FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
- OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended APRIL 1, 2000
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 000-23249
PRIORITY HEALTHCARE CORPORATION
(Exact name of registrant as specified in its charter)
INDIANA 35-1927379
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
250 TECHNOLOGY PARK, SUITE 124
LAKE MARY, FLORIDA 32746
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 804-6700
FORMER FISCAL YEAR WAS CALENDAR YEAR ENDING DECEMBER 31
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No __
-
As of April 24, 2000, the number of shares outstanding of each of the issuer's
classes of common stock were as follows:
Class A Common Stock - 4,634,289
Class B Common Stock - 17,642,978
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS.
PRIORITY HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(000'S OMITTED, EXCEPT SHARE DATA)
(UNAUDITED)
THREE-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
APRIL 1, MARCH 31,
2000 1999
---------------------------
Net sales........................................ $ 136,553 $83,159
Cost of products sold............................ 119,661 72,853
--------- --------
Gross profit..................................... 16,892 10,306
Selling, general and administrative expense...... 6,793 4,251
Depreciation and amortization.................... 345 313
--------- --------
Earnings from operations......................... 9,754 5,742
Interest income.................................. 1,204 258
--------- --------
Earnings before income taxes..................... 10,958 6,000
Provision for income taxes....................... 4,197 2,382
--------- --------
Net earnings..................................... $ 6,761 $ 3,618
========= ========
Earnings per share:
Basic...... $.33 $.19
Diluted.................................. $.32 $.19
Weighted average shares outstanding:
Basic....... 20,715,216 18,831,438
Diluted................................... 21,165,138 19,233,594
See accompanying notes to consolidated financial statements.
2
<PAGE>
PRIORITY HEALTHCARE CORPORATION
CONSOLIDATED BALANCE SHEETS
(000'S OMITTED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
(UNAUDITED)
APRIL 1, DECEMBER 31,
2000 1999
---------------------------------
ASSETS:
Current assets:
<S> <C> <C>
Cash and cash equivalents............................................. $ 50,346 $ 24,814
Marketable securities................................................. 48,923 56,795
Receivables, less allowance for doubtful accounts of
$1,879 and $1,764, respectively............................ 91,309 88,793
Finished goods inventory.............................................. 31,336 30,920
Deferred income taxes................................................. 1,685 1,685
Other current assets.................................................. 2,963 1,860
--------- --------
226,562 204,867
Fixed assets, net.......................................................... 2,748 2,562
Deferred income taxes...................................................... 38 38
Other assets ........................................................... -- 469
Intangibles, net........................................................... 9,647 9,768
--------- --------
Total assets................................................ $ 238,995 $ 217,704
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable...................................................... $ 59,318 $ 53,897
Other current liabilities............................................. 5,654 5,200
--------- --------
64,972 59,097
Commitments and contingencies (note 5)
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized, none
issued and outstanding......................................... -- --
Common stock
Class A, $0.01 par value, 15,000,000 shares authorized, (and split
adjusted) 4,687,368 and 5,241,422 issued and outstanding,
respectively.................................................. 47 52
Class B, $0.01 par value, 40,000,000 shares authorized, (and split
adjusted) 17,588,849 and 16,642,434 issued and outstanding,
respectively.................................................. 176 167
Additional paid in capital....................................... 160,085 151,036
Retained earnings................................................ 44,449 37,688
--------- --------
204,757 188,943
Less: Common stock in treasury (at cost), 1,310,980 and
1,304,858 shares, respectively.................. (30,734) (30,336)
--------- --------
Total shareholders' equity.................................. 174,023 158,607
--------- --------
Total liabilities and shareholders' equity.................. $ 238,995 $ 217,704
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
PRIORITY HEALTHCARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000'S OMITTED)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
APRIL 1, MARCH 31,
2000 1999
----------------------------------
Cash flow from operating activities:
<S> <C> <C>
Net income........................................... $ 6,761 $ 3,618
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization............................... 345 313
Provision for doubtful accounts............................. 384 240
Deferred income taxes....................................... -- (46)
Change in assets and liabilities:
Receivables................................................. (2,900) (4,566)
Finished goods inventory.................................... (416) (145)
Accounts payable............................................ 5,421 2,124
Other current assets and liabilities........................ (649) (587)
------- -------
Net cash provided by operating activities................. 8,946 951
------- -------
Cash flow from investing activities:
Sale of marketable securities......................................... 7,872 --
Purchase of fixed assets.............................................. (410) (65)
Decrease in other assets.............................................. 469 --
------- -------
Net cash provided by (used in) by investing activities.... 7,931 (65)
------- -------
Cash flow from financing activities:
Net change in amounts due to /from BWI................................ -- 3,351
Proceeds from stock option exercises and related tax benefit.......... 9,053 1,467
Payments for purchase of treasury stock............................... (398) --
------- -------
Net cash provided by financing activities................. 8,655 4,818
------- -------
Net increase in cash....................................................... 25,532 5,704
Cash and cash equivalents at beginning of period........................... 24,814 2
------- -------
Cash and cash equivalents at end of period................................. $ 50,346 $ 5,706
========= =======
Supplemental cash flow information:
Income taxes paid..................................................... $ 159 $ 1,500
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
PRIORITY HEALTHCARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. The accompanying consolidated financial statements have been prepared by
the Company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
financial statements for the three-month periods ended April 1, 2000 and
March 31, 1999 include all necessary adjustments for fair presentation.
Results for any interim period may not be indicative of the results of the
entire year.
2. On April 12, 2000, the Company changed its reporting period for this fiscal
year from a calendar year ending December 31 to the 52 or 53 week period
ending on the Saturday closest to December 31. The three months ended April
1, 2000 and March 31, 1999 each contained 13 weeks.
3. A reconciliation of the basic and diluted weighted average shares
outstanding is as follows for the three month periods ended April 1, 2000
and March 31, 1999:
(000'S OMITTED)
2000 1999
Weighted average number of Class A and Class B
Common shares outstanding used as the denominator
in the basic earnings per share calculation 20,715 18,831
Additional shares assuming exercise of dilutive
stock options 450 403
------ ------
Weighted average number of Class A and Class B
Common and equivalent shares used as the denominator
in the diluted earnings per share calculation 21,165 19,234
====== ======
4. The Company has classified all of its investments in marketable securities
as available-for-sale. These investments are stated at fair value, with any
unrealized holding gains or losses, net of tax, included as a component of
shareholders' equity until realized. The cost of debt securities classified
as available-for-sale is adjusted for amortization of premiums and
accretion of discounts to maturity. Interest income is included as a
component of current earnings. Investments with an original maturity of
less than 3 months are included as cash equivalents.
At April 1, 2000 and December 31, 1999 all of the Company's investments in
marketable securities were investment-grade government and corporate debt
instruments. These investments had a fair value of approximately $98.4
million (which includes approximately $49.5 million classified as cash
equivalents) and $75.0 million (which includes approximately $18.2 million
classified as cash equivalents) at April 1, 2000 and December 31, 1999,
respectively. The amortized cost of available-for-sale securities
approximated their market value at April 1, 2000 and December 31, 1999.
There were no unrealized holding gains or losses at April 1, 2000 or
December 31, 1999 and all of the investments mature within one year from
those dates. No investments were disposed of during the three month period
ended April 1, 2000 and there were no realized gains or losses recorded in
earnings for that period. The Company had no investment in marketable
securities during the three month period ended March 31, 1999.
5. IV-1, Inc. ("IV-1") and IV-One Services, Inc. ("IV-One Services") have been
named as defendants in a second amended counterclaim filed by Amgen, Inc.
("Amgen") on May 14, 1996, in the Circuit Court of the Eighteenth Judicial
District of Seminole County, Florida. Amgen has asserted that these
entities tortiously interfered with a license agreement (the "License
Agreement") between Amgen and Ortho Pharmaceutical Corporation ("Ortho").
Pursuant to this agreement, Amgen licensed Ortho to sell EPO for use in the
treatment of non-dialysis patients, while Amgen reserved the exclusive
right to sell EPO for use in the treatment of dialysis patients. Amgen has
asserted that, prior to the purchase of IV-1 and IV-One Services by the
Company, these
5
<PAGE>
entities induced Ortho to sell EPO to them for resale in the dialysis
market in contravention of the License Agreement. Amgen has also alleged
that IV-1 and IV-One Services were involved in a civil conspiracy to
circumvent the terms of the License Agreement to allow the resale of EPO to
the dialysis market. Furthermore, Amgen has asserted unfair competition
claims against IV-1, including that IV-1 manufactured and distributed
unapproved prefilled syringes of EPO and another product manufactured by
Amgen in container systems unapproved by Amgen. Amgen did not specify a
time frame for the acts complained of in the civil conspiracy and unfair
competition allegations. In each count, Amgen has demanded an unspecified
amount of compensatory damages, including costs and interest.
The Company believes that the sellers of IV-1, IV-One Services and Charise
Charles, Ltd., Inc. ("Charise Charles") are contractually obligated to
provide legal defense and to indemnify the Company for losses and
liabilities with respect to this litigation, to the extent that the alleged
acts occurred prior to the purchase of such entities by the Company. To
date, the sellers have provided the legal defense for IV-1 and IV-One
Services in the litigation. Indemnification from the sellers of IV-1 and
IV-One Services is limited to no more than $1.5 million and indemnification
from the sellers of Charise Charles is limited to no more than $2.0
million. The Company does not expect the Amgen litigation to be material to
the Company's results of operations, financial condition or cash flows;
however, no assurance can be given that this litigation will not have a
material adverse effect on the Company's business, financial condition and
results of operations. As of April 1, 2000, approximately $161,000 of
charges have been incurred on behalf of the sellers for claims for
indemnification. In addition, Amgen is the Company's largest supplier.
Consequently, this litigation presents the risk of adversely affecting the
Company's business relationship with Amgen, which could have a material
adverse effect on the Company.
The Company is also subject to ordinary and routine litigation incidental
to its business, none of which is expected to be material to the Company's
results of operations, financial condition, or cash flows.
On November 14, 1995, an investigator for the Food and Drug Administration
(the "FDA"), accompanied by an inspector from the State of Florida Board of
Pharmacy, inspected the Company's pharmacy in Florida. At the end of the
inspection, the FDA investigator issued an FDA Form-483, which is the form
used by FDA investigators to identify any observed or suspected
noncompliance with the laws administered by the agency. The FDA Form-483
identified the facility as a pharmacy/repackager and listed three
observations related to certain requirements that the FDA typically imposes
on manufacturers of sterile products. The Company advised the FDA in
December 1995 that the Company believes it is not, within the statutory or
regulatory meaning of these terms, a repackager or a manufacturer. A second
inspection of the same facility occurred on June 26, 1997, in which the FDA
investigator was again accompanied by Florida pharmacy authorities. The FDA
investigator issued a substantially identical FDA Form-483 at the end of
that inspection. The Florida State Board of Pharmacy did not issue any
deficiencies regarding the operations of this pharmacy in either of these
inspections.
On March 16, 1992, the FDA issued a Compliance Policy Guide (CPG 460.200),
which explains the criteria the FDA uses to distinguish between pharmacy
operations that are properly regulated under state law and drug
manufacturing regulated by the FDA. The Company's response to the FDA in
December 1995 cited this CPG and explained the Company's contention that,
according to the FDA's own criteria, the facility is a pharmacy properly
regulated under state and local laws.
On November 21, 1997, the President signed into law the FDA Modernization
Act of 1997, which, among a number of other items, adds a new section on
pharmacy compounding to the Federal Food, Drug and Cosmetic Act. In this
provision, Congress clarified a gray area by explicitly identifying the
circumstances in which pharmacies may compound drugs without the need for
filing a New Drug Application, observing the FDA's Good Manufacturing
Practice regulations or complying with certain other specific Federal Food,
Drug and Cosmetic Act requirements. Congress provided that the term
"compounding" does not include mixing or reconstituting that is done in
accordance with directions contained in approved labeling provided by the
manufacturer of the product. The Company believes that, as a result of this
amendment, so long as it follows the manufacturer's approved labeling in
each case, and prepares drugs only for identified individual patients using
licensed practitioners, the Company's activities should be regulated by the
Florida State Board of Pharmacy and not be subjected by the FDA to a full
New Drug Application requirement demonstrating the basic safety and
effectiveness of the drugs.
6
<PAGE>
If the Company is correct and its operations are limited to those engaged
in by pharmacies, there should be no material adverse effect from the FDA
Form-483s because the Company believes it is currently in compliance in all
material respects with applicable state and local laws. If the Company is
deemed to be a sterile product manufacturer or a sterile product
repackager, it would be subject to additional regulatory requirements. If
for some reason the FDA or other legal authorities decide that the Company
must file for approval of a New Drug Application, such an event could have
a material adverse effect on the Company.
There can be no assurance that future legislation, future rulemaking, or
active enforcement by the FDA of a determination that the Company is a drug
manufacturer will not have a material adverse effect on the business of the
Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
Forward Looking Statements.
Certain statements included in this quarterly report, which are not
historical facts, are forward looking statements. Such forward looking
statements are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward looking statements
represent our expectations or beliefs and involve certain risks and
uncertainties including, but not limited to, changes in interest rates,
competitive pressures, changes in customer mix, changes in third party
reimbursement rates, financial stability of major customers, changes in
government regulations or the interpretation of these regulations, asserted
and unasserted claims, and our ability and the ability of the entities with
which we transact business to modify or redesign computer systems to work
properly in the year 2000, which could cause actual results to differ from
those in the forward looking statements. The forward looking statements by
their nature involve substantial risks and uncertainties, certain of which
are beyond our control, and actual results may differ materially depending
on a variety of important factors.
General.
We typically are reimbursed for products and services provided by Priority
Healthcare Pharmacy by third-party payors, primarily private insurers and
managed care organizations. Sales derived from agreements with managed care
organizations generally are made pursuant to established rates negotiated
periodically. We typically are reimbursed for products provided by Priority
Healthcare Distribution directly by oncology practices, renal dialysis
centers and other healthcare providers and pricing is negotiated directly
with the providers.
7
<PAGE>
Results of Operations.
The following table sets forth for the periods indicated, the percentages
of total revenues represented by the respective financial items:
THREE-MONTH THREE-MONTH
PERIOD ENDED PERIOD ENDED
APRIL 1, MARCH 31,
2000 1999
--------------------------------
Net sales..................................... 100.0% 100.0%
Cost of products sold......................... 87.6 87.6
-------- --------
Gross profit.................................. 12.4 12.4
Selling, general and administrative expense... 5.0 5.1
Depreciation and amortization................. .3 .4
-------- --------
Earnings from operations...................... 7.1 6.9
Interest income............................... .9 .3
-------- --------
Earnings before income taxes.................. 8.0 7.2
Provision for income taxes.................... 3.1 2.9
-------- --------
Net earnings.................................. 5.0% 4.4%
======== ========
Net sales increased to $136.6 million in the first three months of 2000
from $83.2 million in the first three months of 1999, an increase of 64%.
The growth primarily reflected the addition of new customers, new product
introductions, additional sales to existing customers, the acquisitions of
Pharmacy Plus, Ltd. and Monitors Unlimited, Inc. and inflationary price
increases.
Gross profit increased to $16.9 million in the first three months of 2000
from $10.3 million in the first three months of 1999, an increase of 64%.
Gross profit as a percentage of net sales was 12.4% in the first three
months of 2000 and 1999. The increase in gross profit reflected increased
sales. Competition continues to exert pressure on margins.
Selling, general and administrative ("SGA") expense increased to $6.8
million in the first three months of 2000 from $4.3 million in the first
three months of 1999, an increase of 60%. SGA expense as a percentage of
net sales decreased in the first three months of 2000 to 5.0% from 5.1% in
the first three months of 1999. The increase in SGA expense reflected the
growth in our business and the acquisitions of Pharmacy Plus and Monitors
Unlimited. The decrease in SGA expense as a percentage of net sales
resulted from the spreading of fixed costs over a larger sales base.
Management continually monitors SGA expense and remains focused on
controlling these increases through improved technology and efficient asset
management.
Depreciation and amortization ("D&A") increased to $345,000 in the first
three months of 2000 from $313,000 in the first three months of 1999, an
increase of 10%. The increase in D&A was primarily the result of additional
depreciation on computer hardware and software, furniture and equipment for
our new corporate facility and transportation equipment, offset, in part,
by a decrease in amortization of intangible assets that became fully
amortized.
Interest income increased to $1.2 million in the first three months of 2000
from $258,000 in the first three months of 1999, an increase of 367%. In
the first three months of 2000 the interest income was primarily related to
amounts earned by investing cash and funds received from the June and July
1999 secondary public offering of our Class B Common Stock and employee
stock option exercises in overnight repurchase agreements with major
financial institutions and in marketable securities. In the first three
months of 1999, interest income of $45,000 was primarily related to amounts
earned by investing cash in overnight repurchase
8
<PAGE>
agreements with a major financial institution and interest income of
$213,000 was related to loaning funds received from the October 1997
initial public offering of our Class B Common Stock to Bindley Western
Industries, Inc. ("BWI"). The interest income on the loans to BWI was
calculated by applying BWI's average incremental borrowing rate to the
average outstanding loans. The average outstanding loans to BWI were $13.5
million and BWI's average incremental borrowing rate was 5.3% in the first
three months of 1999.
The provision for income taxes in the first three months of 2000 and 1999
represented 38.3% and 39.7%, respectively, of earnings before taxes. During
the fourth quarter of 1999, we implemented selected tax strategies which
reduced our effective tax rate.
Liquidity - Capital Resources.
NET CASH PROVIDED BY OPERATING ACTIVITIES. Our operations generated $8.9
million in cash during the first three months of 2000. Receivables
increased $2.9 million during the first three months of 2000, primarily to
support the increase in sales and the extension of credit terms to meet
competitive conditions. Inventory increased $416,000 during the first three
months of 2000 primarily to support the increase in sales. Accounts payable
increased $5.4 million to more than offset the cash required for the
receivables and inventory increases. The accounts payable increase was
attributable to the increase in inventory, the timing of payments and the
credit terms negotiated with vendors. We anticipate that our operations may
require cash to fund our growth. Depreciation and amortization totaled
$345,000 during the first three months of 2000. Provision for doubtful
accounts totaled $384,000 during the first three months of 2000.
NET CASH PROVIDED BY INVESTING ACTIVITIES. During the first three months of
2000, $7.9 million of marketable securities matured and we invested the
proceeds in shorter term investments in order to have the funds available
for anticipated interest rate increases. Capital expenditures during the
first three months of 2000 totaled $410,000. Primarily these purchases were
for computer hardware and software and furniture and equipment for the new
corporate facility. We expect that capital expenditures during the last
nine months of 2000 will be approximately $1.1 million and during 2001 will
be approximately $1.5 million. We anticipate that these expenditures will
relate primarily to the purchase of computer hardware and software,
telecommunications equipment, and furniture and equipment for the new
corporate facility.
NET CASH PROVIDED BY FINANCING ACTIVITIES. During the first three months of
2000, we received proceeds of $9.1 million, including the income tax
benefit, from stock option exercises. Also during the first three months of
2000, we purchased treasury stock for $398,000.
Our principal capital requirements have been to fund working capital needs
to support internal growth, for acquisitions and for capital expenditures.
Our principal working capital needs are for inventory and accounts
receivable. Management controls inventory levels in order to minimize
carrying costs and maximize purchasing opportunities. We sell inventory to
our customers on various payment terms. This requires significant working
capital to finance inventory purchases and entails accounts receivable
exposure in the event any of our major customers encounter financial
difficulties. Although we monitor closely the creditworthiness of our major
customers, there can be no assurance that we will not incur some collection
loss on major customer accounts receivable in the future.
On April 1, 2000 we had cash and cash equivalents of $50.3 million,
marketable securities of $48.9 million and working capital of $161.6
million. In addition, we have a $10.0 million unsecured line of credit
which has not been used. We believe that the cash and cash equivalents,
marketable securities, working capital, cash from operations and
availability under our line of credit will be sufficient to meet our
working capital needs for at least two years.
Year 2000 Issues.
Year 2000 issues have not had a material adverse effect on our operations
and we believe that we successfully avoided any significant disruption from
the year 2000 issue.
9
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Our primary exposure to market risk consists of a decline in the market
value of our investments in marketable debt securities as a result of
potential changes in interest rates. Market risk was estimated as the
potential decrease in fair value resulting from a hypothetical 10% increase
in interest rates on securities included in our portfolio, and given the
short term maturities of all of our investments in interest-sensitive
securities, this hypothetical fair value was not materially different from
the period end carrying value.
10
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The information set forth in Note 5 to the Notes to Consolidated
Financial Statements (unaudited) set forth elsewhere in this Report is
incorporated herein by reference.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit 10-Q (iii) Third Amendment to the Profit Sharing Plan
of Priority Healthcare Corporation and
Affiliates (filed herewith)
Exhibit 27 Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
On April 26, 2000, the Company filed a Current Report on Form 8-K
dated April 26, 2000, reporting a change in its fiscal year end from
December 31 to the Saturday closest to December 31 in each year, beginning
with the fiscal year ending December 30, 2000. For interim reporting
purposes, under the new fiscal year calendar, the Company's fiscal quarters
will be based on a 4/4/5 week standard.
11
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
May 3, 2000 PRIORITY HEALTHCARE CORPORATION
BY: /s/ DONALD J. PERFETTO
---------------------------
Donald J. Perfetto
Executive Vice President and Chief Financial
Officer
(Principal Financial Officer and Duly Authorized
Officer)
12
Exhibit 10-Q(iii)
THIRD AMENDMENT TO THE
PROFIT SHARING PLAN OF PRIORITY HEALTHCARE CORPORATION AND AFFILIATES
WHEREAS, Priority Healthcare Corporation (the "Company") established the Profit
Sharing Plan of Priority Healthcare Corporation and Affiliates (the "Plan")
effective on January 1, 1999, in the Key Trust Company PRISM(R) Non Standardized
Prototype Retirement Plan and Trust, as provided by the Trustee; and,
WHEREAS, the Company, effective as of April 1, 2000, desires to modify the
minimum eligibility age requirement, in the Adoption Agreement, from age 21 to
age 18.
NOW THEREFORE,
BE IT RESOLVED, that the Company, effective as of April 1, 2000, amends
provisions of Item B.6.b. of the Adoption Agreement to provide as follows:
B. BASIC PLAN PROVISIONS:
6. ELIGIBILITY:
An Employee covered by the Plan may become a Participant upon
completion of the following eligibility requirements:
b. AGE:
i There shall be no minimum age requirement for an Employee to
become a Participant.
X ii The Employee must attain age 18 (not more than 21) to be a
Participant in the Plan.
AND BE IT FURTHER RESOLVED, that except as AMENDED herein, all other provisions
of the Profit Sharing Plan of Priority Healthcare Corporation and Affiliates
shall remain effective as set forth in the Adoption Agreement.
PLAN SPONSOR: PRIORITY HEALTHCARE CORPORATION
BY: /s/ Barbara J. Luttrell DATED: 3-16-00
----------------------- --------------
TRUSTEE: KEYTRUST COMPANY NATIONAL ASSOCIATION
BY: /s/ George Newsham DATED: 3/23/2000
----------------------- --------------
EXHIBIT A
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> APR-01-2000
<CASH> 50,346
<SECURITIES> 48,923
<RECEIVABLES> 91,309
<ALLOWANCES> 1,879
<INVENTORY> 31,336
<CURRENT-ASSETS> 226,562
<PP&E> 4,008
<DEPRECIATION> 1,260
<TOTAL-ASSETS> 238,995
<CURRENT-LIABILITIES> 64,972
<BONDS> 0
0
0
<COMMON> 223
<OTHER-SE> 173,800
<TOTAL-LIABILITY-AND-EQUITY> 238,995
<SALES> 136,553
<TOTAL-REVENUES> 136,553
<CGS> 119,661
<TOTAL-COSTS> 126,799
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 384
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 10,958
<INCOME-TAX> 4,197
<INCOME-CONTINUING> 6,761
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,761
<EPS-BASIC> .33
<EPS-DILUTED> .32
</TABLE>
