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InterNet Bankruptcy Library - News for April 1, 1997







Bankruptcy News For April 1, 1997




        
  1. Allis-Chalmers Corporation Announces
            Financial Results

  2.     
  3. Krause's Furniture Inc. announces
            fourth-quarter and year-end results






Allis-Chalmers Corporation Announces
Financial Results



MILWAUKEE, Wis., April 1, 1997 - Allis-Chalmers Corporation
today announced a 1996 net loss of $1,728,000, or $1.72 per
common share, compared with a net loss of $1,448,000, or $1.44
per common share in 1995. The Company's 1996 loss included
recognition of pension expense of $1,422,000 or $1.42 per common
share compared with a similar recognition of $1,067,000 or $1.06
per common share in 1995.



Sales totaled $4,060,000 in 1996, a 27% increase from
$3,190,000 in 1995. The increase is primarily the result of
strong market conditions for Houston Dynamic Service, the
Company's sole operating business, coupled with its more focused
marketing strategy and product offering.



For the fourth quarter of 1996, Allis-Chalmers reported a net
loss of $550,000, or $.54 per common share, compared with a net
loss of $254,000, or $.26 per common share in the same quarter of
1995.



Sales in the fourth quarter of 1996 were $951,000 compared
with $798,000 in the 1995 period. Fourth quarter gross margin, as
a percentage of sales, increased to 26.5% in 1996 from 25.2% in
1995.



In addition to its financial results, Allis-Chalmers noted two
concerns regarding its future - the continued significant
shortfall in its pension plan funding and the difficulty in
completing an acquisition or financing.



The Company's lack of cash for investment, restrictions on
debt financing and the uncertainty associated with the Company's
exposure for the underfunding of the pension plan all contributed
to the Company's inability to complete an acquisition or
financing in 1996. Given the present financial condition of the
Company, a meaningful acquisition will be very difficult to
accomplish.



Regarding the underfunding of the Company's Consolidated
Pension Plan, the Company's underfunding on a present value basis
increased to $15.1 million at December 31, 1996. This underfunded
condition required the Company to make significant cash
contributions to the Consolidated Plan pursuant to ERISA minimum
funding requirements starting in 1996. While the first cash
contribution to the Consolidated Plan for $205,000 was made in
January 1996, additional cash contributions and interest of
$2,386,000 are past due as of December 31, 1996. In addition cash
contributions and interest of $4,564,000 are due in 1997. Based
on the Company's limited financial resources to make
contributions, this requirement for contributions continues to
have a material adverse effect on the Company. The Company is not
optimistic that in its current condition it will be able to raise
additional capital to meet its obligations under the Consolidated
Plan. Given the inability of the Company to fund such an
obligation with its current financial resources, a notice of
intent to terminate the Consolidated Plan was mailed to Plan
participants on February 12, 1997 and a filing of appropriate
documentation was made with the Pension Benefit Guaranty
Corporation (PBGC). The termination is anticipated to result in
the assumption by the PBGC of the Consolidated Plan with the
consequence of a liability to the PBGC significantly in excess of
the current net worth of the Company. The Company has been
engaged in ongoing discussions with the PBGC concerning the
Consolidated Plan. The failure to meet the 1995 minimum
obligations of $378,459 to the Consolidated Plan also results in
a 10% excise tax liability to the IRS at December 31, 1996. To
date, the IRS has not assessed the additional 100% excise tax
which may be imposed on the accumulated funding deficiency for
1995. Failure to meet the minimum funding obligations for 1996
will also result in additional excise tax liabilities to the IRS.
The Company also intends to seek a settlement of these tax
obligations with the IRS. Although it is not possible to predict
the outcome of discussions with the PBGC and IRS, the Company's
options include seeking protection from its creditors by
commencing another bankruptcy filing.



Financial results for the three and twelve month periods ended
December 31:



                                                  Three Months    Twelve
Months
                                                  1996   1995      1996
1995
                                                        (thousands, except
        per share)
        


        Sales                                   $ 951   $ 798   $ 4,060  $
3,190
            Net loss                                $(550)  $(254)  $(1,728)
        $(1,448)
        


        Average common shares outstanding       1,003   1,003     1,003
1,003
            Loss per common share                   $(.54)  $(.26)   $(1.72)
        $(1.44)
        


SOURCE Allis-Chalmers Corporation

/CONTACT: Jeffrey I. Lehman for Allis-Chalmers, 610-565-2343/






Krause's Furniture Inc. announces
fourth-quarter and year-end results



BREA, Calif.--April 1, 1997--Krause's Furniture Inc.
(NASDAQ:SOFA) Tuesday announced results for the fourth quarter
and fiscal year 1996, which ended Feb. 2, 1997.



In announcing the results, Philip M. Hawley, chairman and
chief executive officer, noted that Krause's continues to make
progress in returning to profitability following a private
placement of debt and equity, completed in September 1996, in
which the company received approximately $18.6 million from GE
Capital Services and a group of private investors.



EBITDA (earnings before interest, taxes, depreciation and
amortization), which had been a negative $1.7 million as recently
as the third quarter, was a positive $60,000 in the fourth
quarter.



"This is the first time since the third quarter of fiscal
1994," said Hawley, "that EBITDA, a measure of the
company's cash-flow from operations, has been positive. It is a
testament to the success of the company's program to improve
margins, revamp its commission structure and bring overall
corporate expenses under tighter control."



Fourth-quarter net sales were $30.0 million compared with
$29.9 million a year ago. The net loss in the fourth quarter was
$1.0 million or 5 cents per share (on 19.0 million average shares
outstanding) compared with a loss of $4.2 million or $1.04 per
share (on 4.1 million average shares outstanding) in the same
period last year, and a loss of $2.5 million or 24 cents per
share (on 10.6 million average shares outstanding) reported in
the third quarter of the current fiscal year.



Changes in average shares outstanding reflect the September
1996 restructuring. Gross margins in the fourth quarter were 52.9
percent compared with 52.4 percent in the third quarter and 49.0
percent a year ago. Variable selling expenses as a percentage of
net sales were 9.2 percent compared with 10.7 percent in the
third quarter and 11.5 percent a year ago.



Net sales for the 53-week fiscal year ended Feb. 2, 1997 were
$112.7 million compared with $122.3 million for the 52-week
fiscal year ended Jan. 28, 1996. The net loss in fiscal 1996 was
$13.4 million or $1.28 per share (on 10.4 million shares
outstanding) compared with a loss of $8.7 million or $2.21 per
share (on 4.0 million average shares outstanding) last year.



"Clearly," said Hawley, "net sales in 1996 were
adversely affected by the elimination of value pricing and by the
program to reduce variable selling expenses. However, these
programs have already had a positive effect on gross margins, and
we hope to see further improvements in 1997.



"Looking to the bottom line, we are clearly heartened by
the fact that EBITDA turned positive in the fourth quarter,"
continued Hawley, "and we think it augurs well for further
improvements in net income and a return to profitability.



"However, given current bookings and certain costs that
are now being incurred in association with the implementation of
the company's long-range strategic plan , we do not expect to see
similarly large gains in EBITDA in the first quarter."



The company's strategic objectives include: improving its
manufacturing processes; upgrading and remodeling retail
showrooms to provide a more appealing environment for customers;
reducing showroom square-footage to control occupancy expenses;
remerchandising; refocusing advertising expenditures; and an
overall reduction in corporate expenses.



Krause's Furniture is a leading manufacturer and retailer of
custom-crafted furniture which it sells under the names Krause's
(R) and Castro Convertibles (R) through 82 company-owned retail
showrooms and two dealers in 12 states.



"Safe Harbor" Statement under the Private Securities
Litigation Reform Act of 1995: Any statements set forth above
that are not historical in nature are forward-looking statements
that involve risks and uncertainties that could cause actual
results to differ materially from those in the forward-looking
statements.



Potential risks and uncertainties include such factors as
demand for and acceptance of the company's products, change in
the retail environment and the ability of the company to execute
its operating strategies, the success of planned marketing and
promotional campaigns and other risks identified in documents
filed by the company with the Securities and Exchange Commission.



                         Krause's Furniture Inc.
                   Consolidated Statement of
                   Operations


                   (in thousands, except
                   per-share data)


                      14 Weeks    13 Weeks     
                      53 Weeks    52 Weeks
                        Ended       Ended        
                        Ended       Ended 2/2/97
                           1/28/96       2/2/97  
                           1/28/96


        Net furniture
         sales             $29,999      $29,854  
            $112,737    $122,319
        Cost of sales       14,126       15,232  
             56,490      59,852 Gross profit     
          15,873       14,622        56,247     
        62,467


        Operating expenses:
           Selling          14,017       15,725  
                57,573      60,257 General &
        Administrative   2,249        2,284      
         10,101      10,578
           Amortization of
        goodwill           255          256      
          1,020       1,020
                        16,521       18,465      
                         68,694      71,855


        Loss from operations  (648)      (3,843) 
            (12,447)     (9,388)


        Interest expense       448          193  
              1,230         721 Other income
        (expense)  81         (192)          288
                67


        Loss before income 
         taxes              (1,015)      (4,228)
             (13,389)    (10,042)


        Income tax benefit       -            -  
                  -      (1,327)


        Net loss           ($1,015)     ($4,228) 
           ($13,389)    ($8,715)


        Net loss per share  ($0.05)      ($1.04) 
             ($1.28)     ($2.21)


        Average number of 
         common shares
         outstanding        19,021        4,084  
              10,445       3,950


CONTACT: Krause's Furniture Inc., Brea Robert A. Burton,
714/990-3100 or Silverman Heller Associates, Los Angeles Eugene
G. Heller/Philip Bourdillon, 310/208-2550