The Grand Union Company announces third quarter and 40-week results
WAYNE, N.J.--Feb. 7, 1997--The Grand Union Co. announced that sales for its 12-week third quarter ended Jan. 4, 1997
totaled $537.2 million compared to $543.6 million for the comparable quarter ended Jan. 6, 1996.
Sales for the 40-weeks ended Jan. 4, 1997 totaled $1,797.4 million compared to sales of $1,787.9 million for the comparable
period last year. Same store sales decreased 0.8% for the third quarter and increased 0.8% for the year to date.
EBITDA totaled $26.3 million (4.9% of sales) and $98.3 million (5.5% of sales) for this year's third quarter and year-to-date
period compared to $31.1 million (5.7% of sales) and $108.4 million (6.1% of sales) for the comparable periods last year.
The company reported net losses applicable to common stock of $32.5 million ($3.25 per share) and $107.2 million ($10.72
per share) for the third quarter and year to date period. Last year, the company reported a loss for the third quarter of $41.0
million ($4.10 per share) and, for the comparable year to date period, had a loss before extraordinary gain on debt discharge
of $109.9 million.
Roger E. Stangeland, chairman of the board, said "Sales results for the third quarter were disappointing. The company was
faced with a shorter than normal holiday season this year, coupled with no snow this year versus the sales benefits of four
snow storms last year." Stangeland said the company continues to implement each of the key elements of its Strategic Plan
(e.g., More Lower Prices, Best Takeout Restaurant in Town, etc.) with growing intensity to return Grand Union to its previous
trend of improving and positive existing same store sales, which extended over the most recent four quarters.
During the fourth quarter, the company will complete the second installment of its agreement to sell a total of $100 million in
convertible preferred stock by selling $20 million in stock to affiliates of Shamrock Capital Advisors Inc., and GE Investments
Inc. In Sept., 1996, the company completed the initial stage by selling $40 million in preferred stock. Additional sales of stock
will occur in stages through Feb., 1998.
Joseph J. McCaig, president and chief executive officer, said the additional capital has allowed the company to complete
several of its M.A.S.T.E.R.S. (Maximize All Space, Totally Expand the Right Stuff) renovations. Four M.A.S.T.E.R.S.
renovations were completed during the third quarter in Berkeley Heights, Butler, Hackensack and Ridgewood, N.J. and two
M.A.S.T.E.R.S. renovations, Westport, Conn. and Stony Point, N.Y., were completed in January after the third quarter
ended. Four additional stores are currently under renovation and, when completed by March and April, will bring the total
number of M.A.S.T.E.R.S. stores completed in the second half of the fiscal year to the 10 store target announced at the time
of the preferred stock sale in September. Capital spending, including capitalized leases other than real estate leases, total
approximately $34 million to date and is expected to total between $55 and $60 million for the fiscal year. This will be $5 to
$10 million less than projected in Nov., primarily due to delays encountered in two new store projects.
McCaig said "The company is continuing initiatives to reduce expenses from the areas the customer doesn't see, and and
reinvesting those savings into the areas the customer sees every day." He said "This is being accomplished through the efforts
of seven cost reduction teams (GUCO Teams (Get Unnecessary Costs Out)) whose initiatives are already achieving
measurable progress on reducing energy costs, store and customer accidents and administrative expenses. In turn, our
shoppers are seeing, for example, greatly expanded offerings of store-prepared convenience foods as well as the
customer-friendly equipment that presents those offerings."
EBITDA (earnings before LIFO provision, depreciation and amortization, unusual items, interest expense, income tax and
extraordinary gain) decreased $4.9 million and $10.1 million in the third quarter and year to date periods compared to the
same periods last year. The comparison of this year's third quarter EBITDA to last year was negatively affected, as a
percentage of sales, by the `More Lower Prices' marketing program implemented at the beginning of this fiscal year in the
majority of the company's metropolitan New York area stores, higher levels of promotional spending and increased store
labor levels to properly launch and support the key elements of the Strategic Plan. These factors were partially offset by
positive benefits from outsourcing the company's warehousing, distribution and product supply and the restoration of vendor
promotional allowances and other vendor support to normal levels compared to bankruptcy-impacted levels experienced in
last year's first quarter.
The Company and its bank lenders amended the term loan and revolving credit agreements effective at the end of the third
quarter. The amendment reduces the minimum levels of EBITDA required for both the third quarter and the fiscal year and
correspondingly reduces the EBITDA to cash interest coverage requirement over the same time frame. The Company is
currently in compliance with these amended debt agreements.
Certain statements by the Company may be considered "forward- looking statements" within the meaning of federal securities
law. Such forward-looking statements are subject to risks, uncertainties and other factors which could cause actual results to
differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties
include, but are not limited to, the competitive environment in which the company operates, the company's ability to complete
its capital expenditures on a timely basis, the success of operating initiatives, regional weather conditions, the general economic
conditions in the geographic areas in which the company operates and other risks detailed from time to time in the company's
SEC reports.
Grand Union is a regional retail food company which currently operates 226 retail food stores in six Northeastern states. Its
common stock is traded under the GUCO symbol on the NASDAQ National Market.
THE GRAND UNION COMPANY
CONSOLIDATED STATEMENT OF
OPERATIONS
(unaudited)
(in thousands of
dollars)
12 Weeks Ended
40
Weeks Ended
Jan. 4, Jan.
6, Jan.
4, Jan. 6,
1997 1996
1997
1996
Sales $ 537,151 $
543,617 $ 1,797,386 $ 1,787,873
Gross Profit 164,635
167,163 549,392 547,421
Operating and
administrative expenses (138,373)
(136,035) (451,060)
(439,003)
Earnings before LIFO
provision, depreciation and
amortization, unusual items,
interest expense, income tax
benefits, and extraordinary
gain on debt discharge
(EBITDA) 26,262
31,128 98,332
108,418
LIFO provision (300)
(300) (1,000) (1,000)
Depreciation and
amortization (16,257)
(16,547) (61,402)
(57,719)
Amortization of excess
reorganization value (23,678)
(24,578) (78,928)
(59,405)
Unusual items(a) -
(15,000) - (38,127)
Interest expense, net (24,391)
(23,537) (81,252) (75,307)
Loss before income tax
benefit and extraordinary
gain on debt discharge (38,364)
(48,834) (124,250)
(123,140)
Income tax benefit 6,687
7,840 18,108 13,212
Loss before extraordinary
gain on debt discharge (31,677)
(40,994) (106,142)
(109,928)
Extraordinary gain on
debt discharge
- - - 854,785
Net (loss) income (31,677)
(40,994) (106,142) 744,857
Accrued preferred stock
dividends (788)
- (1,031)
-
Net (loss) income applicable
to common stock $ (32,465) $
(40,994) $(107,173) $
744,857
(a) Unusual items consists of (i) a
$15,000 provision for warehouse closures
for the 12 and 40 weeks ended Jan. 6,
1996, (ii) $18,627 of
reorganization expense for the 40 weeks
ended Jan. 6, 1996 and (iii)
a $4,500 provision for voluntary
resignation incentives for the 40 weeks
ended Jan. 6, 1996.
CONTACT: The Grand Union Company Donald C. Vaillancourt, 201/890-6100
50-Off Stores Announces Filing of Plan Reorganization And Related Disclosure Statement With Bankruptcy Court
SAN ANTONIO, TX - Feb. 7, 1997 - San Antonio based 50-OFF Stores, Inc., currently operating in a Chapter 11
Bankruptcy proceeding, announced today that it had filed a Plan of Reorganization and a related Disclosure Statement with the
United States Bankruptcy Court for the Western District of Texas, San Antonio Division, late Thursday, February 6, 1997.
As previously reported, on October 9, 1996, the Company and its three significant subsidiaries filed petitions for protection
under Chapter 11 of the Bankruptcy Code. While management believed it had developed an appropriate business plan for the
Company, the Company had been unable to secure the resources required to implement its plan and to effect the changes
believed necessary to improve operations and reverse the Company's disappointing operating results without the protections
afforded under Chapter 11. The four cases are being jointly administered under Case No., 96-54430-C and are pending
before the Honorable Leif M. Clark, United States Bankruptcy Judge.
50-OFF intends to seek a hearing for the approval of its Disclosure Statement in early March. Pending such hearing, the
Company expects to continue negotiations with its creditors regarding the terms of the proposed Plan of Reorganization. The
Plan calls for:
- a substantial reduction in principal and a lengthening of maturity of certain long-term debt;
- the issuance of at least 770,170 shares ($3,991,050) of convertible "secured" preferred stock (secured initially by the net
proceeds of significant litigation brought by the Company and subject to upward adjustment to the extent such proceeds
exceed $3,991,050; each: $5.00 stated and liquidation value, convertible into two shares of "new" common stock or, under
certain circumstances, into one share of 5.5% convertible preferred stock) to general unsecured creditors;
- the issuance of rights to subscribe for and purchase up to 122,009 Units, each consisting of 20 shares of 5.5% convertible
preferred stock (each: $5.00 stated and liquidation value, convertible into two shares of "new" common stock) and 20 shares
of "new" common stock, at $100 per Unit to current shareholders;
- the forgiveness of more than $28 million of pre-petition obligations of the Company, and
- the canceling of all "old" common stock, warrants and options on the effective date of the Plan of Reorganization, which date
will be 10-45 days after the Plan is confirmed.
Upon approval of the Disclosure Statement by the Court, the Plan and the Disclosure Statement will be mailed to all creditors
and shareholders for their approval. 50-OFF expects to have a Confirmation Hearing on the Plan in late April or early May.
While in Chapter 11, the Company has operated its business as a debtor in possession:
- liquidating and closing 60 stores; -- reducing its geographic presence (exiting Alabama, Arkansas, Florida, Georgia, North
Carolina, South Carolina and most of Tennessee);
- closing one of two freight consolidation and distribution centers; -- downsizing its corporate, staff and field
personnel(corporate and distribution: 177 to 38; field and stores: 967 full-time, 1482 part-time to 319 and 440, respectively);
- selling its headquarters building and leasing appropriate, reduced space;
- refinancing its principal credit facility through General Electric Capital Corporation's providing a line of credit through
November 1997 of up to $15,000,000 (at February 6, 1997, the Company had approximately $5,476,000 outstanding under
the facility);
- restoring credit facilities with vendors (from 100% prepaid to 35% terms currently);
- redirecting its retail activities from an off-price ("50-Off") to a close-out ("LOT$OFF") retailing concept;
- changing its inventory mix from 35.6% to 46% hardlines through category additions; developing marketing and advertising
strategies and programs to revive and increase store traffic; and
- generally positioning itself for improved operating results (higher initial mark-ups, less promotional pricing, fewer mark-
downs, less inventory shrinkage (fiscal 1997 shrinkage was 1.87% of retail sales vs. 4.14% and 3.82% for fiscal 1996 and
1995, respectively)),
while formulating the Plan of Reorganization filed Thursday with the Court.
The Company will continue to manage its affairs and operate its business under Chapter 11 as a debtor in possession while the
Plan of Reorganization is reviewed by the Court, creditors and shareholders. Through the Plan of Reorganization, the
Company is restructuring its obligations and capitalization in order to strengthen its financial position so management can more
fully implement its business plan and improve the Company's operating performance. The Company's ability to successfully
reorganize and continue as a going concern will be affected by a number of factors, including, but not limited to, uncertainty
regarding the eventual outcome of the bankruptcy case, the degree of success in reversing the Company's recent business
trends and the ability to alleviate trade credit concerns and restore merchandise flow to adequate levels. While management
believes that the recent closing of stores and the implementation of expense cuts commensurate with the downsizing of the total
stores in operation (from 101 to 41 stores) facilitates its efforts to improve the Company's operating performance and that the
recapitalization to be implemented upon the confirmation of its Plan of Reorganization should strengthen its financial position
and alleviate concerns of credit and merchandise suppliers, no assurance can be given that the Company will be successful in
its continuing efforts to reverse recent business trends and return to profitability. The Company's projections included in the
Disclosure Statement filed with the Court show a return to profitability in the current fiscal year ending January 30, 1998.
SOURCE 50-OFF, Inc. /CONTACT: Charles Fuhrmann, CEO of 50-OFF Inc., 210-804-4904/
Enron Announces Extension Of Low Rates And Proposes Debt Restructuring Assistance For Cajun Electric Power
Cooperative Members
HOUSTON, TX - Feb. 7, 1997 - In its proposal to acquire the assets of Cajun Electric Power Cooperative (Cajun), Enron
Capital & Trade Resources today announced it has notified the Louisiana Public Service Commission (LPSC) that ENRON
will extend, at Cajun members' option, a low-rate price option for an additional ten years beyond the 15 year primary term of
the proposal. The price guarantee and extension option are anticipated to cap the rate Cajun members will pay for electricity at
four cents per kilowatt hour for up to 25 years.
"This extension option further strengthens our position that ENRON's proposal is best for Louisiana," said Ken Rice, Enron
Capital & Trade Resources managing director. "ENRON can offer this low cost option because the ENRON plan pays off
debt owed by the co- ops to the Rural Utilities Service (RUS), a federal agency, in 15 years compared to the 25 years
required by either Northern States Power or SWEPCO. By paying the RUS debt sooner, this saves consumers money which
would otherwise go to the federal government, while at the same time providing co-op members with guaranteed low cost
power for the foreseeable future."
"As the confirmation process continues, we fully expect each of the member co-ops will execute power purchase agreements
with at least two and possibly all three bidders, and that ENRON will be successful in obtaining agreements from all 12
member co-ops," said Rice. "All agreements signed by all parties, including ENRON, will be non-binding until approved by
the bankruptcy court."
ENRON also announced plans to assist Cajun members with strategies to restructure debt, principally to meet individual
member obligations to the RUS, and to assist the member co-ops in accessing low-cost sources of capital to meet future
operating needs.
"ENRON has always been at the forefront in providing innovative sources of financing to the energy industry," Rice said. "The
electricity marketplace is demanding alternatives to government lending as deregulation unfolds. ENRON is committed to
helping Louisiana cooperatives remain competitive, and serving as a financing alternative is a logical extension of that
commitment."
ENRON, one of the world's largest integrated natural gas and electricity companies with approximately $15 billion in assets,
operates one of the largest natural gas transmission systems in the world; is the largest purchaser and marketer of natural gas
and the largest non-regulated marketer of electricity in North America; markets natural gas liquids worldwide; manages the
largest portfolio of fixed-price natural gas risk management contracts in the world; is among the leading entities arranging new
capital to the energy industry; owns a majority interest in Enron Oil & Gas Company, one of the largest independent
(non-integrated) exploration and production companies in the United States; owns a majority interest in Enron Global Power
& Pipelines L.L.C., which is owner and manager of operating power plants and natural gas pipelines around the world; and is
one of the largest independent developers and producers of electricity in the world. ENRON is traded under the ticker
symbol, "ENE."
SOURCE Enron Capital & Trade Resources /CONTACT: Mark Palmer of ENRON, 713-853-4738/
Search Capital To Acquire MS Financial
DALLAS, TX - Feb. 7, 1997 - Search Capital Group, Inc. (Nasdaq: SCGI, SCGIP) and MS Financial, Inc. (Nasdaq:
MSFI) announced today that they have signed a definitive agreement for Search to acquire MS Financial, Inc., a Jackson,
Mississippi-based non-prime auto finance company, in a stock swap valued at about $21 million.
"The acquisition of MS Financial will be by far the largest step in our acquisition program to date. This transaction more than
triples Search's managed loan portfolio and expands our geographical coverage through access to MS Financial's branch
system and network of automobile dealers," said George C. Evans, Search's chairman, president and chief executive officer.
According to Evans, upon consummation of the acquisition, proforma estimates indicate that Search's gross receivables under
management will increase from $74.7 million to approximately $250 million and Search's net worth will increase to about $52
million from $33.6 million. Realization of additional revenues from the MS Financial portfolio, combined with the consolidation
or elimination of duplicate operating and administrative expenses, should sharply increase Search's earnings during fiscal 1998
(April 1, 1997 to March 31, 1998). Evans emphasized that the acquisition of MS Financial is another step in Search's
continuing plan to emerge as an industry leader in the ongoing consolidation in the non prime auto finance sector.
James B. Stuart Jr., chairman of MS Financial's board, said, "We are impressed with the Search Capital management team
and the company operations, and Mr. Evans has an excellent track record in the consumer finance industry." MS Financial,
Inc.'s board of directors has unanimously voted to approve this transaction with Search Capital Group, Inc. and recommends
that the shareholders approve the merger.
Under the terms of the agreement, MS Financial stockholders will receive the equivalent of $2.00 in Search common stock in
exchange for each MS Financial share, subject to certain minimum and maximum numbers of Search shares and to
adjustments in certain circumstances. There are approximately 10.4 million MS Financial shares outstanding.
The transaction is intended to be a tax-free exchange of shares and is expected to close by the end of April 1997. The
transaction is subject to customary conditions, including regulatory approvals and the finalization of acceptable arrangements
with MS Financial's lenders.
The merger is expected to be submitted to stockholders for approval in April 1997. MS Financial's two principal
stockholders, which own approximately 77 percent of MS Financial's common stock, have agreed to vote their shares in favor
of the transaction. Until final closing of the transaction, Search will assist MS Financial in managing its collections and other
operations and MS Financial has agreed to apply Search's loan underwriting guidelines to its loan purchasing activities. Search
will purchase automobile loans from MS Financial.
Search Capital Group, Inc. is a specialized financial services company engaged in the purchasing, financing and servicing of
non- prime automobile installment loans. Search is also initiating non- auto consumer finance operations. Search common
shares and its 9 percent/7 percent convertible preferred shares are traded on the over the counter bulletin board under the
symbols "SCGI" and "SCGIP," respectively.
MS Financial (Nasdaq: MSFI) is a specialized consumer finance company that purchases and services retail installment
contracts on new and used cars and light duty trucks. The company serves more than 800 dealerships in 13 states.
SEC Cautionary Safe Harbor Language This press release contains certain forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, with respect to the effects of the acquisition of MS Financial on Search's
financial position and earnings. These statements are based on current expectations that involve a number of risks and
uncertainties, and actual results may differ materially. Factors that may cause or contribute to such differences include Search's
actual growth rate, delinquency and default rates with respect to the contracts included in its and MS Financial's portfolio, the
extent to which expected operating efficiencies are realized, changes in business and market conditions and the economy in
general, increased competition, changes in governmental and regulatory matters, unforeseen litigation and other risk factors
identified in Search's SEC filings under the caption "Risk Factors."
SOURCE Search Capital Group; MS Financial, Inc. /CONTACT: James F. Leary, Vice Chairman, Finance of Search
Capital Group, Inc., 214-965-6000; or Philip J. Hubbuch Jr., Vice Chairman and CEO of MS Financial, Inc.,
601-978-6673/
Cypress Bioscience announces year end results
SAN DIEGO, CA --Feb. 7, 1997-- Cypress Bioscience Inc. (NASDAQ:CYPB) Friday announced its financial results for
the year ended Dec. 31, 1996.
The company reported a net loss of $8.1 million, or 28 cents per share, compared with a net loss of $6.8 million, or 39 cents
per share, for 1995. The company's cash position as of Dec. 31, 1996, was $11 million compared with $1 million at Dec. 31,
1995. The company completed two private placements in 1996, raising more than $20 million.
The company completed the first year of its turn-around plan in 1996 consistent with its re-defined business strategy
implemented by the new senior management team. Senior management identified rheumatoid arthritis as the most promising
future market for the PROSORBA column, based on both clinical efficacy and market potential.
Positive results from a Phase II trial in rheumatoid arthritis led to the successful start of the Phase III trial with interim results
expected in mid-1997; more than 60 patients have been enrolled to date. In an effort to increase sales over the next several
years, the company regained North American distribution rights to the PROSORBA column and initiated direct sales and
marketing.
In addition, the acquisition of PRP Inc., and subsequent announcement of positive results in its Phase IIa trial for IPM
(Infusible Platelet Membranes), allowed the company to diversify and strengthen its technology platform and its clinical
pipeline.
Finally, the successful completion of a major restructuring included relocating all but the company's manufacturing operations
from Seattle to San Diego and the consolidation of its manufacturing operations into a single facility.
Revenue for the year ended Dec. 31, 1996, was $2.0 million, a decrease from revenue of $4.1 million for 1995. Revenue for
1995 included a $3.0 million take-or-pay payment made by thecompany's former North American distributor of the
PROSORBA column, Baxter Healthcare Corp. With the termination of the Baxter distribution agreement, the company
regained the right to sell its PROSORBA column directly to customers beginning in May 1996.
Product shipments after reinitiating internal sales and marketing efforts were in excess of product shipments made by Baxter
during the last year of the agreement, thus reemphasizing the strategic importance of the company regaining distribution rights.
"Cypress is on the right track to improve sales performance of the PROSORBA column in hematology. We have transformed
the sales approach to one based on a clinically oriented program which includes gaining support from opinion leaders and
generating trials from key hospitals which have not previously used the product," reported Debby Jo Blank, M.D., president
and chief operating officer.
Total expenses for the year ended Dec. 31, 1996, were $10.5 million compared with total expenses of $11.0 million for 1995.
Reductions in production costs and sales and marketing expenses were offset, in part, by non-recurring charges related to the
company's restructuring and management changes as well as to an increase in research and development expenses associated
with the initiation of the pivotal trial in rheumatoid arthritis.
In 1996, research and development expenses in proportion to total expenses increased by 31 percent over the comparable
proportion in 1995. This increase is indicative of the company's increased focus on the clinical development of new products.
For the quarter ended Dec. 31, 1996, the company reported revenue of $690,000, compared with revenue of $9,000 for the
same period in 1995, a significant increase that reflects the increase in product shipments directly related to the sales and
marketing efforts undertaken by the company.
The net loss reported for the fourth quarter of 1996 was $3.0 million or 9 cents per share, compared with $3.2 million, or 17
cents per share for the comparable quarter of 1995.
Cypress develops, manufactures and markets medical devices and therapeutics for the treatment of certain types of immune
disorders and is engaged in the development of novel therapeutic agents for the treatment of blood platelet disorders. The
company's leading product, the PROSORBA column, is approved by the FDA for sale in the treatment of patients with
idiopathic thrombocytopenic purpura (ITP), an immune-mediated bleeding disorder.
The company is currently conducting a multi-center controlled clinical trial using the PROSORBA column for treatment of
rheumatoid arthritis based on encouraging pilot studies completed in 1995. Recently acquired IPM (Infusible Platelet
Membranes), is positioned to become a substitute for traditional platelet transfusions, a $1.5 billion market worldwide.
Except for historical information contained herein, this news release contains forward-looking statements that involve risks and
uncertainties, including, but not limited to, risks and uncertainties associated with the pursuit of regulatory approvals for the
PROSORBA column and IPM, whether the company can successfully increase sales of its PROSORBA column, whether
IPM will ever become a substitute for traditional platelet transfusions, and the effectiveness and marketability of medical
products, as well as other risks detailed from time to time in the company's SEC reports, including its report on Form 10-K/A
for the year ended Dec. 31, 1995.
Cypress Bioscience
Inc.
Condensed Financial
Data
(In thousands, except per
share data)
Quarter Ended
Year Ended
December 31,
December 31,
1996 1995
1996 1995
Revenue $ 690 $ 9 $
1,968 $ 4,104 Interest income
114 21 458 119 Total
804 30 2,426
4,223
Production costs 646 582
1,483 2,041 Sales and
marketing 365 74
794 820
Research and
development 1,862 778
4,003 3,219
General and
administrative 888 1,090
3,529 2,627 Other
33 645 677 2,080
Interest Expense 11 29
57 262
Total expenses 3,805 3,198
10,543 11,049 Net loss $
(3,001) $ (3,168) $ (8,117) $ (6,826)
Net loss per
share $ (0.09) $ (0.17) $
(0.28) $ (0.39)
Weighted average
shares
outstanding 33,285 18,590
29,206 17,599
CONTACT: Cypress Bioscience Inc., San Diego Susan E. Feiner, 619/452-2323
Grossman's reports January sales
CANTON, Mass.--Feb. 7, 1997-- Grossman's Inc. (Nasdaq-GROS) today reported January sales from ongoing operations
down 3.1 percent to $18.5 million, compared with January 1996 sales of $19.0 million. Companywide, January comparable
store sales were down 9.2 percent.
Contractors' Warehouse
Contractors' Warehouse reported January sales of $15.4 million, 8.9 percent below the $16.9 million from a year ago.
Comparable store sales were down 12.3 percent in January.
Mr. 2nd's Bargain Outlet
The 26 Mr. 2nd's Bargain Outlet stores reported $3.3 million in sales, 37.5 percent above the $2.4 million from 21 stores last
January. Comparable store sales were up 11.6 percent in January.
Letter of Intent Signing
In a separate release earlier today, the company announced the signing of a non-binding letter of intent by the company and
JELD- WEN, inc., an affiliate of the company's largest shareholder and a significant supplier of product, which stipulates terms
under which the company would be provided with the liquidity necessary to continue its business operations. On January 22,
1997, the company had announced that it was experiencing a severe liquidity shortage and was exploring all available options,
including seeking protection from creditors under Chapter 11 of the U.S. Bankruptcy Code. The parties have agreed to work
toward reaching a definitive agreement by February 14, 1997, which would document the substantive terms covered in the
letter of intent.
Divisional Information
January January
1997 1996
------- -------
SALES (in millions)
Ongoing Operations
Contractors' Warehouse
Sales $15.2 $16.6
Service Income 0.2 0.3
-------- --------
Total Contractors' Warehouse 15.4 16.9
Mr. 2nd's Bargain Outlet 3.3 2.4
-------- --------
Total Ongoing Operations 18.5 19.0
Closed Stores NA 13.4
-------- --------
Total Grossman's Inc. $18.7 $32.7
% OF TOTAL SALES
Ongoing Operations
Contractors' Warehouse
Sales 81.3 % 50.8 %
Service Income 1.1 0.9
-------- --------
Total Contractors' Warehouse 82.4 51.7
Mr. 2nd's Bargain Outlet 17.8 7.4
-------- --------
Total Ongoing Operations 100.0 58.6
Closed Stores NA 41.4
-------- --------
Total Grossman's Inc. 100.0 % 100.0 %
SALES % INCREASE (DECREASE)
VERSUS PRIOR YEAR
Ongoing Operations
Contractors' Warehouse (8.9) 30.0
Mr. 2nd's Bargain Outlet 37.5 (14.3)
-------- --------
Total Ongoing Operations (3.1) 22.2
Closed Stores (100.0) (32.0)
-------- --------
Total Grossman's Inc. (42.8)% (7.9)%
COMPARABLE STORE SALES % INCREASE
(DECREASE) VERSUS PRIOR YEAR
Ongoing Operations
Contractors' Warehouse (12.3) 16.7
Mr. 2nd's Bargain Outlet 11.6 (21.4)
-------- --------
Total Ongoing Operations (9.2) 9.9
Closed Stores NA (21.2)
-------- --------
Total Grossman's Inc. (9.2)% (6.2)%
-0-
January January
1997 1996
------- -------
NUMBER OF STORES AT MONTH END
Contractors' Warehouse Division 15 15
Mr. 2nds Bargain Outlet Stores 26 21
-------- -------
Total Number of Stores 41 36
Grossman's Inc. press releases and public filings can be accessed on the Internet through Business Wire's Home Page:
http://www.businesswire.com/cnn/gros.htmMr. 2nd's Bargain Outlet maintains a web site for product information, store
locations and feedback: http://www.bargain-outlets.comGrossman's Inc. operates 15 stores under the name Contractors'
Warehouse in California, Indiana, Kentucky and Ohio, and 26 stores under the name Mr. 2nd's Bargain Outlet in
Massachusetts, New York and Rhode Island.
CONTACT: Grossman's Inc. Steven L. Shapiro, 617/830-4020
Grossman's announces letter of intent
CANTON, Mass.--Feb. 7, 1997-- JELD-WEN inc. to provide interim financing; Arrangement sought with trade creditors;
Management changes made Grossman's Inc. (Nasdaq-GROS) announced the signing of a non- binding letter of intent by the
company and JELD-WEN, inc., an affiliate of the company's largest shareholder and a significant supplier of product, which
stipulates terms under which the company would be provided with the liquidity necessary to continue its business operations.
On January 22, 1997, the company had announced that it was experiencing a severe liquidity shortage and was exploring all
available options, including seeking protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.
The parties have agreed to work toward reaching a definitive agreement by February 14, 1997, which would document the
substantive terms covered in the letter of intent. The terms of the letter would have JELD-WEN, inc. provide the company
with short-term, interim financing in the form of a convertible note, secured by a subordinated collateral position in the
company's owned real estate. Conversion of the note would result in JELD-WEN, inc. owning 50 percent of the company's
outstanding stock. The letter also provides that Grossman's and JELD-WEN, inc. will seek the agreement of trade creditors to
accept discounted payments for past obligations in the form of 90 day notes and stock. Furthermore, during the term of the
loan, suppliers selling goods to the company on credit terms would also receive a security position in the company's owned
real estate.
The letter contemplates that the arrangements with trade creditors may be most expeditiously effected through a future Chapter
11 filing. The company will be meeting with its principal trade creditors to discuss the contemplated arrangements, prior to the
signing of a definitive agreement.
The letter of intent is predicated upon continued financing by the company's secured lender, Congress Financial Corporation.
Discussions continue with Congress, but no agreement for continued financing has yet been reached.
The Company has retained Argus Management Corporation, a business and management consulting firm specializing in
business turnarounds and interim management. The Board of Directors has elected Argus President, David J. Ferrari, as
President and Chief Executive Officer of Grossman's Inc. Robert K. Swanson has resigned the position of Chief Executive
Officer, but will continue as Chairman of the Board.
Thomas A. Ford has been elected as Executive Vice President and Chief Operating Officer, overseeing the operations of both
of the company's divisions, Contractors' Warehouse and Mr. 2nd's Bargain Outlet. Ford, a company veteran of 23 years, was
most recently President of the Mr. 2nd's Bargain Outlet Division.
Stanley G. Berman has resigned the positions of President and Chief Operating Officer of Grossman's Inc.
Grossman's Inc. press releases and public filings can be accessed on the Internet through Business Wire's Home Page:
http://www.businesswire.com/cnn/gros.htm
Mr. 2nd's Bargain Outlet maintains a web site for product information, store locations and feedback: http://www.bargain-
outlets.com
Grossman's Inc. operates 15 stores under the name Contractors' Warehouse in California, Indiana, Kentucky and Ohio, and
26 stores under the name Mr. 2nd's Bargain Outlet in Massachusetts, New York and Rhode Island.
CONTACT: Grossman's Inc. Steven L. Shapiro, 617/830-4020
MBIA expects no losses from Jayhawk transactions
ARMONK, New York--February 7, 1997--MBIA Inc. (NYSE: MBI) announced today that it does not expect to incur any
losses as a result of insuring two sub-prime auto loan receivables transactions issued by Jayhawk Acceptance Corporation
which announced its intention to file for Chapter 11 protection yesterday.
"We are monitoring the Jayhawk situation very carefully and do not expect to experience any losses on either transaction," said
Richard L. Weill, president of MBIA Inc. "These MBIA insured issues are substantially over-collateralized and the assets
supporting our transactions are held in a bankruptcy remote special purpose corporation. MBIA is in contact with Jayhawk to
ensure that effective servicing continues on these portfolios."
The $41.8 million Jayhawk Funding Trust I series 1996 A transaction, issued March 15, 1996, has an outstanding note
balance of $3.2 million and is collateralized by $27.3 million of receivables. The second transaction, The Jayhawk Funding
Trust I Series 1996 B, issued August 7, 1996, with $42.9 million of insured notes, has an outstanding balance of $24.3 million
and is secured by $66.8 million of receivables. Norwest Bank Minnesota, NA acts as a back-up servicer as well as trustee for
both these issues.
MBIA Inc., through its wholly owned subsidiary, MBIA Insurance Corporation, is the leading insurer of municipal bonds and
structured finance transactions. MBIA is also a leading provider of investment management services to the public sector.
MBIA Insurance Corporation has a claims-paying rating of Triple-A from Moody's Investors Service, Inc., Standard &
Poor's Ratings Services and Fitch Investors Service.
CONTACT: Michael Ballinger (914) 765-3893
FirstCity Financial Corporation Makes Clarification
HOUSTON, TX - Feb. 7, 1997 - In response to numerous inquiries, FirstCity Financial Corporation (Nasdaq: FCFC)
clarified that FirstCity and its subsidiaries are in no way related to Jayhawk Acceptance Corporation which yesterday stated
its intention to file for bankruptcy protection.
FirstCity Financial Corporation is a financial services company engaged in value investing through special asset acquisition,
management and disposition, as well as specialized consumer lending. Its common (FCFC) and special preferred (FCFCP)
stocks are listed on the Nasdaq National Stock Market System.
SOURCE FirstCity Financial Corporation /CONTACT: Suzy W. Taylor of FirstCity Financial Corporation, 713-652-1810/