TCR_Public/961029.MBX




InterNet Bankruptcy Library - News for October 29, 1996






Bankruptcy News For October 29, 1996



  1. The Krystal Company Reports Third Quarter Results

  2. Aquila Biopharmaceuticals Commences Trading on Nasdaq; Begins Rights Offering

  3. Best Products signs enhanced deal to sell its assets

  4. The Italian Oven(R) Increases Eastern Exposure

  5. Global Casinos Inc. reports year-end results




The Krystal Company Reports Third Quarter Results


CHATTANOOGA, Tenn., Oct. 29, 1996 - The Krystal Company (Nasdaq: KRYSQ), an operator and franchiser
of quick-service hamburger restaurants, today reported a net loss for its third quarter ended September 29, 1996,
of $11,000, versus a net loss of $5,731,000, or 76 cents per share for the third quarter of 1995. Administrative
costs associated with the Company's Chapter 11 bankruptcy proceeding, initiated on December 15, 1995, were
$776,000 pre-tax and $481,000 after-tax, or six cents per share. Without these costs, net income would have been
$470,000, or six cents per share. Following a first six months loss of four cents per share, the Company reported
a net loss for the nine months ended September 29, 1996, of $331,000, or four cents per share. Year to date
bankruptcy administrative costs were $2,288,000 pre-tax and $1,419,000 after-tax, or 19 cents per share. Without
these costs, nine months net income would have been $1,088,000, or 15 cents per share versus nine months 1995
net income of $2,011,000 or 27 cents per share before a special charge of $10,000,000 pre-tax and $6,200,000
after-tax, recorded in the third quarter of 1995, with respect to certain wage and hour litigation to which the
Company is a party.


According to Carl D. Long, Chief Executive Officer of The Krystal Company, the persistent heavy discounting
and new product introductions throughout the industry continue to be the primary contributors to the Company's
soft sales and reduced operating profitability. However, same restaurant sales for the quarter were up 2.0%
versus third quarter 1995. This same store sales increase was the first such quarterly increase since the first
quarter of 1994. For the first nine months of 1996, same restaurant sales were down 0.7% versus the same period
in 1995.


Total quarterly revenues were $62.4 million, down approximately 0.1% from 1995's third quarter. Total year to
date revenues were $181.0 million, compared with the $184.2 million in 1995. Restaurant sales for the quarter
increased 0.6% to $60.7 million. Restaurant sales for the first nine months of 1996 were $175.4 million
compared to $177.6 million for the same period of 1995.


The Company opened no new restaurants in the first nine months of 1996 versus six in the first nine months of
1995. The Company had 250 restaurants open at the end of the third quarter of 1996 compared to 255 at the end
of the third quarter of 1995. Franchisees opened one and six new restaurants in the quarter and first nine months
of 1996, respectively. In 1995, quarterly and nine months franchisee restaurant openings were 1O and 17,
respectively.


Third quarter revenues included franchise fees of $49,000 and royalties of $713,000 compared with franchise
fees of $276,000 and royalties of $629,000 in the third quarter of 1995. Year to date franchise fees were
$171,000 and royalties were $2,021,000, compared with franchise fees of $504,000 and royalties of $1,718,000
through the same period in 1995. Krystal began franchising in late 1990 and had 83 franchised restaurants in
operation at the end of the third quarter of 1996 compared to 78 at the end of the third quarter of 1995. Sales by
franchisees were $15.7 million for the quarter, up 1O.7% over the same period in 1995. Year to date sales by
franchisees were $44.5 million, up 16.0% over the same period in 1995.


On December 15, 1995, the Company filed a voluntary petition under Chapter 11 of the United States Bankruptcy
Code for the purpose of completely and finally resolving various claims filed against the Company by current and
former employees alleging violations of the Fair Labor Standards Act (FLSA). The Company is a
debtor-in-possession for purposes of the bankruptcy case. Approximately 8,000 current or former employees
have filed claims, alleging that they worked time for which they were not compensated. The Company expects to
contest any claims which it believes to be invalid. The Company's period of exclusivity to file a Chapter 11 Plan
of Reorganization expires November 15. Four previously disclosed lawsuits filed against the Company under the
FLSA have been stayed by the bankruptcy filing. Company management continues to believe that the reserve
previously established with respect to the FLSA claims is adequate to resolve these claims. However, due to the
uncertainty surrounding the ultimate number and amount of employee claims, additional reserves may be required
in the near term. The Company is recording the known administrative costs of the Chapter 11 proceeding as they
are determined.


The Krystal Company operates 250 restaurants in Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi,
South Carolina, and Tennessee. Krystal franchisees operate 84 restaurants located in Alabama, Arkansas,
Florida, Georgia, Kentucky, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. Two
restaurants have opened and one closed since the end of the third quarter of 1996.


Founded in 1932, Krystal is one of the oldest fast-food chains in the United States. The Krystal Company's
common stock is traded on the Nasdaq National Market System under the symbol KRYSQ.


                         THE KRYSTAL COMPANY AND SUBSIDIARY
        

        Third Quarter:                                  1996         1995
        

        Revenues                                  $ 62,432,000  $ 62,508,000
        Net income before the effect of
         reorganization item (a) or special
         charge (b)                               $    470,000  $    469,000
        Net loss                                  $    (11,000) $ (5,731,000)
        Average Shares                               7,492,000     7,510,000
        Net income per share before the effect of
         reorganization item (a) or special
         charge (b)                               $        .06  $        .06
        Net income (loss) per share               $        .00  $       (.76)
        

        Nine Months:
        

        Revenues                                  $181,002,000  $184,205,000
        Net income before the effect of
         reorganization item (a) or special
         charge (b)                               $  1,088,000  $  2,011,000
        Net loss                                  $   (331,000) $ (4,189,000)
        Average Shares                               7,502,000     7,510,000
        Net income per share before the effect of
         reorganization item (a) or special
         charge (b)                               $        .15  $        .27
        Net loss per share                        $       (.04) $       (.56)
        

        (a)  Reorganization item represents legal and professional fees and
             administrative costs incurred in connection with Chapter 11
             proceeding.
        

        (b)  Special charge of $10,000,000 pre-tax or $6,200,000 after-tax
             recorded for wage and hour litigation in third quarter 1995.
        

                            Consolidated Balance Sheets
                                  (In thousands)
        

                                                      Sept. 29,    Dec. 31,
                                                         1996        1995
           ASSETS                                     (Unaudited)  (Audited)
           Current Assets:
        Cash and temporary investments               $ 24,444   $ 13,713
        Receivables, net                                1,783      1,752
        Income tax receivable                           1,203        609
        Net investment in direct financing leases -
         current portion                                  676        856
        Inventories                                     2,028      2,322
        Deferred tax asset                              5,553      5,553
        Prepayments and other                           1,082        830
        Total current assets                           36,769     25,635
        Net investments in direct financing leases,
         excluding current portion                        404        867
        Property, buildings and equipment, net         92,793     98,546
        Leased properties, net                          1,704      1,863
           Other assets:
        Cash surrender value of life insurance          5,440      5,117
        Other                                             776        667
        Total other assets                              6,216      5,784
        Total assets                                 $137,886   $132,695
        

           LIABILITIES AND SHAREHOLDERS' EQUITY
           Current Liabilities:
        Accounts payable                             $  3,785   $  1,681
        Accrued liabilities                            15,662      9,427
        Current portion of long-term debt                 858        432
        Current portion of capital lease obligations      530        653
        Total current liabilities                      20,835     12,193
        Liabilities subject to compromise              53,875     56,909
        Long-term debt, excluding current portion       3,154      3,621
        Capital lease obligations, excluding current
         portion                                        2,365      2,754
        Deferred income taxes                           2,719      2,719
        Other long-term liabilities                     8,350      7,852
           Shareholders' equity:
        Preferred stock, without par value; 5,000,000
         shares authorized; no shares issued or
         outstanding                                      ---        ---
        Common stock, without par value; 15,000,000
         shares authorized; shares issued and
         outstanding:  7,491,768 at Sept. 29, 1996
         and 7,526,808 at Dec. 31, 1995                40,556     40,830
        Retained earnings                               7,864      8,195
        Deferred compensation                          (1,832)    (2,378)
        Total shareholders' equity                     46,588     46,647
        Total liabilities and shareholders' equity   $137,886   $132,695
        

        NOTE:  This is not a complete set of financial statements.
        

                      Consolidated Statements of Operations
                      (In thousands, except per share data)
                                   (unaudited)
                                       Three Months Ended   Nine Months Ended
                                       9/29/96  10/1/95     9/29/96   10/1/95
           Revenues:
        Restaurant sales               $60,658  $60,278  $175,401  $177,587
        Franchise fees                      49      276       171       504
        Royalties                          713      629     2,021     1,718
        Other revenue                    1,012    1,325     3,409     4,396
        Total                           62,432   62,508   181,002   184,205
           Costs and expenses:
        Cost of restaurant sales        50,607   49,874   145,847   146,484
        Deprec. and amort. expense       2,845    3,206     8,447     9,277
        Gen. and admin. expenses         6,578    6,757    19,567    19,234
        Other expenses, net                791    1,036     2,742     3,401
        Special charge                     ---   10,000       ---    10,000
        Total                           60,821   70,873   176,603   188,396
        

        Operating income (loss)          1,611   (8,365)    4,399    (4,191)
           Reorganization item:
        Professional fees and other
         expenses                         (776)     ---    (2,288)      ---
        Interest expense                  (989)  (1,014)   (3,002)   (3,130)
        Interest income                    135      135       361       565
        Loss before benefit from income
         taxes                             (19)  (9,244)     (530)   (6,756)
        Benefit from income taxes           (8)  (3,513)     (199)   (2,567)
        Net loss                       $   (11) $(5,731) $   (331) $ (4,189)
        Earnings (loss) per common
         share                         $ (0.00) $ (0.76) $  (0.04) $  (0.56)
        Wtd. avg. number of common
         shares outstanding              7,492    7,510     7,502     7,510
        

NOTE: This is not a complete set of financial statements.


SOURCE The Krystal Company /CONTACT: Cam Scearce, Krystal Company, 423-757-1510/ (KRYSQ)




Aquila Biopharmaceuticals Commences Trading on Nasdaq; Begins Rights Offering


WORCESTER, Mass., Oct. 29, 1996 - Aquila Biopharmaceuticals, Inc. (Nasdaq: AQLA) announced today that
its common stock has been listed and has begun trading on the NASD National Market System. The Company also
announced the initiation of a rights offering of units consisting of one share of Aquila common stock and a three
year warrant to purchase an additional share of Aquila common stock.


The Aquila rights are being offered under the reorganization plan of Cambridge Biotech Corporation (CBC),
which was consummated on October 21. CBC is now a wholly-owned subsidiary of bioMerieux Vitek, Inc.


Aquila is a biopharmaceutical company which creates and commercializes products that stimulate the immune
system to control or prevent infectious diseases and cancer. The Company is developing a line of human products
under the tradename Quilimmune(TM) for use in preventing infectious diseases, including pneumococcal
infections, malaria and the tick-borne diseases, Lyme disease and human granulocytic ehrlichia. Aquila is also
developing a family of Quilvax(TM) animal vaccines the first of which, a vaccine for feline leukemia virus, is
already approved and on the market. Quilvax products for canine Lyme disease and bovine mastitis are being
evaluated in animal trials. Aquila's products are all based on new proprietary technology centered on the
Stimulon(TM) family of adjuvants. These patented molecules are potent immune stimulators. When used with
antigens such as recombinant proteins or peptides, carbohydrates, DNA molecules or lipids, the frequency, level
and breadth of the immune system response is increased. Aquila has licensed the Stimulon adjuvants to six
corporate licensees: SmithKline Beecham p.l.c., Pasteur Merieux Serums and Vaccins, Wyeth-Lederle Vaccines
and Pediatrics, Genenvax, Inc., NABI, and Progenics Pharmaceuticals, Inc. These partners, together with Aquila's
academic collaborators, have 22 clinical programs underway.


"Aquila has established a promising initial portfolio of immunotherapeutic products and has an outstanding set of
partners," said Alison Taunton-Rigby, Ph.D., President and Chief Executive Officer of Aquila
Biopharmaceuticals. "The proceeds from this rights offering will be used to advance our proprietary Quilimmune
family of human therapeutics and our Quilvax family of animal vaccines."


The Aquila rights are being distributed to CBC's shareholders as of the October 22 record date, certain CBC
creditors, members of a class action settlement agreement with CBC, and certain former CBC employees. Rights
holders may purchase units that are not fully subscribed for. Other investors may participate in the offering by
purchasing Rights.


The initial distribution date for Aquila stock and the rights certificates is October 29. As of the initial distribution
date, Aquila Biopharmaceuticals, Inc. has approximately 5 million shares outstanding. The rights are exercisable
until November 18. Aquila may extend the rights exercise period at its option for up to an additional 15 days,
until December 3. Both the rights and the warrants are transferrable. The subscription price for each unit is $9.49,
and the warrants have an exercise price of 150% of the unit subscription price. The warrants, which are
exercisable at any time after issuance, expire on the third anniversary after the initial distribution date. Aquila
may redeem the warrants on thirty days' notice providing that Aquila's common stock trades at 150% or more of
the warrant exercise price for 20 consecutive days within 10 days of the redemption notice.


In a related matter, the Company reported that CBC has filed a motion with the First Circuit Court of Appeals to
dismiss the Institut Pasteur and Pasteur Sanofi Diagnostics appeal of the U.S. Bankruptcy Court's confirmation of
CBC's reorganization plan. The dismissal is sought on the grounds that CBC's consummation of the plan has made
the appeal moot. The Court has not indicated when it will issue a ruling either on CBC's dismissal motion or
Pasteur's appeal. The Company believes that the likelihood of either the Pasteur appeal or a separate appeal by
Deloitte & Touche, LLP resulting in unraveling of the reorganization plan is remote, although there can be no
assurance that that will not occur.


Statements in this release which relate to plans and objectives of management for future operations of Aquila
Biopharmaceuticals, Inc. or which otherwise relate to future performance are forward looking statements. Actual
results may differ from those projected as a result of product demand, pricing, market acceptance, economic
conditions, intellectual property issues, competitive products, risks in product and technology development, and
other risks identified in the Company's Securities and Exchange Commission filings.


Aquila Biopharmaceuticals, Inc., is a therapeutics biotechnology company located in Worcester, Massachusetts.
The Company is developing and commercializing products which stimulate the immune system for use in treating
and preventing certain infectious diseases and specific cancers. Aquila's proprietary products include the
Quilimmune human products for pneumococcal infections, malaria and tick borne diseases, and the Quilvax
animal vaccines for bovine mastitis and canine Lyme disease. These products incorporate Aquila's Stimulon
adjuvants, which are also included in products under development by the Company's six corporate partners.


SOURCE Aquila Biopharmaceuticals, Inc./CONTACT: Alison Taunton-Rigby, Ph.D., President and Chief
Executive Officer of Aquila Biopharmaceuticals, Inc., 508-797-5777, or Robert Gottlieb, Senior Vice President
of Feinstein Partners, Inc., 617-577-8110/ (AQLA)




Best Products signs enhanced deal to sell its assets


RICHMOND, Va.--Oct. 29, 1996--


Deal may expedite completion of chapter 11 case Agreement calls for closing of all best stores


Best Products Co., Inc. (Nasdaq: BESTQ) today announced it has signed an enhanced deal to sell substantially all
of its retail- related assets to an investor group. The company said earlier this month that it had reached an
agreement to sell the assets to substantially the same investor group for approximately $395 million, including the
proceeds from liquidation sales now underway at 81 stores. The improved transaction involves a purchase price
of $410 million - subject to adjustment - including the proceeds from the liquidation sales. The new agreement
also calls for the investor group to conduct store-closing or similar sales as Best Products' agent at all other Best
locations. The deal, which supercedes the previous agreement, is subject to approval by the U.S. Bankruptcy
Court.


The investor group is comprised of Jubilee Limited Partnership III (an affiliate of the Schottenstein family),
Bernstein Financial Group, LLC, Alco Capital Group, Inc. and The Nassi Group, LLC.


Best Products Chief Executive Officer Daniel H. Levy said, "We believe this agreement, with its enhanced value,
is in the best interests of Best Products' creditors. Consumation of the transaction is subject to higher and better
offers. We believe the agreement may allow the Chapter 11 case to be completed on an expedited basis.
Unfortunately, business realities made it impractical for the investor group to continue operating a portion of Best
Products' stores as originally planned."


With court approval, the company said it expects "going-out-of- business" sales will begin at the company's
remaining 88 Best stores and 11 Best Jewelry stores in late November. About 3,500 full-time employees and
2,000 part-time employees will be affected. Each Best store employs about 25 full-time and 30 part-time
employees. Best Products employs about 650 employees in its other operations.


Best Products, which commenced a Chapter 11 case under the U.S. Bankruptcy Code on Sept. 24, currently
operates 88 Best stores and 11 Best Jewelry stores in 17 states. The company is in the process of liquidating 81
stores pursuant to a bankruptcy court approved transaction involving the same investor group.


CONTACT: Best Products Co., Inc. Financial Information: Nora Crouch, 804/261-2179 or Harry Katz,
804/261-2052 or Media Contact: Ross Richardson, 804/261-2157




The Italian Oven(R) Increases Eastern Exposure


LATROBE, Pa., Oct. 29, 1996 - The Italian Oven, Inc. today announced the signing of a new Franchise
Development Agreement with John Newcomb Enterprises in Blacksburg, Virginia.


According to Michael B. Understein, chief operating officer of The Italian Oven, John Newcomb Enterprises will
operate under the company name Italian Hearth LLC and develop six new The Italian Oven(R) Restaurants
throughout the western portion of Virginia. Mr. Newcomb has a 16-year history of successfully managing various
Burger King restaurants throughout western Virginia.


"This new Franchise Development Agreement further enhances The Italian Oven's presence in the southeast," said
Dante Vespignani, director, franchise operations. "We are very pleased with the knowledge and experience that
John brings to The Italian Oven system."


As previously announced, the Company continues to pursue its financial restructuring under the protection of the
U.S. Bankruptcy Code.


The Italian Oven Restaurant is a casual-dining, family-oriented restaurant chain that provides customers with
high-quality, Italian- style food at reasonable prices. There are currently 95 restaurants - 21 company-owned and
74 franchises - operating in 17 states and Australia.


SOURCE The Italian Oven, Inc. /CONTACT: Michael B. Understein, COO, 412-537-5380, or Dante M.
Vespignani, Director of Franchise Operations, 412-537-8375, both of The Italian Oven/




Global Casinos Inc. reports year-end results


DENVER, CO--Oct. 29, 1996--Global Casinos Inc. (NASDAQ:GBCS) today reported results for the year ended
June 30, 1996.


The company reported that net revenues increased from $7,303,386 on five operating casinos for the year ended
June 30, 1995, to $7,476,699 on three operating casinos for the year ended June 30, 1996. The company reported
a loss of $2,011,078, or 17 cents per share, for the year ended June 30, 1996, compared to a loss of $2,036,422,
or 22 cents per share, for the year ended June 30, 1995. Included in the loss for the year ended June 30, 1996,
were non-cash expenses of $2,051,115 (comprised of a one-time impairment loss on non-operating gaming
properties of $1,225,000 and depreciation and amortization of $826,115) compared to non-cash expenses of
$1,299,381 (comprised of impairment of gaming facility of $200,000, depreciation and amortization of $982,490,
and foreign currency loss of $116,841) for the year ended June 30, 1995.


The results of fiscal 1996 reflect the historical debt burden of Casinos USA notwithstanding its pending plan of
reorganization in bankruptcy. If that plan is confirmed, of which there can be no assurance, the company expects
to report a one-time gain on debt restructure in excess of $1 million. However, the gain, if it occurs, will be
offset by a loss in the first quarter of fiscal 1997, expected to be larger than the loss normally to be experienced
in this seasonally slow quarter.


                           Global Casinos Inc.
                           Financial Highlights
        

                                               Year Ended
                                                June 30,
                                          1996             1995
        

        Net Revenues                       $ 7,476,699      $ 7,303,386
        Operating and General Expenses     $ 6,925,559      $ 7,554,550
        Depreciation and Amortization      $   826,115      $   982,490
        Impairment of Gaming Facility      $(1,225,000)     $  (200,000)
        Operating (Loss)                   $(1,499,975)     $(1,550,545)
        Net Interest Expenses and       
          Reorganization Items             $   527,480      $   535,374
        (Loss) from Continued Operations   $(2,027,455)     $(2,085,919)
        Extraordinary Gain                 $   221,814               --
        Minority Interest                  $  (205,437)     $    49,497
        Net (Loss)                         $(2,011,078)     $(2,036,422)
        

CONTACT: Global Casinos Inc., Denver 303/756-3777