Executive Business Briefing

Here is a look at more of Tuesday's top business stories:

Penn Traffic says bankruptcy filing possible

SYRACUSE, N.Y., May 20 (UPI) -- Penn Traffic Co. has delayed the filing of its annual report again and said it may file for Chapter 11 bankruptcy protection if it is able to secure appropriate debtor-in-possession financing.

The supermarket operator said it is currently negotiating a debtor-in-possession financing arrangement that is expected to permit the company to fund its continuing operations.

Penn Traffic added that it is considering other strategic alternatives.

The company had expected to file its Form 10-K for the fiscal year ended Feb. 1 by May 15.

On May 5, the company signed a waiver and forbearance agreement with the lenders under its revolving credit facility. Had it filed its Form 10-K on May 2, Penn Traffic said it was likely that the audit opinion contained in the report would have raised concerns over the company's ability to continue as a going concern.

Last week, Penn Traffic agreed to an amendment to its credit facility that reduces the required financial covenants of the facility. The amendment also contained a provision that waives the company's obligation to file its Form 10-K until either June 9 or the date the independent auditor notifies the company that it won't issue its unqualified report to be included in the Form 10-K, whichever date is earlier.

Gartner sees 2003 global semiconductor market rising

STAMFORD, Conn., May 20 (UPI) -- Research and advisory firm Gartner Inc. said it expects the global semiconductor market will rise 8.3 percent in 2003 to $168 billion from $152 billion last year, following a first quarter that Gartner labeled as "relatively strong."

During the first quarter, the worldwide semiconductor market rose about 8.9 percent, Gartner said.

"With quarterly sequential growth at about negative 3.5 percent in the first quarter of 2003, but likely to turn mildly positive in the second quarter, it appears that the industry is capable of growing in the high single digits this year," said Richard Gordon, research vice president for Gartner's semiconductor research group.

But Gartner said the level of demand for semiconductors in the second half of the year remains "stubbornly elusive."

Kerr-McGee to close plant

OKLAHOMA CITY, May 20 (UPI) -- Kerr-McGee Corp. said its Kerr-McGee Chemical LLC unit plans to close its synthetic rutile plant in Mobile, Ala., on June 5, eliminating about 140 jobs.

The chemicals company said it estimates the remaining cost of closing the plant, including decommissioning expenses, will total about $15 million, and will be taken as a special charge in the second quarter.

Analysts on Wall Street currently expect the company to report earnings of 91 cents a share in the second quarter, according to Thomson First Call.

Kerr-McGee said the Alabama plant, which has been open since 1976, processes and supplies part of the feedstock for its two titanium dioxide pigment plants in the United States.

Ongoing supply chain initiatives now allow the company to buy the feedstock more economically than it can be made at the Mobile facility.

The company said it expects the supply chain programs to result in annual operating savings of $25 million to $30 million, beginning in 2004.

Kerr-McGee said back in January that it would close the Mobile plant by the end of the year in an effort to boost profits and focus on its core pigment business.

Washington Federal buys United Savings

SEATTLE, May 20 (UPI) -- Washington Federal Inc., seeking to expand its presence in Seattle, said it has reached an agreement to acquire United Savings and Loan Bank for $65 million in stock and cash.

Washington Federal said United Savings shareholders may elect to receive common stock or cash, subject to certain procedures designed to ensure between 45-50 percent of the consideration will be in the form of common stock.

The deal is expected to close in the third quarter, pending the receipt of all requisite regulatory approvals and the approval of United Savings' shareholders.

Privately held United Savings had total assets of $317 million at March 31. Washington Federal had $7.3 billion in assets at March 31. The combined company will have 119 offices in eight western states.

Saks posts profit

BIRMINGHAM, Ala., May 20 (UPI) -- Saks Inc. said it posted a fiscal first-quarter net profit, reversing a year-earlier loss that included a charge related to goodwill.

The upscale retailer reported net income of $14.4 million, or 10 cents a share for the quarter ended May 3, compared with a net loss of $25.4 million, or 18 cents a basic share during the same period a year earlier.

The company noted its latest results included a gain totaling $1.8 million, or 1 cent a share, primarily for a $3.2 million gain on the Household International Inc. transaction. That gain was partially offset by charges related to asset dispositions and the consolidation of Younkers, which is a part of the Saks Department Store Group segment.

Saks said in its year-earlier quarter the charges totaled $47.3 million, or 32 cents a share, mainly for a change in accounting for goodwill.

Excluding items in both periods, the retailer said earnings tumbled 42 percent to $12.6 million, or 9 cents a share, from $21.9 million, or 15 cents a share during the same period a year earlier.

The company blamed the sharp earnings decline on a 3.4 percent slide in sales at stores open more than a year and a lower gross margin rate.

Sales in the latest quarter fell 3.1 percent to $1.38 billion from $1.43 billion a year earlier.

Looking ahead, Saks Chairman and Chief Executive R. Brad Martin said the company believes that there will be "continued sales and gross margin rate pressure in the second quarter."

However, Martin said that the company is "cautiously optimistic" regarding some improvement in sales in the second half of 2003. Analysts currently expect the retailer to post a loss of 16 cents a share in the second quarter on sales of $1.2 billion.

In mid-April, the retailer said it completed a strategic alliance for Household International to own Saks' private label credit-card business.

Saks operates two business divisions -- the department store group, which operates stores under the Parisian, Proffitt's, McRae's, Younkers, Herberger's, Carson Pirie Scott, Bergner's and Boston Store nameplates; and Saks Fifth Avenue Enterprises, which operates the company's Saks Fifth Avenue luxury department stores and Saks Off 5th outlet stores.

Earnings improve at Ross Stores

NEWARK, Calif., May 20 (UPI) -- Ross Stores Inc. said its fiscal first-quarter net income rose 3.4 percent as overall sales increased despite a weak economic environment and unseasonable weather in the quarter.

The discount apparel retailer said its first-quarter net income rose to $49.3 million, or 63 cents a share for the quarter ended May 3, from $47.7 million, or 59 cents a share during the same period a year earlier.

Analysts on Wall Street had expected Ross Stores to post a net income of 63 cents a share, according to Thomson First Call.

Sales rose 7.3 percent to $879.3 million from $819.6 million a year ago, topping a First Call consensus revenue estimate of $877.3 million in the quarter.

The company said overall sales were aided by strong inventory and expense controls, as well as earlier-than-planned new store openings.

Yet, same-store sales, or sales at stores open for at least a year, declined 3 percent as unseasonable weather, the war in Iraq and the lackluster economic climate weighed down results.

The retailer had projected those exact first-quarter results earlier in the month when it lowered its second-quarter sales guidance.

Ross said it plans to add about 62 stores this year, which is in line with its long-term plan for 12 percent annual growth. The company already opened 23 new stores in the first quarter, which resulted in a total of 530 stores in 24 states.

In a filing with the Securities and Exchange Commission back in April, Ross said it planned to open about 66 stores.

Earlier this month, Ross said it expected second-quarter same-store sales to remain flat, rather than posting growth of 2 percent to 3 percent as originally projected. Inventory and expense controls were expected to help the company's bottom line, leading to an earnings projection of 66 cents to 70 cents a share.

Analysts on Wall Street currently expect the company to earn 68 cents a share in the second quarter, according to Thomson First Call.

Philadelphia Suburban sells some AquaSource operations

BRYN MAWR, Pa., May 20 (UPI) -- Philadelphia Suburban Corp. said it has reached an agreement to sell the Connecticut and New York operations of AquaSource Inc. to BIW Ltd. for $5 million.

Philadelphia Suburban said the sale is contingent upon the successful closing of its purchase of AquaSource utility systems, which include the Connecticut and New York operations, pursuant to the previously announced purchase agreement with DQE Inc.

That closing is expected to take place in the third quarter.

In July 2002, Philadelphia Suburban reached an agreement with DQE and its AquaSource unit to purchase AquaSource's investor-owned water and wastewater systems and assume selected integrated operating and maintenance contracts for about $205 million.

The sale of the Connecticut and New York regulated AquaSource operations to BIW's Birmingham Utilities is subject to state regulatory approvals.

Philadelphia Suburban said it is selling the New York and Connecticut operations because of their small size in comparison to the other AquaSource systems and the fact that it has no other utility operations in those states.

Losses at AMC Entertainment widen

KANSAS CITY, Mo., May 20 (UPI) -- AMC Entertainment Inc. posted a wider net loss for its fiscal fourth quarter as costs grew along with the increase in the number of screens the theater chain operates.

AMC reported a net loss of $18 million, or 67 cents a share for the quarter ended April 3, compared with a net loss of $9.6 million, or 76 cents a share during the same period a year earlier.

Total revenue rose to $446.4 million from $338.7 million a year ago.

Results for the latest quarter included an asset-impairment charge of $19.6 million to reset the value of international assets. By comparison, AMC recorded an asset-impairment charge of $4.7 million in the year-earlier quarter.

Total costs and expenses also rose, while investment income fell.

With the integration of the General Cinema and Gulf States theaters, acquired at the beginning of fiscal 2002, AMC operated an average of 3,524 screens as of the end of the latest fiscal year, compared with 2,899 a year earlier.

AMC reported free cash flow, which the company defines as after-tax cash minus net capital expenditures, of $12 million as of the end of the quarter, compared with negative cash flow of $10.9 million a year earlier.

For the full fiscal year, AMC's net loss was $20.3 million, or $1.31 a share, compared with $11.5 million, or $1.73 a share, the previous year. Revenue rose 33 percent to $1.79 billion from $1.34 billion in fiscal 2002.

Crane, Signal Tech deal gets antitrust OK

STAMFORD, Conn., May 20 (UPI) -- Crane Co. said it has received antitrust approval to purchase Signal Technology Corp. with the expiration of the federal antitrust waiting period.

Crane, a diversified maker of engineered industrial products, agreed in April to acquire Signal Technology, a Danvers, Mass.-based developer of electronic components, for $153 million cash.

Crane said its $13.25-per-share tender offer is scheduled to expire Thursday, unless extended.