Apex One, Inc. bankruptcy plan confirmed
NORTH READING, Mass.--Feb. 12, 1997-- Converse Inc.
(NYSE:CVE) today announced that the United States Bankruptcy
Court for the District of New Jersey confirmed a plan of orderly
liquidation in the Chapter 11 Bankruptcy proceedings involving
Converse's subsidiary, Apex One, Inc.
As previously announced, the plan includes a payment of $4 million
by Converse to the Apex bankruptcy estate and the relinquishment
of Converse's claims against the Apex estate. The plan also
includes a permanent injunction barring Apex creditors from
commencing or continuing any lawsuit against Converse which
relates to Apex. Therefore, as a result of the plan, lawsuits seeking
total monetary damages of approximately $6.3 million filed by
several Apex creditors against Converse will be terminated.
In connection with the plan, Converse also announced that it has
settled claims against several additional Apex sellers who were not
participants in the trial, the results of which were announced by
Converse on February 4, 1997. These settlements will result in the
cancellation of approximately $3.5 million principal amount of
Converse promissory notes, surrender of warrants to purchase
approximately 0.5 million shares of Converse common stock and
cancellation of other obligations of Converse in the net amount of
approximately $1.5 million. All of the foregoing were issued by
Converse in connection with the purchase of Apex.
Converse, the largest U.S. manufacturer of athletic footwear, is a
leading designer, manufacturer and marketer of high quality athletic
and leisure footwear and is a licensor of sports apparel and
accessories that are distributed worldwide through over 9,000
athletic specialty, sporting goods, department and shoe stores.
CONTACT: Converse Inc., North Reading Investor Contact:
Donald J. Camacho, 508/664-1100; Morgen-Walke Associates
Christine DiSanto/Caroline Babbitt, 212/850-5600 or Media
Contact: Jennifer Murray, 508/664-7521; Helen Fletcher,
508/664-7509; Morgen-Walke Associates Jeff Siegel,
212/850-5600
Harvard Industries, Inc. Reports First-Quarter Results
TAMPA, Fla., Feb. 12, 1997 - Harvard Industries, Inc. (Nasdaq:
HAVA), a major producer of OEM automotive parts and
accessories, today reported results for the first quarter ended
December 31, 1996.
Consolidated net sales for the quarter ended December 31, 1996
amounted to $187,261,000, compared with $210,536,000 for the
quarter ended December 31, 1995. Approximately $10,000,000
of this sales decline related to the Company's Harman Automotive
and Harvard Interiors operating units, both of which are available
for sale. And, approximately $6,000,000 was attributable to lower
aluminum prices in effect during the quarter ended December 31,
1996, that were passed on to the Company's customers. The
balance of the decline was due primarily to the October 1996 GM
strike and lower tooling sales.
Consolidated EBITDA (earnings before interest expense, taxes,
depreciation and amortization and a non-cash portion of charges
related to the recognition of post retirement benefits other than
pensions) for this first quarter amounted to $1,178,000, compared
with $23,303,000 for last year's first quarter.
After deducting accrued dividends and accretions related to the
Company's 14-1/4% PIK Preferred Stock of $4,224,000 and
$3,710,000 for the quarters ended December 31, 1996 and 1995,
respectively, the net loss for the quarter ended December 31, 1996
attributable to common shareholders was $34,392,000, or a net
loss of $4.90 per common share, compared with $5,434,000, or a
net loss of $.78 per common share, for the quarter ended
December 31, 1995.
The Company attributes the net loss primarily to the continued
operational inefficiencies at the Company's Doehler-Jarvis
subsidiary, the effects of the October 1996 GM strike, softness in
certain large passenger car sales, a sales decline at Harman
Automotive and continued high interest expense and goodwill
amortization.
The Company stated that borrowings outstanding under the
Company's revolving credit facility loan aggregated $32,363,000 at
December 31, 1996, and that $18,500,000 of standby letters of
credit were outstanding. The Company is currently involved in a
due diligence process with a potential buyer looking towards the
possible sale of Harman Automotive assets and, in addition, the
Company is continuing its efforts to sell its non-core Harvard
Interiors Division (furniture segment).
The Company is also continuing the process of investigating other
strategic alternatives, including the sale of certain assets and
businesses. In this regard, the Company has retained The
Blackstone Group, Investment Bankers.
The Company was advised by Ford Motor Company that,
effective January 1997, approximately $8,000,000 of sales during
the year ended September 30, 1996 (related to midsize passenger
car front-wheel-drive, aluminum transmission housings) would be
resourced to a competitor due to the inability of the Doehler-Jarvis
Toledo Plant to maintain delivery dates compatible with customer
demands. The Company believes that this action resulted from the
overcapacity situation at the Doehler-Jarvis Toledo Plant. The
Company is taking immediate steps to eliminate the operating
inefficiencies through the retention of a nationally prominent
management consulting firm to enhance productivity, operating
procedures and results at the Doehler-Jarvis Toledo plant.
The objectives of this program are as follows:
(1) Reduce downtime resulting from equipment failures,
maintenance project delay time, die change time and run cycle time.
(2) Increase pieces per hour by improving machine and operator
capability and consistency.
(3) Reduce scrap and rework by improving machine/die capability
(4) Build up the overall organization infrastructures and capabilities
to sustain higher performance levels and to construct a platform for
long-term continuous improvement.
Upon completion of the program, the Company expects to achieve
labor savings through reductions in weekend production and
maintenance overtime, and improved production efficiencies. The
Company also anticipates achieving a reduction in hydraulic oil
costs, repair and maintenance and external contractor costs. The
Company currently expects that the costs related to the program
will be recovered by the end of August 1997.
The Company currently estimates that sales for the quarter ended
March 31, 1997 will be comparable or slightly higher than the
comparable quarter of the previous year, which was impacted by
the GM strike. The Company is currently forecasting a net loss for
both the second quarter and the year ending September 30, 1997.
Based on current projections, the Company anticipates that it will
be required to use its line of credit to the maximum available under
The CIT Group/Business Financing Agreement for the balance of
the year ending September 30, 1997. Also based on current
projections, the Company expects that its accounts receivable
collateral will exceed the collateral required under the borrowing
limits of its Financing Agreement. The Company has had
preliminary discussions with The CIT Group/Business Credit, Inc.,
regarding increasing the Company's line of credit, to permit using
the additional projected borrowing capacity if necessary. There can
be no assurance, however, that such an increase in the line of credit
will occur.
At December 31, 1996 the Company has reflected on its balance
sheet as long-term debt its $30,000,000 term loan and $8,834,000
of its revolving line of credit, since it is in compliance with the
EBITDA requirement under its Financing Agreement, as amended.
Based on current projections, the Company expects to be in
compliance with such quarterly EBITDA covenants through
September 30, 1997. However, there is no assurance that the
Company ultimately will be in compliance with the EBITDA
requirements.
The Company also announced that it signed a Commitment Letter
agreement with Sun Financial Group, Inc./GATX Capital
Corporation to provide for the leasing of approximately
$12,000,000 of certain equipment, in the form of operating leases.
Approximately $4,000,000 of equipment was funded under this
arrangement on February 10, 1997.
This press release contains forward-looking statements within the
meaning of Section 21.E of the Securities Exchange Act of 1934.
Important factors that could cause actual results to differ materially
from those set forth in, contemplated by or underlying these
forward-looking statements are the following: failure to achieve
desired productivity results at the Doehler- Jarvis operations;
inability of the Company to meet its EBITDA requirements and to
increase its line of credit as described above; unanticipated
increases in launch and other operating costs; a reduction and
inconsistent demand for passenger cars and light trucks; failure of
the Company to sell off its Harman Automotive and non-core
Harvard Interiors operations; and other factors.
Harvard Industries, Inc., through its subsidiaries, designs, develops
and manufactures a broad range of components for original
equipment manufacturers, producing cars and light trucks in North
America and abroad.
HARVARD INDUSTRIES, INC.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
(In thousands of dollars)
December 31,
September 30,
1996 1996
ASSETS (Unaudited) (Audited)
Current assets:
Cash and cash equivalents $1,317
$1,107
Accounts receivable, net 80,793
99,581
Inventories 60,756
53,901
Prepaid expenses and other current assets 1,818
1,637
Total current assets 144,684
156,226
Property, plant and equipment, net 298,179
300,673
Intangible assets, net 123,422
127,250
Other assets, net 35,087
33,556
Total $601,372
$617,705
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities:
Current portion of long-term debt $25,016
$1,487
Accounts payable 73,483
89,073
Accrued expenses 72,221
66,949
Income taxes payable 4,651
5,875
Total current liabilities 175,371
163,384
Long-term debt 358,724
359,116
Postretirement benefits other than pensions 101,638
100,464
Other 27,019
25,970
Total liabilities 662,752
648,934
14-1/4% Pay-In-Kind Exchangeable Preferred Stock,
($119,357 liquidation value at December 31, 1996
- includes $4,107 of undeclared dividends payable
September 30, 1997) 118,719
114,495
Shareholders' deficiency:
Common Stock, $.01 par value; 30,000,000 shares
authorized; shares issued and outstanding:
7,015,338 at December 31, 1996 and 7,014,357
at September 30, 1996 70
70
Additional paid-in capital 38,033
42,245
Additional minimum pension liability (1,767)
(1,767)
Foreign currency translation adjustment (1,959)
(1,964)
Accumulated deficit (214,476)
(184,308)
Total shareholders' deficiency (180,099)
(145,724)
Commitments and contingent liabilities $601,372
$617,705
HARVARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Unaudited)
(In thousands of dollars, except share and per share data)
Three months ended
December 31,
December 31,
1996 1995
Sales $187,261
$210,536
Costs and expenses:
Cost of sales 190,462
188,350
Selling, general and administrative 10,205
10,254
Interest expense 12,188
10,050
Amortization of goodwill 3,828
2,582
Other (income) expense, net 258
124
Total costs and expenses 216,941
211,360
Income (loss) before income taxes (29,680)
(824)
Provision for income taxes 488
900
Net income (loss) $(30,168)
$(1,724)
PIK preferred dividends and accretion $4,224
$3,710
Net loss attributable to common shareholders $(34,392)
$(5,434)
Primary per common and common equivalent share:
Loss per common and common equivalent share $(4.90)
$(0.78)
Weighted average number of common and common
equivalent shares outstanding 7,015,093
6,994,907
HARVARD INDUSTRIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(UNAUDITED)
(In thousands of dollars)
Three months ended
December 31,
December 31,
1996 1995
Cash flows related to operating activities:
Loss from continuing operations $(30,168)
$(1,724)
Add back (deduct) items not affecting cash
and cash equivalents:
Depreciation and amortization 17,236
12,509
Loss on disposition of property, plant and
equipment and property held for sale 308
291
Postretirement benefits 1,666
1,928
Changes in operating assets and liabilities
of continuing operations, net of effects
from acquisitions and reorganization items:
Accounts receivable 18,788
6,743
Inventories (6,855)
(7,052)
Other current assets (181)
395
Accounts payable (15,590)
(576)
Accrued expenses and income taxes payable 3,857
(3,172)
Other noncurrent liabilities 1,101
495
Net cash provided by (used in) continuing
operations (9,838)
9,837
Cash flows related to investing activities:
Acquisition of property, plant and equipment (9,910)
(8,578)
Cash flows related to discontinued operations
-- 1,858
Proceeds from disposition of property, plant
and equipment 3
663
Net change in other noncurrent accounts (1,084)
197
Net cash used in investing activities (10,991)
(5,860)
Cash flows related to financing activities:
Net borrowings under financing agreement 23,529
--
Proceeds from exercise of stock options 12
--
Repayments of long-term debt (392)
(673)
Pension fund payments pursuant to PBGC
settlement agreement (1,500)
(1,500)
Payment of EPA settlements (610)
(571)
Net cash provided by (used in) financing
activities 21,039
(2,744)
Net increase (decrease) in cash and cash
equivalents 210
1,233
Beginning of period 1,107
19,925
End of period $1,317
$21,158
SOURCE Harvard Industries, Inc./CONTACT: Joseph J.
Gagliardi or Richard T. Dawson, 813-288-5000, both of Harvard
Industries; or Stephen J. Kasser of Public Communications Inc.,
813-226-2772/
Imagine Acquisition Corp. Acquires Imaginarium, Inc. With 6.7 M
Private Placement; Brings Chain Out Of Chapter 11
WASHINGTON TOWNSHIP, N.J., Feb. 12, 1997 -- Imagine
Acquisition Corp. announced today the completion of its
acquisition of California-based Imaginarium, Inc., enabling the
44-store, $45 million upscale toy retail chain to immediately
emerge from Chapter 11 protection. The acquisition was financed
by a $6.7 million private placement and places the Company under
the leadership and majority ownership of former Toys 'R' Us
executive Ronald E. Tuchman, who will serve as the Company's
Chairman of the Board and Chief Executive Officer.
"Imaginarium enjoys tremendous loyalty among its core customers
and has an incredibly motivated employee base, but historically had
been plagued by under-capitalization, excessive overhead and a
revolving door management structure which lacked extensive
expertise in the retail toy business," said Tuchman. "With the right
management team in place and a core of 44 of the strongest
performing stores, we are highly optimistic about the concept's
potential and our ability to capitalize on the growing consumer
demand for conveniently located, upscale, customer-friendly toy
stores."
The Company plans to relocate the corporate headquarters from
Walnut Creek, California to Saddle Brook, N.J. on or about April
1, 1997 and will employ approximately 40 people. The Company's
warehouse and distribution center, which at peak season will
employ up to 50 people, will also relocate to Saddle Brook to
improve operating efficiencies and capitalize on the east coast
location of a large number of Imaginarium suppliers. Effective
immediately, the Company headquarters will be in Washington
Township, New Jersey, and supported by the Walnut Creek
corporate office during the transitional period.
The capital was raised by Cloud 9 Capital Corp. and Jericho State
Capital Corp. with the assistance of Appel Planning. Steve
Goldman, Esq. of Sills, Cumis et al served as legal counsel to the
Company.
In addition to a $7 million working capital facility which has already
been secured from Congress Financial, the Company is currently
negotiating a second round of private financing through Wedbush
Morgan Securities, and expects to raise an additional $5 million for
expansion and operating capital.
The Right Management Team For nearly 25 years, Tuchman
served in a variety of capacities at Toys 'R' Us - including Senior
Vice President/Director of Purchasing, as well as an officer of the
company - helping build the chain from a Chicago toy store with
two locations to its current status as a retail powerhouse. When
Tuchman left Toys 'R' Us in 1989, the company had over $6 billion
in annual sales.
Tuchman also led a group that purchased Child World, the second
largest toy retailer and served as the company's President and
Chief Operating Officer, where he led the 175 store chain to its
first comparable store sales gain in several years. He also founded
Price Buster Toys, a close-out specialty toy retailer and has
operated his own private consulting and investment firm serving the
children's market.
Kenneth Mizel will serve as the Company's President and Chief
Operating Officer, bringing more than 20 years of specialty retailing
experience, including the posts of President/CEO of Rodier
Corporation and President of He-Ro Group's retail division, where
he launched the 28-store chain.
Other members of the management team include George Muench,
Chief Financial Officer who previously served as CFO for Mondi
America and Comptroller for Liz Claiborne's retail division. Steven
Albert, Executive Vice President, Store Operations, brings
extensive experience as Executive Vice President of Shoe Town
and Fayva; and Mike Scimeca, Executive Vice President of
Systems and I.S., has previously served as the Director of I.S. at
Party City.
The Right Concept, The Right Size, The Right Location "The
Imaginarium concept of providing an upscale shopping environment
for children's toys that are non-violent, creative and educationally
oriented is fundamentally strong and captures an under- served
niche in the marketplace - upscale toy stores dedicated to
customer service and ease-of-shop," said Tuchman. "We plan to
build on these strengths while updating store design, enhancing our
merchandise selection and improving both store and distribution
operations to provide a higher level of consistency and quality in
store presentation, service and operations."
According to Tuchman, Imaginarium's 3,000 s.f. average size
creates the best environment for a highly focused merchandise
selection, while maintaining a customer friendly shopping
environment conducive to attentive and knowledgeable customer
service. Additionally, the focus on providing unique merchandise
and attention to undermerchandised categories creates a excellent
niche for Imaginarium in the upscale toy market.
"Contrary to the popular trend of big-box retailing, I do not believe
that bigger is necessarily better. In fact, excessive store size can
force upscale specialty toy retailers to fill the space with
merchandise that is widely available at mass merchandisers and
traditional chain stores, as opposed to seeking and stocking only
the best merchandise for the specialty concept," Tuchman
continued. "Our strict discipline with regard to store size will enable
us to strike the right merchandise balance while enabling us to cost-
effectively expand into new locations with a nimbleness that is
impossible with an oversized store model."
The Company plans to build on the core 44 stores with the opening
of at least 10 additional stores this year primarily in the Northeast,
including the introduction of the Imaginarium concept to upscale
strip centers and downtown locations.
"Targeting upscale strip centers and downtown avenues further
supports our focus on the upscale segment of the toy market and
caters to the upper income parents and grandparents who
appreciate the ease and convenience of shopping close to home,"
Tuchman added
Imaginarium is an upscale specialty toy retailer of creative,
non-violent, educationally oriented toys and other related products
for children from birth to 10 years of age. The Company operates
44 stores nationwide in states including California, Washington,
Oregon, Ohio, Minnesota, Connecticut, Maryland, New Jersey,
Texas, Arizona and Kentucky. At its peak, Imaginarium operated
69 stores nationwide, but recently closed 25 underperforming
stores as part of its bankruptcy process.
SOURCE Imagine Acquisition Corp. /CONTACT: Michael W.
Kempner - mkempnermww.com, or Carreen Winters -
cwintersmww.com, both of MWW/Strategic Communications
Public Relations, 201-507-9500/
Southmark Declares Dividend to Preferred Shareholders
DALLAS, TX - Feb. 12, 1997 - Southmark Corporation today
reported that its Board of Directors has authorized the payment of
$9.912 million in dividends to holders of its Redeemable Series A
Preferred shares.
The $3.50 per share dividend represents payment of accrued
regular cumulative dividends of $2.70 per share and special
dividends of $.80 per share. The regular cumulative dividend has
accrued since the payment of the last dividend by Southmark in
June, 1995. The special dividend of $.80 per share will reduce the
liquidation preference of the Redeemable Series A Preferred from
$9.00 per share to $8.20 per share. Payment of regular dividends
has no effect on the liquidation preference of the Series A
Preferred.
The dividend is payable on March 28, 1997 to shareholders of
record as of March 14, 1997. Each preferred shareholder will
receive a Form 1099 at the end of the calendar year regarding the
tax treatment of the distribution. The characterization of the
distribution as a dividend, a return of basis, or capital gain income
cannot be determined at this time.
Southmark issued new debt and equity securities upon emerging
from Chapter 11 in August of 1990 and has redeemed $75 million
principal amount of Secured Redeemable Notes due 1997 plus
accrued interest, has retired approximately 1,200,000 shares of
Redeemable Series A Preferred with a liquidation preference of
$30 million, and has previously paid $90.3 million in dividends to
holders of Redeemable Series A Preferred.
As previously disclosed, Southmark projects that it will complete
the liquidation of its assets by June 30, 1997, depending upon the
resolution of litigation in process. Southmark Corporation,
headquartered in Dallas, is engaged in the liquidation of assets in
accordance with its court-approved Plan of Reorganization.
SOURCE Southmark Corporation /CONTACT: Charles B.
Brewer, president of Southmark Corporation, 972-406-6775/
Spectrum Information Technologies Announces Earnings
PURCHASE, N.Y., Feb. 12, 1997 - Spectrum Information
Technologies, Inc. announced earnings as reported in its Quarterly
Report on Form 10-Q for the quarter ended December 31, 1996,
the third quarter of its fiscal year.
Spectrum reported a net loss of $532,000, or $.01 per share, for
the quarter and a net loss of $2 million, or $.03 per share, for the
nine months ended December 31, 1996. For the three and nine
month periods ended December 31, 1995, Spectrum reported net
loss of $1.3 million, or $.02 per share, and $123,000, or less than
$.01 per share, respectively. The three and nine month periods
ended December 31, 1996 include $531,000 in gains on the
liquidation of Spectrum's discontinued Data One subsidiary. The
net loss reported for the nine month period last fiscal year included
a gain of $1.6 million related to the sale of a product line and
related patent rights that were not essential to Spectrum's direct
connect technology and products. The nine month period ended
December 31, 1995 also included approximately $4.1 million in
gains and income related to discontinued operations.
Spectrum reported an operating loss of $978,000 on revenues of
$205,000 for the three month period ended December 31, 1996,
as compared with an operating loss of $1.4 million on revenues of
$504,000 for the same quarter last fiscal year. For the nine month
period ended December 31, 1996, Spectrum reported revenues of
$1.7 million and an operating loss of $2.1 million, compared to
revenues of $2.2 million and an operating loss of $3.4 million
during the same period last fiscal year. The decrease in revenue
was primarily related to decreases in license fees and royalty
payments. Operating losses decreased largely because of reduced
operating costs and expenses, most significantly in the areas of
non-bankruptcy related legal expenses and outside services.
Spectrum stated that it is evaluating the long term potential of its
existing business and has increased its focus on the development
efforts associated with a new line of software products. Spectrum
has expanded the intended functionality of the remote access
software that it is developing to address communications software
solutions in the business and also possibly the service provider
markets. This software would also enable more efficient Internet
information access over land line and wireless LANs and WANs.
Spectrum also reported that the U.S. District Court for the Eastern
District of New York has scheduled a hearing for February 28,
1997 regarding approval of the previously announced settlement of
the securities related class action lawsuit alleging $676 million in
damages that is pending against the Company. If the District Court
approves the settlement at the hearing, Spectrum expects the
effective date of its confirmed plan of reorganization in Match
1997, at which time the Company will emerge from its Chapter 11
bankruptcy.
This press release contains several statements that are "forward-
looking," including those concerning the introduction of new
software products and the effective date of Spectrum's plan of
reorganization. The Company's actual performance may differ
based on a number of risks, including Spectrum's ability to
successfully develop and market new products with limited capital
resources and the effective date of its plan of reorganization.
Spectrum's quarterly and annual reports as filed with the Securities
and Exchange Commission discuss these and other risk factors.
SOURCE Spectrum Information Technologies, Inc. /CONTACT:
Media, Michael Freitag of Kekst and Company, 212-593-2655;
or Investors, Spectrum Information Technologies, Investor
Relations, 914-251-1800, ext. 182/
Carr Gottstein Foods Announces Year-End Results
ANCHORAGE, Alaska, Feb. 12, 1997 - Carr Gottstein Foods
Company (NYSE: CGF), the largest food and drug retailer in
Alaska, today reported sales for the fourth quarter and year ended
December 29, 1996. Sales for the quarter decreased $1.6 million,
or 1.1 percent, from $152.0 million in 1995 to $150.3 million in
1996. Sales for the year ended December 29, 1996 increased
$11.3 million, or 1.9 percent, from $601.3 million in 1995 to
$612.6 million in 1996.
Net income for the quarter increased $1.0 million to a net loss of
$0.7 million, or $0.09 per share, versus a net loss of $1.7 million,
or $0.14 per share in the same quarter of 1995. Results for the
1995 fourth quarter reflect non-recurring pre-tax charges of $1.5
million for expenses associated with the restructuring of a
management stock option incentive plan and $0.9 million for
extraordinary items resulting from the early retirement of debt and
the refinancing of the Company's bank agreement. The net loss for
the 1996 quarter reflects increases in interest costs related to the
Company's self tender for approximately 49 percent of the
outstanding common stock completed in November of 1995
coupled with increases in depreciation and amortization. Net
income for the year ended December 29, 1996 decreased $6.6
million to a net loss of $2.8 million, or $0.36 per share, versus net
income of $3.7 million, or $0.26 per share in the prior year. The
reduction in net income for the year is due to increases in
depreciation and amortization and interest expense, expenses
incurred in the first part of 1996 due to the "Fusion" corporate
reengineering project and expenses associated with the kick-off of
the Carrs Plus "Swipe the Gold, Save the Green" electronic
marketing campaign.
The Carrs Quality Centers super combination stores showed a
decrease in same-store sales for the 1996 quarter of 1.6 percent as
compared to the fourth quarter of 1995. Same-store sales for the
smaller format Eagle Quality Centers increased 6.7 percent for the
1996 quarter. Sales for the quarter were impacted by the New
Years Holiday sales which fell into the first quarter of 1997 versus
the fourth quarter of 1995. For the year ended December 29,
1996, Carrs same-store sales remained virtually flat with a
decrease of 0.1 percent and Eagle showed positive same-store
sales, increasing 2.9 percent from the prior year.
Earnings before interest, income taxes and depreciation and
amortization ("EBITDA") for the quarter ended December 29,
1996 increased $0.1 million from $11.0 million, or 7.3 percent of
sales, in the fourth quarter of 1995 to $11.1 million, or 7.4 percent
of sales, in 1996. Excluding the 1995 one-time pre-tax charge of
$2.2 million for expenses associated with a sale/leaseback
transaction that the Company elected not to pursue, EBITDA for
the year ended December 29, 1996 decreased $4.6 million, from
$47.4 million, or 7.9 percent of sales, in 1995 to $42.8 million, or
7.0 percent of sales, in 1996.
"We were pleased with the fourth quarter of this year as this was
the first time since the third quarter of 1995 that we have exceeded
the previous years EBITDA, in dollars and in conversion rate," said
Lawrence H. Hayward, President and CEO of Carr Gottstein
Foods. Hayward also noted that the EBITDA conversion rate of
7.4 percent for the fourth quarter of 1996 showed improvement
over the first three quarters of 1996.
"We are starting to recognize some of the benefits we have worked
for with the completion of the "Fusion" project and our other cost
control initiatives," Mr. Hayward added. "We are intensifying our
efforts to adjust our cost structure at all levels throughout the
business which will allow us to more effectively compete under our
current market conditions. In keeping with our other corporate goal
to reduce debt levels, we have been able to reduce our debt by
over $15.5 million since completion of our self-tender in November
of 1995," Hayward concluded.
The Company's capital investment program continued as planned
during the fourth quarter with total capital spending for the year
ended December 29, 1996, of $4.4 million.
Carr Gottstein Foods operates 42 stores in Anchorage, Fairbanks,
Juneau, Ketchikan, the Kenai Peninsula and other Alaska
communities, as well as the state's only full-line food warehouse
and distribution center, and in addition operates Alaska's largest
freight company. Annual revenues in 1996 were $612.6 million.
CARR GOTTSTEIN
FOODS COMPANY
SUMMARY OF
OPERATING RESULTS
(in thousands, except
per share data)
13 Weeks Ended
52
Weeks Ended
Dec. 29, Dec.
31, Dec. 29,
Dec. 31,
1996
1995 1996
1995
Sales $150,308
$151,951 $612,576 $601,322 Cost
of sales and
related occupancy
costs(A) 108,940
105,985 442,996 415,060
Gross profit(A) 41,368
45,966 169,580 186,262
Selling, general
and administrative
expenses(A) 34,980
39,681 144,525 156,536
Operating income 6,388
6,285 25,055 29,726 Other
expenses:
Interest expense, net 7,104
5,564 27,923 16,102 Other
income (14) (16)
(88) Non-recurring charge --
1,519 --
3,768
Net income (loss)
before taxes (702)
(782) (2,780) 9,856
Income tax
expense/(benefit) (4)
(32) 30 5,207
Net loss before
extraordinary items (698)
(750) (2,810) 4,649
Extraordinary item,
net of tax --
906 -- 906
Net income (loss) $(698)
$(1,656) $(2,810) $3,743 Net
income (loss)
per common share $(0.09)
$(0.14) $(0.27) $0.26
Weighted average
common shares
outstanding 7,826,896
11,428,774 7,811,064 14,457,517
EBITDA before
non-recurring charges $11,055
$11,015 $42,756 $47,352
Certain non-cash charges:
Depreciation 3,955
3,898 14,844 10,242
Amortization of
excess cost over net
assets acquired
and other assets 714
832 3,485 2,653
Amortization of
deferred debt
issuance costs
(included under
interest expense) 355
300 696 396
Stock Option
Compensation Expense --
1,519 -- 1,519
NOTE (A): Due to changes in allocation methods comparisons
between 1996 and 1995 gross margin and expenses rates will be
non- comparable.
SOURCE Carr Gottstein Foods Co. /CONTACT: Don
Anderson, Senior V.P. and CFO of Carr Gottstein Foods Co.,
907-564-2124/
PROSOURCE ANNOUNCES FOURTH QUARTER AND
1996 RESULTS
CORAL GABLES, Fla.--Feb. 12, 1997--ProSource, Inc.
(Nasdaq NM:PSDS), the nation's leading independent food
service distributor to chain restaurants, today reported results for
the fourth quarter and fiscal 1996, which included record net sales
for both periods. Other highlights included the completion of the
Company's initial public offering in November and the continued
implementation of the Company's strategies which are intended to
expand its business and improve its cost structure. In connection
with its IPO and these strategies, ProSource, as expected,
recorded several special and unusual charges which resulted in a
net loss for the quarter and year.
"The past year was a milestone period for our Company,"
commented David R. Parker, Chairman of ProSource.
"Throughout the year, we made steady and substantial progress on
the integration of all our acquired businesses into one seamless
operation that is focused on service and cost leadership. The
completion of our initial public offering in November 1996 and the
subsequent refinancing of our credit facilities allow us to normalize
our capital structure, reduce our interest cost, and continue to grow
the Company through acquisitions. This new capital also enables us
to accelerate our programs to optimize our nationwide network
and improve the efficiency of our corporate support functions. We
remain very enthusiastic about the future of ProSource."
Parker noted in particular that, in December 1996, the Company
substantially completed the integration of its operations into a new
corporate support center located in Coral Gables, Florida. This
move allows the Company to unify its purchasing, routing, inbound
transportation, and operations support functions. The Company
also made substantial progress during the fourth quarter on its
network optimization project, developing a prototype for the
design and operation of new distribution centers. In December,
ProSource announced the selection of its first new site under this
program, a 92,000-square-foot distribution center near Denver.
For the fiscal year ended December 28, 1996, net sales increased
19% to $4.1 billion compared with net sales of $3.5 billion in
1995. The Company's after-tax earnings for the year, before
special and unusual charges, as discussed below, totaled $1.8
million or $.31 per share compared with a loss of $0.4 million or
$.08 per share last year.
ProSource's operating earnings for 1996 were reduced by several
previously announced charges relating to restructuring the
Company's operations, the termination of certain agreements,
provisions for asset impairment, and anticipated costs for
severance and lease terminations in connection with the recently
announced discontinuation of the Company's distribution agreement
with the Arby's purchasing cooperative. The aggregate amount of
these charges, net of an extraordinary gain on the early
extinguishment of debt, was approximately $26.2 million or $4.50
per share after tax. After giving effect to all of these special and
unusual charges, the Company posted a net loss for 1996 of $24.4
million or $4.19 per share; an extraordinary charge for early
extinguishment of debt in 1995 resulted in a net loss of $1.6 million
or $.35 per share for that year.
For the fourth quarter ended December 28, 1996, the Company's
net sales increased 5% to $1.06 billion compared with net sales of
$1.01 billion in the fourth quarter of 1995. The Company's
after-tax earnings for the fourth quarter, before special and unusual
charges, totaled $2.0 million or $.27 per share compared with $1.3
million or $.25 per share in the year-earlier period. Special and
unusual charges related to the amendment or termination of certain
agreements, including the distribution agreement discussed above,
net of the extraordinary gain, resulted in a reported net loss of $7.8
million or $1.06 per share for the fourth quarter of 1996. Cash
flow from operations totaled $15.7 million in the fourth quarter and
$21.3 million for fiscal 1996.
ProSource completed its IPO in November 1996, issuing
3,400,000 new shares of Class A common stock and raising $43.2
million after expenses. Proceeds from this offering were used to
prepay $25 million of subordinated debentures and reduce
borrowings under the Company's revolving credit facility.
In December 1996, ProSource received a commitment from The
Bank of Nova Scotia to replace its existing credit facility with a
$150 million receivables securitization and a $75 million revolving
credit loan. Both components of the new facility, which is
scheduled to close in March 1997, provide for significantly lower
interest rates than those that apply under the Company's existing
facility. In connection with the replacement of its existing credit
facility, the Company will incur an extraordinary charge of
approximately $10 million, before taxes, in the first quarter of
1997, representing prepayment fees and the write-off of
unamortized deferred financing costs.
In concluding, Parker said, "ProSource remains well positioned to
capitalize on its leading position as a chain restaurant distributor.
Our strategy will be to continue to use our advantages of local
presence, national scope and specialization to expand our business
with existing chains and develop relationships with new customers.
We also expect to see positive results from our margin
improvement and cost reduction programs as they are more fully
implemented over the next three years, which will further enhance
our ability to grow."
Comments in this news release regarding the Company's business
which are not historical facts are forward looking statements that
involve risks and uncertainties. Among these risks are that the
Company is in a highly competitive business, is in the process of
integrating its operations, and is implementing a strategic plan
intended to expand its business though acquisitions and internal
growth and improve its cost structure. There can be no assurance
that in its highly competitive business environment, the Company
will achieve the planned efficiencies and cost savings, successfully
acquire other distributors, or increase its business with new or
existing customers.
ProSource is the nation's leading independent food service
distributor specializing in the distribution of food and food-related
products to chain restaurants in the quick service and casual dining
segments of the restaurant industry. As of December 28, 1996,
ProSource serviced approximately 14,600 restaurants in such
chains as Burger King, Red Lobster, Olive Garden, Long John
Silver's, TGI Friday's, Chick-fil-A, Chili's, and Sonic.
ProSource, Inc.
Condensed Statements of Operations
(in millions, except per share data)
Three Months Ended Year Ended
Dec. 28, Dec. 30, Dec. 28, Dec. 30,
1996 1995 1996 1995
Total sales $1,057.0 $1,005.9 $4,125.0 $3,461.8
Cost of goods sold 974.6 930.5 3,806.8 3,193.3
Gross profit 82.4 75.4 318.2 268.5
Operating expenses 76.5 69.5 301.3 255.2
Loss on impairment of
long-lived assets(a) - - 15.7 -
Restructuring charges(a) - 0.5 10.9 0.7
Contract terminations(a) 17.6 - 17.6 -
Earnings (loss) from
operations (11.7) 5.4 (27.3) 12.6
Interest expense 2.9 4.0 14.8 14.7
Interest income 0.4 0.4 1.7 1.4
Loss before income taxes
and extraordinary item (14.2) 1.8 (40.4) (0.7)
Income tax (provision) benefit 5.8 (0.7) 15.4
(0.1)
Loss before extraordinary
item (8.4) 1.1 (25.0) (0.8)
Extraordinary item,
net of tax(a) 0.6 - 0.6
(0.8)
Net loss $ (7.8) $ 1.1 $ (24.4) $
(1.6)
Per share data:
Net loss before
extraordinary
item $ (1.14) $ .22 $ (4.29) $ (.17)
Extraordinary item .08 - .10
(.18)
Net loss per share $ (1.06) $ .22 $ (4.19) $
(.35)
Weighted average shares
outstanding 7.342 5.272 5.821 4.482
(a) The aggregate after-tax effect of these special and unusual
charges on earnings, net of the extraordinary gain reported in
1996, reduced net income for the fourth quarter and year ended
December 28, 1996, by $9.8 million ($1.32 per share) and $26.2
million ($4.50 per share), respectively.
ProSource, Inc.
Other Financial and Operating Information
(dollars in millions)
Dec. 28, Dec. 30,
1996 1995
Balance Sheet Data (at year end):
Working capital $ 85.5 $ 115.9
Total assets 506.7 489.2
Total debt 113.1 163.2
Stockholders' equity 78.6 49.4
Other Data: (for the year)
EBITDA before special charges $ 29.6 $ 27.4
Depreciation and amortization 10.9 12.7
Capital expenditures 20.0 5.7
Net operating asset turnover 20.1x
18.3x
Number of restaurants served
(at year end) 14,641 14,562
CONTACT: ProSource Inc., Coral Gables William F. Evans,
305/740-1406