TCR_Public/041113.mbx       T R O U B L E D   C O M P A N Y   R E P O R T E R

         Saturday, November 13, 2004, Vol. 8, No. 249

                          Headlines

AVALON DIGITAL: Posts $37,488 of Net Loss in September 2004
BURLINGTON: BII Trust's July to September 2004 Financial Report
DAN RIVER: Posts $13.3 Million Net Loss in September 2004
FAO INC: Reports Sitting on $37.4 Million of Cash at Sept. 30
FAO INC: Reports Sitting on $37.19 Million of Cash at Oct. 30

FEDERAL-MOGUL: Earns $7.3 Million of Net Income in September 2004
FINOVA GROUP: Posts $23 Million of Third Quarter Net Income
HAYES LEMMERZ: Reports Third Quarter 2004 Financial Results
MARINER HEALTH: Posts $5.7 Million of Net Loss in Third Quarter
MIRANT CORP: Earns $32 Million of Net Income in Third Quarter

OWENS CORNING: Reports $94 Million of Net Income in 3rd Quarter
PACIFIC GAS: Posts $248 Million of Net Income in Third Quarter
PARMALAT: Finanziaria Reports September 2004 Financial Results
SOLUTIA INC: Posts $18 Million of Net Loss in Third Quarter 2004
SOLUTIA INC: September 2004 Net Loss is at $1 Million

USG CORP: Posts $16.5 Million Net Earnings in September 2004
USG CORP: Posts Record $1.2 Billion Net Sales in Third Quarter
WESTPOINT STEVENS: Posts $38.5 Mil. of Net Loss in September 2004
WESTPOINT STEVENS: 3rd Quarter Net Loss Balloons to $52.6 Million
WESTPOINT STEVENS: WP Stevens I Posts $4.1 Mil. Income in Sept.

WESTPOINT STEVENS: JP Stevens Enterprises' Sept. Operating Report
WESTPOINT STEVENS: JP Stevens & Co.'s Sept. 2004 Operating Report
WESTPOINT STEVENS: WP Stevens Stores' Sept. 2004 Operating Report

                          *********

AVALON DIGITAL: Posts $37,488 of Net Loss in September 2004
-----------------------------------------------------------
Avalon Digital Marketing Systems, Inc., filed its monthly
operating report for the period from Sept. 1, 2004, to Sept. 30,
2004. Avalon Digital reported a $37,488 net loss in $111,587 of
gross profit for September 2004.

At Sept. 30, 2004, Avalon Digital's balance sheet showed:

         Current Assets             $82,509
         Total Assets               305,925
         Postpetition Debts         610,892
         Prepetition Debts        9,409,308
         Total Owners' Equity    $9,714,275

A full-text copy of Avalon Digital Marketing Systems, Inc.'s
September 2004 Monthly Operating Report is available at no charge
at:

   http://www.sec.gov/Archives/edgar/data/1095792/000009631304000255/avalondigitalexh991904.txt


On September 5, 2003, Avalon Digital Marketing Systems, Inc.,
filed a voluntary petition for reorganization under Chapter 11 of
the United States Bankruptcy Code in the U.S. Bankruptcy Court in
Salt Lake City, Utah. The case has been assigned to Judge Glen E.
Clark and is being administered under Case No. 03-35180.


BURLINGTON: BII Trust's July to September 2004 Financial Report
---------------------------------------------------------------

                      BII Distribution Trust
                   Unaudited Cash Balance Sheet
                     As of September 30, 2004

Assets:
   Cash                                             $44,963,766
   Letters of Credit - Cash Collateral                1,475,592
                                                   ------------
                                                    $46,439,358
                                                   ============

Liabilities:
   BII Distribution Trust Reserve                   $29,549,284
   BII Distribution Trust - Letters of Credit         1,475,592
   BII Liquidation Real Estate LLC                    2,736,933
   BII Dist. Trust - Class 4 Unsecured Claim Reserve 12,677,549
   BII Dist. Trust - Working Capital Escrow                   0
   BII Dist. Trust - Working Capital Escrow Interest          0
                                                   ------------
                                                    $46,439,358
                                                   ============


                      BII Distribution Trust
            Unaudited Cash Receipts and Disbursements
           From July 1, 2004 through September 30, 2004

Cash Receipts:
   Closing date sale proceeds, net                            -
   Post closing working capital adjustment                    -
   Excluded assets monetized                           $769,394
   Assets monetized due to Buyer                              -
   Interest income                                      186,389
                                                   ------------
                                                        955,783

Cash Disbursements:
   Distributions                                     86,330,623
   Secured lender claims                                      0
   Court appointed professionals expense                      0
   Allowed claims                                       344,432
   Trust expenses                                     1,766,781
                                                   ------------
                                                     88,441,836
                                                   ------------
Net increase (decrease) in cash                     (87,486,053)

Cash at beginning of period                         133,925,411
                                                   ------------
Cash at end of period                               $46,439,358
                                                   ============


Headquartered in Greensboro, North Carolina, Burlington
Industries, Inc. -- http://www.burlington-ind.com/-- was one of  
the world's largest and most diversified manufacturers of soft
goods for apparel and interior furnishings. The Company filed
for chapter 11 protection in November 15, 2001 (Bankr. Del. Case
No. 01-11282). Daniel J. DeFranceschi, Esq., at Richards, Layton
& Finger, and David G. Heiman, Esq., at Jones Day, represent the
Debtors. WL Ross & Co. LLC purchased Burlington Industries and
then sold the Lees Carpets business to Mohawk Industries, Inc.
Combining Burlington with Cone Mills, WL Ross created
International Textile Group. Burlington's chapter 11 Plan
confirmed on October 30, 2003, was declared effective on Nov. 10,
2003. (Burlington Bankruptcy News, Issue No. 56; Bankruptcy
Creditors' Service, Inc., 215/945-7000)


DAN RIVER: Posts $13.3 Million Net Loss in September 2004
---------------------------------------------------------
On Nov. 1, 2004, Dan River Inc., filed its monthly operating
report for September of fiscal 2004, which includes the period
from Sept. 5, 2004 to Oct. 2, 2004, with the United States
Bankruptcy Court for the Northern District of Georgia.  The
Company reports a $13.3 million net loss in $31.4 million of net
sales.

At Oct. 2, 2004, Dan River's balance sheet showed:

         Total current assets         $204,864,000
         Total Assets                  374,196,000
         Total current liabilities     146,433,000
         Total liabilities
           not subject to compromise   173,978,000
         Liabilities
           subject to compromise       193,290,000
         Total shareholders' equity     $6,928,000

A full-text copy of Dan River Inc.'s monthly financial report for
the period from Sept. 5, 2004 to Oct. 2, 2004, is available at no
charge at:

   http://www.sec.gov/Archives/edgar/data/914384/000091438404000027/e9911404.txt


Headquartered in Danville, Virginia, Dan River Inc.
-- http://www.danriver.com/-- designs, manufactures and markets
textile products for the home fashions, apparel fabrics and
industrial markets.  The Company and its debtor-affiliates filed
for chapter 11 protection on March 31, 2004 (Bankr. N.D. Ga. Case
No. 04-10990).  James A. Pardo, Jr., Esq., at King & Spalding
represents the Debtors in their restructuring efforts. When the
Debtors filed for protection from their creditors, they listed
$441,800,000 in total assets and $371,800,000 in total debts.


FAO INC: Reports Sitting on $37.4 Million of Cash at Sept. 30
-------------------------------------------------------------
At Sept. 30, 2004, FAO Inc. (n/k/a Children's Books & Toys, Inc.),
reports sitting on $37,431,737 of cash.  

At Sept. 30, 2004, FAO Inc.'s balance sheet showed:

         Total Current Assets      $37,965,000
         Total Assets               40,821,600
         Total Postpetition Debts   15,530,700
         Total Prepetition Debts    58,775,800
         Total Liabilities          74,306,500
         Total Net Owner Equity   $(33,484,900)


A full-text copy of FAO Inc.'s and its subsidiaries' September
2004 Monthly Operating Report is available at no charge at:

   http://www.sec.gov/Archives/edgar/data/878720/000110465904033584/a04-12375_1ex99d2.htm


As previously reported in the Troubled Company Reporter, Judge
Rosenthal confirmed the Debtors' and Creditors' Committee's Second
Amended Joint Plan of Liquidation under Chapter 11 of the
Bankruptcy Code (As Modified).  The Plan took effect Nov. 8, 2004.  
Under the Plan, the Debtors will be liquidated, the cash will be
divided up among the failed toy retailer's creditors and all
equity interests in the company are cancelled.

FAO Inc. (n/k/a Children's Books & Toys, Inc.) and its wholly
owned subsidiaries ZB Company, Inc., FAO Schwarz, Inc. (n/k/a Toy
Soldier, Inc.), The Right Start, Inc. (n/k/a TRS Liquidation Co.),
and Targoff-RS, LLC, filed for chapter 11 protection a second time
on December 4, 2003 (Bankr. D. Del. Case No. 03-13672), eight
months after they emerged from their first chapter 11 cases
(Bankr. D. Del. Case Nos. 03-10119 through 03-10122). Mark D.
Collins, Esq., at Richards Layton & Finger, represents the
Debtors.  When the failed toy retailer filed for bankruptcy, it
listed $102,079,000 in assets and $85,898,000 in liabilities.  On
October 27, 2004, the Bankruptcy Court approved the Debtors' and
Creditors' Committee's Second Amended Joint Plan of Liquidation.  
The Plan took effect November 8, 2004.


FAO INC: Reports Sitting on $37.19 Million of Cash at Oct. 30
-------------------------------------------------------------
At Oct. 31, 2004, FAO Inc. (n/k/a Children's Books & Toys, Inc.),
reports sitting on $37,191,338 of cash.  

At Oct. 31, 2004, FAO Inc.'s balance sheet showed:

         Total Current Assets      $37,724,600
         Total Assets               40,573,100
         Total Postpetition Debts   15,510,200
         Total Prepetition Debts    58,744,100
         Total Liabilities          74,254,300
         Total Net Owner Equity   $(33,681,200)

A full-text copy of FAO Inc.'s and its subsidiaries' October 2004
Monthly Operating Report is available at no charge at:

   http://www.sec.gov/Archives/edgar/data/878720/000110465904033584/a04-12375_1ex99d3.htm


As previously reported in the Troubled Company Reporter, Judge
Rosenthal confirmed the Debtors' and Creditors' Committee's Second
Amended Joint Plan of Liquidation under Chapter 11 of the
Bankruptcy Code (As Modified).  The Plan took effect Nov. 8, 2004.  
Under the Plan, the Debtors will be liquidated, the cash will be
divided up among the failed toy retailer's creditors and all
equity interests in the company are cancelled.

FAO Inc. (n/k/a Children's Books & Toys, Inc.) and its wholly
owned subsidiaries ZB Company, Inc., FAO Schwarz, Inc. (n/k/a Toy
Soldier, Inc.), The Right Start, Inc. (n/k/a TRS Liquidation Co.),
and Targoff-RS, LLC, filed for chapter 11 protection a second time
on December 4, 2003 (Bankr. D. Del. Case No. 03-13672), eight
months after they emerged from their first chapter 11 cases
(Bankr. D. Del. Case Nos. 03-10119 through 03-10122). Mark D.
Collins, Esq., at Richards Layton & Finger, represents the
Debtors.  When the failed toy retailer filed for bankruptcy, it
listed $102,079,000 in assets and $85,898,000 in liabilities.  On
October 27, 2004, the Bankruptcy Court approved the Debtors' and
Creditors' Committee's Second Amended Joint Plan of Liquidation.  
The Plan took effect November 8, 2004.


FEDERAL-MOGUL: Earns $7.3 Million of Net Income in September 2004
-----------------------------------------------------------------

                 Federal-Mogul Global, Inc., et al.
                      Unaudited Balance Sheet
                      As of September 30, 2004
                           (In millions)

                              Assets

Cash and equivalents                                     $315.4
Accounts receivable                                       621.0
Inventories                                               490.8
Deferred taxes                                            199.6
Prepaid expenses and other current assets                 115.1
                                                      ---------
Total current assets                                    1,742.0

Summary of Unpaid Postpetition Debits                     (67.4)
Intercompany Loans Receivable (Payable)                 2,509.4
                                                      ---------
Intercompany Balances                                   2,442.0

Property, plant and equipment                           1,058.3
Goodwill                                                1,177.3
Other intangible assets                                   450.3
Insurance recoverable                                     815.7
Other non-current assets                                1,085.3
                                                      ---------
Total Assets                                           $8,770.7
                                                      =========

                Liabilities and Shareholders' Equity

Short-term debt                                          $358.5
Accounts Payable                                          203.2
Accrued Compensation                                       73.6
Restructuring and rationalization reserves                 13.3
Current portion of asbestos liability                      (0.0)
Interest Payable                                            0.4
Other accrued liabilities                                 311.4
                                                      ---------
Total current liabilities                                 960.5

Long-term debt                                                -
Post-employment benefits                                1,482.9
Other accrued liabilities                                 964.3
Liabilities subject to compromise                       6,092.8

Shareholders' equity:
    Preferred stock                                     1,050.8
    Common stock                                          555.3
    Additional paid-in capital                          7,937.2
    Accumulated deficit                                (9,640.6)
    Accumulated other comprehensive income               (632.2)
    Other                                                     -
                                                      ---------
Total Shareholders' Equity                               (729.6)
                                                      ---------
Total Liabilities and Shareholders' Equity             $8,770.8
                                                      =========


                 Federal-Mogul Global, Inc., et al.
                 Unaudited Statement of Operations
               For the month ended September 30, 2004
                           (In millions)

Net sales                                                $293.5
Cost of products sold                                     243.0
                                                      ---------
Gross margin                                               50.5

Selling, general & administrative expenses                (47.8)
Amortization                                               (1.1)
Reorganization items                                       12.9
Interest income (expense), net                             (8.0)
Other income (expense), net                                 8.1
                                                      ---------
Earnings before Income Taxes                               14.6

Income Tax (Expense) Benefit                               (7.4)
                                                      ---------
Earnings before effect of change in acctg principle         7.3
Cumulative effect of change in acctg principle                -
                                                      ---------
Net Earnings (loss)                                        $7.3
                                                      =========


                 Federal-Mogul Global, Inc., et al.
                 Unaudited Statement of Cash Flows
                For the month ended September 30, 2004
                           (In millions)

Cash Provided From (Used By) Operating Activities:
    Net earnings (loss)                                    $7.3

Adjustments to reconcile net earnings (loss):
    Depreciation and amortization                          14.0
    Adjustments of assets held for sale to fair value       9.0
    Asbestos Charge                                           -
    Summary of unpaid postpetition debits                     -
    Cumulative effect of change in acctg principle            -
    Change in post-employment benefits                      9.1
    Decrease/(increase) in accounts receivable            (41.4)
    Decrease/(increase) in inventories                      4.8
    Increase/(decrease) in accounts payable                (2.4)
    Change in other assets and other liabilities          (29.8)
    Change in restructuring charge                         (2.0)
    Refunds (payments) against asbestos liability             -
                                                      ---------
Net Cash Provided From Operating Activities               (31.4)

Cash Provided From (Used By) Investing Activities:
    Expenditures for property, plant & equipment           (7.8)
    Proceeds from sale of property, plant & equipment         -
    Proceeds from sale of businesses                          -
    Business acquisitions, net of cash acquired               -
    Other                                                     -
                                                      ---------
Net Cash Provided From (Used By) Investing Activities      (7.8)

Cash Provided From (Used By) Financing Activities:
    Increase (decrease) in debt                            45.7
    Sale of accounts receivable under securitization          -
    Dividends                                                 -
    Other                                                   3.8
                                                      ---------
Net Cash Provided From Financing Activities                49.5

Increase (Decrease) in Cash and Equivalents                10.3

Cash and equivalents at beginning of period               305.1
                                                      ---------
Cash and equivalents at end of period                    $315.4
                                                      =========


FINOVA GROUP: Posts $23 Million of Third Quarter Net Income  
-----------------------------------------------------------

                       The FINOVA Group, Inc.
         Unaudited Condensed Consolidated Balance Sheet
                     As of September 30, 2004
                          (In Thousands)

                              Assets

Current Assets:
   Cash and cash equivalents                           $509,323
   Restricted cash - impermissible restricted pmts.      29,679

Financing Assets:
   Loans and other financing contracts, net             550,037
   Direct Financing leases                              165,066
                                                      ---------
Total financing assets                                  715,103

Reserve for credit losses                              (145,353)
                                                      ---------
Net Financing assets                                    569,750

Other Financial Assets:
   Operating leases                                      66,046
   Assets held for sale                                 116,760
   Assets held for the production income                 30,789
   Investments                                           27,734
                                                      ---------
Total other financial assets                            241,329
                                                      ---------
Total Financial Assets                                  811,079

Other assets                                             20,089
                                                      ---------
Total Assets                                         $1,370,170
                                                      =========

               Liabilities and Stockholders' Equity

Liabilities:
   Berkadia loan                                              -
   Senior Notes, net                                 $1,810,398
   Senior debt - Predecessor Company                          -
                                                      ---------
Total debt                                            1,810,398

Accounts payable and accrued expenses                   126,754
Deferred income taxes, net                                4,964
                                                      ---------
Total Liabilities                                     1,942,116

Stockholders' Equity:
   Common Stock                                           1,259
   Additional capital                                   108,256
   Accumulated deficit                                 (680,581)
   Accumulated other comprehensive (loss) income           (344)
   Common stock in treasury                                (536)
                                                      ---------
Total Stockholders' Equity                             (571,946)
                                                      ---------
Total Liabilities and Stockholders' Equity           $1,370,170
                                                      =========


                       The FINOVA Group, Inc.
    Unaudited Condensed Statements of Consolidated Operations
              Three Months Ended September 30, 2004
                          (In Thousands)

Revenues:
   Interest income                                      $15,714
   Rental income                                          4,557
   Operating leases income                               11,923
   Fees and other income                                  3,930
                                                      ---------
Total Revenues                                           36,124

Interest expense                                        (62,246)
Operating lease and other depreciation                   (4,076)
                                                      ---------
Interest Margin                                         (30,198)

Other Revenues and (Expenses):
   Reversal of provision for credit losses               32,248
   Net gain on financial assets                          33,507
   Portfolio expenses                                    (5,621)
   General & Administrative expenses                     (6,866)
                                                      ---------
Total Other Revenues and (Expenses)                      53,268

Income from continuing operations before
   Income taxes and preferred dividends                  23,070
   Income tax expense                                         -
                                                      ---------
Net Income                                              $23,070
                                                      =========


                       The FINOVA Group Inc.
    Unaudited Condensed Statements of Consolidated Cash Flows
               Nine Months Ended September 30, 2004
                          (In Thousands)

Operating Activities:
Net Income                                              $84,134

Adjustment to reconcile net income to net
   cash provided by operating activities:
   Reversal of provision for credit losses             (102,611)
   Net cash gain on disposal of financial assets        (60,648)
   Net non-cash (gain) charge off of financial assets    (5,539)
   Depreciation and amortization                         14,404
   Deferred income taxes, net                               914
   Other amortization                                    10,234

Change in assets and liabilities:
   Decrease in other assets                               2,378
   Increase in accounts payable and accrued expenses     11,153
                                                      ---------
Net Cash Used by Operating Activities                   (46,114)

Investing Activities:
   Proceeds from disposals of leases and other assets    54,106
   Proceeds from sales of investments                    11,338
   Proceeds from sales of loans and financing leases    195,799
   Collections from financial assets                    643,805
   Fundings under existing customer commitments         (50,605)
   Recoveries of loans previously written-off            30,445
   Deposits of impermissible restricted payments
      into restricted cash account                      (29,679)
                                                      ---------
Net Cash Provided by Investing Activities               855,209

Financing Activities:
   Repayments of Berkadia Loan                         (525,000)
   Repayments of Senior Notes                          (563,910)
                                                      ---------
Net Cash Used by Financing Activities                (1,088,910)

Decrease in Cash and Cash Equivalents                  (279,815)

Cash and Cash Equivalents, beginning of period          789,138
                                                      ---------
Cash and Cash Equivalents, end of period               $509,323
                                                      =========


A full-text copy of The FINOVA Group's Form 10-Q Report ending
September 30, 2004, is available for free at the Securities and
Exchange Commission at:

   http://www.sec.gov/Archives/edgar/data/883701/000119312504192814/d10q.htm


Headquartered in Scottsdale, Arizona, The Finova Group, Inc.,
provides commercial financing to small and midsized businesses;
other services include factoring, accounts receivable management,
and equipment leasing. The firm has three segments: Commercial
Finance, Specialty Finance, and Capital Markets. FINOVA targets
such markets as transportation, wholesaling, communication, health
care, and manufacturing. Loan write-offs had put the firm on shaky
ground. The Company and its debtor-affiliates and subsidiaries
filed for Chapter 11 protection on March 7, 2001 (U.S. Bankr. Del.
01-00697). Daniel J. DeFranceschi, Esq., at Richards, Layton &
Finger, P.A., represents the Debtors. FINOVA has since emerged
from Chapter 11 bankruptcy. Financial giants Berkshire Hathaway
and Leucadia National Corporation (together doing business as
Berkadia) own FINOVA through the almost $6 billion lent to the
commercial finance company. (Finova Bankruptcy News, Issue No. 52;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


HAYES LEMMERZ: Reports Third Quarter 2004 Financial Results
-----------------------------------------------------------

                         HLI Creditor Trust
                    Unaudited Cash Balance Sheet
                      As of September 30, 2004

Assets:
Cash                                                $10,821,695

Liabilities:
Trust Expenses Reserve, net                          10,821,695
     Reimbursements to Reorganized Debtors account            0
Claimholder distribution reserve                              0
                                                     ----------
                                                    $10,821,695
                                                     ==========


                         HLI Creditor Trust
       Unaudited Statement of Cash Receipts and Disbursements
        Period from June 3, 2003 through September 30, 2004

Cash Receipts:
     Funding of Expense Advance                      $1,250,000
     Trust Recoveries                                17,246,033
     Interest Income                                     20,279
                                                     ----------
                                                     18,516,312
                                                     ----------
Cash Disbursements:
     Repayment of expense advance                    (1,250,000)
     Trust Expenses                                  (6,444,617)
                                                     ----------
                                                     (7,694,617)
                                                     ----------

Net increase (decrease) in cash                      10,821,695
Cash at beginning of period                                   -
                                                     ----------
Cash at end of period                               $10,821,695
                                                     ==========


                         HLI Creditor Trust
       Unaudited Statement of Cash Receipts and Disbursements
             For the Period July 1 to September 30, 2004

Cash Receipts:
     Funding of Expense Advance                              $0
     Trust Recoveries                                 6,166,312
     Interest Income                                     12,347
                                                     ----------
                                                      6,178,659
                                                     ----------
Cash Disbursements:
     Repayment of expense advance                            (0)
     Reimbursements to Reorganized Debtors                   (0)
     Distributions to beneficiaries                          (0)
     Trust Expenses                                  (1,345,631)
                                                     ----------
                                                     (1,345,631)
                                                     ----------

Net increase (decrease) in cash                       4,833,028
Cash at beginning of period                           5,988,667
                                                     ----------
Cash at end of period                               $10,821,695
                                                     ==========


Hayes Lemmerz International, Inc., is a world leading global
supplier of automotive and commercial highway wheels, brakes,
powertrain, suspension, structural and other lightweight
components. The Company filed for chapter 11 protection on
December 5, 2001 (Bankr. D. Dela. Case No. 01-11490). Eric
Ivester, Esq. at Skadden, Arps, Slate, Meager & Flom and Mark S.
Chehi, Esq. at Skadden, Arps, Slate, Meager & Flom represent the
Debtors' in their restructuring efforts.  (Hayes Lemmerz
Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


MARINER HEALTH: Posts $5.7 Million of Net Loss in Third Quarter
---------------------------------------------------------------
Mariner Health Care, Inc., reported a net loss for the 2004
third quarter of ($5.7) million as compared to net income of
$6.1 million for the comparable 2003 period.  This loss is
primarily attributable to an increase in taxes, merger related
charges and discontinued operations.

Revenues decreased $26.7 million, or 6.1% to $413.1 million  
from $439.8 million for the same period last year, primarily due  
to facilities divested during the three months ended December 31,  
2003.  For facilities operated at September 30, 2004, revenues  
increased 5.8% to $413.1 million from $390.5 million for the  
three months ended September 30, 2003.  Mariner achieved a  
significant improvement in Adjusted EBITDA -- earnings before
interest, taxes, depreciation and amortization, and certain  
divestiture and merger related items -- to $22.5 million for the  
third quarter ended September 30, 2004 as compared to $16.8  
million for the same period in 2003.

                       Nine Month Results

Consolidated revenues for the nine months ended September 30, 2004
decreased 4.4% to $1,229.7 million from $1,285.7 million for the
comparable 2003 period.  The decrease in revenues is primarily
related to the divestiture of facilities during the fourth quarter
of 2003.  Mariner recorded net income of $3.9 million for the nine
months ended September 30, 2004 as compared to net income of $7.2
million for the comparable 2003 period.  Adjusted EBITDA was $74.6
million for the nine months ended September 30, 2004, as compared
to $49.1 million for the comparable 2003 nine-month period.  
Mariner's average per diem rate for Medicare Part A for same
facility operations increased 8.8%, from $299.42 for the nine
months ended September 30, 2003 to $325.76 for the nine months
ended September 30, 2004.  This resulted in increased revenues of
$25.6 million.

                      Operating Commentary

As a percentage of total revenues, same facility Medicare  
revenues grew slightly, increasing to 31.3% for the third quarter  
of 2004 from 30.7% for the same period in 2003.  Same facility  
Medicare revenues associated with Mariner's skilled nursing and  
long-term acute care hospital segments accounted for 24.6% and  
6.7% of total revenues, respectively, for the third quarter of
2004 compared to 24.5% and 6.2% of total revenues, for the same
period in 2003.

"In addition to making significant progress with the proposed
merger we maintained our operational focus during the quarter,"
said C. Christian Winkle, Chief Executive Officer.  "For the third
quarter of 2004, our Adjusted EBITDA margin improved to 5.4% from
4.3% from the same period last year.  Furthermore, profitability
of both our skilled nursing facility and long-term acute care
hospital groups continued to show improvement during the quarter.  
These improvements reflect the continued success of our
operational strategies."

                        Merger Agreement

On June 29, 2004, the Company entered into a merger agreement with
National Senior Care, Inc. and NCARE Acquisition Corp., a wholly
owned subsidiary of NSC established for the purpose of acquiring
the Company.  Pursuant to the Merger Agreement, NCARE will acquire
the issued and outstanding shares of common stock of the Company
for $30.00 per share in cash.  The merger is expected to close in
December of 2004 and is subject to various conditions described in
the Merger Agreement and the definitive proxy statement, including
but not limited to the approval of the stockholders of the
Company.  The Company has previously announced that it will hold
an annual meeting of its stockholders on Tuesday, November 30,
2004 to vote on the proposed merger.

A full-text copy of Mariner's third quarter results filed on Form  
10-Q with the Securities and Exchange Commission is available for  
free at:

   http://www.sec.gov/Archives/edgar/data/882287/000095014404010512/g91607e10vq.htm


                    Mariner Health Care, Inc.
              Condensed Consolidated Balance Sheets
                    As of September 30, 2004
                         (in thousands)

                              Assets  

Current assets
   Cash and cash equivalents                            $46,766
   Receivables, net of allowance for doubtful  
      accounts of $105,939 and $97,448                  213,631
   Prepaid expenses and other current assets             22,748
                                                     ----------
   Total current assets                                 283,145

Property and equipment, net                             530,584
Reorganization value                                    192,771
Goodwill, net of accumulated amortization of $970         6,797  
Restricted investments                                   16,962  
Other assets                                             35,720  
                                                     ----------  
Total Assets                                         $1,065,979
                                                     ==========

              Liabilities and Stockholders' Equity

Current liabilities
   Current maturities of long-term debt                 $17,183  
   Accounts payable                                      40,699  
   Accrued compensation and benefits                     69,753  
   Accrued insurance obligations                         84,544  
   Other current liabilities                             56,399  
                                                     ----------
Total current liabilities                               268,578
  
Long-term debt, net of current maturities               366,508  
Long-term insurance reserves                            144,202  
Other liabilities                                        23,251  
Minority interest                                         3,342  
                                                     ----------
Total liabilities                                       805,881  

Stockholders' equity  
   Preferred stock                                            -
   Common stock                                             200
   Warrants to purchase common stock                          -
   Capital surplus                                      361,083
   Unearned compensation                                   (345)
   Accumulated deficit                                 (100,980)
   Accumulated other comprehensive income                   140
                                                     ----------
      Total stockholders' equity                        260,098
                                                     ----------
Total Liabilities and Stockholders' Equity           $1,065,979
                                                     ==========


                    Mariner Health Care, Inc.  
         Condensed Consolidated Statements of Operations
          For The Three Months Ended September 30, 2004
                         (in thousands)

Net revenue                                            $413,103
Costs and expenses
   Operating expenses
   Wage and related costs                               237,442  
   Supplies                                              23,179  
   Insurance                                             16,768  
   Provision for bad debt                                 4,507
   Rent expense                                           8,419  
   Other                                                 73,808  
                                                     ----------
   Total operating expenses                             364,123

General and administrative                               27,001  
Merger related costs                                      4,880  
Depreciation and amortization                            10,239  
                                                     ----------
   Total costs and expenses                             406,243
                                                     ----------
Operating income                                          6,860

Other income (expenses):
   Interest expense                                      (8,220)
   Interest income                                          756
   Other                                                    (13)
                                                     ----------
(Loss) Income from continuing operations before taxes      (591)

(Benefit) provision for income taxes                      3,415
                                                     ----------
(Loss) income from continuing operations                 (4,006)

Discontinued operations
   (Loss) gain on sale of discontinued
      operations, net of tax                                 93
   (Loss) income from discontinued operations,
      net of tax                                         (1,803)
                                                     ----------
Net income (loss)                                       ($5,716)
                                                     ==========


                    Mariner Health Care, Inc.
         Condensed Consolidated Statement of Cash Flows
              Nine Months Ended September 30, 2004
                         (in thousands)

Cash flows from operating activities  
   Net income                                            $3,864
   Adjustments to reconcile net income to net cash
      provided by operating activities:
      Provision for bad debts                            11,923
      Gain from divestitures and sales                   (2,600)
      Depreciation and amortization                      30,430
      Amortization of deferred financing costs            1,464
      Stock compensation                                    278
      Minority interest and other                            23
      Provision (benefit) for income taxes                5,041
      Loss from discontinued operations                   3,791
   Changes in operating assets and liabilities:  
      Receivables                                         6,864
      Prepaid expenses and other current assets           1,613
      Accounts payable                                  (28,682)
      Accrued and other current liabilities              14,090
      Insurance reserves                                (16,693)
      Other                                              (8,273)
                                                     ----------
Net cash (utilized) provided by operating  
   activities from continuing operations  
   before reorganization items                           23,133
                                                     ----------
Net cash (utilized) provided by discontinued
   operations                                            (3,872)
                                                     ----------
Payment of reorganization items, net                     (3,956)

Cash flows from investing activities
   Purchases of property and equipment                  (25,002)
   Proceeds from divestitures and sales                  12,293
   Restricted investments                                 2,141
   Collections on notes receivable                        6,040
   Insurance proceeds                                         -
                                                     ----------
Net cash utilized by investing activities                (4,528)

Cash flows from financing activities  
   Repayment of long-term debt                           (5,945)
                                                     ----------
Net cash utilized by financing activities                (5,945)

(Decrease) increase in cash and cash equivalents          4,832
  
Cash and cash equivalents, beginning of period           41,934
                                                     ----------
Cash and cash equivalents, end of period                $46,766
                                                     ==========

Mariner Post-Acute Network, Inc., Mariner Health Group, Inc., and
scores of debtor-affiliates filed for chapter 11 protection on
January 18, 2000 (Bankr. D. Del. Case Nos. 00-113 through 00-301).
Mark D. Collins, Esq., at Richards, Layton & Finger, P.A.,
represents the Reorganized Debtors, which emerged from bankruptcy
under the terms of their Second Amended Joint Plan of
Reorganization declared effective on May 13, 2002. (Mariner
Bankruptcy News, Issue No. 63; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


MIRANT CORP: Earns $32 Million of Net Income in Third Quarter
-------------------------------------------------------------
  
              Mirant Corporation and Subsidiaries
              Unaudited Consolidated Balance Sheet
                    As of September 30, 2004

ASSETS

Cash and cash equivalents                        $1,541,000,000
Funds on deposit                                    201,000,000
Receivables, net                                    988,000,000
Price risk management assets                        201,000,000
Inventories                                         284,000,000
Assets held for sale                                203,000,000
Other                                               283,000,000
                                                 --------------
   Total Current Assets                           3,701,000,000

Property, plant and equipment, net                6,254,000,000
Non-current Assets:
   Goodwill, net of amortization                    587,000,000
   Other intangible assets, net                     272,000,000
   Investments                                      247,000,000
   Price risk management assets                     142,000,000
   Funds on deposit                                 135,000,000
   Other                                            467,000,000
                                                 --------------
   Total Non-current Assets                       1,850,000,000
                                                 --------------
TOTAL ASSETS                                    $11,805,000,000
                                                 ==============

LIABILITIES AND EQUITY

Current Liabilities:
   Short-term debt                                  $17,000,000
   Current portion of long-term debt                212,000,000
   Accounts payable and accrued liabilities         598,000,000
   Price risk management liabilities                244,000,000
   Transition power agreements                       74,000,000
   Other                                            213,000,000
                                                 --------------
      Total current liabilities                   1,358,000,000
Non-current Liabilities:
   Long-term debt                                 1,161,000,000
   Price risk management liabilities                166,000,000
   Transition power agreements                        6,000,000
   Other                                            738,000,000
                                                 --------------
      Total Non-current liabilities               2,071,000,000

Liabilities subject to compromise                 8,933,000,000
Minority interest in subsidiaries                   169,000,000
Stockholders' Equity:
   Common stock                                       4,000,000
   Additional paid-in capital                     4,918,000,000
   Accumulated deficit                           (5,585,000,000)
   Accumulated other comprehensive loss             (61,000,000)
   Treasury stock, at cost                           (2,000,000)
                                                 --------------
      TOTAL STOCKHOLDERS' DEFICIT                  (726,000,000)
                                                 --------------
      TOTAL LIABILITIES & STOCKHOLDERS DEFICIT  $11,805,000,000
                                                 ==============


              Mirant Corporation and Subsidiaries
          Unaudited Consolidated Statements of Income
         For the three months ended September 30, 2004

REVENUES:
   Generation                                      $983,000,000
   Integrated utilities and distribution            147,000,000
   Net trading revenue                               (9,000,000)
                                                 --------------
      Total Operating Revenues                    1,121,000,000

Cost of fuel, electricity and other products        584,000,000
                                                 --------------
      Gross Margin                                  537,000,000
                                                 --------------
OPERATING EXPENSES:
   Operations and maintenance                       239,000,000
   Depreciation and amortization                     77,000,000
   Impairment losses and restructuring charges        9,000,000
   Loss (gain) on sale of assets, net                65,000,000
                                                 --------------
      Total Operating Expenses                      390,000,000
                                                 --------------
Operating Income (loss)                             147,000,000

OTHER (EXPENSE) INCOME, NET:
   Interest expense                                 (32,000,000)
   Interest rate hedging losses                              --
   Equity in income of affiliates                     6,000,000
   Interest income                                    3,000,000
   Other, net                                         3,000,000
                                                 --------------
      Total other expense, net                      (20,000,000)

Income (loss) from continuing
   operations before taxes                          127,000,000
Reorganization items, net                            62,000,000
Provision (benefit) for income taxes                 17,000,000
Minority interest                                     5,000,000
                                                 --------------
   Income (loss) from continuing operations          43,000,000

Loss from discontinued operations, net of tax       (11,000,000)
                                                 --------------
Income (loss) before change
   in accounting principles                          32,000,000
                                                 --------------
      NET INCOME (LOSS)                             $32,000,000
                                                 ==============


              Mirant Corporation and Subsidiaries
        Unaudited Consolidated Statements of Cash Flows
          For the nine months ended September 30, 2004

Cash Flows from Operating Activities:
Net income                                          $94,000,000
Adjustments:
   Equity in income of affiliates                   (19,000,000)
   Dividends received from equity investments        15,000,000
   Non-cash charges for reorganization items        137,000,000
   Change in accounting principles                           --
   Depreciation and amortization                    240,000,000
   Amortization of power agreements                (288,000,000)
   Restructuring charges                             55,000,000
   Price risk management activities, net            (93,000,000)
   Deferred income taxes                             12,000,000
   Loss (gain) on sales of assets                    50,000,000
   Minority interest                                 17,000,000
   Interest rate hedging losses                              --
   Other, net                                         6,000,000
Change in operating assets and liabilities:
   Receivables, net                                 143,000,000
   Other current assets                             (56,000,000)
   Other assets                                       7,000,000
   Accounts payable and accrued liabilities        (273,000,000)
   Taxes accrued                                     41,000,000
   Other current liabilities                        (24,000,000)
   Other liabilities                                  4,000,000
                                                 --------------
      Total adjustments                             (26,000,000)
                                                 --------------
      Net cash provided by operating activities      68,000,000

Cash Flows from Investing Activities:
Capital expenditures                                (94,000,000)
Cash paid for acquisitions                          (21,000,000)
Issuance of notes receivable                                 --
Repayments on notes receivable                        1,000,000
Proceeds from the sale of assets                      3,000,000
Cash paid in relation to disposition                (12,000,000)
                                                 --------------
      Net cash provided by investing activities    (123,000,000)

Cash Flows from Financing Activities:
Proceeds from issuance of debt                      266,000,000
Repayment of long-term debt                        (192,000,000)
Payment dividends to minority interests              (8,000,000)
Repayment of short-term debt                        (11,000,000)
Change in debt service reserve fund                 (46,000,000)
                                                 --------------
      Net cash from financing activities              9,000,000

Exchange rate effect on cash                                 --
                                                 --------------
Net decrease in cash                                (46,000,000)
Cash, beginning of period                         1,587,000,000
                                                 --------------
Cash, end of period                              $1,541,000,000
                                                 ==============


A full-text copy of Mirant Corporation's Form 10-Q Report is
available at no charge at:

   http://sec.gov/Archives/edgar/data/1010775/000110465904034227/a04-12813_110q.htm


Headquartered in Atlanta, Georgia, Mirant Corporation --
http://www.mirant.com/-- together with its direct and indirect  
subsidiaries, generate, sell and deliver electricity in North
America, the Philippines and the Caribbean.  Mirant Corporation
filed for chapter 11 protection on July 14, 2003 (Bankr. N.D. Tex.
03-46590).  Thomas E. Lauria, Esq., at White & Case LLP, represent
the Debtors in their restructuring efforts. When the Company filed
for protection from their creditors, they listed $20,574,000,000
in assets and $11,401,000,000 in debts.  (Mirant Bankruptcy News,
Issue No. 48; Bankruptcy Creditors' Service, Inc., 215/945-7000)


OWENS CORNING: Reports $94 Million of Net Income in 3rd Quarter
---------------------------------------------------------------
Owens Corning (OTC: OWENQ) reported financial results for the
quarter ended Sept. 30, 2004.

For the third quarter, the company posted net sales of
$1.541 billion, an increase of 14 percent compared to net sales of
$1.349 billion for the same period in the prior year.  Net income
for the quarter rose 71 percent, to $94 million, compared to net
income of $55 million for the third quarter of 2003.  Net income
for 2004 included a $16 million pre-tax gain recorded for the
reversal of accrued interest as the result of the settlement of
certain guaranteed subsidiary debt.

Owens Corning reported income from operations of $153 million for
the quarter, including a Chapter 11-related credit of $5 million
and a credit for asbestos-related insurance recoveries of $3
million.  For the third quarter of 2003, the company reported
income from operations of $104 million, including $5 million of
Chapter 11-related charges and a $1 million other charge as the
result of a contractual post-closing adjustment to the selling
price of the Company's metal systems business.

Owens Corning ended the quarter with a cash balance of $822
million.

"For the second quarter in a row, Owens Corning achieved record
sales as we continued to see strong demand in all of our major
markets," said Dave Brown, Owens Corning's chief executive
officer.  "With our results for the last two quarters, we are
entering into the fourth quarter with momentum and we expect to
achieve the aggressive goals we set for the company for the
year."

A full-text copy of Owens Corning's Form 10-Q report is available
for free at the Securities and Exchange Commission at:

    http://www.sec.gov/Archives/edgar/data/75234/000119312504187915/d10q.htm


                    Owens Corning And Subsidiaries
                      Consolidated Balance Sheet
                       As of September 30, 2004
                       (In millions of dollars)

                                 ASSETS

Current Assets:
     Cash and cash equivalents                               $822
     Receivables                                              676
     Inventories                                              436
     Other current assets                                      43
                                                        ---------
Total Current Assets                                        1,977

Other Assets:
     Restricted cash - asbestos and insurance-related         167
     Restricted cash, securities and other - Fibreboard     1,413
     Deferred income taxes                                  1,112
     Pension-related assets                                   507
     Goodwill                                                 193
     Investments in affiliates                                 74
     Other non-current assets                                 164
                                                        ---------
Total other                                                 3,630

Plant and Equipment:
     Land                                                      78
     Buildings and leasehold improvements                     789
     Machinery and equipment                                3,247
     Construction in progress                                  98
                                                        ---------
                                                            4,212
Less - Accumulated depreciation                            (2,252)
                                                        ---------
Net plant and equipment                                     1,960
                                                        ---------
Total Assets                                               $7,567
                                                        =========

                LIABILITIES AND STOCKHOLDERS' DEFICIT

Current Liabilities:
     Accounts payable and accrued liabilities                $836
     Short-term debt                                           11
     Long-term debt - current portion                          12
                                                        ---------
Total Current Liabilities                                     859

Long-term debt                                                 64

Other employee benefits liability                             701
Pension plan liability                                        407
Other Liabilities                                             200
                                                        ---------
Total Other Liabilities                                     1,308

Liabilities subject to compromise                           9,268

Company-Obligated Securities of Entities
     Holding Solely Parent Debentures                         200

Minority Interest                                              46

Stockholders' Deficit:
     Common stock                                               6
     Additional paid-in capital                               690
     Deficit                                               (4,519)
     Accumulated other comprehensive loss                    (354)
     Other                                                     (1)
                                                        ---------
Total stockholders' deficit                                (4,178)
                                                        ---------
Total Liabilities And Stockholders' Deficit                $7,567
                                                        =========


                    Owens Corning And Subsidiaries
                Consolidated Statement of Income (Loss)
                  Three Months Ended September 30, 2004
                       (In millions of dollars)


Net Sales                                                  $1,541
Cost Of Sales                                               1,244
                                                        ---------
Gross margin                                                  297

Operating Expenses:
     Marketing and administrative expenses                    131
     Science and technology expenses                           12
     Restructure costs                                          -
     Chapter 11 related reorganization items                   (5)
     Credit for asbestos litigation claims                     (3)
     Other                                                      9
                                                        ---------
Total operating expenses                                      144

Income (Loss) From Operations                                 153
Interest expense                                              (14)
                                                        ---------
Income (Loss) Before Income Tax Expense                       167
Income tax expense                                             71
                                                        ---------
Income (Loss) Before Equity in Income (Loss) of
     Affiliates                                                96
Minority interest                                              (2)
Equity in net income of affiliates                              -
                                                        ---------
NET INCOME (LOSS)                                             $94
                                                        =========


                    Owens Corning And Subsidiaries
                 Consolidated Statement of Cash Flows
                  Nine Months Ended September 30, 2004
                       (In millions of dollars)

Net Cash Flow From Operations
     Net income (loss)                                       $132

Reconciliation of net cash used in operations
Non-cash items:
     Provision for depreciation and amortization              167
     Provision (credit) for impairment of fixed assets         --
     Provision for deferred income taxes                       81
     Provision for pension and other employee benefits         88
     Other                                                     27
Increase in receivables                                      (200)
Increase (decrease) in inventories                            (37)
Decrease in accounts payable                                   44
Pension fund contribution                                    (225)
Payments for other employee benefits liability                (23)
Increase in restricted cash, securities and other              (1)
Proceeds from insurance for asbestos litigation claims        (19)
Other                                                           3
                                                        ---------
Net cash flow from operations                                  59

Net Cash Flow From Investing:
     Additions to plant and equipment                        (147)
     Investments in subsidiaries, net of cash acquired        (86)
     Proceeds from the sale of affiliate or business            7
                                                        ---------
Net cash flow from investing                                 (226)

Net Cash Flow From Financing:
     Other additions to long-term debt                          -
     Other reductions to long-term debt                       (13)
     Net increase in short-term debt                            -
     Subject to compromise                                     (5)
                                                        ---------
Net cash flow from financing                                  (18)

Effect of exchange rate changes on cash                         2

Net decrease in cash and cash equivalents                    (183)
                                                        ---------
Cash and cash equivalents at beginning of period            1,005
                                                        ---------
Cash and cash equivalents at end of period                   $822
                                                        =========

Headquartered in Toledo, Ohio, Owens Corning --
http://www.owenscorning.com/-- manufactures fiberglass  
insulation, roofing materials, vinyl windows and siding, patio
doors, rain gutters and downspouts. The Company filed for chapter
11 protection on October 5, 2000 (Bankr. Del. Case. No. 00-03837).
Mark S. Chehi, Esq., at Skadden, Arps, Slate, Meagher & Flom,
represents the Debtors in their restructuring efforts. At
June 30, 2004, the Company's balance sheet shows $7.3 billion in
assets and a $4.3 billion stockholders' deficit. (Owens Corning
Bankruptcy News, Issue No. 88; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


PACIFIC GAS: Posts $248 Million of Net Income in Third Quarter
--------------------------------------------------------------
A full-text copy of Pacific Gas and Electric Company's third
quarter results on Form 10-Q is available for free at the
Securities and Exchange Commission at:

    http://sec.gov/Archives/edgar/data/75488/000007548804000007/pge10q_q304.htm


                  Pacific Gas and Electric Company
               Unaudited Consolidated Balance Sheets
                       At September 30, 2004
                           (in millions)

                              ASSETS

Current Assets:
    Cash and cash equivalents                              $980
    Restricted cash                                       2,004
    Accounts receivable:
       Customers (net of allowance for
          doubtful accounts)                              1,958
       Related parties                                        3
       Regulatory balancing accounts                        849
    Inventories:
       Gas stored underground and fuel oil                  226
       Materials and supplies                               127
    Prepaid expenses and other                               53
                                                      ---------
Total current assets                                      6,200

Property, Plant and Equipment:
    Electric                                             21,193
    Gas                                                   8,467
    Construction work in progress                           417
                                                      ---------
Total property, plant and equipment                      30,077

Accumulated depreciation and decommissioning            (11,377)
                                                      ---------
Net property, plant and equipment                        18,700

Other Non-current Assets:
    Regulatory assets                                     6,635
    Nuclear decommissioning funds                         1,539
    Other                                                   997
                                                      ---------
Total other non-current assets                            9,171
                                                      ---------
TOTAL ASSETS                                            $34,071
                                                      =========

               LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities Not Subject to Compromise:
Current Liabilities:
    Long-term debt, classified as current                  $457
    Current portion of rate reduction bonds                 290
    Accounts payable:
       Trade creditors                                      484
       Disputed claims                                    2,142
       Related parties                                       33
       Regulatory balancing accounts                        464
       Other                                                423
    Interest payable                                        383
    Income taxes payable                                    131
    Deferred income taxes                                   253
    Other                                                   817
                                                      ---------
Total current liabilities                                 5,877

Non-current Liabilities:
    Long-term debt                                        7,844
    Rate reduction bonds                                    657
    Regulatory liabilities                                3,980
    Asset retirement obligations                          1,280
    Deferred income taxes                                 3,567
    Deferred tax credits                                    122
    Preferred stock with redemption provisions              122
    Other                                                19,308
                                                      ---------
Total non-current liabilities                            19,286

Liabilities Subject to Compromise:
    Financing debt                                            -
    Trade creditors                                           -
                                                      ---------
Total liabilities subject to compromise                       -

Commitments and Contingencies                                 -

Shareholders' Equity
    Preferred Stock With Mandatory Redemption Provisions:
       Non-redeemable, 5% to 6%,
          outstanding 5,784,825 shares                      145
       Redeemable, 4.36% to 7.04%, outstanding 5,973,456    149
    Common stock, $5 par value, authorized
       800,000,000 shares, issued 321,314,760 shares      1,606
    Common stock held by subsidiary, at cost, 19,481,213   (475)
    Additional paid-in capital                            2,040
    Reinvested earnings                                   5,424
    Accumulated other comprehensive loss                     (3)
                                                      ---------
Total Shareholders' Equity                                8,886
                                                      ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $34,071
                                                      =========


                  Pacific Gas and Electric Company
           Unaudited Consolidated Statements of Operations
                Three months ended September 30, 2004
                           (in millions)

Operating Revenues:
    Electric                                             $2,042
    Natural gas                                             581
                                                      ---------
Total operating revenues                                  2,623

Operating Expenses:
    Cost of electricity                                     792
    Cost of natural gas                                     239
    Operating and maintenance                               671
    Recognition of regulatory assets                          -
    Depreciation, amortization, and decommissioning         405
    Reorganization professional fees and expenses             -
                                                      ---------
Total operating expenses                                  2,107
                                                      ---------
Operating Income                                            516

Reorganization interest income                                -
Interest income                                              11
Interest expense (non-contractual interest of
    $31 million in 2004 and $99 million in 2003)           (141)
Other income, net                                            14
                                                      ---------
Income Before Income Taxes                                  400

Income tax provision                                        152
                                                      ---------
Income Before Cumulative Effect of
    Changes in Accounting Principles                        248

Cumulative Effect of changes in
    acctg principles, net                                     -
                                                      ---------
Net Income                                                 $248
                                                      =========


                  Pacific Gas and Electric Company
           Unaudited Consolidated Statements of Cash Flows
                Nine months ended September 30, 2004
                           (in millions)

Cash Flows From Operating Activities:
Net income (loss)                                        $3,735
Adjustments to reconcile net income (loss) to
    net cash provided by operating activities:
    Depreciation, amortization, and decommissioning       1,054
    Recognition of regulatory assets                     (4,900)
    Deferred income taxes and tax credits, net            2,395
    Other deferred charges and non-current liabilities     (121)
    Gain on sale of assets                                  (18)
    Cumulative effect of a change in acctg principle          -
Net effect of changes in operating assets & liabilities:
    Restricted cash                                         150
    Accounts receivable                                      42
    Inventories                                             (61)
    Accounts payable                                         77
    Accrued taxes                                            87
    Regulatory balancing accounts, net                     (323)
    Other working capital                                   285
Payments authorized by the Bankruptcy Court on
     amounts classified as liabilities
     subject to compromise                               (1,022)
Other, net                                                   28
                                                      ---------
Net cash provided by operating activities                 1,408

Cash Flows From Investing Activities:
    Capital expenditures                                 (1,110)
    Proceeds from sale of assets                             28
    Increase in restricted cash                          (1,751)
    Other, net                                              (50)
                                                      ---------
Net cash used by investing activities                    (2,883)

Cash Flows From Financing Activities:
    Net proceeds from issuance of long-term debt          7,346
    Long-term debt matured, redeemed, or repurchased     (7,552)
    Rate reduction bonds matured                           (213)
    Dividends paid                                          (88)
    Preferred stock with
       mandatory redemption provisions redeemed             (15)
    Other, net                                               (2)
                                                      ---------
Net cash provided (used) by financing activities           (524)

Net change in cash and cash equivalents                  (1,999)

Cash and cash equivalents at January 1, 2004              2,979
                                                      ---------
Cash and cash equivalents at September 30, 2004            $980
                                                      =========


Headquartered in San Francisco, California, Pacific Gas and
Electric Company -- http://www.pge.com/-- a wholly owned
subsidiary of PG&E Corporation (NYSE:PCG), is one of the largest
combination natural gas and electric utilities in the United
States. The Company filed for Chapter 11 protection on April 6,
2001 (Bankr. N.D. Calif. Case No. 01-30923). James L. Lopes,
Esq., William J. Lafferty, Esq., and Jeffrey L. Schaffer, Esq.,
at Howard, Rice, Nemerovski, Canady, Falk & Rabkin represent the
Debtors in their restructuring efforts. On June 30, 2001, the
Company listed $23,216,000,000 in assets and $22,152,000,000 in
debts. Pacific Gas and Electric emerged from chapter 11
protection on April 12, 2004, paying all creditors 100 cents-on-
the-dollar plus post-petition interest. (Pacific Gas Bankruptcy
News, Issue No. 86; Bankruptcy Creditors' Service, Inc.,
215/945-7000)


PARMALAT: Finanziaria Reports September 2004 Financial Results
--------------------------------------------------------------
Parmalat Finanziaria SpA in Extraordinary Administration
communicates the financial results of the Parmalat Group as of
September 30, 2004.

A number of the non-Italian operations of the Group
identified in previous months as subject to "Special Bankruptcy
Proceedings" (for example, USA Dairy, Brazil, Chile, EVH) and
certain financial companies (for example, Parmalat Capital
Finance) are currently subject to certain restrictions on their
management as a result of local bankruptcy proceedings, with the
result that these operations are effectively outside the control
of Parmalat Finanziaria SpA in Extraordinary Administration.  For
this reason, the Group no longer consolidates these companies on
a line-by-line basis, choosing instead to value them by the
equity method.  This approach will be followed while the Group
reviews and verifies any potential obligations that Parmalat
Finanziaria SpA in Extraordinary Administration may have based on
the laws of the countries where the companies in question are
located, and any guarantees provided to their lenders.

More specifically: USA Dairy (Parmalat USA Corp., Farmland
Dairies, Milk Products of Alabama), which handles the Group's
milk and dairy products operations in the United States, has
filed for Chapter 11 bankruptcy protection; two Brazilian
companies (Parmalat Brasil and Parmalat Partecipacoes) have
successfully filed under a local proceeding called Concordata,
which applies to their subsidiaries as well; the Chilean business
has also filed for protection locally ; EVH, a company
incorporated in Canada, has been granted creditor protection
under the Companies' Creditors Arrangement Act; Parmalat Capital
Finance has been placed in liquidation by the local court.  This
group of companies also includes Eurofood IFSC, currently the
object of a dispute with Irish judicial authorities who allege
that Italian Extraordinary Administration proceedings cannot be
applied to this company.

Pro forma data for the previous year, reflecting the current
financial composition of the Group and allowing like-for-like
comparisons with the data in the current fiscal year:

                        Financial Highlights

                    Cumulative Through September
                         (in EUR millions)

                                            Revenues
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities            2,776.4        2,776.4  2,722.2
      Non Core Activities        1,289.3          557.6    433.0
                                --------  -------------  -------
      Total                      4,065.7        3,333.9  3,155.2
                                ========  =============  =======

                                             EBITDA
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities              162.1          162.1    192.9
      Non Core Activities          (54.2)         (34.0)    12.8
                                --------  -------------  -------
      Total                        107.9          128.1    205.8
                                ========  =============  =======

                                          % of Revenues
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities                5.8            5.8      7.1
      Non Core Activities           (4.2)          (6.1)     3.0
                                --------  -------------  -------
      Total                          2.7            3.8      6.5
                                ========  =============  =======


                            Third Quarter
                         (in EUR millions)

                                            Revenues
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities              956.1          956.1    901.8
      Non Core Activities          420.3          125.4    124.7
                                --------  -------------  -------
      Total                      1,376.4        1,081.4  1,026.5
                                ========  =============  =======

                                             EBITDA
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities               46.7           46.7     61.1
      Non Core Activities          (12.4)         (6.4)     (1.1)
                                --------  -------------  -------
      Total                         34.3           40.3     60.1
                                ========  =============  =======

                                          % of Revenues
                                --------------------------------
                                Previous  Previous year  Current
                                year      Pro-Forma      year
                                --------  -------------  -------
      Core Activities                4.9            4.9      6.8
      Non Core Activities           (3.0)          (5.1)    (0.9)
                                --------  -------------  -------
      Total                          2.5            3.7      5.9
                                ========  =============  =======

       * The Core Businesses include beverages (milk and fruit
         juices) and milk-based products, sold under some 30 brand
         names (global and strong local brands) primarily in
         high-potential countries where there is sustained demand
         for healthy lifestyle products, consumers are willing to
         pay a premium price for Parmalat brands, and there is
         access to leading-edge technologies.

      ** The Non-core Businesses are those that are located in
         countries or engaged in activities that are not
         strategically significant and have been earmarked for
         divestiture.

                          Core Businesses

The Group's Core Businesses had revenues of EUR2,722.2 million in
the first nine months of 2004, down slightly (-2.0%) from the
EUR2,776.4 million booked in the same period last year, but EBITDA
increased to EUR192.9 million, or 19.0% more than the
EUR162.1 million earned in the nine months ended September 30,
2003.

This improved operating performance is largely the result of
successful marketing initiatives and programs implemented to cut
operating costs and overheads, which offset the negative impact
of lower unit sales.

The operating data are before expenses related to the
extraordinary administration proceedings (which represents an
extraordinary event).  The accrued portion attributable to the
first nine months of 2004 amounts to about EUR55.0 million.

Revenues for the third quarter of 2004 amounted to EUR901.8
million, down 5.7% from the same period a year ago (EUR956.1
million).  During the same three months, EBITDA increased by
30.8%, rising from EUR46.7 million to EUR61.1 million.

An analysis of the Group's performance in the main geographic
regions in which it operates is provided:

      -- Italy

         In the first nine months of 2004, revenues decreased to
         EUR1,029.1 million, or 8.7% less than the EUR1,126.6
         million reported as of September 30, 2003.

         Revenue shortfalls are being accompanied by increases in
         EBITDA, which grew from EUR65.7 million in the first nine
         months of 2003 to EUR66.6 million this year.  The ratio
         of EBITDA to net revenues also improved, rising from 5.8%
         to 6.5%.

         In the third quarter of 2004, net revenues and EBITDA
         totaled EUR337.1 million and EUR17.1 million (5.1% of
         revenues), respectively, compared with EUR383.9 million
         and EUR23.2 million (6.0% of revenues), respectively.

         The milk and fresh dairy products operations (yogurt
         especially) posted the best cumulative results,
         confirming that the positive trend of previous months is
         continuing.  Compared with other areas of business,
         these operations have experienced a smaller decrease in
         unit sales and benefited from deep cuts in promotional
         and advertising expenses, and overheads.  On a less
         positive note, the results reported by the fruit juice
         operations for the third quarter of 2004 were lower than
         in the same period last year, due to the negative impact
         of less favorable weather conditions.  Other negative
         factors were the increase in raw materials costs,
         attributable in part to higher oil prices, and the
         greater relative weight of fixed manufacturing costs,
         which were unchanged in absolute terms compared with a
         year ago.  The Group is implementing streamlining
         programs to address this issue.

         During the latter part of the third quarter, the Group
         resumed its advertising programs (Kyr and Zymil
         campaigns) and promotional initiatives (Eurolat
         products), which are expected to have a positive impact
         and provide fresh momentum to customer demand in the
         fourth quarter of 2004.

      -- Spain

         Revenues for the first nine months of 2004 totaled
         EUR172.9 million, or 2.5% less than the EUR177.4 million
         reported a year earlier.  EBITDA were also down,
         decreasing from EUR17.7 million to EUR12.3 million.

         In the third quarter of 2004, revenues and EBITDA
         amounted to EUR58.6 million (EUR61.9 million in 2003) and
         EUR4.4 million (EUR6.4 million in 2003), respectively.

         A steady increase in the cost of milk, which has been
         rising since the beginning of the year and could not be
         passed on fully to customers, and higher prices paid for
         plastics, especially in the third quarter, are the main
         reasons for the decrease in EBITDA, compared with the
         first nine months of 2003.  A reduced contribution from
         sales of seasonal products (Royne-branded ice-cream, milk
         shakes and almond-flavored beverages), which were
         severely affected by cooler summer weather (compared with
         2003) and a sharp drop in tourist flows, was also a
         contributing factor.  Lastly, price competition was
         especially strong, yogurt sales were affected by
         aggressive promotions from competitors with a global
         reach, and intense television advertising by competitors
         had an impact on the flavored milk segment.

         In the flavored milk business, the Spanish operations
         increased production for private labels, a business that,
         while less profitable, provides these operations with
         coverage for their fixed costs and enables them to
         maintain high sales volumes.

      -- South Africa

         Revenues for the first nine months of 2004 grew to
         EUR178.3 million, up 29.8% compared with the EUR137.4
         million reported in the same period a year ago.

         EBITDA followed a similar trend, rising from EUR11.9
         million to EUR14.2 million (+19.2%).

         The improvement in cumulative revenues and EBITDA,
         compared with the first nine months of 2003, was made
         possible by several factors: the acquisition of new
         brands (Simonsberg), the growing strength of the Parmalat
         brand in the yogurt and cheese segments, sharply higher
         unit sales of UHT milk and the positive impact of the
         appreciation of the South African rand versus the euro
         (+7.2%).  In addition, less profitable products such as
         bulk cheese helped boost unit sales.

         In the third quarter of 2004, revenues increased to
         EUR65.2 million (EUR51.0 million in 2003), but EBITDA
         declined to EUR4.9 million (EUR5.2 million in 2003), due
         mainly to a less favorable product mix (increased
         shipments of bulk cheese and pasteurized milk) and higher
         prices paid for raw materials.

      -- Venezuela

         The devaluation of the bolivar versus the euro continued
         during the month of September (-26.5% compared with
         September 2003), despite the fact that the outcome of the
         August referendum helped to reduce the political and
         social instability that has characterized this country.

         Cumulative revenues for the first nine months of 2004
         declined to EUR110.7 million, or 26.1% less than the
         EUR149.7 million booked in the first three quarters of
         2003.  The same was true for EBITDA, which were down
         both in absolute terms (from EUR18.3 million to EUR3.8
         million) and as a percentage of revenues (from 12.2% to
         3.4%).

         The failure to renew credit lines for importation
         powdered milk, the social policies pursued by the
         Venezuelan government (establishment of a Ministry of
         Nutrition responsible for importing and distributing
         essential staples, which include "basic" powdered milk),
         increases in the prices paid domestically for raw
         materials that could not be passed on to consumers, and
         lower unit sales of fruit juices are the reasons for the
         drastic decrease in revenues and EBITDA.

         The Group responded to this development by implementing a
         process designed to refocus the Venezuelan operations,
         beginning with the restructuring of the local operating
         unit.

         Revenues for the third quarter of 2004 totaled EUR35.9
         million (EUR53.2 million in 2003) and EBITDA fell to
         EUR1.7 million (EUR4.8 million in 2003).

      -- Canada

         Cumulative revenues increased to EUR849.3 million,
         compared with EUR841.7 million in the first nine months
         of 2003.

         The improvement in net revenues produced impressive gains
         in EBITDA, which rose 15.5% in absolute terms (EUR55.9
         million, compared with EUR48.4 million for the nine
         months ended September 30, 2003) and 0.8 point as a
         percentage of revenues (from 5.8% to 6.6%).  A strong
         performance in basic ingredients and cheese, a reduction
         in promotional and advertising expenses and overheads, a
         reorganization of manufacturing processes, and a
         streamlining of the product portfolio (about 300 items
         have thus far been eliminated) account for this positive
         performance.

         In the third quarter of 2004, the Canadian operations had
         revenues of EUR291.7 million (EUR295.5 million in 2003),
         generating EBITDA of EUR20.3 million (EUR12.7 million
         last year).

      -- Australia

         Owing in part to the appreciation of the Australian
         dollar versus the euro (+4.7% compared with the average
         rate as of September 2003), revenues grew to EUR277.6
         million, up from EUR269.5 million in the first nine
         months of 2003.  Over the same period, EBITDA increased
         from EUR19.2 million to EUR22.6 million (+17.7%).

         Other factors that contributed to these improved results
         include: higher unit sales of milk (especially
         pasteurized milk) and yogurt, a reduction in overhead and
         promotional expenses, a more effective raw materials
         procurement policy and the implementation of streamlining
         programs.

         In the third quarter of 2004, revenues totaled EUR95.0
         million (EUR94.2 million in 2003) and EBITDA increased to
         EUR8.8 million (EUR6.5 million in 2003).

                        Non-core Businesses

The Group's Non-core Businesses reported revenues of
EUR433.0 million, or 22.3% less than the EUR557.6 million booked
in the first nine months of 2003.

After the restatement of the result reported at June 30, 2004
stemming from a change in the treatment of certain items
attributed to Parma F.C. (which totaled EUR26.4 million), EBITDA
were positive by EUR12.8 million, compared with a loss of EUR34.0
million in the first nine months of 2003.

In the first quarter of 2004, revenues totaled EUR124.7 million
(EUR125.4 million in 2003) and EBITDA were negative by
EUR1.1 million (negative EBITDA of EUR6.4 million in 2003).

The main reasons for the year-over-year improvement in cumulative
EBITDA are the restatement and programs implemented by certain
Italian businesses and the U.S. baked goods operations
(USA Bakery).

                               Italy

The Divisions of Parmalat SpA that have been designated as
Non-core Businesses had lower revenues than in the first nine
months of 2003, but EBITDA improved (loss narrowed to EUR4.3
million as of September 30, 2004, compared with a loss of EUR11.6
million a year earlier).

The decision to discontinue the water business and drastic
cuts in advertising and promotion for baked goods and fruit
juices account for this improvement.

                            USA Bakery

The baked goods operations had revenues of EUR210.8 million,
or 17.6% less than the EUR255.8 million reported for the nine
months ended September 30, 2003, owing in part to a sharp decline
in the value of the U.S. dollar, which fell by 10.3% over the
same period of time.

Overall, the negative impact of lower unit sales and higher
raw materials prices was offset by targeting promotional
investments more effectively, reorganizing the manufacturing
operations (the Bollingbrook facility was closed in July) and
cutting overheads.  As a result, EBITDA, while still negative (-
EUR7.0 million) showed a dramatic improvement over the figure as
of September 30, 2003 (-EUR13.7 million).

                        NET FINANCIAL POSITION

                    Highlights (in EUR millions)

                        Balance
              Balance   as at       Balance   Balance   Balance
              as at     12/31/03    as at     as at     as at
              12/31/03  Pro-Forma   06/30/04  08/31/04  09/30/04
              --------  ---------   --------  --------  --------
Short term
financial      (121.4)    (104.7)     (130.5)   (126.0)  (173.9)
assets broken
down as:

Financial assets
not held as
fixed assets   (20.9)     (20.9)      (5.4)      (1.0)    (0.8)

Liquid assets (100.5)     (83.8)    (125.1)    (125.0)  (173.1)

Financial accrued
income and prepaid
expenses ((incl.
intra-Group)    (61.9)     (57.2)     (55.0)     (31.0)   (28.5)
               -------  ---------   --------  --------  --------
Total
short-term
financial
assets         (183.3)    (161.9)    (185.5)   (157.0)   (202.4)
               =======  =========   ========  ========  ========

Financial
debts        13,457.5   11,402.6   11,408.0  11,447.2  11,444.8

Financial
accrued
expenses &
deferred
income (incl.
intra-Group)    256.2      200.8      246.6     229.3     231.1
             --------  ---------   --------  --------  --------
Total financial
liabilities  13,713.7   11,603.4   11,654.6  11,676.5  11,675.9

Indebtedness
owed to lenders
outside the Group/
(Financial assets)
of companies
consolidated
line-by-line 13,530.4   11,441.5   11,469.1  11,519.5  11,473.5

Indebtedness
owed by companies
consolidated
line-by-line
to companies
valued by the
equity method       -          -      750.5     750.5     750.5

Indebtedness/
Financial
assets)
of companies
consolidated
line-by-line 13,530.4   11,441.5   12,219.6  12,270.0  12,224.0

Financial
receivables
owed to the
companies
consolidated
line by line
by companies
valued by the
equity method      -          -     (750.5)   (750.5)   (750.5)

Indebtedness
owed to lenders
outside
the Group/
(Financial
assets) of
companies valued
by the equity
method           49.4    2,138.3    2,442.3   2,442.3   2,442.3
             --------  ---------   --------  --------  --------
Total
indebtedness/
(financial
assets)      13,579.8   13,579.8   13,911.4  13,961.8  13,915.8
             ========  =========   ========  ========  ========

The Group's net financial position at September 30, 2004 shows an
increase in liquid assets held by Parmalat SpA and the Canadian
operations.

The combined indebtedness owed to lenders outside the Group
by companies valued by the equity method totaled EUR2,442.3
million.  Because some of these borrowings are secured by
guarantees provided Parmalat and Parmalat Finanziaria in the
amount of EUR1,701.7 million, a reserve for risks of equal amount
has been recognized in the consolidated financial statements.
The consolidated financial statements also show indebtedness of
EUR750.5 million owed by the Group to companies in special
proceedings who are not consolidated line by line.

As of [October 29, 2004], no amount has been drawn from the
EUR105.8-million line of credit provided by a pool of banks on
March 4, 2004.

A breakdown of the net indebtedness owed to lenders outside
the Group by companies consolidated line by line:

                         (in EUR millions)

                         Balance
                         as at      Balance   Balance   Balance
                         12/31/03   as at     as at     as at
                         Pro-Forma  06/30/04  08/31/04  09/30/04
                         ---------  --------  --------  --------
Companies in EA
    subject to proposed
    composition with
    creditors             10,055.3  10,084.0  10,087.3  10,064.1

Other companies in EA         56.9      42.8      54.5      58.2

Other companies            1,329.3   1,342.3   1,377.7   1,351.2
                         ---------  --------  --------  --------
Total indebtedness/
(financial assets)        11,441.5  11,469.1  11,519.5  11,473.5
                         =========  ========  ========  ========

             Companies in Extraordinary Administration

The net indebtedness incurred by companies under extraordinary
administration toward lenders outside the Group prior to their
becoming eligible for extraordinary administration is all short-
term, since all of these companies are in default of the covenants
of the respective loan agreements.

A noteworthy development is the increase in liquid assets held by
the companies included in the Proposal of Composition with
Creditors, which rose from EUR24.0 million at December 31, 2003 to
EUR80.7 million at September 30, 2004.

                          Other Companies

At September 30, 2004, the remaining operating and financial
companies consolidated line by line that are not included in the
extraordinary administration proceedings had net indebtedness
toward lenders outside the Group of EUR1,351.2 million (including
EUR729.3 million in long-term debt), compared with EUR1,329.3
million at December 31, 2003.

On September 30, 2004, the companies belonging to SBU Africa
completed the renegotiation of their indebtedness.  Other
companies, including those in Portugal, are currently
renegotiating their indebtedness in order to restructure it.

        Principal Companies in Extraordinary Administration

Financial highlights of the principal Italian companies
under extraordinary administration:

                      Parmalat Finanziaria SpA
                   (Amounts in millions of Euros)

                         (in EUR millions)

                          Balance   Balance   Balance   Balance
                          as at     as at     as at     as at
                          12/31/03  06/30/04  08/31/04  09/30/04
                          --------  --------  --------  --------
Short-term
    financial assets        (140.8)   (140.0)    (18.6)    (18.3)
    broken down as:

    Intra-Group loans
    receivable              (138.8)   (138.8)    (18.1)    (17.1)

    Financial assets
    not held as
    fixed assets              (2.0)     (0.0)        -         -

    Liquid assets             (0.0)     (1.1)     (0.5)     (1.2)

Financial accrued income
and prepaid expenses
(including intra-Group)       (0.6)        -         -      (0.1)
                          --------  --------  --------  --------
Total short-term
financial assets            (141.4)   (140.0)    (18.6)    (18.4)
                          ========  ========  ========  ========

Financial liabilities
(including intra-Group)    1,269.9   1,272.9   1,274.4   1,277.2
    broken down as:

    Intra-Group
    loans payable          1,007.8   1,010.9   1,012.4   1,015.2

    Other financial
    liabilities              262.1     262.0     262.0     262.0

Financial accrued expenses
and deferred income
(including intra-Group)        4.8       4.7       4.6       4.6
                          --------  --------  --------  --------
Total financial
liabilities                1,274.7   1,277.6   1,279.0   1,281.8
                          --------  --------  --------  --------
Total indebtedness/
(financial assets)         1,133.3   1,137.6   1,260.4   1,263.4
                          ========  ========  ========  ========

In September, intra-Group indebtedness increased by EUR2.8 million
as a result of a loan received from Parmalat SpA in
Amministrazione Straordinaria.

                             Parmalat SpA
                   (Amounts in millions of Euros)

                         (in EUR millions)

                          Balance   Balance   Balance   Balance
                          as at     as at     as at     as at
                          12/31/03  06/30/04  08/31/04  09/30/04
                          --------  --------  --------  --------
Short-term
    financial assets         (54.3)    (61.7)    (57.4)    (64.9)
    broken down as:

    Intra-Group
    loans receivable         (28.0)    (38.6)    (36.8)    (33.9)

    Financial assets not
    held as fixed assets     (19.7)        -         -         -

    Liquid assets             (6.6)    (23.2)    (20.6)    (31.0)

Financial accrued income
and prepaid expenses
(including intra-Group)        0.0         -       0.0         -
                          --------  --------  --------  --------
Total short-term
financial assets             (54.3)    (61.7)    (57.4)    (64.9)
                          ========  ========  ========  ========

Financial liabilities
(including intra-Group)    4,149.0   4,144.1   3,891.4   3,883.6
    broken down as:

    Intra-Group
    loans payable          1,266.2   1,266.2   1,013.2   1,005.5

    Other financial
    liabilities            2,882.8   2,877.9   2,878.2   2,878.2

Financial accrued expenses
and deferred income
(including intra-Group)        0.0         -       0.0         -
                          --------  --------  --------  --------
Total financial
liabilities                4,149.0   4,144.1   3,891.3   3,883.6
                          --------  --------  --------  --------
Total indebtedness/
(financial assets)         4,094.7   4,082.4   3,833.9   3,818.7
                          ========  ========  ========  ========

Changes compared with the positions at August 31, 2004 include a
decrease in intra-Group indebtedness following the netting out of
EUR7.7 million in debt owed by Centrale del Latte di Roma SpA,
which had an equivalent impact on intra-Group loans receivable.  
The balance of intra-Group loans receivable also changed, due to
the granting of additional intra-Group loans to Parmalat
Finanziaria SpA in Amministrazione Straordinaria (EUR2.8 million),
Boschi Luigi & Figli SpA (EUR1.0 million) and Latte Sole SpA
(EUR1.0 million).  Liquid assets increased due to the normal cash
flow from operations.

                             Eurolat SpA
                   (Amounts in millions of Euros)

                         (in EUR millions)

                          Balance   Balance   Balance   Balance
                          as at     as at     as at     as at
                          12/31/03  06/30/04  08/31/04  09/30/04
                          --------  --------  --------  --------
Short-term
financial assets            (13.6)    (23.2)    (19.3)    (18.3)
    broken down as:

    Intra-Group
    loans receivable            -         -         -         -

    Financial assets not
    held as fixed assets        -         -         -         -

    Liquid assets           (13.6)    (23.2)    (19.3)    (18.3)

Financial accrued income
and prepaid expenses
(including intra-Group)         -         -      (0.1)     (0.1)
                          --------  --------  --------  --------
Total short-term
financial assets            (13.6)    (23.2)    (19.4)    (18.4)
                          ========  ========  ========  ========

Financial liabilities
(including intra-Group)     191.9     189.3     190.1     190.1
    broken down as:

    Intra-Group
    loans payable            45.8      45.8      45.8      45.8

    Other financial
    liabilities             146.1     143.5     144.4     144.4

Financial accrued expenses
and deferred income
(including intra-Group)       1.5       0.7         -         -
                          --------  --------  --------  --------
Total financial
liabilities                 193.4     190.0     190.1     190.1
                          --------  --------  --------  --------
Total indebtedness/
(financial assets)          179.7     166.8     170.8     171.7
                          ========  ========  ========  ========

      No change from a month earlier.

                              Lactis SpA
                   (Amounts in millions of Euros)

                         (in EUR millions)

                          Balance   Balance   Balance   Balance
                          as at     as at     as at     as at
                          12/31/03  06/30/04  08/31/04  09/30/04
                          --------  --------  --------  --------
Short-term
financial assets             (0.4)     (3.7)     (2.5)     (3.6)
    broken down as:

    Intra-Group
    loans receivable            -         -         -         -

    Financial assets not
    held as fixed assets        -         -         -         -

    Liquid assets            (0.4)     (3.7)     (2.5)     (3.6)

Financial accrued income
and prepaid expenses
(including intra-Group)      (0.0)     (0.0)     (0.0)     (0.0)
                          --------  --------  --------  --------
Total short-term
financial assets             (0.4)     (3.7)     (2.5)     (3.6)
                          ========  ========  ========  ========

Financial liabilities
(including intra-Group)      20.5      19.1      19.1      19.1
    broken down as:

    Intra-Group
    loans payable             8.6       8.6       8.6       8.6

    Other financial
    liabilities              11.9      10.5      10.5      10.5

Financial accrued expenses
and deferred income
(including intra-Group)       0.0         -         -       0.0
                          --------  --------  --------  --------
Total financial
liabilities                  20.5      19.1      19.1      19.1
                          --------  --------  --------  --------
Total indebtedness/
(financial assets)           20.2      15.4      16.6      15.5
                          ========  ========  ========  ========

Liquid assets increased to EUR3.6 million, up from EUR2.5 million
a month earlier.

               Significant Events during August and September

   September 10      Publication of an invitation to submit bids
                     to buy the real estate complex owned by
                     Eurolat SpA in Amministrazione Straordinaria
                     that is located in the municipalities of
                     Lodi, Montanaso, Lombardo and Tavazzano con
                     Villavesco.

   September 18      Publication of the requirements for filing
                     objections to the list of creditors published
                     by the Extraordinary Commissioner and for
                     filing responses to these objections.

   September 21      Approval by the Board of Director of Parmalat
                     SpA (Assumptor), acting for the purpose of
                     implementing the Restructuring Plan of the
                     Parmalat Group approved by the Ministry of
                     Production Activities acting in concert with
                     the Ministry of Agricultural and Forest
                     Policies, of a resolution to prepare a draft
                     investment solicitation and prospectus for
                     listing the Company's shares and warrants on
                     the online stock market operated by Borsa
                     Italiana.

   September 30      Repayment of the indebtedness of Parmalat
                     Africa Ltd and Parmalat South Africa (Pty)
                     Ltd toward Bank of America with refinancing
                     provided by a top international bank.

   September 30      Sale of a 65.74% interest in Parmalat
                     Dominicana SA by Curcastle Corporation NV to
                     PAR SA, a Dominican company that is a
                     minority stockholder of Parmalat Dominicana
                     SA, and to other parties represented by PAR
                     SA at a price of EUR6.6 million.  The price
                     was collected on October 6, 2004.  Pursuant
                     to the sales agreement, the buyers agreed to
                     repay within two years the indebtedness owed
                     by Parmalat Dominicana SA to Parmalat Group
                     companies, which amounts to US$930,794.  In
                     addition, Parmalat SpA in Amministrazione
                     Straordinaria and Parmalat Dominicana SA
                     executed a trademark licensing agreement.
                     This transaction, which was authorized by the
                     Italian Ministry of Production Activities,
                     acting with the input of the Oversight
                     Committee, provides a continuing revenue
                     stream for Parmalat SpA in Amministrazione
                     Straordinaria.

      October 7      Filing by the Extraordinary Commissioner of a
                     complaint with the United States District
                     Court for the Western District of North
                     Carolina asking it to order Bank of America
                     and certain of its subsidiaries to pay
                     damages under various titles.  The
                     Commissioner believes that the defendant
                     companies actively engaged in actions that,
                     over an extended period time, caused damages
                     to the Parmalat Group that are estimated at
                     the present time to be not less than US$10
                     billion.

     October 14      Following approval by the Italian Ministry of
                     Production Activities, acting with the input
                     of the Oversight Committee of the
                     Extraordinary Administration proceedings,
                     acceptance of the settlement proposal put
                     forth on October 6, 2004 by Nextra Investment
                     Management -- Societa di gestione del
                     risparmio SpA and collection of the
                     settlement amount.  This amount will be
                     allocated to the companies that are parties
                     to the settlement in accordance with the
                     instructions of the Oversight Committee and
                     with the approval of the Italian Ministry of
                     Production Activities.


SOLUTIA INC: Posts $18 Million of Net Loss in Third Quarter 2004
----------------------------------------------------------------

                            Solutia, Inc.
                Condensed Consolidated Balance Sheet
                      As of September 30, 2004
                             (Unaudited)

                              ASSETS

Current Assets:
     Cash and cash equivalents                      $92,000,000
     Trade receivables, net                         309,000,000
     Miscellaneous receivables                       90,000,000
     Inventories                                    247,000,000
     Prepaid expenses and other assets               38,000,000
                                                  -------------
Total current assets                                776,000,000

Property, plant and equipment, net                  841,000,000
Investments in affiliates                           177,000,000
Goodwill                                             97,000,000
Identified intangible assets, net                    42,000,000
Other assets                                        175,000,000
                                                  -------------
TOTAL ASSETS                                     $2,108,000,000
                                                  =============

               LIABILITIES AND SHAREHOLDERS' DEFICIT

Current liabilities:
     Accounts payable                              $158,000,000
     Accrued liabilities                            260,000,000
     Short-term debt                                          -
                                                  -------------
Total current liabilities                           418,000,000
Long-term debt                                      559,000,000
Other liabilities                                   280,000,000
                                                  -------------
Total liabilities not subject to compromise       1,257,000,000

Liabilities subject to compromise                 2,174,000,000

Total shareholders' deficit                      (1,323,000,000)
                                                  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT      $2,108,000,000
                                                  =============


                            Solutia, Inc.
           Condensed Consolidated Statement of Operations
                Three Months Ended September 30, 2004

Net sales                                          $677,000,000
Cost of goods sold                                  586,000,000
                                                  -------------
Gross profit                                         91,000,000

Marketing expenses                                   31,000,000
Administrative expenses                              20,000,000
Technological expenses                                7,000,000
Amortization expense                                          -
                                                  -------------
Operating loss                                       33,000,000

Equity loss from affiliates                         (16,000,000)
Interest expense                                    (21,000,000)
Other income, net                                     1,000,000
Loss on debt modification                                     -
Reorganization items, net                           (14,000,000)
                                                  -------------
Loss before income tax expense (benefit)            (17,000,000)
Income tax expense (benefit)                          1,000,000
                                                  -------------
Loss from continuing operations                     (18,000,000)
Loss from discontinued operations, net of tax                 -
                                                  -------------
     NET LOSS                                      ($18,000,000)
                                                  =============


                            Solutia, Inc.
           Condensed Consolidated Statement of Cash Flows
                Nine Months Ended September 30, 2004

Increase (decrease) in cash and cash equivalents
Operating Activities:
Net loss                                          ($216,000,000)
Adjustments to reconcile to Cash From Operations:
     Depreciation and amortization                   95,000,000
     Loss from discontinued operations, net of tax            -
     Amortization of deferred credits               (30,000,000)
     Restructuring expenses and other charges       139,000,000
     Reorganization items, net                                -
     Other, net                                       4,000,000
     Changes in assets and liabilities:
        Income and deferred taxes                             -
        Trade receivables                           (28,000,000)
        Inventories                                  (7,000,000)
        Accounts payable                             80,000,000
        Liabilities subject to compromise           (47,000,000)
        Other assets and liabilities                  1,000,000
                                                  -------------
Cash used in operating activities                    (9,000,000)

Investing activities:
Property, plant and equipment purchases             (32,000,000)
Acquisition and investment payments                 (36,000,000)
Other investing activities                           (1,000,000)
                                                  -------------
Cash provided by (used in) investing activities     (69,000,000)
                                                  -------------
Financing activities:
Net change in short-term debt obligations          (361,000,000)
Proceeds from long-term debt obligations            300,000,000
Net change in cash collateralized letters of credit  85,000,000
Deferred debt issuance costs                        (13,000,000)
Other financing activities                                    -
                                                  -------------
Cash provided by (used in) financing activities      11,000,000
                                                  -------------

Increase (Decrease) in cash and cash equivalents    (67,000,000)

Cash and cash equivalents:
Beginning of year                                   159,000,000
                                                  -------------
End of period                                       $92,000,000
                                                  =============


A full-text copy of Solutia, Inc.'s Form 10-Q Report is available
for free at:

    http://www.sec.gov/Archives/edgar/data/1043382/000106880004000628/solutiaq.txt  


Headquartered in St. Louis, Missouri, Solutia, Inc. --
http://www.solutia.com/-- with its subsidiaries, make and sell a
variety of high-performance chemical-based materials used in a
broad range of consumer and industrial applications. The Company
filed for chapter 11 protection on December 17, 2003 (Bankr.
S.D.N.Y. Case No. 03-17949). When the Debtors filed for protection
from their creditors, they listed $2,854,000,000 in assets and
$3,223,000,000 in debts. (Solutia Bankruptcy News, Issue No. 26;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


SOLUTIA INC: September 2004 Net Loss is at $1 Million
-----------------------------------------------------

                     Solutia Chapter 11 Debtors
       Unaudited Statement of Consolidated Financial Position
                      As of September 30, 2004

                              ASSETS

Current Assets:
    Cash                                            $34,000,000
    Trade Receivables, net                          180,000,000
    Account Receivables-Unconsolidated subsidiaries  52,000,000
    Inventories                                     155,000,000
    Other Current Assets                             92,000,000
                                                   ------------
Total Current Assets                                513,000,000

Property, Plant and Equipment, net                  706,000,000
Investments in Affiliates                           489,000,000
Intangible Assets, net                              102,000,000
Other Assets                                        122,000,000
                                                  -------------
TOTAL ASSETS                                     $1,932,000,000
                                                  =============


               LIABILITIES AND SHAREHOLDERS' DEFICIT

Current Liabilities
    Accounts Payable                               $131,000,000
    Other Current Liabilities                       167,000,000
                                                  -------------
Total Current Liabilities                           298,000,000

Long-Term Debt                                      300,000,000
Other Long-Term Liabilities                         231,000,000
                                                  -------------
Total Liabilities Not Subject to Compromise         829,000,000
Liabilities Subject to Compromise                 2,281,000,000
Shareholders' Deficit                            (1,178,000,000)
                                                  -------------
TOTAL LIABILITIES & SHAREHOLDERS' DEFICIT        $1,932,000,000
                                                  =============


                     Solutia Chapter 11 Debtors
          Unaudited Consolidated Statement of Operations
               For the Month Ended September 30, 2004

Total Net Sales                                    $169,000,000
Total Cost Of Goods Sold                            147,000,000
                                                  -------------
Gross Profit                                         22,000,000
Total MAT Expense                                     7,000,000
                                                  -------------
Operating Income                                     15,000,000
Equity Loss from Affiliates                          (9,000,000)
Interest Expense, net                                (4,000,000)
Other Income, net                                     4,000,000
Reorganization Items:
    Professional fees                                (4,000,000)
    Employee severance and retention costs           (1,000,000)
                                                  -------------
    Total Reorganization Items                       (5,000,000)
                                                  -------------
Loss Before Taxes                                    (1,000,000)
Income Taxes                                                  -
                                                  -------------
NET LOSS                                            ($1,000,000)
                                                  =============


USG CORP: Posts $16.5 Million Net Earnings in September 2004
------------------------------------------------------------

USG Corporation, et al.
Consolidated Balance Sheet                    30-September-2004
__________________________                    _________________

Assets:
Cash and cash equivalents                          $421,211,000
Marketable Securities                               128,820,000
Restricted Cash                                      12,422,000
Receivables                                         407,533,000
Inventories                                         307,623,000
Income taxes receivable                              19,600,000
Deferred income taxes                                30,547,000
Other current assets                                 69,600,000
                                                  -------------
Total current assets                              1,397,356,000

Property, plant and equipment, net                1,586,072,000
Marketable Securities                               258,219,000
Deferred income taxes                               135,447,000
Goodwill                                             41,201,000
Other assets                                        350,978,000
                                                  -------------
Total Assets                                     $3,769,273,000
                                                  =============

Liabilities and Stockholders' Equity:
Accounts payable                                   $214,760,000
Accrued expenses                                    191,968,000
Taxes on income                                      15,877,000
                                                  -------------
Total current liabilities                           422,605,000

Other liabilities                                   427,744,000
Liabilities subject to compromise                 2,238,647,000

Stockholders' Equity:
Common stock                                          4,998,000
Treasury stock                                     (258,024,000)
Capital received in excess of par value             101,603,000
Accumulated other comprehensive income/(loss)        23,910,000
Retained earnings                                   807,790,000
                                                  -------------
Total stockholders' equity                          680,277,000
                                                  -------------
Total Liabilities and Stockholders' Equity       $3,769,273,000
                                                  =============


USG Corporation, et al.                            Month Ending
Consolidated Income Statement                 30-September-2004
__________________________                    _________________


Net sales                                          $348,032,000

Cost of products sold                               291,395,000
Selling and administrative expenses                  22,405,000
Chapter 11 reorganization expenses                    5,306,000
Interest expense                                        858,000
Interest income                                        (141,000)
Other (income)/expense, net                            (181,000)
                                                  -------------
Earnings/(loss) before income taxes                  28,390,000

Income taxes (benefit)                               11,851,000
                                                  -------------
Net Earnings/(loss)                                 $16,539,000
                                                  =============

Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading  
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


USG CORP: Posts Record $1.2 Billion Net Sales in Third Quarter
--------------------------------------------------------------
USG Corporation (NYSE:USG), a leading building products company,
today reported third quarter 2004 net sales of $1.2 billion, a
record for any quarter in USG's history, and net earnings of $90
million.  Net sales and net earnings increased $212 million and
$51 million, respectively, compared with the third quarter last
year.  Diluted earnings per share for the third quarter of 2004
were $2.10, compared with $0.89 a year ago.  Results were stronger
in all business segments, with record product shipments in the
domestic wallboard business, higher profits in the worldwide
ceilings business and double-digit percentage increases in sales
and profit in the distribution business.

"USG's growth strategies are succeeding," said William C. Foote,
USG Corporation Chairman, CEO and President.  "Our solid  
financial and operational performance thus far in 2004 reflects
both robust demand for our products and the success of our
strategies emphasizing the introduction of new products,
expansion of our distribution business and investment in new low-
cost manufacturing capacity.  Our strategies, supported by over
$300 million in capital spending during the past three years, are
enabling us to grow along with our customers and increase
production efficiencies to help manage rising operating costs."

Foote continued, "Our results suggest that we are on the
right course with the right strategies to achieve long-term
growth at USG as we navigate a competitive and challenging
operating environment."

Net sales for the first nine months of 2004 were $3.3 billion,
versus net sales of $2.7 billion for the same period in 2003.  Net
earnings for the first nine months nearly tripled to $227 million
compared with $76 million for that period last year.  Net earnings
for the first nine months of 2003 include a non-cash, after-tax
charge of $16 million related to the adoption of a new accounting
standard on asset retirement obligations.  Net earnings before the
cumulative effect of this accounting change for the first nine
months of 2003 were $92 million.

Diluted earnings per share for the first nine months of 2004
were $5.28, compared with 2003 nine months earnings of $1.75, or
$2.13 prior to [an accounting change].

                       North American Gypsum

USG's North American Gypsum business recorded net sales of
$708 million in the third quarter of 2004, an increase of $108
million over the same period a year ago.  Operating profit more
than doubled to $125 million in the third quarter, compared with
$60 million in last year's third quarter.

United States Gypsum Company realized third quarter 2004 net
sales of $638 million and operating profit of $103 million.
These results compare favorably with net sales and operating
profit of $540 million and $43 million, respectively, in the
third quarter last year.  The factors contributing to increased
profitability included higher selling prices for Sheetrockr Brand
gypsum wallboard and record shipments of gypsum wallboard and
complementary products.

U.S. Gypsum's nationwide average realized price of Sheetrock
Brand gypsum wallboard was $128.65 per thousand square feet
during the third quarter, compared with $101.83 in the third
quarter last year and $118.47 in the second quarter this year.
The higher third quarter selling prices reflect strong demand for
wallboard and wallboard industry capacity utilization rates that
exceeded 90 percent.

Demand for U.S. Gypsum's Sheetrock Brand gypsum wallboard
remained strong, as shipments were at a record level for any
third quarter in U.S. Gypsum's history.  U.S. Gypsum shipped 2.73
billion square feet of wallboard, 1 percent higher than the
previous record of 2.70 billion square feet shipped in the third
quarter last year.  For the first nine months of this year,
shipments totaled 8.24 billion square feet, up 6 percent from the
same period last year.  Shipments are expected to remain at
relatively high levels through the remainder of 2004.

U.S. Gypsum's operating profit in the quarter was negatively
affected by higher manufacturing costs, especially raw materials
and energy costs.  Prices paid for wastepaper used to produce the
facing and backing of gypsum wallboard were significantly higher
in the third quarter of 2004 compared with the third quarter last
year.  The cost of natural gas (a major source of energy) was
also higher compared to last year's third quarter.  These higher
costs were partially offset by improved production efficiencies.

The company continues to profitably grow its complementary
product lines.  Shipments for DUROCK(R) Brand cement board
products and FIBEROCK(R) Brand gypsum fiber panels were the
highest for any quarter in U.S. Gypsum's history.  Shipments of
SHEETROCK Brand joint treatment products were the highest of any
third quarter in the company's history.  In September, the
company announced the start-up of a new state-of-the-art joint
treatment manufacturing line at the company's Gypsum, Ohio plant.
This additional capacity will enable the company to satisfy
growing demand for joint treatment products in the Northeast and
Great Lakes markets.

The gypsum business of Canada-based CGC Inc. reported third
quarter 2004 net sales of $73 million, which was $4 million
higher than last year's third quarter.  Operating profit of $12
million increased $1 million from the same period a year ago.
Most of the improvement in results was due to the favorable
effect of currency translation, which was partially offset by
higher manufacturing costs for gypsum wallboard.

                         Worldwide Ceilings

USG's worldwide ceilings business recorded net sales of $168
million and operating profit of $14 million in the third quarter.
This compared with net sales and operating profit of $157 million
and $12 million, respectively, in the third quarter of 2003.

USG Interiors, USG's domestic ceilings business, reported
third quarter sales and operating profit of $118 million and $9
million, respectively.  Net sales increased $5 million, while
operating profit declined $1 million compared with the third
quarter last year.

Increased sales at USG Interiors primarily reflect higher
selling prices for ceiling grid and tile.  Higher energy and
steel costs, combined with lower shipments of ceiling grid,
contributed to the decrease in operating profit.  Third quarter
ceiling grid shipments were lower following a surge in customer
purchases of grid during the first half of the year in
anticipation of reduced supply and higher grid prices associated
with a global shortage of steel.  The cost of steel is expected
to continue to rise further during the fourth quarter, but at a
lesser rate than for the first nine months of the year.

USG International achieved operating profit of $4 million in
the third quarter, compared with break-even results for the same
period a year ago.  The profit improvement was primarily due to
increased demand for ceiling grid in Europe and the favorable
effect of currency translation.  Third quarter 2003 results also
included a $1 million writedown related to a previously closed
ceiling tile plant in Aubange, Belgium.  Operating profit for the
ceilings business of Canada-based CGC Inc. was $1 million, a
decline of $1 million compared with the same period a year ago.

                   Building Products Distribution

L&W Supply Corporation, USG's building products distribution
business, reported third quarter 2004 net sales of $470 million
and operating profit of $31 million.  Sales and operating profit
increased $129 million and $14 million, respectively, compared
with the same period a year ago.  The improved results reflect
record shipments of gypsum wallboard and complementary products.
L&W's gypsum wallboard shipments increased 10 percent versus the
third quarter of 2003, and sales of complementary products were
up 43 percent.

                          Business Outlook

USG's outlook for the fourth quarter is favorable.  The
residential market is expected to remain strong, although the
exceptional strength of the first nine months may abate somewhat
in the fourth quarter.  Increasing mortgage interest rates may
affect the level of demand in both the new housing and
residential remodeling markets.  The commercial construction
market, the principal market for USG's ceilings products, is
showing signs of improvement, but office vacancy rates remain at
very high levels.  In addition, USG's businesses, like many
others, face ongoing cost pressures such as higher prices for
energy and raw materials and increased employee benefit costs.

                   Other Consolidated Information

Third quarter 2004 selling and administrative expenses totaled $82
million, an increase of $4 million versus the third quarter of
2003.  The increase reflects higher employee benefit costs
(pension and medical insurance for active employees and
retirees) and higher levels of accruals for incentive
compensation associated with the attainment of profit goals.
Selling and administrative expenses totaled $238 million for the
first nine months of 2004, compared to $239 million for that
period last year.  Selling and administrative expenses were 7
percent of net sales in both the third quarter and first nine
months of 2004, down from 8 percent and 9 percent of net sales in
the third quarter and first nine months of 2003, respectively.

Third quarter interest expense of $2 million was unchanged from
the same period a year ago. Under AICPA Statement of Position
90-7, "Financial Reporting by Entities in Reorganization
under the Bankruptcy Code," virtually all of USG's outstanding
debt is classified as liabilities subject to compromise, and
interest expense on this debt has not been accrued or recorded
since USG's bankruptcy filing.  Contractual interest expense not
accrued or recorded on pre-petition debt totaled $18 million and
$53 million in the third quarter and first nine months of 2004,
respectively.  From the date of USG's bankruptcy filing through
September 30, 2004, contractual interest expense not accrued or
recorded on pre-petition debt totaled $239 million.

For the third quarter, USG's Chapter 11 reorganization expenses of
$4 million reflected $7 million of legal and financial advisory
fees, partially offset by $3 million of interest income earned by
the USG entities in Chapter 11.  Under SOP 90-7, interest income
on USG's bankruptcy-related cash is offset against Chapter 11
reorganization expenses.

As of September 30, 2004, USG had $1.1 billion of cash, cash
equivalents, restricted cash and marketable securities on a
consolidated basis, up from $973 million as of June 30, 2004, and
$947 million as of December 31, 2003.  Capital expenditures for
the third quarter and first nine months of 2004 were $33 million
and $80 million, respectively.  Expenditures for the same periods
last year were $25 million and $61 million, respectively.

                      Chapter 11 Reorganization

USG Corporation and its principal domestic subsidiaries filed
voluntary petitions for reorganization under Chapter 11 of
the United States Bankruptcy Code on June 25, 2001.  This action
was taken to resolve asbestos claims in a fair and equitable
manner, protect the long-term value of the businesses and
maintain their market leadership positions.

On September 27, 2004, the Third Circuit Court of Appeals
assigned U.S. District Court Judge Joy Flowers Conti to preside
over USG's Chapter 11 cases.  Judge Conti replaces U.S. District
Court Judge Alfred M. Wolin, who was removed from USG's cases in
May 2004.  Judge Judith K. Fitzgerald remains the bankruptcy
judge presiding over USG's Chapter 11 cases.

USG Corporation is a Fortune 500 company with subsidiaries
that are market leaders in their key product groups: gypsum
wallboard, joint compound and related gypsum products; cement
board; gypsum fiber panels; ceiling panels and grid; and building
products distribution.  For more information about USG
Corporation, visit the USG home page at http://www.usg.com

A full-text copy of USG's Third Quarter 2004 Results is
available for free at:

    http://sec.gov/Archives/edgar/data/757011/000095013704008990/c89083exv99w1.htm  


                           USG Corporation
                 Unaudited Consolidated Balance Sheet
                       As of September 30, 2004

Assets
Current Assets:
    Cash and cash equivalents                      $669,000,000
    Short-term marketable securities                129,000,000
    Restricted cash                                  20,000,000
    Receivables, net                                453,000,000
    Inventories                                     364,000,000
    Income taxes receivable                          20,000,000
    Deferred income taxes                            32,000,000
    Other current assets                             81,000,000
                                                   ------------
Total current assets                             $1,768,000,000

Long-term marketable securities                     258,000,000
Property, plant and equipment
    (net of accumulated depletion -
     $892,000,000 & $816,000,000)                 1,822,000,000
Deferred income taxes                               135,000,000
Goodwill                                             41,000,000
Other assets                                        115,000,000
                                                  -------------
Total Assets                                     $4,139,000,000
                                                  =============

Liabilities and Stockholders' Equity
Current Liabilities:
    Accounts payable                                248,000,000
    Accrued expenses                                211,000,000
    Current portion of long-term debt                 1,000,000
    Income taxes payable                             23,000,000
                                                  -------------
Total current liabilities                           483,000,000

Long-term debt                                        1,000,000
Deferred income taxes                                23,000,000
Other liabilities                                   455,000,000
Liabilities subject to compromise                 2,239,000,000

Stockholders' Equity:
    Preferred stock                                           -
    Common stock                                      5,000,000
    Treasury stock                                 (258,000,000)
    Capital received in excess of par value         414,000,000
    Accumulated other comprehensive income (loss)    21,000,000
    Retained earnings                               756,000,000
                                                  -------------
Total stockholders' equity                          938,000,000
                                                  -------------
Total liabilities and stockholders' equity       $4,139,000,000
                                                  =============


                           USG Corporation
            Unaudited Consolidated Statement of Earnings
               Three Months Ended September 30, 2004

Net Sales                                        $1,175,000,000

Cost of products sold                               941,000,000
Selling & administrative expenses                    82,000,000
Chapter 11 reorganization expenses                    4,000,000
                                                  -------------
Operating profit                                    148,000,000

Interest expense                                      2,000,000
Interest income                                      (2,000,000)
Other expense (income), net                                   -
                                                  -------------
Earnings before income taxes and
    cumulative effect of accounting change          148,000,000
Income taxes                                         58,000,000
                                                  -------------
Earnings before cumulative effect
    of accounting change                             90,000,000
Cumulative effect of accounting change,
    net of tax                                                -
                                                  -------------
Net earnings                                        $90,000,000
                                                  =============


                           USG Corporation
                   Unaudited Core Business Results
                Three Months Ended September 30, 2004

Net Sales:

North American Gypsum:
    U.S. Gypsum Company                            $638,000,000
    CGC Inc. (gypsum)                                73,000,000
    Other subsidiaries                               49,000,000
    Eliminations                                    (52,000,000)
                                                  -------------
Total                                               708,000,000

Worldwide Ceilings:
    USG Interiors, Inc.                             118,000,000
    USG International                                50,000,000
    CGC Inc. (ceilings)                              12,000,000
    Eliminations                                    (12,000,000)
                                                  -------------
Total                                               168,000,000

Building Products Distribution:
    L&W Supply Corporation                          470,000,000
    Eliminations                                   (171,000,000)
                                                  -------------
Total USG Corporation                            $1,175,000,000
                                                  =============

Operating Profit:

North American Gypsum:
    U.S. Gypsum Company                             103,000,000
    CGC Inc. (gypsum)                                12,000,000
    Other subsidiaries                               10,000,000
                                                  -------------
Total                                               125,000,000

Worldwide Ceilings:
    USG Interiors, Inc.                               9,000,000
    USG International                                 4,000,000
    CGC Inc. (ceilings)                               1,000,000
                                                  -------------
Total                                                14,000,000

Building Products Distribution:
    L&W Supply Corporation                           31,000,000

Corporate                                           (20,000,000)
Chapter 11 reorganization expenses                   (4,000,000)
Eliminations                                          2,000,000
                                                  -------------
Total USG Corporation                              $148,000,000
                                                  =============

                           USG Corporation
                Consolidated Statements of Cash Flows
                Nine Months Ended September 30, 2004

Operating Activities:
Net earnings                                       $227,000,000
Adjustments to reconcile net earnings to net cash:
    Cumulative effect of accounting change                    -
    Depreciation, depletion and amortization         83,000,000
    Deferred income taxes                            44,000,000
    (Gain) loss on asset dispositions                (1,000,000)
    (Increase) decrease in working capital:
    Receivables                                    (132,000,000)
    Income taxes receivable                           6,000,000
    Inventories                                     (84,000,000)
    Payables                                         64,000,000
    Accrued expenses                                  5,000,000
(Increase) decrease in other assets                 (28,000,000)
Increase (decrease) in other liabilities             16,000,000
Change in asbestos receivable                        11,000,000
Decrease in liabilities subject to compromise        (4,000,000)
Other, net                                            4,000,000
                                                   ------------
Net cash provided by operating activities           211,000,000
                                                   ------------
Investing Activities:
Capital expenditures                                (80,000,000)
Purchases of marketable securities                 (361,000,000)
Sales or maturities of marketable securities        210,000,000
Net proceeds from asset dispositions                  6,000,000
Acquisition of business                              (4,000,000)
                                                   ------------
Net cash used for investing activities             (229,000,000)
                                                   ------------
Financing Activities:
Deposit of restricted cash                          (13,000,000)
                                                   ------------
Net cash used for financing activities              (13,000,000)
                                                   ------------
Net (decrease) increase in cash and
    cash equivalents                                (31,000,000)

Cash & cash equivalents, beginning of period        700,000,000
                                                   ------------
Cash & cash equivalents, end of period             $669,000,000
                                                   ============

Headquartered in Chicago, Illinois, USG Corporation --
http://www.usg.com/-- through its subsidiaries, is a leading  
manufacturer and distributor of building materials producing a
wide range of products for use in new residential, new
nonresidential and repair and remodel construction, as well as
products used in certain industrial processes. The Company filed
for chapter 11 protection on June 25, 2001 (Bankr. Del. Case No.
01-02094). David G. Heiman, Esq., and Paul E. Harner, Esq., at
Jones Day represent the Debtors in their restructuring efforts.
When the Debtors filed for protection from their creditors, they
listed $3,252,000,000 in assets and $2,739,000,000 in debts. (USG
Bankruptcy News, Issue No. 75; Bankruptcy Creditors' Service,
Inc., 215/945-7000)


WESTPOINT STEVENS: Posts $38.5 Mil. of Net Loss in September 2004
-----------------------------------------------------------------

                      WESTPOINT STEVENS, INC.
                           Balance Sheet
                       At September 30, 2004
                           (in thousands)

                               Assets

Current Assets
    Cash and cash equivalents                            $4,728
    Short-term investments                                    -
    Accounts receivable, net                            237,913
    Inventories                                         336,122
    Prepaid expenses and other current assets            14,857
                                                     ----------
Total current assets                                    593,620

Total investments and other assets                      120,889
Goodwill                                                      -
Property, Plant and Equipment, net                      536,639
                                                     ----------
TOTAL ASSETS                                         $1,251,148
                                                     ==========

            Liabilities and Stockholders' Equity (Deficit)

Liabilities Not Subject to Compromise:
    Senior Credit Facility                             $439,060
    DIP Credit Agreement                                118,137
    Second lien facility                                165,000
    Accrued interest payable                              5,566
    Accounts payable - trade                             52,993
    Accounts payable - intercompany                     169,100
    Other accrued liabilities                           112,930
    Deferred income taxes                                   474
    Pension and other liabilities                       139,334
                                                     ----------
Total liabilities not subject to compromise           1,202,594

Liabilities Subject to Compromise
    Senior notes                                      1,000,000
    Deferred financing fees                              (5,276)
    Accrued interest payable on Senior Notes             36,130
    Accounts payable                                     26,917
    Other payables and accrued liabilities                8,237
    Pension and other liabilities                        18,807
                                                     ----------
Total liabilities not subject to compromise           1,084,815
                                                     ----------
Total Liabilities                                     2,287,409

Shareholders' Equity (Deficit)
    Equity of subsidiaries                             (123,757)
    Common stock                                            711
    Capital surplus/Treasury Stock                       51,436
    Retained earnings (deficit)                        (850,798)
    Minimum pension liability adjustment               (101,921)
    Other adjustments                                   (11,932)
    Unearned compensation                                     -
                                                     ----------
Stockholders' Equity (Deficit)                       (1,036,261)
                                                     ----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)   $1,251,148
                                                     ==========


                      WESTPOINT STEVENS, INC.
                      Statement of Operations
                  Month Ended September 30, 2004
                           (in thousands)

Total sales                                            $115,017
Cost of sales                                           109,297
                                                     ----------
    Gross profit                                          5,720

Selling and administrative expenses
    Selling expenses                                      2,146
    Warehousing and shipping                              5,331
    Advertising                                             410
    Division administrative expense                         936
    MIS expense                                           1,008
    Corporate administrative expense                      1,587
                                                     ----------
Total selling and administrative expense                 11,418
Restructuring and impairment charge                      10,380
Goodwill impairment charge                                7,929
                                                     ----------
    Profit (loss) from operations                       (24,007)

Interest expense
    Interest expense - outside                            6,135
    Capitalized interest expense                              -
    Interest expense - intercompany                         290
    Interest income                                           -
    Interest income - intercompany                            -
                                                     ----------
Net interest expense                                      6,425

Other expense
    Miscellaneous                                         1,533
    Royalties - intercompany                              3,700
    Transaction gain/loss                                     -
                                                     ----------
    Total other expense                                   5,233

Other income
    Royalties - intercompany                                  -
    Dividends                                                 -
    Sale of assets                                            -
    Miscellaneous                                             9
                                                     ----------
    Total other income                                        9
                                                     ----------
Net other expense                                         5,224
                                                     ----------
Income (loss) before Chapter 11 reorganization
    expenses and income taxes (benefit) and
    extraordinary items                                 (35,656)

Chapter 11 reorganization expenses                        3,590

Income tax expense (benefit)                               (713)

Extraordinary item - net of taxes                             -
                                                     ----------
Net Income (loss)                                      ($38,533)
                                                     ==========


                      WESTPOINT STEVENS, INC.
                      Statement of Cash Flows
                   Month Ended September 30, 2004
                           (in thousands)

Cash flows from operations:
Net income (loss)                                      ($38,533)
    Restructuring                                         7,603
    Equity adjustments                                   (2,486)
    Depreciation and amortization expense                15,604
    Fixed asset impairment charge                         7,929
Working Capital Changes
    Decrease/(increase) - accounts receivable            18,168
    Decrease/(increase) - inventories                    11,075
    Decrease/(increase) - other current assets            2,751
    Decrease/(increase) - other non-current
       assets & debts                                     1,367
    Increase/(decrease) - accounts payable (trade)       (1,797)
    Increase/(decrease) - a/p (intercompany)              3,233
    Increase/(decrease) - accrued liabilities             2,707
    Increase/(decrease) - accrued interest payable         (759)
    Increase/(decrease) - pension and other liabilities  (5,000)
    Increase/(decrease) - deferred federal income tax    (3,957)
                                                     ----------
Total cash flows from operations                         17,905

Cash flows from investing activities:
    Capital expenditures                                   (725)
    Transfers                                                 -
    Net proceeds from sale of assets                        565
                                                     ----------
Total cash flows from investing                            (160)

Cash flows from financing activities:
    Increase/(decrease)- DIP Credit Agreement           (15,596)
                                                     ----------
Total cash flows from financing                         (15,596)

Beginning cash balance                                    2,579
Change in cash                                            2,149
                                                     ----------
Ending cash balance                                      $4,728
                                                     ==========


Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts.  (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


WESTPOINT STEVENS: 3rd Quarter Net Loss Balloons to $52.6 Million
-----------------------------------------------------------------
WestPoint Stevens Inc. reported results for the third quarter
ended Sept. 30, 2004.

The Company's net sales for the third quarter of 2004 decreased
6.5% to $416.1 million compared with $445.2 million a year ago.  
Bed Product sales decreased 4.5% and Bath Product sales decreased
4.4% due to slower retail sales at department stores, national
chains and warehouse clubs which more than offset gains with mass
merchants and specialty stores.  Other (Mill Stores and
International) sales decreased, primarily from a reduction in the
Company's mill store sales as a result of restructuring
initiatives that have reduced the total number of retail stores to
36 from 57 in the year ago period.  Furthermore, one of the
Company's foreign subsidiaries, WestPoint Stevens (Europe) Ltd.,
filed for bankruptcy in the United Kingdom in August of 2003 and
is in the process of liquidating.  WestPoint Stevens Stores' same-
store sales decreased 0.8% for the remaining stores in the third
quarter of 2004 versus the year ago period due to severe weather
that impacted store sales in coastal locations.

Net income for the third quarter of 2004 was a loss of
$52.6 million, compared with a loss of $12.8 million in 2003.

Loss before taxes for the third quarter of 2004 was $54.0 million
compared with a loss before taxes in 2003 of $16.0 million.  
Included in the third quarter of 2004 were $14.1 million in
expenses related to the Company's restructuring initiatives, $7.9
million in charges related to fixed asset impairments, and $7.2
million in expenses related to the current bankruptcy proceedings
compared with $8.7 million in expenses in the third quarter of
2003 related to WestPoint Stevens previously announced
restructuring initiatives and $12.7 million in expenses related to
the current bankruptcy proceedings.

M. L. "Chip" Fontenot, WestPoint Stevens President and CEO
commented, "The retail environment continued to be challenging
for home fashions in the third quarter as retailers experienced
slower sales growth in textile home furnishings.  Nevertheless,
we increased our market share with targeted key accounts and
received positive retailer response during our recent Fall Market.
Furthermore, we remain adequately funded with availability under
our $300 million debtor-in-possession facility of $146 million at
the end of the third quarter."

Mr. Fontenot continued, "We have completed our revised Business
Plan and are in final negotiations with our creditors regarding
our exit from bankruptcy.  We are hopeful this process will be
concluded in the first quarter of 2005.  On September 28, the
Company received an additional extension of its exclusive period
to file a plan of reorganization through December 1, 2004."

WestPoint Stevens Inc. is the nation's premier home fashions
consumer products marketing company, with a wide range of bed
linens, towels, blankets, comforters and accessories marketed
under the well-known brand names GRAND PATRICIAN, PATRICIAN,
MARTEX, ATELIER MARTEX, BABY MARTEX, UTICA, STEVENS, LADY
PEPPERELL, SEDUCTION, VELLUX and CHATHAM - all registered
trademarks owned by WestPoint Stevens Inc. and its subsidiaries -
and under licensed brands including RALPH LAUREN HOME, DISNEY
HOME and GLYNDA TURLEY. WestPoint Stevens can be found on the
World Wide Web at http://www.westpointstevens.com/

A full-text copy of WestPoint Stevens' Third Quarter 2004
Report is available for free at the Securities and Exchange
Commission at:

    http://www.sec.gov/Archives/edgar/data/852952/000085295204000018/wpst093010-q.htm  


                      WESTPOINT STEVENS, INC.
               Condensed Consolidated Balance Sheets
                       At September 30, 2004

                              Assets

Current Assets
    Cash and cash equivalents                         $8,698,000
    Accounts receivable, net                         247,913,000
    Inventories, net                                 369,711,000
    Prepaid expenses and other current assets         15,331,000
                                                  --------------
Total current assets                                 641,653,000

Property, Plant and Equipment, net                   552,069,000

Other Assets
    Deferred financing fees, net                       3,090,000
    Other assets                                         712,000
                                                  --------------
TOTAL ASSETS                                      $1,197,524,000
                                                  ==============

             Liabilities and Stockholders' Equity (Deficit)

Current Liabilities
    Senior Credit Facility                         $484,749,000
    Second-Lien Facility                            165,000,000
    DIP Credit Agreement                            118,137,000
    Accrued interest payable                          5,566,000
    Accounts payable                                 54,453,000
    Other accrued liabilities                       135,078,000
                                                  -------------
Total current liabilities                           962,983,000

Noncurrent Liabilities
    Deferred income taxes                               474,000
    Pension and other liabilities                   142,779,000
                                                  -------------
Total noncurrent liabilities                        143,253,000

Liabilities Subject to Compromise                 1,087,889,000

Stockholders' Equity (Deficit)                     (996,601,000)
                                                  -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY       $1,197,524,000
                                                  =============


                      WESTPOINT STEVENS, INC.
            Condensed Consolidated Statements of Income
               Three Months Ended September 30, 2004

Net sales                                          $416,100,000
Cost of goods sold                                  367,212,000
                                                  -------------
Gross earnings (loss)                                48,888,000

Selling, general and administrative expenses         54,059,000
Restructuring and impairment charge                  10,380,000
Fixed asset impairment charge                         7,929,000
Goodwill impairment charge                                    -
                                                  -------------
Operating earnings (loss)                           (23,480,000)

Interest expense                                     19,822,000
Other expense-net                                     3,441,000
Chapter 11 expenses                                   7,242,000
                                                  -------------
Income (loss) before income tax expense (benefit)   (53,985,000)
Income tax expense (benefit)                         (1,346,000)
                                                  -------------
Net income (loss)                                  ($52,639,000)
                                                  =============


                      WESTPOINT STEVENS, INC.
          Condensed Consolidated Statements of Cash Flows
                Nine Months Ended September 30, 2004

Cash flows from operating activities:
    Net loss                                       ($91,512,000)
    Adjustments to reconcile net loss to net cash
     provided by (used for) operating activities:
       Depreciation and other amortization           59,625,000
       Deferred income taxes                        (16,804,000)
       Changes in working capital                    19,525,000
       Other-net                                        592,000
       Non-cash component of restructuring
          and impairment charge                       9,421,000
       Fixed asset impairment charge                  7,929,000
       Goodwill impairment charge                             -
                                                  -------------
Net cash used for operating activities              (11,224,000)

Cash flows from investing activities:
    Capital expenditures                            (14,257,000)
    Net proceeds from sale of assets                  7,339,000
                                                  -------------
Net cash used for investing activities               (6,918,000)

Cash flows from financing activities:
    Senior Credit Facility:
       Borrowings                                             -
       Repayments                                    (5,940,000)
    DIP Credit Agreement:
       Borrowings                                   603,120,000
       Repayments                                  (574,000,000)
       Fees associated with DIP Credit Agreement              -
       Trade Receivables Program                              -
                                                  -------------
Net cash provided by financing activities            23,180,000

Net increase in cash and cash equivalents             5,038,000

Cash and cash equivalents at beginning of period      3,660,000
                                                  -------------
Cash and cash equivalents at end of period           $8,698,000
                                                  =============

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


WESTPOINT STEVENS: WP Stevens I Posts $4.1 Mil. Income in Sept.
---------------------------------------------------------------

                     WESTPOINT STEVENS, INC., I
                           Balance Sheet
                       At September 30, 2004
                           (in thousands)

                               Assets

Current Assets
    Cash and cash equivalents                               $35
    Accounts receivable - intercompany                   15,054
    Inventories                                          10,283
    Prepaid expenses and other current assets                 -
                                                       --------
Total current assets                                     25,372

Total investments and other assets                      124,052
Property, Plant and Equipment, net                       12,239
Goodwill                                                      -
                                                      ---------
TOTAL ASSETS                                           $161,663
                                                      =========

           Liabilities and Stockholders' Equity (Deficit)

Liabilities Not Subject to Compromise
    Senior Credit Facility                                    -
    DIP Credit Agreement                                      -
    Long-term debt classified as current                      -
    Accrued interest payable                                  -
    Accounts payable - trade                               $896

    Accounts payable - intercompany                           -
    Other accrued liabilities                            11,439
    Deferred income taxes                                     -
    Pension and other liabilities                             -
                                                      ---------
Total Liabilities Not Subject to Compromise              12,335

Liabilities Subject to Compromise
    Senior notes                                              -
    Deferred financing fees                                   -
    Accrued interest payable on Senior Notes                  -
    Accounts payable                                      1,400
    Other payables and accrued liabilities                    -
    Pension and other liabilities                             -
                                                      ---------
Total Liabilities Subject to Compromise                   1,400
                                                      ---------
Total Liabilities                                        13,735

Shareholders' Equity (Deficit)
    Equity of subsidiaries                                    -
    Common stock                                              1
    Capital surplus/Treasury Stock                       70,559
    Retained earnings (deficit)                          77,368
    Minimum pension liability adjustment                      -
    Other adjustments                                         -
    Unearned compensation                                     -
                                                      ---------
Shareholders' Equity (Deficit)                          147,928
                                                      ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)     $161,663
                                                      =========


                     WESTPOINT STEVENS, INC., I
                       Statement of Operations
                   Month Ended September 30, 2004
                           (in thousands)

Net sales                                                $8,282
Cost of goods sold                                        5,402
                                                      ---------
    Gross earnings                                        2,880

Selling and administrative expenses
    Selling expenses                                          1
    Warehousing and shipping                                225
    Advertising                                               -
    Division administrative expense                           -
    MIS expense                                               -
    Corporate administrative expense                        170
                                                      ---------
Total selling and administrative expense                    396

Restructuring and impairment charge                           -
Goodwill impairment charge                                    -
                                                      ---------
    Operating earnings (loss)                             2,484

Interest expense
    Interest expense - outside                                -
    Capitalized interest expense                              -
    Interest expense - intercompany                           -
    Interest income                                           -
    Interest income - intercompany                          357
                                                      ---------
Net interest expense                                       (357)

Other expense
    Miscellaneous                                             -
    Royalties - intercompany                                190
    Transaction gain/loss                                     -
                                                      ---------
Total other expense                                         190

Other income
    Royalties - intercompany                              3,700
    Dividends                                                 -
    Sale of assets                                            -
    Miscellaneous                                             -
                                                      ---------
Total other income                                        3,700
                                                      ---------
Net other expense                                        (3,510)
                                                      ---------
Income (loss) before Chapter 11 reorganization
    expenses and income taxes (benefit) and
    extraordinary items                                   6,351

Chapter 11 reorganization expenses                            -

Income tax expense (benefit)                              2,226

Extraordinary item - net of taxes                             -
                                                      ---------
     Net Income (loss)                                   $4,125
                                                      =========


                     WESTPOINT STEVENS, INC., I
                       Statement of Cash Flows
                   Month Ended September 30, 2004
                           (in thousands)

Cash flows from operations:
Net income (loss)                                        $4,125
Non-cash items
    Depreciation and amortization                           111
Working Capital Changes
    Decrease/(increase) - a/r (customers)                     -
    Decrease/(increase) - a/r (intercompany)             (3,423)
    Decrease/(increase) - inventories                     1,610
    Decrease/(increase) - other current assets             (370)
    Decrease/(increase) - other non-current assets            -
    Increase/(decrease) - accounts payable (trade)         (311)
    Increase/(decrease) - a/p (intercompany)                  -
    Increase/(decrease) - accrued liabilities            (1,963)
    Increase/(decrease) - accrued interest payable            -
    Increase/(decrease) - pension & other liabilities         -
    Increase/(decrease) - deferred federal income tax         -
                                                      ---------
Total cash flows from operations                           (221)

Cash flows from investing activities:
    Capital expenditures                                     16
    Transfers                                                 -
    Net proceeds from sale of assets                          -
                                                      ---------
Total cash flows from investing                              16

Cash flows from financing activities:
    Increase/(decrease)- DIP Credit Agreement                 -
                                                      ---------
Total cash flows from financing                               -

Beginning cash balance                                      240
Change in cash                                             (205)
                                                      ---------
Ending cash balance                                         $35
                                                      =========

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


WESTPOINT STEVENS: JP Stevens Enterprises' Sept. Operating Report
-----------------------------------------------------------------

                   J.P. STEVENS ENTERPRISES, INC.
                           Balance Sheet
                       At September 30, 2004
                           (in thousands)

                               Assets

Current Assets
    Cash and cash equivalents                               $15
    Accounts receivable - intercompany                   16,580
    Prepaid expenses and other current assets                 -
                                                       --------
Total current assets                                     16,595

Total investments & other assets                              -
Goodwill                                                      -
                                                       --------
TOTAL ASSETS                                            $16,595
                                                       ========

           Liabilities and Stockholders' Equity (Deficit)

Liabilities Not Subject to Compromise:
    Accounts payable - intercompany                           -
    Other accrued liabilities                              $181
    Deferred income taxes                                     -
    Pension and other liabilities                             -
                                                       --------
Total Liabilities Not Subject to Compromise                 181

Liabilities Subject to Compromise                             -
                                                       --------
Total Liabilities                                           181

Shareholders' Equity (Deficit)
    Equity of subsidiaries                                    -
    Common stock                                              2
    Capital surplus/Treasury Stock                            -
    Retained earnings (deficit)                          16,412
    Minimum pension liability adjustment                      -
    Other adjustments                                         -
    Unearned compensation                                     -
                                                       --------
Stockholders' Equity (Deficit)                           16,414
                                                       --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)      $16,595
                                                       ========


                   J.P. STEVENS ENTERPRISES, INC.
                      Statement of Operations
                   Month Ended September 30, 2004
                           (in thousands)

Net sales                                                     -
Cost of goods sold                                            -
                                                       --------
    Gross earnings                                            -

Selling and administrative expenses
    Selling expenses                                         $1
    Warehousing and shipping                                  -
    Advertising                                               -
    Division administrative expense                           -
    MIS expense                                               -
    Corporate administrative expense                          -
                                                       --------
Total selling and administrative expense                      1

Restructuring and impairment charge                           -
Goodwill impairment charge                                    -
                                                       --------
    Operating earnings (loss)                                (1)

Interest expense
    Interest expense - outside                                -
    Capitalized interest expense                              -
    Interest expense - intercompany                           -
    Interest income                                           -
    Interest income - intercompany                           65
                                                       --------
Net interest expense                                        (65)

Other expense
    Miscellaneous                                             -
    Royalties - intercompany                                  -
    Transaction gain/loss                                     -
                                                       --------
Total other expense                                           -

Other income
    Royalties - intercompany                                190
    Dividends                                                 -
    Sale of assets                                            -
    Miscellaneous                                             -
                                                       --------
Total other income                                          190
                                                       --------
Net other expense                                          (190)
                                                       --------
Income (loss) before Chapter 11 reorganization
    expenses and income taxes (benefit) and
    extraordinary items                                     254

Chapter 11 reorganization expenses                            -

Income tax expense (benefit)                                 89

Extraordinary item - net of taxes                             -
                                                       --------
    Net Income (loss)                                      $165
                                                       ========


                   J.P. STEVENS ENTERPRISES, INC.
                      Statement of Cash Flows
                   Month Ended September 30, 2004
                           (in thousands)

Cash flows from operations:
Net income (loss)                                          $165
Non-cash items
    Depreciation and amortization                             -
Working Capital Changes
    Decrease/(increase) - a/r (intercompany)                  1
    Decrease/(increase) - inventories                         -
    Decrease/(increase) - other current assets                -
    Decrease/(increase) - other non-current assets            -
    Increase/(decrease) - accounts payable (trade)            -
    Increase/(decrease) - a/p (intercompany)                  -
    Increase/(decrease) - accrued liabilities              (177)
    Increase/(decrease) - accrued interest payable            -
    Increase/(decrease) - pension & other liabilities         -
    Increase/(decrease) - deferred federal income tax         -
                                                       --------
Total cash flows from operations                            (11)

Cash flows from investing activities
    Capital expenditures                                      -
    Net proceeds from sale of assets                          -
                                                       --------
Total cash flows from investing                               -

Cash flows from financing activities
    Increase/(decrease)- DIP Credit Agreement                 -
                                                       --------
Total cash flows from financing                               -

Beginning cash balance                                       26
Change in cash                                              (11)
                                                       --------
Ending cash balance                                         $15
                                                       ========

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


WESTPOINT STEVENS: JP Stevens & Co.'s Sept. 2004 Operating Report
-----------------------------------------------------------------


                      J.P. STEVENS & CO., INC.
                           Balance Sheet
                       At September 30, 2004
                           (in thousands)

                               Assets

Current Assets
    Cash and cash equivalents                                 -
    Accounts receivable - intercompany                 $110,749
    Prepaid expenses and other current assets                 -
                                                      ---------
Total current assets                                    110,749

Total investments & other assets                          2,697
Goodwill                                                      -
                                                      ---------
TOTAL ASSETS                                           $113,446
                                                      =========

           Liabilities and Stockholders' Equity (Deficit)

Liabilities Not Subject to Compromise
    Accounts payable - intercompany                           -
    Other accrued liabilities                                 -
    Deferred income taxes                                     -
    Pension and other liabilities                             -
                                                      ---------
Total Liabilities Not Subject to Compromise                   -

Liabilities Subject to Compromise                             -

Shareholders' Equity (Deficit)
    Equity of subsidiaries                              $10,503
    Common stock                                              -
    Capital surplus/Treasury Stock                            -
    Retained earnings (deficit)                         102,943
    Minimum pension liability adjustment                      -
    Other adjustments                                         -
    Unearned compensation                                     -
                                                      ---------
Stockholders' Equity (Deficit)                          113,446
                                                      ---------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)     $113,446
                                                      =========

J.P. Stevens & Co., Inc., reports no income and cash flow for
September 2004.

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)


WESTPOINT STEVENS: WP Stevens Stores' Sept. 2004 Operating Report
-----------------------------------------------------------------


                   WESTPOINT STEVENS STORES, INC.
                           Balance Sheet
                       At September 30, 2004
                           (in thousands)

                               Assets

Current Assets
    Cash and cash equivalents                            $1,067
    Accounts receivable - customers                         171
    Accounts receivable - intercompany                    5,692
    Total Inventories                                    21,264
    Prepaid expenses and other current assets               748
                                                       --------
Total current assets                                     28,942

Total investments & other assets                              -
Goodwill                                                      -
Property, plant and equipment, net                        2,373
                                                       --------
TOTAL ASSETS                                            $31,315
                                                       ========

           Liabilities and Stockholders' Equity (Deficit)

Liabilities Not Subject to Compromise
    Accounts payable - trade                               $638
    Accounts payable -intercompany                            -
    Other accrued liabilities                             5,443
    Deferred income taxes                                     -
    Pension and other liabilities                             -
                                                       --------
Total Liabilities Not Subject to Compromise               6,081
                                                       --------
Liabilities Subject to Compromise
    Accounts payable                                      1,674
                                                       --------
Total Liabilities                                         1,674

Shareholders' Equity (Deficit)
    Equity of subsidiaries                                    -
    Common stock                                              1
    Capital surplus/Treasury Stock                       15,955
    Retained earnings (deficit)                           7,604
    Minimum pension liability adjustment                      -
    Other adjustments                                         -
    Unearned compensation                                     -
                                                       --------
Stockholders' Equity (Deficit)                           23,560
                                                       --------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY (DEFICIT)      $31,315
                                                       ========


                   WESTPOINT STEVENS STORES, INC.
                      Statement of Operations
                   Month Ended September 30, 2004
                           (in thousands)


Net sales                                                $6,003
Cost of goods sold                                        3,611
                                                       --------
    Gross earnings                                        2,392

Selling and administrative expenses
    Selling expenses                                      2,024
    Warehousing and shipping                                196
    Advertising                                             217
    Division administrative expense                         246
    MIS expense                                              56
    Corporate administrative expense                         82
                                                       --------
Total selling and administrative expense                  2,821
Restructuring and impairment charge                           -
Goodwill impairment charge                                    -
                                                       --------
    Operating earnings (loss)                              (429)

Interest expense
    Interest expense - outside                                -
    Capitalized interest expense                              -
    Interest expense - intercompany                         155
    Interest income                                           -
    Interest income - intercompany                            -
                                                       --------
Net interest expense                                        155

Other expense
    Miscellaneous                                             -
    Royalties - intercompany                                  -
    Transaction gain/loss                                     -
                                                       --------
Total other expense                                           -

Other income
    Royalties Intercompany                                    -
    Dividends                                                 -
    Sale of assets                                            -
    Miscellaneous                                             -
                                                       --------
Total other income                                            -
                                                       --------
Net other expense                                             -
                                                       --------
Income (loss) before Chapter 11 reorganization
    expenses and income taxes (benefit) and
    extraordinary items                                    (584)

Chapter 11 reorganization expenses                            -
Income tax expense (benefit)                               (204)

Extraordinary item - net of taxes                             -
                                                       --------
    Net Income (loss)                                     ($380)
                                                       ========


                   WESTPOINT STEVENS STORES, INC.
                      Statement of Cash Flows
                   Month Ended September 30, 2004
                           (in thousands)

Cash flows from operations:
Net income (loss)                                         ($380)
Non-cash items
    Depreciation and amortization                            54
    Gain on sale of assets                                    -
Working Capital Changes
    Decrease/(increase) - a/r (customers)                    30
    Decrease/(increase) - a/r (intercompany)                217
    Decrease/(increase) - inventories                    (1,222)
    Decrease/(increase) - other current assets              107
    Decrease/(increase) - other non-current assets            -
    Increase/(decrease) - accounts payable (trade)          236
    Increase/(decrease) - a/p (intercompany)                  -
    Increase/(decrease) - accrued liabilities               424
    Increase/(decrease) - accrued interest payable            -
    Increase/(decrease) - pension & other liabilities         -
    Increase/(decrease) - deferred federal income tax         -
                                                       --------
Total cash flows from operations                           (534)

Cash flows from investing activities
    Capital expenditures                                      -
    Transfers                                                 -
    Net proceeds from sale of assets                          -
                                                       --------
Total cash flows from investing                               -

Cash flows from financing activities
    Increase/(decrease)- DIP Credit Agreement                 -
                                                       --------
Total cash flows from financing                               -

Beginning cash balance                                    1,601
Change in cash                                             (534)
                                                       --------
Ending cash balance                                      $1,067
                                                       ========

Headquartered in West Point, Georgia, WestPoint Stevens, Inc., --
http://www.westpointstevens.com/-- is the #1 US maker of bed
linens and bath towels and also makes comforters, blankets,
pillows, table covers, and window trimmings. It makes the Martex,
Utica, Stevens, Lady Pepperell, Grand Patrician, and Vellux
brands, as well as the Martha Stewart bed and bath lines; other
licensed brands include Ralph Lauren, Disney, and Joe Boxer.
Department stores, mass retailers, and bed and bath stores are its
main customers. (Federated, J.C. Penney, Kmart, Sears, and Target
account for more than half of sales.) It also has nearly 60 outlet
stores. Chairman and CEO Holcombe Green controls 8% of WestPoint
Stevens. The Company filed for chapter 11 protection on June 1,
2003 (Bankr. S.D.N.Y. Case No. 03-13532). John J. Rapisardi, Esq.,
at Weil, Gotshal & Manges, LLP, represents the Debtors in their
restructuring efforts. (WestPoint Bankruptcy News, Issue No. 32;
Bankruptcy Creditors' Service, Inc., 215/945-7000)

                          *********

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
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public debt and equity securities about which we report.

Each Tuesday edition of the TCR contains a list of companies with
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share in public markets.  At first glance, this list may look like
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Monthly Operating Reports are summarized in every Saturday edition
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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, Emi Rose S.R. Parcon, Rizande B. Delos Santos, Jazel P.
Laureno, Cherry Soriano-Baaclo, Marjorie Sabijon, Terence Patrick
F. Casquejo 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
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