American Pasta Drooping and News on Other Financially Challenged U.S. Companies for June 19

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.

Aaron Rents Inc., which recently reported its first quarter earnings declined 15%–to $25 million on revenue of $437 million, is undergoing a management change. After founding the Atlanta electronics and furniture rental firm more than 50 years ago, the company’s chairman and CEO, R. Charles Loudermilk, Sr., is handing the reins of the company over to his son, Robert Loudermilk, Jr. Aaron Rents operates more than 1,500 stores throughout North America.

Air Canada, Canada’s largest airline, is not only reducing the number of its flight offerings but now anticipates reducing its workforce by 7%–2,000 jobs.

American Italian Pasta Co., the Kansas City restaurant chain, has now filed its 2005 fiscal report with the SEC. The report includes restatements for prior periods. Independent auditors are in the process of completing a review of the company’s financial statements for fiscal 2006 and 2007.

Boeing Co. of Chicago won a big protest. The manufacturer was protesting the AirForce’s decision to purchase at least $40 billion worth of refueling tankers from its competitor, Northrop Grumman Corp. and its partner Airbus, a European company.

Dana Corp, the automotive supplier which has seen the EPA as well as the Fish and Wildlife Service file claims against the company in the neighborhood of $300 million, has now agreed to settle certain environmental claims at several of its toxic waste sites for $126 million. Dana exited bankruptcy protection earlier in the year.

Eagle River Inc., a Colonie, N.Y. trucking firm which transports mail for the U.S. Post Office, has been charged with falsifying its business records and underreporting its payroll by more than $2 million.

FedEx Corp., Memphis, Tenn., reported a fourth quarter net loss of $241 million, on an 8% revenue increase–to $9.8 billion. For the year, the company reported its net declined 44%–to $1.1 billion, on an 8% revenue increase–to $38 billion. The quarterly loss, which compares with income of $610 million for the same period one year earlier, includes an impairment charge of $882 million.

Ford Motor Co., the troubled Detroit automaker which previously reported it would reduce its salaried workforce by 15% by 8/1 while also announcing it would not reach its goal of returning to profitability in 2009, is now closing its Wayne, Mich. truck plant for nine weeks–beginning 6/23. Citing declining demand for large sport utility vehicles, the plant, which makes the Lincoln Navigator and Ford Expedition, will remain idle until 8/25.

Mooney Airplane Co., a unit of Mooney Aerospace Group Ltd. of Kerrville, Texas, is reducing production citing a decline in the sale of piston engine airplanes. Mooney intends on laying off eighty factory workers as a result.

News & Observer, a Raleigh, N.C. newspaper which is owned by newspaper giant McClatchy Co., is reducing its payroll by 70 jobs as part of an overall cost reduction at its parent company.

OfficeMax Inc., the troubled Naperville, Ill. retailer which recently saw Credit Suisse reduce its rating on the office supplier’s stock, is reducing its workforce. The company anticipates cutting half of its assistant manager positions as well as more than 60% of its store supervisors throughout its 900 stores, as part of its streamlining efforts. Overall the company expects to eliminate 2,700 positions.

Plug Power Inc., the Latham, Md. fuel cell developer which recently reduced its workforce by 80 employees as part of its efforts to reduce overall expenses, expects the layoffs and overall restructuring efforts to cost the company $6.4 million. The restructuring was part of Plug’s efforts to reorganize itself from an engineering and technology firm to one more focused on sales and marketing.