Shares of School Specialty ( SCHS) were among Nasdaq's losers Monday, falling 19% after the company said backers of its going-private deal with LBW Holdings terminated certain financing for the acquisition. The educational products company also warned that fiscal 2006 earnings would fall well short of expectations.

The company said that Banc of America Securities, J.P. Morgan Securities and Deutsche Bank Securities terminated the $350 million in senior-notes because "certain conditions to their obligations under the senior notes purchase agreement have not been and cannot be satisfied," School Specialty said. The company said it believes the decision relates to "disappointing results in August and September and concerns about near-term financial and operating performance.

As a result of the debt-financing situation, the $1.5 billion merger, which was supposed to close on or about Sept. 30, won't close on time. The "drop dead date" under the transaction is Oct. 31. LBW Holdings and its financing sources, meanwhile, have asked for more time to perform supplemental due diligence into School Specialty's recent and near-term operating performance.

As for the company's financial performance, School Specialty now expects fiscal 2006 earnings, before items, of $2.17 to $2.31 a share on sales of $1.03 billion to $1.06 billion. Previously, the company predicted that it would earn $2.35 to $2.60 a share on sales of $1.04 billion to $1.07 billion. Analysts polled by Thomson First Call had been expecting earnings of $2.53 a share on sales of $1.06 billion. The company blamed the shortfall on difficulties related to the start-up of its new Lancaster, Pa., distribution center and a decline in order flow from PreK-12 customers. Shares were recently down $9.43 to $39.35.

Lennar ( LEN) rose 3% after Standard & Poor's said it would add the homebuilder to the S&P 500 Index after the close of trading Monday. Lennar will replace Gillette, which was acquired by Procter & Gamble ( PG). Lennar shares rose $1.84 to $61.60.

Shares of Hoku Scientific ( HOKU) jumped 21% after the company said the U.S. Navy exercised two options under the company's PEM fuel-cell demonstration contract. The options are worth $2.5 million, which is in addition to the $2.1 million already under contract. Shares were trading up $2.22 to $12.92.

Procter & Gamble traded actively after the company reiterated its near-term and long-term earnings outlook. P&G, which closed its acquisition of Gillette on Saturday, said it expects the purchase to reduce earnings by 20 cents to 26 cents a share in fiscal 2006 and by 12 cents to 18 cents a share in fiscal 2007. The deal is expected to be neutral to earnings in fiscal 2008, becoming accretive during the second half of fiscal 2008. P&G now expects annual sales growth for the remainder of the decade to be 5% to 7%, up from an earlier forecast of 4% to 6%. Shares were trading down 16 cents to $59.30.

Shares of Plantronics ( PLT) fell 5% after the maker of headsets cut its second-quarter earnings and sales outlook. The company now expects earnings of 32 cents a share on sales of $150 million. The projection excludes results from the acquisition of Altec Lansing. Previously, Plantronics projected that it would earn 39 cents to 43 cents a share on sales of $160 million to $165 million. Analysts had been expecting earnings of 40 cents a share on sales of $162.2 million. Including Altec Lansing, the company expects earnings of about 28 cents a share on sales of $170 million. Plantronics said results were hurt by lower-than-expected shipments of several headset models.

Separately, the company announced a 1-million-share repurchase plan. "We purchase shares when we believe it should be strongly accretive to EPS to do so in comparison to alternative investment choices," the company said. Shares recently fell $1.56 to $29.25.

NYSE volume leaders included Lucent Technologies ( LU), up 8 cents to $3.33; Nortel Networks ( NT), down 1 cent to $3.25; EMC ( EMC), up 31 cents to $13.25; Micron Technology ( MU), up 31 cents to $13.61; Wal-Mart ( WMT), up 30 cents to $44.12; Pfizer ( PFE), down 4 cents to $24.93; and Motorola ( MOT), up 51 cents to $22.54.

Nasdaq volume leaders included JDSU ( JDSU), down 9 cents to $2.13; Telewest Global ( TLWT), up 14 cents to $23.09; Intel ( INTC), up 18 cents to $24.83; Cisco Systems ( CSCO), up 3 cents to $17.95; Microsoft ( MSFT), down 17 cents to $25.56; Lexar ( LEXR), up $1.22 to $7.60; Oracle ( ORCL), up 8 cents to $12.48; Sirius Satellite Radio ( SIRI), unchanged at $6.54; Apple Computer ( AAPL), up 37 cents to $53.98; and Sun Microsystems ( SUNW), down 1 cent to $3.92.

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