NEW YORK -- July 23, 1996 -- Saks Holdings, Inc.
(NYSE:SKS), the holding company for Saks Fifth Avenue, and Isetan
Company Limited, a leading Japanese retailer, today announced that
they have agreed to investigate the feasibility of developing a
joint Plan of Reorganization for Barneys Inc.
The two companies will not submit specific proposals for a Plan
of Reorganization until Saks has signed a Confidentiality Agreement
and they have completed a joint review of Barneys operations, and
they may elect not to proceed if this review does not support the
development of a Plan that is economically and strategically viable.
Consequently, no assurances can be given that, upon completion of
this review, Saks and Isetan will decide to proceed with the
proposal of a joint Plan of Reorganization. Barneys has been
operating under Chapter 11 of the Bankruptcy Code since January 10,
1996.
Under the working agreement between Isetan and Saks, any joint
Plan proposed would provide that control of the reorganized Barneys
would rest with Saks; that, as the owner of the Madison Avenue, NY,
Chicago, IL and Beverly Hills, CA store locations, Isetan would
lease such locations to the reorganized Barneys; and that Isetan
would have continued use of and marketing rights to the Barneys
name, trademarks, etc. in Japan and Asia.
In a joint statement, the two companies said, "We believe that
Saks and Isetan are the parties with the greatest potential to
develop a Plan of Reorganization that can offer a workable solution
for creditors while preserving the value of the Barneys franchise.
At the same time, both parties have committed that they will only
present a Plan if it is in the best interests of Saks and Isetan
shareholders."
Saks operates 40 full-line stores and five resort stores in
premier retail locations across the United States, led by its
flagship on New York's Fifth Avenue. In addition, Saks operates 21
Off 5th outlet stores and Folio, a direct mail business.
CONTACT: Saks Holdings, Inc., New York
Jaqui Lividini, (212) 940-4245
or
Morgen-Walke Associates, New York
David Walke/Naomi Rosenfeld/Stacey Herschaft
Media Contact: Terry Rooney/Stacy Berns
(212) 850-5600
MT. LAUREL, N.J. -- July 23, 1996 -- Tyco Toys,
Inc. (NYSE:TTI) today reported a Net Loss of $4,658,000 or $.13 per
share for the Second Quarter ended June 30, 1996, compared to a Net
Loss of $9,625,000 or $.28 per share last year.
The 1995 results include a pre-tax restructuring charge of $4.9
million ($.09 per share after tax). Net Sales for the quarter were
$140,590,000 compared to $151,692,000 for the same period a year
ago.
For the Six Months, Net Sales were $236,358,000 compared to
$267,752,000 for the same period a year ago. The Net Loss for the
Six Months was $15,682,000 or $.45 per share compared to $17,078,000
or $.49 per share last year. The 1995 results include the $4.9
million restructuring charge, partially offset by a pre-tax, one-
time gain of $2.5 million ($.05 per share after tax) from the sale
of distribution rights for Kidsongs(R) Music Videos.
Gary Baughman, president and chief executive officer, said, "The
elimination of several 1995 product categories did result in lower
overall sales during the Second Quarter and First Half of 1996, as
expected. At the same time, however, the focus on core products,
coupled with other cost-saving initiatives, helped improve gross
profit margins, decrease operating expenses and resulted in a modest
operating profit.
"We are particularly encouraged by the performance of the
company's International and Preschool business units where
significantly higher gross profit margins and lower operating
expenses resulted in improved Second Quarter operating results," he
said. "Operating profit was marginally lower in the U.S. business
unit, where lower sales and gross profit were substantially offset
by reduced operating expenses."
Baughman said the company recently began shipping several new
product lines, including TycoVideoCam(TM), a $100 children's video
camera; Kitchen Littles(TM), a line of die-cast kitchen miniatures;
new Radio Control vehicles, including Dagger(TM) and Mutator(TM);
new Matchbox(R) toys; and Tickle Me Elmo(TM), a giggling soft toy
that is expected to be Tyco's most successful Sesame Street(R)
introduction.
"We expect Sales to increase significantly during the Second
Half of 1996 with the introduction of these new lines and the
continuing strong sales at retail of products such as Doodle
Bear(TM), BabyWiggles 'n Giggles(TM), Rebound(TM) 4x4 Radio Control,
Matchbox(R) cars and our line of Sesame Street(R) toys."
Baughman continued, "Our turnaround program is beginning to
positively impact our operating results and contributed to the very
successful $96.6 million Preferred Stock Offering completed in June.
The proceeds from the offering will help accelerate our growth and
return to profitability by increasing new product development and
making capital available for potential acquisitions."
Tyco Toys markets a broad range of products worldwide, including
Tyco(R) Radio Control vehicles, Matchbox(R) die-cast vehicles and
playsets, Magna Doodle(R) drawing toys, View-Master(R) 3-D Viewers
and a wide variety of Sesame Street(R) preschool toys.
TYCO TOYS INC.
Consolidated Statements of Operations
(In thousands, except per share amounts)
For the Quarters Ended For the Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Net sales $140,590 $151,692 $236,358
$267,752
Cost of goods sold 79,540 87,862 134,673
154,819
Gross profit 61,050 63,830 101,685
112,933
Marketing, advertising
and promotion 32,429 36,239 57,396
65,107
Selling, distribution
and administrative
expenses 26,901 28,429 51,948
55,828
Restructuring charge -- 4,900
-- 4,900
Amortization of
goodwill 1,616 1,598 3,223
3,191
Total operating
expenses 60,946 71,166 112,567
129,026
Operating income
(loss) 104 (7,336) (10,882)
(16,093)
Interest expense, net 5,564 6,084 10,840
11,949
Other (income)
expense, net (57) 139 (631)
(4,190)
Loss before taxes (5,403) (13,559) (21,091)
(23,852)
Income tax benefit (1,634) (4,724) (7,125)
(8,348)
Net loss (3,769) (8,835) (13,966)
(15,504)
Preferred stock
dividends 889 790 1,716
1,574
Net loss applicable
to common
shareholders ($4,658) ($9,625) ($15,682)
($17,078)
Net loss per
common share ($0.13) ($0.28) ($0.45)
($0.49)
Average common shares
outstanding 34,827 34,762 34,827
34,760
TYCO TOYS INC.
Consolidated Balance Sheets
(In thousands)
June 30, Dec. 31,
1996 1995 1995
Assets
Current assets
Cash and cash equivalents $ 47,269 $ 14,387 $ 27,604
Receivables, net 159,719 189,159 187,503
Inventories, net 72,332 87,641 56,710
Prepaid expenses and
other current assets 18,962 22,025 19,738
Deferred taxes 13,008 17,271 13,008
Total current assets 311,290 330,483 304,563
Property and equipment, net 32,600 42,637 33,021
Goodwill, net of accumulated
amortization 222,418 229,420 226,112
Deferred taxes, noncurrent 35,881 30,288 28,560
Other assets 21,164 21,984 22,876
Total assets $623,353 $654,812 $615,132
Liabilities and
Stockholders' Equity
Current liabilities
Notes payable $20,226 $87,337 $60,923
Current portion of
long-term debt 859 1,065 1,053
Accounts payable 40,354 53,092 45,557
Accrued expenses and
other current liabilities 68,704 83,701 93,179
Total current liabilities 130,143 225,195 200,712
Long-term debt, net of
current portion 147,064 147,590 147,180
Other liabilities 2,174 2,342 1,900
Stockholders' Equity
Preferred stock 83 5 5
Common stock 350 349 350
Additional paid-in capital 441,309 344,920 347,033
Accumulated deficit (73,943) (44,910) (58,261)
Treasury stock (1,676) (1,595) (1,676)
Cumulative translation
adjustment (22,151) (19,084) (22,111)
Total stockholders' equity 343,972 279,685 265,340
Total liabilities and
stockholders' equity $623,353 $654,812 $615,132
MIAMI, FL -- July 23, 1996 -- In the second quarter of 1996,
Knight-Ridder, Inc. (NYSE: KRI) earned $.86 a share, up $.05, or
6.2% from the $.81 reported in the same quarter in 1995. These 1995
results are before a $1.07 gain on the sale of the Journal of
Commerce (JoC), but after a $.12 charge for the adjustment of the
carrying value of certain investments. (In the second quarter of
1995, the company earned $1.88 per share, reflecting the one-time
gain resulting from the JoC sale.)
Net income in the second quarter of 1996 was $42.4 million, up
$2.0 million, or 4.9%, from the same period last year exclusive of
the gain on the sale of the JoC. Total operating revenue rose 4.3%,
to $717.0 million, Operating income declined 5.0%., to $80.5 million
as a result of higher newsprint prices and the impact of the Detroit
strike.
(On July 31, our previously announced two-for-one stock split
will become effective. Financial communications after that date
will reflect the change.)
Newspaper Division
Total operating revenue for the Newspaper Division rose 5.3%,
to $595.6 million. Operating income for the division fell 5.5%, to
$89.5 million.
Business Information Systems Division
BIS Division operating revenue was flat at $121.4 million.
Operating income for the division declined to $1.8 million.
Comment on Operations
Ross Jones, Knight-Ridder's chief financial officer, said, "We
anticipated that the quarter would be adversely affected by both the
price of newsprint, which was up 28.9% year over year, and by the
strike in Detroit - where the operating loss for the quarter was
less than half that of the first quarter. Detroit is doing better
than expected, and we are on track to be breaking even on an
operating basis by year's end. As in the first quarter, we faced
modest dilution from the Contra Costa acquisition.
"Total advertising revenue, on a pro forma basis for the Contra
Costa acquisition, but excluding Detroit, was up 4.0% for the
quarter. In Philadelphia and Charlotte, the increases were 6.7% and
11.1%, respectively, and both markets achieved their best
performances of the year in June, up 9.9% and 11.9%, respectively.
Miami's performance for the three months - ad revenue up 1.3% - was
a marked improvement over the first quarter. Detroit was steady
during the period with total ad revenue at approximately 76% of pre-
strike levels. St. Paul ad revenue was up 8.5% and Akron was up
6.8%.
"San Jose's total ad revenue was up 6.1% for the quarter, even
though tough comparisons caught up with us in May and June.
Recruitment advertising is no longer showing the dramatic year-over-
year increases that it did during the first four months, reflecting
pressure on the Silicon Valley economy. In both San Jose and Contra
Costa, retail deteriorated during the period - a combination of the
slowing business environment and the Emporium going out of business.
"Retail advertising for the quarter, pro forma without Detroit,
was down slightly, reflecting softness in the major markets except
Charlotte. A variety of out-of-business or bankruptcy situations
account for much of the retail decline; particulars are market-
specific. On the same basis, general and classified were both strong
- each up just under 10% - with good results fairly evenly spread
outside of northern California.
"Operating costs in the Newspaper Division were up 7.5% for the
quarter. On a pro forma basis, operating costs were up 2.4%. On a
pro forma basis without newsprint, they were down 1.1%. On a pro
forma basis (excluding Detroit), labor and employee benefits were
down 1.5% and other operating costs were down 0.9%.
"Business Information Services revenue reflects a modest decline
in year-over-year results for Knight-Ridder Financial. (We announced
in May the sale of KRF to Global Financial Inc. for $275 million,
and that sale is expected to close this week.) Revenues for Knight-
Ridder Information increased modestly during the quarter.
Technimetrics had an excellent quarter.
"Corporate costs for the quarter were down 17.1% versus the same
period last year, The decline reflects in part an allocation to the
newspapers and BIS companies of some of the reengineering costs
associated with the new Shared Services Center.
"By the quarter's end, we had 48.4 million shares outstanding,
and we continue to repurchase shares under an authorization that
extends to 3.0 million shares. To date, we have purchased more than
1.5 million of that authorization.
"As we look ahead, we are encouraged by the still-improving
newsprint story and by the cycling through of the Detroit strike.
Although the annualization of 1995s newsprint price hikes will still
cause year-over-year increases to be between 10% and 15%, these are
significantly less than originally anticipated. If, as we believe,
current trends continue, we will pay less for newsprint in the
second half of 1996 than we did in the second half of 1995. Detroit
continues to outperform expectations and, with the strike now more
than one year old, comparisons are easier. While the lackluster
retail performance and northern California's stall are concerns,
classified continues to do well and many markets are healthy. We
continue to anticipate a year of strong earnings growth."
Knight-Ridder is an international communications company engaged
in newspaper publishing, business news and information services,
electronic retrieval services, news, graphics and photo services and
newsprint manufacturing. The company publishes 31 daily newspapers
in the United States. Around the world, news, advertising and
information from Knight-Ridder reach more than 100 million people in
more than 150 countries.
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands of dollars, except share data)
Quarter Ended Two Quarters Ended
June 30 June 25 June 30 June 25
1996 1995 1996 1995
OPERATING REVENUE
Newspapers
Advertising
Retail $ 200,651 $ 200,091 $ 382,702 $ 381,876
General 51,101 46,951 97,337 94,322
Classified 197,687 175,390 393,253 342,489
Total 449,439 422,432 873,292 818,687
Circulation 125,837 123,046 252,691 245,638
Other 20,305 20,248 40,354 38,534
Total Newspapers 595,581 565,726 1,166,337 1,102,859
Business Information
Services 121,401 121,729 248,306 259,195
Total Operating
Revenue 716,982 687,455 1,414,643 1,362,054
OPERATING COSTS
Labor and employee
benefits 278,959 274,485 562,274 554,079
Newsprint, ink and
supplements 127,643 107,953 254,163 202,782
Other operating
costs 187,103 183,155 381,440 374,712
Depreciation and
amortization 42,827 37,148 85,704 74,760
Total Operating
Costs 636,532 602,741 1,283,581 1,206,333
OPERATING INCOME 80,450 84,714 131,062 155,721
OTHER INCOME (EXPENSE)
Interest expense (19,175) (12,612) (38,802) (25,013)
Interest expense
capitalized 1,384 366 2,579 611
Interest income 2,094 2,270 4,675 4,403
Equity in earnings of
unconsolidated companies
in joint ventures 8,815 7,393 16,570 8,344
Minority interests in
earnings of consolidated
subsidiaries (2,567) (2,369) (4,150) (3,983)
Other, net 343 82,778 246 84,104
Total (9,106) 77,826 (18,882) 68,466
Income before
income taxes 71,344 162,540 112,180 224,187
Income taxes 28,992 68,420 46,310 94,394
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE 42,352 94,120 65,870 129,793
Cumulative effect of
change in accounting
principle for
contributions --- --- --- (7,320)
Net income $42,352 $94,120 $65,870 $122,473
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Income before cumulative
effect of change in
accounting principle $0.86 $1.88 $1.33 $2.54
Cumulative effect of
change in accounting
principle --- --- --- (0.14)
Net income $0.86 $1.88 $1.33 $2.40
DIVIDENDS DECLARED
PER COMMON SHARE.. $ 0.40 $ 0.37 $ 0.77 $ 0.74
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING (000s).. 49,507 50,061 49,490 50,972
Four Quarters Ended
June 30 June 25
1996 1995
OPERATING REVENUE
Newspapers
Advertising
Retail $ 808,584 $ 805,486
General 185,531 186,257
Classified 733,460 647,834
Total 1,727,575 1,639,577
Circulation 502,368 487,904
Other 83,717 74,300
Total Newspapers 2,313,660 2,201,781
Business Information
Services 490,763 516,821
Total Operating
Revenue 2,804,423 2,718,602
OPERATING COSTS
Labor and employee
benefits 1,136,174 1,107,117
Newsprint, ink and
supplements 498,222 379,372
Other operating
costs 791,846 755,501
Depreciation and
amortization 162,556 149,726
Total Operating
Costs 2,588,798 2,391,716
OPERATING INCOME 215,625 326,886
OTHER INCOME (EXPENSE)
Interest expense (73,361) (47,414)
Interest expense
capitalized 3,857 1,022
Interest income 9,414 7,858
Equity in earnings of
unconsolidated companies
in joint ventures 28,887 15,564
Minority interests in
earnings of consolidated
subsidiaries (8,515) (8,530)
Other, net (118) 81,947
Total (39,836) 50,447
Income before
income taxes 175,789 377,333
Income taxes 72,330 157,133
INCOME BEFORE CUMULATIVE EFFECT
OF CHANGE IN ACCOUNTING
PRINCIPLE 103,459 220,200
Cumulative effect of
change in accounting
principle for
contributions --- (7,320)
Net income $103,459 $212,880
EARNINGS PER COMMON AND
COMMON EQUIVALENT SHARE
Income before cumulative
effect of change in
accounting principle $2.10 $4.21
Cumulative effect of
change in accounting
principle --- (0.14)
Net income $2.10 $4.07
DIVIDENDS DECLARED
PER COMMON SHARE.. $ 1.51 $ 1.48
AVERAGE COMMON AND COMMON
EQUIVALENT SHARES
OUTSTANDING (000s).. 49,357 52,316
.. The Company declared a 2-for-1 stock split on June 21, 1996,
to be distributed on July 31, 1996. Common and common equivalent
shares outstanding and dividends declared per common share do not
reflect the 2- for-1 split of the company's Common Stock for periods
presented.
KNIGHT-RIDDER, INC. AND SUBSIDIARIES
BUSINESS SEGMENT INFORMATION
(In thousands of dollars)
Quarter Ended Two Quarters Ended
June 30 June 25 June 30 June 25
1996 1995 1996 1995
OPERATING REVENUE
Newspapers $595,581 $565,726 $1,166,337 $1,102,859
Business Infor-
mation Services 121,401 121,729 248,306 259,195
$716,982 $687,455 $1,414,643 $1,362,054
OPERATING INCOME
Newspapers $89,497 $94,736 $150,743 $172,465
Business infor-
mation Services 1,803 3,072 2,776 9,756
Corporate (10,850) (13,094) (22,457) (26,500)
$80,450 $84,714 $131,062 $155,721
DEPRECIATION AND
AMORTIZATION
Newspapers $28,291 $23,809 $56,567 $47,474
Business Infor-
mation Services 13,567 12,785 27,231 26,200
Corporate 969 554 1,906 1,086
$42,827 $37,148 $85,704 $74,760
BUSINESS SEGMENT INFORMATION
(In thousands of dollars)
(continued)
Four Quarters Ended
June 30 June 25
1996 1995
OPERATING REVENUE
Newspapers $2,313,660 $2,201,781
Business Information Services 490,763 516,821
$2,804,423 $2,718,602
OPERATING INCOME
Newspapers $ 259,424 $ 353,240
Business Information Services 5,042 20,297
Corporate (48,841) (46,651)
$ 215,625 $ 326,886
DEPRECIATION AND AMORTIZATION
Newspapers $ 105,144 $ 94,713
Business Information Services 53,902 53,137
Corporate 3,510 1,876
$ 162,556 $ 149,726
RYE, N.Y. -- July 23, 1996 -- Melville Corp.
(NYSE:MES) reported today its financial results for the second
quarter ended June 29, 1996.
As a result of the company's restructuring program, the results
of several of Melville's divisions are reported as discontinued
operations. The company's results from continuing operations
represent solely those of CVS, which will emerge as a stand-alone
chain drug company following the spin-off of Melville's footwear
businesses, to be known as Footstar Inc., in the third quarter.
Subsequent to the Footstar spin-off, the company will change its
corporate name to CVS Corp. and its stock symbol to "CVS." The
Company is actively working on alternatives to separate Linens 'n
Things and Bob's from CVS Corp.
Stanley Goldstein, chairman and chief executive officer of
Melville, commented, "Melville's operating results are very
encouraging. We are particularly pleased with the outstanding
performances of both CVS and Footaction during the quarter. These
businesses will be the growth vehicles of the two public companies
resulting from our restructuring program. We are very excited about
the prospects for CVS and Footstar and we are continuing to move
ahead as quickly as possible to complete the remaining steps in the
restructuring process."
Second Quarter
Net sales from continuing operations, representing CVS, for the
second quarter of 1996 increased 13.4% to $1.36 billion from sales
of $1.20 billion for the comparable period last year. CVS' same
store sales for the quarter rose 9.8%. Net sales from the Footstar
businesses for the second quarter of 1996 were $473.1 million, a
decrease of 1.0% from $478.0 million in the 1995 second quarter.
Same store sales for the footwear businesses decreased 2.2% for the
quarter. Total net sales for Melville, including continuing and
discontinued operations, were $2.10 billion, compared to $1.89
billion in the second quarter of 1995, after adjusting 1995's sales
to exclude the businesses that were sold. Melville's total same
store sales, including continuing and discontinued operations, rose
4.7% for the second quarter.
Operating profit from continuing operations for the second
quarter was $84.2 million, an increase of 22.2% from $69.0 million
in the comparable period last year. Operating profit for the
footwear businesses, before the restructuring charge related to
exiting Thom McAn, increased 7.8% to $48.2 million from $44.7
million in the 1995 second quarter.
Consolidated net earning from continuing operations for the
quarter reached $45.0 million, or $.40 per share, up 35.1% from
$33.3 million, or $.28 per share, excluding a $.43 per share gain
from the sale in the second quarter of 1.15 million shares of TJX
Companies Inc. Series E preferred stock received as proceeds from
the sale of Marshalls. An additional 350,000 shares of TJX
Companies Inc. Series E preferred stock was sold on July 2, 1996.
Melville continues to hold 250,000 shares of TJX Series D preferred
stock, which it expects to monetize in the future.
Melville announced several steps during the second quarter to
accelerate the emergence of CVS as a stand-alone chain drug company
and to further strengthen Footstar Inc. The actions included (1)
classifying Linens 'n Things and Bob's results as discontinued
operations, demonstrating the company's formal plan to separate
these divisions from CVS; and (2) a formal plan to convert 80 to 100
of Thom McAn's stores to the highly successful Footaction format and
to exit the Thom McAn business by mid-1997. Primarily in connection
with these actions, the company recorded a one-time, after-tax
restructuring charge of approximately $148 million, or $1.40 per
share, in the second quarter, which is included in discontinued
operations. Melville's total consolidated net loss, including
continuing and discontinued operations as well as the TJX gain and
the restructuring charge, was $62.5 million, or $.62 per share,
compared to net earnings of $30.7 million, or $.25 per share, for
the second quarter of 1995.
Six Months
For the first six months of 1996, net sales from continuing
operations, representing CVS, rose 12.5% to $2.62 billion from sales
of $2.33 billion for the first half of last year. CVS's same store
sales for the six-month period increased 10.0%. Net sales from the
Footstar businesses for the 1996 six-month period were $848.9
million, an increase of .4% from $845.3 million in the comparable
period last year. Same store sales for the footwear businesses
increased 1.6% for the first half of 1996, fueled by the strong
performance of Footaction. Total net sales for Melville, including
continuing and discontinued operations, were $3.94 billion, compared
to $3.53 billion for the first half of 1995, after adjusting 1995's
sales to exclude the businesses that were sold. Melville's total
same store sales, including continuing and discontinued operations,
increased 6.5% in the first half of 1996.
Operating profit from continuing operations was $155.6 million,
an increase of 25.0% from $124.5 million for the comparable period
in 1995. Operating profit for the footwear businesses, before the
restructuring charge related to exiting Thom McAn, reached $47.5
million, up 15.6% from $41.1 million in the 1995 first half.
Consolidated net earnings from continuing operations for the
first half of 1996 increased 39.8% to $85.7 million, or $.75 per
share, from $61.3 million, or $.50 per share, excluding the $.43 per
share gain from the sale in the second quarter of 1.15 million
shares of TJX Companies Inc. preferred stock. Melville's total
consolidated net loss, including continuing and discontinued
operations as well as the TJX gain and restructuring charge, was
$48.3 million, or $.52 per share, compared to a net loss of $41.6
million, or $.48 per share, for the six-month period in 1995.
As of June 29, 1996, Melville's operating results from
continuing operations included 1,375 CVS stores. The company is
also operating, as part of discontinued operations, 3,267 stores and
lease departments associated with the footwear businesses and 35
Bob's and 154 Linens 'n Things locations.
Since October 1995, Melville has been implementing a strategic
restructuring program, which was the product of a strategic review
initiated in 1994. The main components of the restructuring include
the creation of two publicly-traded, independent and industry-
focused companies -- CVS Corp. in the chain drug industry and
Footstar Inc. in the footwear industry -- a significant reduction in
costs, the sale of Melville's mature or unrelated businesses, and
the closing of approximately 330 underperforming stores.
Melville Corp. and Subsidiary Companies
Consolidated Statements of Earnings (unaudited)
($ and Shares in 000's, except per share amounts)
Second Quarter Ended
June 29, % of July 1, % of
1996 Sales 1995 Sales
Net sales $1,363,507 100.0 $1,202,865
100.0
Cost of goods sold, buying
and warehousing costs 974,991 71.5 860,127
71.5
Gross margin 388,516 28.5 342,738
28.6
Store operating, selling, general
and administrative expenses 284,467 20.9 255,909
21.3
Depreciation and amortization 19,806 1.5 17,866
1.5
Operating profit from
continuing operations 84,243 6.2 68,963
5.7
Gain on sale of securities 76,625 5.6
- 0.0
Dividend income 2,709 0.2
- 0.0
Interest expense, net (11,981) (0.9) (12,478)
(1.0)
Other income, net 67,353 4.9 (12,478)
(1.0)
Earnings from continuing
operations before income taxes
and cumulative effect of change
in accounting principle 151,596 11.1 56,485
4.7
Income tax provision 60,664 4.4 23,158
1.9
Earnings from continuing
operations before cumulative
effect of change in accounting
principle 90,932 0.0 33,327
2.8
Loss from discontinued
operations, net (153,466) (11.3) (2,662)
(0.2)
Earnings before
cumulative effect of change in
accounting principle (62,534) (4.6) 30,665
2.5
Cumulative effect of change
in accounting principle, net
- - - -
Net earnings ($62,534) (4.6) $30,665
2.5
Weighted average number of common
shares outstanding 105,697 104,938
Earnings per share from
continuing operations before cumulative
effect of change in accounting
principle (3) $ 0.83 $ 0.28
Loss per share from
discontinued operations, net ($1.45) ($0.03)
Earnings per share before
cumulative effect of change in
accounting principle ($0.62) $0.25
Loss per share from
cumulative effect of change in
accounting principle, net - -
Net earnings (loss)
per common share ($0.62) $0.25
Dividends per common share $ 0.11 $ 0.38
Melville Corp. and Subsidiary Companies
Consolidated Statements of Earnings (unaudited)
($ and Shares in 000's, except per share amounts)
Six Months Ended
June 28, % of July 1, % of
1996 Sales 1995 Sales
Net sales $2,621,941 100.0 $2,331,030
100.0
Cost of goods sold, buying
and warehousing costs 1,871,442 71.4 1,665,930
71.5
Gross margin 750,499 28.6 665,103
28.5
Store operating, selling, general
and administrative expenses 555,327 21.2 504,414
21.6
Depreciation and amortization 39,575 1.5 36,182
1.6
Operating profit from
continuing operations 155,597 5.9 124,507
5.3
Gain on sale of securities 76,625 2.9
- 0.0
Dividend income 5,443 0.2
- 0.0
Interest expense, net (17,505) (0.7) (20,645)
(0.9)
Other income, net 64,563 2.5 (20,645)
(0.9)
Earnings from continuing
operations before income taxes
and cumulative effect of change
in accounting principle 220,160 8.4 103,862
4.5
Income tax provision 88,727 3.4 42,582
1.8
Earnings from continuing
operations before cumulative
effect of change in accounting
principle 131,433 0.0 61,280
2.6
Loss from discontinued
operations, net (179,765) (6.9) (80,607)
(3.5)
Earnings before
cumulative effect of change in
accounting principle (48,332) (1.8) (19,327)
(0.8)
Cumulative effect of change
in accounting principle, net - - 22,315
1.0
Net earnings ($48,332) (1.8) ($41,642)
(1.8)
Weighted average number of common
shares outstanding 105,352 105,109
Earnings per share from
continuing operations before cumulative
effect of change in accounting
principle(3) $ 1.18 $ 0.50
Loss per share from
discontinued operations, net ($1.70) ($0.77)
Earnings per share before
cumulative effect of change in
accounting principle ($0.52) $0.27
Loss per share from
cumulative effect of change in
accounting principle, net - ($0.21)
Net earnings (loss)
per common share ($0.52) ($0.48)
Dividends per common share $ 0.22 $ 0.76
Number of stores open at
end of period (CVS only) 1,375 1,339
Notes:
(1) Percentages may not foot due to rounding.
(2) In accordance with APB opinion No. 30, the Footwear, Apparel
and Toys and Home Furnishings segments have been classified as
discontinued operations.
(3) Earnings per share from continuing operations for the second
quarter and six month period ended June 29, 1996 includes a $.43 per
share gain from the sale of 1.15 million shares of TJX Companies
Inc. preferred stock.
(4) Certain reclassifications have been made to the financial
periods of prior periods to conform to the current period
presentation.
Melville Corp. and Subsidiary Companies
Consolidated Balance Sheets (unaudited)
($ in 000's)
June 29, July 1,
1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 82,255 $ 82,664
Investments 101,805 --
Accounts receivable, net 189,879 219,574
Inventories 1,434,344 2,284,788
Prepaid expenses 285,616 170,216
Total current assets 2,093,899 2,757,242
Property and equipment, net 891,879 1,495,155
Other non-current assets 418,119 558,539
TOTAL ASSETS $3,403,897 $4,810,936
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued
expenses $1,276,376 $1,117,259
Notes payable 91,900 805,000
Other current liabilities 14,774 13,657
Total current liabilities 1,383,050 1,935,916
Long-term debt(a) 321,435 331,229
Other non-current liabilities 188,092 298,863
Redeemable preferred stock 1,330 1,330
Shareholders' equity 1,509,990 2,243,598
TOTAL LIABILITIES AND EQUITY $3,403,897 $4,810,936
(a) Includes $309,400 and $323,000 related to the company's Employee
Stock Ownership Plan in 1996 and 1995, respectively.
Certain reclassifications have been made to the financial statements
of prior periods to conform to current period presentation.
CONTACT: Melville Corp., Rye
Nancy Christal, 914/925-4385
or
Kekst & Co.
Jim Fingeroth or Wendi Kopsick, 212/593-2655
IRVINE, Calif., July 23, 1996 - Pinnacle Micro, Inc.
(Nasdaq: PNCL) today announced its second quarter results,
successful closing of an offshore private placement of $10 million
in convertible notes and reports on its turnaround progress.
Second Quarter Results
Net sales for the second quarter ended June 29, 1996 declined 29
percent to $12,333,000 from $17,434,000 in the first quarter of 1996
and are down 40 percent from $20,600,000 in the second quarter of
1995. Net loss was $3,913,000 for the second quarter of 1996, or
$.49 per share, as compared to net loss for the first quarter of
1996 of $3,915,000 or $.50 per share, and net income of $162,000, or
$.02 per share, in the second quarter of 1995. Gross margin was
17.5 percent for the second quarter of 1996 compared to 17.9 percent
in the first quarter of 1996 and 26.2 percent for the second quarter
of 1995.
"I am pleased with our progress so far," said Larry Goelman,
President and CEO, "but there are critical milestones still ahead of
us. The new management team is first rate. I am very impressed by
the engineers at the R&D Center. Now it is time for us to execute,
beginning with the planned reorganization into business units,
restructuring of the sales organization and implementing our
strategy. I want to thank all of Pinnacle's vendors and strategic
partners for their patience, support and cooperation with Pinnacle
at this point in its history."
Revenue was lower in the second quarter of 1996 compared to both
the first quarter 1996 and the second quarter 1995 primarily due to
a decrease in volume as well as price erosion in shipments of
existing Recordable CD products. The Company expects these
reductions in sales of existing products will continue to impact
revenues and margins in the market for 2X/2X and 2X/4X speed drives.
Management plans to introduce a next generation Recordable CD
product in the second half of 1996.
The Sierra and Tahoe lines have reached the end of their product
lives, resulting in decreased quantities and related declines in
revenue and margin contribution. Vertex 2.6 GB began shipping at
the end of the second quarter in quantities which partially offset
the quarter to quarter reduction in sales of the Sierra product.
Gross margins for the second quarter 1996 when compared to both
the first quarter 1996 and second quarter 1995 declined as a result
of lower sales volume and prices particularly in existing Recordable
CD products. Gross margins in the second quarter 1996 were
approximately the same as the gross margin reported in the first
quarter 1996, primarily due to the Company's ability to negotiate
cost reductions from its suppliers.
The loss reported in the second quarter 1996 was approximately
the same as the first quarter 1996 loss, primarily due to product
cost reductions received from suppliers and reduced selling, general
and administrative expenses in the second quarter, which management
believes is partially a result of their new initiatives.
Offshore Private Placement
In July 1996 the Company closed the offshore private placement
of an aggregate of $10 million of 8 percent convertible debentures,
from which sale the Company received approximately $9.4 million
after fees and expenses. The notes are convertible into common
stock of the Company in one-third increments 60, 90 and 120 days
after closing at varying discounts from fair market value at the
time of conversion. The Company used a portion of the proceeds to
pay off its outstanding indebtedness to its lender, and will use the
balance for working capital.
Risk Factors Associated With Outlook
The Company's prospects for the rest of 1996 will depend
significantly on Vertex sales and Apex remaining on schedule. The
Company anticipates that price erosion and market competition will
continue to reduce the contributions to earnings from its existing
Recordable CD sales. The Company's working capital requirements
will remain high and there is no assurance that the Company will be
able to raise additional financing from a second anticipated
offshore private placement.
All the technical challenges of the Apex product have not yet
been solved. The Company is in the process of negotiating with an
asset- based lender for a new credit facility, which if not
finalized could constrain growth. A breakdown of an understanding
with a strategic vendor partner could materially adversely affect
the Company. The nonrecurring costs of defending the class action
lawsuit vigorously may be significant during the remainder of the
year.
Pinnacle Micro, Inc. is a recognized leader in Recordable CD
technology and optical storage systems for general data storage and
data intensive applications such as network storage, imaging,
desktop publishing and prepress, as well as emerging applications
such as digital audio/video editing and commercial multimedia.
Founded in 1987, Pinnacle Micro, Inc. is headquartered in Irvine, CA
with offices in North America, Europe and the Pacific Rim.
PINNACLE MICRO, INC.
CONDENSED BALANCE SHEETS
(Unaudited)
June 29, December 30,
1996 1995
Assets
Current assets:
Cash and cash equivalents $2,720,000 $3,606,000
Accounts receivable, net 8,741,000 11,354,000
Income taxes receivable 921,000 999,000
Inventories 14,337,000 11,413,000
Prepaid expenses and other current
assets 1,329,000 961,000
Deferred income taxes 1,058,000 1,058,000
Total current assets 29,106,000 29,391,000
Furniture and equipment, net 2,113,000 2,098,000
Deferred income taxes 213,000 213,000
Other assets 322,000 303,000
Total assets $31,754,000 $32,005,000
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $13,929,000 $11,644,000
Accrued expenses 1,571,000 1,244,000
Payroll related liabilities 1,106,000 956,000
Note payable to bank and current
portion of long-term debt 5,000,000 6,000
Total current liabilities 21,606,000 13,850,000
Long-term debt, less current portion -- 14,000
Accrued litigation settlement 980,000 1,400,000
Commitments and contingencies
Stockholders' equity:
Common stock 8,000 8,000
Additional paid-in capital 16,578,000 16,158,000
Retained earnings (7,053,000) 775,000
Foreign currency translation adjustment(365,000) (200,000)
Total stockholders' equity 9,168,000 16,741,000
Total liabilities and stockholders'
equity $31,754,000 $32,005,000
PINNACLE MICRO, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except per share data)
13 Weeks 13 Weeks 26 Weeks 26 Weeks
Ended Ended Ended Ended
June 29, July 1, June 29, July 1,
1996 1995 1996 1995
Net sales $12,333 $20,600 $29,767 $40,785
Cost of sales 10,180 15,201 24,486 29,702
Gross profit 2,153 5,399 5,281 11,083
Operating expenses:
Selling, general and
administrative 4,429 4,106 9,681 8,798
Research and development 1,436 891 3,028 1,680
Nonrecurring charges 87 183 251 408
Total operating
expenses 5,952 5,180 12,960 10,886
Operating income (loss) (3,799) 219 (7,679) 197
Interest income (expense) (114) 45 (146) 86
Income (loss) before
income taxes (3,913) 264 (7,825) 283
Income tax expense -- 102 3 109
Net income (loss) $(3,913) $162 $(7,828) $174
Net income (loss) per
share $(0.49) $0.02 $(0.99) $0.02
Weighted average common
shares outstanding 7,917 7,929 7,892 7,928
SALT LAKE CITY, July 23, 1996 - Smith's Food & Drug
Centers, Inc. (NYSE: SFD) today announced results for the second
quarter and first half ended June 29, 1996.
On May 23, 1996, Smith's Food & Drug Centers, Inc. ("Smith's" or
the "Company") completed its acquisition by merger of Smitty's
Supermarkets, Inc. ("Smitty's"), a 28-store Arizona supermarket
chain and also completed a recapitalization of the Company which
included the redemption of approximately one-half of the Company's
Common Stock. Accordingly, the results for 1996 reflect only five
weeks of operations from the Smitty's stores. As reported earlier,
Smith's closed its California region comprised of 34 stores and a
large distribution center during the first quarter of 1996. The
closure of the California region and merger with Smitty's causes the
comparisons of quarter and first half results to the prior year's
comparable periods not to be meaningful.
SECOND QUARTER RESULTS
Sales for the second quarter 1996 were $690.0 million, a
decrease of 10.4% from the second quarter last year. The sales
decrease was primarily attributable to changes in the number of
operating stores. Since the end of the second quarter of 1995, the
Company closed its 34 California stores, opened an additional 10
stores in other operating areas, and acquired 28 stores in the
Smitty's merger. Excluding California, net sales increased $93.2
million, or 15.6%, from $596.8 million in 1995 to $690.0 million in
1996. Excluding California, same store sales for the 13 week period
decreased .9% compared to a decline of 2.7% in the first quarter of
1996.
The Company had a net loss of $174.7 million for the quarter
compared to net income of $9.0 million in the second quarter of
1995. The loss was primarily attributable to one-time expenses
resulting from the merger and recapitalization and one-time charges
related to the California disposition totaling $183.3 million after
tax. Excluding these expenses and charges, net income for the
quarter totaled approximately $8.6 million or $.39 per common share.
The average number of common shares outstanding during the quarter
totaled 21.3 million, compared to 25.1 million last year. (There
are currently 15.8 million common shares outstanding reflecting the
recapitalization of the Company and the issuance of shares to the
former Smitty's shareholders in connection with the merger with
Smitty's.) The pre-tax LIFO charge for the second quarter was $1.8
million compared to $1.0 million last year.
Excluding the expenses and charges related to the merger,
recapitalization and California disposition, earnings before
interest, taxes, depreciation, amortization and LIFO (EBITDA) for
the quarter increased 13.1% to $61.4 million, or 8.9% of sales,
compared to EBITDA of $54.3 million, or 9.1% of sales, last year.
The increase in EBITDA resulted primarily from the 10 new stores
which Smith's opened outside California since the end of the second
quarter of 1995.
FIRST HALF RESULTS
Sales for the first half (26 weeks) ended June 29, 1996 were
$1.38 billion, a decrease of 8.8%. Excluding California, net sales
increased $129.0 million, or 10.9% during the first six months.
Excluding California, same stores sales for the first half decreased
1.8%.
The net loss for the first half totaled $175.8 million or $7.58
per common share, compared to net income of $18.5 million or $.73
per common share for the comparable period last year. The decrease
was attributable to the expenses and charges discussed above.
Excluding these expenses and charges, net income for the first half
totaled approximately $22.3 million or $.94 per common share. The
average number of common shares outstanding during the first half
were 23.2 million. The pre-tax LIFO charge for the first half
totaled $3.5 million compared to $2.0 million for the comparable
period last year.
Excluding the expenses and charges related to the merger,
recapitalization, and California disposition, EBITDA for the first
half increased 9.8% to $120.5 million, or 9.2% of sales, compared to
EBITDA of $109.7 million or 9.3% of sales, in the comparable period
last year.
EXPANSION
During the first half of the year, the Company opened one new
store in Cedar City, Utah, acquired the 28 Smitty's stores in
Arizona and closed 34 stores in California. Two of the Smitty's
stores were subsequently leased to other retailers. As of June 29,
1996, the Company operated 147 stores, 135 of which were large food
and drug combination stores, with total square footage of
approximately 10.0 million. The Company plans to open three
additional new stores during the remainder of 1996, with total
square footage of 180,000.
MERGER AND RECAPITALIZATION
On May 23, 1996, Smith's repurchased approximately one-half of
its 25.1 million outstanding shares of Common Stock at $36.00 per
share and issued 3.2 million shares of its Class B Common Stock in
connection with the Smitty's merger. To finance the transactions,
Smith's (i) entered into a new senior secured bank credit facility
under which Smith's borrowed $805 million of term loans and (ii)
issued and sold $575 million of 11 1/4% Senior Subordinated Notes
due 2007 in a public offering.
Al Rowland, Smith's President and Chief Operating Officer, said,
"I am satisfied with the transition we have made with the merger of
the Smith's-Smitty's stores in Arizona. We are looking forward to
realizing the benefits that increased market share and operating
synergies will provide us in the future."
The Company operates stores in seven Intermountain and
Southwestern states with principal markets in Salt Lake City,
Phoenix, Las Vegas and Albuquerque.
SMITH'S FOOD & DRUG CENTERS, INC.
Consolidated Statements of Income
(Unaudited)
(Dollar amounts in thousands, except per share data)
Thirteen Twenty-Six
Weeks Ended Weeks Ended
Jun 29, Jul 1, Jun 29, Jul 1,
1996 1995 1996 1995
Net sales $690,023 $770,405 $1,383,188 $1,517,078
Cost of goods sold 533,312 597,882 1,079,918 1,176,233
156,711 172,523 303,270 340,845
Expenses:
Operating, selling
and administrative 130,350 116,698 241,703 229,468
Depreciation and
amortization 21,432 25,713 44,071 50,409
Interest 22,655 15,172 37,092 30,141
Amortization of deferred
financing costs 772 108 880 216
Restructuring Charges 201,622 201,622
376,831 157,691 525,368 310,234
INCOME (LOSS) BEFORE
INCOME TAXES AND
EXTRAORDINARY CHARGE (220,120) 14,832 (222,098) 30,611
Income taxes (benefit) (87,245) 5,800 (88,045) 12,100
INCOME (LOSS) BEFORE
EXTRAORDINARY CHARGE (132,875) 9,032 (134,053) 18,511
Extraordinary charge on
extinguishment of debt,
net of tax benefit 41,782 41,782
NET INCOME (LOSS) $(174,657) $9,032 $(175,835) $18,511
Income (loss) per share of Common Stock:
Income (loss) before
extraordinary charge $(6.24) $0.36 $(5.78) $0.73
Extraordinary charge 1.96 1.80
Net income (loss) $(8.20) $0.36 $(7.58) $0.73
Average number of common
shares outstanding
(In thousands) 21,297 25,139 23,184 25,314
SMITH'S FOOD & DRUG CENTERS, INC.
Consolidated Balance Sheets
(Unaudited)
(Dollar amounts in thousands)
June 29, 1996 July 1, 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 45,379 $ 13,447
Rebates and accounts receivable 27,419 23,119
Refundable income taxes 40,878
Inventories 328,674 366,200
Prepaid expenses and deposits 19,273 34,785
Deferred tax asset 110,621 300
Assets held for sale 111,402
TOTAL CURRENT ASSETS 683,646 437,851
PROPERTY AND EQUIPMENT
Land 193,086 309,261
Buildings 578,063 631,350
Leasehold improvements 52,507 57,887
Property under capitalized leases 32,120
Fixtures and equipment 508,881 598,943
1,364,657 1,597,441
Less allowances for
depreciation and amortization 394,346 394,936
970,311 1,202,505
GOODWILL, less accumulated
amortization of $312,571 112,752
OTHER ASSETS 87,604 17,024
$1,854,313 $1,657,380
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable $ 220,601 $ 207,734
Accrued sales and other taxes 32,936 35,217
Accrued payroll and related benefits 67,328 56,778
Other accrued expenses 80,715 41,660
Current maturities of long-term debt 26,739 20,000
Current maturities of obligations
under Capital Leases 1,194
Current maturities of Redeemable
Preferred Stock 634
Accrued restructuring costs 65,826
TOTAL CURRENT LIABILITIES 495,339 362,023
LONG-TERM DEBT, less current maturities 1,374,206 709,619
OBLIGATIONS UNDER CAPITAL LEASES,
less current portion 25,466
ACCRUED RESTRUCTURING COSTS, less
current portion 20,900
DEFERRED INCOME TAXES 44,384 94,000
OTHER LONG-TERM LIABILITIES 30,513 5,419
REDEEMABLE PREFERRED STOCK,
less current maturities 3,319 4,410
COMMON STOCKHOLDERS' EQUITY
Convertible Class A Common Stock, par
value $.01 per share: Authorized
20,000,000 shares; issued and
outstanding, 5,195,261 shares in 1996
and 11,925,019 shares in 1995 52 119
Class B Common Stock, par value
$.01 per share: Authorized 100,000,000
shares; issued 10,606,969 shares in
1996 and 18,036,992 shares in 1995 106 180
Additional paid-in capital 193,667 285,609
Retained earnings (deficit) (333,639) 304,555
(139,814) 590,463
Less Treasury Shares at cost
(4,968,454 shares in 1995) 108,554
(139,814) 481,909
$1,854,313 $1,657,380
SMITH'S FOOD & DRUG CENTERS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
(In thousands)
Twenty-Six Twenty-Six
Weeks Ended Weeks Ended
June 29, 1996 July 1, 1995
OPERATING ACTIVITIES:
Net income (loss) $ (175,835) $ 18,511
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation and amortization 44,071 50,409
Deferred income taxes (benefit) (74,189) 5,600
Restructuring charges 201,622
Other 303 393
(4,028) 74,913
Changes in operating assets and
liabilities:
Rebates and accounts receivable 5,171 2,477
Refundable income taxes (40,878)
Inventories 112,132 23,364
Prepaid expenses and deposits 11,808 (18,927)
Trade accounts payable (30,633) (28,109)
Accrued sales and other taxes (12,151) 3,076
Accrued payroll and related
benefits (8,231) (1,949)
Accrued other expenses (18,470) 4,066
Accrued restructuring costs (48,636)
CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (33,916) 58,911
INVESTING ACTIVITIES:
Additions to property and equipment (64,996) (65,697)
Proceeds from sale of property
and equipment 96,846 2,648
Other (62,159) (28)
CASH USED IN INVESTING ACTIVITIES (30,309) (63,077)
FINANCING ACTIVITIES:
Additions to long-term debt 1,380,000 25,000
Payments on long-term debt (830,536) (8,855)
Redemptions of Preferred Stock (1,000) (383)
Purchases of Treasury Stock (452,405) (7,845)
Proceeds from sale of Treasury Stock 1,227 2,920
Payment of dividends (3,761) (7,412)
CASH PROVIDED BY FINANCING ACTIVITIES 93,525 3,425
NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 29,300 (741)
Cash and cash equivalents at
beginning of year 16,079 14,188
CASH AND CASH EQUIVALENTS AT END OF PERIOD $45,379 $13,447
SUPPLEMENTAL SCHEDULE OF BUSINESS ACQUISITION
Fair value of assets acquired $ 352,745
Value of stock issued (72,173)
Liabilities assumed $ 280,572
NEW YORK -- July 23, 1996 -- Barney's Inc. today
issued the following statement in response to the announcement by
Saks Holding, Inc. and Isetan Company Limited that they have agreed
to investigate the feasibility of developing a joint plan of
reorganization for Barneys.
We are outraged that Isetan Company Limited has entered into an
agreement with Saks that interferes with Barneys' negotiations with
Saks and other prospective investors during the company's exclusive
period. Since the commencement of the Chapter 11 cases, Barneys has
had the exclusive right to file a plan of reorganization, and it
expects to retain that right for the foreseeable future.
Barneys offered Saks the opportunity to sign a confidentiality
agreement similar to that signed by other prospective investors, but
Saks refused to do so.
Barneys is concerned that Isetan may have violated its
confidentiality agreement with Barneys and its fiduciary duty as a
member of the Creditors' Committee.
Barneys reiterated that while it is negotiating with several
interested investors, the company is not for sale.
Barney's Inc. and certain of its subsidiaries voluntarily filed
a petition of reorganization under Chapter 11 on January 10, 1996.
The company employees approximately 2000 employees in 14 stores in
New York City and Manhasset, New York; Beverly Hills and Costa Mesa,
California; Chicago, Illinois; Dallas and Houston, Texas; Troy,
Michigan; Short Hills, New Jersey; Chestnut Hills, Massachusetts;
Westport, Connecticut; Seattle, Washington; seven outlet stores,
corporate offices in New York and a distribution center in
Lyndhurst, New Jersey.
CONTACT: Sitrick & Co.
Sandra Sternberg, 310/788-2850
HUNTSVILLE, Ala. -- July 23, 1996 -- Intergraph
Corporation (NASDAQ:INGR) today reported operating results for the
second quarter ended June 30, 1996.
The Company had a net loss for the quarter of $15.2 million, or
$.32 per share. This compares with a net loss in the second quarter
of 1995 of $22.0 million, or $.48 per share. Revenue for the
quarter totaled $268.2 million, compared with $260.2 million in the
second quarter of 1995. Orders for new systems totaled $185.4
million, compared with $175.5 million in the second quarter of 1995
and $144.3 million in the first quarter of 1996.
Intergraph also announced that the Company has engaged The
Robinson-Humphrey Company, an investment banking firm, to value and
sell its 50% ownership interest in Bentley Systems, Inc.
Summary Financial Information
Quarter Ended June 30 (Unaudited)
1996 19975
Revenue $268,166,000 $260,167,000
Loss before restructuring charge
and non-operating income (expense) (14,749,000) (21,616,000)
Restructuring charge -- (7,470,000)
Non-operating income (expense) (430,000) 7,128,000(a)
Income taxes -- --
Net loss (15,179,000) (21,958,000)
Net loss per share ($.32) ($.48)
Weighted average shares outstanding 46,922,000 45,929,000
(a) Includes a $5.0 million gain ($.11 per share) on the sale
of an operating unit of the Company.
Six Months Ended June 30 (Unaudited)
1996 1995
Revenue $524,872,000 $517,496,000
Loss before restructuring charge
and non-operating income (expense) (31,486,000) (44,212,000)
Restructuring charge -- (7,470,000)
Non-operating income (expense) 9,916,000(a) 7,252,000(b)
Income taxes -- --
Net loss (21,570,000) (44,430,000)
Net loss per share ($.46) ($.97)
Weighted average shares outstanding 46,947,000 45,766,000
(a) Includes a gain of $9,373,000 ($.20 per share) from the sale
of an investment.
(b) Includes a $5.0 million gain ($.11 per share) on the sale of
an operating unit of the Company.
Intergraph Background Information
Intergraph Corporation (Huntsville, Ala.) is the world's largest
company dedicated to supplying interactive computer graphics
systems. Products range from point solutions, meeting individual
and departmental needs, to integrated, enterprise-wide systems.
Noted for delivering interoperable systems and applications,
Intergraph bases its products on Windows, Windows NT, and UNIX
operating systems.
Intergraph Corporation and Subsidiaries
Second Quarter 1996
Consolidated Balance Sheets (Unaudited)
June 30, December 31,
(In thousands) 1996 1995
Assets
Cash and cash equivalents $ 37,081 $ 56,407
Accounts receivable, net 295,735 324,051
Inventories 104,032 111,813
Refundable income taxes 5,715 6,391
Other current assets 37,619 43,190
Total current assets 480,182 541,852
Investments in affiliated companies 15,167 11,636
Other assets 61,539 59,900
Property, plant, and equipment, net 195,317 212,657
Total assets $751,205 $826,045
Liabilities and Shareholders' Equity
Trade accounts payable $ 36,758 $ 54,352
Accrued compensation 52,398 51,301
Other accrued expenses 59,643 72,479
Billings in excess of sales 53,911 63,707
Income taxes payable 4,793 6,720
Short-term debt and current
maturities of long-term debt 27,585 32,153
Total current liabilities 235,088 280,712
Deferred income taxes 3,850 3,881
Long-term debt 33,062 37,388
Total liabilities 272,000 321,981
Total shareholders' equity 480,205 504,064
Total liabilities and shareholders' equity $752,205 $826,045
Consolidated Statements of Operations (unaudited)
Quarter ended June 30,
(in thousands except per share amounts) 1996 1995
Revenues
Systems $174,915 $161,646
Maintenance and services 93,251 98,521
Total revenues 268,166 260,167
Cost of revenues
Systems 112,973 101,326
Maintenance and services 53,823 57,454
Total cost of revenues 166,796 158,780
Gross profit 101,370 101,387
Product development 25,914 29,530
Sales and marketing 67,076 69,490
General and administrative 23,129 23,983
Restructuring charge -- 7,470
Loss from operations (14,749) (29,086)
Interest expense (1,182) (870)
Interest income 395 348
Other income (expense) - net 357 7,650
Loss before income taxes (15,179) (21,958)
Income taxes -- --
Net loss ($15,179) ($21,958)
Net loss per share ($0.32) ($0.48)
Weighted average shares outstanding 46,922 45,929
Systems Orders $185,000 $175,000
Note: Intergraph and the Intergraph logo are registered
trademarks of Intergraph Corporation. Other brands and product
names are trademarks of their respective owners.
CONTACT: Intergraph Corporation, Huntsville
Larry Laster, 205/730-2103 or 205/730-2104
Mary Beth Medley, 205/730-2629
GREENWICH, Conn. -- July 23, 1996 -- PanAmSat
Corporation (NASDAQ: SPOT) announced today that total revenues were
$60.3 million for the three months ended June 30, 1996, an increase
of 145 percent over total revenues of $24.6 million for the same
period in 1995. Total revenues for the first six months of 1996
were $110.7 million, an increase of $66.9 million or 153 percent as
compared to the same six-month period in 1995.
Earnings Before Net Interest Expense, Income Taxes, Depreciation
and Amortization (EBITDA) for the second quarter of 1996 was $43.4
million, an increase of 212 percent as compared to $13.9 million for
the same three-month period in 1995. EBITDA was $79.9 million for
the six months ended June 30, 1996, an increase of $62.2 million or
351 percent over the same period in 1995. EBITDA for the first six
months of 1995 included a charge for a non-recurring reorganization
expense of $8.2 million.
EBITDA was 72 percent of total revenues for the first six months
of 1996, as compared to 41 percent of total revenues for the same
period in 1995.
PanAmSat experienced significant revenue increases during the
second quarter of 1996 for both broadcast and business
communications services. Broadcast services revenue increased by
188 percent to $49.9 million. This increase was due primarily to
revenues for video services on the PAS-3 and PAS-4 satellites.
Business communications services revenue grew by 47 percent to $10.0
million as a result of the commencement of several new data network
and carrier service contracts.
As of June 30, 1996, PanAmSat had signed contracts of
approximately $2.0 billion to provide satellite services on the PAS-
1, PAS-2, PAS-3 and PAS-4 satellites. In addition, the Company
signed a binding letter agreement in February 1996 with certain
partners of the Latin America direct-to-home (DTH) television
partnership of Televisa, News Corp., Globo and Tele-Communications
International for services on 48 transponders on the PAS-5 and PAS-6
satellites at a minimum value of $1.2 billion. For most of the
transponders, this value reflects service fees that are equal to the
company's best estimate of the cost to design, construct, launch,
insure and operate the satellites and for the balance of the
transponders, the value reflects service fees that are based on a
fixed price. On the cost-based transponders, the company also could
receive revenue sharing from the DTH venture.
On April 2, 1996, PanAmSat announced that it had engaged a
financial advisor to explore alternatives that would enable its
major stockholders to meet their strategic objectives. In that
connection, the Company filed a registration statement with the
Securities and Exchange Commission for an underwritten secondary
offering by certain major stockholders of $350 million of common
stock, which may be pursued as one of the alternatives. As part of
this plan to meet its major stockholders' objectives, the Company
has also asked its financial advisor to explore other options,
including joint ventures or alliances with other companies and the
sale or merger of the Company. No decision has been made regarding
any of the alternatives.
PanAmSat is the world's first private-sector company to provide
global satellite services. It offers satellite-based video and data
communications services to more than 300 customers worldwide. The
company currently operates a four-satellite global system: PAS-1 and
PAS-3 over the Atlantic Ocean Region; PAS-2 over the Pacific Ocean
Region; and PAS-4 over the Indian Ocean Region. PanAmSat plans to
launch four additional satellites by early 1998, which will enable
the company to operate at least two satellites in each ocean region
worldwide. The next launch will deploy the PAS-6 Atlantic Ocean
Region satellite in November 1996.
PanAmSat Corporation
For the Six Months Ended June 30, 1996
Financial Statements
Balance Sheets, June 30, 1996 (unaudited) and December 31, 1995.
Statements of Operations for the Six Months Ended June 30, 1996 and
1995 (unaudited).
Statements of Operations for the Three Months ended June 30, 1996
and 1995 (unaudited).
Statements of Cash Flows for the Six Months Ended June 30, 1996 and
1995 (unaudited).
Notes to Financial Statements.
PanAmSat Corporation
BALANCE SHEETS
June 30, December 31,
1996 1995
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 7,400,492 $
13,562,113
Accounts receivable, less
allowance for doubtful accounts
of $100,000 8,102,437
4,881,255
Prepaid expenses and other
current assets 17,815,257
5,594,999
TOTAL CURRENT ASSETS 33,318,186
24,038,367
SATELLITES AND OTHER PROPERTY AND
EQUIPMENT, AT COST 850,048,043
609,927,311
Less: Accumulated Depreciation
and Amortization (107,270,028) (79,177,520)
742,778,015 530,749,791
MARKETABLE SECURITIES 413,489,902
495,078,866
SATELLITE SYSTEMS UNDER
DEVELOPMENT 338,215,308
377,383,581
DEBT ISSUANCE COSTS (Net of
Amortization) 10,434,598
11,414,920
OTHER ASSETS 512,434
154,287
TOTAL ASSETS $1,538,748,443
$1,438,819,812
June 30, December 31,
1996 1995
(Unaudited)
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Current portion of long-term debt $ 3,965,891 $
3,287,250
Accounts payable 1,125,653
834,405
Accrued interest 7,109,375
7,109,375
Accrued liabilities and taxes 3,630,905
7,686,452
Deferred revenue 6,382,678
6,009,836
TOTAL CURRENT LIABILITIES 22,214,502
24,927,318
LONG-TERM DEBT 607,417,526
575,283,661
DEFERRED INCOME TAXES 43,805,000
31,573,000
DEFERRED REVENUE 71,184,356
41,656,778
OTHER LIABILITIES 777,934
867,934
TOTAL LIABILITIES 745,399,318
674,308,691
COMMITMENTS AND CONTINGENCIES
PREFERRED STOCK, 12-3/4% Mandatorily
Exchangeable Senior Redeemable
Preferred Stock, $0.01 par value,
20,000,000 shares authorized, 311,134
shares issued and outstanding, 8,281
shares for accrued dividends 307,668,167
287,648,667
STOCKHOLDERS' EQUITY:
Class A Common Stock, $0.01 par value,
100,000,000 shares authorized,
40,459,432 shares issued and
outstanding 404,594
404,594
Class B Common Stock, $0.01 par value,
100,000,000 shares authorized,
40,459,431 shares issued and
outstanding 404,594
404,594
Common Stock, $0.01 par value,
400,000,000 shares authorized,
19,081,137 shares issued and
outstanding 190,812
190,812
Additional paid-in-capital 477,297,753
477,297,753
Retained earnings (deficit) 7,383,205 (
1,435,299)
Total Stockholders' Equity 485,680,958
476,862,454
TOTAL LIABILITIES AND EQUITY $1,538,748,443
$1,438,819,812
PanAmSat Corporation
STATEMENTS OF OPERATIONS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
June 30, June 30,
1996 1995
REVENUES:
Unaffiliated parties $106,510,394 $41,897,278
Related parties 4,196,772 1,909,658
110,707,166 43,806,936
OPERATING EXPENSES:
Direct expenses-service agreements 3,724,571 2,550,818
Sales and marketing 7,233,472 4,194,711
Engineering and technical services 7,772,119 4,243,250
General and administrative 12,046,740 6,870,072
Depreciation and amortization 29,091,687 13,949,024
Compensation expense related to
corporate reorganization - 8,153,600
59,868,589 39,961,475
INCOME FROM OPERATIONS 50,838,577 3,845,461
INTEREST INCOME (12,269,345) (7,702,396)
INTEREST EXPENSE 14,883,918 9,390,488
INCOME BEFORE INCOME TAXES 48,224,004 2,157,369
INCOME TAXES 19,386,000 3,630,000
NET INCOME (LOSS) 28,838,004 (1,472,631)
PREFERRED STOCK DIVIDEND 20,019,500 7,119,870
NET INCOME (LOSS) TO COMMON SHARES $ 8,818,504 $(8,592,501)
PRO FORMA NET LOSS TO COMMON SHARES:
HISTORICAL NET LOSS $(1,472,631)
PRO FORMA INCOME TAX BENEFIT (1,207,000)
PRO FORMA NET LOSS ( 265,631)
PREFERRED STOCK DIVIDEND 7,119,870
PRO FORMA NET LOSS TO COMMON SHARES $(7,385,501)
ACTUAL AND PRO FORMA EARNINGS (LOSS)
PER COMMON SHARE $ 0.09 $ (0.09)
ACTUAL AND PRO FORMA WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING 100,359,533 85,675,677
PanAmSat Corporation
STATEMENTS OF OPERATIONS
For the Three Months Ended June 30, 1996 and 1995
(Unaudited)
June 30, June 30,
1996 1995
REVENUES:
Unaffiliated parties $57,762,893 $23,691,417
Related parties 2,521,148 902,559
60,284,041 24,593,976
OPERATING EXPENSES:
Direct expenses-service agreement 2,313,109 1,229,545
Sales and marketing 4,208,541 2,274,461
Engineering and technical services 4,300,648 2,215,940
General and administrative 6,109,648 3,480,393
Depreciation and amortization 15,841,368 6,860,670
Compensation expense related to
corporate reorganization - 1,537,250
32,773,314 17,598,259
INCOME FROM OPERATIONS 27,510,727 6,995,717
INTEREST INCOME (5,709,489) (5,117,769)
INTEREST EXPENSE 7,813,399 3,111,588
INCOME BEFORE INCOME TAXES 25,406,817 9,001,898
INCOME TAXES 10,211,000 3,630,000
NET INCOME 15,195,817 5,371,898
PREFERRED STOCK DIVIDEND 10,191,631 7,119,870
NET INCOME (LOSS) TO COMMON SHARES $ 5,004,186 $(1,747,972)
EARNINGS (LOSS) PER COMMON SHARE $ 0.05 $ (0.02)
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING 100,462,257 85,675,677
PanAmSat Corporation
STATEMENTS OF CASH FLOWS
For the Six Months Ended June 30, 1996 and 1995
(Unaudited)
June 30, June 30,
1996 1995
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income (loss) $ 28,838,004 $
(1,472,631)
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 29,091,687
13,949,024
Deferred income taxes 12,232,000
3,630,000
Accretion of interest on senior subordinated
discount notes 19,614,741
17,566,302
(Accretion) collection of interest on marketable
securities (1,363,871)
484,390
Interest expense capitalized (16,727,322)
(18,040,680)
Compensation expense related to corporate
reorganization
- 8,153,600
Changes in assets and liabilities:
Increase in accounts receivable (3,221,182)
(2,903,548)
Increase in prepaid expenses and other current
assets (12,220,258)
(1,640,986)
Decrease in tax distribution receivable
- 2,811,733
Increase (decrease) in accounts payable 291,248
(1,342,197)
Decrease in accrued liabilities and taxes (4,055,547)
(814,394)
Increase in deferred revenue 29,900,420
30,484,129
Decrease in other liabilities (90,000) -
NET CASH PROVIDED BY OPERATING ACTIVITIES 82,289,920
50,864,742
CASH FLOWS FROM INVESTING ACTIVITIES:
Expenditures for property and equipment (8,123,439)
(11,679,167)
Expenditures for satellite systems under
development (161,180,546)
(202,473,697)
Purchase of marketable securities and cash
- (335,987,151)
Proceeds from insurance claim receivable
- 191,084,380
Proceeds from maturity of marketable securities 82,952,835
50,000,000
Increase in other assets (377,004)
(83,214)
NET CASH USED IN INVESTING ACTIVITIES (86,728,154)
(309,138,849)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from preferred stock offering
- 275,000,000
Preferred stock issuance costs
- (11,500,471)
Repayments of long-term debt (1,723,387)
(832,219)
NET CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES (1,723,387) 262,667,310
NET INCREASE(DECREASE)IN CASH AND CASH
EQUIVALENTS (6,161,621) 4,393,203
CASH AND EQUIVALENTS, beginning of period 13,562,113
22,854,209
CASH AND EQUIVALENTS, end of period $ 7,400,492 $
27,247,412
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION:
Cash received for interest $ 10,905,475 $
8,612,568
Cash paid for interest $ 11,996,785 $
9,864,866
Cash paid for income taxes $ 8,459,139 $
-
(1) Principles of Presentation.
The interim unaudited Financial Statements should be read in
conjunction with the audited Financial Statements and the
notes thereto for the year ended December 31, 1995 included in
the Company's Annual Report on Form 10-K, as filed with the
Securities and Exchange Commission (Commission File Number 33-
63284) (the "Annual Form 10-K"). The balance sheet as of June
30, 1996, and the related statements of operations,
stockholders' equity and cash flows for the six months ended
June 30, 1996 and 1995 have been prepared by the Company and
are unaudited. In the opinion of management, all adjustments
which are of a normal recurring nature necessary to present
fairly the financial position, results of operations and cash
flows as of and for the three and six month periods ended June
30, 1996 and 1995 have been made. The accounting policies
followed during the interim periods reported are in conformity
with generally accepted accounting principles and are
consistent with those applied for annual periods and described
in the Company's Annual Form 10-K. The results of operations
for the six month periods ended June 30, 1996 and 1995 are not
necessarily indicative of the operating results for the full
year.
(2) DTH Joint Venture.
During the third quarter of 1994, the Company announced its
intention to provide DTH services in Latin America. In
connection therewith, the Company and Grupo Televisa, S.A.
("Televisa") signed a binding memorandum of understanding in
the first quarter of 1995 (the "Original MOU") to put into
operation a digital DTH satellite television broadcasting
business covering Latin America, the Caribbean and certain
areas of the southern United States.
In November 1995, the Company announced that it would serve as
a satellite service provider for the Latin America DTH service
("Latin America DTH") to be offered by the Globo Organization
("Globo"), Televisa, The News Corporation Limited ("News Corp.")
and Tele-Communications International, Inc. ("TCI").
On February 29, 1996, the Company signed a binding letter
agreement with Globo, Televisa and News Corp. (the "1996
Letter Agreement") to provide service to a series of joint
ventures (the "Latin America JVs") to be formed by them and
TCI on 48 transponders ultimately on PAS-5 and PAS-6, with
temporary service on PAS-3 pending the commencement of service
on PAS-6. This capacity would enable the Latin America JVs to
broadcast to Latin America, the Caribbean, and certain areas
of the southern United States approximately 500 digital
channels and to permit distribution of program packages of
approximately 120 digital channels to specific market areas.
Also under the 1996 Letter Agreement, Globo, Televisa, and
News Corp. have agreed to proportionally guarantee 100 percent
of the fees for transponder services to the Latin America JVs.
These guarantee obligations may be assigned to TCI and, with
the Company's prior written consent, to new equity
participants in the Latin America JVs. The Company will
receive minimum service fees equivalent to the Company's best
estimate of the cost per transponder to the Company of
designing, launching, operating and insuring each satellite
for the transponders used by the Latin America JVs. The
Company also will receive additional revenue based on
subscriber revenues of the Latin America JVs above a certain
threshold, except that the transponders on PAS-3 and PAS-6
that will be used by the Latin America JV operating in Brazil
will be charged on a fixed fee basis.
Under a verbal agreement with Televisa, the Company would be
granted an option for ten years to obtain 10- to 15-percent
interests from Televisa in the Latin America JVs that would
service Latin America, the Caribbean and the southern United
States, but not Brazil. The purchase price would be equal to
the Company's pro rata share of Televisa's aggregate
contributions to the Latin America JVs providing such service,
less all distributions by such Latin America JVs to Televisa,
plus interest. The Company has no interest nor any options to
acquire an interest in the Latin America JVs that will
provide DTH service in Brazil. Upon the execution of binding
agreements incorporating the verbal agreements in principle and
relating to the Spain joint venture with Televisa described
below, the Original MOU will be terminated.
The Company and Televisa have also announced their intention to
provide DTH services through a joint venture in Spain with the
capacity to broadcast approximately 24 to 80 digital channels to
subscribers in Spain using small 24-36 inch (60-90 cm) antennas.
It is anticipated that the Company will ultimately acquire up to
49% (subject to pro rata dilution with Televisa upon admission
of new investors, if any) of this venture for a price equal to
the pro rata aggregate amount of Televisa's contributions to the
venture, less all distributions by the venture to Televisa, plus
interest.
The Company has significant investments in and commitments for
PAS-5 and PAS-6 which it intends to use in the proposed DTH
business. Globo, Televisa and News Corp. plan to enter into one
or more definitive agreements to implement the terms agreed in
and contemplated by the 1996 Letter Agreement. The Company's
acquisition of an option to acquire equity interests in certain
of the Latin America JVs and the joint venture in Spain is
subject to the execution by such parties of such definitive
agreements and to the Company's execution of definitive
agreements with Televisa. No assurance can be given that such
definitive agreements will be consummated, or that the Latin
America JVs or the joint venture in Spain will be successful.
(3) PAS-3 Placed in Service.
The Company's PAS-3 satellite (a replacement for a satellite
lost as a result of a launch failure in December 1994) was
launched on January 12, 1996 and commenced service on February
19, 1996. As a result, approximately $232 million of costs
included in satellite systems under development was
transferred to satellites in service and the Company incurred
$15.0 million of long-term debt in accordance with the
satellite performance incentive terms in its PAS-3 satellite
construction contract during the quarter ended March 31, 1996.
(4) Stockholders' Strategic Objectives.
On April 2, 1996, the Company announced that it had engaged a
financial advisor to explore alternatives that would enable
its major stockholders to meet their strategic objectives. In
that connection, the Company filed a Registration Statement on
Form S-1 on that date with the Securities and Exchange
Commission for an underwritten secondary offering by certain
of its major stockholders of $350 million of common
stock, which may be pursued as one of the alternatives.
As part of this plan to meet its major stockholders' objectives,
the Company has also asked its financial advisor to explore
other options, including joint ventures or alliances with
other companies and the sale or merger of the Company.
No decision has been made regarding any of the alternatives.
CONTACT: PanAmSat
Kevin Burgoyne, 203/622-6664
TANNERSVILLE, N.Y., July 23, 1996 - Madison Sports and
Entertainment Group, Inc. (Nasdaq Bulletin Board: MSET), today
announced that they have signed an Asset Purchase Agreement with
SeaEscape Cruises, Ltd., a
Bahamian Corporation, to acquire the name
and business operations of SeaEscape. The agreement is subject to
approval by the U.S. Bankruptcy Court and contingent upon Madison
making satisfactory arrangements with various concessions, operators
and service providers.
SeaEscape Cruises runs day cruises from Ft. Lauderdale, Florida
to Freeport, Bahamas as well as daily mini-cruises to nowhere.
Passengers experience fine gourmet dining and world class gaming
facilities. The SeaEscape combination of affordability and first
quality amenities resulted in total revenues in 1995 of over $20
Million Dollars (U.S.). SeaEscape has been sailing for 15 years and
has carried more than 6 Million paying passengers.
Joseph D. Radcliffe, Chairman of Madison states: "We welcome
SeaEscape to the Madison family of sports and entertainment
companies. SeaEscape fits nicely with Madison's over-all concept and
we should be able to expand its markets significantly. We plan to
introduce SeaEscape as an upscale venue for corporate, shareholder
and sales meetings to the business community.
Madison Sports and Entertainment Group, Inc. is a conglomerate
that has a number of divisions including: a snowboard division, KTL
Financial - which has a sports apparel line, and Global Trading
which does importing and exporting as well as closeouts.
CONTACT: Joe Radcliffe of Madison Sports and Entertainment Group,
Inc., 518-589-9190
MINNEAPOLIS, MN -- July 23, 1996 -- American Paging, Inc. (AMEX:
APP) today announced second quarter 1996 operating results. As
expected, the Company posted nearly flat customer unit and service
revenue growth as a result of its comprehensive restructuring
initiative launched during the third quarter of 1995.
Second Quarter Summary
"While we anticipated slow sales growth during the first half of
the year as we restructured the organization, the magnitude of the
impact was greater than expected. Now that the primary hurdles of
the back office consolidation are behind us, we intend to re-focus
our efforts in terms of sales and marketing, with a goal of quarter
to quarter increases in units served and service revenue growth."
Second Quarter Results:
Service revenue increased 3 percent on a 9 percent increase in
units in service compared to the same period in 1995. As
anticipated, growth has been nearly flat over the past few quarter
due to the restructuring of the Company's field sales and service
offices. Also contributing to slower service revenue growth are
competitive pricing declines, resulting in an 8 percent decline in
the average monthly service revenue per unit ("ARPU") to $9.73 from
$10.56 for the second quarter of 1995.
Operating cash flow was $927,000 for the quarter. During the
quarter, the Company recorded pretax charges of approximately $1.5
million related to restructuring efforts, primarily for consulting
fees, travel, training and duplicative staffing. Excluding these
restructuring charges, the Company's operating cash flow would have
been $2.4 million, or 10 percent of service revenue.
Service operating expenses increased 20.3 percent to $30.1
million, principally due to increased costs to serve the expanded
customer base, higher selling costs, restructuring charges, and
higher depreciation and amortization expense. As a result, the
Company incurred in operating loss of $6.6 million. In addition,
the Company incurred $1.4 million interest expense, net of $1.4
million capitalized on narrowband Personal Communications Services
("PCS") licenses, contributing to the second quarter net loss of
$8.3 million.
American Paging, Inc., and 82.3 percent owned subsidiary of
Telephone and Data Systems, Inc. (AMEX: TDS), is headquartered in
Minneapolis and provides high-quality, advanced wireless messaging
communications services to over 803,000 subscribers in 21 states and
the District of Columbia, covering a total population base of 75
million.
American Paging's quarterly reports on Form 10-Q and Annual
Report on Form 10-K are available without charge, to our investors,
security analysts and other members of the investment community.
AMERICAN PAGING, INC.
Summary Operating Data
Quarter Ended
(dollars in June 30, Mar. 31, Dec. 31, Sept. 30, June 30,
thousands, 1996 1996 1995 1995 1995
except ARPU)
8 Customer units
in service 803,500 802,100 784,500 776,900 738,600
Net unit growth 1,400 17,600 7,600 38,300 33,500
ARPU $9.73 $10.03 $10.17 $10.63 $10.56
Average monthly
churn rate 2.8% 2.7% 2.6% 2.6% 2.5%
EBITDA(A) $927 $3,083 $4,160 $4,290 $3,714
EBITDA(A) (excluding
restructuring) $2,392 $3,527 $4,542 $6,041 $3,714
EBITDA margin(A) 3.9% 13.0% 17.5% 17.8% 16.2%
EBITDA margin(A)
(excluding
restructuring) 10.2% 14.9% 19.1% 25.1% 16.2%
Capital
Expenditures $9,515 $8,676 $11,513 $7,073 $8,436
Baland Sheet
Highlights:
Assets:
Cash and cash
equivalents $2,297 $1,607 $4,280 $4,160 $1,515
Property, plant
and equipment,
net $63,425 $58,437 $59,452 $56,430 $58,868
Investment in
PCS, net $58,236 $56,887 $55,538 $54,797 $54,721
Liabilities:
Revolving credit
agreement $121,760 $104,914 $94,523 $87,343 $81,893
(A) EBITDA or earnings before interest, taxes, depreciation and
amortization is a commonly used measure of performance in the paging
industry and by financial analysts and other who follow the paging
industry. However, it should not be considered in isolation or used
as an alternative in the determination of the Company's operating
performance and liquidity pursuant to generally accepted accounting
principles.
AMERICAN PAGING, ING
Consolidating Statement of Operations
(Unaudited)
Three Months Ended Increase (Decrease)
6/30/96 6/30/96 Amount Percent
(Dollars in thousands, expect per share amounts)
Service operations
Revenue $ 23,493 $ 22,866 $ 627 2.7 percent
Operating expenses
Cost of service 7,533 5,973 1,560 26.1 percent
Selling and
advertising 6,377 4,309 2,068 48.0 percent
General and
administrative 8,697 9,019 (322) (3.6)percent
Depreciation and
amortization(1) 7,494 5,724 1,770 30.9 percent
(1) includes
amortizations of $957
and $923, respectively 30,101 25,025 5,076 20.3 percent
Service operating
loss (6,608) (2,159) (4,449) N/M
Equipment sales
Revenue 2,803 3,999 (1,196) (29.9)percent
Cost of equipment
sold 2,762 3,850 (1,088) (28.3)percent
Equipment sales
income 41 149 (108) (72.3)percent
Operating loss (6,567) (2,010) (4,557) N/M
Investment and other
income/(expense)
Investment loss in
joint venture (374) (377) 3 (0.9)percent
Interest income 80 39 41 101.2 percent
Other, net -- 30 (30) 100.0 percent
Total (294) (308) 14 4.3 percent
Loss before interest and
income taxes (6,861) (2,318) (4,543) 196.0 percent
Interest expense -
affiliates 1,441 1,534 (93) (6.1)percent
Loss before income
taxes (8,302) (3,852) (4,450) 115.6 percent
Income tax expense 38 175 (137) (78.6)percent
Net loss $ (8,340) $ (4,027) $(4,313) 107.1 percent
Weighted average
Commons shares (000s) 20,047 20,019 28 0.1 percent
Loss per Common share$ (0.42) $ (0.20) $ (0.22) 110.0 percent
N/M: Percentage change not meaningful.
AMERICAN PAGING, ING
Consolidating Statement of Operations
(Unaudited)
Six Months Ended Increase (Decrease)
6/30/96 6/30/96 Amount Percent
(Dollars in thousands, expect per share amounts)
Service operations
Revenue $ 47,201 $ 45,103 $2,098 4.7 percent
Operating expenses
Cost of service 14,119 11,425 2,694 23.6 percent
Selling and
advertising 11,509 8,451 3,058 36.2 percent
General and
administrative 17,402 18,083 (681) (3.8 percent)
Depreciation and
amortization(1) 14,663 11,284 3,379 29.9 percent
(1) includes
amortization of
$1,928 and
$1,896
respectively 57,693 49,243 8,450 (17.2 percent)
Service operating
loss (10,492) (4,140) (6,352) N/M
Equipment sales
Revenue 5,405 7,680 (2,275) (29.6 percent)
Cost of equipment
sold 5,566 7,579 (2,013) (26.6 percent)
Equipment sales (loss)/
income (161) 101 (262) N/M
Operating loss (10,653) (4,039) (6,614) 163.7 percent
Investment and other
income/(expense)
Investment loss in
joint venture (668) (494) (174) 35.1 percent
Interest income 122 74 48 62.5 percent
Other, net 33 58 (25) (43.3 percent)
Total (513) (362) (151) 42.0 percent
Loss before interest and
income taxes (11,166) (4,401) (6,765) 153.7 percent
Interest expense -
affiliates 2,519 2,322 197 8.5 percent
Loss before income
taxes (13,685) (6,723) (6,962)(103.6 percent)
Income tax (benefit)
expense (1) 52 (53)(102.3 percent)
Net loss $(13,685) $(6,775) $(6,909) 102.0 percent
Weighted average
Commons shares (000s) 20,044 20,010 34 0.2 percent
Loss per Common share $(0.68) $(0.34) $(0.34) 100.0 percent
CONTACT: Michelle Haupt, Manager-Financial Reporting of American
Paging, Inc. at 612-623-3100