Wonder Bread Rising and Other Financially Challenged U.S. Companies for March 28

 
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.

Avistar Communications Inc., San Mateo, Calif., will trim its payroll by about 25% in the first quarter, citing challenges by Microsoft Corp. to all of Avistar’s patents in the U.S.

Beazer Homes USA Inc.’s shares sank almost 14% after the Atlanta, Ga. homebuilder’s credit rating was reduced by Moody’s Investors Service to B2, deeper into junk territory. Moody’s also warned of a possible further downgrade.

Belden Inc., a St. Louis, Mo. provider of signal-transmission products, will shut down a facility in Manchester, Conn. where it manufactures copper-cable products.  The move, part of a cost-cutting consolidation, will result in the loss of 132 jobs. Belden, which hopes the consolidation will save it $5 million a year, will incur extra charges of between $9 million and $13 million.

Business Representation International, Miami, Fla., is laying off 100 employees at its operations at the Fort Lauderdale-Hollywood International Airport by the end of April, blaming a contract that wasn’t renewed.  Business Representation is a holding company for American Sales Management, an airline service company. 

Capital Senior Living Corp., a senior living center operator in Dallas, Texas, may be headed for the selling block. The firm is reportedly considering a number of options, including a restructuring of its portfolio by selling some assets, merging with a private company or undertaking some other privatization arrangement. Capital Senior Living, with sixty-four senior communities, reported a profit in its fourth quarter of $1.3 million on revenue of $48.2 million.

CKE Restaurants Inc. of Carpinteria, Calif. reported its fourth quarter net income plunged to only $98,000, down from $10.3 million in net income a year ago, partly because of a $9.7 million charge related to interest-rate swaps.  Revenue fell more than 3%–to $349 million. CKE’s operations include the Hardee’s and Carl’s Jr. restaurant chains.

Coast Distribution Inc. in California reported a fourth quarter net loss of $1.5 million. Revenue increased less than 1%–to $26.7 million. For the year, net income tumbled 93%–to $210,000, on an 8% revenue decline–to $164 million.

Comstock Homebuilding Cos.’ executives announced that the Reston, Va. homebuilder may consider putting itself up for sale, although as of now there are no concrete plans to do so.  Struggling under a tough housing market, Comstock, which is nonetheless reported to be in good standing with its lenders, recently reported a fiscal net loss of $87.5 million.  Comstock did manage to reduce its debt by $124 million in 2007, leaving it with debt of $171 million.

Interstate Bakeries Corp., the bankrupt Kansas City, Mo. baking company, reported a narrowed loss for the four weeks ended 2/9 of $16.5 million, compared to a $20.1 million loss in the prior four-week period.  Net sales were up nearly 12%–to $210 million. Interstate, which makes Wonder Bread and Twinkies, is talking with a number in of investors about strategies for getting out of bankruptcy.

Lennar Corp., the Miami, Fla. homebuilder, reported a first quarter net loss of $88.2 million, compared to net income of $68.6 million in the year-earlier period.  Revenue sank 62%–to less than $1.1 billion.  Lennar’s results were hurt by valuation adjustments and writeoffs. Orders in the quarter declined 57% and average sales priced slid more than 8%.

Pep Boys-Manny, Moe & Jack’s shares lost 11% of their value after the Philadelphia, Pa.-based retailer of auto parts reported a worse-than-expected loss in its fourth quarter of $20.4 million.  Profits were hurt by $20.7 million in charges for restructuring and repaying debt. Sales fell 11%–to $518 million, and not counting an extra week in the year-earlier fourth quarter same-store sales were down 7%. Pep Boys is being challenged by a dropoff in consumer spending just as it’s engaged in a turnaround effort. Its realignment so far, aimed at reducing costs, has already resulted in closing thirty-one locations, or about 5% of its total, and more than $60 million in sale-leaseback deals. For the year, Pep Boys lost $41 million on a 5% sales decline–to $2.1 billion. The quarter and year included asset-disposition gains of $13.3 million and more than $15 million respectively.

West Marine Inc., a Watsonville, Calif. boating-supplies retailer, reported a fourth quarter net loss of $65.7 million on a 5% sales decline–to $118 million. For the year, West Marine lost $50.2 million while sales for the full year also declined 5%–to almost $680 million. Both the quarter and year included impairment and store-closure charges of $57.5 million.