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Kit
Menkin’s Leasing News
www.leasingnews.org Friday,
17, 2002 Accurate,
fair and unbiased news for the equipment Leasing Industry
Headlines---- New
IBM Chief Confirms Layoffs
Tyco says comfortable with estimates, cash situation
Tyco plans to pay off $10 billion in debt
Personal Bankruptcy Filings Up 15.2 Percent
Comdisco Chapter 11 plan, disclosure filed with SEC
6 Ex-Employees Win Judgment Against MSM Capital
Mortgage rates move higher this week
Teamsters push UPS on contract, Union to Hold Strike Vote
AOL Time Warner Execs Admit Missteps—Big Time
At AOL, Parting Without the Sweet Sorrow
Fitch Rates $1.07B CIT Equipment Collateral 2002-VT1
Congress Must Act Now to Keep Banks Out of Real Estate
Dell Profit Exceeds Firm's Forecast Sunrise
International Leasing Reports Strong 1st Q 2002 Results
U.S. Economy: Production Rises; Core Inflation Tame
Comdisco Fiscal2nd Q and Six Month Financial Results ###
Denotes Press Release --------------------------------------------------------------------------------------------------- Where
is Johnnie Johnson, who used to do CLP training? If anyone knows
his e-mail
address or where he is, please let us know. ------------------------------------------------------------------------------------ Jim
Merrilees says he will not be at the MAEL Golf Tournament this weekend. We
will never know how well he does on the golf course. Evidently,
business comes
first before pleasure with the Merrilees. Bummer. New
IBM Chief Confirms Layoffs (www.f**kedcompany.com reported: “In
addition to the Vermont layoffs I reported a few days ago, IBM is
preparing to lay off 10% of its US workforce across the board --
word is d-day is May 23, 2002. Two-months severance expected. IBM
Global Services will
be the department most affected. By
Steve Lohr, New York Times ____________________________________________________________.
Tyco
says comfortable with estimates, cash situation NEW
YORK, (Reuters) - Embattled conglomerate Tyco International Ltd.
(NYSE:TYC - News), which makes products ranging from diapers to
burglar alarms, said on Thursday it was comfortable with Wall Street
estimates for the current quarter and full year. Chief
Financial Officer Mark Swartz also said he expected to "monetize"
the company's finance arm, CIT Group, by the end of June. Tyco bought
CIT last year for about $10 billion and filed in April to sell it
in a $7.15 billion initial public offering of common stock. Tyco
expects to see sequential improvement in the electronics and health
care sectors. Analysts
expect Tyco to report earnings of 57 cents per share for the third
quarter, with estimates ranging from 48 cents to 60 cents, according
to tracking firm Thomson Financial/First Call. For the year, analysts
peg Tyco at a profit of $2.58 a share. In
a new report, ratings agency Standard and Poor's included Tyco in
a list of 15 investment-grade companies that could face a cash crunch. The
CIT offering would give Tyco breathing room in its drive to refinance
its debt, $3.25 billion of which is coming due in February. On
Thursday's call, the company said its cash flow would be sufficient
to pay off its immediate debt without a CIT sale. Including cash
from a CIT offering, it said it expected to pay off $10 billion
of debt, reducing outstanding debt to about $17 billion, from about
$27 billion. In
the quarterly report filed on Wednesday with the Securities and
Exchange Commission, Tyco said it may book a gain of as much as
$1.5 billion if it goes ahead with the CIT transaction, CIT's credit
ratings are upgraded and it gets "cost effective" access
to unsecured credit markets. But
Tyco predicted it may face a charge of as much as $750 million if
those things do not happen. "At
this time, we believe that separation from Tyco, subsequent credit
upgrades and access to the unsecured credit markets on a cost effective
basis is the most likely outcome," the company said in the
SEC filing. Tyco
shares have lost roughly two-thirds of their value this year, due
to questions about its accounting and corporate ethics, several
earnings warnings, credit issues, and a loss of confidence in its
management after reversals in strategy. The
stock rose $1.14, or 5.87 percent, to close at $20.56 on the New
York Stock Exchange. Tyco
plans to pay off $10 billion in debt By
Harry R. Weber, Associated Press CONCORD,
N.H. (AP) Tyco International Ltd. plans to pay off about $10 billion
of its $27 billion in debt after it spins off its lending division,
and is on course to do so by the end of June, a company executive
said Thursday. The
figure includes the $7.2 billion the huge conglomerate hopes to
generate from its CIT unit through an initial public stock offering
or whatever the division would fetch through a sale. Tyco would
pay off the balance of the $10 billion with cash. A
worst-case scenario would require Tyco to refinance $3.25 billion
in debt when Tyco's next payment comes due in February, chief financial
officer Mark Swartz said in a conference call with investors. ''Our
financial position as we sit right now is stronger than it was a
year ago today,'' Swartz said. Swartz
said the company is on track to shed CIT by June, but did not disclose
further details. Swartz
said there is still weak demand for some of Tyco's core products,
including plastic products and telecommunications. There have also
been added pressures on sales because of Tyco's announcement last
month that it would not sell its plastics unit and was abandoning
a breakup plan announced in January. The
struggle to overcome weak demand and months of negative publicity
over the company's accounting practices was underscored in a quarterly
filing Tyco submitted late Wednesday with the Securities and Exchange
Commission. Tyco,
which is based in Bermuda but has headquarters in Exeter, N.H.,
said it must focus on its core businesses before it can return to
a strategy of growth through acquisitions. ''We
anticipate reducing the number of acquisitions we complete prospectively,
and, therefore, expect that our growth rate in revenues and earnings
from acquisitions will also be reduced as compared to prior quarters,''
Tyco said. Rob
Plaza, an analyst with Morningstar Inc. in Chicago, said it's time
for Tyco to dispense with the rhetoric and get results. The company's
stock has slid 66 percent since Jan. 1 ''I
think the question is, 'Will anyone take management at face value?'
I don't think they will. Tyco has to prove what it says it can do,''
Plaza said. The
SEC filing provided revenue and expense numbers for the six months
ending March 31. It also detailed thousands of layoffs at Tyco subsidiaries
during that period. The
filing said about 12,366 jobs were eliminated at Tyco during the
six months ending March 31, including about 7,100 that had taken
place but were not announced until Tyco revealed on April 25 that
it was reversing course on the breakup plan. But
Tyco's overall work force stood at 277,000 employees as of April
1 leaving the company with 30,000 more jobs than the company reported
in October. Spokeswoman Maryanne Kane said the increase was primarily
due to acquisitions. Swartz
said in the conference call that ''the bottom has been met'' in
Tyco's core businesses. He added that Tyco expects $36 billion in
sales this year. Shares
of Tyco have been battered in recent months because of Enron-inspired
accounting questions. Tyco
shares closed at $20.56, up $1.14 , or almost 6 percent, Thursday
on the New York Stock Exchange. On
the Net: http://www.tyco.com Personal
Bankruptcy Filings Up 15.2 Percent in 12- Month Period By
Marcy Gordon AP
Business Writer Bankruptcy
filings by American consumers jumped 15.2 percent in the 12 months
ended March 31, fueled by the strong spending that helped make the
recession shallow, the government said Thursday. Personal
bankruptcies hit a record 1,464,961 during the period, up from 1,271,865
in the 12 months ending March 31, 2001, the Administrative Office
of the U.S. Courts reported. "Consumers
did their part to make the recession a recessionette," said
Samuel Gerdano, executive director of the American Bankruptcy Institute,
a group of bankruptcy judges, lawyers and experts. "Consumers
still have confidence in the economy." Gerdano
noted that consumers were lured by free-financing deals on vehicles
while lower interest rates brought a surge in mortgage refinancing
that put more spending money in their pockets. 2001
already was a boom year for bankruptcies amid the economic downturn. The
majority of consumer bankruptcy filings continued to be under Chapter
7 of the U.S. Bankruptcy Code, which allows people to dissolve their
credit- card and other debts. Chapter 7 filings during the 12-month
period jumped 17.2 percent, to 1,059,777. In
return for having their debts erased, people in Chapter 7 cases
often turn their property over to a bankruptcy trustee, except for
basic necessities such as a car, clothing and work tools. Property
with value is sold to pay creditors. Debtors generally are allowed
to keep some personal items and possibly some of the equity in their
home, depending on state laws. (We
sure know this in the leasing business. It was the 1974’s since
I have seen so
many companies file BK on leases. editor ) _____________________________________________________________ Comdisco
Chapter 11 plan, disclosure filed with SEC By
Associated Press ROSEMONT,
Ill. (Dow Jones Newswires) Comdisco Inc. filed a proposed joint
plan of reorganization in late April with the federal bankruptcy
court for the Northern District of Illinois. The
Rosemont, Ill., computer services company said its plan calls for
Comdisco to operate with three units and continue to sell or run-off
all of its asset portfolios, a process which the company expects
will take up to three years to complete. The
company has been selling assets since filing for Chapter 11 bankruptcy
protection last July. Comdisco's international operations aren't
included in the Chapter 11 reorganization. Comdisco
filed its plan with the Securities and Exchange Commission in connection
with a form 8-K filing, and the company will mail the plan to creditors
and voting shareholders following bankruptcy court approval. The
company said a hearing on the disclosure statement is scheduled
for May 31, and a confirmation hearing is scheduled for July 30.
Comdisco
said all of its businesses, including those that filed for Chapter
11, are conducting normal operations. In
April, Comdisco agreed to sell some of its domestic health care
leasing assets to GE Capital's Healthcare Financial Services unit
for $165 million and the assumption of debt. GE capital is a unit
of General Electric Co. Comdisco
expects to cut about 180 positions, or 20 percent of its staff,
as part of its restructuring. Comdisco's
plan proposes that its general unsecured creditors receive their
prorata share of an initial cash distribution, which the company
plans to fund by current cash on hand from asset sales and cash
flow from operations, less amounts necessary to establish a cash
reserve for other payments and operations. Comdisco
expects to make an initial cash distribution of about $2 billion,
if its plan is approved, while it expects the ultimate recovery
to unsecured creditors will be about 87 percent of their claims,
subject to provisions. ------------------------------------------------------------------------------------------------------- Six
Ex-Employees Win Judgment Against MSM Capital, Southern California Posted
on the Leasing Rag (http://groups.yahoo.com/group/theleasingrag/) “The
three remaining employees who had cases up at the Labor Board now
have
MSM
President Mike Cingari, former president of Colonial Pacific Leasing,
states the six employees were dismissed after commissions were cut
back, and he caught them brokering to other leasing companies. The
six employees deny this, saying they were owed back commissions
not paid. Evidently the California State Labor Board has agreed. “
The Disgruntled Six.....$136,000 “MSM
Capital. $0” (Name
with held until May 28th ) (on
the 28th, the first appeal will be heard. If he loses it will toss
out all of our appeals as well and we will get paid.) In
an earlier interview with Mike Cingari, he said he would appeal
the matter should he
lose at this level. The interview concerned three complaints Leasing
News has received
regarding advance rentals or deposits not being returned and wanting
their
situation posted on the Leasing News Bulletin Board. The complaints
by the
applicants were faxed to MSM Capital; the last one May 9th.
Mr.
Cingari was not available to respond to Leasing News (More
news to follow as it develops) -------------------------------------------------------------------------------------------- Mortgage
rates move higher this week
ASSOCIATED
PRESS WASHINGTON
– Mortgage rates around the country rose this week, but still
remained below the 7 percent mark. Freddie
Mac, the mortgage company, reported that the average interest rate
on 30-year fixed-rate mortgages climbed to 6.89 percent this week
from 6.79 the previous week, according to a nationwide survey released
Thursday. A year ago this time, 30-year mortgages averaged 7.14
percent. Rates
on 30-year mortgages hit a low of 6.45 percent in early November,
their lowest point since Freddie Mac began conducting its nationwide
survey in 1971. Even
though rates have moved higher since that time, analysts believe
that mortgage rates will be fairly stable this year and will continue
to support the housing market. Fifteen-year
mortgages, a popular option for refinancing, rose 6.37 percent from
6.27 percent the week before. A year ago, 15-year mortgages averaged
6.67 percent. On
one-year adjustable-rate mortgages, lenders were asking an average
initial rate of 4.81 percent, up slightly from 4.80 percent the
previous week. Last year this time, one-year ARMs averaged 5.81
percent. These
rates do not include add-on fees known as points, which averaged
around 0.7 percent of the loan amount for all three types of mortgages
last week. "With
mortgage rates continuing to remain below 7 percent, the housing
industry will still experience a good year and continue to support
the overall economy," said Frank Nothaft, Freddie Mac's chief
economist.
----------------------------------------------------------------------------------------------------- _______________________________________________________
Teamsters
push UPS on contract Union
to hold vote on strike this weekend (UPS
Leasing has plenty of cash and the Teamsters want some of it ) George
Raine, S.F. Chronicle Staff Writer The
230,000 Teamsters employed by United Parcel Service will vote this
weekend whether or not to authorize a strike that could, if contract
negotiations are fruitless, commence Aug. 1. The
International Brotherhood of Teamsters struck UPS for 15 days in
1997, disrupting commerce in the United States and causing the world's
largest package-delivery company to lose $750 million in revenue. That
strike, the only one in the Teamsters' 75-year relationship with
UPS, served as an incentive for beginning the negotiations early
this year, in February, rather than in May, when they started in
1997, said Norman Black, UPS spokesman at the company's Atlanta
headquarters. There are about 10,000 Teamster-represented UPS employees
in the Bay Area. The
union and UPS have conflicting opinions on the pace of the contract
talks in Chicago. The two sides have reached tentative settlement
on 13 of 32 supplemental contracts covering workplace issues and
will take up major economic matters next week. In
an indication that the talks are progressing, the company said it
believes that all the supplementals can be resolved this week. The
union thinks otherwise. "From
day one, UPS has said they want an early contract because of their
concern about losing customer base" if service is disrupted,
said Bret Caldwell, a Teamsters spokesman at its Washington, D.C.,
headquarters. "But we have seen no movement to indicate that
there will be an early settlement, much less resolution by the time
of the contract's expiration on July 31." "It's
time to jump-start negotiations," said Teamsters General President
James Hoffa, in announcing the coming strike authorization vote.
"It is time to get down to business. It is time to address
the issues that are important to our members." The
vote, said UPS' Black, "is a normal part of the negotiating
process and always has been and should not be taken out of context
as a barometer of the progress of negotiations." He added that
the company has not seen "any significant diversion" or
decline in business that might be attributable to customer unease
about labor negotiations. Chuck
Mack, the Teamsters' Western regional vice president based in Oakland
and a participant in the Chicago talks, said, "We are looking
for solid wage increases -- solid money -- that will give Teamsters
the opportunity to afford to live in the Bay Area. This is a very
powerful, very wealthy company. It has done extremely well. But
it is the people who are driving the trucks who made them the money,
and they needed to be compensated fairly." E-mail
George Raine at graine@sfchronicle.com.
____________________________________________________
AOL
Time Warner Execs Admit Missteps –Big Time
NEW
YORK (AP) - AOL Time Warner Inc. executives acknowledged that they
made serious missteps over the past year in overpromising financial
results, and pledged to work hard to restore the company's battered
stock price and credibility with investors. Speaking
at the company's annual meeting Thursday, the executives also marked
the official transition of power at the world's largest media company
as 30-year veteran Gerald Levin stepped aside as chief executive
and was replaced by Richard Parsons. ``This
past year has been difficult, and things didn't go quite as we expected,''
chairman Steve Case said in opening remarks to the capacity crowd
of shareholders at the Apollo Theater in Harlem. ``We have to work
to regain your confidence.'' ``We
have made some mistakes in the past year,'' Case said, such as setting
profit targets that were too high and then sticking with them too
long. But he also said the company was ``getting its house in order
and will deliver on the premise and promise of the merger.'' AOL
Time Warner's stock has been savaged in recent months after the
company failed to meet targets for profit growth and also sprung
a number of unpleasant surprises on investors - including a massive
$54 billion write-off to reflect a loss in the company's value since
the merger, and losses at its AOL Europe division that were larger
than expected. The
shares have tumbled about 40 percent since the beginning of the
year and are now off a total of about 70 percent since the merger
of America Online and Time Warner was announced in January 2000.
They edged up 5 cents to $18.90 Thursday on the New York Stock Exchange. At
the meeting, several shareholders expressed frustration at the poor
performance of the company's stock, and demanded explanations from
management for what they planned to do in order to get the company
back on track. Michael
Hariton, a 36-year-old private investor, delivered a blistering
tirade against the executives, chastising Case for spending time
away from the job for family reasons and demanding that they bring
down the company's $27 billion in debt. ``We're
paying you guys to be full-time employees. Get the job done,'' Hariton
said, his face reddening. ``These are our hard-earned dollars, and
you have decimated them. ... Get working.'' Robert
Schue, 62, a semiretired free-lance writer, asked managers why there
were ``replicating the Taj Mahal in Columbus Circle'' - a reference
to the construction of the company's lavish new headquarters building
in Manhattan - after they posted a loss of $54 billion and their
share price is under $20. ``I
think there's something seriously wrong with the management of the
company,'' Schue said in an interview later. ``My five hundred shares
may not be a lot in the grand scheme of things, but they are a lot
for me. My savings are at risk.'' Parsons,
speaking to reporters immediately after the meeting, said he was
relieved that the shareholders' meeting wasn't more rancorous. ``I
thought the tone of the meeting was more gracious and respectful
than I anticipated,'' Parsons said. ``I thought the shareholders
were realistic and respectful, in the main.'' On
the Net: Company
Web site: http://www.aoltimewarner.com At
AOL, Parting Without the Sweet Sorrow By
GERALDINE FABRIKANT with SETH SCHIESEL
New York Times After
AOL Time Warner's annual meeting yesterday, Richard D. Parsons told
reporters that the shareholders who gathered at the Apollo Theater
in Harlem had been "more gracious and respectful than I had
anticipated." Mr.
Parsons must have expected torches and pitchforks. While his coronation
as AOL Time Warner's chief executive went off as planned yesterday,
it was clear that the shareholders were irate. They, after all,
have suffered the collapse of the stock price, which has lost about
64 percent of its value in the last year. "These
are our hard-earned dollars that we trusted to
you, and you have decimated us," said one of many angry shareholders
who strode to a microphone during the question-and-answer period.
Another referred unhappily to the huge headquarters tower that the
company is building on the West Side of Manhattan, saying the company
was "replicating the Taj Mahal on Columbus Circle" while
shareholders nurse their losses. Mr.
Parsons and Stephen M. Case, the company's chairman, stoically braved
the barrage. But the executive who did not take questions was the
man whom Mr. Parsons is replacing: Gerald M. Levin, who retired
yesterday after 30 years at the company and its predecessors, the
last decade as chief executive. Mr.
Levin gave a brief farewell address in which he thanked shareholders
for "faith, hope and, above all, patience." Most of the
audience of perhaps 1,400 replied with a polite standing ovation.
But others sat in stony silence. For while it is Mr. Parsons who
must now try to fix AOL Time Warner, it is Mr. Levin whom some shareholders,
analysts and industry executives blame for the current state of
the company. During
his career, first at Time Inc., then Time Warner and finally AOL
Time Warner, Mr. Levin knew his share of successes — primarily
as a deal maker. But he leaves under a cloud of perceptions that
the 2000 merger that created AOL Time Warner may have been one deal
too many. "You
just lost $54 billion," an angry shareholder told the executives
yesterday, referring to the noncash charge that AOL Time Warner
took in the first quarter to account for the company's plunge in
value since the merger. "Where'd that come from?" the
accuser continued. "Our pockets — the shareholders —
not the options you got." Because Mr. Levin is expected to continue as an adviser to the company, analysts and company executives are wary of discussing his legacy on the record. But a recurrent criticism is that Mr. Levin gave away too much of the company when he agreed to merger terms in January 2000 that granted America Online 55 perce |