TCR_Public/960530.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy News For - May 30, 1996



  1. DEP Corp. shows improvement in operating income
  2. Moody's Assigns Baa Rating to Orange County





Return to the InterNet Bankruptcy Library Homepage


DEP Corp. shows improvement in operating income and cash flow for the
third quarter and nine-month periods



            LOS ANGELES -- May 30, 1996 -- DEP Corp. (NASDAQ
        SmallCap:DPCAQ,DPCBQ) reported an improvement in operating income
        and cash flow for both its third quarter and nine-month periods.
        


            Operating income in its third fiscal quarter ended April 30,
        1996, was $1 million, compared with a loss of $2.1 million for the
        same period in the prior year.  For the nine months, operating
        income was $2.4 million in the current year, compared with a loss of
        $645,000 for the comparable period last year.  Last year's operating
        loss figures exclude the writedown in the value of Agree and Halsa
        assets.
        


            Sales for the third quarter this year were $29.6 million,
        compared with $29.2 million in the same period last year.  Sales for
        the nine months were $86.3 million, compared with $91.6 million for
        the first nine months of the prior year.
        


            Net losses for the current three- and nine-month periods were
        $979,000 and $3.2 million, or 16 cents per share and 51 cents per
        share, respectively, compared with net losses of $26.9 million and
        $27.6 million, or $4.30 per share and $4.42 per share, for the prior
        year's periods.
        


            The losses for the current three- and nine-month periods include
        4 cents per share and 7 cents per share, respectively, related to
        reorganization expenses.  The three- and nine-month periods ended
        April 30, 1995, included an after-tax charge of $24.1 million, or
        $3.85 per share, resulting from a writedown in the asset value of
        Agree and Halsa.  The current periods also were impacted by a 6
        percent and 15 percent increase in interest expense over last year's
        periods.  
        


            As previously reported, DEP has initiated litigation against
        S.C. Johnson & Son Inc., related to the purchase of Agree and Halsa.
        The U.S. District Court for the Central District recently
        rescheduled the trial to commence on Sept. 6, 1996.
        


            Robert Berglass, president and chief executive officer of DEP,
        said that management is pleased with the progress being made in its
        efforts to restore the company to more acceptable levels of
        profitability.  He said that in addition to the improved operating
        results, the company continues to have positive cash flow.  The
        company entered its fourth quarter with more than $8 million of cash
        on hand.
        


            "Programs implemented over the past 12 months are beginning to
        show results," he said.  "Our cost reduction programs reduced SG&A
        expenses as planned.  We have also substantially tightened our
        inventory levels, while continuing to maintain excellent service
        levels with our retail customers."
        


            Commenting on the quarter results, Berglass said:  "The
        refinement in our marketing efforts has resulted in improved sales
        in our hair, skin and oral-care products.  Additionally, we are
        actively pursuing new customers in an effort to expand our private
        label business.  The result of these efforts should be that
        additional volume in future periods will utilize excess
        manufacturing capacity and make our operations more efficient by
        reducing per-unit overhead costs."  
  

      
            Commenting the chapter proceedings, he said that the company is
        gratified by the overwhelming support it has received from its
        suppliers, retail customers and international distributors.
     

   
            "We continue to have open lines of credit with virtually all of
        our suppliers.  We have obtained approval from the court for full
        use of our cash collateral and do not anticipate having to secure
        any debtor-in-possession financing," he said.
        


            "With the support of Western International Media, the company's
        media buying service, DEP has been able to continue its consumer
        advertising campaigns without any interruption.  The company's
        promotional program of its brands has also continued, as scheduled,
        with our domestic and international customers."
        


            DEP is a consumer products company that develops, manufactures
        and markets a wide variety of hair, oral and skin-care products
        under 10 major brand names:  Dep, L.A. Looks, Agree, Halsa, Lilt,
        Topol, Lavoris, Natures Family, Porcelana and Cuticura.


        
                        DEP. CORP. AND SUBSIDIARIES
                 Consolidated Condensed Statements of Income

                               (Unaudited)
        
                           Three months ended         Nine months ended
                                April 30,                 April 30,
                            1996         1995         1996         1995
        
Net sales            $29,568,000  $29,239,000  $86,309,000   $91,591,000

Gross profit           18,453,000   17,721,000   54,268,000    57,708,000

Selling, general
and administrative   
expense               17,464,000   19,869,000   51,846,000    58,353,000

Income (loss) from
operations before
writedown and
reorganization              989,000   (2,148,000)   2,422,000      (645,000)

Writedown in value
of Agree/Halsa assets            --   25,166,000           --    25,166,000

Reorganization items        261,000           --      452,000            --

Interest expense         1,680,000    1,578,000    5,240,000     4,550,000

Income (loss) before
income tax benefit        (979,000) (28,930,000)  (3,169,000)  (30,480,000)

Income tax benefit               --    2,060,000           --     2,865,000

Net income (loss)      $ (979,000)$(26,870,000) $(3,169,000) $(27,615,000)

Per-share data:

Before reorganization
items and writedown
in Agree/Halsa assets     (12 cents)   (45 cents)   (44 cents)    (57cents)

Reorganization items       (4 cents)          --     (7 cents)          --

Writedown in
Agree/Halsa assets               --       $(3.85)          --       $(3.85)

Net income (loss)
per share                 (16 cents)      $(4.30)   (51 cents)      $(4.42)

Weighted average
shares outstanding         6,251,140    6,244,900    6,250,110    6,243,841
        

        CONTACT:  DEP Corp., Rancho Dominguez, Calif.
                  D. Lee Johnson, 310/604-0777


Moody's Assigns Baa Rating to Orange County, California
        Recovery Financing Investment Grade Recovery Financing Rating
        Reflects Legal Strength of Pledged Revenues and State Intercept



            NEW YORK -- May 30, 1996 -- Moody's Investors
        Service has assigned a rating of Baa to Orange County, California's
        sale of approximately $770 million in Recovery Certificates of
        Participation, Series 1996A.  The financing will enable the county
        to emerge from bankruptcy.  Proceeds, combined with reserves on
        hand, will repay $800 million in short-term debt maturing on June
        30, 1996, replenish debt service reserve funds which had been
        depleted during the bankruptcy for outstanding certificates of
        participation, and repay vendor and employee claims.  The bonds are
        expected to be insured by MBIA and rated Aaa.  We are providing an
        underlying rating at the county's request to inform investors of our
        evaluation of the transaction absent any insurance.  
        


            The investment grade rating reflects the strong legal structure
        of the transaction, which insulates debt service payments to
        bondholders from the remaining uncertainties regarding the county's
        budgetary stress and management track record.  The structure
        includes a state intercept of, and superior lien on motor vehicle
        license fees and certain sales taxes; these pledged revenues provide
        over 1.6 times coverage of peak debt service.  While the county has
        significantly reduced discretionary spending and made many
        management changes, it is too early to evaluate whether the county
        will successfully withstand budget pressures and whether management
        will operate effectively in a post- bankruptcy environment.  
        


            In addition to the strong legal structure, an important
        component of the investment grade rating is the county's plan to
        repay all short-term debt holders in full, to continue to make full
        and timely payment on all outstanding debt, and to cure any
        defaults.  The county's actions in its recovery plan to fully
        restore bondholders' security to its pre-bankruptcy state was an
        important prerequisite for the county to attain investment grade on
        this financing.  
        


        County to Issue Pension Obligation Bonds


            Concurrently with recovery certificates, the county will sell
        $120 million in taxable refunding pension obligation bonds, Series
        1996A.  The bonds will be entirely insured by MBIA and rated Aaa;
        proceeds will refund the $110 million outstanding Series 1994B
        bonds. We have revised the ratings on the county's 1994A pension
        obligation bonds from Caa to Ba.  These bonds are payable on a
        parity with the current offering of the 1996A pension obligation
        bonds.  
   

     
        Other Ratings Revised


            The county's general obligation debt rating has been raised from
        Caa to Ba1.  We have also revised the ratings on the county's
        outstanding certificates of participation, dated 7-1-86 and 1-1-91
        from Caa to Ba.  The rating revisions reflect the fact that the
        county has improved its financial situation and will emerge from
        bankruptcy, although debt service payments will not benefit from the
        protection of the intercept mechanism.  We have also revised the
        rating on the county's certificates of participation, dated 12-1-88
        from Caa to Baa.  This debt is secured by the net revenues of the
        county's solid waste system.  The county's other outstanding
        certificates are all insured and rated Aaa.  


    
        CONTACT: Barbara Flickinger
                 212/553-7736
                      or
                 Kathy McManus
                 212/553-4036
                      or
                 Renee Boicourt
                 212/553-7162