50-OFF Stores Announces Filing Under Chapter 11 of the Bankruptcy Code
SAN ANTONIO, TX - Oct. 9, 1996 - San Antonio based 50-OFF Stores, Inc. announced today that it has
filed a petition under Chapter 11 of the Bankruptcy Code. Although management believes it has developed
an appropriate business plan for the company in its current environment, the company was unable to
secure the resources required to implement its plan and to effect the changes believed necessary to
improve operations and to reverse the company's disappointing operating results without the protections
afforded under Chapter 11 of the Bankruptcy Code. The Chapter 11 filing is expected to give management
the opportunity to put together a reorganization plan which could include strategic or financial alliances
with third parties (which may include suppliers of product) and/or the sale of all or a part of the company.
50-OFF Stores' operating results in recent years have been increasingly disappointing. For the 26-week
period ended Aug. 2, 1996, the company reported the following preliminary results: net sales of $64.1
million and a loss before income taxes of $9.7 million (including an approximately $4.1 million write
down of inventories in stores liquidated or scheduled for liquidation).
Faced with such results, the Board of Directors supported a change of leadership in mid-May and, more
recently, the continued conversion of existing 50-OFF stores to LOT$OFF stores, a geographic
consolidation of the chain (exiting Alabama, Georgia, North Carolina, South Carolina and Arkansas and
parts of Florida and Tennessee), the liquidation or closing of at least 37 underperforming stores or stores
located outside of the reduced market area, appropriate reductions in field and corporate overhead and
staffing and the filing of a petition under Chapter 11 of the Bankruptcy Code.
As previously reported, 50-OFF Stores is in the process of redirecting its retail activities from off-price
retailing to a closeout retailing concept. Coincident and consistent with this change is a change in the mix
of products, historically a majority in family apparel, to a majority in non-apparel merchandise,
principally through the addition of new product categories. On Sept. 27, the company opened six
LOT$OFF stores in San Antonio, bringing to 19 the number of LOT$OFF stores operated by the company,
13 of such stores having opened in Oklahoma (5) and the Dallas Metroplex (8) July 26 and Aug. 1, 1996,
respectively. Early operating results for the LOT$OFF stores have been encouraging, in spite of
difficulties in maintaining inventories due to serious cash shortages, far surpassing the results of the
remaining 50-OFF stores. Under Chapter 11 protection, the company hopes to proceed with the
conversion of those stores it elects to operate.
SOURCE 50-Off Stores, Inc. -0- 10/09/96 /CONTACT: Media -- Charles Fuhrmann, CEO of 50-OFF
Stores, Inc., 210-804-4904, or Creditor - 210-804-5357/
FoxMeyer Drug Buys Approximately $140 Million in New Inventory Will Be Shipped to Fill Current
DALLAS, TX - Oct. 9, 1996 - FoxMeyer Drug Company announced today that in the past 24 hours, it has
placed orders for approximately $140 million in new inventory, which it says will be shipped to
customers within the next few days to fill current orders. The Company's ability to purchase inventory of
this magnitude is a direct result of $30 million in cash received from McKesson Corporation through a
participation in the Company's existing debtor in possession financing with GE Capital Services pursuant
to an agreement to purchase the assets of FoxMeyer Drug and its affiliated companies, as well as funds
that have been made available through the DIP facility in the normal course of business.
Robert A. Peiser, vice chairman and chief executive officer of FoxMeyer, said, "We are extremely
pleased that we now have the liquidity available to purchase the inventory necessary to increase our
service levels to our customers. Today's purchase - combined with our ability to fill customer orders - is
an important step in resuming normal operations at FoxMeyer during the transition period prior to the sale
of the Company."
On October 4, FoxMeyer Drug and its affiliated companies engaged in the healthcare distribution business
reached an agreement to sell substantially all of their assets to McKesson Corporation, a provider of
health care products and services throughout the U.S. and Canada. Under the Bankruptcy Code, the sale is
subject to an open-bidding process, making it possible for other bidders to come forward. The proceeds
from the sale transaction will be used to discharge liabilities and satisfy creditors' claims in the Chapter
11 cases of FoxMeyer Drug and certain of its affiliated companies.
In a related announcement, the Company said that the Bankruptcy Court in Wilmington, Del., approved
certain provisions of the agreement with McKesson relating to, among other items, the $30 million
funding arrangement and established an auction procedure for the sale of the Company's business. The
Court also set November 8, 1996 as the date for a hearing to consider the sale.
FoxMeyer Drug and certain affiliated companies filed to reorganize under Chapter 11 of the Bankruptcy
Code on August 27, 1996, in U.S. Bankruptcy Court in Wilmington, Del. FoxMeyer Drug is the nation's
fourth largest wholesaler of pharmaceutical products, health and beauty aids. The Company, which is
headquartered in Dallas, employs approximately 2,200 people in 21 states and the District of Columbia.
FoxMeyer Drug Company and its affiliates are wholly-owned subsidiaries of FoxMeyer Health
Corporation (NYSE: FOX).
SOURCE FoxMeyer Drug Company/CONTACT: Sandra Sternberg or Ann Julsen, both of Sitrick And
Company, 310-788-2850/ (FOX)