SAN FRANCISCO -- April 2, 1996 -- Supercuts Inc.
(NASDAQ:CUTS) today announced an $18.9 million pre-tax restructuring
charge recorded in the 1995 fourth quarter.
The majority of the charge relates to significant operating
losses and negative cash flow from Supercuts' metropolitan New York
and company-owned and managed store expansion programs from 1993 to
1995.
For the full year ended Dec. 31, 1995, including this charge,
the company reported a net loss of $7.1 million, as compared to net
income of $7.3 million for 1994. The net loss per share for 1995
was $0.63 vs. net income of $0.66 per share in 1994.
Total revenues for the year were $100.8 million, a 23 percent
increase over $82.1 million in 1994. System-wide comparable store
sales growth for the year was 3.9 percent.
According to Steve Price, president and chief executive officer,
"During the past year, our core established stores, opened prior to
1993, continued to provide strong store sales, profitability and
cash flow generation.
"Unfortunately, our core business strength and performance was
overshadowed by weak results, overall, in the 246 company-owned and
managed stores, including 84 stores in the metropolitan New York
market, that were opened from 1993 to 1995. The rapid pace of
expansion during this period severely taxed all our resources, and
we were not able to achieve acceptable initial and ramp-up sales
levels in this group of stores."
Of the total pre-tax restructuring charge, approximately $15
million relates to store closings or other alternatives such as the
sale of stores, or markets, to either franchisees or third parties.
The costs relative to this portion of the charge are composed of
amounts related to provision for disposal of property and equipment
and the write-off of non-current receivables related to the
company's managed store programs (approximately $8.0 million),
unreimbursable operating lease and lease cancellation costs
(approximately $6.1 million) and other store restructuring-related
activities.
The board of directors and Price have changed the company's
strategies and priorities to reflect the reality of the store
expansion program from 1993 to 1995 and to take advantage of
opportunities within the Supercuts System. This shift in focus is
centered on the following areas:
The fourth quarter restructuring charge also includes costs
relating to a lawsuit brought against Supercuts by David Lipson,
former chairman and chief executive officer, in March 1996. As
previously reported, Supercuts plans a vigorous defense of this
matter.
The company and its banks have agreed and entered into an
amendment of the current credit agreement, which waives prior
defaults. This amendment provides that the maximum amount of the
credit line is $29.3 million and the credit line is subject to
periodic reductions during the term.
The company believes cash flow from operations and available
borrowings will be sufficient to meet its operational expense and
capital expenditure requirements through fiscal 1996.
Supercuts Inc. is one of the largest chain providers of
affordable haircare. As of Dec. 31, 1995, the company had 1,163
stores operating in 39 states and Puerto Rico. During 1995, 127
stores (net) were opened. Supercuts is headquartered in San
Francisco and is traded on the NASDAQ National Market System under
the ticker symbol "CUTS."
Supercuts Inc. and Subsidiaries
Consolidated Statements of Income
For the years ended Dec. 31, 1995 and 1994
(In thousands, except per share data)
For the Year Ended Dec. 31,
1995 1994
Revenues
Franchise operations $ 20,789 $ 20,123
Retail operations 80,034 61,974
Total revenues 100,823 82,097
Costs and Expenses
Franchise operations
Salaries and benefits 3,726 3,971
Other expenses 3,173 3,625
Total franchise operations 6,899 7,596
Retail operations
Salaries and benefits 43,676 33,003
Other expenses 30,221 20,276
Total retail operations 73,897 53,279
Total costs and expenses 80,796 60,875
Contribution
Franchise operations 13,890 12,527
Retail operations 6,137 8,695
Total contribution 20,027 21,222
Depreciation and amortization expense 5,582 3,962
Corporate general & administrative expense 6,785 5,798
Provision for restructuring activities 18,925 --
Income (loss) from operations (11,265) 11,462
Interest (income) (1,266) (814)
Interest expense 2,330 1,171
Other (income) expense, net (1,005) (468)
Income (loss) before provision for
(benefit from) income taxes (11,324) 11,573
Provision for (benefit from) income taxes (4,240) 4,277
Net income (loss) $ (7,084) $ 7,296
Net income (loss) per common share $ (0.63) $ 0.66
Weighted average number of common shares
and equivalents outstanding during
the year 11,165 11,097
Note: The Notes to the Consolidated Financial Statements in the
1995 Form 10-K are an integral part of these statements of income.
Supercuts Inc. and Subsidiaries
Consolidated Balance Sheets
As of Dec. 31, 1995 and 1994
(In thousands, except per share data)
Assets
Dec. 31,
1995 1994
Current Assets
Cash and short-term investments $ 2,054 $ 1,504
Accounts receivable, net of allowance for
doubtful accounts of $47 and $60, respectively 3,255 3,019
Prepaid expenses and other assets 2,059 2,086
Deferred tax assets 6,600 987
Income taxes receivable 2,493 --
Inventories 1,885 1,415
Total current assets 18,346 9,011
Non-current receivables 13,917 15,016
Property and equipment, net 28,891 26,218
Other assets
Intangible assets, net 35,600 32,175
Deferred charges and other 612 693
Total other assets 36,212 32,868
Total assets $97,366 $83,113
Liabilities & Stockholders' Equity
Dec. 31,
1995 1994
Current Liabilities
Accounts payable $ 7,380 $ 4,055
Accrued liabilities 6,408 5,461
Deferred franchise fees and other liabilities 1,489 1,421
Current portion of long-term liabilities 371 33
Restructuring liabilities 11,965 --
Total current liabilities 27,613 10,970
Long-term Liabilities
Revolving line of credit 25,300 23,500
Deferred income taxes 3,408 1,211
Other 2,479 2,080
Total long-term liabilities 31,187 26,791
Total liabilities 58,800 37,761
Contingencies & commitments -- --
Stockholders' Equity
Common stock, $.08 par value -- 30,000,000
shares authorized; 11,982,385 and 11,942,675
shares issued at Dec. 31, 1995 and 1994,
respectively 120 119
Additional paid-in capital 29,889 29,592
Retained earnings 13,198 20,282
Less 806,840 shares in 1995 and 1994 of
common stock held in treasury at cost (4,641)
(4,641)
Total stockholders' equity 38,566 45,352
Total liabilities and
stockholders' equity $97,366 $83,113
CONTACT: Supercuts Inc., San Francisco
Lisa Horn Chainey, 415/693-4726
Details of Profit Improvement Plan Reported
PORTLAND, Ore., April 2, 1996 - William J. Stanners, Jr.,
Vice President and Chief Financial Officer of Arrow Transportation
Co. (Nasdaq: ARRW), today announced results for the company's fourth
quarter and fiscal year ended December 31, 1995. As the company
previously indicated, it experienced a loss for the quarter and
year. During the fourth quarter, the company recorded a loss of
$1,505,000 or $0.36 per share on revenue of $6.9 million compared to
a loss of $212,000 or $0.05 per share on revenue of $8.4 million for
the same quarter a year ago. For the year ended December 31, 1995,
the company reported a loss of $1,820,000 or $0.43 per share on
revenue of $31.4 million compared to net income of $18,000 or $0.00
per share on revenue of $34.1 million for the year ended December
31, 1994. The results for the fourth quarter and year ended
December 31, 1995 included pre-tax restructuring charges of $535,000
associated with the implementation of the company's profit
improvement plan.
According to Stanners, both revenue and earnings declined in
1995 as a result of overly aggressive geographic and fleet expansion
in 1994 and 1995. The terminals and carrying capacity added in late
1994 and early 1995 added to operating and overhead expenses and
were not effectively utilized because of lower business levels.
Arrow utilized less than 60% of its carrying capacity in 1995.
Business volume declined in 1995 as a result of business lost from
pricing issues, sluggish freight demand from slow growth in the
durable goods producing sectors of the economy, the impact of
deregulation of intrastate transportation and business lost as a
result of service disruptions caused by 1994's labor problems. This
low level of capacity utilization and lack of balance in its newer
longhaul traffic lanes were the primary factors which contributed to
the losses experienced in 1995.
Given the company's performance in 1995, in December the
company's board of directors initiated a restructuring and profit
improvement plan. The plan was designed to restructure the company
to better serve its customers and enhance Arrow's overall
competitiveness, productivity and efficiency through a reduction in
operating and overhead costs. Stanners reported as a result of the
plan's implementation, the company has reduced corporate,
administrative and terminal personnel by approximately 20% and has
closed its terminals in Baton Rouge, LA, Chattanooga, TN, and Tulsa,
OK. The company is also downsizing its fleet by selling 43 power
units to reduce excess carrying capacity. Other actions under the
plan include stringent spending controls with a freeze on all
corporate, administrative and terminal salaries, a freeze on
discretionary spending and strict limits on capital spending. In
addition the plan calls for a refocused marketing effort on those
markets where the company believes it has a competitive advantage:
the Pacific Northwest and California.
The company will focus its Texas business only on those traffic
lanes where it can obtain balanced freight with minimal empty miles.
An integral part of the profit improvement plan is the
implementation of an integrated total quality management program
throughout the entire organization. In January, the company engaged
a consultant with expertise in chemical manufacturing, distribution
and bulk liquid transportation to assist it with the implementation
of the total quality management process.
The actions taken under the profit improvement plan are expected
to result in significant cost savings in 1996. It is expected the
plan will result in improvement in four key areas of the company's
operations, business volume, equipment utilization, non-productive
time and loaded mile ratio. The company reported it was hopeful the
actions taken under the plan will allow it to return to
profitability during 1996. Stanners indicated although the company
expects to record a loss in the first quarter of 1996, he expects
the company will demonstrate improvement on a quarterly basis during
the year as the benefits of the profit improvement plan and
integrated total quality management program begin to be realized.
Arrow Transportation Co. is engaged primarily in the
transportation of bulk liquid chemical products. The company serves
a wide variety of manufacturing and industrial customers in the
United States and Western Canada.
WESTERN TRANSPORTATION CO.
Consolidated Statements of Income
(Unaudited)
(in thousands, except per share data)
For the Three Months For the Twelve Months
Ended December 31, Ended December 31,
1995 1994 1995 1994
REVENUE $ 6,853 $ 8,371 $31,416 $34,110
Operating expense 7,464 7,857 29,601 30,109
Depreciation and
amortization 694 682 2,790 2,670
Restructuring charges 535 -- 535 --
TOTAL OPERATING EXPENSES 8,694 8,539 32,926 32,779
OPERATING INCOME (LOSS) (1,840) (168) (1,510) 1,331
Interest expense 311 303 1,229 1,291
Net other expense
(income) 212 (106) 148 22
INCOME (LOSS) BEFORE
INCOME TAXES (2,363) (365) (2,887) 18
INCOME TAX (EXPENSE)
BENEFIT 858 153 1,007 0
NET INCOME (LOSS) $(1,505) $ (212) $(1,820) $ 18
NET INCOME (LOSS) PER
COMMON AND EQUIVALENT
SHARE $ (0.36) $ (0.05) $ (O.43) $ 0.00
SHARES USED IN PER
SHARE CALCULATION 4,200 4,171 4,189 4,153
BOCA RATON, Fla., April 2, 1996 - Model Imperial, Inc.
(Nasdaq: MODL) today announced that, subject to completion of its
financial statements, it expects that its net loss for 1995 will be
in excess of $20 million. The company had previously announced an
expected net loss of between $7.5 million and $8.5 million for 1995.
The Company indicated that as its financial statements are
completed, the actual loss could be determined to be higher. The
Company indicated that in addition to a generally weak retail
environment, as well as increased competition, additional
promotional activity and decreased margins, factors expected to
contribute to the net loss are, among others, inventory writedowns,
reserves for accounts receivable and credits, and costs related to
downsizing the Company and its inventory levels in association with
a forbearance agreement being negotiated with the Company's bank
lenders.
The Company also announced that it is in the process of
negotiating a forbearance agreement with its bank lenders, to which
it presently owes approximately $47.5 million. Pursuant to such an
agreement as presently being negotiated, the, Company would
acknowledge that it is in default under its loans and the bank
lenders would agree to forbear from exercising their default rights,
subject to compliance with certain conditions, until August 31,
1996. The Company believes that it will know shortly whether such
an agreement will be consummated.
The Company also announced that Stephen J. Kesh would be
resigning as Chief Financial Officer and a director of the Company
and that it was presently expected that he would enter into a
consulting agreement with the Company for the remainder of the year.
Model Imperial, Inc. is one of the largest wholesale
distributors of brand-name fragrances in the United States. The
Company primarily distributes prestige fragrances, but also offers
mass market fragrances and certain cosmetic and beauty care products
for man and women. The Company is also one of the largest operators
of licensed retail departments in the country with over 650 retail
locations throughout the United States. The Company's principal
customers include many of the nation's leading mass merchants,
discount retailers and drug store and supermarket chains, as well as
numerous independent pharmacies and other specialty retailers.
Model Imperial's fragrance and cosmetic distribution product line
comprises approximately 4,000 individual brand-name items.
CONTACT: Len Silverstein, Model Imperial, Inc., 407-241-8244
MILWAUKEE, April 2, 1996 - Allis-Chalmers Corporation
today announced a 1995 net loss of $1,448,000, or $1.44 per common
share, compared with a net loss of $4,174,000, or $4.13 per common
share in 1994. The Company reported a loss from continuing
operations of $1,448,000 (including recognition of pension liability
of $1.1 million), or $1.44 per common share in 1995 compared with a
loss of $1,087,000, or $1.08 per common share in 1994. A loss from
discontinued operations of $231,000, or $.23 per common share was
incurred in 1994, along with a loss on the sale of its molded fabric
products division of $2,856,000, or $2.82 per common share in 1994.
Sales totaled $3,190,000 in 1995, down from $3,380,000 in 1994.
The decrease resulted from a weakened market for machine repairs and
services.
For the fourth quarter of 1995, Allis-Chalmers reported a net
loss of $254,000, or $.26 per common share, compared with a net loss
of $272,000, or $.27 per common share in the same quarter of 1994.
Sales in the fourth quarter of 1995 were $798,000 compared with
$924,000 in the 1994 period. Fourth quarter gross margin, as a
percentage of sales, increased to 25.2% in 1995 from 22.7% in 1994.
In addition to its financial results, Allis-Chalmers noted two
concerns regarding its future - the significant shortfall in its
pension plan funding and the difficulty in completing an acquisition
or financing.
The Company's lack of cash for investment, restrictions on debt
financing and the uncertainty associated with the Company's exposure
for the underfunding of the pension plan all contributed to the
Company's inability to complete an acquisition or financing in 1995.
Given the present financial condition of the Company, a meaningful
acquisition will be very difficult to accomplish.
Regarding the underfunding of the Company's Consolidated Pension
Plan, the Company's underfunding on a present value basis is $11.9
million at December 31, 1995. This underfunding requires the
Company to make significant cash contributions to the pension plan
pursuant to ERISA minimum funding requirements starting in 1996.
While the first cash contribution to the Consolidated Plan has been
made in 1996, future cash contributions are estimated at $2.3
million in 1996, $3.1 million in 1997 and $8.1 million in 1998.
Based on the Company's limited financial resources, this requirement
for contributions will have a material adverse effect on the
Company. The Company is not optimistic that in its current
condition it will be able to raise additional capital to meet its
obligation under the Consolidated Plan. Given the inability of the
Company to fund such an obligation with its current financial
resources, a termination of the Consolidated Plan is likely to
occur, with the consequence of a liability to the Pension Benefit
Guaranty Corporation (PBGC) in excess of the current net worth of
the Company. If the Company is unable to reach an acceptable
arrangement with the PBGC or to raise additional capital, it will
have to evaluate its alternatives, which include, among others,
another bankruptcy filing.
Financial results for the three and twelve month periods ended
December 31:
Three Months Twelve Months
1995 1994 1995 1994
(thousands, except per share)
Sales $ 798 $ 924 $3,190 $3,580
(Loss) income from:
Continuing Operations $(254) $(280) $(1,448) $(1,087)
Discontinued Operations -- 56 -- (231)
Sale of molded fabric
products division -- (48) -- (2,856)
Net loss $(254) $(272) $(1,448) $(4,174)
Average common shares
outstanding 1,003 1,003 1,003 1,003
(Loss) income per common share:
Continuing Operations $ (.26) $ (.28) $ (1.44) $ (1.08)
Discontinued Operations -- .06 -- (.23)
Sale of molded fabric
products division -- (.05) -- (2.82)
Loss per common share $ (.26) $ (.27) $ (1.44) $ (4.13)
WASHINGTON, April 2, 1996 - The Nostalgia Network Inc.
(OTC: NNET) today reported 1995 financial results which reflect
initiatives to increase the quality of network programming, increase
ratings and stabilize subscriber counts. These steps to overhaul
the network resulted in 1995 revenue of $11.27 million compared to
$12.45 million in 1994, and a net loss of $9.48 million, compared to
a net loss of $4.23 million in 1994.
Jack Heim, President and Chief Executive Officer, said, "The
overhaul of Nostalgia Television which began two years ago has
increased our recognition as the only network for the active, fifty-
plus viewer. Consider all that Nostalgia accomplished last year:
Revenue Base Changes As Network Cuts Infomercial Time In Half
Total revenue for the fiscal year ended December 31, 1995 was
$11.27 million, a decline of 9.5% from 1994's results. This
decrease was primarily attributed to decreases in affiliate and
advertising revenues, partially offset by increases in revenue from
the Network's shopping service.
Advertising sales declined 19.3% to $5.81 million primarily as a
result of the company's decision to significantly reduce its
dependence on infomercial advertising. Time allotted to
infomercials was reduced 54% in 1995. Infomercials have been
removed from the Network's mid day schedule. Average advertising
rates for the remaining infomercial slots were increased 53% during
the year due to high demand and increased sales and marketing
efforts. Revenue from short-format commercial advertising,
generally two minutes or less in length, increased 4.6%.
Due to declines in the 1994 subscriber base, affiliate revenue
declined 16.1% to $4.21 million. In general, positive changes in
affiliate revenue lag positive changes in the subscriber base, while
declines in the subscriber base are reflected immediately. During
1995, the number of subscribers stabilized at 8.9 million,
relatively unchanged from the previous year's count.
Nostalgia's full day ratings, as measured by Nielsen, doubled to
0.2 in the quarter ended December 31, 1995, compared to 0.1 in the
previous year's period. Nielsen's weekday prime time ratings for
the same period doubled to 0.4 from 0.2.
During 1995 the company fully reserved accounts receivable of
$997,000 relating to the bankruptcy of Via TV!, the Network's former
Home Shopping Service provider. These reserves are reflected in
finance, general and administrative expenses.
Increases in operating expenses reflect emphasis on quality
programming
Total operating expenses increased 23.3% to $20.26 million in
1995. This increase is primarily due to a 133.7% increase in
programming amortization costs to $6.33 million, which reflect a
full year of new prime time television series in 1995, compared to
their inclusion for only four months in 1994.
Improved quality of programming is necessary for the Network's
future growth. In 1995 the Network continued these efforts by
adding additional shows including more Love Boat episodes, The Paper
Chase, The Streets of San Francisco, and starting in 1996 The
Rockford Files. The Network also improved its Feature Presentation
series by adding Cinema Spotlight, a series of hosted movies
selected from the libraries of Warner Brothers, Columbia Tri Star
and Paramount Pictures. Original programming included the 1995
premier of Nostalgia Television Issues and Answers, a panel
discussion show; The Big Beat Broadcast, a music program block which
includes original cabaret and big band performances; and a series of
documentaries produced in cooperation with The National Archives of
the United States.
Sales and marketing expenses increased 47.2% to $4.51 million in
1995 due to increased staff and a renewed sales and marketing
effort. Additionally, to provide for necessary future growth, the
company has embarked on an aggressive affiliate marketing campaign
including prominent presence at major trade shows and trade
advertising. During 1995 the Network also launched its Lifestage
Matrix program, which provides affiliates with the tools to
effectively target the 50 year plus audience in their communities.
The Network also launched the "Be a Visionary" campaign in
coordination with the 1.4 million-member Lions Clubs to help the
blind and visually impaired.
THE NOSTALGIA NETWORK, INC.-0- 4/2/96
STATEMENT OF OPERATIONS
Fiscal year ended December 31, 1995 1994
Revenue
Affiliate Revenue $4,205,324 $5,014,547
Advertising Sales Revenue 5,812,663 7,206,501
Other Revenue 1,248,898 231,052
Total Revenue 11,266,885 12,452,100
Operating Expenses
Programming, production and
transmission 4,682,928 4,267,913
Programming amortization 6,325,975 2,706,898
Sales and marketing 4,508,084 3,062,181
Finance, general and
administrative 4,743,944 4,208,145
Revaluation of film library,
relocation and litigation
settlement -- 2,180,032
Total Operating Expenses 20,260,931 16,425,169
Loss from Operations (8,994,046) (3,973,069)
Interest income (expense) 482,321 258,108
Net Income (Loss) $(9,476,367) $(4,231,177)
Income (Loss) per Common
Shares $(0.47) $(0.22)
Weighted Average Shares
Outstanding 20,267,704 19,504,488
Separately, the Company has filed documents with the Securities
and Exchange Commission indicating that it would not be able to file
its Form 10-K for the year ended December 31, 1995 on a timely
basis. The Company is unable to file this 10-K on a timely basis
because losses of key personnel in its finance and MIS departments
(which occurred soon after the Company filed its voluntary petition
to reorganize under Chapter 11 of the Bankruptcy Code on December 6,
1995) have delayed the compilation of the Company's financial
results for 1995. However, the Company is making efforts to
complete its 1995 financials and will attempt to file its Form 10-K
with the Securities and Exchange Commission as soon as it is
reasonably practical following the completion of its annual
financial audit.
CONTACT: Jack Lavine, 818-995-7333