TCR_Public/970701.MBX



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InterNet Bankruptcy Library - News for July 1, 1997







Bankruptcy News For July 1, 1997




        
  1. Western Kentucky Energy Reduces Big Rivers
            Work Force Move Required to Improve Competitive Position

  2.     
  3. Elder-Beerman Sues Carson, Pirie &
            Scott For Breach of Confidentiality

  4.     
  5. /C O R R E C T I O N -- Avatex
            Corporation/

  6.     
  7. KTI To Purchase Assets of Prins
            Recycling Corp.

  8.     
  9. Sanctuary Woods Posts Fiscal 1997
            Results

  10.     
  11. NEXTEL Communications' S&POutlook
            Revised to Positive

  12.     
  13. Image Entertainment, Inc. Announces
            Fiscal 1997 Revenues of $85.7 Million and Net Earnings of
            $845,000






Western Kentucky Energy Reduces Big Rivers
Work Force Move Required to Improve Competitive Position



HENDERSON, Ky., July 1, 1997 - Western Kentucky Energy
announced today it will reduce the work force at the href="chap11.bigrivers.html">Big Rivers electric generating
plants and headquarters by approximately 14 percent, or about 80
employees. The work force reduction is consistent with
commitments made in the Big Rivers bankruptcy reorganization plan
that was approved in federal court June 9. Cost savings from the
reduction will contribute to lower electricity costs for Big
Rivers' member cooperatives and their 92,000 customers. More
competitively priced electricity rates also will attract major
new businesses and many job opportunities to the Western Kentucky
area.



"We understand the serious impact this process will have
on individual lives, and WKE will provide both economic and
personal support to any employees whose jobs are
eliminated," said George Basinger, Senior Vice President,
Power Operations, LG&E Energy Corp. (NYSE: LGE)
"However, this was a very critical business decision. The
future of Big Rivers, WKE and economic growth in Western Kentucky
rides on our ability to cut energy costs to a competitive level.
Eventually employees, customers, the community and both our
companies will feel the positive impact that low rates and
business expansion can have on the quality of life in the
area."



"While this is difficult, we must move forward,"
said Michael Core, President, Big Rivers. "In order to meet
the commitments to the U.S. Bankruptcy Court and for our company
to survive in today's competitive industry, we have to do
this."



Under a work force reorganization plan, most salaried
employees will be eligible for direct assignments into positions
or have the opportunity to apply for positions at the Big Rivers
plants. Those who are not placed in positions will receive a
severance package, outplacement services and support for
continued medical coverage. The reorganization and downsizing is
expected to be complete by the date on which the transaction will
close, which will be following regulatory approval of the Big
Rivers/LG&E Energy transaction.



Big Rivers Electric Corporation provides power to four
Kentucky distribution cooperatives: Henderson Union Electric
Cooperative, Green River Electric Corporation, Jackson Purchase
Electric Cooperative Corporation and Meade County Rural Electric
Cooperative Corporation. The distribution cooperatives serve
92,000 customers in 22 Western Kentucky counties.



Western Kentucky Energy Corp. is an indirect subsidiary of
LG&E Energy Corp. (NYSE: LGE) that will operate and maintain
the Big Rivers' generating plants.



LG&E Energy Corp., a Fortune 500 company, is an industry-
leading energy services holding company headquartered in
Louisville, Ky. The company has assets and operations in retail
and wholesale power and natural gas services and marketing. It
has offices, operations and partnership projects throughout the
U.S. as well as in Argentina and Spain.



SOURCE LG&E Energy Corporation /CONTACT: Claudia
Hendricks, LG&E Energy Corp., 502-627-2506, or digital pager,
502-421-6905/






Elder-Beerman Sues Carson, Pirie &
Scott For Breach of Confidentiality



DAYTON, Ohio, July 1, 1997 - The Elder-Beerman
Stores Corp.
announced that it has filed suit in the United
States Bankruptcy Court in Dayton, Ohio against the
Milwaukee-based retailer Carson, Pirie & Scott, Inc. (NYSE:
CRP). The lawsuit alleges that Carson, Pirie & Scott has
breached and continues to breach a confidentiality agreement.



Those agreements expressly prohibit Carson, Pirie & Scott
from seeking to acquire, control or otherwise combine with
Elder-Beerman for a period of two years from the date of the
amended agreement, and also prohibit Carson, Pirie & Scott
from utilizing any of the confidential Elder-Beerman information
it received at that time and from acquiring additional
Elder-Beerman information. The agreements were entered into prior
to Elder-Beerman's bankruptcy filing when Carson, Pirie &
Scott was holding discussions with Elder-Beerman stockholders for
a transaction which never occurred relating to the possible
purchase of the company.



Among other things, the lawsuit stems from recent Carson,
Pirie & Scott public announcements -- believed to be tied to
its misappropriation of confidential Elder-Beerman business
information -- about its interest in acquiring Elder-Beerman. In
addition, the action alleges that Carson, Pirie & Scott has
violated the agreements and sought to acquire Elder-Beerman both
through its own actions and in concert with others. Seeking
injunctive relief from the Court, the Elder-Beerman lawsuit also
claims that Carson, Pirie & Scott's actions could hinder
Elder-Beerman's efforts to reorganize under Chapter 11 and cause
the Company irreparable harm.



Richard A. Chesley, legal counsel to Elder-Beerman, explained,
"Since the bankruptcy filing, Elder-Beerman has time and
time again stated its goal of remaining an independent company
headquartered in Dayton, Ohio. This action is wholly consistent
with that goal."



With annual sales in fiscal 1996 of $569.6 million, The Elder-
Beerman Stores Corp. is a leading department store company
headquartered in Dayton, Ohio. Elder-Beerman operates 50
department stores in Ohio, Indiana, Illinois, Michigan,
Wisconsin, Kentucky and West Virginia, as well as two furniture
superstores in Ohio. The company also operates 68 El-Bee and
Shoebilee! shoe stores in seven states.



SOURCE Elder-Beerman Stores Corp. /CONTACT: Richard A.
Chesley, legal counsel to Elder-Beerman Stores Corp.,
312-269-4095/






/C O R R E C T I O N -- Avatex
Corporation/



In story, NYM161, Avatex Announces Fourth Quarter and Year End
Results, which ran yesterday, June 30, we are advised by a
representative of the company that the Condensed Statements of
Operations Revenues should read:



      Revenues                 $12,463     $10,439    $  1,423
  $4,721
  


        rather than:
  


      Revenues                 $ 12,463    (84,769)  $ (21,658) $
  (42,013)
  


as originally transmitted. The full corrected version of the
release follows:



Avatex Announces Fourth Quarter and Year End Results



DALLAS, TX - JUNE 30, 1997 -- Avatex Corporation (NYSE: AAV)
today announced financial results for the fourth quarter and
fiscal year ended March 31, 1997.



Avatex reported revenues for the fourth quarter of $1.4
million compared to revenues of $4.7 million for the same period
last year. The decrease is due primarily to a reduction in the
number of real estate partnerships the Company operated compared
to the previous year. The Company reported an operating loss of
$0.3 million for the quarter, compared with an operating loss of
$1.7 million a year ago. The Company reported a net loss from
continuing operations of $9.2 million, compared with a net loss
from continuing operations of $4.2 million for the same period
last year. Included in the loss from continuing operations for
the fourth quarter of fiscal 1997 is a charge for the write-down
of the Company's investment in Phar-Mor, Inc. of approximately
$13.6 million. After discontinued operations and preferred stock
dividends, the Company recorded a net loss to common shareholders
of $21.7 million, or $1.56 per share, compared with a net loss to
common shareholders of $42.0 million, or $2.47 per share, for the
same period last year.



For the fiscal year ended March 31, 1997, Avatex reported
revenues of $12.5 million compared to $10.4 million for the same
period last year. Operating losses were $2.4 million compared
with operating losses of $7.1 million the previous year. The
Company reported a net loss from continuing operations of $12.2
million, inclusive of the write-down of the Company's investment
in Phar-Mor of $13.6 million, compared to net income from
continuing operations of $5.1 million for the same period last
year. After discontinued operations and preferred stock
dividends, the Company recorded a net loss to common shareholders
of $298.4 million, or $19.90 per share, compared with a net loss
to common shareholders of $84.8 million, or $4.95 per share, for
the same period last year. The results of discontinued operations
relate primarily to FoxMeyer
Corporation
, and its subsidiaries, which declared bankruptcy
in August 1996.



All financial results have been reclassified to reflect the
treatment of FoxMeyer Corporation as discontinued operations.



                          AVATEX CORPORATION AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                               (in thousands of dollars)
  


                                                    March 31,
  March 31,
                                                      1997
  1996
        ASSETS
        Current Assets
       Cash and short-term investments         $     7,173    $
  26,987
       Restricted cash and investments              33,115
  -
       Receivables                                   3,059
  291,750
       Inventories
  --        632,269
         Net assets of discontinued operations
        held for sale
  --         16,527
       Other current assets                         15,293
  43,632
      Total current assets                          58,640
  1,011,165
      Investment in National Steel Corporation      44,961
  44,099
      Investment in affiliates                      28,711
  49,602
      Net property, plant and equipment             18,390
  142,855
        Other assets
       Goodwill and intangibles                        910
  220,489
       Deferred tax asset
  --         79,676
       Miscellaneous assets                          6,825
  29,184
      Total other assets                             7,735
  329,349
      Total assets                              $  158,437    $
  1,577,070
  


        LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
  


        Current liabilities
       Accounts payable                          $   1,501     $
  610,579
       Other accrued liabilities                     4,604
  39,088
       Salaries, wages and employee benefits         3,148
  9,919
       Income taxes payable
  -          2,468
       Deferred income tax payable
  -         43,917
       Long-term debt due within one year            2,969
  28,793
      Total current liabilities                     12,222
  734,764
      Long-term debt                                27,482
  403,831
      Other long-term liabilities                   35,985
  38,646
        Minority interest in consolidated
       subsidiaries                                  6,853
  10,074
      Redeemable preferred stock                   189,402
  187,292
        Stockholders' equity (deficit)
       Common stock                                 69,030
  120,940
       Capital in excess of par value              119,092
  209,613
       Minimum pension liability                   (73,531)
  (64,634)
       Net unrealized holding loss on securities
  -            (17)
       Retained earnings (deficit)                (228,098)
  70,431
       Treasury stock
  -       (133,870)
      Total stockholders' equity (deficit)        (113,507)
  202,463
        Total liabilities and stockholders'
       equity (deficit)                         $  158,437
  $1,577,070
  


                          AVATEX CORPORATION AND SUBSIDIARIES
                          CONDENSED STATEMENTS OF OPERATIONS
                         (Thousands, except per share amounts)
  


                                      For the year ended   For the
  quarter ended
  


                                           March 31,
  March 31,
                                         1997      1996        1997
  1996
  


      Revenues                        $ 12,463  $ 10,439    $  1,423
  $  4,721
  


        Operating costs:
         Operating costs, including
         general and administrative
       costs                             13,386   16,534       1,490
  5,919
  


       Depreciation and amortization      1,468    1,034         272
  485
  


      Operating loss                     (2,391)  (7,129)       (339)
  (1,683)
  


      Other income, net                  19,228   21,779     (11,560)
  2,856
  


        Financing costs
       Interest income                    1,678    2,822         451
  574
  


       Interest expense                   6,416    6,391       1,254
  1,795
  


      Financing costs, net                4,738    3,569         803
  1,221
  


        Income (loss) from continuing
         operations before National Steel
         Corporation, equity in income
         (loss) of affiliates, income tax
        provision and minority interest  12,099   11,081     (12,702)
  (48)
  


        National Steel Corporation,
       net preferred dividend income      9,620    3,329       4,394
  579
        Equity in income (loss)
       of affiliates                     (5,199)  (4,168)     (3,293)
  (2,487)
  


        Income (loss) from continuing
         operations before income tax
       provision and minority interest   16,520   10,242     (11,601)
  (1,956)
  


      Income tax provision               29,870    2,977          15
  1,974
  


     Income (loss) from continuing
        operations before
      minority interest                 (13,350)   7,265     (11,616)
  (3,930)
  


        Minority interest in results
         of operations of consolidated
       subsidiaries                      (1,106)   2,117      (2,448)
  228
        Net income (loss) from continuing
       operations                       (12,244)   5,148      (9,168)
  (4,158)
  


        Discontinued operations:
         Loss from discontinued operations,
        net of tax                      (21,057) (61,728)       (285)
  (25,765)
  


         Loss on disposal of discontinued
        operations, net of tax         (246,055)  (7,081)     (6,172)
  (7,081)
  


      Net loss                         (279,356) (63,661)    (15,625)
  (37,004)
  


      Preferred stock dividends          19,081   21,108       6,033
  5,009
  


        Loss applicable to common
       stockholders                   $(298,437)$(84,769)   $(21,658)
  $(42,013)
  


        Per share of common stock:
       Loss from continuing operations   $(2.09)  $(0.93)     $(1.09)
  $(0.54)
  


       Discontinued operations           (17.81)   (4.02)      (0.47)
  (1.93)
  


      Loss per share                    $(19.90)  $(4.95)     $(1.56)
  $(2.47)
  


        Average number of
       common shares outstanding         14,997   17,115      13,886
  16,982
  


SOURCE Avatex Corporation/CONTACT: Edward Massman, Chief
Financial Officer of Avatex, 214-365-7450/






KTI To Purchase Assets of Prins Recycling
Corp.



GUTTENBERG, N.J., July 1, 1997 - KTI, Inc. (Nasdaq: KTIE)
announced today it has signed a definitive agreement to acquire
the assets of Prins Recycling Corp.



Prins, which is currently operating as a debtor in possession
in Chapter 11 proceedings under the bankruptcy code, processes
and markets approximately 25,000 tons per month of post consumer
recyclables at state-of-the-art high capacity plants in Boston,
Newark and Chicago. The closing of the purchase is subject to
receipt of all necessary approvals from the bankruptcy court
which is expected to occur around October 1, 1997.



The agreement calls for KTI to purchase most of Prins assets
for $13.1 million in cash and notes and the assumption of
$500,000 in trade payables. At the height of its operations,
Prins generated approximately $80 million in annual revenue.
Until the purchase is completed, Prins continues to operate its
facilities at its historic levels.



KTI President and Chief Operating Officer Martin J. Sergi,
said, "This acquisition enables us to add additional
municipal recycling programs to our comprehensive solid waste
disposal services. We are strengthening our investment in the
recycling industry at a time when the industry has begun to
restructure itself and when commodity prices are near an all time
low. We believe this gives us a solid financial foundation for
taking this step and that this will put KTI in the forefront of
the recycling industry consolidation."



KTI is a 15-year-old company that operates an integrated waste
handling business for municipal and specialty wastes. The company
owns two waste-to- energy facilities in Maine which convert non-
hazardous solid waste from residential, commercial and industrial
sources into electric power. KTI also has developed and operates
a wood waste processing and recycling facility in Lewiston,
Maine. These facilities represent 60% of Maine's disposal
capacity.



KTI also owns a 14-megawatt power plant in Telogia, Fla. which
converts biomass waste into electricity for sale to Florida Power
Company; a majority interest in America's only commercially
operational municipal waste ash recycling facility in Nashville,
Tenn.; a 400,000 ton per year wood chip mill in Cairo, Ga.; a
plastic recycling plant in Tuscaloosa, Ala. and a Maryland
company specializing in marketing recycled plastics.



SOURCE KTI, Inc. /CONTACT: Marty Sergi, KTI, 201-854-7777; or
Frank N. Hawkins, Jr., Hawk Associates, 305-852-2383/






Sanctuary Woods Posts Fiscal 1997
Results



SAN MATEO, Calif., July 1, 1997 - Sanctuary Woods Multimedia
Corporation (OTC Bulletin Board: SWMC) today reported a net loss
of $3,677,011 or $3.30 per share on sales of $4,749,351 for the
fiscal year ended March 31, 1997 as compared to a net loss of
$18,698,441 or $22.16 per share for the year ended December 31,
1995 on revenues of $10,981,097.



"The Company's fiscal 1997 results are not comparable to
fiscal 1995 results because in fiscal 1997 the Company
discontinued the distribution of entertainment products. In
addition, in fiscal 1995, the Company wrote down numerous assets
and took extraordinarily high reserves to account for product
returns and price markdowns related mostly to its discontinued
entertainment business," said Charlotte Walker, President.
In fiscal 1997, the Company re-structured its balance sheet and
reorganized operations into the US including the sale of its
studio in Victoria, British Columbia and the closure of its
Toronto office. Expenses related to the re-structuring and
reorganization were approximately $1.1 million. The Company also
incurred $329,000 in bad debt losses partly resulting from
bankruptcy filings by two of the industry's major distributors.



"Market conditions remain very challenging, however we
believe that our continued focus on the Head Coach(TM) and
Franklin(TM) line of educational products and our efforts to open
new sales channels, including the internet, will position us for
growth in 1997-1998," added Ms. Walker.



About Sanctuary Woods Founded in 1988, San Mateo-based
Sanctuary Woods Multimedia is the innovative developer of the
Head Coach(TM) line of sports-based educational software titles
derived from unique licensing agreements with NFL(TM) Properties,
the National Football League Players Incorporated and Major
League Baseball Properties. Current titles include Major League
Math(TM), Major League Reading(TM), NFL(TM) Math and NFL(TM)
Reading. Major League Math Second Edition was recently awarded
Newsweek Magazine's "Editor's Choice" award. The
company also manufacturers the popular Franklin series which
includes Franklin Learns Math, Franklin's Reading World and
Franklin's Activity Center. All are based on the popular Franklin
storybook character. Sanctuary Woods can be reached at
800-943-3664 or visit the company's Web site located at
http://www.ah-hah.com.



NOTE: Sanctuary Woods is a registered trademark and Head Coach
is a trademark of Sanctuary Woods Multimedia. Franklin is a
trademark of Kids Can Press Ltd. Major League Math and Major
League Reading are trademarks of Major League Baseball
Properties, Inc. NFL is a trademark of National Football League
Properties.






Centennial Technologies redeems a portion
of its investment in Century; reduces debt obligations; and
extends current financing




WILMINGTON, Mass.--July 1, 1997-- Centennial
Technologies Inc. (Ticker:CENL) announced today that it has
completed its earlier announced redemption of a portion of its
equity interest in its contract manufacturing subsidiary, Century
Electronics Manufacturing Inc. Centennial, which previously owned
approximately 67 percent of Century, now owns approximately 45
percent of the contract manufacturing business. Centennial has
also transferred to Century its majority interest in Centennial
Technologies (Thailand) Limited and has sold to Century equipment
resulting from certain lease buyouts. In return, Centennial has
received from Century $5.8 million in cash, a $1.9 million
promissory note, and a $6 million subordinated convertible
debenture.



Centennial also announced that its current secured lender, The
First National Bank of Boston, has extended until July 31, 1997
the company's forbearance agreement related to its line of
credit. The company's current loan balance is approximately $1.5
million, reduced from approximately $13.5 million in February
1997 when the company received a notice of default. As previously
announced, the company is currently in negotiations with Congress
Financial, an asset-based lending institution, for replacement
borrowing facilities. The company expects to have such facilities
in place in three weeks.



The company also announced that it has requested from the
Securities and Exchange Commission (the "Commission")
an extension of time until July 15, 1997 to file its Form 10-K
for its fiscal period ended March 31, 1997. The company and its
independent public accountants continue to work on the financial
disclosures required by the company's recent announcements
regarding its financial restatements.



In reference to the Private Securities Litigation Reform Act,
this press release contains forward looking statements. The
matters expressed in such statements are subject to numerous
risks and uncertainties, including, without limitation, the
ability of Centennial to negotiate replacement credit facilities,
the impact of shareholder class action suits currently pending
against the company and their effect on the company's continued
ability to operate as a going concern, and other risks identified
in filings made by Centennial Technologies Inc. with the
Commission including Centennial's Form 10-K filed with the
Commission on September 30, 1996 under the heading "Risk
Factors."



CONTACT: Centennial Technologies Inc. Cheryl Byrne, (508)
988-8848






NEXTEL Communications' S&POutlook
Revised to Positive



NEW YORK, NY - July 1, 1997 - Standard & Poor's today has
revised its outlook on NEXTEL Communications Inc. (NEXTEL) to
positive from stable.



In addition, Standard & Poor's has assigned its
triple-'C'-minus preferred stock rating to the company's $350
million (initial proceeds) series D exchangeable preferred stock
and its triple-'C'-minus debt rating to McCaw International
Ltd.'s $500 million ($951.5 million maturity value) 13% senior
discount notes due 2007. McCaw International is an indirect
wholly owned subsidiary of NEXTEL. McCaw International's
corporate credit rating is triple-'C'-plus.



Additionally, Standard & Poor's has assigned its
triple-'C'-plus bank loan rating to NEXTEL's $2.4 billion bank
facility. The triple-'C'-plus corporate credit rating and
triple-'C'-minus senior unsecured debt rating of NEXTEL have been
affirmed.



The bank loan facility is secured by a first priority pledge
of all of the shares of stock of NEXTEL's restricted subsidiaries
and a lien on substantially all of the restricted subsidiaries
assets. While this facility derives strength from its secured
position, based on Standard & Poor's simulated default
scenario, it is not clear that stressed asset values would be
sufficient to cover the entire loan facility. Therefore, the bank
loan rating is the same as the corporate credit rating.



About $3.7 billion of debt is outstanding. The revised outlook
on the McLean, Va.-based NEXTEL reflects the following:



- The reconfigured iDEN technology works and has improved
voice quality on the company's wireless network;



- The growth in number of digital subscribers, which totaled
more than 400,000 in the first quarter 1997, shows that the
company is beginning to establish a business for its services;
and



- The company's financial flexibility has increased somewhat
with the $232 million to be received from Craig O. McCaw as a
result of his exercising options by the end of July and the $420
million in additional options purchased by Mr. McCaw.



NEXTEL recently announced that it is accelerating the buildout
of its digital mobile network in order to be "first to
market" with digital nationwide coverage. The company is
expected to distinguish itself from other wireless providers with
its integrated wireless phone, which includes push-to- talk
instant conferencing features, cellular, paging, and advanced
text messaging services. The network buildout to be completed in
1998 will cover 85% of the U.S. population. However, to
accommodate this buildout, the company will require about $1
billion of additional financing, which is in addition to the
planned equity infusion from Craig McCaw.



The majority of this new financing is expected to be a
combination of bank and vendor debt. Nevertheless, the company's
capital structure is expected to be highly leveraged over the
near term. Earnings before interest, taxes, depreciation, and
amortization is not expected to turn positive until 1999
dependent upon the demand for NEXTEL's product. Significant
growth in number of subscribers over the next two-to-three years
will be required in order to satisfy cash interest payments that
become due in 1999.



OUTLOOK: Positive. Continued strong growth in subscribers for
NEXTEL's integrated services and the potential additional equity
commitment by Craig O. McCaw could lead to a rating upgrade in
the near term. - CreditWire



SOURCE Standard & Poor's CreditWire /CONTACT: Rosemarie
Kalinowski of S&P New York, 212-208-1645/






Image Entertainment, Inc. Announces Fiscal
1997 Revenues of $85.7 Million and Net Earnings of $845,000



CHATSWORTH, Calif., July 1, 1997 - Image Entertainment, Inc.
(Nasdaq: DISK), the largest licensee and distributor of optical
laserdisc programming in the United States, today reported
financial results for the year ended March 31, 1997.



Fiscal 1997 net sales decreased approximately 10% to $85.7
million from $95.1 million in fiscal 1996. Fiscal 1997 operating
income decreased approximately 72% to $2.3 million from $8.2
million in fiscal 1996. Fiscal 1997 net income (inclusive of the
nonrecurring charges and charges relating to doubtful accounts
receivable and slow-moving laserdisc inventory, net of taxes,
totaling $3.3 million, or $.24 per share, detailed below) was
down approximately 89% to $845,000, or $.06 per share, from $7.6
million, or $.49 per share, for fiscal 1996. The Company's
effective tax rate for fiscal 1997 was approximately 31% versus
9% in fiscal 1996. Fiscal 1997 EBITDA (earnings before interest,
income taxes, depreciation and amortization) was $3.3 million
(exclusive of a write-off of acquisition expenses of $662,000)
down 65% from $9.4 million for fiscal 1996.



During fiscal 1997, the Company recorded nonrecurring charges,
net of taxes, totaling $585,000, or $.04 per share, relating to
the write-off of acquisition expenses and costs associated with
the early retirement of debt. Also during fiscal 1997, the
Company significantly increased its provision for doubtful
accounts receivable in response to the August 1996 Chapter 11
bankruptcy filing of Camelot Music (one of the Company's largest
customers prior to their bankruptcy), the February 1997
suspension by Musicland Group Inc., the Company's largest
customer, of $2.7 million in payments owing the Company and the
overall distressed condition of the retail entertainment software
market. The provision for doubtful accounts receivable, net of
taxes, was $1,345,000, or $.10 per share, for fiscal 1997 versus
$95,000, or $.01 per share for fiscal 1996. Further, in fiscal
1997, the Company increased its provision for slow-moving
laserdisc inventory, net of taxes, to $1,358,000, or $.10 per
share, versus $232,000, or $.01 per share, for fiscal 1996, in
response to the continued uncertainty in the laserdisc
marketplace caused by the introduction of the new optical disc
format commonly known as digital video disc, or "DVD,"
as well as the distressed condition of the retail entertainment
software market.



Net sales for the fourth quarter of fiscal 1997 were $22.8
million, comparable to $22.9 million for the fourth quarter of
fiscal 1996. The Company, however, had an operating loss of
$269,000 for the fourth quarter of fiscal 1997 versus operating
income of $1.9 million for the fourth quarter of fiscal 1996. The
Company had a net loss of $415,000, or $.03 per share, for the
fourth quarter of fiscal 1997 versus net income of $1.9 million,
or $.12 per share, for the fourth quarter of fiscal 1996. In the
fourth quarter of fiscal 1997, the Company recorded a provision
for doubtful accounts receivable, net of taxes, of $548,000, or
$.04 per share, in response to the aforementioned distressed
condition of the retail entertainment software market. Also
during the fourth quarter of fiscal 1997, the Company recorded a
provision for slow-moving inventory, net of taxes, of $840,000,
or $.06 per share, in response to the continued uncertainty in
the laserdisc marketplace caused by the introduction of DVD as
well as the distressed condition of the retail entertainment
software market.



Martin W. Greenwald, Image's President and Chief Executive
Officer, said, "As we turn the page on fiscal 1997, I'd like
to reflect upon two market conditions that most affected the
Company's financial results. First, the distressed condition of
the retail entertainment software market negatively impacted
Image's fiscal 1997 results. In particular, the economic slump in
music retailing (a subset of the retail entertainment software
market), which began in 1995, and which has continued through
1997, dramatically affected Image's customer base. Musicland and
Alliance Entertainment, two of the Company's largest customers,
have continued to struggle financially. Because of the financial
difficulties of Musicland, Alliance, and certain smaller
customers, and Camelot Music's August 1996 bankruptcy, Image
significantly increased its provision for doubtful accounts
receivable which directly impacted the bottom-line. As the retail
entertainment software market continues to experience
difficulties, we have continued our efforts to find new customers
for both our core laserdisc business and our new DVD business.



"The second market condition affecting the Company, the
introduction of DVD, is a mixed blessing for Image. Pre-launch
marketing and widespread media coverage of the DVD format created
uncertainty regarding laserdisc's future, which affected both
Image's laserdisc software sales, and the sale of laserdisc
hardware which drives the sale of laserdisc software. The trend
appears to be continuing as entertainment software retailers are
actively buying what DVD titles are currently available in hopes
that the DVD format will live up to expectations and capture the
interest of optical disc consumers. Although software retailers
have taken what I believe to be an overly cautious approach to
laserdisc purchasing, consumer demand for laserdisc software
continues.



"DVD, on the other hand, has also presented additional
licensing and distribution opportunities for Image. While
continuing our commitment to laserdisc, since DVD's March 1997
launch we have been distributing DVD programming on a
non-exclusive basis. We have also just recently begun to release
our exclusive licensed DVD programming. Our first two exclusive
DVD releases have been well received and I am optimistic that our
long-term experience in the sell-through, optical disc
entertainment software business and our strong reputation and
expertise in licensing, sales, marketing and distribution will
help us grow our presence in the DVD market through the
aggressive pursuit of additional licensing and distribution
opportunities.



"Although fiscal 1997 was not a banner year for the
Company, relative to past years, I am far from disappointed.
Image fared well considering a large part of our customer base
wrestled with financial difficulties, bankruptcy and/or
reorganization. In addition, fiscal 1997 nevertheless represents
our fourth consecutive year of profitability. With the diligence
of our employees and the support of loyal customers I am
optimistic about our opportunities in both the laserdisc and DVD
formats, and with that in mind, we continue our dedication to
strengthening our balance sheet, increasing our profitability and
growing shareholder value."



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 laserdisc 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.



This press release contains forward-looking statements
concerning the Company's ability to grow its presence in the DVD
market, the Company's continued opportunities in the laserdisc
and DVD formats and the Company's ability to strengthen its
balance sheet, increase profitability and grow shareholder value.
Actual results may differ materially from the expectations
contained herein. Additional detailed information concerning a
number of factors that could cause the Company's actual results
to differ materially from the expectations contained herein is
readily available in the Company's most recent Annual Report on
Form 10-K.



IMAGE

ENTERTAINMENT, INC.



                        CONSOLIDATED STATEMENTS
                        OF OPERATIONS
                     For the Years Ended March
                     31, 1997 and 1996


                                               19
                                               97
  1996


      NET SALES                    
      $85,650,000100.0%    $95,086,000
  100.0%


        OPERATING COSTS AND EXPENSES:
       Cost of optical disc sales    68,427,000
       79.9     74,387,000
  78.2
       Selling expenses               4,752,000  
       5.5      4,531,000
  4.8
         General and administrative
         expenses                     7,108,000  
         8.3      5,124,000
  5.4
         Amortization of production
         costs                        3,112,000  
         3.6      2,884,000
  3.0
                                     83,399,000
                                     97.4    
                                     86,926,000
  91.4


      OPERATING INCOME                2,251,000  
      2.6      8,160,000
  8.6


        OTHER EXPENSES (INCOME):
      Interest expense                  415,000  
      0.5        155,000
  0.2
      Interest income                 (231,000)
      (0.3)      (337,000)
  (0.4)
      Other                             662,000  
      0.8
  --     --
                                        846,000  
                                        1.0     
                                        (182,000)
  (0.2)


        INCOME BEFORE INCOME TAXES
      AND EXTRAORDINARY ITEM          1,405,000  
      1.6      8,342,000
  8.8


      INCOME TAXES                      433,000  
      0.5        743,000
  0.8


      INCOME BEFORE EXTRAORDINARY ITEM  972,000  
      1.1      7,599,000
  8.0


        EXTRAORDINARY ITEM -
          COSTS ASSOCIATED WITH EARLY
        RETIREMENT OF DEBT, NET OF TAXES127,000  
        0.1
  --     --


      NET INCOME                       $845,000 
      1.0%     $7,599,000
  8.0%


        NET INCOME PER SHARE:
         Income before extraordinary item    $.07
                         $.49 Extraordinary item
         - costs
           associated with early retirement
           of debt, net of taxes            (.01)
                             --


        NET INCOME PER SHARE                 $.06
                        $.49


        WEIGHTED AVERAGE SHARES
        OUTSTANDING:
         Common shares                 13,504,000
                   13,570,000 Common stock
         options and
           warrants                       332,000
                      4,082,000
                                       13,836,000
                                                


                                       17,651,000


      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
  March 31, 1997 Form 10-K.


                              IMAGE
                              ENTERTAINMENT, INC.


                        CONSOLIDATED STATEMENTS
                        OF OPERATIONS
                  For the Three Months Ended
                  March 31, 1997 and 1996


                                               19
                                               97
  1996


      NET SALES                    $22,794,000 
      100.0%   $22,878,000
  100.0%


        OPERATING COSTS AND EXPENSES:
       Cost of optical disc sales   18,845,000   
       82.7    17,608,000
  77.0
       Selling expenses              1,295,000   
        5.7     1,280,000
  5.6
         General and administrative
         expenses                    2,119,000   
          9.3     1,289,000
  5.6
         Amortization of production
         costs                         804,000   
          3.5       769,000
  3.4


                                    23,063,000  
                                    101.2   
                                    20,946,000
  91.6


      OPERATING INCOME               (269,000)  
      (1.2)     1,932,000
  8.4


        OTHER EXPENSES (INCOME):
       Interest expense                189,000   
        0.8        32,000
  0.1
       Interest income                (43,000)  
       (0.2)     (109,000)
  (0.5)
                                       146,000   
                                        0.6     
                                       (77,000)
  (0.3)


      INCOME BEFORE INCOME TAXES     (415,000)  
      (1.8)     2,009,000
  8.8


      INCOME TAXES                      16,000   
       0.1        98,000
  0.4


        INCOME BEFORE EXTRAORDINARY
        ITEM                         (431,000)  
        (1.9)     1,911,000
  8.4


        EXTRAORDINARY ITEM -
          COSTS ASSOCIATED WITH EARLY
          RETIREMENT OF DEBT, NET
        OF TAXES                      (16,000)  
        (0.1)
  --     --


      NET INCOME                    $(415,000) 
      (1.8)%    $1,911,000
  8.4%


        NET INCOME PER SHARE:
         Income before
           extraordinary  item            $(.03)
                           $.12
         Extraordinary item - costs
           associated with early
           retirement of debt net of taxes (.00)
                             --


        NET INCOME PER SHARE              $(.03) 
                        $.12


        WEIGHTED AVERAGE
        SHARES OUTSTANDING:
         Common shares                13,334,000
                   13,555,000 Common stock
         options
           and warrants                  272,000
                      3,306,000
                                      13,607,000
                                               


                                      16,861,00O


      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
  March 31, 1997 Form 10-K.


SOURCE Image Entertainment, Inc. /CONTACT: Image: Cheryl Lee,
Esq., Chief Administrative Officer & General Counsel of Image
Entertainment, Inc., 818-407-9100, ext. 256 or
cleeimage-entertainment.com; or Investor Relations: Brian Crane
of Coffin Communications Group, 818-789-0100/