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CREDITOR’S EDGE
(The Nation’s Oldest Daily Business E-Newspaper)
—The Day’s News in Capsule Form—
A Product of Bastien Financial Publications
(For more information contact us at 847-491-1900
or email usbj7@yahoo.com)
Thursday
January 15, 2009
(This daily e-newspaper is a copyrighted publication for the exclusive use
of the recipient only and is not to be forwarded or copied
in whole or in part for use by any other party.)
Educational Tidbits
For Today's Financial Executive
Improving Collections
By Speeding Up Payments
Collecting from debtors in a timely manner is a crucial part of any company’s cash-flow situation. Particularly if cash flow is a problem, a strategy of speeding up payments from debtors will help improve your company’s financial outlook. While some companies operate under the idea that they shouldn’t pressure their clients for payments, the fact is that if your company provides a useful service you have every right to be paid in a timely manner. Your company can expedite payments if all charges are explained at the outset so that clients know exactly what they’re supposed to pay and when they’re supposed to pay it. All invoices should be clearly marked as to when they are due and payment terms should be spelled out clearly on all invoices. In addition, collections can be improved upon by initiating an efficient policy for handling all deductions.
The Business Professional’s
Q&A Corner
YESTERDAY’S QUESTION: Explain receivership proceedings as an alternative to the bankruptcy liquidation of the assets of a corporation.
ANSWER: On the federal level, a U.S. District Court may appoint a receiver to liquidate a corporation, or sometimes a partnership, as an alternative to a liquidation through the U.S. Bankruptcy Court. In such a case, the federally appointed receiver continues operating the debtor’s business in order to maximize recovery for a federal agency when there are, usually, fewer creditor interests involved. In state receiverships, statutes vary by state.
QUESTION: Explain what a liquidating reorganization is.
ANSWER NEXT ISSUE
Today's Headlines:
The Commerce Department reported that retail sales sank 2.7% in December from the month earlier. That’s the sixth-straight monthly drop in retail sales.
CalAmp Corp. reports a third quarter net loss on a drop in revenue...
Cummins Inc. trims its staff by another 800 workers...
FormFactor Inc. to cut a fifth of its workforce...
Gottschalks Inc. files Chapter 11...
Insteel Industries Inc. reports a first quarter net loss on a revenue decline...
Mount Carmel Health System to cut 300 jobs...
Neiman Marcus Group Inc. to cut 375 jobs...
Nortel Networks Corp. files Chapter 11...
Oracle Corp. is said to have cut 500 jobs...
Tiffany & Co.’s holiday same-store sales plunge...
Yahoo Inc. to get a new chief executive...
YRC Worldwide Inc.’s regional unit’s ratings are lowered...
BANKRUPTCY NEWS
(For more information on these (or any) bankrupt firms
call the 800-number in your U.S. Bankruptcy Court Directory
available through Bastien Financial Publications.)
Apex Silver Mines Ltd. plans on selling its San Cristobal mine in Bolivia to Japan’s Sumitomo Corp. in a debt-for-equity swap valued at about $275 million. The sale is considered crucial to Apex’s hopes of getting out of Chapter 11. The firm recently filed in the U.S. Bankruptcy Court for the Southern District of New York listing assets and liabilities of about $721 million and $931 million respectively. For further information contact the court at 212-668-2870.
Brick Hill One Realty LLC has seen a 2/19 auction scheduled regarding certain assets in its Chapter 11 bankruptcy. For more information contact the U.S. Bankruptcy Court in New York at 800-252-2537.
BSCV Inc. has seen a 3/2 deadline set for filing proof of claims in its Chapter 11 bankruptcy. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2900.
Copper Cliffs Development LLC filed Chapter 11 in the U.S. Bankruptcy Court in Utah. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-20219. For more information contact the court at 800-733-6740.
E.J. Stewart Electric Inc. filed Chapter 11 in the U.S. Bankruptcy Court in New Jersey. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-10666. For more information contact the court at 877-239-2547.
Eurway Inc. filed Chapter 11 in the U.S. Bankruptcy Court for the Northern District of Texas. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-30274. For more information contact the court at 800-886-9008.
First Americans Insurance Service Inc. filed Chapter 11 in the U.S. Bankruptcy Court in Nebraska. The firm listed assets of between $1 million and $100 million and liabilities of between $100 million and $500 million. The case number is 09-40067. For more information contact the court at 800-829-0112.
Gill Enterprises LLC filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Indiana. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-90064. For more information contact the court at 800-335-8003.
Gottschalks Inc., a Fresno, Ca. department-store operator, filed Chapter 11 and suggested that one route to survive is to find a buyer. Reportedly, the retailer has worked out a $125 million debtor-in-possession financing facility through a lending group led by GE Capital. That amount should keep Gottshalks operating as it reorganizes. The firm, with fifty-eight department stores on the West Coast, had earlier been talking with possible investors, including Everbright Development Overseas Ltd. and El Corte Ingless, a Spanish retailer.
Hiocean Realty LLC has seen a 2/19 hearing scheduled regarding the auction of certain property in its Chapter 11 bankruptcy. For more information contact the U.S. Bankruptcy Court for the Eastern Division of New York at 800-252-2537.
IP Retail Technologies International Inc. filed Chapter 11 in the U.S. Bankruptcy Court in Delaware. The firm listed assets of less than $100,000 and liabilities of between $1 million and $100 million. The case number is 09-10089. For more information contact the court in Wilmington, De. at 302-252-2900.
Jackson Corp. filed Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-10594. For more information contact the court at 213-894-4111.
Mervyn’s Holdings LLC has seen a 2/18 deadline set for filing administrative claims in its Chapter 11 bankruptcy. For further information contact the U.S. Bankruptcy Court in Wilmington, De. at 302-252-2900.
Non-Ferrous Extrusion & Scrap Metals Inc. filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-30267. For more information contact the court at 800-745-4459.
Nortel Networks Corp., a Brampton, Ontario-based manufacturer of telecommunications equipment, filed Chapter 11 in the U.S., in the court in Delaware. Nortel, which was facing a more than $100 million bond-interest payment, also filed Chapter 15 in the U.S. and plans to seek protection from creditors in Canada under that country’s Companies’ Creditors Arrangement Act. The company has been plagued by sharp drops in demand for its telecom gear and has been trying to sell assets and to reduce costs.
Pilgrim’s Pride Corp.’s creditors won approval from the U.S. Bankruptcy Court to hire Andrews Kurth as attorney in the Pittsburg, Tx. poultry company’s bankruptcy proceedings.
Point Service Corp. filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of West Virginia. The firm listed assets of between $100,000 and $1 million and liabilities of between $1 million and $100 million. The case number is 09-30018. For more information contact the court at 304-347-5680.
Praise and Glory Church of God in Christ Inc. filed Chapter 11 in the U.S. Bankruptcy Court in Massachusetts. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-30044. For more information contact the court at 888-201-3572.
Richard Chevrolet Inc. filed Chapter 11 in the U.S. Bankruptcy Court for the Western District of Pennsylvania. The firm listed assets of between $100,000 and $1 million and liabilities of between $1 million and $100 million. The case number is 09-20230. For more information contact the court at 412-355-3210.
Southwest Medical Home Patient filed Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The firm listed assets and liabilities of between $1 million and $100 million each. The case number is 09-10014. For more information contact the court at 800-745-4459.
Tarragon Corp., the bankrupt Manhattan, N.Y.-based homebuilder, asked for permission from the U.S. Bankruptcy Court to hire Travis Wolff & Co. as an independent auditor and accountant, among other consultants.
Tribune Co.’s Chicago Tribune flagship newspaper will begin printing a tabloid version that will be sold at newsstands, with the traditional broadsheet version continuing to go out to subscribers. Content and price will be the same in the two editions, but the tabloid format is intended to boost newsstand sales of the newspaper. Tribune Co. is currently reorganizing in bankruptcy proceedings.
DISTRESSED / RAPIDLY-EXPANDING COMPANIES
&
OTHER COMPANY NEWS
American International Group Inc., the Manhattan, N.Y. insurer, is in a definitive deal to sell its AIG Life Insurance Co. of Canada business in Toronto, Ontario to Bank of Montreal for about $309 million, as it continues trying to sell off assets.
Benihana Inc., the Florida-based restaurant chain, said that total restaurant sales slipped almost 4% in its most recent quarter from the year-earlier period–to $66.8 million.
Blockbuster Inc., trying to keep up with rival Netflix Inc., wants to widen its digital operations and offer customers digital access to its video library. The Dallas, Tx.-based chain of video-rental stores is reportedly teaming up with Sonic Solutions Inc. to sell and rent movies through a variety of broadband-based digital devices. Internet-based movie services are a small but growing part of the $9 billion movie-rental market. Blockbuster still holds on to about 40% of the $5.5 billion in-store rental business.
Bon-Ton Stores Inc., a York, Pa.-based department-store operator, is closing its Elder-Beerman location in Hamilton, Oh. by the middle of March. The closing will result in the loss of about seventy-five jobs.
Borders Group Inc., the Ann Arbor, Mi.-based bookseller, named Richard McGuire to succeed Larry Pollock as chairman of the board, as the company continues trying to work through its financial problems. Nearly a year ago, Borders warned that it faced liquidity pressures, but despite its low capitalization it was unable to attract a buyer.
CalAmp Corp., an Oxnard, Ca. manufacturer of microwave and amplification devices, reported a third quarter net loss of $1.8 million. Revenue declined 19%–to $25.8 million.
Centrue Financial Corp. in Clayton, Mo. sold $32.7 million of its shares to the Treasury Department’s Troubled Asset Relief Program.
Cepheid’s shares tanked 16% after the Sunnyvale, Ca. microfluidics-systems manufacturer reported revenue for its fourth quarter that came in shy of analysts’ expectations. The company also cut its forecast for fiscal revenue.
Chrysler LLC, with sales continuing to plunge, ought to merge with another car company if it wants to survive, according to Republican Senator Bob Corker of Tennessee. Senator Corker has been a critic of the recent government bailout of the auto sector, saying that Chrysler’s owner, Cerberus Capital Management LP, pushed for the bailout so that it would have more time to find a buyer for Chrysler. Chrysler’s CEO, Robert Nardelli, recently insisted that the Michigan-based carmaker is not being prettied up for sale.
Citigroup Inc., the latest big bank victim of the current crisis, will start to unravel two decades of expansion, saying it will unwind about a third of its operations and return to its former preexpansion size. Citigroup, which days ago said it would split off its venerable Smith Barney brokerage operations into a joint venture, now says that it will dump two of its large consumer-finance units and its private-label credit-card operations, not to mention trimming back its own trading business. In its streamlined version, Citigroup will focus on business with large corporations and wealthy customers. As for its deal with Morgan Stanley, the joint venture will be 51%-owned by Morgan Stanley, which will pay $2.7 billion for the stake, but Morgan will have an option to buy up the remainder over time. Citigroup, facing a $10 billion operating loss for its fourth quarter, currently has 300,000 employees at its operations in more than 100 countries, but following the planned downsizing it would diminish its balance sheet of $2 trillion by about a third. Despite the massive growth of Citigroup that began with the merger of Commercial Credit and Primerica in 1988, a string of CEOs found it difficult to maintain control over the sprawling financial conglomerate. In the current financial climate, Citigroup, Manhattan, N.Y., has already benefitted from two Treasury Department bailouts, including $45 billion in cash and nearly $250 billion in guarantees for bad assets.
Conforma Clad Inc., a New Albany, Ky. metal-coatings firm, announced that it cut its payroll by eight positions, as part of a wider-ranging restructuring by Kennametal Inc., its parent company. Kennametal, Latrobe, Pa., recently said it would cut its overall workforce by 1,200 jobs amid a worldwide decline in industrial production.
Courier Corp., a North Chelmsford, Ma. publisher and maker of books, will shut down its Book-Mart Press unit and close a book plant in New Jersey as part of a consolidation. The move will affect more than seventy employees and result in restructuring costs of about $2 million.
Credo Petroleum Corp., Denver, Co., reported that its fiscal net income increased 4%–to $6 million, on a 22% revenue increase–to $17.3 million.
Cummins Inc., a Columbus, Oh. manufacturer of fuel systems, power generators and other products, is cutting at least 800 workers from its worldwide operations by the end of next month and will also freeze salaries. That brings announced personnel cutbacks up to about 4,500, including contingent staffers.
Dallas Morning News and the Forth Worth-Star Telegram said that they will share some sports and other news content in an effort to reduce expenses.
Dell Inc., the Round Rock, Tx. computer company, expanded by acquiring the Microsoft IT consulting and solutions unit of Allin Corp. of Pittsburgh, Pa. in a $12 million stock transaction.
DHL, the delivery unit of Deutsche Post AG which earlier said it would slash its payroll by 9,500 employees, confirmed that it will shutter a Cheektowaga, N.Y. service center.
Elan Corp., the Irish-based biotech firm, initiated a strategic review of its operations in order to boost the money and infrastructure needed to market drugs that it’s developing. Under pressure from shareholders, Elan could end up engaging in a merger or some other kind of partnership. Elan, which has been operating in the red, needs financing to reduce its $1.8 billion debtload and to pay for development expenses.
Fifth Third Bancorp’s CEO, Kevin Kabat, has recommended that board members not get bonuses for 2008. The Cincinnati, Oh. bank, which has already cut its dividend, lost $81 million in its third quarter.
First Solar Inc. looks like it’s poised to take advantage of the governments’ interest in promoting renewable energy. The Tempe, Az. company, the biggest maker of thin-film solar panels in the world, boasts that its new-technology low-priced panels have greater efficiency. First Solar says its panels are better than the older type of crystalline silicon technology, effectively meaning that its products use fewer thin-film panels than its competitors to produce the same amount of electricity. The company hopes to get a lot of business especially from utilities that are pumping more money into solar projects, partly because of state government mandates that increase the percentage of solar energy production required. In California, for example, power companies must get 20% of their energy from renewable sources by 2011. For markets outside the U.S., First Solar will take advantage of the cheap dollar to spur exports.
Ford Motor Co., Dearborn, Mi., reached an agreement to end litigation with Navistar International Corp. over a supply contract. The carmaker will pay an unrevealed amount and the two firms will end their diesel supply agreement at the end of this year. However, Warrenville, Il.-based Navistar and Ford will continue to cooperate with their Blue Diamond Truck and Parts collaboration.
FormFactor Inc., a Livermore, Ca. manufacturer of probe cards for making semiconductors, announced that it will reduce its payroll by 200 workers (about a fifth of its workforce) amid declining revenue.
Franklin Covey Co., a Salt Lake City, Ut. productivity and time-management company, reported a first quarter net loss of $570,000. Revenue sank 52%–to $35.1 million.
General Electric Co.’s shares took a hit in recent trading after Barclays Capital analysts projected that the Fairfield, Ct. conglomerate’s earnings will come in at the lower end of expectations. GE plans on releasing its earnings report in about a week.
Genesco Inc., a Nashville, Tn. retailer of shoes and hats, predicted that its same-store sales will likely drop in the fourth quarter. Quarterly and fiscal results will be released early in March.
GeoPharma Inc., a Largo, Fl.-based generic drug company, closed two of its warehouses and renegotiated certain shipping contracts as it tries to improve its finances. GeoPharma is also trimming executives’ pay as it looks for a way to refinance or otherwise deal with its financial obligations.
ING Groep NV, the Netherlands-based financial giant, announced that it will reduce its U.S. payroll by 750 workers (8% of U.S. workforce).
Insteel Industries Inc., a Mount Airy, N.C. maker of steel-wire reinforcing products for the construction sector, reported a first quarter net loss of $5.6 million. That compares with a profit of $4.2 million in the year-earlier period. Revenue declined 6%–to $61.8 million.
Jewett-Cameron Trading Co. Ltd., a North Plains, Or. supplier of building materials, reported its first quarter net income declined 22%–to $290,000. Revenue slumped 23%–to $10.8 million.
Linear Technology Corp.., Milpitas, Ca., reported its second quarter net income declined 10%–to $84.2 million, on a 14% revenue decline–to $249 million. The results included a more than $19 million gain, mostly from retiring notes.
Liz Claiborne Inc. has investors both cheering and booing. Wall Street applauded an announcement that the company reduced a credit facility from $750 million to $600 million and extended the life of the arrangement until 2011. On the other hand, investors were disappointed on the announcement that the Manhattan, N.Y. apparel retailer anticipates a loss for its fourth quarter of up to 15 cents a share. Analysts had been expecting earnings of at least 19 cents a share for the period and the company itself had earlier projected an even higher range for earnings. But the company has faced sharp drops in same-store sales at its brands including its Juicy Couture, Kate Spade, Lucky Brand and Mexx businesses.
Lowe's Cos. Inc., the Mooresville, N.C.-based home-improvement retail chain, is trimming more than thirty positions at the end of the month, citing the weak housing market and overall sagging economy.
Medtronic Inc., a Minneapolis, Mn., maker of medical devices, completed its deal to acquire Ablation Frontiers Inc., a privately-held Carlsbad, Ca. manufacturer of medical devices, in a $225 million transaction. Medtronic may make additional milestone payments.
Mesa Air Group Inc., Phoenix, Az., reported a fiscal net loss of $29.2 million, including nonrecurring gains of $45.7 million. Revenue edged up 2%–to $1.3 billion.
Milacron Inc., a Cincinnati, Oh. maker of plastics processing machinery and other products, extended employee furloughs by another couple of weeks to further reduce costs.
Mount Carmel Health System in Columbus, Oh. will cut about 300 jobs by the end of next month, or about 3% of its payroll, citing the weak economy. The firm is facing the threat of increased numbers of patients not paying their medical bills.
Neiman Marcus Group Inc., the Dallas, Tx.-based specialty retailer, is cutting 375 positions, or about 3% of its staff, as it has been hammered by the weak retail environment. The company recently said that same-store sales in December plunged by nearly a third from the year-earlier period.
O’Gara Group Inc. filed for an initial public offering next month, hoping to raise up to about $150 million. O’Gara, a homeland-security company, has been losing money since 2006.
Oracle Corp., the Redwood Shores, Ca. business-software company, reportedly lopped off 500 jobs in North America at its sales and consulting operations. There have been rumors that Oracle might slash up to 10% of its worldwide payroll of more than 86,000 workers.
Pegasus Imaging Corp., a Tampa, Fl. provider of digital imaging software development kits and other products, acquired Tasman Software, a British barcode software company, for an undisclosed amount. That’s the second recent acquisition for Pegasus, which last month bought the imaging operations of AccuSoft Corp.
Rite Aid Corp.’s shares bumped up 12% after the Camp Hill, Pa.-based drugstore chain said that it and nine of its units will pay $5 million in civil penalties to settle charges about the sale of controlled substances.
Round2 Inc., a provider of recycling services, has acquired Monitex LLC, a firm that specializes in the recycling and reuse of computer monitors and related products, for an undisclosed amount. With the acquisition of Monitex, Round2 has moved its headquarters from Austin to Grand Prairie, Tx.
Sana Security Inc., a Redwood City, Ca. identity-theft software company, has been acquired by AVG Technologies of the Netherlands for an undisclosed amount.
Schmitt Industries Inc., a Portland, Or. supplier of computer balancing equipment, reported a second quarter net loss of $110,000. Revenue declined 4%–to $3 million.
STEN Corp., Minnetonka, Mn., reported a fiscal net loss of $8 million while revenue soared more than fourfold–to $15.9 million. The company has interests in auto financing and contract manufacturing.
Sunoco Inc., the Philadelphia, Pa. oil, gas and chemicals firm, is shuttering a polypropylene-manufacturing factory in Bayport, Tx. by the end of April. Sunoco, which purchased the plant six years ago from Equistar Chemicals LP, said that the Bayport site is no longer financially viable.
Susquehanna Bancshares in Lititz, Pa. is selling a bank branch in Baltimore, Md. to Advance Bank in Maryland for an undisclosed amount.
Taylor Devices Inc., North Tonawanda, N.Y., reported its second quarter net income sank 51%–to $60,000. Revenue declined 12%–to $3.8 million.
Tiffany & Co.’s same-store sales in November and December plunged 24%, including a 35% drop in the U.S. Total sales for the period declined 21%–to $687 million. With luxury-goods retailers being particularly hurt recently, the Manhattan, N.Y. retailer of jewelry and specialty products also reduced its earnings outlook for the year.
UnitedHealth Group Inc., the big Minnesota-based insurer, reached an agreement with the attorney general in New York whereby it will pay $50 million to set up a new independent service that will calculate what insurers pay for doctors and facilities outside the insurer’s network. UnitedHealth came under criticism from Attorney General Andrew Cuomo for operating a system that in effect resulted in it underpaying for policyholders’ medical services by as much as 28%.
Walgreen Co. is adopting a strategy that will hopefully boost its healthcare business, saying that it will establish a network of pharmacies and clinics in stores and market the services to corporate and government customers around the U.S. Such clinics would be open for basic service past work hours and customers would be able to take a 15% discount on Walgreen’s private-label products. The Deerfield, Il. drugstore chain has been increasing beyond basic pharmacy operations, last year acquiring I-trax Inc. and Whole Health Management, which operate health centers at work sites.
WellPoint Inc., the big Indianapolis, In. health insurer, was temporarily banned from marketing or selling Medicare health and drug plans after federal officials discovered computer problems that, they say, resulted in thousand of seniors being denied coverage they were entitled to.
Yahoo Inc. is getting a new CEO to replace co-founder Jerry Yang, saying it hired Carol Bartz, who has served as chief executive of Autodesk Inc., a software company. Ms. Bartz will presumably help spur the Sunnyvale, Ca. Internet firm’s turnaround efforts, which lagged under Mr. Yang. As another part of a management shakeup, Yahoo’s president, Susan Decker, will depart after eight years, partly because of dissatisfaction among shareholders. The reshuffling at the top could indicate a change of strategy for Yahoo, and some are wondering whether it may revive the possibility of selling its search operations to Microsoft Corp. In any case, Ms. Bartz will face pressure from many shareholders who want Yahoo to break itself up.
YRC Worldwide Inc.’s shares plunged in recent trading after Fitch Ratings lowered the issuer default and debt ratings of the Overland Park, Ks. trucking company’s YRC Regional Transportation Inc. unit. The downgrading affects about $1.6 billion in notes, loans and other facilities and raises speculation that YRC could land in bankruptcy proceedings if it can’t amend its credit arrangements.
