TCR_Public/960801.MBX BANKRUPTCY CREDITORS' SERVICE, INC.


Bankruptcy and Troubled Company News


August 1, 1996



  1. AST Reports Second Quarter Results
  2. Eljer Industries announces second quarter results





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AST Reports Second Quarter Results


        


            IRVINE, Calif.  --  Aug. 1, 1996  --  AST Research,
        Inc. (ASTA-NASDAQ) today announced revenues of $553.7 million for
        the second quarter of fiscal year 1996, ended June 29.  This
        compares with revenues of $662.0 million reported during the
        comparable prior year period and $530.0 million during the first
        quarter of fiscal year 1996.  
        


            The company reported a net loss of $98.7 million, or net loss
        per share of $2.21 during the second quarter of fiscal year 1996,
        compared to a net loss of $31.6 million and net loss per share of 98
        cents reported during the prior year period.  The net loss includes
        charges of $13.6 million, or approximately 30 cents per share,
        including $6.5 million that was taken as part of the company's
        previously-announced worldwide restructuring activities and $7.1
        million of other charges.  
        


            "Second quarter performance, excluding the $13.6 million in
        charges, improved by $30.6 million when compared with the
        immediately preceding quarter, indicating that our efforts to grow
        market share and return to profitability are definitely moving in
        the right direction,"  said Ian Diery, president and chief executive
        officer.  "We grew revenues in the U.S. sequentially which resulted
        in a domestic market share increase and the re-establishment of AST
        as a top 10 PC supplier."  
        


            Improved internal processes that were established months earlier
        began to achieve results during the second quarter.  "We made
        further progress towards our goals of being first to market with new
        technologies, maintaining aggressive pricing levels relative to
        direct manufacturers and improved quality and customer satisfaction
        levels within the company's service and support operations, said
        Diery.  "AST also maintained tight asset management controls which
        resulted in above-average inventory turn levels, as well as a six
        percentage point gross margin improvement from the preceding
        quarter."  
        


            Worldwide revenues for the second quarter included sales of
        $538.7 million, as well as $15 million that was received from
        Samsung as part of a previously-announced intellectual property
        assignment agreement.  Worldwide sales represented a 19 percent
        decrease from the prior year period, and a four percent increase
        over first quarter.  Lower year-over-year sales in the quarter was
        primarily caused by sluggish international performance.  
        


            Sales of $337.9 million in the Americas represented a four
        percent decline over the prior-year period but a 30 percent increase
        when compared to the immediately preceding quarter.  Sales within
        the company's Europe and Asia Pacific regions declined 35 percent
        over the prior year's quarter and were 23 percent lower versus last
        quarter.  
        


            "On a sequential basis, we've shown dramatic improvement in
        domestic sales, due largely from having the right mix of leading-
        edge products available at aggressive price points which are
        typically at or below those of direct PC manufacturers like Dell and
        Gateway,"  said Diery.  "With this as a foundation, we've used
        aggressive advertising and other brand awareness efforts to enhance
        customer knowledge about the outstanding value that our products
        represent across the desktop, notebook and server platforms."  
        


            Unit shipments during the second quarter totaled approximately
        321,000, comprised of 274,000 desktops and 47,000 notebooks.  The
        total represented a decline of approximately 19 percent over the
        prior year period and an increase of seven percent when compared
        sequentially.  Total second quarter notebook shipments decreased 13
        percent over last year's second quarter but were 57 percent higher
        as compared sequentially.  
        


            "Despite tough competition, executing on our strategy has
        resulted in a significant jump in domestic unit shipments during the
        second quarter,"  said Diery.  "AST has returned as a top 10 PC
        company due to increases in business desktop and notebook systems,
        as well as the success of our sub-$1,000 PCs that are selling at Wal-
        Mart."  
        


        Balance Sheet Summary
        


            During the second quarter, AST sustained its sharp focus on
        improving its balance sheet and maintaining prudent inventory
        management.  
        


            At June 29, 1996, total cash and cash equivalents were $66.9
        million, with $95.0 million in short-term borrowings against a $200
        million credit line.  Total net inventory was $218.1 million, up
        from $190.4 million at Mar. 30 and represented inventory turns of
        9.8.  Accounts receivable totaled $387.5 million, which represented
        63 days sales outstanding.  
        


            In July, the company repaid its $90 million three-year
        promissory note to Tandy Corp. utilizing $30 million in newly issued
        common stock and $60 million in cash.  Cash paid to Tandy was
        advanced to AST by Samsung, which resulted in Samsung receiving
        approximately 8.5 million shares of newly-issued AST stock.  
        


            "Samsung and AST will continue to closely monitor the potential
        need that AST may have for further financial support from Samsung,"
        said Kwang Ho Kim, AST chairman and Samsung Electronics vice
        chairman, president and chief executive officer.  
        


        Second Quarter Summary
        


            During the quarter, AST made significant improvements in its
        strategic direction of being first to market with leading-edge
        products, maintaining short and flexible supply lines, becoming the
        best and most reliable supplier to the indirect channel and becoming
        the company of choice to supply product worldwide.  
        


            AST's first to market strategy resulted in the industry's first
        shipments of Bravo business desktops based on 200 MHz Intel Pentium
        processors, Manhattan servers and Bravo business desktops based on
        180 MHz and 200 MHz Pentium Pro processors and Ascentia mobile
        systems based on Intel's 100 MHz and 133 MHz Pentium processors.  In
        the consumer channel, the company was first to ship Advantage!
        desktop systems with 200 MHz Pentium processors and 6X CD-ROM
        drives, as well as breaking the $1,000 price barrier for a complete
        multimedia system with monitor.  AST was also first to begin a
        unique notebook service program with Federal Express, called Express
        ONE, which enables overnight notebook system exchanges, anywhere
        nationwide, to ensure maximum user productivity and minimum
        downtime.
        


            To further enhance the company's ability to speed products to
        market, AST recently enhanced its product development processes,
        including design verification testing, reliability testing and other
        prototype engineering activities.  Working through these processes
        with increased engineering resources is expected to result in
        product designs that are more efficiently manufactured, which will
        save additional time.  In addition, teams from AST and Samsung are
        now implementing joint procurement, product development and
        manufacturing efficiency projects which are designed to leverage the
        combined strengths of both company's resources.  
        


            AST is also in the process of significantly enhancing its
        research and development efforts, including an expansion of its
        product development and engineering staff housed in Irvine.  In
        total, more than 80 positions are to be added in the current quarter
        which will allow the company to more quickly adapt to changing
        market requirements and expand into new areas, better implement
        concurrent product designs and enhance other systems-related
        activities.  The majority of the benefits of additional research and
        development resources are not expected to be realized until 1997.  
        


            Working closely with its major vendors, AST has established
        short and flexible supply lines which are beneficial to quickly
        adapt to changes in customer demand.  Just-in-time (JIT) delivery
        and closely-coupled vendor ordering and forecasting programs are
        among the worldwide activities that AST is utilizing to enhance
        flexibility.  In addition, the company has begun development of SAP
        systems in its European operations to more closely orchestrate
        regional sales, manufacturing and procurement activities.  The
        company's efforts in Europe are part of a two-year program which
        will result in worldwide SAP implementation.  
        


            Resellers and end users are beginning to notice AST's efforts in
        becoming the best and most reliable supplier to the indirect
        channel. AST has received positive feedback regarding its product
        and pricing strategy that helps resellers compete against direct
        marketers.  This also has assisted AST in achieving its goal of
        recruiting an additional 400 domestic resellers.  In addition, the
        company's increased emphasis on service and support has resulted in
        an increase in responsiveness to technical support phone calls and
        speed in spare parts shipments which are now operating at best-in-
        class levels.  
        


            AST also achieved progress towards its efforts to become the
        company of choice to supply product worldwide.  During the quarter,
        the company laid the groundwork that will allow companies, both
        domestic and internationally-based, to purchase PCs on a worldwide
        basis by establishing and staffing a major accounts group that will
        target companies with global operations.  
        


        Outlook
        


            "We have started to turnaround and have seen significant
        progress in the U.S.,"  said Diery.  "Our foundation is more stable
        than last quarter, which we expect will act as a catalyst for more
        positive future results."  
        


            "Our plans for the remainder of the year are to maintain
        consistency in bringing new technologies to market in advance of
        competitors, while working with our strategic partner towards
        expanding market share in the commercial desktop and notebook
        arenas."  
        


            "Long-term, we aim to continue our efforts to associate first-to-
        market and AST together in the minds of our customers,"  said Diery.
        "One extremely important short-term goal is to pave a smooth path
        for corporate buyers to make early and strategic investments in
        Pentium Pro systems that will utilize the benefits of the
        Microsoft's recently-announced Windows NT 4.0 operating system. In
        the consumer market, we see communication and networking as the next
        trend and will take action to be the first company premiering
        several useful technologies, including video conferencing, for home
        and home office users."
        


        Forward-Looking Statements
        


            Statements contained in this press release which are not
        historical information are forward-looking statements as defined
        within the Private Securities Litigation Reform Act of 1995.  Such
        forward-looking statements are subject to risks and uncertainties
        which could cause results to differ materially from those projected.
        Such potential risks and uncertainties include, but are not limited
        to: the level of competitive pricing pressures in the computer
        industry; the company's ability to continue to develop, produce and
        deliver new products that incorporate leading-edge PC technologies
        on a timely basis, that are competitively priced and achieve
        significant market acceptance; the effect of any continued losses on
        the company's supplier and customer relationships; and its ability
        to fund continuing operations.  Additional factors which could
        affect the company's financial results are included in the company's
        report on Form 10-K for Transition Period 1995 which is filed with
        the Securities and Exchange Commission.  
        


        Corporate Background
        


            AST Research Inc., a member of the Fortune 500 list of America's
        largest industrial and service companies, is one of the world's
        leading personal computer manufacturers.  The company develops a
        broad spectrum of desktop, mobile and server PC products that are
        sold in more than 100 countries worldwide.  AST systems meet a wide
        range of customer needs, ranging from corporate business
        applications to advanced home and home office use.  Corporate
        headquarters is located at 16215 Alton Parkway, P.O. Box 57005,
        Irvine, Calif.  92619-7005.  Telephone (714) 727-4141 or (800) 876-
        4278.  Fax: (714) 727-9355.  Information about AST and its products
        can be found on the World Wide Web at http://www.ast.com" target=_new>http://www.ast.com">http://www.ast.com
        



        AST RESEARCH, INC
        Condensed Consolidated Balance Sheets

        (In thousands)
        
                                                Quarter Ended
                                       -------------------------------
                                          June 29,         December 31,
                                            1996               1995
                                         (Unaudited)
                                       -------------------------------
        
        Assets:
        
         Cash and cash equivalents          $    66,947       $   125,387
        
         Accounts receivable, net               387,495           392,598
        
         Inventories                            218,149           252,339
        
         Other current assets                    49,257            67,297
        
                                        -----------         -----------
        
          Total current assets                  721,848           837,621
        
         Property and equipment, net             96,605            98,725
        
         Other assets                           103,882           119,696
        
                                        -----------         ----------
        
          Total assets                      $   922,335       $ 1,056,042
                                                
        
        Liabilities and shareholders' equity:
        
         Current liabilities                $  659,895        $   614,075
        
         Long-term debt                        158,564            125,540
        
         Other non-current liabilities           7,241              5,545
                                       -----------         -----------
          Total liabilities                    825,700            745,160
        
         Common stock and additional capital   415,425            415,182
        
         Retained earnings (deficit)          (318,790)          (104,300)
        
                                       -----------         -----------
        
          Total shareholders' equity            96,635            310,882
        
                                       -----------         -----------
        
          Total liabilities and
           shareholders' equity            $   922,335         $1,056,042
        
                                                
        
        AST RESEARCH, INC.
        Condensed Consolidated Statements of Operations

        (In thousands, except per share amounts)
        
                         Three Months Ended        Six Months Ended
                             (Unaudited)              (Unaudited)  
                         June 29,   July 1,      June 29,      July 1,
                           1996      1995          1996         1995
        
        Net sales          $  538,759  $  662,002  $ 1,058,731  $ 1,332,178
        Revenue from
         related party         15,000        -          25,000         -
        
        Total revenue         553,759     662,002    1,083,731    1,332,178
        
        Cost of sales         535,158     606,886    1,084,775    1,190,120
        
        Gross profit (loss)    18,601      55,116       (1,044)     142,058
        
        Selling, general and
         administrative
          expenses             86,275      80,694      160,416      163,259
        
        Engineering and
         development            9,645       8,817       20,159       17,833
        Restructuring and
         other charges         13,619         -         13,619         -
        
        Operating loss        (90,938)    (34,395)    (198,081)     (37,408)
        
        Other expense, net     (7,792)     (4,898)     (16,409)     (10,019)
          
        Loss before taxes     (98,730)    (39,293)    (214,490)     (47,427)
        
        Income tax benefit        -        (7,662)          -        (9,248)
        
        Net loss             $(98,730)  $ (31,631)  $ (214,490)   $ (38,179)
        
        Net loss per share   $  (2.21)  $   (0.98)  $    (4.80)   $   (1.18)
        
        Shares used in computing net
         loss per share        44,723      32,393       44,702       32,385
        

        AST RESEARCH, INC.     
        Computation of Net Loss per Share

        (In thousands, except per share amounts)
        
                         Three Months Ended        Six Months Ended
                             (Unaudited)              (Unaudited)  
                         June 29,   July 1,      June 29,      July 1,
                           1996      1995          1996         1995
        
        Shares used in
         computing primary
          loss per share:
        Weighted average
         shares of common
          stock outstanding    44,723      32,393       44,702       32,385
        
         Effect of stock
          options treated as
           common stock
        equivalents under
         the treasury stock
           method             -           -            -            -
        
        Weighted average common
         and common equivalent
          shares outstanding   44,723      32,393       44,702       32,385
        
        Net loss            $ (98,730)  $ (31,631)   $(214,490)    $(38,179)
        
        Net loss per
         share - primary    $   (2.21)  $   (0.98)   $   (4.80)    $  (1.18)
        
        Shares used in computing
         fully diluted loss
          per share:
        
        Weighted average shares
         of common stock
          outstanding          44,723      32,393       44,702       32,385
        
        Effect of stock options
         treated as equivalents
          under the treasury
           stock method          -            -            -            -
        
        Shares assumed issued
         on conversion of Liquid
          Yield Option Notes     -            -            -            -
        
        Weighted average common
         and common equivalent
          shares outstanding   44,723      32,393       44,702       32,385
        
        Net loss
        Net loss - primary
         earnings per share  $(98,730)   $(31,631)  $ (214,490)    $(38,179)
        
        Adjustment for interest
         on LYONs, net
          of tax                 -            -            -            -
        
        Adjusted net loss -
         fully diluted
          loss per share     $(98,730)   $(31,631)  $ (214,490)    $(38,179)
        
        Net loss per share -
         fully diluted       $  (2.21)   $  (0.98)  $    (4.80)    $  (1.18)
        
CONTACT:  AST Research
                  Emory Epperson, 714/727-7958 (media)
                       or
                  Misty Ohmart, 714/727-7728 (analyst)



Eljer Industries
announces second quarter results


        


            DALLAS, Texas  --  Aug. 1, 1996  --  Eljer Industries,
        Inc. (NYSE:ELJ) today reported results for the second quarter and
        six months ended June 30, 1996.  
        


            For the second quarter, net income was $3,885,000, or $0.54 per
        share, compared with a net loss in the second quarter of 1995 of
        $1,206,000, or $0.17 per share.  Income from operations, before
        litigation costs and unusual items, increased 45% to $5,629,000 in
        the second quarter of 1996 from $3,872,000 in the second quarter of
        1995.  During the second quarter, the Company recorded an unusual
        gain of $4.8 million related to the settlement reached in the
        litigation with Household International, Inc., its former parent.
        Net sales for the 1996 second quarter were $92,983,000 compared with
        $92,416,000 in the second quarter of 1995.  
        


            For the first half of 1996, net income was $2,938,000, or $0.41
        per share, on net sales of $186,397,000, compared with a net loss of
        $2,088,000, or $0.29 per share, on net sales of $191,471,000 in the
        same period of 1995.  Operating income, before litigation costs and
        unusual items, was $8,782,000 compared with $7,789,000 in the first
        six months of 1995.  
        


            Second quarter sales were favorably affected by strengthened
        U.S. housing starts and successful new product offerings, partially
        offset by the impact of the 11-week long strike at our cast iron
        facility (resolved on May 22, 1996) and a weak European economy.
        Gross profit margins improved as a result of a more stable raw
        material market and continued customer acceptance of price increases
        resulting from the escalation of raw material prices in early 1995.
        


            An adjustment was recorded by href="chap11.usbrass.html">United States Brass Corporation,
        an indirect, wholly-owned subsidiary, to maintain its equity at zero
        during the course of its bankruptcy proceedings.  In 1995, the U.S.
        Brass adjustment was a favorable $1.1 million as a result of its net
        loss due to bankruptcy related legal fees and lower gross profit
        margins resulting from significantly higher raw material prices.
        The 1996 U.S.  Brass adjustment of $1.2 million is unfavorable as
        this subsidiary has experienced improved gross margins due to
        stabilized raw material prices, success of its new products and
        lower litigation costs.  
        


            As discussed above, the Company recorded unusual income of $4.8
        million in the second quarter of 1996 as a result of the previously
        announced settlement in the litigation with Household.  The net
        proceeds of $24.5 million were used initially to repay U.S.  term
        debt, as required under the debt agreement.  Ultimately, the Company
        expects to pay approximately $14.4 million, which represents 75% of
        the net proceeds of the Household settlement after a recoupment of
        $5.3 in legal fees and expenses, to a trust to be established
        pursuant to the tentative settlement reached in connection with the
        U.S.  Brass bankruptcy proceeding.  The net litigation costs of
        $247,000 recorded in the 1996 second quarter reflect the $5.3
        million recoupment of legal fees and expenses offset by an
        additional $4.0 million accrual for other legal matters.  
        


            Scott Arbuckle, Chairman and Chief Executive Officer, commented:
        "We are pleased that we achieved both operational improvement and
        successfully settled the litigation with Household during the
        quarter.  We are diligently working to resolve the U.S.  Brass
        issues.  Operationally, we had to overcome a difficult European
        economy and the impact of the strike at our Salem, Ohio, cast iron
        facility.  We are encouraged by the favorable market reaction to our
        new QestPEX product line, further reinforcing our belief that this
        product will ultimately have more applications than the previous
        Qest polybutylene product line, being phased out of production."  
        


            Eljer Industries, Inc.  is a leading manufacturer and marketer
        of high quality building products, including plumbing, heating and
        ventilation products, for the residential and commercial
        construction, remodeling and repair, and do-it-yourself markets.  
        



                 ELJER INDUSTRIES, INC. AND SUBSIDIARIES
                      CONDENSED STATEMENTS OF INCOME

                               (unaudited)
                (In thousands, except per share amounts)
        
                            For the Three Months      For the Six Months  
                                  Ended                         Ended
                              6/30/96    7/2/95         6/30/96        7/2/95   
        
        NET SALES                 $92,983    $92,416       $186,397
        $191,471 COST OF SALES              68,216     69,606        139,986
        145,263 GROSS PROFIT               24,767     22,810         46,411
        46,208 SELLING & ADMINISTRATIVE                           
        
            EXPENSES               19,138     18,938         37,629
        38,419 LITIGATION COSTS, net         247      1,834          1,635
        4,493 UNUSUAL ITEM - U.S. BRASS  
        
            BANKRUPTCY ADJUSTMENT   1,200      (1,076)          852
        (2,242) UNUSUAL ITEM - HOUSEHOLD
        
            SETTLEMENT              (4,802)       --         (4,802)
        -- INCOME FROM OPERATIONS       8,984       3,114       11,097
        5,538 OTHER EXPENSE, net              68         827          232
        931 INTEREST EXPENSE, net        2,882       3,536        5,963
        6,665 INCOME (LOSS) BEFORE INCOME
        
            TAXES                     6,034      (1,249)       4,902
        (2,058) INCOME TAX EXPENSE (BENEFIT)  2,149         (43)       1,964
        30 NET INCOME (LOSS)           $ 3,885    $ (1,206)     $ 2,938
        $ (2,088) NET INCOME (LOSS) PER SHARE   $ .54     $ (0.17)      $
        .41       $ (0.29) WEIGHTED AVERAGE NUMBER OF
        
         COMMON SHARES            7,225       7,130        7,205         7,130
        

        CONTACT: Brooks Sherman
                 Chief Financial Officer
                 (214) 407-2600
                      or
                 Morgen-Walke Associates
                 Lynn Morgen/June Filingeri
                 Stan Froelich, Media Contact
                 (212) 850-6500
                 Ken Pieper
                 (214) 663-9390
                        or                    
                 Eljer Industries, Inc.
                 Linda Pankewicz
                 (214) 407-2604