TCR_Public/961108.MBX




InterNet Bankruptcy Library - News for November 8, 1996






Bankruptcy News For November 8, 1996



  1. SubMicron Systems Corporation Reports Third Quarter and Nine Month Results

  2. United States Leather, Inc. Reports Third Quarter Results

  3. Holly Products, Inc. Announces Court Ruling On Claims Hearings For Country World Casinos, Inc. Chapter
    11 Bankruptcy Proceedings

  4. Spectrum Information Technologies Announces Earnings




SubMicron Systems Corporation Reports Third Quarter and Nine Month Results


ALLENTOWN, Pa., Nov. 8, 1996 - SubMicron Systems Corporation (Nasdaq: SUBM) today reported financial
results for the third quarter and nine months ended September 30, 1996.


Third quarter 1996 net sales totaled $32.9 million versus $25.2 million for the third quarter of 1995, an increase
of 31%. The Company reported a third quarter 1996 operating loss of $23.5 million compared to a loss of
$17,000 for the 1995 period. The net loss for the 1996 period was $16.1 million, or $0.96 per share, versus a net
loss of $341,000, or $0.02 per share in 1995. Results for the third quarter were adversely affected by shipment
delays, customization demands, pricing pressures due to softening market conditions and an increase in reserves
to address these factors. In addition, the Company recognized a $3 million writedown of inventory due to the
inability of a customer to complete a scheduled purchase.


The Company's net sales for the nine months ended September 30, 1996 were $124.9 million with a net loss of
$14.9 million or $0.89 per share. Net sales for the nine months ended September 30, 1995, were $72.1 million
with a net loss of $2.1 million or $0.13 per share.


All 1995 results for the three and nine month periods have been restated to reflect the acquisition of Imtec
Acculine, Inc., which was completed in March 1996 and which was treated as a pooling-of-interests for
accounting purposes.


Customized orders were a major factor in the third quarter results. The Company is moving towards a more
standardized product line and expects gross margins to improve going forward as product standardization takes
hold. The production pipeline is clearing of customized orders and the experience of standardization will be felt
next quarter.


The Company has significantly reduced its workforce by approximately 15% and is in the process of major
organizational changes at the corporate level and at its two largest subsidiaries, SubMicron Systems, Inc. and
Systems Chemistry, Inc.. This will include a realignment of management and additional cost reduction programs
designed to improve profitability. Much of the reorganization is complete though some additional changes are
anticipated. Further cost control measures have been instituted with additional programs to be added.


Selling, general and administrative expenses were 35% and 24% of net sales for the three and nine month periods
ended September 30, 1996, respectively, as compared to 31% and 29% of net sales for the comparable periods
in the prior year. The increase in the selling, general and administrative expenses as a percentage of sales for the
three month period is the result of relatively lower shipment volume in relation to the Company's high amount of
fixed charges and to professional fees incurred in connection with the Company's proposed exchange offers for
its currently outstanding subordinated convertible notes.


Research and development costs were $3 million and $7 million for the three and nine month periods ended
September 30, 1996, respectively, as compared to $1.3 million and $3.7 million for the comparable 1995
periods. The increase of $1.7 million and $3.3 million as compared to the prior year periods were expended to
continue standardization of designs and to further develop the Company's PRIMAXX(TM) gas-phased products.


Other expense, net, consists of interest charges associated with borrowings on the Company's line of credit and
subordinated convertible notes. Other expense, net was $1.4 million and $3.3 million for the three and nine month
periods ended September 30, 1996, respectively, as compared to approximately $400,000 and $750,000 for the
comparable periods in 1995.


David Levy, Chairman and CEO, commented "The past six months have shown a marked downturn in the
semiconductor equipment industry. During this slowdown, SubMicron will continue to institute cost reduction
measures in accordance with current conditions."


"We are concentrating on making substantial long-term improvements for the Company's future, not quick fixes.
Historically, in a period of an industry slowdown, an opportunity is available for our customers to research and
qualify new processes and technologies in order to increase manufacturing capability. We feel this will better
position SubMicron for increased market penetration with next generation technology when the industry recovers.
We will continue to explore new applications and technologies in order to offer the best combination of products
to the industry," continued Mr. Levy. "We will also take advantage during this period to revisit our management
and cost structure to be better positioned for the upturn. One area of continued focus will be on new technology
including the new revolutionary DIO3(TM) process and PRIMAXX(TM) gas phase, single wafer products along
with our ferroelectric deposition tool. A new manufacturing facility for the PRIMAXX(TM) subsidiary should be
available for production by the end of 1996," he added.


Furthermore, the Company has experienced an increase in quotation activity and corresponding booking success
during the period since the end of the third quarter, an indication that the Company's products are consistent with
market needs and that the Company continues to enjoy successful relationships with its customers.


This release contains forward looking statements that are subject to risks and uncertainties. Factors that could
cause actual results to differ materially include, but are not limited to, changes in customer orders, the impact of
competitive products, product demand and market acceptance risk, fluctuations in operating results and other
risks detailed from time to time in the Company's filings with the Securities and Exchange Commission including
the Company's 10-K and 10-Q reports.


SubMicron Systems Corp. is a leading supplier of advanced wafer processing equipment to the semiconductor
and other related industries. The Company has world-wide operations consisting of SubMicron Systems, Inc., a
manufacturer of automated wafer cleaning, etching, and stripping systems; Universal Plastics, offering manual and
semi-automatic wet chemical processing stations and parts cleaning systems; Systems Chemistry, Incorporated,
focusing on bulk chemical distribution, management and recovery systems, and Imtec Acculine, Inc., provider of
chemical process vessels and thermal control of process chemicals to the equipment segment of the
semiconductor industry.


                            SUBMICRON SYSTEMS CORPORATION
                   Condensed Consolidated Statements of Operations
                        (in thousands, except per share data)
        

                                 Three Months Ended          Nine Months Ended
                                   September 30,               September 30,
                                  1996          1995         1996          1995
        

        Net sales              $32,956       $25,182     $124,876       $72,106
        Costs and expenses
         Cost of Sales          41,874        16,158      107,440        50,099
        

         Selling, general &
          administrative        11,596         7,780       30,016        20,966
         Research and
          development            2,997         1,261        7,020         3,656
        

           Operating loss      (23,511)          (17)     (19,600)       (2,615)
         Other expense, net     (1,355)         (403)      (3,300)         (750)
        

           Loss before income
            taxes              (24,866)         (420)     (22,900)       (3,365)
         Benefit for income
          taxes                  8,728            79        8,015         1,315
        Net loss              $(16,138)        $(341)    $(14,885)      $(2,050)
        

        Net loss per
         Common Share          $(0.96)       $(0.02)      $(0.89)       $(0.13)
        

        Weighted average number of shares
         of Common stock
          outstanding           16,801        16,286       16,801        16,101
        

                            SUBMICRON SYSTEMS CORPORATION
                        Condensed Consolidated Balance Sheets
                                    (in thousands)
        

                                   September 30,            December 31,
                                       1996                     1995
        

        Assets
          Cash and cash equivalents    $2,594                 $16,010
          Accounts receivable, net     39,886                  46,619
          Inventories, net             48,121                  34,132
          Other current assets         19,638                   4,622
        

          Total current assets        110,239                 101,383
        

        Property and equipment, net    21,089                  12,631
        Other assets, net               4,673                   5,934
        

           Total assets              $136,001                $119,948
        

        Liabilities and stockholders' equity
          Current liabilities          $6,163                 $54,282
          Non-current liabilities         776                     734
          Long-term debt               25,867                  18,909
          Stockholders' equity         33,195                  46,023
        

          Total liabilities and
           stockholders' equity      $136,001                $119,948
        

SOURCE SubMicron Systems Corporation /CONTACT: Robert J. Okunski, Director of Investor Relations,
610-530-3480, or e-mail, bob_okunskisubm.com, or R.G. Holmes, Chief Financial Officer, 610-391-9200, both
of SubMicron Systems Corporation, or Internet, www.subm.com/




United States Leather, Inc. Reports Third Quarter Results


MILWAUKEE, Wis., Nov. 8 , 1996- United States Leather, Inc. reported today that excluding the sales of the
USL Trading Division and the German furniture branch, both discontinued operations, net sales for the third
quarter of 1996 were $74.5 million, an increase of $0.9 million, or 1.2%, as compared to the third quarter of
1995. Similarly, on this basis, third quarter 1996 net sales were consistent with the previous four quarters which,
excluding sales from discontinued operations, have averaged $74.2 million. Including sales from discontinued
operations, net sales for the third quarter of 1996 were $75.3 million, a decrease of $3.3 million, or 4.2%, as
compared to the third quarter of 1995. Excluding the discontinued operations, net sales for the nine month period
were $224.4 million as compared to $254.8 million for the same period last year, a decrease of $30.4 million, or
12.0%. Including discontinued operations, net sales for the nine month period were $235.4 million, a decrease of
$40.7 million, or 14.7%, versus the same period last year.


Gross profit for the third quarter of 1996 was $7.0 million, a reduction of $3.8 million, or 35.2%, as compared to
the same period last year. The Company recorded a $1.0 million LIFO revaluation charge to operations in the
third quarter of 1996 as compared to a $2.5 million LIFO revaluation credit during the same period last year.
This variance of $3.5 million was principally the result of increasing hide costs during the third quarter of 1996
as compared to decreasing hide costs during the third quarter of 1995. The average price of domestic hide
purchase commitments made during the third quarter of 1996 was approximately 19% higher than the average
prices of similar commitments made during the third quarter of 1995. Gross profits were also adversely impacted
by manufacturing process issues, automotive cutting startup costs, losses associated with the German furniture
branch and nonrecurring expenses associated with environmental accruals. Gross profit for the nine months
period, excluding the nonrecurring $6.6 million inventory reserve recorded in the second quarter of 1996, was
$28.2 million, a decrease of $12.2 million, or 30.2%, as compared to the first nine months of 1995. This
decrease was the result of reduced sales volume and prices, increased unit conversion costs, losses associated
with the German furniture branch, increasing hide costs and automotive cutting startup. Including the second
quarter inventory reserve, gross profit through the first nine months of 1996 was $21.6 million.


As a result of the lower gross profit, income from operations dropped from $4.0 million in the third quarter of
1995 to $0.3 million in the third quarter of 1996. Income from operations for the nine months ended September
30, 1996, excluding the $9.4 million of nonrecurring restructuring expenses recorded in the second quarter of
1996, was $7.4 million, a reduction of $12.2 million versus the first three quarters of 1995 principally due to the
lower sales and gross profit. Including the nonrecurring expenses, the Company had a year-to-date loss from
operations of $2.0 million.


Interest expense during the third quarter of 1996 was $4.1 million, a decrease of $0.4 million versus the same
period last year. The decrease was principally the result of reduced average borrowings in the Company's
revolving credit facility as well as the completion of the amortization of fees associated with the original
placement of this facility. For the nine month period ended September 30, 1996, interest expense was $12.8
million as compared to $13.6 million in the first nine months of 1995.


The Company had a net loss of $2.7 million in the third quarter of 1996 as compared to a net loss of $0.6 million
in the third quarter of 1995 principally the result of reduced gross profits due to increasing hide costs. During the
first three quarters of 1996, the Company recorded a net loss of $10.3 million, $5.8 million of which is
nonrecurring, as compared to net income of $3.3 million during the first nine months of 1995. 1995 year-to-date
net income included a $0.4 million extraordinary gain related to the Company's purchase of its 10.25% senior
notes due 2003 during the first quarter of 1995.


United States Leather is a diversified producer and marketer of finished leather serving the footwear, furniture,
personal leather goods and automotive markets. The Company, headquartered in Milwaukee, Wis., operates
manufacturing facilities in Wisconsin, North Carolina, Nebraska, Indiana and Canada.


        CHART:
        

                     UNITED STATES LEATHER, INC. AND SUBSIDIARIES
                      CONDENSED STATEMENTS OF INCOME (UNAUDITED)
                                (Dollars in Millions)
        

                                           3 Months Ended      9 Months Ended
                                          September    30,    September    30,
        Income Statement Data                1996     1995      1996      1995
        Net sales                           $75.3    $78.6    $235.4    $276.1
        Cost of sales                        68.3     67.8     213.8     235.7
        Gross profit                          7.0     10.8      21.6      40.4
        Selling, general &
        administrative expenses               5.7      5.8      18.0      18.2
        Restructuring expense                 0.0      0.0       2.5       0.0
        Amortization of intangible assets     1.0      1.0       3.1       2.6
        Income (loss) from operations         0.3      4.0      (2.0)     19.6
        Other (income) expense                0.0      0.0       0.1       0.0
        Interest expense                      4.1      4.5      12.8      13.6
        Income (loss) before taxes
         and extraordinary gain              (3.8)    (0.5)    (14.9)      6.0
        Income tax provision                 (1.1)     0.1      (4.6)      3.1
        Net income (loss) before
         extraordinary gain                  (2.7)    (0.6)    (10.3)      2.9
        Extraordinary gain, net of tax        0.0      0.0       0.0       0.4
        Net income (loss)                   ($2.7)   ($0.6)   ($10.3)     $3.3
        

        Other Data
        EBITDA                               $3.1     $6.5      $6.7     $27.0
        

        % of Net Sales
        Gross profit margin                   9.3%    13.7%      9.2%     14.6%
        Income from operations                O.4%     5.1%     -0.8%      7.1%
        EBITDA                                4.1%     8.3%      2.8%      9.8%
        

SOURCE United States Leather, Inc./CONTACT: Robert Hale, Chief Financial Officer of United States Leather,
Inc., 414-291-3014/




Holly Products, Inc. Announces Court Ruling On Claims Hearings For Country World Casinos, Inc. Chapter 11
Bankruptcy Proceedings


BALA CYNWYD, Pa.--Nov. 8, 1996--Holly Products Inc. (NASDAQ: HOPR, HOPRW, HOPRP; BSE: HOP,
HOPP) today announced that the U.S. Bankruptcy Court, District of Colorado, has rendered an opinion and order
for the company's subsidiary, Country World Casinos, Inc.


The Court's order finds that TommyKnocker Casino Corporation/New Allied Development Corporation is not
entitled to default interest at the rate of 18%. However, Country World is ordered to pay 8% per annum on the
unpaid balance due TommyKnocker. Country World is not obligated to pay attorney's fees as each party has been
directed by the court to pay their own accordingly.


The Court further finds that Country World Casinos, Inc. is not in default of its Agreement with
TommyKnocker/New Allied Development Corporation with regard to filing a registration statement for its
preferred stock. Until TommyKnocker/NADC files such registration statement and Country World fails to pay for
its cost, Country World is not in breach of the agreement.


Lastly, the Court's order upheld TommyKnockers/New Allied's claim that Country World was not entitled to an
offset on the environmental clean-up as the work had been completed and Country World had paid all clean-up
costs without objection prior to the takeover by Holly Products, Inc.


Both parties are ordered to confer and agree on a specific dollar amount by November 15th else the Court will
set forth a hearing, determining the amount and assess costs and attorneys' fees to the prevailing party.


William H. Patrowicz, president of Holly Products, Inc., stated, "We have repeatedly tried to negotiate a
settlement with TommyKnocker and New Allied over the past 22 months without success. We are confident that
the Judge's opinion and order have set the parameters for us to bring the issues to resolve this coming week as
ordered by the Court and such settlement should be fully paid from funds deposited by Country World earlier in
these proceedings."


Holly Products Inc., headquartered in Bala Cynwyd, has a wholly owned subsidiary, Navtech Industries of
Shiprock, N.M. and a majority owned subsidiary, Country World Casinos Inc., of Denver. Navtech is a
manufacturer and tester of electronic components for casino equipment, hotel equipment and signage. Country
World Casinos Inc. is a development corporation, whose plan is to construct a casino in Black Hawk, Colo., as
well as a hotel complex.


CONTACT: Corporate Contact: William H. Patrowicz, 610/617-0400 or Media Contact: Elliott Jacobson,
312/943-1100




Spectrum Information Technologies Announces Earnings


PURCHASE, N.Y., Nov. 8, 1996 - Spectrum Information Technologies, Inc. announced earnings as reported in
its Quarterly Report on Form 1O-Q for the quarter ended September 30, 1996, the second quarter of its fiscal
year.


Spectrum reported an operating loss of $579,000 on revenues of $651,000 for the three month period ended
September 30, 1996, as compared with an operating loss of $819,000 on revenues of $669,000 for the same
quarter last fiscal year. The decrease in operating loss is primarily the result of reduced operating costs and
expenses most significantly in the areas of non- bankruptcy related legal expenses and outside services. For the
six month period ended September 30, 1996, Spectrum reported revenues of $1.5 million and an operating loss of
$1.1 million, compared to revenues of $1.7 million and an operating loss of $2 million during the same period
last fiscal year.


Spectrum's operating loss is consistent with the summary projections described in the disclosure statement
associated with its recently confirmed plan of reorganization. Spectrum stated in the report its belief that royalty
payments from existing license agreements and revenues generated from sales of its existing products will not be
sufficient to reverse operating losses. The Company expects this negative cash flow to continue until it can
successfully implement its strategy to develop and market a new line of mobile communications software
products.


Spectrum reported a net loss of $667,000, or $.01 per share, for the quarter and a net loss of $1.5 million, or $.02
per share, for the six months ended September 30, 1996. For the three and six month periods ended September
30, 1995, Spectrum reported net income of $519,000, or $.01 per share, and $1.2 million, or $.02 per share,
respectively. The net income reported last fiscal year included a gain of $1.6 million related to the sale of a
product line and related patent rights that were not essential to Spectrum's direct connect technology and
products. The six month period ended September 30, 1995 also included approximately $3.2 million in gains and
income related to discontinued operations.


In its latest quarterly report, Spectrum also announced that the U.S. District Court for the Eastern District of New
York has scheduled a bearing for January 24, 1997 regarding approval of the previously announced settlement of
the securities related class action pending against the Company. The effective date of Spectrum's Chapter 11 plan
of reorganization, which was confirmed by the U.S. Bankruptcy Court for the Eastern District of New York on
August 14, 1996, is contingent upon the District Court's approval of the class action settlement becoming final.


This press release contains several statements that are "forward- looking," including those concerning expected
revenues, the introduction of mobile communications software products and consummation of its plan of
reorganization. The Company's actual performance may differ based on a number of risks, including Spectrum's
ability to consummate its plan of reorganization and to develop and market new products with limited capital
resources. Spectrum's quarterly and annual reports as filed with the Securities and Exchange Commission discuss
these and other risk factors.


SOURCE Spectrum Information Technologies, Inc. /CONTACT: For Media Only: Michael Freitag of Kekst and
Company, 212-593-2655; or Investors: Spectrum Information Technologies, Inc. Investor Relations,
914-251-1800, ext. 182/