TCR_Public/970211.MBX




InterNet Bankruptcy Library - News for February 11, 1997






Bankruptcy News For February 11, 1997



  1. O.J. ROUND III? Will O.J. Have to Battle His Way Through Bankruptcy Court?

  2. Phar-Mor, Inc. Reports Second Quarter Results




O.J. ROUND III? Will O.J. Have to Battle His Way Through Bankruptcy Court?


CHICAGO, IL--Feb. 11, 1997--The jury has just found O.J. Simpson liable in his civil court case and awarded the plaintiffs
more than $34 million in compensatory and punitive damages.


What are the odds that O.J. will face another trial, this time in bankruptcy court? What are the critical issues and what is at
stake?


Keith Shapiro, a partner at Holleb & Coff (Chicago), concentrates his practice in bankruptcy and creditors' rights and is
available to comment on the bankruptcy implications of the Simpson case.


Key questions on which media legal analysts cannot sufficiently comment because of the complexities of the U.S. Bankruptcy
Code include: -0- *T


-- What will happen to O.J.'s multi-million dollar pension and retirement plans? Can he use these funds?


-- Will O.J. file for bankruptcy? If so, will he file for chapter 7 or chapter 11 and why?


-- Will O.J.'s debts to the Browns and Goldmans be dischargeable in bankruptcy?


-- Will O.J.'s recent child custody victory benefit him in shielding his assets from creditors?


-- What will O.J.'s standard of living be?


-- Will O.J.'s filing for bankruptcy delay his creditors' ability to cash in on valuable assets, such as his house, heirlooms,
jewelry, etc.? To what extent are these assets protected from creditor claims?


-- Can O.J. save his multi-million dollar house? What will happen to O.J.'s mother's house, which he owns? Will she lose it?


-- Can creditors touch O.J.'s future income?


Shapiro is vastly experienced in complex bankruptcy matters and has been an excellent media source on recent issues in the
O.J. case. He is the Chair of Holleb & Coff's Bankruptcy practice, one of the largest bankruptcy practices in the U.S.


Shapiro is also Vice President of the American Bankruptcy Institute, the leading organization for the nation's bankruptcy
judges and attorneys. Shapiro founded and was first Chairman of the Board of the American Bankruptcy Board of
Certification, the nation's premier certifier of bankruptcy specialists.




Phar-Mor, Inc. Reports Second Quarter Results


YOUNGSTOWN, Ohio, Feb. 11, 1997 - Phar-Mor, Inc. (Nasdaq-NNM: PMOR) today announced the results for its
second quarter of fiscal 1997, the thirteen weeks ended December 28, 1996.


Total sales for the thirteen weeks ended December 28, 1996 were $290.9 million compared to $284.3 million for the
comparable thirteen weeks of the prior year, an increase of 2.3%. The Company opened a new store in Oxford Valley,
Pennsylvania (a Philadelphia suburb) on December 1, 1996. This is the first new store opened by the Company since
September 1992. Comparable store sales for the 102 stores the Company operated during the second quarter of fiscal 1997
increased 2.0% to $289.9 million from $284.3 million for the same period in the prior year.


On November 17, 1996, the Company completed the remodeling of its flagship store (Boardman, Ohio) and its Anderson,
Indiana store into a new prototype that includes an expanded grocery department of approximately 12,000 square feet
featuring a limited selection of "club-pack" grocery items, produce, refrigerated and frozen foods. This prototype is an
expansion of the prototype stores opened in Bethel Park, Pennsylvania in May 1996 and Allentown, Pennsylvania in August
1996, and brings to four the number of "club stores" that the Company now operates. A drive-through pharmacy was also
added to the Boardman store, the first drive-through pharmacy for the chain. From November 17, 1996 through December
28, 1996 the sales volume of these two stores increased 21.7% compared to the prior year, while they produced a combined
20.5% improvement in comparable gross profit dollars.


The impact of a new marketing program and expenses associated with the proposed business combination with ShopKo
Stores, Inc. resulted in the Company reporting a loss of $0.5 million or $0.05 per share for the quarter compared to net
income of $3.6 million or $0.29 per share for the comparable thirteen weeks ended December 30, 1995. The Company's
gross margin increased to 18.9% for the quarter versus 18.6% for the comparable period of the prior year and advertising
costs increased $0.9 million, or 14.6%. Earnings were also impacted $0.4 million resulting from costs associated with the
remodeling of two stores and pre-opening expenses incurred for the new store opened in December 1996. Further, the
Company recorded $2.2 million in expenses associated with the proposed business combination with ShopKo Stores during
the second quarter of fiscal 1997. Phar-Mor management believes that $1.8 million of these transaction expenses are
"common" expenses and should be shared with ShopKo. Although the parties have not reached agreement on the specific
allocation of these expenses, the parties are currently negotiating a cost sharing arrangement with respect to these expenses
which will include reimbursement by ShopKo to the Company of certain of these expenses paid or incurred by the Company
to date. Income tax expense was $1.5 million for the second quarter of fiscal 1997 compared to $2.4 million for the
corresponding period in fiscal 1996, a decrease of $0.9 million. The Company reversed the income tax benefit recorded in the
first quarter of fiscal 1997 as a result of lower than planned earnings and the expectation that additional business combination
expenses will cause it to incur a loss for the fiscal year.


Total sales for the twenty-six weeks ended December 28, 1996 were $555.5 million compared to $539.2 million for the
comparable twenty-six weeks of the prior year, an increase of 3.0%. Comparable store sales for the first half of fiscal 1997
increased 2.8% to $554.5 million from $539.2 million for the same period last year. The Company reported a net loss of $2.7
million or $0.23 per share for the first half of fiscal 1997 compared to a pro forma net income of $4.5 million or $0.37 per
share for the comparable period last year.


On January 13, 1997, Cabot Noble, Inc., a newly formed holding company, filed its Pre-Effective Amendment No. 1 to Form
S-4 Registration Statement with the Securities and Exchange Commission (S.E.C.) outlining the terms and rationale for the
business combination in which shares of Cabot Noble will be exchanged for shares of both Phar-Mor and ShopKo. The
companies anticipate submitting the merger proposal for a vote of the shareholders of both companies during the last half of
March 1997, subject to S.E.C. clearance.


Phar-Mor is a retail drug store chain with 103 stores in 18 states. The Company's common stock is traded on the Nasdaq
National Market under the symbol "PMOR."


                                    PHAR-MOR, INC.
                 Unaudited Consolidated Summary of Sales and Earnings
                       (In thousands, except per share amounts)
        

           PRO FORMA: (a)
        

                                                  Successor Company
                                                Twenty-six Weeks Ended
                                      December 28, 1996    December 30, 1995
        

           Sales                              $555,484             $539,163
           Income (loss) before
        income tax expense                 $(2,743)              $7,450
           Income tax expense                       --(b)
        2,982(b)
           Net income (loss)                   $(2,743)              $4,468
           Earnings (loss) per share            $(0.23)               $0.37
        

           AS REPORTED:
        

                                            Successor             Successor
                                             Company               Company
                                             Thirteen              Thirteen
                                            Weeks Ended          Weeks Ended
                                         December 28, 1996    December 30, 1995
        

           Sales                                $290,933
        $284,318
           Income before income taxes                916
        5,966
           Income tax expense                      1,464(b)
        2,388(b)
           Net income (loss)                       $(548)
        $3,578
           Earnings (loss) per share              $(0.05)
        $0.29
        

                                   Successor       Successor      Predecessor
                                    Company         Company         Company
                                  Twenty-six       Seventeen         Nine
                                  Weeks Ended     Weeks Ended     Weeks Ended
                                 Dec. 28, 1996   Dec. 30, 1995   Sept. 2, 1995
        

           Sales                      $555,484         $357,195
        $181,968
           Income (Loss) before
        reorganization items,
        fresh start revaluation,
        extraordinary item
        and income taxes           $(2,743)          $6,112        ($1,634)
           Reorganization items
        --               --        (16,798)(c)
           Fresh start revaluation
        --               --          8,043
           Extraordinary item - gain
        on debt discharge               --               --        775,073
           Income (loss) before
        income taxes                (2,743)           6,112        764,684
           Income tax expense               --(b)         2,446(b)
        --(b)
           Net income (loss)           $(2,743)          $3,666
        $764,684
           Earnings (loss) per share    $(0.23)           $0.30
        N/M
        

NOTES:


(a) The Company emerged from protection under Chapter 11 of the United States Bankruptcy Code on September 11, 1995
(the "Effective Date"). Consequently, the Company has applied the reorganization and fresh-start reporting adjustments to the
balance sheet as of September 2, 1995, the closest fiscal month end to the Effective Date.


The pro forma information includes all retroactive adjustments for fresh start accounting, elimination of non-recurring
reorganization items and adjusting interest expense to give effect to the new debt of the reorganized Company.


(b) Due to the losses generated by the Predecessor Company it was in a net operating loss carryforward position. Further, the
discharge of debt in conjunction with the reorganization did not generate taxable income. Consequently, no provision for
income taxes was recorded by the Predecessor Company. The Company reversed the income tax benefit recorded in the first
quarter of fiscal 1997 as a result of lower than planned earnings and the expectation that additional business combination
expenses will cause it to incur a loss for the fiscal year.


(c) Reorganization items include charges for Chapter 11 professional fees, the Debtor-In-Possession financing facility fees and
costs of downsizing net of credits for interest income, amortization of prepetition vendor exclusivity income and an insurance
claim recovery.


N/M - not meaningful.


EARNINGS PER SHARE for the Successor Company have been computed based on 12,157,054 and 12,156,250
weighted average shares outstanding for the thirteen and twenty-six weeks ended December 28, 1996 and the thirteen and
seventeen weeks ended December 30, 1995, respectively. No earnings per share have been presented for the Predecessor
Company because such presentation would not be meaningful.


SOURCE Phar-Mor, Inc./CONTACT: Gary Holmes, 212-484-7736, for Phar-Mor, Inc./