Image Entertainment, Inc. Reports Third Quarter Financial Results
CHATSWORTH, Calif., Feb. 13, 1997 - Image Entertainment, Inc. (Nasdaq:
DISK), the largest licensee and distributor of optical laserdisc programming in
the United States, today reported operating results for the third quarter ended
December 31, 1996.
For the third quarter ended December 31, 1996, net sales were $24,948,000
versus $28,072,000 for the December 1995 quarter. Operating income was
$1,087,000 for the December 1996 quarter versus $2,670,000 for the December
1995 quarter. Net income was $158,000, or $.01 per share, for the December
1996 quarter versus $2,427,000, or $.15 per share, for the December 1995
quarter.
Although the Company's exclusive release schedule for the December 1996
quarter included hits such as "TOY STORY," "THE ROCK" and
"POCAHONTAS," net sales were negatively impacted by weaker net sales of
catalogue titles (previously released laserdisc titles) as compared to the same
prior-year period. Sales of catalogue titles continue to be adversely impacted by
declining laserdisc hardware sales. Management believes the decline in
hardware sales is attributable to continued confusion and uncertainty in the
laserdisc marketplace over the pending introduction of the new 5-inch Digital
Video Disc ("DVD") format and its quality (versus laserdisc), marketability and
ultimately consumer acceptance. Catalogue sales were also negatively impacted
by continued softness in the retail entertainment software market.
In February, Musicland, the Company's largest customer, informed the Company
that it was suspending, indefinitely, payment on all outstanding amounts owing
to its trade vendors, which include the Company and several major
entertainment companies. In response to Musicland's action and continued
softness in the retail entertainment software market, the Company recorded a
provision for doubtful accounts during the December 1996 quarter of
approximately $641,000, net of taxes, or $.05 per share. The Company also
recorded nonrecurring charges totaling approximately $650,000, net of taxes, or
$.05 per share, relating to the write-off of acquisition expenses and costs
associated with early retirement of debt.
For the nine months ended December 31, 1996, net sales were $62,856,000
versus $72,208,000 for the comparable December 1995 period. Operating
income was $2,520,000 for the nine months ended December 31, 1996 versus
$6,228,000 for the comparable December 1995 period. Net income was
$1,260,000, or $.09 per share, for the nine months ended December 31, 1996
versus $5,688,000, or $.36 per share, for the comparable December 1995
period.
During the nine months ended December 31, 1996, the Company recorded a
provision for doubtful accounts of approximately $889,000, net of taxes, or $.06
per share, due to the August 1996 Chapter 11 bankruptcy filing of Camelot
Music, the recent suspension by Musicland of payments owing to Image, and
continued softness in the retail entertainment software market. The Company
also recorded nonrecurring charges totaling approximately $650,000, net of
taxes, or $.O5 per share, relating to the write-off of acquisition expenses and
costs associated with early retirement of debt.
Martin W. Greenwald, Image's President and Chief Executive Officer, said,
"The December 1996 quarter was our 15th consecutive quarter of net earnings -
no small feat in a decidedly weak software sector with declining laserdisc
hardware sales. Although revenues declined by 11%, it should be noted that
December 1995 quarterly sales were an all-time high for the Company and
December 1996 quarterly sales were the fourth highest. This suggests continued
strength in laserdisc sales. I am confident in the longevity of our format and we
continue to aggressively pursue laserdisc rights. As recently as December we
added to our large exclusive roster signing an exclusive laserdisc output
agreement with PolyGram Home Video.
"There were several items that eroded Image's net profit in the third quarter. The
termination of our negotiations to acquire Essex Entertainment, Inc., resulted in
a one-time charge of $510,000, net of taxes. In addition, we decided to
refinance our Foothill Capital Corporation debt with a revolving credit facility
from Union Bank of California. We recorded approximately $140,000, net of
taxes, in accelerated amortization of deferred financing costs and a penalty
relating to the early-termination of the Foothill debt. The Union facility allows
for greater borrowing flexibility at lower rates, and increased availability of up
to $20 million as compared to $15 million under the Foothill facility. The
quarter's operating profit was also impacted by the Company recording a
provision for doubtful accounts of approximately $641,000, net of taxes.
"In 1996, true to our acquisition and diversification strategy, we pursued
negotiations to acquire Essex Entertainment, Inc. The negotiations were
ultimately terminated in December. The monies spent relative to the transaction
- primarily legal and accounting fees incurred in connection with due diligence
efforts, are a necessary part of any acquisition process. The music industry is
undergoing a great deal of turmoil as retailers contract and suppliers fight for
dollars in a stagnant economy. I believe these conditions will yield new
opportunities for us.
"Image is also well positioned to take advantage of opportunities that will arise
with the imminent launch of the 5-inch DVD format. Our strong sales, licensing
and distribution skills will allow us to be an active participant in the roll-out of
this new software. As exampled by our exclusive distribution agreement with
Thomson Consumer Electronics (RCA and GE) pursuant to which we will
provide DVD product to participating Thomson dealers. Just as we have
aggressively pursued laserdisc rights, we will aggressively pursue licensing and
distribution deals in DVD.
"Finally, in December, the Board of Directors increased the maximum number
of shares to be repurchased under the Company's stock buy back program by an
additional 1,000,000 shares. To date, the Company has repurchased
approximately 1,680,000 of the 2,500,000 maximum shares repurchasable by
the Company."
Image is the largest licensee and distributor of laserdiscs in the United States,
with the most extensive library of titles in the industry. Image has exclusive
agreements with Disney's Buena Vista Home Video, Twentieth Century Fox
Home Entertainment, MGM/UA Home Entertainment, New Line Home Video,
PolyGram Home Video, Orion Home Video, The Voyager Company, Playboy
Home Video, Hallmark Home Entertainment and other suppliers.
To visit Image Entertainment on-line, please go to
http://www.image-entertainment.com.
The matters discussed in this press release involving forward looking
statements with regard to laserdisc industry hardware and software sales;
commercialization of DVD and the Company's potential opportunities in that
market; and, the potential financial impact of future quarterly laserdisc release
schedules involve certain risks and uncertainties. Risks and uncertainties
include the commercial success of DVD; third-party licensing opportunities for
DVD rights; the popularity and marketing of new-title laserdisc releases; and the
financial strength of the Company's largest customers. The historical results
achieved are not necessarily indicative of future prospects of the Company.
More information on factors that could affect the Company's financial
performance are included in the Company's reports on Form 10-K and 10-Q
filed with the Securities and Exchange Commission.
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Three Months Ended December 31, 1996 and 1995
1996 1995
NET SALES $24,947,656 100.0%
$28,071,730 100.0%
OPERATING COSTS AND EXPENSES:
Cost of laserdisc sales 19,749,866 79.2
21,899,417 78.0
Selling expenses 1,142,850 4.6
1,340,016 4.8
General and administrative expenses 2,173,289 8.7
1,474,383 5.3
Amortization of production costs 794,347 3.2
687,680 2.4
23,860,352 95.6
25,401,496 90.5
OPERATING INCOME 1,087,304 4.4
2,670,234 9.5
OTHER EXPENSES (INCOME):
Interest expense 118,038 0.5
43,798 0.2
Interest income (44,257) (0.2)
(70,762) (0.3)
Other 662,193 2.7
--- ---
735,974 3.0
(26,964) (0.1)
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 351,330 1.4
2,697,198 9.6
INCOME TAXES 50,000 0.2
269,800 1.0
INCOME BEFORE EXTRAORDINARY ITEM 301,330 1.2
2,427,398 8.6
EXTRAORDINARY ITEM - COSTS ASSOCIATED
WITH EARLY RETIREMENT OF DEBT,
NET OF TAXES 143,308 0.2
--- ---
NET INCOME $158,022 0.6%
$2,427,398 8.6%
NET INCOME PER SHARE:
Income before extraordinary item $.02 $.15
Extraordinary item - costs associated
with early retirement of debt,
net of taxes (.01) ---
NET INCOME PER SHARE $.01
$.15
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common shares 13,501,048 13,346,766
Common stock options and warrants 411,734 4,301,789
13,912,782 17,648,555
The above consolidated statements of operations should be read
in conjunction with the Financial Statements and the Notes thereto
and Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's December 31, 1996 Form 10-Q.
IMAGE ENTERTAINMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
For the Nine Months Ended December 31, 1996 and 1995
1996 1995
NET SALES $62,855,934 100.0%
$72,207,892 100.0%
OPERATING COSTS AND EXPENSES:
Cost of laserdisc sales 49,581,725 78.9
56,778,266 78.6
Selling expenses 3,457,693 5.5
3,251,060 4.5
General and administrative expenses 4,988,616 7.9
3,834,869 5.3
Amortization of production costs 2,307,550 3.7
2,115,785 2.9
60,335,584 96.0
65,979,980 91.4
OPERATING INCOME 2,520,350 4.0
6,227,912 8.6
OTHER EXPENSES (INCOME):
Interest expense 226,106 0.4
123,013 0.2
Interest income (188,560) (0.3)
(228,157) (0.3)
Other 662,193 1.1
--- ---
699,739 1.1
(105,144) (0.1)
INCOME BEFORE INCOME TAXES
AND EXTRAORDINARY ITEM 1,820,611 2.9
6,333,056 8.8
INCOME TAXES 417,000 0.7
645,000 0.9
INCOME BEFORE EXTRAORDINARY ITEM 1,403,611 2.2
5,688,056 7.9
EXTRAORDINARY ITEM - COSTS ASSOCIATED
WITH EARLY RETIREMENT OF DEBT,
NET OF TAXES 143,308 0.2
--- ---
NET INCOME $1,260,303 2.0%
5,688,056 7.9%
NET INCOME PER SHARE:
Income before extraordinary item $.10
$.36
Extraordinary item - costs associated with
early retirement of debt, net of taxes (.01) ---
NET INCOME PER SHARE $.09
$.36
WEIGHTED AVERAGE SHARES OUTSTANDING:
Common shares 13,617,165 13,574,462
Common stock options and warrants 465,804 4,340,803
14,082,969 17,915,265
The above consolidated statements of operations should be read
in conjunction with the Financial Statements and the Notes thereto
and Management's Discussion and Analysis of Financial Condition and
Results of Operations in the Company's December 11, 1996 Form 10-Q.
SOURCE Image Entertainment, Inc./CONTACT: Cheryl Lee of Image,
818-407-9100, ext. 256; or Doris Banchik of Coffin Communications Group,
818-789-0100/
Cincinnati Microwave Files for Chapter 11
CINCINNATI, OH - Feb. 14, 1997 - Cincinnati Microwave, Inc. (Nasdaq:
CNMW) announced today that it has filed for protection from its creditors under
Chapter 11 of the U.S. Bankruptcy Code, which provides the Company an
opportunity to reorganize its operations or to liquidate its assets in an orderly
manner. The action was filed in the U.S. Bankruptcy Court for the District of
Southern Ohio- Western Division.
"Our efforts to find partners, or sell portions of the business in order to generate
enough cash to carry the Company forward have been unsuccessful," said Erika
Williams, president and chief executive officer. "The $10 million in excess
inventory purchased in 1995 and the outstanding shareholder lawsuit have
hindered our ability to attract suitable partners. We expect several interested
parties to bid for portions of the Company's assets under court protection."
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.
Additional information on the Company, its products and markets can be
obtained from the Company's worldwide web site:
http://www.cnmw.com/welcome.htm.Information about Cincinnati
Microwave also is available, free of charge via fax, by dialing 1-
800-PRO-INFO and using ticker symbol CNMW.
SOURCE Cincinnati Microwave, Inc. - /CONTACT: Elaine Bacon of
Cincinnati Microwave, 513-489-5400, shinfocnmw.com, Bill Schmidle,
Analyst Inquiries, 312-640-6753, or Karl Plath, General Inquiries,
312-640-6738, both of the Financial Relations Board/
Boston Auto Dealer Wins Court Battle with Citizens Bank
BOSTON, MA - Feb. 14, 1997 - Bahig Bishay, a Boston automobile dealer,
today announced that Citizens Bank has been sanctioned by the U.S. Bankruptcy
Court in Boston, as a result of his charges that the bank employed illegal tactics
in its attempts to accelerate repayment of a loan it acquired in the purchase of
another bank.
In what Bishay characterized as a "potentially precedent- setting" decision, the
U.S. Bankruptcy Court in Boston has ruled that Citizens Bank fraudulently
engaged in illegitimate billing practices, in violation of Bishay's rights.
Chief Judge Carol J. Kenner also ruled that Citizens and its law firm, Brown,
Rudnick, Freed & Gesmer, engaged in a two-tiered fee arrangement which they
then misrepresented and concealed from both the borrower and the court.
In her decision, which followed a two-day trial, Judge Kenner imposed
financial sanctions on Citizens for its actions, and ordered Citizens to reimburse
Bishay of Westwood, for all legal expenses in pursuit of the court's decision.
"What we're talking about here is a bank's abuse of economic power, " said
Bishay, president of U.S. Auto Exchange, a Boston- based dealer of pre-owned
luxury and vintage vehicles. "I had the resources to withstand Citizens's actions,
but others in similar circumstances may not be so fortunate."
Both the Massachusetts attorney general and the state's banking commissioner
are aware of the federal court decision.
Bishay said the federal court ruling confirms his claims that Citizens Bank,
headquartered in Rhode Island, had engaged in widespread improprieties
between 1994 and 1996 in an unsuccessful attempt to force him to liquidate
valuable assets in order to accelerate the repayment of a small loan.
Bishay cites additional testimony in the Bankruptcy Court which also reveals
that:
- Citizens Bank tampered with values and appraisals by threatening to withhold
bank payment from its appraiser until the appraiser agreed to reduce the
assessed value of Bishay's assets.
- In a separate State Court litigation which is currently pending, Bishay states
that Citizens Bank engaged in extortion by refusing to accept full payment from
Bishay of the outstanding loan amount, unless Bishay agreed to drop his
counterclaim relating to the bank's improprieties.
In the State Court suit, Bishay charges the bank with attempting to undermine his
financial status and his ability to repay the small, outstanding loan.
"I have no personal vendettas against Citizens or its agents," said Bishay, "I
simply want to be made whole, and I want to ensure that others do not endure
such misconduct."
He is calling upon Citizens President Lawrence Fish to "look into the
improprieties as they relate to the internal policies of the bank, to insure that
such violations have not befallen others and do not recur."
In sanctioning Citizens Bank under Rule 9011 (a), Judge Kenner said the bank
and its law firm, BRF&G, misrepresented and concealed the dual fee
arrangement from the court and Bishay, from whom they sought reimbursement.
The judge said the agreement "was intended to create a two-tier billing system
that would impose on (the) borrower higher rates than Citizens itself agreed to
bear."
"This is an attempt to couch in legitimacy what is in essence the illegitimate
practice of billing the borrower for more than the lender is liable," said the
judge. "Where this is done without disclosure of the underlying agreement, and
the nondisclosure is intentional, I cannot distinguish it from fraud."
Judge Kenner refuted Citizens's claim that its dual rate arrangement is legal
under Massachusetts law, and she cited several individuals for their role in
concealing and misrepresenting the illegal arrangement.
"As an institution that routinely looked to its borrowers to pay its legal fees,
Citizens should reasonably have put in place and used a mechanism by which its
loan officers and attorneys could ascertain and accurately represent to the
borrowers - and the courts - the fee arrangements that underlie their payment
obligations," said Judge Kenner, "If Citizens had such a mechanism, there was
no evidence of it in this case.
"The court concludes that the misrepresentations in Citizens's motion and in the
supporting affidavit were the result of Citizens's negligence in conducting its
inquiry into the underlying fee agreement, but also, in (the loan officer's) case,
of reckless disregard for the truth, and, to the extent of (the attorney's)
involvement in the process, of intent to deceive."
SOURCE Bahig Bishay /CONTACT: Alan S. Eisner or Alexander Caswell of
Regan Communications, 617-742-8180/
Imaginarium Names Connie Van Epps Executive Vice President & Director of
Merchandise
WASHINGTON TOWNSHIP, N.J., Feb. 14, 1997 - Imaginarium Inc., which
recently emerged from Chapter 11 protection after being purchased by an
investment group led by former Toys 'R' Us executive Ronald E. Tuchman,
announced today that Connie Van Epps will join the new management team as
Executive Vice President, Director of Merchandise, effective February 24,
1997. In this position, Van Epps will lead the Company's merchandising efforts
to further develop its niche as an upscale toy retailer specializing in creative,
non-violent, educational merchandise that is not widely available at mass
merchandisers and toy store chains.
"Connie is an extremely talented merchant whose knowledge of the upscale toy
market is second to none," said Ronald E. Tuchman, Imaginarium Chairman and
Chief Executive Officer. "Her 11 years at F.A.O. Schwarz coupled with her
expertise in product development, sourcing and merchandise management, will
be an important asset for the new management team as we refine the concept and
expand nationwide."
Van Epps commented, "I am excited to join the new Imaginarium management
team. Imaginarium is one of the few retailers that truly focuses on the upscale
end of the toy business. I believe that Imaginarium's 3,000 s.f. store size allows
for a truly focused upscale merchandise mix while creating a profitable model
for the Company and a manageable shopping experience for the customers. I
look forward to using my knowledge of the toy industry to contribute to the
management team's efforts to make a good concept into a great Company."
In addition to sourcing and refining the merchandise mix for the 44-store, $45
million chain, Van Epps will spearhead efforts to expand Imaginarium's
exclusive line of creative, non-violent, developmentally appropriate toys which
are sold under the Imaginarium label.
For the past 11 years Van Epps has served in a variety of senior capacities at
F.A.O. Schwarz, most recently as Vice President, Merchandise Manager
responsible for Infants, Arts & Crafts, Educational, Wood, Construction,
Nickelodeon, Lego, Playmobil, Novelty, Clothing and Special Projects.
Previously, Van Epps served as a Buyer for Gimbels and a Department Manager
and Buyer Trainee at Macy's.
"Imaginarium's proprietary toy line - which was never properly developed
under previous management - has tremendous potential to help build brand
awareness and increase the chain's identity as the destination for upscale,
high-quality merchandise," added Tuchman. "Connie's expertise in program and
merchandise development coupled with her extensive background in overseas
product sourcing, will enable us to expand this line with high quality products at
excellent margins for the Company."
Imaginarium is an upscale specialty toy retailer of creative, non-violent,
educationally oriented toys and other related products for children from birth to
10 years of age. The Company operates 44 stores nationwide in states including
California, Washington, Oregon, Ohio, Minnesota, Connecticut, Maryland, New
Jersey, Texas, Arizona and Kentucky. At its peak, Imaginarium operated 69
stores nationwide, but recently closed 25 underperforming stores as part of its
bankruptcy process.
SOURCE Imaginarium Inc. /CONTACT: Michael W. Kempner,
mkempnermww.com, or Carreen Winters, cwintersmww.com, both of
MWW/Strategic Communications, Inc. Public Relations, 201-507-9500/
Pinnacle Micro Announces Fourth Quarter and Year-End 1996 Operating
Results
IRVINE, Calif., Feb. 14, 1997 - Pinnacle Micro, Inc. (Nasdaq: PNCL) today
reported operating results for the fourth quarter and year ended December 28,
1996.
Fourth Quarter Results
Revenue for the fourth quarter of 1996 was $15,895,000, compared to
$19,658,000 in the fourth quarter of 1995. This change was primarily due to the
decline in sales of the Company's earlier generation RCD products and the end
of life Sierra drive, but was partially offset by shipments of Apex and Vertex
products. Initial Apex shipments contributed to an 11 percent increase in fourth
quarter 1996 revenue over the third quarter 1996 revenue.
The operating loss (before interest and taxes) was $3,119,000 for the fourth
quarter of 1996, compared to an operating loss of $3,481,000 for the fourth
quarter of 1995. The fourth quarter 1996 operating loss excluding nonrecurring
charges was $2,982,000, an improvement of $350,000 over the third quarter of
1996 due to improved gross margin and product mix, largely the result of Apex
shipments. Improvements in gross margin were offset by certain expenses
related to the relaunch of Apex and the manufacturing consolidation and
reorganization in Colorado Springs.
Fiscal Year 1996
Revenue for fiscal 1996 was $59,921,000, compared to $81,844,000 in fiscal
1995. The decline in sales of earlier generation RCD products and the end of
life Sierra product in the current year was partially offset by Apex and Vertex
sales. The operating loss was $18,463,000 for l996, compared to an operating
loss of $3,274,000 for 1995. Excluding nonrecurring charges, the operating loss
for 1996 was $13,742,000 compared to $1,142,000 for 1995, attributable to
lower revenue and product mix.
"1996 was a year of transition with positive developments and progress in a
number of areas," said Ken Campbell, president. "After a long delay Apex
entered production. The Company addressed some of its liquidity requirements
with the completion of two offshore private placements of convertible debt and
a secured line of credit. Beginning in the third quarter 1996, on a sequential
quarter to quarter basis, revenues have increased and the operating loss before
nonrecurring charges declined. Gross margins improved and cost reduction
steps taken in the fourth quarter are expected to reduce the Company's cost
structure in 1997. Management believes the important relationships with
strategic suppliers are strong. Important steps have been taken to position the
Company to launch high capacity 5.25" optical library systems and to address
the vertical systems market for optical drives. Our turnaround is underway,
although a lot of work remains to be done."
The Company is not announcing its net loss for 1996 at this time because of an
accounting issue concerning its convertible debentures. As previously reported,
in July 1996 the Company issued $10,000,000 of convertible debentures which
allowed conversion into common stock at a discount from market value. Late in
the fourth quarter of 1996, the Company issued an additional $5,000,000 of
convertible debentures with discount features. In December, at a conference
presented by the American Institute of Certified Public Accountants,
representatives of the Securities and Exchange Commission (SEC) presented
their belief as to the proper accounting for similar securities. If this accounting
treatment is applied to the issuance of the Company's convertible debentures, the
Company understands that it would be required to record the discount as
additional paid-in capital and amortize that amount over the earliest conversion
period of the debentures.
The Company and its accountants have been in discussions with the SEC to
resolve this issue. Based on the Company's current understanding, this non- cash
interest expense for 1996 could be in the range of $1,500,000 to $2,000,000.
This expense would not affect operating results, cash or stockholders' equity.
The Company has no assurance as to how the issue will be resolved.
Risk Factors Associated with Forward Looking Statements The Company's
prospects depend on Apex selling according to plan and shipments remaining on
schedule. The Company's working capital requirements will remain high. If
Apex demand is significantly below forecast there will be liquidity constraints.
An adverse change in a relationship with a strategic vendor partner could
materially affect the Company.
Pinnacle Micro, Inc. is a recognized leader in recordable CD technology and
optical storage systems for general data storage and data intensive applications
such as network storage, imaging, desktop and prepress, as well as emerging
applications such as digital audio/video editing and commercial multimedia.
Founded in 1987, Pinnacle Micro, Inc. is headquartered in Irvine, CA with
offices in North America and Europe.
PINNACLE MICRO,
INC.
CONDENSED STATEMENTS OF
OPERATING RESULTS
13 Weeks
Ended
52
Weeks Ended
Dec. 28,
Dec. 30,
Dec. 28,
Dec. 30,
1996
1995
1996
1995
Net sales $15,895,000
$19,658,000 $59,921,000
$81,844,000
Cost of sales 11,960,000
14,700,000 48,092,000
59,892,000
Gross profit 3,935,000
4,958,000 11,829,000
21,952,000
Operating expenses:
Selling, general
and administrative 5,433,000
4,993,000 19,565,000
18,116,000
Research and
development 1,484,000
1,920,000 6,006,000
4,978,000
Nonrecurring charges 137,000
1,526,000 4,721,000
2,132,000
Total operating
expenses 7,054,000
8,439,000 30,292,000
25,226,000
Operating loss $(3,119,000)
$(3,481,000)
(18,463,000)$(3,274,000)
Memo:
Operating loss before
nonrecurring charges$(2,982,000)
$(1,955,000)
$(13,742,000)$(1,142,000)
SOURCE Pinnacle Micro, Inc./CONTACT: Megan Morrow, Investor Relations
of Pinnacle Micro, 714-789-3114 direct, or 800-553-7070, ext. 3114,
irpinnaclemicro.com/
Tyler Corporation Reports 1996 Financial Results
DALLAS, TX - Feb. 14, 1997 - C. A. Rundell, Jr., interim chief executive
officer of Tyler Corporation (NYSE: TYL), announced today that for the year
ended December 31, 1996, the Company had a pretax loss from continuing
operations of $64.3 million. This loss includes a pretax charge of $52.1 million
for the write-off of goodwill and other intangibles at Forest City Auto Parts
("Forest City") and Institutional Financing Services ("IFS"), and $9.9 million of
restructuring and other charges. Net sales fell 9% to $128.4 million from $140.6
million.
The tangible fourth-quarter charges are primarily for excess inventory at IFS
and Forest City, store closings at Forest City, uncollectible accounts receivable
at IFS, lease commitments on vacant corporate facilities, severance pay and
other obligations relating to termination of employees, and settlement of an
employee-benefit plan which was discontinued in 1996.
The Company reported a $2.0 million pretax loss from discontinued operations
in 1996 related to claims arising from the past foundry operations of Tyler Pipe.
Tyler Pipe is, has been and expects to continue to be, involved in different types
of litigation, including environmental claims and claims for work-related
injuries and physical conditions. Tyler Pipe has a suit involving silicosis claims
at this time. Amounts expensed in 1996 include costs of investigating the
silicosis claims and other claims and the cost of related expert studies to
determine what, if any, liability Tyler Pipe has for these matters.
Forest City same-store sales were up 1% compared to the year-earlier period.
"Same-store sales advanced 5% in the first half of 1996; however, competitors
aggressively opened new stores in Forest City's markets in the second half of
1996, adversely affecting same-store sales comparisons," Rundell stated.
Operating profit declined from $4.0 million in 1995 to $3.8 million in 1996
before charges for impairment of goodwill and other intangibles and
restructuring and other charges.
Domestic sales at IFS were 18% below 1995. "The company lost market share
as a result of competitive pressures on the profit percentages offered to school
sponsors and turnover in its established sales force," Rundell commented. The
company posted a $1.0 million operating loss, before charges for impairment of
goodwill and restructuring and other charges, for 1996 versus $5.0 million of
operating profit in 1995.
Before restructuring charges and other charges, Tyler had much lower corporate
expense for calendar year 1996 compared to 1995. Savings came from a gain
through sale of an asset and lower personnel expense.
"With new leadership at Forest City and the expectation of a new chief
executive officer at Tyler, we believe that the Company is positioned to make
significant progress in 1997," Rundell continued."Our primary focus will be on
improving near-term operating performance at both IFS and Forest City and
returning Tyler to profitability. In addition, corporate expense will be reduced
significantly for the year.
"We continue to explore all available avenues to enhance shareholders' return,
including both supplemental acquisitions for existing operations and
acquisitions in new lines of business."
Tyler Corporation, with national headquarters in Dallas, provides products for
fund-raising programs and retails automotive parts.
TYLER CORPORATION
NET SALES AND OPERATING PROFITS (LOSSES)
(Dollars in thousands)
Years ended December 31
% of
1996 1995 Change
Net sales
Forest City Auto Parts $ 85,074 $ 86,893 (2)
Institutional Financing
Services 43,299 53,689 (19)
$128,373 $140,582 (9)
Operating profits (losses)
Forest City Auto Parts $ 127 (A)$ 4,002 --
Institutional Financing
Services (3,631)(A) 5,031 --
(3,504) 9,033 --
Other expenses
Goodwill amortization
and other expense 2,160 2,426 (11)
Interest (income) expense, net (290) 2,628 --
Corporate expense 3,242 4,126 (21)
Goodwill and other intangibles
impairment charge 52,105 -- --
Restructuring and other
corporate charges 3,616 -- --
60,833 9,180 --
Loss from continuing operations
before income tax (benefit) $(64,337) $ (147) --
(A) Includes restructuring and other charges of $3,634 and $2,647 at
Forest City and IFS, respectively
TYLER CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
Years ended December 31
% of
1996 1995 Change
Net sales $128,373 $140,582 (9)
Costs and expenses 193,000(B) 138,101 +40
Interest (income) expense, net (290) 2,628 --
Loss from continuing operations
before income tax (benefit) (64,337) (147) --
Income tax (benefit) (4,307) 560 --
Loss from continuing operations (60,030) (707) --
Discontinued operations
Income (loss) from discontinued
operations, after income
tax (benefit) (1,300) 365 --
Loss on disposal of discontinued
operations, after income tax -- (16,631) --
Loss from discontinued
operations (1,300) (16,266) --
Net loss $(61,330) $(16,973) --
Loss per common share
Continuing operations $ (3.02) $ (.04) --
Discontinued operations (.07) (.81) --
Net loss per common share $ (3.09) $ (.85) --
Average shares (thousands) 19,876 19,869
(B) Includes $52,105 goodwill and other intangibles impairment charge
and $9,897 restructuring and other charges
Three months ended December 31
% of
1996 1995 Change
Net sales $ 45,136 $ 52,810 (15)
Costs and expenses 103,343(C) 42,085 +146
Interest (income) expense, net (71) 543 --
Income (loss) from continuing
operations before
income tax (benefit) (58,136) 10,182 --
Income tax (benefit) (2,802) 5,824 --
Income (loss) from continuing
operations (55,334) 4,358 --
Discontinued operations
Loss from discontinued
operations, after income
tax (benefit) (1,300) (739) --
Loss on disposal of discontinued
operations, after
income tax -- (16,631) --
Loss from discontinued
operations (1,300) (17,370) --
Net loss $(56,634) $(13,012) --
Earnings (loss) per common share
Continuing operations $ (2.78) $ .22 --
Discontinued operations (.07) (.87) --
Net loss per common share $ (2.85) $ (.65) --
Average shares (thousands) 19,877 19,873
(C) Includes $52,105 goodwill and other intangibles impairment charge
and $9,897 restructuring and other charges
SOURCE Tyler Corporation/CONTACT: Linda K. Hill of Tyler Corporation,
214-754-7831/
Xyvision reports third fiscal quarter 1997 results
WAKEFIELD, Mass.--Feb. 14, 1997-- Xyvision, Inc. (NASDAQ Symbol:
XYVI) reported revenues of $5,698,000 for the third quarter of fiscal 1997
ended December 31, 1996.
This represents an increase of 8% from revenues of $5,288,000 for the same
quarter of the previous year. The operating income for the third quarter of the
current fiscal year was $185,000 compared to a net loss from operations of
$1,782,000 for the same quarter of the previous year. For the third quarter of
fiscal 1997, the Company reported net income allocable to common
stockholders of $16,000, or $.00 per share, compared to a net loss allocable to
common stockholders of $2,017,000, or $.23 per share, for the same quarter a
year ago.
For the nine month period ended December 31, 1996, revenues of $17,208,000
were up $237,000, or 1%, from the same period of the previous fiscal year. The
year to date income from operations for the current fiscal year was $613,000
compared to a net loss from operations of $2,378,000 for the same period of the
previous fiscal year. The net income allocable to common stockholders for the
first nine months of fiscal 1997 was $37,000, or $.00 per share, compared to a
net loss allocable to common stockholders of $3,018,000, or $.34 per share, for
the same period a year ago.
Xyvision develops, markets and supports publishing, document management,
and prepress software products that automate the production of paper and
electronic documents. Headquartered in Wakefield, Mass., Xyvision sells its
products through a direct sales force and systems integrators in North America
and through affiliated distributors in the rest of the world.
Third quarter financial highlights are as follows:
XYVISION, INC.
CONSOLIDATED BALANCE
SHEETS
AT DECEMBER 31, 1996 AND
MARCH 31, 1996
(Unaudi
ted)
Decembe
r 31,
March
31,
1996
1996
(
I
n
t
h
o
u
s
a
n
d
s
)
ASSETS
Current assets:
Cash and cash equivalents $
227 $ 332 Accounts receivable:
Trade, less allowance
for doubtful accounts of $578 at
December 31, 1996 and $938 at
March 31, 1996
6,851 5,889
Inventories
390 377 Other current assets
699 756
-----
--
-----
--
Total current assets
8,167 7,354
Property and equipment, net
718 724 Other assets, net,
principally
software development costs
2,344 2,203
Total assets
$11,229 $10,281
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Note payable to a stockholder $
4,900 $ 3,400 Current portion of
long-term debt 2,027
4,064 Accounts payable and accrued
expenses 2,930 3,588 Other
current liabilities 2,280
3,053
Total current liabilities
12,137 14,105
Long-term debt, less current portion
177 5,420
Total liabilities
12,314 19,525
Commitments and contingencies
-- --
Stockholders' deficit:
Capital stock:
Series preferred stock, $1.00 par
value; 2,700,000 shares authorized; no
shares issued --
--
Series B preferred stock, $1.00 par
value; 300,000 shares authorized;
235,299 issued at December 31, 1996 and
222,943 issued at March 31, 1996
(aggregate liquidation preference of
$2,941 and $2,787, respectively)
235 223
Common stock, $.03 par value;
50,000,000 shares authorized;
14,730,857 issued at December 31, 1996
December 31, 1996 and 9,300,037 at March
31, 1996 442
279 Additional paid-in capital
48,968 41,262
Accumulated deficit
(49,561) (49,599)
-----
-
-----
--
8
4
(
7
,
8
3
5
)
Less:
Treasury stock, at cost; 476,865
shares at December 31, 1996 and
477,865 shares at March 31, 1996
1,169 1,172
Receivable from Employee Stock
Ownership Plan
-- 237
Total stockholders' deficit
(1,085) (9,244) Total
liabilities and
stockholders' deficit
$11,229 $10,281
-0-
XYVISION, INC.
CONSOLIDATED STATEMENT
OF OPERATIONS
For the three and nine months ended
December 31, 1996 and 1995
(in thousands, except per
share data)
Three Months
Ended Nine
Months Ended Dec.
31, Dec. 31,
Dec. 31, Dec.
31,
1996 1995
1996
1995
(Unaudited)
(Unaudited)
Revenues 5,698
5,288 17,208 16,971
Cost of sales 2,940
3,022 8,820 8,799 Gross margin
2,758 2,266
8,388 8,172
Expenses:
Research and development 797
879 2,266 2,416 Marketing,
general and
administrative 1,776
2,669 5,509 7,634
Restructuring charge --
500 -- 500 Total
operating expenses 2,573 4,048
7,775 10,550 Income (loss) from
operations 185
(1,782) 613 (2,378)
Other expense, net:
Interest income 1
1 4 5 Interest
expense - third
party (38)
(112) (227) (298)
Interest expense -
stockholder (108)
(102) (383) (284)
Total other expense, net (145)
(213) (606) (577)
Income (loss) before income
taxes and extraordinary item 40
(1,995) 7 (2,995) Provision
for income taxes -- --
-- -- Net income (loss) before
extraordinary item 40
(1,995) 7 (2,955)
Extraordinary item:
Gain on the exchange of
convertible subordinated
debentures --
-- 100 -- Net income
(loss) 40 (1,995)
107 (2,955) Series B Preferred Stock
dividends 24
22 70 63
Net income (loss) allocable
to common stockholders $16 $
(2,017) $37 $ (3,018)
Earnings per share:
Income (loss) per share $.00 $
(0.23) $.00 $ (0.34)
Weighted average common and
common equivalent shares
outstanding 23,505
8,731 18,165 8,707
CONTACT: Eugene P. Seneta Xyvision, Inc. (617) 245-4100, ext. 5234
http://www.xyvision.com
PORTLAND, Ore.--Feb. 14, 1997--As a result of prolonged delays in payment
by the California Department of Health Services, Benova, Inc. has been forced
to file a petition for reorganization in U.S. Bankruptcy Court. This
reorganization will protect the company from actions by creditors, while the
company reorganizes and continues to seek payment from the state.
"We have built Benova into the most experienced health plan enrollment broker
in the country, trusted by state and federal health officials to implement complex
Medicaid and Medicare enrollment programs," said Colleen Cain, president of
Benova, a national enrollment broker that helps Medicaid recipients make
informed decisions about their health care. "We will survive this, pay our
creditors, and continue to serve our customers."
"We took this action to ensure that California's failure to pay us in a timely
manner, and the resulting financial repercussions, would not compromise our
ability to manage our successful existing enrollment contracts. We don't believe
our other clients or their states should be disadvantaged by what California has
done to Benova," Cain said.
Benova currently has enrollment broker contracts with Connecticut,
Pennsylvania, Virginia and Oklahoma to enroll Medicaid- eligible individuals
into managed care plans, and a contract with the federal government to plan an
enrollment broker demonstration program for the Medicare program in Denver.
Cain said Benova needs to separate its payment dispute with California from the
ongoing operations of an otherwise healthy business, which is what the
reorganization plan will accomplish.
The Department of Health Services owes Benova approximately $6 million in
overdue invoices for work the company conducted on their behalf to implement
the largest expansion ever undertaken in the nation for Medicaid managed care.
"Once we receive payment from the state, we'll be able to pay our vendors for
work completed," Cain said.
Last June, after a successful 12-year relationship, Benova learned a competitor
had been selected as the state's new enrollment broker beginning January 1997.
Despite the pending transition, California health department managers asked
Benova to manage an unprecedented five-fold increase in enrollment and an
expansion into 10 new California counties.
To help prevent potential service issues resulting from the rapid expansion,
Benova asked the state for additional computer hardware and software, and
during the expansion, repeatedly warned the state of the need for adequate
resources. Without the state's support, Benova was able to resolve service
issues affecting the program and, as recently as early December, the state and
Benova were negotiating to extend Benova's contract to June 1997. The
California Department of Health Services has been widely criticized by health
care leaders and elected officials for its management of this program.
"We have spent millions of dollars to perform under very difficult
circumstances," Cain said. "It is clearly the state's obligation to pay for the
services we provided."
The state recently filed a suit against Benova over reported billing
discrepancies, which could have been resolved if the state had followed its
contractual agreement to share questions about invoices within 15 days of their
receipt. The suit also asks Benova for damages related to service issues during
the expansion. Benova believes the suit is an attempt for political purposes to
unfairly place blame on Benova for service issues resulting from the Department
of Health Services decision to greatly expand its Medi- Cal program.
The U.S. Bank of Oregon, Benova's largest creditor, has been cooperating with
the company throughout this process. Benova expects the court to confirm its
reorganization plan within six months.
Benova, based in Portland, Ore., is the most experienced enrollment broker in
the country with more than 15 years of helping people make informed decisions
about their health care. The company has approximately 260 employees
nationwide.
CONTACT: Bowler & Associates Inc. Brian Bell or Jennifer Maxwell-Muir,
503/248-9468