<PAGE> 1
SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement / / Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or
Section 240.14a-12
FoxMeyer Health Corporation
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
FOXMEYER HEALTH CORPORATION
1220 SENLAC DRIVE
CARROLLTON, TEXAS 75006
June 30, 1995
To our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
FoxMeyer Health Corporation, formerly known as National Intergroup, Inc. (the
"Company"), to be held on Tuesday, August 8, 1995, at the Four Seasons Hotel,
4150 North MacArthur Blvd., Irving, Texas 75038, at 9:00 a.m., local time (the
"Annual Meeting").
The accompanying Notice of Annual Meeting of Stockholders and Proxy
Statement describe the business to be transacted at the Annual Meeting.
Directors and officers of the Company will be present at the Annual Meeting to
respond to any questions that our stockholders may have.
It is important that your shares be represented at the Annual Meeting.
Whether or not you plan to attend the Annual Meeting, we urge you to sign, date
and return the enclosed proxy card at your earliest convenience. Your prompt
cooperation will be greatly appreciated.
<TABLE>
<S> <C>
Very truly yours,
/s/ ABBEY J. BUTLER /s/ MELVYN J. ESTRIN
ABBEY J. BUTLER MELVYN J. ESTRIN
Co-Chairman of the Board Co-Chairman of the Board
and Co-Chief Executive Officer and Co-Chief Executive Officer
</TABLE>
<PAGE> 3
FOXMEYER HEALTH CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------
The Annual Meeting of Stockholders of FoxMeyer Health Corporation, a
Delaware corporation formerly known as National Intergroup, Inc. (the
"Company"), will be held on Tuesday, August 8, 1995, at the Four Seasons Hotel,
4150 North MacArthur Blvd., Irving, Texas 75038, at 9:00 a.m., local time (the
"Annual Meeting"), for the purpose of considering and acting upon the following
matters, which are described more fully in the accompanying Proxy Statement:
(a) To elect two directors to the Company's Board of Directors, each
to hold office for a three year term; and
(b) To transact such other business as may properly come before the
Annual Meeting or any adjournment or postponement thereof.
The Board of Directors has fixed the close of business on June 30, 1995 as
the record date for the purpose of determining the stockholders who are entitled
to receive notice of and to vote at the Annual Meeting and any adjournment or
postponement thereof.
A list of the stockholders entitled to vote at the Annual Meeting will be
made available for examination by any stockholder, for any purpose germane to
the Annual Meeting, during ordinary business hours, at the offices of the
Company at 1220 Senlac Drive, Carrollton, Texas 75006, commencing on July 28,
1995, and at the Annual Meeting.
STOCKHOLDERS ARE REQUESTED TO COMPLETE, DATE AND SIGN THE ENCLOSED PROXY
CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE WHICH HAS BEEN PROVIDED FOR
YOUR CONVENIENCE AND WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES.
THE PROMPT RETURN OF PROXY CARDS WILL ENSURE A QUORUM. ANY STOCKHOLDER PRESENT
AT THE ANNUAL MEETING MAY VOTE PERSONALLY ON ALL MATTERS BROUGHT BEFORE THE
ANNUAL MEETING AND, IN THAT EVENT, HIS OR HER PROXY WILL NOT BE USED.
/s/ KEVIN J. ROGAN
KEVIN J. ROGAN
Secretary
Carrollton, Texas
June 30, 1995
<PAGE> 4
FOXMEYER HEALTH CORPORATION
1220 SENLAC DRIVE
CARROLLTON, TEXAS 75006
---------------------
PROXY STATEMENT
---------------------
INTRODUCTION
This Proxy Statement is being furnished to holders of shares of common
stock of FoxMeyer Health Corporation, a Delaware corporation formerly known as
National Intergroup, Inc. (the "Company"), in connection with the solicitation
of proxies by the Board of Directors of the Company for use at the Annual
Meeting of Stockholders of the Company to be held on Tuesday, August 8, 1995, at
the Four Seasons Hotel, 4150 North MacArthur Blvd., Irving, Texas 75038, at 9:00
a.m., local time, and at any and all adjournments or postponements thereof, for
the purposes set forth in the accompanying Notice of Annual Meeting of
Stockholders (the "Annual Meeting"). It is expected that the Notice of Annual
Meeting, this Proxy Statement and the enclosed proxy card will be mailed to each
stockholder who is entitled to vote at the Annual Meeting commencing on or about
June 30, 1995.
Stockholders can ensure that their shares are voted at the Annual Meeting
by signing and returning the enclosed proxy card in the envelope provided. The
submission of a signed proxy card will not affect a stockholder's right to
attend the Annual Meeting and vote in person. Stockholders who execute proxies
retain the right to revoke them at any time before they are voted by filing with
the Secretary of the Company a written revocation or a proxy bearing a later
date, or by attending the Annual Meeting and voting in person. The presence at
the Annual Meeting of a stockholder who has signed a proxy card does not itself
revoke that proxy.
VOTING OF PROXIES
Proxies will be voted as specified by the stockholders. Where specific
choices are not indicated, proxies will be voted FOR the proposals submitted to
the stockholders for approval. The proxy card provides space for a stockholder
to withhold voting for any or all nominees to the Board of Directors or to
abstain from voting for any proposal if the stockholder chooses to do so. For
purposes of determining the number of votes cast with respect to any voting
matter, only those votes cast "for" or "against" are included. Abstentions or
broker non-votes are counted only for the purpose of determining whether a
quorum is present at the Annual Meeting.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies that have theretofore been
effectively revoked or withdrawn), notwithstanding that they may have been
effectively voted on the same or any other matter at a previous meeting.
If any other matters are properly presented at the meetings for
consideration, including, among other things, consideration of a motion to
adjourn the meeting to another time and/or place (including, without limitation,
for the purpose of soliciting additional proxies), the persons named in the
enclosed form of proxy and acting thereunder will have discretion to vote on
such matters in accordance with their best judgment.
GENERAL INFORMATION
The Company is a holding company principally involved in health care
services, including the distribution of a full line of pharmaceutical products
and health and beauty aids, as well as providing managed care services, through
FoxMeyer Corporation ("FoxMeyer"), its wholly-owned subsidiary. FoxMeyer's
geographic coverage extends to the entire continental United States, and is the
fourth largest wholesale drug distributor in
<PAGE> 5
the United States. In addition, the Company is involved in the franchising and
operation of crafts stores, and the wholesale distribution of products to those
stores, through Ben Franklin Retail Stores, Inc. ("Ben Franklin"), its
67.7%-owned subsidiary. FoxMeyer also owns approximately 47% of the outstanding
shares of FoxMeyer Canada Inc., a Canadian corporation ("FoxMeyer Canada").
Prior to October 12, 1994, FoxMeyer was an 80.5%-owned subsidiary of the
Company. On October 12, 1994, FoxMeyer merged with and into FoxMeyer Acquisition
Corp., a Delaware corporation and wholly owned subsidiary of the Company. Each
outstanding share of common stock of FoxMeyer (other than shares held by
FoxMeyer or the Company) was converted into the right to receive 0.904 shares of
common stock of the Company. In connection with this merger, the Company changed
its name from National Intergroup, Inc. to FoxMeyer Health Corporation, and
FoxMeyer Acquisition Corp. changed its name to FoxMeyer Corporation.
RECORD DATE
The Board of Directors has fixed the close of business on June 30, 1995 as
the record date (the "Record Date") for the determination of the stockholders of
the Company who are entitled to receive notice of and to vote at the Annual
Meeting. At the close of business on the Record Date, the Company had issued and
outstanding approximately 16,448,761 shares of common stock, par value $5 per
share (the "Common Stock"), which number does not include any shares of Common
Stock held in the Company's treasury. The presence at the Annual Meeting, in
person or by proxy, of the holders of forty percent (40%) of the issued and
outstanding shares of Common Stock is necessary to constitute a quorum at the
Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors of the Company, which presently consists of seven
members, is divided into three classes of directors, each having a three year
term. The two members whose terms of office expire at the Annual Meeting, Paul
M. Finfer and Alfred H. Kingon, have been nominated by the Board of Directors to
serve until the annual meeting of stockholders to be held in 1998. All properly
executed proxies received in response to this solicitation will be voted. Unless
otherwise specified in the proxy, it is the intention of the persons named in
the proxies solicited by the Board of Directors to vote FOR the re-election of
Messrs. Finfer and Kingon to the Board. If events not now known or anticipated
makes either of them unable to serve, the proxies will be voted, at the
discretion of the holders thereof, for other nominees supported by the
management of the Company in lieu of those unable to serve.
Abbey J. Butler, Melvyn J. Estrin and William G. Tull were previously
elected to serve until the Company's annual meeting to be held in 1996, and
Thomas L. Anderson and Sheldon W. Fantle were previously elected to serve until
the Company's annual meeting to be held in 1997. The following sets forth
information concerning the members of the Board of Directors:
TERMS EXPIRING IN 1995
<TABLE>
<S> <C>
PAUL M. FINFER Paul M. Finfer has served as a director of the
(56) Company since 1991. Mr. Finfer has also served as
the President and Chief Executive Officer of
Franklin Acceptance Corporation, a consumer finance
company since October 1989. From May 1986 through
February 1988, he served as the Chairman of the
Board and Chief Executive Officer of FBX Corpora-
tion, a manufacturer and distributor of electronic
fire and burglar alarm signal processing products.
Mr. Finfer also serves as a director of Kitchen
Bazaar, Inc., a specialty retailer.
</TABLE>
2
<PAGE> 6
<TABLE>
<S> <C>
ALFRED H. KINGON Alfred H. Kingon has served as a director of the
(64) Company since 1991. Mr. Kingon is a principal of
Kingon International, Inc., an international
investment and consulting firm since September
1989. From April 1987 through June 1988, he served
as the United States Ambassador to the European
Union. Mr. Kingon served as the Assistant to the
President of the United States and Secretary of the
Cabinet from February 1985 through April 1987. Mr.
Kingon also serves as a director of Ben Franklin.
</TABLE>
TERMS EXPIRING IN 1996:
<TABLE>
<S> <C>
ABBEY J. BUTLER Abbey J. Butler has served as a director of the
(58) Company since 1990. Mr. Butler has also served as
Co-Chairman of the Board of the Company since March
1991, and was appointed Co-Chief Executive Officer
of the Company in October 1991. Mr. Butler has
served as Co-Chairman of the Board of FoxMeyer
since March 1991 and became Co-Chief Executive
Officer of FoxMeyer in May 1993, and has also
served as Co-Chairman of the Board of Ben Franklin
since November 1991 and as a director of FoxMeyer
Canada. Mr. Butler serves as managing partner of
Centaur Partners, L.P., an investment partnership.
Mr. Butler has also been the President and a
director of C.B. Equities Corp., a private
investment company, since 1982. Mr. Butler is a
trustee of The American University, a director of
the Starlight Foundation, a charitable
organization, and is a member of the advisory
boards of the Pediatric AIDS Foundation and the
National Center for Survivors of Child Abuse. Mr.
Butler presently serves as a director and a member
of the Executive Committee of FWB Bancorporation,
the holding company of FWB Bank of Maryland, and as
a director of CST Entertainment Imaging, Inc., a
company engaged in digital color enhancement of
black and white films. Mr. Butler's past experience
includes director of corporate development,
American Bakeries Corp.; director of corporate
finance, Federated Management Corp.; Chairman,
Independent Funding Corp., Northeastern Title
Guaranty Corporation and Macro Publishing
Corporation, the owner-publisher of Financial World
Magazine; and Chairman, Butler Capital Corporation,
a member of the NYSE. Mr. Butler was appointed by
President Bush to serve on the President's Advisory
Committee on the Arts, and he now serves as a
member of the Executive Committee of the National
Committee for the Performing Arts, John F. Kennedy
Center, Washington, D.C.
</TABLE>
3
<PAGE> 7
<TABLE>
<S> <C>
MELVYN J. ESTRIN Melvyn J. Estrin has served as a director of the
(52) Company since 1990. Mr. Estrin has also served as
Co-Chairman of the Board of the Company since March
1991 and was appointed Co-Chief Executive Officer
of the Company in October 1991. Mr. Estrin has
served as Co-Chairman of the Board of FoxMeyer
since March 1991 and became Co-Chief Executive
Officer of FoxMeyer in May 1993. Mr. Estrin has
also served as the Co-Chairman of the Board of Ben
Franklin since November 1991, and as a director of
FoxMeyer Canada. From December 1983 to the present,
Mr. Estrin has served as the Chairman of the Board
and Chief Executive Officer of Human Service Group,
Inc., a private management and investment firm, and
has also served as Chairman of the Board of
Financial Investors Corp., a private investment and
real estate development company, since 1979. Mr.
Estrin presently serves as a director of Washington
Gas Light Company, a public utility company, as a
trustee of the University of Pennsylvania, and as a
Commissioner on the President's National Capital
Planning Commission. Mr. Estrin's past experience
includes Chairman, President and CEO of American
Health Services and Vice President and director of
Spectro Industries. He founded First Women's Bank
of Maryland and was President of FWB Bancor-
poration, and presently serves as a director and a
member of the Executive Committee of FWB
Bancorporation, the holding company of FWB Bank of
Maryland. He later served on the Board and the
Executive Committee of MNC Financial.
WILLIAM G. TULL William G. Tull has served as a director of the
(66) Company since 1990. Mr. Tull served as the
President and Chief Operating Officer of American
Security Bank, N.A., a commercial bank, from April
1985 until January 1990. Upon his retirement in
January 1990, Mr. Tull became a self-employed
financial consultant. Mr. Tull serves as a director
of Ramtron International Corporation, a company
that develops, manufactures and sells non-volatile
semiconductor memory products, and as Chairman of
ASB Capital Management Corporation, a real estate
investment fund.
</TABLE>
4
<PAGE> 8
TERMS EXPIRING IN 1997:
<TABLE>
<S> <C>
THOMAS L. ANDERSON Thomas L. Anderson has served as a director and as
(46) President and Chief Operating Officer of the
Company since October 1994. Mr. Anderson has also
served as President of FoxMeyer since May 1993, as
a director of FoxMeyer since July 1992, and as
Chief Operating Officer of FoxMeyer since 1991. Mr.
Anderson served as Executive Vice President of
FoxMeyer from September 1990 to May 1993, and as
Senior Vice President and Chief Financial Officer
from January 1989 to September 1990. Mr. Anderson
also serves as a director of FoxMeyer Canada. He
served as Vice President of Fresh Meats and
Refinery Operations of Wilson Foods Corporation, a
meat processor and distributor, from August 1987 to
December 1988 after serving as Vice President of
Planning and Distribution at Wilson Foods
Corporation from November 1985 to August 1987. Mr.
Anderson serves on the Board of Directors and the
Executive Committee of the National Wholesale
Druggists' Association.
SHELDON W. FANTLE Sheldon W. Fantle has served as a director of the
(72) Company since 1991. Mr. Fantle has also served as
the Chairman and Chief Executive Officer of Fantle
Enterprises, Inc., a venture capital, consulting
and public relations firm since 1990. From 1987 to
1990, he served as the Chairman of the Board,
President and Chief Executive Officer of Dart Drug
Stores, Inc. From 1975 through 1987, he served as
Chairman of the Board, President and Chief
Executive Officer of Peoples Drug Stores, Inc. Mr.
Fantle currently serves as a director of Ben
Franklin, Washington Gas Light Company, a public
utility company, Medlantic Healthcare Corporation,
a hospital management company, and the National
Association of Chain Drug Stores. Mr. Fantle is a
trustee and a member of the Executive Committee of
The American University and a trustee of the
National Symphony. He serves on the Board of
Governors of United Way of America.
</TABLE>
THE BOARD OF DIRECTORS
COMMITTEES OF THE BOARD OF DIRECTORS
The Board of Directors has four committees. The principal responsibilities
and membership of each committee are described in the following paragraphs.
Audit Committee. The Audit Committee reviews the work of the Company's
independent auditors, management and internal audit staff to ensure that each is
properly discharging its responsibilities in the area of financial controls and
reporting. This committee is presently comprised of Mr. Kingon, who is the
Chairman, and Messrs. Fantle and Tull. This committee held seven meetings during
the fiscal year ended March 31, 1995 ("Fiscal 1995").
Executive and Nominating Committee. The Executive and Nominating Committee
has the authority to exercise substantially all of the powers of the Board of
Directors in the management and business affairs of the Company, except it does
not have the authority to declare dividends, authorize the issuance of Common
Stock, modify the Company's Restated Certificate of Incorporation or By-laws,
adopt any agreement of merger or consolidation or recommend to the stockholders
the sale, lease or exchange of all or substantially all
5
<PAGE> 9
of the Company's assets or the dissolution of the Company. In addition, this
committee recommends prospective nominees for election to the Board of
Directors. Regularly scheduled meetings of the Board of Directors are held
periodically each year and special meetings are held from time to time. As a
consequence, the occasions on which this committee is required to take action
are limited. The members of this committee are Messrs. Butler, Estrin and
Anderson. The committee did not meet in Fiscal 1995.
Finance and Pension Committee. The Finance and Pension Committee reviews
and monitors the financial planning and structure of the Company and the
performance of investments in the Company's pension plans. This committee is
presently comprised of Mr. Tull, who is the Chairman, and Messrs. Butler, Estrin
and Finfer. This committee held one meeting in Fiscal 1995.
Personnel and Compensation Committee. The Personnel and Compensation
Committee reviews the performance of the management of the Company, determines
the compensation of management and makes recommendations with respect to the
establishment of management compensation plans. This committee is presently
comprised of Mr. Fantle, who is the Chairman, and Messrs. Finfer and Kingon.
This committee held eight meetings in Fiscal 1995.
MEETINGS OF THE BOARD OF DIRECTORS
During Fiscal 1995, there were eleven meetings of the Board of Directors.
Each director attended at least 75% of the meetings of the Board of Directors
and the committees of the Board of Directors of which he was a member in Fiscal
1995.
COMPENSATION OF DIRECTORS
Directors who are not officers or employees of the Company or one of its
subsidiaries or members of the Executive and Nominating Committee receive an
annual fee of $22,500. They also receive $1,000 for each meeting of the Board of
Directors or of a committee of the Board of Directors (other than the Executive
and Nominating Committee) they attend. Chairmen of each of the committees
receive an additional $1,000 for each meeting of the committee they attend.
Directors are reimbursed for travel and lodging expenses in connection with
Board and committee meetings.
Under the terms of the Company's 1993 Stock Option and Performance Award
Plan, as amended (the "Plan"), directors who are not officers or employees of
the Company or one of its subsidiaries ("outside directors") are automatically
granted options to purchase 15,000 shares of Common Stock when first elected to
serve on the Board of Directors and, in each year they continue to serve as
members of the Board of Directors, options to purchase 1,000 shares of Common
Stock on the third trading date following the later of (i) the date on which the
annual meeting of the Company's stockholders, or any adjournment thereof, is
held each year or (ii) the date on which the Company's earnings for the fiscal
quarter immediately preceding the date of such annual meeting are released to
the public.
The Company has a Director's Retirement Plan which provides for the payment
of retirement benefits to directors (other than directors who are, or at any
time subsequent to December 31, 1975 have been, officers of the Company or an
affiliated corporation). Each qualifying director is entitled, at the later of
retirement or age 60, to receive a monthly benefit for a period equal to his
years of service or 15 years, whichever is less. Such monthly benefit is equal
to one-twelfth ( 1/12) of the highest annual fee in effect for directors during
such director's years of service on the Board of Directors.
EXECUTIVE OFFICERS
A brief biography of each executive officer of the Company (other than the
Co-Chairmen of the Board and Co-Chief Executive Officers, and the President and
Chief Operating Officer, whose biographies are set forth above) who served
during Fiscal 1995 is provided below. Executive officers are elected by the
Board of Directors at its annual meeting and hold office until the next annual
meeting of the Board of Directors or until their successors have been duly
elected and qualified.
6
<PAGE> 10
Peter B. McKee, 57, has served as Senior Vice President and Chief Financial
Officer of the Company since October 1994 and, prior thereto, as Vice President
and Chief Financial Officer of the Company since February 1994. He has also
served as Senior Vice President and Chief Financial Officer of FoxMeyer since
January 1994. From October 1991 to December 1993, he was Executive Vice
President and Chief Financial Officer of InterSolve Group, a managerial
consulting firm. From March 1988 to September 1991, he was Senior Vice President
and Chief Financial Officer of Metro Airlines, a regional airline that operated
in the Southwest and Eastern United States and in the Caribbean and which filed
a petition under Chapter 11 of the United States Bankruptcy Code in April 1991
and was subsequently reorganized thereunder.
Kevin J. Rogan, 43, has served as Senior Vice President, General Counsel
and Secretary of the Company since September 1994. He has also served as Senior
Vice President, General Counsel and Secretary of FoxMeyer since September 1994.
From March 1992 to August 1994, he was Senior Vice President, General Counsel
and Secretary of Pearle Vision, Inc., and from 1988 to 1992 he was Vice
President and General Counsel of The Haagen-Dazs Company, Inc. Both Pearle
Vision and Haagen-Dazs are subsidiaries of Grand Metropolitan, PLC. Prior to
Grand Metropolitan, Mr. Rogan worked as an attorney for PepsiCo, Inc.
Edward L. Massman, 36, has served as Vice President and Controller of the
Company since July 1994 and as Controller of the Company since July 1993. He has
also served as Vice President and Controller of FoxMeyer since September 1994
and, prior thereto, served as Director of Accounting of FoxMeyer since September
1990. Mr. Massman was employed by Deloitte & Touche from January 1983 to
September 1990, serving most recently as Senior Audit Manager.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth the compensation for the three fiscal years
ended March 31, 1995 received by the Company's Co-Chief Executive Officers and
the three remaining most highly compensated executive officers of the Company in
Fiscal 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION(A)
------------------------------------ -------------------------
AWARDS PAYOUTS
---------- ----------
OTHER SECURITIES
ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL FISCAL COMPENSA- OPTIONS/ LTIP COMPENSA-
POSITION YEAR SALARY($) BONUS($) TION($)(B) SARS(#) PAYOUTS($) TION($)(C)
- ---------------------------- ------ --------- -------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Abbey J. Butler (D) 1995 804,761 700,000 108,058 800,000 0 4,995
Co-Chairman of the 1994 709,000 318,330 53,974 28,000 0 5,372
Board and Co-Chief 1993 702,000 175,000 (H) 535,200 0 1,750
Executive Officer
Melvyn J. Estrin (D) 1995 804,761 700,000 109,234 800,000 0 4,995
Co-Chairman of the 1994 709,000 318,330 50,997 28,000 0 5,958
Board and Co-Chief 1993 702,000 175,000 (H) 535,200 0 1,167
Executive Officer
Thomas L. Anderson (E) 1995 331,080 40,000 70,301 300,000 0 5,370
President and Chief 1994 305,664 155,088 (H) 0 0 4,947
Operating Officer 1993 250,250 275,000 (H) 21,696 75,000 4,477
Peter B. McKee (F) 1995 203,753 13,000 (H) 0 0 1,537
Senior Vice President and 1994 44,302 35,750 (H) 54,240 0 0
Chief Financial Officer 1993 0 0 0 0 0 0
Edward L. Massman (G) 1995 118,369 32,500 (H) 22,000 0 4,229
Vice President and 1994 94,338 24,379 (H) 0 0 3,115
Controller 1993 82,362 9,500 0 0 0 2,471
</TABLE>
- ---------------
(A) The Company made no awards of restricted stock during the three fiscal years
ended March 31, 1995 to any of the five executive officers of the Company
named in the Summary Compensation Table.
7
<PAGE> 11
(B) For Fiscal Year 1995, the amount set forth under "Other Annual Compensation"
includes amounts paid by the Company or FoxMeyer to each executive officer
under FoxMeyer's Supplemental Savings Plan, which is a nonqualified plan for
employees whose contributions to the FoxMeyer 401(k) Plan are limited by the
Internal Revenue Code's limitations on elective contributions thereto, any
personal use of corporate property by the executive officer, and other
personal benefits.
(C) Represents amounts contributed by the Company or FoxMeyer to each executive
officer's account under FoxMeyer's 401(k) Plan.
(D) In Fiscal 1995, Mr. Butler and Mr. Estrin each received $387,507 (which
amount includes a prorated increase during Fiscal 1995 in their annual
salary to $400,000) from the Company for serving as Co-Chief Executive
Officer of the Company, $331,254 from FoxMeyer for serving as Co-Chairman of
the Board and Co-Chief Executive Officer of FoxMeyer and $86,000 from Ben
Franklin for serving as Co-Chairman of the Board of Ben Franklin. For Fiscal
1995, Mr. Butler and Mr. Estrin each received a $650,000 bonus from the
Company and a $50,000 bonus from Ben Franklin.
In Fiscal 1994, Mr. Butler and Mr. Estrin each received $350,000 from the
Company for serving as Co-Chief Executive Officer of the Company, $275,000
from FoxMeyer for serving as Co-Chairman of the Board and Co-Chief
Executive Officer of FoxMeyer and $84,000 from Ben Franklin for serving as
Co-Chairman of the Board of Ben Franklin. For Fiscal 1994, Mr. Butler and
Mr. Estrin each received a $175,000 bonus from the Company and a $137,500
bonus from FoxMeyer, and a $5,830 bonus under FoxMeyer's performance plan
(which paid bonuses to all FoxMeyer employees upon the attainment by
FoxMeyer of an earnings target).
In Fiscal 1993, Mr. Butler and Mr. Estrin each received $350,000 from the
Company for serving as Co-Chief Executive Officer of the Company, $275,000
from FoxMeyer for serving as Co-Chairman of the Board of FoxMeyer and
$77,000 from Ben Franklin for serving as Co-Chairman of the Board of Ben
Franklin. For Fiscal 1993, Mr. Butler and Mr. Estrin each received a
$65,000 bonus from the Company, an $85,000 bonus from FoxMeyer and a
$25,000 bonus from Ben Franklin.
In Fiscal 1995, Mr. Butler and Mr. Estrin were each granted options for
800,000 shares of the Company's Common Stock, which options are exercisable
over a four year period commencing on June 3, 1995, and each also accepted
the offer of the Company's Board of Directors to receive a cash payment
equal to the difference between the exercise price and the closing market
price on October 26, 1994 with respect to the options for 440,000 shares of
the Company's Common Stock granted to each of them in Fiscal 1993, or
$935,000. In Fiscal 1995, Mr. Butler and Mr. Estrin were each granted
options for 100,000 shares of Common Stock of FoxMeyer Canada and 50,000
shares of Ben Franklin Common Stock.
In Fiscal 1994, Ben Franklin extended the expiration date (from April 27,
1997 to April 27, 2001) of options for 10,000 shares of Ben Franklin Common
Stock held by each of Mr. Butler and Mr. Estrin and granted each of them
additional options for 18,000 shares of Ben Franklin Common Stock. In
Fiscal 1993, Mr. Butler and Mr. Estrin were each granted options for 50,000
shares of FoxMeyer Common Stock (which converted into options for 45,200
shares of the Company's Common Stock in connection with the FoxMeyer merger
on October 12, 1994), and options for 50,000 shares of Ben Franklin Common
Stock.
(E) Mr. Anderson serves as President and Chief Operating Officer of the Company
but does not receive compensation from the Company in such capacity. Mr.
Anderson also serves as President and Chief Operating Officer of FoxMeyer,
which paid all of his compensation for services rendered in Fiscal 1995,
1994 and 1993. In Fiscal 1995, Mr. Anderson was granted options for 300,000
shares of the Company's Common Stock and 100,000 shares of FoxMeyer Canada
Common Stock. In Fiscal 1993, Mr. Anderson was granted options for 24,000
shares of FoxMeyer Common Stock, which converted into options for 21,696
shares of the Company's Common Stock in connection with the FoxMeyer merger
on October 12, 1994.
8
<PAGE> 12
(F) Mr. McKee serves as Senior Vice President and Chief Financial Officer of the
Company but does not receive compensation from the Company in such capacity.
Mr. McKee also serves as Senior Vice President and Chief Financial Officer
of FoxMeyer, which paid all of his compensation for services rendered in
Fiscal 1995 and Fiscal 1994. In Fiscal 1994, Mr. McKee was granted options
for 60,000 shares of FoxMeyer Common Stock, which converted into options for
54,240 shares of the Company's Common Stock in connection with the FoxMeyer
merger on October 12, 1994.
(G) Mr. Massman serves as Vice President and Controller of the Company. Prior to
July 1994, Mr. Massman was also the Director of Accounting of FoxMeyer,
which paid all of his compensation for services rendered in Fiscal 1995,
1994 and 1993, except for $20,000 of his bonus in Fiscal 1995 and $5,000 of
his bonus in Fiscal 1994 which were paid by the Company. In Fiscal 1995, Mr.
Massman was granted options for 22,000 shares of the Company's Common Stock.
(H) Other annual compensation to this executive officer did not exceed the
lesser of $50,000 or 10% of such executive officers's total salary and bonus
for such fiscal year.
REPORT OF THE PERSONNEL AND COMPENSATION COMMITTEE
The Personnel and Compensation Committee of the Board of Directors (the
"Compensation Committee") is comprised of three directors: Mr. Sheldon W.
Fantle, who is the Chairman, and Messrs. Paul M. Finfer and Alfred H. Kingon,
all of whom are outside directors.
EXECUTIVE COMPENSATION
Compensation for the Company's executive officers is comprised of base
salary, annual incentive payments, including a long-term incentive plan, and
long-term incentive awards in the form of stock option grants. The goal of the
Company's executive compensation policy is to reward its executive officers for
overseeing and managing the Company's operating subsidiaries, for their
contributions towards long-term strategic planning and for improving long-term
stockholder value. Decisions with respect to the compensation of the Co-Chief
Executive Officers of the Company are made by the Compensation Committee. The
Company generally does not pay any compensation (other than stock options) to
the Company's other executive officers, whose salaries and bonuses are paid
solely by FoxMeyer.
FoxMeyer provides an executive compensation program that aims to reinforce
FoxMeyer's overall business mission, strategies, values and objectives. The
goals of FoxMeyer's executive compensation program are to motivate and reward
its executive officers and other key employees to improve long-term stockholder
value and to attract and retain high-quality executive talent. FoxMeyer's
executive compensation program consists of base salary, annual and long-term
incentive payments, Company stock options and employee benefits. FoxMeyer
reviews its compensation programs periodically and compares its pay practices
with other companies in the wholesale distribution business and with companies
staffed with similarly-skilled executives. FoxMeyer's objective is to position
total compensation at approximately the median of market pay for executives in
similar positions. Annual incentive payments are based on the attainment of
specific goals established each year. Long-term incentives, in the form of cash
payments and stock option grants, are designed to reward sustained corporate
performance over a three to five-year period.
During the first fiscal quarter of each year, the Compensation Committee
meets to review salary increases for the current year and incentive payments to
be made in connection with the previous year's performance. The Compensation
Committee also reviews the current fiscal year's business plan and establishes
performance objectives for each FoxMeyer executive officer. Goals relating to
FoxMeyer's financial performance, based on such factors as return on capital,
pre-tax income or net income, are set as a primary component of executive
incentive compensation. Individual performance objectives are also determined
for officers and are weighted to reflect their respective functions,
significance and contribution to FoxMeyer business goals. In making its
decisions, the Compensation Committee receives recommendations from FoxMeyer's
Co-Chief Executive Officers on senior executives and then meets privately
(without the presence of management, including FoxMeyer's Co-Chief Executive
Officers in relation to their compensation) to determine compensation for
9
<PAGE> 13
FoxMeyer's Co-Chief Executive Officers. The Compensation Committee's decisions
are based on input from FoxMeyer's human resources department, and periodically
from outside advisors, to maintain the desired level of competitiveness and
congruence with long-term company performance.
During the year, the Compensation Committee receives periodic updates on
FoxMeyer's operating results and the progress made by FoxMeyer's executive
officers towards performance targets relevant to FoxMeyer's incentive programs.
Discussions of management contribution and performance are held periodically.
CO-CHIEF EXECUTIVE OFFICERS
During Fiscal 1995, the Company paid each of Messrs. Butler and Estrin, the
Company's Co-Chief Executive Officers, a base salary of $387,507 (which amount
includes a prorated increase during Fiscal 1995 in their annual salary to
$400,000). This base salary was approved by the Board of Directors in January
1995, based upon the recommendation of the Compensation Committee (which had
consulted with an outside advisor). See "EMPLOYMENT AGREEMENTS" below. For
Fiscal 1995, the Board of Directors of the Company, based upon the
recommendation of the Compensation Committee, awarded each Co-Chief Executive
Officer a bonus of $650,000 for their management of the Company and their
involvement in a number of financing and other transactions by the Company and
FoxMeyer during Fiscal 1995, including the Company's purchase in October 1994 of
the remaining outstanding shares of FoxMeyer; the completion of various
financing transactions (including amendments to the financing and sale of
FoxMeyer's trade receivables in November 1994), which provided FoxMeyer with
greater liquidity at lower cost; and the presentment to the Company and FoxMeyer
of a number of favorable investment opportunities. In determining the amount of
the Co-Chief Executive Officers' bonuses for Fiscal 1995, the Compensation
Committee took into consideration the aggregate compensation payable to them by
the Company, FoxMeyer and Ben Franklin relative to their performance on behalf
of the Company's stockholders.
In Fiscal 1995, each Co-Chief Executive Officer received $331,254 from
FoxMeyer for his services as Co-Chairman of the Board and Co-Chief Executive
Officer of FoxMeyer. The Board of Directors of FoxMeyer (the "FoxMeyer Board")
consisted of six members in Fiscal 1995, including Messrs. Butler and Estrin
(who were also directors of the Company). Although Messrs. Butler and Estrin are
members of the FoxMeyer Board, they do not participate in the determination of
their annual compensation and bonuses to them. The $331,254 payment to each of
Messrs. Butler and Estrin was approved by the FoxMeyer Board (without the
participation of Messrs. Butler and Estrin) based upon the substantial, but not
full-time services they were expected to render to FoxMeyer as Co-Chairmen of
the Board, including financial and strategic planning and supervisory and
managerial services. When they assumed the additional offices of Co-Chief
Executive Officers of FoxMeyer in May 1993, there was no increase in the
payments to Messrs. Butler and Estrin from FoxMeyer.
The Board of Directors of Ben Franklin (the "Ben Franklin Board") consisted
of seven members in Fiscal 1993, including Messrs. Butler, Estrin, Fantle and
Kingon (who were also directors of the Company). Although Messrs. Butler and
Estrin are members of the Ben Franklin Board, they do not participate in the
determination of their annual fees, bonuses and the grant of Ben Franklin
options to them. The Ben Franklin Board has approved (without the participation
of Messrs. Butler and Estrin) the payment of $86,000 per annum to each of them
for serving as Co-Chairman of the Board of Ben Franklin in which capacity each
of them would render substantially the same services as those rendered to
FoxMeyer.
SHELDON W. FANTLE (CHAIRMAN)
PAUL M. FINFER
ALFRED H. KINGON
The foregoing report is not incorporated by reference in any prior or
future filings of the Company under the Securities Act of 1933, as amended (the
"1933 Act"), or under the Securities Exchange Act of 1934, as amended (the "1934
Act"), directly or by reference to the incorporation of proxy statements of the
Company, unless the Company specifically incorporates the report by reference,
and the report shall not otherwise be deemed filed under such Acts.
10
<PAGE> 14
OPTION/SAR GRANTS IN FISCAL YEAR 1995 TO EXECUTIVE OFFICERS
The following table provides information regarding the options granted by
the Company and Ben Franklin to the Company's executive officers named in the
Summary Compensation Table. FoxMeyer did not grant options in Fiscal 1995 to any
of the Company's executive officers named in the Summary Compensation Table.
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
-----------------------------------------------------
PERCENT OF
TOTAL POTENTIAL REALIZABLE
OPTIONS/ VALUE
NUMBER OF SARS AT ASSUMED ANNUAL RATES
SECURITIES GRANTED OF STOCK PRICE
UNDERLYING TO APPRECIATION
OPTIONS/ EMPLOYEES EXERCISE OR FOR OPTION TERM(A)
SARS IN FISCAL BASE PRICE EXPIRATION -----------------------
NAME GRANTED(#) YEAR ($/SH) DATE 5%($) 10%($)
- --------------------------- ---------- ---------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
GRANTS BY THE COMPANY:
Abbey J. Butler............ 800,000(B) 38.67% 18.25 06-03-99 $4,033,710 $8,913,446
Melvyn J. Estrin........... 800,000(B) 38.67% 18.25 06-03-99 4,033,710 8,913,446
Thomas L. Anderson......... 300,000(C) 14.50% 17.94 07-20-99 1,486,947 3,285,765
Edward L. Massman.......... 2,000(D) .09% 17.94 07-20-99 9,913 21,905
20,000(E) .9% 14.94 11-28-99 92,466 476,210
GRANTS BY BEN FRANKLIN:
Abbey L. Butler............ 50,000(F) 12.87% 3.875 12-06-04 121,848 308,787
Melvyn J. Estrin........... 50,000(F) 12.87% 3.875 12-06-04 121,848 308,787
GRANTS BY FOXMEYER CANADA:
Abbey J. Butler............ 100,000(G) 15.6% 4.60 12-31-99 127,089 280,834
Melvyn J. Estrin........... 100,000(G) 15.6% 4.60 12-31-99 127,089 280,834
Thomas L. Anderson......... 100,000(G) 15.6% 4.60 12-31-99 127,089 280,834
</TABLE>
- ---------------
(A) The potential realizable values set forth under these columns result from
calculations assuming 5% and 10% growth rates as set by the Commission and
are not intended to forecast future price appreciation of the Company's
Common Stock or Ben Franklin Common Stock. The amounts reflect potential
future value based upon growth at these prescribed rates. The Company did
not use an alternative formula for a grant date valuation, an approach
which would state gains at present, and therefore lower, value. The Company
is not aware of any formula which will determine with reasonable accuracy a
present value based on future unknown or volatile factors. Actual gains, if
any, on stock option exercises are dependent on the future performance of
the Company's Common Stock and Ben Franklin's Common Stock. There can be no
assurance that the amounts reflected in this table will be achieved.
(B) One-fourth ( 1/4) of these options became exercisable on June 3, 1995,
another 1/4 will become exercisable on June 3, 1996, another 1/4 will
become exercisable on June 3, 1997, and the remaining 1/4 will become
exercisable on June 3, 1998.
(C) One-third ( 1/3) of these options will become exercisable on July 20, 1995,
another 1/3 will become exercisable on July 20, 1996, and the remaining
1/3 will become exercisable on July 20, 1997.
(D) One-half ( 1/2) of these options will become exercisable on July 20, 1995,
and the remaining 1/2 will become exercisable on July 20, 1996.
(E) One-third ( 1/3) of these options will become exercisable on November 29,
1995, another 1/3 will become exercisable on November 29, 1996, and the
remaining 1/3 will become exercisable on November 29, 1997.
(F) One-third ( 1/3) of these options will become exercisable on December 7,
1995, another 1/3 will become exercisable on December 7, 1996, and the
remaining 1/3 will become exercisable on December 7, 1997.
(G) All of these options became exercisable on December 31, 1994.
11
<PAGE> 15
AGGREGATE OPTIONS/SAR EXERCISES IN FISCAL 1995 BY EXECUTIVE OFFICERS
The following table provides information as to options exercised in Fiscal
1995 by each of the executives named in the Summary Compensation Table and the
value of options for the Company's Common Stock held by such executives at
Fiscal 1995 year end measured in terms of the last reported sale price for the
shares of the Company's Common Stock on March 31, 1995 ($19.375, as reported on
the New York Stock Exchange Composite Tape).
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS/SAR'S AT OPTIONS AT MARCH 31,
FY-END(#) 1995($)(B)
SHARES ACQUIRED VALUE REALIZED ---------------------------- ----------------------------
NAME ON EXERCISE(#) ($)(A) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- --------------------------- --------------- -------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Abbey J. Butler............ -- (C) 122,040 822,600 $ 438,276 $1,006,624
Melvyn J. Estrin........... -- (C) 122,040 822,600 438,276 1,006,624
Thomas L. Anderson......... -- -- 110,288 310,848 382,832 481,680
Peter B. McKee............. -- -- 18,080 36,160 105,300 210,599
Edward L. Massman.......... -- -- 0 22,000 0 91,570
</TABLE>
- ---------------
(A) Market value on the date of exercise of shares covered by options exercised,
less option price.
(B) Market value of shares covered by in-the-money options on March 31, 1995,
less option price. Options are in-the-money if the market value of the
shares covered thereby is greater than the option exercise price.
(C) On October 27, 1994, Mr. Butler and Mr. Estrin each accepted the offer of
the Company's Board of Directors to receive a cash payment equal to the
difference between the exercise price and the closing market price on
October 26, 1994 with respect to the options for 440,000 shares of the
Company's Common Stock granted to each of them in Fiscal 1993, or $935,000.
LONG-TERM INCENTIVE PLANS -- AWARDS IN LAST FISCAL YEAR (A)
<TABLE>
<CAPTION>
NUMBER
OF PERFORMANCE
SHARES, OR OTHER
UNITS PERIOD ESTIMATED FUTURE PAYOUTS UNDER
OR UNTIL NON-STOCK PRICE-BASED PLANS
OTHER MATURATION ---------------------------------------------
NAME RIGHTS OR PAYOUT THRESHOLD($) TARGET($)(B) MAXIMUM($)(C)
- ------------------------------- ------- ----------- ------------ ------------ -------------
<S> <C> <C> <C> <C> <C>
Abbey J. Butler................ 8.0% 3/31/97 0 $224,312 $ 659,925
Co-Chairman of the Board and
Co-Chief Executive Officer
Melvyn J. Estrin............... 8.0% 3/31/97 0 224,312 659,925
Co-Chairman of the Board and
Co-Chief Executive Officer
Thomas L. Anderson............. 9.0% 3/31/97 0 252,351 742,415
President and Chief
Operating Officer
Peter B. McKee................. 6.0% 3/31/97 0 168,234 494,944
Senior Vice President and
Chief Financial Officer
Edward L. Massman.............. 2.25/3% 3/31/97 0 73,602 216,538
Vice President and
Controller
</TABLE>
12
<PAGE> 16
- ---------------
(A) In April 1993, FoxMeyer adopted a Long-Term Incentive Plan (the "LTIP") to
motivate and reward sustained improvements in FoxMeyer's financial
performance over a long-term period. Under the LTIP, the Compensation
Committee is authorized to create, from time to time, pools to be funded by
FoxMeyer ("performance pools") for the payment of incentive payments to
participants in the LTIP upon the attainment by FoxMeyer of certain earnings
and financial parameters. The Compensation Committee created the first
performance pool in April 1993 to be funded by FoxMeyer based on the
attainment of sustained annual growth in its earnings before taxes ("EBT")
over a four-year period from Fiscal 1994 through Fiscal 1997, and may create
subsequent performance pools thereafter. If FoxMeyer's EBT increases from
year to year by at least 7.5%, a certain percentage of FoxMeyer's EBT (the
"Multiplier") of the just completed fiscal year will be allocated to the
existing performance pool(s). The Multiplier is 3% if growth in FoxMeyer's
EBT equals 7.5% but is less than 15%; 4% if growth in EBT equals 15% but is
less than 20%; 6% if growth in EBT equals 20% but is less than 25%; and 7%
if growth in EBT is equal to or greater than 25%. If FoxMeyer's EBT declines
from year to year, dollars will be deducted from the amount allocated to the
performance pool(s) based on the same scale, except that in calculating the
amount to be deducted the Multiplier will be applied to the higher of
FoxMeyer's EBT target that year or the actual EBT. Depending on the extent
of any decline in EBT in subsequent years, individuals previously granted
shares in the performance pool(s) could ultimately not receive any payments
under the LTIP. In addition, if another performance pool is created under
the LTIP, amounts to be allocated to the pre-existing performance pool(s)
subsequent thereto may be adjusted based upon terms and conditions to be
established at such time by the Compensation Committee.
FoxMeyer's EBT target for Fiscal 1994 was $46.1 million, which also served
as the EBT starting point. Because FoxMeyer achieved its Fiscal 1994 EBT
target, 2.5% of FoxMeyer's actual EBT for Fiscal 1994 (which was $46.8
million) was initially allocated to the first performance pool. Because
FoxMeyer's actual EBT for Fiscal 1995 declined, the balance of the amount
of the first performance pool has been reduced to zero.
Messrs. Butler and Estrin were each awarded an 8% share of the initial
performance pool in their capacities as Co-Chairmen of the Board and
Co-Chief Executive Officers of FoxMeyer. Mr. Anderson was awarded 9% of the
initial performance pool in his capacity as President and Chief Operating
Officer of FoxMeyer. Mr. McKee was awarded 6% of the initial performance
pool in his capacity as Senior Vice President and Chief Financial Officer
of FoxMeyer. Mr. Massman was awarded a 2.25% prorated share of the initial
performance pool and 3% of subsequent performance pools in his capacity as
Vice President and Controller of FoxMeyer. The first payouts from the
initial performance pool may be made after the end of Fiscal 1995 (of up to
50% of the aggregate amount accumulated therein) and the final payouts will
be made after the end of Fiscal 1997.
(B) These amounts are provided for illustrative purposes only and are calculated
based on each individual's share in the performance pools and assumes that,
after Fiscal 1995, FoxMeyer's EBT will grow by a factor of 7.5% each year,
with the starting point equal to Fiscal 1995 EBT exclusive of extraordinary
items. Based on an assumed EBT growth rate of 7.5% each year, $1,351,275
would be allocated by FoxMeyer to the performance pools for Fiscal 1996 and
$1,452,621 for Fiscal 1997, resulting in a hypothetical aggregate amount
allocated to the performance pools by the end of Fiscal 1997 of $2,803,896.
There can be no assurances that the EBT growth reflected in the amounts set
forth in this table will be achieved by FoxMeyer.
(C) These amounts are provided for illustrative purposes only and are calculated
based on each individual's share in the performance pools and assumes that,
after Fiscal 1995, FoxMeyer's EBT will grow by a factor of 25% each year,
with the starting point equal to Fiscal 1995 EBT exclusive of extraordinary
items. Based on an assumed EBT growth rate of 25% each year, $3,666,250
would be allocated by FoxMeyer to the performance pools for Fiscal 1996 and
$4,582,812 for Fiscal 1997, resulting in a hypothetical aggregate amount
allocated to the performance pools by the end of Fiscal 1997 of $8,249,062.
There can be no assurances that the EBT growth reflected in the amounts set
forth in this table will be achieved by FoxMeyer.
13
<PAGE> 17
PERFORMANCE GRAPH
The following performance graph compares the performance of the Common
Stock, the Standard & Poor's 500 Index and an index of peer companies selected
by the Company (the "Peer Group Index") for the Company's last five fiscal
years. The graph assumes that the value of the investment in the Common Stock
and in each index was $100 on April 1, 1990, and that all dividends were
reinvested.
The Company has two operating subsidiaries: FoxMeyer, in which the Company
owns 100% of the outstanding shares and which contributed approximately 93% of
the Company's net sales in Fiscal 1995, and Ben Franklin, in which the Company
owns approximately 67% of the outstanding shares and which contributed
approximately 7% of the Company's net sales in Fiscal 1995. The Peer Group Index
shown on the performance graph (which is weighted on the basis of market
capitalization) consists of the Company and Ben Franklin; the following
companies which are engaged primarily in the wholesale drug distribution
business: Bergen Brunswig Corporation, Bindley Western Industries, Inc.,
Cardinal Health, Inc., D&K Wholesale Drug, Inc., Krelitz Industries, Inc.,
McKesson Corporation, Moore Medical Corporation and Owens & Minor, Inc.; and the
following companies which are engaged primarily in the sale of variety and
crafts merchandise: Ambers Stores, Inc. and Michaels Stores, Inc.
<TABLE>
<CAPTION>
Measurement Period S&P 500 In- Peer Group
(Fiscal Year Covered) The Company dex Index
<S> <C> <C> <C>
4/1/90 100.00 100.00 100.00
1991 93.89 114.41 117.44
1992 81.68 127.05 122.47
1993 79.67 146.39 146.25
1994 98.06 148.55 189.94
1995 118.74 171.68 320.87
</TABLE>
The Peer Group Index increased substantially in Fiscal 1995 primarily due
to a one-time extraordinary dividend distribution made by McKesson Corporation
in December 1994.
The foregoing graph is not incorporated in any prior or future filings of
the Company under the 1933 Act or the 1934 Act, directly or by reference to the
incorporation of proxy statements of the Company, unless the Company
specifically incorporates the graph by reference, and the graph shall not
otherwise be deemed filed under such Acts.
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the 1934 Act ("Section 16(a)"), requires the Company's
directors, executive officers and persons who beneficially own more than 10% of
a registered class of the Company's equity securities ("10% Owners") to file
reports of beneficial ownership of the Company's securities and changes in such
beneficial ownership with the Commission. Directors, executive officers and 10%
Owners are also required by rules promulgated by the Commission to furnish the
Company with copies of all forms they file pursuant to Section 16(a).
14
<PAGE> 18
Based solely upon a review of the copies of the forms filed pursuant to
Section 16(a) furnished to the Company, or written representations that no
year-end Form 5 filings were required for transactions occurring during Fiscal
1995, the Company believes that its directors, executive officers and 10% Owners
complied with Section 16(a) filing requirements applicable to them during Fiscal
1995.
EMPLOYMENT AGREEMENTS
Effective February 27, 1995, each of the Company, FoxMeyer and Ben
Franklin, entered into employment agreements with Messrs. Butler and Estrin
pursuant to which they each agreed to serve as Co-Chairmen and Co-Chief
Executive Officers of the Company, FoxMeyer and Ben Franklin for a rolling
three-year term at a minimum annual base salary of $350,000, $400,000 and
$108,000, respectively, subject to periodic increases by the respective Board of
Directors. Under the terms of the agreements, Messrs. Butler's and Estrin's
minimum annual base salaries may not be less than their annual base salaries as
of February 27, 1995 (which are the amounts indicated above). If either Mr.
Butler's or Mr. Estrin's employment with the Company, FoxMeyer or Ben Franklin
is terminated for any reason other than for cause, Mr. Butler or Mr. Estrin, as
the case may be, will be entitled to receive from the relevant company, monthly
severance payments equivalent to his monthly base salary and any bonus awards
which otherwise would have been paid during the term of the agreements. The
Co-Chief Executive Officers are also entitled to participate in the benefits
generally available to senior executives of the Company and to receive such
other amounts as the Board of any other entity controlled by the Company may
authorize. For additional compensation received by Messrs. Butler and Estrin,
see the Summary Compensation Table and Note D thereto.
Mr. Anderson, the President, Chief Operating Officer and a director of the
Company, has an employment agreement with FoxMeyer in his capacity as President
and Chief Operating Officer of FoxMeyer, which expires on August 9, 1997. Under
the terms of the agreement, Mr. Anderson's minimum annual base salary may not be
less than his annual base salary as of August 10, 1994 (which was $400,000 per
annum). If Mr. Anderson's employment with FoxMeyer is terminated for any reason
other than for cause, Mr. Anderson will be entitled to receive monthly severance
payments equivalent to his monthly base salary in effect at the time of
termination for a period equal to the longer of the remaining term of his
employment agreement or twenty-four months.
Mr. McKee, the Senior Vice President and Chief Financial Officer of the
Company, has an employment agreement with FoxMeyer in his capacity as Senior
Vice President and Chief Financial Officer of FoxMeyer which expires on January
31, 1997. Under the terms of the agreement, Mr. McKee's minimum annual base
salary may not be less than his annual base salary as of January 31, 1995 (which
was $205,000 per annum). If Mr. McKee's employment with FoxMeyer is terminated
for any reason other than for cause, Mr. McKee will be entitled to receive
monthly severance payments equivalent to his monthly base salary in effect at
the time of termination for a period equal to the longer of the remaining term
of his employment agreement or eighteen months.
Mr. Rogan, the Senior Vice President, General Counsel and Secretary of the
Company, has an employment agreement with FoxMeyer in his capacity as Senior
Vice President, General Counsel and Secretary of FoxMeyer which expires on
January 31, 1997. Under the terms of the agreement, Mr. Rogan's minimum annual
base salary may not be less than his annual base salary as of January 31, 1995
(which was $180,000 per annum). If Mr. Rogan's employment with FoxMeyer is
terminated for any reason other than for cause, Mr. Rogan will be entitled to
receive monthly severance payments equivalent to his monthly base salary in
effect at the time of termination for a period equal to the longer of the
remaining term of his employment agreement or eighteen months.
15
<PAGE> 19
OWNERSHIP OF COMMON STOCK OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of June 1, 1995 with
respect to the beneficial ownership of Common Stock by (i) persons known to the
Company to be the beneficial owners of more than 5% of the outstanding shares of
Common Stock, (ii) all directors and nominees for election as directors of the
Company, (iii) each of the executive officers of the Company, and (iv) all
directors and executive officers as a group.
The number of shares of Common Stock beneficially owned by each individual
set forth below is determined under rules of the Securities and Exchange
Commission (the "Commission") and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which an individual has sole or shared
voting power or investment power and any shares which an individual presently,
or within 60 days of the date of the Annual Meeting, has the right to acquire
through the exercise of any stock option or other right. Unless otherwise
indicated, each individual has sole voting and investment power (or shares such
powers with his spouse) with respect to the shares of Common Stock set forth in
the following table.
<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS(1) OF COMMON STOCK OUTSTANDING
OF BENEFICIAL OWNER BENEFICIALLY OWNED SHARES(13)
- ----------------------------------------------------------- ------------------ -------------
<S> <C> <C>
The Centaur Group.......................................... 3,777,000(2) 21.6%
c/o Centaur Partners IV
17 Battery Place, Suite 709
New York, New York 10004
DIRECTORS AND NOMINEES FOR DIRECTORS
(INCLUDING THOSE WHO ARE ALSO EXECUTIVE OFFICERS):
Abbey J. Butler.......................................... 4,203,295(2)(3) 24.0%
Melvyn J. Estrin......................................... 4,122,181(2)(4) 23.6%
Thomas L. Anderson....................................... 223,848(5) 1.3%
Sheldon W. Fantle........................................ 33,272(6) (14)
Paul M. Finfer........................................... 32,729(7) (14)
Alfred H. Kingon......................................... 17,000(8) (14)
William G. Tull.......................................... 22,712(9) (14)
EXECUTIVE OFFICERS:
Peter B. McKee........................................... 18,984(10) (14)
Kevin J. Rogan........................................... 6,667(11) (14)
Edward L. Massman........................................ 1,000(12) (14)
All Directors and Executive Officers as a Group (10
persons)................................................. 4,904,688(15) 28.0%(15)
State of Wisconsin Investment Board(16).................... 2,376,867 13.6%
</TABLE>
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(1) The business address of each of the persons listed above is c/o FoxMeyer
Health Corporation, 1220 Senlac Drive, Carrollton, Texas 75006.
(2) The Centaur Group is comprised of Messrs. Butler and Estrin, Centaur
Partners IV, a New York general partnership ("Centaur IV"), Estrin Equities
Limited Partnership, a Maryland limited partnership ("Estrin Equities"),
and Butler Equities II, L.P., a Delaware limited partnership ("Butler
Equities"). The general partners of Centaur IV are Estrin Equities and
Butler Equities. Mr. Estrin owns 69.8% of the outstanding capital stock of
Human Service Group, Inc., a Delaware corporation ("Human Service"),
subject to a dispute involving ownership of approximately 9% of the shares
of Human Service. Human Service owns all of the capital stock of HSG
Acquisition Co., a Delaware corporation ("HSG"). HSG and MJE, Inc., a
Virginia corporation controlled by Mr. Estrin, are the general partners of
Estrin Equities.
Mr. Butler owns all of the outstanding capital stock of AB Acquisition
Corp., a Delaware corporation ("AB Acquisition"). AB Acquisition is the
sole general partner of Butler Equities.
The Centaur Group in the aggregate holds 3,777,000 shares of Common Stock.
These shares are held directly by the persons and entities described above
as follows: Mr. Butler, none; Mr. Estrin, 392,375; Centaur IV, 1,000
shares; Estrin Equities, 1,495,625 shares; and Butler Equities, 1,888,000
shares. Pursuant to the terms of the Centaur IV partnership agreement,
neither Estrin Equities nor Butler Equities may acquire or dispose of
shares of Common Stock without the consent of Centaur IV. In
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addition, pursuant to the Centaur IV partnership agreement, Estrin Equities
and Butler Equities must vote all shares of Common Stock owned by each such
entity as directed by Centaur IV. Accordingly, Centaur IV, which directly
holds 1,000 shares, may be deemed to share the power to direct the voting
and disposition of the 1,495,625 and the 1,888,000 shares held by each of
Estrin Equities and Butler Equities, respectively.
Estrin Equities has designated Mr. Estrin and Butler Equities has
designated Mr. Butler to act as a "Coordinating Person" pursuant to the
Centaur IV partnership agreement. Messrs. Estrin and Butler, acting
together, manage the affairs of Centaur IV and have the authority to make
all decisions concerning Centaur IV's interest in the Common Stock.
Estrin Equities disclaims beneficial ownership of the shares of Common
Stock owned by Butler Equities and Mr. Butler individually, and Butler
Equities disclaims beneficial ownership of the shares of Common Stock owned
by Estrin Equities and Mr. Estrin individually.
(3) In addition to his beneficial ownership of Common Stock through The Centaur
Group, Mr. Butler holds 78,600 shares of Common Stock directly, which
shares were converted from 86,948 shares of FoxMeyer Common Stock in
connection with the FoxMeyer merger on October 12, 1994, and 3,055 shares
of Common Stock through his participation in the FoxMeyer Employees'
Savings and Profit Sharing Program (the "FoxMeyer 401(k) Plan"). Mr. Butler
also holds options to purchase 344,640 shares of Common Stock which are
presently exercisable or exercisable within 60 days of the Annual Meeting,
all of which shares and options represent less than 2.4% of the outstanding
Common Stock. Mr. Butler also holds options to purchase 600,000 additional
shares of the Company's Common Stock which are not reflected in the table
above because such options are not presently exercisable or exercisable
within 60 days of the Annual Meeting. Mr. Butler also holds options to
purchase 50,000 shares of Ben Franklin Common Stock which are presently
exercisable or exercisable within 60 days of the Annual Meeting and which
represent less than 1% of the outstanding Ben Franklin Common Stock.
(4) In addition to his beneficial ownership of Common Stock through The Centaur
Group, Mr. Estrin holds 541 shares of Common Stock through his
participation in the FoxMeyer 401(k) Plan. Mr. Estrin is also a co-trustee
for two trusts which hold an aggregate of 18,080 shares of Common Stock
(the beneficial ownership of which he disclaims), and he holds options to
purchase 344,640 shares of Common Stock which are presently exercisable or
exercisable within 60 days of the Annual Meeting, all of which shares and
options represent less than 2% of the outstanding Common Stock. Mr. Estrin
also holds options to purchase 600,000 additional shares of the Company's
Common Stock which are not reflected in the table above because such
options are not presently exercisable or exercisable within 60 days of the
Annual Meeting. Mr. Estrin is also a co-trustee for two trusts which hold
an aggregate of 10,000 shares of Ben Franklin Common Stock (the beneficial
ownership of which he disclaims) and he holds options to purchase 50,000
shares of Ben Franklin Common Stock which are presently exercisable or
exercisable within 60 days of the Annual Meeting, which shares and options
represent less than 1% of the outstanding Ben Franklin Common Stock.
(5) Mr. Anderson holds 2,712 shares of Common Stock, which converted from 3,000
shares of FoxMeyer Common Stock in connection with the FoxMeyer merger on
October 12, 1994, and options to purchase 221,136 shares of Common Stock
which are presently exercisable or exercisable within 60 days of the Annual
Meeting, which shares and options represent less than 1.3% of the
outstanding Common Stock.
(6) Mr. Fantle holds 904 shares of Common Stock, which converted from 1,000
shares of FoxMeyer Common Stock in connection with the FoxMeyer merger on
October 12, 1994, and options to purchase 32,368 shares of Common Stock
which are presently exercisable or exercisable within 60 days of the Annual
Meeting, which shares and options represent less than 1% of the outstanding
Common Stock.
(7) Mr. Finfer holds 361 shares of Common Stock, which converted from 400
shares of FoxMeyer Common Stock in connection with the FoxMeyer merger on
October 12, 1994, and options to purchase 32,368 shares of Common Stock
which are presently exercisable or exercisable within 60 days of the Annual
Meeting, which shares and options represent less than 1% of the outstanding
Common Stock.
(8) Mr. Kingon holds options to purchase 17,000 shares of Common Stock which
are presently exercisable or exercisable within 60 days of the Annual
Meeting.
(9) Mr. Tull holds 5,712 shares of Common Stock, 2,712 of which converted from
3,000 shares of FoxMeyer Common Stock in connection with the FoxMeyer
merger on October 12, 1994, and options to purchase 17,000 shares of Common
Stock which are presently exercisable or exercisable within 60 days of the
Annual Meeting, which shares represent less than 1% of the outstanding
Common Stock.
(10) Mr. McKee shares beneficial ownership with his child of 904 shares of
Common Stock, which converted from 1,000 shares of FoxMeyer Common Stock in
connection with the FoxMeyer merger on October 12, 1994, and options to
purchase 18,080 shares of Common Stock which are presently exercisable or
exercisable within 60 days of the Annual Meeting, which shares and options
represent less than 1% of the outstanding Common Stock.
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(11) Mr. Rogan holds options to purchase 6,667 shares of Common Stock which are
presently exercisable or exercisable within 60 days of the Annual Meeting.
(12) Mr. Massman holds options to purchase 1,000 shares of Common Stock which
are presently exercisable or exercisable within 60 days of the Annual
Meeting.
(13) Percentages are based on 16,448,761 shares outstanding as of the Record
Date, plus 1,034,899 shares that are subject to options which are presently
exercisable, or exercisable within 60 days of the Annual Meeting, held by
all directors and executive officers of the Company as a group under the
Company's 1987 Restated Stock Option and Performance Award Plan.
(14) Indicates less than 1%.
(15) Includes (a) 3,777,000 shares of Common Stock held by members of The
Centaur Group, (b) 92,789 shares of Common Stock owned by directors and
executive officers of the Company, and (c) 1,034,899 shares of Common Stock
that are subject to options which are presently exercisable, or exercisable
within 60 days of the Annual Meeting, held by directors and executive
officers of the Company.
(16) The address of the State of Wisconsin Investment Board ("SWIB") is 121 E.
Wilson Street, Madison, Wisconsin 53707. SWIB provided information
regarding its stock ownership in the Company as of December 31, 1994.
CERTAIN TRANSACTIONS
National Intergroup Realty Corporation ("Realty"), National Intergroup
Realty Development, Inc. ("Development") and National Intergroup Realty Funding,
Inc. ("Funding") are wholly-owned subsidiaries of the Company engaged primarily
in the activity of buying, holding, operating and disposing of real estate
assets put up for bid by the Resolution Trust Corporation and other financial
institutions.
The business activities of Realty, Development and Funding are typically
conducted through joint ventures (the "Joint Ventures") in which Realty,
Development or Funding holds a general partner's interest. The managing general
partner of each of the Joint Ventures is an affiliate of The Bernstein
Companies, a real estate development firm based in Washington, D.C.
Mr. Estrin, who is Chairman and the Co-Chief Executive Officer of the
Company, is a director of Realty, Development and Funding. Mr. Estrin is the
brother of Wilma E. Bernstein and the brother-in-law of Stuart A. Bernstein,
owners of The Bernstein Companies.
For Fiscal 1995, the annual return on the investments of Realty,
Development and Funding in the Joint Ventures was approximately 29%. As of March
31, 1995, approximately $6,441,378 remained invested by Realty, Development and
Funding in the Joint Ventures.
One of the Joint Ventures holds a $2,770,000 note issued by RCHLP Limited
Partnership and secured by a hotel property in Bethesda, Maryland. The general
partner of RCHLP Limited Partnership is Z Investors, Inc., a corporation owned
by Mr. Stuart A. Bernstein. Mr. Bernstein personally guarantees the note.
Oceanside Enterprises, Inc., a Delaware corporation and a wholly-owned
subsidiary of the Company ("Oceanside"), currently owns certain real property
and improvements located in Clarke County, Virginia (the "Property") acquired by
Oceanside through a November, 1994 foreclosure on a $2,600,000 note purchased by
Oceanside in August, 1994 for $2,100,000. Oceanside acquired the right to
purchase the note from FWB Bancorporation, a Maryland corporation ("FWB"), in
August, 1994 with the intention of acquiring the Property through foreclosure.
In May, 1995, Oceanside entered into a contract for a sale of a major portion of
the Property for $3,000,000. The contract requires, and Oceanside anticipates,
that the sale will be consummated on or before July 31, 1995. The terms of the
agreement between Oceanside and FWB with respect to the Property entitle FWB to
receive a percentage of the sales proceeds from the Property, such percentage to
be calculated only after Oceanside has received the entire amount of its
original investment plus a preferred return of 15%. Mr. Butler and Mr. Estrin,
Co-Chairman of the Board and Co-Chief Executive Officers of the Company, are
members of the Board of Directors of Oceanside. Messrs. Butler and Estrin are
also significant owners of FWB capital stock, and serve as directors and members
of the Executive Committee of FWB.
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GENERAL
As of the date of this Proxy Statement, management does not intend to
present at the Annual Meeting, and has no knowledge that others will present,
any matters other than the matters set forth in the Notice of Annual Meeting of
Stockholders. If any other matters should properly come before the Annual
Meeting, the persons named in the accompanying proxy will vote on such matters
in accordance with their own judgment.
Deloitte & Touche served as independent auditors for the Company for the
fiscal year ended March 31, 1995 and will continue in that capacity for the
fiscal year ending March 31, 1996. Representatives of Deloitte & Touche will be
present at the Annual Meeting. It is not expected that such representatives will
make a statement at the Annual Meeting, but they will have an opportunity to
make a statement if they so desire and will be available to respond to
appropriate questions from stockholders.
Proxies in the form enclosed are solicited by or on behalf of the Board of
Directors. The Company will bear the cost of preparing, assembling and mailing
material in connection with this solicitation of proxies and may reimburse
persons holding stock in their names or those of their nominees for their
expenses in sending solicitation material to their principals.
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, STOCKHOLDERS ARE
URGED TO SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ACCOMPANYING
STAMPED AND ADDRESSED ENVELOPE.
STOCKHOLDER NOMINATIONS AND PROPOSALS FOR 1996
Stockholders intending to submit names of nominees for election to the
Board of Directors at any annual meeting must comply with Section 12A of the
Company's By-laws which requires, among other things, notice to the Secretary of
the Company 45 days in advance of such meeting.
Any proposals intended to be presented to stockholders at the Company's
1996 Annual Meeting of Stockholders must be received by the Company for
inclusion in the proxy statement for such annual meeting by March 1, 1996.
/s/ KEVIN J. ROGAN
KEVIN J. ROGAN
Secretary
Carrollton, Texas
June 30, 1995
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/X/ PLEASE MARK YOUR
VOTES AS IN THIS
EXAMPLE.
<TABLE>
<S> <C>
FOR WITHHELD
1. Election of / / / / NOMINEES: Paul M. Finfer 2. In their discretion, the Proxies are authorized to vote upon
Directors: Alfred H. Kingon such other business as may properly be presented to the
meeting or any adjournment thereof.
For, except vote WITHHELD from the following nominee(s):
________________________________________________________
</TABLE>
SIGNATURE ______________________________________________ DATE _______________
The signature should agree with the name on your stock certificate. If acting
as attorney, executor, administrator, trustee, guardian, etc., you should so
indicate when signing. If the signer is a corporation, please sign the full
corporate name by duly authorized officer. If shares are held jointly , each
stockholder should sign.
PROXY
FOXMEYER HEALTH CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 8, 1995
The undersigned, a stockholder of Foxmeyer Health Corporation (the
"Corporation"), hereby constitutes and appoints Abbey J. Butler and Melvyn J.
Estrin and each of them, as the true and lawful proxies and attorneys-in-fact of
the undersigned, with full power of substitution and revocation in each of them,
to represent the undersigned at the Annual Meeting of Stockholders of the
Corporation to be held at 9:00 a.m. on August 8, 1995, and at any and all
adjournments or postponements thereof, with authority to vote all shares held or
owned by the undersigned in accordance with the direction indicated herein.
Receipt of the Notice of Annual Meeting of Stockholders dated June 30,
1995 and the Proxy Statement furnished therewith is hereby acknowledged.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED FOR ITEM 1 AND PURSUANT TO ITEM 2.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR ITEM 1.
(Continued and to be signed on the reverse side)
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