WASHINGTON (Reuters) -
U.S. wireless carriers Verizon Communications and AT&T took issue with assertions that they colluded in setting prices for text messages, saying on Tuesday that prices for most customers had fallen and the market was competitive.
Sen. Herb Kohl, chair of the Senate Judiciary Committee's antitrust subcommittee, said he was concerned that the four largest cell phone companies doubled their text message rates from 10 cents in 2006 to 20 cents in 2008.
"These sharp price increases raise concerns. Are these price increases the result of a lack of competition in a highly concentrated market?" he asked, adding that the subcommittee had urged the Justice Department to scrutinize any future mergers or allegations of anticompetitive practices in the industry.
But the general counsels of both Verizon and AT&T argued that the price increases affected 1 percent of text messages sent because most consumers bought volume plans that lowered the per-message cost.
"The faulty notion that prices for text messaging have risen derives from an unduly narrow interest in the trend of a single pricing option for text messaging services, the pay-per-use option, when the vast majority of AT&T's customers do not choose that option," said Wayne Watts, general counsel of AT&T.
Watts and Randal Milch, general counsel of Verizon Communications, said that about 17 percent of their customers were on a plan that had them paying for each text message.
They also each denied that their companies colluded on pricing.
"The market evidence shows fierce competition across the wireless market," Milch said.
Tuesday, June 16, 2009
Wish Fulfillment? No. But Dreams (and Sleep) Have Meaning
Dreams may not be the secret window into the frustrated desires of the unconscious that Sigmund Freud first posited in 1899, but growing evidence suggests that dreams - and, more so, sleep - are powerfully connected to the processing of human emotions.
According to new research presented last week at the annual meeting of the Associated Professional Sleep Societies in Seattle, adequate sleep may underpin our ability to understand complex emotions properly in waking life. "Sleep essentially is resetting the magnetic north of your emotional compass," says Matthew Walker, director of the Sleep and Neuroimaging Lab at the University of California, Berkeley. (See the top 10 scientific discoveries of 2008.)
A recent study by Walker and his colleagues examined how rest - specifically, rapid eye movement (REM) sleep - influences our ability to read emotions in other people's faces. In the small analysis of 36 adults, volunteers were asked to interpret the facial expressions of people in photographs, following either a 60- or 90-minute nap during the day or with no nap. Participants who had reached REM sleep (when dreaming most frequently occurs) during their nap were better able to identify expressions of positive emotions like happiness in other people, compared with participants who did not achieve REM sleep or did not nap at all. Those volunteers were more sensitive to negative expressions, including anger and fear.
Past research by Walker and colleagues at Harvard Medical School, which was published in the journal Current Biology, found that in people who were sleep deprived, activity in the prefrontal lobe - a region of the brain involved in controlling emotion - was significantly diminished. He suggests that a similar response may be occurring in the nap-deprived volunteers, albeit to a lesser extent, and that it may have its roots in evolution. "If you're walking through the jungle and you're tired, it might benefit you more to be hypersensitive to negative things," he says. The idea is that with little mental energy to spare, you're emotionally more attuned to things that are likely to be the most threatening in the immediate moment. Inversely, when you're well rested, you may be more sensitive to positive emotions, which could benefit long-term survival, he suggests: "If it's getting food, if it's getting some kind of reward, finding a wife - those things are pretty good to pick up on." (See more about sleep.)
Our daily existence is largely influenced by our ability "to understand our societal interactions, to understand someone else's emotional state of mind, to understand the expression on their face," says Ninad Gujar, a senior research scientist at Walker's lab and lead author of the study, which was recently submitted for publication. "These are the most fundamental processes guiding our personal and professional lives."
REM sleep appears to not only improve our ability to identify positive emotions in others; it may also round out the sharp angles of our own emotional experiences. Walker suggests that one function of REM sleep - dreaming, in particular - is to allow the brain to sift through that day's events, process any negative emotion attached to them, then strip it away from the memories. He likens the process to applying a "nocturnal soothing balm." REM sleep, he says, "tries to ameliorate the sharp emotional chips and dents that life gives you along the way." (See the top 10 medical breakthroughs of 2008.)
"It's not that you've forgotten. You haven't," he says. "It's a memory of an emotional episode, but it's no longer emotional itself."
That palliative safety-valve quality of sleep may be hampered when we fail to reach REM sleep or when REM sleep is disrupted, Walker says. "If you don't let go of the emotion, what results is a constant state of anxiety," he says.
The theory is consistent with new research conducted by Rebecca Bernert, a doctoral candidate in clinical psychology at Florida State University who specializes in the relationship between sleep and suicidal thoughts and behaviors, and who also presented her work at the sleep conference this week.
In her study of 82 men and women between the ages of 18 and 66 who were admitted into a mental-health hospital for emergency psychiatric evaluation, Bernert discovered that the presence of severe and frequent nightmares or insomnia was a strong predictor of suicidal thoughts and behaviors. More than half of the study participants had attempted suicide at least once in the past, and the 17% of the study group who had made an attempt within the previous month had dramatically higher scores in nightmare frequency and intensity than the rest. Bernert found that the relationship between nightmares or insomnia and suicide persisted, even when researchers controlled for other factors like depression. See TIME's special report on how not to get sick.)
Past studies have also established a link between chronic sleep disruption and suicide. Sleep complaints, which include nightmares, insomnia and other sleep disturbances, are listed in the current Substance Abuse and Mental Health Services Administration's inventory of suicide-prevention warning signs. Yet what distinguishes Bernert's research is that when nightmares and insomnia were evaluated separately, nightmares were independently predictive of suicidal behavior. "It may be that nightmares present a unique risk for suicidal symptoms, which may have to do with the way we process emotion within dreams," Bernert says.
If that's the case, it may help explain the recurring nightmares that characterize psychiatric conditions like posttraumatic stress disorder (PTSD), Walker says. "The brain has not stripped away the emotional rind from that experience memory," he says, so "the next night, the brain offers this up, and it fails again, and it starts to sound like a broken record ... What you hear [PTSD] patients describing is, 'I can't get over the event.' "
At the biological level, Walker explains, the "emotional rind" translates to sympathetic nervous-system activity during sleep: faster heart rate and the release of stress chemicals. Understanding why nightmares recur and how REM sleep facilitates emotional processing - or hinders it, when nightmares take place and perpetuate the physical stress symptoms - may eventually provide clues to effective treatments of painful mental disorders. Perhaps, even, by simply addressing sleeping habits, doctors could potentially interrupt the emotional cycle that can lead to suicide. "There is an opportunity for prevention," Bernert says.
The new findings highlight what researchers are increasingly recognizing as a two-way relationship between psychiatric disorders and disrupted sleep. "Modern medicine and psychiatry have consistently thought that psychological disorders seem to have co-occuring sleep problems and that it's the disorder perpetuating the sleep problems," says Walker. "Is it possible that, in fact, it's the sleep disruption contributing to the psychiatric disorder?"
According to new research presented last week at the annual meeting of the Associated Professional Sleep Societies in Seattle, adequate sleep may underpin our ability to understand complex emotions properly in waking life. "Sleep essentially is resetting the magnetic north of your emotional compass," says Matthew Walker, director of the Sleep and Neuroimaging Lab at the University of California, Berkeley. (See the top 10 scientific discoveries of 2008.)
A recent study by Walker and his colleagues examined how rest - specifically, rapid eye movement (REM) sleep - influences our ability to read emotions in other people's faces. In the small analysis of 36 adults, volunteers were asked to interpret the facial expressions of people in photographs, following either a 60- or 90-minute nap during the day or with no nap. Participants who had reached REM sleep (when dreaming most frequently occurs) during their nap were better able to identify expressions of positive emotions like happiness in other people, compared with participants who did not achieve REM sleep or did not nap at all. Those volunteers were more sensitive to negative expressions, including anger and fear.
Past research by Walker and colleagues at Harvard Medical School, which was published in the journal Current Biology, found that in people who were sleep deprived, activity in the prefrontal lobe - a region of the brain involved in controlling emotion - was significantly diminished. He suggests that a similar response may be occurring in the nap-deprived volunteers, albeit to a lesser extent, and that it may have its roots in evolution. "If you're walking through the jungle and you're tired, it might benefit you more to be hypersensitive to negative things," he says. The idea is that with little mental energy to spare, you're emotionally more attuned to things that are likely to be the most threatening in the immediate moment. Inversely, when you're well rested, you may be more sensitive to positive emotions, which could benefit long-term survival, he suggests: "If it's getting food, if it's getting some kind of reward, finding a wife - those things are pretty good to pick up on." (See more about sleep.)
Our daily existence is largely influenced by our ability "to understand our societal interactions, to understand someone else's emotional state of mind, to understand the expression on their face," says Ninad Gujar, a senior research scientist at Walker's lab and lead author of the study, which was recently submitted for publication. "These are the most fundamental processes guiding our personal and professional lives."
REM sleep appears to not only improve our ability to identify positive emotions in others; it may also round out the sharp angles of our own emotional experiences. Walker suggests that one function of REM sleep - dreaming, in particular - is to allow the brain to sift through that day's events, process any negative emotion attached to them, then strip it away from the memories. He likens the process to applying a "nocturnal soothing balm." REM sleep, he says, "tries to ameliorate the sharp emotional chips and dents that life gives you along the way." (See the top 10 medical breakthroughs of 2008.)
"It's not that you've forgotten. You haven't," he says. "It's a memory of an emotional episode, but it's no longer emotional itself."
That palliative safety-valve quality of sleep may be hampered when we fail to reach REM sleep or when REM sleep is disrupted, Walker says. "If you don't let go of the emotion, what results is a constant state of anxiety," he says.
The theory is consistent with new research conducted by Rebecca Bernert, a doctoral candidate in clinical psychology at Florida State University who specializes in the relationship between sleep and suicidal thoughts and behaviors, and who also presented her work at the sleep conference this week.
In her study of 82 men and women between the ages of 18 and 66 who were admitted into a mental-health hospital for emergency psychiatric evaluation, Bernert discovered that the presence of severe and frequent nightmares or insomnia was a strong predictor of suicidal thoughts and behaviors. More than half of the study participants had attempted suicide at least once in the past, and the 17% of the study group who had made an attempt within the previous month had dramatically higher scores in nightmare frequency and intensity than the rest. Bernert found that the relationship between nightmares or insomnia and suicide persisted, even when researchers controlled for other factors like depression. See TIME's special report on how not to get sick.)
Past studies have also established a link between chronic sleep disruption and suicide. Sleep complaints, which include nightmares, insomnia and other sleep disturbances, are listed in the current Substance Abuse and Mental Health Services Administration's inventory of suicide-prevention warning signs. Yet what distinguishes Bernert's research is that when nightmares and insomnia were evaluated separately, nightmares were independently predictive of suicidal behavior. "It may be that nightmares present a unique risk for suicidal symptoms, which may have to do with the way we process emotion within dreams," Bernert says.
If that's the case, it may help explain the recurring nightmares that characterize psychiatric conditions like posttraumatic stress disorder (PTSD), Walker says. "The brain has not stripped away the emotional rind from that experience memory," he says, so "the next night, the brain offers this up, and it fails again, and it starts to sound like a broken record ... What you hear [PTSD] patients describing is, 'I can't get over the event.' "
At the biological level, Walker explains, the "emotional rind" translates to sympathetic nervous-system activity during sleep: faster heart rate and the release of stress chemicals. Understanding why nightmares recur and how REM sleep facilitates emotional processing - or hinders it, when nightmares take place and perpetuate the physical stress symptoms - may eventually provide clues to effective treatments of painful mental disorders. Perhaps, even, by simply addressing sleeping habits, doctors could potentially interrupt the emotional cycle that can lead to suicide. "There is an opportunity for prevention," Bernert says.
The new findings highlight what researchers are increasingly recognizing as a two-way relationship between psychiatric disorders and disrupted sleep. "Modern medicine and psychiatry have consistently thought that psychological disorders seem to have co-occuring sleep problems and that it's the disorder perpetuating the sleep problems," says Walker. "Is it possible that, in fact, it's the sleep disruption contributing to the psychiatric disorder?"
Monday, June 15, 2009
Hollywood's Top-Earning Actors
Harrison Ford is riding high again, while funnyman Will Ferrell is firing blanks.
For the past five years, it seemed that Harrison Ford was happier out of the spotlight than on the silver screen. Since 2000, Ford has appeared in only four movies, none of which made much of an impression at the box office.
That all changed in 2008 when Ford strapped back on his trusty whip and went adventuring again in "Indiana Jones and the Kingdom of the Crystal Skull," the fourth film in the Indiana Jones series. In order to lure Ford out of his semi-retirement, Paramount agreed to a lucrative deal that split almost all of the film's earnings (after the studio made back its production and advertising costs) between Ford, Steven Spielberg and George Lucas.
As a result of the deal, Ford earned $65 million between June 2008 and June 2009, making him the highest-paid actor on our annual Celebrity 100 list. (Even though the movie was released in May of 2008, Ford didn't earn his money until several months later.)
In Pictures: Hollywood's Top-Earning Actors >>
To figure out earnings, we talked to agents, managers, producers and lawyers to determine what the stars earned as upfront pay on movies they are currently shooting, as well as backend pay earned after a movie hit the theaters. We also looked at any money actors might have earned from doing ads for things like beer, banks and coffee.
Coming in behind Ford with $55 million is Adam Sandler. The funnyman had two successful movies last year, "You Don't Mess With The Zohan" and "Bedtime Stories," plus he earned a big paycheck for the upcoming Judd Apatow movie "Funny People," in which he plays a comedian who thinks he might be dying.
In third is Will Smith, often considered in Hollywood to be the one person who can open any movie in the U.S. and abroad. Critics lambasted his two latest movies, "Hancock" and "Seven Pounds," but they were both still hits -- earning $800 million between them.
Eddie Murphy lands in fourth place on our list despite his disastrous film "Meet Dave." The movie, which was made for an estimated $60 million, earned only $50 million at the worldwide box office.
Rounding out the top five is Nicolas Cage. The tireless worker doesn't earn the same size paychecks as people like Smith and Sandler, but he currently has six movies scheduled to hit theaters in the next two years, including "G-Force," about some very smart hamsters, and a live-action version of "The Sorcerer's Apprentice."
Conspicuously low on the list (10th place) is Johnny Depp, who last year ranked second with $72 million. This year he earned $27 million. The reason: no pirate movie. Depp is almost always well paid, but he earns a nice chunk of the profits of the Disney series "Pirates of the Caribbean," which have earned a collective $2.6 billion at the worldwide box office.
Coming in at the bottom of our top 20 is Will Ferrell. The former "Saturday Night Live" star has seen a steady decline in box office revenue for his comedies. Things hit bottom this weekend when his remake of the TV show "Land of the Lost" earned just $18 million at the box office.
Hollywood's 10 Top-Earning Actors
1. Harrison Ford
2. Adam Sandler
3. Will Smith
4. Eddie Murphy
5. Nicolas Cage
6. Tom Hanks
7. Tom Cruise
8. Jim Carrey
9. Brad Pitt
10. Will Ferrell
For the past five years, it seemed that Harrison Ford was happier out of the spotlight than on the silver screen. Since 2000, Ford has appeared in only four movies, none of which made much of an impression at the box office.
That all changed in 2008 when Ford strapped back on his trusty whip and went adventuring again in "Indiana Jones and the Kingdom of the Crystal Skull," the fourth film in the Indiana Jones series. In order to lure Ford out of his semi-retirement, Paramount agreed to a lucrative deal that split almost all of the film's earnings (after the studio made back its production and advertising costs) between Ford, Steven Spielberg and George Lucas.
As a result of the deal, Ford earned $65 million between June 2008 and June 2009, making him the highest-paid actor on our annual Celebrity 100 list. (Even though the movie was released in May of 2008, Ford didn't earn his money until several months later.)
In Pictures: Hollywood's Top-Earning Actors >>
To figure out earnings, we talked to agents, managers, producers and lawyers to determine what the stars earned as upfront pay on movies they are currently shooting, as well as backend pay earned after a movie hit the theaters. We also looked at any money actors might have earned from doing ads for things like beer, banks and coffee.
Coming in behind Ford with $55 million is Adam Sandler. The funnyman had two successful movies last year, "You Don't Mess With The Zohan" and "Bedtime Stories," plus he earned a big paycheck for the upcoming Judd Apatow movie "Funny People," in which he plays a comedian who thinks he might be dying.
In third is Will Smith, often considered in Hollywood to be the one person who can open any movie in the U.S. and abroad. Critics lambasted his two latest movies, "Hancock" and "Seven Pounds," but they were both still hits -- earning $800 million between them.
Eddie Murphy lands in fourth place on our list despite his disastrous film "Meet Dave." The movie, which was made for an estimated $60 million, earned only $50 million at the worldwide box office.
Rounding out the top five is Nicolas Cage. The tireless worker doesn't earn the same size paychecks as people like Smith and Sandler, but he currently has six movies scheduled to hit theaters in the next two years, including "G-Force," about some very smart hamsters, and a live-action version of "The Sorcerer's Apprentice."
Conspicuously low on the list (10th place) is Johnny Depp, who last year ranked second with $72 million. This year he earned $27 million. The reason: no pirate movie. Depp is almost always well paid, but he earns a nice chunk of the profits of the Disney series "Pirates of the Caribbean," which have earned a collective $2.6 billion at the worldwide box office.
Coming in at the bottom of our top 20 is Will Ferrell. The former "Saturday Night Live" star has seen a steady decline in box office revenue for his comedies. Things hit bottom this weekend when his remake of the TV show "Land of the Lost" earned just $18 million at the box office.
Hollywood's 10 Top-Earning Actors
1. Harrison Ford
2. Adam Sandler
3. Will Smith
4. Eddie Murphy
5. Nicolas Cage
6. Tom Hanks
7. Tom Cruise
8. Jim Carrey
9. Brad Pitt
10. Will Ferrell
Sunday, June 14, 2009
Restaurants on the Ropes
When Americans get stressed out, one thing they do is eat. But apparently not enough.
The dismal economy has punished retailers, with companies like Circuit City and Linens 'n Things going extinct and dozens of others losing money. Now it's hitting their cousins in the restaurant industry, too. The Bennigan's and Steak & Ale chains were early casualties, going belly up last summer. This year, with Americans cutting back on spending, sales at restaurants could fall by 10 percent or more. Analysts don't expect widespread closures, but some chains are likely to close unprofitable outlets, cut back on service, and look for other ways to reduce costs.
As in retail, companies that help people save money will weather the storm better than others. Chains like McDonald's, Pizza Hut, and Olive Garden, which offer ample portions at value prices, should do OK and maybe even pick up market share. It helps if they've been run conservatively, with low borrowing costs and cash held for a rainy day.
[See who stands to gain from the General Motors bankruptcy.]
Other eateries are in a pickle. Fancy restaurants that had long waits a few years ago are now begging for customers and offering sales. Midpriced casual dining outlets are losing customers to cheaper fast-food joints. Even some dollar-menu franchises are suffering if they're overdependent on mall traffic or clustered in regions where the economy is weakest. A key factor is debt: With sales down everywhere, many companies that borrowed heavily to remodel, expand, or buy other franchises now find that interest payments gobble up a nerve-wracking amount of cash flow.
Since debt is such an important menu item, we scoured data from ratings agency Standard & Poor's to gauge which well-known restaurants are facing tough challenges. The following list represents companies that meet two criteria: They have a credit rating of B or lower, and S&P assigns them a negative outlook. Landing on this list doesn't mean the company is likely to declare bankruptcy or close its doors. But these firms are vulnerable to deteriorating economic and financial conditions. And the negative outlook means there's a chance S&P could downgrade the company's rating over the next six to 24 months. Here's our watch list:
Perkins Restaurant and Bakery. Company accountants could probably use some of the comfort food on the menu at this diner-style franchise, which has about 500 locations, mostly in the Midwest. Like other restaurants, Perkins has been able to cut food costs since they soared in 2007. But revenue has fallen, and the parent firm lost $9.7 million in the first quarter. S&P says the firm's liquidity position is "tenuous." With market share of just 8 percent, Perkins is more vulnerable to a lousy economy that competitors like Denny's (22 percent market share) and IHOP (19 percent). Perkins also owns the Marie Callender's Restaurant and Bakery chain, which suffers from similar financial burdens. Plus, Marie Callender is based in hard-hit California, which has been hammered by the housing bust.
A company spokesperson says Perkins has cut expenses by $7.3 million to help shore up its finances, delayed some remodeling, and called a halt to expansion.
[See how to find gold in a recession economy.]
El Torito. Slumping sales and steep debt are an unappetizing combo, especially in California, where this chain is based. The parent firm, Real Mex Restaurants, has bought time by extending a key credit line until next January. But S&P has questioned whether the company, owned by a group of private-equity firms, will have the cash flow to comply with loan terms over the next two years. Real Mex also owns Chevy's, the Acapulco chain, the more upscale El Torito Grill, and several other eateries. All are facing the same woes.
Real Mex says that cost-cutting has helped sustain earnings, and it recently hired a new CEO to help turn things around. The company also announced plans recently to issue new debt that would help cover a major payment due to lenders next year. If that offering is successful, it would indicate investors' confidence in the chain.
[See the upside of economic carnage.]
Sbarro. Many of this pizza chain's 1,070 outlets are in malls, where traffic is down and spenders are stingy. That contributed to a $5.7 million loss in the first quarter, more than double the red ink from a year ago. Interest payments on debt gobble up much of the company's cash flow, leaving little margin for error. The company is especially vulnerable to any rises in food or commodity costs and to competition that could force prices down. With about 40 percent of sales coming during the Christmas season, the company will need strong December results at a time of high unemployment and weak spending. A Sbarro executive declined to comment on the company's financial prospects.
Captain D's Seafood Kitchen. This chain's thrifty appeal--"sit-down food at fast-food prices"--hits the right note during lean times. And aggressive cost-cutting has helped offset falling sales. But debt is still too high, compared with the company's earnings. Parent company Sagittarius Brands got some relief last year from lenders who agreed to relax certain financial requirements. But the old terms go back into effect in 2010, and S&P doesn't think the firm, which operates nearly 600 restaurants across the south, will be able to meet them. A breach could trigger higher borrowing costs or give lenders the right to call in their loans. The California-based Del Tacos chain, which Sagittarius bought in 2006, is under similar pressure. The company didn't respond to calls seeking comment.
[See how businesses can prosper, even now.]
Krispy Kreme. The famed doughnut chain got too chubby over the last 15 years, and it's been closing unprofitable stores to help reverse several years of steep losses. Revenue has plunged since 2005, but cutbacks helped the company turn a $1.9 million profit in the latest quarter. Lenders have provided a breather by easing some of their requirements over the last two years. The temporary reprieve expires in 2011. By then, the company hopes that streamlining, profitable new overseas stores, and other measures will have strengthened its finances.
Spokesman Brian Little points out that Krispy Kreme has cut its debt by nearly 40 percent and has a $21 million cash cushion. The recession, he adds, isn't as daunting to Krispy Kreme as to other food chains: "We sell an affordable indulgence consumers will purchase when they can't afford to treat themselves or their families to other luxuries."
[See several companies at risk of failing.]
Mastro's. These elegant steakhouses may be among the nation's best, but they're also clustered in Arizona and southern California, where housing woes have char-broiled the economy. With just 7 outlets (including two Ocean Club restaurants), Mastro's lacks the scale and geographic diversity of bigger chains like Morton's and McCormick & Schmick's. Sales have fallen along with customers' net worth and corporate expense budgets, and Mastro's cash flow is likely to get worse before the double-cut porterhouse ($68.50) comes back into style.
To cope, Mastro's is scaling back expansion plans, and may only open four new restaurants by 2012, fewer than half its original target. "Returns to investors will be impaired," says CEO Tom Heymann, "but doing this will improve our cash flow and still allow us to grow and meet our commitments to the banks." And refrain from adding burgers and hot dogs to the menu.
The dismal economy has punished retailers, with companies like Circuit City and Linens 'n Things going extinct and dozens of others losing money. Now it's hitting their cousins in the restaurant industry, too. The Bennigan's and Steak & Ale chains were early casualties, going belly up last summer. This year, with Americans cutting back on spending, sales at restaurants could fall by 10 percent or more. Analysts don't expect widespread closures, but some chains are likely to close unprofitable outlets, cut back on service, and look for other ways to reduce costs.
As in retail, companies that help people save money will weather the storm better than others. Chains like McDonald's, Pizza Hut, and Olive Garden, which offer ample portions at value prices, should do OK and maybe even pick up market share. It helps if they've been run conservatively, with low borrowing costs and cash held for a rainy day.
[See who stands to gain from the General Motors bankruptcy.]
Other eateries are in a pickle. Fancy restaurants that had long waits a few years ago are now begging for customers and offering sales. Midpriced casual dining outlets are losing customers to cheaper fast-food joints. Even some dollar-menu franchises are suffering if they're overdependent on mall traffic or clustered in regions where the economy is weakest. A key factor is debt: With sales down everywhere, many companies that borrowed heavily to remodel, expand, or buy other franchises now find that interest payments gobble up a nerve-wracking amount of cash flow.
Since debt is such an important menu item, we scoured data from ratings agency Standard & Poor's to gauge which well-known restaurants are facing tough challenges. The following list represents companies that meet two criteria: They have a credit rating of B or lower, and S&P assigns them a negative outlook. Landing on this list doesn't mean the company is likely to declare bankruptcy or close its doors. But these firms are vulnerable to deteriorating economic and financial conditions. And the negative outlook means there's a chance S&P could downgrade the company's rating over the next six to 24 months. Here's our watch list:
Perkins Restaurant and Bakery. Company accountants could probably use some of the comfort food on the menu at this diner-style franchise, which has about 500 locations, mostly in the Midwest. Like other restaurants, Perkins has been able to cut food costs since they soared in 2007. But revenue has fallen, and the parent firm lost $9.7 million in the first quarter. S&P says the firm's liquidity position is "tenuous." With market share of just 8 percent, Perkins is more vulnerable to a lousy economy that competitors like Denny's (22 percent market share) and IHOP (19 percent). Perkins also owns the Marie Callender's Restaurant and Bakery chain, which suffers from similar financial burdens. Plus, Marie Callender is based in hard-hit California, which has been hammered by the housing bust.
A company spokesperson says Perkins has cut expenses by $7.3 million to help shore up its finances, delayed some remodeling, and called a halt to expansion.
[See how to find gold in a recession economy.]
El Torito. Slumping sales and steep debt are an unappetizing combo, especially in California, where this chain is based. The parent firm, Real Mex Restaurants, has bought time by extending a key credit line until next January. But S&P has questioned whether the company, owned by a group of private-equity firms, will have the cash flow to comply with loan terms over the next two years. Real Mex also owns Chevy's, the Acapulco chain, the more upscale El Torito Grill, and several other eateries. All are facing the same woes.
Real Mex says that cost-cutting has helped sustain earnings, and it recently hired a new CEO to help turn things around. The company also announced plans recently to issue new debt that would help cover a major payment due to lenders next year. If that offering is successful, it would indicate investors' confidence in the chain.
[See the upside of economic carnage.]
Sbarro. Many of this pizza chain's 1,070 outlets are in malls, where traffic is down and spenders are stingy. That contributed to a $5.7 million loss in the first quarter, more than double the red ink from a year ago. Interest payments on debt gobble up much of the company's cash flow, leaving little margin for error. The company is especially vulnerable to any rises in food or commodity costs and to competition that could force prices down. With about 40 percent of sales coming during the Christmas season, the company will need strong December results at a time of high unemployment and weak spending. A Sbarro executive declined to comment on the company's financial prospects.
Captain D's Seafood Kitchen. This chain's thrifty appeal--"sit-down food at fast-food prices"--hits the right note during lean times. And aggressive cost-cutting has helped offset falling sales. But debt is still too high, compared with the company's earnings. Parent company Sagittarius Brands got some relief last year from lenders who agreed to relax certain financial requirements. But the old terms go back into effect in 2010, and S&P doesn't think the firm, which operates nearly 600 restaurants across the south, will be able to meet them. A breach could trigger higher borrowing costs or give lenders the right to call in their loans. The California-based Del Tacos chain, which Sagittarius bought in 2006, is under similar pressure. The company didn't respond to calls seeking comment.
[See how businesses can prosper, even now.]
Krispy Kreme. The famed doughnut chain got too chubby over the last 15 years, and it's been closing unprofitable stores to help reverse several years of steep losses. Revenue has plunged since 2005, but cutbacks helped the company turn a $1.9 million profit in the latest quarter. Lenders have provided a breather by easing some of their requirements over the last two years. The temporary reprieve expires in 2011. By then, the company hopes that streamlining, profitable new overseas stores, and other measures will have strengthened its finances.
Spokesman Brian Little points out that Krispy Kreme has cut its debt by nearly 40 percent and has a $21 million cash cushion. The recession, he adds, isn't as daunting to Krispy Kreme as to other food chains: "We sell an affordable indulgence consumers will purchase when they can't afford to treat themselves or their families to other luxuries."
[See several companies at risk of failing.]
Mastro's. These elegant steakhouses may be among the nation's best, but they're also clustered in Arizona and southern California, where housing woes have char-broiled the economy. With just 7 outlets (including two Ocean Club restaurants), Mastro's lacks the scale and geographic diversity of bigger chains like Morton's and McCormick & Schmick's. Sales have fallen along with customers' net worth and corporate expense budgets, and Mastro's cash flow is likely to get worse before the double-cut porterhouse ($68.50) comes back into style.
To cope, Mastro's is scaling back expansion plans, and may only open four new restaurants by 2012, fewer than half its original target. "Returns to investors will be impaired," says CEO Tom Heymann, "but doing this will improve our cash flow and still allow us to grow and meet our commitments to the banks." And refrain from adding burgers and hot dogs to the menu.
Saturday, June 13, 2009
Worth by Reverend H Chronicles
(Verse 1)
Sometimes,
You’re told just who to believe.
But in time,
The ones you know can be just way too much.
We’re told to believe in authority,
To confide, and embrace the cross,
But when life unfolds, breeds fornication,
I’m the child that’s lost.
(Part 1)
I come to you to trust.
I come to you to talk.
You came to me with disease.
To hold me, and assault.
You’re the one I trusted.
You’re the one I tried.
I became your victim.
The thing you didn’t have at home.
(Verse 2)
We’re bond,
By a system, to say how perfect it should be.
And we’re prey,
To the ones we trust,
Such as, our father, and police.
(Verse 3)
Entrapped,
By our social teachings, breeding our social disease.
How must we survive, when our hearts are dependent, on the beliefs that we are safe?
(Extra’s 1)
(2 xs) I’m the child in need.
I’m the one who’s lost.
I’m the child in need.
(Part 2)
You’re the one I trusted.
You’re the one I tried.
You’re the one I believed in.
I fell in your lies.
You’re the one that took me.
And I’m the one that you tasted.
You’re the one I confided in.
And I’m the one you broke.
(Verse 1)
(Extra’s 2)
(2 xs) I’m the one who’s lost; I’m the child in need.
Am I not worthy?
I’m the child that’s lost.
I’m not worthy.
I’m the child in need.
I’m just not worthy.
(Part 3)
I was a child in need.
I trusted in you, but you took me away; consumed me like food.
I was lost, you came, I believed in you.
I confided to trust, you took me to pursue.
You’re comforts inside, on the times I failed.
You took me; I was tried as something else.
I was unworthy of you, but you chose me as food; to consume me.
I’ve trusted you, I was broke in half.
You took me apart.
You tore me up, and chewed me like food.
I’m unworthy, of you.
I’m so, unworthy of you.
I can’t be consumed.
I trusted in you, as you tore me apart.
I trusted in you, you’re the one I tried.
I’ve thought so much this time, you’ve took.
I’ve confided in you, as you took and took.
I’m unworthy.
I was a child in need.
I’m not worthy.
Sometimes,
You’re told just who to believe.
But in time,
The ones you know can be just way too much.
We’re told to believe in authority,
To confide, and embrace the cross,
But when life unfolds, breeds fornication,
I’m the child that’s lost.
(Part 1)
I come to you to trust.
I come to you to talk.
You came to me with disease.
To hold me, and assault.
You’re the one I trusted.
You’re the one I tried.
I became your victim.
The thing you didn’t have at home.
(Verse 2)
We’re bond,
By a system, to say how perfect it should be.
And we’re prey,
To the ones we trust,
Such as, our father, and police.
(Verse 3)
Entrapped,
By our social teachings, breeding our social disease.
How must we survive, when our hearts are dependent, on the beliefs that we are safe?
(Extra’s 1)
(2 xs) I’m the child in need.
I’m the one who’s lost.
I’m the child in need.
(Part 2)
You’re the one I trusted.
You’re the one I tried.
You’re the one I believed in.
I fell in your lies.
You’re the one that took me.
And I’m the one that you tasted.
You’re the one I confided in.
And I’m the one you broke.
(Verse 1)
(Extra’s 2)
(2 xs) I’m the one who’s lost; I’m the child in need.
Am I not worthy?
I’m the child that’s lost.
I’m not worthy.
I’m the child in need.
I’m just not worthy.
(Part 3)
I was a child in need.
I trusted in you, but you took me away; consumed me like food.
I was lost, you came, I believed in you.
I confided to trust, you took me to pursue.
You’re comforts inside, on the times I failed.
You took me; I was tried as something else.
I was unworthy of you, but you chose me as food; to consume me.
I’ve trusted you, I was broke in half.
You took me apart.
You tore me up, and chewed me like food.
I’m unworthy, of you.
I’m so, unworthy of you.
I can’t be consumed.
I trusted in you, as you tore me apart.
I trusted in you, you’re the one I tried.
I’ve thought so much this time, you’ve took.
I’ve confided in you, as you took and took.
I’m unworthy.
I was a child in need.
I’m not worthy.
Thursday, June 11, 2009
Mo. family Christmas photo turns up in Czech ad
ST. LOUIS – It's an international mystery: How did a Missouri family's Christmas card photo end up in the Czech Republic, splashed across a huge storefront advertisement? Danielle Smith said Wednesday that the photo taken of her family last year got sent to family and friends, and was posted on her blog and a few social networking sites. The photo showed her and her husband Jeff holding their two young children.
About 10 days ago, one of Smith's college friends was driving through Prague when he spotted their huge smiling faces in the window of a store specializing in Europeann food. He snapped a few pictures and sent them to a flabbergasted Smith.
"It's a life-size picture in a grocery store window in Prague — my Christmas card photo!" said Smith, 36, who lives in the St. Louis suburb of O'Fallon.
Mario Bertuccio, who owns the Grazie store in Prague, said the photo was from the Internet. Details were sparse, but he said he thought it was computer-generated. When told it was a real photo — of a real family — he said he started taking steps to remove it.
"We'll be happy to write an e-mail with our apology," said Bertuccio, who said he would send the Smiths a bottle of good wine if they lived in his eastern European country.
The Smiths and photographer Gina Kelly hadn't authorized anyone to use the pictures. Kelly said she has asked a professional photographers' organization to help figure out how her image wound up in Prague.
Smith has gotten 180,000 hits to her Web site since she recently posted the story about the well-traveled snapshot. She said the photo wasn't used in an unseemly manner, it was just used to tell potential shoppers about the store's delivery service.
Smith said next time she posts a photo on the Internet, she's going to lower the resolution or add an electronic watermark to make it hard to reproduce.
"This story doesn't frighten me, but the potential frightens me," Smith said.
____
Associated Press Writer Karel Janicek in Prague contributed to this report.
____
On the Net:
Danielle Smith's blog: http://www.extraordinarymommy.com/blog
About 10 days ago, one of Smith's college friends was driving through Prague when he spotted their huge smiling faces in the window of a store specializing in Europeann food. He snapped a few pictures and sent them to a flabbergasted Smith.
"It's a life-size picture in a grocery store window in Prague — my Christmas card photo!" said Smith, 36, who lives in the St. Louis suburb of O'Fallon.
Mario Bertuccio, who owns the Grazie store in Prague, said the photo was from the Internet. Details were sparse, but he said he thought it was computer-generated. When told it was a real photo — of a real family — he said he started taking steps to remove it.
"We'll be happy to write an e-mail with our apology," said Bertuccio, who said he would send the Smiths a bottle of good wine if they lived in his eastern European country.
The Smiths and photographer Gina Kelly hadn't authorized anyone to use the pictures. Kelly said she has asked a professional photographers' organization to help figure out how her image wound up in Prague.
Smith has gotten 180,000 hits to her Web site since she recently posted the story about the well-traveled snapshot. She said the photo wasn't used in an unseemly manner, it was just used to tell potential shoppers about the store's delivery service.
Smith said next time she posts a photo on the Internet, she's going to lower the resolution or add an electronic watermark to make it hard to reproduce.
"This story doesn't frighten me, but the potential frightens me," Smith said.
____
Associated Press Writer Karel Janicek in Prague contributed to this report.
____
On the Net:
Danielle Smith's blog: http://www.extraordinarymommy.com/blog
Tuesday, June 2, 2009
Brazil confirms Air France jet crashed in ocean
FERNANDO DE NORONHA, Brazil – Brazilian military planes found a 3-mile (5-kilometer) path of wreckage in the Atlantic Ocean, confirming that an Air France jet carrying 228 people crashed in the sea, Defense Minister Nelson Jobim said Tuesday. Jobim told reporters in Rio de Janeiro that the discovery "confirms that the plane went down in that area," hundreds of miles (kilometers) from the Brazilian archipelago of Fernando de Noronha.
"There isn't the slightest doubt that the debris is from the Air France plane," Jobim said.
He said the strip of wreckage included metallic and nonmetallic pieces, but did not describe them in detail. No bodies were spotted in the crash of the Airbus A330 in which all aboard are believed to have died.
The discovery came just hours after authorities announced they had found an airplane seat, an orange buoy and signs of fuel in a part of the Atlantic Ocean where ocean depths range from less than 1,610 meters (one mile) to more than 4,800 meters (three miles).
Jobim said recovery of the plane's cockpit voice and data recorders and other wreckage could be difficult because much of the wreckage sank.
"It's going to be very hard to search for it because it could be at a depth of 2,000 meters or 3,000 meters (1.2 miles to 1.8 miles) in that area of the ocean," Jobim said.
The initial discovery of wreckage announced before Jobim spoke came about 36 hours after the jet went missing as it flew from Rio de Janeiro toward Paris.
A Brazilian air force spokesman said the two spots where debris was located suggested the pilots may have tried to turn the plane around to return to Fernando de Noronha.
"The locations where the objects were found are toward the right of the point where the last signal of the plane was emitted," said the spokesman, Col. Jorge Amaral. "That suggests that it might have tried to make a turn, maybe to return to Fernando de Noronha, but that is just a hypothesis."
Amaral said some of the debris was white and small, but did not describe it in more detail.
Jobim made the announcement after two commercial ships that joined the search late Tuesday morning reached sites where the debris was found, a Navy spokeswoman said.
"Once they come across the objects, they will be analyzed to determine if they are parts of the plane or just junk," she said.
A U.S. Navy P-3C Orion surveillance plane and 21 crew members arrived in Brazil on Tuesday morning from El Salvador and was to begin overflying the zone in the afternoon, U.S. officials said in a statement. The plane can fly low over the ocean for about 12 hours at a time and has radar and sonar designed to track submarines underwater.
The French dispatched a research ship equipped with unmanned submarines to the debris site. The subs can explore depths of up to 19,600 feet (6,000 meters). The U.S. was considering contributing unmanned underwater vehicles in the search as well, according to a defense source who spoke on condition of anonymity because he was not authorized to speak on the record.
The 4-year-old plane was last heard from at 0214 GMT Monday (10:14 p.m. EDT Sunday) about four hours after it left Rio.
If no survivors are found, it would be the world's worst civil aviation disaster since the November 2001 crash of an American Airlines jetliner in the New York City borough of Queens that killed 265 people.
Investigators on both sides of the ocean are trying to determine what brought the plane down, with few clues to go on. Potential causes include violently shifting winds and hail from towering thunderheads, lightning or some combination of other factors.
The crew made no distress call before the crash, but the plane's system sent an automatic message just before it disappeared, reporting lost cabin pressure and electrical failure. The plane's cockpit and "black box" recorders could be thousands of feet (meters) below the surface.
French Prime Minister Francois Fillon said that if the debris is confirmed to be part of Flight 447, "This will allow us to better determine the search zone."
"We are in a race against the clock in extremely difficult weather conditions and in a zone where depths reach up to 7,000 meters (22,966 feet)," he told lawmakers in the lower house of French parliament Tuesday. Black box recorders can emit signals for up to 30 days.
The chance of finding survivors now "is very, very small, even nonexistent," said Jean-Louis Borloo, the French minister overseeing transportation.
The Airbus A330-200 was cruising normally at 35,000 feet (10,670 meters) and 522 mph (840 kph) just before it disappeared.
But just north of the equator, a line of towering thunderstorms loomed. Bands of extremely turbulent weather stretched across the Atlantic toward Africa.
Borloo called the A330 "one of the most reliable planes in the world" and said lightning alone, even from a fierce tropical storm, probably couldn't have brought down the plane.
"There really had to be a succession of extraordinary events to be able to explain this situation," Borloo said on RTL radio Tuesday.
France's junior minister for transport, Dominique Bussereau, said the plane sent "a kind of outburst" of automated messages just before it disappeared, "which means something serious happened, as eventually the circuits switched off."
French military spokesman Christophe Prazuck said France has three military patrol aircraft flying over the central Atlantic, but could shift its search operations closer to the site of the Brazilian discovery. He said an AWACS radar plane also had been dispatched and should join the operation on Wednesday.
French police were studying passenger lists and maintenance records, and preparing to take DNA from passengers' relatives to help identify any bodies.
French Defense Minister Herve Morin said "we have no signs so far" of terrorism, but all hypotheses must be studied.
Alain Bouillard, who led the probe into the crash of the Concorde in July 2000, was put in charge of France's accident investigation team.
President Barack Obama told French television stations the United States is ready to do everything necessary to find out what happened.
On board the flight were 61 French citizens, 58 Brazilians, 26 Germans, nine Chinese and nine Italians. A lesser number of citizens from 27 other countries also were on the passenger list.
Two Americans living in Rio de Janeiro were on board. Michael Harris, 60, a geologist, and his wife Anne, 54, were headed to Europe for work and vacation. They lived previously in Lafayette, Louisiana.
Among the passengers were three young Irish doctors, returning from a two-week vacation in Brazil. Aisling Butler's father John paid tribute to his 26-year-old daughter, from Roscrea, County Tipperary.
"She was a truly wonderful, exciting girl. She never flunked an exam in her life — nailed every one of them — and took it all in her stride," he said.
"There isn't the slightest doubt that the debris is from the Air France plane," Jobim said.
He said the strip of wreckage included metallic and nonmetallic pieces, but did not describe them in detail. No bodies were spotted in the crash of the Airbus A330 in which all aboard are believed to have died.
The discovery came just hours after authorities announced they had found an airplane seat, an orange buoy and signs of fuel in a part of the Atlantic Ocean where ocean depths range from less than 1,610 meters (one mile) to more than 4,800 meters (three miles).
Jobim said recovery of the plane's cockpit voice and data recorders and other wreckage could be difficult because much of the wreckage sank.
"It's going to be very hard to search for it because it could be at a depth of 2,000 meters or 3,000 meters (1.2 miles to 1.8 miles) in that area of the ocean," Jobim said.
The initial discovery of wreckage announced before Jobim spoke came about 36 hours after the jet went missing as it flew from Rio de Janeiro toward Paris.
A Brazilian air force spokesman said the two spots where debris was located suggested the pilots may have tried to turn the plane around to return to Fernando de Noronha.
"The locations where the objects were found are toward the right of the point where the last signal of the plane was emitted," said the spokesman, Col. Jorge Amaral. "That suggests that it might have tried to make a turn, maybe to return to Fernando de Noronha, but that is just a hypothesis."
Amaral said some of the debris was white and small, but did not describe it in more detail.
Jobim made the announcement after two commercial ships that joined the search late Tuesday morning reached sites where the debris was found, a Navy spokeswoman said.
"Once they come across the objects, they will be analyzed to determine if they are parts of the plane or just junk," she said.
A U.S. Navy P-3C Orion surveillance plane and 21 crew members arrived in Brazil on Tuesday morning from El Salvador and was to begin overflying the zone in the afternoon, U.S. officials said in a statement. The plane can fly low over the ocean for about 12 hours at a time and has radar and sonar designed to track submarines underwater.
The French dispatched a research ship equipped with unmanned submarines to the debris site. The subs can explore depths of up to 19,600 feet (6,000 meters). The U.S. was considering contributing unmanned underwater vehicles in the search as well, according to a defense source who spoke on condition of anonymity because he was not authorized to speak on the record.
The 4-year-old plane was last heard from at 0214 GMT Monday (10:14 p.m. EDT Sunday) about four hours after it left Rio.
If no survivors are found, it would be the world's worst civil aviation disaster since the November 2001 crash of an American Airlines jetliner in the New York City borough of Queens that killed 265 people.
Investigators on both sides of the ocean are trying to determine what brought the plane down, with few clues to go on. Potential causes include violently shifting winds and hail from towering thunderheads, lightning or some combination of other factors.
The crew made no distress call before the crash, but the plane's system sent an automatic message just before it disappeared, reporting lost cabin pressure and electrical failure. The plane's cockpit and "black box" recorders could be thousands of feet (meters) below the surface.
French Prime Minister Francois Fillon said that if the debris is confirmed to be part of Flight 447, "This will allow us to better determine the search zone."
"We are in a race against the clock in extremely difficult weather conditions and in a zone where depths reach up to 7,000 meters (22,966 feet)," he told lawmakers in the lower house of French parliament Tuesday. Black box recorders can emit signals for up to 30 days.
The chance of finding survivors now "is very, very small, even nonexistent," said Jean-Louis Borloo, the French minister overseeing transportation.
The Airbus A330-200 was cruising normally at 35,000 feet (10,670 meters) and 522 mph (840 kph) just before it disappeared.
But just north of the equator, a line of towering thunderstorms loomed. Bands of extremely turbulent weather stretched across the Atlantic toward Africa.
Borloo called the A330 "one of the most reliable planes in the world" and said lightning alone, even from a fierce tropical storm, probably couldn't have brought down the plane.
"There really had to be a succession of extraordinary events to be able to explain this situation," Borloo said on RTL radio Tuesday.
France's junior minister for transport, Dominique Bussereau, said the plane sent "a kind of outburst" of automated messages just before it disappeared, "which means something serious happened, as eventually the circuits switched off."
French military spokesman Christophe Prazuck said France has three military patrol aircraft flying over the central Atlantic, but could shift its search operations closer to the site of the Brazilian discovery. He said an AWACS radar plane also had been dispatched and should join the operation on Wednesday.
French police were studying passenger lists and maintenance records, and preparing to take DNA from passengers' relatives to help identify any bodies.
French Defense Minister Herve Morin said "we have no signs so far" of terrorism, but all hypotheses must be studied.
Alain Bouillard, who led the probe into the crash of the Concorde in July 2000, was put in charge of France's accident investigation team.
President Barack Obama told French television stations the United States is ready to do everything necessary to find out what happened.
On board the flight were 61 French citizens, 58 Brazilians, 26 Germans, nine Chinese and nine Italians. A lesser number of citizens from 27 other countries also were on the passenger list.
Two Americans living in Rio de Janeiro were on board. Michael Harris, 60, a geologist, and his wife Anne, 54, were headed to Europe for work and vacation. They lived previously in Lafayette, Louisiana.
Among the passengers were three young Irish doctors, returning from a two-week vacation in Brazil. Aisling Butler's father John paid tribute to his 26-year-old daughter, from Roscrea, County Tipperary.
"She was a truly wonderful, exciting girl. She never flunked an exam in her life — nailed every one of them — and took it all in her stride," he said.
Subscribe to:
Posts (Atom)