Bankruptcy News For - April 16, 1996

  1. Western Publishing Group announces fourth quarter and full year results
  2. Option B Group and Orange County Considering Proposed Settlement
  3. Encore reports year end financial results...$100M financing completed
  4. New Valley Corporation reports 1995 financial results
  6. Watts reports third quarter earnings

Western Publishing Group announces fourth quarter and full year results

            NEW YORK, NY -- April 16, 1996 -- Western Publishing
        Group, Inc. (OTC:WPGI) today reported sales and earnings for the
        fourth quarter and year ended Feb. 3, 1996.

            Revenues were $88.9 million for the fourth quarter of Fiscal
        1996 or a decrease of $9.8 million when compared to $98.7 million
        for the same period in Fiscal 1995.  This decrease resulted
        principally from the decline in unit and dollar sales of the
        company's interactive electronic storybooks and other interactive
        electronic products reflecting the competitive environment, the
        maturity of certain older formats and price reductions implemented
        by the company on a number of these products in an effort to meet
        competition and to reduce inventory.  In addition, the company
        experienced lower sales in its paper tableware and party goods
        division as the performance of certain licensed products declined in
        comparison to the prior year.

            For the Fourth Quarter of Fiscal 1996, the company incurred an
        operating loss (loss before interest expense and income taxes) of
        $12.4 million versus an operating loss of $4.2 million in the Fourth
        Quarter of Fiscal 1995.  The net loss for the Fourth Quarter was
        $13.2 million or $0.64 per share based upon an average of 21,092,000
        shares outstanding compared to a loss of $6.0 million or $0.30 per
        share for the fourth quarter of fiscal 1995 based upon an average of
        21,023,000 shares outstanding.

            Revenues for Fiscal 1996 were $374.3 million compared to $402.6
        million for Fiscal 1995, or a decrease of $28.3 million.  The
        factors contributing to this revenue decline are consistent with the
        aforementioned Fourth Quarter discussion.  The net loss for the year
        ended Feb. 3, 1996 was $67.0 million or $3.23 per share, compared to
        a net loss of $17.6 million or $0.88 per share for the year ended
        Jan. 28, 1995.  Results of operations for the year ended Feb. 3,
        1996 included a provision for restructuring and closure of
        operations of $8.7 million and an additional gain on streamlining
        plan of $2.0 million before income taxes.  Results of operations for
        the year ended Jan. 28, 1995 included a gain on streamlining plan of
        $20.4 million before income taxes and an adjustment to reflect a
        reduction to the provision for the write-down of Division of $1.1
        million before income taxes.

            Richard A. Bernstein, chairman and chief executive officer of
        Western Publishing Group, Inc., commented:  "This year has been one
        of significant internal change for our company and external
        difficulties in the retail marketplace.  The Company has undergone
        an organizational restructuring in an effort to return to
        profitability.  A significant Company-wide workforce reduction,
        including the reorganization of our sales and merchandising forces
        and an early retirement program, was executed in Fiscal 1996 with
        the benefits of these actions to be realized in Fiscal 1997.  

            "Operating results were also impacted by personnel distractions
        resulting from the announced sale of a major interest in the company
        which will result in a change in management.  Further, it was
        determined that despite the success in expanding the sale of
        children's books in the mass market, operation of our Storyland
        Category Management Program at Wal-Mart would be returned to Wal-
        Mart management at the beginning of calendar 1996.  This decision
        resulted in reduced sales of non-Western product during the Fourth
        Quarter of Fiscal 1996."

            "Notwithstanding these issues," Bernstein continued, "the
        company was able to accomplish many improvements in its effort to
        return to profitability.  The WISDOM computerized operating system
        is now performing to expectations and has resulted in more accurate
        tracking of sales as well as improved customer service.  Inventory
        has been reduced significantly, resulting in lower carrying costs
        and the need for less warehousing space.  The company's expansion of
        its paper tableware and party goods operations in Kalamazoo, Mich.
        will be completed and operational in the First Half of Fiscal 1997.

            "The company has no short-term debt and the combination of the
        company's year-end cash balances and Receivables Purchasing Facility
        provide adequate working capital for Fiscal 1997."

            "I am delighted that we were able to reach an agreement for an
        acquisition of a significant interest in the company by Richard E.
        Snyder, Barry Diller and Warburg, Pincus Ventures, L.P.  Upon the
        completion of this transaction, which is scheduled to close in early
        May, Dick Snyder will be taking over the leadership of the Company.
        I have now had the opportunity to work with Dick during the last
        three months and I am certain he will bring a new vision and
        leadership to our company.  There is no question that he will be the
        stimulus for renewed growth and profitability at Western and that he
        will lead the Company into a new era of expansion and success.   

            "All of our employees and shareholders will benefit from Dick's
        management and leadership skills as well as from the business acumen
        of Warburg Pincus, one of the major venture banking firms in the
        United States.  As a major Western shareholder, I look forward to
        enjoying the future enhancement to shareholder value that I know
        will insure to all shareholders under Dick's leadership.  I would
        also like to welcome Robert Asahina who is rejoining Dick at Western
        after Bob's very successful career at Simon & Schuster.  

            "Bob will create a new division at Western Publishing Company
        that will extend and enhance the GOLDEN BOOKS(R) brand and franchise
        by introducing a line of adult non-fiction books under the GOLDEN
        BOOKS(R) imprint.  Bob's joining the company marks a significant
        event for Western Publishing Company and is a symbol of the
        Company's re-emergence as a major force in publishing for the entire

            Western Publishing Group Inc., through its Western Publishing
        Co. subsidiary, creates, publishes, manufactures, prints and markets
        story and picture books, interactive electronic books and games,
        computer and multi-media "edutainment" products, as well as coloring
        books and other activity books and products for children.  These
        products are sold principally under the GOLDEN BOOK(R) brand.  The
        company also produces and markets Frame-Tray(R) puzzles, children's
        pre-recorded videos and special interest books for the entire
        family. Western Publishing Co. also offers a wide range of printing,
        graphic, creative and distribution services to customers in industry
        and government.  

            Western Publishing Group Inc. through the Beach Products
        Division of its Penn Corporation subsidiary, is engaged in the
        manufacture and sale of decorated paper tableware, party goods,
        stationery and gift products.

                  (in thousands, except for per share data)
                            Three Months Ended        Year Ended
                           Feb. 3,      Jan. 28,    Feb. 3,   Jan. 28,
                             1996         1995        1996       1995
        Revenues               $ 88,887     $ 98,666    $374,257    $402,555
        (Loss) income before
         interest expense and
         income taxes
         (benefit)             $(12,374)   $ (4,227)(b) $(42,856)(a) $
        Net loss               $(13,210)   $ (6,013)    $(67,047)
        Preferred dividend
         requirements              (212)        (212)       (848)
        Loss applicable
         to common stock       $(13,422)    $ (6,225)   $(67,895)
        Loss per common share  $  (0.64)    $  (0.30)   $  (3.23)   $
        Weighted average number
         of common shares
         outstanding             21,092       21,023      21,047      20,997

         (a) Includes a provision for restructuring and closure of
        operations of $8.7 million and an additional gain on streamlining
        plan of $2.0 million. (b) Includes an adjustment to reflect a
        reduction to the provision for write-down of Division of $1.1
        million in the three months and year ended Jan. 28, 1995, and a pre-
        tax gain on streamlining plan of $20.4 million in the year ended
        Jan. 28, 1995.

        CONTACT: Western Publishing Group Inc., New York
                 Ira A. Gomberg, 212/688-4500

Option B Group and Orange County Considering Proposed

            LONG BEACH, Calif. -- April 16, 1996 -- City
        attorneys and city managers representing the 14 Option B cities and
        agencies are recommending to their elected officials a proposed
        settlement of the group's bankruptcy claims against Orange County.

            Members of the group which chose Option B in the Orange County
        bankruptcy are all expected to vote on the proposed settlement by 10
        a.m. Friday.  The county Board of Supervisors is scheduled to
        consider the settlement Wednesday.

            The City of Buena Park is considering the proposed settlement at
        tonight's (April 15) City Council meeting.

            "We have never supported using taxpayer money to fight other
        public agencies," said Michael Martello, city attorney for the City
        of Mountain View.  "Hopefully, this proposed settlement will allow
        the county to make peace with all the cities and agencies involved
        in the bankruptcy."

            In exchange for a settlement from the county, the Option B group
        would drop their lawsuit against the county and vote for the
        county's Plan of Adjustment.  The Option B group also would retain
        all its claims against Merrill Lynch and other third parties, from
        which the group plans to recover the remainder of its losses and
        damages.  Terms of the proposed settlement cannot be released
        pending review by both the county and the 14 Option B cities and

            "We always said our goal was to recover 100 percent of taxpayer
        funds.  This proposed settlement and our right to seek recovery from
        Merrill Lynch and others does just that," Martello said.

            When Orange County declared bankruptcy on Dec. 6, 1994, the
        Option B cities had $187 million deposited in the Orange County
        Investment Pool, about 2.5 percent of the total.  In the subsequent
        bankruptcy settlement, which was approved by the federal bankruptcy
        judge and the Orange County Board of Supervisors, all depositors
        ultimately were offered Option A or Option B.  The cities and
        agencies which chose B were paid less but were allowed to pursue
        independent recovery efforts against the county and third parties.
        The B participants received an average of 77 percent of their money
        but have been working to recover the rest--at least $44 million.

            "We cut the best deal we could," Martello said.  "The As got a
        reasonable deal that accomplished their goals.  Our proposed
        settlement is structured a little differently but it will do the
        same thing."

        CONTACT:  Adler Public Affairs, Long Beach, Calif.
                  Cheryl Downey, 310/433-3176              

Encore reports year end financial results...$100M financing

            FORT LAUDERDALE, Fla. -- April 16, 1996 -- Encore
        Computer Corp. (NASDAQ/NMS:ENCC) Tuesday announced that revenues for
        the year ended Dec. 31, 1995 were $49,328,000 compared to 1994
        revenues of $76,550,000.  

            Losses for 1995 were $81,354,000 ($2.37 per share) as compared
        to a 1994 loss of $54,556,000 ($1.68 per share).  

            The company also announced the completion of a $100 million two
        phased financial restructuring with Gould Electronics Inc.  The
        equity phase of the restructuring consists of the conversion of $35
        million of debt into a Series H Convertible Preferred Stock.  The
        debt financing phase consists of providing Encore with a committed
        financing facility of $65 million through April 16, 1997.  

            Commenting on these results, Kenneth G. Fisher, chairman and
        chief executive officer stated:  "We continued to make a major
        investment during 1995 in R&D to develop the company's new storage
        product.  This investment, together with the recent $35 million
        equity investment and increased funding provided by the company's
        major shareholder, Gould Electronics, a subsidiary of a $20 billion
        Japanese company, should provide the basis for the company to
        significantly grow its market share in the expanding storage

            During 1995, the company continued to experience the negative
        effects of the termination of its agreement with Amdahl Corp. and
        recognized associated losses of $14,240,000.  Since the termination
        of the Amdahl agreement, the company has focused its marketing
        efforts on OEM's as well as other distributors and end user sales.
        Building this new distribution strategy has taken time and caused
        delays in revenue.  Significant progress has been accomplished in
        building the new storage distribution strategy.  During the First
        Quarter of 1996, the company began to recognize storage product
        revenues from both the direct sales force and distributors on a
        worldwide basis.  

            Encore's efforts in developing storage OEM relationships are
        very active.  On April 10, 1996, Digital Equipment Corp. and Encore
        announced an agreement to jointly market the Encore Infinity Gateway
        storage product.  The companies will join forces to provide data
        sharing between IBM mainframes and open Alpha Server 8000 systems.  

            Discussions with other OEM's regarding Encore's Infinity storage
        systems are continuing.  Interest is high and it is Encore's
        objective to obtain additional agreements for storage revenues in

            Encore's real-time business enjoyed a 48% increase in quarterly
        revenues over the previous quarter due to Encore's new Alpha-based
        real-time systems, new markets and new government program orders.  

            Encore Computer Corp. is a worldwide company headquartered in
        Fort Lauderdale.  Encore is the world's leading innovator in
        scalable real-time data storage, data retrieval and data sharing
        technologies for mixed platform processing environments.  Encore has
        been the market leader for over 30 years in providing real-time
        deterministic systems for time-critical applications.  Encore is a
        publicly held corporation with shares traded on the NASDAQ National
        Market System (ENCC).  For more information about Encore products
        and services, see our World Wide Web page at:" target=_new>">

        CONTACT:  Encore Computer Corp., Fort Lauderdale
                  Charles S. Anderson, 305/797-5605

New Valley Corporation reports 1995
financial results

            MIAMI, FL -- April 16, 1996 -- href="chap11.newvalley.html">New Valley Corporation
        (OTC: NVLY) today reported financial results for the year ended
        December 31, 1995.  

            Full-year 1995 revenues were $67.7 million compared to revenues
        of $10.4 million in 1994.  Income from continuing operations was
        $1.4 million in 1995 compared to a loss of $15.3 million in 1994.
        Net income was $18.2 million in 1995 compared to $1,010 million in
        1994. After giving effect to dividends on and repurchases of New
        Valley s preferred shares, the net loss applicable to common shares
        was $13.7 million, or $.07 per common share, in 1995 compared to net
        income applicable to common shares of $929.9 million, or $4.94 per
        common share, in 1994.  

            "For New Valley Corporation, 1995 was a year of many important
        developments," said Bennett S. LeBow, chairman and chief executive
        of New Valley Corporation.  "After emerging from bankruptcy in
        January 1995 with over $300 million in unrestricted cash, New Valley
        embarked on an aggressive acquisition program, which, in addition to
        purchasing 5.2 million shares of RJR Nabisco (NYSE: RN), also
        included purchasing the investment bank, Ladenburg, Thalmann & Co.
        Inc., acquiring a controlling interest in Thinking Machines, a
        software developer and marketer, and making a $184 million
        commercial real estate purchase."  

            New Valley is principally engaged in, through Ladenburg,
        Thalmann & Co. Inc., the investment banking and brokerage business,
        and in the ownership and management of commercial real estate and
        the acquisition of operating companies.  

        CONTACT: Sard Verbinnen & Co., New York
                 George Sard/Anna Cordasco/Paul Caminiti, 212/687-8080


            MIAMI, FL -- April 16, 1996 -- Brooke Group Ltd. (NYSE:
        BGL) today reported financial results for the year ended December
        31, 1995.  Preliminary results had previously been reported on April
        2, 1996.  

            Full-year 1995 revenues were $461.5 million compared to revenues
        of $479.3 million in 1994.  Operating income was $8.1 million in
        1995 versus operating income of $14.2 million in 1994.  The loss
        from continuing operations before income taxes was $45.0 million in
        1995 versus $42.5 million in 1994.  Net loss applicable to common
        shares was $17.1 million, or $0.94 per common share, in 1995
        compared to net income of $110.1 million, or $6.25 per common share
        in 1994.  

            "1995 and the first few months of 1996 have marked a time of
        pivotal developments for Brooke Group and its shareholders," said
        Bennett S. LeBow, chairman, president and chief executive of Brooke
        Group.  "Most significantly, in early 1996, Brooke's Liggett tobacco
        subsidiary entered into comprehensive settlements of tobacco
        litigation with the nationwide Castano class and with the Attorneys
        General of five states.  For a small price, these settlements secure
        an insurance policy protecting Liggett from all addiction-based
        claims, the most serious litigation risks facing the industry, and
        greatly increase Liggett s potential value to Brooke shareholders.  

            "Many important steps were also taken in 1995 by href="chap11.newvalley.html">New Valley
, of which we are 42 percent owners.  After emerging
        bankruptcy in January 1995 with over $300 million in unrestricted
        cash, New Valley embarked on an aggressive acquisition program,
        which, in addition to purchasing 5.2 million shares of RJR Nabisco
        (NYSE: RN), also included purchasing the investment bank, Ladenburg,
        Thalmann & Co.  Inc., acquiring a controlling interest in Thinking
        Machines, a software developer and marketer, and making a $184
        million commercial real estate purchase.  

            In 1995, the Company resumed payment of a regular quarterly cash
        dividend of $0.075 per share, or $0.30 annually, to holders of
        Brooke Group common stock.  Also in 1995, the Company successfully
        refinanced substantially all of its corporate debt with five year
        notes due 2001, through its BGLS Inc. subsidiary.  

            LeBow continued, "In our effort to realize value for our
        shareholders, Brooke Group continues to strive as a contrarian
        investor, pursuing opportunities in a number of diverse industries.
        In 1996, we intend to focus on maximizing the value of our current
        operations while continuing to identify and capitalize on new
        investment opportunities in the U.S. and abroad."  

            Brooke Group is a holding company which owns controlling
        interests in New Valley Corporation and Liggett Group, and has
        tobacco and real estate operations in Russia.  

        CONTACT: George Sard/Anna Cordasco/Paul Caminiti
                 Sard Verbinnen & Co

Watts reports third quarter earnings

            NORTH ANDOVER, Mass. -- April 16, 1996 -- Watts
        Industries, Inc. (NYSE:WTS) today announced its financial results
        for the third quarter of fiscal 1996.  

            Net sales from continuing operations increased 4.5% to
        $159,823,000 compared to $152,973,000 last year.  Net income (loss)
        for the third quarter from continuing operations, inclusive of the
        restructuring charge, for the net loss of ($80,303,000) compared to
        net income of $11,751,000 last year.  The results from continuing
        operations, exclusive of the restructuring charge, for the third
        quarter are $.32 earnings per share compared to $.40 earnings per
        share last fiscal year.  

            For the nine month period, net sales from continuing operations
        increased 10% to $470,545,000 compared to $426,977,000 last year.
        Net income (loss) for the nine months from continuing operations,
        inclusive of the restructuring charge, is a net loss of
        ($58,588,000) compared to net income of $32,899,000.  For the nine
        month period, results from continuing operations, exclusive of the
        restructuring charge, are $1.05 earnings per share compared to $1.11
        earnings per share last fiscal year.  

            As previously announced, the company recorded an $89.6 million
        after-tax ($3.02 per share) restructuring charge in the third
        quarter.  The restructuring charge includes $63 million of asset
        write-downs, primarily goodwill, reflecting the company's adoption
        of Financial Accounting Standards no. 121, "Accounting for the
        Impairment of Long-Lived Assets and for Long-Lived Assets to be
        Disposed of."  The charge also includes approximately $13 million
        associated with plant consolidation and downsizing, $9 million of
        asset write-downs, and $4 million of other charges.  The after-tax
        cash impact of these charges is $9 million.  There will be a
        reduction in employment of 290 people associated with this
        restructuring program.  The company is also divesting the Municipal
        Water Group to enable it to concentrate on its core plumbing and
        heating, industrial, and oil and gas businesses.  The Municipal
        Water Group will be treated as discontinued operations for
        accounting purposes.    

            Timothy P. Horne, Chairman, President and Chief Executive
        Officer, stated, "The large write-off of goodwill relates primarily
        to our operations in Italy including Pibiviesse S.p.A and Intermes
        S.p.A.  In the case of Pibiviesse, these operations have incurred
        significant losses and this company is being downsized accordingly
        in an effort to provide profitability during fiscal 1997.  The
        goodwill issues at Intermes do not pertain to that company's
        profitability but rather to the fact that goodwill is no longer tax
        deductible because of a change in Italian law."    

            Horne continued, "As a part of our overall restructuring program
        to become more efficient by consolidating operations, one of the
        major initiatives we are taking is to relocate Jameco Industries
        from Wyandanch, Long Island to a Watts Regulator plant located in
        Spindale, North Carolina.  Jameco's nine month sales are $44.5
        million.  We believe that it will take approximately nine months to
        effectuate this transfer on an orderly basis and various charges
        relating to this decision are contained in our third quarter's
        results.  There will be some related charges also incurred in the
        future, mostly in our fourth quarter."    

            Horne added, "Our diversification through acquisition has led us
        into many different markets during the past decade and we have now
        decided to focus on our Plumbing and Heating, Industrial, and Oil
        and Gas segments for future acquisition strategy and growth
        potential.  We have, therefore, recently announced that our
        Municipal Water Group of companies consisting of Henry Pratt, James
        Jones and Edward Barber & Company will be divested.  We expect that
        this diverstiture program will take from three to six months to

            Horne concluded, "The steps undertaken through the restructuring
        program should provide a forward momentum for earnings growth.  The
        reorganization will require more than two years to complete although
        we believe some positive effects of these actions will be realized
        during fiscal year 1997."

                     Watts reports third quarter earnings
                   (In thousands, except per share amounts)
                                   Third Quarter Ended  Nine Months Ended
                                        March 31st          March 31st
                                      1996    1995        1996     1995
        Net Sales                     $159,823 $152,973   $470,545 $426,977
        Cost of Sales                  114,882   97,101    312,770  268,360
        Selling, General and
          Administrative                51,053   34,605    123,104   98,160
        Restructuring charges           19,891        0     19,891        0
        Impairment of Long-lived        63,065        0     63,065        0
        Other (Income) expense, net      2,517    1,853      7,937    5,965
        Income Before Income Taxes     (91,585)  19,414    (56,222)  54,492
        Provision for Income Taxes     (11,282)   7,663      2,366   21,593
        Income from Continuing
         Operations                    (80,303)  11,751    (58,588)  32,899
        Income from Discontinued
         Operations - net                1,030      980      2,226    2,387
        Net Income                    ($79,273) $12,731   ($56,362) $35,286
        Average Shares
         Outstanding               29,732,876 29,695,621 29,757,391
        Earnings Per Share:
          Continuing Operations         ($2.70)   $0.40     ($1.97)   $1.11
          Discontinued Operations        $0.03    $0.03      $0.08    $0.08
        Net Income                      ($2.67)   $0.43     ($1.89)   $1.19
        Cash Dividends per Share       $0.0700  $0.0625    $0.1950  $0.1725

        CONTACT: Watts Industries
                 Kenneth J. McAvoy, 508/688-1881

Suit filed against officers
        and directors, affiliates, and auditor of The Bennett Funding Group,
        Inc., and certain broker-dealers alleging deception and other
        violations of State and Federal Law in connection with the sale of
        securities to the public

            NEW YORK, NY -- April 16, 1996 -- A class action was
        filed last Friday, April 12, 1996, in the Supreme Court of the State
        of New York, County of New York, on behalf of purchasers of notes,
        bonds, units, lease assignments and other instruments ("Bennett
        Securities") issued by The Bennett
Funding Group, Inc.
        which filed a voluntary petition for relief under Chapter 11 of the
        United States Bankruptcy Code on April 1, 1996 and halted further
        payments to investors, and companies affiliated with it.

            The Class Action Complaint asserts claims for common law fraud,
        negligent misrepresentation, breaches of fiduciary duty, deceptive
        business practices in violation of Section 349 of the New York
        General Business Law, and the sale of unregistered securities in
        violation of the Securities Act of 1933.  The complaint also seeks
        an accounting.  Named as defendants are certain of the officers and
        directors of BFG, certain non-bankrupt affiliates of BFG, the
        accounting firm that audited BFG's financial statements, and various
        broker-dealers that participated in offering and selling Bennett
        Securities to the public.

            The Complaint charges that defendants violated state and federal
        law by, among other things, engaging in deceptive and wrongful
        practices and misrepresenting and/or omitting material information
        with respect to the business, financial condition and performance of
        BFG and its affiliates in connection with the sale of Bennett
        Securities to the public.  Plaintiffs in this action seek to recover
        damages on behalf of persons who purchased Bennett Securities prior
        to March 28, 1996 and are represented by the law firms of Milberg
        Weiss Bershad Hynes & Lerach LLP, Spector & Roseman, P.C., and the
        Law Offices of Edward A. Berman P.C., which have significant
        experience and expertise prosecuting class actions on behalf of
        defrauded investors and shareholders and handling complex commercial

            Milberg Weiss has been actively engaged in commercial
        litigation, emphasizing securities, shareholder and antitrust class
        actions, for more than 20 years.  The firm has offices in New York,
        San Diego, San Francisco and Los Angeles and is active in major
        litigations pending in federal and state courts throughout the
        United States.  The firm's reputation for excellence has been
        recognized on repeated occasion by courts, which have appointed the
        firm to major positions in complex multi-district or consolidated
        litigations.  Milberg Weiss has taken a lead role in numerous
        important actions on behalf of defrauded investors and has been
        responsible for a number of outstanding recoveries which, in the
        aggregate, total approximately $2 billion.

            If you wish to discuss this action or have any questions
        concerning your rights or interests with respect to these matters,
        please contact Milberg Weiss at One Penn Plaza, 49th Floor, New
        York, NY 10119-0165, or telephone: 1-800-390-7969.

        CONTACT: Milberg Weiss Bershad Hynes & Lerach LLP


            ELKIN, N.C., April 16, 1996 - href="chap11.brendle.html">Brendle's Incorporated
        (Nasdaq: BRDL), announced today a dramatic strategic repositioning
        as it plans to focus on six merchandise categories that have
        demonstrated significant strength and substantial opportunity.  As
        part of this fundamental shift the Company announced the closing of
        eighteen stores, thus concentrating its initial efforts on the
        twelve markets it will continue to serve.  In order to effect these
        and other changes the Company announced today that it has filed a
        Chapter 11 reorganization petition in the United States Bankruptcy
        Court for the Middle District of North Carolina.

            Brendle's, best known for its jewelry, housewares and gift
        selection, will expand its offering of party goods, successfully
        launched last year under the Party Universe name; substantially
        broaden its crafts offering; and further concentrate on personal
        health care, fitness, and outdoor products.  By concentrating its
        strategic efforts on these merchandise categories the Company is
        positioning itself as a destination store for the home, for family
        and for health.  The Company expects to offer its customers far
        deeper selections than do its competitors in the markets it serves.

            Brendle's will exit from or substantially reduce its emphasis on
        several merchandise categories which provide very low margin and
        have significant carrying costs.  It is anticipated that the
        revitalized merchandise selection will have a significant and
        positive effect on the Company's financial performance, resulting in
        higher gross margins, reduced inventory investment requirements and
        higher return on investment.

            The Company's decision to file a Chapter 11 petition is
        necessitated by the fact that it has substantial lease liabilities
        which, together with the investment necessary to restructure itself
        both strategically and operationally, have put significant pressure
        on its working capital. Foothill Capital Corp., the Company's
        secured lender, is providing a $25 million debtor-in-possession
        revolving credit facility.  The Company expects the reorganization
        process to be a relatively short one.

            Joseph M. McLeish, Jr., President and Chief Executive Officer,
        stated, "The plans we have are the most exciting I have seen in
        years. We have developed a new, unique and exciting, destination
        store which provides our valued customers an unparalleled offering
        for the home, for family and for health.  Combined with our
        established, excellent jewelry offering we are providing an
        assortment of quality products under one roof not available anywhere
        in the markets we serve.  Our customers will see the new Brendle's
        emerge before their eyes as we also undertake a major store
        renovation program which will further enhance the Brendle's shopping

        CONTACT:  Joseph M. McLeish, Jr., 910-526-6570, or David R.
        Renegar, 910-526-6511, both of Brendle's Incorporated