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InterNet Bankruptcy Library - News for April 17, 1997







Bankruptcy News For April 17, 1997




        
  1. Converse announces significant
            improvement in first quarter results and 47% increase in
            order backlog

  2.     
  3. Grossman's appoints reorganization
            head

  4.     
  5. United States Attorney Seeks Nationwide
            Order Against Sears For Fraudulent Credit Practices






Converse announces significant
improvement in first quarter results and 47% increase in order
backlog



NORTH READING, Mass.--April 17, 1997--Converse Inc. (NYSE:CVE)
today announced significant improvement in financial results for
the first quarter ended March 29, 1997.



Net sales for the first quarter were $136.0 million, compared
to $86.6 million in the first quarter of 996, an increase of 57%.
Earnings from operations were $12.3 million compared to $0.2
million in the first quarter of 1996. Net income for the first
quarter of 1997, excluding a one-time gain, was $4.7 million or
$0.26 per share, compared to a net loss of $3.3 million, or a
$0.20 loss per share, in the first quarter of 1996. During the
first quarter of 1997, the Company concluded substantially all of
its outstanding litigation relating to Apex One, Inc. resulting
in a one-time pretax gain of $13.0 million and a net after-tax
gain of $8.0 million. Net income for the quarter including this
one-time gain was $12.7 million or $0.71 per share.



United States net sales increased 105% and international net
sales increased 8% in the first quarter of 1997 compared to the
first quarter of 1996. The Company recorded substantial sales
increases in each of its four product categories of basketball,
athleisure, children's and cross training during the period of
approximately 105%, 26%, 66% and 61%, respectively.



The Company's first quarter 1997 gross profit margin increased
to $42.2 million or 31% of net sales compared to $21.6 million or
25% of net sales in the first quarter of 1996. Selling, general
and administrative

expenses increased by $10.5 million in the first quarter of 1997
compared to the 1996 period, but decreased as a percentage of net
sales to 27% versus 30% in the first quarter of 1996. Royalty
income for the first quarter of 1997 increased by 31% to $6.4
million compared to $4.9 million in the first quarter of 1996.



Converse's global backlog increased to $220.1 million at March
29, 1997 from $149.3 million at March 30, 1996, a 47% increase.
The backlog increases were approximately 32%, 83%, 40% and 14%,
respectively, in the Company's categories of basketball,
athleisure, children's and cross training.



Glenn Rupp, Converse's Chairman and Chief Executive Officer,
commented, "We are pleased with the Company's first quarter
operating results, particularly with the substantial increases in
sales in all four product categories, the improvement of our
gross profit margin percentage, and improved operating
profitability. We are also encouraged by the continued momentum
of the Converse brand as reflected by the strong backlog at the
end of the quarter."



Converse Inc. is a leading global designer, manufacturer and
marketer of high quality athletic footwear for men, women and
children. The Company is also a global licensor of sports
apparel, accessories and selected footwear. The Company's
products are distributed worldwide in over 90 countries through
specialty athletic, sporting goods, department and shoe stores.



Any statements set forth above which are not historical facts
are forward looking statements that involve certain 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 the
financial strength of the Company, the competitive pricing
environment of the footwear and apparel industries, product
demand, market acceptance of the Company's products, and the
success of planned advertising, marketing and promotional
campaigns and other risks identified in documents filed by the
Company with the Securities and Exchange Commission.



                     CONVERSE INC. AND
                     SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENT OF
             OPERATIONS
            (Dollars in thousands, except per
            share amounts)
                               (Unaudited)


                                     Three Months
                                     Ended
                                   March 29,    
                                   March 30,
                                      1997       
                                       1996


        Net sales                      $ 135,969 
         $ 86,551 Cost of sales                  
          93,809     64,934 Gross profit         
                    42,160     21,617 Selling,
        general &
         administrative expenses          36,764
            26,306
        Royalty income                     6,377
            4,928 Restructuring expense (credit)
           (563)        --- Earnings from
        operations          12,336        239
        (Credit) loss on investment in
         unconsolidated subsidiary       (13,051)
               ---
        Interest expense, net              2,679
            3,837 Other (income) expense, net    
           2,090        877 Earnings (loss)
        before income tax 20,618    (4,475)
        Income tax expense (benefit)       7,938
          (1,215) Net earnings (loss)            
         $12,680(a)$(3,260)


        Net earnings (loss) per share    $ 
        0.71(a)$ (0.20) Weighted average number
        of
         common shares                    17,862
           16,692


        (a) Net earnings for the first quarter of
        1997 included a gain of $8.0 million, net
        of taxes, pertaining to the settlement of
        outstanding litigation relating to Apex
        One, Inc.  Earnings per share for the
        first quarter of 1997 of $0.71 includes
        $0.45 pertaining to these litigation
        settlements.  


        -0-


                        CONVERSE INC. AND
                        SUBSIDIARIES
                         CONSOLIDATED BALANCE
                         SHEETS
               (Dollars in thousands, except per
               share amounts)
                                 (Unaudited)


                                          March
                                          29,  
                                          Decembe
                                          r 28,
                                             1997
                                                 


                                              
                                             1996
        ASSETS
        Current Assets:
          Cash and cash equivalents           $
          3,913       $ 5,908 Restricted cash    
                                          1,354
          Receivables, less allowances of
           $1,994 and $2,357 respectively    
           114,419        61,546
          Inventories                         
          78,290        86,799 Refundable income
          taxes                 582           582
          Prepaid expenses and other current
           assets                             
           13,529        20,383
        Total current assets              210,733
              176,572 Net property, plant and
        equipment      17,746        17,849 Other
        assets                           27,355  
             28,182
                                        $ 255,834
                                            $
                                        222,603


        LIABILITIES AND STOCKHOLDERS' EQUITY
        (DEFICIENCY) Current liabilities:
          Short-term debt                    $
          16,366      $ 13,421 Current maturities
          of long-term
           debt                              
           154,777       117,765
          Accounts payable                    
          52,758        49,503 Accrued expenses  
                            15,319        25,124
          Income taxes payable                 
          3,836         3,407
        Total current liabilities         243,056
              209,220 Long-term debt             
                      ---         9,644 Current
        assets in excess of
         re-organization value                
         31,857        32,376
        Deferred post-retirement benefits
         other than pensions                  
         10,207        10,231


        Stockholders' equity (deficiency)
          Common stock, $1.00 stated value,
           50,000,000 shares authorized,
           17,213,157 and 17,250,056 shares
           issued and outstanding at December 28,
           1996 and March 29, 1997 respectively  
                 17,250        17,213
          Preferred stock, no par value,
           10,000,000 shares authorized,
           none issued and outstanding          
           ---           ---
          Additional paid-in capital           
          2,049         5,392 Retained earnings
          (deficit)         (47,585)     
          (60,265) Foreign currency translation
           adjustment                         
           (1,000)       (1,208) Total
           stockholders' equity
             (deficiency)                
             (29,286)      (38,868)
                                        $ 255,834
                                            $
                                        222,603


CONTACT: Investor: Donald J. Camacho Chief Financial Officer
508/664-1100 Christine DiSanto/Jim Cappuccio Morgen-Walke
Associates 212/850-5600 or Media: Jennifer Murray V.P. Marketing
Communications 508/664-1100 Stacy Berns/Jeff Siegel Morgen-Walke
Associates 212/850-5600






Grossman's appoints reorganization
head



CANTON, Mass.--April 17, 1997-- href="chap11.grossmans.html">Grossman's Inc. (Nasdaq-GROS)
today reported that Thomas E. Arnold, Jr., a current member of
the Board of Directors and its Audit Committee, has been
appointed by the Board, effective today, as the person
principally responsible for Grossman's reorganization effort and
its related Chapter 11 bankruptcy proceeding. Mr. Arnold's duties
and responsibilities also include supervision of financial
reporting. The initial term of Mr. Arnold's assignment is 90
days, subject to renewal by the Board. Seymour Kroll, as Chief
Executive Officer, will focus primarily on improving store sales
and operations.



Mr. Arnold, 52, has extensive experience working with
financially distressed companies. He recently served as Chairman,
Board of Trustees, of three separate trusts responsible for the
orderly management and disposition of over $1 billion in assets
of Executive Life Insurance Company. Mr. Arnold also served as
court- appointed Chairman of the Board, Chief Executive Officer
and President of American Continental Corporation, formerly one
of the largest public finance-related real estate development
companies. Mr. Arnold was appointed following the resignation of
Charles Keating in conformance with the confirmed Plan of
Reorganization in the American Continental case.



Robert K. Swanson, Chairman of the Board of Grossman's stated,
"I am pleased that Tom Arnold has accepted the position of
head of our reorganization efforts in the bankruptcy case. Tom
brings the right skill set, as well as the complete confidence of
the Board and management. We are enthusiastic about Tom's
leadership abilities and fortunate that he is available to help
us."



Statements contained in this release that are not based on
historical fact are "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of
1995. Important factors, beyond the company's control, that could
cause actual results to differ materially from those in the
forward- looking statements include, but are not limited to, the
need for approvals by the Bankruptcy Court, competition,
stability of customer demand, and the sufficiency of its capital
resources. Undue reliance should not be placed on these
forward-looking statements, which speak only as of the date
hereof. The company undertakes no obligations to publicly release
revisions to these forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the
occurrence of unanticipated events.



Grossman's Inc. operates 15 stores under the name Contractors'
Warehouse in California, Indiana, Kentucky and Ohio, and 28
stores under the name Mr. 2nd's Bargain Outlet in Massachusetts,
New York and Rhode Island.



Grossman's Inc. press releases and public filings can be
accessed on the Internet through Business Wire's Home Page:
http://www.businesswire.com/cnn/gros.htm



Mr. 2nd's Bargain Outlet maintains a web site for product
information, store locations and feedback:
http://www.bargain-outlets.com



CONTACT: Grossman's Inc. Steven L. Shapiro, 617/830-4020






United States Attorney Seeks Nationwide Order Against name="SEARS">Sears For Fraudulent Credit Practices



BOSTON, MA - April 17, 1997 - United States Attorney Donald K.
Stern announced today that his office has filed a civil complaint
in the United States District Court against SEARS, ROEBUCK AND
CO., seeking an order of nationwide reach that SEARS immediately
stop certain fraudulent debt collection activities against
once-bankrupt debtors. SEARS has agreed to the entry of a
preliminary injunction which would halt the nationwide practice.
SEARS has also agreed to undertake a nationwide audit of debtors
who have been victimized by SEARS' conduct.



The Complaint filed by the United States alleges that SEARS
obtained "reaffirmation agreements" from debtors during
their bankruptcy, in which the debtors agreed to repay their
prebankruptcy debt to SEARS. Without such an agreement, the
debtors would be given a "fresh start," meaning that
creditors such as SEARS are forever barred from collecting the
prebankruptcy debts. Under bankruptcy law, such reaffirmation
agreements are enforceable only if they are filed with, and in
some cases, approved by, the Bankruptcy Court. In Sears' case, in
November, 1995, the Bankruptcy Court in Boston refused to approve
the standard reaffirmation agreement form used by SEARS. Today's
Complaint alleges that Sears conducted an intentional and
deliberate practice nationwide of continuing to obtain the
agreements, but, in many instances, did not file them with the
Court. As a result, SEARS has been taking collection actions,
such as collecting payments and assessing interest charges
against individuals whom it had no right to pursue. In
Massachusetts alone, SEARS admits to collecting from at least
2,733 such debtors.



On April 14, 1997, the Bankruptcy Court entered an order
against SEARS in Massachusetts, requiring SEARS to stop this
practice. The order sought by the United States today, to which
Sears agreed, will have the effect of halting this practice
nationwide. Specifically, today's agreement requires SEARS to
take the following actions:



SEARS will file all reaffirmation agreements with the
appropriate Bankruptcy Court;



SEARS will complete its ongoing review to identify all debtors
affected by



SEARS' conduct from January 1, 1992 to the present;



SEARS will stop collection activities against the identified
individuals;



and,



SEARS will provide the United States Attorney's Office with
status reports



every two weeks. U.S. Attorney Stern stated: "SEARS'
practice has had the effect of thwarting the entire purpose of a
bankruptcy, which is to give debtors a fresh start. In obtaining
these agreements, SEARS deceived debtors into thinking that they
were obligated to pay back debts which had already been
discharged by the Bankruptcy Court."



Stern added: "The federal investigation is continuing.
This action is only a stop-gap measure to require that the
conduct by Sears immediately cease, in Massachusetts and the rest
of the country, and to allow us to collect other necessary
information." In addition to an order to stop the practice,
today's Complaint also states that the government intends to
later seek restitution from Sears for debtors victimized by this
practice, and civil penalties.



The action is being handled by Assistant U.S. Attorney Susan
M. Poswistilo of Stern's Civil Division. Stern commended the
Office of the United States Trustee, which had referred the case
for investigation.



SOURCE U.S. Attorney's Office /CONTACT: Joy Fallon or Amy
Rindskopf of the U.S. Attorney's Office, 617-223-9445/