Credit Manager?s Weekly Summary of Financially Challenged U.S. Companies

The 12 items below are taken from the Credit Manager’s Weekly Summary of Financially Challenged U.S. Companies of 1/17/2008. A full issue contains information on more than 200 companies. A sample issue is available in the insideARM bookstore.

AMR Corp., reporting a loss in its fourth quarter because of high fuel prices, warned that jet fuel expenses will continue to hamper results in the coming year. CEO Gerard Arpey commented that operations at American Airlines have been strong, with increased passenger demand and ticket bookings, but that fuel costs are taking their toll, resulting in carrier’s first loss after six-straight quarters in the black. One analyst has projected that American will face a loss in the first quarter as well. For its just ended fourth quarter, Fort Worth, Texas-based AMR lost $69 million on a 5% revenue increase–to $5.7 billion. Results included special gains of $115 million. For the year, AMR’s net income more than doubled–to $504 million, on a revenue increase of 2%–to nearly $23 billion. Fiscal results included an $84 million extra gain.

California Pizza Kitchen Inc.’s stock price tanked almost 18% after the Los Angeles, Calif. restaurant chain lowered fourth quarter and fiscal 2008 earnings guidance because of weak same-store sales.

Cephalon Inc., the Frazer, Pa., drug company, is consolidating operations by closing a plant in Eden Prairie, Minn., moving some work to Salt Lake City, and Brooklyn Park, Minn. and cutting its payroll by a net eighty positions. The reorganization plan will result in pretax expenses of between $34 million and $47 million as it hopes to cut costs and boost efficiency.

General Motors Corp., Detroit, Mi., is reportedly close to an agreement that will lead to more early-retirement buyouts for hourly employees in North America that could include 1,500 jobs at its engine plant in Tonawanda, N.Y.

Hanesbrands Inc., Winston-Salem, N.C., is closing its Asheboro and Advance manufacturing facilities in North Carolina by the end of June in conjunction with a plan to outsource production of elastic fabric used in women’s and girls’ underwear products. The realignment will affect 102 employees. Also, Hanesbrands hopes ultimately to sell the two facilities that it’s closing.

IndyMac Bancorp Inc., a big mortgage lender which recently announced plans to slash its payroll by 2,400 workers (or about 24% of its workforce), will shutter its regional wholesale mortgage centers in Boston, Mass., Philadelphia, Pa., Columbia, S.C., Tampa, Fla. and Kansas City, Mo. Operations from those facilities will be consolidated at eleven other regional centers. The Pasadena, Calif. firm’s plans to cut 2,400 jobs follow the loss of 1,600 jobs last year.

Interstate Bakeries Corp.’s bidding deadline passed without any qualifying bids to buy the bankrupt firm coming to the table. The Kansas City, Mo. Twinkies and Wonder Bread maker earlier opened itself up to buyout bids, following a move by the International Brotherhood of Teamsters, one of its biggest unions, that called for the liquidation of the baker. The company said that it therefore won’t conduct an asset auction that had been scheduled for later this month. Interstate is still trying to emerge from bankruptcy after more than three years of trying to reorganize under Chapter 11. A hearing on its disclosure statement and reorganization plan is scheduled for 1/29.

MarineMax, a Clearwater, Fla. recreational-boat dealer, reduced its guidance for its fiscal year and also warned that its first quarter loss will be greater than in the year-earlier period. For the first quarter, MarineMax is now looking at a loss of at least 35 cents a share on revenue of about $215 million, down from $234 million a year ago.

Merrill Lynch & Co. reported a whopping fourth quarter net loss of $9.8 billion, with net revenue a negative $8.2 billion as a result of mortgage-related write downs. The huge loss included nearly $10 billion in write downs of collateralized debt obligations; subprime-related write downs of $1.6 billion and another $3.1 billion in write downs stemming from exposure to bond insurers. That all follows $7.9 billion in mortgage-related write downs that Merrill recorded in the third quarter. However, the Manhattan, N.Y. firm sidestepped a potential ratings cut by Moody’s Investors Service when it raised capital to bolster its balance sheet by selling off a commercial-finance unit and arranging $12.8 billion in infusions from largely foreign investors. However, Merrill isn’t out of the woods yet, as the credit markets are expected to continue hobbling along while mortgage holders will likely have trouble keeping up with increased interest rates this year.

NewPage Corp., a Miamisburg, Oh.-based maker of specialty papers which earlier acquired Stora Enso North America, will shut down a converting plant in Chillicothe, Ohio and related operations in Maine and Wisconsin, resulting in the loss of more than 700 jobs. Overall, the shutdowns and resulting consolidation are aimed at boosting its production in North America this year by between 3% and 8%. NewPage, which wrapped up its $2.5 billion acquisition of Stora Enso North America in December, is controlled by Cerberus Capital Management, the New York private-equity firm.

TOUSA, a Florida homebuilder, reported that it missed a semiannual interest payment due 1/15 on $200 million in principal on certain senior notes. The firm’s debt holders can speed up payment of the notes if TOUSA doesn’t pay the interest within thirty days. Earlier, TOUSA missed a 1/1 interest payment on $484 million of its debt.

WCI Communities Inc., a Bonita Springs, Fla. developer of leisure and retirement communities, won waivers on certain terms of its revolving credit line and term loan.