S&P rates Bristol-Myers convertible AA-

Standard & Poor's assigned a AA- senior unsecured debt rating to Bristol-Myers Squibb Co.'s $1 billion senior unsecured convertible notes offering and confirmed its other ratings, with a negative outlook.

The ratings reflect a strong presence in the worldwide pharmaceutical industry, diverse product portfolio and solid financials, partially offset by uncertain prospects of new product launches, S&P said.

Bristol-Myers faces another round of significant patent expirations, so successful new product launches are increasingly important, and will likely experience a period of slower growth as it transitions to its next generation of new drugs.

The company has completed two major debt-financed acquisitions in the past two years to bolster its product portfolio and drug pipeline: the $7.8 billion purchase of DuPont Pharmaceuticals and the original $1.2 billion investment in ImClone Systems, both in 2001.

Given the significant amount of additional debt related to these transactions, in conjunction with earnings pressures tied to increased generic competition, credit and financial performance measures have eroded somewhat, S&P said.

Net debt to capital has risen to 41%, whereas the company had a net cash position in 2000. Return on capital has declined to roughly 30% from more than 60% as recently as 2000.

Nevertheless, cash flow impact is limited, and with expected funds from operations to net debt of more than 70% and minimal debt maturities during the next four years, the financial profile remains consistent with the rating.

Liquidity is high with nearly $4.4 billion of cash and marketable securities as well as $500 million in unused credit facilities at June 30. Proceeds from the proposed $1 billion offering will be used to reduce commercial paper borrowings.

Moody's ups Wells Fargo ratings

Moody's Investors Service raised the ratings of Wells Fargo & Co. (senior debt to Aa1 from Aa2 and subordinated debt to Aa2 from Aa3), reflecting a strong franchise, good earnings diversification as well as consistently robust core earnings, solid risk management and highly focused sales culture.

Moody's believes that these attributes should lead to the continuation of a stable and predictable earnings and risk profile. The upgrade also reflects recent steps taken to strengthen financial management and controls, bolster liquidity and reduce double leverage, as well as good corporate governance.

Moody's noted that during an extended period of very low interest rates the earnings Wells Fargo's realizes from its strong core deposit business would likely be diminished.

However, while this would lead to a contraction of net interest margins, the rating agency believes that Wells Fargo's strong customer focus and leading mortgage banking franchise should help to generate offsetting earnings and sustain ample credit protection for bondholders.

S&P ups Micron outlook to stable

Standard & Poor's revised the outlook on Micron Technology Inc. to stable from negative, reflecting the sale of about $450 million in common stock rights to Intel Corp., which eased concerns about near-term liquidity.

All ratings, including subordinated debt at B-, were confirmed.

Ratings on Micron reflect the challenges of supplying technologically intensive products subject to severe price pressures, tempered by the company's conservative financial policies, S&P said.

Because of volatile profitability, Micron's debt-protection measures vary widely through the business cycle, although capitalization has remained conservative. Debt, including capitalized operating leases, was 21% of capital at Aug. 31.

Micron had about $1.3 billion of unrestricted cash at Aug. 31, pro forma for the Intel transaction, while debt and capitalized leases also totaled $1.3 billion. Capital expenditures were $1.06 billion in the fiscal year ended August. Micron does not have a revolving credit agreement.

While market conditions will likely remain challenging over the intermediate term, and while quarterly volatility is a characteristic of the industry, liquidity, along with its good competitive position and technology base, provides support for the rating.

S&P ups Universal Health

Standard & Poor's raised Universal Health Services' senior unsecured debt to BBB from BBB-, with a stable outlook, reflecting proven ability to sustain strong financial results and confidence that it will continue, given its moderate financial policy and demonstrated ability to manage industry risks.

Conservative acquisition criteria and prudent use of debt and cash flow has enabled the company to sustain healthy growth while maintaining credit protection measures consistent with the rating, S&P said.

Favorable reimbursement trends coupled with solid increases in revenue per adjusted admission have contributed to strong financial results; the company's cash flow coverage of interest is about 11x.

Success of the strategy is evidenced by an increase in return on capital to 19% in 2002 from 15% in 2000.

Nevertheless, cost increases remain a key concern. Notwithstanding recent improvement in the environment for labor expenses, long-term risks remain. Expenses for pharmaceuticals, medical devices, and insurance will continue to be a threat to margins.

Moreover, government reimbursement and commercial insurance pricing is a long-term credit concern, S&P continued. Still, funds from operations to lease-adjusted debt, which has averaged more than 40% since 1999, provides a comfortable cushion.

In addition to strong operating cash flow, at June 30, Universal had $27 million of cash and cash equivalents and about $340 million of unused borrowing capacity on its unrated $400 million senior unsecured non-amortizing bank credit facility, which matures December 2006.

S&P rates Fubon convertible BBB

Standard & Poor's assigned a BBB rating to Fubon Financial Holding Co. Ltd.'s proposed 0% convertible bond.

S&P raises SanDisk outlook

Standard & Poor's raised its outlook on SanDisk Corp. to positive from stable including its subordinated debt at CCC+.

S&P said the revision in the outlook reflects improved profitability over the last four quarters resulting from rapid growth in flash-memory cards, driven primarily by growth in the digital camera market.

Revenues grew sequentially in the June 2003 quarter to $235 million, from $175 million in the March 2003 quarter, which was nearly flat sequentially with a seasonally strong December quarter. EBITDA was $52 million in the June 2003 quarter, following significant increases over the previous four quarters.

SanDisk's ratings reflect significant business risk because of a narrow business focus on the rapidly emerging flash-memory-card market, partly offset by a strong market position, increasing profitability and a moderate capital structure.

SanDisk developed and controls the intellectual property behind several leading flash card formats, including CompactFlash and Secure Digital. SanDisk has the leading worldwide flash-card market share, comprised of SanDisk-branded cards and re-branded cards supplied to leading consumer electronic and photographic original equipment manufacturers (OEMs), as well as distribution to industrial end-markets.

SanDisk also receives quarterly royalty income from licensees of its flash memory technology patents, including Samsung Electronics Co. Ltd., Hitachi, Ltd., and others. Sony Corp. controls the leading non-SanDisk card format, Memory Stick. Sony and SanDisk are jointly developing the next generation of Memory Stick, S&P noted.

Total debt-to-EBITDA fell to 0.9x as of the June 2003 quarter. Further improvements are expected in the second half of 2003 as a result of the seasonally strong holiday demand, S&P said.

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