GM Cuts Production and Other Financially Challenged U.S. Companies for April 23

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 a special $99 subscription to the Summary.

Dan River Inc., a manufacturer of bedroom linens and fabric for clothing, filed Chapter 11, hoping to reorganize and remain in business. The filing, in the U.S. Bankruptcy Court in Delaware, listed assets of between $50 million and $100 million and liabilities of between $100 million and $500 million. Dan River is seeking permission from the court to borrow up to $32 million from GMAC Commercial Finance LLC.

CSK Auto Corp., a Phoenix, Az. operator of auto-parts stores, reported a fourth quarter net loss of $12.3 million on a nearly 10% sales decline–to $427 million. For the year, CSK lost $11.2 million on a 3% decline in sales–to almost $1.9 billion.

Deltic Timber Corp., an El Dorado, Ar. timber company, reported a first quarter net loss of $370,000. Sales fell 31%–to $27.8 million.

Gannett Co., the McLean, Va. newspaper and television company, reported its first quarter net income declined 9%–to $192 million. Revenue declined 8%–to $1.7 billion.  Gannett suffered from weak ad sales, and newspaper publishing revenue was down nearly 9% in the quarter, while ad revenue fell 10%, partly because of the weak U.S. economy. 

General Motors Corp., Detroit, had to reduce production at two more of its auto factories as a result of the ongoing strike at American Axle and Manufacturing Holdings Inc., which is now stretching into its third month.

Jefferies Group Inc., a Manhattan, N.Y. investment bank, is selling 14% of itself to Leucadia National Corp. in exchange for $100 million. Leucadia will also get two seats on Jefferies Group’s board of directors. Also, Jefferies reported financial results for its first quarter, saying it lost $60.5 million. Revenue declined 52%–to $201 million.

JetBlue Airways Corp., the Forest Hills, N.Y. discount carrier, reported a narrowed first quarter net loss of $8 million, down from a $22 million loss in the year-earlier period and better than analysts had expected. Revenue jumped 34%–to $816 million. While JetBlue faced a more than 40% jump in fuel costs, it benefitted from a 14% increase in capacity and a 10% increase in revenue passenger miles. 

Lee Enterprises Inc., the Davenport, Iowa. newspaper publisher, reported its second quarter net income sank 74%–to $3 million. That compares with net income of $11.9 million in the year-earlier period.  Revenue fell 5%–to $248 million.

Linens ‘n Things Inc., a Clifton, N.J. seller of household goods, announced that it will pay its biggest vendors in cash even before the delivery of products, as part of an attempt to keep vendors’ confidence in shipping to the retailer. Meanwhile, as the firm tries to line up a capital infusion of perhaps several hundred million dollars, some suspect that the company, losing money and plagued by debt, will eventually land in Chapter 11. One possible investor could be Apollo Management LP, which orchestrated a 2006 buyout of Linens ‘n Things for $1.3 billion in conjunction with NRDC Real Estate Advisors. Apollo has already had to write down the value of its $426 million investment in half. Linens ‘n Things lost $242 million last year on sales of almost $2.8 billion.

Novellus Systems Inc., a San Jose, Ca. manufacturer of semiconductor equipment, reported its first quarter net income sank 71%–to $15.5 million. Revenue declined 21%–to $315 million, hurt partly by a market glut of its NAND flash-memory chips.  Novellus also lowered its projections for the second quarter.

Theravance Inc., a South San Francisco, Ca. drug company, announced that it will reduce its payroll by 115 workers (40% of its workforce) in an effort to conserve cash as it tries to complete studies on its telavancin drug. The layoffs will result in extra expenses of $5.8 million, although Theravance hopes to realize annualized operating savings of $17 million. The firm added that it’s sitting on cash and equivalents of almost $260 million, $129 million more than in the previous quarter.

TRM Corp. of Portland, Or., a provider of ATM services, withdrew its request for a hearing and accepted its stock being delisted from the Nasdaq Global Market. The firm recently arranged an $11 million loan from LC Capital Master Fund Ltd. of New York to pay for its acquisition of LJR Consulting Corp., a Whippany, N.J. firm that does business as Access To Money.