GMAC Cuts Jobs, and Other Financially Challenged U.S. Companies

The items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged Companies. A full issue contains information on more than 200 companies. Please visit the insideARM bookstore for information on subscribing to the Summary.

 
American Woodmark Corp., a Winchester, Va. maker of kitchen cabinets, reported a third quarter net loss of $2 million. Revenue fell 18%–to $133 million.

Black Diamond Mining Co. LLC was hit with an involuntary Chapter 11 bankruptcy petition filed against it in the U.S. Bankruptcy Court for the Eastern District of Kentucky. No schedules were listed. The case number is 08-70666. The petitioning creditors included CIT Capital USA Inc., CIT Group/Commercial Service Inc. and Prudential Ins. Co. of America. Also hit with an involuntary filing was Black Diamond Land Co. LLC.

ELoyalty Corp., a Lake Forest, Ill. provider of customer relationship management services, reported a fourth quarter net loss of $5.9 million. Revenue declined 9%–to $21.6 million. For the year, it lost $18.7 million on a 14% revenue increase–to $102 million.

Emerson Radio Corp., Parsippany, N.J., reported its third quarter net income declined 70%–to $1.1 million. Revenue declined 15%–to $75.8 million.

GMAC LLC will shut down most of its auto-financing operations in the U.S. and Canada in a cost-saving move that will shave more than 900 jobs from its payroll. GMAC, amid declining profits in the auto-lending sector and sinking consumer credit, lost $2.3 billion last year, including a $4.3 billion loss at its ResCap mortgage unit. The auto-lending side of its business was profitable, to the tune of $1.2 billion. GMAC is 51%-owned by Cerberus Capital Management LP.

Nautilus Inc., the Vancouver, Wash. maker of fitness equipment, is selling its Pearl iZumi sports-apparel and athletic-footwear business to Shimano American Corp. of Irvine, Ca. for a total of about $69.5 million. That price includes $4.2 million in long-term debt assumption.  The deal, which should close by the end of March, comes fast on the heels of Nautilus revealing that it lost $57.6 million in its most recent quarter, much worse than had been expected by analysts.

Smithfield Foods Inc., Smithfield, Va., said that it will cut hog production this year by 4% or 5% in an effort to reduce costs.

St. Joe Co., a Jacksonville, Fla. property company, reported its fourth quarter net income plummeted 96%–to $1 million.  Revenue declined 35%–to $93.8 million, because of a sharp decline in land sales.  Last fall, St. Joe said that it would restructure by selling off noncore assets and trimming its payroll by several hundred jobs. For the year, net income was down 23%–to $39.3 million, on a 28% drop in revenue–to $377 million. The results included restructuring and impairment charges of $6.8 million and $22.5 million in the quarter and year respectively.

Sharper Image Corp., a specialty retailer, filed Chapter 11 amid sinking sales, three consecutive years in the red and a resultant liquidity crisis. Sharper Image had assets and liabilities of about $251 million and $199 million respectively, as of the end of last year, with only $700,000 of cash on hand.  The company has suffered from a number of factors, including competition, weaker margins, litigation and tight credit. The San Francisco, Ca. retailer is seeking a $60 million loan through Wells Fargo Retail Finance LLC to fund operations. The bankruptcy filing, in the U.S. Bankruptcy Court in Delaware, was under case number 08-10322,

Steven Madden Ltd., a Long Island City, N.Y. shoe company, reported its fourth quarter net income sank 53%–to $4.7 million. Revenue declined 10%–to $103 million. For the year, net income fell 23%–to $35.7 million, on a 9% slide in revenue–to $431 million.

TierOne Corp.’s plans to be acquired by CapitalSource Inc. of Chevy Chase, Md. could fall through.  CapitalSource, which last May agreed to buy the Lincoln, Neb. bank holding company for $652 million, recently announced that its board called for CapitalSource to either call off the merger or negotiate new terms for the deal. Nonetheless, TierOne is claiming that it is still committed to completing the merger. 

UAL Corp., the parent company of United Airlines which is in talks to merge with Continental Airlines of Texas, just may get some financial assistance from Lufthansa AG of Germany, which is thinking about investing in a United-Continental entity. That would parallel plans by Air France-KLM Group SA, a Lufthansa rival, to invest in a possible merger between Northwest Airlines and Delta Air Lines Inc.