago. -- Revenues increased 6%, to $4.819 billion and adjusted EBITDA grew 7% to $1.927 billion for the year ended December 31, 2003, as compared to the prior year. Fourth quarter revenues grew 2% to $1.217 billion, and adjusted EBITDA increased 6% to $484 million as compared to the fourth quarter of 2002. Charter President and CEO Carl Vogel said, "2003 was a year of transition as we reorganized our operations, made significant changes in our management team, and completed call center consolidations and billing conversions. Even in this transition year, we accomplished much, which we believe positions the Company to improve sales, customer satisfaction and operating performance in 2004. We made significant progress in improving our financial position and we continue to evaluate opportunities to reduce intermediate term debt maturities and leverage." Mr. Vogel said Charter is focused on driving revenue growth in 2004 by defending its existing customer base, and delivering advanced services that will enhance the digital video product, reduce churn and continue to drive high-speed data growth. "We believe that the breadth of our advanced products, including video on demand, subscription video on demand, high definition services including local broadcasters where available, and personal video recorders, together with competitive price-value packaging and quality customer care, will stabilize and expand our number of customer relationships and revenue generating units. We believe our attractively priced platform of products and continued disciplined toward capital spending and expense controls will better enable us to accomplish these objectives going forward." Year to Date Results Total 2003 revenues were $4.819 billion, an increase of $253 million, or 6%, over last year's revenues of $4.566 billion. This increase is principally the result of growth in high-speed data revenues, as well as increased video and commercial revenues. For the year ended December 31, 2003, high-speed data revenues increased $219 million, or 65%, primarily due to customer growth. Video revenues increased $41 million, or 1%, for the year, primarily due to price increases, which were partially offset by a decline in video customers and free periods included in promotional offers. Commercial revenues increased $43 million, or 27%. These increases were offset by a decline in advertising revenues of $39 million, or 13%, due to reduced vendor-related advertising in 2003. Operating costs and expenses, which are an aggregation of Charter's operating expenses and selling, general and administrative expenses, rose $122 million, or 4%, compared to the year ended December 31, 2002, primarily due to increased programming and service costs, partially offset by a reduction in marketing expenses. Income from operations for the year ended December 31, 2003, totaled $516 million, an increase of $4.838 billion from the $4.322 billion loss reported a year ago. This change was mainly attributable to the 2002 franchise impairment charge of $4.638 billion. Excluding the impairment charge and $72 million of income recognized from renegotiating an unfavorable programming contract, as described below, and other settlements in 2003, income from operations grew approximately 41% from $316 million in 2002 to $444 million for the year ended December 31, 2003. Net loss applicable to common stock and loss per common share for the year ended December 31, 2003, declined to $242 million and 82 cents, respectively, partially due to a favorable gain from a debt exchange of $267 million on September 23, 2003, and the items discussed above. Charter reported net loss applicable to common stock and loss per common share of $2.517 billion and $8.55, respectively, for the year 2002. Fourth Quarter Results For the fourth quarter of 2003, Charter generated revenues of $1.217 billion, an increase of 2% over last year's fourth quarter revenues of $1.189 billion. This growth is due primarily to a $49 million, or 47%, increase in high-speed data revenues, reflecting 437,400 additional data customers since December 2002, including 88,100 in the fourth quarter, excluding the impact of the sale of the Port Orchard, Washington system. This increase was partially offset by a decline in advertising and video revenues in the fourth quarter. The Company reported $75 million in advertising revenues in the fourth quarter of 2003, down from $88 million in the same 2002 period. Video revenues totaled $854 million in the quarter as compared to $867 million in 2002 fourth quarter. Quarterly video revenues in 2003 were negatively impacted by various promotional pricing offers made in connection with marketing programs implemented in both the third and fourth quarter of 2003 and basic customer losses. Commercial revenues increased $11 million, or 25%, compared to the year ago quarter. Operating costs and expenses for the fourth quarter 2003 totaled $733 million, essentially the same as the year ago quarter, as increases in programming costs were partially offset by a reduction in marketing and other expenses. Programming costs increased primarily as a result of rising prices, particularly in sports programming, and an increase in the number of channels carried at some system locations. The price and channel increases were partially offset by decreases in video customers. Income from operations totaled $210 million, an improvement of $4.805 billion from the $4.595 billion loss reported in the fourth quarter a year ago. This change was mainly attributable to the prior year's charge of $4.638 billion related to the impairment of franchises. Charter also recorded $72 million of income in 2003, the majority of which relates to the successful renegotiation of an unfavorable major programming contract, for which a liability had been recorded in conjunction with both the Falcon acquisition in 1999 and the Bresnan acquisition in 2000, for the above-market portion of that contract, and other settlements. Excluding the impairment charge and the impact of the income recognized from unfavorable contracts and other settlements, income from operations more than tripled from $43 million in the fourth quarter of 2002 to $138 million in the comparable period of 2003. Net loss applicable to common stock and loss per common share were $58 million and 20 cents, respectively, for the 2003 fourth quarter. For the fourth quarter of 2002, Charter reported net loss applicable to common stock and loss per common share of $1.872 billion and $6.36, respectively. Liquidity Net cash flows from operating activities for the year ended December 31, 2003, were $765 million, an increase of 2% from $748 million reported a year ago. Expenditures for property, plant and equipment, including capitalized labor and overhead, for the year totaled $854 million, a decline of approximately 61% from 2002 when capital expenditures totaled $2.167 billion. The decrease in capital expenditures resulted from a substantial reduction in rebuild costs as Charter's network upgrade and rebuild were substantially completed in prior years; consumption of inventories; negotiated savings in contract labor and network components, including digital set-top terminals and cable modems; and reduced volume of installation related activities. Adjusted EBITDA totaled $1.927 billion for the year ended December 31, 2003, an increase of $131 million, or 7%, compared to the year 2002. During 2003, $26 million was recorded for severance and related special charges in connection with the Company's reorganization plan commenced in December 2002, and were partially offset by a $5 million credit recorded in 2003 related to the 2002 settlement with the Internet service provider Excite@Home. Special charges totaled $36 million in 2002 principally the result of severance and related organizational costs of the Company's operational restructuring. Adjusted EBITDA for the 2003 fourth quarter was $484 million, a 6% increase over adjusted EBITDA of $457 million for the year ago fourth quarter. Successful management of expense and capital spending produced exponential improvement in free cash flow for the year ended December 31, 2003. Negative free cash flow was $70 million for the year 2003, compared to $1.479 billion for 2002. In the fourth quarter of 2003, negative free cash flow was $166 million, a $241 million improvement from fourth quarter 2002 negative free cash flow of $407 million. While the Company generated free cash flow for the first three quarters of 2003, increased capital spending on revenue generating activities in the fourth quarter, including the rollout of advanced services and aggressive completion of new build line extensions, resulted in negative free cash flow for the fourth quarter and full year. After considering changes in working capital items, the improvement in free cash flow would have actually increased by $18 million for the fourth quarter and decreased by only $52 million for the year 2003. Charter reported un-levered free cash flow of $1.073 billion for the year 2003, a $1.444 billion improvement over negative un- levered free cash flow of $371 million in 2002. For the fourth quarter of 2003, Charter reported $133 million of un-levered free cash flow, a $255 million improvement from negative un-levered free cash flow of $122 million for the fourth quarter of 2002. At December 31, 2003, the Company had $18.647 billion of outstanding indebtedness, and $127 million cash on hand. Borrowing capacity, as limited by financial covenants in Charter's credit facilities, totaled $828 million at December 31, 2003. Operating Statistics During 2003, Charter reorganized its workforce, adjusted digital pricing and packages, completed call center consolidations and implemented billing conversions. In the first half of 2003, Charter reduced spending on marketing its products and services. The reduced marketing activities and other necessary operational changes negatively impacted customer retention and acquisition, primarily during the first half of the year. All operating statistics exclude the impact of the sale of the Port Orchard system. (See the customer statistics table and related footnotes in the Addendum to this release for more information.) Charter increased its marketing efforts and implemented promotional campaigns during the second half of 2003 to slow the loss of analog video customers, and to accelerate advanced service penetration, specifically in high-speed data. As a result, the Company reported a net increase of 320,700 revenue generating units (RGUs), or 3%, during 2003 to end the year with 10,693,700 RGUs. The increase in RGUs was driven by a net gain of 437,400 high-speed data and 2,100 digital video customers during the year, and was partially offset by a net loss of 120,900 analog video customers over the past twelve months. Charter ended the year with 6,431,300 analog video, 2,671,900 digital video and 1,565,600 high-speed data customers. The Company also ended the year with 24,900 telephony customers, principally in the St. Louis market, an increase of approximately 9% compared to the end of 2002. RGUs increased approximately 67,200 compared to the third quarter of 2003, driven primarily by the addition of 88,100 high-speed data customers during the fourth quarter. The Company also reported a sequential net gain of approximately 19,600 digital video customers during the fourth quarter, and a net loss of approximately 41,300 analog video customers. Use of Non-GAAP Financial Metrics The Company uses certain measures that are not defined by GAAP (Generally Accepted Accounting Principles) to evaluate various aspects of its business. Adjusted EBITDA, un-levered free cash flow and free cash flow are non-GAAP financial measures and should be considered in addition to, not as a substitute for, net cash flows from operating activities reported in accordance with GAAP. These terms as defined by Charter may not be comparable to similarly titled measures used by other companies. Adjusted EBITDA is defined as income from operations before special charges, non-cash depreciation and amortization, impairment of franchises, gain on sale of system, option compensation expense and unfavorable contracts and other adjustments. As such, it eliminates the significant level of non- cash depreciation and amortization expense that results from the capital intensive nature of our businesses and intangible assets recognized in business combinations as well as other non-cash or non-recurring items, and is unaffected by our capital structure or investment activities. Adjusted EBITDA is a liquidity measure used by Company management and the Board of Directors to measure our ability to fund operations and our financing obligations. For this reason, it is a significant component of Charter's annual incentive compensation program. However, a limitation of this measure is that it does not reflect the periodic costs of certain capitalized tangible and intangible assets used in generating revenues and the cash cost of financing for the Company. Company management evaluates these costs through other financial measures. Un-levered free cash flow is defined as adjusted EBITDA less purchases of property, plant and equipment. This is an important measure as it takes into account the period cost associated with capital expenditures used to upgrade, extend and maintain our plant without regard to our leverage structure. Free cash flow is defined as un-levered free cash flow less interest on cash pay obligations. It can also be computed as net cash flows from operating activities, less capital expenditures and special charges, adjusted for the change in operating assets and liabilities, net of acquisitions. As such, it is unaffected by fluctuations in working capital levels from period to period. The Company believes that adjusted EBITDA, un-levered free cash flow and free cash flow provide information useful to investors in assessing our ability to service our debt, fund continued growth, and make additional investments with internally generated funds. In addition, adjusted EBITDA generally correlates to the amount utilized under the Company's various credit facilities, senior notes, and senior discount notes for its leverage ratio covenants (all such documents have been previously filed with the United States Securities and Exchange Commission). Adjusted EBITDA, as presented, is reduced for management fees in the amounts of $18 million and $74 million for the three months and year ended December 31, 2003 and $24 million and $71 million for the three months and the year ended December 31, 2002, which amounts are added back for the purposes of leverage covenants. As of December 31, 2003, Charter and its subsidiaries are in compliance with their debt covenants. Charter Communications, Inc. is a broadband communications company operating in 40 states. Charter provides a full range of advanced broadband services to the home, including cable television on an advanced digital video programming platform via Charter Digital(TM) and Charter High-Speed Internet Service. Charter provides business to business video, data and Internet protocol (IP) solutions through its Commercial Services Division. Advertising sales and production services are sold under the Charter Media brand. More information about Charter can be found at http://www.charter.com/ CHET DECKER INC: Case Summary & 20 Largest Unsecured Creditors -------------------------------------------------------------- Debtor: Chet Decker, Inc. dba The New Decker Dodge 300 Lincoln Avenue Hawthorne, New Jersey 07506 Bankruptcy Case No.: 04-15223 Type of Business: The Debtor is an automobile dealer selling quality new and pre-owned vehicles. See http://www.chetdecker.fivestardealers.com/ Chapter 11 Petition Date: February 18, 2004 Court: District of New Jersey (Newark) Judge: Donald H. Steckroth Debtor's Counsel: Chad Brian Friedman, Esq. Howard S. Greenberg, Esq. Ravin Greenberg, PC 101 Eisenhower Parkway Roseland, NJ 07068 Tel: 973-226-1500 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Fairway Dodge $3,500,000 Huntington & Carver 312 Kindermack Road Westwood, NJ 07675 Arthur Attonito $240,000 Valley National Bank $180,000 Reyna Capital Corporation $42,107 North Jersey Media Group $28,805 Royal Guard Etch $14,787 The Guardian $10,828 Reynolds & Reynolds $8,182 Bell & Howell $7,865 American National Insurance Company $4,863 Sentry Select Insurance $4,499 PSE&G $4,474 Verizon Yellow Pages $4,097 LML Technologies $3,020 Easy Care Gap Protection $2,700 Nadit Employee Life Insurance Plan $2,418 PBS $2,364 North Haledon Auto Body $2,054 EST Tire Distributors $1,902 NJ Car Services, Inc. $1,781 COEUR D'ALENE: 4th Quarter Net Loss Decreases to $13.5 Million -------------------------------------------------------------- Coeur d'Alene Mines Corporation (NYSE: CDE) reported fourth quarter 2003 revenue of $30.6 million, an increase of 6% over reported revenue of $28.8 million in the fourth quarter of 2002. For the full year 2003, the Company reported revenue of $109.7 million, up 16% from the $94.5 million reported in the previous year. The increase was due primarily to the first complete year of production from the Company's low-cost Cerro Bayo and Martha mines in South America, which began production in the second quarter of 2002. During the fourth quarter of 2003, the Company reported a net loss of $13.5 million, or $0.06 per share, compared to a net loss of $46.1 million, or $0.44 per share, a year ago. The most recent fourth quarter included a loss on retirement of debt of $7.6 million and an additional interest payment of $1.1 million triggered by the exchange in November 2003 of the Company's 9% Senior Convertible Notes. Excluding these non-recurring items, the Company would have reported a net loss of $4.8 million in the recent fourth quarter. For the full year 2003, the Company reported a net loss of $67.0 million, or $0.40 per share, compared to a net loss of $81.2 million, or $1.04 per share in 2002. The most recent year included a $41.6 million loss on the early retirement of debt, a $2.3 million loss for the cumulative effect of change in accounting principle, and an additional interest payment of $7.0 million triggered by the early retirement of debt. Absent the nonrecurring items, the Company would have reported a net loss of $16.1 million for 2003. In 2003, Coeur continued and substantially completed the restructuring of its debt by eliminating indebtedness in the approximate amount of $70 million, constituting approximately 88% of Coeur's indebtedness as of January 1, 2003. Coeur ended 2003 with $9.6 million in convertible debt outstanding, and on February 11, 2004 Coeur announced that it would redeem this debt for cash in March 2004. On January 13, 2004, the Company completed an offering of $180 million of 1.25% Senior Convertible Notes due 2024. Giving effect to these post year-end transactions, Coeur's cash, cash equivalents and short-term investments at January 31, 2004 stand at approximately $252.7 million. For the fourth quarter, Coeur realized an average silver price of $5.18 per ounce compared to an average realized price during last year's fourth quarter of $4.53 per ounce. For its gold production, Coeur realized an average price of $359 per ounce during the fourth quarter of 2003 compared to an average gold price of $324 per ounce during the same period last year. The market prices of silver (Handy & Harman) and gold (London Final) on February 18, 2004 were $6.73 and $414.50 per ounce, respectively. Overview of Operations South America Cerro Bayo (Chile) -- 1.1 million ounces of silver and 14,982 ounces of gold produced during the fourth quarter. -- Extremely low cash costs of $0.52 per ounce of silver during the fourth quarter. -- Full year silver production of 4.9 million ounces and 67,155 ounces of gold production in 2003. -- Cash costs of $0.60 per ounce of silver for the year. -- Exploration added 2.8 million silver equivalent ounces of reserves and 2.4 million tons of resources averaging 3.6 ounces of silver per ton and .09 ounces of gold per ton at an average discovery cost of $0.09 per ounce. -- Additional high-grade vein structures intersected during recent drilling program. In its first full year of operations, Cerro Bayo silver production increased 56% over 2002 levels and gold production increased 49% over the same period. Continued low cash costs were achieved of $0.52 per ounce of silver in the fourth quarter and $0.60 per ounce for the full year 2003. The Company's exploration program at Cerro Bayo, which was accelerated in the second half of 2003, resulted in total year-end proven and probable reserves of 5.4 million ounces of silver and 94,000 ounces of gold. Mineralized material doubled to 3.5 million tons, averaging 4.83 ounces of silver per ton and 0.10 ounces of gold per ton. The most significant of the new discoveries in 2003 included extensions of the Javiera and Wendy veins, and the Lucero and Veronica veins, which are near existing stockworks and can be brought quickly and economically into production. An additional 130 veins have been identified for further exploration and possible development upon the 103 square miles surrounding the property. The Company has budgeted $3.5 million in 2004 for exploration at Cerro Bayo designed to increase proven and probable reserves to a sustained level equal to five year's mine life. Most the new drilling this year will be focused near the existing mine. Martha (Argentina) -- Mined and transported approximately 4,381 tons of ore to Cerro Bayo during the fourth quarter, averaging 60 - 70 silver equivalent ounces per ton. -- Total reserves of 1.4 million silver ounces and mineralized material of 24,000 tons at an average grade of 78 silver ounces per ton at December 31, 2003. -- Total 2004 exploration budget at Martha of $2.3 million. Martha remains among the highest-grade silver mines in the world. At year-end, proven and probable reserves amounted to 1.35 million silver ounces and mineralized material amounted to 24,000 tons at an average grade of 78 ounces per ton. The extension of the reserves at Martha now exceeds the parameters upon which the acquisition of this property was based. Coeur has increased its exploration budget at Martha to $2.3 million for 2004, an increase of 323% over 2003 levels. The current exploration program continues to focus on extensions of high grade ore shoots known to exist on the property and two drill rigs are operating full time. The Company believes there is excellent potential to discover additional silver resources on prospects within the 450 square miles it controls in the Santa Cruz Province, which includes the Martha Mine. North America Rochester Mine (Nevada) -- Rochester joined the ranks as one of history's greatest silver and gold mines when in early January of this year, Rochester exceeded 100 million ounces of silver production and one million ounces of gold production since operations began in 1986. -- 1.4 million ounces of silver and 11,126 ounces of gold produced during the fourth quarter -- Average cash operating cost in quarter of $4.82 per ounce -- Full year 2003 production of 5.6 million ounces of silver and 52,363 ounces of gold -- Average 2003 cash costs of $4.67 per ounce of silver -- Gold production expected to increase in 2004 Cash operating costs were higher in the fourth quarter and full year 2003 compared to the previous year due to the changeover to the new life-of-mine crushing facility, which was completed in late October. Mining has commenced in the area under the previous crusher, which contains some of the highest-grade gold ores on the property. This will increase gold production levels during 2004. During 2004, the Company expects the cost per ounce of silver produced to decline. Coeur Silver Valley - Galena Mine (Idaho) -- Fourth quarter silver production of 1.0 million ounces -- Average cash cost during quarter of $4.76 per ounce of silver -- Full year silver production of 3.7 million ounces of silver -- Full year average cash costs of $4.66 per ounce of silver Coeur has budgeted $1.3 million for exploration at Silver Valley in 2004 for the mine's ongoing long-term development plan, which is expected to increase production levels by approximately 40%, to 5.3 million ounces, commencing in 2006. Drilling in the fourth quarter continued to focus on extensions of known veins at the 4900 level and at the 2400 level in the Upper Silver Vein. Some of the drifting at the 4900 level is extending toward the Coeur mine, where existing infrastructure is expected to be utilized in future production. Development Projects During the second quarter of 2004, the Company expects to complete ongoing optimization and feasibility work at the Company's two major development projects, the San Bartolome (Bolivia) silver project and Kensington (Alaska) gold project. The development timetables at the two properties remain on schedule and it is expected that these projects could boost company gold and silver production in 2006 following a production decision. San Bartolome - Bolivia Based on current information, Coeur expects silver production at San Bartolome of up to 6 million ounces per year -- approximately a 40% increase over current Company-wide levels -- at an average cash operating cost of approximately $2.50 per ounce. The low operating costs are due in part to the fact that it has been established that tin can be commercially recovered. San Bartolome has an anticipated mine life of over 14 years. Capital costs to construct the mine are currently estimated at approximately $80 million. Recent feasibility work in defining the orebodies has indicated the potential to expand mineral resources. As a consequence, the Company is reviewing an alternative to increase the planned plant throughput. Advanced metallurgical test work indicates changes in the processing circuit may result in increases in silver recovery. The Company is now assessing the impact of such on revenue, operating costs and capital associated with such improvements. The measured and indicated resources are currently under study and Coeur expects this to result in a marked increase in the proven and probable reserves which were reported in July 2003 at 123 million ounces of silver. San Bartolome ore consist of silver-bearing gravel deposits that can be hauled directly to processing facilities. The deposits are located near Potosi, Bolivia, in a region with historical silver production of over two billion ounces. The updated feasibility study and necessary permits at San Bartolome are expected in the second quarter of 2004. Subject to the completion of the updated feasibility study and the confirmation of earlier findings, a construction decision could be made. Construction is projected to take approximately 18 months. Kensington - Alaska Following re-engineering and optimization work, capital costs necessary to place the Kensington Gold Project into production are currently estimated at approximately $75 million, with a current mine life of approximately ten years at a cash cost of production of approximately $195. Coeur believes that significant exploration potential exists at Kensington and intends to continue an active exploration program upon commencement of mine development. Coeur anticipates receiving all necessary permits for Kensington during the second quarter of 2004, and could reach a final decision on developing the mine after completion of the permitting and completion of the updated feasibility study. Kensington is located approximately 45 miles north of Juneau, Alaska and contains an estimated 1.0 million ounces of proven and probable gold reserves and mineralized material totaling 7.3 million tons at an average grade of 0.12 per ton. Exploration Projects On February 10, 2004, Coeur announced the acquisition of ten mineral properties in Tanzania where it plans to begin early stage exploration activities in the second quarter of 2004. The ten prospecting licenses, which are valid for three years with options to renew, cover 315 square miles (815 square kilometers) in northwestern Tanzania, near Lake Victoria, in an emerging gold mining region. Also, in Mexico, Coeur has elected not to pursue the purchase of the mining assets of Minera Real de Cosala S.A. located in the State of Sinaloa. We continue to evaluate other opportunities in Mexico. Commodity Hedging Coeur does not hedge any of its silver production. At December 31, 2003, the Company had 16,600 ounces of gold sold forward over the next 12 months at an average price of $348 per ounce. Coeur d'Alene Mines Corporation (S&P, CCC Corporate Credit Rating, Positive) is the world's largest primary silver producer, as well as a significant, low-cost producer of gold, with anticipated 2003 production of 14.6 million ounces of silver and 112,000 ounces of gold. The Company has mining interests in Nevada, Idaho, Alaska, Argentina, Chile and Bolivia. COMM 2004-LNB2: S&P Assigns Prelim. Ratings to 2004-LNB2 Notes -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its preliminary ratings to COMM 2004-LNB2's $968.4 million commercial mortgage pass-through certificates series 2004-LNB2. The preliminary ratings are based on information as of Feb. 19, 2004. Subsequent information may result in the assignment of final ratings that differ from the preliminary ratings. The preliminary ratings reflect the credit support provided by the subordinate classes of certificates, the liquidity provided by the trustee, the economics of the underlying loans, and the geographic and property-type diversity of the loans. Classes A-1, A-2, A-3, A-4, B, C, D, and E are currently being offered publicly. Standard & Poor's analysis determined that, on a weighted average basis, the pool has a debt service coverage of 1.44x, a beginning loan- to-value of 87.9%, and an ending LTV of 75.7%. PRELIMINARY RATINGS ASSIGNED COMM 2004-LNB2 Commercial mortgage pass-thru certs series 2004-LNB2 Class Rating Amount ($) A-1 AAA 135,894,000 A-2 AAA 138,594,000 A-3 AAA 108,197,000 A-4 AAA 454,979,000 B AA 25,420,000 C AA- 9,684,000 D A 19,368,000 E A- 8,474,000 F BBB+ 9,684,000 G BBB 10,894,000 H BBB- 10,895,000 J BB+ 4,842,000 K BB 6,052,000 L BB- 3,632,000 M B+ 4,842,000 N B 2,421,000 O B- 1,210,000 P N.R. 13,316,042 X-1* AAA 968,398,042 X-2* AAA 935,698,000 *Interest-only class. COMMSCOPE INC: Reports $1 Million Net Loss in Fourth Quarter ------------------------------------------------------------ CommScope, Inc. (NYSE: CTV) announced fourth quarter results for the period ended December 31, 2003, which was prior to the acquisition of the Connectivity Solutions business of Avaya Inc. The Company reported sales of $153.8 million and a net loss of $1 million, or $0.02 per share, for the fourth quarter. The net loss included after-tax equity in losses of OFS BrightWave, LLC of $0.08 per share related to CommScope's minority ownership interest in this venture. For the fourth quarter of 2002, CommScope reported sales of $135.9 million and a net loss of $3.5 million or $0.06 per share. This net loss reflected after-tax equity in losses of OFS BrightWave of $0.08 per share. CommScope's sales for the fourth quarter rose 13% to $153.8 million, compared to $135.9 million in the year-ago quarter and rose 3% sequentially compared to $148.7 million in the third quarter of 2003. Sales rose year- over-year in all major product groups. Enterprise LAN sales increased more than 50% from the depressed year-ago sales levels. Wireless/Other Telecom sales more than doubled year-over-year. Orders booked in the fourth quarter of 2003 were $149.4 million compared to $132.8 million in the fourth quarter of 2002 and $152.2 million in the preceding quarter. "We are pleased to have ended 2003 with stronger sales as we begin a new chapter in the history of CommScope," said Chairman and Chief Executive Officer Frank M. Drendel. "We believe that we are strategically positioned for exciting opportunities through SYSTIMAX Solutions, our new enterprise connectivity business, and through CommScope Carrier Solutions, our new business that provides cabinets, cables and apparatus to telecom service providers." Full Year Results CommScope reported sales of $573.3 million for 2003, compared to sales of $598.5 million in 2002. Total international sales remained relatively stable year-over-year at $110.8 million. For 2003, the Company incurred a net loss of $54.3 million or $0.92 per share. CommScope's 2003 results include: a) after tax equity in losses of OFS BrightWave of $45.5 million or $0.77 per share; and b) impairment charges primarily related to uninstalled, underutilized and idle broadband cable manufacturing equipment of $20.0 million after tax or $0.34 per share. For 2002, the company incurred a net loss of $67.2 million or $1.10 per share. CommScope's 2002 results include: a) after tax equity in losses of OFS BrightWave of $53.7 million or $0.88 per share; b) impairment charges primarily related to underutilized and idle production equipment of $15.8 million after tax or $0.26 per share; and c) Adelphia bad debt charges of $13.5 million after tax or $0.22 per share. OFS BrightWave Results For the fourth quarter of 2003, OFS BrightWave had revenues of $26.6 million, a negative gross profit of $30.8 million and a net loss of $40.0 million. The net loss included charges of approximately $15.7 million primarily related to ongoing restructuring activities, which was mainly recorded in cost of sales. For the fourth quarter of 2002, OFS BrightWave had revenues of $27.2 million, a negative gross profit of $23.4 million and a net loss of $38.9 million for the fourth quarter of 2002. CommScope recorded after-tax charges of $4.6 million, or $0.08 per share, in the fourth quarter of 2003 for equity in losses of OFS BrightWave related to the Company's minority investment in this venture. The Furukawa Electric Co. Ltd. (Tokyo: 5801) recently stated that it believes it is in the last stages of restructuring the OFS business. Among other actions, OFS plans to move certain cable production from the Norcross facility to the Carrollton facility in the next few months. While CommScope believes that the OFS restructuring actions are appropriate, they could reduce CommScope's overall ownership interest in the OFS BrightWave venture. However, such restructuring activity does not affect CommScope's contractual right to sell its ownership interest in OFS BrightWave to Furukawa in 2006 for a cash payment equal to CommScope's original investment. Cash Flow and Liquidity Net cash provided by operating activities was $36.5 million for the fourth quarter, including receipt of $12.5 million related to the assignment of CommScope's trade claims against Adelphia Communications Corporation and its affiliates to a third party. Capital expenditures were $1.2 million in the quarter. For calendar year 2003, cash provided by operating activities was $91.4 million and capital expenditures were $5.3 million. CommScope ended the year with $206.0 million in cash and cash equivalents, up 72% from $120.1 million at the end of 2002. The Company currently expects capital expenditures to be approximately $30 million for calendar year 2004, including capital spending for our new businesses. CommScope Fourth Quarter 2003 Highlights * Broadband/Video sales rose 3% year-over-year and sequentially to $121.8 million for the fourth quarter primarily due to stronger international sales. International sales increased to $31.9 million in the quarter, up 20% sequentially and up 25% year- over-year. Total Broadband/Video orders were $116.8 million and international orders were $30.7 million in the quarter. * For calendar year 2003, worldwide Broadband/Video sales decreased 10% to $449.5 million, primarily due to lower sales to certain domestic broadband service providers and lower sales of fiber optic cable. Total international sales for the year were $110.8 million. * Sales to Comcast Corporation represented about 17% of total Company sales for the fourth quarter and approximately 18% for calendar year 2003. * LAN sales rose 57% year-over-year to $22.2 million in the fourth quarter of 2003, compared to depressed levels in the year-ago quarter, but were down 8% sequentially from third quarter sales of $24.0 million. LAN orders for the quarter were $23.0 million. For calendar year 2003, LAN sales rose 16% to $93.8 million, primarily due to higher sales of fiber optic cable. * Wireless/Other Telecom sales were $9.8 million, up 151% compared to the year-ago quarter and up 44% sequentially. CommScope continues to make progress communicating the Cell Reachr value proposition to customers and remains optimistic about long-term wireless opportunities. Wireless/Other Telecom orders were $9.6 million for the quarter. For calendar year 2003, Wireless/Other Telecom sales rose 44% to $30 million. * Selling, general and administrative (SG&A) expense was $23.0 million in the fourth quarter of 2003, compared to $21.9 million in year-ago quarter. SG&A expense in the fourth quarter of 2003 included approximately $0.6 million related to the then pending acquisition of the Connectivity Solutions business. * Gross margin for the fourth quarter of 2003 was 20.2%, compared to 20.6% in the preceding quarter and 19.4% in the year-ago quarter. Gross margin improved year-over-year primarily due to higher sales volume somewhat offset by lower sales prices and increased raw material costs. Acquisition of Connectivity Solutions business (ACS) Effective January 31, 2004, CommScope completed the acquisition of substantially all of the assets of the Connectivity Solutions business from Avaya, Inc., except for certain international operations that are expected to be completed later this year. The total purchase price consisted of $250 million in cash, subject to post-closing adjustments, and approximately 1.8 million shares of CommScope common stock. CommScope assumed certain current liabilities of the Connectivity Solutions business and up to $65 million of other specified liabilities, primarily related to employee benefits. The cash portion of the purchase price consisted of $150 million from CommScope's existing cash balances and $100 million from borrowing under a new 5-year $185 million senior secured credit facility. The new credit facility, which replaces CommScope's previous credit facility, is comprised of a $75 million term loan and a $110 million revolving credit facility. Based on unaudited data and prior to any expected pro forma adjustments to reflect the acquisition, Connectivity Solutions operating results under Avaya for the twelve months ended September 30, 2003, included: * Sales of $542 million, * Gross margin of approximately 26.4% of sales, * Selling, general and administrative expense of approximately 19.5% of sales, * Research and development expense of approximately 5.4% of sales, and * Depreciation and amortization expense of $30 million. These results include approximately $48 million of corporate overhead allocated by Avaya to the Connectivity Solutions business, primarily in SG&A; they do not reflect CommScope's expected corporate overhead allocations, incremental one-time start-up and transition costs, and other potential pro forma adjustments. The Company also expects significant purchase accounting adjustments and increased financing costs. CommScope intends to file an amended Form 8-K by April 15, 2004, containing pro forma financial information reflecting the effect of the acquisition. CommScope First Quarter 2004 Outlook For the first quarter of 2004, CommScope expects total sales in the $225- $240 million range. "Our first-quarter forecast reflects modest year-over-year growth for our historical business and two months of revenue, or approximately $95-$100 million, from our recent acquisition of the Connectivity Solutions business," said CommScope Executive Vice President and Chief Financial Officer Jearld Leonhardt. "Although we expect sales growth in the first quarter, we anticipate lower gross margins as a result of higher material costs and increasing pricing pressure for certain broadband products," Leonhardt added. "In addition, prices for copper and polymers have increased substantially over the past 12 months. As a result, CommScope and SYSTIMAX Solutions increased prices for certain enterprise products by 3 percent to 8 percent during the first quarter of 2004. CommScope's enterprise price increase was effective February 10th while the SYSTIMAX Solutions price increase will be effective March 1st. An additional price increase of up to 10% for fluoropolymer-based products will be effective mid March due to the significant increase in the cost of fluoropolymers. "With regards to transition and other costs related to our recent acquisition, we expect first-year costs of approximately $25 million primarily for information technology, transition services and other acquisition-related costs. We expect to incur most of the transition costs during the first and second quarters of 2004," Leonhardt stated. "At the same time, we believe that we can provide corporate services at a lower cost than the historical Avaya corporate allocation, which is expected to improve operating results by approximately $20 million per year." CommScope (NYSE: CTV) -- http://www.commscope.com/-- (S&P, BB Corporate Credit & B+ Subordinated Debt Ratings, Stable) is a world leader in the design and manufacture of 'last mile' cable and connectivity solutions for communication networks. We are the global leader in structured cabling systems for business enterprise applications and the world's largest manufacturer of coaxial cable for Hybrid Fiber Coaxial applications. Backed by strong research and development, CommScope combines technical expertise and proprietary technology with global manufacturing capability to provide customers with high-performance wired or wireless cabling solutions from the central office to the home. COMPRESSION POLYMERS: S&P Assigns Stable Outlook to B Rating ------------------------------------------------------------ Standard & Poor's Ratings Services assigned its 'B' corporate credit rating to building products manufacturer, Compression Polymers Holdings LLC. The outlook is stable. At the same time, Standard & Poor's assigned its 'B' bank loan rating and its recovery rating of '4' to the company's proposed $20 million revolving credit facility due 2009, and $90 million first lien term loan due 2010, based on preliminary terms and conditions. The '4' recovery rating indicates that bank lenders can expect marginal (25%-50%) recovery of principal in the event of a default, but at the upper end of that range. In addition, a 'CCC+' rating and a recovery rating of '5' were assigned to the company's proposed $30 million second lien term loan due 2011. The 'CCC+' is two notches lower than the corporate credit rating; this and the '5' recovery rating indicate that the lenders can expect negligible recovery prospects after taking into consideration the priority claims of the revolving credit facility and the first lien term loan. "Proceeds will be used to refinance certain existing indebtedness of the borrowers and to make a $30 million distribution to shareholders," said Standard & Poor's credit analyst Wesley E. Chinn. The ratings on Moosic, Pennsylvania-based Compression Polymers reflect the modest sales bases of its principal product lines, the relatively short operating record of the key trimboard product, aggressive debt leverage, exposure to volatile raw-material costs, the cyclicality of end markets, and vulnerability to rising interest rates. These negatives overshadow the company's solid position in residential and light commercial exterior building products, and toilet partition markets, the trend toward plastic products with their lower lifecycle costs, and healthy operating margins. Compression Polymers' plastic products, which generate annual sales of more than $135 million, are used for decorative, synthetic wood trim, high-use institutional toilet compartments, and a variety of other applications. The company's business strengths include its low-cost ability to extrude thick plastic sheets, thus providing a significant cost advantage over other sheet manufacturers that must compress multiple sheets. COVANTA ENERGY: Obtains Go-Ahead for New Covanta Lake Merger Deal ----------------------------------------------------------------- Debtor Covanta Lake, Inc. owns a waste-to-energy facility in Lake County, Florida, which it operates pursuant to a service agreement with Lake County. James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton, in New York, informs the Court that Covanta Lake has a "built-in gain" in its assets of approximately $50,000,000. This means that for federal, state and local income tax purposes, Covanta Lake will be required to recognize a gain in that amount if certain "triggering" events occur. Mr. Bromley relates that the Covanta Lake Project has been problematic. Covanta Lake is currently involved in disputes with F. Browne Gregg and Lake County. Although the Debtors believe that their dispute with Mr. Gregg, or alternatively, their dispute with Lake County, ultimately will be resolved in a manner favorable to them, the Disputes create a material risk that Covanta Lake might in the future be required to terminate the Service Agreement and abandon the Lake Facility, whether to bondholders that financed the construction of the Lake Facility or otherwise. An abandonment of the Lake Facility, explains Mr. Bromley, would constitute a "triggering event." If it were to occur after the Effective Date of the Second Reorganization Plan, it would subject the post-emergence Danielson Holding Corporation Group, including the Reorganizing Debtors, to a substantial tax liability. In order to make the problematic Covanta Lake Project pleasing to DHC, and to give the Debtors maximum flexibility to deal with the Disputes, the Debtors and DHC agreed on a transaction involving a pre-emergence merger of Covanta Lake with a newly-formed subsidiary of DHC. Specifically, the Debtors contemplate on taking these steps to effect the Lake Transaction: (a) A merger of Covanta Lake with DHC's subsidiary, New Covanta Lake, with the surviving entity being New Covanta Lake; (b) The receipt by Covanta Systems, Inc. of 75% -- in voting and value -- of the New Covanta Lake shares and $175,000 in cash in consideration of 100% of the Covanta Lake shares; (c) DHC's retention of 25% -- in voting and value, and preferred as to liquidation only, not as to dividends -- of the New Covanta Lake shares; (d) The reduction of the DHC Consideration by $175,000 to be funded from the deposit paid by DHC currently held in escrow; (e) The assumption of all Covanta Lake liabilities by New Covanta Lake by operation of law; and (f) An indemnity by Covanta Systems holding DHC harmless from any tax liabilities resulting from the Lake Transaction being treated for U.S. income tax purposes. Mr. Bromley points out that New Covanta Lake will be the successor-in-interest to Covanta Lake. New Covanta Lake will continue to operate the Lake Facility and replace Covanta Lake in the Second Reorganization Plan. Furthermore, the creditors of New Covanta Lake will receive the same treatment under the Second Reorganization Plan to which they were entitled as creditors of Covanta Lake, and no creditor or contract counter-party will be negatively impacted. In order to insure that the New Covanta Lake creditors will retain all of the same rights as they now have against Covanta Lake, upon consummation of the Lake Transaction, New Covanta Lake will immediately file: (a) a Chapter 11 petition; and (b) a motion to: -- jointly administer New Covanta Lake's Chapter 11 case with the Chapter 11 cases of the Debtors; -- direct that certain orders previously entered in the Debtors' Chapter 11 cases be made applicable, nunc pro tunc, to New Covanta Lake's case; -- deem that all proof of claim forms filed against Covanta Lake be deemed filed against New Covanta Lake; -- adopt the bar date for Covanta Lake for New Covanta Lake, and waiving the setting of a new bar date for New Covanta Lake; and -- deem that all ballots submitted in connection with the Second Reorganization Plan for New Covanta Lake. By this motion, the Debtors ask the Court to approve the Lake Transaction. Without the implementation of the Lake Transaction, the requirements of the Investment and Purchase Agreement between Covanta Energy and DHC, dated December 2, 2003, could leave the Debtors with no choice but to abandon all interest in the Service Agreement and Lake Facility. Thus, Mr. Bromley asserts, the Court must authorize the Lake Transaction. * * * Judge Blackshear grants the Debtors' request and authorizes the merger of Covanta Lake with DHC's subsidiary, Covanta Lake II, with the surviving entity being Covanta Lake II. (Covanta Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) CRESCENT: Incurs $300K Net Loss for the Year Ended Dec. 31, 2003 ---------------------------------------------------------------- Crescent Real Estate Equities Company (NYSE:CEI) announced results for the fourth quarter 2003. Funds from operations available to common shareholders before impairments related to real estate assets ("FFO") for the three months ended December 31, 2003 were $91.2 million, or $0.78 per share and equivalent unit (diluted). FFO for the year ended December 31, 2003 was $212.6 million or $1.82 per share and equivalent unit (diluted). These compare to FFO of $70.8 million or $0.60 per share and equivalent unit (diluted), for the three months ended December 31, 2002 and $238.2 million or $2.02 per share and equivalent unit (diluted) for the year ended December 31, 2002. Funds from operations is a supplemental non-GAAP financial measurement used in the real estate industry to measure and compare the operating performance of real estate companies, although these companies may calculate funds from operations in different ways. Net income available to common shareholders for the three months ended December 31, 2003 was $28.4 million, or $0.29 per share (diluted). Net loss to common shareholders for the year ended December 31, 2003 was $0.3 million, or $0.00 per share (diluted). This compares to net income available to common shareholders of $27.5 million or $0.27 per share (diluted), for the three months ended December 31, 2002 and $66.0 million or $0.63 per share (diluted), for the year ended December 31, 2002. According to John C. Goff, Vice Chairman and Chief Executive Officer, "Although our office markets continued to be challenging during 2003, we were pleased to have been able to execute on two strategic initiatives for the Company. One was the sale of our interest in The Woodlands, and the second was our Hughes Center acquisition in Las Vegas. Together, they demonstrated our commitment to shift capital to investments offering more predictable earnings. "While we don't expect that 2004 will be a year of meaningful growth in terms of office fundamentals, we do expect it to be a year for stabilization. We will continue to focus our efforts on actively managing our portfolio, seeking to improve our return on invested capital." On January 15, 2004, Crescent announced that its Board of Trust Managers had declared cash dividends of $.375 per share for Common, $.421875 per share for Series A Convertible Preferred, and $.59375 per share for Series B Redeemable Preferred. The dividends are payable February 13, 2004, to shareholders of record on January 30, 2004. BUSINESS SECTOR REVIEW Office Sector (66% of Gross Book Value of Real Estate Assets as of December 31, 2003) Office property same-store net operating income ("NOI") declined 8.5% for the three months ended December 31, 2003 over the same period in 2002. Average occupancy for these properties for the three months ended December 31, 2003 was 83.2% compared to 87.0% for the same period in 2002. As of December 31, 2003, the overall office portfolio's leased occupancy was 86.4%, and its economic occupancy was 84.0%. During the three months ended December 31, 2003 and 2002, Crescent received $1.5 million and $11.8 million, respectively, of lease termination fees. Crescent's policy is to exclude lease termination fees from its same-store NOI calculation. Office property same-store net operating income ("NOI") declined 11.5% for the year ended December 31, 2003 over the same period in 2002. Average occupancy for these properties for the year ended December 31, 2003 was 84.3% compared to 89.2% for the same period in 2002. During the year ended December 31, 2003 and 2002, Crescent received $9.3 million and $16.7 million, respectively, of lease termination fees. The Company leased 2.3 million net rentable square feet during the three months ended December 31, 2003, of which 1.5 million square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) decreased 6.3% from the expiring rates for the leases of the renewed or re-leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.76 per square foot per year and leasing costs were $.97 per square foot per year. The Company leased 6.4 million net rentable square feet during the year ended December 31, 2003, of which 4.0 million square feet were renewed or re-leased. The weighted average full service rental rate (which includes expense reimbursements) decreased 10.0% from the expiring rates for the leases of the renewed or re- leased space. All of these leases have commenced or will commence within the next twelve months. Tenant improvements related to these leases were $1.80 per square foot per year and leasing costs were $1.01 per square foot per year. Denny Alberts, President and Chief Operating Officer, commented, "As expected, our total office economic occupancy remained relatively constant, declining from 84.4% at the end of the third quarter to 84.0% at the end of the fourth quarter. However, leased occupancy increased from 86.2% to 86.4%. While we continued to lease at a record pace, market conditions, lease expirations and early terminations, have kept us from seeing any meaningful lift in occupancy. We expect this to hold true throughout 2004, projecting both the average and year end occupancy to be relatively flat. "We signed leases for 2.3 million square feet in the fourth quarter. For the year, we signed leases totaling 6.4 million square feet, or 20% of our portfolio net rentable area. This was by far the largest leasing year we've had in terms of volume in the history of our company. In 2004, we have 4.9 million total gross square feet of leases scheduled to expire by the end of the year. To date, 83% of that expiring space has been addressed - 62% by signed leases and 21% by leases in negotiation. For the 62% of expiring space that has been signed, we are showing a slight increase in the weighted average full service rental rate." Resort and Residential Development Sector (23% of Gross Book Value of Real Estate Assets as of December 31, 2003) Destination Resort Properties Same-store NOI for Crescent's five consolidated resort properties increased 71% for the three months ended December 31, 2003 over the same period in 2002, as a result of a reduction in operating expenses primarily at Park Hyatt Beaver Creek and Ventana Inn and Spa during the three months ended December 31, 2003, and one-time transition costs associated with the joint venture of the Fairmont Sonoma Mission Inn and Spa incurred during the three months ended December 31, 2002. The average daily rate increased 7% and revenue per available room increased 2% for the three months ended December 31, 2003 compared to the same period in 2002. Weighted average occupancy was 59% for the three months ended December 31, 2003 compared to 62% for the three months ended December 31, 2002. Same-store NOI for Crescent's five consolidated resort properties declined 2% for the year ended December 31, 2003 over the same period in 2002. The average daily rate increased 1% and revenue per available room remained flat for the year ended December 31, 2003 compared to the same period in 2002. Weighted average occupancy was 68% for the year ended December 31, 2003 compared to 69% for the year ended December 31, 2002. Upscale Residential Development Properties Crescent's overall residential investment generated $74.4 million and $88.1 million in FFO for the three months and twelve months ended December 31, 2003, respectively, including $54 million from the sale of The Woodlands. This compares to $18.7 million and $51.0 million in FFO generated for the three and twelve months ended December 31, 2002, respectively. Investment Sector (11% of Gross Book Value of Real Estate Assets as of December 31, 2003) Business-Class Hotel Properties Same- store NOI for Crescent's four business-class hotel properties decreased 13% for the three months ended December 31, 2003 over the same period in 2002. The average daily rate increased 5% and revenue per available room remained flat for the three months ended December 31, 2003 compared to the same period in 2002. Weighted average occupancy was 66% for the three months ended December 31, 2003 and 69% for the three months ended December 31, 2002. Same-store NOI for Crescent's four business-class hotel properties decreased 6% for the years ended December 31, 2003 over the same period in 2002. The average daily rate increased 2% and revenue per available room increased 3% for the year ended December 31, 2003 compared to the same period in 2002. Weighted average occupancy was 71% for the years ended December 31, 2003 and 2002. Temperature-Controlled Facilities Investment Crescent's investment in temperature-controlled facilities generated $7.0 million and $23.3 million in FFO for the three and twelve months ended December 31, 2003, respectively. This compares to $6.5 million and $21.0 million of FFO generated for the three and twelve months ended December 31, 2002, respectively. ACQUISITIONS Office Properties On December 31, 2003, Crescent acquired from The Rouse Company two office properties and two leased restaurant parcels within the Hughes Center portfolio in Las Vegas for a gross purchase price of $39 million, $29 million in cash and $10 million in assumed debt. Subsequent to year end, Crescent acquired from Rouse five additional office properties (one of which is held in a joint- venture arrangement with a third-party) and seven leased restaurant parcels within the Hughes Center portfolio for a gross purchase price of $175 million, $90 million in cash and $85 million in assumed debt. One other office property of 86,000 square feet was scheduled to be a part of the portfolio acquisition; however, Rouse's third-party joint-venture partner in the office property had a right of first refusal in Rouse's interest in the venture and it elected to exercise it. As a result of these transactions with Rouse, Crescent acquired seven office properties totaling 1.0 million square feet and nine leased restaurant parcels within the Hughes Center office portfolio for a gross purchase price of $214 million, $119 million of which was paid in cash and $95 million in net assumed debt. In accordance with the original agreement, Crescent has also agreed to acquire, in March 2004, the undeveloped land within Hughes Center from Rouse for $10 million, $2.5 million of which is to be paid in cash with the remaining $7.5 million to be financed in the form of a note due December 2005. On October 9, 2003, Crescent announced that it had partnered with JPMorgan Fleming Asset Management in the acquisition of One BriarLake Plaza, a 20-story, 502,000 square foot Class A office building located in the Westchase submarket of Houston, Texas. The leased occupancy of this three year old building, as of September 30, 2003, was 90%. Under the joint-venture arrangement, JPMorgan Fleming Asset Management has a 70% interest in the property, while Crescent has a 30% interest and has been retained to provide management and leasing services to the venture. DISPOSITIONS Upscale Residential Development Property and Office Properties On December 31, 2003, Crescent sold its previously held interests in The Woodlands master-planned community in Houston to The Rouse Company. The sale included: -- Crescent's 52.5% economic interest (including earned promote) in The Woodlands Land Company, Inc. -- Crescent's 52.5% economic interest (including earned promote) in The Woodlands Commercial Properties Company, L.P. -- Crescent's 75% interest in Woodlands Office Equities - '95 Limited Partnership The gross sales price was $387 million, of which $185 million was the allocation of partnership debt and the remaining $202 million was received by Crescent in cash, including partnership distributions net of working capital adjustments received prior to closing. As a result of the sale, Crescent recorded FFO related to the sale of its interest in the residential land component of $54 million. Resort Property On November 12, 2003, Crescent sold its 50% interest in the Ritz- Carlton Palm Beach resort owned by Manalapan Hotel Partners, LLC. Crescent's joint-venture partner in the resort was Westbrook Real Estate Fund IV, L.P., which also sold its 50% interest to the same purchaser. The sales price of the resort was $92 million, generating net proceeds to Crescent of $19 million after debt repayment Other On December 15, 2003, Crescent sold the Las Colinas Plaza retail property in Dallas for net proceeds of $21 million prior to debt repayment, and resulted in a gain of $15 million. BALANCE SHEET REVIEW Financing On February 5, 2004, Crescent and Vornado Realty Trust announced that AmeriCold Realty Corporation, the entity through which Crescent and Vornado hold their 40% and 60% interests, respectively, in the temperature-controlled facilities, completed a $254 million mortgage financing with Morgan Stanley Mortgage Capital Inc. that is secured by 21 of its owned and 7 of its leased temperature-controlled warehouses. The loan bears interest at LIBOR plus 295 (with a LIBOR floor of 1.5% with respect to $54.4 million of the loan) and requires principal payments of $5 million annually. The loan matures in April 2006 and has three one-year extension options. The net proceeds, after providing for usual escrows, closing costs and the repayment of $13 million of existing mortgages on two of the warehouses, were $225 million to the partners. Crescent received a distribution of $90 million, representing its 40% share in the partnership. On January 15, 2004, Crescent issued 3.4 million additional shares of its 6.75% Series A convertible cumulative preferred shares in a public offering. The shares were issued at $21.98 per share, resulting in a current yield of 7.68%, excluding dividends accrued on the shares up to the issuance date. Gross proceeds to Crescent totaled $74 million. The terms of the newly issued Series A preferred shares are the same as the terms of the Series A preferred shares outstanding prior to completion of the offering. Including this additional issuance, Crescent has 14.2 million shares of the Series A cumulative preferred shares outstanding. Refinancing On January 13, 2004, Crescent entered into a $275 million secured loan with Bank of America Securities LLC and Deutsche Bank Securities. The loan currently bears interest at LIBOR plus 275 and has an initial two-year term with a one-year extension option. The loan is secured by eight office properties, 1 resort and 1 business-class hotel within Crescent Real Estate Funding XII, L.P. and was structured to defease the existing $160 million LaSalle Note II which is scheduled to mature in 2006. The residual loan proceeds were used to pay down the $275 million secured, floating rate loan from Fleet Bank. ABOUT THE COMPANY Crescent Real Estate Equities Company (NYSE:CEI) is one of the largest publicly held real estate investment trusts in the nation. Through its subsidiaries and joint ventures, Crescent owns and manages a portfolio of more than 75 premier office properties totaling more than 30 million square feet, located primarily in the Southwestern United States, with major concentrations in Dallas, Houston, Austin, Denver, Miami and Las Vegas. In addition, the Company has investments in world-class resorts and spas and upscale residential developments. * * * As previously reported in Troubled Company Reporter, Standard & Poor's affirmed its ratings on Crescent Real Estate Equities Co., and Crescent Real Estate Equities L.P., and removed them from CreditWatch, where they were placed on Jan. 23, 2002. The outlook remains negative. Ratings Affirmed And Removed From CreditWatch Issue To From Crescent Real Estate Equities Co. Corporate credit rating BB BB/Watch Neg $200 million 6-3/4% preferred stock B B/Watch Neg $1.5 billion mixed shelf prelim B/B+ prelim B/B+/Watch Neg Crescent Real Estate Equities L.P. Corporate credit rating BB BB/Watch Neg $150 million 6 5/8% senior unsecured notes due 2002 B+ B+/Watch Neg $250 million 7 1/8% senior unsecured notes due 2007 B+ B+/Watch Neg DEUTSCHE MORTGAGE: Fitch Ups & Affirms Series 2002-1 Ratings ------------------------------------------------------------ Fitch Ratings has upgraded 1 & affirmed 5 classes of Deutsche Mortgage Securities residential mortgage-backed certificates, as follows: Deutsche Mortgage Securities, Mortgage Pass-Through Certificates, Series 2002-1 -- Class A Affirmed at 'AAA'; -- Class M Upgraded to 'AAA' from 'AA'; -- Class B1 Affirmed at 'A'; -- Class B2 Affirmed at 'BBB'; -- Class B3 Affirmed at 'BB'; -- Class B4 Affirmed at 'B'. These rating actions are being taken as a result of low delinquencies and losses, as well as increased credit support. ENRON: Court Permits Cabazon Unit to Disburse FPL Sale Proceeds ---------------------------------------------------------------- Through an auction, Cabazon Power Partners LLC sold its Cabazon Project to FPL Energy Cabazon Wind LLC, which the Court approved on December 4, 2003. The Sale Order provides that except to certain required amounts, all proceeds Cabazon received in connection with the contemplated transactions by the Cabazon Asset Purchase Agreement will be retained by Cabazon and will neither by disbursed nor used until further Court order. Cabazon also entered into the Herling Settlement Agreement, which the Court approved, wherein Cabazon, inter alia, agreed to pay the Herling Parties $2,900,000 to resolve certain disputes between them. As a condition to the closing of the Herling Settlement Agreement, all amounts payable to Fortis Bank S.A./N.V., UK Branch relating to a loan to Cabazon secured by its assets will have been paid. As of December 9, 2003, the Fortis Secured Claim is about $20,000,000. In light of the ambiguity between the Sale Order, which restricts its use of the Sale Proceeds and the Herling Settlement Order, Cabazon sought and obtained the Court's authority to pay the Herling Settlement Payment to the Herling Parties out of the Sale Proceeds. In addition, since the terms of the Herling Settlement Agreement required it to satisfy the Fortis Secured Clam prior to closing, Cabazon got Court permission to use a portion of the Sale Proceeds to satisfy the Fortis Secured Claim. (Enron Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service, Inc., 215/945- 7000) ENRON CORP: Inks Settlement Resolving Prudential Relocation Claims ------------------------------------------------------------------ Enron Corporation entered into a Master Service Agreement with Prudential Relocation, Inc., formerly known as Citicapital Relocation Services, formerly known as Associates Relocation Management Company, Inc.; and Prudential Real Estate Affiliates, Inc., doing business as Prudential Real Estate and Relocation Services, effective April 3, 2000. Under the Agreement, the Prudential Relocation Entities provided certain services related to the relocation of the Debtors' employees. The Prudential Relocation Entities issued, and the Debtors paid during the 90 days preceding the Petition Date, 16 invoices aggregating $781,191. The 16 invoices were payable 30 days from the invoice date -- the Citicapital Preference Period Invoices. In addition, the Prudential Relocation Entities issued, and the Debtors paid during the Preference Period, nine invoices aggregating $12,346,508, which were payable from 28 days to one day from invoice date -- the Associates Preference Period Invoices. One of the nine Associates Preference Period Invoices, dated November 28, 2001 for $7,280,524, was payable on November 29, 2001 -- the Eve of Bankruptcy Invoice. Shortly after the Petition Date, the Debtors conducted an internal audit of payments made to the Prudential Relocation Entities and determined that during the one year prior to the Petition Date, they overpaid the Prudential Relocation Entities $2,921,978, due to duplicative billing, misapplication of certain billing rates and what appeared to be the failure of the Prudential Relocation Entities to timely invoice vendors or submit refunds to the Debtors for resold homes. Approximately $2,766,585 of the Overpayment was included in the Eve of Bankruptcy Invoice and the remaining $155,393 of the Overpayment was spread out over numerous invoices. By a March 18, 2003 letter, the Debtors demanded that the Prudential Relocation Entities, pursuant to Sections 547, 548 and 550(a) of the Bankruptcy Code, return $13,283,092, consisting of all payments made to the Prudential Relocation Entities during the Preference Period and the Overpayment. However, the Prudential Relocation Entities asserted the ordinary course of business defense, pursuant to Section 547(c) of the Bankruptcy Code, to 10 of the Citicapital Preference Period Invoices, aggregating $473,373, because the Invoices were paid by the Debtors between 28 and 32 days from invoice date, which the Prudential Relocation Entities allege, is the same as the payment range prior to the Preference Period, and that a number of the payments were made within the terms of the invoices. The Prudential Relocation Entities asserted that $5,065,984, representing payment for eight of the Associates Preference Period Invoices, was paid in the ordinary course of business. Thus, the payments are not avoidable because, inter alia: (a) the invoices were paid on or within one day of the due date; (b) payments were made within the terms of the invoices; and (c) the credit terms did not change. The Prudential Relocation Entities also asserted that the Ordinary Course of Business Defense applies to all or part of the payment made for the Eve of Bankruptcy Invoice because it was paid when due and $2,774,684 of the payment was for Relocation Services invoiced to the Debtors within the same time frame as prior invoicing as it initially appeared that the invoicing has been accelerated. In connection with the Overpayment, the Prudential Relocation Entities conducted an internal audit, which confirmed that substantially all of the Overpayment the Debtors calculated was accurate. The Prudential Relocation Entities assert that they have provided documentation and other information establishing a strong Defense to $8,314,041 of the Debtors' Claims. The Debtors dispute certain of these assertions. As a result of negotiations and an exchange of documentation, the Debtors and the Prudential Relocation Entities agreed to settle the Debtors' Claims by these terms: (a) The Prudential Relocation Entities will pay $7,750,000 to the Debtors in immediately available funds by wire transfer; (b) The Prudential Relocation Entities' scheduled Claim Nos. 100209450, 100228810, 100766580 and 100771850, aggregating $33,892, which is scheduled in the name of Citicapital Relocations, Inc., are expunged. If any of the Prudential Relocation Entities or its affiliates have filed any proofs of claim in the Debtors' Chapter 11 cases connected in any way with the Relocation Services, these claims are expunged; (c) The Prudential Relocation Entities waive their right to file a proof of claim in the Debtors' cases for the Settlement Amount. The Prudential Relocation Entities will not file any further proof of claim on account of prepetition Relocation Services provided to the Debtors; (d) Upon full payment of the Settlement Amount, the Debtors will be deemed to have waived and released any and all claims they may have against the Prudential Relocation Entities relating to or on account of the Debtors' Claims; and (e) All proceeds the Debtors received in connection with the Settlement will be retained by the Debtors and neither disbursed nor used until the earlier to occur of (i) agreement between the Debtors and the Committee to release the proceeds or (ii) by the Court's order. Judge Gonzalez approves the Stipulation. (Enron Bankruptcy News, Issue No. 98; Bankruptcy Creditors' Service, Inc., 215/945-7000) FEDERAL-MOGUL: Disclosure Statement Hearing Fixed for April 13 -------------------------------------------------------------- At the request of the Federal-Mogul Corporation Debtors, the Unsecured Creditors Committee, Asbestos Claimants Committee, the Future Claimants Representative and JPMorgan Chase Bank, as the Administrative Agent for the holders of Bank Claims, Judge Lyons will convene a hearing on April 13, 2004 at 10:00 a.m. to consider the approval of a Disclosure Statement explaining the company's plan to emerge from chapter 11 bankruptcy. The Debtors will send a notice of the Disclosure Statement Hearing by first-class mail to all of their known creditors and interest holders not later than March 5, 2004. Objections to the Disclosure Statement must be filed by April 2, 2004 at 4:00 p.m. Objections must: (1) be in writing; (2) state the name and address of the objecting party and the nature of the claim or interest of the party; (3) state with particularity the basis and nature of any objection and include, where appropriate, proposed language to be inserted in the Disclosure Statement to resolve the objection; and (4) be filed, together with proof of service, with the Bankruptcy Court, the Clerk of the Court, 824 North Market Street, 3rd Floor, Wilmington, Delaware 19801. At the hearing, the Court will review whether the Disclosure Statement contains adequate information as required by Section 1125 of the Bankruptcy Code to enable a hypothetical creditor to make an informed decision whether to vote to accept or reject the Plan. The hearing may be continued from time to time without further notice to all creditors and interest holders. Headquartered in Southfield, Michigan, Federal-Mogul Corporation -- http://www.federal-mogul.com/-- is one of the world's largest automotive parts companies with worldwide revenue of some $6 billion. The Company filed for chapter 11 protection on October 1, 2001 (Bankr. Del. Case No. 01-10582). Lawrence J. Nyhan, Esq., James F. Conlan, Esq., and Kevin T. Lantry, Esq., at Sidley Austin Brown & Wood and Laura Davis Jones, Esq., at Pachulski, Stang, Ziehl, Young, Jones & Weintraub, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $ 10.15 billion in assets and $ 8.86 billion in liabilities. (Federal-Mogul Bankruptcy News, Issue No. 50; Bankruptcy Creditors' Service, Inc., 215/945-7000) FIRST AMERICAN: Agrees to Acquire SNK Holdings & Units ------------------------------------------------------ The First American Corporation (NYSE: FAF), the nation's leading data provider, completed a letter of intent to acquire privately held, mortgage default services provider SNK Holdings, Inc. and its subsidiary operations, including LOGS Financial Services. First American will combine SNK Holdings with its Mortgage Information Group's National Default Outsourcing operations to introduce the industry's most complete solution for managing all aspects of the mortgage default process. The new company, which will operate as First American National Default Outsourcing, will be headquartered in Lewisville, Texas. First American will manage and direct outsourcing activities from its regional offices in Milwaukee; Northbrook, Ill.; and Jacksonville, Fla. First American will also work to maximize service levels by continuing to utilize its existing attorney/agent network, as well as the LOGS network of agents nationwide. Based in Northbrook, SNK/LOGS is the second largest mortgage default services provider in the nation. The company has established the industry's premier system for complete process outsourcing. With the addition of the LOGS platform, First American will be better positioned to offer its lender customers either full-service onsite default assistance, or complete outsource management of default operations at a First American NDO support facility. James C. Frappier, president of First American Default Management Solutions, said: "We are excited to add the talent and resources of SNK and LOGS to the First American team. This agreement is part of our continuing strategy to provide our customers with the complete suite of products and services in the default continuum. The addition of LOGS' servicing platform gives us greater capacity to support clients and complements our recent acquisition of default claims management specialist Baker, Brinkley & Pierce." SNK Holdings has approximately 700 employees and was profitable in 2003 on revenues of $53.5 million. While complete details of the transaction were not disclosed, the combination of these businesses will be immediately accretive to First American. As a result of the combination of default servicing operations, technology integration, process improvements and other synergies, First American National Default Outsourcing will reduce annual operating expenses by $5 million within the first 12 months and will serve approximately 60 percent of the default outsourcing market. "Our default operations are an important part of our strategy of being a full-service resource to our large lender customers and adding counter- cyclical revenues to our operations," said Parker S. Kennedy, president and chief executive officer of The First American Corporation. "By expanding our services in this area, we are well positioned to meet our customers' needs in the event of an increase in mortgage defaults. This addition also gives us the opportunity to cross sell other default, mortgage information and title related products and services." Gerald M. Shapiro, chairman of LOGS, stated: "By partnering with First American we will be able to integrate our default services and provide our customers with the best possible service and technology solutions to meet their unique needs. This new relationship with First American confirms our strategic vision and our significant investment in recent years to develop a complete end-to-end default outsource solution, which includes our MasterViewc workflow software for law firms, and our REO management expertise." Michael Barrett, vice chairman of First American Real Estate Information Services, said, "The combination of the LOGS platform with the efficiencies provided by First American's best-in-class default technologies, VendorScape/CMS, iClear and eDAISY, puts First American in a position to offer truly comprehensive default management to the servicing industry." Additional operations and opportunities that SNK brings to First American include: LOGS REO Management Company; ARM Financial, a California-based trustee; a facilities management business; a business practice management group that provides key support services to law firms and title agencies nationwide; and technology operations. The First American Corporation is a Fortune 500 company that traces its history to 1889. As the nation's largest data provider, the company supplies businesses and consumers with information resources in connection with the major economic events of people's lives, such as getting a job; renting an apartment; buying a car, house, boat or airplane; securing a mortgage; opening or buying a business; and planning for retirement. The First American Family of Companies, many of which command leading market share positions in their respective industries, operate within seven primary business segments including: Title Insurance and Services, Specialty Insurance, Trust and Other Services, Mortgage Information, Property Information, Credit Information and Screening Information. With revenues of $6.2 billion in 2003, First American has nearly 30,000 employees in approximately 1,400 offices throughout the United States and abroad. More information about the company and an archive of its press releases can be found at http://www.firstam.com/ * * * As reported in the Troubled Company Reporter's February 10, 2004 edition, Standard & Poor's Ratings Services affirmed its 'BBB' counterparty credit and senior debt ratings and 'BB+' preferred stock ratings on insurance holding company First American Corp. (NYSE:FAF). Standard & Poor's also revised its outlook on all the ratings to positive from stable. FLEMING COS: Court Approves PCI & Commercenter Claims Settlement ---------------------------------------------------------------- The Fleming Debtors, and particularly Core-Mark International, Inc., sought and obtained Judge Walrath's approval for their settlement agreement with Performance Contracting, Inc., and Commercenter #23 Limited Liability Company, a Colorado limited liability company and successor-in-interest to Majestic Realty Co., a California corporation. The Controversy On January 29, 2003, Fleming, as tenant, signed a lease for a new distribution facility located at 3797 North Windsor Drive, in Aurora, Colorado, with Majestic, as landlord. A rider to the lease provides that, within 30 days following the imposition of any lien resulting from Fleming's alterations, Fleming must either: (1) cause any lien to be released by record of payment; or (2) in the case of a disputed lien, cause the posting of a proper bond in favor of Majestic or provide other security reasonably satisfactory to Majestic. The PCI Contract On February 6, 2003, Fleming and PCI signed a contract to install cooler and freezer improvements at the property. Under the contract, Fleming was to pay PCI in three installments. PCI was paid $650,000 on the first installment on March 12, 2003, and $760,000 on the second installment on March 26, 2003. Fleming paid $680,000 on the third installment under the contract on April 15, 2003 -- two weeks after the Petition Date. Work under the contract was finished on May 15, 2003. The payment by check of the second installment did not clear because of Fleming's Chapter 11 petition. As a result, PCI had a $760,000 prepetition claim against Fleming. On June 27, 2003, PCI recorded its Notice of Intent to File a Lien Statement and Statement of Lien in Adams County, Colorado, which under Colorado law was intended to perfect PCI's mechanic's lien on the property. PCI's Statement of Lien was for $2.09 million, which was the entire value of the contract, from an abundance of caution in case it was later determined that any of Fleming's payments under the contract were avoidable under the Bankruptcy Code. Because of PCI's filing, and under the lease, Fleming was contractually obligated within 30 days after June 27, 2003, to perform one of the two options to remove or bond around the lien. PCI subsequently commenced an action in Adams County Colorado District Court against Majestic and Fleming to foreclose the mechanic's lien. The filing of the lawsuit was intended to preserve the mechanic's lien under Colorado law. On September 9, 2003, PCI filed proofs of claim with respect to the amounts owed by Fleming. The Settlement The Settlement Agreement is a global settlement of the claims each party holds against the other. The primary terms of the Settlement Agreement are: (1) PCI will pay Fleming $55,000 to resolve any and all avoidance claims Fleming may have in these bankruptcy cases against it; (2) Fleming will pay PCI $760,000 to resolve the prepetition mechanic's lien claim, in full satisfaction of the lien; (3) The avoidance settlement payment and the contractual payment will be effected by means of an offset of the avoidance settlement payment against the contractual payment. Accordingly, Fleming will pay $705,000 to PCI without further delay; (4) Upon Fleming's payment of the final settlement payment, Majestic, through its successor, agrees that Fleming is in compliance with the lease obligation and, therefore, does not have any obligation to post a bond or other security; and (5) PCI and Fleming sign mutual releases. Headquartered in Lewisville, Texas, Fleming Companies, Inc. -- http://www.fleming.com/-- is the largest multi-tier distributor of consumer package goods in the United States. The Company filed for chapter 11 protection on April 1, 2003 (Bankr. Del. Case No. 03-10945). Richard L. Wynne, Esq., Bennett L. Spiegel, Esq., Shirley Cho, Esq., and Marjon Ghasemi, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $4,220,500,000 in assets and $3,547,900,000 in liabilities. (Fleming Bankruptcy News, Issue No. 25; Bankruptcy Creditors' Service, Inc., 215/945-7000) FRESH CHOICE: Reports Losses & Working Capital Deficit for 2003 --------------------------------------------------------------- Fresh Choice, Inc. (Nasdaq:SALD) reported a net loss of $5 million or $0.83 per share for the fourth quarter, which included a non- cash asset-impairment charge of $3 million and restaurant-opening costs of $32,000. This compared to a net loss of $3 million or $0.50 per share for the fourth quarter of 2002, which included a non-cash asset-impairment charge of $1.8 million and restaurant- opening costs of $189,000. For 2003 the Company reported a loss of $6 million or $1.00 per share, including a non-cash asset-impairment charge of $3.7 million and restaurant-opening costs of $268,000, versus a net loss of $1.7 million or $0.29 per share, which included a non-cash asset-impairment charge of $1.8 million and restaurant-opening costs of $438,000. Fresh Choice's December 28, 2003 balance sheet shows a working capital deficit of $5,734,000 Sales of $78.5 million for the year were up $3.5 million or 4.7% versus the prior year. Sales for the fourth quarter were $22.4 million, up $0.5 million or 2.3%, compared with the fourth quarter of 2002. Comparable-store sales increased 0.1% in the fourth quarter and were down 1.1% in 2003 versus 2002. Comparable-store guest counts decreased 1.3% in the quarter and 3.1% for the year. The comparable store sales and guest count declines, although improved in the fourth quarter, continue to result primarily from the continued weak economic environment in our core markets. The comparable-store average check was $7.78 in the fourth quarter, an increase of 1.3% versus the prior year, and $7.76 for the year, an increase of 2.1% versus 2002. Sales for both the fourth quarter and the year reflect an increase in the number of restaurants. The Company had an average of 56.3 and 55.7 restaurants included in sales in the fourth quarter and year, respectively, versus 52.9 and 51.2 in the respective comparable prior year periods. Primarily as a result of lower than expected sales performance at some of the newer restaurants, the Company recorded a non-cash impairment charge of $3.0 million during the fourth quarter of 2003. The Company had previously recorded a non-cash impairment charge of $0.7 million in the third quarter for another newer restaurant. The total non-cash impairment charge of $3.7 million for 2003 relates primarily to four newer restaurants and one additional restaurant where management has concluded that the projected cash flows from operations will not be sufficient to recover the net book value of those restaurants in accordance with Statement of Financial Accounting Standards No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." The average weekly sales volume for these five restaurants in 2003 was approximately 44% below the comparable store average. Everett (Jeff) Jefferson, president and chief executive officer, said, "The financial results for the fourth quarter and fiscal year were disappointing. The economy remained weak in our core markets as unemployment continued to run above the national average, and we are uncertain when a significant economic recovery is going to begin in these markets. In addition, the Company's earnings were impacted by increases in workers' compensation, advertising and gas and electric costs and the continued weak sales of the Fresh Choice restaurants that the Company impaired in 2003." "Management has been thoroughly reviewing its current restaurant portfolio, operations and strategy. As a result of this review, management is currently negotiating with certain landlords on possible lease restructurings including the possible closure of up to three restaurants. Any future closures may result in additional charges in subsequent quarters," continued Mr. Jefferson. "We continue to focus on providing an exceptional dining experience to every guest and we are encouraged by the recent improvement in our sales trends. The Company's comparable-store sales were up versus the prior year 0.1% in the fourth quarter after being down each quarter beginning with the third quarter of 2001. Comparable-store sales versus the prior year have continued to improve since year end and are up 0.3% versus the prior year for the first seven weeks of the first quarter," said Mr. Jefferson. The Company opened four new Fresh Choice restaurants in 2003 with one new Fresh Choice restaurant opening in the fourth quarter. The Company has no other expansion plans at this time. Fresh Choice, Inc. operates 53 restaurants under the Fresh Choice and Zoopa brand names in California (43), the state of Washington (4) and Texas (6). The Company's Fresh Choice and Zoopa restaurants offer customers an extensive selection of high quality, freshly-prepared traditional and specialty salads, hot pasta dishes, pizza, soups, bakery goods and desserts in a self- service format. In addition, the Company operates one Fresh Choice Express restaurant, two dual branded Fresh Choice Express and licensed Starbucks retail stores and one stand-alone licensed Starbucks retail store in Texas. FRIENDLY ICE: Stockholders' Deficit Narrows to $98M at Dec. 28 -------------------------------------------------------------- Friendly Ice Cream Corporation (AMEX: FRN) reported net income for the three-months-ended December 28, 2003 of $3.3 million, or $0.42 per share, compared to a net loss of $0.7 million, or $0.9 per share, reported for the three-months-ended December 29, 2002. Comparable systemwide restaurant sales increased 4.0% for the 2003 fourth quarter as compared to the prior year (3.3% increase for company restaurants and 5.7% increase for franchise restaurants). Including results of the current quarter, the Company has reported twelve consecutive quarters of positive comparable systemwide restaurant sales. Total company revenues for the three-months- ended December 28, 2003 were $135.1 million, an increase of 3.4%, as compared to total revenues of $130.7 million for the three- months-ended December 29, 2002. Effective December 31, 2003, all benefits accrued under the Company's noncontributory defined benefit pension plan have been frozen at the level attained on that date. As a result, the Company recognized a one-time non-cash pension curtailment gain of $8.1 million pre-tax ($4.8 after-tax or $0.62 per share) equal to the unamortized balances as of December 31, 2003 from all plan changes prior to that date. Simultaneously, the Company took a corresponding charge to its stockholders' deficit of $9.1 million ($5.4 million after-tax) offsetting the curtailment gain. This charge resulted from the accumulated benefit obligation exceeding the fair value of the pension plan assets as of December 31, 2003, the latest measurement date. Net income for the fiscal year December 28, 2003 was $10.2 million, or $1.34 per share compared to net income of $6.2 million, or $0.82 per share, reported for the year-ended December 29, 2002. As previously discussed, 2003 results include a one-time non-cash pension curtailment gain of $8.1 million pre-tax ($4.8 after-tax or $0.62 per share). The Company reported a corresponding charge to its stockholders' deficit of $9.1 million ($5.4 million after-tax) offsetting the curtailment gain. Results for 2002 included the favorable impact of $0.4 million pre-tax, or $0.03 per share, from the reduction of the Company's restructuring reserve. Total company revenues increased $9.4 million, or 1.6%, to $579.8 million for the year-ended December 28, 2003 from $570.4 million for the same period in 2002. Year-to-date, comparable systemwide restaurant sales increased 3.1% (2.3% increase for company restaurants and 5.3% increase for franchise restaurants). Case volume in the Company's retail supermarket business increased 2.7% in 2003 when compared to the prior year. "We are very pleased with the Company's continued revenue growth and profitability," stated John L. Cutter, Chief Executive Officer and President of Friendly Ice Cream. "Twelve consecutive quarters of positive comparable systemwide restaurant sales is the result of continued improvements to guest satisfaction and targeted marketing. Guest satisfaction, supported by training initiatives and management incentive programs, continues to be the top priority for Friendly's. The recently completed re-franchising of ten company-operated restaurants in Orlando to an existing franchisee, along with an agreement to open up to 25 new restaurants, will help to expand franchise development and growth in the state of Florida." Cutter continued, "During the fourth quarter, we continued to refine the look and capital efficiency of our Impact program by re-modeling eight company restaurants. The Impact program enhances the guest experience by improving the appearance of our restaurants and reinforces our 68-year ice cream heritage. Also during the quarter, we opened two new company restaurants and our franchisees opened three new franchise restaurants. For the year, three new company restaurants opened and our franchisees opened six new franchise restaurants." Friendly Ice Cream Corporation's December 28, 2003 balance sheet shows a stockholders' deficit of $98,026,000 compared to $103,702,000 the previous year. Business Segment Results In the 2003 fourth quarter, pre-tax income in the restaurant segment was $5.5 million, or 5.2% of restaurant revenues, compared to $6.8 million, or 6.6% of restaurant revenues, in the fourth quarter 2002. The decrease in pre-tax income was the result of an increase in restaurant labor and fringe benefit costs and higher expenses for advertising, depreciation, employment recruitment fees for field management positions and pre-opening costs associated with the opening of two company restaurants during the quarter. Partially offsetting these costs was a 3.3% improvement in comparable company restaurant sales, lower maintenance costs and a decrease in general liability insurance claims. Pre-tax income in the Company's foodservice segment was $3.5 million in the fourth quarter of 2003 compared to $2.6 million in the fourth quarter 2002. The increase was mainly due to increased sales to franchisees and to retail supermarket customers. Retail case volume increased by 0.2% in the fourth quarter. Pre-tax income in the franchise segment increased in the fourth quarter to $1.4 million from $1.2 million in the prior year. The increase is mainly due to higher royalty revenue from increased comparable franchise restaurant sales of 5.7% for the quarter. Corporate expenses of $12.4 million in the fourth quarter of 2003 increased by $0.1 million, or 1%, as compared to the fourth quarter of 2002 primarily due to higher employment recruitment costs, increased legal fees and a reduction in the benefit realized from the Company's pension plan when compared to the prior year. These increases were partially offset by depreciation expense and lower interest expense resulting from reduced debt levels. Tender Offer On February 17, 2004, the Company announced that it has commenced a cash tender offer for all $176.0 million outstanding principal amount of its 10 1/2% Senior Notes due 2007. The Company intends to fund the tender offer through a private offering of a new series of approximately $165.0 million of senior notes, available cash and borrowings under its revolving credit facility. The Company has obtained an amendment to its existing $30.0 million revolving credit facility to increase the amount which may be borrowed under the revolver to $45.0 million and to extend the term to June 2007. The tender offer and the effectiveness of the amendment to the credit facility are subject to a number of conditions including completion of the offering of the new senior notes. Franchising Agreement On January 15, 2004, the Company entered into an agreement with an existing franchisee, Central Florida Restaurants LLC, to grant certain limited exclusive rights to operate and develop Friendly's restaurants in designated areas within the Orlando, Florida market. The franchisee purchased certain equipment assets, lease and sublease rights and franchise rights in ten existing company operated restaurants. The agreement includes a commitment to open an additional ten restaurants over the next six years with an option for fifteen more restaurants in the following five years. Gross proceeds from the sale were approximately $3.2 million. The Company expects to record a gain on this transaction of approximately $0.7 million in the first quarter of 2004. The cash proceeds will be used to reduce debt, subject to the terms of the revolving credit facility. An investor conference call to review fourth quarter 2003 results will be held on Friday, March 5, 2004 at 2:00 P.M. Eastern Time. The conference call will be broadcast live over the Internet and will be hosted by John Cutter, Chief Executive Officer and President. To listen to the call, go to the Investor Relations section of the Company's website located at www.friendlys.com, or go to www.streetevents.com. An online replay will be available approximately one hour after the conclusion of the call. Friendly Ice Cream Corporation is a vertically integrated restaurant company serving signature sandwiches, entrees and ice cream desserts in a friendly, family environment in over 530 company and franchised restaurants throughout the Northeast. The company also manufactures ice cream, which is distributed through more than 4,500 supermarkets and other retail locations. With a 68-year operating history, Friendly's enjoys strong brand recognition and is currently remodeling its restaurants and introducing new products to grow its customer base. Additional information on Friendly Ice Cream Corporation can be found on the Company's Web site http://www.friendlys.com/ GALAXY NUTRITIONAL: Issues Clarification about Loan Compliance -------------------------------------------------------------- Galaxy Nutritional Foods, Inc. (Amex: GXY), a leading producer of nutritious plant-based dairy alternatives for the retail and foodservice markets, issued a statement regarding clarification of a response to an investor during yesterday's conference call while discussing the results for its third quarter of fiscal 2004, ended December 31, 2003. Salvatore J. Furnari, Galaxy's Chief Financial Officer, stated, "I would like to clarify a statement which I made during [Wednes]day's conference call in response to a question from one of our investors. The question related to the current status of our loan covenants due to our sales being down versus our original forecast. I stated that we currently had no violations or waivers with our lenders that needed to be addressed. However, to clarify that point, we did have a need to amend the underlying loan covenants with both Southtrust Bank and Textron Financial Corp. due to the new line item 'Employment Contract Expense' appearing on our third quarter financial statements. Since this line item wasn't anticipated when we finalized the loan documents last May, the underlying loan covenants did not specifically address the impact of this item when calculating any required ratios. Prior to the call, the lenders had assured me that, effective as of December 31, 2003, they would amend the underlying loan covenants so that the Company would be in compliance. I therefore stated that we were currently in compliance with our loan covenants. Upon reflection, I should have expanded my answer to the question from the investor to specifically address this loan covenant issue. We now have written confirmation from the lenders that they will amend the underlying loan covenants accordingly, effective December 31, 2003; and therefore, the Company will not be in violation of any loan covenants as of that date. Our lenders are currently preparing the necessary amendments." About Galaxy Nutritional Foods, Inc. Galaxy Nutritional Foods is the leading producer of great-tasting, health- promoting plant-based dairy and dairy-related alternatives for the retail and foodservice markets. These phytonutrient- enriched products, made from nature's best grains -- soy, rice and oats -- are low- and no-fat (no saturated fat and no trans-fatty acids), have no cholesterol, no lactose, are growth hormone and antibiotic free and have more calcium, vitamins and minerals than conventional dairy products. Because they are made with plant proteins, they are more environmentally friendly and economically efficient than dairy products derived solely from animal proteins. Galaxy's products are part of the nutritional or functional foods category, the fastest-growing segment of the retail food market. Galaxy brand names include: Galaxy Nutritional Foods, Veggie, Veggie Nature's Alternative to Milk, Veggie Slices, Soyco, Soymage, Wholesome Valley, formagg and Lite Bakery. For more information, please visit Galaxy's Web site at: http://www.galaxyfoods.com/ GENCO REDI MIX: Case Summary & 16 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Genco Redi Mix, Inc. 1001 Roman Road Grand Prairie, Texas 75050 Bankruptcy Case No.: 04-32015 Type of Business: The Debtor is a concrete ready mix producer and supplier. Chapter 11 Petition Date: February 19, 2004 Court: Northern District of Texas (Dallas) Judge: Harlin DeWayne Hale Debtor's Counsel: Mark Ian Agee, Esq. Mark Ian Agee, P.C., Attorney at Law 5207 McKinney Avenue, Suite 16 Dallas, TX 75205 Tel: 214-320-0079 Total Assets: $497,858 Total Debts: 1,015,879 Debtor's 16 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Cemex US Operations Materials $362,620 840 Gessner, Suite 1400 Houston, TX 77024 Martin Marietta Materials Materials $130,581 Thomas Reyes Trucking Services & Supplies $89,000 Hanson Aggregates Materials $87,584 Wells Fargo Bank Credit Card $50,500 Wells Fargo Equipment Purchase Money $169,804 Financing Security Interest Value of Collateral: $120,000 Trinity Materials, Inc. Materials $48,181 Holcim US, Inc. Materials $42,000 Ohio Casualty Group Insurance $9,033 Advanta Business Cards Credit Line $8,784 Advanta Business Cards Credit Line $8,069 Texas Refinery Corp. Materials $3,299 Betsy Price, Tarrant County Property Taxes $2,924 Mack Commercial Credit Corp. Credit Line $1,750 Betsy Price Taxes $1,749 JTM Materials, Inc. Materials $0 GIHON REALTY CORP: Voluntary Chapter 11 Case Summary ---------------------------------------------------- Debtor: Gihon Realty Corp. 100 Hart Street #1B Brooklyn, New York 11206 Bankruptcy Case No.: 04-12168 Chapter 11 Petition Date: February 17, 2004 Court: Eastern District of New York (Brooklyn) Judge: Elizabeth S. Stong Debtor's Counsel: James E. Hurley, Jr., Esq. 225 Broadway - Ste 1401 New York, NY 10007 Tel: 212-240-9393 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million GLIMCHER REALTY: Posts Decreasing Net Income for Q4 and FY 2003 --------------------------------------------------------------- Glimcher Realty Trust (NYSE: GRT) announced financial results for the fourth quarter and year ended December 31, 2003. Net income available to common shareholders in the fourth quarter of 2003 was $8.5 million, or $0.24 per share, as compared to $11 million, or $0.32 per share, in the fourth quarter of 2002. For the year ended December 31, 2003, net income available to common shareholders was $10.1 million, or $0.29 per share, as compared to $24.4 million, or $0.75 per share, in 2002. Funds From Operations ("FFO") in the fourth quarter of 2003 was $29.5 million, an 84.2% increase from the fourth quarter of 2002. On a per share basis, FFO for the fourth quarter as compared to the same period in 2002 increased 79.1% to $0.77 per share. In the fourth quarter of 2003, the Company incurred $436,200 of costs associated with the early extinguishment of debt as compared to $9.8 million in the fourth quarter of 2002. Excluding these costs, FFO per share for the fourth quarter 2003 increased 13.6% from the fourth quarter of 2002. For the year ended December 31, 2003 FFO increased 4.7% to $81.4 million or $2.13 per share. Excluding debt costs, FFO for the year ended December 31, 2003 was $82.2 million as compared to $89.1 million for 2002. "In January our Company celebrated the 10-year anniversary of our initial public offering," stated Michael P. Glimcher, President. "With 2003 revenues exceeding $316 million, we have achieved a 250% increase in revenues since 1994. Recently Glimcher's common stock hit an all time high of $26.06 on February 3, and consistent with our strategy, we now own 100% of our properties. I am extremely proud of our 2003 performance, our management team and all the Glimcher associates." Highlights -- Revenues in the fourth quarter of 2003 were $93.1 million compared with revenues of $80.2 million in the fourth quarter of 2002. The 16.1% increase included incremental revenues of $7.3 million from four joint venture properties the Company acquired in 2003 and during the fourth quarter of 2002. The acquisitions of WestShore Plaza in August 2003 and Eastland Mall (Ohio) in December 2003 accounted for $5.5 million of the quarterly increase. An increase in lease termination fees of $979,000 and a $1.1 million decrease in outparcel sales were the other significant changes in revenue during the quarter as compared to the fourth quarter of 2002. -- Revenues in 2003 were $316.9 million, an 18.3% increase from the prior year. Six mall properties acquired from joint venture partners in 2003 and 2002 increased revenues by $41.0 million. The Company's acquisitions of WestShore Plaza and Eastland Mall (Ohio) generated revenue growth of $7.4 million in 2003 and lease termination fees received from tenants were $6.6 million in 2003 as compared to $2.1 million in 2002. Offsetting these revenue gains were $1.8 million fewer proceeds from outparcel sales in 2003 as compared to 2002 and a $3.5 million reduction in comparable revenues from tenant reimbursements. -- FFO for the quarter increased 84.2% from $16.0 million in the fourth quarter of 2002 to $29.5 million. Fourth quarter FFO included a $2.5 million increase in operating income due to the inclusion of four joint venture properties the Company acquired in 2003 or during the fourth quarter of 2002. Also included is a $1.2 million increase for the operating results of WestShore Plaza and Eastland Mall (Ohio). The Company also incurred $9.3 million less in costs associated with the early extinguishment of debt in the fourth quarter of 2003 as compared to the fourth quarter of 2002. Fourth quarter 2002 FFO has been restated to reflect early extinguishment of debt costs as a component of interest expense in accordance with a new accounting standard, SFAS No. 145. Prior to January 1, 2003, these costs were reflected as extraordinary items and added back to net income in computing FFO. -- FFO for 2003 increased 4.7% to $81.4 million. FFO for 2003 included full year operating results of $4.5 million for four properties acquired from joint venture partners in the later half of 2002 as well as the operating results of two properties acquired from joint venture partners in 2003. Also favorably impacting 2003 FFO was the reduction in debt extinguishment costs, from $11.3 million in 2002 to $825,900 in 2003. The acquisition of WestShore Plaza and Eastland Mall (Ohio) favorably impacted 2003 FFO by $1.5 million or $.04 per share. Offsetting these increases was $14.1 million of charges recorded by the Company in the first and second quarters of 2003 for bankrupt tenants and prior years' estimated recoveries of property expenses. -- Occupancy for mall stores at December 31, 2003 was 89.6%. Excluding the 2003 acquisitions of WestShore Plaza and Eastland Mall (Ohio), comparable mall store occupancy was 90.2% at December 31, 2003, consistent with mall store occupancy of 90.1% at December 31, 2002. -- Mall store average rents were $23.89 per square foot at December 31, 2003, an increase of 2.9% from December 31, 2002. Excluding the 2003 acquisitions of WestShore Plaza and Eastland (Ohio), comparable mall store average rents per square foot increased 1.4% to $23.54 on a year- over-year basis. -- Same mall net operating income improved in the fourth quarter of 2003 by 2.9% and for the year was unchanged from 2002. Same store mall revenue decreased 1.2% in the fourth quarter of 2003 and 1.2% on a year-over-year basis, primarily due to lower lease termination fees received from tenants. -- In the fourth quarter of 2003 the Company sold two community centers for $5.35 million. The cash proceeds from these sales was used to pay down debt. Total asset sales in 2003 were $24.8 million, producing a net loss of $1.8 million. Assets sold during 2003 included five community centers and one vacant anchor at a community center. In addition, four outparcels were sold in 2003 for $2.5 million. Asset sales in 2002 of $274.7 million included 27 community centers and three single tenant assets, generating a net gain of $15.8 million. Seven outparcels were sold in 2002 for $4.3 million. -- Debt-to-total-market capitalization at December 31, 2003 was 55.5% based on the common share closing price of $22.38, compared to 57.9% at December 31, 2002. Fixed rate debt represented 84.1% of total Company debt at December 31, 2003. New Corporate Credit Facility On October 17, 2003 the Company replaced its existing secured credit facility that was scheduled to mature on January 31, 2004 with a new $150 million three-year secured bank credit facility maturing on October 16, 2006. The interest rate on the new credit facility ranges from 1.15% to 1.70% over LIBOR per annum depending upon the Company's ratio of debt to total asset value. The interest rate on the previous credit facility ranged from 1.60% to 1.90% over LIBOR per annum. The new credit facility is secured by a mortgage on three malls and eleven community centers. At December 31, 2003 the outstanding balance on the new credit facility was $80.8 million. Acquisitions On December 22, 2003, the Company acquired Eastland Mall, a 940,000 square foot enclosed mall located in Columbus, Ohio for $29.65 million. The acquisition was funded with a new $24.0 million three-year bank loan bearing interest at LIBOR plus 2.00% per annum and approximately $5.0 million in borrowings under the Company's credit facility. On January 5, 2004, the Company acquired for $56.5 million the remaining joint venture interests in Polaris Fashion Place, a 1.6 million square foot upscale mall, and in Polaris Towne Center, a 443,165 square foot community center, both located in Columbus, Ohio. The purchase (including loan fees) was funded with a new $36.5 million loan secured by the equity interests in Polaris Fashion Place, the issuance of 594,342 operating partnership units and approximately $6.6 million in additional borrowings on the Company's credit facility. The new debt matures in one year and bears interest at a rate of LIBOR plus 3.00% per annum. With the acquisition of these two joint ventures, the Company fully owns all of its properties. Preferred Stock Issuance On January 23, 2004, the Company announced a $150 million public offering of 6,000,000 shares of 8.125% Series G Cumulative Redeemable Preferred Shares of Beneficial Interest at a price of $25.00 per share. The Company also announced that it will redeem all of its outstanding 9.25% Series B Cumulative Redeemable Preferred Shares of Beneficial Interest on February 27, 2004. The net proceeds of the Series G preferred share offering of approximately $144.9 million will be used to repay $16.9 million in subordinated mortgage debt relating to the Company's Great Mall of the Great Plains located in Olathe, Kansas and to fund the redemption of the Company's outstanding Series B Preferred Shares. Outlook For the full year of 2004, the Company estimates FFO per share to be in the range of $2.28 to $2.34 per share and earnings per share to be in the range of $0.41 to $0.47 per share. This range incorporates the Company's January 2004 acquisitions and no additional acquisitions in 2004, the issuance of Series G Preferred Shares and the full redemption of Series B Preferred Shares, discussed earlier. The Series B redemption creates a one- time, non- cash charge of $4.8 million or $0.12 per share in the first quarter of 2004. This charge represents costs that were incurred and reported as an adjustment to Paid In Capital as required under GAAP at the time of the initial issuance of the Series B shares in 1997. Under the current NAREIT definition, this is not an item that can be added back to net income in computing FFO. Accordingly, the range includes the $0.12 per share charge as a reduction in 2004 FFO. Funds From Operations and Net Operating Income This press release contains certain non-Generally Accepted Accounting Principles (GAAP) financial measures and other terms. The Company's definition and calculation of these non-GAAP financial measures and other terms may differ from the definitions and methodologies used by other REITs and, accordingly, may not be comparable. The non-GAAP financial measures referred to below should not be considered as alternatives to net income or other GAAP measures as indicators of our performance. Funds from Operations is used by industry analysts and investors as a supplemental operating performance measure of an equity real estate investment trust ("REIT"). The Company uses FFO in addition to net income to report operating results. FFO is an industry standard for evaluating operating performance defined as net income, plus real estate depreciation, less gains or losses from sales of depreciable property, extraordinary items and the cumulative effect of accounting changes. Reconciliations of non- GAAP financial measures to net income available to common shareholders are included in the Operating Results section of this press release. Net Operating Income (NOI) is used by industry analysts, investors and Company management to measure operating performance of the Company's properties. NOI represents total property revenues less property operating and maintenance expenses. Accordingly, NOI excludes certain expenses included in the determination of net income such as property management and other indirect operating expenses, interest expense and depreciation and amortization expense. These items are excluded from NOI in order to provide results that are more closely related to a property's results of operations. In addition the Company's computation of same mall NOI excludes property bad debt expense and termination income. Certain items, such as interest expense, while included in FFO and net income, do not affect the operating performance of a real estate asset and are often incurred at the corporate level as opposed to the property level. As a result, management uses only those income and expense items that are incurred at the property level to evaluate a property's performance. Real estate asset depreciation and amortization is excluded from NOI for the same reasons that it is excluded from FFO pursuant to NAREIT's definition. Glimcher Realty Trust, a real estate investment trust, is a recognized leader in the ownership, management, acquisition and development of enclosed regional and super-regional malls and community shopping centers. At December 31, 2003, the Company's mall portfolio GLA totaled approximately 21.8 million square feet. Additionally, the community center and single tenant portfolio totaled approximately 5.2 million square feet. Currently, Glimcher owns a total of 70 properties in 22 states aggregating approximately 27.0 million square feet of GLA. Glimcher Realty Trust's common shares are listed on the New York Stock Exchange under the symbol "GRT." Glimcher Realty Trust's Series B and Series F preferred shares are listed on the New York Stock Exchange under the symbols "GRT-B" and "GRT-F," respectively. Visit Glimcher at http://www.glimcher.com/ * * * As reported in the January 27, 2004 edition of The Troubled Company Reporter, Standard & Poor's Ratings Services assigned its 'B' rating to Glimcher Realty Trust's $150 million 8.125% series G preferred stock issuance. At the same time, Standard & Poor's affirmed its 'BB' corporate credit rating on Glimcher and its 'B' preferred stock rating. The affirmation impacts $188 million of preferred stock outstanding. The outlook is stable. "The assigned rating acknowledges Glimcher 's below-average business position and its relatively aggressive financial profile," said credit analyst Elizabeth Campbell. "The ratings are supported by a relatively well-occupied and profitable (but comparatively smaller) portfolio, which generates stable, predictable cash flow from a diverse and moderately creditworthy tenant base. Glimcher management has been successful in buying out its joint venture partners' interests in seven mall properties, which helps leverage the company's existing operating platform and reduce complexity. The company now wholly-owns all of its 25 mall properties. However, these strengths are offset by generally higher leverage and historically high bank line usage, a mostly encumbered portfolio and weak coverage of total obligations (including the common dividend), and vacancy issues in its non- core community center portfolio." GOLD KIST: S&P Assigns B+ Senior Secured Bank Loan Rating --------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'B+' senior secured bank loan rating on the proposed amendment and restatement to poultry cooperative Gold Kist Inc.'s existing $125 million senior secured revolving credit facility due 2007. At the same time, Standard & Poor's assigned its recovery rating of '1' to the bank credit facility. The 'B+' rating is one notch higher than the corporate credit rating on Gold Kist; this and the '1' recovery rating indicate a high expectation of full recovery of principal in the event of a default. Standard & Poor's also assigned its 'B-' senior unsecured debt rating to Gold Kist's proposed $200 million senior notes due 2014. In addition, Standard & Poor's assigned its 'B' corporate credit rating. The senior unsecured rating is notched down from the corporate credit rating because of the amount of secured debt. There is $125 million under the senior secured revolving credit facility and about $100 million of other debt instruments and obligations outstanding that share in the bank collateral under an inter-creditor agreement. Proceeds from these issues will be used to refinance the company's existing senior credit facilities and repay certain term loans. The outlook is stable. Pro forma for the refinancing, total rated debt on Atlanta, Georgia-based Gold Kist is about $325 million. "The ratings on Gold Kist reflect the inherent cyclical nature and seasonality of the cooperative's agricultural-based poultry business, low-margins, high debt levels, some geographic and customer concentration, and moderate discretionary cash flow. These factors are somewhat mitigated by the cooperative's position as the third-largest poultry producer in this consolidating industry, distribution through all channels--retail, food service, and industrial--and a modest debt maturity schedule," said credit analyst Jayne M. Ross. Gold Kist is a farmer-owned agricultural marketing cooperative with vertically integrated poultry operations principally located in the southeastern part of the U.S. with about a 9% market share. The company markets a wide variety of poultry products under its own brands and private label. In addition, the cooperative has a small pork production operation in the Southeast and has a joint venture arrangement with Land O'Lakes Inc. in the form of a limited liability hog sales and production company. GOODYEAR: Steelworkers Press for Investigation on Tire Production ----------------------------------------------------------------- The United Steelworkers of America (USWA) demanded an investigation into the possible violation of its contract, which calls for new products developed for sale in North America to be manufactured in Steelworker-represented plants. Earlier this month, Goodyear announced that the new Assurance tire line would be produced at its non-union facility in Lawton, Oklahoma. "The company's announcement significantly undercuts the goodwill and cooperation that is the basis of the contract ratified by our members last September," said USWA International vice president Andrew V. Palm. "We are deeply concerned that this announcement came without any discussion or notice, particularly given our patience and understanding regarding the company's slow progress on their promised financial restructuring." "While we remain committed to working with the Company, we will not allow it to become a one-way street. This Company has some serious explaining to do to its employees and their Union." The Protected Plant provisions of the contract guarantees "meaningful and significant first consideration and preference" to twelve USWA facilities for producing new products developed for sale in North America. These provisions were critical features of the recently negotiated agreement which provided USWA members with a network of job security measures in exchange for providing the company with the short-term flexibility it needed to get its operations back on track. The contract also requires Goodyear to reduce its debt obligations and refinance its debt by December 31, 2003, with the Union holding the right to strike if the refinancing is not completed. "We are demanding an immediate and thorough investigation of the company's failure to commit to producing this tire line in one of our facilities," said Ron Hoover, USWA Contract Coordinator. "And we will continue to closely monitor all developments relating to the investigations of the Company's accounting irregularities. The USWA represents 19,000 workers at 13 facilities throughout the U.S. They are located in Akron, Ohio; Buffalo, New York; Danville, Virginia; Fayetteville, North Carolina; Freeport, Illinois; Gadsden, Alabama; Lincoln Nebraska; Marysville, Ohio; St. Marys, Ohio; Sun Prairie, Wisconsin; Topeka, Kansas; Tyler Texas and Union City, Tennessee. All the facilities except the Tyler plant were designated as protected plants in the contract. The Tyler facility was granted partial protected status, with the opportunity to obtain full- protected status upon attaining certain goals. As part of the agreement, the Huntsville, Alabama facility was not granted protected status and was closed in December 2003. Protected Plant status guarantees among other things, no closures during the three-year contract; minimum staffing levels; import restrictions; capital investments commitments as well as "meaningful and significant first consideration and preference" for new products developed for sale in the North America market. The USWA represents 1.2 million active and retired members in the U.S. and Canada. * * * As reported in the Troubled Company Reporter's February 17, 2004 edition, Fitch Ratings downgraded Goodyear Tire & Rubber Company's senior unsecured rating to 'CCC+' from 'B' and the senior secured bank facilities to 'B' from 'B+' The Rating Outlook remains Negative. Approximately $5 billion of debt(as of Sept. 30, 2003) is affected. The rating action is based on lack of resolution in the investigation and review of the company's accounting practices and certain reported financial statements. An informal inquiry by the Securities and Exchange Commission prompted by two previous company announcements (December and October 2003) of accounting problems has now escalated into a formal SEC investigation. These latest issues have further delayed the filing of timely financial statements and could hinder Goodyear's access to credit facilities and external capital markets. Access to significant external capital is required in order to meet heavy debt maturities, pension funding requirements, and other cash needs over the next few years. The delays and questions surrounding the company's financial statements have precluded the ability to track the progress of the company's critical cost restructuring program. Furthermore, Goodyear appears not to have met the terms of its latest union contract which required the company to raise external financing prior to yearend 2003. The downgrade also reflects the deterioration in the relative position of the unsecured creditors versus senior creditors due to the layering on of additional secured bank facility and the likely granting of additional security in pending and future transactions. Even as Goodyear is currently in negotiations with its banks to amend and expand its existing $1.3 billion senior secured asset- backed credit facilities (due March 2006) by $650 million of additional term loans, a material charge in its equity account resulting from the accounting problems could breach existing loan covenants. Goodyear had to meet a minimum consolidated net worth requirement of $2.8 billion for quarters ending in 2003. At Sept. 30, 2003, Goodyear's consolidated net worth amounted to $3.1 billion. A consolidated net loss in the fourth quarter plus a charge to equity accounts to reconcile accounts could potentially breach the minimum net worth threshold. GS MORTGAGE: S&P Ups and Affirms Series 1999-C1 Note Ratings ------------------------------------------------------------ Standard & Poor's Ratings Services raised its ratings on two classes of GS Mortgage Securities Corp. II's commercial mortgage pass-through certificates from series 1999-C1. Concurrently, the ratings on eight classes from the same transaction are affirmed. The raised ratings reflect the successful resolution of several specially serviced assets. The affirmed ratings reflect adequate levels of credit enhancement for the respective ratings. As of Jan. 20, 2004, the trust collateral consisted of 285 loans with an aggregate outstanding principal balance of $794.1 million, down from 304 loans totaling $856.7 million at issuance. The master servicer, GMAC Commercial Mortgage Corp., provided full- year 2002 net cash flow debt service coverage figures for 89.3% of the pool. Based on this information, Standard & Poor's calculated a weighted-average DSC of 1.47x (which excludes three defeased loans), up from 1.44x at issuance. Additionally, Standard & Poor's received 2003 year-to-date financial data for 220 loans (74.1% by balance). Analysis of this data yields a weighted average YTD DSC of 1.48x for 2003. The trust has experienced seven realized losses to date, amounting to $6.9 million (0.8%), and has six loans with appraisal reduction amounts (ARA) aggregating to $4.7 million (0.6%). The top 10 loans have an aggregate outstanding balance of $132.9 million (16.7%) and reported a 2002 weighted average DSC of 1.09x, down from 1.39x at issuance. The 2002 DSC figure excludes three loans for which financial information is still unavailable. Partial-year 2003 financial data was available for six of the top 10 loans and financial performance has been comparable or lower when compared to 2002 DSC figures. As part of its surveillance review, Standard & Poor's reviewed recent property inspections for assets underlying the top 10 loans. The properties that secure nine of top 10 loans were characterized as "excellent" or "good." The sole exception, the Atrium Hotel, was characterized as "fair." Three of the top 10 loans are specially serviced, two loans are on GMACCM's watchlist, and one loan, secured by Bruckner Nursing Home, has not reported full-year financial data since 1999. There are 16 loans with an outstanding balance of $66.8 million (8.4%) that are with the special servicer, Lennar Partners Inc. This includes three of the top 10 loans. The third-largest loan in the trust is secured by a 221-room luxury hotel in Chicago, Illinois, and has an outstanding balance of $17.5 million (2.2%). The borrower is delinquent in funding the furniture, fixtures, and equipment (FF&E) reserve and has requested a downward adjustment to this $10,000 monthly reserve requirement. The loan is current on its principal and interest payments, but has been specially serviced several times in the past three years. The fourth-largest loan in the portfolio has an outstanding balance of $16.5 million (2.1%) and is secured by a 380,000-sq.-ft. retail property in Roswell, Georgia. This asset has been with Lennar since 2001 due to a payment default. Kmart, which previously occupied 90,000-sq.- ft. and paid $2 per sq.-ft., vacated its space in 2003. In August 2003, the borrower entered into a forbearance agreement in which it agreed to, among other things, provide the lender $400,000 to fund capital expenditures associated with re-leasing the vacant space. The borrower also agreed to repay past due P&I and escrow obligations by June 2004, a commitment that it fulfilled in November 2003. The lender has agreed to waive other obligations and fees amounting to $1.2 million if the loan is repaid by Dec. 31, 2004. Hobby Lobby has signed a lease to occupy 65,000- sq.-ft. of the space previously occupied by Kmart and will pay $6 per sq.-ft. As of Jan. 1, 2004, the property is 100% leased. The seventh-largest loan in the trust collateral is secured by a 214- room hotel in Irvine, California, which has an outstanding balance of $10.7 million (1.3%). The borrower has entered a forbearance agreement by which it is required to fund all arrearages via six equal payments beginning in July 2004. Additionally, the borrower contributed $100,000 toward these obligations when the forbearance agreement was signed and provided a personal guarantee for all arrearages. The borrower's monthly P&I obligations have not been modified and the borrower remains current on these payments. Standard & Poor's anticipates minimal losses, if any, on these three assets. The other 13 loans that are in special servicing have an aggregate balance of $22.2 million (2.8%). Standard & Poor's expects substantial losses on the three assets in Kentucky that are in special servicing as well as for several, but not all, assets for which there is a corresponding ARA. GMACCM's watchlist consists of 71 loans with an aggregate outstanding balance of $198.8 million (25.0%), and includes two of the top 10 loans in the trust collateral. The second-largest loan has an outstanding balance of $17.7 million (2.2%) and is secured by a 746-unit multifamily complex in Erie, Pennsylvania. This asset appears on the watchlist because it reported a DSC of 1.04x in 2002, a figure that has not subsequently improved. In fact, this asset would have reported a DSC of less than 1.10x since 2000 if there had been a standard assumption for capital expenditures (currently estimated to be $300 per unit). The ninth-largest loan in the pool has an outstanding principal balance of $10.2 million (1.3%) and is secured by a 108,000-sq.-ft. office building in Bethesda, Md. This asset reported a third quarter 2003 DSC of 1.22x and 78.2% occupancy, down from 2.12x and 99.0%, respectively, in 2001. 2002 financial data for this asset is still unavailable. Two of the top five tenants in this building are on month-to-month leases, while the second-largest tenant's lease expires in June 2005. The 69 other assets appear on the watchlist primarily due to DSC or occupancy issues. Additionally, 46.8% of the watchlist by balance (33 by loan count) comprises multifamily assets. The trust collateral is located across 37 states, and only Texas (13.0%) and California (10.0%) domicile more than 10.0% of the pool balance. Property concentrations are found in multifamily (32.3%), retail (25.0%), and office (16.6%) assets. Standard & Poor's stressed the specially serviced loans and the loans that appear on the watchlist, when appropriate, in its analysis. The resultant credit enhancement levels support the raised and affirmed ratings. RATINGS RAISED GS Mortgage Securities Corp. II Commercial mortgage pass-through certs series 1999-C1 Rating Class To From Credit Enhancement B AAA AA+ 27.74% C AA- A+ 22.13% RATINGS AFFIRMED GS Mortgage Securities Corp. II Commercial mortgage pass-through certs series 1999-C1 Class Rating Credit Enhancement A-1 AAA 33.07% A-2 AAA 33.07% D BBB 14.85% E BBB- 13.16% F B+ 7.28% G CCC+ 3.63% H CCC- 2.79% X AAA - GUESS? INC: Reports Improved 4th Quarter and FY 2003 Results ------------------------------------------------------------ Guess?, Inc. (NYSE: GES) reported financial results for the fourth quarter and fiscal year ended December 31, 2003. Fourth Quarter Results For the fourth quarter of 2003, the Company reported net earnings of $11.8 million, or diluted earnings of $0.27 per share, compared to a net loss of $4.6 million, or a diluted loss of $0.11 per share, for the fourth quarter of 2002. The 2003 fourth quarter results include impairment charges of $1.6 million, or $0.9 million net of tax, or $0.02 per diluted share, of which $1.2 million relate to the Company's fourth quarter decision to close its 10 underperforming kids' stores. The 2002 fourth quarter results include restructuring, impairment and severance charges of $8.5 million, or $6.1 million net of tax, or $0.14 per diluted share, associated with various actions the Company took to lower future operating costs. Carlos Alberini, President and Chief Operating Officer, commented, "Guess? capped off 2003 with an excellent performance in the fourth quarter. Results were driven by higher sales and a significant gross margin increase in the period coupled with continued cost control, which resulted in an SG&A rate improvement of over 500 basis points. Our retail segment generated the greatest gains, with operating income up by $15.4 million, or 160.4%, a testament to the leverage of our retail business model and its significant opportunity for growth. We have entered 2004 with an improved balance sheet. Cash and restricted cash at year- end 2003 totaled $71.7 million, inventories were down 12.7% from a year ago, and total debt was 16.6% lower than the prior year-end. We have strong business momentum and look forward to building on our progress in the future." Total net revenue for the fourth quarter of 2003 increased 19.1% to $199.3 million from $167.4 million in the fourth quarter of 2002. The Company's retail stores, including those in Canada, generated revenues of $154.2 million in the 2003 fourth quarter, a 17.7% increase from $130.9 million reported in the same period a year ago. Comparable store sales increased 11.7% during the fourth quarter of 2003 from the year-ago period. Net revenue from the Company's wholesale segment increased 29.7% to $34.2 million in the fourth quarter of 2003 from $26.4 million in the year-ago period. Licensing segment net revenue increased 8.3% to $10.9 million in the 2003 fourth quarter from $10.1 million in the fourth quarter last year. Full Year 2003 Results For the full year ended December 31, 2003, the Company reported net earnings of $7.3 million, or diluted earnings of $0.17 per share, versus a net loss of $11.3 million, or a diluted loss of $0.26 per share, in the comparable 2002 period. The 2003 results include impairment and severance charges of $2.4 million, or $1.4 million net of tax, or $0.03 per diluted share. The 2002 results include litigation settlement proceeds of $4.3 million, or $2.9 million net of tax, or $0.07 per diluted share, and restructuring, impairment and severance charges of $9.2 million, or $6.2 million net of tax, or $0.14 per diluted share. Total net revenue for 2003 increased 9.2% to $636.6 million from $583.1 million in 2002. The Company's retail stores, including those in Canada, generated revenue of $447.7 million for 2003, an increase of 16.4% from $384.5 million for last year. Comparable store sales increased 9.3% for the 2003 year. Net revenue from the Company's wholesale segment decreased 6.6% to $149.1 million in 2003 from $159.6 million in 2002. Licensing segment net revenue for 2003 increased 1.8% to $39.8 million from $39.0 million for the prior year. Guess?, Inc. (S&P, BB- Corporate Credit Rating, Negative) designs, markets, distributes and licenses one of the world's leading lifestyle collections of contemporary apparel, accessories and related consumer products. HERVAL CONSTRUCT: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Herval Construction & Masonry Corp. 174 Passaic Avenue Fairfield, New Jersey 07004 Bankruptcy Case No.: 04-15203 Type of Business: The Debtor provides construction and renovation services. Chapter 11 Petition Date: February 18, 2004 Court: District of New Jersey (Newark) Judge: Donald H. Steckroth Debtor's Counsel: Howard S. Greenberg, Esq. Ravin Greenberg, PC 101 Eisenhower Parkway Roseland, NJ 07068 Tel: 973-226-1500 Estimated Assets: $100,000 to $500,000 Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ E.L. Congdon & Sons Lumber Co. $286,519 17 Park Avenue West Orange, NJ 07052 SIBCO Electrical Contracting $132,427 Birch Lumber Company, Inc. $107,668 Pella Windows & Doors $73,654 American Express $67,338 Valley National Bank $65,267 Hardware Designs, Inc. $39,801 Nodoro Plumbing & Heating $37,006 Platinum Plus For Business $34,936 Devine Roofing Co. $33,289 Cananwill, Inc. $32,928 Roco-Drywall $29,800 J.V. Woodworking $22,500 Structural Stone Co., Inc. $18,390 Waste Management $14,932 Heines Insulation Co., Inc. $14,390 Extend Inds. $12,146 Sunrise Nurseries $11,915 Columbian Iron Works, Inc. $11,850 Home Depot Credit Services $10,674 HOMESTEADS COMMUNITY: Section 341(a) Meeting Fixed for March 8 -------------------------------------------------------------- The United States Trustee will convene a meeting of Homesteads Community at Newtown, LLC's creditors at 12:00 p.m., on March 8, 2004, to be held in the Bankruptcy Meeting Room, One Century Tower, 265 Church Street, Suite 1104, New Haven, Connecticut 06510-7017. This is the first meeting of creditors required under 11 U.S.C. Sec. 341(a) in all bankruptcy cases. All creditors are invited, but not required, to attend. This Meeting of Creditors offers the one opportunity in a bankruptcy proceeding for creditors to question a responsible office of the Debtor under oath about the company's financial affairs and operations that would be of interest to the general body of creditors. Headquartered in Guilford, Connecticut, Homesteads Community at Newtown, LLC filed for chapter 11 protection on February 2, 2004 (Bankr. D. Conn. Case No. 04-30417). Patrick W. Boatman, Esq., at Boatman, Boscarino, Grasso & Twachtman represents the Debtor in its restructuring efforts. When the company filed for protection from its creditors, it listed $4,275,000 in total assets and $9,332,446 in total debts. INTEGRATED HEALTH: Court Approves Settlement Pact with Horizon -------------------------------------------------------------- Horizon/CMS Healthcare, formerly known as Horizon Healthcare Corporation, and its parent company, HealthSouth Corporation, filed 47 proofs of claim in these Chapter 11 Cases. The Claims relate primarily to claimed adjustments in the purchase price and claimed breaches of a Purchase and Sale Agreement, dated November 3, 1997, between Integrated Health Services, Inc. and Horizon et al. Pursuant to Sale Agreement, IHS purchased certain healthcare businesses owned by Horizon. The Debtors objected to 46 of Horizon's Claims. By a Court- approved stipulation between the Debtors and Horizon et al., 34 of the Claims were disallowed and expunged, leaving 13 claims on file: Claim No. Claim Amount --------- ------------ 10856 $10,208,711 10855 22,803,557 10857 8,244,797 10858 16,787,457 10854 15,189,519 10863 30,620,000 10861 600,000 10420 121,888,881 10862 1,500,000 10859 1,000,000 10864 4,934,840 753 550,000 13108 6,527 IHS Liquidating LLC notes that the Remaining Claims, net of duplicates, assert an aggregate amount of approximately $127,700,000: A. Rejection Damages Horizon et al. seek $73,234,041 in damages arising from the Debtors' rejection of four management agreements pursuant to which the Debtors operated five facilities in North Andover, Brighton, Hyannis, Middleboro and Worcester, Massachusetts -- the Greenery Facilities -- under Horizon et al.'s licenses as provided by the terms of acquisition. Edmond L. Morton, Esq., at Young Conaway Stargatt & Taylor, in Wilmington, Delaware, relates that the Debtors submitted an application for licensure of the Greenery Facilities in March 1998, approximately two and a half months after the December 31, 1997 closing. However, the Massachusetts Department of Public Health later rejected the application as incomplete. On July 16, 1998, the Debtors resubmitted their application. The Public Health Department again rejected it. In November 1998, the Debtors retained new counsel to pursue licensure, but were unable to complete the application process. The application was abandoned in late 1999 due to the Debtors' worsening financial condition. Mr. Morton contends that the Debtors acted diligently under the circumstances and therefore are not liable for the claimed rejection damages. Horizon et al. question the Debtors' diligence and assert that they were able to obtain licensure not long before the Debtors' attempt and did so over the course of an application process that spanned no more than several months. B. Indemnification and Defense Costs Horizon et al. seek indemnification and defense costs under the Purchase and Sale Agreement with respect to regulatory lawsuits with the Commonwealth of Massachusetts and the State of Michigan and two personal injury actions pending in State Courts in North Carolina and Nevada, in the aggregate amount of $13,500,000. The Debtors dispute these claims because the claims either have been released, have been satisfied or are premature. C. Judgment Claim in the Southern Oaks Litigation Horizon et al. assert a claim for $30,620,000 with respect to a judgment against them, affirmed on appeal, in litigation with the owner of the Southern Oaks Facility, which litigation the Debtors assumed responsibility for under the terms of the Purchase and Sale Agreement. The Debtors believe the Claim to be overstated by approximately $7,000,000. The Debtors further believe that they have a defense to the claim under Section 509(c) of the Bankruptcy Code. D. Additional Rejection Damages and Indemnification Horizon et al. seek additional rejection damages and indemnification for $6,500,000, with respect to administrative fines relating to the Royal Oaks facility and other unidentified facilities and $3,934,840 due to an alleged breach of certain contractual obligations to lease and build certain facilities in Nevada. According to Mr. Villoch, Horizon et al. provided insufficient information for the Debtors to identify any corresponding liabilities. The Debtors, IHS Liquidating and Horizon et al. negotiated a settlement of all disputes between them, including those relating to the Debtors' Objection as it pertains to the Remaining Claims. The salient terms of the Settlement Agreement are: (a) Claim No. 10420 for $121,888,881 filed on behalf of HealthSouth will be irrevocably reduced, fixed and classified as an allowed unsecured non-priority claim for $30,000,000 to be treated as a Class 6 Claim in accordance with the IHS Plan; (b) Each of the Remaining Claim Nos. 10856, 10855, 10857, 10858, 10854, 10863, 10861, 10862, 10859, 10864, 753, 13108, and any other claims filed in these Chapter 11 cases by or on behalf of or transferred to or held by any and all of Horizon et al. will be disallowed and expunged with prejudice; and (c) IHS Liquidating and the Debtors, on the one hand, and Horizon et al., on the other hand, will exchange releases. Mr. Morton points out that the Settlement Agreement will eliminate tens of millions of dollars of potential prepetition liability. The Settlement Agreement also allows IHS Liquidating to avoid disruption and distraction of defending complex litigations potentially in multiple courts and further avoid administrative costs and the uncertain outcomes of litigations. At the Debtors' request, the Court approved the Settlement Agreement. Headquartered in Owings Mills, Maryland, Integrated Health Services, Inc. -- http://www.ihs-inc.com/-- IHS operates local and regional networks that provide post-acute care from 1,500 locations in 47 states. The Company filed for chapter 11 protection on February 2, 2000 (Bankr. Del. Case No. 00-00389). Michael J. Crames, Esq., Arthur Steinberg, Esq., and Mark D. Rosenberg, Esq., at Kaye, Scholer, Fierman, Hays & Handler, LLP, represent the Debtors in their restructuring efforts. On September 30, 1999, the Debtors listed $3,595,614,000 in consolidated assets and $4,123,876,000 in consolidated debts. (Integrated Health Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) INTERNET CAPITAL: December 2003 Deficit Narrows to $19 Million -------------------------------------------------------------- Internet Capital Group, Inc. (Nasdaq: ICGE) reported its results for the fourth quarter and fiscal year ended December 31, 2003. "The past year was pivotal for ICG in terms of progress made against our primary goals of improving our financial position and driving partner company progress," said Walter Buckley, ICG's chairman and CEO. "Considering our current liquidity position and refinancing opportunities, we are confident that we will satisfy our convertible debt obligations at or prior to maturity. This will enable us to fully focus our resources on building our key partner companies, which we believe will result in long-term stockholder value." Retirement of Convertible Notes & Liquidity As of February 18, 2004, cash on an ICG corporate basis totaled $48.6 million and the market value of ICG's holdings in its four public partner companies was approximately $39 million, while the outstanding balance of the Company's 5.5% convertible notes was $51.9 million. Common shares outstanding total 718.1 million as of February 18, 2004. ICG Financial Results ICG's financial results have been adjusted for all prior periods to reflect the fourth quarter disposition of the assets of One Coast Network ("OCN"). ICG reported consolidated GAAP revenue of $16.5 million and a net loss of $(56.4) million, or $(0.15) per share, for the fourth quarter of 2003. This compares to consolidated GAAP revenue of $24.0 million and a net loss of $(40.3) million, or $(0.15) per share, for the comparable 2002 period. The decrease in revenue is due to lower software and services revenue and the deconsolidation of two partner companies. ICG reported consolidated GAAP revenue of $70 million and a net loss for the full year 2003 of $(135.9) million compared to consolidated GAAP revenue of $79.5 million and a net loss of $(102.2) million for the corresponding 2002 period. Results for the fourth quarter of 2003 include $43 million of unusual charges, which primarily relate to the accounting for the debt-for-equity exchanges and impairment charges, compared to $14 million reported for the corresponding 2002 period. For the full year 2003 period, unusual charges increased ICG's net loss by $67 million, while in 2002, the Company benefited from net gains of $69 million. A schedule of these unusual charges is included as an attachment to this release. "Excluding the effects of the debt-for-equity exchanges and other unusual items, our losses continue to narrow," commented Anthony Dolanski, chief financial officer of ICG. Internet Capital Group, Inc.'s December 31,2003 balance sheet shows a stockholders' deficit of $19,280,000 compared to $51,646,000 the previous year Private Core Company Results In an effort to illustrate macro trends within its private Core companies, ICG provides an aggregation of revenue and net loss figures reflecting 100% of the revenue and Aggregate EBITDA for these companies. The Company has consistently defined Aggregate EBITDA for these purposes as earnings/(losses) before interest, tax, depreciation, amortization and excluding stock-based compensation, restructuring charges and impairments ("Aggregate EBITDA"). ICG does not own its Core companies in their entirety and, therefore, this information should be considered in this context. Aggregate revenue and Aggregate EBITDA, in this context, represent certain of the financial measures used by the Company's management to evaluate the performance for Core companies. The Company's management believes these non-GAAP financial measures provide useful information to investors, potential investors, securities analysts and others so each group can evaluate private Core companies' current and future prospects in a similar manner as the Company's management. A reconciliation to the most comparable GAAP measure is included as an attachment to this release. OCN has been excluded from these results. ICG's private Core companies reported positive Aggregate EBITDA of $8.6 million for the quarter as compared with a $2.9 million positive Aggregate EBITDA in the third quarter of 2003 and a $(0.8) million Aggregate EBITDA loss in the fourth quarter of 2002. Aggregate revenue for ICG's private Core companies was $95 million for the quarter, or a 6% increase over aggregate revenue of $90 million during the third quarter of 2003, and a 10% increase over the fourth quarter of 2002 revenue of $86 million. For the quarter, ICG's private Core companies also reported an aggregate $(7.7) million net loss as compared with a $(14.3) million net loss in the third quarter of 2003 and a $(18.9) million net loss in the fourth quarter of 2002. Looking ahead, ICG expects that private Core company overall results for the full year 2004, including both revenues and earnings, will be an improvement over those of 2003. Historically, first quarter results are lower than the previous fourth quarter results. 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, Pennsylvania. ISLE OF CAPRI: Sells Senior Subordinated Notes in Private Offering ------------------------------------------------------------------ Isle of Capri Casinos, Inc. (Nasdaq: ISLE) announced that it has agreed to sell $500 million in aggregate principal amount of its 7.0% senior subordinated notes due 2014. Isle of Capri Casinos, Inc. intends to complete the transaction on or about March 3, 2004. The notes are being sold in the United States only to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, and to non-U.S. persons in accordance with Regulation S under the Securities Act. The notes have not been registered under the Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements. Isle of Capri Casinos, Inc. intends to use the net proceeds of this sale to fund its offer to purchase $390 million in aggregate principal amount of its 8 3/4% senior subordinated notes due 2009 and the consent payment provided in the related consent solicitation, repay a portion of its borrowings under its senior secured credit facility and for general corporate purposes. No assurance can be given that the sale will be completed, and the sale is subject to market and other customary conditions. Isle of Capri Casinos, Inc. (S&P, B+ Corporate Credit Rating, Stable) owns and operates 17 riverboat, dockside and land-based casinos at 15 locations, including Biloxi, Vicksburg, Lula and Natchez, Mississippi; Bossier City and Lake Charles (two riverboats), Louisiana; Black Hawk (two land-based casinos) and Cripple Creek, Colorado; Bettendorf, Davenport and Marquette, Iowa; Kansas City and Boonville, Missouri; Freeport, Grand Bahama Island; and Dudley, England, UK. The company also operates Pompano Park Harness Racing Track in Pompano Beach, Florida. IW INDUSTRIES: Employing Piper Rudnick as Bankruptcy Counsel ------------------------------------------------------------ I.W. Industries, Inc., is seeking permission from the U.S. Bankruptcy Court for the Eastern District of New York to employ Piper Rudnick LLP as its bankruptcy counsel. The Debtor relates that when it became apparent that a bankruptcy filing was likely, it requested Piper Rudnick to provide advice regarding, among other things, preparation for the commencement and prosecution of a case under chapter 11 of the Bankruptcy Code. In its capacity as Debtor's counsel, Piper Rudnick will: a) advise the Debtor with respect to its powers and duties as debtor and debtor in possession in the continued management and operation of its business and property; b) attend meetings and negotiate with representatives of creditors and other parties in interest, and advise and consult on the conduct of cases, including all of the legal and administrative requirements of operating in Chapter 11; c) advise the Debtor in connection with any contemplated sales of assets or business combinations, including negotiating any asset, stock purchase, merger or joint venture agreements, formulating and implementing any bidding procedures, evaluating competing offers, drafting appropriate corporate documents with respect to the proposed sales, and counseling the Debtor in connection with the closing of any such sales; d) advise the Debtor in connection with postpetition financing and cash collateral arrangements, negotiate and draft documents relating thereto, provide advice and counsel with respect to the Debtor's prepetition financing arrangements, provide advice to the Debtor in connection with issues relating to financing and capital structure under any plan or reorganization, and negotiate and draft documents relating thereto; e) advise the Debtor on matters relating to the evaluation of the assumption or rejection of unexpired leases and executory contracts; f) advise the Debtor with respect to legal issues arising in or relating to the Debtor's ordinary course of business, including attendance at senior management meetings, meetings with the Debtor's financial and turnaround advisors, and meetings of the board of directors, advise the Debtor on employee, workers' compensation, employee benefits, labor, tax, environmental, banking, insurance, securities, corporate, business operation, contract, joint ventures, real property, press/public affairs and regulatory matters, and advise the Debtor with respect to continuing disclosure and reporting obligations, if any, under securities laws; g) take all necessary action to protect and preserve the Debtor's estate, including the prosecution of actions on its behalf, the defense of any actions commenced against the estate, any negotiation concerning litigation in which the Debtor may be involved, and the prosecution of objections to claims filed against the estate; h) prepare on behalf of the Debtor all motions, applications, answers, proposed orders, reports and papers necessary to the administration of the estate; i) negotiate and prepare on the Debtor's behalf any plan(s) of reorganization, disclosure statement(s) and related agreements and/or documents, and take any necessary action on behalf of the Debtor to obtain confirmation of such plan(s); j) attend meetings with third parties and participate in negotiations with respect to the above matters; k) appear before this Court and any appellate courts, and protect the interests of the Debtor's estate before such courts; and l) perform all other necessary legal services and provide all other necessary legal advice to the Debtor in connection with this chapter 11 case. Piper Rudnick's current hourly rates range from: Professional Hourly Rate ------------ ----------- attorneys $350 and $550 per hour paraprofessionals $80 and $175 per hour Piper Rudnick's attorneys that are likely to represent the Debtor in this case are: Attorney's Name Hourly Rate --------------- ----------- Thomas R. Califano $550 per hour Jeremy R. Johnson $380 per hour Kathryn Eiseman $350 per hour Headquartered in Melville, New York, I.W. Industries, is a leading manufacturer of brass products and machined parts such as plumbing and lightning fixtures and other industrial parts. The Company filed for chapter 11 protection on February 12, 2004 (Bankr. E.D.N.Y. Case No. 04-80852). Kathryn R. Eiseman, Esq., at Piper Rudnick LLP represents the Debtor in its restructuring efforts. When the Company filed for protection from its creditors, it listed estimated debts and assets of more than $10 million. JAG MEDIA: Will Commence Resale of Class A Common Shares -------------------------------------------------------- Jag Media Holdings Inc. has prepared a prospectus relating to the resale of: * 1,282,675 shares of its Class A common stock by Bay Point Investment Partners LLC, which received its shares from Jag Media in a private placement that closed as of June 19, 2003, * 128,267 shares of its Class A common stock by RMC 1 Capital Markets, Inc., which received its shares from Jag Media as a placement agent fee in connection with the Bay Point private placement that closed on June 19, 2003, * 35,000 shares of its Class A common stock by Kuekenhof Equity Fund L.P., which received its shares from Jag Media in a private placement that closed as of September 25, 2003. Jag Media Holdings' Class A common stock is traded on the Nasdaq OTC Bulletin Board under the symbol "JGMHA." On January 16, 2004, the closing bid price of its Class A common stock as reported on the Nasdaq OTC Bulletin Board was $0.44. The shares of Class A common stock offered involve a high degree of risk. It is likely that the Class A common stock will be subject to "penny stock" rules, which generally require that a broker or dealer approve a person's account for transactions in penny stocks and the broker or dealer receive from the investor a written agreement to the transactions setting forth the identity and quantity of the penny stock to be purchased before a trade involving a penny stock is executed. JAG Media Holdings' October 31, 2003 balance sheet shows that total liabilities exceeded its total assets by about $255,000. J.P. MORGAN: S&P Takes Rating Actions on Series 2001-CIBC1 Notes ---------------------------------------------------------------- Standard & Poor's Ratings Services lowered its ratings on three classes of J.P. Morgan Chase Commercial Mortgage Securities Corp.'s mortgage pass-through certificates from series 2001-CIBC1. At the same time, ratings are affirmed on 13 other classes from the same transaction. The lowered ratings reflect the deteriorating credit fundamentals associated with the specially serviced and watchlist loans, which comprise more than 35% of the pool by balance. The affirmed ratings reflect credit enhancement levels that adequately support the ratings under various stress scenarios. According to the special servicer, GMAC Commercial Mortgage Corp., there are eight specially serviced loans ($65.9 million, 7% of the loan pool). Six of the specially serviced loans are delinquent. The remaining loans in the pool are current. Details are as follows on the relevant specially serviced loans: -- The second-largest loan in the pool ($36.1 million) is secured by a 475,000-square-foot (sq. ft.) class B office property in Philadelphia, Pa. The loan is current and was transferred to special servicing Oct. 9, 2003 after two tenants vacated, which caused a cash flow shortage. While the building is well located in downtown Philadelphia, there are currently no prospective tenants for the vacated space. GMACCM is considering resolutions that may result in a forbearance agreement or loan payoff. The Sept. 30, 2003 net cash flow debt service coverage ratio and occupancy were 1.45x and 89%, respectively, both of which are prior to the previously mentioned loss of the two tenants. Financial information for full or interim year 2002 was not available. A recent appraisal and broker's opinion of value (BOV) indicate potential for a modest loss. -- Four specially serviced loans are more than 90 days delinquent. Based on recent appraisals and BOVs, the loans will likely result in moderate losses to the trust. First is a $6.2 million loan secured by 223-room hotel in Orlando, Fla. Area construction has disrupted the property's performance. November 2003 occupancy was 62% and revenue per available room (RevPAR) was $30.17. Second is a $5.0 million loan secured by an industrial property in Atlanta, Ga. Vacancy of 48% forced the borrower into bankruptcy. GMACCM is seeking relief from the bankruptcy stay in order to foreclose on the property. Third is a $1.8 million loan secured by a 97-room hotel in Pecos, Texas. Poor economic conditions in the area, along with increased competition, have caused occupancy to drop to 42%, as of Dec. 31, 2003. The loan was recently transferred to GMACCM for special servicing. Finally, a $1.3 million loan is secured by a 64-unit multifamily property in Lackawanna, New York. Property performance suffered after repairs to the building exterior forced several units offline. GMACCM is negotiating a possible forbearance with the borrower. The specially serviced assets also include an REO asset and a loan in foreclosure. The REO asset is a 118-unit multifamily property in Austin, Texas with a total exposure of $3.6 million. The property became REO on Feb. 3, 2004, and is a class C property, which requires significant repairs in order to bring several down units back on line. Occupancy was reported at 46% as of year-end 2003. An Oct. 6, 2003 appraisal indicated significant potential losses. The loan in foreclosure has a balance of $2.3 million and is secured by a 93-unit multifamily property in East Point, Georgia. It was transferred to special servicing Nov. 18, 2003. Poor area economics have caused occupancy to fall to 55% as of Sept. 30, 2003. A recent appraisal and BOV indicate moderate potential losses. The master servicer, also GMACCM, reported a watchlist including 45 loans, with an aggregate principal balance of $278.0 million (28%). The majority of the loans are on the watchlist due to low DSCR levels, lease expirations, and occupancy issues. The fourth-, sixth-, and ninth-largest loans in the pool, which have a cumulative principal balance of $72.0 million (7%), are all on the watchlist. The fourth-largest loan ($27.3 million) is secured by office building in Alexandria, Virginia. The major tenant at the property has a Dec. 31, 2004 lease expiration. However, all indications suggest that the lease will be renewed. The loan has historically performed at a 1.35x DSCR. The sixth- largest loan ($23.1 million) is secured by a retail center in Wallkill, New York. The loan is on the watchlist due to a Dec. 31, 2002 DSCR of 1.0x. The DSCR dropped largely due to tenant turnover and associated expenses at the property. As of Sept. 30, 2003, occupancy was 99%. A 138-room Holiday Inn in downtown Manhattan, N.Y. secures the ninth-largest loan ($21.7 million). Occupancy and DSCR have declined due to increased competition with renovated and new hotels coming on line after Sept. 11, 2001. Occupancy and DSCR have also been affected by the vacancies left by workers who resided at the property while helping with the cleanup following the Sept. 11, 2001 terrorist attacks. The Sept. 30, 2003 DSC and occupancy were 0.90x and 75%, respectively. As of Feb. 17, 2004, GMACCM reported that the trust collateral consisted of 164 loans with an outstanding principal balance of $983.9 million, down from 165 loans totaling $1,014.8 million at issuance. GMACCM reported year-end 2002 financial information for 89% of the pool and Sept. 30, 2003 financial information for 57% of the pool. Based on the Sept. 30, 2003, information, Standard & Poor's calculated that the DSCR for the current pool is relatively flat at 1.33x, down only slightly from 1.34x at issuance. The current top 10 loans have an aggregate outstanding balance of $271.2 million (28%). The weighted average DSCR, based upon Sept. 30, 2003 information, for the top 10 loans was also relatively flat at 1.36x, up from 1.34x at issuance. The pool is geographically diverse, with collateral in 36 states. Geographic concentrations in excess of 10% are in New York (14%) and California (13%). Property type concentrations include office (31%), retail (30%), and multifamily (25%), with the balance of the loans secured by hotel, manufactured housing, industrial, and self-storage properties. Standard & Poor's stressed various loans in its analysis and the resultant credit enhancement levels adequately support the rating actions. RATINGS LOWERED J.P. Morgan Chase Commercial Mortgage Securities Corp. Mortgage pass-through certs series 2001-CIBC1 Rating Class To From Credit Enhancement (%) K B B+ 3.03 L B- B 2.51 M CCC+ B- 2.00 RATINGS AFFIRMED J.P. Morgan Chase Commercial Mortgage Securities Corp. Mortgage pass-through certs series 2001-CIBC1 Class Rating Credit Enhancement (%) A-1 AAA 22.88 A-2 AAA 22.88 A-3 AAA 22.88 B AA 18.50 C A 14.37 D A- 13.09 E BBB 10.51 F BBB- 9.09 G BB+ 6.12 H BB 5.09 J BB- 4.32 X1 AAA N.A. X2 AAA N.A. KMART CORP: Wants to Recover Transfers Made to 39 Trade Vendors --------------------------------------------------------------- On January 25, 2002, the Court authorized the Kmart Corporation Debtors to pay prepetition claims to certain critical trade vendors. William J. Barrett, Esq., at Barack Ferrazzano Kirschbaum Perlman & Nagelberg LLC, in Chicago, Illinois, relates that Capital Factors, Inc., a factoring agent for a number of the Debtors' apparel suppliers holding millions of dollars in unsecured claims against the bankruptcy estate, appealed the Authorization Order to the District Court. On April 10, 2003, the District Court reversed the Bankruptcy Court's decision, finding that payments for prepetition claims are simply not authorized by the Bankruptcy Code. The District Court ruling is on appeal before the Seventh Circuit Court of Appeals. According to Mr. Barrett, the Debtors informed the District Court that, by the time of the appeal, they had already made disbursements to critical vendors. The District Court nonetheless held that it is not too late to order the disbursements to be returned. Thus, in furtherance of the District Court's ruling, the Debtors ask Judge Sonderby to allow them to recover each of these prepetition payments, in its full amount, including interests and costs, made to 39 critical trade vendors: Creditor Amount -------- ------ Adplex-Rhodes, Inc. $1,079,008 Dean Foods Company 2,000,000 Quad Graphics, Inc. 966,327 Stora Enso North America Corp. 2,686,221 Superior Graphics, Inc. 1,640,976 Donnelley Receivables, Inc. 3,817,852 Bowater Incorporated 3,977,588 Vertis Inc. 7,206,132 Great Lakes Media, Inc. 1,217,336 Pittsburgh Post Gazette 808,476 Seattle Times Company 934,382 Washington Post Company 790,194 Landmark Community 1,330,534 Lee Enterprises, Inc. 1,055,486 Quebecor, Inc. 4,082,906 Cypress Media, Inc. et al. 8,750,080 Irving Paper, Inc. 3,254,073 Detroit Newspaper Agency 2,055,995 Times Publishing Company 856,437 Morris Newspaper Corporation 1,627,913 Advo, Inc. 975,185 CIPS Marketing Group, Inc. 774,818 Newhouse Advance Newspapers 4,176,416 Int'l Paper Company et al. 2,172,039 Associated Grocers, Inc. et al. 2,478,359 The Herald Company 837,087 Tribune Company 4,418,032 Hearst Newspapers Partnership 1,975,436 The New York Time Company Inc. 1,914,667 Copley Press, Inc. 1,218,318 The McClatchy Company 2,479,046 Pulitzer Publishing Company 950,138 Ottaway Newspaper, Inc. 609,273 Cox Newspapers, Inc. 1,871,598 Media New Group, Inc. 2,123,752 Journal Register Company 548,365 Freedom Communications, Inc. 1,589,827 Media General, Inc. et al. 1,930,350 Ogden Newspaper Group 566,779 (Kmart Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) KNOLOGY INC: S&P Says Junk Ratings Reflect High Financial Risk -------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' corporate credit rating to cable overbuilder Knology Inc. At the same time, a 'CCC-' rating was assigned to the company's proposed $280 million senior notes due 2014, which will be issued under Rule 144A with registration rights. These notes are rated two notches below the corporate credit rating because of Standard & Poor's assessment that existing and potential secured debt claims could impair noteholder recovery values in light of uncertain asset values of overbuilder or competitive cable operators. The outlook is developing. Proceeds from the notes will be used to refinance Knology's $220.3 million 12% notes and to retire the company's $15.5 million senior secured credit facility. West Point, Georgia-based Knology Inc. is a provider of video, voice, data and communications services to residential and small business customers in eight medium-size markets in the Southeastern U.S. The company served over 133,000 video subscribers as of Sept. 30, 2003 (or 183,494, including the subsequent acquisition of cable overbuild subscribers from Verizon Communications Inc.). Pro forma for the proposed debt offering, the Dec. 23, 2003 $56.3 million (net proceeds) public stock offering, and the $17 million purchase of overbuilder cable assets from Verizon, total debt outstanding as of Sept. 30, 2003 was $315.9 million. "The ratings on Knology reflect high financial risk from debt- financed capital spending and operating cash flow losses, limited financial flexibility, rising competitive pressure that the company could face as a cable overbuilder competing with larger and better-financed incumbent operators, and increasing programming costs," said Standard & Poor's credit analyst Eric Geil. "The company also faces competition from direct-to-home (DTH) satellite TV companies and incumbent local exchange carriers (ILECs) for voice service. Tempering factors include Knology's attractive bundled offerings delivered over upgraded systems, which have helped the company achieve respectable penetration levels and revenue growth. In addition, the smaller markets in which the company operates are somewhat less competitive than larger markets." Following the prepackaged Chapter 11 restructuring in 2002, Knology has improved its financial profile with the December 2003 initial public offering, which was partly used to purchase cable systems and franchise rights in Florida and California from Verizon. The proposed refinancing will moderately reduce financial pressure by extending debt maturities. However, debt protection measures remain weak. MEDCOMSOFT: Raises $1.2 Million from Private Placement Financing ---------------------------------------------------------------- MedcomSoft Inc. (TSX - MSF) closed a private placement equity financing consisting of the issue of 2,175,492 units for gross proceeds of approximately $1.2 million in cash. Each unit was issued at $0.55 per unit and consisted of one common share and one-third of one common share purchase warrant. Each whole warrant is exercisable at $0.65 per warrant for a period of two years from the closing date. All of the securities issued in connection with these private placements have a four-month hold period from the closing date. "The funds received from this financing will be used for general corporate purposes in support of MedcomSoft accelerated marketing campaigns in the United States, which have been initiated in early January to coincide with the release of several new products in March and April of the current year", said Nick Clemenzi, MedcomSoft's Vice President of Finance. MedcomSoft Inc. designs, develops and markets cutting-edge software solutions to the healthcare industry. MedcomSoft has pioneered the use of codified point of care medical terminologies and intelligent pen-based data capture systems to create a new generation of electronic medical records. As a result of MedcomSoft innovations, physicians and managed care organizations can now securely build and exchange complete, structured and homogeneous electronic patient records. MedcomSoft applications are written with the latest Microsoft tools to run on the Windows platform (Windows 2000 & XP), operate with MS SQL Server 2000(TM), support MS Terminal Server and fully integrate with MS Office 2003, Exchange and Outlook(R). MedcomSoft applications are fully compatible with Tablet PCs and wireless technology. On June 30, 2003, the company's current debts exceeded its current assets by around $2.3 million. Net capital deficiency for that same period is $2.1 million. MIRANT: Canadian Court Extends CCAA Protection Until March 31 ------------------------------------------------------------- Rod Pocza, President of the Canadian Mirant Debtors, notes that various sales are scheduled to close on March 1, 2004. In the meantime, the Canadian Debtors will continue to collect its accounts receivable, manage the transportation and marketing contracts, and work to resolve the smaller outstanding disputed claims. The Canadian Debtors presently have 21 employees. They intend to reduce their staff to 12 employees by March 1, 2004, which will effectively reduce the payroll by 40%. The employee reduction is expected to continue until the Canadian Debtors will have no salaried employees left by June 1, 2004. According to Mr. Pocza, the Canadian Debtors do not expect to be in a position to finalize a Plan of Arrangement until they resolve or at least substantially reduce the outstanding issues by and against their U.S. Parent. The Monitor is currently working independently with the Canadian Debtors' largest unrelated creditors on these claims. The Canadian Debtors have proceeded in good faith and with due diligence to develop a Plan of Arrangement. However, given the present closing date of the sales and the status of the investigation of their claims by and against Mirant Corporation, the Canadian Debtors ask the CCAA Court to extend the stay of proceedings to April 30, 2004. * * * The Honourable Madame Justice Kent extends the stay of proceedings until 5:00 p.m. Calgary time, on March 31, 2004. (Mirant Bankruptcy News, Issue No. 23; Bankruptcy Creditors' Service, Inc., 215/945-7000) MONTE VISTA HOTEL: Case Summary & 10 Largest Unsecured Creditors ---------------------------------------------------------------- Debtor: Monte Vista Hotel, Inc. 308 West State Street Black Mountain, North Carolina 28711 Bankruptcy Case No.: 04-10182 Type of Business: The Debtor operates a boarding house-style inn with accommodations for individual travelers, families, and groups. See http://www.montevistahotel.com/ Chapter 11 Petition Date: February 18, 2004 Court: Western District of North Carolina (Asheville) Judge: George R. Hodges Debtor's Counsel: David G. Gray, Esq. Westall, Gray, Connolly & Davis, P.A. 81 Central Avenue Asheville, NC 28801 Tel: 828-254-6315 Total Assets: $1,525,900 Total Debts: $832,752 Debtor's 10 Largest Unsecured Creditors: Entity Claim Amount ------ ------------ Internal Revenue Service $160,000 Morrow Insurance Agency $24,300 Memorial Mission Hospital $11,500 Barry Hinerstein, DDS $10,000 Black Mountain Tax Collector $8,873 N. C. Dept. of Revenue $8,000 Drs. J. Robert Scully & $6,200 John D. Matheson G.S. Hodges, DDS PA $5,000 The IJ Company $4,504 US Food Services $4,375 MORTGAGE ASSET: Fitch Takes Rating Actions on 6 Securitizations --------------------------------------------------------------- Fitch Ratings upgraded 26 & affirmed 10 classes of the following Mortgage Asset Securitization Transactions, Inc. (MASTR) residential mortgage-backed certificates: Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2001-2 -- Class A affirmed at 'AAA'; -- Class B1 affirmed at 'AAA'; -- Class B2 affirmed at 'AAA'; -- Class B3 upgraded to 'AAA' from 'AA'; -- Class B4 upgraded to 'A+' from 'A'; -- Class B5 affirmed at 'BB'. Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2001-3 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AAA' from 'A'; -- Class B3 upgraded to 'AA' from 'BBB'; -- Class B4 upgraded to 'BBB' from 'BB'; -- Class B5 upgraded to 'BB' from 'B'. Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2002-1 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AAA' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'; -- Class B4 upgraded to 'BBB' from 'BB'; -- Class B5 affirmed at 'B'. Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2002-6 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AAA' from 'A'; -- Class B3 upgraded to 'AA' from 'BBB'; -- Class B4 upgraded to 'A-' from 'BB'; -- Class B5 upgraded to 'BB+' from 'B'. Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2002-7 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AAA' from 'A'; -- Class B3 upgraded to 'AA-' from 'BBB'; -- Class B4 upgraded to 'BBB+' from 'BB'; -- Class B5 upgraded to 'BB' from 'B'. Mortgage Asset Securitization Transactions, Inc., Mortgage Pass- Through Certificates, Series 2002-8 -- Class A affirmed at 'AAA'; -- Class B1 upgraded to 'AAA' from 'AA'; -- Class B2 upgraded to 'AA' from 'A'; -- Class B3 upgraded to 'A' from 'BBB'; -- Class B4 upgraded to 'BBB' from 'BB'; -- Class B5 upgraded to 'BB' from 'B'. The upgrades are being taken as a result of low delinquencies and losses, as well as increased credit support levels. The affirmations are due to credit enhancement consistent with future loss expectations. MRS. FIELDS: S&P Rates $192 Million Senior Secured Notes at CCC+ ---------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'CCC+' rating to Mrs. Fields Famous Brands LLC's proposed $122 million senior secured note offering due 2011 and the company's proposed $70 million 9% exchange notes due 2011. At the same time, Standard & Poor's assigned its 'CCC+' corporate credit rating to the company. The outlook is negative. Proceeds of the offerings will be used to refinance debt outstanding under the company's previous corporate structure. "The ratings reflect Mrs. Fields' heavy dependence on mall traffic to support sales at the company's cookie and pretzel brands, declining operating performance at both the Mrs. Fields and TCBY concepts, very thin cash flow protection measures, and a highly leveraged capital structure," said Standard & Poor's credit analyst Robert Lichtenstein. Salt Lake City, Utah-based Mrs. Fields is a leading operator in the premium snack food industry. The company's brands include Mrs. Fields, Great American Cookie Co., Pretzel Time, and Pretzelmaker. Because most of the company's cookie and pretzel stores are located in malls, Mrs. Fields has shown its vulnerability to a weak economy and a decline in mall traffic. The company's operating performance has been negatively affected since the recession began in 2001. As a result, Mrs. Fields has experienced prolonged systemwide same-store sales decreases, as well as declining operating margins. Mrs. Fields' systemwide same-store sales dropped 5.2% for the 12 months ended Sept. 27, 2003, following a 3.6% falloff in the previous two years. Moreover, the TCBY concept has also struggled. TCBY's systemwide same-store sales fell 7.3% for the 12 months ended Sept. 27, 2003, following a 2.6% decrease in 2002. New management has initiated a turnaround strategy to revitalize the company's brands. The initiatives include accelerating franchise growth, growing licensing and gift operations, and repositioning the TCBY brand toward health-conscious consumers. Still, Standard & Poor's believes the challenges of turning around the brands are significant. The company operates a primarily franchised system. Over the past three years, a significant amount of franchisees have closed stores. A continuation of this trend could negatively affect the company's performance. MTS INCORPORATED: Asks to Continue Hiring Ordinary Course Profs. ---------------------------------------------------------------- MTS, Incorporated and its debtor-affiliates ask approval from the U.S. Bankruptcy Court for the District of Delaware to continue the employment of the professionals they turn to in the ordinary course of their businesses. The Debtors explain that their employees, in the day-to-day performance of their duties, regularly call upon certain professionals, including attorneys, accountants, and other professionals to assist them in carrying out their assigned responsibilities. The Debtors want to continue employing these professionals without the necessity of filing formal applications for employment and compensation by each professional. The Debtors point out that to request each Ordinary Course Professional to apply separately for approval of their employment and compensation would be unwieldy and burdensome on both the Debtors and this Court. The Debtors also submit that the uninterrupted service of the Ordinary Course Professionals is vital to the Debtors' continuing operations and their ability to reorganize. The Debtors wish to pay, without formal application to the Court by any Ordinary Course Professional, 100% of the interim fees and disbursements to each of the Ordinary Course Professionals, after submission of an appropriate invoice setting forth in reasonable detail the nature of the services rendered after the Petition Date. Provided however that the fees do not exceed a total of $35,000 per month The Debtors believe that the failure to employ and compensate the Ordinary Course Professionals would have a material adverse impact on their ability to operate in the ordinary course of business. While some of the Ordinary Course Professionals may wish to continue to work for the Debtors, others may be unwilling or unable to do so if they are not paid on a regular basis. Headquartered in West Sacramento, California, MTS, Incorporated -- http://www.towerrecords.com/-- is the owner of Tower Records and is one of the largest specialty retailers of music in the US, with nearly 100 company-owned music, book, and video stores. The Company, together with its debtor-affiliates, filed for chapter 11 protection on February 9, 2004 (Bankr. Del. Case No. 04-10394). Mark D. Collins, Esq., and Michael Joseph Merchant, Esq., at Richards Layton & Finger represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed its estimated debts of over $10 million and estimated debts of over $50 million. NATIONAL CENTURY: Wants Court to Nix 4 National Medical Claims -------------------------------------------------------------- National Century Financial Enterprises, Inc., and its debtor- affiliates ask the Court to disallow Claim Nos. 621, 622, 623 and 624 filed by National Medical Care, Inc., Fresenius Medical Care Holdings, Inc., Fresenius Medical Care Pharmacy and NMC Homecare, Inc. Prior to the Petition Date, NCFE, Inc., NPF VI, Inc., NPF X, Inc. and NMC were involved in litigation in the Middlesex Superior Court Department in Massachusetts. The Massachusetts Action arose out of a July 29, 1998 transaction, where NMC sold substantially all of its homecare division assets to Home Medical of America, Inc. To finance the transaction, HMA entered into a Sale and Subservicing Agreement with NPF VI. HMA sold to NPF VI most of the receivables that it purchased from NMC. As purchaser, NPF VI had the right to collect the proceeds of the Repurchased Receivables. According to Joseph M. Witalec, Esq., at Jones, Day, Reavis & Pogue, in Columbus, Ohio, the parties to the Massachusetts Action asserted claims and counterclaims that in the aggregate exceed $100,000,000. NMC claimed that HMA and the NCFE Defendants defaulted on the payment of a portion of the promissory notes issued to NMC in the 1998 sales transaction -- the NCFE Defendants' liability is based on a disputed guaranty purportedly provided to NMC by Lance Poulsen. NMC further asserted claims for breach of contract, unjust enrichment and fraud. NMC estimated its claim at $50,000,000, subject to trebling and an award of attorneys' fees, for a total claim for $150,000,000. The NCFE Defendants and HMA asserted counterclaims for fraudulent misrepresentation as to the collectability of the Repurchased Receivables, which the NCFE Defendants assert resulted in a $50,000,000 shortfall in actual collections. The Massachusetts Action also includes disputes regarding the proper allocation of funds flowing into the parties' various lockbox accounts. The NCFE Defendants believe that NMC intercepted and diverted more than $4,000,000 in funds that were proceeds of the Repurchased Receivables and rightfully due to the NCFE Defendants or HMA. NMC claims to have remitted to the NCFE Defendants nearly $1,500,000 of the diverted funds, leaving a $2,600,000 balance due to the NCFE Defendants. In addition, the NCFE Defendants were alleged to hold some $5,800,000 in funds attributable to non-Repurchased Receivables. By the parties' agreement, the Massachusetts Court authorized the NCFE Defendants to interplead funds for $5,800,000, and those funds remain in the Massachusetts Court. On April 3, 2003, NMC asserted secured claims and unliquidated, unsecured non-priority claims in the Debtors' Chapter 11 cases. NMC states that some or all of its claims "may be entitled to allowance and payment as secured claims" on theories of recoupment and setoff, constructive trust as to the Interplead Funds or an equitable lien in the Interplead Funds. NMC also asserts that to the extent its claims are not allowed as secured claims, it is entitled to allowance and payment of the claims asserted in the Massachusetts Action as general unsecured claims pursuant to Section 502 of the Bankruptcy Code. NMC estimates its claims at $150,000,000, although only $50,000,000 of that amount relates to the actual damages it claims to have suffered. Mr. Witalec argues that the NMC Claims should be disallowed to the extent that the NMC Claims seek allowance and payment of the Interplead Funds as a secured claim. The Interplead Funds were deposited with the Massachusetts Court prior to the Petition Date. If NMC prevails in the interpleader action, its recovery would be against those funds, and not against the Debtors' estates. On the other hand, if the Debtors prevail, NMC would have no claim to those funds, much less a secured claim. The NMC Claims should also be disallowed on the basis that they are subject to valid defenses. NMC filed requests for summary judgment in the Massachusetts Action, seeking to dismiss the Debtors' misrepresentation-based counterclaims. Those requests were denied by the Massachusetts Court. Thus, Mr. Witalec points out, the NMC Claim asserted in the Massachusetts Action would be subject to possible defenses of set-off and recoupment if the Debtors ultimately prevail on their $50,000,000 fraud counterclaim before the Massachusetts Court. Moreover, the Debtors also challenged the entirety of the NMC Claims on the basis that the liability in the Massachusetts Action can only be extended to the Debtors on an alter ego basis. All the improper actions alleged by NMC were undertaken by HMA. Mr. Witalec explains that the Debtors acted solely as the financing mechanism for the sales transaction. Thus, because the Debtors have overcome the prima facie case raised by NMC, the ultimate burden of persuasion will be on NMC to prove the validity of the claim. (National Century Bankruptcy News, Issue No. 33; Bankruptcy Creditors' Service, Inc., 215/945-7000) NET PERCEPTIONS: Shareholders to Decide on Liquidating Plan ----------------------------------------------------------- A special meeting of stockholders of Net Perceptions, Inc., a Delaware corporation, will be held on a date yet to be announced. The meeting will commence at 10:00 a.m. Central Standard Time, at the Company's headquarters located at 7700 France Avenue South, Edina, Minnesota, to consider and vote upon the following proposals: To approve and adopt the Plan of Complete Liquidation and Dissolution of the Company, substantially in the form of Exhibit A attached to the proxy statement accompanying the notice of meeting. To transact such other business as may properly come before the meeting and any adjournments thereof. The Board of Directors has fixed the close of business Tuesday, January 13, 2004, as the record date for determining stockholders entitled to receive notice of, and to vote at, the special meeting (or any adjournment or postponement of the meeting). Only stockholders of record at the close of business on that date are entitled to notice of and to vote at the special meeting. * * * Plan of Liquidation In its latest Form 10-Q filed for period ended September 30, 2003, Net Perceptions reported: "The condensed consolidated financial statements were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. On October 21, 2003, the Company announced that its Board of Directors had unanimously approved a Plan of Complete Liquidation and Dissolution which will be submitted to the Company's stockholders for approval and adoption at a special meeting of stockholders to be held as soon as reasonably practicable. If the Company's stockholders approve the Plan of Liquidation, the Company will adopt the liquidation basis of accounting effective upon such approval. Inherent in the liquidation basis of accounting are significant management estimates and judgments. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities, including costs of liquidation, are stated at their anticipated settlement amounts, all of which approximate their estimated fair values. The estimated net realizable values of assets and settlement amounts of liabilities will represent management's best estimate of the recoverable values of the assets and settlement amounts of liabilities. "A preliminary proxy statement related to the Plan of Liquidation was filed on Schedule 14A with the Securities and Exchange Commission on November 4, 2003. The key features of the Plan of Liquidation are (i) filing a Certificate of Dissolution with the Secretary of State of Delaware and thereafter remaining in existence as a non-operating entity for three years; (ii) winding up our affairs, including selling remaining non-cash assets of the Company, and taking such action as may be necessary to preserve the value of our assets and distributing our assets in accordance with the Plan; (iii) paying our creditors; (iv) terminating any of our remaining commercial agreements, relationships or outstanding obligations; (v) resolving our outstanding litigation; (vi) establishing a contingency reserve for payment of the Company's expenses and liabilities; and (vii) preparing to make distributions to our stockholders." NEWPOWER HLDGS: Wants Final Nod for Settlement Pact with Directors ------------------------------------------------------------------ As previously reported, on August 15, 2003, the United States Bankruptcy Court for the Northern District of Georgia, Newnan Division, confirmed the Second Amended Chapter 11 Plan with respect to NewPower Holdings, Inc. and TNPC Holdings, Inc., a wholly owned subsidiary of the Company. As previously reported, on February 28, 2003, the Bankruptcy Court previously confirmed the Plan, and the Plan took effect on March 11, 2003, with respect to The New Power Company, a wholly owned subsidiary of the Company. The Plan became effective on October 9, 2003 with respect to the Company and TNPC. On February 4, 2004, the Company filed a motion with the Bankruptcy Court seeking authorization and approval of a settlement agreement resolving certain claims against its former directors in consolidated actions pending in the United States District Court for the Southern District of New York and purported class proofs of claim against the Company pending in the Bankruptcy Court. As previously disclosed, the plaintiffs and claimants agreed to resolve all such claims against the Company and its former directors in exchange for a payment of $26 million, of which $24.5 million will be paid by insurance providers and $1.5 million will be paid by the Company. The settlement agreement is subject to approval by the District Court and the Bankruptcy Court. On December 24, 2003, the District Court granted preliminary approval of the settlement agreement. In the Motion, the Company currently estimates that after the payments contemplated to be made by the Company in respect of the settlement agreement, it will have approximately $85 million available for distribution to holders of allowed claims and interests in Classes 9 (Common Stock), 10 (Options) and 11 (Warrants) and to any remaining holders of allowed claims in Class 8 (Securities Claims), which will be paid in accordance with the terms of the Plan. To the extent that the settlement agreement is approved by the District Court and the Bankruptcy Court and becomes effective, and, as requested by the Company, the Bankruptcy Court disallows in full certain Class 8 claims filed by each of the underwriters from the Company's initial public offering and certain former officers and directors of the Company, the Company currently does not anticipate making any distributions on account of any Class 8 claims. NEXTEL COMMUNICATIONS: Reports Record 2003 Financial Results ------------------------------------------------------------ Nextel Communications, Inc. (NASDAQ: NXTL) announced record financial results for 2003 including income available to common stockholders of $1.47 billion, or $1.41 per share. Revenue was $10.8 billion in 2003, a 24% increase over 2002 and was $3.0 billion in the fourth quarter. Operating income before depreciation and amortization, (OIBDA) was $4.2 billion in 2003, an increase of 35% over the prior year. During 2003, Nextel's free cash flow grew to a record $1.3 billion, compared to $122 million for 2002. Nextel retired $7.8 billion in debt and preferred stock in 2003 and issued $4.7 billion in new lower cost debt, resulting in net debt and preferred retirements of $3.1 billion. Year-end debt and preferred stock, net of cash, cash equivalents and short- term investments was $8.2 billion. Nextel added approximately 2.3 million new subscribers during 2003 with 553,000 subscribers added during the fourth quarter, bringing total subscribers to 12.9 million at year-end. "In 2003, Nextel set the pace for the wireless industry exceeding all of our financial goals," said Tim Donahue, Nextel's president and CEO. "We delivered $1.3 billion in free cash flow, which is more than a billion dollar increase over 2002. We increased OIBDA by 35% over last year to $4.2 billion. We grew subscribers 21% to 12.9 million by adding 2.3 million subscribers. In addition, we added 385,000 subscribers using Boost Mobile service in 2003. Nextel has a keen focus on operational excellence and a drive to aggressively pursue opportunities to build on our record of profitable growth. We will continue to invest in long term growth opportunities that expand Nextel's reach, enhance our differentiation and build on our success." "In 2003, strong customer demand helped drive revenue growth of 24%, while a long term focus on smart growth strategies allowed our operating margin on service revenue to grow to approximately 44% in the fourth quarter. At the same time, Nextel launched a new campaign to enhance our corporate brand, signed an exclusive sports marketing arrangement with NASCARr, and improved our industry leading customer satisfaction while making Nationwide Direct Connect(sm) a reality," said Tom Kelly, Nextel's executive vice president and COO. "In 2004, we will expand the Nextel National Network and broaden our reach by adding an additional 2,200 coverage sites. In addition, we will increase our targeting of high-value customer segments, like the millions of NASCAR fans. We will also expand our Boost Mobile service to new markets, while continuing to deliver industry leading results." Nextel's average monthly service revenue per subscriber was approximately $70 for the fourth quarter and $69 for the full year. Customer churn decreased to an average of 1.6% for the year and was 1.5% for the fourth quarter of 2003. Nextel's net income available to common stockholders for the year was $1.47 billion, or $1.41 per share and includes gains from the sale of investments of $213 million, or $0.20 cents per share, and losses from the retirement of debt and preferred stock of $252 million, or $0.24 per share. 2003 net income after adjustment to eliminate the impact of those two items, was up significantly to $1.5 billion, or $1.45 per share as compared with last year's net income, adjusted to eliminate gains from the deconsolidation of NII Holdings and from balance sheet de-leveraging activities and other items, of $236 million, or $0.27 per share. During the fourth quarter, Nextel reported income of $637 million, or $0.58 per share, including charges related to debt restructuring of $106 million, or $0.09 per share, and gains related to the sale of a portion of our investments in NII Holdings and Nextel Partners of $213 million, or $0.19 per share. Net of these items, the fourth quarter adjusted net income was up significantly to $530 million, or $0.48 per share, as compared with last year's net income of $209 million, or $0.21 per share, adjusted for gains related to the retirement of debt and preferred stock of $35 million, or $0.04 per share, and a gain on the deconsolidation of NII Holdings of $1.2 billion, or $1.24 per share. (See attached reconciliation of Income and EPS data.) "Nextel enters 2004 in excellent financial condition," said Paul Saleh, Nextel's executive vice president and CFO. "Nextel has a healthy balance sheet and a solid financial profile. Our industry leading subscriber metrics coupled with low operating costs have produced the industry's highest margins and strong capital efficiency. During the fourth quarter, Nextel generated $1.18 billion in OIBDA making it Nextel's seventh consecutive quarter of OIBDA margins above 40%. Nextel's focus on high-value customer segments continues to produce sustainable growth in subscribers, revenue and margins while generating strong free cash flow." Capital expenditures for the full year of 2003 were $1.8 billion - essentially flat with 2002. Total minutes of use on the Nextel National Network grew by 37% in 2003 to 101 billion. Nextel added approximately 1,200 cell sites to its network during 2003, bringing the total number of sites to approximately 17,500 at year-end. During the fourth quarter, Nextel added approximately 700 cell sites and capital expenditures were $711 million. 2004 Guidance Nextel's 2004 Guidance is forward-looking and is based upon management's current beliefs as well as a number of assumptions concerning future events and as such, should be taken in the context of the risks and uncertainties outlined in the Securities and Exchange Commission filings of Nextel Communications Inc. Nextel's current outlook for 2004 results is as follows: -- $4.9 billion in OIBDA, or more -- $1.6 billion in free cash flow, or more -- $2.00 in earnings per share, or more -- Capital expenditures of approximately $2.2 billion -- Subscriber additions of 1.8 million, or more, excluding Boost Mobile In addition to the results prepared in accordance with Generally Accepted Accounting Principles (GAAP) provided throughout this press release, Nextel has presented non-GAAP financial measures, such as operating income before depreciation and amortization, OIBDA margin, free cash flow and ARPU. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information prepared in accordance with GAAP. Nextel Communications, a FORTUNE 300 company based in Reston, Virginia, is a leading provider of fully integrated wireless communications services and has built the largest guaranteed all- digital wireless network in the country covering thousands of communities across the United States. Today 95 percent of FORTUNE 500 companies are Nextel customers. Nextel and Nextel Partners, Inc. currently serve 293 of the top 300 U.S. markets where approximately 249 million people live or work. * * * As reported in the Troubled Company Reporter's December 22, 2003 edition, Standard & Poor's affirmed its 'BB-' corporate credit rating on Nextel. The outlook remains positive. "The rating primarily reflects concern over Nextel's ability to maintain a competitive edge with its service offering (push-to- talk [PTT] and customized applications) in light of wireless number portability and challenges from other wireless carriers that have rolled out (i.e., Verizon Wireless and Sprint PCS) or are planning to introduce (i.e., AT&T Wireless) PTT service," said Standard & Poor's credit analyst Michael Tsao. Somewhat offsetting this concern are three factors. First, Nextel has an entrenched subscriber base in several industries. Since Nextel operates an exclusive network that is not compatible with those operated by other wireless carriers, subscribers are less likely to churn off, as doing so would entail losing access to critical user groups; anyone associated with these user groups is more likely to select Nextel as his wireless service provider. Second, the company has years of experience offering differentiated services by way of targeting specific industries in terms of marketing and applications support. It will take time for other carriers to acquire the sufficient level of experience to materially challenge Nextel. Third, the company has notably improved its financial risk profile by lowering leverage (down to about 2.2x debt to annualized EBITDA at Sept. 30, 2003, pro forma for these transactions, from about 3.8x a year ago), growing free cash flow (primarily through solid operations), and lengthening its maturity profile. NFIL HOLDINGS: S&P Assigns Stable Outlook to Low-B Ratings ---------------------------------------------------------- Standard and Poor's Ratings Services assigned a 'B+' long-term corporate credit rating to transit bus manufacturer NFIL Holdings Corp. (New Flyer). At the same time, Standard & Poor's assigned its 'B+' rating to New Flyer's proposed US$145 million six-year senior secured term loan B, its US$40 million five-year senior secured revolving credit facility, and its US$55 million synthetic letter of credit facility. The outlook is stable. Proceeds from the notes will be used to finance the acquisition of transit bus manufacturer New Flyer and its subsidiaries by Transit Holdings Inc. (Delaware), a company formed and controlled by funds managed by New York-based private equity firm Harvest Partners; provide for general working capital requirements; and provide for committed security to secure performance bonds or letters of credit. The rating on the proposed credit facility is based on preliminary offering statements and is subject to review of final documentation. "The ratings on New Flyer reflect the high leverage of the borrower following the acquisition, the competitive market conditions, and the limited diversity of the business," said Standard & Poor's credit analyst Kenton Freitag. "These factors are partially offset by New Flyer's reputation for leading innovation in the industry, quality manufacturing, its broad product lines, and the fairly stable demand levels for its products," Mr. Freitag added. Winnipeg, Manitoba-based New Flyer is one of the leading manufacturers of heavy-duty mass transit buses in North America. New Flyer's primary products are widely used by most large cities in the U.S. and Canada, and the company is estimated to have the largest market share by annual deliveries and installed base of vehicles. Approximately three quarters of its sales are in the U.S. with the remainder in Canada. A primary risk to the company is maintaining manufacturing efficiency. Although manufacturing quality has consistently been strong, New Flyer's expansion through the late 1990s resulted in inventory build-ups, production inefficiencies, very thin operating margins, and consequent liquidity pressures. New management was instated in March 2002 and has since been intensely focused on maintaining a disciplined manufacturing process and monitoring and controlling inventory levels. This resulted in a fairly rapid improvement in margins and significantly reduced working capital requirements. The stable outlook reflects the expectation that stable demand from the transit sector and management's continued focus on production efficiencies will allow for modest free cash flow generation, debt reduction, and the maintenance of current levels of liquidity. NVIDIA CORP: Will Present at Goldman Sachs' Symposium on Wednesday ------------------------------------------------------------------ NVIDIA Corporation (Nasdaq: NVDA) announced that key executives of the Company will present at the following upcoming events with the financial community: -- Goldman Sachs Technology Investment Symposium 2004 at The Arizona Biltmore Resort & Spa, Phoenix, Arizona on February 25, 2004 at 8:40 a.m. PST -- Morgan Stanley Semiconductor and Systems Conference at The St. Regis, Monarch Beach Resort & Spa, Dana Point, California on March 2, 2004 at 8:00 a.m. PST A live audio web cast of NVIDIA's presentation at the Goldman Sachs conference will be available through the following website: http://customer.nvglb.com/GOLD006/022304a_by/default.asp?entity=nvidia A live audio web cast of NVIDIA's presentation at the Morgan Stanley conference will be available at: http://customer.nvglb.com/MORG007/030104a_cf/default.asp?entity=nvidia NVIDIA Corporation, whose corporate credit rating is rated at B+ by Standard & Poor's, is a visual computing technology and market leader dedicated to creating products that enhance the interactive experience on consumer and professional computing platforms. Its graphics and communications processors have broad market reach and are incorporated into a wide variety of computing platforms, including consumer digital-media PCs, enterprise PCs, professional workstations, digital content creation systems, notebook PCs, military navigation systems and video game consoles. NVIDIA is headquartered in Santa Clara, California and employs more than 1,500 people worldwide. For more information, visit the company's Web site at: http://www.nvidia.com/ OAKWOOD HOMES: Files 2nd Amended Chapter 11 Plan & Disc. Statement ------------------------------------------------------------------ On February 6, 2004, Oakwood Homes Corporation and certain of its subsidiaries filed with the U.S. Bankruptcy Court in Delaware a revised Second Amended Plan of Reorganization and related revised Proposed Supplemental Disclosure Statement which, among other things, provide for the sale of substantially all of the Company's non-cash assets to Clayton Homes, Inc. under an Asset Purchase Agreement between the Company and Clayton dated November 24, 2003. The Amended Plan provides for the emergence of the reorganized Company from bankruptcy as a standalone operating entity if the sale to Clayton is not consummated. The Supplemental Disclosure Statement reflects an estimated recovery to the Debtors' unsecured creditors of approximately 37% of such unsecured creditors' estimated allowed claims if the sale to Clayton is consummated. The Supplemental Disclosure Statement also reflects that existing shareholders in the reorganized Company will retain their ownership interest in the Company and the right to receive cash, if any, remaining in the reorganized Company after its liabilities, including any future claims, are satisfied, if the sale to Clayton is consummated. There can be no assurance that any cash will remain in the reorganized Company after its liabilities are satisfied. The Debtors expect to circulate the Supplemental Disclosure Statement to parties in interest within the next couple of weeks. In the event that the sale of assets to Clayton is consummated, it is likely that reorganized Company will be dissolved and that its securities will not be listed for trading, which would affect the ability of the reorganized Company's shareholders to transfer the Company's stock. Bankruptcy law does not permit solicitation of acceptances of a plan of reorganization until the Bankruptcy Court approves the disclosure statement relating to the plan of reorganization as providing adequate information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holder of claims or interests of the relevant class to make an informed judgment about the plan of reorganization. The Debtors will engage in a Chapter 11 sale of its assets if and when a plan of reorganization receives the requisite creditor approvals and is confirmed by the Bankruptcy Court. OWENS-ILLINOIS: S&P Places Low-B Level Ratings on Watch Negative ---------------------------------------------------------------- Standard & Poor's Ratings Services placed its 'BB-' corporate credit rating on Owens-Illinois Inc. on CreditWatch with negative implications, following the company's announcement that it had entered into exclusive negotiations to acquire France-based BSN Glasspack S.A. (B+/Stable/--), the second-largest producer of glass containers in Europe for about $1.46 billion (?1.16 billion) including the assumption of debt. An agreement is expected to be reached shortly, and the acquisition is expected to close in the second quarter of 2004, subject to regulatory approvals. If the transaction is completed as proposed, Toledo, Ohio-based Owens-Illinois' total debt pro forma for the acquisition at Dec. 31, 2003, would climb to about $7 billion from about $5.4 billion. At the same time, Standard & Poor's assigned its 'BB-' senior secured bank loan rating and a recovery rating of '3' to the company's proposed $1.4 billion senior secured tranche C term loans due April 2008, based on preliminary terms and conditions. The new senior secured bank loan rating was placed on CreditWatch with negative implications, along with the existing ratings on Owens-Illinois to reflect the strong likelihood that all ratings, including the new and existing bank loans, will be lowered upon completion of the BSN transaction. The bank loan ratings are the same as the corporate credit rating; this and the '3' recovery rating indicate the expectation of a meaningful (50%-80%) recovery of principal in the event of default. Proceeds of the tranche C term loans are expected to be used to finance the BSN acquisition, refinance certain BSN debt, and for fees and expenses. The proposed tranche C term loans consist of a $671 million U.S. tranche C term loan, a $381 million European tranche C term loan, and a $386 million European tranche C delayed draw term loan. Proceeds of the delayed draw tranche C term loan would be used to refinance existing BSN subordinated notes to the extent noteholders exercise their change of control put rights (about ?306.4 million if all noteholders exercise put rights). Concurrently, Standard & Poor's affirmed its ratings on BSN, including the 'B+' corporate credit rating. If the transaction is successfully completed, and if the existing BSN senior subordinated notes are put (and refinanced with the European tranche C delayed draw term loan), ratings on the notes will be withdrawn. "The CreditWatch placement reflects the potential integration- related challenges of the BSN acquisition and the significant increase in financial pressures stemming from the debt-financed transaction," said credit analyst Liley Mehta. Standard & Poor's expects that proceeds from the sale of the blow- molded plastic operations, if completed as proposed, will be used for debt reduction, although the timing and valuation of these assets remains uncertain. Other material credit concerns include the continuing pressures from asbestos-related liabilities, the sub par financial profile, and significant refinancing risks in 2007 and 2008. Subject to the BSN transaction being completed as proposed, Standard & Poor's will lower its corporate credit rating on Owens- Illinois to 'B+' from 'BB-', and accordingly, all other ratings would be lowered by one notch. The outlook likely would be stable reflecting the underlying strength of Owens-Illinois' businesses and Standard & Poor's expectation that management would take actions to improve free cash generation and credit measures, and that refinancing pressures will be addressed. Standard & Poor's will monitor developments and will resolve the CreditWatch upon successful completion of the proposed acquisition and related debt financing. OWENS-ILLINOIS: ACI Packaging Subsidiary to Sell Plastics Assets ---------------------------------------------------------------- Owens-Illinois, Inc. (NYSE: OI) announced that ACI Packaging, a subsidiary of the Company, has agreed to a conditional sale of a substantive part of its plastics packaging business in Australia and New Zealand to Visy Industrial Plastics, a wholly-owned subsidiary of Visy Industrial Packaging. The sale, which excludes ACI's beverage containers business in Australia, is subject to regulatory approvals in both Australia and New Zealand. Expected cash proceeds of approximately A$76.5 million (US$60.6 million) will be used to repay bank debt. Owens-Illinois is the largest manufacturer of glass containers in North America, South America, Australia and New Zealand, and one of the largest in Europe. O-I also is a worldwide manufacturer of plastics packaging with operations in North America, South America, Europe, Australia and New Zealand. Plastics packaging products manufactured by O-I include consumer products (blow molded containers, injection molded containers and closures, and dispensing systems) and prescription containers. * * * As reported in the Troubled Company Reporter's February 6, 2004 edition, 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. PAK-A-SAK FOOD: Case Summary & 20 Largest Unsecured Creditors ------------------------------------------------------------- Debtor: Pak-A-Sak Food Stores, Inc. 4466 Arendell Street Morehead City, North Carolina 28557 Bankruptcy Case No.: 04-00590 Type of Business: The Company operates grocery stores located in Carteret County, Craven County and Onslow County, North Carolina. Chapter 11 Petition Date: January 22, 2004 Court: Eastern District of North Carolina (Wilson) Judge: J. Rich Leonard Debtor's Counsel: Trawick H. Stubbs, Esq. Stubbs & Perdue, P.A. P. O. Drawer 1654 New Bern, NC 28563 Tel: 252-633-2700 Total Assets: $6,678,838 Total Debts: $6,669,439 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Nash Finch Company Promissory Note $700,000 Attn: Manger or Agent 7600 France Ave. South Minneapolis, MN 55440-0335 Nash Finch Company --- $249,220 NC Dept. of Revenue withholding tax $115,606 $10,536 sales tax $105,070.01 Minges Bottling Group --- $55,154 Internal Revenue Service 941 $54,709 Institutional Food House --- $47,453 Piedmont Partnership --- $27,758 Onslow County Tax Coll real property tax $20,313 owed as part of lease Frito Lay --- $17,908 Coastal Dist. Group --- $12,999 Interstate Brands Corp --- $10,110 Craven Co. Tax Collector real property tax $8,670 $6,966 owed as part of lease personal property tax $1,704 Star Foods --- $8,508 Town of Morehead City real property tax $8,095 $6,681 owed as part of lease personal property tax $1,414 City of New Bern real property tax $7,300 $2,946 owed as part of lease personal property tax $4,354 Sysco of Hampton --- $7,114 Stevens Sausage --- $6,194 Keebler/B&H --- $6,029 Carteret County Tax Coll real property owed as $5,568 part of lease on #8 Anderson --- $5,399 PACIFIC GAS: Asks Go-Signal for Cash-Collateralized L/C Program --------------------------------------------------------------- Jeffrey L. Shaffer, Esq., at Howard, Rice, Nemerovski, Canady, Falk & Rabkin, in San Francisco, California, tells the Court that since the Petition Date, Pacific Gas and Electric Company has made ongoing and substantial use of its "GSSA Program" to provide credit support for its gas purchases for core customers. Mr. Shaffer relates that PG&E entered into a master Gas Supplier Security Agreement with a group of gas suppliers, pursuant to which PG&E granted a security interest in most of its gas customer accounts receivable and various gas-related assets to secure PG&E's payments for gas purchases from the gas suppliers that are parties to the GSSA. Mr. Shaffer reports that while the GSSA Program has worked smoothly to facilitate the uninterrupted flow of gas to PG&E's customers throughout the Chapter 11 case to date, PG&E intends to terminate the GSSA Program and the GSSA to facilitate the financings contemplated to be in place on the effective date of the confirmed Settlement Plan. However, PG&E does not want to replace the GSSA with cash prepayments for gas purchases because of the materially increased credit risk to PG&E and its estate that widespread cash prepayment would entail. To facilitate its Chapter 11 emergence, among other things, PG&E seeks the Court's authority to: (a) establish a cash-collateralized letter of credit program; (b) establish a cash-collateralized letter of credit facility with on or more banks; and (c) incur secured debt in favor of the letter of credit issuing banks, up to a maximum of $400,000,000 face amount of cash-collateralized letters of credit outstanding under the letter of credit facility at any one time. As part of the Gas LOC Program, PG&E also seeks Judge Montali's permission to use up to $50,000,000 of the Interim LOC Facility for the issuance of letters of credit to support the purchase of gas transportation services. The Gas LOC Program and facility will provide credit support and facilitate PG&E's gas purchases for its core customers in the ordinary course of business and related gas transportation. The Gas LOC Program and facility is a salutary equivalent and substitute for the existing Court-approved security device in place to provide necessary credit support for PG&E's core gas purchases. The Gas LOC Program and facility are consistent with the confirmed Plan. March 2004 GSSA Termination Date For the transition to the new facilities to occur smoothly by the Effective Date, PG&E believes that it is appropriate from both a cost and efficiency standpoint to begin transition to the Gas LOC Program in early March 2004. The Target Date for transition will allow the process of obtaining and recording the termination of the gas suppliers' security interest in the Gas Accounts to be completed before the Effective Date. Additionally, the Target Date will ensure that the Gas Accounts are freed up to be pledged in connection with one or more of the facilities contemplated under the Confirmed Plan as of the Effective Date. Mr. Shaffer explains that because PG&E anticipates that the Effective Date will happen at the end of the first quarter 2004, and because of the somewhat arcane way the cycle of gas purchases and payments works, migration to the new Gas LOC Program commencing in early March 2004 -- with the aim of having fully terminated the GSSA by the end of March 2004 -- will facilitate the earliest possible Effective Date. Transition Requirements Mr. Shaffer points out that to terminate the GSSA before the Effective Date and have the Existing Gas Suppliers' security interest in the Gas Accounts terminated, PG&E will need to provide an alternative form of credit support for the Existing Gas Suppliers for: (a) all amounts then owed under the GSSA; and (b) new gas purchases that take place between the time the GSSA is terminated and the Effective Date. Under the Gas LOC Program, Gas Suppliers will receive irrevocable standby letters of credit, which are determined by PG&E to be the most efficient and practicable alternative form of credit support acceptable. The standby letters of credit will serve as the necessary credit support for PG&E' obligations to the Gas Suppliers in lieu of the Gas Accounts pledged under the GSSA. The transition requires PG&E to establish an interim letter of credit facility with one or more banks so that letters of credit can be issued for the Gas Suppliers' benefit until the Effective Date, in the amount equal to: (a) that owed to Existing Gas Suppliers under the GSSA at the time the GSSA is terminated; plus (b) PG&E's new gas purchases from gas suppliers between the time the Gas LOC Program is put in place and the Effective Date. Continuity in Credit Assurance Since its inception, the GSSA has provided security for at least three months of gas supply at any given time. The monthly cycle of buying, taking delivery and paying for core gas delivered for a given month spans at least three calendar months. Under the GSSA, the term of PG&E's credit assurance has not been an issue because the GSSA has continued in effect since February 2001 without interruption. The Interim LOC Facility that will replace the GSSA will need to provide continuity in credit assurance for the Gas Suppliers, to accommodate PG&E's repeat month-to-month contracting and some multi-month contracts for core gas need later in the year. For this reason, in place of the GSSA, PG&E under the proposed Interim LOC Facility will need to use Letters of Credits with terms potentially extending through March 31, 2005, both for existing contracts and for new core gas purchase commitments that take place between the time the Gas LOC Program is implemented and the Effective Date. Once the Effective Date occurs, no additional letters of credit will be issued. If and to the extent letters of credit are required for core gas purchase commitments made after the Effective Date, they will be issued under a post-Effective Date credit facility. $420,000,000 Cash Collateral PG&E has determined that in light of its current credit rating -- which will not be upgraded to investment grade until the Effective Date -- it cannot establish the requisite Interim LOC Facility without posting cash collateral with the LOC Banks in an amount equal to the face amount of the letters of credit issued under the facility. Mr. Shaffer relates that based on PG&E's experience over the past several years, PG&E may need to cause up to $400,000,000 of letters of credit to be issued under the Interim LOC Facility. In this regard, PG&E seeks the Court's authority to establish the Interim LOC Facility and pledge up to $420,000,000 in cash or cash equivalents to the LOC Banks to secure PG&E's obligations. The $420,000,000 includes a maximum 5% cushion required by the LOC Banks as cash collateral to cover interest, fees and costs, to the extent applicable. No Prejudice PG&E emphasizes that the substitution of the Interim LOC Facility for the GSSA does not prejudice in any way the estate or its unsecured creditors pending the Effective Date. All of PG&E's obligations to the Existing Gas Suppliers under the GSSA have remained oversecured pursuant to the terms of the GSSA, and have always been paid and continue to be paid in full on time. Mr. Shaffer states that by effectively substituting cash collateral for PG&E's outstanding obligations to the Existing Gas Suppliers under the Gas LOC Program for the oversecured security interest in Gas Accounts under the GSSA Program, PG&E is actually freeing up estate assets, more closely matching the amount of security or credit support with the amount of the outstanding secured obligations. Mr. Shaffer further assures the Court that the amounts PG&E owes to the Gas Suppliers are a function solely of the gas purchases that PG&E makes, and are in no way driven or influenced by whether the credit support device is a security interest in Gas Accounts, on the one hand, or a letter of credit, on the other. Indenture Trustee's Interest Mr. Shaffer informs the Court that BNY Western Trust Company, in its capacity as successor trustee under an Indenture dated December 1, 1920, as amended to date, presently has a lien on substantially all of PG&E's real and personal property assets. Therefore, BNY Western Trust holds an interest in the cash that PG&E proposes to be pledged to secure its obligations to the LOC Banks under the Interim LOC Facility. Mr. Shaffer assures the Court that BNY Western Trust's interests are more than adequately protected, and, thus, not an impediment to granting the LOC Banks a senior lien on the cash collateral to be pledged to them. PG&E discussed with BNY Western Trust its intention to use the cash collateral to provide security to the LOC Banks. BNY Western Trust indicated that it has no objection to PG&E's request. However, BNY Western Trust reserved the right to object to the use of the cash collateral and to require PG&E to establish that BNY Western Trust's interests are adequately protected. (Pacific Gas Bankruptcy News, Issue No. 71; Bankruptcy Creditors' Service, Inc., 215/945-7000) PAC-WEST TELECOM: Fourth Quarter Net Loss Widens to $9.8 Million ---------------------------------------------------------------- Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of broadband communications services to service providers (SPs) and small and medium-sized enterprises (SMEs) in the western U.S., announced its results for the fourth quarter and year ended December 31, 2003. Pac-West's total revenues for the fourth quarter 2003 were $28.1 million, a 7.3% decrease from revenues of $30.3 million in the third quarter of 2003, and a 41.8% decrease from revenues of $48.3 million in the fourth quarter of 2002. Fiscal 2003 revenues of $134.6 million represented an 18.0% decrease from revenues of $164.1 million for fiscal 2002. Net loss for the fourth quarter of 2003 was $9.8 million, compared to a net loss of $4.3 million for the third quarter of 2003, and net income of $3.2 million for the fourth quarter of 2002. Annual net loss was $15.3 million for 2003, compared to net income of $2.0 million for 2002. Total DS-0 equivalent lines in service, which include wholesale and on-network retail DS-0 line equivalents, were 428,192 at the end of 2003, essentially unchanged from 425,070 lines at the end of the third quarter of 2003, and a 30.9% year-over-year increase from 327,021 lines at the end of fiscal 2002. Total minutes of use were 11.1 billion in the fourth quarter of 2003, essentially unchanged from 11.2 billion minutes in the third quarter of 2003, and a 30.6% increase from 8.5 billion minutes for the fourth quarter of 2002. Total minutes of use for the fiscal year 2003 were 41.7 billion, a 29.9% increase from 32.1 billion minutes of use for fiscal 2002. Hank Carabelli, Pac-West's President and CEO, commented, "In 2003, we achieved our second consecutive year of greater than 30% growth in lines in service while maintaining greater than 92% customer line retention rates and reducing total operating expenses. We believe that these levels of growth and customer loyalty are the result of providing businesses with reliable, cost-effective Five- Star Customer Service. Despite what we believe to be inappropriate withholding of reciprocal compensation payments by the ILECs in the latter half of the year, we believe our financial performance was very strong. We continue to fight what we believe are anti- competitive actions by the ILECs, and are disputing these withheld reciprocal compensation payments. Our successful debt restructuring and strategic capital raising efforts resulted in Pac-West emerging from 2003 a fundamentally different company." Carabelli continued, "Our announced acquisition of the assets of Sentient Group signals our entry into an exciting new business opportunity, voice over Internet protocol (VoIP) targeted to medium and large-sized enterprises. This is the natural next step for Pac-West, leveraging our experience, network, and reputation to offer our services to more business customers within California and Nevada. We are looking forward to renewed growth and interest in our sector, propelled by a rebounding economy, exciting new technologies, industry consolidation, and a resurgence in communications-related spending by businesses." Ravi Brar, Pac-West's CFO, added, "In 2003, we made significant progress in our efforts to rebalance our capital structure. In particular, we retired $59.0 million of our 13.5% Senior Notes, utilizing a portion of our cash position as well as a $40.0 million capital investment raised during what remains a very difficult funding environment. Our fourth quarter financial performance included $3.7 million loss associated with successfully completing these initiatives. These efforts are expected to reduce our annual cash interest payments, enhancing cash flow to facilitate growth and defend any further anti- competitive actions by ILECs." Revenues Pac-West's total revenues for the fourth quarter 2003 were $28.1 million, a 7.3% decrease from revenues of $30.3 million in the third quarter of 2003, and a 41.8% decrease from revenues of $48.3 million in the fourth quarter of 2002. Fiscal 2003 revenues of $134.6 million represented an 18.0% decrease from revenues of $164.1 million for fiscal 2002. Both fourth quarter, and full year 2003 revenues were impacted by reciprocal compensation reductions resulting from lower per minute reciprocal compensation rates paid by ILECs and the withholding of reciprocal compensation payments by Verizon for the final five months of 2003 as well as by SBC for approximately one month of the fourth quarter as well as settlements received for reciprocal compensation revenues withheld from previous periods. Fourth quarter 2003 reciprocal compensation revenues declined by $1.7 million from the previous quarter, and full year 2003 reciprocal compensation revenues declined by $32.8 million from the previous year, as a result of lower per minute reciprocal compensation rates paid by ILECs, lower previously withheld reciprocal compensation, and withholdings by ILECs. Total revenues for the fourth quarter of 2002 were inclusive of the receipt of a previously announced $15.8 million settlement from SBC California for revenues withheld from previous periods. Excluding this settlement, Pac-West's total revenues for the fourth quarter 2003 decreased 13.5% from fourth quarter 2002. Total revenues for the full year 2002 included $20.6 million in previously announced settlements from various parties for revenues withheld from previous periods. Total revenues for the full year 2003 included $5.7 million in previously announced settlements from various parties for revenues withheld from previous periods. Excluding these settlements, Pac-West's total revenues for 2003 decreased by 10.2% from total revenues in 2002. As previously announced, both Verizon and SBC have attempted to adopt the Federal Communications Commission's (FCC) Intercarrier ISP Compensation Order. In particular, the FCC Order introduced a series of declining reciprocal compensation pricing tiers for minutes of use, at rates starting below the rates previously negotiated in our interconnection agreements with both carriers. The lowest pricing tier specified by the order went into effect on June 15, 2003, which will remain in effect until such time that a replacement FCC Order may be introduced. Additionally, the FCC Order introduced artificial annual growth limits on compensable minutes of use subject to reciprocal compensation based on the composition and balance of traffic between carriers. Based on their interpretations of the growth cap formula, Verizon commenced withholding reciprocal compensation payments to us during July 2003 for the remainder of 2003, and SBC commenced withholding in December 2003. ILECs that withheld reciprocal compensation payments for 2003 based on their interpretation of the FCC Order may also withhold reciprocal compensation payments in 2004 and beyond pending resolution of this issue. Pac-West is disputing these withheld reciprocal compensation revenues and has challenged the legality of the growth caps as well as Verizon's and SBC's implementation of the FCC Order. There are no assurances that we will ever receive any disputed past or future reciprocal compensation payments. Expenses Network expenses were $9.8 million in the fourth quarter of 2003, an increase of 11.4% from $8.8 million in the third quarter of 2003, but a decrease of 26.3% from $13.3 million in the fourth quarter of 2002. Annual network expenses of $36.3 million in 2003 decreased by 32.1% from annual network expenses of $53.5 million for 2002. Network expenses for the fourth quarter of 2003 were inclusive of $0.2 million in negotiated supplier credits recognized during the period. Similarly, network expenses for the third quarter of 2003 were inclusive of $2.0 million of supplier credits, and network expenses for the fourth quarter of 2002 were inclusive of no negotiated supplier credits for the period. These supplier credits are a result of the resolution of disputes with suppliers, and there can be no assurance that we will continue to receive supplier credits in the future. Excluding these supplier credits, and others received during the year, annual network expenses for 2003 were $44.1 million, a 17.6% decrease from network expenses of $53.5 million for 2002 resulting primarily from network optimization efforts including improved utilization of our IRU assets. Selling, general and administrative (SG&A) expenses were $14.6 million in the fourth quarter of 2003, a decrease of 3.9% from $15.2 million in the third quarter of 2003, and a 2.8% increase from $14.2 million in the fourth quarter of 2002. Annual SG&A expenses of $59.2 million in 2003 decreased by 1.5% from $60.1 million in annual SG&A expenses in 2002. Net Income (Loss) Net loss for the fourth quarter of 2003 was $9.8 million, compared to a net loss of $4.3 million for the third quarter of 2003, and net income of $3.2 million for the fourth quarter of 2002. Annual net loss was $15.3 million for 2003, compared to net income of $2.0 million for 2002. Diluted net loss per share (EPS) for the fourth quarter of 2003 was $0.27, as compared to a net loss of $0.12 in the third quarter of 2003, and net income of $0.09 in the fourth quarter of 2002. Diluted net loss for fiscal 2003 was $0.42 per diluted share, as compared to net income of $0.06 per diluted share in fiscal 2002. A loss on redemption of bonds of $3.7 million was recognized in 2003 relating to a completed tender offer to retire $59.0 million principal amount of Senior Notes. These actions follow a gain on redemption of bonds of $33.8 million recognized in 2002 relating to purchases undertaken to retire $54.9 million principal amount of Senior Notes at a significant discount from face value. EBITDA EBITDA (earnings before interest, net, income taxes, depreciation and amortization) for the fourth quarter of 2003 was $0.0 million, a 100.0% decrease from EBITDA of $6.3 million for the third quarter of 2003, and a 100.0% decrease from $19.0 million in the fourth quarter of 2002. For the year ended December 31, 2003, the Company's EBITDA was $35.3 million, a decrease of $23.6 million from $58.9 million for 2002. EBITDA for the fourth quarter of 2003, and fiscal 2003, were impacted by the previously announced reciprocal compensation reductions resulting from lower per minute reciprocal compensation rates paid by ILECs and the withholding of reciprocal compensation payments by Verizon for the final five months of 2003 as well as by SBC for approximately one month in the fourth quarter of 2003, as well as previously announced settlements and losses on redemption of bonds. Liquidity As of December 31, 2003, the Company had cash and short-term investments totaling $34.7 million, a decrease of $26.6 million from $61.3 million in cash at the end of the third quarter of 2003. For the year, cash and short-term investments decreased $22.6 million from $57.3 million as of December 31, 2002. Cash was utilized in 2003 for capital expenditures as well as to retire approximately $59.0 million of the formerly $95.1 million of outstanding 13.5% Senior Notes via a tender offer completed on December 18, 2003. This transaction was partially funded via a $40.0 million loan at three-month LIBOR plus 0.50%, which is currently less than 2.0%, from Deutsche Bank. These actions follow efforts in 2002 to retire approximately $54.9 million of the original $150.0 million outstanding Senior Notes through a combination of open market purchases as well as a cash tender offer. Over the course of the last two years, these efforts have reduced our total long-term debt to approximately $54.5 million from $150.0 million, and will reduce annual cash interest payments on our Senior Notes to $4.9 million from $20.3 million. Pac-West continues to review its debt obligations and is considering various alternatives to reducing its outstanding obligations and borrowing costs. Lines in Service and Minutes of Use Retail on-network DS-0 equivalent lines were 65,028 in the fourth quarter of 2003, a 3.4% sequential increase from 62,916 lines at the end of the third quarter of 2003, and a 19.6% year-over-year increase from 54,385 lines at the end of the fourth quarter of 2002. Wholesale DS-0 equivalent lines remained relatively unchanged at 363,164 in the fourth quarter of 2003, compared to 362,154 lines at the end of the third quarter of 2003, and a 33.2% year-over- year increase from 272,636 lines at the end of the fourth quarter of 2002. Total DS-0 equivalent lines in service, which include wholesale and on-network retail DS-0 line equivalents, were 428,192 in the fourth quarter of 2003, essentially unchanged from 425,070 lines at the end of the third quarter of 2003, and a 30.9% year-over- year increase from 327,021 lines at the end of the fourth quarter of 2002. Total minutes of use were 11.1 billion in the fourth quarter of 2003, essentially unchanged from 11.2 billion minutes in the third quarter of 2003, and a 30.6% increase from 8.5 billion minutes for the fourth quarter of 2002. Total minutes of use for the fiscal year 2003 were 41.7 billion, a 29.9% increase from 32.1 billion minutes of use for fiscal 2002. About Pac-West Telecomm, Inc. 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, please 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." PAC-WEST TELECOMM: Agrees to Acquire Sentient Group, Inc. --------------------------------------------------------- Pac-West Telecomm, Inc. (Nasdaq: PACW), a provider of broadband communications services to service providers and small and medium- sized enterprises in the western U.S., signed a definitive agreement to acquire substantially all of the assets, and assume certain specified liabilities of Sentient Group, Inc., a small provider of fully hosted, managed voice and data services for business communications. The transaction is currently anticipated to close within the next thirty days. Hank Carabelli, Pac-West's President and CEO, commented, "Based on the success of the Joint Operating Agreement we announced with Sentient in December of 2003, we are combining the two organizations to broaden our target markets and accelerate our entry into the medium and large-sized business customer segment using voice over Internet protocol. According to Dun & Bradstreet, there are over 50,000 MLE businesses in California alone. Sentient's proven success in developing and selling VoIP solutions is an ideal fit with the breadth and reliability of Pac-West's network, our existing services, and our shared passion for delivering Five-Star Customer Service. We look forward to partnering with Sentient's team and existing customers to significantly build on Sentient's accomplishments." Jeff Meacham, President and CEO of Sentient Group, Inc., said, "We are very excited about joining Pac-West to benefit our existing customers and greatly accelerate our growth. For many businesses evaluating the advantages of a VoIP solution, the reputation and reliability that Pac-West has built over the past 24 years is a powerful endorsement. We look forward to joining a team that emphasizes customer service and relationships as strongly as we do." About Pac-West Telecomm, Inc. 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, please 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." PENTHOUSE INT'L: S&P Approves Listing in Market Access Program -------------------------------------------------------------- Penthouse International (OTC Bulletin Board: PHSL), a diversified holding company with operating subsidiaries in adult entertainment and real estate, announced that the Editorial Board of Standard & Poor's has approved Penthouse International for inclusion in its premier Market Access Program. As part of the program, a full description of Penthouse International will be published in the Daily News Section of Standard & Poor's Corporation Records. Additionally, S&P will initiate financial coverage for Penthouse International on S&P MarketScope and the S&P Stock Guide database, as well as on the company's Internet Site at: http://www.advisorinsight.com/ S&P's financial coverage program is one of the industry's most widely accepted and best programs to broaden the dissemination of company information and heighten awareness within the financial community. The S&P Corporation Records is the definitive source of financial information available in print, CD-ROM and on the Internet, and is a recognized securities manual for secondary trading in approximately 35 states under the Blue Sky Laws. S&P's website, http://www.advisorinsight.com/provides free access to a full spectrum of investors interested in getting information on Penthouse International. S&P's MarketScope is a real-time information service offering instant access to current market information on Penthouse International by more than 80,000 brokers and traders worldwide. S&P's Stock Guide database is distributed electronically to virtually all major quote vendors. Vital statistics such as price, volume, dividends, shares outstanding, financial position, earnings and much more will be made available to thousands of brokers, traders and professionals. Penthouse International, Inc., through its 99.5% owned subsidiaries General Media, Inc. and Del Sol Investments LLC, is a brand-driven global entertainment business founded in 1965 by Robert C. Guccione. General Media's flagship PENTHOUSE brand is one of the most recognized consumer brands in the world and is widely identified with premium entertainment for adult audiences. General Media caters to men's interests through various trademarked publications, movies, the Internet, location-based live entertainment clubs and consumer product licenses. General Media licenses the PENTHOUSE trademarks to third parties worldwide in exchange for recurring royalty payments. Penthouse International, Inc.'s September 30, 2003 balance sheet shows a total shareholders' equity deficit of about $70 million. PG&E NATIONAL: CL Power Asks Court Nod to Set Off Cash Collateral ---------------------------------------------------------------- Before the Petition Date, CL Power Sales Ten, LLC and NEGT Energy Trading - Power, LP were parties to a Power Supply Agreement, dated as of March 5, 1999, pursuant to which ET Power provided power to CL Power. Subsequently, ET Power ceased performing under the Supply Agreement on the Petition Date. CL Power asserted $15,000,000 in damages resulting from ET Power's failure to perform under the Supply Agreement. The Cash Collateral The ET Debtors parent, PG&E Corporation, entered into a Guarantee, dated as of March 5, 1999, in favor of CL Power. Under the Guarantee, PG&E Corp. guaranteed ET Power's performance under the Supply Agreement. On January 3, 2001, by Assignment and Assumption Agreement, NEGT Energy Trading Holdings Corporation assumed and agreed to perform, discharge and observe all the obligations of PG&E Corp. arising out of the Guarantee. Moreover, ET Holdings provided a $4,000,000 cash collateral to secure the performance of ET Power under the Supply Agreement. Consequently, CL Power asserts a $15,000,000 claim against ET Holdings for damages resulting from the same failure by ET Power to perform under the Supply Agreement, pursuant to the Guarantee and the Assignment and Assumption Agreement. By this motion, CL Power asks the Court to lift the automatic stay so it may set off the $4,000,000 Cash Collateral against its $15,000,000 prepetition claim against ET Power and ET Holdings. Michael D. Colglazier, Esq., Hogan & Hartson, LLP, in Baltimore, Maryland, tells the Court that, in accordance with In re The Bennett Funding Group, Inc., 146 F.3d at 140-41, where a party has a valid set-off right -- where the amount of the debt exceeds the amount due to the estate in refunds -- good cause exist to lift the automatic stay to permit set-off. Furthermore, in In re Davidson Lumber Sales, Inc., 66 F.3d 1560, 1569 (10th Cir. 1995) "if the right to set off will not substantially interfere with the debtor's reorganization effort and has been obtained in good faith, equitable consideration favor lifting the automatic stay to allow setoff." Section 362(d)(2) of the Bankruptcy Code also allows relief from the stay if the debtor has no equity in the property and the property is not necessary to an effective reorganization. According to Mr. Colglazier, although ET Power and ET Holdings may -- or may not -- dispute that CL Power has a valid claim for $15,000,000, it is undisputed CL Power has a valid claim in excess of $4,000,000. ET Power's and ET Holding's debt to CL Power, therefore, is greater than the amount of the Cash Collateral. Mr. Colglazier assures the Court that CL Power's right to set-off will not interfere with an effective reorganization because the ET Debtors have represented -- and it appears undisputed -- that they will proceed to liquidation, either through a reorganization plan or by conversion to a proceeding under Chapter 7 of the Bankruptcy Code. Mr. Colglazier relates that, due to ET Power's breach of the Supply Agreement, CL Power obtained power from alternative sources at prices greater than what it would have paid under the Supply Agreement. CL Power needs access to the Cash Collateral to pay for and continue to pay for this alternative, higher- priced power. (PG&E National Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) PG&E CORP: Reports Improved Fourth Quarter 2003 Results ------------------------------------------------------- PG&E Corporation (NYSE: PCG) earned $420 million, or $1.06 per share, in consolidated net income in 2003, compared with a net loss of $874 million, or $2.26 per share, in 2002. For the fourth quarter only, consolidated net income was $37 million, or $0.09 per share, in 2003, compared with a net loss of $2,189 million, or $5.41 per share, in the fourth quarter of 2002. On an earnings-from-operations basis, PG&E Corporation and its California utility business, Pacific Gas and Electric Company, earned $611 million, or $1.48 per share in 2003, compared with $851 million, or $2.22 per share in 2002. Earnings from operations for the fourth quarter only were $139 million, or $0.34 per share, in 2003, compared with $220 million, or $0.55 per share, in 2002. PG&E Corporation's earnings from operations do not include results from National Energy & Gas Transmission, Inc. (NEGT). Also excluded from earnings from operations are headroom at Pacific Gas and Electric Company, as well as certain non-operating income and expenses. Income from headroom (the difference between Pacific Gas and Electric Company's generation-related costs and generation-related revenues) was $43 million, or $0.11 per share, in the fourth quarter of 2003, compared with $133 million, or $0.33 per share, in the fourth quarter of 2002. Total headroom in 2003 was $677 million, or $1.64 per share, compared with $1,051 million, or $2.74 per share, in 2002. For the full year 2003, items impacting comparability at the Corporation and Pacific Gas and Electric Company primarily included incremental interest costs of $370 million, or $0.85 per share, as well as Chapter 11 costs and costs related to the California energy crisis of $123 million, or $0.30 per share, generally consisting of external legal fees, financial advisory fees and other related costs. As disclosed in the Corporation's annual report on Form 10-K for 2003, accounting for stock options as an expense in 2003 would have reduced earnings by $0.05 per share. PACIFIC GAS AND ELECTRIC COMPANY Pacific Gas and Electric Company contributed $616 million, or $1.49 per share, to earnings from operations in 2003, compared with $797 million, or $2.08 per share, in 2002. For the fourth quarter only, Pacific Gas and Electric Company's earnings from operations were $141 million, or $0.35 per share, in 2003, compared with $204 million, or $0.51 per share, in 2002. The difference between Pacific Gas and Electric Company's 2003 and 2002 earnings from operations, both for the full year and for the fourth quarter, largely reflected the delay of a final decision in the 2003 General Rate Case (GRC), which is pending at the California Public Utilities Commission (CPUC). While the delay of the final GRC decision affects earnings from operations, it did not significantly affect the utility's or the Corporation's consolidated net income, because the majority of any revenues authorized for 2003 are recognized in existing headroom, which is included in 2003 consolidated net income. The delay of the GRC decision is not expected to impact 2004 earnings from operations or 2004 earnings guidance, because Pacific Gas and Electric Company continues to expect that the final GRC decision will reflect the terms of the settlement agreement the utility reached in September with the CPUC's Office of Ratepayer Advocates and various consumer groups. Under the settlement, the CPUC would authorize base revenues for 2003 and provide for timely and predictable revenue adjustments in 2004, 2005 and 2006 to cover higher expenses for rate base growth and inflation. In addition to the delay of the GRC decision, the year-over-year difference in utility earnings from operations is attributable to lower revenues in 2003 from the utility's California gas transmission pipeline due to increased hydroelectric production, which reduced the demand for some gas-fired generation. Additionally, PG&E Corporation had a greater number of average shares outstanding in 2003. These factors were offset partially by the positive impact of higher electric transmission rates that went into effect in August 2003. CHAPTER 11 EXIT ACTIVITIES Pacific Gas and Electric Company continues to move forward as planned with preparations to implement the Plan of Reorganization approved in December by the CPUC and federal bankruptcy court. The utility has targeted April 2004 to complete the sale of the long- term debt, which the utility expects to be the last condition of the Plan of Reorganization to be satisfied. The plan provides that the effective date will occur 11 business days after all the conditions have been satisfied. "We continue to see a clear path to stability and increasing financial performance through Pacific Gas and Electric Company's upcoming exit from Chapter 11," said Robert D. Glynn, Jr., PG&E Corporation Chairman of the Board, CEO and President. NATIONAL ENERGY & GAS TRANSMISSION PG&E Corporation's consolidated net income for the full year 2003 includes financial results for NEGT only for the period January 1 through July 7, 2003, which are classified as results from discontinued operations. On July 8, 2003, NEGT, then named PG&E National Energy Group, Inc., and certain of its subsidiaries filed for Chapter 11. PG&E Corporation no longer has representatives on NEGT's Board of Directors and no longer retains significant influence over the ongoing operations of NEGT. PG&E Corporation's equity interest in NEGT is expected to be eliminated when the bankruptcy court approves a plan of reorganization for NEGT. As appropriate under accounting rules, as of July 8, 2003, PG&E Corporation is no longer including NEGT in the Corporation's consolidated results and has begun using the cost method of accounting to reflect its ownership interest in NEGT. GUIDANCE FOR 2004 EARNINGS FROM OPERATIONS Reaffirming its previously issued earnings guidance, the Corporation expects 2004 earnings from operations for PG&E Corporation and Pacific Gas and Electric Company to be in the range of $2.00-$2.10 per share. Guidance estimates reflect forecasted results for PG&E Corporation and Pacific Gas and Electric Company; guidance does not include NEGT. Guidance for 2004 is based on a number of assumptions, including the assumption that the confirmed plan of reorganization is implemented in a timely manner. Guidance also assumes that the CPUC issues a final decision in the utility's 2003 GRC that is consistent with the terms of the GRC settlement agreement. PG&E Corporation bases guidance on "earnings from operations" in order to provide a measure that allows investors to compare the underlying financial performance of the business from one period to another, exclusive of items that management believes do not reflect the normal course of operations. Earnings from operations are not a substitute or alternative for consolidated net income presented in accordance with GAAP. PITTSBURGH, PA: S&P Revises Outlook on BB Bond Rating to Positive ----------------------------------------------------------------- Standard & Poor's Ratings Services affirmed its 'BB' rating on Pittsburgh, Pa.'s outstanding general obligation bonds and removed the rating from CreditWatch, where it had been placed Oct. 15, 2003, while assigning a positive outlook to the rating. The removal of the rating from CreditWatch follows the city's progress in developing a framework by which it may identify and implement budget-balancing options under its control and/or successfully negotiate expanded revenue and tax authority. The positive outlook reflects the city's recently approved status as a "distressed municipality" under Pennsylvania Act 47; the ensuing assignment of a coordinator to develop a financial recovery plan; and the passage of House Bill 2006, which establishes an Intergovernmental Cooperation Authority to work in concert with the Act 47 coordinator and prohibits the city's filing under Chapter 9 of the U.S. Bankruptcy Code without the governor's approval. The ICA would not have any revenue or debt- raising authority, but could recommend withholding of state monies should the city fail to comply with the recovery plan. The assignment of Pennsylvania Act 47 "distressed municipality" status and the establishment of the ICA provides a two-track process (certain elements of which need to be clarified) to help the city develop a financial recovery plan. "The development of a financial recovery plan that restores budgetary balance could result in a rating upgrade," said Standard & Poor's credit analyst Jeffrey Panger. The ICA, which would provide financial oversight to the city, would have the power to make annual reports to the General Assembly; make recommendations to the city and General Assembly regarding consolidation of services, restructuring of debt, the need for new revenue, and changes to future labor agreements; and review and approve operating and capital budgets, five-year financial plans, and quarterly financial reports. The CreditWatch removal affects approximately $879 million of outstanding city general obligation debt. PLAINS RESOURCES: Accepts Vulcan's Revised Acquisition Proposal --------------------------------------------------------------- Plains Resources Inc. (NYSE: PLX) entered into a definitive cash merger agreement with an affiliate of Vulcan Capital, the investment arm of Paul G. Allen's Vulcan Inc. Plains Resources' Chairman James C. Flores and its CEO and President, John T. Raymond are participating with the affiliate of Vulcan Capital in the transaction. The agreement provides for shareholders of Plains Resources, other than Mr. Flores and Mr. Raymond (who together with the affiliate of Vulcan Capital form the "Vulcan Group") to receive $16.75 per share in cash. As previously announced on November 20, 2003, the Vulcan Group delivered a written proposal to Plains Resources to acquire all of PLX's outstanding stock for $14.25 per share in cash (the "Original Vulcan Proposal"). The Board of Directors of Plains Resources formed a Special Committee of independent directors in response to the Original Vulcan Proposal. The Special Committee was authorized to retain independent advisors and to review, evaluate, negotiate, and make recommendations to the full board of Plains Resources with respect to the Original Vulcan Proposal. In addition, the Special Committee was authorized to consider proposals from other parties relating to a transaction with Plains Resources. The Special Committee retained Petrie Parkman & Co., Baker Botts L.L.P., and Morris, Nichols, Arsht & Tunnell as its independent advisors. After careful consideration, including a thorough review with its independent advisors, the Special Committee announced on January 22, 2004 that it had determined that the Original Vulcan Proposal was inadequate and not in the best interests of Plains Resources' shareholders. Following discussions and negotiations with the Vulcan Group and other interested parties, the Special Committee voted unanimously to recommend to the PLX Board of Directors and to Plains Resources' shareholders the $16.75 per share proposal from the Vulcan Group. The PLX Board of Directors, excluding Mr. Flores, has approved the merger agreement and recommends that shareholders vote in favor of the transactions contemplated thereby. The Revised Vulcan Proposal is backed by financing commitment letters from Fleet Bank, Bank of America, and Paul G. Allen. The $16.75 per share cash price in the Revised Vulcan Proposal represents a premium of approximately 24.6% over the closing price of Plains Resources stock of $13.44 per share on the day prior to the Original Vulcan Proposal and an increase of $2.50 per share above the Original Vulcan Proposal. In addition, $16.75 per share is above the highest closing price of Plains Resources shares on the New York Stock Exchange since the spin-off of Plains Exploration & Production Company on December 18, 2002. The merger agreement contains customary fiduciary termination rights. The closing of the merger is subject to approval by the shareholders of Plains Resources and other customary closing conditions. The company plans to hold a special meeting of shareholders as soon as practicable. Completion of the transaction is expected during the second quarter of 2004. As a result of the merger, Plains Resources will become a privately-held company. Accordingly, upon closing, the registration of the company's common stock under the Securities Exchange Act of 1934 will terminate and the Company will cease filing reports with the Securities and Exchange Commission. About Vulcan Capital Vulcan Capital is the private investment department of Vulcan Inc., the project and investment management company founded by Paul G. Allen in 1986 to manage his personal and business initiatives. Vulcan Capital is focused on generating long-term value appreciation across a diversified, multi-billion dollar portfolio. Investment activity spans various industry sectors and asset classes, from early stage venture investments and public equity investing to leveraged buyouts and structured finance. About Plains Plains Resources is an independent energy company engaged in the acquisition, development and exploitation of crude oil and natural gas. Through its ownership in Plains All American Pipeline, L.P., Plains Resources has interests in the midstream activities of marketing, gathering, transportation, terminalling and storage of crude oil. Plains Resources is headquartered in Houston, Texas. At Sept. 30, 2003, the company's balance sheet reports a working capital deficit of about $20 million. QWEST COMMS: Charles L. Biggs and K. Dane Brooksher Join Board -------------------------------------------------------------- Qwest Communications International Inc.'s (NYSE: Q) board of directors approved the appointments, effective April 1, of Charles L. Biggs, retired Senior Partner in Deloitte Consulting, and K. Dane Brooksher, chairman and chief executive officer of ProLogis, to the Qwest board. When they become directors, Messrs. Biggs and Brooksher will serve on the board's audit committee. "We're pleased to have Charles and Dane join the board of directors. Their respective backgrounds and leadership will certainly complement the wealth of experience we have on our board today," said Richard C. Notebaert, chairman and CEO of Qwest. "These appointments are further evidence of our progress in creating the new Qwest." Biggs, who retired in November 2002, spent 34 years at Deloitte Consulting where he served as National Director of Strategy Services for Deloitte's strategy arm and was chairman of Deloitte/Holt Value Associates. He has advised companies on governance matters, and has also advised on business strategy, marketing, finance, manufacturing and systems management. He is past chairman of AMCF -- the Association of Management Consulting Firms -- and is a member of the New York chapter of the Institute of Management Consultants. Brooksher is chairman and CEO of ProLogis. ProLogis (NYSE: PLD) is Denver-based and is the world's largest global provider of distribution services and facilities. Prior to joining ProLogis, he was with KPMG Peat Marwick for over 32 years, where he served as vice chairman, and as the company's mid-west area managing partner and the Chicago office managing partner. He is currently a board member of, among other organizations, Butler Manufacturing Company, Pactiv Corporation, and the National Association of Manufacturers. He is also a member of the advisory board of the J. L. Kellogg Graduate School of Management at Northwestern University. Following the appointment of Biggs and Brooksher, Qwest's board of directors will have 14 members. "I'm very excited to be joining the Qwest team and working with my fellow board members to support the company's plans for long-term profitable growth and shareowner value," said Biggs. Brooksher added, "I'm pleased to have the opportunity to work with such an experienced board and management team. I look forward to helping them plot a course for future success through stronger customer relationships and a strengthened financial position." Qwest Communications International Inc. (NYSE: Q) is a leading provider of voice, video and data services to more than 25 million customers. The company's 47,000 employees are committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at: http://www.qwest.com/ At March 31, 2003, Qwest Communications's balance sheet shows a total shareholders' equity deficit of about $2.6 billion. RAILAMERICA: Posts $17M Working Capital Deficit at Dec. 31, 2003 ---------------------------------------------------------------- RailAmerica, Inc. (NYSE:RRA) reported its financial results for the fourth quarter and year ended December 31, 2003. Financial highlights for the quarter and year included: -- Diluted EPS from continuing operations for the fourth quarter of 2003 was $0.15 per share. Excluding a non-cash charge of $0.05 per share relating to a December 2003 change in the statutory tax rate in Ontario, Canada, diluted EPS from continuing operations was $0.20 per share. -- Diluted EPS from continuing operations for the year was $.75 per share. Excluding the Canadian tax law change, diluted EPS from continuing operations was $0.80 per share. -- Net debt-to-capital ratio was reduced to 58% at December 31, 2003. -- Free cash flow from continuing operations was $20.7 million for the year ended December 31, 2003.(1) Income from continuing operations for the fourth quarter ended December 31, 2003 was $5.0 million, or $.15 per diluted share compared to $6.7 million or $.20 per diluted share in 2002. Excluding the tax charge of $1.5 million, or $.05 per share, related to the December 2003 change in tax rate in Ontario, Canada, net income for the 2003 quarter was $6.5 million or $.20 per share. Fourth quarter 2002 net income included an after-tax charge of $2.3 million, or $.07 per share, related to restructuring and bid costs. Consolidated revenue from continuing operations for the fourth quarter of 2003 increased $10.3 million, or 12.3%, to $93.9 million, from $83.6 million in 2002. Excluding the impact of acquisitions in 2003, revenue increased $5.9 million or 7.1%. Operating expenses were $75.3 million in the fourth quarter of 2003 compared to $65.2 million in the fourth quarter of 2002. Asset sale gains were $0.9 million in the fourth quarter of 2003 compared to $3.8 million in the fourth quarter of 2002. The fourth quarter of 2002 also included $3.0 million of restructuring and acquisition costs. Operating income for the fourth quarter of 2003 was $18.6 million, compared to $18.4 million in 2002. Net income for the fourth quarter of 2003, which includes the discontinued international railroads, Ferronor and Freight Australia, was $1.4 million or $0.05 per diluted share compared to $1.8 million or $0.06 per diluted share in 2002. For the year ended December 31, 2003, revenue from continuing operations increased 7.5% to $358.4 million from $333.3 million in 2002. Despite higher fuel costs, the North American operating ratio improved to 77.3% for the year ended December 31, 2003, compared to 77.8% for the year ended December 31, 2002. Income from continuing operations and net income for 2003 was $24.7 million and $14.7 million, respectively, compared to $2.5 million and $2.2 million, respectively, in 2002. Management estimates that the 2003 results were negatively impacted by $.19 cents per share compared to 2002 due to the severe drought in Australia. The 2003 results include the $1.5 million tax charge for the December 2003 change in the tax rate in Ontario, Canada while the 2002 results include $22.4 million of after-tax charges associated with restructuring, refinancing and acquisition activities. "RailAmerica continued to see revenue growth exceeding industry averages in the fourth quarter. This growth is a reflection of the excellent service we provide to our customers coupled with the strengthening domestic economy. In the fourth quarter, we saw carload increases in 11 of our 14 commodity groups," said Gary O. Marino, Chairman, President and CEO of RailAmerica. "In addition, while we are actively pursuing the sale of Freight Australia, we are very encouraged by the results of the recent grain harvest and the positive impact it is having on our grain task in Australia. As evidenced by our December and January carloading reports, which showed agriculture commodity carloads up 89% from the comparable prior periods, we are quite optimistic about the commercial prospects for Freight Australia." Michael J. Howe, RailAmerica's Executive Vice President & CFO, said, "Overall, we made significant progress during 2003 in improving RailAmerica's financial fundamentals. We are pleased that we reduced our net debt-to-capital ratio from 64% at December 31, 2002 to 58% at December 31, 2003 and continue to target 50% by December 31, 2004. We remain focused on generating free cash flow, increasing our return on invested capital, managing risk, controlling costs and improving our capital structure." Marino added, "So far in 2004, we have completed the sale of our Chilean railroad, Ferronor, and the acquisition of the Central Michigan Railroad. We are committed to completing the sale of Freight Australia and believe the proceeds from that sale could be used to further de-lever our balance sheet and assist in funding additional accretive acquisitions in North America." RailAmerica's December 31, 2003 balance sheet shows a working capital deficit of $17,109,000. RailAmerica, Inc. (NYSE:RRA) is the world's largest short line and regional railroad operator with 47 railroads operating approximately 15,000 miles in the United States, Canada, and Australia, including track access arrangements. The Company is a member of the Russell 2000(R) Index. Its website may be found at: http://www.railamerica.com/ * * * As reported in Troubled Company Reporter's January 28, 2004 Edition, Standard & Poor's Ratings Services assigned a preliminary 'B+/B' rating to RailAmerica Inc.'s (RRA.N: Quote, Profile, Research) and unit RailAmerica Transportation Corp.'s (co- registrants) $400 million Rule 415 shelf registration, under which the companies may issue debt securities. The 'B+' preliminary rating reflects the rating that would likely be assigned to senior unsecured debt obligations, based on the company's current capital structure, which contains a significant amount of secured debt. The 'B' rating reflects the rating that would be assigned to subordinated debt. The companies may also issue senior secured debt and RailAmerica Inc., may also issue preferred stock under the shelf. At the same time, Standard & Poor's affirmed its 'BB-' corporate credit rating on RailAmerica Inc. and its 'BB' senior secured bank loan rating and 'B' subordinated debt rating on RailAmerica Transportation Corp. RailAmerica Transportation Corp.'s debt is guaranteed by RailAmerica Inc. The outlook is stable. READER'S DIGEST: S&P Assigns BB- Rating to $300M Sr. Unsec. Notes ----------------------------------------------------------------- Standard & Poor's Ratings Services assigned its 'BB-' rating to Reader's Digest Association Inc.'s privately placed, Rule 144A offering of $300 million senior unsecured notes due 2011. Proceeds from this offering are expected to be used to repay a portion of outstanding debt under the company's term loan. Standard & Poor's affirmed its ratings, including its 'BB' corporate credit rating, on the company. The rating outlook remains negative. Pleasantville, New York-based Reader's Digest publishes the world's highest circulating, paid magazine and is a leading direct marketer of books. Pro forma total debt as of Dec. 31, 2003, was $806 million. The core Reader's Digest worldwide magazine and direct marketing book businesses, accounting for about half of sales, have exhibited declining revenues and low margins, and incurred several restructuring charges. The success of management's strategies to stimulate profitability is less assured given the demographic and lifestyle trends of its mature customer base, while competitive distribution channels are increasing due to the proliferation of book superstores and the growth of Internet book sales. "The negative outlook reflects the company's currently lackluster profitability and the modest cushion against the bank agreement's maximum debt leverage covenant," said Standard & Poor's credit analyst Hal Diamond. "Standard & Poor's would consider revising the outlook to stable over the near to intermediate term if the company is able to improve profitability and widen the cushion of covenant compliance," Mr. Diamond added. REDDY ICE: Q4 Earnings Release & Conference Call Set for Feb. 25 ---------------------------------------------------------------- Reddy Ice Group, Inc. announced that it plans to release results for the fourth quarter 2003 on Wednesday, February 25, 2004 at 6:00 a.m. eastern time. In conjunction with the release, Reddy Ice has scheduled a conference call on Wednesday, February 25, 2004 at 10:00 a.m. eastern time. What: Reddy Ice Fourth Quarter Earnings Conference Call When: Wednesday, February 25, 2004 - 10:00 a.m. eastern How: Live via phone, by dialing 303-262-2175 and asking for the Reddy Ice call 10 minutes prior to the start time. A telephonic replay will be available through March 3, 2004 and may be accessed by calling 303-590- 3000 and using the passcode 570613. For more information, please contact Karen Roan at DRG&E at 713-529-6600 or email kcroan@drg-e.com . Reddy Ice (S&P, B+ Corporate Credit Rating, Stable) is the largest manufacturer and distributor of packaged ice in the United States. With over 2,000 employees, the Company sells its products primarily under the widely known Reddy Ice(R) brand to more than 82,000 locations in 32 states and the District of Columbia. The Company provides a broad array of product offerings in the marketplace through traditional direct store delivery, warehouse programs, and its proprietary technology, The Ice Factory(R). Reddy Ice serves most significant consumer packaged goods channels of distribution, as well as restaurants, special entertainment events, commercial users and the agricultural sector. Reddy Ice Group, Inc. is a wholly owned subsidiary of Reddy Ice Holdings, Inc., an entity owned and managed by Trimaran Capital Partners and Bear Stearns Merchant Banking. REPUBLIC ENGINEERED: Names George Strickler Chief Fin'l Officer --------------------------------------------------------------- Republic Engineered Products Inc., North America's largest producer of special bar quality (SBQ) steel, announced that it has appointed George E. Strickler to executive vice president and chief financial officer. Strickler, 56, joins Republic from BorgWarner Inc. in Chicago, where he served as executive vice president and chief financial officer. Strickler is also a former vice president of finance for Akron-based Goodyear Tire & Rubber Co., where he held finance and treasury positions for 30 years. "We are proud to welcome George to our management team," said Joseph F. Lapinsky, Republic's president and chief executive officer. "He will bring tremendous financial experience and vision to Republic as we continue to grow stronger and prepare for the future. His extensive knowledge of the automotive industry brings added benefits to our commercial equation. This is a clear signal that our improved financial structure will be a real value to the business in many ways as we proceed. George's contributions will help leverage this." Strickler joined BorgWarner, a $3 billion Tier I automotive supplier, in March 2001, as executive vice president and CFO, and was part of a management team credited with dramatic improvements in financial performance. In 2003, Strickler was named "CFO of the Year" by the Chicago chapter of the National Investor Relations Institute and Northwestern University's Kellogg School of Management. Prior to joining BorgWarner, he was executive vice president and CFO at Lake West Group, a retail consulting company based in Cleveland. Strickler's 30-year career at Goodyear began in 1969. He held top finance posts with operations in Brazil and Peru, then served as director of international treasury, and then held several finance management posts in the corporate office. In 1998, he became assistant comptroller-vice president for the tire business, and in 1993 he became corporate vice president financial operations and comptroller. In 1996, he was named vice president of finance- North America, a position he held three years. He holds a bachelor of science degree in accounting from Pennsylvania State University and an MBA in finance from the University of Akron. Republic Engineered Products, Inc. is North America's leading supplier of special bar quality (SBQ) steel, a highly engineered product used in axles, drive trains, suspensions and other critical components of automobiles, off- highway vehicles and industrial equipment. With headquarters in Fairlawn, Ohio, Republic Engineered Products Holdings LLC, filed for chapter 11 protection (Bankr. N.D. Ohio Case No.: 03-55118-mss) on October 6, 2003. Shawn M. Riley, Esq. of McDonald, Hopkins, Burke & Haber Co LPA and Martin J. Bienenstock, Esq. of Weil, Gotshal & Manges LLP represent the debtor in its restructuring efforts. As of June 30, 2003, it listed assets of $481,000,000 and debts of $467,939,000. ROOD TRUCKING CO: Case Summary & 20 Largest Unsecured Creditors --------------------------------------------------------------- Debtor: Rood Trucking Company, Inc. 3505 Union Street P.O. Box 556 Mineral Ridge, Ohio 44440 Bankruptcy Case No.: 04-40227 Type of Business: The Debtor is engaged in the trucking industry as a contract carrier for the United States Postal Service. The Company utilizes over-the- road tractor-trailer rigs for hauling that exclusive cargo. Chapter 11 Petition Date: January 23, 2004 Court: Northern District of Ohio (Youngstown) Judge: William T. Bodoh Debtor's Counsel: Melissa M. Macejko, Esq. Suhar & Macejko, LLC 1101 Metropolitan Tower P.O. Box 1497 Youngstown, OH 44501-1497 Tel: 330-744-9007 Estimated Assets: $1 Million to $10 Million Estimated Debts: $1 Million to $10 Million Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Internal Revenue Service Withholding taxes $551,828 Insolvency Group 3 P.O. Box 99183 - Rm. 457 Cleveland, OH 44199 Scudder Investments Contributions to $254,558 108 W. Western Reserve Rd. employee pension Youngstown, OH 44514 New York State Insurance $221,524 BP Oil Company Fuel $106,255 Taft, Stettinius & Hollister Professional fee $95,078 The Lyden Company Fuel $72,096 Shirley Davis Insurance Premiums $62,779 Tops Markets, LLC Fuel $57,759 Dunn & Bradstreet Professional fee $50,000 R & R, Inc. Parts $43,167 New York State Thruway Tolls $28,898 U.S. Fleet Services Fuel $26,074 Tire Centers, Inc. Tires $25,482 Anthem Blue Cross/ Medical Insurance $21,363 Blue Shield Burns, O'Hare & Bella Professional fee $19,310 NOCO Energy Corp. Fuel $11,370 Pennsylvania Turnpike Tolls $9,500 Ohio Turnpike Commission Tolls $8,627 L. Calvin Jones Insurance Premiums $8,422 Terry's Tire Town Tires $7,246 RSTAR CORP: Shares Knocked Off Nasdaq, Now Trading on OTC BB ------------------------------------------------------------ As a result of rStar Corporation's (Nasdaq:RSTRC) failure to satisfy the $1.00 minimum bid price rule, shares of the Company's common stock were delisted from The Nasdaq SmallCap Market effective with the opening of business on Thursday, February 19, 2004. The Company's securities are immediately eligible for quotation on the OTC Bulletin Board effective Feb. 19. The OTC Bulletin Board symbol assigned to the Company is RSTR. As previously announced, although shares of rStar's common stock have failed to satisfy the $1.00 minimum bid requirement for continued listing on The Nasdaq SmallCap Market for some time, to date the Company's shares have continued to be listed pursuant to a series of grace periods for compliance granted to the Company by the Nasdaq Listing Qualifications Panel. The last grace period expired on February 17, 2004, and the Nasdaq Listing Qualification Panel determined not to grant any further extensions. Founded in 1997, rStar Corporation (Nasdaq:RSTRC) is a leading provider of satellite-based communications services in Latin America. Through its Starband Latin America (Holland) NV subsidiary, it operates satellite-based rural telephony networks as well as high-speed consumer Internet access pilot networks for the SOHO and select consumer market segments in certain Latin American countries. Gilat Satellite Networks Ltd. (Nasdaq:GILTF) owns approximately 85% of rStar Corporation's issued and outstanding common stock. rStar Corporation headquarters are located in Sunrise, Florida. rStar Corp.'s September 30, 2003 balance sheet shows a working capital deficit of $6,371,000. Net loss for the three months ended September 30, 2003 was $3,609,000. SPECTRASITE: Stockholders Register 9-Mil. Shares for Sale --------------------------------------------------------- SpectraSite, Inc., is launching a public offering of shares of common stock. All of the 9,000,000 shares of common stock are being sold by selling stockholders. SpectraSite will not receive any of the proceeds from the shares being sold by these selling stockholders. On February 5, 2004, the last reported sale price of the Company's common stock, which is quoted on the New York Stock Exchange under the ticker symbol "SSI", was $35.50 per share. * * * Standard & Poor's Ratings Services revised the outlook on Cary, N.C.-based wireless tower operator SpectraSite Inc. to positive from stable. At the same time, Standard & Poor's affirmed its ratings on the company, including the 'B' corporate credit rating. As of Sept. 30, 2003, the company had about $640 million in total debt outstanding. SPIEGEL GROUP: Court Gives Clearance for New Fry Agreements ----------------------------------------------------------- James L. Garrity, Jr., Esq., at Shearman & Sterling LLP relates that as each Merchant Division sells goods through their user- friendly websites, the Spiegel Group Debtors' customer-focused Internet operations and related websites are critical to their businesses. Web sales not only comprise a substantial portion of the Debtors' gross income, but also support their continuing efforts to maximize the value of their brand identities. Fry, Inc. has provided website technical design and development, back- end integration, strategy, usability assessment, creative design, hosting, and other managed services to the Debtors since 1996. On January 1, 2002, the Debtors and Fry entered into a certain Web Site Hosting Agreement and a certain Services and Consulting Agreement. Pursuant to these Prior Fry Agreements, Fry has provided and continues to provide website hosting and related professional and development services to the Debtors. The Prior Hosting Agreement had an original expiration date of August 2003, which was automatically extended by six months to February 2004. The Prior Service Agreement had an original expiration date of January 2004 and was automatically renewed until January 2005. In early 2002, the Debtors began to evaluate whether the Prior Fry Agreements were the most cost efficient means for the hosting of their websites. As part of that process, the Debtors conducted a financial analysis to determine the costs of hosting their websites internally and concluded that while there would be a break-even cash flow impact, hosting the websites internally would require a large capital expenditure and increase the risk of website failure. In addition, the Debtors engaged in discussions with and solicited bids from other website hosting and development companies. After reviewing and analyzing those bids, the Debtors determined to restructure their contractual relationships with Fry. The Debtors made that determination based on these facts: (a) Fry reduced their hosting charges to a level that was comparable to the bids received; (b) A lead-time of four months would be required to transition new website development and hosting providers; (c) The Debtors have an excellent relationship with Fry; and (d) Fry provides superior service. In 2003, the http://eddiebauer.com/Web site earned the fastest transaction speed of the 13 sites measured in the Keynote Systems Consumer E-Commerce Transaction Index, with times twice as fast as the index average and website availability consistently above 99%. Moreover, the eddiebauer.com website was the winner of WebAwards from the Web Marketing Association in 2000, 2001 and 2002, as well as named a Top 50 Retailing Site by Internet Retailer Magazine in 2002. This illustrates Fry's provision of good quality service. The New Fry Agreements On December 22, 2003, the Debtors and Fry entered into a new Web Site Hosting Agreement and a new Services and Consulting Agreement. In connection with the New Fry Agreements, the Debtors sent a letter to Fry on December 23, 2003, which, among other things, sets forth the treatment of its claims against the Debtors. Pursuant to the New Hosting Agreement, Fry will provide certain website hosting services to the Debtors at a reduced cost. The key terms and conditions contained in the New Hosting Agreement are: Term The New Hosting Agreement is effective as of the Petition Date and will terminate on August 31, 2004, unless earlier terminated. The New Hosting Agreement will be automatically renewed beyond the initial term for an additional six-month term unless the Debtors provide Fry with a written notice of termination at least 30 days prior to the expiration of the initial term. Hosting Service The New Hosting Agreement calls for monthly Fees payments of $175,000. This is a $50,000 reduction in the monthly payments called for by the Prior Hosting Agreement. The reduced pricing is retroactive to the Petition Date and the Debtors have made payments to Fry at this reduced rate since then. In addition, the Debtors are required to pay Fry a one-time fee of $60,000 for certain hardware and managed service labor incurred in connection with the establishment of certain secondary websites. Out-of-Pocket The Debtors will reimburse Fry for reasonable Expenses and necessary out-of-pocket expenses, including, without limitation, reasonable and necessary travel and travel-related expenses, incurred by Fry in connection with the services rendered to the Debtors pursuant to the New Hosting Agreement. Fry will obtain the prior written approval of the Debtors prior to incurring any single out-of-pocket expense in excess of $500. Indemnification The Debtors agree to indemnify, defend, and of Fry hold Fry harmless, and defend any third party action or threat of action, claim, demand, cause of action, debt or liability, including reasonable attorney's fees, to the extent that such action is based on a claim that: * if true, would constitute a breach of any of the Debtors' representations, warranties or agreements under the New Hosting Agreement; * arises out of the negligence or willful misconduct of the Debtors; or * any of the Client Content to be provided by the Debtors under the New Hosting Agreement, or other material on the Web Site infringes or violates any rights of third parties, including rights of publicity, rights of privacy, patents, copyrights, trademarks, trade secrets, and licenses. Indemnification Fry agrees to indemnify, defend, and hold of the Debtors harmless the Debtors and defend any third party action or threat of action, claim, demand, cause of action, debt or liability including reasonable attorneys' fees, to the extent that: * such action is one of certain pre-existing actions set forth in the New Hosting Agreement; or * such action is based on a claim arising on or after the Petition Date that: -- if true, would constitute a breach of any of Fry's representations, warranties or agreements under the New Hosting Agreement; -- arises out of the gross negligence or willful misconduct of Fry; or -- the Web Site, the Hosting Services, the Work Product, or the Host Materials infringes upon, violates or misappropriates any patent, copyright, trade secret, trademark, contract or other right or interest of any third party: (1) which right or interest arises under the law of the United States or under the law with regard to the same subject matter of another country with which the United States is a co-signer of a treaty with respect to such law; and (2) of which Fry actually knew or of which a reasonably informed provider of Internet hosting services would have known, in either case of the time that the claim arises. Fry's liability for its obligation to indemnify the Debtors will not exceed: (i) $50,000 for the period March 17, 2003 through March 31, 2004; and (ii) $90,000 per year or $10,000 per month for each year after March 31, 2004 that the New Hosting Agreement is in effect. Pursuant to the New Services Agreement, Fry will provide the Debtors with certain website related services and consulting services. The key terms and conditions of the New Services Agreement are: Term The New Services Agreement is effective as of the Petition Date and remains in effect for two years after, unless earlier terminated as provided for in the New Services Agreement. The New Services Agreement will automatically be renewed beyond the initial term for additional one- year terms unless either party provides the other party with a written notice of termination at least 60 days prior to the expiration of the initial term of the then- current renewal term. Pricing For the period March 17, 2003 through May 31, 2003, these prices will apply: * March 17, 2003 through March 21, 2003 -- $137 per hour; * April 1, 2003 through April 30, 2003 -- $146 per hour; * May 1, 2003 through May 31, 2003 -- $137 per hour. For the period June 1, 2003 through the end of the Initial Term, Fry will invoice the Debtors based on the number of man-hours actually worked during a calendar month: * Less than 344 hours per month -- $155 per hour; * 345 hours to 688 hours per month -- $150 per hour; * 689 hours to 1032 hours per month -- $144 per hour; and * More than 1,032 hours per month -- $137 per hour. Indemnification The New Services Agreement contains substantially similar indemnification provisions to those of the New Hosting Agreement. The New Fry Agreements will allow the Debtors to achieve substantial cost savings. The Debtors have realized $475,000 in cost savings from the Petition Date through December 2003 and estimate that they will realize an additional $400,000 in cost savings through the term of the New Fry Agreements. Moreover, the New Fry Agreements will allow the Debtors to continue the high performance and responsiveness of their customer-driven websites and therefore maintain critical web sales. In addition, the short term of the New Fry Agreements will allow the Debtors the flexibility to pursue any favorable hosting service opportunities that may arise. The Settlement with Fry The Debtors understand that Fry has filed a claim for $1,139,542 for sums due and owing by Spiegel, of which Fry asserts $227,000 for development services, the end product of which was delivered postpetition. These services included the development and enhancement of the websites for the three Merchant Divisions. The Debtors have reviewed the claim and agreed to a $912,542 prepetition amount due Fry and to pay Fry $227,000 for the postpetition claim. In addition, the Debtors agree that the maximum liability in connection with Fry's prepetition indemnification obligations will be $26,284. This amount reconciles with the Debtors' books and records. Fry agrees to file an amended prepetition claim for $886,257, which sum recognizes the Debtors' set-off for Fry's indemnification obligation and includes any damages that it would assert arising from the rejection of the Prior Fry Agreements. Thus, the Debtors agree to enter into a stipulation establishing a prepetition claim for Fry for $886,257. Accordingly, at the Debtors' request and pursuant to Sections 363 and 365(a) of the Bankruptcy Code and Rules 6006 and 9019 of the Federal Rules of Bankruptcy Procedure, the Court authorizes the Debtors to: -- reject the Prior Fry Agreements; and -- enter into and perform under the New Fry Agreements. Judge Blackshear also approves the Settlement between the parties. (Spiegel Bankruptcy News, Issue No. 20; Bankruptcy Creditors' Service, Inc., 215/945-7000) SR TELECOM: Sets 4th Quarter Conference Call for Feb. 26, 2004 -------------------------------------------------------------- OPEN TO: Analysts, investors and media DATE: Thursday, February 26, 2004 TIME: 10:00 A.M. Eastern Standard Time CALL: 514-807-8791 (FOR ALL MONTREAL AND OVERSEAS PARTICIPANTS) 1-800-814-4860 (FOR ALL OTHER NORTH AMERICAN CALLERS) Please dial-in 15 minutes before the conference begins. If you are unable to call in at this time, you may access a tape recording of the meeting by calling 1-877-289-8525 and entering the passcode 21039177 (pound key) on your phone. This recording will be available on Thursday, February 26 as of 12:00 P.M. until 11:59 P.M. on Thursday, March 4. An archive of the conference call will also be available at http://www.srtelecom.com http://www.newswire.ca/or at http://www.q1234.com/ For First-Time Analysts: Please contact Maison Brison at 514-731-0000 prior to the day of the conference call. SR TELECOM (S&P, B+ Corporate Credit and Senior Unsecured Debt Ratings) is a world leader and innovator in Fixed Wireless Access technology, which links end-users to networks using wireless transmissions. SR Telecom's solutions include equipment, network planning, project management, installation and maintenance services. The Company offers one of the industry's broadest portfolios of fixed wireless products, designed to enable carriers and service providers to rapidly deploy high-quality voice, high- speed data and broadband applications. These products, which are used in over 120 countries, are among the most advanced and reliable available today. TRAVEL PLAZA: Seeks Okay to Tap Whiteford Taylor as Attorneys ------------------------------------------------------------- Travel Plaza of Baltimore II, LLC and Calverton Hotel Venture L.L.C., seek authority from the U.S. Bankruptcy Court for the District of Maryland to employ Whiteford, Taylor & Preston L.L.P. as their bankruptcy attorneys. The Debtors report that they require the assistance of this law firm to pursue a successful reorganization of their debts and to assist with the performance of their duties as debtors and debtors in possession while in chapter 11. Whiteford Taylor will: a. provide the Debtors legal advice with respect to their powers and duties as debtors in possession and in the operation of their businesses and management of the Property; b. represent the Debtors in defense of any proceedings instituted to reclaim property or to obtain relief from the automatic stay under Section 362(a) of the Bankruptcy Code; c. prepare any necessary applications, answers, orders, reports and other legal papers, and appearing on the Debtors' behalf in proceedings instituted by or against the Debtors; d. assist the Debtors in the preparation of schedules, statements of financial affairs, and any amendments thereto which the Debtors may be required to file in this case; e. assist the Debtors with any assets sales; f. assist the Debtors in the preparation of a plan and a disclosure statement; g. assist the Debtors with other legal matters as necessary, including, among others, securities, corporate, real estate, tax, intellectual property, employee relations, general litigation, and bankruptcy legal work; and h. perform all of the legal services for the Debtors which may be necessary or desirable. Martin T. Fletcher, Esq., a partner of Whiteford Taylor reports that the firm's current rates are: principal attorneys $215 to $450 per hour paralegals $140 per hour Headquartered in Baltimore, Maryland, Travel Plaza of Baltimore II, LLC, a hotel company, filed for chapter 11 protection on February 2, 2004 (Bankr. Md. Case No. 04-12481). Cameron J. Macdonald, Esq., Karen Moore, Esq., and Kevin G. Hroblak, Esq., at Whiteford Taylor & Preston L.L.P. represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed both estimated debts and assets of more than $10 million. UNIFORET: Canadian Supreme Court Says No to US Noteholders' Appeal ------------------------------------------------------------------ UNIFORET INC. and its subsidiaries, Uniforet Scierie-Pate Inc. and Foresterie Port-Cartier Inc., announced that the Supreme Court of Canada has dismissed the motion presented by a group of US Noteholders seeking leave to appeal the judgment rendered by the Court of Appeal on July 24, 2003, which judgment has refused leave to appeal the decision rendered by Quebec Superior Court on May 16, 2003, sanctioning and approving the Company's plan of arrangement under the Companies' Creditors Arrangement Act. The Company's plan of arrangement has been implemented a few months ago. The Company manufactures softwood lumber. It carries on business through mills located in Port-Cartier and in the P�ribonka area. Uniforet Inc.'s securities are listed on the Toronto Stock Exchange under the trading symbol UNF.A for the Class A Subordinate Voting Shares. UNITED AIRLINES: Wants Court to Reduce Retroactive Pay Claims ------------------------------------------------------------- United Airlines Inc., and its debtor-affiliates object to 23,833 claims filed by former or current employees asserting claims for Retroactive Pay. In Spring 2002, the Debtors entered into a new collective bargaining agreement with the International Association of Machinists and Aerospace Workers. Pursuant to the CBA, covered or "eligible" IAM employees were entitled to an effective wage increase, retroactive from July 12, 2000 to March 14, 2002, to be paid in eight quarterly installments at 6% interest, compounded annually. The Debtors paid the first installment on December 13, 2002. The final payment is to be made on October 15, 2004. James H.M. Sprayregen, Esq., at Kirkland & Ellis, reports that Debtors have paid 50% of their Retroactive Pay obligations. The Debtors' books and records reflect that there are 46,000 employees represented or formerly represented by the IAM who are entitled to receive Retroactive Pay. The Debtors object to the Proofs of Claim to establish the correct amount of remaining Retroactive Pay that each eligible individual is entitled to. By correcting the Retroactive Pay Claims, the Debtors will reduce the claims pool down to a manageable size, facilitating their Chapter 11 emergence. The modifications would reduce the Debtors' outstanding Retroactive Pay liability by as much as $136,000,000. The Claims aggregate $5,287,400,965. Among the largest Claims are: Name Claim No. Amount Claimed Amount Owing ---- --------- -------------- ------------ Christine Brannon 14368 $2,264,874 Unspecified William Cornick 16164 1,165,000 Unspecified Helene DeSouza 17380 978,650 Unspecified Timothy Gillespie 21627 495,438 Unspecified Georgia Kaczmarek 40774 1,884,553 Unspecified Ronald Madsen 14810 1,280,331 Unspecified Robert McCunn 14047 220,420 Unspecified Mehrdad Mehmandoost 31376 1,013,562 Unspecified Daniel Salata 33990 965,320 Unspecified Paul Temple 11895 600,000 Unspecified (United Airlines Bankruptcy News, Issue No. 39; Bankruptcy Creditors' Service, Inc., 215/945-7000) UNITED SALES: Case Summary & 20 Largest Unsecured Creditors ----------------------------------------------------------- Debtor: United Sales & Leasing Co., Inc. d/b/a Path Truck Lines, successor by Merger to Transport Systems, Western NY, Inc. P.O. Box 1338 Dunkirk, New York 14048 Bankruptcy Case No.: 04-10475 Type of Business: The Debtor is a full service carrier specializing in big, wide and heavy loads. Chapter 11 Petition Date: January 23, 2004 Court: Western District of New York (Buffalo) Judge: Carl L. Bucki Debtor's Counsel: Beth Ann Bivona, Esq. Daniel F. Brown, Esq. Damon & Morey LLP 1000 Cathedral Place 298 Main Street Buffalo, NY 14202-4096 Tel: 716-856-5500 Fax: 716-856-5537 Total Assets: $23,439,892 Total Debts: $18,405,955 Debtor's 20 Largest Unsecured Creditors: Entity Nature Of Claim Claim Amount ------ --------------- ------------ Liberty Mutual Insurance Co. 2003-2004 Trade Debt $111,748 Valley Tire 2003-2004 Trade Debt $89,595 Southside Trailer 2003-2004 Trade Debt $80,284 Custom Canvas 2003-2004 Trade Debt $50,936 Aethea Systems 2003-2004 Trade Debt $39,390 Bridgestone Tire 2003-2004 Trade Debt $28,738 PTC E-Z Pass Customer Svc. 2003-2004 Trade Debt $28,618 Ctr Bestone Tire 2003-2004 Trade Debt $27,460 Coastal Transport 2003-2004 Trade Debt $26,520 Pomp's Tire Service 2003-2004 Trade Debt $26,216 Kenworth Truck of UNY 2003-2004 Trade Debt $16,481 Lee Smith, Inc. 2003-2004 Trade Debt $13,609 Haylor, Freyer & Coon, Inc. 2003-2004 Trade Debt $13,537 Snelling Search 2003-2004 Trade Debt $13,500 Sopus 2003-2004 Trade Debt $12,503 Hunter Truck Sales 2003-2004 Trade Debt $11,889 Wilbur Ave Garage 2003-2004 Trade Debt $11,535 Johnson Mackowiak Moore 2003-2004 Trade Debt $10,980 Price Flowers Malin 2003-2004 Trade Debt $10,509 GCR Commercial Tire Center 2003-2004 Trade Debt $9,404 UPC POLSKA: Plans to Issue 9% Senior Notes to Raise $105.4-Mil. --------------------------------------------------------------- UPC Polska, a Delaware limited liability company, and its affiliate, Polska Finance, a Delaware corporation, propose to issue, as part of UPC Polska's Second Amended Chapter 11 Plan of Reorganization Jointly Proposed by UPC Polska, Polska Finance and UnitedGlobalCom, Inc., an indirect parent of both UPC Polska and Polska Finance, dated December 17, 2003, newly issued 9% senior notes due 2007 in the aggregate principal amount of $105,394,659 of UPC Polska and Polska Finance. Pursuant to the Plan of Reorganization, each holder of an Allowed Class 3 Claim (as defined in the Plan of Reorganization) against UPC Polska is entitled to receive on account of its claim, in consideration for the UPC Polska Notes (as defined in the Plan of Reorganization) on or as soon as practicable after the effective date of the Plan of Reorganization, a pro rata portion of an aggregate amount of (i) $100,000,000 principal amount of Notes, (ii) shares of common stock of UGC in the aggregate amount of $14,500,000 (based on the per-share closing price as reported by The Nasdaq Stock Market, Inc. on December 15, 2003), and (iii) $80,000,000 in cash. Pursuant to the Plan of Reorganization, each holder of an Allowed Class 5 Claim (as defined in the Plan of Reorganization) against UPC Polska is entitled to receive on account of its claim the amount of cash, shares of common stock of UGC and Notes per $1,000 of claim amount of each Allowed Class 5 Claim which is equal to the amount of cash consideration, shares of common stock of UGC and Notes issued per $1,000 of claim amount payable to the holders of the Allowed Class 3 Claims. UPC Polska and Polska Finance filed with the United States Bankruptcy Court for the Southern District of New York the First Amended Disclosure Statement, with respect to the First Amended Chapter 11 Plan of Reorganization Jointly Proposed by UPC Polska and Polska Finance, dated October 27, 2003. Pursuant to an order dated October 29, 2003, the Bankruptcy Court approved the Disclosure Statement, which was subsequently distributed to holders of claims against or equity interests in UPC Polska for the purpose of soliciting their votes for the acceptance or rejection of such plan of reorganization. On December 17, 2003, UPC Polska, Polska Finance and UGC filed with the Bankruptcy Court a Second Amended Chapter 11 Plan of Reorganization Jointly Proposed by UPC Polska, Polska Finance and UGC. After notice and a hearing held on January 21, 2004 and January 22, 2004, the Bankruptcy Court entered the Findings of Fact, Conclusions of Law and Order under Section 1129 of the Bankruptcy Code and Rule 3020 of the Bankruptcy Rules Confirming the Second Amended Chapter 11 Plan of Reorganization Jointly Proposed by UPC Polska, Polska Finance and UGC, signed on January 22, 2004, confirming the Plan of Reorganization. The Notes are to be issued under an indenture between UPC Polska and Polska Finance, as co-issuers, and Wilmington Trust Company, as trustee. UPC Polska and Polska Finance believe that the issuance of the Notes is exempt from the registration requirements of the Securities Act of 1933 pursuant to Section 1145(a)(1) of the United States Bankruptcy Code. Generally, Section 1145(a)(1) of the Bankruptcy Code exempts the offer and the issuance of securities from the registration requirements of the Securities Act and equivalent state securities and "blue sky" laws, except with respect to an entity that is deemed an underwriter under Section 1145(b) of the Bankruptcy Code, if, among other things, the securities are offered or sold under a plan of reorganization of the debtor, or under a plan jointly proposed by the debtor and an affiliate of the debtor, in exchange for a claim against, an interest in or a claim for an administrative expense in the case concerning the debtor or such affiliate. UPC Polska and Polska Finance believe that the issuance of Notes contemplated by the Plan of Reorganization will satisfy the aforementioned requirements. US AIRWAYS: Agrees to Settle Three General Electric Claims ---------------------------------------------------------- On November 1, 2002, General Electric Capital Corporation filed these proofs of claim in the Chapter 11 case of U.S. Airways, Inc.: Claim No. Claim Amount --------- ------------ 4352 Contingent and Unliquidated 4354 Not less than $389,000,000 4355 Not less than $389,000,000 By Order dated January 16, 2003, the Court authorized the Reorganized Debtors to enter into a global settlement, including a DIP liquidity facility with GE Capital, acting through its agent, GE Capital Aviation Services, Inc., and GE Engine Services, Inc., and General Electric Company, Aircraft Engine Component and their affiliates. Pursuant to the terms of the GE Order and Global Settlement: (i) The 2001 Credit Facility and the guarantee issued by U.S. Airways Group, which is the subject of Claim No. 4355, have been reinstated, subject to terms and conditions of the GE Order and the Global Settlement; and (ii) GE Capital is allowed a fully secured claim against the Debtors for not less than $389,000,000 plus: (a) advances made under the 2001 Credit Facility subsequent to the Petition Date; and (b) accrued and accruing costs, fees and expenses, less principal and interest payments subsequent to the Petition Date. GE Capital and the Debtors agree that Claim Nos. 4352 and 4355 are withdrawn. Claim No. 4354 is allowed as a fully secured Class USAI-2 claim against U.S. Airways in the amount provided in the 2001 Credit Facility, the GE Order and the Global Settlement, with all rights, obligations and distributions governed by the 2001 Credit Facility, the GE Order and the Global Settlement. (US Airways Bankruptcy News, Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000) VERTIS INC: December Balance Sheet Upside-Down by $342 Million -------------------------------------------------------------- Vertis, Inc., the premier provider of targeted advertising, media and marketing services, announced results for the three and 12 months ended December 31, 2003. For the three months ended December 31, 2003, net sales were $446.4 million, or 1.9 percent below the fourth quarter of 2002. For the year ended December 31, 2003, net sales amounted to $1,585.9 million, a 5.3 percent decrease from the year ended December 31, 2002. The decline in net sales reflects the difficult overall economic conditions experienced throughout 2003 and competitive pricing pressures. Earnings before interest, taxes, depreciation and amortization ("EBITDA") amounted to $58.9 million in the three months ended December 31, 2003, an increase of $0.4 million, or 0.6 percent versus the fourth quarter of 2002. For the year ended December 31, 2003, EBITDA amounted to $172.7 million, an increase of $71.7 million, or 71.0 percent versus 2002. Included in the fourth quarter and full-year 2003 results are approximately $8.5 million and $15.2 million of restructuring costs compared to $13.3 million and $19.1 million in the comparable 2002 periods. In addition, the full-year 2002 results include an after-tax charge of $108.4 million due to adopting Statement of Financial Accounting Standards No. 142 ("SFAS No. 142") as it relates to goodwill and other intangibles. Excluding the effects of SFAS No. 142 in 2002, EBITDA for the year ended December 31, 2003 would have been less than 2002 by $36.7 million or 17.5 percent. The decline in EBITDA, excluding the effects of SFAS No. 142, was the result of the difficult market conditions, which offset lower costs and a $10.1 million recovery from a settlement to a legal proceeding recorded in the first quarter of 2003. The recovery is included in "Other, net" on the Company's Consolidated Statement of Operations. Vertis' Chairman, President, and Chief Executive Officer, Donald Roland, stated, "We ended the year by posting the best quarter- over-quarter net sales and EBITDA performance in the fourth quarter. During this quarter several of our business units posted year-over-year growth and we completed the reorganization of our North American platform, forming Vertis North America. The year- over-year growth reflects the solid underpinnings of our business while the reorganization will allow us to drive top-line growth and better serve our customers with our targeted, integrated solutions. In addition, we completed a rigorous marketing study, including extensive customer interviews that verified our strategic direction. We believe this will provide new growth opportunities for Vertis." Vertis reported net income of $5.9 million in the fourth quarter of 2003 and a net loss of $95.9 million for the year ended December 31, 2003 versus net income of $5.5 million and a net loss of $120.1 million in the fourth quarter and full-year 2002, respectively. The net loss in the year ended December 31, 2003 includes a $67.4 million increase in the Company's valuation allowance against deferred tax benefits arising from net operating loss carryforwards. The valuation allowance was recorded due to the continuation of the poor economic climate and the projected increase in annual interest expense resulting from the high-yield bond offering completed in June 2003. The 2002 net loss reflects the $108.4 million after-tax cumulative effect of adopting SFAS No. 142 as it relates to goodwill and other intangibles. Dean D. Durbin, chief financial officer for Vertis, commented, "The advertising market conditions were extremely challenging in 2003. Our fourth quarter comparables, however, showed some signs of stabilization as evidenced by the growth in EBITDA and nearly flat sales when compared to the fourth quarter of 2002. In fact, excluding the consulting costs associated with the marketing study mentioned earlier and the negative impact of the grocery strike in California, our fourth quarter EBITDA would have exceeded the 2002 fourth quarter results by 6.1 percent." Mr. Durbin added, "Even in these difficult conditions we reduced total debt by $41 million and finished the year safely within our debt covenant requirements." As of December 31, 2003, Vertis posted a total stockholder's deficit of $342,198,000 compared to $249,992,000 in 2002. Vertis is the premier provider of targeted advertising, media, and marketing services that drive consumers to marketers more effectively. Its comprehensive products and services range from consumer research, audience targeting, creative services, and workflow management to targeted advertising inserts, direct mail, interactive marketing, packaging solutions, and digital one-to-one marketing and fulfillment. Headquartered in Baltimore, Md., with facilities throughout the U.S. and the U.K., Vertis combines best- in-class technology, creative resources, and innovative production to serve the targeted marketing needs of companies worldwide. Visit Vertis at http://www.vertisinc.com/ WESTPOINT STEVENS: Plan-Filing Exclusivity Extended To March 29 --------------------------------------------------------------- As of January 31, 2004, the Creditors Committee appointed in WestPoint Stevens Inc. and its debtor-affiliates' Chapter 11 cases did not file any objection to the Debtors' request to extend their Exclusive Periods. Thus, the Debtors' exclusive period to file a plan is automatically extended through and including March 29, 2004 and their exclusive period to solicit acceptances for that plan is automatically extended through and including May 28, 2004. (WestPoint Bankruptcy News, Issue No. 17; Bankruptcy Creditors' Service, Inc., 215/945-7000) WILLIAMS COMPANIES: 2003 Net Loss Pegged at $504 Million -------------------------------------------------------- Williams (NYSE: WMB) announced an unaudited 2003 net loss of $504.5 million, or a loss of $1.03 per share on a diluted basis, compared with a net loss of $754.7 million, or a loss of $1.63 per share, for the same period in 2002. During the first quarter of 2003, the company recorded an after- tax charge of $761.3 million, or $1.47 per share, to reflect the cumulative effect of new accounting principles primarily associated with the adoption of Emerging Issues Task Force (EITF) Issue 02-3, "Issues Related to Accounting for Contracts Involved in Energy Trading and Risk Management Activities." The company reported 2003 income from continuing operations of $2.9 million. This resulted in a loss of 5 cents per share on a diluted basis, which includes the effect of preferred stock dividends. In the same period for 2002, the company reported a loss of $611.7 million, or a loss of $1.35 per share, on a basis restated for discontinued operations related to assets sold or held for sale. Factors in the improved full-year performance from continuing operations include a $759 million improvement in Power segment profit, significantly reduced levels of asset and investment impairment charges, reduced losses associated with interest-rate swaps, and lower general corporate expenses. Income from discontinued operations for 2003 was $253.9 million, or 49 cents per share, compared with a loss from discontinued operations of $143 million, or a loss of 28 cents per share, in 2002 on a restated basis. The year-over-year improvement from discontinued operations largely reflects net gains from asset sales in 2003. For the fourth quarter of 2003, the company reported a net loss of $66 million, or a loss of 13 cents per share, compared with a net loss of $219.2 million, or a loss of 44 cents per share for the same period of 2002. Included in the fourth quarter of 2003 is $66.8 million of pre-tax expense associated with the early retirement of debt. "The improvement in our results is indicative of the significant steps we've taken to restructure our company," said Steve Malcolm, chairman, president and chief executive officer. "In 2003, we made substantial progress in strengthening our finances, we refocused our business strategy around key natural gas assets, and we began executing on a plan toward achieving investment-grade credit characteristics. That plan includes making continued disciplined capital investments to grow our businesses." Recurring Results Recurring income from continuing operations -- which excludes items of income or loss that the company characterizes as unrepresentative of its ongoing operations -- was $12 million, or 2 cents per share, for 2003. In 2002, the recurring results from continuing operations reflected a loss of $221.7 million on a restated basis, or a loss of 43 cents per share. Core-Business Performance Williams' natural gas businesses -- Gas Pipeline, Exploration & Production and Midstream Gas & Liquids -- reported combined segment profit of $1.24 billion in 2003 vs. the same level in 2002 on a restated basis. These businesses, which the company considers core to its strategy, reported combined segment profit of $244.4 million in the fourth quarter of 2003 vs. $176.6 million for the same period in 2002. The fourth-quarter results included $41.7 million and $115 million of impairments in 2003 and 2002, respectively, related to certain Midstream assets. "Our natural gas wells, pipelines and midstream assets are producing the solid results that we expected in what was a challenging environment of liquidity-driven divestitures and constrained capital investment," said Malcolm. "While we are focusing the majority of our available cash toward debt reduction, we are once again making disciplined investments in these world- class assets to create economic value. In the near-term, we are focused on maintaining or improving our favorable market position so that we create opportunities for more substantial growth in the future." Gas Pipeline, which provides natural gas transportation and storage services, reported 2003 segment profit of $554.9 million vs. $545.1 million for the previous year on a restated basis. Results reflect the benefit of expansion projects that are now in service and reduced general and administrative costs, offset by lower equity earnings and a $25.5 million charge at Northwest Pipeline to write-off capitalized software development costs associated with a cancelled service delivery system. Equity earnings in 2002 included a $27.4 million benefit related to a construction fee received by an affiliate and $19 million of equity earnings from an investment that was sold in the fourth quarter of 2002. For the fourth quarter of 2003, Gas Pipeline reported segment profit of $148.4 million, compared with restated segment profit of $122.1 million for 2002. The quarter-over-quarter increase was due to completed expansion projects and the absence of a $17 million FERC-related charge in 2002. Exploration & Production, which includes natural gas production and development in the U.S. Rocky Mountains, San Juan Basin and Midcontinent, reported 2003 segment profit of $401.4 million vs. $508.6 million for the previous year on a restated basis. Year-over-year results reflect the impact of lower levels of production in 2003 due to property sales and reduced drilling activities in the first half of the year, and reduced gains from the sales of assets in 2003 vs. 2002 of approximately $46 million. For the fourth quarter of 2003, segment profit was $50.1 million, compared with $81.5 million a year ago on a restated basis. The quarter-over-quarter decline in segment profit reflects the impact of lower net domestic production volumes resulting from previous property sales. Midstream Gas & Liquids, which provides gathering, processing, natural gas liquids fractionation and storage services, reported 2003 segment profit of $286 million vs. a restated segment profit of $183.2 million for the previous year. The increase in segment profit reflects a net reduction of $73 million for impairment charges recorded in 2003 vs. 2002 associated with certain Canadian assets, the contribution of increased operations in the deepwater area of the Gulf of Mexico and gains on the sales of certain assets and investments. Partially offsetting these items were lower margins in the Canadian and U.S.-based olefins business and $14.1 million of impairment charges associated with the Aux Sable equity interest. For the fourth quarter of 2003, segment profit was $45.9 million vs. a segment loss of $27 million on a restated basis in the same period a year ago. The increase in segment profit is primarily a result of $73 million in lower impairment charges associated with the Canadian operations. In addition, the current quarter includes a gain of $16.2 million from the sale of Williams' wholesale propane business. Power Business Power, which manages more than 7,500 megawatts of power through long-term contracts, reported 2003 segment profit of $134.2 million vs. a segment loss of $624.8 million for the previous year. The company is pursuing a strategy designed to result in substantially exiting the power business through sales of component parts of its portfolio or as a whole. As Williams has previously stated, the exact timing of that exit and the resulting value to the company are uncertain because of the complexity of the underlying contracts and a power market that is significantly depressed based on historical comparisons. In the interim, Williams' strategy is to manage this business -- which continues to play a significant role in the company's financial performance -- to reduce risk, generate cash and honor contractual obligations. Consistent with the overarching and interim strategies described above, Williams received $315 million in cash in 2003 from sales of and agreements to terminate certain contracts. The significant improvement in Power's year-over-year performance reflects gains on the sales of assets, contracts and investments of $208 million, as well as significantly reduced levels of impairments in 2003 from those of 2002. As previously disclosed, Power recognized $80.7 million of revenue in the second quarter of 2003 from a correction of the accounting treatment previously applied to certain third-party derivative contracts during 2002 and 2001. Results for 2003 include $105 million of revenue related to these prior period items, of which $24 million was recorded prior to the correction. The 2003 results also include the application of a different accounting treatment (EITF Issue No. 02-3), under which non- derivative, energy-related trading contracts are accounted for on an accrual basis. In 2002, all energy-related contracts, including tolling and full-requirements contracts, were marked to market. In 2003, Power recognized gains on power and natural gas derivative contracts, while 2002 reflected significant mark-to-market losses. For the fourth quarter of 2003, Power reported a segment loss of $121.3 million, compared with a loss of $22.8 million in 2002. The fourth quarter of 2003 includes asset and goodwill impairment charges totaling $89.1 million and a charge of $33.3 million related to refund and other accrual adjustments for power marketing activities in California during 2000 and 2001. The prior year quarter included $95.5 million of impairment charges related to assets that were disposed. Other In the Other segment, the company reported a segment loss of $50.5 million in 2003 vs. a restated segment profit of $14.1 million for the previous year. The decrease in 2003 primarily results from an impairment of the company's investment in a petroleum pipeline project. For the fourth quarter of 2003, Williams reported a segment loss of $7.7 million, compared with a restated segment loss of $20.8 million for 2002. Changes in Cash and Debt For 2003, Williams increased its unrestricted cash by $665.3 million, ending the year with available cash and equivalents of approximately $2.3 billion. A significant factor in the company's increased cash is approximately $3 billion in net proceeds from asset sales and $315 million from the sale and/or agreement to terminate certain marketing and trading contracts in 2003. Williams also reduced its debt by approximately $2 billion during 2003, including debt associated with discontinued operations and the early retirement of approximately $951 million of debt through tender offers. Net cash provided by operating activities was approximately $770 million in 2003. In 2002, the company's operating activities used approximately $515 million in cash. Williams has already completed the majority of its planned asset sales. The company continues to market certain Midstream assets in 2004, such as its straddle plants in Western Canada. Williams also expects to complete the sale of its Alaska operations in the first quarter. Company Direction for 2004 "The progress we've made toward strengthening our finances since this time last year defines the kind of discipline we will continue to exercise this year and in the years ahead," Malcolm said. Consistent with the company's stated financial and commercial strategies, Williams in 2004 will continue to focus on disciplined growth, cash management and cost efficiencies. Capital allocation will be assessed using Economic Value Addedr financial metrics, adopted Jan. 1. Growth plans call for 1,400 new natural gas wells in 2004, the construction of a previously announced 110-mile expansion of the Gulfstream Natural Gas System and the spring startup of Midstream's Devils Tower floating production system in the deepwater Gulf of Mexico. On March 15, Williams is scheduled to retire the remaining $679 million of 9.25 percent Notes. Beyond March 15, Williams has $505 million of scheduled debt maturities for 2004 and 2005. Williams plans to capitalize on its financial flexibility by establishing new credit facilities at favorable terms that reduce cash-on-hand requirements. The company's goal is to maintain liquidity of approximately $1 billion to $1.3 billion. Earnings Guidance Williams is providing updated forecasts for 2004 through 2006 during a presentation this morning to analysts. In 2004, Williams expects enterprise-wide segment profit of $1.1 billion to $1.4 billion. In 2005, Williams expects enterprise-wide segment profit of $1.3 billion to $1.6 billion. In 2006, Williams expects enterprise-wide segment profit of $1.4 billion to $1.7 billion. Information on how to access the presentation and the analyst call via the company's web site is provided at the end of this news release. Williams, through its subsidiaries, primarily finds, produces, gathers, processes and transports natural gas. Williams' gas wells, pipelines and midstream facilities are concentrated in the Northwest, Rocky Mountains, Gulf Coast and Eastern Seaboard. More information is available at http://www.williams.com/ * * * As reported in Troubled Company Reporter's October 16, 2003 edition, Fitch Ratings affirmed The Williams Companies, Inc.'s outstanding senior unsecured notes and debentures at 'B+'. Also affirmed are outstanding credit ratings for WMB's wholly-owned subsidiaries Northwest Pipeline Corp., Transcontinental Gas Pipe Line Corp., and Williams Production RMT Co. The Rating Outlook for each entity has been revised to Positive from Stable. Details of the securities affected are listed below. The following is a summary of outstanding ratings affected by the action: The Williams Companies, Inc. -- Senior unsecured notes and debentures 'B+'; -- Feline PACs 'B+'; -- Senior secured debt 'BB'; -- Junior subordinated convertible debentures. 'B-'. Williams Production RMT Co. -- Senior secured term loan B 'BB+'. Northwest Pipeline Corp. -- Senior unsecured notes and debentures 'BB'. Transcontinental Gas Pipe Line Corp. -- Senior unsecured notes and debentures 'BB'. WILLIAMS PRODUCTION: Fitch Affirms Sr. Term Loan B Rating at BB+ ---------------------------------------------------------------- Fitch Ratings affirms the 'BB+' rating for Williams Production RMT Co.'s outstanding $497.5 million senior secured term loan B. The Rating Outlook is Positive. RMT is an indirect wholly owned subsidiary of The Williams Companies, Inc. (WMB; 'B+' senior unsecured, Rating Outlook Positive) and is engaged in the exploration and production of primarily natural gas in the U.S. Rockies. The rating action follows Fitch's review of a series of proposed amendments to RMT's credit agreement including a one-year extension of the final maturity date to May 2008 from May 2007 and a reduction in the applicable Libor margin. RMT's rating reflects the underlying collateral securing the term loan, the quality of its reserves, its stable stand alone credit profile and low production and finding & development costs. Since completing the term loan financing in May 2003, RMT has generally performed ahead of expectations due to the robust natural gas commodity price environment. For the 12-month period ended Sept. 30, 2003, EBITDA/Interest and Secured Debt/EBITDA approximated 6.4x and 1.6x, respectively. In addition, collateral coverage (PV 10 Value/Senior Secured Debt) as of Sept. 30, 2003 is strong at 4.7x. RMT's Rating Outlook was revised to Positive in October 2003 reflecting primarily the ongoing liquidity improvement and debt reduction progress being exhibited by RMT's parent WMB. In particular, Fitch believes that WMB's strengthened cash position and reduced debt refinancing risk has reduced WMB's ongoing reliance on RMT cash flows to support parent company level debt. WOLVERINE TUBE: Reports 2003 Fourth Quarter and Full-Year Losses ---------------------------------------------------------------- Wolverine Tube, Inc. (NYSE: WLV) reported results for the fourth quarter and full year ended December 31, 2003. Loss from continuing operations for the fourth quarter of 2003 was $8 million, or $0.65 per diluted share. Included in the loss was a $5.7 million after-tax restructuring charges, principally related to the previously announced closing of the Company's Booneville, MS manufacturing plant. Excluding the restructuring charges, the loss from continuing operations would have been $2.3 million, or $0.19 per share. Operating results were also negatively impacted by $3.4 million after-tax, as a result of the relative strengthening of the Canadian dollar versus the U.S. dollar and a sharp spike in copper prices, especially in December. This rise in copper prices resulted in a loss on the Company's copper hedge position, which should be offset in subsequent periods. In the fourth quarter of 2002, income from continuing operations was $169,000, or $0.01 per share. Total pounds of product shipped in the fourth quarter of 2003 were 80.1 million, an increase of 11.4 percent compared to 71.9 million pounds in 2002. Net sales for the fourth quarter of 2003 were $155.8 million compared to $125.6 million, a 24 percent increase. Gross profit for the fourth quarter of 2003 decreased to $7.4 million from $10.4 million in the fourth quarter of 2002. Included in gross profit was the aforementioned impact of currency and the loss on the Company's copper hedge, which was $5.4 million before tax. In 2001 the Company discontinued its WRI operations in Ontario, Canada. In the fourth quarter of 2003, the Company recognized $1.6 million net- of-tax losses in discontinued operations to reflect changes in the carrying value of the assets and additional pensions and post retirement obligations as we prepare to dispose of this facility. For the year ended December 31, 2003, loss from continuing operations was $39 million or $3.18 per share compared with income from continuing operations of $7.2 million, or $0.58 per share for 2002. The 2003 loss included a $23.2 million goodwill impairment charge and restructuring charges, totaling $15.1 million ($10.0 million after-tax) relating principally to the closure of the Booneville plant and a corporate-wide workforce reduction program. Excluding goodwill impairment and the restructuring charges, loss from continuing operations would have been $6.9 million or $0.56 per share. Total pounds of product shipped in 2003 were 327.4 million pounds compared to 310.2 million pounds in 2002. Net sales were $596.3 million, an 8.3 percent increase from 2002. Gross profit for 2003 was $40.8 million compared to $58.4 million in 2002. Commenting on the results, Dennis Horowitz, Chairman, President and Chief Executive Officer, said, "The combined impacts of sharply rising copper prices and the weakening U.S. dollar had a very significant negative effect on our fourth quarter earnings. However, excluding these impacts, fourth quarter operating results was much improved from the third quarter of 2003 and encouraging for several reasons, including improved demand for our value added commercial products, improved demand and pricing in wholesale and rod and bar products, and improved operational performance at our facilities." Horowitz added, "That while our cash position at $46.1 million was below what we expected at year-end, it was principally due to copper price increases, which affected inventory dollar values. At the same time, inventory turns, as well as receivable and payable days outstanding, improved and capital expenditures were within expectations." Fourth Quarter Results by Segment Shipments of commercial products totaled 49.8 million pounds, a 4.8 percent increase over the fourth quarter 2002 of 47.5 million pounds. Net sales increased approximately 16.2 percent to $110.4 million. These results reflect increased shipments of industrial tube, technical tube and fabricated products. Gross profit decreased to $7.3 million from the prior year's fourth quarter of $10.5 million. Gross profit gains due to increased demand and improved operating efficiencies were more than offset by the losses on the Company's copper hedge and currency translation. Shipments of wholesale products totaled 24.1 million pounds, as compared to last year's fourth quarter of 19.5 million pounds. Net sales increased 52.6 percent to $34.2 million from the prior year's fourth quarter. Gross profit was a loss of $800 thousand compared to last year's fourth quarter loss of $500 thousand. Again, increased demand and pricing gains in this segment were more than offset by the losses on the Company's copper hedge. Shipments of rod, bar and other totaled 6.2 million pounds, a 27.6 percent increase from the fourth quarter of 2002. Net sales increased to $11.2 million, a 36.4 percent increase from the fourth quarter in the prior year. These results reflect increased volume and price in rod and bar. Gross profit in rod, bar and other in the quarter was $900 thousand compared to $400 thousand in the prior year's fourth quarter. Gains in our European distribution business and improvements in rod and bar demand in North America offset copper hedge and currency translation losses. Earnings Outlook Commenting on the outlook for the Company, Horowitz said, "In the second half of the fourth quarter, we began to see tangible improvement in demand across all our product segments and stabilizing in wholesale pricing. This has carried over into the first quarter of 2004 and reflects a recovering U.S. economy. In addition, operations are running well with increasing productivity. Market shares remain strong, and in many cases, are improving, and customer contracts that were up for renewal are essentially completed with only moderate price concessions." Horowitz continued, "Several identifiable challenges that we continue to face are related to copper price volatility and currency translation impacts. On the other hand, natural gas costs are hedged for all of 2004 at levels below 2003, especially in the first quarter. Pension and retirement costs are expected to be relatively stable year-over-year, and our healthcare costs will increase moderately. With this in mind, coupled with seasonal strengthening in the first quarter, operating income from continuing operations should show both a sharp increase both sequentially from the fourth quarter of 2003, as well as in comparison to the first quarter of 2003." About Wolverine Tube, Inc. Wolverine Tube, Inc. (S&P, BB- Corporate Credit Rating, Negative Outlook) is a world-class quality partner, providing its customers with copper and copper alloy tube, fabricated products, metal joining products as well as copper and copper alloy rod, bar and other products. Internet addresses: http://www.wlv.com/and http://www.silvaloy.com/ * CLLA Headquarters Relocates to 70 East Lake Street ---------------------------------------------------- The Commercial Law League of America relocated its headquarters to: Commercial Law League of America 70 East Lake Street, Suite 630 Chicago, IL 60601 Phone: 312.781.2000 Fax: 312.781.2010 The phone and fax numbers have not changed. The CLLA has also created a new website at http://www.clla.org/ Finally, with the new website, CLLA staff email addresses have changed to: David Watson (Executive Vice President): dwatson@clla.org Erica Jenks (Administrative Director): ejenks@clla.org Megan Tocci (Administrative Assistant): mtocci@clla.org * Jones Rogers in Toronto Looks for Associate with Sense of Humor ----------------------------------------------------------------- Jones, Rogers LLP in Toronto wants to hire an Associate in its bankruptcy, insolvency and commercial litigation practice area. Kevin Taylor, Esq., is moving to Bermuda, which is the home of his fiancee. As a result, the Firm is looking for a young lawyer (0-6 year Call) to join its practice focusing on bankruptcy, insolvency and commercial litigation. "A sense of humour is probably essential for the applicant," Richard B. Jones, of Counsel, says. See http://www.jonesrogers.ca/ * Retailers' 2004 Legislative Agenda Includes Bankruptcy Reform --------------------------------------------------------------- Tax policy, overtime regulations, international trade, health insurance costs and bankruptcy reform are among the issues that will top the legislative agenda of the nation's retailers this year, the National Retail Federation said. "The decisions Congress makes on these issues over the next several months will have a profound effect not only on the health of the retail industry but on our customers and employees as well," NRF Senior Vice President for Government Relations Steve Pfister said. "Each of these issues affects the cost of doing business and the price of products on the shelf. With consumer spending making up two-thirds of the gross domestic product, the impact of Congress's actions on the retail sector trickles down through every segment of our nation's economy. Coming as the economy continues its recovery, these issues are more crucial than ever." NRF's legislative priorities were set after consultation with member companies on their top concerns for the year. While the issues have been identified as those where NRF will take a leadership position on behalf of the retail industry, NRF will continue to deal with a wide variety of topics as they arise during the 2004 congressional session. Top issues on the agenda include: * Consumer/Business Tax Relief -- NRF supports President Bush's State of the Union proposal to make the series of temporary tax cuts enacted since 2001 permanent. In addition to broad rate reductions, these included measures to double the child tax credit, reduce the marriage penalty, reduce taxes on capital gains and stock dividends, cut taxes on small businesses, and eliminate the estate tax. The consumer tax cuts have pumped billions of dollars into the national economy and have played a major role in increased retail sales. Business tax cuts, meanwhile, have allowed retailers to create more jobs. Small retailers are particularly supportive of plans to make the estate tax repeal permanent because the tax makes it difficult to pass on family-owned businesses from one generation to the next. * Bankruptcy Reform -- NRF supports H.R. 975, the Bankruptcy Abuse Prevention Act of 2003, because retailers are being left holding an ever-increasing amount of bad debt as the number of bankruptcy filings hits new records each year. The cost of the bad debt must be passed on to consumers and currently amounts to approximately $500 a year per family. The legislation would require those who can afford to pay a significant portion of their debts to do so under Chapter 13, while preserving the safety net of Chapter 7 -- which wipes out all debts -- for those who truly need a fresh start. * Health insurance reform -- NRF supports increased access to health care and steps to reduce health insurance costs. NRF strongly supports legislation to allow the creation of Association Health Plans, which would allow small employers to band together to purchase health insurance for their employees at large-group rates. * Trade -- NRF is opposed to antidumping and safeguards cases filed by U.S. manufacturers, and other actions intended to limit the importation of affordable consumer goods from China or other low-cost foreign manufacturers. NRF believes many manufacturers are using China as a scapegoat rather than addressing problems within their own industries. * Sales tax simplification -- NRF supports federal legislation that would allow states to require out-of-state merchants to collect sales tax on sales to their residents. NRF believes all retailers should play by the same tax rules regardless of whether they sell their merchandise from a storefront, through the mail or over the Internet. * White-Collar Overtime Rules -- NRF supports the Department of Labor's proposal to update white-collar overtime regulations. Current regulations are vague and out-of-date, making it difficult for retailers and other businesses to know whether they are making the correct decision when determining which employees should receive overtime. The proposed update would save the retail industry an estimated $285 million a year spent in legal fees defending disputed decisions. * Class-action Lawsuit Reform -- NRF supports class-action lawsuit reform legislation, including provisions that would limit "forum shopping" by moving more class actions to federal court. National retail chains have been popular targets in class-action suits because the presence of stores in multiple states makes it easy for plaintiffs' attorneys to find a favorable judge. * Electronics Recycling Tax -- NRF is opposed to H.R. 1165, legislation that would require retailers to collect a recycling tax of up to $10 on each computer, and to other so-called "product stewardship" proposals that might require retailers to accept the return of used electronics equipment or other products for recycling. The recycling tax would impose another financial burden on consumers and would burden retailers with the cost of collection, while other recycling proposals could force enormous logistics problems and costs upon retailers. The National Retail Federation is the world's largest retail trade association, with membership that comprises all retail formats and channels of distribution including department, specialty, discount, catalog, Internet and independent stores as well as the industry's key trading partners of retail goods and services. NRF represents an industry with more than 1.4 million U.S. retail establishments, more than 20 million employees -- about one in five American workers -- and 2003 sales of $3.8 trillion. As the industry umbrella group, NRF also represents more than 100 state, national and international retail associations. For more information, go to http://www.nrf.com/ * SSG Capital Advisors & Resilience Capital Partners Join Forces ---------------------------------------------------------------- SSG Capital Advisors, L.P., an investment bank specialized in providing financial advisory services in middle market business restructurings, announced that it has joined forces with the investment banking and financial advisory practice of Cleveland- based Resilience Capital Partners LLC, which effective immediately will operate as SSG's Midwestern office. SSG Capital Advisors has named Geoffrey S. Frankel a Managing Director and Jeremy P. Eberlein a Vice President. Previously, Mr. Frankel and Mr. Eberlein were Managing Partner and Vice President of Resilience, respectively. "Our mutual focus on distressed middle market companies was just one of a number of compelling reasons to merge Resilience's investment banking practice into SSG Capital Advisors," said Mark E. Chesen, SSG's president. He noted that the investment bankers from the two firms had worked effectively together on prior deals and can now leverage their combined, broad experience in the metals and steel, capital equipment, packaging, and consumer products areas. Frankel added, "SSG's strong infrastructure enables us to build on the momentum we achieved at Resilience and expand our commitment to distressed companies in the Midwest and nationwide." Over the past 3 years, Mr. Frankel has participated in 35 restructuring transactions involving over $2.6 billion of restructured obligations. Prior to forming Resilience, Mr. Frankel was a Managing Director and Manager of the Restructuring Group with McDonald Investments. Before that he was an attorney with Jones, Davis, Reavis & Pogue, where he represented distressed companies, principal creditors, and equity holders in corporate reorganizations, sales transactions, and bankruptcy proceedings. Mr. Frankel's restructuring engagements have included Atchison Casting Corporation, Nexpak Corporation, Cold Metal Products, Inc., Freedom Forge Corporation, Globe Metallurgical, Inc., Homeland Stores, Inc., Genesis Worldwide, Inc., Vista Eyecare, The Gibson-Homans Company, AL Tech Specialty Steel, Gulf States Steel, Inc. of Alabama, Garden Botanika, CSC, Inc., and Quick to Fix Foods, Inc. He also has advised on out-of-court sales or restructuring of companies in the automotive, specialty chemicals/plastics, wood products, educational construction/engineering and agricultural industries. Before joining Resilience, Mr. Eberlein was an associate in the Restructuring Group at McDonald Investments, following four years with KeyCorp's institutional asset services and corporate capital groups. Resilience Capital Partners is a private merchant banking firm located in Cleveland, Ohio. Unaffiliated to SSG Capital, Resilience Capital Partners will continue to focus exclusively on managing The Resilience Fund, a private equity fund that invests in middle-market underperforming, under managed, and turnaround buyout opportunities under the leadership of Bassem Mansour and Steven Rosen. Mr. Frankel remains a partner in that business. Contacts: Mark E. Chesen President Telephone (610) 940-5801 mchesen@ssgca.com Geoffrey Frankel Managing Director Telephone (216) 292-4746 gfrankel@resiliencecapital.com About SSG Capital Advisors, L.P. With offices in Philadelphia, New York and Cleveland, SSG Capital Advisors, L.P. -- http://www.ssgca.com/-- advises middle market businesses nationwide and in Europe that are under-capitalized and/or facing turnaround situations. With more than 100 investment banking assignments completed since 1994, the firm is recognized for its expertise in mergers and acquisitions; private placements of debt and equity; complex financial restructurings, and valuations and fairness opinions. In addition, SSG assists institutional and individual limited partners, throughout the country, in selling their private equity fund interests into the secondary market. * * * Resilience Capital Partners to Focus Exclusively on Private Equity Investing By Exiting Investment Banking Practice Dear Friends: We are pleased to announce that Resilience Capital Partners has completed a spin-off of its investment banking/financial advisory practice to SSG Capital Advisors. The transition of our investment banking practice to SSG Capital Advisors will allow Resilience to focus 100% of its resources on investing in new transaction opportunities and managing its existing portfolio. Resilience currently has three investments in its portfolio and expects to complete two to three additional transactions during 2004. Resilience Capital Partners will continue to invest in underperforming and turnaround oriented situations. Our investment criteria remains focused on middle-market companies, typically between $10 million and $75 million in revenue, undergoing a change of control precipitated by a lack of adequate capitalization, downturn in the company's industry sector or financial restructuring. Effective immediately, Geoffrey Frankel and Jeremy Eberlein will join SSG Capital Advisors in establishing its Cleveland office. Geoff remains a partner in Resilience Capital Partners. We thank you for continuing to think of us as you come across transaction opportunities that might fit with our investment criteria. Bassem Mansour Telephone 216.292.4748 bmansour@resiliencecapital.com Steven Rosen Telephone 216.292.4535 srosen@resiliencecapital.com Ki Mixon Telephone 216.292.0503 kmixon@resiliencecapital.com Christopher Rossi Telephone 216.292.4526 crossi@resiliencecapital.com * BOND PRICING: For the week of February 23 - 27, 2004 ------------------------------------------------------ Issuer Coupon Maturity Price ------ ------ -------- ----- Adelphia Communications 6.000% 02/15/06 54 Allegiance Telecom 11.750% 02/15/08 56 American & Foreign Power 5.000% 03/01/30 69 Asarco Inc. 8.500% 05/01/25 71 Atlas Air Inc. 10.750% 08/01/05 39 Best Buy 0.684% 06/27/21 75 Better Mining 13.000% 09/15/09 71 Burlington Northern 3.200% 01/01/45 57 Comcast Corp. 2.000% 10/15/29 38 Cummins Engine 5.650% 03/01/98 74 Cox Communications Inc. 2.000% 11/15/29 34 Cummins Engine 5.650% 03/01/98 74 Delta Air Lines 8.300% 12/15/29 62 Delta Air Lines 9.000% 05/15/16 68 Elwood Energy 8.159% 07/05/26 70 Enron Corp. 6.750% 08/01/09 23 Federal-Mogul 7.500% 01/15/09 25 Fibermark Inc. 10.750% 04/15/11 69 Finova Group 7.500% 11/15/09 64 Inland Fiber 9.625% 11/15/07 55 International Wire Group 11.750% 06/01/05 74 Kaiser Aluminum 12.750% 02/01/03 15 Level 3 Communications 6.000% 09/15/09 67 Level 3 Communications 6.000% 03/15/10 68 Levi Strauss 11.625% 01/15/08 70 Levi Strauss 12.250% 12/15/12 69 Liberty Media 3.750% 02/15/30 68 Liberty Media 4.000% 11/15/29 73 Mirant Corp. 2.500% 06/15/21 65 Mirant Corp. 5.750% 07/15/07 66 Northern Pacific Railway 3.000% 01/01/47 55 RCN Corporation 10.000% 10/15/07 54 RCN Corporation 10.125% 01/15/10 55 Select Notes 5.700% 06/15/33 75 Universal Health Services 0.426% 06/23/20 67 ********* 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, Aileen M. Quijano and Peter A. Chapman, Editors. Copyright 2004. All rights reserved. ISSN: 1520-9474. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re-mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The TCR subscription rate is $675 for 6 months delivered via e- mail. Additional e-mail subscriptions for members of the same firm for the term of the initial subscription or balance thereof are $25 each. For subscription information, contact Christopher Beard at 240/629-3300. *** End of Transmission ***