*AFE Terminates Staff, Curtails Operations

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American Family Enterprises, Jersey City, NJ, will eliminate 85 positions and significantly curtail operations while it evaluates its new lines of business, the company said yesterday.

AFE decided last year to take the company in a new direction after stopping its American Family Publishers sweepstakes mailings.

AFE sent its last U.S. sweepstakes solicitation -- which featured Ed McMahon -- in September because response to the sweepstakes had been declining rapidly over the past few years and had reached a marginal profitability level.

"For more than a year American Family Enterprises, as part of its strategic reorganization, has been conducting an extensive analysis of its traditional business operations while exploring additional business opportunities," AFE said.

"In September of 2000, AFE exited the mail sweepstakes promotions business and began testing a number of new lines of business -- all of them non-sweepstakes direct marketing programs that would combine AFE's direct marketing strengths with new channels for magazine subscription sales."

AFE said that in keeping with this strategy, it would eliminate the positions and significantly curtail operations while it evaluates its new lines of business.

"A core team will remain throughout this period while the future of these businesses and their structure are determined," AFE said. "All employees whose jobs are affected will receive a severance package."

AFE said it would "continue to accept orders for magazine subscriptions and fulfill all outstanding customer subscriptions and renewals. This downsizing will have no effect on the prizes that have previously been awarded in the American Family Publishers sweepstakes. AFE's plan of reorganization and related class-action and attorney general settlements are not affected by today's announcement."

AFE filed for Chapter 11 bankruptcy in 1999 to enable it to resolve several dozen class-action lawsuits that have been consolidated into one federal court case in Newark, NJ.

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