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FOXMEYER RESPONDS TO PHAR-MOR BANKRUPTCY FILING; NO MATERIALLY ADVERSE IMPACT EXPECTED

 FOXMEYER RESPONDS TO PHAR-MOR BANKRUPTCY FILING;
 NO MATERIALLY ADVERSE IMPACT EXPECTED
 DALLAS, Aug. 18 /PRNewswire/ -- FoxMeyer Corporation (NYSE: FOX) late yesterday confirmed its position as a significant supplier to Phar-Mor, Inc., which filed for bankruptcy court protection Monday afternoon in the federal bankruptcy court for the Northern District, Eastern Division, of Ohio in Youngstown. As previously reported in the corporation's form 10-Q for the quarter ended June 30, 1992, Phar-Mor represented 16 percent of the FoxMeyer's sales in the June 30 quarter, and at Aug. 11, 1992, the total amounts due to the corporation from Phar-Mor were approximately $74 million.
 Robert L. King, FoxMeyer president and chief executive officer, said, "We regret that the events recently reported by Phar-Mor have led to this result for a valued customer of FoxMeyer. We are prepared to work with Phar-Mor as the company attempts to reorganize its business."
 While it is too early to estimate the amount of any possible one- time write-offs on FoxMeyer's receivables from Phar-Mor, King indicated that the Corporation had filed a reclamation claim covering the last 10 calendar days of shipments to Phar-Mor. King also indicated that, for the remaining amounts owed to FoxMeyer, the corporation believes some level of recovery can be anticipated, but at this time it is too early to ascertain if this level would be as high as the approximately 80 percent recovery that was experienced by some trade creditors, including FoxMeyer's subsidiary, Harris Wholesale Company, in the recent REVCO bankruptcy. "In summary, while we are disappointed by the possible need for FoxMeyer to take a one-time charge, we believe that, after consideration of reclamation claims, recoveries and tax benefits, the eventual write-off will not have a materially adverse impact on the corporation."
 King commented that it is also too early to speculate about possible changes in FoxMeyer's sales volume as a result of Phar-Mor's action. "However, it is important to note that, just prior to the announcement by Phar-Mor, the corporation had announced the signing of new contracts with Perry Drug Stores, Inc. and Omnicare, Inc. which are expected to generate up to $2 billion in new volume over the next five years," he said. King also pointed out that the corporation has managed to maintain a nearly 20 percent sales growth rate over the past five years despite the loss of two significant customers in that time period. "The management team knows how to respond to these situations, aggressively eliminating any related servicing costs and developing new business," he said.
 "We have evaluated the impact that Phar-Mor's action will have on near-term liquidity and, based on FoxMeyer's invested cash balances that have averaged between $52 million and $73 million over the past few months together with an unused $200 million working capital facility, we are highly confident that there will be no cash constraints generated by the Phar-Mor problem," King said. "We have reviewed both our borrowing base calculations and the covenants of the working capital facility, and at this time we believe that, even in the unlikely event of the entire receivable being written off, the full facility would still be available. Some covenants of the working capital facility may need to be modified as a result of a quantification of the possible write-off, but based on preliminary discussions with the members of the bank group, the company believes that such modifications can be obtained."
 In conclusion, King said, "While we regret what has happened to Phar-Mor, we are prepared to move ahead with our plans to strengthen FoxMeyer's position as a premier national supplier of pharmaceutical products. Despite this short term set-back, we are continuing to make good progress toward that goal."
 FoxMeyer is 69 percent owned by National Intergroup, Inc. (NYSE: NII).
 -0- 8/18/92
 /CONTACT: J. Warren Henry of FoxMeyer, 214-446-4270/
 (FOX) CO: FoxMeyer Corporation ST: Texas IN: MTC SU:


SM -- NY018 -- 0848 08/18/92 09:36 EDT
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Publication:PR Newswire
Date:Aug 18, 1992
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