S&P raises dj Orthopedics outlook to positive

Standard & Poor's raised its outlook on dj Orthopedics LLC to positive from stable and confirmed its ratings, including the B- subordinated debt rating and BB- senior secured bank loan rating.

S&P said the revision reflects dj Orthopedics' "improved financial profile following a significant reduction of LBO-related debt from the proceeds of the company's recent IPO."

Although the company has increased its size in the orthopedic recovery products market, it remains a relatively small operator, with about a 24% market share, S&P said. "Indeed, with the company's small revenue base and narrow focus in a niche market, ongoing industry cost-containment pressures could have a significant impact, and competition from innovative technology remains a concern."

Moody's cuts ITC^Deltacom senior unsecureds to Ca

Moody's Investors Service downgraded ITC^Deltacom, Inc., affecting $845 million of debt securities. Ratings reduced include ITC^DeltaCom's senior notes, lowered to Ca from B2, its $100 million 4.5% convertible subordinated notes due 2006, lowered to C from B3, and Interstate Fibernet Inc.'s $160 million guaranteed senior secured credit facility rating, lowered to Caa2 from Ba3. The outlook remains negative.

Moody's said it took the action because ITC^DeltaCom's performance to date has fallen short of Moody's previous expectations. The rating agency is also concerned about the company's ability to "finance its operations over the intermediate term given its current liquidity constraints and our belief that a prolonged deterioration in the economic environment will further impact its operations."

While ITC^Deltcom has generated positive EBITDA. over the past several quarters EBITDA has remained "relatively flat for the company's broadband business and declining for its retail operations," Moody's added.

Moody's reduces Tommy Hilfiger outlook to negative from stable

Moody's revised the ratings outlook for Tommy Hilfiger U.S.A., Inc. to negative from stable. At the same time Moody's confirmed the company's Ba1 rated $250 million guaranteed senior unsecured revolving facility due 2003, its Ba1 rated $85 million guaranteed senior unsecured term loan due 2003, its Ba1 rated $200 million issue of 6.85% guaranteed senior unsecured notes due 2008, and its Ba1 rated $250 million issue of 6.5% guaranteed senior unsecured notes due 2003.

The lower rating outlook - which affects approximately $785 million of debt - "reflects a decline in operating margins and return on assets; continued weakness in the wholesale segment, particularly in menswear and childrenswear, a segment representing a significant portion (75%) of the company's sales; and high single-digit same store sales declines in its retail segment," Moody's said.

Stating that the company's overall profitability for the six months ending Sept. 30, 2001, as reported, decreased to 14.6% from 15.7% a year ago, Moody's noted "the relatively short tenor of the company's debt profile, the majority of which matures in 2003."

S&P cuts Amatek outlook to negative

Standard & Poor's lowered its outlook on Amatek Industries Pty. Ltd. to negative from stable and confirmed the B rating on its $115 million senior subordinated notes and its $81 million subordinated notes.

S&P said the lower outlook reflects the company's "recent weak financial performance and softer-than-expected industry conditions, which could make it difficult for Amatek to improve its credit protection measures to those more consistent with its rating in the short term. The rating on Amatek reflects its high margin, yet narrow product range and its strong competitive positions in the cyclical Australian and U.S. concrete construction and building markets, offset by a very aggressive financial profile."

S&P downgrades Iron Age

Standard & Poor's downgraded Iron Age Holdings Inc. and subsidiary Iron Age Corp. The outlook is negative. Ratings affected include Iron Age Holdings' senior unsecured debt, lowered to CCC from CCC+ and Iron Age Corp.'s senior secured debt, cut to B from B+, and senior subordinated debt, cut to CCC from CCC+.

S&P said the downgrade reflects the company's "deteriorating credit protection measures, weak operating results, and Standard & Poor's expectation that credit measures will remain weak in the intermediate term."

The rating agency commented: "Iron Age's operating performance has been negatively affected by a weakening general economy, resulting in plant closings and employee layoffs that affected Iron Age's customers. Sales declined 9% while EBITDA declined 20% for the first six months of 2001, and operating margins slipped to 14% for the last 12 months ended July 2001 from 15% in fiscal 2000."

It added: "In the intermediate term, business conditions remain challenging because of the contraction in demand due to a slumping economy and increased competitive pressure from consumer brand products. Although Iron Age's footwear products have good brand recognition, competition from more recognized consumer brands has intensified, further pressuring Iron Age's sales."

S&P downgrades Park-Ohio Industries

Standard & Poor's downgraded Park-Ohio Industries Inc., including cuttings its senior secured debt to B from B+ and its subordinated debt rating to CCC+ from B-. The outlook is negative.

S&P said the downgrade is in response to Park-Ohio's "weak operating results during 2001 and the expectation that results will be weaker than expected for the near to intermediate term. The company reported a 14% decline in sales and a 50% decline in operating income during the first nine months of 2001 (pro forma for an asset sale)."

The rating agency said the "poor results were caused by overall weakness in the manufacturing economy, particularly in the heavy-duty truck and automotive industries. In addition, the planned ending of certain automotive sales contracts and the cessation of production of low volume non-automotive products contributed to the weaker sales levels and lower fixed cost absorption. The automotive and truck markets are expected to remain weak during 2002."

Moody's confirms Archibald Candy

Moody's Investors Service confirmed the ratings of Archibald Candy Corp., including its $170 million of 10¼% senior secured notes due 2004 at Caa2. The outlook is stable.

Moody's confirmed the ratings after one of Archibald's operating subsidiaries The Sweet Factory Group Inc. filed for bankruptcy.

"Sweet Factory is the poorest performing of the four candy-retailing banners owned by Archibald," Moody's commented.

It added that Archibold's leverage will likely see a modest improvement as non-contributing Sweet Factory stores are closed and Moody's belief that the company will operate normally through the vital candy buying periods preceding Christmas, Valentine's Day, and Easter.

"However, shopping mall traffic has been adversely impacted by the September 11th terrorist incidents, and continued traffic declines could lead to reduced revenue over the intermediate term," Moody's commented.

Moody's rates GAL new offering B2

Moody's Investors Service said it assigned a B2 rated to GAL Finance SA's planned offering of €100 million of senior notes due 2009, guaranteed on a senior subordinated basis by Global Automotive Logistiques SAS. It also rated at Ba3 the company's €265 million senior secured credit facilities The outlook is stable.

Moody's said the notes are expected to refinance €34.6 million of the company's €60.0 million term loan B under its senior secured credit facilities and €60.0 million in outstanding mezzanine bonds, the proceeds of which were utilized to fund the acquisition by GAL of Compagnie d'Affretement et de Transport from Renault SA in July.

The rating agency said the Ba3 senior implied rating reflects "the strong historical relationship between Renault and CAT (the latter having operated as a logistics service provider to Renault since 1957), the significant technical and practical integration of both parties' operations, as well as the fact that Renault and CAT have entered newly-established long-term contracts to further strengthen this relationship going forward. While the maturity of the notes exceeds that of GAL's contracts with Renault, Moody's derives some comfort from the resilience afforded by certain contractual clauses, including indemnification and insurance requirements, material change clauses, termination notices, as well as from certain established historical practices between Renault and CAT."

Moody's also noted there are substantial barriers to entry for a competitor seeking to enter into a relationship with Renault.

The rating agency added: "While Moody's recognises that the business currently affords significant scope for cost reductions, Moody's cautions that GAL management will need to effect such internal re-structurings in a timely manner and on budget in order to yield the level of organic cash flow growth sufficient to adequately service all debt obligations (including bank debt principal amortisation starting in August 2002) and maintain sufficient liquidity to absorb potential negative credit events going forward."

S&P rates GAL new offering B

Standard & Poor's rated GAL Finance SA's planned offering of €100 million notes due 2008 at B. The notes are guaranteed by Global Automotive Logistics SAS.

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