August 52003

Submitted by webadmin on Tue, 2003-08-05 00:00

August 5, 2003

U.S. Record Consumer Spending Buoyed by Rates, Debt

Companies have kept consumer spending rising a record 13th straight
year, Bloomberg News reported. Household spending accounts for 70
percent of the economy and has been driving the recovery. 'This is a
completely debt-reliant economy that hinges on low interest rates,''
Merrill Lynch & Co. Chief Economist David Rosenberg said. 'It
wouldn't take much of a rebound in 'market-determined interest rates to
cause the economy to slow right back down,'' he said, reported the
newswire.

The 2001 contraction was shorter and milder than average because
consumer spending kept rising through a recession for the first time
since 1948-49. The low interest rates and longer financing terms helped
counter the drag created by record household debt of $8.9 trillion and
the highest unemployment in nine years. This has left little pent-up
demand for consumer products, and households may need to borrow and
spend less.

In four of the past five years, household net worth declined as the
value of family stock accounts fell, according to Federal Reserve data.
Mortgage debt jumped 60 percent to more than $6 trillion from $3.9
trillion over the past five years, according to the Fed. Outstanding
household debt as a percent of disposable income is 104 percent in the
United States, compared with 76 percent in the 12 countries that use the
euro, according to a July 9 report from the European Central Bank,
reported the newswire.

Profits at Big Companies Show Solid Gains in Second Period

The growth in corporate profits appears to be picking up momentum, the
Wall Street Journal reported. Net income rose 63 percent in the
second quarter among companies tracked by Dow Jones & Co. that had
reported earnings as of Friday. At present levels, net income is
approaching historic highs and falls just short of the $122.9 billion
recorded when the economy was still booming during the second quarter of
2000, reported the online newspaper. The profit improvement, if
sustained in the coming months, could contribute to the stronger
economic recovery that so many economists are now predicting.

Still, some executives, in talking about their earnings progress,
remained cautious in conference calls with investors in recent weeks. 'I
don't need to remind investors that second-half economic recoveries were
expected back in 2001 and again in 2002,' IBM CFO John Joyce said in
mid-July after the company beat analyst expectations with its earnings
report. 'While some may argue that it's more likely this year, we're
going to take a very pragmatic view,' reported the Journal.

Samuels Jewelers Seeks Bankruptcy Protection From
Creditors

Samuels Jewelers Inc., a specialty retailer that once had more than 200
stores in 23 states, sought bankruptcy protection for the third time
after three straight years of losses, Bloomberg News reported. The
Austin, Texas-based jewelry chain listed $42.5 million in assets and
$78.4 million in debts in chapter 11 papers filed yesterday in the U.S.
Bankruptcy Court in Wilmington, Del.

Atchison Casting Seeks Bankruptcy Protection From
Creditors

Atchison Casting Corp., which makes iron and steel castings for
construction, transportation, marine and oil-field equipment, sought
bankruptcy protection from

creditors after failing to obtain bank loans to keep operating,
Bloomberg News reported. The Atchison, Kan.-based company said last
November it was having trouble meeting debt obligations. In a chapter 11
petition in the U.S. Bankruptcy Court in Kansas City, Mo., the company
listed $136.7 million in assets and $96.8 million in debts, reported the
newswire.

WORLDCOM/MCI

WorldCom Names Ex-Sears Lawyer as General Counsel

WorldCom Inc. said on Monday it hired a former Sears, Roebuck & Co.
executive as general counsel and corporate secretary, replacing Michael
Salsbury, who resigned in June, Reuters reported. WorldCom said its new
executive, Anastasia Kelly, was previously general counsel for retailer
Sears and, before that, for mortgage financier Fannie Mae. WorldCom said
Kelly's appointment is effective immediately. She reports to Chief
Executive Michael Capellas.

Salsbury's resignation came after two reports detailing an investigation
into WorldCom's $11 billion accounting scandal chastised the company's
legal and audit teams for failing to prevent a corporate culture that
allowed 'acts of wrongdoing and neglect' to flourish. 'WorldCom's legal
departments and its internal audit department were not structured in
ways that would make them effective as a control of management
wrongdoing,' said one report by William McLucas, former chief of the
enforcement division of the U.S. Securities and Exchange Commission,
reported the newswire.

MCI Rebuts AT&T in Court Filing

In a court filing on Monday, MCI denied AT&T Corp.'s charges that it
improperly routed telecom traffic to avoid paying millions of dollars in
access fees, the Wall Street Journal reported.

At the same time, new details have emerged of additional testimony
corroborating original allegations made against MCI. In a meeting with
prosecutors last month, a witness to MCI's alleged fraud agreed with
parts of the testimony of former Onvoy Inc. engineer James Krutchen, who
worked for MCI in the mid-1990s. Both the new witness and Krutchen named
the same current MCI manager, William Ira Gorick, as part of the
rerouting effort to U.S. prosecutors last month, this person said. MCI
is hoping to emerge from bankruptcy-court protection as early as
October, but these latest allegations of fraud have the potential to
derail the proceedings, reported the Journal.

MCI, however, dismisses the allegations against it and says rivals are
trying to obstruct its emergence from bankruptcy protection. In its
filing with the bankruptcy court on Monday, MCI says it hadn't
manipulated coding on any of the telecom traffic it tested over its own
network, according to the online newspaper.

Acterna Hopes to Emerge from Bankruptcy in October

Acterna Corp., which makes communications testing equipment, said on
Monday it filed a reorganization plan that envisions the company
emerging from bankruptcy as a private company in early October with 80
percent less long-term debt, Reuters reported. Germantown, Md.-based
Acterna said it had $53 million in cash as of June 30 and access to $30
million of debtor-in-possession credit. The company also said it named
Grant Barber as chief financial officer to replace John Ratliff, whose
retirement was announced simultaneously.

Edwards Friend Oversaw Estate Case

A federal bankruptcy judge in 1999 approved a million-dollar fee for the
law firm where Elizabeth Anania Edwards once worked -- one month after
Sen. John Edwards got President Clinton to nominate the jurist as a
lifetime federal trial court judge, the Newsobserver.com
reported. There's no evidence that the senator knew about the case, or
that Elizabeth Edwards, who had left the firm three years earlier, was
involved in it at the time. Mrs. Edwards says she wasn't paid for her
last three years of work at the Raleigh law firm where she was an
associate. 'I have zero financial interest in the Conner case,' she
said. 'I never got any of it myself,' reported the online newspaper.

Bankruptcy Judge Rich Leonard approved the $1.06 million fee in a case
called Conner Home Sales, a liquidation bankruptcy of a mobile-home
company in which Mrs. Edwards had done most of her firm's work from 1989
to 1995 as trustee of the Conner estate. Leonard, a close personal
friend of the Edwardses, says he saw no reason to recuse himself from a
case that he had been handling for years without any complaint from the
parties. Leonard, who didn't get the District Court judgeship and
remains a bankruptcy judge, said the suggestion that his nomination by
Clinton or his friendship with the Edwardses might have influenced his
fee decision was baseless, reported the newspaper. To read the full
article, point your browser to
href='http://www.newsobserver.com/edwards/coverage/story/2744807p-2544664c.ht…'>http://www.newsobserver.com/edwards/coverage/story/2744807p-2544664c.ht….

DVI Considers Sale, Chapter 11 Bankruptcy Filing

DVI Inc., a medical-equipment leasing and finance company, said it is
considering options that include a sale of the entire business or a
chapter 11 bankruptcy filing, Bloomberg News reported. The company is in
default under a number of credit facilities and seeking waivers or
grants of forbearance with lenders. DVI extends loans and leases to help
finance the purchase of diagnostic imaging and other medical equipment.
It had a net loss of $4.09 million, or 28 cents a share, for the year
ended June 30, 2002, reported the newswire.

FERC Extends Period For Reviewing NRG Energy Rehearing Bids

Federal energy regulators have extended their timeline for reviewing
requests that they reconsider requiring a unit of NRG Energy Inc. to
continue supplying electricity to Connecticut Light & Power Co.
Under federal law, the several requests received over the past month by
the Federal Energy Regulatory Commission for a rehearing of its late
June order would effectively be denied if the commission didn't act on
them within 30 days, the regulators wrote in an order on Thursday. The
timeline extension will 'afford additional time for consideration of the
matters raised or to be raised,' the FERC wrote.

Court Extends Adelphia Business DIP Loan With Beal Bank For 9
Months

The bankruptcy court overseeing Adelphia Business Solutions Inc.'s
case extended the company's debtor-in-possession financing agreement
with Beal Bank, according to a court order. Judge Robert E.
Gerber of the U.S. Bankruptcy Court in Manhattan signed an order
last Thursday that extended Adelphia Business Solutions' $15 million DIP
loan pact through April 30, 2004. Under a prior court order, a term loan
under the pact would have matured on Thursday. In August 2002, the
bankruptcy court granted final approval of the DIP credit agreement with
Beal Bank. In a motion filed with the court July 18, Adelphia Business
Solutions said the loan pact is secured by liens on its assets.

Weirton Steel Names CEO, President

Weirton Steel named D. Leonard Wise as chief executive officer and Mark
E. Kaplan as president, the Wall Street Journal reported. The
appointments follow last month's announcement by John H. Walker that he
would resign as president and CEO. Wise, who is on Weirton Steel's
board, was president and chief executive of Greensboro, N.C.-based
Carolina Steel Corp. Kaplan, who joined Weirton Steel in 1995, is senior
vice president and chief financial officer. Weirton Steel filed a
voluntary petition on May 19 to reorganize under chapter 11 bankruptcy
protection.

Boeing Finance Unit Sees Delinquencies Mount

Boeing Co.'s finance unit on Monday said delinquent payments and
nonperforming assets rose sharply in the first half of 2003 and it may
take a charge against earnings if the troubled 757 jet line is closed
down, Reuters reported. In a federal securities filing, Boeing Capital
Corp. reported 23 percent of its total receivables, or $1.76 billion,
were to delinquent obligors as of June 30. Executives of Chicago-based
Boeing Co. said in an earnings conference call last month that Boeing
was nearing a decision on whether to shut down the jet line. If that
happens, Boeing would incur a charge of about $200 million and its net
profit would be cut by about $100 million, they said in the call,
reported the newswire.

Global Crossing Net Loss Widens to $99 Million in June

Bankrupt telephone company Global Crossing Ltd. said on Monday that its
net loss for June expanded from May, as higher professional fees and
one-time restructuring costs offset slightly higher revenues, Reuters
reported. In June, the company had a net loss of $99 million on revenue
of $252 million. Global Crossing in May posted a loss of $86 million on
revenues of $247 million. Global Crossing said it had about $559 million
in cash as of June 30, including $222 million in unrestricted cash and
$337 million in restricted cash, reported the newswire.
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