S&P puts Reebok on positive watch

Standard & Poor's placed the BBB- senior unsecured debt of Reebok International Ltd. on positive watch, based on an improved financial profile.

Reebok's operating performance and financial profile have shown significant improvement during the past couple of years as a result of new sports licensed products and a renewed focus and investment in footwear.

The consequent growth in revenues, net earnings, and credit protection measures might result in a one-notch upgrade following the review, S&P said.

S&P confirms Time Warner ratings

Standard & Poor's confirmed the ratings on Time Warner Inc. and removed it from watch, based on its success in reducing debt through a concentrated effort at debt reduction from a combination of free cash flow and non-core asset sales.

The effect of these developments has been to bring Time Warner's total debt to EBITDA within S&P's 2.75x target for the company at this rating level.

The rating on Time Warner reflects its strong content and distribution positions in media and entertainment, the online services market position it holds through America Online and the company's moderate capital structure, S&P said.

These strengths are tempered by risks associated with ongoing SEC and U.S. Dept. of Justice investigations and shareholder litigation, competitive pressures in all of its businesses from well-capitalized peers, and increased business risk at AOL.

Consolidated gross debt to EBITDA for the 12 months ended Sept. 30 pro forma for the divestitures of the music manufacturing and winter sports businesses, was about 2.7x. Management still intends to reduce its net debt to $20 billion or less by the end of 2004, and thereafter to focus its free cash flow and debt capacity within the rating on growth strategies, which may include acquisitions.

Time Warner's liquidity is more than adequate for its needs at this time, with cash and equivalents totaled $1.7 billion. Time Warner has a $6 billion revolving credit expiring in 2007 and a $2 billion 364-day facility, extendable one year at its option, last renewed in July 2003. At Sept. 30, total cash and available borrowing capacity was roughly $10 billion.

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