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/raid1/www/Hosts/bankrupt/TCR_Public/041120.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 20, 2004, Vol. 8, No. 255 Headlines AIR CANADA: Reports Third Quarter 2004 Financial Results BURLINGTON IND: Post-Confirmation Quarterly Summary Report COVANTA ENERGY: Posts $10.2 Million of Net Income in 3rd Quarter COVANTA WTE: Posts $143,958 of Net Income in August 2004 ENRON CORP: Releases June 2004 Monthly Operating Report EXIDE TECH: Posts $17.1 Million of Net Loss in Sept. 2004 FOOTSTAR INC: Posts $0.8 Million of Net Income for October 2004 KEYSTONE CONSOLDIATED: Earns $1.2 Million of Net Income in October KMART HOLDING: Earns $553 Million of Net Income in 3rd Quarter LAIDLAW INT'L: Restates Second Quarter 2004 Financial Results LAIDLAW INT'L: Restates Third Quarter 2004 Financial Results LOEWEN GROUP: Alderwoods Releases 3rd Quarter Financial Results MISSISSIPPI CHEMICAL: Sept. to Oct. 2004 Monthly Operating Reports RCN CORP: Posts $26.4 Million of Net Loss in September 2004 SPIEGEL: Files Monthly Operating Report for Period Ended Oct. 2 TWINLAB CORPORATION: Files October 2004 Monthly Operating Report UAL CORPORATION: Reports Third Quarter Financial Results UNIVERSAL ACCESS: Files October 2004 Monthly Operating Report WINSTAR COMMS: Releases August 2004 Monthly Operating Report ********* AIR CANADA: Reports Third Quarter 2004 Financial Results -------------------------------------------------------- On October 15, 2004, ACE Aviation Holdings Inc (ACE) released an estimate of $235 million representing operating income before reorganization and restructuring items for the third quarter of 2004. The objective of the early release was to ensure that stakeholders were given current information on its recent operations given record high fuel prices and the deteriorated performance of US carriers. ACE reported operating income of $243 million before reorganization and restructuring items for the third quarter of 2004, an improvement of $226 million from the third quarter of 2003. Operating revenues were up $268 million or 12 per cent. The improvement in passenger revenues of $222 million, or 12 per cent, was due to a recovery in all markets, with the exception of the US transborder market. International markets rebounded from a SARS impacted 2003. A stronger domestic market showed improving yield and traffic performance as well. Total operating expenses increased $42 million or 2 per cent despite an increase in fuel expense of $138 million on an ASM capacity increase of 6 per cent. Operating expense per ASM was 4 per cent below the 2003 quarter for the Mainline-related operations (down 11 per cent, excluding fuel expense). As at November 9, 2004, ACE's consolidated cash balance, measured on the basis of cash in its bank accounts, amounted to approximately $1.9 billion. The Corporation's debt and capitalized operating lease obligations, net of cash, has been reduced from the previously disclosed approximate $5 billion to approximately $4 billion mainly as a result of the strengthening of the Canadian dollar. Since Air Canada's filing under CCAA, it has recorded significant reorganization and restructuring items directly associated with the rearranging of its business affairs while under the Court's protection. These "reorganization and restructuring items" represent revenues, expenses, gains and losses and provisions for losses since the date of filing that can be directly associated with the reorganization and restructuring of the business under CCAA. In the third quarter of 2004, reorganization and restructuring items amounted to $313 million, of which $281 million represented non-cash items. As the Corporation emerged from CCAA proceedings on September 30, 2004, this is the last quarter that reorganization and restructuring items will be recorded. Foreign exchange gains on non-compromised long term monetary items of $123 million were recorded in the quarter. With the benefit of fresh start reporting and the recognition of the remaining renegotiated leases effective on emergence, results for the fourth quarter will more accurately reflect the progress achieved in the airline's restructuring. The net loss for the quarter including the above significant items was $81 million. This compares to a net loss of $263 million in the third quarter of 2003, an improvement of $182 million. The third quarter of 2003 included $273 million of reorganization and restructuring items. "In October, we achieved record load factors for the seventh straight month and forward bookings remain strong for the balance of the quarter," said Robert Milton, Chairman, President and CEO of ACE Aviation Holdings Inc. "Our commercial strategy is producing the desired results. Notwithstanding an obvious concern over fuel prices, we continue to expect to achieve significant profitability in 2005 over the full year," said Mr. Milton. A full-text copy of ACE's Management's Discussion & Analysis is available for free at: http://bankrupt.com/misc/3rd_q_management_discussion.pdf A full-text copy of the Notes to the Unaudited Consolidated Financial Statements is available for free at: http://bankrupt.com/misc/third_quarter_financials.pdf ACE Aviation Holdings Inc. Unaudited Consolidated Balance Sheet As of September 30, 2004 (dollars in millions) ASSETS Current Cash and cash equivalents CN$1,939 Restricted cash 62 Accounts receivable 732 Spare parts, materials and supplies 202 Prepaid expenses 140 -------- Total current assets 3,075 Property and equipment 3,665 Deferred charges 111 Goodwill - Intangible assets 1,875 Other assets 106 -------- TOTAL ASSETS CN$8,832 ======== LIABILITIES Liabilities not subject to compromise Current Accounts payable and accrued liabilities CN$1,315 Advance ticket sales 1,129 Current portion of long-term debt & capital lease obligations 239 -------- Total current liabilities not subject to compromise 2,683 Long-term debt and capital lease obligations 2,551 Convertible preferred shares 127 Future income taxes 434 Pension and other benefit liabilities 2,368 Other long-term liabilities 1,280 Deferred credits - -------- Total liabilities not subject to compromise 9,443 Liabilities subject to compromise - -------- Total Liabilities 9,443 SHAREHOLDERS' EQUITY Share capital and other equity (611) Contributed surplus - Deficit - -------- Total shareholders' equity (611) -------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY CN$8,832 ======== ACE Aviation Holdings Inc. Predecessor Company - Air Canada Unaudited Consolidated Statement of Operations and Retained Earnings (Deficit) Three months ended September 30, 2004 (dollars in millions) Operating revenues Passenger CN$2,123 Cargo 142 Other 231 -------- 2,496 Operating expenses Salaries, wages and benefits 630 Aircraft fuel 462 Aircraft rent 157 Airport and navigation fees 206 Aircraft maintenance, materials and supplies 80 Communications and information technology 73 Food, beverages and supplies 98 Depreciation, amortization and obsolescence 114 Commissions 78 Other 355 -------- 2,253 -------- Operating income (loss) before reorganization 243 and restructuring items Reorganization and restructuring items (313) Non-operating income (expense) Interest income 2 Interest expense (62) Interest capitalized - Loss on sale of and provisions on assets (62) Other (11) -------- (133) -------- Loss before foreign exchange on non-compromised long-term monetary items and income taxes (203) Foreign exchange gain 123 Loss before income taxes (80) Recovery of (provision for) income taxes (1) -------- Loss for the period (CN$81) ======== ACE Aviation Holdings Inc. Predecessor Company - Air Canada Unaudited Consolidated Statement of Cash Flow Three months ended September 30, 2004 (dollars in millions) Cash flows from (used for): Operating: Loss for the period (CN$81) Adjustments to reconcile to net cash provided by operations: Reorganization and restructuring items 281 Depreciation, amortization and obsolescence 114 Loss on sale of and provisions on assets 62 Foreign exchange (123) Future income taxes 1 Employee future benefit funding less than expense 23 Decrease (increase) in accounts receivable (15) Decrease (increase) in spare parts, materials and supplies (7) Increase (decrease) in accounts payable and accrued liabilities 49 Increase (decrease) in advance ticket sales, net of restricted cash (138) Aircraft lease payments (in excess of) less than rent expense (3) Other 20 -------- 183 Financing: Drawdown on GE DIP financing - Aircraft related borrowings 116 Credit facility borrowings - Reduction of long-term debt and capital lease obligations (49) DIP financing fees - Other (2) -------- 65 Investing: Additions to property and equipment (142) Proceeds from sale of assets 1 Investments and advances - -------- (141) -------- Increase (decrease) in cash and cash equivalents 107 Exit financing transactions 982 Cash and cash equivalents, beginning of period 850 -------- Cash and cash equivalents, end of period CN$1,939 ======== Air Canada filed for CCAA protection on April 1, 2003 (Ontario Superior Court of Justice, Case No. 03-4932) and filed a Section 304 petition in the U.S. Bankruptcy Court for the Southern District of New York (Case No. 03-11971). Mr. Justice Farley sanctioned Air Canada's CCAA restructuring plan on Aug. 23, 2004. Sean F. Dunphy, Esq., and Ashley John Taylor, Esq., at Stikeman Elliott LLP, in Toronto, serve as Canadian Counsel to the carrier. Matthew A. Feldman, Esq., and Elizabeth Crispino, Esq., at Willkie Farr & Gallagher serve as the Debtors' U.S. Counsel. When the Debtors filed for protection from its creditors, they listed C$7,816,000,000 in assets and C$9,704,000,000 in liabilities. On September 30, 2004, Air Canada successfully completed its restructuring process and implemented its Plan of Arrangement. The airline exited from CCAA protection raising $1.1 billion of new equity capital and, as of September 30, has approximately $1.9 billion of cash on hand. (Air Canada Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) BURLINGTON IND: Post-Confirmation Quarterly Summary Report ---------------------------------------------------------- Burlington Industries, Inc. Quarterly Summary Report Three months ended September 30, 2004 Beginning Cash Balance $133,925,411 All receipts received by the Debtor: Cash Sales 0 Collection of Accounts Receivable 0 Proceeds from Litigation 35,000 Sale of Debtor's Assets 734,394 Capital Infusion pursuant to the Plan 0 Interest Income 186,389 ------------ Total cash received 955,783 ------------ Total cash available $134,881,194 ------------ Disbursements or payments made by the Debtor: Disbursements made under the plan, excluding administrative claims of bankruptcy professionals: $86,675,055 Disbursements made pursuant to administrative claims of bankruptcy professionals: 0 All other disbursements made in the ordinary course: 1,766,781 ------------ Total Disbursements 88,441,836 ------------ Ending cash balance $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) COVANTA ENERGY: Posts $10.2 Million of Net Income in 3rd Quarter ---------------------------------------------------------------- Covanta Energy Corporation and Subsidiaries Consolidated Balance Sheets At September 30, 2004 (In Thousands) ASSETS Current Assets: Cash and cash equivalents $89,491 Restricted funds for emergences costs 39,590 Restricted funds held in trust 141,212 Receivables - net 111,733 Unbilled services receivables 51,221 Deferred income taxes 12,894 Prepaid expenses and other current assets 53,852 ------------ Total current assets 499,993 Property plant and equipment - net 902,822 Restricted funds held in trust 114,481 Other non-current receivables - net 12,899 Unbilled services receivables 95,360 Service and energy contracts - net 204,176 Un-amortized contract acquisition costs - net - Goodwill and other intangibles 894 Investments in and advances to investees 76,734 Other assets 27,195 ------------ Total assets $1,934,554 ============ LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) Liabilities: Current Liabilities: Current portion of long-term debt $108 Current portion of project debt 104,385 Accounts payable 21,277 Income Tax Payable 3,290 Accrued expenses 107,180 Accrued emergence costs 39,590 Deferred income 16,810 ------------ Total current liabilities 292,640 Long-term debt 318,330 Project debt 827,713 Deferred income taxes 225,767 Deferred income - Other liabilities 116,885 Liabilities subject to compromise - ------------ Total Liabilities 1,781,335 Minority interests 83,174 ------------ Shareholders' Equity (Deficit): Successor Common stock - Predecessor serial preferred stock - Predecessor common stock - Capital surplus 47,525 Notes receivable from key employees - Retained Earnings 24,243 Accumulated other comprehensive loss (1,723) ------------ Total Shareholders' Equity (Deficit) 70,045 ------------ Total Liabilities and Shareholders' Equity $1,934,554 ============ Covanta Energy Corporation and Subsidiaries Consolidated Statement of Operations For the Three Months Ended September 30, 2004 (In Thousands) Service revenues $112,437 Electricity and steam sales 54,893 Construction revenues 821 Other revenues-net - ------------ Total revenues 168,151 ------------ Plant operating expenses 107,897 Construction costs 149 Depreciation and amortization 18,111 Net interest on project debt 10,218 Other operating costs and expenses 265 Net Loss on sale of businesses and equity investments (151) Selling, general and administrative expenses 11,098 Other expense, net (513) ------------ Total costs and expenses 147,074 ------------ Operating income 21,077 Equity in income from unconsolidated investments 7,387 Interest expense, net (9,761) Reorganization items - ------------ Income (loss) from continuing operations before income taxes and minority interests 18,703 Income tax benefit (expense) (6,813) Minority interests (1,632) ------------ Income (loss) from continuing operations before discontinued operations 10,258 Gain from discontinued operations, net - ------------ Net Income $10,258 ============ Covanta Energy Corporation and Subsidiaries Consolidated Cash Flow Statement For the period March 11, 2004 through September 30, 2004 (In Thousands) CASH FLOWS FROM OPERATING ACTIVITIES: Net income $24,243 Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities of Continuing Operations: Gain on cancellation of prepetition debt - Fresh start adjustments - Fresh start tax adjustments - Loss (gain) from discontinued operations - Reorganization items - Payment of reorganization items - Depreciation and amortization 38,510 Deferred income taxes 10,231 Provision for doubtful accounts 975 Equity in income from unconsolidated investments (12,792) Amortization of project debt premium & discount (7,370) Accretion on principal of senior secured note 1,884 Cumulative effect of change in accounting principles, net - Other 5,309 Management of Operating Assets and Liabilities: Decrease (Increase) in Assets: Receivables 28,379 Restricted funds for emergence costs 60,396 Unbilled service receivables 6,638 Other assets 13,903 Increase (Decrease) in Liabilities: Accounts payable (2,294) Accrued expenses (4,456) Accrued emergence costs (60,396) Deferred income (1,723) Other liabilities (1,119) ------------ Net cash provided by operating activities of continuing operations 100,318 ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Proceeds from sale of businesses 1,844 Proceeds from sale of Property, Plant & Equipment 61 Proceeds from sale of marketable securities available for sale - Proceeds from sale of investment - Investments in facilities (6,810) Distributions from investees and joint ventures 6,996 Increase in investments in and advances to investees and joint ventures - Other - ------------ Net cash provided by investing activities of continuing operations 2,091 ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Borrowings for facilities 1,208 Decrease(increase) in restricted funds held in trust (47,097) Payment of project debt (14,932) Payment of recourse debt (12,604) Distributions to secured lenders and 9.25% holders - Proceeds from issuance of stock - Distribution to minority partners (6,368) Proceeds from sale of minority interests - ------------ Net cash used in financing activities of continuing operations (79,793) ------------ Net cash provided by discontinued operations - ------------ NET DECREASE IN CASH AND CASH EQUIVALENTS 22,616 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 66,875 ------------ CASH AND CASH EQUIVALENTS AT END OF YEAR $89,491 ============ A full-text copy of Covanta's Form 10-Q Report is available for free at: http://www.sec.gov/Archives/edgar/data/73902/000095013704009618/c89399e10vq.htm Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/-- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) COVANTA WTE: Posts $143,958 of Net Income in August 2004 -------------------------------------------------------- The WTE Debtors are: -- Covanta Warren Energy Resource Co., L.P., -- Covanta Warren Holdings I, Inc., -- Covanta Warren Holdings II, Inc., and -- Covanta Lake II, Inc. WTE Debtors Consolidated Balance Sheet As of August 31, 2004 ASSETS Cash $3,784,903 Inventory - Accounts receivable 37,568,223 Land - Machinery, fixtures and equipment 97,262,176 Restricted funds 12,824,880 Other current assets 55,274 Other assets 3,437,082 ------------ Total assets $154,932,538 ============ LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Postpetition Liabilities: Subject to postpetition collateral or financing order - Advances from parent and affiliates $17,171,045 Accounts payable and other liabilities 7,485,530 ------------ Total postpetition liabilities 24,657,575 Prepetition Liabilities: Project Debt 83,829,349 Advances from parent and affiliates 37,185,761 Liabilities Subject to Compromise 3,525,224 Taxes/Others - ------------ Total Prepetition Liabilities 124,540,334 ------------ Shareholders' Equity: Capital stock - Capital surplus 5,820 Retained earnings - prepetition 15,866,416 Retained earnings - postpetition (10,137,607) ------------ Total Shareholders' Equity 5,734,629 ------------ Total Liabilities and Shareholders' Equity $154,932,538 ============ WTE Debtors Consolidated Statements of Operations From August 1 to August 31, 2004 INCOME: Service, electric and construction revenue $1,238,189 Waste-to-Energy project debt revenue 1,003,415 ------------ Total Income 2,241,604 EXPENSES: Operating and construction costs 1,190,397 Waste-to-Energy project debt expense 407,124 Depreciation and amortization expense 337,924 Other - Net - Cost allocations from parent & affiliates 160,000 Gain on sale of businesses - ------------ Total Expenses 2,095,445 ------------ NET OPERATING PROFIT/(LOSS) 146,159 Non-Operating Income/(Expense) Reorganization costs - Interest expense (2,201) ------------ Total Non-Operating Income (Expense) (2,201) Income Taxes - Income before cumulative effect of accounting Change 143,958 ------------ NET INCOME $143,958 ============ WTE Debtors Consolidated Cash Flow Statements From August 1 to August 31, 2004 Net income $143,958 Depreciation and amortization 316,161 Receivables (896,123) Other assets 62,065 Payables and accrued expenses 1,301,319 Other liabilities (431,641) Property, plant and equipment expenditures - Restricted funds, net (219,170) (Repayments) issuance of debt, net - Advances from parents & affiliates (357,222) ------------ (80,653) Cash, beginning balance 3,865,556 ------------ Cash, ending balance $3,784,903 ============ Headquartered in Fairfield, New Jersey, Covanta Energy Corporation -- http://www.covantaenergy.com/ -- is a publicly traded holding company whose subsidiaries develop, own or operate power generation facilities and water and wastewater facilities in the United States and abroad. The Company filed for Chapter 11 protection on April 1, 2002 (Bankr. S.D.N.Y. Case No. 02-40826). Deborah M. Buell, Esq., and James L. Bromley, Esq., at Cleary, Gottlieb, Steen & Hamilton represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $3,280,378,000 in assets and $3,031,462,000 in liabilities. On March 10, 2004, Covanta Energy Corporation and its core subsidiaries emerged from chapter 11 as a wholly owned subsidiary of Danielson Holding Corporation. Some of Covanta's non-core subsidiaries have liquidated under separate chapter 11 plans. (Covanta Bankruptcy News, Issue No. 69; Bankruptcy Creditors' Service, Inc., 215/945-7000) ENRON CORP: Releases June 2004 Monthly Operating Report ------------------------------------------------------- From Enron Corporation and its debtor-affiliates' monthly operating report filed on Form 8-K with the Securities and Exchange Commission for the month of June 2004. The full text of the June Operating Report is available at: http://www.sec.gov/Archives/edgar/data/1024401/000095012904008539/h19822exv99w1.txt Enron Corp. et al. Cash Activity Rollforward For the Month Ended June 30, 2004 Beginning cash $1,940,000,000 Third party receipts 67,000,000 Third party disbursements (58,000,000) Net Intercompany 90,000,000 Transfer from or to Restricted Cash (24,000,000) --------------- Ending balance $2,015,000,000 Enron Corp. et al. Tax Rollforward (Non-Payroll) For the Month Ended June 30, 2004 Beginning Balance $28,000,000 Accruals (397,000,000) Intercompany 399,000,000 Payments - --------------- Ending Balance $30,000,000 Enron Corp. et al. Receivables Rollforward - Non-Commodity For the Month Ended June 30, 2004 Beginning Balance $292,000,000 Billings 13,000,000 Payments Received (4,000,000) Other Adjustments (5,000,000) --------------- Ending Balance $296,000,000 Enron Corp. et al. Commodity Receivables and Payables As of June 30, 2004 Receivables $179,000,000 Payables 589,000,000 Headquartered in Houston, Texas, Enron Corporation filed for chapter 11 protection on December 2, 2001 (Bankr. S.D.N.Y. Case No. 01-16033) following controversy over accounting procedures, which caused Enron's stock price and credit rating to drop sharply. Judge Gonzalez confirmed the Company's Modified Fifth Amended Plan on July 15, 2004, and numerous appeals followed. The Debtors' confirmed chapter 11 Plan took effect on Nov. 17, 2004. Martin J. Bienenstock, Esq., and Brian S. Rosen, Esq., at Weil, Gotshal & Manges, LLP, represent the Debtors in their restructuring efforts. (Enron Bankruptcy News, Issue No. 130; Bankruptcy Creditors' Service, Inc., 15/945-7000) EXIDE TECH: Posts $17.1 Million of Net Loss in Sept. 2004 --------------------------------------------------------- Exide Technologies (NASDAQ: XIDE), a global leader in stored electrical energy solutions, reported financial results for the second quarter and first six months of fiscal 2005 ended Sept. 30, 2004. Consolidated net sales for the second quarter of fiscal 2005 rose 8.5% to $637.6 million from $587.4 million in the second quarter of fiscal 2004. Quarterly net sales results benefited from favorable currency exchange rates compared to the prior year and the effect of the Company's lead-related pricing actions. Consolidated net loss for the second quarter of fiscal 2005, including restructuring costs of $4.8 million, reorganization costs of $1.7 million and gain on revaluation of warrants liability of $12.1 million, was $17.1 million, or $0.68 per share, compared to a net loss of $15.7 million, or $0.57 per share, in the second quarter of fiscal 2004, including restructuring costs of $4.8 million and reorganization costs of $15.7 million. Net loss as adjusted for these items was $22.7 million for the second quarter of fiscal 2005, compared to net income as adjusted of $4.8 million for the second quarter of fiscal 2004. "The Company experienced further dramatic escalation in commodity prices during the second quarter of fiscal year 2005, especially the price of lead," said Craig H. Muhlhauser, President and Chief Executive Officer of Exide Technologies. "Lead, which is our number-one commodity and comprises approximately one-third of the Company's cost of goods sold, rose to an average of EUR763 ($932) per metric tonne for the second quarter of fiscal year 2005 versus the prior year second quarter average of EUR454 ($511) per metric tonne - nearly a 70% increase. "Due to the Company's inability to hedge lead prior to our emergence from Chapter 11 and despite pricing actions and cost reduction initiatives implemented during the quarter, we were only able to offset 30-40% of the approximately $40 million adverse cost impact from lead price increases during the course of the quarter. In the second half, we believe the Company will realize additional benefits from the lead hedging, pricing actions, restructuring and cost reductions implemented in the first half of fiscal year 2005 to mitigate the impact of higher lead prices." Consolidated Half-Year Results As a result of the Company's emergence from Chapter 11 on May 5, 2004, financial results for the first half of the fiscal year are split between "Successor Company" and "Predecessor Company." For purposes of the presentation of results of operations for the first half of fiscal 2005, unless otherwise indicated, the results of the Predecessor Company for the period April 1, 2004 through May 5, 2004 have been combined with the results of the Successor Company for the period May 6, 2004 through September 30, 2004. Consolidated net sales for the first half of fiscal 2005 rose 6.7% to $1.25 billion from $1.17 billion in the first half of fiscal 2004. Consolidated net income for the first half, including Fresh Start accounting adjustments, restructuring costs, reorganization items, gain on revaluation of warrants liability, gain on the discharge of liabilities subject to compromise and cumulative effect of change in accounting principle was $1.77 billion compared to a net loss of $54.3 million in the first half of 2004. Net loss as adjusted for these items was $48.1 million in the first half of fiscal 2005 compared to a net loss of $7.1 million in the first half of fiscal 2004. The Company estimates that it recovered approximately 30-40% of the approximately $65 million adverse lead cost impact in the first half of fiscal 2005 through pricing and related actions as compared with the first half of fiscal 2004. Results for the second quarter and first half of fiscal 2005 reflect the implementation of Fresh Start accounting in accordance with the Company's emergence from Chapter 11. Adopting Fresh Start reporting has resulted in material adjustments to the historical carrying values of the Company's assets and liabilities, and has required the Company to allocate the reorganization value to its assets based upon estimated fair values. The Company's Form 10-Q, filed this week with the U.S. Securities and Exchange Commission, provides a discussion of the effects of Fresh Start accounting on comparable earnings. Transportation Business For its Transportation business, the Company reported net sales of $404.4 million for the second quarter 2005, a 9.1% increase compared to $370.6 million for the same quarter of 2004. Results benefited mainly from favorable currency exchange rates, higher average selling prices and higher third-party lead sales in the smelters. Transportation income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle in the second quarter of 2005 was $10.6 million compared to $38.7 million in the second quarter of fiscal 2004, attributable to higher lead costs and North American smelter inefficiencies, offset partially by higher average selling prices and margin benefits from third-party lead sales. For the first six months of fiscal 2005, the Transportation business reported net sales of $782.2 million, a 7.5% increase compared to $727.9 million in the first six months of fiscal 2004. Transportation income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle in the first six months of fiscal 2005 was $21.0 million compared to $62.5 million in the same period last year. Higher lead costs were the principal factor adversely impacting reported results. Industrial Energy Business For the Industrial Energy business, net sales for the second quarter of fiscal 2005 were $233.2 million, a 7.6% increase compared to $216.8 million for the same period of fiscal 2004. Favorable currency exchange rates, higher Motive Power volumes and higher average selling prices positively impacted Industrial Energy net sales in the second quarter. The Industrial Energy business reported income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle for the second quarter 2005 of $1.8 million compared to $10.6 million in the second quarter of the previous fiscal year. Industrial Energy income results declined as a result of higher lead costs not recovered through pricing and lower Network Power sales. For the Industrial Energy business, net sales for the first half of fiscal 2005 were $467.9 million, a 5.4% increase compared to $444.1 million for the same period of 2004. Reported income before reorganization items, income taxes, minority interest and cumulative effect of change in accounting principle for the Industrial Energy business segment in the first half of 2005 was $12.2 million compared to $24.6 million in the first half of the previous fiscal year. Higher lead costs were the principal factor adversely impacting reported results. A full-text copy of Exide Technologies' financial results for the period ending September 30, 2004 is available for free at: http://www.sec.gov/Archives/edgar/data/813781/000119312504197324/d10q.htm Exide Technologies and Subsidiaries Unaudited Condensed Consolidated Balance Sheets As of September 30, 2004 (in thousands) Assets Current Assets: Cash and cash equivalents $27,293 Restricted cash 1,820 Receivables (net of allowance of doubtful accounts) 638,647 Inventories 439,324 Prepaid expense 19,371 Deferred financing costs, net - Deferred income taxes 35,985 ---------- Total current assets 1,162,440 ---------- Property Plant & Equipment, net 807,957 ---------- Goodwill, net 399,388 Other intangibles, net 196,148 Deferred financing costs - Deferred income taxes 95,262 Investment in subsidiaries & affiliates 7,656 Other assets 36,249 ---------- 734,703 ---------- Total Assets $2,705,100 ========== Liabilities & Stockholder's Equity Current liabilities: Short term borrowings $13,662 Current maturities of long-term debt 4,984 Accounts payable 288,505 Accrued expenses 361,584 Warrants liability 18,625 ---------- Total current liabilities 687,360 Long-term debt 550,343 Non-current retirement obligations 322,068 Non-current deferred tax liability 111,733 Other non-current liabilities 112,814 Liabilities Subject to Compromise - ---------- Total Liabilities 1,783,318 ---------- Minority interest 12,430 ---------- Stockholders' equity: Common stock 234 Paid in capital 888,157 Retained Earnings 16,526 Notes receivable-stock award plan - Accumulated other comprehensive income 4,435 ---------- Total Stockholder's Equity 909,352 ---------- Total Liabilities & Stockholder's Equity $2,705,100 ========== Exide Technologies and Subsidiaries Unaudited Condensed Consolidated Statements of Operations Three Months Ended September 30, 2004 (in thousands) Net Sales $637,599 Cost of Sales 542,587 ---------- Gross Profit 95,012 Operating Expenses: Selling, marketing and advertising 68,326 General and administrative 37,847 Restructuring and other 4,826 Purchased research and development - Goodwill impairment charge - Other (income) expense, net (9,161) Interest expense, net 11,411 ---------- 113,249 ---------- Income (loss) before reorganization items, income tax, minority interest (18,237) Reorganization Items 1,725 Income tax (benefit) provision (2,874) Minority interest 13 ---------- Net loss ($17,101) ========== Exide Technologies and Subsidiaries Unaudited Condensed Consolidated Statements of Operations May 6, 2004 to September 30, 2004 (in thousands) Net Sales $1,035,527 Cost of Sales 875,716 ---------- Gross Profit 159,811 Operating Expenses: Selling, marketing and advertising 109,614 General and administrative 61,236 Restructuring and other 7,273 Purchased research and development - Goodwill impairment charge - Other (income) expense, net (52,037) Interest expense, net 17,437 ---------- 143,523 ---------- Income before reorganization items, income tax, minority interest and cumulative effect of change in accounting principle 16,288 Reorganization Items 3,418 Income tax (benefit) provision (3,702) Minority interest 46 ---------- Net income before change in accounting principle 16,526 Cumulative effect of change in accounting principle - ---------- Net Income (loss) $16,526 ========== Exide Technologies and Subsidiaries Unaudited Condensed Consolidated Statements of Cash Flows May 6, 2004 to September 30, 2004 (in thousands) Cash Flows from Operating Activities: Net income (loss) $16,526 Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: Depreciation and amortization 52,519 Net loss (gain) on asset sales - Effect of change in accounting principle - Amortization of original issue discount on notes - Gain on discharge of liabilities subject to compromise - Fresh start accounting adjustments, net - Unrealized gain on Warrants (55,675) Net loss (gain) on asset sales 11 Provision for doubtful accounts 2,521 Deferred income taxes 680 Non-cash provision for restructuring 98 Reorganization items, net 3,418 Goodwill impairment charge - Minority interest 46 Amortization of deferred financing costs - Net change from sales of receivables: European securitization - U.S. securitization - Other, net - Changes in assets and liabilities: Receivables (12,849) Inventories (17,956) Prepaid expenses 2,524 Accounts payable 2,387 Accrued expenses (19,315) Non-current liabilities 915 Other, net (4,938) ---------- Net cash provided by (used in) operating activities (29,088) Cash Flows from Investing Activities: Capital expenditures (26,018) Proceeds from sales of assets 10,034 ---------- Net cash used in investing activities (15,984) Cash Flows from Financing Activities: Increase (decrease) in short-term borrowings, net 2,407 Borrowings under DIP Credit Facility - Repayments under DIP Credit Facility - Repayments under 9.125% Senior Notes - Borrowings under Replacement DIP Credit Facility - Repayments under Replacement DIP Credit Facility - Borrowings under Senior Secured Credit Facility 8,962 European asset securitization - Increase (decrease) in other debt 659 Financing costs and other (681) Dividends paid - ---------- Net cash provided by (used in) financing activities 11,347 ---------- Effect of Exchange Rate Changes on Cash 1,422 ---------- Net Increase (Decrease) in Cash (32,303) Cash and Cash Equivalents, Beginning of Period 59,596 ---------- Cash and Cash Equivalents, End of Period $27,293 ========== Headquartered in Princeton, New Jersey, Exide Technologies is the worldwide leading manufacturer and distributor of lead acid batteries and other related electrical energy storage products. The Company filed for chapter 11 protection on April 14, 2002 (Bankr. Del. Case No. 02-11125). Matthew N. Kleiman, Esq., and Kirk A. Kennedy, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. Exide's confirmed chapter 11 Plan took effect on May 5, 2004. On April 14, 2002, the Debtors listed $2,073,238,000 in assets and $2,524,448,000 in debts. (Exide Bankruptcy News, Issue No. 56; Bankruptcy Creditors' Service, Inc., 215/945-7000) FOOTSTAR INC: Posts $0.8 Million of Net Income for October 2004 --------------------------------------------------------------- On November 16, 2004, Footstar, Inc. and its debtor-affiliates filed with the U.S. Bankruptcy Court their monthly operating report for the month of October 2004. The Debtors report a net income of $0.8 million in $61.5 million of net sales for October 2004. At October 30, 2004, Footstar, Inc.'s consolidated balance sheet shows: Total Current Assets $318,200,000 Total Assets 374,700,000 Current Liabilities 106,100,000 Total Liabilities Subject to Compromise 177,800,000 Shareholders' Equity $34,500,000 A full-text copy of Footstar, Inc.'s October 2004 Monthly Operating Report is available at no charge at: http://www.sec.gov/Archives/edgar/data/1011308/000090951804000901/jd11-16ex_99.txt On March 2, 2004, Footstar, Inc. and substantially all of its subsidiaries filed voluntary petitions under Chapter 11 of title 11, United States Code in the United States Bankruptcy Court for the Southern District of New York (Case No. 04-22350). The Debtors remain in possession of their assets and properties, and continue to operate their businesses and manage their properties as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. KEYSTONE CONSOLDIATED: Earns $1.2 Million of Net Income in October ------------------------------------------------------------------ For the month ending Oct. 31, 2004, Keystone Consolidated Industries reports a $1,225,247 net income in $37,168,481 of net sales. At Oct. 31, 2004, Keystone Consolidated's balance sheet shows: Current Assets $ 3,078,574 Total Assets 314,835,229 Current Liabilities 154,579,930 Stockholders' Deficit $(16,770,068) A full-text copy of Keystone Consolidated Industries' October 2004 Monthly Operating Report is available at no charge at: http://www.sec.gov/Archives/edgar/data/55604/000005560404000040/exhibit991oct.txt Headquartered in Dallas, Texas, Keystone Consolidated Industries, Inc., makes carbon steel rod, fabricated wire products, including fencing, barbed wire, welded wire and woven wire mesh for the agricultural, construction and do-it-yourself markets. The Company filed for chapter 11 protection on February 26, 2004 (Bankr. E.D. Wisc. Case No. 04-22422). Daryl L. Diesing, Esq., at Whyte Hirschboeck Dudek S.C., and David L. Eaton, Esq., at Kirkland & Ellis LLP represent the Debtors in their restructuring efforts. When the Company filed for protection from their creditors, they listed $196,953,000 in total assets and $365,312,000 in total debts. KMART HOLDING: Earns $553 Million of Net Income in 3rd Quarter -------------------------------------------------------------- Kmart Holding Corporation (NASDAQ: KMRT) reported financial results for the third quarter of fiscal 2004. For the 13 weeks ended October 27, 2004, Kmart Holding Corporation (Kmart or the Company) reported net income of $553 million, or $5.45 per diluted share compared to a net loss of $(23) million or $(0.26) per diluted share for the same period in 2003. Adjusted net income and adjusted diluted earnings per share, excluding gains on sales of assets, primarily related to previously announced transactions with Home Depot and Sears, were $59 million, or $0.59 per diluted share for the 13 weeks ended October 27, 2004, compared to adjusted net loss and adjusted diluted loss per share of $(24) million and $(0.27) for the same prior year period. Below is a reconciliation of adjusted results to GAAP results. 13-WEEKS ENDED --------------------------------- OCTOBER 27, 2004 OCTOBER 29, 2003 ---------------- ---------------- Adjusted operating income (loss) $102 ($12) Gains on sales of assets 807 1 ------ ------ GAAP Operating income (loss) $909 ($11) ====== ====== Adjusted net income (loss) $59 ($24) Gains on sales of assets 494 1 ------ ------ GAAP Net income (loss) $553 ($23) ====== ====== Adjusted diluted earnings (loss) per share $0.59 ($0.27) Gains on sales of assets 4.86 0.01 ------ ------ GAAP Diluted earnings (loss) per share $5.45 ($0.26) ====== ====== Same-store sales and total sales decreased 12.8% and 13.7%, respectively, for the 13 weeks ended October 27, 2004, compared to the 13 weeks ended October 29, 2003. Total sales were $4.4 billion for the 13 weeks ended October 27, 2004, compared to $5.1 billion in the 13 weeks ended October 29, 2003. Aylwin Lewis, President and Chief Executive Officer of Kmart, said, "We are pleased that the Company continued to make good progress in improving profitability in the quarter. In addition, with same-store sales in October improving relative to the year- to-date trend, although still negative, we are beginning to see stability as we anniversary the advertising, promotional and inventory changes instituted last year. More importantly, we have achieved this improvement without altering our focus on profitable sales. While we are not yet satisfied with the results, we believe it provides us a solid base for improvement in the important fourth quarter. Mr. Lewis continued, "In my short time at Kmart, I am excited by the dramatic improvement that the Company has achieved in our product offering, reflecting the increased investment in quality merchandise in the stores. This is particularly apparent in apparel and electronics, as this quarter we completed our home electronics reset, and continued the roll out of our new more stylish and higher quality apparel lines. "In addition, we recently upgraded and greatly improved the online shopping experience for our customers through http://www.Kmart.com/ and last week we announced the launch of our new private label credit card, Kmart Rewards. Together, these initiatives provide us with the products and tools to better serve our customers, which in turn will fuel the continued growth and profitability of our Company. We have a lot of work ahead of us to achieve the level of in-store execution consistent with our goal of being a great company, but I have been impressed by the enthusiasm and energy of the executives and store associates, and believe that together, we have the ability and willingness to meet the challenge." Operating income for the 13 weeks ended October 27, 2004 was $909 million, as compared to a loss of $(11) million for the same period in the prior year. Adjusted operating income for the 13 weeks ended October 27, 2004 was $102 million, as compared to a loss of $(12) million for the same period in the prior year. Adjusted operating income (loss), adjusted net income (loss) and adjusted diluted earnings (loss) per share are non-GAAP measures. The Company has provided these adjusted figures to provide a more meaningful comparison of ongoing results and analysis of the Company's operating performance, as they reflect core operations excluding the significant gains realized on sales of assets. Non- GAAP financial measures should be evaluated in conjunction with, and are not a substitute for, GAAP financial measures. For the 39 weeks ended October 27, 2004 Kmart reported net income of $801 million, or $7.93 per diluted share. Gains on sales of assets contributed $558 million or $5.50 per diluted share during the 39 weeks. Operating activities provided net cash of $171 million for the 39 weeks ended October 27, 2004 which was favorably affected by our strong net earnings. This was partially offset by the increase in our inventories, net of associated accounts payable, for the upcoming holiday season and by funding $77 million for future associate medical and dental expenses. Investing activities generated $345 million for the 39 weeks ended October 27, 2004. During the current year, we received proceeds of $524 million from sales of real and personal property, including $432 million from the sale of owned and assignment of leased properties to Sears and Home Depot. In addition, we purchased 28 previously leased operating properties for $103 million. Cash and cash equivalents at the end of the quarter was approximately $2.6 billion, which excludes approximately $400 million expected upon the delivery of stores to Sears in the first quarter of 2005 pursuant to the previously announced store sale transaction. The $400 million is included in Accounts receivable, net as of October 27, 2004. Mr. Lewis commented, "We expect to end the year with over $3.1 billion in cash, which does not include approximately $400 million that we will receive in the first quarter of next year from the sale of stores to Sears. This demonstrates the considerable financial strength and cash generation of the Company, and provides the foundation for our continued improvement. Kmart has been very successful doing more with less; we are now in a position to do more with more. We are very excited about the opportunities before us." Management's Discussion and Analysis of Operations Favorable mark-on, improvements in shrink, and reductions in markdowns on promotional and clearance items were the primary factors improving our gross margin rate this quarter. This improvement in the current quarter was partially offset by the effect of the decline in sales on certain fixed operating costs. As a result, gross margin as a percentage of sales increased to 26.1% for the 13 weeks ended October 27, 2004, from 22.9% in the prior year comparable quarter. Gross margin decreased $22 million to $1.15 billion, for the 13 weeks ended October 27, 2004, from $1.17 billion for the 13 weeks ended October 29, 2003. Selling, general and administrative expenses decreased $136 million to $1.04 billion for the 13 weeks ended October 27, 2004, from $1.18 billion for the 13 weeks ended October 29, 2003. SG&A, as a percentage of sales, increased to 23.7% for the 13 weeks ended October 27, 2004, from 23.2% in the prior year comparable quarter. The decline in SG&A resulted from a reduction in store payroll and related expenditures due to increased operating efficiencies and reduced sales volume at our stores, and to reductions in newspaper advertising. Included in SG&A for the period is compensation expense of $5 million related to the departure of our former President and Chief Executive Officer. Interest expense, net for the 13 weeks ended October 27, 2004 and October 29, 2003 was $22 million and $24 million, respectively. During the 13 weeks ended October 27, 2004, $13 million of interest expense was recorded for the accretion of obligations recorded at net present value. To reduce the overall cost of our Credit Facility, we restated and amended it in October 2004, reducing the facility from $1.0 billion to $800 million. We recognized $6 million of debt issuance costs in Interest expense, net for the 13 weeks ended October 27, 2004, $3 million of which we accelerated in conjunction with the reduction to our Credit Facility. Interest expense is net of interest income of $9 million and $2 million for the 13 weeks ended October 27, 2004 and October 29, 2003, respectively. Discussion of Year-to-Date Adjusted EBITDA Year-to-date adjusted EBITDA (Year-to-date earnings before interest, taxes, depreciation, amortization, net gains on sales of assets, bankruptcy-related recoveries and certain other items) is a non-GAAP financial measure. Year-to-date adjusted EBITDA is not the same as EBITDA defined in Kmart's Credit Facility. Year- to-date adjusted EBITDA is a Company-defined metric used by Kmart's management for the administration of the Company's incentive compensation program for eligible employees. Year-to- date adjusted EBITDA is not a measure or indicator of the overall financial condition or performance of Kmart and should not be used by investors as a basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. Management compensates for this limitation by using GAAP measures, as well, in managing the business. 39-WEEKS ENDED OCTOBER 27, 2004 ---------------- Net income $801 Adjustments to reconcile to Year-to-date Adjusted EBITDA: Income tax provision 485 Interest expense, net 79 Depreciation and amortization 14 Net gains on sales of assets (911) Bankruptcy-related recoveries (13) Other 45 ------- Year-to-date Adjusted EBITDA $500 ======= Comparability of Financial Statements Upon emergence from bankruptcy on May 6, 2003, Kmart Corporation (Predecessor Company) applied the provisions of Fresh-Start accounting effective as of April 30, 2003, at which time a new reporting entity, Kmart Holding Corporation (Kmart), was created. As a result of applying Fresh-Start accounting, the reported historical financial statements of the Predecessor Company for periods ended prior to May 1, 2003 generally are not comparable to those of Kmart. Therefore, comparisons of earnings per share data to Predecessor Company results are not included herein. As referenced within this news release, results of operations for the period ended April 30, 2003, refer to the Predecessor Company. A full-text copy of Kmart's Second Quarter Report for the fiscal year 2004 is available for free at: http://www.sec.gov/Archives/edgar/data/1229206/000095012404005784/k89800exv99w1.txt Kmart Holding Corporation Unaudited Consolidated Balance Sheets As of October 27, 2004 (In millions) Assets Current Assets Cash and cash equivalents $2,564 Merchandise inventories 3,902 Accounts receivable, net 649 Other current assets 195 -------------- Total Current Assets 7,310 Property and equipment, net 288 Other assets and deferred charges 67 -------------- TOTAL ASSETS $7,665 ============== Liabilities and Shareholders' Equity Current Liabilities Mortgages payable due within one year $4 Accounts payable 1,264 Accrued payroll and other liabilities 777 Taxes other than income taxes 276 -------------- Total Current Liabilities 2,321 Long-term Liabilities Long-term debt and mortgages payable 101 Capital lease obligations 288 Pension obligations 874 Unfavorable operating leases 302 Other long-term liabilities 720 -------------- Total Liabilities 4,606 Shareholders' Equity Preferred stock 20,000,000 shares authorized; no shares outstanding - Common stock $0.01 par value, 500,000,000 shares authorized; 89,178,003, 89,633,760 and 89,655,445 shares issued, respectively 1 Treasury stock, at cost (36) Capital in excess of par value 2,045 Retained earnings (Accumulated deficit) 1,049 Accumulated other comprehensive income - -------------- Total shareholders' equity 3,059 -------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $7,665 ============== Kmart Holding Corporation Unaudited Consolidated Statements of Operations 13 Weeks Ended October 27, 2004 (In millions) Sales $4,392 Cost of sales, buying and occupancy 3,247 -------------- Gross margin 1,145 Selling, general and administrative expenses 1,043 Net gains on sales of assets (807) -------------- Operating income (loss) 909 Interest expense, net 22 Bankruptcy-related recoveries (1) Equity income in unconsolidated subsidiaries - -------------- Income (loss) from operations before income taxes 888 Provision for (benefit from) income taxes 335 -------------- Net income (loss) $553 ============== Kmart Holding Corporation Unaudited Consolidated Statements of Cash Flows 39 Weeks Ended October 27, 2004 (In millions) Cash Flows From Operating Activities Net income (loss) $801 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation and amortization 36 Store closings inventory charges 22 Net gains on sales of assets (911) Deferred income taxes 462 Equity income in unconsolidated subsidiaries (3) Dividends received from Meldisco 3 Cash used for store closings and other charges - Change in: Merchandise inventories (686) Accounts receivable 21 Accounts payable 444 Taxes payable 11 Other assets - Other liabilities (29) -------------- Net Cash Provided By Operating Activities 171 -------------- Cash Flows From Investing Activities Proceeds from sales of assets 524 Capital expenditures (179) -------------- Net Cash Provided By Investing Activities 345 -------------- Cash Flows From Financing Activities Payments on capital lease obligations (37) Payments on mortgages (3) -------------- Net Cash Used For Financing Activities (40) -------------- Net Change in Cash and Cash Equivalents 476 Cash and Cash Equivalents, Beginning of Period 2,088 -------------- Cash and Cash Equivalents, End of Period $2,564 ============== Headquartered in Troy, Michigan, Kmart Corporation (n/k/a KMART Holding Corporation) -- http://www.bluelight.com/-- is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Martha Stewart Everyday, Route 66 and Sesame Street. The Company filed for chapter 11 protection on January 22, 2002 (Bankr. N.D. Ill. Case No. 02-02474). Kmart emerged from chapter 11 protection on May 6, 2003. John Wm. "Jack" Butler, Jr., Esq., at Skadden, Arps, Slate, Meagher & Flom, LLP, represented the retailer in its restructuring efforts. The Company's balance sheet showed $16,287,000,000 in assets and $10,348,000,000 in debts when it sought chapter 11 protection. (Kmart Bankruptcy News, Issue No. 85; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAIDLAW INT'L: Restates Second Quarter 2004 Financial Results ------------------------------------------------------------- Laidlaw International management recently identified a $6.6 million increase in the company's Canadian deferred tax assets and a corresponding tax benefit to reflect a change in the Ontario, Canada provincial tax rates. On November 15, 2004, Laidlaw filed a Form 10-Q/A to restate its second fiscal quarter 2004 earnings to reflect the $6.6 million tax benefit as a reduction of its second quarter tax expense. A full-text copy of Laidlaw's Form 10-Q/A filed with the Securities and Exchange Commission is available for free at: http://www.sec.gov/Archives/edgar/data/737874/000095013704009983/c89685a1e10vqza.htm Laidlaw International Inc. Unaudited Consolidated Balance Sheet At February 29, 2004 ASSETS Current assets Cash and cash equivalents $93,100,000 Restricted Cash and cash equivalents 64,800,000 Short-term deposits and marketable securities 12,800,000 Accounts Receivable 715,400,000 Parts and supplies 50,200,000 Deferred income taxes assets 77,300,000 Other current assets 66,400,000 -------------- Total Current Assets 1,080,000,000 -------------- Long-term investments 572,900,000 Property and equipment Land 187,200,000 Buildings 161,700,000 Vehicles 1,309,700,000 Other 161,900,000 -------------- 1,820,500,000 Less: Accumulated depreciation 180,600,000 -------------- 1,639,900,000 Other Assets: Goodwill 183,100,000 Contacts & customer relationships 208,900,000 Deferred income taxes 205,000,000 Deferred charges and other assets 75,500,000 -------------- 672,500,000 -------------- TOTAL ASSETS $3,965,300,000 ============== LIABILITIES Current Liabilities: Accounts Payable $123,800,000 Accrued Liabilities 489,400,000 Current portion of Long-term Debt 48,500,000 -------------- Total current liabilities 661,700,000 Long-term debt 1,185,400,000 Pension liability 226,200,000 Other long-term liabilities 555,400,000 -------------- Total liabilities 2,628,700,000 -------------- SHAREHOLDERS' EQUITY Common Shares: $0.01 par value per share; issued and outstanding 103,806,110 1,000,000 Additional paid in capital 1,359,100,000 Common shares held in trust: 3,777,419 issued (50,000,000) Accumulated other comprehensive income (loss) 6,600,000 Retained earnings (deficit) 19,900,000 -------------- Total shareholder's equity 1,336,600,000 -------------- TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $3,965,300,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Operations For Three Months Ended February 29, 2004 Revenue $1,162,500,000 Expenses: Compensation expense 679,100,000 Accident claims & prof. liability expense 77,500,000 Vehicle related costs 68,800,000 Occupancy 51,300,000 Fuel Expense 45,300,000 Depreciation expense 69,100,000 Amortization expense 4,600,000 Other operating expense 125,400,000 -------------- Operating income 41,400,000 Interest expense (34,600,000) Other income (4,500,000) -------------- Income before taxes and change in accounting principle 2,300,000 Income tax benefit (expense) 4,900,000 -------------- Income before change in accounting principle 7,200,000 -------------- Net income (loss) $7,200,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Operations For Six Months Ended February 29, 2004 Revenue $2,372,800,000 Expenses: Compensation expense 1,364,100,000 Accident claims & prof. liability expense 167,100,000 Vehicle related costs 138,700,000 Occupancy 101,200,000 Fuel Expense 89,700,000 Depreciation expense 145,200,000 Amortization expense 9,200,000 Other operating expense 246,700,000 -------------- Operating income 110,900,000 Interest expense (67,300,000) Other income (3,600,000) -------------- Income before taxes and change in accounting principle 40,000,000 Income tax benefit (expense) (10,200,000) -------------- Income before change in accounting principle 29,800,000 -------------- Net income (loss) $29,800,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Cash Flow For Three Months Ended February 29, 2004 Operating Activities: Net income (loss) $7,200,000 Items not affecting cash: Depreciation and amortization 73,700,000 Deferred income taxes (5,900,000) Other items 1,400,000 Increase in claims liability and professional liability insurance accruals 28,700,000 Cash provided by (used in) other working capital items 41,700,000 Decrease (increase) in restricted cash and cash equivalents (600,000) -------------- Net cash provided by operating activities 146,200,000 Investing activities: Purchase of property, equipment and other assets, net (65,800,000) Expended on acquisitions (1,300,000) Net increase in investments (400,000) -------------- Net cash used in investing activities (67,500,000) Financing activities Net increase (decrease) in long-term debt and other long-term liabilities (60,700,000) -------------- Net cash provided by (used in) financing activities (60,700,000) Net increase (decrease) in cash and cash equivalents 18,000,000 Cash & cash equivalents - beginning of period 75,100,000 -------------- Cash & cash equivalents - end of period $93,100,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Cash Flow For Six Months Ended February 29, 2004 Operating Activities: Net income (loss) $29,800,000 Items not affecting cash: Depreciation and amortization 154,400,000 Deferred income taxes 8,200,000 Other items 5,500,000 Increase in claims liability and professional liability insurance accruals 34,500,000 Cash provided by (used in) other working capital items (138,400,000) Decrease (increase) in restricted cash and cash equivalents 600,000 -------------- Net cash provided by operating activities 94,600,000 Investing activities: Purchase of property, equipment and other assets, net (105,100,000) Expended on acquisitions (1,300,000) Net increase in investments (8,100,000) -------------- Net cash used in investing activities (114,500,000) Financing activities Net increase (decrease) in long-term debt and other long-term liabilities (12,700,000) -------------- Net cash provided by (used in) financing activities (12,700,000) Net increase (decrease) in cash and cash equivalents (7,200,000) Cash & cash equivalents - beginning of period 100,300,000 -------------- Cash & cash equivalents - end of period $93,100,000 ============== Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. (Laidlaw Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) LAIDLAW INT'L: Restates Third Quarter 2004 Financial Results ------------------------------------------------------------ Laidlaw International filed a Form 10-Q/A to restate its third fiscal quarter 2004 earnings to reflect the $6.6 million tax benefit as a reduction of its tax expense for the nine month period ended May 31, 2004. A full-text copy of Laidlaw's Form 10-Q/A filed with the Securities and Exchange Commission is available for free at: http://www.sec.gov/Archives/edgar/data/737874/000095013704009984/c89687a1e10vqza.htm Laidlaw International Inc. Unaudited Consolidated Balance Sheet At May 31, 2004 ASSETS Current assets Cash and cash equivalents $161,300,000 Restricted cash & cash equivalents 74,300,000 Short-term deposits and marketable securities 10,300,000 Accounts receivable 720,300,000 Parts and supplies 51,500,000 Deferred income taxes assets 75,300,000 Other current assets 54,200,000 -------------- Total current assets 1,147,200,000 Long-term investments 552,500,000 Property and equipment Land 184,000,000 Buildings 161,400,000 Vehicles 1,339,800,000 Other 174,000,000 -------------- 1,859,200,000 Less: Accumulated depreciation 253,500,000 -------------- 1,605,700,000 Other Assets: Goodwill 183,100,000 Contacts & customer relationships 205,300,000 Deferred income taxes 184,400,000 Deferred charges and other assets 72,100,000 -------------- 644,900,000 -------------- TOTAL ASSETS $3,950,300,000 ============== LIABILITIES Current liabilities: Accounts payable $128,900,000 Accrued liabilities 518,800,000 Current portion of long-term debt 37,800,000 -------------- Total current liabilities 685,500,000 Long-term debt 1,121,500,000 Pension liability 226,700,000 Other long-term liabilities 557,800,000 -------------- Total liabilities 2,591,500,000 -------------- SHAREHOLDER'S EQUITY Common Shares: $0.01 par value per share; issued and outstanding 103,806,110 1,000,000 Additional paid in capital 1,359,800,000 Common shares held in trust: 3,777,419 issued (50,000,000) Accumulated other comprehensive loss (6,500,000) Retained earnings (Deficit) 54,500,000 -------------- Total shareholder's equity 1,358,800,000 -------------- TOTAL LIABILITIES & SHAREHOLDER'S EQUITY $3,950,300,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Operations For Nine Months Ended May 31, 2004 Revenue $3,612,400,000 Expenses: Compensation 2,070,600,000 Accident claims and professional liability 245,200,000 Vehicle related costs 207,400,000 Occupancy 151,200,000 Fuel 139,800,000 Depreciation 215,300,000 Amortization 13,800,000 Other 368,700,000 -------------- Operating income 200,400,000 Interest expense (98,700,000) Other expenses, net income (3,700,000) -------------- Income before taxes and change in accounting principle 98,000,000 Income tax expense (33,600,000) -------------- Income before change in accounting principle 64,400,000 -------------- Net income (loss) $64,400,000 ============== Laidlaw International Inc. Unaudited Consolidated Statements of Cash Flow For Nine Months Ended May 31, 2004 Operating Activities: Net Income (loss) $64,400,000 Non-cash items included in net income (loss): Depreciation and amortization 229,100,000 Deferred income taxes 33,500,000 Other Items 4,700,000 Increase in claims liability and professional liability insurance accruals 47,200,000 Cash provided by (used in) other working capital items (101,800,000) Decrease in restricted cash and cash equivalents 4,100,000 -------------- Net cash provided by operating activities 281,200,000 Investing activities: Purchase of property, equipment and other assets, net (150,800,000) Expended on acquisition (1,300,000) Net increase in investments (10,600,000) -------------- Net cash used in investing activities (162,700,000) Financing activities Net increase (decrease) in long-term debt (55,200,000) Net increase (decrease) in other long-term liabilities (2,300,000) -------------- Net cash provided by (used in) financing activities (57,500,000) Net increase in cash and cash equivalents 61,000,000 Cash & cash equivalents -- beginning of period 100,300,000 -------------- Cash & cash equivalents -- end of period $161,300,000 ============== Headquartered in Arlington, Texas, Laidlaw, Inc., now known as Laidlaw International, Inc., -- http://www.laidlaw.com/-- is North America's #1 bus operator. Laidlaw's school buses transport more than 2 million students daily, and its Transit and Tour Services division provides daily city transportation through more than 200 contracts in the US and Canada. Laidlaw filed for chapter 11 protection on June 28, 2001 (Bankr. W.D.N.Y. Case No. 01-14099). Garry M. Graber, Esq., at Hodgson Russ LLP, represents the Debtors. Laidlaw International emerged from bankruptcy on June 23, 2003. (Laidlaw Bankruptcy News, Issue No. 53; Bankruptcy Creditors' Service, Inc., 215/945-7000) LOEWEN GROUP: Alderwoods Releases 3rd Quarter Financial Results --------------------------------------------------------------- Alderwoods Group, Inc. (NASDAQ:AWGI) reported its third quarter results, representing the 16 weeks and 40 weeks ended Oct. 9, 2004. The Company reported a total net loss of $13.4 million, on revenues of $212.0 million for the third quarter of 2004, compared with a total net loss of $13.2 million on revenues of $205.7 million, for the 16 weeks ended Oct. 4, 2003. From continuing operations, the Company reported a total net loss of $26.0 million for the third quarter of 2004, compared with a net loss of $7.1 million for the same quarter a year ago. Included in the total net loss for the third quarter of 2004 were $35.3 million in costs associated with the Company's refinancing of long-term debt in the third quarter. Highlights of the Third Quarter from Continuing Operations -- Funeral services performed for the quarter declined by 1,571 or 4.4% -- Average revenue per funeral increased 3.2% to $4,020 -- Cemetery revenue increased 5.0% to $49.0 million -- Insurance revenue increased 28.8% to $26.0 million -- Total revenue increased 3.0% to $212.0 million -- Pre-need funeral contracts written increased 3.1% to $52.9 million -- Total debt reduced by $96.9 million in the quarter Highlights of the Year-to-Date from Continuing Operations -- Funeral services performed declined by 2,935 or 3.1% -- Average revenue per funeral increased 2.7% to $4,019 -- Cemetery revenue increased 1.8% to $123.9 million -- Insurance revenue increased 34.4% to $62.1 million -- Total revenue increased 3.0% to $552.8 million -- Pre-need funeral contracts written increased 8.9% to $137.6 million -- Total debt reduced by $131.7 million Significant Activities in the Quarter Refinancing of long-term debt: In August 2004, the Company successfully completed the refinancing of substantially all of its long-term debt. The Company repurchased the principal amount of $316.2 million (approximately 98.6%) of its outstanding 12.25% Senior Notes due 2009. The tender premium on the long-term debt repayment and related financing costs amounted to $35.3 million and are included in interest expense for the 16 weeks ended Oct. 9, 2004. The repurchase was financed with the net proceeds from the issuance of $200 million of 7.75% Senior Unsecured Notes due 2012 and borrowing under an amended Senior Secured Term Loan B. Sale of Security Plan: The Company completed the sale of its Security Plan Life Insurance subsidiary for $85 million, for a pre-tax gain of $16 million. After payment of applicable taxes and expenses associated with the transaction and the recapitalization of Mayflower National Life Insurance Company, Alderwoods Group has utilized $65 million of the proceeds to reduce long-term debt. Field Organizational Structure Changed to Address At-Need and Pre- Need Growth: -- The Company introduced changes to its field organizational structure designed to improve the performance of its at-need business and increase the number of funeral services performed across its operations. -- The Company created the new position of Senior Vice President of Advance Planning, to improve the effectiveness of the sales organization and focus on growing the Company's pre-need funeral and cemetery backlog. Mr. Paul Houston, President and CEO of Alderwoods Group, said, "We continued to make progress in many areas of our business in the third quarter, particularly in our cemetery and insurance revenues, strong operating expense controls and debt reduction and divestiture programs. However, we recognize that we need to take strong and decisive action to improve the number of funeral services performed." "To that end, we are realigning our field organizational structure to increase the levels of coaching and support available to our locations," Mr. Houston continued. "We believe this will help enhance our service to families and improve the execution of our marketing and community outreach programs." Mr. Houston added, "With the appointment of new leadership for pre-need sales, we look forward to further integrating our pre- need funeral business with our pre-need insurance operations. Our objective is to build our backlog and, over time, increase the percentage of funeral calls it contributes to our business." Refinancing and Debt Reduction During the third quarter of 2004, the Company's long-term debt was reduced by $96.9 million, through proceeds from the sale of Security Plan Life Insurance, the sale of other assets held for sale and from cash generated from operations. As at October 9, 2004, long-term debt outstanding stood at $499.1 million, a reduction of $335.3 million since the Company emerged on January 2, 2002. At the end of the quarter, cash on hand was $10.2 million. In August 2004, the Company successfully completed the refinancing of substantially all of its long-term debt. The Company repurchased the principal amount of $316.2 million (approximately 98.6%) of its outstanding 12.25% Senior Notes due 2009. The tender premium on the long-term debt repayment and related financing costs amounted to $35.3 million and are included in interest expense for the 16 weeks ended October 9, 2004. The repurchase was financed with the net proceeds from the issuance of $200 million of 7.75% Senior Unsecured Notes due 2012 and borrowing under an amended Senior Secured Term Loan B. At October 9, 2004, the carrying amounts of the Company's long- term debt of $499.1 million were as follows: -- Senior Secured Term Loan B due in 2009 of $281.9 million; -- 7.75% Senior Unsecured Notes due 2012 of $200 million; -- 12.25% Senior Unsecured Notes due 2009 of $4.5 million; and -- Promissory notes and capitalized obligations of $12.7 million. "We are pleased with the strong results of our refinancing and debt reduction initiatives, which have succeeded in bringing our long-term debt below $500 million at the end of the quarter, substantially reducing our interest expense," said Mr. Houston. Based on the Company's debt levels at October 9, 2004, and interest rates in effect at November 17, 2004, interest expense is expected to be approximately $31 million annually. This reflects a lower overall interest rate on the Company's debt as a result of the refinancing and an anticipated lower rate on the Senior Secured Term Loan B as a result of the Company meeting a specified consolidated leverage ratio threshold as of October 9, 2004. Discontinued Operations and Assets Held for Sale Over the past several years, Alderwoods Group engaged in a strategic market assessment to identify operating assets that did not fit into the Company's market or business strategies. As a result of this assessment, a significant number of properties have been identified as assets held for sale and then subsequently sold. In the quarter, the Company sold 21 funeral and 20 cemetery locations in North America. Gross proceeds of these dispositions were $15.5 million. In the 40 weeks ended October 9, 2004, the Company sold 27 funeral and 39 cemetery locations in North America. As of October 9, 2004, the Company holds for sale 41 funeral homes, 34 cemeteries and five combination properties. The Company expects to complete the sale of these properties by the end of 2004. Provided that the properties are ultimately sold for estimated proceeds, accumulated unrealized gains of approximately $10 million will be included in income upon disposition. The Company now believes that the identification of non-strategic businesses for disposal is substantially complete. However, the Company will continue to evaluate its assets, from time to time, with the intent of acquiring and disposing of assets in order to optimize the Company's assets. Upon completion of the disposal of the properties identified for sale, the Company will operate 642 funeral homes, 76 cemeteries and 56 combination properties. On October 1, 2004, the Company's subsidiary Mayflower National Life Insurance Company completed the sale of all of the outstanding shares of Security Plan Life Insurance Company. Mayflower received cash proceeds from this sale of $85 million and Alderwoods Group recorded a pre-tax gain on the sale of approximately $16 million in the third quarter. After payment of applicable taxes and expenses associated with the transaction and the recapitalization of Mayflower, the Company has utilized $65 million of the proceeds to reduce long-term debt. Financial Summary 16 Weeks Ended October 9, 2004 Overview Total net loss of $13.4 million for the 16 weeks ended October 9, 2004, increased by $0.2 million compared to net loss of $13.2 million for the 16 weeks ended October 4, 2003. Basic and diluted loss per share were $0.33 for the 16 weeks ended October 9, 2004 and for the 16 weeks ended October 4, 2003. Continuing Operations Total revenue for the 16 weeks ended October 9, 2004, was $212.0 million compared to $205.7 million for the 16 weeks ended Oct. 4, 2003, an increase of $6.3 million, or 3.1%. The increase in total revenue was the result of an increase in cemetery and insurance revenue, which was partially offset by a decrease in funeral revenue. Funeral revenue was $137.0 million for the 16 weeks ended Oct. 9, 2004, which was down by $1.8 million compared to $138.8 million for the 16 weeks ended October 4, 2003. The decrease in funeral revenue was primarily due to a decrease in funeral services performed, which was partially offset by an increase in average funeral revenue per service. For the 16 weeks ended October 9, 2004, funeral services performed were 34,074, down 4.4% compared to 35,645 funeral services performed in the 16 weeks ended Oct. 4, 2003. Average funeral revenue per service was $4,020 for the 16 weeks ended October 9, 2004, a 3.2% increase compared to $3,893 for the 16 weeks ended October 4, 2003. Funeral gross margin as a percentage of revenue decreased to 18.8% for the 16 weeks ended October 9, 2004, compared to 21.9% for the corresponding period in 2003. The decrease in gross margin was primarily due to the decrease in funeral revenue, and increases in wages, benefits, and operating expenses. Cemetery revenue for the 16 weeks ended October 9, 2004, was $49.0 million, which was up by $2.3 million, or 4.9% compared to $46.7 million for the 16 weeks ended October 4, 2003. The increase is due to higher at-need service and merchandise revenue and recognition of pre-need merchandise. Cemetery gross margin as a percentage of revenue was 11.9% of revenue for the 16 weeks ended October 9, 2004, compared to 8.9% of revenue for the 16 weeks ended October 4, 2003. The increase in the cemetery gross margin percentage was primarily due to the revenue increase, partially offset by increases in cost of goods sold, selling expenses and facilities costs. The Company's insurance operations generated revenue of $26.0 million for the 16 weeks ended October 9, 2004, compared to revenue of $20.2 million for the 16 weeks ended October 4, 2003. Insurance revenue increased primarily due to higher premium and investment income. Insurance gross margin as a percentage of revenue increased to 6.1% for the 16 weeks ended October 9, 2004, compared to 1.2% for the corresponding period in 2003, primarily as a result of the revenue increase. General and administrative expenses totaled $14.9 million for the 16 weeks ended October 9, 2004, while for the corresponding period in 2003, general and administrative expenses totaled $13.3 million. The bonus accrual for the 16 weeks ended October 9, 2004, was $1.6 million lower than the corresponding period last year. However, during the 16 weeks ended October 4, 2003, general and administrative expenses were reduced by $3.1 million as a result of net interest income received from a tax refund in connection with the audit of the predecessor company's 1993 through 1998 federal income tax returns. For the 16 weeks ended October 9, 2004, interest expense was $50.1 million, an increase of $22.4 million, or 80.6%, compared to the 16 weeks ended October 4, 2003. The effect of lower effective interest rates and debt repayments made by the Company during 2003 and the 40 weeks ended October 9, 2004, were more than offset by costs associated with the Company's refinancing of long-term debt that occurred during the 16 weeks ended October 9, 2004. For the 16 weeks ended October 9, 2004, net income tax benefit was $6.2 million, compared to $0.2 million for the 16 weeks ended October 4, 2003. The effective tax rate varied from the statutory tax rate, primarily because the Company was not able to fully realize the income tax benefit associated with the cost of refinancing of long term debt. In addition, the losses incurred in certain jurisdictions did not offset the tax expenses in profitable jurisdictions. Net loss from continuing operations was $26.0 million, or $0.65 basic and diluted loss per share for the 16 weeks ended October 9, 2004, compared to a net loss of $7.1 million, or $0.18 basic and diluted loss per share for the 16 weeks ended October 4, 2003. Pre-need funeral and cemetery contracts written during the 16 weeks ended October 9, 2004, totaled $52.9 million and $26.3 million, respectively. For the 16 weeks ended October 4, 2003, pre-need funeral and cemetery contracts written totaled $51.4 million and $23.7 million, respectively. The Company is continuing its program to increase pre-need sales. The Company believes that pre-need sales are an important part of building the foundation for future revenue and positive cash flow. Discontinued Operations The Company has classified all the locations identified for disposal as assets held for sale in the consolidated balance sheets and recorded any related operating results, long-lived asset impairment provision, and gains or losses recorded on disposition as income from discontinued operations. The Company has reclassified prior periods to reflect any comparative amounts on a similar basis. For the 16 weeks ended October 9, 2004, income from discontinued operations, net of tax, was $12.7 million, or $0.32 basic and diluted loss per share, which included $16.9 million of pre-tax disposal gains, and a pre-tax long-lived asset impairment provision of $0.7 million. Financial Summary 40 Weeks Ended October 9, 2004 Overview Total net loss for the 40 weeks ended October 9, 2004, was $15.0 million compared to net income of $0.4 million for the 40 weeks ended October 4, 2003, a decrease of $15.4 million. Basic and diluted loss per share were $0.37 for the 40 weeks ended October 9, 2004. Basic and diluted earnings per share were $0.01 for the 40 weeks ended October 4, 2003. Continuing Operations Total revenue for the 40 weeks ended October 9, 2004, was $552.8 million compared to $536.8 million for the 40 weeks ended Oct. 4, 2003, an increase of $16.0 million, or 3.0%. The increase in total revenue was the result of the increases in cemetery and insurance revenue, compared to the corresponding period in 2003. Funeral revenue was $366.8 million for the 40 weeks ended October 9, 2004, which was down by $2.1 million compared to $368.9 million for the 40 weeks ended October 4, 2003. The decrease in funeral revenue was primarily due to a decrease in funeral services performed, which was partially offset by an increase in average funeral revenue per service. For the 40 weeks ended October 9, 2004, funeral services performed were 91,274, down 3.1% compared to 94,209 funeral services performed in the 40 weeks ended October 4, 2003. Average funeral revenue per service was $4,019 for the 40 weeks ended October 9, 2004, a 2.7% increase per funeral service performed compared to $3,915 for the 40 weeks ended October 4, 2003. Funeral gross margin as a percentage of revenue decreased slightly to 21.2% for the 40 weeks ended October 9, 2004, compared to 22.6% of revenue for the 40 weeks ended October 4, 2003. The decrease in gross margin was primarily due to the decrease in funeral revenue. Cemetery revenue for the 40 weeks ended October 9, 2004, was $123.9 million, which was up $2.2 million, or 1.7% compared to $121.7 million for the 40 weeks ended October 4, 2003. The increase in at-need service revenue during the 40 weeks ended October 9, 2004, compared to the corresponding period in 2003, was partially offset by a decrease in other revenue. Cemetery gross margin as a percentage of revenue was 13.1% of revenue for the 40 weeks ended October 9, 2004, compared to 12.5% of revenue for the 40 weeks ended October 4, 2003. The increase in the cemetery gross margin percentage was primarily as a result of the increase in cemetery revenue, partially offset by increases in advertising and promotion, facilities, and selling expenses. The Company's insurance operations generated revenue of $62.1 million for the 40 weeks ended October 9, 2004, compared to revenue of $46.2 million for the 40 weeks ended October 4, 2003. Insurance revenue increased primarily due to higher premium and investment income. Insurance premium revenue is up in 2004 primarily due to the impact of the Company's subsidiary, Rose Hills, beginning to sell the Company's insurance products. Insurance gross margin as a percentage of revenue increased to 4.8% for the 40 weeks ended October 9, 2004, compared to 2.9% for the corresponding period in 2003, primarily as a result of the revenue increase being at a rate higher than that of the cost increase. General and administrative expenses totaled $36.2 million for the 40 weeks ended October 9, 2004, while for the corresponding period in 2003, general and administrative expenses totaled $32.4 million. During the 40 weeks ended October 4, 2003, general and administrative expenses were reduced by a $5.0 million reversal of accrued legal expense, which resulted from a settlement by the Company of an automobile accident suit. In addition, during the 40 weeks ended October 4, 2003, general and administrative expenses were reduced by $3.1 million as a result of net interest income received from a tax refund in connection with the audit of the predecessor company's 1993 through 1998 federal income tax returns. For the 40 weeks ended October 9, 2004, interest expense was $70.8 million, an increase of $5.8 million, or 8.8%, compared to the 40 weeks ended October 4, 2003. The effect of lower effective interest rates and debt repayments made by the Company during 2003 and the 40 weeks ended October 9, 2004, were more than offset by costs associated with the Company's refinancing of long-term debt that occurred during the 40 weeks ended October 9, 2004. For the 40 weeks ended October 9, 2004, net income tax expense was $1.6 million, compared to a net income tax benefit of $8.1 million for the 40 weeks ended October 4, 2003. For the 40 weeks ended October 9, 2004, the effective tax rate varied from the statutory rate primarily because losses incurred in certain jurisdictions did not offset the tax expenses in profitable jurisdictions. In addition the effective tax rate varied from the statutory tax rate, primarily because the Company was not able to fully realize the income tax benefit associated with the cost of refinancing of long-term debt. The income tax benefit for the 40 weeks ended October 4, 2003 was primarily due to a $9.7 million favorable settlement of a federal income tax audit. Net loss from continuing operations was $12.9 million, or $0.32 basic and diluted loss per share for the 40 weeks ended October 9, 2004, compared to net income of $5.8 million, or $0.14 basic and diluted earnings per share for the 40 weeks ended October 4, 2003. Pre-need funeral and cemetery contracts written during the 40 weeks ended October 9, 2004, totaled $137.6 million and $65.5 million, respectively. For the 40 weeks ended October 4, 2003, pre-need funeral and cemetery contracts written totaled $126.4 million and $61.4 million, respectively. The Company is continuing its program to increase pre-need sales. The Company believes that pre-need sales are an important part of building the foundation for future revenue and positive cash flow. Discontinued Operations The Company has classified all the locations identified for disposal as assets held for sale in the consolidated balance sheets and recorded any related operating results, long-lived asset impairment provision, and gains or losses recorded on disposition as income from discontinued operations. The Company has reclassified prior periods to reflect any comparative amounts on a similar basis. For the 40 weeks ended October 9, 2004, loss from discontinued operations, net of tax, was $2.0 million, or $0.05 basic and diluted loss per share, which included $17.5 million of pre-tax disposal gains, and a pre-tax long-lived asset impairment provision of $23.3 million. Company Overview Alderwoods Group is the second largest operator of funeral homes and cemeteries in North America, based upon total revenue and number of locations. As of October 9, 2004, the Company operated 683 funeral homes, 110 cemeteries and 61 combination funeral home and cemetery locations throughout North America. Of the Company's total locations, 41 funeral homes, 34 cemeteries and five combination funeral home and cemetery locations were held for sale as of October 9, 2004. The Company provides funeral and cemetery services and products on both an at-need and pre-need basis. In support of the pre-need business, the Company operates insurance subsidiaries that provide customers with a funding mechanism for the pre-arrangement of funerals. For more information about the Company's results, readers are directed to the Company's Form 10-Q for the period ended Oct. 9, 2004, which will be filed with the United States Securities and Exchange Commission (SEC) on November 18, 2004, and will be available in PDF format through the Company's Web site http://www.alderwoods.com/ Basis of Presentation The Company's financial results discussed in this media release are presented in U.S. dollars, and all accounting information is presented on the basis of United States generally accepted accounting principles. The Company's fiscal year ends on the Saturday nearest to the last day of December in each year (whether before or after such date). During 2004, the Company's first, second and fourth fiscal quarters each consist of 12 weeks and the third fiscal quarter consists of 16 weeks. The fourth fiscal quarter of 2004 will end on January 1, 2005. Alderwoods Group, Inc. Consolidated Balance Sheets At October 9, 2004 (In Thousands) ASSETS Current assets Cash and cash equivalents $10,223 Receivables, net of allowances 56,930 Inventories 17,261 Other 28,997 Assets held for sale 103,719 ---------- 217,130 Pre-need funeral receivables & trust investments 345,721 Pre-need cemetery receivables & trust investments 306,037 Cemetery property 117,040 Property and equipment 536,668 Insurance invested assets 243,987 Deferred income tax assets 7,554 Goodwill 321,158 Cemetery perpetual care trust investments 236,249 Other assets 40,061 ---------- TOTAL ASSETS $2,371,605 ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued liabilities $133,317 Current maturities of long-term debt 4,492 Liabilities associated with assets held for sale 75,411 ---------- 213,220 Long-term debt 494,643 Deferred pre-need funeral and cemetery revenue 86,287 Non-controlling interest in funeral and cemetery trusts 550,426 Insurance policy liabilities 206,094 Deferred income tax liabilities 19,527 Other liabilities 19,557 ---------- 1,589,754 ---------- Non-controlling interest in perpetual care trusts 254,506 Stockholders' equity Common stock, $0.01 par value, 100,000,000 shares authorized, 40,001,069 issued and outstanding (January 3, 2004 -- 39,984,979) 400 Capital in excess of par value 740,165 Accumulated deficit (237,954) Accumulated other comprehensive income 24,734 ---------- 527,345 ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $2,371,605 ========== Alderwoods Group, Inc. Consolidated Statement of Operations 16 Weeks Ended October 9, 2004 (In Thousands) Revenue Funeral $136,966 Cemetery 49,002 Insurance 25,994 ---------- 211,962 Costs and expenses Funeral 111,272 Cemetery 43,153 Insurance 24,399 ---------- 178,824 ---------- 33,138 General and administrative expenses 14,909 Provision for asset impairment 445 ---------- Income from operations 17,784 Interest on long-term debt 50,058 Other expense (income), net (65) ---------- Income (loss) before income taxes (32,209) Income taxes (6,180) ---------- Net income (loss) from continuing operations (26,029) Discontinued operations Income (loss) from discontinued operations 20,198 Income taxes 7,547 ---------- Income (loss) from discontinued operations 12,651 ---------- Net income (loss) ($13,378) ========== Alderwoods Group, Inc. Consolidated Statement of Cash Flows 16 Weeks Ended October 9, 2004 (In Thousands) CASH PROVIDED BY (APPLIED TO) Operations Net income (loss) ($13,378) ---------- (Income) loss from discontinued operations, net of tax (12,651) Items not affecting cash Depreciation and amortization 12,997 Amortization of debt issue costs 4,716 Insurance policy benefit reserves 14,693 Provision for asset impairment 445 (Gain) loss on disposal of business assets (92) Deferred income taxes (5,723) Premium on long-term debt repurchase 31,340 Other, including net changes in other non-cash balances 3,544 ---------- Net cash provided by continuing operations 35,891 Net cash provided by discontinued operations 4,729 ---------- 40,620 Investing Proceeds on disposition of business assets 763 Purchase of property and equipment (14,614) Purchase of insurance invested assets (57,107) Proceeds on disposition and maturities of insurance invested assets 24,794 ---------- Net cash provided by continuing operations (46,164) Net cash provided by discontinued operations 96,197 ---------- (50,033) Financing Increase in long-term debt 365,224 Repayment of long-term debt (493,604) Issuance of Common stock 47 ---------- Net cash provided by continuing operations (128,333) Net cash provided by discontinued operations (303) ---------- (128,636) Increase (decrease) in cash and cash equivalents (37,983) Cash and cash equivalents, beginning of period 48,206 ---------- Cash and cash equivalents, end of period $10,223 ========== MISSISSIPPI CHEMICAL: Sept. to Oct. 2004 Monthly Operating Reports ------------------------------------------------------------------ Mississippi Chemical Corporation and its domestic subsidiaries filed its Monthly Operating Reports for the months ended Sept. 30, 2004 and Oct. 31, 2004 with the Securities and Exchange Commission. The Company's consolidated balance sheet showed (in thousands): Sept. 30, 2004 Oct. 31, 2004 -------------- ------------- Total Assets $343,172 $365,893 Total Current Liabilities 196,847 208,418 Liabilities Subject to Compromise 231,899 231,899 Shareholders' Deficit $(128,903) $(117,928) Full-text copies of Mississippi Chemical Corporation's Monthly Operating Reports are available at no charge at: September 2004: http://www.sec.gov/Archives/edgar/data/66895/000006689504000040/exhibit99-11.htm October 2004: http://www.sec.gov/Archives/edgar/data/66895/000006689504000040/exhibit99-21.htm Headquartered in Yazoo City, Mississippi, Mississippi Chemical Corporation produces nitrogen and phosphorus products used as crop nutrients and in industrial applications. Production facilities are located in Mississippi, Louisiana, and through Point Lisas Nitrogen Limited, in The Republic of Trinidad and Tobago. On May 15, 2003, Mississippi Chemical Corporation, together with its domestic subsidiaries, filed voluntary petitions seeking reorganization under Chapter 11 of the U.S. Bankruptcy Code (Bankr. S. Miss. Case No. No.: 03-02984). James W. O'Mara, Esq., and Doug Noble, Esq., at Phelps Dunbar, LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from its creditors, they listed $552,934,000 in assets and $462,496,000 in debts. RCN CORP: Posts $26.4 Million of Net Loss in September 2004 ----------------------------------------------------------- RCN Corporation, Hot Spots Production, Inc., RCN Finance, LLC, RLH Property Corporation and TEC Air, Inc. (Debtors-in-Possession) Unaudited Condensed Combined Consolidated Balance Sheets As of September 30, 2004 (In Thousands) ASSETS Current Assets: Cash and temporary cash investments $816 Other current assets 939 -------------- Total current assets 1,755 Accounts receivable from non-combined subsidiaries 237,105 Investment in and advances to non-combined subsidiaries 1,461,613 Deferred charges and other assets 250,434 -------------- Total assets $1,950,907 ============== LIABILITIES AND SHAREHOLDERS' DEFICIT Current Liabilities: Current maturities of long-term debt $438,512 Accounts payable and accrued expenses 6,142 -------------- Total current liabilities 444,654 Accounts payable to non-combined subsidiaries 821,715 Prepetition liabilities subject to compromise Liabilities subject to compromise 1,205,165 Series A redeemable Preferred stock 350,362 Series B redeemable Preferred stock 1,474,850 Shareholders' deficit: Common stock 123,588 Additional paid in capital 2,153,614 Cumulative translation adjustment (17,288) Unearned compensation expense (90) Treasury stock (10,166) Unrealized appreciation on investments (126) Accumulated deficit (4,595,371) -------------- Total shareholders' deficit (2,345,839) -------------- Total liabilities and shareholders' deficit $1,950,907 ============== RCN Corporation, Hot Spots Production, Inc., RCN Finance, LLC, RLH Property Corporation and TEC Air, Inc. (Debtors-in-Possession) Unaudited Condensed Combined Statement of Operations For the period September 1, 2004 through September 30, 2004 (In Thousands) Revenues $482 Costs and expenses 797 Non-cash stock based compensation 356 Depreciation and amortization 1 Reorganization items 3,215 -------------- Operating loss (3,887) Interest expense 3,521 Other expense 12 -------------- Loss before income taxes (7,420) Equity in the income of non-combined subsidiaries (18,931) -------------- Net loss ($26,351) ============== RCN Corporation, Hot Spots Production, Inc., RCN Finance, LLC, RLH Property Corporation and TEC Air, Inc. (Debtors-in-Possession) Unaudited Condensed Combined Statement of Cash Flows For the period September 1, 2004 through September 31, 2004 (In Thousands) Cash flows from operating activities: Net loss ($26,351) Non-cash stock based compensation 356 Depreciation and amortization 1 Equity loss of non-combined subsidiaries 18,931 Accretion of discounted debt 338 Amortization of financing costs 537 -------------- Net cash used in operating activities (6,188) Cash flows from financing activities: Payment of long-term debt (14,234) Investments from non-combined subsidiaries 20,430 -------------- Net cash provided by financing activities 6,196 -------------- Net increase (decrease) in cash and temporary cash investments 8 -------------- Beginning cash & temporary cash investments 808 -------------- Ending cash & temporary cash investments $816 ============== Headquartered in Princeton, New Jersey, RCN Corporation -- http://www.rcn.com/-- provides bundled Telecommunications services. The Company, along with its affiliates, filed for chapter 11 protection (Bankr. S.D.N.Y. Case No. 04-13638) on May 27, 2004. Frederick D. Morris, Esq., and Jay M. Goffman, Esq., at Skadden Arps Slate Meagher & Flom LLP, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $1,486,782,000 in assets and $1,820,323,000 in liabilities. (RCN Corp. Bankruptcy News, Issue No. 15; Bankruptcy Creditors' Service, Inc., 215/945-7000) SPIEGEL: Files Monthly Operating Report for Period Ended Oct. 2 --------------------------------------------------------------- Spiegel, Inc., and Subsidiaries Debtors-in-Possession Unaudited Consolidated Balance Sheet As of October 2, 2004 ASSETS Current assets: Cash and cash equivalents $189,241,000 Receivables, net 35,022,000 Inventories 194,942,000 Prepaid expenses 32,442,000 Assets of discontinued operations 75,077,000 -------------- Total current assets 526,724,000 -------------- Property and equipment, net 123,517,000 Intangible assets, net 135,608,000 Other assets 24,656,000 -------------- Total assets $810,505,000 ============== LIABILITIES AND STOCKHOLDERS' DEFICIT Liabilities not subject to compromise: Current liabilities: Accounts payable and accrued liabilities $208,534,000 Current portion of long-term debt 48,000,000 Liabilities of discontinued operations 149,572,000 -------------- Total current liabilities 406,106,000 -------------- Deferred lease obligation 10,475,000 Liabilities subject to compromise 1,385,791,000 Total liabilities 1,802,372,000 -------------- Stockholders' deficit: Class A non-voting common stock, $1.00 par value; authorized 16,000,000 shares; 14,945,144 shares issued and outstanding 14,945,000 Class B voting common stock, $1.00 par value; authorized 121,500,000 shares; 117,009,869 shares issued & outstanding 117,010,000 Additional paid-in capital 329,489,000 Accumulated other comprehensive loss (24,583,000) Accumulated deficit (1,428,728,000) -------------- Total stockholders' deficit (991,867,000) -------------- Total liabilities & stockholders' deficit $810,505,000 ============== Spiegel, Inc., and Subsidiaries Debtors-in-Possession Unaudited Consolidated Statement of Operations Five Weeks Ended October 2, 2004 Net sales and other revenues: Net sales $97,750,000 Other revenue 7,332,000 -------------- 105,082,000 Cost of sales and operating expenses: Cost of sales, including buying and occupancy expenses 58,088,000 Selling, general & administrative expenses 40,750,000 -------------- 98,838,000 Estimated loss of non-debtors (914,000) Operating Income 5,330,000 Interest expense 1,094,000 -------------- Loss from operations before reorganization items 4,236,000 -------------- Reorganization items, net (2,956,000) Income Tax 4,687,000 Minority interest in loss of subsidiary (240,000) -------------- Income from operations 2,745,000 -------------- Discontinued operations: Loss from discontinued operations (1,299,000) -------------- Net Income $1,446,000 ============== Spiegel, Inc., and Subsidiaries Unaudited Consolidated Statement of Cash Flows Five Weeks Ended October 2, 2004 Cash flows from operating activities: Net Income $1,446,000 Adjustments to reconcile net loss to net cash used in operating activities: Reorganization items, net (2,956,000) Depreciation and amortization 3,379,000 Change in assets and liabilities: (Increase) decrease in receivables, net (4,619,000) (Increase) decrease in investments/advances 998,000 (Increase) decrease in inventories (24,086,000) (Increase) decrease in prepaid expenses (323,000) Increase (decrease) in accounts payable and other accrued liabilities 11,402,000 Increase (decrease) in net liabilities of discontinued operations 140,000 (Increase) decrease in income taxes 3,888,000 -------------- Net cash used for operating activities (10,731,000) -------------- Net cash used for reorganization items (3,136,000) Cash flows from investing activities: Net (additions) reductions to property and equipment (1,303,000) Net (additions) reductions to other assets (19,000) -------------- Net cash used in investing activities (1,322,000) -------------- Net cash provided by financing activities - -------------- Effect of exchange rate changes on cash 532,000 -------------- Net change in cash and cash equivalents (14,657,000) Cash & cash equivalents, beginning of period 203,898,000 -------------- Cash & cash equivalents, end of period $189,241,000 ============== Headquartered in Downers Grove, Illinois, Spiegel, Inc. -- http://www.spiegel.com/ -- is a leading international general merchandise and specialty retailer that offers apparel, home furnishings and other merchandise through catalogs, e-commerce sites and approximately 560 retail stores. The Company filed for Chapter 11 protection on March 17, 2003 (Bankr. S.D.N.Y. Case No. 03-11540). James L. Garrity, Jr., Esq., and Marc B. Hankin, Esq., at Shearman & Sterling, represent the Debtors in their restructuring efforts. When the Company filed for protection from its creditors, it listed $1,737,474,862 in assets and $1,706,761,176 in debts. (Spiegel Bankruptcy News, Issue No. 34; Bankruptcy Creditors' Service, Inc., 215/945-7000) TWINLAB CORPORATION: Files October 2004 Monthly Operating Report ---------------------------------------------------------------- On November 15, 2004, Twinlab Corporation (n/k/a TL Administration Corporation ), Twin Laboratories Inc. (n/k/a TL Administration Inc.) and Twin Laboratories (UK) Ltd. (n/k/a TL Administration (UK) Ltd.) filed its Monthly Operating Reports for the month ended October 31, 2004 with the Securities and Exchange Commission. At October 31, 2004, Twinlab Corporation (n/k/a TL Administration Corporation) reports that it has no independent means of generating revenue due to its non-operation. As a holding company, Twinlab's internal sources of funds to meet its cash needs, including the payment of expenses, are dividends and other permitted payments from its direct and indirect subsidiaries. Full-text copies of the Debtors' October 2004 Monthly Operating Report are available at no charge at: http://www.sec.gov/Archives/edgar/data/1015868/000095012304013595/y68800exv99w1.txt On September 4, 2003, Twinlab Corporation, Twin Laboratories Inc. and Twin Laboratories (UK) Ltd. commenced voluntary cases under chapter 11 of title 11 of the United States Code in the United States Bankruptcy Court for the Southern District of New York. These chapter 11 cases are being jointly administered under chapter 11 case number 03-15564 (CB) and are pending before the Honorable Cornelius Blackshear. In addition, on September 4, 2003, the Companies entered into that certain asset purchase agreement with IdeaSphere, Inc. of Grand Rapids, Michigan, pursuant to which the Companies sold substantially all of their assets. The sale closed on Dec. 9, 2003, effective as of December 9, 2003. In connection with the sale, the Debtors obtained an order from the Court authorizing them to change their names. Twinlab Corporation changed its name to TL Administration Corporation, Twin Laboratories Inc., changed its name to TL Administration Inc., and Twin Laboratories (UK) Ltd., changed its name to TL Administration (UK) Ltd. The Debtors continue to operate as debtors-in-possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. UAL CORPORATION: Reports Third Quarter Financial Results -------------------------------------------------------- UAL Corporation and Subsidiary Companies Statements of Consolidated Financial Position At September 30, 2004 (In Millions) Assets Current assets: Cash and cash equivalents $1,493 Restricted cash 857 Short-term investments 41 Receivables, net 1,134 Inventories, net 239 Deferred income taxes 13 Prepaid expenses and other 490 --------- Total current assets 4,267 Operating property and equipment: Owned 17,915 Accumulated depreciation and amortization (5,542) --------- Total operating property and equipment 12,373 Capital leases 2,720 Accumulated amortization (629) --------- 2,091 --------- 14,464 Other assets: Investments 63 Intangibles, net 401 Pension assets 904 Aircraft lease deposits 497 Prepaid rent 161 Other, net 848 --------- Total other assets 2,874 --------- Total Assets $21,605 ========= Liabilities and Stockholders' Equity Current liabilities: Current portions of long-term debt and capital lease obligations $891 Advance ticket sales 1,595 Accounts payable 515 Accrued salaries, wages and benefits 2,149 Other accrued liabilities 1,492 --------- Total current liabilities 6,642 Long-term debt 172 Long-term obligations under capital leases 151 Other liabilities and deferred credits: Deferred pension liability 4,874 Postretirement benefit liability 1,982 Deferred income taxes 296 Other 694 --------- Total other liabilities and deferred credits 7,846 Liabilities subject to compromise 13,650 Stockholders' equity: Preferred stock - Common stock at par 1 Additional capital invested 5,064 Retained deficit (7,205) Accumulated other comprehensive loss (3,248) Treasury Stock (1,468) --------- Total stockholders' equity (6,856) --------- Total Liabilities and Stockholders' Equity $21,605 ========= UAL Corporation and Subsidiary Companies Statements of Consolidated Cash Flows Nine Months Ended September 30, 2004 (In Millions) Cash and cash equivalents at beginning of period, excluding restricted cash $1,640 Cash flows from operating activities 346 Cash flows from reorganization activities: Reorganization items, net (389) Increase in liabilities 276 Loss on distribution of property - --------- Net cash flows from operating activities (113) Cash flows from investing activities: Additions to property and equipment (220) Proceeds on disposition of property and equipment 17 Proceeds on sale of investments 18 Decrease (increase) in short-term investments 37 Increase in restricted cash (178) Increase in deferred financing costs (20) Other, net (55) --------- Net cash flows from investing activities (401) Cash flows from financing activities: Proceeds from DIP Financing 513 Repayment of DIP Financing (313) Repayment of long-term debt (125) Principal payments under capital leases (214) Aircraft lease deposits, net 160 Other, net - --------- Net cash flows from financing activities 21 Increase (decrease) in cash and cash equivalents (147) Cash and cash equivalents at end of period $1,493 ========= A full-text copy of UAL Corporation's Third Quarter 2004 Report on Form 10-Q is available for free at: http://www.sec.gov/Archives/edgar/data/100517/000010051704000038/body.htm Headquartered in Chicago, Illinois, UAL Corporation -- http://www.united.com/-- through United Air Lines, Inc., is the holding company for United Airlines -- the world's second largest air carrier. The Company filed for chapter 11 protection on December 9, 2002 (Bankr. N.D. Ill. Case No. 02-48191). James H.M. Sprayregen, Esq., Marc Kieselstein, Esq., David R. Seligman, Esq., and Steven R. Kotarba, Esq., at Kirkland & Ellis, represent the Debtors in their restructuring efforts. When the Debtors filed for protection from their creditors, they listed $24,190,000,000 in assets and $22,787,000,000 in debts. UNIVERSAL ACCESS: Files October 2004 Monthly Operating Report ------------------------------------------------------------- Universal Access Global Holdings, Inc., filed its October 2004 monthly operating report with the United States Bankruptcy Court for the Northern District of Illinois, Eastern Division. The Debtor's summary of cash receipts and disbursements shows: Beginning Cash Balance $8,456,832 Total Receipts 4,009,266 Total Disbursements 6,193,311 Ending Cash Balance $6,272,787 A full-text copy of Universal Access' October Monthly Operating Report is available at no charge at: http://www.sec.gov/Archives/edgar/data/1070699/000110465904036389/a04-13714_1ex99d1.htm Headquartered in Chicago, Illinois, Universal Access Global Holdings, Inc. -- http://www.universalaccess.com/-- provides network infrastructure services and facilitates the buying and selling of capacity on communications networks. The company, and its debtor-affiliates, filed for a chapter 11 protection on August 4, 2004 (Bankr. N.D. Ill. Case No. 04-28747). John Collen, Esq., and Rosanne Ciambrone, Esq., at Duane Morris LLC, represent the Company. David W. Wirt, Esq., and David Neier, Esq., at Winston & Strawn, represent an Official Committee of Unsecured Creditors. When the Debtor filed for protection from its creditors, it listed $22,047,000 in total assets and $24,054,000 in total debts. WINSTAR COMMS: Releases August 2004 Monthly Operating Report ------------------------------------------------------------ Winstar Communications, Inc. Balance Sheet As of August 31, 2004 ASSETS Unrestricted Cash and Equivalents $25,856,144 Restricted Cash and Cash Equivalents - Accounts Receivable (Net) - Notes Receivable - Inventories - Prepaid Expenses - Professional Retainers - Other Current Assets - ------------ Total Current Assets 25,856,144 ------------ Real Property and Improvements Machinery & Equipment - Furniture, Fixtures & Office Equipment - Leasehold Improvements - Vehicles - Less: Accumulated Depreciation - ------------ Total Property & Equipment - ------------ Loans to Insiders Other Assets - ------------ Total Other Assets - ------------ TOTAL ASSETS $25,856,144 ============ LIABILITIES & SHAREHOLDER'S EQUITY Accounts Payable - Taxes Payable - Wages Payable - Notes Payable - Rent/Leases - Building/Equipment - Secured Debt/Adequate Protection Payments - Professional Fees - Amounts Due to Insiders - Other Post Conversion Liabilities - ------------ Total Post Conversion Liabilities - ------------ Secured Debt - Priority Debt - Unsecured Debt - ------------ Total Pre-Conversion Liabilities - ------------ Owners' Equity Capital Stock - Additional Paid In Capital - Partners' Capital Account - Owners' Equity Account $57,559,619 Retained Earnings - Pre-Conversion - Retained Earnings - Post-Conversion (31,703,475) Adjustments to Owner Equity - Postpetition Contributions (Distributions) (Draws) - ------------ Net Owners' Equity 25,856,144 ------------ TOTAL LIABILITIES & OWNERS' EQUITY $25,856,144 ============ Winstar Communications, Inc. Statement of Operations For the Month Ended August 31, 2004 Gross Revenues Les: Returns and Allowances - ------------ Net Revenue - Beginning Inventory - Add: Purchases - Add: Cost of Labor - Add: Other Costs - Less: Ending Inventory - Cost of Goods Sold - ------------ Gross Profit - Advertising - Auto and Truck Expense - Bad Debts - Contributions - Employee Benefits Programs - Insider Compensation - Insurance - Management Fees/Bonuses - Office Expense - Pension & Profit-Sharing Plans - Repairs and Maintenance - Rent and Lease Expenses - Salaries/Commissions/Fees - Supplies - Taxes - Payroll - Taxes - Real Estate - Taxes - Other - Travel and Entertainment - Utilities - Other - Total Operating Expenses before Depreciation - Depreciation/Depletion/Amortization - ------------ Net Profit (Loss) before other income and expenses - Other Income $322,196 Worker's Comp Refund - Tax Refund - Leasehold Buyback - Interest Expense - Other Expense 1,392 Pmt from Sale of Assets - Tera - Compensation as Director per Court Order - Payment Per Stipulation 1,000,000 Pmt from Sale of Assets - American Communications - Return of DIP Loan Disbursement - Pmt from Sale of Del Telecom International Stock - Pmt per NW Nexus Sale Order - Pmt per 1/7 Order and APA Agreement - Payment per 2/10/03 Court Order - Pmt PTO Employment Contract - Turnover of Funds to IDT - Turnover of Bank Account - Insurance Expense 4,251 Reimbursement of Expenses - Payroll 15,052 Sale of Assets - ------------ Net Profit (Loss) before reorganization items (698,499) Professional Fees - U.S. Trustee Quarterly Fees - Interest Earned on Accumulated Cash from Chapter 11 - Gain (Loss) from Sale of Equipment - Other Reorganization Expenses - Income Taxes - ------------ Net Profit (Loss) $698,499 ============ Winstar Communications, Inc. Cash Receipts and Disbursements For the Month Ended August 31, 2004 Cash Beginning of Month $26,554,643 Receipts: Cash Sales - Accounts Receivable - Return of DIP Loan Disbursement - Sale of ISP Northwest Nexus - Holdings Funds - Insurance Refund Dividend - Final Settlement - Liquidation of Well's Fargo Acct - Liquidation of Fleet Account per stipulation - Transfer from AON - Leasehold Buyback - Closing of Bank Account - Pmt from Sales of Assets - Tera - Pmt from Sales of Assets - American Communications - Pmt from Sale of Del Telecom International Stock - Transfers - Claim Settlement - Refund of Overpayment - Worker's Comp Refund - Collection on Preferences 322,196 Turnover of Bank Account - Reimbursement - Moving Expenses - Interest - Payment from Sale of Assets - ------------ Total Receipts $322,196 Disbursements: Employee Benefits - Net Payroll 15,052 Payroll Taxes - Sales, Use, & Other Taxes - Chapter 11 Quarterly Fees - Chapter 11 Administrative Claims - Insurance 4,251 Additional Payment of Funds - CTG Revised Accounting - Pmt per NW Nexus Sale Order - Pmt per 1/7 Order and APA Agreement - Advertising Fees - License Fees - Legal Fees per Court Order - Administrative 1,392 Telephone - Compensation as Director per Court Order - Distribution Per Orders of 12/12/02 - Payment per 2/10/03 Court Order - Pmt PTO Employment Contract - Owner Draw - Reimbursement of Check from SF Interactive - Reimbursement of Expenses - Reimbursement of Expenses per Order of 5/13/03 - Turnover of Funds to IDT - Trustee Bond - Professional Fees - Trustee Expense - Trustee Commission - Bankruptcy Service Payments - Rent - Moving Expenses - Payment per Stipulation 1,000,000 Payment of Carve Out per order of 12/11/02 - Payment per stipulation and order of 4/15/03 - per carve out - Per Order of 4/15/03 - payment of chapter 11 carve out - Pmt per order of 4/15/03 - pmt of carve out chapter 11 fees - Attorney's Fees for Counsel for Trustee - Accounting Fees for acct. for Chapter 7 Trustee - Tax Consultant Fees - Payment - Summary Judgment - Payment of Claims - ------------ Total Disbursements 1,020,695 ------------ Net Cash Flow (698,499) ------------ Cash - End of Month $25,856,144 ============ A copy of Winstar's August 2004 Operating Report is available for free at: http://bankrupt.com/misc/winstar_mor_08312004.pdf Headquartered in New York, New York, Winstar Communications, Inc., provides broadband services to business customers. The Company and its debtor-affiliates filed for chapter 11 protection on April 18, 2001 (Bankr. D. Del. Case Nos. 01-01430 through 01-01462). The Debtors obtained the Court's approval converting their case to a chapter 7 liquidation proceeding in January 2002. Christine C. Shubert serves as the Debtors' chapter 7 trustee. When the Debtors filed for bankruptcy, they listed $4,975,437,068 in total assets and $4,994,467,530 in total debts. (Winstar Bankruptcy News, Issue No. 61; 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 sell any security of any kind. It is likely that some entity affiliated with a TCR editor holds some position in the issuers' public debt and equity securities about which we report. Each Tuesday edition of the TCR contains a list of companies with insolvent balance sheets whose shares trade higher than $3 per share in public markets. At first glance, this list may look like the definitive compilation of stocks that are ideal to sell short. Don't be fooled. Assets, for example, reported at historical cost net of depreciation may understate the true value of a firm's assets. A company may establish reserves on its balance sheet for liabilities that may never materialize. The prices at which equity securities trade in public market are determined by more than a balance sheet solvency test. A list of Meetings, Conferences and Seminars appears in each Wednesday's edition of the TCR. Submissions about insolvency- related conferences are encouraged. Send announcements to conferences@bankrupt.com. Each Friday's edition of the TCR includes a review about a book of interest to troubled company professionals. All titles are available at your local bookstore or through Amazon.com. Go to http://www.bankrupt.com/books/to order any title today. Monthly Operating Reports are summarized in every Saturday edition of the TCR. 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 written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. 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