XM Satellite Radio inches higher on revenue growth; Fleming rises despite closings

By Carlise Newman

Chicago, May 8 - XM Satellite Radio Holdings Inc. was better bid Thursday after the company said its first-quarter net loss widened but revenue increased sevenfold from a year earlier because of continued strong growth in the number of subscribers.

The satellite-radio provider late Wednesday reported a net loss of $126.3 million ($1.26/share), compared with a net loss of $112.3 million ($1.56/share) a year earlier. The street was expecting a loss of $1.36 a share. Total revenue soared to $13.1 million from $1.8 million.

A trader quoted XM's 14% notes due 2009 at 71 bid/73 offered, up three points from Wednesday's trade.

Also in its earnings release, XM reported 483,075 subscribers as of March 31, a 39% increase from the fourth quarter and six times the subscribers from the first quarter of 2002.

In April, Washington, D.C.-based XM announced that it had surpassed the 500,000-subscriber level.

Subscriber revenue surged to $12.5 million from $1.4 million, while ad sales rose 15% to $448,000 from $391,000. Royalties and other revenue jumped to $13, 052 from $1,785.

On Tuesday, Delphi Corp. said that Wal-Mart Stores Inc. will carry Delphi XM SKYFi radios in 2,100 stores nationwide. The SKYFi receivers were jointly developed by Delphi and XM Satellite.

"XM shot up Tuesday when the Wal-Mart news came out, and they've been holding in ever since," said a distressed debt trader. "They were in the 30s a few months ago, but the future of the company is looking a little brighter now."

Fleming Cos. Inc.'s bonds also saw moderate gains Thursday. The 9¼% notes due 2010 were up two points to 13 bid/15 offered from 11 bid/13 offered Wednesday.

The Dallas-based bankrupt grocery supplies distributor said it will close five wholesale divisions, including a general merchandise distribution center, as it works to cut costs and focus its resources on the profitable parts of its business.

Fleming said the facilities slated for closure by mid-June are located in Salt Lake City, Utah; Warsaw, N.C.; Northeast, Md.; and Phoenix, Ariz. The general merchandise distribution center to cease operations is located in King of Prussia, Pa.

Collectively, the divisions being closed represent about $1 billion in annualized revenue, Fleming said in a statement.

Fleming said it is also reviewing options for its Minneapolis distribution center, which was entirely dedicated to supplying its 31 Hopkins, Minn.-based Rainbow Food stores, which are being sold. The Rainbow Foods stores were part of Fleming's retail division, which the company has been slowly selling as it moves its focus to growing its distribution business instead of running its own supermarkets as well.

Fleming has an asset purchase agreement to sell 31 of the stores and has filed a motion with the U.S. Bankruptcy Court to establish an auction for the sale of the stores.

The company is also announced the opening of its new convenience division in Denver, which replaces the previous Denver division, destroyed by fire in late 2002.

"We saw Fleming come across. It hasn't been moving recently. Some days are like that, you see names that were really hot just die."

Global Crossing was active again Thursday. The company filed its monthly operating report in court as required in bankruptcy proceedings late Wednesday.

The company's bonds were reportedly bid at 3.5 and offered at 4.5, close to Wednesday's levels, a trader said. Its bank debt traded at 21 Thursday, up from 19.5 bid/20 offered Wednesday. Another desk had the bank debt higher Thursday, at 21.5 bid/22.5 offered.

"A bunch of bonds traded in the last few days. They're actually pretty active, they trade all the time," said a distressed debt trader. "They've been at these levels for a couple of days. They were bid at 4 a few weeks ago, 6 a few months ago. They just get lower and lower."

For continuing operations in March 2003, the company reported consolidated revenue of $231 million. Consolidated access and maintenance costs were reported as $164 million, while other operating expenses were $63 million.

The company reported a consolidated cash balance of $662 million as of March 31, comprised of $257 million in unrestricted cash, $332 million in restricted cash and $73 million of cash held by Global Marine. Global Crossing posted a consolidated net loss of $89 million for March 2003, and positive consolidated EBITDA of $4 million.

Last week, the U.S. said it had expanded its probe in Hutchinson Whampoa Ltd.'s bid for Global Crossing. A report from Bloomberg news said the U.S. government extended its investigation into whether Hutchison Whampoa Ltd.'s $250 million plan to take control of bankrupt network operator Global Crossing will jeopardize national security.

The government told the companies it would take another 45 days to determine whether China would exert undue influence over Hong Kong-based Hutchison's ownership of a fiber-optic network.

In other news, Centennial Communications Corp.'s term loan A was "about three quarters of a point higher" to 90 bid/91 offered, according to a market source.

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