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InterNet Bankruptcy Library - News for May 9, 1997

Bankruptcy News For May 9, 1997

  1. Jay Jacobs Inc. reports profitable fourth

  3. Nets Inc. Files for Protection Under
            Chapter 11

  5. Dow Chemical Silicone Breast Plant Cases
            to be Consolidated in Federal Court

  7. Flagstar reports first quarter

Jay Jacobs Inc. reports profitable fourth

SEATTLE, WA--May 9, 1997--Jay Jabobs
(JAYJ) today reported results for its fourth quarter and
fiscal year ended Feb. 1, 1997.

For the fourth quarter, the company reported a profit of
$351,000, or $0.06 per share, on sales of $17,795,000. This
compares to a profit of $261,000 or $0.04 per share on sales of
$18,625,000 for the fourth quarter of the previous year.
Comparable store sales increased 4% over the same quarter last

For the twelve month fiscal year ended Feb. 1, 1997, the
company incurred a loss of $3,361,000, or $0.55 per share, on
sales of $61,571,000. This compares to a loss for the previous
year of $2,811,000 on sales of $72,886,000 or $0.47 per share.
Comparable store sales during the year decreased by 4%.

"We are pleased with our fourth quarter
performance," said Rex Steffey, president and CEO. "The
fourth quarter profit, which represents a thirty-four percent
increase over the prior year quarter, was accomplished in spite
of significant restraints on our working capital. The company
continues to pursue an outside investor and our improved
performance enhances our ability to get that done."

Jay Jacobs is a Seattle based specialty apparel retailer
selling to men and women, operating at year end 123 stores
located in 20 states. During the fourth quarter the company
closed seven stores.

                      JAY JACOBS, INC. AND
                        CONSOLIDATED BALANCE
                      (Dollar amounts in
                               A S S E T S


  Current assets:
  Cash and cash equivalents              $ 249   
        $ 705 Accounts receivable                
       540            442 Inventories            
                 7,935          7,323 Prepaid
  expenses                         276           
  219 Total current assets                  
  9,000          8,689

  Property and equipment, net            5,297   
        5,558 Total assets                       
   $14,297        $14,247

                      LIABILITIES AND
                      SHAREHOLDERS' EQUITY

  Current liabilities
  Accounts payable                     $ 4,735   
       $1,401 Accrued payroll                    
       217            529 Accrued reorganization
  expenses        2,618          3,188 Sales
  taxes payable                      575         
    237 Other accrued expenses                  
  311            313 Line of credit              
            3,177              - Total current
  liabilities             11,633          5,668

  Deferred rental credits                  331   

  Federal income tax refund reserve      1,955
  Accrued reorganization expenses          334   
        4,249 Total liabilities                  
    14,253         10,912

  Shareholders' equity:
  Preferred stock: 5,000,000 shares
   authorized; none issued or outstanding    0   
  Common stock: 20,000,000 shares
   authorized; 6,124,000 and 6,054,000
   issued and outstanding               12,990   
  Accumulated deficit                  (12,946)  

   Total shareholders' equity               44   



                            JAY JACOBS, INC. AND
                          CONSOLIDATED STATEMENT
                          OF OPERATIONS
                        (In thousands, except per
                        share amounts)





  Net sales                              $ 61,571
      $ 72,886

  Operating costs and expenses:
  Cost of sales, buying and occupancy
  costs                                    47,676
        55,052 Selling, general and
  administrative expenses                  18,122
        20,924 Interest and other income, net    
           (55)       ( 279)

  Net operating expenses                   65,743

  Loss before reorganization
  items and income taxes                  
  (4,172)      (2,811)

  Reorganization expense (income)           
  (340)           0 Income tax benefit           
               (471)           0

  Net loss                               $
  (3,361)    $ (2,811)

  Loss per share                          
  $(0.55)      $(0.47)

  Weighted average number of
  shares outstanding                        6,102

CONTACT: Jay Jacobs Inc. Bill Lawrence, 206/622-5400 x 217

Nets Inc. Files for Protection Under
Chapter 11

CAMBRIDGE, Mass., May 9, 1997 - Nets
today announced that its inability to secure additional
long-term financing has forced it to seek protection under the
provisions of Chapter 11. The company, whose focus is on
business-to-business electronic commerce, has filed a Chapter 11
petition in U.S. Bankruptcy Court for the District of

A company spokesman said Nets Inc. will maintain its service as it examines its options for reorganizing
the company under Chapter 11.

"As I said on the day I made my initial investment in
this company, there is a great business concept here with great
potential," said Jim Manzi, chairman of Nets Inc.
"However, that same day I also said the company needed
stronger financial support than it had previously received.

"While we were initially successful in raising a
substantial amount of money from investors, our efforts in recent
months to secure adequate long-term financing have not been as

"In the past few weeks, I've personally provided bridge
financing to the company to provide us the opportunity to
successfully execute the business concept," Mr. Manzi said.
"But our financing deadline has passed and we do not have
the capital to build from strength. As a result, the board of
directors has decided to reorganize the company utilizing Chapter

Nets Inc., with headquarters in Cambridge, Mass., and an
operations and production facility in Pittsburgh, Pa., has 200
employees. The company's primary service is
(,an electronic marketplace
where buyers and sellers of industrial goods and services connect
with one another to lower the costs of buying and selling. While
serving the broader industrial market, the service
focuses primarily on meeting the needs of buyers andsellers of
maintenance, repair and operations (MRO) goods and services.

NOTE: Nets Inc. and are service marks of Nets

SOURCE Nets Inc./CONTACT: Richard Eckel of Nets Inc.,
617-252-5214 or

Dow Chemical Silicone Breast Plant Cases to
be Consolidated in Federal Court

CINCINNATI, OH - May 9, 1997 -The end may be in sight for the
protracted and costly legal battle over silicone breast implants.
The thousands of implant lawsuits languishing in state courts
around the country can soon be consolidated for a faster
resolution in federal court, according to a ruling here today by
the U.S. Court of Appeals for the Sixth Circuit.

Upholding its April 1996 decision, the court reaffirmed that
lawsuits against shareholders in former implant manufacturer href="chap11.dow.html">Dow Corning Corporation and other
implant manufacturers belong in federal court. "We're now on
a path to a final resolution for the women, companies and the
judicial system alike," said John G. Scriven, vice president
and general counsel of The Dow Chemical Company.

Dow Chemical and Corning Incorporated each own 50 percent of
the shares in Dow Corning. The disposition of thousands of
lawsuits against them and other co-defendant implant
manufacturers has been pending since July 1996 when the U.S.
District Court of the Eastern District of Michigan in Detroit
granted a plaintiffs' motion to abstain from handling the cases
in the context of Dow Corning's reorganization under U.S.
bankruptcy law in July 1996.

"This ruling means that the process of resolving claims
involving Dow Corning's products will be a part of the bankruptcy
resolution process," commented Dow Chemical's Scriven.
"It fulfills Dow Corning's plan to provide fair treatment
for all women by eliminating any bias in favor of who was first
with a court date, who filed in a specific court, or with a
specific attorney. Consolidation of the cases means that Dow
Corning can focus its energy and its resources on succeeding with
its reorganization plan and emerging from Chapter 11 having
appropriately addressed the claims of its creditors."

The Sixth Circuit's decision today declared, " makes
little practical sense to transfer the claims against Dow Corning
while refusing to transfer those against the shareholders. The
claims against the shareholders arise from an identical set of
facts and are merely duplicates of those against Dow Corning. The
shareholders have never manufactured a silicone-implant product
and are only named in the suits because of their association with
Dow Corning." The court went on to say, "We therefore
believe that transferring these claims to a single jurisdiction
is the only way to achieve an efficient resolution to this
litigation, the development of a successful reorganization plan,
and the adequate compensation of deserving claimants."

The cases subject to this decision are before U.S. District
Court Judge Sam C. Pointer, Jr. In Birmingham, Ala. Judge Pointer
was appointed to oversee all federal breast implant cases in a
consolidate pretrial proceeding.

Meanwhile in August 1996, Judge Pointer appointed a national
panel of neutral experts "to evaluate and critique pertinent
scientific literature and studies bearing on issues in breast
implant litigation" in federal courts.

SOURCE The Dow Chemical Company /CONTACT: Bob Charlton,
Corporate Public Affairs of Dow Chemical Company, 517-636-1797/

Flagstar reports first quarter results

SPARTANBURG, S.C.--May 9, 1997--Flagstar Companies, Inc.
(NASDAQ:FLST) today reported revenue of $676 million for the
first quarter ended April 2, 1997, compared with $550 million in
the same period last year. Earnings before interest, taxes,
depreciation, amortization (EBITDA) and restructuring expenses
were $57.7 million, compared with $56.5 million in the prior year
quarter. Operating income was $23.0 million, versus $27.5 million
in the same quarter last year.

"We are pleased to report increased first quarter revenue
and EBITDA due to last year's acquisition of Coco's and Carrows,
as well as improved profitability at Denny's," said James B.
Adamson, chairman and chief executive officer of Flagstar.
"Denny's profitability continued to benefit from an increase
in average guest check resulting from a September 1996 pricing
increase. We fully anticipated guest count declines in Denny's,
but felt that the check increase would have a positive net impact
on margins and profitability."

"As we indicated previously, overall sales were soft at
the start of the first quarter and continued that pattern through
the end of the period, especially at Hardee's and Quincy's,"
continued Adamson. "El Pollo Loco faced a very difficult
sales comparison with the prior year quarter, yet still recorded
an increase in restaurant profitability. Operating performance at
Coco's and Carrows continues to meet our expectations."

"The Company is proceeding with its proposed financial
restructuring plan which is designed to achieve a stronger,
healthier capital structure that will enable us to invest in the
future of our businesses," said Adamson. "The proposed
restructuring will not affect our operating subsidiaries."
On March 24, 1997, the Company filed a Form S-4 Registration
Statement with the Securities and Exchange Commission which
details the Company's restructuring plan. The plan has received
the approval of an ad hoc committee of the Company's Senior
Subordinated Debentureholders.

Due to the continued substantial debt and interest expense, as
well as a decline in operating income, the Company recorded a
first quarter net loss of $51.7 million, or $1.30 per share,
compared with a net loss of $27.3 million, or $0.73 per share, in
the prior year quarter.

Effective January 1, 1997, the Company changed its fiscal year
end from December 31 to the last Wednesday of the calendar year.
Concurrent with this change, the Company changed to a
four-four-five week quarterly closing calendar which will
generally result in four thirteen-week quarters during the year
with each quarter ending on a Wednesday. Due to the timing of
this change, the extra day impact of the first quarter of 1997
versus the prior year quarter was five days at Denny's, one day
at Hardee's and Quincy's, and seven days at El Pollo Loco.

Concept Results

Denny's first quarter restaurant operating income increased to
24.0 million, from $20.9 million in the same period last year.
The improvement in operating income was driven primarily by a
substantial increase in average check resulting from price
increases enacted late last year. Denny's company-owned
comparable store sales decreased 2.4 percent due to lower
customer traffic, but the increase in average check somewhat
offset the decline. The Denny's domestic system opened 21 new
restaurants and closed seven restaurants during the quarter.

Hardee's first quarter operating income was $2.8 million, a
decline from last year due to a 6.5 percent decrease in
comparable store sales. Quincy's recorded operating income of
$0.3 million, which also represented a decline from the prior
year quarter due to a 6.8 percent decrease in comparable store

El Pollo Loco's operating income, excluding the impact of
prior year gains on sale of restaurants, improved to $2.9 million
during he quarter, versus $2.6 million in the same period last
year. Comparable store sales declined 3.6 percent primarily due
to a difficult comparison with the prior year when comparable
store sales increased 7.9 percent. During the quarter, El Pollo
Loco opened three new domestic system restaurants.

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 first
quarter of 1997 but was not included in the prior year period.
Revenue and operating income for the quarter were $127.1 million
and $7.1 million, respectively. Coco's contributed $4.3 million
in operating income, while Carrows contributed $2.8 million in
operating income for the period. Comparable store sales at each
of these concepts declined 0.8 percent during the quarter. During
the quarter, Coco's opened one new domestic system restaurant and
four new international restaurants in Japan and Korea. One
international restaurant was closed during the quarter. Carrows
opened one new domestic system restaurant and closed two during
the quarter.

Flagstar is one of the nation's largest restaurant companies
with over 3,200 moderately-priced restaurants and annualized
revenue of approximately $2.7 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

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 Management's
Discussion and Analysis in the Company's Annual Report on Form
10-K for the year ended December 31, 1996 (and in the Company's
subsequent quarterly reports on Form 10-Q).

                           FLAGSTAR COMPANIES, INC.
                    Statements of Consolidated Operations

                                             Quarter    Quarter
                                              Ended      Ended
  (in millions, except per share amounts)  4/2/97(a)  3/31/96

  Operating Revenue                       $  675.8   $  550.4

  Operating Expenses:
     Product costs                           197.7      160.0
     Payroll and benefits                    256.8      214.5
     Depreciation and amortization            34.7       29.0
     Utilities expense                        27.5       22.8
     Other                                   136.1       96.6
                                               652.8      522.9
  Operating Income                            23.0       27.5
  Other Charges:
     Interest and debt expense - net          68.6       57.7
     Other - net                               1.5        --
  Loss Before Reorganization Expenses
   and Taxes                                 (47.1)     (30.2)
  Reorganization Expenses (b)                  4.0       --  
  Loss Before Taxes                          (51.1)     (30.2)
  Provision For (Benefit From)
   Income Taxes                                0.6       (2.9)
  Net Loss                                   (51.7)     (27.3)
  Dividends on Preferred Stock (c)            (3.5)      (3.5)
  Net Loss Applicable to
   Common Shareholders                    $  (55.2)  $  (30.8)

  Loss Per Share Applicable to
   Common Shareholders                    $   (1.30) $   (0.73)

  Average Outstanding and Equivalent
  Common Shares                               42.4       42.4


  (a) Includes results of operations of Coco's and Carrows which
        were acquired on May 23, 1996.  Interest and debt expense
        for Coco's and Carrows for the quarter ended April 2, 1997
        was $7.5 million.

  (b) Reorganization expenses include professional fees and other
        expenditures incurred in conjunction with the planned
        reorganization under Chapter 11 of the Bankruptcy Code.

  (c) Amounts for 1997 include undeclared dividends of $3.5 million.

                          FLAGSTAR COMPANIES, INC.
                         Results by Operating Entity

                                             Quarter    Quarter
                                              Ended      Ended
  (in millions)                             4/2/97    3/31/96

     Denny's (d)                          $  315.0   $  305.7
     Hardee's                                137.5      145.1
     Quincy's                                 64.2       68.5
     El Pollo Loco                            32.0       31.1
  Subtotal                                   548.7      550.4
     Coco's                                   71.5        --
     Carrows                                  55.6        --
  Total Revenue                           $  675.8   $  550.4

  Operating Income:
     Denny's (e)                          $   24.0   $   20.9
     Hardee's                                  2.8        4.6
     Quincy's                                  0.3        5.2
     El Pollo Loco (e)                         2.9        2.9
     Processing operation (f)                  --         2.4
     Corporate and other                     (14.1)      (8.5)
  Subtotal                                    15.9       27.5
     Coco's                                    4.3        --
     Carrows                                   2.8        --
  Total Operating Income                  $   23.0   $   27.5

     Denny's (e)                          $   36.1   $   35.0
     Hardee's                                 12.0       14.0
     Quincy's                                  3.3        8.1
     El Pollo Loco (e)                         4.3        4.3
     Processing operation (f)                  --         2.8
     Corporate and other                     (12.6)      (7.7)
  Subtotal                                    43.1       56.5
     Coco's                                    8.4        --
     Carrows                                   6.2        --
  Total EBITDA                            $   57.7   $   56.5


  (d) Includes the revenue of the food processing operation in 1996.

  (e) Operating income and EBITDA include gains on sale of
        restaurants of $0.1 million in 1997 at Denny's and $0.3 million
        in 1996 at El Pollo Loco.

  (f) The food processing operation was sold on September 30, 1996. 

  EBITDA -- Operating income before depreciation and amortization

                            FLAGSTAR COMPANIES, INC.
                    Condensed Consolidated Balance Sheets

  (in millions)                           4/2/97(g)  12/31/96

  Current Assets:
     Cash and cash equivalents            $   31.8   $   92.4
     Other current assets                     83.0       98.3
                                               114.8      190.7
  Long-Term Assets:
     Property -  net                       1,153.3    1,168.6
     Other                                   323.7      328.1
  Total Assets                            $1,591.8   $1,687.4

  Current Liabilities:
     Current maturities of
        long-term debt                      $1,001.0   $   62.9
     Accounts payable and other
        accrued liabilities                    402.7      420.4
                                             1,403.7      483.3

  Long-Term Liabilities:
     Debt, less current maturities         1,226.7    2,179.4
     Other                                   240.7      252.2
                                             1,467.4    2,431.6

  Total Liabilities                        2,871.1    2,914.9
  Shareholders' Deficit                   (1,279.3)  (1,227.5)
  Total Liabilities and
   Shareholders' Deficit                  $1,591.8   $1,687.4


  (g) Includes Coco's and Carrows, which were acquired on May 23,

                           FLAGSTAR COMPANIES, INC.
                     Statistical Data by Operating Entity

                                           Quarter    Quarter
                                            Ended      Ended    Increas
  Average Unit Sales  (in thousands):     4/2/97    3/31/96   (Decr.)

          Company Operated                   $336.3     $316.0     6.4%
          Franchise                          $276.3     $260.1     6.2%

     Hardee's                              $237.2     $250.4    -5.3%

     Quincy's                              $322.5     $342.9    -6.0%

     El Pollo Loco:
          Company Operated                   $301.0     $276.0     9.1%
          Franchise                          $220.9     $208.8     5.8%

     Coco's  (h):
          Company                            $385.6     $357.2     7.9%
          Franchise                          $441.7     $444.3    -0.6%

     Carrows  (h)                          $349.3     $323.6     7.9%

                                            Quarter     Quarter
                                             Ended       Ended    Increas
  Average Guest Check -- Company Operated: 4/2/97     3/31/96
  (Comparable Store Basis)

     Denny's                                $5.39      $4.85    11.1%
     Hardee's                               $3.21      $3.13     2.6%
     Quincy's                               $6.30      $6.08     3.6%
     El Pollo Loco                          $6.58      $6.64    -0.9%
     Coco's  (h)                            $6.60      $6.76    -2.4%
     Carrows  (h)                           $6.37      $6.13     3.9%


  (h) Coco's and Carrows were acquired on May 23,1996.  Prior year
        data is provided for informational purposes only.

                            FLAGSTAR COMPANIES, INC.
                     Statistical Data by Operating Entity

  Restaurant Units:                        4/2/97     3/31/96

          Company Operated                       891        919
          Franchise                              694        610
          International licensees                 25         25
                                               1,610      1,554

     Hardee's                                  580        580

     Quincy's                                  199        199

     El Pollo Loco:
          Company Operated                        95        100
          Franchise                              139        120
          International licensees                 10          5
                                                 244        225
     Coco's  (i):
          Company Operated                       184        186
          Franchise                                5          6
          International licensees                281        255
                                                 470        447
     Carrows  (i):
          Company Operated                       158        162
          Franchise                                1        --
                                                 159        162

                                               3,262      3,167


  (i) Coco's and Carrows were acquired on May 23,1996.  Prior year
        data is provided for informational purposes only.

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