July 28, 2004

U.S. Company Profits Grow, But
Concerns Remain

Earnings keep growing for some
of the biggest U.S. companies, even as analysts worry about the second
half of the year and that results aren't beating expectations by as much
as they have in the past, Reuters reported. With 277 companies of the
Standard & Poor's 500 Index having reported, the current projected
second-quarter earnings growth for the index stands at 23.6 percent,
according to Reuters. 'Earnings are up for the quarter and that is good
but people are still preparing for a deceleration in the third and
fourth quarters,' said Cummins Catherwood, portfolio manager with
Philadelphia-based Rutherford, Brown & Catherwood, which oversees
$750 million in assets. More companies are exceeding estimates in the
second quarter of 2004 compared to the same time last year, but
ominously for some investors, companies are not beating expectations by
as much as they were a year ago, the newswire reported.

Confidence Hits 2-Year
High

Consumer confidence rose for
the fourth straight month in July, reaching 106.1, thanks to steady
improvements in the job market, the Conference Board reported, putting
the indicator at its highest level since June 2002. The index for
consumer confidence was 102.8 in June and was expected to be 102.0 this
month, the Washington Post reported.

U.S. Court Confirms Fleming
Bankruptcy Exit Plan

Food distributor Fleming Cos.
Inc. on Tuesday said a U.S. Bankruptcy Court confirmed its plan for
getting out of bankruptcy, and it will focus on its convenience store
distribution business, Reuters reported. The company filed for chapter
11 bankruptcy protection in April of last year after its biggest
customer, Kmart Corp., ended its food distribution agreement. Fleming
said it expects to exit bankruptcy on Aug. 15.

Halliburton Asbestos Settlement Approved by
Court

Halliburton Co. on Tuesday said a U.S. district court
has approved a $4.2 billion asbestos settlement, another step toward two
units of the energy services company emerging from bankruptcy
protection, Reuters reported. The order approving the settlement in the
proposed restructuring of DII Industries and KBR, the engineering and
construction unit formerly known as Kellogg Brown & Root, by the
Hon. Terrence McVerry of the U.S. District Court for the Western
District of Pennsylvania comes six days after it was approved by a U.S.
bankruptcy court. The two companies filed for bankruptcy in December
2003 to facilitate the resolution of the asbestos liability, the
newswire reported.

Judge Denies Loral Shareholder
Request

A U.S. Bankruptcy Judge on Tuesday rejected a request
by shareholders of bankrupt satellite operator Loral Space &
Communications Ltd. to appoint an equity committee at company expense to
seek a recovery after the bankruptcy, Reuters reported. After a
four-hour hearing in Manhattan, U.S. Bankruptcy Judge Robert Drain
turned down requests by three shareholder groups to form a committee,
saying the groups hadn't met the legal requirements. Loral filed for
bankruptcy a year ago, listing assets of $2.6 billion, but debt of $3
billion. It stated this month that common and preferred shareholders
would get no recovery under a plan of reorganization it is
devising.

Kmart Real Estate Worth Up to $150 Share –
Analysts

Kmart Holding Corp.'s real estate could be worth as
much as $150 per share, Deutsche Bank analysts said in a research note
that may fan speculation that the discount retailer intends to sell off
its stores, Reuters reported. The report, released on Monday, examined
the real estate value of some 37 U.S. retailers and found that eight had
stock prices that were below their net asset value per share, according
to Deutsche Bank estimates. Kmart has agreed to sell dozens of its
stores in recent months, prompting intense speculation that the company
is slowly liquidating. The retailer has repeatedly said it is committed
to turning around its stores.

US AIRWAYS

US Airways Posts Profit,
Foresees Losses

US Airways Group, struggling to avoid another
bankruptcy, on Tuesday posted a quarterly profit but forecast
second-half losses because of high fuel prices and competition from
low-cost carriers, Reuters reported. Second-quarter net income increased
to $34 million, or 59 cents a share, from $13 million, or 25 cents, a
year earlier. Last year's results included a one-time government aid
payment, without which the airline would have posted a big loss.
Arlington, Va.-based US Airways, 16 months after emerging from
bankruptcy, has said its cost structure does not allow for sustained
profitability. It has turned to its unions -- which agreed to steep
concessions in chapter 11 -- for more givebacks, the newswire
reported.

US Airways Plans a Major Overhaul of Its Flights

US Airways plans a major overhaul of the way it flies,
concentrating on direct flights to and from major airports on the East
Coast and dismantling its hub in Pittsburgh, executives said yesterday,
the New York Times reported. It will
also wade into the highly competitive New York-to-Florida market, they
said. The moves, which are meant to defend US Airways' share of traffic
in its most valuable markets, will take effect this
fall.  But the airline warned that the plan, and the
company's solvency, depended on cutting $800 million a year from
employee wages and benefits. It is pushing its unions to accept the cuts
before Sept. 30.

Your Number and Your
Life ...Harder to Locate Debtors?

Some lawyers, private
investigators and business groups say a privacy bill spearheaded by a
Florida congressman to combat identity theft would hamper key legal
functions, such as locating witnesses and criminals, and would interfere
with many common business transactions, Law.com reported. Read 
href='http://www.law.com/jsp/article.jsp?id=1090180177719'>the
article.

Artifact Files for Bankruptcy Protection

Artifact Entertainment, the
makers of Horizons, recently filed for chapter 11 bankruptcy protection,
About.com reported. 'We have sought court protection in order to prevent
interruption of service and are taking every step possible to ensure
Horizons’ players experience seamless game play. In fact, Artifact
Entertainment has been working diligently to create new content for the
game, including the development of new creatures, quests, events and
lore that will be introduced within the next two months,' the company
said.

Adelphia Creditors Get
Approval to File Objections Under Seal

The bankruptcy court overseeing
Adelphia Communications Corp.'s chapter 11 case allowed creditors to
file under seal their objections to the company's proposed employee
bonus plan, according to court papers. Adelphia wants to spend up to
$120.4 million on employee bonus and severance packages. The company's
shareholder panel and ad hoc convertible notes committee separately
requested that their objections to the bonus plan be filed under seal
because they contain information that hasn't been made public. The U.S.
Bankruptcy Court in Manhattan granted both of the requests Monday.
Adelphia wants to start several compensation and retention programs that
consist of performance payments, severance, bonus awards and enhanced
employee agreements, according to court papers.

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Holders Object to
NorthWestern Bonus Plan's Quick Approval

Investment funds holding shares
in NorthWestern Corp. said a bankruptcy court should delay considering
the energy company's management bonus plan until after challenges to
confirmation of the company's turnaround plan are heard. The
shareholders, RCG Carpathia Master Fund Ltd. and Kellogg Capital Group
LLC, said the bonus plan -- which would grant stock in the reorganized
company to management -- said they would challenge the confirmation, and
expect other parties to object to the confirmation as well, according to
papers filed last Friday with the U.S. Bankruptcy Court in Wilmington,
Del.



NorthWestern earlier this month sought emergency approval of a new
stock-based incentive plan for key employees under which it could issue
up to 285,300 shares of common stock as an incentive bonus upon
emergence from chapter 11. These bonus shares were proposed on top of
the 35.5 million shares NorthWestern would issue to creditors to pay off
debts. An additonal 109,317 shares of stock could be issued annually if
the plan is approved, court papers said.

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Reserved

size='3'>Churches Weigh Going Bankrupt to Escape
Suits




size='3'>Earlier this month, David Slader finally had the Roman Catholic
Church where he wanted it -- in a courtroom, on trial, the Legal
Times reported. Then Slader was hit with an unpleasant, but not
totally unexpected, surprise. The defendant, the Archdiocese of
Portland, announced July 6 it was filing for bankruptcy, bringing the
proceedings to a dead stop. It's also certain to create a legal maze for
the bankruptcy court and could land the case in the federal appellate
courts and, ultimately, the Supreme Court.
face='Times New Roman' size='3'>   The
filing means that, for perhaps the first time, a civil authority -- a
bankruptcy judge -- will have unprecedented access to internal church
information and control over many major decisions. Canon law may
conflict with civil law, and unanswered constitutional questions could
be litigated, according to the Legal Times. Read 
href='http://www.law.com/jsp/article.jsp?id=1090180184373'>the
article.



Enron Tries to Block  $85 Million Insurance
Payout

On Monday, Enron Corp. filed an
objection in U.S. Bankruptcy Court in Manhattan seeking to block payment
of the $85 million in insurance proceeds to approximately 20,000 current
and former Enron employees, the Wall
Street Journal reported. Enron employees lost hundreds of millions
of dollars when the Enron stock in their 401(k) plan evaporated as the
company slid into bankruptcy in late 2001, and sued the company. In May,
a federal court judge in Houston approved the tentative settlement
payment to the former Enron retirement-plan participants, and the final
hearing is scheduled for Aug. 19.

The settlement, which would be the
largest to date for a case involving company stock in retirement plans,
would be largely paid by Associated Electric & Gas Insurance
Services Ltd. and Federal Insurance Co. Enron had $85 million in
liability insurance to cover company employees who were acting as
fiduciaries. Read the article at
href='http://www.wsj.com/'>
size='3'>www.wsj.com (subscription
required).

Consumer Bankruptcies Slowing
in 2004

U.S. consumer bankruptcy
filings dropped in the first half of the year for the first time since
2000, a sign that personal finances are improving as the economy
strengthens, a report to be released on Wednesday shows, Reuters
reported. Consumer bankruptcy filings for the first six months of 2004
were 801,817, down 3 percent from 825,792 in same period in 2003,
according a report by Lundquist Consulting of Burlingame, Calif.
Bankruptcies climbed with mounting job losses stemming
from the 2001 recession and slow recovery that followed.

Ex-CEO Charged With Trying to Kill U.S.
Judge

The founder and former CEO of a
bankrupt Silicon Valley technology company was indicted on Tuesday on
charges of plotting the murder of a federal judge and burning the cars
of witnesses in a patent infringement case, federal authorities said.
U.S. law enforcement officials in California indicted Aptix Corp.
founder and former CEO and Chairman Amr Mohsen on 23 criminal counts and
charged his brother Aly with conspiracy to obstruct justice and perjury.
Mohsen resigned from Aptix in April, the same month it filed for chapter
11 bankruptcy protection, the newswire reported.