TCR_Public/970213.MBX




InterNet Bankruptcy Library - News for February 13, 1997






Bankruptcy News For February 13, 1997



  1. The Krystal Company Reports Fourth Quarter and Annual Results For 1996

  2. Cincinnati Microwave Issues Statement

  3. Clothestime announces appointment of new chief merchant, other executive appointments

  4. Reorganized ICH Announces Purchase of Sybra, Inc.

  5. Dataware Technologies Announces Fourth Quarter and Fiscal 1996 Results

  6. Flagstar reports fourth quarter and year-end results

  7. Hexcel Reports Fourth Quarter and 1996 Results; Fourth Quarter Net Income is $2.3 Million and 1996 Net Loss is
    $19.2 Million; Results Include Business Acquisition and Consolidation Expenses Totaling $6.6 Million for the Fourth
    Quarter and $42.4 Million for the Year




The Krystal Company Reports Fourth Quarter and Annual Results For 1996


CHATTANOOGA, Tenn., Feb. 13, 1997 - The Krystal Company (Nasdaq: KRYSQ), an operator and franchisor of
quick-service hamburger restaurants, today reported net income for the fourth quarter ended December 29, 1996, of
$1,845,000, or 25 cents per share versus comparable net income of $1,404,000, or 19 cents per share for the fourth quarter
of 1995 before deducting special or unusual charges related to the Company's Chapter 11 proceedings, Fair Labor Standards
Act (FLSA) lawsuits, and provision for restaurant closings (1995 only) which reduced net income by 53 cents per share in the
fourth quarter of 1996 and by 34 cents per share in the fourth quarter of 1995. After the charges were made, a net loss of
$2,091,000, or 28 cents per share was reported for the fourth quarter of 1996 versus a net loss of $1,135,000, or 15 cents
per share for the fourth quarter of 1995.


Net income for the year ended December 29, 1996, before the special or unusual charges was $2,933,000, or 39 cents per
share versus comparable net income of $3,415,000, or 45 cents per share for the year 1995. The special or unusual charges
related to the Company's Chapter 11 proceedings, FLSA lawsuits, and provision for restaurant closings (1995 only) reduced
net income by 71 cents per share for 1996 and by $1.16 per share for 1995. After the special charges were made, the net
loss was $2,422,000, or 32 cents per share versus a net loss of $5,324,000, or 71 cents per share for the year 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. The Company is a debtor-in-possession for purposes of the bankruptcy
case. An agreement was reached in January 1997 to settle the various wage claims for approximately $13,000,000. The
Company is recording the known administrative costs of the Chapter 11 proceedings as they are determined. The Company
expects that its plan of reorganization will be approved by the bankruptcy court near the end of the first quarter of 1997 and
that shortly thereafter it will emerge from Chapter 11 proceedings.


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 fourth quarter were up 0.4% versus fourth quarter of 1995. This
same store sales increase was the second consecutive quarterly increase, and the last two quarters were the first such
increases since the first quarter of 1994. For the 1996 fiscal year same restaurant sales were down 0.4% versus the same
period in 1995.


Total quarterly revenues were $63.3 million, down approximately 0.9% from the fourth quarter of 1995. Total year to date
revenues were $244.3 million, down approximately 1.5% from 1995. Restaurant sales for the quarter decreased 1.2% to
$61.1 million versus $61.8 million in the fourth quarter of 1995. Restaurant sales for the year 1996 were $236.5 million
compared to $239.4 million for 1995, a 1.2% decrease.


The Company opened no new restaurants in 1996 versus six in 1995. The Company had 249 restaurants open at the end of
1996 compared to 256 at the end of 1995. Franchisees opened seven and 13 new restaurants in the quarter and 1996 year,
respectively. In 1995, quarterly and annual franchisee restaurant openings were six and 23, respectively.


Fourth quarter revenues included franchise fees of $178,000 and royalties of $757,000 compared with $114,000 and
$702,000, respectively, in the fourth quarter of 1995. For the year franchise fees were $349,000 and royalties were
$2,778,000, compared with $618,000 and $2,420,000, respectively, in 1995. Krystal began franchising in late 1990 and had
89 franchised restaurants in operation at the end of the 1996 year compared to 80 at the end of 1995. Sales by franchisees
were $16.6 million for the quarter, up 6.3% over the same period in 1995. Year to date sales by franchisees were $61.1
million, up 13.2% over the same period in 1995.


Founded in 1932, The Krystal Company is one of the oldest fast-food chains in the United States. Krystal owns and operates
249 restaurants in Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, South Carolina, and Tennessee. Krystal
franchisees and licensees operate 89 restaurants located in Alabama, Arkansas, Florida, Georgia, Kentucky, Louisiana,
Mississippi, North Carolina, South Carolina, and Tennessee.


                                                1996                    1995
        Fourth quarter:
        Revenues                            $  63,266,000         $ 63,823,000
        Net income before the
          effect of reorganization
          item (a), special charge
          (b), and provision for loss
          on restaurant closings (1995) (c) $   1,845,000        $   1,404,000
        Net loss                            $  (2,091,000)       $  (1,135,000)
        Average shares                          7,492,000            7,539,000
        Net income per share before the
          effect of reorganization item
          (a), special charge (b), and
          provision for loss on restaurant
          closings (1995) (c)               $         .25        $        .19
        Net loss per share                  $        (.28)       $       (.15)
        

        Twelve months:
        Revenues                            $ 244,268,000        $248,028,000
        Net income before the effect of
          reorganization item (a),
          special charge (b), and provision
          for loss on restaurant closings
          (1995) (c)                        $   2,933,000        $  3,415,000
        Net loss                            $  (2,422,000)       $ (5,324,000)
        Average shares                          7,500,000           7,517,000
        Net income per share before the
          effect of reorganization item
          (a), special charge (b), and
           provision for loss on restaurant
           closings (1995) (c)              $        .39         $        .45
        Net loss per share                  $       (.32)        $       (.71)
        

        (a) Reorganization item represents legal and professional fees and
            administrative costs incurred in connection with Chapter 11
                proceedings plus additional interest expense, net, related
        to certain
        

            pre-petition liabilities.
        

            (b) Special charge of $4,000,000 pre-tax or $2,480,000 after-tax
        recorded
        

            for wage and hour litigation in the fourth quarter 1996 and
                $10,000,000 pre-tax or $6,200,000 after-tax in the third
        quarter 1995.
        

        (c) Provision for loss on restaurant closings and other property write-
            downs of $3,911,000 pre-tax or $2,425,000 after-tax recorded in the
            fourth quarter of 1995.
        

                     THE KRYSTAL COMPANY AND SUBSIDIARY
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                   (In thousands, except per share data)
        

                         For the Three Months       For the Twelve Months
                                 Ended                     Ended
                         12/29/96      12/31/95    12/29/96      12/31/95
        

           Revenues:
        Restaurant sales $ 61,069     $ 61,789     $ 236,470     $ 239,376
        Franchise fees        178          114           349           618
        Royalties             757          702         2,778         2,420
        Other revenue       1,262        1,218         4,671         5,614
        Total              63,266       63,823       244,268       248,028
        

           Costs and expenses:
        Cost of restaurant
         sales             49,886       50,547       195,733       197,031
        Deprec. and amort.
         expense            2,931        3,034        11,378        12,311
        Gen. and admin.
         expenses           5,855        6,536        25,422        25,770
        Other expenses, net 1,067        1,016         3,809         4,417
        Provision for loss
         on restaurant
         closings and other
         property write-
         downs                ---        3,911           ---         3,911
        Special charge      4,000          ---         4,000        10,000
        Total              63,739       65,044       240,342       253,440
        

        Operating income
         (loss)              (473)      (1,221)        3,926        (5,412)
           Reorganization item:
        Professional fees
         and other exps.   (1,558)        (184)       (3,846)         (184)
        

           Interest expense:
        Contractual rate
         interest          (1,003)      (1,004)       (4,005)       (4,134)
        Interest related to
         certain pre-
         petition
         liabilities, net    (791)         ---          (791)          ---
        Interest income       453          153           814           718
        Loss before benefit
         from income taxes (3,372)      (2,256)       (3,902)       (9,012)
        Benefit from
         income taxes      (1,281)      (1,121)       (1,480)       (3,688)
        Net loss         $ (2,091)    $ (1,135)    $  (2,422)    $  (5,324)
        Loss per common
         share           $  (0.28)    $  (0.15)    $   (0.32)    $   (0.71)
        Wtd. avg. number of common
         shares outstanding 7,492        7,539         7,500         7,517
        

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

                            Consolidated Balance Sheets
                                  (In thousands)
        

                                                       12/29/96     12/31/95
           ASSETS
           Current Assets:
        Cash and temporary investments               $ 28,765   $ 13,713
        Receivables, net                                2,566      1,752
        Income tax receivables                            ---        609
        Net investment in direct financing leases -
         current portion                                  562        856
        Inventories                                     2,156      2,322
        Deferred tax asset                              8,327      5,553
        Prepayments and other                           1,980        830
        Total current assets                           44,356     25,635
        Net investments in direct financing leases,
         excluding current portion                        305        867
        Property, buildings and equipment, net         91,173     98,546
        Leased properties, net                          1,653      1,863
           Other assets:
        Cash surrender value of life insurance          5,638      5,117
        Other                                             745        667
        Total other assets                              6,383      5,784
        Total assets                                 $143,870   $132,695
        

           LIABILITIES AND SHAREHOLDERS' EQUITY
           Current Liabilities:
        Accounts payable                             $  4,535   $  1,681
        Accrued liabilities                            17,986      9,427
        Current portion of long-term debt                 967        432
        Current portion of capital lease obligations      454        653
        Income taxes payable                              822        ---
        Total current liabilities                      24,764     12,193
        Liabilities subject to compromise              58,317     56,909
        Long-term debt, excluding current portion       3,090      3,621
        Capital lease obligations, excluding current
         portion                                        2,278      2,754
        Deferred income taxes                           2,286      2,719
        Other long-term liabilities                     8,447      7,852
           Shareholders' equity:
        Preferred stock, without par value; 5,000,000
         shares authorized; no shares issued and
         outstanding                                      ---        ---
        Common stock, without par value; 15,000,000
         shares authorized; shares issued and
         outstanding,  7,491,768 at December 29, 1996
         and 7,526,808 at December 31, 1995            40,556     40,830
        Retained earnings                               5,873      8,195
        Deferred compensation                          (1,741)    (2,378)
        Total shareholders' equity                     44,688     46,647
        Total liabilities and shareholders' equity   $143,870   $132,695
        

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

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





Cincinnati Microwave Issues Statement


CINCINNATI, OH - Feb. 13, 1997 - Cincinnati Microwave, Inc. (Nasdaq: CNMW) announced today that the Asset
Purchase Agreement dated December 3, 1996 between BEL-Tronics U.S.A., Inc. and the Company has been terminated.
The Company had previously announced that the transaction was subject to numerous conditions precedent including
BEL-Tronics obtaining additional equity or debt financing on terms satisfactory to the parties and Cincinnati Microwave
obtaining additional working capital to continue operations through the consummation of the transaction. Since certain
conditions precedent to the consummation of the transaction have not been fulfilled, and are incapable of fulfillment, the
agreement has been terminated.


The Company also said that it intends to file for protection under Chapter 11 of the U.S. Bankruptcy Code within the next
several days.


The Company also announced that Joseph M. O'Donnell has resigned from the board of directors stating that he did not have
the time available to meet his many commitments. Kurt H. Stump, Cincinnati Microwave's vice president and chief financial
officer, has been appointed a director, effective yesterday.


Cincinnati Microwave designs, manufactures and markets ultrahigh frequency and microwave wireless communications
products. The Company's product lines include radar warning devices, digital spread spectrum cordless telephones and
wireless data modems for use on the Cellular Digital Packet Data (CDPD) network.


SOURCE Cincinnati Microwave, Inc. /CONTACT: Elaine Bacon of Cincinnati Microwave, 513-489-5400, or
shinfocnmw.com; or Bill Schmidle, Analyst Inquiries, 312-640-6753, or Karl Plath, General Inquiries, 312-640-6738, both of
the Financial Relations Board/




Clothestime announces appointment of new chief merchant, other executive appointments


ANAHEIM, Calif.--Feb. 13, 1997--The Clothestime Inc. (OTC:CTMEQ) Thursday announced that, after a nationwide
search for a new chief merchandising executive, its board of directors has elected Barry Herman as the company's vice
president and general merchandising manager, and that Herman's appointment has been approved by the United States
Bankruptcy Court for the Central District of California, which is presiding over the company's chapter 11 reorganization case.


Herman previously served as the senior merchandising executive at a number of retailers, including Sycamore Stores, the Stage
Division of Fashion Bar and 5-7-9 Shops. He has also served as a merchant for Gimble Brothers and Abraham & Straus.


David Sejpal, the chairman of the board, president and chief executive officer of Clothestime, said: "We are delighted to have
a merchant of Barry Herman's experience and proven expertise in junior women's discount retailing joining the Clothestime
team."


Sejpal also said that Herman had been selected after an extensive search in which the company worked closely, with the
official committee of unsecured creditors in its chapter 11 case (the "Creditors' Committee").


"Barry Herman will be a key player in the company's reorganization," Sejpal said, "and his appointment is a significant
milestone on the road to a successful exit from chapter 11."


Clothestime also announced that its board of directors has elected Douglas L. Pereira, formerly the company's corporate
controller, as senior vice president, chief financial officer, treasurer and secretary and has promoted Robert Klausner, formerly
the company's director of store operations, to the position of vice president -- store operations.


Pereira and Klausner previously were elected as directors of the company. In addition, the company announced the
appointment of Sona McGrath as corporate controller and assistant secretary. McGrath previously served as Clothestime's
assistant controller.


Separately, Sejpal said that Clothestime and its Creditors' Committee were continuing to engage in active discussions
regarding a plan of reorganization and the company's alternatives for exiting chapter 11. He also reemphasized that, based on
these discussions, the company and the Creditors' Committee had concluded that Clothestime's existing stockholders would
not receive any cash or other property under a plan of reorganization.


Clothestime currently operates 333 women's apparel stores in 17 states and Puerto Rico, offering primarily in-season,
moderately- priced sportswear, dresses and accessories, emphasizing fashion at a discount from department and specialty
stores.


CONTACT: Clothestime Inc., Anaheim Douglas L. Pereira, 714/779-5881, Ext. 2410




Reorganized ICH Announces Purchase of Sybra, Inc.


DALLAS, TX - Feb. 13, 1997 - The official Committee of Equity Security Holders of ICH Corporation, appointed by the
United States Bankruptcy Court to represent shareholders in the Chapter 11 cases of ICH Corporation and its affiliated
debtors, today announced that it had entered into an agreement to purchase Sybra, Inc., an operating company owning 150
Arby's restaurants in 4 states. Sybra, Inc. is a wholly owned subsidiary of Valcor, Inc., which is a wholly owned subsidiary of
Valhi, Inc. (NYSE: VHI)


The proposed sale will be accomplished in simultaneous transactions that will include the sale of certain restaurant properties
by Valhi to U.S. Restaurant Properties Master L.P. (NYSE: USV), a Delaware limited partnership, for $45 million in cash
consideration and the sale of 100% of the stock of Sybra to ICH for $39.7 million cash consideration, which includes the
retirement of approximately $23.7 million of indebtedness of Sybra. These transactions are subject to, among other things, the
effectiveness of ICH's plan, completion of due diligence, the purchaser obtaining financing for the transaction and certain
consents from third parties. Subject to the foregoing, the transactions are expected to close by April 15, 1997.


On February 7, 1997 the United States Bankruptcy Court, supervising the Chapter 11 cases of ICH and its related debtors,
entered an order confirming the First Amended Joint Plan of Reorganization for the Company. Under the Plan as approved by
the Bankruptcy Court, reorganized ICH is retaining assets valued at approximately $11 million, including cash and real estate.
Additionally, four members of the Equity Committee will serve as the initial Board of Directors of reorganized ICH, including
James R. Arabia who will serve as Chairman of the Board, President and CEO. The Plan is presently scheduled to become
effective on February 19, 1997.


Following the effective date of the Plan, eligible holders of existing preferred and common shares of ICH will be entitled to
exchange such securities for shares of common stock of the reorganized company at a conversion rate of 1 new share for each
5 existing preferred, and .0269 new shares for each existing share of common. In lieu of this conversion, eligible shareholders
holding small amounts of shares have the option to elect to receive a single cash payment as provided in the Plan.


SOURCE ICH Corporation  /CONTACT: James R. Arabia of ICH Corporation, 619-587-8533/




Dataware Technologies Announces Fourth Quarter and Fiscal 1996 Results


CAMBRIDGE, Mass., Feb. 13, 1997 - Dataware Technologics, Inc. (Nasdaq: DWTI), a leading developer of software for
professional electronic publishing, today announced financial results for the fourth quarter and the full year ended December
31, 1996.


For the fourth quarter of 1996, Dataware reported record revenues of $10.6 million, up from $10.5 million in the fourth
quarter of l995. The net loss for the fourth quarter of 1996 was $4.4 million, or $0.66 per share, compared to a net loss of
$0.1 million, or $0.02 per share, in the same quarter of the prior year. The net loss per share, before non-recurring items, was
$0.26 per share, compared to no income per share in the fourth quarter of 1995.


For the full-year 1996, revenues were $37.5 million, down from $41.1 million in 1995. The net loss for the year was $19.3
million compared to net income of $1.7 million in 1995. The net loss per share for 1996 was $3.01 as compared to net
income per share in 1995 of $0.26 per share. The net loss for 1996 includes non-recurring charges of $8.5 million, or $1.32
per share.


"Our positive momentum continued from the prior quarter as we hit record revenues, improved gross margins, and significantly
narrowed the operating losses in our core software solutions business," said Kurt Mueller, chairman and chief executive officer
of Dataware Technologies. "We signed a number of exciting new customer contracts in Q4 as well, including Booz Allen,
Carlsberg A/S, Library Corp., Georgia Tech, Air Charter Guides, Worldwide Information, Unisys, and the National Library
of Sweden."


"We continued our aggressive new product investment program, hitting the first of our key targets," added Mueller. "We
launched and shipped, on schedule, our new Dataware Electronic Publishing Management System (EPMS). With Dataware
EPMS, corporate and commercial publishers can create compelling electronic publications from widely disparate source
information, and then simultaneously publish to the Internet, Intranet, CD-ROM, DV-ROM and client/server systems. Initial
response to the new product from customers and industry analysts has been very enthusiastic."


The statements in this press release about the Company's prospects, including those relating to the anticipated timing and
benefits of the Company's investment strategy, product initiatives and ongoing restructuring activities are forward-looking
statements based on assumptions that may not be realized for various reasons. Among these are that the Company's new
product offerings may not adequately meet the needs of a rapidly changing marketplace; that the Company may not be able to
develop appropriate new distribution channels to deliver these products economically and on time; that the Company's
competitors, some of whom have significantly more resources than the Company, may meet the needs of the market more
quickly and effectively; and that increases in various cost and expense categories may exceed management's current
expectations. In general, for the Company to be successful, it also must continue to attract and retain highly skilled technical,
management, sales and marketing personnel; and worldwide and regional economic conditions must not significantly
deteriorate.


Dataware Technologies develops and markets software for professional electronic publishing. Our innovative software
products and solutions enable customers to manage and distribute a wide variety of information via the Internet, CD-ROM,
enterprise networks, commercial online services, print-on- demand, and combinations of these media. Today, Dataware's
software is used by more than 2,000 organizations worldwide - including publishers, corporations, government agencies,
professional firms and educational institutions - serving over 800,000 end-users in more than 20 countries. The Company's
growth strategy emphasizes technology and market leadership, extensive customer service, global distribution and selective
acquisitions.


The Company's consolidated statements of operations are attached. Dataware is a registered trademark of Dataware
Technologies, Inc.


                             Dataware
                             Technologies, Inc.
                   Condensed Consolidated
                   Statements of Operations (In
                   thousands except per share
                   data, unaudited)

                                               Th
                                               re
                                               e
                                               mo
                                               nt
                                               hs
                                               en
                                               de
                                               d
                                               Tw
                                               el
                                               ve
        months ended

                                               De
                                               ce
                                               mb
                                               er
                                               31
                                               ,
                                                 

                                                 
                                               De
                                               ce
                                               mb
                                               er
                                               31
                                               ,
                                             1996
                                                

                                             1995
                                                 

                                             1996
                                                 

                                             1995
         Revenues:
         Software license fees            $5,094
            $5,376    $16,502 $19,996 Services   
                               5,540      5,157  
           20,957  21,128

         Total revenues                   10,634 
            10,533     37,459  41,124

         Cost of revenues:
         Software license fees               861
               916      3,437   3,125 Write down
         of intangible
          assets                            ----
               ----      1,926    ----
         Services                          3,162
             3,102     12,938  11,923

         Total cost of revenues            4,023 
             4,018     18,301  15,048

         Gross margin                      6,611 
             6,515     19,158  26,076

         Operating expenses:
         Sales and marketing               4,927
             3,895     17,679  13,754 Product
         development               2,191     
         1,421      8,144   5,040 General and
         administrative        1,431      1,401  
            6,603   5,337 Writedown of goodwill
          and other non-recurring
          charges                           ----
               ----      1,889    ----
         Merger costs                       ----
               171       ----     171 Acquired
         research and
          development                       ----
               ----      1,861    ----

         Total operating expenses          8,549 
             6,888     36,176  24,302

         Income (loss) from
          operations                     (1,938)
              (373)   (17,018)   1,774

         Interest income                      26 
               180        386     611 Settlement
         of litigation          1,250       ----
           (2,823)    ---- Other income
         (expenses), net        173          2   
             144      61

         Income (loss) before income
          taxes                            (489)
              (191)   (19,311)   2,446

         Provision (benefit) for
          income taxes                     3,867
               (58)       ----     733

         Net income (loss)              $(4,356) 
            $(133)  $(19,311)  $1,713

         Net income (loss) per common
          share                          $(0.66)
            $(0.02)    $(3.01)  $ 0.26

         Weighted average number of
          common and common
          equivalent shares                6,626
              6,566      6,425   6,511

SOURCE Dataware Technologies, Inc./CONTACT: Daniel M. Clarke, Chief Financial Officer of Dataware Technologies,
Inc., 617-577-2892, or dclarkedataware.com, or Home Page: http://www.dataware.com/





Flagstar reports fourth quarter and year-end results


SPARTANBURG, S.C.--Feb. 13, 1997--Flagstar Companies, Inc. (NASDAQ:FLST) today reported revenue of $661
million for the fourth quarter ended December 31, 1996, compared with $577 million in the same period last year. Operating
income, excluding prior year charges for the adoption of Statement of Financial Accounting Standards No. 121 (SFAS 121)
and restructuring items ("special charges"), was $37.2 million, versus $21.7 million in the prior year quarter. Earnings before
interest, taxes, depreciation and amortization (EBITDA), excluding special charges, were $74.6 million, compared with $54.8
million in the same quarter last year.


"For the quarter, we were pleased to report strong cash flow growth of 36 percent on an overall basis and 13 percent on a
comparable basis, excluding the contribution of Coco's and Carrows," said James B. Adamson, chairman and chief executive
officer of Flagstar. "Denny's profit margin benefited from an increase in average guest check resulting from a pricing increase in
September, while Hardee's growth in profitability was primarily driven by improved operating efficiencies and cost control
measures."


"We are somewhat concerned, however, that 1997 has started slowly," continued Adamson. "At Denny's, our customer
counts have fallen short of expectations since the pricing increase, and our Hardee's division continues to face obstacles to
increasing traffic at its restaurants due to its limited control as a Hardee's franchisee. While a relaunch of the Quincy's brand
has helped moderate sales declines, progress has not been as rapid as planned."


"As we indicated in January, Flagstar is actively pursuing capital structure options to increase its ability to respond to changing
consumer tastes and generate increased traffic," said Adamson. "We are quickly moving forward with the development of a
business plan to help position the company with the resources and strategies for long-term growth. As part of this effort, we
announced last month that the company has hired Donaldson, Lufkin & Jenrette Securities Corporation to assist in exploring
alternatives to improve the company's capital structure so that it can reinvest in its businesses and grow its restaurant concepts
for the long- term. We are still in the early stages of this process and cannot speculate on the form that a potential financial
transaction might take."


The revenue increase for the period was due to a full quarter of operating contribution from the Coco's and Carrows
restaurant brands which were acquired on May 23, 1996. The increase was partially offset by the sale of Denny's food
processing business, Portion-Trol Foods, Inc., lower comparable store sales at Hardee's and Quincy's and fewer
company-operated restaurants versus the prior year.


The improvement in operating income and EBITDA for the fourth quarter of 1996 was principally driven by margin
improvement at Denny's and Hardee's, and a full quarter of operating contribution from Coco's and Carrows. The
improvement was partially offset by weak performance at Quincy's, the sale of Denny's food processing business and lower
income from gains on the sale of restaurants to franchisees versus the prior year quarter. Results for the quarter include income
of $0.9 million from gains on the sale of restaurants to franchisees, compared with $2.4 million in the same quarter last year.


The company recorded a fourth quarter loss from continuing operations of $28.2 million, or $0.75 per share, compared with
$101.4 million, or $2.47 per share, in the prior year quarter. The loss from continuing operations for the prior year quarter
reflects special charges of $67 million, including a $51 million pre-tax charge associated with the adoption of SFAS 121, as
well as a pre-tax provision of $16 million for charges associated with a restructuring plan primarily related to the outsourcing of
the company's information systems function.


Full Year Results


For the year ended December 31, 1996, the company reported revenue of $2.54 billion, compared with $2.57 billion last
year. The revenue decline was primarily due to the sale of Denny's food processing and distribution businesses, lower
comparable store sales at Hardee's and Quincy's and fewer company-operated restaurants versus the prior year. The decline
in revenue was essentially offset by 31 weeks of operating contribution from Coco's and Carrows. Operating income,
excluding special charges, was $156.4 million, versus $165.5 million in the prior year. EBITDA for the year, excluding special
charges, was $286.3 million, compared with $298.3 million last year. Full-year income results were principally impacted by
weak performance at Quincy's, the sale of Denny's distribution and food processing businesses and lower gains on the sale of
restaurants to franchisees versus the prior year. Full-year results include income of $8.4 million from gains on the sale of
restaurants to franchisees, compared with $24.5 million in the prior year. The decline in income was largely offset by the
operating contribution from Coco's and Carrows. For the full year, the loss from continuing operations was $85.5 million, or
$2.35 per share, compared with $132.9 million, or $3.47 per share, last year.


Concept Results


Denny's fourth quarter restaurant operating income, excluding gains on the sale of restaurants to franchisees and special
charges, increased to $27.1 million, from $12.5 million in the same period last year. The improvement in operating income was
driven by a substantial increase in average check, which was largely offset by a sharp decline in customer counts. As a result,
Denny's company-owned comparable store sales increased 1.1 percent versus the prior year quarter, marking the ninth
consecutive quarterly increase. Denny's recorded $0.8 million in income from gains on the sale of Denny's restaurants versus
$1.7 million in the same quarter last year. For the full year, Denny's realized $7.7 million in such gains versus $20.7 million last
year. During the quarter, the Denny's domestic system opened 20 new restaurants and closed four restaurants. For the full
year, the Denny's domestic system opened 72 new restaurants and closed 30 restaurants.


Hardee's fourth quarter operating income, excluding special charges, increased to $15.9 million, from $5.5 million in the same
period last year. The increase in operating income was due to significant management focus on cost controls and achieving
improvement in profitability flow-through. Hardee's comparable store sales declined 8.2 percent versus the prior year quarter.
Fourteen restaurants were closed during the year-to-date period, all of which occurred in the first quarter.


Quincy's comparable store sales in the fourth quarter declined 10.1 percent versus the prior year quarter. As a result of the
declining sales, Quincy's recorded an operating loss of $1.2 million during the quarter, compared with operating income,
excluding special charges, of $5.9 million in the same period last year. Quincy's closed four restaurants during the year-to-date
period, all of which occurred in the first quarter.


El Pollo Loco's comparable store sales increased 5.0 percent versus the prior year quarter, marking the 11th consecutive
quarterly increase. Operating income, excluding gains on the sale of restaurants to franchisees, increased to $3.0 million during
the quarter, from $2.6 million in the same period last year, due to the strong sales trends. El Pollo Loco also recorded $0.1
million of income from gains on the sale of restaurants during the quarter, versus $0.6 million in the prior year period. For the
full year, El Pollo Loco realized $0.7 million in such gains versus $3.8 million in the prior year. During the quarter, El Pollo
Loco opened five new domestic restaurants as well as two new international restaurants in Singapore. For the year, El Pollo
Loco opened 16 new domestic restaurants as well as eight new international restaurants in Malaysia, the Philippines and
Singapore.


FRD Acquisition Co., a wholly-owned subsidiary of Flagstar Corporation and holding company for Coco's and Carrows,
contributed a full quarter of operating results for the fourth quarter of 1996. Revenue and operating income for the quarter
were $123.6 million and $4.1 million, respectively. Coco's contributed $2.6 million in operating income, while Carrows
contributed $1.5 million in operating income for the period. Coco's comparable store sales declined 0.2 percent during the
quarter, while Carrows comparable store sales increased 1.3 percent. During the quarter, Coco's closed two domestic
restaurants and opened 12 new international restaurants in Japan and Korea.


Flagstar is one of the nation's largest restaurant companies with over 3,200 moderately-priced restaurants and annualized
revenue of approximately $2.8 billion. Flagstar owns and operates the Carrows, Coco's, Denny's, El Pollo Loco and Quincy's
Family Steakhouse restaurant brands and is the largest franchisee of Hardee's.


Certain matters discussed in this release constitute forward looking statements and involve risks, uncertainties, and other
factors which may cause the actual performance of Flagstar Companies, Inc., its subsidiaries and underlying concepts to be
materially different from the performance indicated or implied by such statements. Such factors include, among others:
competitive pressures from within the restaurant industry; the level of success of the Company's operating initiatives and
advertising and promotional efforts, including the initiatives and efforts specifically mentioned above; adverse publicity; changes
in business strategy or development plans; terms and availability of capital; regional weather conditions; overall changes in the
general economy, particularly at the retail level and other factors from time to time set forth in the Company's SEC reports,
including but not limited to the discussion in the Management's Discussion and Analysis in the Company's Annual Report on
Form 10-K for the ended December 31, 1995 (and in the Company's subsequent quarterly reports on form 10-Q).


         
        *T
        

                            FLAGSTAR COMPANIES, INC.
                      Statements of Consolidated Operations
                         for the Quarter and Year Ended
                           December 31, 1996 and 1995
                                  (Unaudited)
          

                                                    Quarter Ended
        (in thousands, except per share amounts)         December 31,
         

                                               1996 (a)        1995
        Revenue
         Company Restaurant Sales              $    643,067  $    561,285
         Franchise Revenue                           18,402        15,375
           Total Revenue                       $    661,469  $    576,660
         

        Operating Income from Continuing 
         Operations Before Provision for
         Restructuring Charges and Charge for
         Impaired Assets                       $     37,219  $     21,705
        Provision for Restructuring Charges           -            15,873
        Charge for Impaired Assets                    -            51,358
         

        Operating Income (Loss) from Continuing 
         Operations                                  37,219       (45,526)
        Interest and Debt Expense, Net               65,547        55,167
        Other Non-Operating Expenses, Net             3,338         1,121
        Loss From Continuing Operations Before
           Income Taxes                             (31,666)     (101,814)
        Prov. for (Benefit from) Income Taxes        (3,470)         (414)
        Loss from Continuing Operations             (28,196)     (101,400)
        Gain on Sale of Discontinued
         Opertions, Net                               -            77,877
        Loss from Discontinued Operations, Net        -            (1,293)
        Income from Discontinued Operations, Net      -            76,584
         

        Extraordinary Item                            -             -    
        Provision for Income Taxes                    -             -    
        Extraordinary Item, Net                       -             -    
        Net Income (Loss)                           (28,196)      (24,816)
        Dividends on Preferred Stock (d)             (3,544)       (3,544)
         

        Net Loss App. to Common Shareholders   $    (31,740) $    (28,360)
         

        Per Share Amounts Applicable to Common Shareholders:
         Loss From Continuing Operations       $      (0.75) $      (2.47)
         Inc. From Discontinued Operations, Net       -              1.80
         Extraordinary Item, Net                      -             -    
         

         Net Loss                              $      (0.75) $      (0.67)
         

         Avg Outstanding & Equiv. Common Shares      42,434        42,434
        

                            FLAGSTAR COMPANIES, INC.
                      Statements of Consolidated Operations
                         for the Quarter and Year Ended
                           December 31, 1996 and 1995
                                  (Unaudited)
         

                                                     Year Ended
        (in thousands except per share amounts)          December 31,
         

                                               1996 (a)        1995
        Revenue
         Company Restaurant Sales                 2,471,247     2,512,164
         Franchise Revenue                           71,055        59,323
           Total Revenue                       $  2,542,302  $  2,571,487
         

        Operating Income from Continuing 
         Operations Before Provision for
         Restructuring Charges and Charge for
         Impaired Assets                       $    156,392  $    165,465
        Provision for Restructuring Charges           -            15,873
        Charge for Impaired Assets                    -            51,358
         

        Operating Income (Loss) from Continuing 
         Operations                                 156,392        98,234
        Interest and Debt Expense, Net              254,707       229,149
        Other Non-Operating Expenses, Net             3,537         2,005
        Loss from Continuing Operations Before
           Income Taxes                            (101,852)     (132,920)
        Prov. for (Benefit from) Income Taxes (b)   (16,392)          (14)
        Loss from Continuing Operations             (85,460)     (132,906)
        Gain on Sale of Discontinued
         Opertions, Net                               -            77,877
        Loss from Discontinued Operations, Net        -              (636)
        Income from Discontinued Operations, Net      -            77,241
         

        Extraordinary Item  (c)                       -               491
        Provision for Income Taxes                    -                25
        Extraordinary Item, Net                       -               466
        Net Income (Loss)                           (85,460)      (55,199)
        Dividends on Preferred Stock (d)            (14,175)      (14,175)
         

        Net Loss App. to Common Shareholders   $    (99,635) $    (69,374)
         

        Per Share Amounts Applicable to Common Shareholders:
         Loss from Continuing Operations       $      (2.35) $      (3.47)
         Inc. from Discontinued Operations, Net       -              1.82
         Extraordinary Item, Net                      -              0.01
         

         Net Loss                              $      (2.35) $      (1.64)
         

         Avg Outstanding & Equiv. Common Shares      42,434        42,431
         

         
        (a) Includes results of operations of Coco's and Carrows and the
         related interest and debt expense for the period
         May 23, 1996 (date of acquisition) through year-end 1996.
         Interest and debt expense for Coco's and Carrows for the
         quarter and year was $7,572 and $17,680, respectively.
         

        (b) The Company recorded a $7.3 million federal tax benefit in
         the third quarter of 1996 related to the reversal of
         certain reserves established in prior years in connection
         with proposed IRS deficiencies.  This action was taken as
         a result of certain legislation included within the Small
         Business Jobs Protection Act.
         

        (c) The extraordinary item  represents the gain on the repurchase
         of $24,975 principal amount of certain senior indebtedness
         net of the charge-off of the related unamortized deferred
         financing costs.
         

        (d) Amounts for 1996 include dividends in arrears of $3,544.
         

         
                            FLAGSTAR COMPANIES, INC.
                    Consolidated Revenue and Operating Income
                   by Operating Entity for the Quarter and Year
                           December 31, 1996 and 1995
                                  (Unaudited)
         

                                                  Quarter Ended
        ($ in thousands)                               December 31,
         

                                                1996          1995
        Revenue:
         Denny's (e)                       $    301,023  $    317,734
         Hardee's                               143,699       159,345
         Quincy's                                61,779        69,460
         El Pollo Loco                           31,332        30,121
         Subtotal                                   537,833       576,660
         Coco's                                  69,338         -    
         Carrows                                 54,298         -    
         Total Revenue                     $    661,469  $    576,660
         

        Operating Income (Loss) from Continuing
         Operations Before Provision for
         Restructuring Charges and Charge for
         Impaired Assets:
         Restaurants
         Denny's                           $     27,914  $     14,237
         Hardee's                                15,865         5,535
         Quincy's                                (1,243)        5,883
         El Pollo Loco                            3,072         3,259
         Processing and Dist. Operations (f)          -             4,435
         Corporate and Other                        (12,480)      (11,644)
         Subtotal                                    33,128        21,705
         Coco's                                   2,614         -    
         Carrows                                  1,477         -    
        Operating Income (Loss) from Continuing
         Operations Before Provisions for
         Restructuring Charges and Charge for
         Impaired Assets:                            37,219        21,705
        Provision for Restructuring Charges           -            15,873
        Charge for Impaired Assets                    -            51,358
         Total Operating Income            $     37,219  $    (45,526)
         

        Supplemental Data:
         Total company amortization and deprec.
         expense related to cont. operations   $     37,340  $     33,073
         

         
                            FLAGSTAR COMPANIES, INC.
                    Consolidated Revenue and Operating Income
                   by Operating Entity for the Quarter and Year
                           December 31, 1996 and 1995
                                  (Unaudited)
         

         
                                                     Year Ended
        ($ in thousands)                                December 31,
         

                                                1996          1995
        Revenue:
         Denny's (e)                       $  1,256,746  $  1,490,567
         Hardee's                               602,946       659,875
         Quincy's                               259,174       294,308
         El Pollo Loco                          128,392       126,737
         Subtotal                                 2,247,258     2,571,487
         Coco's                                 163,679 (g)     -    
         Carrows                                131,365 (g)     -    
         Total Revenue                     $  2,542,302  $  2,571,487
         

        Operating Income (Loss) from Continuing
         Operations Before Provisions for
         Restructuring Charges and Charge for
         Impaired Assets:
         Restaurants
         Denny's                           $    113,970  $    101,547
         Hardee's                                40,734        35,771
         Quincy's                                 6,648        22,965
         El Pollo Loco                           13,773        12,712
         Processing and Dist. Operations (f)          7,883        24,513
         Corporate and Other                        (41,513)      (32,043)
         Subtotal                                   141,495       165,465
         Coco's                                   8,217 (g)     -    
         Carrows                                  6,680 (g)     -    
        Operating Income (Loss) from Continuing
         Operations Before Provision for
         Restructuring Charges and Charge for
         Impaired Assets:                           156,392       165,465
        Provision for Restructuring Charges           -            15,873
        Charge for Impaired Assets                    -            51,358
         Total Operating Income            $    156,392  $     98,234
         

        Supplemental Data:
         Total company amortization and deprec.
         expense related to cont. operations   $    129,948  $    132,872
         

         
        (e)  Includes the revenue of the food processing and distribution
         operations.
         

        (f)  The distribution operation was sold in September 1995.  The
         food processing operation was sold in September 1996.
         

        (g)  Amounts relate to the period May 23, 1996 (date of
         acquisition through year-end 1996.
        

                            FLAGSTAR COMPANIES, INC.
                      Condensed Consolidated Balance Sheets
                        as of December 31, 1996 and 1995
                                 (Unaudited)
         

         
                                             December 31,  December 31
        ($ in thousands)                            1996 (h)       1995
         

        Assets
        Current Assets:
         Cash and Cash Equivalents             $     92,369  $    196,966
         Other Current Assets                        98,286        88,376
         Total Current Assets                   190,655       285,342
         

        Long-Term Assets:
         Property, Net                            1,168,582     1,104,361
         Other                                      328,133       118,048
         Total Assets                      $  1,687,370  $  1,507,751
         

        Liabilities
        Current Liabilities:
         Current Maturitues of L-T Debt        $     62,890  $     38,835
         Accounts Payable and Other Accrued
        Liabilities                             420,385       368,695
         Total Current Liabilities              483,275       407,530
         

        Long-Term Liabilities:
         Debt, Less Current Maturities            2,179,393     1,996,111
         Other                                      252,229       235,087
         Total Long-Term Liabilities          2,431,622     2,231,198
         Total Liabilities                    2,914,897     2,638,728
         

        Shareholders' Deficit                    (1,227,527)   (1,130,977)
         

         Total Liabilities and Shareholders'
            Deficit                        $  1,687,370  $  1,507,751
         

         
        (h) Includes Coco's and Carrows, which were acquired on
        May 23, 1996.
         

         
                            FLAGSTAR COMPANIES, INC.
                               Supplemental Data
                for the Quarter Ended December 31, 1996 and 1995
                                  (Unaudited)
         

         
                                Quarter        Quarter
         EBITDA                      Ended          Ended
         ($  in  millions)         12/31/96       12/31/95
         

         Denny's                       $41.7          $31.0
         Hardee's                       24.8           16.1
         Quincy's                        1.7            8.9
         El Pollo Loco                   4.9            4.8
         Processing and Dist. (f)      -                4.8
         Corporate and Other           (11.1)         (10.8)
         

        Subtotal                    62.0           54.8
         

         Coco's                          7.3            -  
         Carrows                         5.3            -  
         

        Total EBITDA               $74.6          $54.8
         

         
                                Quarter        Quarter
         CAPITAL  EXPENDITURES       Ended          Ended
         ($  in  millions)         12/31/96       12/31/95
         

         Denny's                       $20.3          $34.3
         Hardee's                        9.7            5.1
         Quincy's                        5.0            1.4
         El Pollo Loco                   1.3            4.8
         Processing and Dist. (f)         -             0.9
         Corporate and Other             1.6            0.1
         

        Subtotal                    37.9           46.6
         

         Coco's                          0.8            -  
         Carrows                         0.6            -  
         

           Total Capital Expenditures   39.3          $46.6
         

         (f) The distribution operation was sold in September 1995.
         The food processing operation was sold in September 1996.
         

         
         COMPARABLE STORE SALES   % Chg. vs.
         Company-Owned Units      Prior Year
         

         Denny's                         1.1%
         Hardee's                       -8.2%
         Quincy's                      -10.1%
         El Pollo Loco                   5.0%
         Coco's  (i), (j)               -0.2%
         Carrows  (i), (j)               1.3%
         

         
         AVERAGE  UNIT  SALES       Quarter        Quarter
         Company-Owned  Units        Ended          Ended
         ($  in  thousands)        12/31/96       12/31/95      % Change
         

         Denny's                      $318.8         $312.9           1.9%
         Hardee's                     $248.2         $267.1          -7.0%
         Quincy's                     $310.5         $342.6          -9.4%
         El Pollo Loco                $281.7         $259.1           8.7%
         Coco's  (j)                  $373.8         $400.7          -6.7%
         Carrows  (j)                 $336.6         $356.7          -5.6%
         

         
         AVERAGE CHECK              Quarter        Quarter
         Company-Owned  Units        Ended          Ended
         (Average Unit Sales Basis 12/31/96       12/31/95      % Change
         

         Denny's                       $5.36          $4.87          10.0%
         Hardee's                      $3.28          $3.17           3.5%
         Quincy's                      $6.31          $5.93           6.4%
         El Pollo Loco                 $6.83          $6.97          -2.0%
         Coco's  (j)                   $6.76          $6.87          -1.5%
         Carrows  (j)                  $6.38          $6.10           4.5%
         

         (i)   Coco's and Carrows had a 14-week period in the fourth
            quarter of 1995 and a 13-week period in the fourth
            quarter of 1996.  The extra week in 1995 has been
            excluded form comparable store sales data for
            comparability.
         

         (j)    Statistical data for Coco's and Carrows is presented
            on a pro-forma basis and intended for analytical
            purposes only
         

         
         RESTAURANT UNITS          12/31/96       12/31/95
         

         Denny's
         Company                         894            933
         Franchise                       677            596
         International                    25             24
         Subtotal                  1,596          1,553
         

         Hardee's                        580            593
         

         Quincy's                        199            203
         

         El Pollo Loco
         Company                          96            103
         Franchise                       135            112
         International                    10              2
         Subtotal                    241            217
         

         Coco's
           Company                       183            -  
           Franchise                       5            -  
           International                 278            -  
         Subtotal                    466            -  
         

         Carrows                         160            -  
         

           Total Restaurants           3,242          2,566
         

         
                                FLAGSTAR COMPANIES, INC.
                                   Supplemental Data
                    for the Year Ended December 31, 1996 and 1995
                                     (Unaudited)
         

         
                                 Year           Year
         EBITDA                  Ended          Ended
         ($  in  millions)     12/31/96       12/31/95
         

         Denny's                  $165.4         $166.4
         Hardee's                   78.0           78.0
         Quincy's                   18.0           35.1
         El Pollo Loco              20.1           18.4
         Processing and Dist.        9.1           29.3
         Corporate and Other       (37.7)         (28.9)
                                                        

            Subtotal               252.9          298.3
         

         Coco's                     18.5            -  
         Carrows                    14.9            -  
         

            Total EBITDA          $286.3         $298.3
         

         
                                 Year           Year
         CAPITAL  EXPENDITURES   Ended          Ended
         ($  in  millions)     12/31/96       12/31/95
         

         Denny's                    29.0          $86.0
         Hardee's                   18.4           22.8
         Quincy's                    9.2            7.4
         El Pollo Loco               2.4           10.2
         Processing and Dist.        1.4            1.5
         Corporate and Other         4.2            1.3
         

            Subtotal                64.6          129.2
         

         Coco's  (g)                 1.5            -  
         Carrows (g)                 1.2            -  
         

        Total Capital Expenditures $67.3         $129.2
         

         (f)  The distribution operation was sold in September 1995.
          The food processing operation was sold in September 1996.
         

         (g)  Amounts relate to thje period May 23, 1996 (date of 
          acquisition) through year-end 1996.
        

        COMPARABLE STORE SALE% Chg. vs.
         Company-Owned Units  Prior Year
         

         Denny's                     1.7%
         Hardee's                   -7.2%
         Quincy's                  -10.8%
         El Pollo Loco               7.2%
         Coco's  (i), (j)           -1.6%
         Carrows  (i), (j)           0.1%
         

         
         AVERAGE  UNIT  SALES    Year           Year
         Company-Owned  Units    Ended          Ended
         ($  in  thousands)    12/31/96       12/31/95      % Change
         

         Denny's                $1,313.4       $1,282.9           2.4%
         Hardee's               $1,040.8       $1,104.0          -5.7%
         Quincy's               $1,301.4       $1,437.5          -9.5%
         El Pollo Loco          $1,154.9       $1,019.3          13.3%
         Coco's  (j)            $1,461.9       $1,506.3          -2.9%
         Carrows  (j)           $1,342.6       $1,372.0          -2.1%
         

         
         AVERAGE CHECK           Year           Year
         Company-Owned  Units    Ended          Ended
        (Average Unit Sales Basis) 12/31/96       12/31/95      % Change
         

         Denny's                   $5.03          $4.86           3.3%
         Hardee's                  $3.17          $3.16           0.1%
         Quincy's                  $6.06          $5.88           3.0%
         El Pollo Loco             $6.63          $6.76          -1.9%
         Coco's  (j)               $6.79          $6.72           1.1%
         Carrows  (j)              $6.26          $6.09           2.7%
         

         (i)   Coco's and Carrows had a 53-week year in 1995 and a 52-week
           year in 1996.  The extra week in 1995 has been excluded
            from comparable store sales data for comparability.
         

         (j)    Statistical data for Coco's and Carrows is presented on a
            pro-forma basis and intended for analytical purposes only.
        

        *T
        

 


CONTACT: Flagstar Companies, Inc. Investor Contact: Larry Gosnell, 864-597-8658 Media Contact: Karen Randall,
864-597-8440


     





Hexcel Reports Fourth Quarter and 1996 Results; Fourth Quarter Net Income is $2.3 Million and 1996 Net Loss is $19.2
Million; Results Include Business Acquisition and Consolidation Expenses Totaling $6.6 Million for the Fourth Quarter and
$42.4 Million for the Year


STAMFORD, Conn.--Feb. 13, 1997--Hexcel Corp. (NYSE/PSE:HXL) today reported results for the fourth quarter and
year ended Dec. 31, 1996.


Fourth Quarter Results


Net sales for the fourth quarter of 1996 were $212.5 million, compared with net sales of $189.5 million for the third quarter of
1996 and $92.7 million for the fourth quarter of 1995. Net income was $2.3 million for the fourth quarter of 1996, or $0.06
per share, compared with $0.3 million for the third quarter of 1996, or $0.01 per share, and $2.1 million for the fourth quarter
of 1995, or $0.11 per share.


The fourth quarter 1996 results are after deduction of business acquisition and consolidation expenses of $6.6 million, or
$0.15 per share after income taxes. Fourth quarter earnings before business acquisition and consolidation expenses, other
expense, interest, taxes, depreciation and amortization ("Adjusted EBITDA") was $23.1 million.


Gross margin for the fourth quarter of 1996 was $43.5 million, or 20.5% of sales, compared with $35.8 million for the third
quarter of 1996, or 18.9% of sales. Business operations owned by Hexcel prior to 1996 generated gross margins totaling
approximately 24% of sales for both the third and fourth quarters of 1996, compared with 19.8% for the fourth quarter of
1995, reflecting the benefits derived from the company's prior restructuring. Business operations acquired during 1996, and
not yet fully restructured, generated aggregate gross margins of approximately 14% of third quarter sales and 18% of fourth
quarter sales.


The increase in 1996 fourth quarter sales relative to the third quarter reflects the production of structural and interior
components outsourced by The Boeing Co. to Hexcel's Structures and Interiors business unit, as well as the normal seasonal
effect of increased European sales following the end of the summer vacation period.


Primarily as a result of the additional work from Boeing, together with strong shipments of retrofit interiors, sales by the
company's Structures and Interiors business unit grew by more than 60% over the third quarter of 1996.


U.S. sales of composite materials continued at the increased levels seen in the third quarter, reflecting the emerging upturn in
the commercial aircraft market. With commercial aircraft build rates increasing, the outlook for future sales growth remains
positive.


The increase in gross margin compared to the third quarter reflects the benefits of higher sales volumes and improved
manufacturing efficiency, partially offset by the start-up costs associated with the rapid increase in structures and interiors
production volumes.


Hexcel began a major business consolidation program earlier this year to absorb newly acquired operations. On Dec. 10,
1996, the company announced additional consolidation actions identified during the ongoing integration of the acquired
businesses.


Consistent with the December announcement, 1996 results include $6.6 million of business acquisition and consolidation
expenses for the fourth quarter and $42.4 million for the year. As previously announced, Hexcel expects to incur a remaining
$16 million of expenses, primarily in 1997, to complete the business consolidation program. Once fully implemented in 1999,
this program is expected to produce cost savings of approximately $32 million per year. Cash expenditures incurred in
connection with this program during the period 1996 through 1998 are expected to be fully offset by cash savings generated.


On Jan. 20, 1997, Hexcel announced that it had settled a strike at its Salt Lake City carbon fibers plant on favorable terms.
The impact to sales and margins from the strike were not significant. Further, the company noted its plans to increase
manufacturing capacity at this plant by 50% during 1997.


Results for the fourth quarter of 1996 also include the recognition of $2.5 million of income from the favorable resolution of
U.S. tax audits. The $0.5 million benefit for income taxes recognized during the fourth quarter of 1996 includes this income,
which was partially offset by international taxes. Hexcel did not recognize any potential tax benefits resulting from pre-tax
losses in countries where the company has net operating loss carryforwards for income tax purposes.


Full Year Results


Hexcel's 1996 results include the results of the composites business acquired from Ciba-Geigy Ltd. and Ciba-Geigy Corp.
(collectively, "Ciba") for the period from March 1 through Dec. 31, 1996, and the results of the composites business acquired
from Hercules Inc. for the period from June 28 through Dec. 31, 1996.


Net sales for 1996 were $695.3 million, compared with $350.2 million for 1995. Gross margin for 1996 was $141.3 million,
or 20.3% of sales, versus $67.1 million for 1995, or 19.2% of sales. Excluding the business operations acquired from Ciba
and Hercules, 1996 sales were approximately $385 million (a 10% increase over 1995) and gross margin was approximately
24% of sales.


The 1996 net loss was $19.2 million, or $0.58 per share, compared with net income for 1995 of $2.7 million, or $0.17 per
share. The 1996 net loss includes business acquisition and consolidation expenses of $42.4 million, or $1.16 per share after
income taxes. In addition, the net loss includes a $3.4 million provision for income taxes on a pre-tax loss of $15.8 million.
There were 33.4 million weighted average shares and equivalent shares outstanding during 1996, versus 15.7 million during
1995. Adjusted EBITDA for 1996 was $71.9 million.


Pro forma net sales for 1996, giving effect to the business operations acquired from Ciba and Hercules as if those businesses
had been acquired at the beginning of the year, were approximately $798 million. Pro forma adjusted EBITDA for 1996 was
approximately $86 million. For 1995, pro forma net sales were approximately $771 million and pro forma adjusted EBITDA
was approximately $62 million.


John J. Lee, the chairman and chief executive officer of Hexcel said, "1996 was a remarkable year for Hexcel. The company
successfully completed two important acquisitions, becoming an integrated supplier and global leader in advanced structural
materials. In addition, Hexcel secured a new $250 million revolving credit facility and completed a $114.5 million offering of
convertible subordinated notes, providing the company with the financial flexibility necessary for continued growth.


"The consolidation of acquired business operations is now well underway and should produce additional financial and strategic
benefits in 1997. In 1996, Hexcel saw the commercial aerospace market begin to grow rapidly, with the first positive impact
being felt by the Composite Materials business unit.


"Efforts to expand and improve the production of carbon fiber are also proceeding and are expected to generate additional
sales and reduced manufacturing costs in the second half of the new year. While much work remains, progress is being made
and the outlook for 1997 is encouraging."


Hexcel Corp. is an international developer and manufacturer of carbon fibers, fabrics and lightweight, high-performance
composite materials, parts and structures for use in the commercial aerospace, space and defense, recreation and general
industrial markets.


        Hexcel Corp. and Subsidiaries
        Consolidated Statements of Operations (in
        thousands, except per share data)

                                             Unau
                                             dite
                                             d
                             The Quarter Ended   
                                The Year Ended
                             Dec. 31,    Dec.31,
                              Dec. 31,    Dec.
                             31,
                              1996        1995   
                                 1996        1995

        Net sales                $212,521  
        $92,694   $695,251    $350,238

        Cost of sales            (168,996) 
        (74,342)  (553,942)   (283,148)

        Gross margin               43,525   
        18,352    141,309      67,090

        Selling, general and
         administrative expenses  (29,147)
         (13,637)   (96,150)    (49,324)
        Business acquisition and
         consolidation expenses    (6,568)      
         --    (42,370)         --
        Other income (expense), net  (133)     
        134      2,994         791

        Operating income            7,677    
        4,849      5,783      18,557 Interest
        expense           (5,882)   (1,980)  
        (21,537)     (8,682) Bankruptcy
        reorganization
         expenses                      --       
         --         --      (3,361)

        Income (loss) from 
         continuing operations
         before income taxes        1,795    
         2,869    (15,754)      6,514
        Benefit (provision) for
        income taxes                  488     
        (810)    (3,436)     (3,313)

          Income (loss) from
           continuing operations    2,283    
           2,059    (19,190)      3,201

        Discontinued operations:
         Losses during
         phase-out period              --       
         --         --        (468)

          Net income (loss)      $  2,283   
          $2,059   $(19,190)    $ 2,733

        Net income (loss) per share 
        and equivalent share:
        Primary and fully diluted:               
                              

          Continuing operations    $ 0.06    
          $0.11     $(0.58)     $ 0.20
          Discontinued operations      --       
          --         --       (0.03)

           Net income (loss)   $ 0.06     $0.11  
             $(0.58)     $ 0.17

        Weighted average shares 
         and equivalent shares     37,664   
         18,092     33,351      15,742

        Hexcel Corp. and Subsidiaries
        Comparative Financial Data

                                            Unaud
                                            ited
                          The Quarter Ended      
                                The Year Ended
                       Dec. 31,  Sept. 29,  Dec.
                       31,   Dec. 31,    Dec. 31,
        (in millions)        1996       1996    
        1995       1996 1995

        Net sales:

        Business operations
         owned prior to
         1996                $95.8      $92.2   
         $92.7      $385.2
        $350.2
        Business operations
         acquired during
         1996                116.7       97.3    
           --       310.1
        --
        Total net sales     $212.5     $189.5   
        $92.7      $695.3 $350.2

        Gross margin as a 
         percentage of sales:

        Business operations    
         owned prior to 1996   24%        24%   
         19.8%         24%
        19.2%
        Business operations
         acquired during
         1996                  18%        14%    
           --         16%
        --
        Total gross margin
         as a percentage of
         sales               20.5%      18.9%   
         19.8%       20.3%
        19.2%

        Adjusted earnings 
         before business
         acquisition and
         consolidation
         expenses, other
         expense, interest
         bankruptcy
         reorganization
         expenses, taxes,
         depreciation and
         amortization        $23.1      $18.2    
         $7.6       $71.9
        $29.4

        *T

CONTACT: Hexcel Corp., Stamford Stephen C. Forsyth, 203/969-0666