MID AM, INC. REPORTS THIRD QUARTER EARNINGS
BOWLING GREEN, Ohio, Oct. 15, 1996 Mid Am, Inc. (Nasdaq: MIAM, MIAMP) announced today its
earnings for the third quarter of 1996 of $4.25 million, which reflects a non-recurring pre-tax charge of
$3.56 million assessed by the Federal Deposit Insurance Corp. The assessment is the result of
long-awaited legislation passed on September 30, 1996, to recapitalize the Savings Association Insurance
Fund. The charge applies to approximately $616 million of thrift deposits acquired by Mid Am, Inc. since
1989, and is less than previously anticipated. The Company's ongoing deposit insurance premiums will,
however, be significantly reduced in the future, amounting to annual pre-tax cost savings of approximately
$900,000 per year, or an after-tax savings of approximately $0.03 per share in 1997.
The Company's earnings, without including the one-time FDIC assessment, were $6.56 million, up from
the $6.47 million earned in the third quarter of last year.
Primary and fully-diluted earnings per share for the third quarter were $0.18 or, adjusting for the one-time
assessment, $0.29 per share ($0.27 fully diluted), compared to $0.27 ($0.26 fully diluted) for the same
period in the prior year. Return on Average Equity for the quarter was 9.42% or 15.39% adjusted for the
one-time assessment, while Return on Average Assets was 0.79% or 1.22% adjusted for the one-time
assessment. This compares to ROE and ROA ratios of 14.76% and 1.19%, respectively, in the third
quarter of 1995.
The Company's net interest margin averaged 4.36% for the three months ended September 30, 1996,
which compares favorably to the 4.29% and 4.13% net interest margin reported for the second quarter of
1996 and the third quarter of 1995, respectively. The improvement in the margin is due to increased
yields in interest earning assets caused by an increase in commercial loans and the decrease in the
Company's cost of funds caused by a favorable change in the Company's deposit mix.
"We are pleased with the Company's core earnings performance for the third quarter, despite the
long-awaited resolution of the FDIC recapitalization issue," stated Edward J. Reiter, Chairman and Chief
Executive Officer, "particularly in light of the significant reduction in deposit insurance premiums in the
future."
Asset quality ratios show favorable trends, with the ratio of non-accrual loans to total loans of 0.52% and
the ratio of non-performing loans to total loans of 0.56%, compared to 0.64% and 0.74%, respectively, at
the same time last year. At quarter end, the Company's Reserve for Loan Losses was 175% of
non-performing loans.
The Company, through several of its affiliates, owns approximately $6.2 million of lease receivables
representing approximately 1,000 leases which were purchased from The Bennett Funding Group, Inc., a
Syracuse-based company which filed for bankruptcy in March, 1996. Based upon current information
available to the Company, approximately $1.6 million of these assets appear to have been pledged to
more than one party. The Company therefore has reclassified $1.6 million of Bennett assets to
non-performing status. The Company continues to closely monitor the bankruptcy proceedings and is
pursuing all remedies available to it.
Mid Am, Inc. is a $2.2 billion bank holding company, headquartered in Bowling Green, Ohio. Affiliates
include Mid American National Bank & Trust Company, Toledo and Bowling Green; First National Bank
Northwest Ohio, Bryan; American Community Bank, N.A., Lima and Bellefontaine; AmeriFirst Bank,
N.A., Xenia and Cincinnati; Adrian State Bank, Adrian, Michigan; Mid Am Recovery Services, Inc.,
Toledo and Clearwater, Florida; MFI Investments Corp, Bryan, Ohio; Mid Am Credit Corp, Columbus;
and Mid Am Information Services, Inc., Bowling Green, the Company's technology and operations
affiliate.
MID AM, INC.
STATEMENT OF EARNINGS - (unaudited)
For Three Months Ended
September 30, Percent
(Dollars in thousands) 1996 1995 Change
Interest income $41,143 $41,395 (0.6)
Interest expense 19,782 20,951 (5.6)
Net interest income 21,361 20,444 4.5
Provision for credit losses 1,305 864 51.0
Net interest income after
provision for credit losses 20,056 19,580 2.4
Non-interest income
Trust fees 373 325 14.8
Service charges on
deposit accounts 1,773 1,602 10.7
Mortgage banking 2,166 2,452 (11.7)
Brokerage commissions 1,391 2,520 (44.8)
Collection agency fees 1,053 841 25.2
Net gains on sales
of securities 488 86 467.4
Other income 3,227 1,622 99.0
Total non-interest income 10,471 9,448 10.8
Non-interest expense
Salaries and employee benefits 10,227 8,471 20.7
Net occupancy expense 1,376 1,353 1.7
Equipment expense 1,979 1,796 10.2
Other expenses 10,805 7,778 38.9
Total non-interest expense 24,387 19,398 25.7
Income before income taxes 6,140 9,630 (36.2)
Applicable income taxes 1,895 3,158 (40.0)
Net income $ 4,245 $ 6,472 (34.4)
Net income available to
common shareholders $ 3,657 $ 5,798 (36.9)
MID AM, INC.
FINANCIAL SUMMARY - (unaudited)
For Three Months Ended
(Dollars in thousands, September 30, Percent
except per share data) 1996 1995 Change
Earnings per common share:
Primary $0.18 $0.27 (33.3)
Fully diluted 0.18 0.26 (30.8)
Cash dividend paid on
common share $0.15 $0.145 3.1
Shares outstanding:
Average primary 20,892,000 21,170,000 ---
Average fully diluted 24,131,000 24,812,000 ---
PERFORMANCE RATIOS
Net interest spread - FTE 3.82 3.57 ---
Net interest margin - FTE 4.36 4.13 ---
Return on average common
shareholders' equity 9.42 14.76 ---
Return on average total assets 0.79 1.19 ---
Average Balances for Three
Months Ended September 30
Total assets $2,143,128 $2,162,983 (0.9)
Loans - net of unearned income 1,511,960 1,447,404 4.5
Loans held for sale 4,406 19,924 (77.9)
Total deposits 1,804,571 1,813,367 (0.5)
Common shareholders' equity 154,410 155,892 (1.0)
Total shareholders' equity 187,447 192,847 (2.8)
MID AM, INC.
STATEMENT OF EARNINGS - (unaudited)
For Nine Months Ended
September 30, Percent
(Dollars in thousands) 1996 1995 Change
Interest income $122,713 $120,843 1.5
Interest expense 59,959 59,334 1.1
Net interest income 62,754 61,509 2.0
Provision for credit losses 2,940 2,008 46.4
Net interest income after
provision for credit losses 59,814 59,501 0.5
Non-interest income
Trust fees 1,090 1,005 8.5
Service charges on
deposit accounts 5,085 4,604 10.4
Mortgage banking 7,579 5,940 27.6
Brokerage commissions 7,851 6,739 16.5
Collection agency fees 3,075 2,510 22.5
Net gains on sales
of securities 1,274 142 797.2
Other income 7,462 4,903 52.2
Total non-interest income 33,416 25,843 29.3
Non-interest expense
Salaries and employee benefits 30,415 25,511 19.2
Net occupancy expense 3,951 3,884 1.7
Equipment expense 5,887 5,367 9.7
Other expenses 28,040 22,862 22.6
Total non-interest expense 68,293 57,624 18.5
Income before income taxes 24,937 27,720 (10.0)
Applicable income taxes 7,974 8,973 (11.1)
Net income $16,963 $18,747 (9.5)
Net income available to
common shareholders $15,125 $16,642 (9.1)
MID AM, INC.
FINANCIAL SUMMARY - (unaudited)
For Nine Months Ended
(Dollars in thousands, September 30, Percent
except per share data) 1996 1995 Change
Earnings per common share:
Primary $0.72 $0.79 (8.9)
Fully diluted 0.70 0.75 (6.7)
Cash dividend paid on
common share $0.44 $0.43 3.2
Shares outstanding:
Average primary 20,975,000 21,123,000 ---
Average fully diluted 24,329,000 24,923,000 ---
PERFORMANCE RATIOS
Net interest spread - FTE 3.73 3.72 ---
Net interest margin - FTE 4.28 4.26 ---
Return on average common
shareholders' equity 12.87 14.66 ---
Return on average total assets 1.05 1.18 ---
Average Balances for Nine
Months Ended September 30
Total assets $2,155,957 $2,125,565 1.4
Loans - net of unearned income 1,478,324 1,446,932 2.2
Loans held for sale 11,617 12,302 (5.6)
Total deposits 1,808,844 1,776,805 1.8
Common shareholders' equity 156,956 151,759 3.4
Total shareholders' equity 191,095 190,392 0.4
SOURCE Mid Am, Inc./CONTACT: Dennis L. Nemec, Executive Vice President, Chief Financial
Officer, of Mid Am, Inc., 419-373-6462/(MIAM MIAMP)
Cayenne Software Reports First Quarter Results
54 Percent Increase in Client/Server and Object-Oriented Product Revenue
Highlights Company's Debut Quarter
BURLINGTON, Mass., Oct. 15 /PRNewswire/ - Cayenne Software, Inc. (Nasdaq: CAYN), the newly
named company formed from the July 1996 merger of Bachman Information Systems, Inc. and Cadre
Technologies Inc., today announced results for its first quarter of fiscal 1997 ended September 30, 1996.
Revenue for the quarter totaled $13.2 million, down from $16.4 million in the comparable quarter of
fiscal 1996 for the combined companies. A net loss from operations of $400,000 was posted, which
excludes a $6.3 million charge for restructuring and other expenses, down from a net loss from operations
of $3.2 million for the combined companies in the comparable quarter of fiscal 1996. Gross margins
improved to 75 percent from a combined 71 percent in the first quarter of fiscal 1996 as Cayenne
eliminated lower margin product and service offerings that were tangential to the company's analysis and
design initiatives.
Worldwide revenue for Cayenne's client/server and object-oriented products, which include Terrain,
GroundWorks and ObjectTeam, increased 54 percent over the comparable quarter in fiscal 1996.
Cayenne's worldwide maintenance revenue also grew from the fourth quarter of fiscal 1996, reflecting
renewals of its maintenance offerings for new and old products, those new products coming off warranty
and into maintenance, and the two- tiered maintenance program implemented in July 1996. In addition,
Cayenne's critical mass resulting from the merger produced a 30 percent reduction in core operating
expenses, excluding restructuring charges, relative to combined expenses incurred in the comparable
quarter offiacal 1996. Since the completion of the merger in July, core operating expenses were reduced
an additional 19 percent from the combined expenses for the fourth quarter of fiscal 1996, which ended in
June.
"The summer quarter is historically the slowest, reflecting the large international component of our
business," said Peter J. Boni, Cayenne Software's president and CEO. "The global acceptance of our
scalable solutions for client/server and object-oriented programming used in data warehousing and
Internet/Intranet application development clearly demonstrates that the competitive differentiation of our
solutions is compelling to commercial and technical software development teams worldwide."
During the first quarter, Bachman and Cadre received shareholder approval of the merger, forming the
newly named company, Cayenne Software Inc. Cayenne also signed 39 new customers including: GE
Medical, Sony Electronics, NEC, Fujitsu, JAL Technologies, EFRAT, Bitech, Cardiac Pacemaker, City
of Las Vegas and 3M Health Systems. This compares to 19 new customers being signed in the first quarter
of fiscal 1996 for the combined companies.
In addition, Cayenne announced at Object Expo in the United Kingdom the immediate availability of a
Java code generator for ObjectTeam, Cayenne's object-oriented modeling solution used in team-based
application development projects. Cayenne also announced a strategic alliance with Project Technology,
Inc., a provider of Shlaer Mellor-based object technology for software development. This alliance
provides current Cayenne Software ObjectTeam for Shlaer Mellor customers an easy upgrade path to
Project Technology's BridgePoint tool set. Cayenne also announced the appointments of Fred Phillips,
formerly assistant treasurer of Lotus Development Corporation, to vice president of finance and
administration, chief financial officer and treasurer, and John Hammel, former sales executive at Rational
Software, Inc., as director of product management. Cayenne also appointed Cadre's founding investor and
former chairman, William H.D. Goddard, to its board of directors.
Cayenne Software, Inc., headquartered in Burlington, Mass., is one of the largest global suppliers of
analysis and design solutions for commercial and technical application and database development.
Cayenne offers development teams a scalable, workgroup-to-enterprise product family for
object-oriented, data-driven and structured application development approaches. The company has
approximately 400 employees and ranks among the top 50 software vendors in North America. Further
information can be obtained through the company's Web site: http://www.cayennesoft.com.
The matters discussed herein may contain "forward-looking" statements that involve risks and
uncertainties including, without limitation, competitive factors in the marketplace. For further information
regarding "forward- looking" statements, please refer to the company's Annual Report on Form 10-K,
"Management's Discussion and Analysis of Financial Condition and Results of Operations - Factors that
May Affect Future Results."
NOTE: BACHMAN and Terrain are registered trademarks and Cayenne, Cayenne Software, Cayenne
Software, Inc. and Groundworks are trademarks of Cayenne Software, Inc. Cadre, Cadre Technologies,
Cadre Technologies Inc. and ObjectTeam are registered trademarks of Cadre Technologies Inc. All other
products and company names may or may not be trademarks or registered trademarks of their respective
companies.
Cayenne Software, Inc.
Consolidated Statement of Operations
(in thousands except per share data)
Three months ended
September 30,
1996 1995
Revenues:
Software license $4,180 $6,612
Consulting and education services 2,164 2,698
Maintenance 6,854 7,127
Total revenues 13,198 16,437
Costs and Expenses:
Cost of revenues
Cost of software licenses 812 1,253
Cost of consulting and education
services and maintenance 2,467 3,537
Sales and marketing 5,812 8,580
Research and development 2,778 4,270
General and administrative 1,775 2,017
Restructuring and other costs 6,300 0
Total costs and expenses 19,944 19,657
Loss from operations (6,746) (3,220)
Interest/other income (expense), net (65) (92)
Loss before provision for income taxes (6,811) (3,312)
Provision for income taxes 49 159
Net loss ($6,860) ($3,471)
Net loss per common share ($0.39) ($0.24)
Weighted average number of common and
common equivalent shares outstanding 17,509 14,393
CONDENSED BALANCE SHEETS
(in thousands)
September 30, June 30,
1996 1996
Assets
Cash $8,683 $14,690
Accounts receivable 11,276 12,445
Other assets 5,362 6,964
Total $25,321 $34,099
Liabilities & Stockholders' Equity
Accounts payable $2,499 $3,606
Accrued expenses 7,033 5,151
Deferred revenue 12,026 13,714
Other liabilities 5,372 9,004
Total 26,930 31,475
Stockholders' equity (1,609) 2,624
Total $25,321 $34,099
NOTE: As a result of the merger between Bachman Information Systems, Inc., and Cadre Technologies,
Inc. effective July 18, 1996, which was accounted for as a pooling-of-interests, the above financial data
for all periods reflects the combined results of operations of the two companies.
SOURCE Cayenne Software, Inc. /CONTACT: David Smith of Cayenne Software, 617-273-9003, ext.
595 or smithdcayennesoft.com, or Kristen Holmes of The Weber Group, 617-520-9003 or
kholmeswebergroup.com/ (CAYN)
Comprehensive Care Corporation Reports First Quarter Results
Revenues Increase to $9.0 Million in 1st Qtr. FY1997;
Managed Care Business Contributes 61% to 1st Qtr's Revenues
CORONA DEL MAR, Calif., Oct. 15, 1996 - Comprehensive Care Corporation (NYSE: CMP)
(CompCare(R)) today reported a loss of $1.8 million, or $0.62 loss per share, on 2.9 million weighted
average shares outstanding for the first quarter of fiscal year 1997 ended August 31, 1996. This loss
includes a $0.3 million non-recurring expense and a $0.2 million restructuring charge, which is related to
the planned closure of an administrative office and several contract units. This quarter's loss compares to
a loss of $1.3 million, or $0.50 loss per share, on 2.6 million weighted average shares outstanding for the
first quarter of 1996. Revenues for this quarter increased $0.2 million to $9.0 million from $8.8 million in
the same quarter last year. For the quarter, managed care revenues as a percent of total operating revenues
increased to 61%, compared to 39% for the same period last year as a result of new managed care
contracts and an acquisition.
Chriss W. Street, Chairman and President of CompCare stated, "We are pleased with the results of our
first quarter of fiscal year 1997. Our ability to transition from the hospital business to the managed care
contract business is evidenced by our current revenue mix. Managed care revenues now comprise 61% of
our revenues. We have spent an additional $0.2 million this quarter to ramp up our operations in Texas to
meet the needs of our new contracts in the state. We continue to seek growth opportunities in the exciting
Medicaid arena, as well as other government agencies, HMOs, hospitals and corporate arenas,"
concluded Street.
The Company will be holding a conference call on Wednesday, October 16 at 10:00 a.m. PDT. Please
dial 212-346-0198 a few minutes before the call time in order to be connected.
This release contains statements that are forward-looking in nature that are subject to many factors which
can materially affect future results. These risks and uncertainties include but are not limited to future
funding needs, potential healthcare reform, the disposition of assets, historical losses, the company's
restructuring and other information detailed in the company's Form 10-K filed with the Securities and
Exchange Commission.
CompCare provides care and care coordination on a contractual or at-risk (managed care) basis of
chronic and catastrophic diseases to HMOs, hospitals, the government and corporations throughout the
United States and its protectorates through its Disease State Management(SM) products.
COMPREHENSIVE CARE CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share amounts)
Three Months Ended
August 31, August 31,
1996 1995
Revenues:
Operating revenues $8,993 $8,776
Costs and expenses:
Direct healthcare operating expenses 8,169 7,715
General and administrative expenses 1,654 1,270
Restructuring expenses 195 ---
Provision for doubtful accounts 47 280
Depreciation and amortization 162 348
10,227 9,613
Loss from operations (1,234) (837)
Other (income)/expenses:
Gain on sale of assets (6) ---
Non-operating loss 250 ---
Interest income (45) (10)
Interest expense 336 454
Loss before income taxes (1,769) (1,281)
Provision (benefit for income taxes) (1) 26
Net loss ($1,768) ($1,307)
Net loss per share ($0.62) ($0.50)
SOURCE Comprehensive Care Corp./CONTACT: Chriss W. Street, Chairman and President,
800-678-2273; or Linda Staley, Account Principal of Coffin..KCSA Investor Relations,
818-789-0100/(CMP)
Reddi Brake reports fiscal 1996 results
VENTURA, Calif.--Oct. 15, 1996--Reddi Brake Supply Corp. (NASDAQ: REDI) today announced that
for fiscal 1996, ending June 30, 1996, the company reported revenue of $62,725,468, an increase of 34.3
percent from fiscal 1995 revenue of $46,695,341.
For the year, the company reported a loss of $8,562,836 or 52 cents per share, as compared to fiscal 1995
net income of $66,354 or 0 cents per share.
For the quarter ending June 30, 1996, the company reported revenue of $17,404,162, as compared to
fiscal 1995 fourth quarter revenue of $14,497,490. The net loss for the fourth quarter in fiscal 1996 was
$4,012,879 or 24 cents per share, as compared to a net loss of $938,487 or 6 cents per share for the
fourth quarter of fiscal 1995.
The increase in sales is attributable primarily to maturing warehouses opened during the year ended June
30, 1995 and the acquisition of three new warehouses in Nevada and four new warehouses in Orange
County, Calif., with these factors partially offset by the closing of 14 under performing warehouses in
February 1996. Furthermore, gross profit on sales decreased from 46.4 percent in 1995 to 38.5 percent
for fiscal 1996. This decrease is due primarily to the company recognizing fewer purchase discounts as a
percentage of sales, for initial inventories, since the company has not opened any new Reddi Brake
warehouses since May of 1995.
Richard McGorrian, president and chief operating officer of Reddi Brake said: "This past year has
certainly been one of great struggle, as a number of problems have beset the company. These problems
are not new, but manifested themselves during fiscal 1996. Since February, management of the company
has been working to halt the various conditions that threaten the company's future and establish a strong
base to set the stage for a turnaround of the company's operations."
McGorrian added that although several concrete positive steps have been taken during the fourth quarter
of 1996, these steps have resulted in the company incurring large expenses. "There is still a tremendous
amount of work to do to create a healthy company," explained McGorrian, who noted that in order to
continue the company's operations and further implement its restructuring program, the company must
raise additional capital.
McGorrian also announced that Gerald Birin, chief financial officer of the company, has resigned as an
officer and director of the company, effective Oct. 23, 1996 to pursue other business interests. McGorrian
added that "we want to wish Gerald the best in his new ventures. His expertise during the past eight
months has been tremendously valuable and welcome during this difficult period in the company's history.
Mr. Sandy Waddell has agreed to accept the position vacated by Mr. Birin. Mr. Waddell comes to Reddi
Brake with a strong management and financial background."
Reddi Brake Supply Corp. operates 85 Reddi Brake warehouse stores in 26 states, providing two-step
distribution of brake systems, chassis components and other auto undercarriage parts to professional
installers.
Reddi Brake Supply Corporation
Year End and Fourth Quarter
For the Year Ending June 30
1996 1995
Net sales $62,725,468 $46,695,341
Net income (loss) $(8,562,836) $ 66,354
Net income (loss) per share $ (.52) $ .00
Weighted average number of
common shares outstanding 16,528,268 16,393,930
For the Quarter Ending June 30
1996 1995
Net sales $17,404,162 $14,497,490
Net income (loss) $(4,012,879) $ (938,487)
Net income (loss) per share $ (.24) $ (.06)
Weighted average number of
common shares outstanding 16,528,268 16,393,930
CONTACT: Reddi Brake Supply Corp. Richard J. McGorrian, 805/644-8355 ext. 125 or Martin E. Janis
& Company Inc. Bev Jedynak, 312/943-1100
Corning Incorporated Reports Third Quarter Results; Earnings from Continuing Operations Increase 11
Percent
CORNING, N.Y.--Oct. 15, 1996--
Performance Reflects Sustained Growth In Communications and Specialty Materials Segments
Corning Incorporated (NYSE: GLW) said today that its 1996 third quarter net income from continuing
operations totaled $95.2 million, or $0.42 per share, an increase of 11 percent over adjusted third quarter
1995 earnings of $0.38 per share.
Third quarter sales from continuing operations totaled $910.2 million, an increase of 9 percent over
adjusted 1995 levels.
Adjustments to the 1995 results include the previously announced change to Corning's accounting
calendar, effective January 1, 1996.
Corning Board Chairman and Chief Executive Officer Roger G. Ackerman said, "Our results clearly
demonstrate the strategy we have implemented for our core businesses is on track. The Opto-Electronics
businesses - optical fiber, cable and associated components -- and the Specialty Materials businesses --
ceramics, polymers and specialty glass products -- have been strong all year."
"Consumer is showing improvement, although not up to plan," noted Mr. Ackerman. "In the Information
Display business, soft markets combined with aggressive development and expansion plans have resulted
in substantially lower earnings than year earlier levels.
"As we move through the next quarter, we believe the company is poised to meet our objectives," said
Ackerman, "And, that our operating environment is structured to support a continuous growth strategy."
Earnings from equity companies increased significantly from adjusted 1995 levels due to strong
performance by the optical fiber equity companies in Europe and Australia and by Samsung-Corning
Company, Ltd., in South Korea.
On May 14, 1996, Corning announced a plan to spin-off its Health Care Services Segment and, therefore,
in the second quarter, Corning began to account for its Health Care Services segment as a discontinued
operation. The company said it is on track to complete the spin-off transaction by the end of this year.
As previously announced, the company recorded a third-quarter after-tax charge from discontinued
operations totaling $115.0 million. The charge relates primarily to the establishment of additional
reserves at Corning Clinical Laboratories (CCL) for claims relating to billing practices of certain clinical
laboratories acquired by CCL in 1993 and 1994.
Commenting on the Health Care Segment, Mr. Ackerman said, "Excluding the special charge, operating
results of CCL have begun to stabilize and Corning Pharmaceutical Services continues on its growth
pace."
For the third quarter 1996, including the loss from discontinued operations, Corning recorded a net loss of
$19.8 million, or $0.09 per share.
Established in 1851, Corning Incorporated creates leading-edge technologies for the fastest growing
segments of the world's economy. Corning manufactures optical fiber, cable and components, high-
performance glass and components for televisions, and other electronic displays for communications and
communications-related industries; advanced materials for the scientific, life sciences and environmental
markets; and consumer products. Corning's total revenues from continuing operations in 1995 were $3.3
billion.
Editors' Notes:
-- Corning's continuing operations include its Communications, Specialty Materials and Consumer
Products segments.
-- As previously announced on May 14, 1996, Corning is pursuing the simultaneous spin-off of its Health
Care Service Segment (clinical laboratory and pharmaceutical services businesses) in a transaction
expected to be completed by year-end. As a result of the planned spin-Health Care Services segment as
discontinued operations.
-- Corning discontinued recognition of equity earnings from Dow Corning Corporation in the second
quarter of 1995.
-- Effective January 1, 1996, Corning made several changes to its accounting calendar to make Corning's
results more comparable with other companies and to enable Corning to report results of certain
subsidiaries on a more current basis.
Corning Incorporated and Subsidiary
Companies Consolidated Statements of Income
(Unaudited; in millions, except per-share amounts)
Nine Months Forty Three Months Sixteen
Ended Weeks Ended Ended Weeks Ended
September 30, October 8, September 30, October 8,
1996 1995 1996 1995
Revenues
Net sales $ 2,661.5 $2,442.6 $910.2 $ 1,045.6
Royalty,
interest,
and dividend
income 24.0 22.9 9.0 8.3
2,685.5 2,465.5 919.2 1,053.9
Deductions
Cost of sales 1,636.9 1,512.2 551.2 645.0
Selling, general
and
administrative
expenses 470.1 413.8 163.3 172.8
Research and
development
expenses 137.5 130.4 47.3 53.0
Provision for
restructuring and
other special
charges 26.5
Interest expense 53.8 52.8 17.8 21.2
Other, net 19.7 17.7 8.5 8.0
Income from
continuing
operations before
taxes on income 367.5 312.1 131.1 153.9
Taxes on income from
continuing
operations 123.1 92.9 43.9 45.0
Income from
continuing
operations before
minority interest
and equity
earnings 244.4 219.2 87.2 108.9
Minority interest in
earnings of
subsidiaries (41.0) (51.4) (13.0) (23.1)
Dividends on
convertible
preferred securities
of subsidiary (10.3) (10.5) (3.4) (4.2)
Equity in earnings
(losses) of
associated companies:
Other than Dow
Corning
Corporation 58.5 48.9 24.4 19.5
Dow Corning
Corporation (348.0)
Income (loss) from
continuing
operations 251.6 (141.8) 95.2 101.1
Income (loss) from
discontinued
operations, net
of income taxes (162.6) 7.5 (115.0) (17.6)
Net Income (Loss) $ 89.0 $ (134.3) $ (19.8) $ 83.5
Per Common Share:
Continuing
operations $ 1.10 $ (0.63) $ 0.42 $ 0.45
Discontinued
operations (0.72) 0.03 (0.51) (0.08)
Net Income (Loss) $ 0.38 $ (0.60) $ (0.09) $ 0.37
Dividends Declared $ 0.54 $0.54 $0.18 $ 0.18
Weighted Average
Shares Outstanding 227.4 226.5 227.4 227.2
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Condensed Consolidated Balance Sheets
(In millions)
September 30, 1996 Dec. 31, 1995
(Unaudited)
Assets
Current Assets
Cash and short-term
investments $ 127.5 $187.6
Receivables, net 545.8 479.5
Inventories 504.0 426.5
Deferred taxes on income and
other current assets 122.9 102.8
Total current assets 1,300.2 1,196.4
Investments 349.4 364.9
Plant and Equipment, Net 1,848.7 1,599.6
Goodwill and Other Intangible
Assets, Net 342.2 330.8
Other Assets 271.9 305.3
Net Assets of Discontinued
Operations 1,616.3 1,664.7
$ 5,728.7 $ 5,461.7
Liabilities and
Stockholders' Equity
Current Liabilities
Loans payable $ 427.8 $143.1
Accounts payable 159.2 202.6
Other accrued liabilities 452.7 396.3
Total current liabilities 1,039.7 742.0
Other Liabilities 637.2 618.3
Loans Payable Beyond One Year 1,278.3 1,340.0
Minority Interest in
Subsidiary Companies 311.5 269.8
Convertible Preferred Securities
of Subsidiary 365.0 364.7
Convertible Preferred Stock 22.7 23.9
Common Stockholders' Equity 2,074.3 2,103.0
$ 5,728.7 $ 5,461.7
The accompanying notes are an integral part of these statements.
Corning Incorporated and Subsidiary Companies
Notes to Consolidated Financial Statements
Quarter 3, 1996
(1) Earnings per common share are computed by dividing net income less dividends on Series B
convertible preferred stock by the weighted average number of common shares outstanding during the
period. The weighted average shares outstanding was 227.4 million for the third quarter and third quarter
year-to-date 1996 and 227.2 million and 226.5 million, respectively, for the same periods in 1995. Series
B preferred dividends amounted to $0.5 million and $1.5 million in the third quarter and third quarter
year-to-date, respectively, in both 1996 and 1995.
(2) Depreciation and amortization charged to continuing operations during the third quarter year-to-date
of 1996 and 1995 totaled $212.1 million and $185.2 million, respectively.
(3) Corning's effective tax rate for continuing operations was 33.5% for the third quarter and third quarter
year-to-date 1996, respectively. Excluding the impact of the second quarter 1995 restructuring charge, the
effective tax rate was 29% and 30.5% for the third quarter and third quarter year-to-date 1995. The lower
1995 rate was due to a higher percentage of Corning's earnings being from consolidated entities with
lower effective tax rates.
(4) Effective January 1, 1996, Corning made several changes to its accounting calendar to make Corning's
results more comparable with other companies and to enable Corning to report results of certain
subsidiaries on a more current basis.
Third quarter and third quarter year-to-date 1995 financial statements were not restated for the calendar
change. The following table presents unaudited pro forma results for the third quarter and third quarter
year-to-date 1995 as if this change had occurred at the beginning of 1995 (in millions, except per-share
amounts):
Three Nine
Months Ended Months Ended
September 30, 1995 September 30, 1995
Sales $ 834.5 $ 2,403.3
Net income (loss)
Before Dow Corning
Corporation and
restructuring $ 84.3 $ 221.1
Equity in losses of Dow
Corning Corporation (348.0)
Provision for restructuring (16.1)
Continuing operations 84.3 (143.0)
Discontinued operations (21.3) 8.2
Net income (loss) $ 63.0 $ (134.8)
Net income (loss) per
common share
Before Dow Corning
Corporation and
restructuring $ 0.38 $ 0.98
Equity in losses of Dow
Corning Corporation (1.54)
Provision for
restructuring (0.07)
Continuing operations 0.38 (0.63)
Discontinued operations (0.10) 0.03
Net income (loss) per
common share $ 0.28 $ (0.60)
(5) On May 15, 1995, Dow Corning Corporation (a 50%-owned equity company) voluntarily filed for
protection under Chapter 11 of the United States Bankruptcy Code. As a result of this action, Corning
recorded an after-tax charge of $365.5 million, or $1.62 per share, in the second quarter of 1995 to fully
reserve its investment in Dow Corning Corporation.
Corning also discontinued recognition of equity earnings from Dow Corning Corporation beginning in the
second quarter of 1995. Corning recognized equity earnings from Dow Corning Corporation of $17.5
million in the first quarter of 1995.
(6) In the second quarter of 1995, Corning recorded a restructuring charge in continuing operations
totaling $26.5 million ($16.1 million after tax) or $0.07 per share.
(7) In May 1996, Corning's Board of Directors approved a plan to distribute to its shareholders on a pro
rata basis all of the shares of Corning Clinical Laboratories Inc. and Corning Pharmaceutical Services
Inc. ("the Distributions"). The result of the plan will be the creation of two independent, publicly-owned
(but as yet unnamed) companies. Corning has submitted to the Internal Revenue Service a request for a
ruling that the Distributions will qualify as tax-free distributions under the Internal Revenue Code of
1986. The final terms of the Distributions, which are subject to approval by Corning's Board of Directors,
will be set forth in registration statements to be filed with the Securities and Exchange Commission and in
an Information Statement to be distributed to Corning's shareholders. The Distributions are expected to
occur by the end of 1996.
As a result of the plan to distribute the clinical-laboratory and pharmaceutical-services businesses,
Corning's consolidated financial statements and notes report these businesses, which comprised Corning's
Health Care Services segment, as discontinued operations. Prior period financial statements have been
restated accordingly.
During the third quarter, Corning recorded a loss in discontinued operations totaling $115 million
after-tax. The loss related primarily to a charge taken by Corning Clinical Labs (CCL) to increase
reserves related to certain government investigations of billing practices of certain clinical laboratories
acquired by CCL in 1993 and 1994.
As disclosed in Corning's 1995 Annual Report on Form 10-K, government investigations of certain
practices by clinical laboratories acquired in recent years are ongoing. In the second quarter 1996, the
U.S. Department of Justice (DOJ) notified Corning Clinical Labs (CCL) that it has taken issue with
certain payments received by Damon Corporation from federally-funded healthcare programs prior to its
acquisition by Corning. As a result, in the second quarter 1996, CCL increased its reserves by $37
million after tax.
During the third quarter, CCL management met with the government several times to evaluate the
substance of the government's allegations. As a result of these discussions, CCL, on behalf of its Damon
subsidiary, has reached a settlement agreement with the DOJ which will cause CCL to pay $119 million
to the government. As a result of this settlement agreement, CCL management has reassessed the level of
reserves recorded for other asserted and unasserted claims related to the Damon and other similar
government investigations, the most significant of which is the investigation of billing practices by
Nichols Institute prior to its acquisition by Corning in 1994.
Corning will agree to indemnify CCL for settlement of certain governmental claims pending at the
Distribution date. Although management believes that established reserves should be sufficient to pay
other asserted and unasserted claims, it is possible that the final resolution of these matters could be in
excess of established reserves by an amount which could be material to Corning's results of operations
and cash flows in the quarter in which any such claim is settled. Corning does not believe that these issues
will have a material adverse impact on Corning's overall financial condition.
The loss from discontinued operations in the third quarter year- to-date 1996 totaled to $162.6 million. It
includes the $115 million third quarter after-tax charge discussed above and a $56.8 million after-tax
charge recorded in the second quarter offset by $9.2 million of income recognized in the first quarter. The
second quarter charge includes the estimated costs related to the Distributions and a charge to increase
reserves for government claims, offset by the estimated results of operations of the businesses to be
distributed from April 1, 1996, through December 31, 1996, the anticipated date of the Distributions.
Income from discontinued operations for the third quarter year-to-date 1995 includes an after-tax
restructuring charge of $24.4 million recorded in the second quarter 1995.
CONTACT: Kathryn C. Littleton (607) 974-8206 Paul A. Rogoski (607) 974-8832 or Investor Relations
Contacts: Richard B. Klein, (607) 974-8313 Katherine M. Dietz, (607) 974-8217
LOS ANGELES--Oct. 15, 1996--Apparel shopping patterns continue to shift towards discount and outlet
retailers, driven by consumer caution and the current low inflation environment, according to ``The State
of Apparel Retailing'' study commissioned by Heller Financial, a leading finance company and factor to
the apparel and textile industries.
Even as consumer confidence rises to its highest level since 1990, shoppers are showing restraint that
reflects uncertainty over the security of traditionally stable jobs, and a frustration with the stagnation of
their wages.
``There has been a pickup in apparel spending in recent months,'' says Dean Planeaux, senior VP of
Heller's Current Asset Management Group, Western Division, ``and the immediate outlook is upbeat.''
Planeaux adds that ``For the long-term, the outlook is somewhat more cautious and guarded. In this
environment, apparel retailers will continue to face strong price competition, and margins will remain
tight. But there will be success stories, among those retailers that can cut costs, or add value and
differentiate themselves with superb merchandising skills or remarkable customer service.''
The Heller study, performed by Price Waterhouse's Management Horizons Consulting Division, found that
apparel prices fell almost 2 percent in 1995, but was offset by unit growth that produced a 2.6 percent
increase in total apparel spending. Family apparel stores are taking a growing share of spending, as are
discount and conventional department stores, while men's- and women's-only stores are losing market
share.
The study finds that overstoring is the central competitive problem facing retailers in general and apparel
retailers in particular, with an imbalance of approximately 10 percent of supply over demand. Since
1990, more than 100,000 retail firms have filed for bankruptcy protection (a 60 percent increase over the
1985-89 period), causing a significant financial upheaval for apparel suppliers as well. In fact, nearly
100,000 jobs were lost in 1995 and early 1996 in the apparel industry, the largest loss in ten years.
Not all the news is bad, however, as Heller's Planeaux explains. ``The bright spot for apparel suppliers
and retailers alike is that consumers are truly enamored with brands, both traditional and private label. In
addition, many large retailers are cutting costs by building strategic partnerships with suppliers that
enable both to grow their businesses. By providing services that offer retailers added value -- such as
EDI, QuickResponse, and Vendor- Managed Inventory -- some suppliers are clearly positioning
themselves for the future while taking pressure off retailers. The only down side is that many suppliers
can't afford to implement these technologies and techniques immediately.''`
The study also found that suppliers are also using the lessons learned over the last few years to compete
head-to-head with retailers. Many manufacturers are offering first quality, current seasonal merchandise
in outlet stores, with some even producing exclusive styles. After gaining experience with outlets, apparel
suppliers frequently open full-price specialty stores. Planeaux notes that ``This allows suppliers to gain
direct-selling experience for the `interactive future' and increase their control of brand image. But
suppliers will have to balance the potentially high payoff of direct selling with the risk of cannibalizing
their current retail accounts. To compete in the future, retailers and suppliers will have to come to an
understanding on markets, and anticipate consumer demands by having the right product in the right
format.''
Heller Financial, Inc. is a worldwide commercial financial services organization providing U.S.-based
clients with leveraged financing, commercial real estate financing, factoring and working capital loans,
equipment financing and leasing, asset-based finance and equity investments. The company also operates
European, Asian, and Latin American countries through joint venture and wholly-owned companies that
specialize in asset-based finance, factoring, trade finance, credit protection, inventory finance, leasing,
and collection and settlement services.
Following is a fact sheet with additional results of Heller's September 1996 study, ``The State of Apparel
Retailing.'' More information is available, including a detailed analysis of the implications of the study
for apparel manufacturers and suppliers. To schedule an interview with Dean Planeaux, contact David
Gaier of HLB Communications, Inc., 312/649-0371.
Additional Study Results THE STATE OF APPAREL RETAILING (September 1996) Heller Financial -
Current Asset Management Group
CONSUMER APPAREL SPENDING PATTERNS
o Although now in the sixth year of economic recovery, U.S. apparel spending remains moderate
o Casual clothing for busy lifestyles is taking increased market share; for example, pantsuit sales
increased 167 percent between 1990 and 1995
o Off-price apparel is now capturing most market share. In 1995, off-price men's apparel captured 84.2
percent of the total; off- price women's apparel garnered 90.4 percent of the market
o So-called ``Baby Boomers'' are spending more on their children -- between 1991 and 1995, children's
apparel spending grew 21 percent.
o 3.7 percent growth in overall apparel spending is predicted for 1996, but will likely drop marginally in
1997 as the economy slows.
o Typical apparel spenders, those between the ages of 25-54, are decreasing in number and have less
discretionary income to spend.
OVERSTORING AND FALLING APPAREL PRICES
o Apparel retailing remains overstored by at least 10 percent, leading to consumer price sensitivity as the
search continues for best apparel values.
o The 1991-95 retail store expansion has been profitless for apparel retailers as a group.
o The pricing squeeze affects apparel manufacturers and textile producers as much as retailers. For
example, while menswear producer prices rose 1.2 percent for the first half of 1995, apparel retail prices
rose only 0.2 percent.
RETAILERS AND SUPPLIERS
o More than 500 manufacturers operate stores in 310 outlet centers across the U.S., competing with
retailers that they typically also supply.
o Margins are excellent for outlet retailers. Average operating income for factory outlets is 15 percent,
vs. 5 percent for specialty retailers.
o 50 percent of retailers responding to the study have reduced the number of suppliers that serve them
over the last three years.
CONTACT: HLB Communications, Inc., David Gaier, 312/649-0371
O'Sullivan Industries Sales Reach Record Levels for First Quarter of Fiscal 1997; Net Income More Than
Doubles
LAMAR, Mo. Oct. 15, 1996 - O'Sullivan Industries Holdings, Inc. (NYSE: OSU), a leading manufacturer
of ready-to-assemble furniture, today reported record sales and increased net income for the first quarter
of fiscal 1997 ended Sept. 30, 1996. Net income more than doubled to $3.5 million or $0.21 per share,
compared with $1.3 million or $0.08 per share for the first quarter of fiscal 1996. Net sales for the fiscal
1997 first quarter were up 11.1 percent to a record $83.1 million, compared with net sales of $74.8
million for the first quarter of fiscal 1996.
"O'Sullivan's financial results for the first quarter of this fiscal year were stronger than we had originally
anticipated for some very good reasons," said Daniel F. O'Sullivan, chairman and chief executive officer.
"An 11 percent increase in net sales was a good starting point for our improved showing, as it helped to
reduce various expenses as a percent of sales.
"Our gross margin for the quarter was enhanced by an improvement in the product mix which resulted
from an increase in the average selling prices and lower material costs," added O'Sullivan. "Profitability
also strengthened due to higher capacity utilization at all three plants, as well as our continuing
commitment to control factory overhead and related expenses.
"Net income for the first quarter would have been even higher, but we recorded an after-tax bad debt
reserve of $494,000 or $0.03 per share relating to the Chapter 11 bankruptcy filing of a major customer
[Best Products Co., Inc.] during September," said O'Sullivan. "In addition, we expended higher
advertising dollars during the first quarter of this year to kick off joint advertising programs with some of
our major customers that should benefit O'Sullivan's sales in the coming year.
"The company's focus on improving cash flow and working capital continued to reflect positive results on
the balance sheet. We reduced inventories and maintained long-term debt at fiscal 1996 year-end levels,
even with the higher sales this quarter," added O'Sullivan. "We plan to maintain the momentum that has
been building since the beginning of the 1996 calendar year, and we will continue to focus on building the
future success of the company."
As a leading manufacturer of ready-to-assemble furniture, O'Sullivan's products are sold primarily
through office superstores, mass merchandisers, catalog showrooms, department stores, home
improvement centers and other retailers.
O'Sullivan Industries Holdings, Inc.
First Quarter Results
Unaudited Condensed Consolidated Statement of Operations
(in thousands except per share data)
Three Months Ended September 30,
%
1996 1995 Change
Net sales $83,126 $74,774 +11%
Cost of sales 60,574 59,890 +1%
Gross profit $22,552 $14,884 +52%
Gross profit percent 27.1% 19.9% --
Selling, marketing and
administrative $16,200 $11,655 +39%
Operating income 6,352 3,229 +97%
Net interest expense 718 1,057 -32%
Income before income taxes 5,634 2,172 +159%
Income taxes 2,158 824 +162%
Net income $3,476 $1,348 +158%
Earnings per share $0.21 $0.08 +163%
Average shares outstanding 16,806 16,820 --
Condensed Consolidated Balance Sheets
(in thousands)
September 30, June 30,
1996 1995 1996
Assets Unaudited
Current Assets:
Cash and cash equivalents $1,966 $204 $506
Trade receivables, net 62,488 57,952 53,570
Inventories 38,002 54,606 41,481
Prepaid expenses and
other assets 2,260 3,759 2,347
Total current assets 104,716 116,521 97,904
Property, plant and
equipment, net 68,441 70,789 67,990
Goodwill, net 46,006 47,673 46,423
Total $219,163 $234,983 $212,317
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $9,584 $8,729 $11,046
Accrued liabilities 17,945 15,816 14,955
Income taxes payable 2,925 1,050 767
Total current liabilities 30,454 25,595 26,768
Long term debt 30,000 52,000 30,000
Deferred taxes 13,934 14,408 13,934
Stockholders' Equity 144,775 142,980 141,615
Total $219,163 $234,983 $212,317
SOURCE O'Sullivan Industries Holdings, Inc./CONTACT: Terry L. Crump, Vice President and CFO,
417-682-8379, or Phillip J. Pacey, Treasurer, 417-682-8312, both of O'Sullivan Industries Holdings,
Inc./ (OSU)