Moody's cuts Applica

Moody's Investors Service said it downgraded the debt ratings of Applica Inc. reflecting the company's weakened cash flow and liquidity profile in light of ongoing industry challenges. The outlook remains negative.

Moody's downgraded Applica's senior implied rating to B3 from B1, $205 million senior secured revolving credit facility due Dec. 28, 2005 to B2 from Ba3, $60.8 million 10% senior subordinated notes due July 31, 2008 to Caa2 from B3 and senior unsecured issuer rating to Caa1 from B2.

Moody's said the ratings downgrade and negative outlook reflect the erosion in Applica's profitability and its exposure to product categories with weak brand loyalty, raw material price sensitivity, low entry barriers and concentration of retail distributors.

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