Grossman's announces initial financing provided by JELD-WEN, board
of directors changes, executive changes, credit expansion with existing
lender and plans for Chapter 11 filing
CANTON, Mass.--March 4, 1997-- Grossman's Inc.
(Nasdaq-GROS) announced an agreement with GDI Company, Inc.
("GDI") pursuant to which Grossman's Inc. ("the company") has
received approximately $3.1 million, representing the initial funding in a
plan which provides the liquidity necessary for the company to continue
its business operations. GDI is a subsidiary of JELD-WEN, inc.
("JELD-WEN"), a major supplier to the company and an affiliate of its
largest shareholder. On February 7, 1997, the company announced the
signing of a non-binding letter of intent with JELD- WEN which
stipulated terms under which the company would be provided with the
financing necessary to solve its previously announced liquidity shortage.
In addition, the company's Board of Directors has been reconstituted.
The size of the Board has been reduced from eight to seven, and four
members of the previous Board, John R. Grey, Maurice Grossman,
Leo Kahn and Samuel Witt III have resigned. Three nominees of
JELD-WEN, Richard Wendt, Theodore Schnormeier and Larry
Wetter, have been elected as directors to fill the three resulting
vacancies. Robert K. Swanson continues to serve as Chairman of the
Board, and Thomas E. Arnold, Russell Cox, and Dr. Abraham
Zaleznik continue to serve as board members.
The new directors are:
Richard Wendt, 66, Chairman and co-founder of JELD-WEN. As co-
founder, Mr. Wendt has been with JELD-WEN for 36 years. Prior to
the organization and start-up of JELD-WEN, he was associated with
Caradco, a manufacturer of wood windows. Mr. Wendt is a graduate
of Iowa State University with a Bachelor of Science degree in Industrial
Economics.
Theodore Schnormeier, 61, Senior Vice President with responsibilities
for product development for the window segment of JELD-WEN since
1965. He was primarily responsible for all window manufacturing and
assembly for JELD-WEN until January 1, 1995 and has now shifted his
focus to new product development. Mr. Schnormeier is a graduate of
the University of Iowa with a Bachelor of Arts degree.
Larry Wetter, 63, Vice Chairman and co-founder of JELD-WEN. As
co-founder, Mr. Wetter has been with JELD-WEN for 36 years. He is
responsible for foreign sales and is a member of the Board of Directors
of several of the foreign subsidiaries in which JELD-WEN has made
investments. Prior to the organization and start-up of JELD-WEN he
was also associated with Caradco in a sales capacity. Mr. Wetter is a
graduate of Iowa State University with a Bachelor of Science degree in
Industrial Economics.
The restructured board has elected Seymour Kroll as President and
Chief Executive Officer of the company, replacing David J. Ferrari of
Argus Corporation, a firm which supplies interim management to
financially distressed companies.
Seymour Kroll, 67, has been President of Sugarcreek Window &
Door Company since May 1995. From 1992 through 1994, he was
President and Chief Executive Officer of Acorn Window Systems, Inc.
Prior to that time he was President of SNE, a subsidiary of Sentry
Insurance, operating five divisions in the building materials
Mr. Kroll has been a management consultant to manufacturers,
distributors and dealers in the building materials industry for over 20
years. Mr. Kroll is a graduate of the University of Michigan with a
Bachelor of Business Administration degree and earned a Master of
Science degree in Marketing at Columbia University.
Michael J. Shea, Executive Vice President and Chief Financial Officer,
has resigned. A successor will be elected at a later date. The funds
received by the company included approximately $2 million pursuant to
a note secured by real estate of a wholly- owned subsidiary of the
company. In addition, GDI purchased the convertible note payable to
Combined Investors LLP, an affiliate of Gordon Brothers Partners, Inc.
Following the purchase, $1.1 million of segregated cash collateral from
the sale of real estate was released to the company for general use. The
$3.1 million has been applied to essential expenses and the restocking
of inventories. Only limited inventory has been received since the
company's January 22, 1997 announcement of a severe liquidity
shortage and its consideration of a Chapter 11 filing.
Representatives of the company, JELD-WEN and Congress Financial
Corporation ("Congress") have agreed to basic terms and are working
to finalize an arrangement that would increase the credit provided by
Congress. Under present plans, an increase in the credit line will be
supported by a stand-by letter of credit put in place by an affiliate of
JELD-WEN in favor of Congress. Congress has recently notified the
company that the company was in default of its credit line due to
adverse business conditions. Congress has not yet exercised any of its
remedies available upon default and has informed the company that in
conjunction with the letter of credit agreement with JELD-WEN, it will
currently forbear all known defaults.
Present plans call for a filing for protection from creditors under
Chapter 11 of the U.S. Bankruptcy Code sometime in the near future.
Representatives of the company and JELD-WEN have had an initial
meeting with principal creditors to commence discussions concerning an
arrangement under which creditors will receive discounted payments for
past obligations of the company.
The company and JELD-WEN are working cooperatively to
implement these plans, replenish inventory in the company's stores,
resume normal business operations and restore the company to
profitability. 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
Congoleum Corp. reports fourth quarter results
MERCERVILLE, N.J.--March 4, 1997--Congoleum Corp.
(NYSE:CGM) Tuesday reported its financial results for the fourth
quarter and full year ended Dec. 31, 1996.
Fourth Quarter Results
Sales for the three months ended Dec. 31, 1996 were $69.1 million, an
increase of 4%, compared with sales of $66.4 million reported in the
fourth quarter of 1995. Net earnings for the quarter were $3.9 million
versus $1.4 million in 1995, an increase of 188%. Earnings per share
increased by 179% to 39 cents per share in the fourth quarter of 1996
from 14 cents per share in 1995.
Results for the fourth quarter of 1995 included an after-tax charge of
$1.5 million, or 15 cents per share, relating to a total write-off of the
company's accounts receivable from Color Tile Inc., the Fort
Worth-based flooring retailer, which filed for Chapter 11 bankruptcy
protection in January 1996.
Year End Results
For the year ended Dec. 31, 1996, sales were $269.5 million, a 2.4%
increase over the $263.1 million reported in 1995. Net earnings for
1996 were $12.1 million, an increase of 28.2% over the $9.4 million
reported in 1995. Earnings per share also increased 28.7% in 1996, to
$1.21 per share versus 94 cents per share in 1995.
Roger S. Marcus, chairman of the board, commented, "These positive
results reflect Congoleum's successes during 1996, including the
establishment of important new customer relationships and the
introduction of new products.
"We also had significant other accomplishments during the year,
including the replacement of our Canadian distribution, whose results
we are only now beginning to see. 1997 has already started off strong
-- we introduced a new product, Exclamation, in the first quarter and
have finalized another exciting introduction for the second half of the
year."
Marcus continued, "In addition, Congoleum made significant
investments in our operations during the year, which contributed to
productivity improvements worth more than $2 million annually. We
have also budgeted $20 million for capital improvements in 1997,
which should provide further efficiencies to our operations."
Congoleum Corp. is North America's second largest manufacturer of
resilient flooring, serving both residential and commercial markets. Its
sheet, tile and plank products are available in a wide variety of designs
and colors, and are used in remodeling, manufactured housing, new
construction, and commercial applications.
The Congoleum brand name is recognized and trusted by consumers as
representing a company that has been supplying attractive and durable
flooring products for over a century.
Congoleum is a 44% owned subsidiary of American Biltrite Inc.
(AMEX:ABL).
CONGOLEUM CORP.
UNAUDITED RESULTS OF
OPERATIONS
(IN THOUSANDS, EXCEPT PER
SHARE AMOUNTS)
For the Three
For the
Twelve
Months Ended
Months
Ended
Dec. 31,
Dec. 31,
1996 1995
1996
1995 ----
----
---- ----
Net sales $ 69,053 $
66,410 $269,451 $263,147 Cost of
sales 44,968 47,560
180,520 184,621 Selling, general &
administrative
expenses 16,383
15,020 63,662 56,989
------- -------
-------
-------
Income from operations 7,702
3,830 25,269 21,537 Interest
expense, net (1,429) (1,571)
(6,369) (6,708) Other income, net
172 26 1,095
1,135
------- -------
-------
-------
Income before income taxes 6,445
2,285 19,995 15,964 Provision
for income taxes 2,546 935
7,898 6,529
------- -------
-------
-------
Net income $ 3,899 $
1,350 $ 12,097 $ 9,435
Primary earnings per
common share $ .39 $
.14 $ 1.21 $ .94
Weighted average number
of common and equivalent
shares outstanding 10,008
10,000 10,001 10,000
CONTACT: Congoleum Corp., Mercerville Howard N. Feist, Sr.
VP/Finance, 609/584-3586 or Dewe Rogerson Inc., New York
Debra Wasser or Daniel Gray, 212/688-6840
AutoLend Group Announces Quarterly Results Under New
Management
ALBUQUERQUE, N.M., March 4 , 1997 - AutoLend Group, Inc.
(OTC Bulletin Board: AUTL) (the "Company") announced financial
results for its third quarter, ended December 31, 1996, noting that this
was the first quarter under the control of the Company's new
management.
The Company reported a net loss of $558,000 for the quarter ended
December 31, 1996, as compared to a $2.7 million loss for the quarter
ended September 30, 1996, and a $3.8 million loss for the quarter
ended June 30, 1996. In addition to the reduction in the net loss for the
third quarter compared to the prior quarters, the Company also
reported positive earnings before interest expense, taxes, depreciation
and amortization ("EBITDA") before discontinued operations of
$198,000 for the third quarter, as compared to a $2.4 million EBITDA
loss and a $3.2 million loss for the second and first quarters,
respectively.
As a result of the Company's efforts to reduce overhead and the
relocation of the Company's offices from Miami to Albuquerque,
general and administrative expenses decreased by 45% for the third
quarter compared to the second quarter, and by 56% as compared to
the first quarter. The Company also noted that its cash balance
improved by approximately $200,000 during the third quarter.
As previously disclosed, the Company is the subject of an involuntary
bankruptcy proceeding commenced by four holders of the Company's
Debentures. The Company has been advised that these petitioning
creditors have accepted an offer from a third party to purchase the
Debentures from the petitioning creditors. As a result of the proposed
purchase, the Company and the petitioning creditors have filed a joint
motion to dismiss the involuntary bankruptcy proceedings against the
Company. A hearing on the joint motion is scheduled for March 25
before the U.S. Bankruptcy Court.
AutoLend's Common Stock is traded on the over-the-counter market
through the Electronic Bulletin Board, and stock quotes can be
accessed via CompuServe and other electronic services under the
symbol AUTL. The Company will send a copy of its 10-Q report upon
request.
SOURCE AutoLend Group, Inc. /CONTACT: Nunzio DeSantis,
Chairman, AutoLend Group, 505-768-1000, or fax, 505-768-1111/
Claridge Pays Interest on its 11-3/4% First Mortgage Notes Due 2002
ATLANTIC CITY, N.J., March 4, 1997 - The Claridge Hotel and
Casino Corporation, operator of the Claridge Casino Hotel here, today
announced that it made the interest payment that is due on March 5,
1997, on its 11-3/4% Notes due 2002, contrary to its earlier
expectations and previous announcements.
The Corporation also announced that it has reached an agreement with
an unofficial committee of the Corporation's Noteholders, whose
members include the three noteholders who filed an involuntary
bankruptcy petition against the Corporation. The agreement provides,
among other things, that the Corporation and the noteholder committee
will jointly move to dismiss the bankruptcy petition and a related state
court lawsuit.
As previously announced, the Corporation is in negotiation with Hilton
Hotels Corporation regarding the possible acquisition of the company
by Hilton. The Corporation expects these negotiations, as well as those
with other interested parties, to continue.
Robert M. Renneisen, Claridge president and chief executive officer,
attributed the Company's decision to pay the interest to faster-than-
anticipated recovery from a series of negative circumstances that
impacted the Company last year. Cash flows have rebounded more
quickly than was previously expected.
The Claridge Hotel and Casino Corporation, through its subsidiary, The
Claridge at Park Place, Incorporated, operates the Claridge Casino
Hotel in Atlantic City. The casino hotel opened in July 1981 and has
59,000 square feet of casino gaming space. The Claridge Hotel and
Casino Corporation is a closely-held public corporation. Its Corporate
Bonds are publicly traded on the New York Stock Exchange under the
symbol CLAR02.
SOURCE The Claridge Hotel and Casino Corporation /CONTACT:
Glenn Lillie or Robert Renneisen of Claridge Hotel and Casino,
609-340-3501, or fax, 609-340-3589/
ICH Corporation Emerges from Bankruptcy
LAJOLLA, Calif., March 4, 1997 - The Board of Directors of
Reorganized ICH Corporation, whose plan of reorganization under
chapter 11 became effective on February, today announced several
developments following the company's emergence from chapter 11.
The company's headquarters will be located at 9404 Genesee Avenue,
LaJolla, California 92037, telephone 619-587-8533. Pursuant to the
chapter 11 plan confirmed by the bankruptcy court, the company has
also filed an amended corporate charter with the Delaware secretary of
state.
Pursuant to the terms of the confirmed chapter 11 plan, all existing
securities of ICH have been cancelled as of the effective date. In
exchange for those cancelled securities, eligible holders of the old
preferred and common stock of ICH are entitled to receive shares of
new common stock of the reorganized company, at a rate of 0.2 new
shares for each share of old preferred stock, and 0.0269 new shares
for each share of old common stock, in each case rounded to the
nearest whole number of shares. Under the confirmed chapter 11 plan,
holders of fewer than 14 shares of old preferred stock, or fewer than
101 shares of old common stock are not entitled to receive any value
on account of those securities. Also as provided in the chapter 11 plan,
eligible shareholders have the option to surrender their securities in
exchange for a single cash payment of .36 per share of old preferred
stock (up to a maximum of $234 per holder) or .05 per share of old
common stock (up to a maximum of $250 per holder) in lieu of
receiving shares of common stock in the reorganized company.
The transfer books for the old common and preferred shares were
closed as of the effective date. ICH has been advised by the NASD
that the new common shares of the company will initially be identified
by the ticker symbol "ICHCV," and that once a majority of the old
shares have been tendered, the symbol will become "ICHC."
Letters of transmittal have been mailed to record and nominee holders
of old common and preferred stock. Those letters of transmittal require
eligible holders of old common or old preferred stock to elect whether
they wish to receive shares of reorganized ICH common stock or cash
on account of their canceled securities, and to tender their old securities
back to the transfer agent in accordance with the instructions contained
in the letters of transmittal.
The company has also formed Perry Park Resort, Inc., a Kentucky
corporation which will be a wholly owned subsidiary of ICH and which
will hold and operate the company's 2,600 acre residential and
recreational property development known as Perry Park and located in
Owenton, Kentucky.
The company also announced that it is continuing its due diligence under
the Stock Purchase Agreement which it executed on February 12,
1997 with Valcor, Inc. for the purchase of 100% of the outstanding
common stock of Sybra, Inc. As previously announced, Sybra, Inc.
owns and operates 150 Arby's restaurants in four states. The purchase
price for the proposed purchase of the Sybra, Inc. stock by ICH
consists of $16 million in cash, plus the repayment of certain
indebtedness of Sybra, Inc., which indebtedness is not to exceed $23.7
million. The proposed sale would be accomplished in simultaneous
transactions that will include the sale of certain of the restaurant
properties to U.S. Restaurant Properties Master L.P. for $45 million.
ICH would then enter into lease agreements with U.S. Restaurant
Properties Master L.P. for those restaurants. The transactions are
subject to, among other things, due diligence, ICH's obtaining adequate
financing and certain consents from third parties. Subject to the
foregoing, the transaction is expected to close on or about April 18,
1997.
The company also announced that it has adopted a shareholder rights
plan designed to encourage third parties interested in acquiring ICH to
negotiate with the board of directors on a level playing field in order to
obtain maximum value for all of the company's shareholders. Under the
terms of the rights plan, generally, once any shareholder accumulates
15% or more of the outstanding shares of the company's common
stock, all other shareholders of the company (excluding the
accumulating shareholder) will have the right to purchase additional
authorized shares of common stock at a fixed exercise price which is
expected to be substantially below the market price of the common
stock. Assuming the exercise of those rights by the other shareholders,
the activation of the shareholder rights plan would thus have the effect
of diluting the ownership interest of the potential acquirer. James R.
Arabia, President and Chief Executive Officer of ICH stated that the
rights plan "is not intended to prevent an acquisition of the company on
terms that the board considers favorable and fair to all shareholders.
The rights plan is intended to deal with unilateral actions taken by
hostile acquirers that are calculated to deprive the company's board of
directors and its shareholders of their ability to determine the destiny of
the company."
SOURCE ICH Corporation /CONTACT: James R. Arabia of ICH
Corporation, 619-587-8533/
The Men's Wearhouse Forms Joint Venture to Acquire and Liquidate
Certain Assets of Kuppenheimer's
FREMONT, Calif.--March 4, 1997--The Men's Wearhouse Inc.
(NASDAQ/NMS:SUIT) Tuesday announced that through a
wholly-owned subsidiary, Value Priced Liquidators Inc., it has formed
a joint venture with Buxbaum, Ginsberg & Associates and entered into
an asset purchase and license agreement to acquire and liquidate certain
of the assets of Kuppenheimer's Men's Clothiers, a chain of 43 men's
clothing stores.
Kuppenheimer Manufacturing Company Inc. et al. Debtor has been
operating under a Chapter 11 proceedings since August, 1996. Since
the August filing, Kuppenheimer's has closed approximately 40 stores.
The majority of the remaining Kuppenheimer's stores are located in
Chicago, Atlanta and St. Louis.
The joint venture will operate a Kuppenheimer's going out of business
sale under the Agreement. The Men's Wearhouse has entered into an
agreement to obtain the rights to the tradename, customer list, certain
fixed assets and other proprietary information of Kuppenheimer's. In
addition, The Men's Wearhouse has an option to review all of the
existing Kuppenheimer store locations and ascertain if it will assume any
of the existing leases.
The joint venture will be managed by Paul Buxbaum of Buxbaum,
Ginsberg & Associates. Buxbaum has more than 20 years of
experience in the retail liquidation business. His company has liquidated
retail chains such as Hastings, Joseph Magnin, Sakowitz and Frost
Brothers. Buxbaum also serves as the chairman of the board of Ames
Department Stores Inc. (NASDAQ/NMS:AMES).
"This joint venture serves as a vehicle for us to evaluate
Kuppenheimer's real estate and participate in the liquidation of any
stores not taken," said David Edwab, president of The Men's
Wearhouse. "In addition, we will acquire certain of their assets, such as
the Kuppenheimer's trade name and customer lists. We are excited
about the relationship we have formed with the Buxbaum organization,"
he continued.
Founded in 1973, The Men's Wearhouse is one of the country's largest
off-price specialty retailers of men's tailored business attire. The
company currently operates 330 The Men's Wearhouse stores in 33
states. In addition, the company operates 17 C&R Clothier Stores in
Southern California, which it acquired in January, 1997. The stores
carry a full selection of designer, brand name and private label suits,
sport coats, slacks, furnishings, shoes and accessories.
The company's convertible subordinated notes trade on the NASDAQ
SmallCap market under the symbol "SUITG."
CONTACT: The Men's Wearhouse David Edwab, 510/657-9821
Gary Ckodre, 713/295-7200
Pudgie's Chicken, Inc. Announces Approval of Debtor-in-Possession
Financing
UNIONDALE, N.Y., March 4, 1997 - Pudgie's Chicken, Inc.
(Nasdaq: PUDGQ), an operator of quick service takeout and delivery,
Pudgie's restaurants, announced today that on February 28, 1997 the
Bankruptcy Court overseeing its Chapter 11 case granted preliminary
approval of debtor-in- possession financing extended by a private
financing source. The Court authorized Pudgie's to borrow a portion of
the entire $250,000 secured loan facility on an interim basis and has
scheduled a hearing for March 13, 1997 to consider final approval of
the loan. The debtor-in-possession financing is being provided by
Jeffrey N. Zisselman, a private investor.
Pudgie's Chicken announced on September 18, 1996 that it had filed a
voluntary petition for reorganization under Chapter 11 of the
Bankruptcy Code.
Pudgie's Chicken operates and franchises quick service Pudgie's
Famous Chicken restaurants with an emphasis on home delivery that
offers tasty, reasonably priced meals featuring fresh, skinless, fried
chicken. Pudgie's also offers a "spicy" chicken menu, barbecued ribs,
shrimp, corn on the cob, mashed potatoes, rice, salads and other side
dishes.
You can contact Pudgie's on their Web Site at
http://ison.com/pudgies/source
SOURCE Pudgie's Chicken, Inc. /CONTACT: Steve Wasserman,
President and CEO of Pudgie's Chicken, Inc., 516-222-8833; or Joe
Calabrese or Kerry Thalheim, both of The Financial Relations Board,
212-661-8030/
DCR Rates Kmart CMBS Financing, Inc. Series 1997-1
CHICAGO, IL - March 4, 1997 - Duff & Phelps Credit Rating Co.
(DCR) has assigned the following ratings to the Kmart CMBS
Financing, Inc. Series 1997-1 certificates:
Initial
Class Principal Balance
DCR Rating
A $181,000,000
AAA (Triple-A) B $
53,700,000 AA (Double-A) C
$ 52,200,000
A (Single-A) D $
48,000,000 BBB (Triple-B)
The certificates, issued in the aggregate principal amount of
$335,000,000, have an expected maturity date of March 1, 2002, and
a final scheduled distribution date of March 1, 2007. The certificates
were offered under Rule 144A by Morgan Stanley & Co. and Chase
Securities Inc. The certificates bear floating pass- through interest rates
above one-month LIBOR with interest paid monthly to investors. There
will also be servicer advancing through foreclosure and liquidation.
The certificates are secured by a blanket first-lien mortgage on a
portfolio of 81 Kmart properties that are cross-collateralized and
cross- defaulted. The properties are retail stores with 47 assets
operating as Kmarts and 34 assets operating as Super Kmart Centers.
The entire portfolio encompasses roughly 11.5 million square feet of
retail space and is geographically dispersed across 27 states.
Approximately 39 assets, or 55 percent of the portfolio by value, were
inspected by DCR.
The borrowing entity, Troy CMBS Property, L.L.C., is a
special-purpose, bankruptcy-remote limited liability corporation
comprised of Kmart entities and an affiliate of the depositor. The
depositor, Kmart CMBS Financing, Inc., is a wholly owned,
special-purpose, bankruptcy-remote subsidiary of the Kmart
Corporation.
The properties are triple net leased to the Kmart Corporation. Although
the current DCR long-term debt rating for Kmart is
'BB-'(Double-B-Minus), DCR has analyzed the portfolio on a real
estate basis assuming that Kmart has vacated the properties, the
mortgage has been foreclosed upon and the assets sold in liquidation.
As a result, the analysis placed minimal emphasis on the rating of the
company and primarily focused on the alternative use value of the
assets.
Based on DCR's estimate of the alternative use value of the properties,
the aggregate market value of the properties was estimated at
approximately $602 million, resulting in an aggregate loan-to-value ratio
for the portfolio of 55.7 percent. The implied loan-to-value ratios for
the Class A, B, C and D certificates are 30.1 percent, 39.0 percent,
47.7 percent and 55.7 percent, respectively.
The ratings represent DCR`s quantitative and qualitative analysis of the
properties and the structure of the transaction.
SOURCE Duff & Phelps Credit Rating Co. /CONTACT: Diane M.
Lans, 312-368-2067, lansdcrco.com or Robert K. McLean,
Marketing, 312-368-3190, mcleandcrco.com, both of Duff & Phelps
Credit Rating Co./
1996 Results Reflect Charges To Support Zenith's Turnaround;
Company 'Investing In Future'
GLENVIEW, Ill., March 4, 1997 - Zenith Electronics Corporation
(NYSE: ZE) today reported a 1996 net loss of $178 million, or $2.73
per share, compared with a 1995 net loss of $90.8 million, or $1.85
per share.
Full-year 1996 results include approximately $80 million of unusual
charges, reflecting aggressive actions taken by Zenith's new
management team to stabilize the company's cost structure and improve
operating performance. Sales in 1996 were $1.29 billion, up slightly
from 1995 sales of $1.27 billion.
"We are confident that the actions we have taken position Zenith for
major performance improvements in 1997 and beyond," said Peter S.
Willmott, who was elected president and CEO last November. The
1996 charges were related to workforce reductions, inventory
write-offs and other cost-reduction and productivity enhancement
actions.
"In addition to taking actions that will permanently reduce our cost
structure, we are investing in the future by making the capital
investments necessary to improve efficiency and productivity in our
plants," Willmott said.
Zenith made net capital investments of about $125 million in 1996,
primarily to support the expansion and modernization of the company's
Melrose Park, Ill., picture tube plant, and its Chihuahua, Mexico, plant
for digital set-top boxes. Zenith expects these capital projects,
scheduled for completion in the first half of 1997, to yield significant
productivity improvements.
Operating results in 1996 suffered from delays in production of
higher-end Consumer Electronics products, lower selling prices than in
1995, soft sales of Network Systems products, particularly analog
set-top boxes, and higher expenses related to the launch of digital
products in 1997. However, Zenith gained market share in its core
domestic television business, with higher direct-view color TV unit sales
in a down industry.
For the fourth quarter, the net loss was $69.3 million, or $1.05 per
share, compared with a net loss of $23 million, or 42 cents per share, in
the fourth quarter of 1995. Fourth-quarter 1996 results include
approximately $40 million in unusual charges and reflect higher
operating costs, compared with the same quarter in 1995.
Fourth-quarter sales were $428 million, an 8 percent increase from
$395 million in 1995. Consumer Electronics sales increased, while
Network Systems sales declined.
Willmott predicted revenue growth for the second half of 1997 as a
result of Zenith's focus on higher-margin home theater TV systems and
new "convergence" TV products, as well as a multimillion-dollar
national advertising campaign, the company's first in five years. In
addition, he said Zenith expects to begin shipping high-resolution
computer display tubes to computer monitor manufacturers by
mid-year. The company also will begin initial shipments of new digital
set-top boxes to telecommunications companies under the five- year,
$1 billion Americast contract signed last August.
To support its 1997 business plan, the company is seeking financing for
planned capital investment projects and working capital requirements.
Zenith's existing credit agreements, amended at year-end 1996,
continue in place as the company moves toward completing its new
financing, which will be supported by Zenith's majority shareholder, LG
Electronics Inc.
Zenith Electronics Corporation, based in Glenview, Ill., is a leading
manufacturer and marketer of television and video products for
consumer and professional markets; display devices including color
television picture tubes, computer display tubes and components; and
network systems products, including digital and analog set-top boxes
and cable modems. Zenith is a leader in the development of digital
high-definition television. (Visit Zenith's web site at
http://www.zenith.com.)
Zenith's largest shareholder is LG Electronics Inc. (LGE), which,
together with its affiliate LG Semicon, owns 55 percent of the
company's outstanding shares. LGE acquired its majority interest in
November 1995 in a $351 million transaction. Zenith continues to
operate as a U.S.-based, publicly traded company with shares listed on
the New York Stock Exchange.
ZENITH ELECTRONICS
CORPORATION
STATEMENTS OF
CONSOLIDATED OPERATIONS
(In millions, except per
share amounts)
(unaudited)
Three Months
Ended 12
Months Ended
Dec. 31, Dec.
31, Dec. 31,
Dec. 31,
1996 1995
1996
1995
Net sales $427.6
$394.7 $1,287.9 $1,273.9
Costs, expenses and other:
Cost of products sold 437.6
368.3 1,257.0 1,188.8 Selling,
general and
administrative 44.3
40.9 167.8 128.8
Engineering and research 12.1
9.3 46.7 43.5 Other
operating expense
(income), net (9.6)
(10.5) (26.3) (30.1)
Restructuring and other
charges 9.3
3.6 9.3 21.6
Operating income (loss) (66.1)
(16.9) (166.6) (78.7) Gain
(loss) on
asset sales, net --
(2.5) 0.3 (1.7)
Interest expense (4.2)
(4.8) (15.1) (19.9) Interest
income 0.9 1.2
3.6 1.8
Income (loss) before
income taxes (69.4)
(23.0) (177.8) (98.5)
Income taxes (credit) (0.1)
-- 0.2 (7.7)
Net income (loss) $(69.3)
(23.0) (178.0) $(90.8)
Net income (loss) per
common share (1.05)
$(0.42) $(2.73) $(1.85)
Weighted average shares
outstanding 66.4
55.2 65.2 49.2
NOTES:
a. Certain prior-year amounts have
been reclassified to conform
with the presentation used in the current
year.
b. Certain prior-year amounts were
restated as the company
changed its inventory costing method for
its manufactured picture tube inventory
from LIFO to FIFO.
SOURCE Zenith Electronics Corporation/CONTACT: John I. Taylor
of Zenith, 708-391-8181/