NeoStar Retail Group Secures $70 Million DIP Financing
DALLAS, TX - Oct. 16, 1996 - NeoStar Retail Group, Inc. (Nasdaq: NEOSQ), parent company of
Babbage's and Software Etc., announced that on Oct. 3, 1996, the United States Bankruptcy Court in
Dallas entered an order granting final approval of a $70 million debtor-in-possession ("DIP") financing.
"Receiving final approval for our DIP financing will go a long way towards boosting consumer and
vendor confidence," said Tom Plaskett, NeoStar's Chairman. "We are sending a signal to our
constituencies that we are serious and optimistic about the prospects for the upcoming holiday selling
season."
NeoStar filed a voluntary petition to reorganize under Chapter 11 of the U.S. Bankruptcy Code in
Federal Bankruptcy Court in Dallas on Sept. 16, 1996. The Company said that it, along with its
subsidiaries, elected to seek court protection in order to strengthen vendor confidence to ensure
adequate inventory for the upcoming holiday selling season. NeoStar received court approval for an
interim DIP financing the day following its Chapter 11 filing.
NeoStar Retail Group is the nation's leading chain of consumer software specialty stores. The Company
employs over 5,000 people and operates 707 stores in 49 states, the District of Columbia, Puerto Rico,
and Canada primarily under the names of Software Etc. and Babbage's. Virtually all of the Company's
stores are located in major regional shopping malls.
"THE SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION ACT OF
1995. This press release contains forward-looking statements that involve risks and uncertainties,
including but not limited to, projections of future operating results, the financial condition of the
company, bankruptcy court approval of those actions requiring such approval, and other risks detailed
from time to time in the Company's Securities and Exchange Commission filings.
SOURCE NeoStar Retail Group, Inc. /CONTACT: Paul R. Streiber, NeoStar Retail Group, Inc.,
972-830- 2639, or 817-424-2186/ (NEOSQ)
U.S. Bankruptcy Court Approves Purchase of Palace Casino
BILOXI, Miss., Oct. 16, 1996 - Casino Resource Corporation, (Nasdaq: CSNR), a Minnesota
corporation headquartered in Biloxi, Miss., announced today that the United States Bankruptcy Court for
the Southern District of Mississippi ruled Tuesday, October 15, 1996, in favor of the purchase of the
Palace Casino located in Biloxi, Miss. by a newly formed Joint Venture between Casino Resource
Corporation and Robert and Lawana Low. The newly formed Joint Venture, New Palace Casino, L.L.C.
was created for the purpose of acquiring and operating the Palace Casino assets. The ruling follows an
October 8, 1996 deadline allowing for competing bids to purchase the casino. Casino Resource
Corporation, along with its Joint Venture Partner, will acquire the Palace Casino and its assets for a
purchase price of $14.25 Million which consists of $11.5 Million in cash and the balance in notes. A
closing is scheduled in 60 days.
Casino Resource Corporation is a diversified entertainment, hospitality and gaming enterprise. The
company owns and operates the 2,000-seat Country Tonite Theatre in Branson, Mo., and will operate
the new 1,500-seat Country Tonite Theatre in Pigeon Forge, Tenn., scheduled to open in March of 1997.
In addition, the company owns Country Tonite Enterprises, an award-winning theatrical production
company in Las Vegas, Nev. (producers of the "Country Tonite Show," currently in its fifth year at the
Aladdin Hotel); and the Grand Hinckley Inn, located in Hinckley, Minn., adjacent to the Grand Casino.
Further, the company has entered into strategic alliances with Harrah's Entertainment for the
development of Indian gaming properties in Michigan and Indiana; has agreed to lease and operate a
casino and 600-seat theatre in Sousse, Tunisia; and as a member of a Joint Venture, is in the process of
acquiring the Palace Casino in Biloxi, Miss.
SOURCE Casino Resource Corporation /CONTACT: Robert J. Allen, Vice President of Casino
Resource Corporation, 601-435-1976/ (CSNR)
Sparta Surgical Corp. Announces Results for its Second Quarter And Six Months Period
PLEASANTON, Calif., Oct. 16, 1996 - Sparta Surgical Corporation, (Nasdaq: SPSG), today announced
unaudited results for its second quarter and six months ended August 31, 1996 ("Six Months Fiscal
1997").
On December 7, 1995, the Company sold its medical product line, which consisted primarily of wound
care gauze dressings, to Tecnol Medical Products, Inc. ("Tecnol") (Nasdaq: TCNL), which resulted in
the Company's elimination of the medical product line from its business operations approximately three
months before the year ended February 29, 1996 ("Fiscal 1996"). Therefore, the results for the two
periods are not strictly comparable. Following this disposition of assets, the Company implemented a
restructuring plan involving a reduction of personnel, the reorganization of its sales department, and the
consolidation of operating facilities. As part of the ongoing restructuring program, Sparta intends to
concentrate its efforts on achieving profitability and growth through selective strategic acquisitions.
Net sales for the Six Months Fiscal 1997 were $1,057,631, a decrease of $2,643,312 from net sales of
$3,700,943 for the Six Months Fiscal 1996. The net sales decrease during the Six Months Fiscal 1997
as compared to the Six Months Fiscal 1996 is the result of a decrease of $2,221,529 in medical product
sales which resulted from the disposition of the Company's medical product line in December 1995, a
decrease of $62,763 in surgical product sales from $653,306 to $590,543 and a decrease of $359,020 in
electrotherapy product sales from $826,108 to $467,088 primarily attributed to the completion in July
1995 of a one year, non-cancelable $500,000 contract with Henley Healthcare ("Henley") in which the
Company provided Henley with its Spectrum Max-SD TENS unit. The Company is currently in
negotiations to enter into a new contract with Henley.
Net loss for the Six Months Fiscal 1997 was $1,408,626 or $.35 per share. The loss is primarily due to
the decrease in net sales and the corresponding decrease in gross profit coupled with a one time
$695,712 settlement expense more fully described below and legal expenses in the approximate amount
of $208,000 which were incurred in connection with various litigation proceedings. In addition, the
Company increased its sales and marketing expenses in an effort to broaden its customer base and target
new independent sales representatives and distributors for each of its product lines.
On August 6, 1996 the Company settled three related civil actions involving disputes between the
Company; Thomas F. Reiner, the Company's Chairman, President and Chief Executive Officer; and
Gerald S. Kramer, a former officer and Chairman of the Company's Board of Directors which concerned
Mr. Kramer's termination as an officer and director, disputes regarding his employment agreement and
various monetary obligations between the parties. Under the settlement, the Company paid to Mr.
Kramer $262,500 and issued to him a promissory note in the amount of $62,500, payable over five
years. In addition, the parties exchanged general releases and forgave all debts to each other which
included obligations from Mr. Kramer to the Company in the amount of approximately $371,000. The
Company's management believes that it would have ultimately prevailed in the lawsuit, but took the
opportunity to settle the litigation before substantial additional legal fees and management time were
expended.
Mr. Reiner commented, "We are pleased to resolve the litigation on favorable terms to Sparta. The cash
portion of this settlement was, in effect, a buyout of Mr. Kramer's employment contract for
approximately one year's compensation under that contract. It also brought an end to the uncertainty of
the litigation, which hampered Sparta's previous efforts, in certain instances, to raise financing from
various sources of capital."
Statements, either written or oral, which express the Company's expectation for the future with respect to
financial performance or operating strategies can be identified as forward-looking statements. These
statements are made to provide the public with management's assessment of the Company's business.
Caution must be taken to consider these statements in light of a number of factors discussed in the
Company's filings with the Securities and Exchange Commission. In the event such factors do not occur
as management anticipates, actual results could differ materially from the expectations expressed in any
forward-looking statements.
Sparta Surgical Corporation develops, manufactures and markets specialty surgical and non-invasive
electrotherapy devices to the healthcare industry worldwide. Sparta's specialty surgical products,
include critical care hospital disposables, microsurgical hand-held instruments and facial reconstructive
plating systems for use in General, Ophthalmic, Ear, Nose, Throat, Plastic, and Oral Maxillofacial
surgical procedures. In addition, Sparta offers a full line of patented and proprietary transcutaneous
electrical nerve stimulation devices, supplies and accessories used to relieve chronic and acute pain for
use by physicians, physical therapists and their patients.
SPARTA SURGICAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
August 31, August 31,
1996 1995 1996 1995
Net Sales(A) $472,678 $1,931,481 $1,057,631
$3,700,943
Net Income (Loss) (1,135,529) 17,945 (1,408,626)
43,467
Preferred Stock
Dividends (88,951) (31,381) (93,085)
(38,345)
Net Income (Loss)
Applicable to Common
Shareholders $(1,224,480) $(13,436) $(1,501,711)
$5,122
Weighted Average Number
of Primary Common
Shares Outstanding 4,489,039 3,665,307 4,314,586
3,502,826
Net Income (Loss)
Per Primary
Common Share $(.27) $ -- $ (.35)
$ --
(A) Net sales adjusted to reflect the disposition of the medical product line were $708,117 and
$1,479,414 for the three and six months ended August 31, 1995, respectively. Therefore, the results of
these two periods are not strictly comparable.
SOURCE Sparta Surgical Corp. /CONTACT: Thomas F. Reiner, Chairman, President & CEO, or Wm.
Samuel Veazey, V.P. of Finance, of Sparta Surgical Corp., 510-417-8812; or investors, Alan Stone,
President of Alan Stone & Company, 310-444-3940, for Sparta Surgical Corp./(SPSG)
Borland Expects Second Quarter Loss of $.32 to $.36 Per Share; Announces Cost Reduction Program
SCOTTS VALLEY, Calif., Oct. 16, 1996 - Borland International Inc. (Nasdaq: BORL) today announced
that it expects to report a loss for quarter ending Sept. 30, 1996 of between $.32 and $.36 per share on
revenues of approximately $36 million.
Concurrently, the company announced a series of actions designed to reduce costs, improve
responsiveness to customers, return to profitability and enhance shareholder value.
Paul Emery, vice president and chief financial officer, said that Borland's cost reduction measures,
which ultimately are expected to produce annual savings from $15 million to $17 million, include a
worldwide restructuring and realignment of its corporate structure to be more consistent with the
strategic direction of the company. These actions will reduce corporate headcount by approximately 15
percent or 125 individuals.
Whitney Lynn, acting president and chief executive officer, said that the revised organization structure is
designed to simplify the company's operations, eliminate certain redundancies of functions and focus on
responsiveness to customers requirements.
"The layoffs, the cost reductions and operational streamlining are necessary for Borland's to remain
viable and compete effectively in the emerging Internet/intranet and client/server marketplaces," he said.
Mr. Lynn said that other cost reduction measures implemented by the company include tighter
procedures and cost controls and a renewed emphasis on achieving operational savings through
organizational efficiencies.
"These efforts are designed to achieve a cost structure more consistent with revenue expectations," he
added.
Borland attributed the losses in the quarter to a slower than expected transition of its sales, marketing
and development efforts in moving from desktop markets into departmental and corporate technologies.
In addition, market reluctance to adopt client/server products while organizations were evaluating the
impact of new Internet/intranet technologies on their information strategies. The company said that early
responses to the actions taken during the second quarter to address Borland's desktop products, were,
however, encouraging as resellers reported greater sales of repriced and repackaged products.
"To address the shift in the market, we are restructuring the company to reflect our increased
commitment to corporate IT s, including departmental and intranet developers," said Mr. Lynn. "When
the company was restructured in 1995, the company shifted its strategy to focus on products and services
for the entire software development community. This year, while continuing to develop for and support
our traditional independent developer customer, we are more closely focusing our efforts and increasing
our commitment to departmental and corporate IT. We are concentrating on those areas where we feel
we have the most potential for future growth."
Borland plans to increase its presence and improve both its credibility and market penetration at all
levels, Lynn said, particularly at the corporate level.
Mr. Lynn stated that Borland's product mix now includes software development tools for the desktop to
the enterprise, including the new IntraBuilder tool suites for intranet development, internet- enablement
of its Delphi and C++ development tools and as yet unreleased tools for enterprise Java development.
IntraBuilder, launched in the quarter, is Borland's first pure Internet technologies product which is used
to connect corporate data over internal intranets.
The company also noted that its acquisition of client/server enterprise software vendor Open
Environment Corporation is nearing completion with the transaction set for closure on November 18.
"Our goal is to increase the sales of existing products while simultaneously pursuing the delivery of new
products into the marketplace," Mr. Lynn said.
"No one disputes the technical superiority of our products, nor the outstanding capabilities of our
people," Lynn said. "With these important strengths, the job of management is to maximize the
capabilities of our software technologies and their market potential to produce improved shareholder
value. With the changes that we are implementing today, we are confident that we should be able to
improve the company's operating results and return to profitability in fiscal 1998," he said.
This release includes forward-looking statements that involve risks and uncertainties. Actual future
events or results may differ materially. Readers are referred to the documents filed by Borland with the
S.E.C., specifically the most recent reports on Form 10-K and 10-Q, which identify important risk
factors that could cause actual results to differ from those contained in the forward-looking statements.
Borland International Inc. is a leading provider of products and services targeted to software
developers. Borland is distinguished for its high-quality software development tools, which include
Delphi, Delphi Client/Server, IntraBuilder, Borland C++, Visual dBASE, Paradox and InterBase.
Borland's award-winning products are supported through comprehensive programs for small- and
large-sized software developers, corporate developers, value added resellers and systems integrators.
Founded in 1983, Borland is headquartered in Scotts Valley, California.
SOURCE Borland International Inc./CONTACT: media, W. Knox Richardson, 408-431-1201, or
krichardsonwpo.borland.com; or investors, Vallee Hubbard, 408-431- 4705, or
vhubbardwpo.borland.com, both of Borland International Inc.; or Michael Sitrick of Sitrick and
Company Inc., 310-788-2850, for Borland/
Mohawk Industries Inc. Announces Record Third Quarter and First Nine Months Results
CALHOUN, Ga., Oct. 16, 1996 - Mohawk Industries, Inc. (Nasdaq-NNM: MOHK) today announced
results for the quarter ended September 28, 1996. Net earnings before nonrecurring costs were
$15,617,000, or $0.45 per share, for the current quarter, and $14,800,000, or $0.43 per share after
nonrecurring costs. This compares to net earnings for the third quarter of 1995 before restructuring costs
were $8,429,000, or $0.25 per share, and $6,629,000, or $0.20 per share, after restructuring costs. The
improvement in net earnings results from better leveraging of costs on strong sales growth,
improvements in manufacturing costs through restructuring changes, and product mix.
Net sales for the quarter increased 11% to $471,199,000 compared to $425,594,000 for the third
quarter of 1995. The sales increase was attributable to a gain in market share which the Company
believes primarily results from changes in the retail segment of the industry and Mohawk's realignment
of its residential sales forces under a regional structure. Additionally, American Rug Craftsmen
continues to experience strong sales growth. The Company recorded an additional $1,350,000 charge
for nonrecurring costs related to the mill closings that occurred in 1995. The additional charge arises
from a revision in the estimate of the fair value of certain land and buildings based upon current market
conditions.
Net earnings for the first nine months of 1996 were the highest first nine months earnings in the
Company's history. Net earnings before nonrecurring costs were $37,350,000, or $1.08 per share, and
$36,533,000, or $1.06 per share after nonrecurring costs. This compares to net earnings in the first nine
months of 1995 before nonrecurring costs of $21,656,000 or $0.64 per share and $16,555,000 or $0.49
per share after nonrecurring costs. The improvement in net earnings results from better leveraging of
costs on strong sales growth, improvements in manufacturing costs through restructuring changes, and
product mix. Net sales for the first nine months of 1996 were $1,329,418,000 representing an 8%
increase over net sales of $1,233,596,000 in the first nine months of 1995.
On October 11, 1996, the Company announced it signed a letter of intent to acquire certain assets of
Diamond Rug and Carpet Mills, Inc. The proposed purchase price will be a maximum of $43,000,000 in
cash, subject to adjustment based on the level of inventory at closing. Mohawk will also purchase
selected facilities owned by Diamond's principal shareholders. The acquisition will be accomplished
through a prepackaged or other plan of reorganization under Chapter 11 of the United States Bankruptcy
Code.
In commenting on the third quarter performance, David L. Kolb, Chairman and CEO, stated, "We carried
much of the momentum from our second quarter into the third quarter of 1996, breaking another sales and
earnings record. We continue to increase our market share and maintain strong margins. Our nylon
carpet price increases held up well during most of the quarter but we noticed some softening of the
pricing toward the end of the quarter due to an imbalance in supply between staple fiber and continuous
filament fiber. Additionally, we experienced some margin erosion in our polypropylene products in the
latter part of the quarter due to cost increases. However, we believe the rise in the polypropylene resin
prices will abate during the next six months.
"The consolidation of our residential operations, expansion of our distribution system and installation of
our company-wide management information systems are progressing well. If completed, the acquisition
of the selected assets of Diamond will be complementary to Mohawk's current manufacturing
capabilities. These assets will facilitate entry into a new product line of cut pile polypropylene products
and a significant expansion of our polyester product line. In addition these assets provide our Company
with significant increased production capacity to support continued strong growth. Also, we continue to
be committed to aligning with our independent retailers to ensure the mutual success of both Mohawk
and our customers."
Some of the statements contained in this press release are forward looking statements that involve risks
and uncertainties. A variety of factors could cause actual results to differ materially from those
anticipated, some of which are market conditions in the carpet industry, raw material prices and other
risk factors that are discussed from time to time in the Company's SEC reports.
Mohawk is a leading producer of woven and tufted broadloom carpet and rugs for residential and
commercial applications. The Company designs, manufactures and markets carpet in a broad range of
colors, textures and patterns and is widely recognized through its premier brand names, some of which
include "Aladdin," "Alexander Smith," "Bigelow" "Eden," "Galaxy," "Harbinger," "Helios," "Horizon,"
"Karastan," "Mohawk" and "Mohawk Commercial." Mohawk offers a broad line of washable accent
and bath rugs through Aladdin and area rugs through Karastan and American Rug Craftsmen. The
Company markets its products primarily through retailers and commercial dealers.
MOHAWK INDUSTRIES, INC. AND SUBSIDIARIES
Consolidated Statement of Earnings Data
(Amounts in thousands, except per share data)
Three months ended Nine months ended
9/28/96 9/30/95(a) 9/28/96 9/30/95(a)
Net sales $471,199 425,594 1,329,418 1,233,596
Cost of sales 361,870 330,683 1,015,791 962,670
Gross profit 109,329 94,911 313,627 270,926
Selling, general and
administrative expenses 74,782 72,345 224,134 206,964
Restructuring costs --- 2,936 --- 5,610
Carrying value reduction of
property, plant and
equipment 1,350 --- 1,350 2,711
Operating income 33,197 19,630 88,143 55,641
Interest expense 7,944 8,603 25,126 27,081
Other expense, net 795 212 2,640 1,553
Earnings before income taxes 24,458 10,815 60,377 27,007
Income taxes 9,658 4,186 23,844 10,452
Net earnings $ 14,800 6,629 36,533 16,555
Earnings per common and
common equiv. share $ 0.43 0.20 1.06 0.49
Weighted avg. common and
common equiv. shares
outstanding 34,823 33,994 34,479 33,809
Consolidated Balance Sheet Data
(Amounts in thousands)
9/28/96 9/30/95(a)
Assets
Current assets:
Receivables $ 258,803 213,250
Inventories 328,034 301,835
Prepaid expenses 18,131 22,180
Deferred income taxes 12,858 4,453
Total current assets 617,826 541,718
Property, plant and equipment, net 330,538 345,212
Other assets 76,451 83,334
Total $1,024,815 970,264
Liabilities and stockholders' equity
Current liabilities:
Current portion of long-term debt and
note payable $ 41,822 5,548
Accounts payable and accrued expenses 235,400 215,367
Total current liabilities 277,222 220,915
Long-term debt 400,911 438,400
Deferred income taxes and other long-term
liabilities 26,815 26,214
Total liabilities 704,948 685,529
Total stockholders' equity 319,867 284,735
Total $1,024,815 970,264
(a) Certain prior year financial statement balances have been
reclassified to conform with the current year's presentation.
SOURCE Mohawk Industries, Inc./CONTACT: John D. Swift, Chief Financial Officer, Mohawk
Industries, 706-629-7721/