SECURITIES AND EXCHANGE COMMISSION TOTAL NUMBER OF
Washington, D. C. 20549 PAGES INCLUDED IN
THIS QUARTERLY
FORM 10-Q REPORT IS 27.
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934(NO FEE REQUIRED)
For the fiscal quarter ended June 30, 1994
----------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
For the transition period from _______________ to __________________
Commission file number 1-5110
BERGEN BRUNSWIG CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-1444512
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4000 Metropolitan Drive, Orange, California 92668-3510
- ---------------------------------------------- -------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 385-4000
-------------------
No Change
- --------------------------------------------------------------------------------
(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
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
<TABLE>
<CAPTION>
Title of each class of Number of Shares Outstanding
Common Stock July 31, 1994
----------------------- ----------------------------
<S> <C>
Class A Common Stock -
par value $1.50 per share 37,260,010
</TABLE>
INDEX TO EXHIBITS FOUND ON PAGE 24
1
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX
-----
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets, June
30, 1994 and August 31, 1993 3
Statements of Consolidated Earnings
for the third quarter and nine
months ended June 30, 1994 and
May 31, 1993 4
Statements of Consolidated Cash Flows
for the nine months ended June
30, 1994 and May 31, 1993 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 13
Part II. Other Information
Item 1. Legal Proceedings 16
Item 6. Exhibits and Reports on Form 8-K 21
Signatures 23
Index to Exhibits 24
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BERGEN BRUNSWIG CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1994 AND AUGUST 31, 1993
(dollars in thousands)
(Unaudited)
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------------------
June 30, August 31, LIABILITIES AND June 30, August 31,
- - ASSETS - - 1994 1993 - - SHAREOWNERS' EQUITY - - 1994 1993
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents........... $ 14,224 $ 54,960 Accounts payable................... $ 924,843 $ 876,584
Accounts and notes receivable, Accrued liabilities................ 92,489 94,051
less allowance for doubtful Customer credit balances........... 83,641 71,992
receivables: $16,679 at June Income taxes payable............... 1,143 -
30, 1994 and $14,539 at Deferred income taxes.............. 6,588 -
August 31, 1993................... 491,431 471,248 Current portion of long-term
Inventories......................... 849,313 684,234 obligations...................... 1,293 2,129
Income taxes receivable............. - 7,925 ---------- ----------
Deferred income taxes............... - 6,151 Total current liabilities...... 1,109,997 1,044,756
Prepaid expenses.................... 8,910 6,310 ---------- ----------
---------- ---------- LONG-TERM OBLIGATIONS:
Total current assets.............. 1,363,878 1,230,828 7 3/8% senior notes................ 149,050 148,958
---------- ---------- 5 5/8% senior notes................ 99,912 99,864
Revolving bank loan payable........ 50,000 -
7% convertible subordinated
debentures....................... 22,641 23,146
6 7/8% exchnageable subordinated
debentures....................... 10,575 10,905
Deferred income taxes.............. 2,138 12,553
Other.............................. 10,765 14,355
PROPERTY - At cost: ---------- ----------
Land................................. 10,942 11,287 Total long-term obligations.... 345,081 309,781
Building and leasehold improvements.. 74,910 71,187 ---------- ----------
Equipment and fixtures............... 121,350 110,303 COMMITMENTS AND CONTINGENT LIABILITIES
---------- ---------- SHAREOWNERS' EQUITY:
Total property..................... 207,202 192,777 Capital Stock:
Less accumulated depreciation Preferred - authorized 3,000,000
and amortization................... 76,304 66,079 shares, issued, none.......... - -
---------- ---------- Class A Common - authorized
Property - net..................... 130,898 126,698 100,000,000 shares; issued:
---------- ---------- 44,006,416 shares at June 30,
1994 and 43,026,082 shares at
August 31, 1993............... 66,010 64,539
Class B Common - Convertible,
OTHER ASSETS: authorized 100,492 shares;
Excess of cost over net assets of issued, 100,492 shares at
acquired companies................. 322,250 324,409 August 31, 1993............... - 151
Other investments.................... 26,890 25,221 Paid-in capital.................... 154,938 156,312
Noncurrent receivables............... 9,488 10,438 Retained earnings.................. 366,876 349,384
Deferred charges and other assets.... 53,420 54,743 ---------- ----------
---------- ---------- Total.......................... 587,824 570,386
Total other assets................. 412,048 414,911 Less Treasury shares, at cost:
---------- ---------- 6,752,996 shares at June 30, 1994
and 7,553,028 shares at August
31, 1993......................... 136,078 152,586
---------- ----------
Total shareowners' equity...... 451,746 417,800
---------- ----------
TOTAL LIABILITIES AND
TOTAL ASSETS........................... $1,906,824 $1,772,337 SHAREOWNERS' EQUITY.................. $1,906,824 $1,772,337
========== ========== ========== ==========
<FN>
See accompanying Notes to Consolidated Financial Statements.
Page 3
</TABLE>
<PAGE>
<TABLE>
BERGEN BRUNSWIG CORPORATION
---------------------------
STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JUNE 30, 1994 AND MAY 31, 1993
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
THIRD QUARTER NINE MONTHS
------------------------- -------------------------
June 30, May 31, June 30, May 31,
1994 1993 1994 1993
------------------------- -------------------------
<S> <C> <C> <C> <C>
Net sales and other revenues $1,878,548 $1,764,608 $5,558,933 $5,067,143
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales 1,767,176 1,651,168 5,229,558 4,738,821
Distribution, selling, general &
administrative expenses 79,872 82,992 242,696 240,076
---------- ---------- ---------- ----------
Total costs and expenses 1,847,048 1,734,160 5,472,254 4,978,897
---------- ---------- ---------- ----------
Operating earnings 31,500 30,448 86,679 88,246
Net interest expense 5,020 5,954 16,393 17,508
---------- ---------- ---------- ----------
Earnings before taxes on income 26,480 24,494 70,286 70,738
Taxes on income 11,453 10,043 30,399 29,003
---------- ---------- ---------- ----------
Earnings before extraordinary loss 15,027 14,451 39,887 41,735
Extraordinary loss from early extinguishment
of debt, net of income tax benefit of $1,786 - - - (2,570)
---------- ---------- ---------- ----------
Net earnings $ 15,027 $ 14,451 $ 39,887 $ 39,165
========== ========== ========== ==========
Earnings (loss) per common and
common equivalent share:
Primary:
Before extraordinary loss $ .41 $ .40 $ 1.09 $ 1.15
Extraordinary loss - - - (.07)
---------- ---------- ---------- ----------
Net earnings $ .41 $ .40 $ 1.09 $ 1.08
========== ========== ========== ==========
Fully diluted:
Before extraordinary loss $ .41 $ .40 $ 1.09 $ 1.11
Extraordinary loss - - - (.06)
---------- ---------- ---------- ----------
Net earnings $ .41 $ .40 $ 1.09 $ 1.05
========== ========== ========== ==========
Cash dividends per share:
Class A Common Stock $ .120 $ .100 $ .340 $ .300
========== ========== ========== ==========
Class B Common Stock $ - $ .953 $ 2.096 $ 2.859
========== ========== ========== ==========
<FN>
See accompanying Notes to Consolidated Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
BERGEN BRUNSWIG CORPORATION
---------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 1994 AND MAY 31, 1993
(in thousands)
(Unaudited)
<CAPTION>
-------------------------
June 30, May 31,
1994 1993
-------------------------
<S> <C> <C>
Operating Activities
- --------------------
Net earnings including extraordinary loss $ 39,887 $ 39,165
Adjustments to reconcile net earnings including extraordinary
loss to net cash flows from operating activities:
Provision for doubtful accounts 3,725 3,634
Depreciation and amortization of property 14,752 10,281
Deferred compensation 1,052 (6,240)
Amortization of customer lists 1,312 1,312
Amortization of excess of cost over net assets of acquired companies 6,502 6,403
Deferred income taxes 333 (9,444)
Interest accretion on convertible zero coupon-subordinated notes - 6,304
Amortization of original issue discount on senior notes 126 60
Amortization of deferred financing costs 649 569
Loss on dispositions of property 857 122
Effects of changes on:
Receivables 2 1,586
Inventories (186,418) 48,428
Prepaid expenses and other assets (7,536) (2,985)
Accounts payable 41,423 49,791
Accrued liabilities (7,902) (35,521)
Customer credit balances 13,371 16,197
Income taxes payable 8,440 7,095
---------- ----------
Net cash flows from operating activities (69,425) 136,757
---------- ----------
Investing Activities
- --------------------
Investments (1,332) (1,022)
Property acquisitions (17,860) (25,216)
Proceeds from dispositions of property 2,573 45
Acquisition of businesses, less cash acquired - (357,506)
Sale of business - 9,159
Sale of discontinued operations - (4,880)
---------- ----------
Net cash flows from investing activities (16,619) (379,420)
---------- ----------
Financing Activities
- --------------------
Proceeds from revolving bank loan 40,000 30,000
Repayment of other obligations (12,349) (977)
Redemption of convertible subordinated debentures (505) (45,851)
Redemption of exchangeable subordinated debentures (330) -
Proceeds from issuance of senior notes - 248,720
Early extinguishment of convertible zero coupon-subordinated notes - (215,952)
Shareowners' equity transactions:
Exercise of stock options 180 564
Cash dividends on Common Stock (12,490) (10,800)
---------- ----------
Net cash flows from financing activities 14,506 5,704
---------- ----------
Net decrease in cash and cash equivalents (71,538) (236,959)
Cash and cash equivalents at beginning of period 85,762 307,539
---------- ----------
Cash and cash equivalents at end of period $ 14,224 $ 70,580
========== ==========
Supplemental Cash Flows Disclosures
- -----------------------------------
Cash paid during the period for:
Interest $ 13,226 $ 11,199
Income taxes 22,269 28,155
<FN>
See accompanying Notes to Consolidated Financial Statements.
5
</TABLE>
</PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. The consolidated financial statements include the accounts of Bergen
Brunswig Corporation and its subsidiaries (the "Company"), after
elimination of the effect of intercompany transactions and balances.
Effective October 1, 1993, the Company changed its fiscal year from a
twelve-month period ending August 31 to a twelve-month period ending
September 30. The Statements of Consolidated Earnings are presented for
the third quarter and nine months ended June 30, 1994, and for the third
quarter and nine months ended May 31, 1993. The Statements of Consolidated
Cash Flows are presented for the nine months ended June 30, 1994, and for
the nine months ended May 31, 1993.
These consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and related notes of the
Company contained in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1993.
Certain reclassifications have been made in the consolidated financial
statements and notes to conform to fiscal 1994 presentations.
B. Effective September 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109").
The effect of initially adopting SFAS 109 was accounted for as a cumulative
effect of an accounting change of $8.7 million, or $0.24 per share,
recorded in September 1993 and, accordingly, resulted in a reduction of
previously reported retained earnings at September 1, 1993.
This Statement changed the Company's method of accounting for income taxes
from the deferred method to an asset and liability method. Under the
deferred method, annual income tax expense is matched with pre-tax
accounting income by providing deferred taxes at current rates for timing
differences between the determination of net income for financial reporting
and tax purposes. Under the asset and liability method, deferred tax
assets and liabilities are established for temporary differences between
the financial reporting basis and the tax basis of the Company's assets and
liabilities at tax rates expected to be in effect when such assets or
liabilities are realized or settled.
C. On September 15, 1992, the Company entered into a credit agreement (the
"Credit Agreement") with a group of banks providing the Company with a
three-year $300 million unsecured revolving line of credit to be used to
fund the fiscal 1993 acquisition of Durr-
6
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
Fillauer Medical, Inc. and subsidiaries ("Durr") and to be used for general
working capital purposes of the Company. In August 1993, the Credit
Agreement was amended to extend the maturity date to September 15, 1996.
Borrowings outstanding under the Credit Agreement were $50 million at June
30, 1994. The maximum outstanding borrowing under the Credit Agreement
during the third quarter ended June 30, 1994 was $240 million.
On January 14, 1993, the Company publicly sold $100 million aggregate
principal amount of 5 5/8% Senior Notes due January 15, 1996 and $150
million aggregate principal amount of 7 3/8% Senior Notes due January 15,
2003, collectively the "Senior Notes". The Senior Notes were issued
pursuant to the $400 million shelf registration filed by the Company in
December 1992. Interest on the Senior Notes is payable semi-annually on
January 15 and July 15 of each year, beginning July 15, 1993.
In connection with the Durr acquisition, the Company assumed $69.0 million
of Durr's 7% Convertible Subordinated Debentures due March 1, 2006 (the "7%
Debentures"). The acquisition of Durr by the Company resulted in each
holder receiving the right, at such holder's option, to require Durr to
redeem on November 23, 1992 all or any portion of such holder's 7%
Debentures for cash equal to the principal amount plus accrued interest to
that date. As a result, the Company redeemed $45.6 million aggregate
principal amount on November 23, 1992. Since that date, and through June
30, 1994, an additional $0.8 million aggregate principal amount has been
redeemed. The remaining outstanding 7% Debentures receive interest on
March 1 and September 1 of each year.
D. The authorized capital stock of the Company consists of 100,000,000 shares
of Class A Common, par value $1.50 per share (the "Common Stock") and
3,000,000 shares of Preferred Stock without nominal or par value (the
"Preferred Stock").
The Board of Directors (the "Board") is authorized to divide the Preferred
Stock into one or more series, to determine the relative rights,
preferences and limitations of the shares of any class or of any such
series. In addition, the Board may give the Preferred Stock (or any
series), special, limited, multiple or no voting rights.
Subject to the preferences and other rights of the Preferred Stock, the
Common Stock may receive stock or cash dividends as declared by the Board
and each share of Common Stock is entitled to one vote per share at every
meeting of shareowners. In the event of any liquidation, dissolution or
winding up of the affairs of the Company, after payment to the owners of
7
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
the Preferred Stock of the full amounts to which they have a liquidation
preference, the owners of Common Stock shall be entitled to receive a
distribution of all assets then remaining.
No owner of stock of any class of the Company shall have any preemptive
right to purchase or subscribe for, or to receive rights or warrants to
purchase or subscribe for, any shares of the Company, whenever authorized,
which the Company may issue or sell or any obligations which the Company
may issue or sell that shall be convertible into or exchanged for any
shares of any class of stock of the Company.
The Company shall not be obligated to issue any fractional shares of Common
Stock and if any interest in a fractional share would otherwise be
deliverable, the Company shall make adjustment for that fractional share
interest by payment of an amount in cash equal to the same fraction of the
market value of a full share of Common Stock.
On February 9, 1994, the Board adopted a Shareowner Rights Plan which
provided that a dividend of one Preferred Share Purchase Right (the
"Rights") was declared for each share of Common Stock outstanding at the
close of business on February 18, 1994. The Rights are generally not
exercisable until 10 days after a person or group acquires 15% of the
Common Stock or announces a tender offer which could result in a person or
group owning 15% or more of the Common Stock (an "Acquisition"). Each
Right, should it become exercisable, will entitle the owner to buy 1/100th
of a share of a new series of the Company's Series A Junior Preferred Stock
at an exercise price of $80.00.
In the event of an Acquisition without the approval of the Board, each
Right will entitle the owner, other than an acquiror, to buy at the Rights'
then current exercise price a number of shares of Common Stock with a
market value equal to twice the exercise price. In addition, if at the
time when there was a 15% stockholder, the Company were to be acquired by
merger, shareowners with unexercised Rights could purchase common stock of
the acquiror with a value of twice the exercise price of the Rights. The
Board may redeem the Rights for $0.01 per Right at any time prior to an
Acquisition. Unless earlier redeemed, the Rights will expire on February
18, 2004.
In addition to the Shareowner Rights Plan, the staggered election of the
Board of Directors, the possible impact of the anti-trust laws and the New
Jersey Shareholders Protection Act ("NJSPA") may deter a hostile takeover
of the company.
8
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The NJSPA could discourage a hostile takeover of the Company because it
could significantly delay the ability of a person who acquires control of
the Company to consummate a merger with the Company. The NJSPA purports to
regulate certain "Business Combinations" of a "Resident Domestic
Corporation" and an "Interested Stockholder" after a "Stock Acquisition
Date," in each case as defined in the NJSPA. The NJSPA provides that no
Resident Domestic Corporation shall engage in any Business Combination with
any Interested Stockholder of such corporation for a period of five years
following that Interested Stockholder's Stock Acquisition Date unless that
Business Combination is approved by the Board of Directors of the Resident
Domestic Corporation prior to that Interested Stockholder's Stock
Acquisition Date.
The NJSPA defines a "Resident Domestic Corporation" as a corporation
incorporated in, and having its principal executive offices or significant
business operations located in, the State of New Jersey. A "Business
Combination" includes (i) a merger of a Resident Domestic Corporation with
an Interested Stockholder or any corporation which is an affiliate of such
Interested Stockholder, (ii) any sale, lease, exchange, mortgage, pledge,
transfer or other disposition of 10% of more of the assets of a Resident
Domestic Corporation to or with an Interested Stockholder or any affiliate
thereof, and (iii) other specified extraordinary transactions between a
Resident Domestic Corporation and an Interested Stockholder or any
affiliate thereof. "Interested Stockholder" is defined, in pertinent part,
as any person that is the beneficial owner, directly or indirectly, of 10%
or more of the voting power of the outstanding voting stock of a Resident
Domestic Corporation. "Stock Acquisition Date" is defined as the date that
a person becomes an Interested Stockholder.
The Company believes that it is a Resident Domestic Corporation because it
has significant business operations located in New Jersey. Unless a court
determines that the NJSPA is invalid, that the Company is not a Resident
Domestic Corporation or that the NJSPA is otherwise inapplicable to a
particular transaction, the NJSPA would prohibit consummation of a merger
for a period of five years after a person became an Interested Stockholder
unless, prior to that date, the Board of Directors of the Company approved
the proposed Business Combination. The Securities and Exchange Commission
(the "Commission") has argued that statutes similar to the NJSPA are
invalid. The United States Court of Appeals for the Seventh Circuit has
upheld a Wisconsin statute which is similar to the NJSPA. The Company has
not solicited or received any legal opinion as to the validity of the
NJSPA.
9
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The NJSPA imposes additional restrictions on the ability of an Interested
Stockholder to consummate a Business Combination with a Resident Domestic
Corporation even after the five year period has expired. The NJSPA
requires the affirmative vote of the holders of two-thirds of the shares
not beneficially owned by an Interested Stockholder to approve a Business
Combination with the Interested Stockholder unless (i) the Business
Combination is approved by the Company's Board of Directors prior to the
Interested Stockholder's Stock Acquisition Date or (ii) a "fair price"
consideration, determined pursuant to criteria specified in the NJSPA, is
paid to holders of shares and certain other specified conditions are met.
"Fair Price" is defined to mean the highest of numerous valuations
including the following: (1) the highest price paid for the shares by the
Interested Stockholder in the five years preceding the announcement of the
Business Combination or the five years preceding the Interested
Stockholder's Stock Acquisition Date, whichever is higher, and (2) the
market value of the stock on the Business Combination announcement date, or
the market value of the stock on the Interested Stockholder's Stock
Acquisition Date, whichever is higher (plus, in each case, interest
compounded annually from such date through the consummation date at the
rate for one-year United States Treasury obligations, less the aggregate
amount of any cash dividends paid, and the market value of any dividends
paid other than in cash, up to the amount of that interest).
Under the New Jersey Business Corporation Act ("NJBCA") a merger would
generally require the approval of the Board of Directors of the Company and
the affirmative vote of a majority of the votes cast by the holders of
capital stock of the Company entitled to vote on the merger assuming the
presence of a quorum which would be a majority of all shares entitled to
vote. Any merger would have to comply with the applicable procedural and
substantive requirements of the NJBCA, including the NJSPA and any duties
to other shareholders imposed upon a controlling or, if applicable,
majority shareholder.
Any merger would also have to comply with any applicable federal law. In
particular, an Interested Stockholder may be required to comply with Rule
13e-3 promulgated by the Commission under the Exchange Act. Rule 13e-3
requires, among other things, that certain financial information concerning
the Company and certain information relating to the fairness of such merger
or other similar business combination and the consideration offered to
minority shareholders be filed with the Commission and distributed to
10
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
minority shareholders prior to the consummation of any such transaction.
On February 24, 1994 (the "Conversion Date"), in accordance with the
provisions of the Recapitalization Plan approved by the Company's
shareowners on January 31, 1989, all of the 100,492 then outstanding shares
of the Company's Class B Stock were automatically converted into shares of
the Company's Class A Common Stock at the stated conversion rate of 9.5285
shares of Class A Common Stock for each share of Class B Common Stock. The
converted shares of Class B Common Stock were subsequently cancelled.
E. Earnings per common and common equivalent share are based on the weighted
average number of shares of Class A Common Stock outstanding during each
period and the assumed conversion of the weighted average number of shares
of Class B Common Stock outstanding during each period through the
Conversion Date and the assumed exercise of dilutive employees' stock
options (less the number of treasury shares assumed to be purchased from
the proceeds using the average market price or, for fully diluted earnings
per share, the greater of the average market price or period-end market
price of the Company's Class A Common Stock). Primary earnings per share
are based upon 37,062,902 shares and 36,527,108 shares for the third
quarter ended June 30, 1994 and May 31, 1993, respectively, and 36,705,795
shares and 36,245,136 shares for the respective nine-month year-to-date
periods. Fully diluted earnings per share are based upon 37,062,902 shares
and 36,529,182 shares for the third quarter ended June 30, 1994 and May 31,
1993, respectively, and 36,710,583 shares and 40,883,560 shares, for the
respective nine-month year-to-date periods and assume conversion of the
Company's Liquid Yield OptionTM Notes ("LYONs") from the issue date of
November 16, 1989 through the redemption date of February 10, 1993.
F. On April 29, 1994, the Company completed the acquisition of Southeastern
Hospital Supply Corporation ("Southeastern"), a privately held medical
supply distributor located in Fayetteville, North Carolina, for 785,452
shares, previously held as Treasury shares at a cost of approximately $16.0
million, of the Company's Class A Common Stock valued at approximately
$13.3 million and the assumption of approximately $6.4 million of debt by
the Company, subject to adjustments after completion of the acquisition
audit.
11
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
G. During the quarter ended March 31, 1994, the Company recorded a pre-tax
charge of $1.4 million ($0.8 million after tax) for the estimated uninsured
portion of an earthquake loss sustained by the Company's Valencia,
California division on January 17, 1994.
H. In the opinion of management of the Company, the foregoing consolidated
financial statements reflect all adjustments necessary for a fair statement
of the results of the Company and its subsidiaries for the periods shown
and such adjustments are of a normal recurring nature. Results of
operations for the third quarter and first nine months of fiscal 1994 are
not necessarily indicative of results to be expected for the full year.
12
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
- ---------------------
For the quarter ended June 30, 1994, net sales and other revenues increased 7%,
while operating earnings and pre-tax earnings increased 3% and 8%, respectively,
from the quarter ended May 31, 1993. For the nine months ended June 30, 1994,
net sales and other revenues increased 10%, while operating earnings and pre-tax
earnings decreased 2% and 1%, respectively, compared to the nine-month period
ended May 31, 1993. Operating earnings and pre-tax earnings for the first nine
months of fiscal 1994 were impacted by a pre-tax charge of $1.4 million for the
estimated uninsured portion of an earthquake loss. See Note G of Notes to
Consolidated Financial Statements.
Of the 7% increase in net sales and other revenues for the quarter,
approximately 1% is attributable to the acquisition of Southeastern in April
1994. Approximately 6% of the net sales and other revenues increase reflects
internal growth within the Company's existing pharmaceutical business. Of the
10% increase in net sales and other revenues for the nine-month period,
approximately 1% in the aggregate is attributable to the acquisitions of Dr.
T.C. Smith Company in November 1992 and Healthcare Distributors of Indiana, Inc.
in January 1993. Approximately 9% of the net sales and other revenues increase
reflects internal growth within the Company's existing pharmaceutical business.
Primary and fully diluted earnings per share before extraordinary loss for the
third quarter of fiscal 1994 both increased 3% compared to the third quarter of
the prior year, both on an increase of 1% in the average number of common and
common shares outstanding. Primary earnings per share before extraordinary loss
for the first nine months of fiscal 1994 decreased 5% compared to the first nine
months of the prior year on an increase of 1% in the average number of common
and common equivalent shares outstanding. Fully diluted earnings per share
before extraordinary loss for the first nine months of fiscal 1994 decreased 2%
from the first nine months of the prior year on a decrease of 10% in the average
number of common and common equivalent shares outstanding, primarily due to the
redemption of the LYONs in February 1993. The earthquake-related charge
referred to above was equivalent to $.02 per fully diluted share.
Cost of sales increased 7% and 10% from the third quarter and nine- month period
of fiscal 1993, respectively, due mainly to the Company's increased sales
levels. The overall gross margin as a percent of net sales and other revenues
for the third quarter and nine-month period decreased due to continued price
competition and reduced opportunities for investment buying. In the
pharmaceutical distribution industry,
13
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
it has been customary to pass on to customers price increases from
manufacturers. Investment buying enables distributors such as the Company to
benefit from anticipated price increases. The rate or frequency of future price
increases by manufacturers, or lack thereof, does influence the profitability of
the Company. The effect of reduction in price increases in the comparison of
the third quarter and first nine months of fiscal 1994 to the same periods in
fiscal 1993 was partially offset by the use of the LIFO method of accounting for
inventory costs.
Management of the Company anticipates further downward pressure on gross margins
in the Company's pharmaceutical distribution business during the fiscal year
ending September 30, 1994, because of continued price competition influenced by
large buying groups, reduced opportunities for investment buying and current
political pressures on the health care industry. The Company expects that this
pressure on margins may be offset to some extent by continued reduction of
distribution, selling, general and administrative expenses as a percentage of
net sales and other revenues through improved operating efficiencies.
Distribution, selling, general and administrative expenses, including the
earthquake-related charge, decreased 4% over the prior year quarter and
increased 1% over the prior year nine-month period, while net sales and other
revenues increased 7% and 10% over the prior year quarter and nine-month period,
respectively. These expenses decreased as a percent of net sales and other
revenues from 4.7% in the third quarter of fiscal 1993 to 4.3% in the third
quarter of fiscal 1994 and were 4.4% and 4.7% of net sales and other revenues in
the current and prior year nine-month periods, respectively. Had the Company
not recorded the above mentioned $1.4 million pre-tax earthquake-related charge
in the second quarter of fiscal 1994, distribution, selling, general and
administrative expenses would have been 4.3% of net sales and other revenues for
the current year nine-month period. The decreased distribution, selling,
general and administrative expenses as a percentage of net sales and other
revenues in the current year reflect operating efficiencies resulting from the
positive effects of the Company's restructuring plan adopted for its
pharmaceutical distribution business in the fourth quarter of fiscal 1993 and
the continuing consolidation of distribution branches into larger regional
distribution centers.
Net interest expense decreased from $6.0 million to $5.0 million for the third
quarter and decreased from $17.5 million to $16.4 million for the nine-month
period, primarily due to reduced borrowings under the Credit Agreement and fewer
outstanding 7% Debentures, partially offset by a reduced cash investment base.
14
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
The extraordinary after-tax charge for the nine-month period of fiscal 1993 of
$2,570,000 (net of the related income tax benefit of $1,786,000) was recorded in
connection with the redemption of the Company's LYONs due 2004.
Financial Condition
- -------------------
At June 30, 1994, capitalization consisted of 43% debt and 57% shareowners'
equity, as compared to 42% and 58%, respectively, at August 31, 1993. The
increased debt percentage primarily reflects additional borrowings under the
Credit Agreement, due principally to greater opportunities for investment buying
of inventory. Borrowings under the Credit Agreement were $50.0 million at June
30, 1994. There were no borrowings under the Credit Agreement at August 31,
1993. Cash and cash equivalents of $14.2 million at June 30, 1994 decreased
from $55.0 million at August 31, 1993.
On April 29, 1994, the Company completed the acquisition of Southeastern
Hospital Supply Corporation ("Southeastern"), a medical supply distributor. The
transaction included issuance of 785,452 shares, previously held as Treasury
shares, of the Company's Class A Common Stock and the assumption of certain
liabilities subject to adjustments after completion of the acquisition audit.
Capital expenditures for the nine months ended June 30, 1994 were $17.9 million
and relate principally to the expansion of the Company into new locations, the
expansion of existing locations, the acquisition of automated warehouse
equipment and additional investments in data processing equipment. Dividends on
Class A and Class B Common Stock amounted to $12.5 million for the nine months
ended June 30, 1994 compared to $10.9 million for the nine months ended May 31,
1993, reflecting, primarily, a 20% increase in the quarterly dividend rate on
both the Class A and Class B Common Stock during the second quarter of fiscal
1994.
The Company believes that internally generated funds, funds available under the
existing Credit Agreement and funds available under the existing shelf
registration will be sufficient to meet anticipated cash and capital needs.
15
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 2, 1988, Aline K. Hayle instituted legal proceedings ("Hayle
Complaint") in the Orange County Superior Court (State of California), which was
consolidated with related proceedings instituted on November 14, 1988 in the
same court by Martin Bergstein. The Hayle Complaint names the Company as a
nominal defendant, and further names as defendants certain officers who are also
directors of the Company as well as seven independent Company directors. This
complaint seeks damages and other relief with respect to actions allegedly taken
by the defendants in connection with the Company's recapitalization plan, said
plan having been approved by the Company's shareowners in January 1989. On
March 16, 1994, the Court gave its preliminary approval for the settlement of
this matter and approved the form of notice to be sent to all shareholders. A
final hearing is expected to occur on September 7, 1994 and the settlement, if
approved, will require Mr. Robert Martini and the Estate of Emil P. Martini, Jr.
to transfer 15,000 shares each to the Company (the Estate has the option of
paying the cash equivalent of 15,000 shares) and the Company has agreed to pay
attorney fees, if approved in the Court, of a sum not to exceed $370,000 plus
accumulated interest from the date of settlement. This legal proceeding is more
fully detailed in "Item 3 - Legal Proceedings" of Part I of the Company's Annual
Report on Form 10-K for the fiscal year ended August 31, 1988, and "Item I -
Legal Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for
the fiscal quarter ended May 31, 1989, each as filed with the Securities and
Exchange Commission. Such Items are incorporated herein by reference.
On July 7, 1992, two putative class action complaints were filed in the Delaware
Court of Chancery against Durr and its directors: Steiner v, Adair, et. al.,
C.A. No. 12634 and Goldwurm v. Adair, et. al., C.A. No. 12635. These actions
were consolidated on July 15, 1992. On July 17, 1992, another putative class
action complaint was filed in the Delaware Court of Chancery against Durr and
its directors: Trief v. Adair, et. al., C.A. No. 12648. This action was
consolidated with C.A. Nos. 12634 and 12635 on August 7, 1992. The named
plaintiffs in the three complaints (the "Class Action Complaints") allegedly
owned an undisclosed number of shares of Durr common stock. The plaintiffs
sought certification of a class consisting of all public stockholders of Durr
who held Durr stock at the time of the filing of the Class Action Complaints and
who were not affiliated with any of the defendants. The Class Action Complaints
alleged, among other things, that Durr's directors breached their fiduciary
duties in entering into a June 2, 1992, Agreement and Plan of Reorganization
which contemplated the merger of Durr's wholesale drug business with Cardinal
Distribution, Inc. ("Cardinal") and the spin-off of Durr's remaining businesses
into a newly formed entity (the "Cardinal Acquisition").
16
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION (CONTINUED)
The Class Action Complaints sought a variety of relief, including: an injunction
requiring the Durr directors to consider competing offers, damages, attorneys
fees and costs.
In connection with the acquisition of Durr, and for the purpose of settling the
expressed concern of the Attorneys General of the States of Alabama, Florida and
Louisiana (collectively, the "Attorneys General") over the alleged potential
lessening of competition in the wholesale distribution of pharmaceutical
products, the Company and Durr entered into an agreement dated September 18,
1992, with the Attorneys General wherein the Company agreed that (1) subject to
certain exceptions, no existing customer of either the Company or Durr in
Alabama, Florida and Louisiana (the "Customers") will suffer a diminution of
service levels until April 30, 1997, (2) except for price increases resulting
from taxes, fees or governmental charges, neither the Company nor Durr will
increase the markup percentage for the Customers in Alabama, Florida and
Louisiana for a period of two years and from September 1994 through April 1997
will not increase such percentage in excess of the percentage increase in the
Consumer Price Index; (3) Durr will maintain its distribution facilities in
Montgomery and Mobile, Alabama; Lakeland, Florida; and Shreveport, Louisiana for
a period of at least two years; (4) Durr will maintain and enhance its Accu NetR
system for a period of at least two years; and (5) the Company will reimburse
the States of Alabama, Florida and Louisiana for their legal fees, costs and
expenses incurred in the investigation of the acquisition of Durr by the
Company.
Drug Barn, Inc. ("Drug Barn"), a former retail pharmacy chain in the San
Francisco Bay Area, currently with two operating stores, owed the Company
approximately $6.2 million in principal obligations as of June 30, 1994, of
which approximately $1.2 million represents trade receivables and $5.0 million
represents a note which matured on March 25, 1993 and has not been paid to date.
The Company has a security interest in virtually all of Drug Barn's assets, as
well as personal guaranties, which collateralize the note and trade receivables.
In May 1992, Drug Barn requested additional financing which the Company denied
to extend. In December 1992, Drug Barn commenced an action against the Company
in the Santa Clara Superior Court (State of California) alleging breach of
contract, misrepresentation and violations of certain California antitrust and
unfair practices laws. Drug Barn seeks a variety of damage claims including
compensatory, treble and punitive damages, an injunction against collection on
the note, and declaratory judgment as to Drug Barn's rights under the alleged
oral joint venture agreement with the Company. In April 1994, this matter was
coordinated with several other similar cases in San Francisco County Superior
Court and the trial date was vacated. The
17
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION (CONTINUED)
Company believes that there is no merit to the material allegations of this
complaint and intends to vigorously defend this action.
On April 20, 1993, the Company filed a complaint in the Orange County Superior
Court (State of California), Case No. 709136 against Drug Barn and Milton Sloban
and Barbara Sloban, as guarantors on the defaulted note and open trade
receivables, alleging breach of contract and guaranty, and requesting judicial
foreclosure of and the possession of collateral.
Drug Barn commenced a Chapter 11 case in U.S. Bankruptcy Court for the Northern
District of California, Case No. 93-3-3437 TC, by filing a voluntary petition
for relief under Chapter 11 of the United States Bankruptcy Code on July 29,
1993 and remains in possession pursuant to 11 U.S.C. Section 1107. The effect
of this filing is that the Company's action against Drug Barn has been
automatically stayed.
The Company has been named as a defendant in the following eight state antitrust
actions (collectively, the "California Complaints"). On August 3, 1993, the
Company was named as a defendant, along with five pharmaceutical
industry-related companies in a state lawsuit filed in San Francisco Superior
Court entitled Feitelberg v. Medco Containment Services, Inc., et. al., Case No.
953865. On August 4, 1993, the Company was named as a defendant, along with six
other pharmaceutical industry-related companies in a state class action lawsuit
filed in San Francisco Superior Court entitled Boynoff v. Medco, et. al., Case
No. 953907. On August 24, 1993, the Company was named as a defendant along with
five pharmaceutical industry-related companies in a state lawsuit filed in San
Francisco Superior Court entitled Chang v. Medco., et. al., Case No. 954389. On
December 20, 1993, the Company was named as a defendant along with the fourteen
other pharmaceutical industry-related companies in a state class action lawsuit
filed in San Francisco Superior Court entitled Michael Goldstein v. Medco, et.
al., Case No. 953866. Also in December of 1993, the Company was named as a
defendant, along with five other pharmaceutical industry-related companies in a
state lawsuit filed in San Francisco Superior Court entitled Harry B. Ambrunn
and Seventeen Fifty Medical Pharmacy, Inc., v. Abbott Laboratories, et. al.,
Case No. 957383. On January 20, 1994, the Company was named as a defendant
along with seven manufacturers of pharmaceuticals in a state class action
lawsuit filed in Monterey Superior Court entitled Donald J. Bartolo v. American
Home Products Corporation, et. al., Case No. 98845. On January 21, 1994, the
Company was named as a defendant along with the same defendants in the Bartolo
action in a state class action lawsuit filed in Santa Clara Superior Court
entitled Charles Leiter, Morton Roy Leiter and Lionel Leiter v. American Home
Products Corporation, et. al., Case No. CV737815. On February 14, 1994, the
Company was named as a defendant along with
18
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION (CONTINUED)
twenty-four other pharmaceutical industry-related companies in a state class
action lawsuit filed in San Joaquin County Superior Court entitled
Pharmaceutical Investments v. Abbott Laboratories, Case No. 269444. On April
11, 1994, these California state actions were all coordinated, and on April 26,
1994, the actions were assigned to a single judge in San Francisco Superior
Court.
The complaints in the state actions allege that the Company and other defendants
violated the California Cartwright Act, the Unfair Practices Act and an unfair
competition statute. The plaintiffs in each case allege that the defendants
jointly and separately engaged in secret rebating, kickbacks, and price
discrimination between plaintiffs and plaintiffs' alleged competitors.
Plaintiffs in all actions seek injunctive relief and treble damages.
The Company believes that the California Complaints against it are without merit
and intends to defend them vigorously.
The Company has also been named in nine federal antitrust complaints (one in
California and eight in New York). All nine actions have all been consolidated
into one multidistrict action in the Northern District of Illinois entitled, In
Re Brand-Name Prescription Drugs Antitrust Litigation, No. 94 C 897 (MDL 997).
An amended class action complaint ("Federal Complaint") incorporating all nine
actions was filed in March of 1994. The Federal Complaint names the Company and
thirty other pharmaceutical industry-related companies. The Federal Complaint
alleges a conspiracy to fix prices for prescription pharmaceuticals under
Section 1 of the Sherman Act on behalf of a class of retail pharmacies in the
United States which purchased pharmaceuticals from any of the defendants in the
last four years. The Company believes that the Federal Complaint against it is
without merit and intends to defend it vigorously.
On April 29, 1994 a purported class action pursuant to Rule 23 of the Alabama
Rules of Civil Procedure was filed against Durr Drug Company, Inc. (a subsidiary
company of Bergen Brunswig Drug Company, which is a subsidiary of the
registrant), Medco Containment Services, Inc. and sixteen pharmaceutical
manufacturers in the Circuit Court for Bullock County, Alabama entitled, Main
Drug Company, Inc. et.al. v. The Upjohn Company, et.al., Civil Action Number
CV-94-37 (the "Main Drug Suit"). The plaintiffs allege that the defendants
formed an unlawful trust, combine or monopoly to further an unlawful pricing
structure and to prevent and restrain competition in the prescription drug
industry and maintain the price of prescription drugs at artificially high
levels. On May 2, 1994, a purported class action was filed against Durr Drug
Company, Inc., Bergen Brunswig Corporation, Medco Containment Services, Inc. and
twenty-four pharmaceutical manufacturers in the Circuit Court
19
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION (CONTINUED)
of Greene County, Alabama entitled, Cecil Durrett, Jr., et.al. v. Upjohn
Company, et.al., Civil Action Number CV94-029. The plaintiffs allege that the
defendants engaged in conduct similar to that described in the Main Drug Suit.
The Company believes that there is no merit to the material allegations in these
claims and intends to vigorously defend these actions.
The Company is involved in various additional items of litigation. Although the
amount of liability at June 30, 1994 with respect to these items of litigation
cannot be ascertained, in the opinion of management, any resulting future
liability will not have a material adverse effect on its consolidated financial
position or results of operations.
20
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
--------
*4 The Senior Indenture for $400,000,000 of Debt Securities dated as of
December 1, 1992 between the Company and Chemical Trust Company of
California as Trustee is set forth as Exhibit 4.1 to the Company's
Registration Statement on Form S-3 dated December 1, 1992 (file no.
33-55136).
The Company agrees to furnish to the Commission, upon request, a
copy of each instrument with respect to other issues of long-term
debt of the Company, the authorized principal amount of which does
not exceed 10% of the total assets of the Company and its
subsidiaries on a consolidated basis.
*10(a) Agreement and Plan of Merger dated as of September 4, 1992 by and
among Bergen Brunswig Corporation, BBC Acquisition Corp. and
Durr-Fillauer Medical, Inc. is set forth as Exhibit (c)(1) to
Amendment No. 16 to Bergen Brunswig Corporation's and BBC
Acquisition Corp.'s Tender Offer Statement Pursuant to Section
14(d)(1) of the Securities Exchange Act of 1934.
*10(b) Agreement dated as of September 18, 1992 by and among Bergen
Brunswig Corporation, Durr-Fillauer Medical, Inc. and the Attorneys
General of the States of Alabama, Florida and Louisiana is set forth
as Exhibit 10(p) in the Annual Report of the Company on Form 10-K
for the fiscal year ended August 31, 1992.
11 Computation of primary earnings per share and computation of
earnings per share assuming full dilution for the third quarter and
nine months ended June 30, 1994 and May 31, 1993.
*99(a) Credit Agreement dated as of September 15, 1992 by and among Bergen
Brunswig Drug Company, Bergen Brunswig Corporation and Continental
Bank N.A. ("Credit Agreement") is set forth as Exhibit (b)(4) to the
Final Amendment to Bergen Brunswig Corporation's and BBC Acquisition
Corp.'s Tender Offer Statement pursuant to Section 14(d)(1) of the
Securities Exchange Act of 1934.
*99(b) First Amendment to Credit Agreement dated as of December 23, 1992 is
set forth as Exhibit 28(b) in the Quarterly Report of the Company on
Form 10-Q for the quarter ended February 28, 1993.
21
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS (Continued)
--------
*99(c) Second Amendment to Credit Agreement dated as of May 18, 1993 is set
forth as Exhibit 28(c) in the Quarterly Report of the Company on
Form 10-Q for the quarter ended May 31, 1993.
*99(d) Third Amendment to Credit Agreement dated as of August 27, 1993 is
set forth as Exhibit 99(f) in the Annual Report of the Company on
Form 10-K for the fiscal year ended August 31, 1993.
*99(e) Fourth Amendment to Credit Agreement dated as of September 1, 1993
is set forth as Exhibit 99(e) in the Quarterly Report of the Company
on Form 10-Q for the quarter ended December 31, 1993.
*99(f) Rights Agreement, dated as of February 8, 1994, between Bergen
Brunswig Corporation and Chemical Trust Company of California, as
Rights Agent, including all exhibits thereto, is incorporated herein
by reference to Exhibit 1 to Bergen Brunswig Corporation's
Registration Statement on Form 8-A dated February 14, 1994.
*99(g) Certificate of Amendment to the Restated Certificate of
Incorporation of Bergen Brunswig Corporation, is incorporated herein
by reference to Exhibit A of Exhibit 1 to Bergen Brunswig
Corporation's Registration Statement on Form 8-A dated February 14,
1994.
* Document has heretofore been filed with the Securities and Exchange
Commission and is incorporated herein by reference and made a part hereof.
(b) REPORTS ON FORM 8-K:
-------------------
There were no reports filed on Form 8-K during the three months ended
June 30, 1994.
22
<PAGE>
SIGNATURES
----------
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.
BERGEN BRUNSWIG CORPORATION
By /s/ Robert E. Martini
--------------------------------------
Robert E. Martini
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By /s/ Neil F. Dimick
--------------------------------------
Neil F. Dimick
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
August 11, 1994
23
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. PAGE NO.
- ----------- --------
*4 The Senior Indenture for $400,000,000 of Debt Securities
dated as of December 1, 1992 between the Company and
Chemical Trust Company of California as Trustee is set forth
as Exhibit 4.1 to the Company's Registration Statement on
Form S-3 dated December 1, 1992 (file no. 33-55136).
The Company agrees to furnish to the Commission, upon
request, a copy of each instrument with respect to other
issues of long-term debt of the Company, the authorized
principal amount of which does not exceed 10% of the total
assets of the Company and its subsidiaries on a consolidated
basis.
*10(a) Agreement and Plan of Merger dated as of September 4, 1992
by and among Bergen Brunswig Corporation, BBC Acquisition
Corp. and Durr-Fillauer Medical, Inc. is set forth as
Exhibit (c)(1) to Amendment No. 16 to Bergen Brunswig
Corporation's and BBC Acquisition Corp.'s Tender Offer
Statement Pursuant to Section 14(d)(1) of the Securities
Exchange Act of 1934.
*10(b) Agreement dated as of September 18, 1992 by and among Bergen
Brunswig Corporation, Durr-Fillauer Medical, Inc. and the
Attorneys General of the States of Alabama, Florida and
Louisiana is set forth as Exhibit 10(p) in the Annual Report
of the Company on Form 10-K for the fiscal year ended August
31, 1992.
11 Computation of primary earnings per share and 26
computation of earnings per share assuming full dilution for
the third quarter and nine months ended June 30, 1994 and
May 31, 1993.
*99(a) Credit Agreement dated as of September 15, 1992 by and among
Bergen Brunswig Drug Company, Bergen Brunswig Corporation
and Continental Bank N.A. is set forth as Exhibit (b)(4) to
the Final Amendment to Bergen Brunswig Corporation's and BBC
Acquisition Corp.'s Tender Offer Statement pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934.
24
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX TO EXHIBITS (Continued)
-----------------
EXHIBIT NO. PAGE NO.
- ----------- --------
*99(b) First Amendment to Credit Agreement dated as of December 23,
1992 is set forth as Exhibit 28(b) in the Quarterly Report
of the Company on Form 10-Q for the quarter ended February
28, 1993.
*99(c) Second Amendment to Credit Agreement dated as of May 18,
1993 is set forth as Exhibit 28(c) in the Quarterly Report
of the Company on Form 10-Q for the quarter ended May 31,
1993.
*99(d) Third Amendment to Credit Agreement dated as of August 27,
1993 is set forth as Exhibit 99(f) in the Annual Report of
the Company on Form 10-K for the fiscal year ended August
31, 1993.
*99(e) Fourth Amendment to Credit Agreement dated as of September
1, 1993 is set forth as Exhibit 99(e) in the Quarterly
Report of the Company on Form 10-Q for the quarter ended
December 31, 1993.
*99(f) Rights Agreement, dated as of February 8, 1994, between
Bergen Brunswig Corporation and Chemical Trust Company of
California, as Rights Agent, including all exhibits thereto,
is incorporated herein by reference to Exhibit 1 to Bergen
Brunswig Corporation's Registration Statement on Form 8-A
dated February 14, 1994.
*99(g) Certificate of Amendment to the Restated Certificate of
Incorporation of Bergen Brunswig Corporation, is
incorporated herein by reference to Exhibit A of Exhibit 1
to Bergen Brunswig Corporation's Registration Statement on
Form 8-A dated February 14, 1994.
* Document has heretofore been filed with the Securities and Exchange
Commission and is incorporated herein by reference and made a part hereof.
25
<TABLE>
EXHIBIT 11
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JUNE 30, 1994 AND MAY 31, 1993
(in thousands except per share amounts)
<CAPTION>
THIRD QUARTER NINE MONTHS
------------------------ ------------------------
June 30, May 31, June 30, May 31,
1994 1993 1994 1993
------------------------ ------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
DATA AS TO EARNINGS:
Earnings before extraordinary loss $ 15,027 $ 14,451 $ 39,887 $ 41,735
Extraordinary loss from early extinguishment of debt,
net of taxes on income - - - (2,570)
---------- ---------- ---------- ----------
Net earnings applicable to common
and common equivalent shares $ 15,027 $ 14,451 $ 39,887 $ 39,165
========== ========== ========== ==========
DATA AS TO NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES:
Weighted average number of shares outstanding:
Class A Common Stock 36,985,682 35,488,213 36,103,326 35,163,714
Class B Common Stock - 100,492 54,234 100,492
Shares of Class A Common Stock to be issued from
assumed conversion of remainder of Class B Stock - 857,046 462,533 857,046
Common equivalent shares assuming issuance of shares
represented by outstanding employees' stock options:
Additional shares assumed to be issued 539,107 249,518 575,318 503,890
Reduction of such additional shares assuming proceeds
invested in treasury stock (at average market stock
prices during each period) (461,887) (168,161) (489,616) (380,006)
---------- ---------- ---------- ----------
Average number of common and common
equivalent shares outstanding 37,062,902 36,527,108 36,705,795 36,245,136
========== ========== ========== ==========
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE OUTSTANDING:
Before extraordinary loss $ .41 $ .40 $ 1.09 $ 1.15
Extraordinary loss - - - (.07)
---------- ---------- ---------- ----------
Net earnings $ .41 $ .40 $ 1.09 $ 1.08
========== ========== ========== ==========
<FN>
Reference is made to Notes D, E and F in the accompanying Notes to Consolidated Financial Statements.
26
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11.1
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JUNE 30, 1994 AND MAY 31, 1993
(in thousands except per share amounts)
<CAPTION>
THIRD QUARTER NINE MONTHS
------------------------ ------------------------
June 30, May 31, June 30, May 31,
1994 1993 1994 1993
------------------------ ------------------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
NET EARNINGS APPLICABLE TO COMMON AND
COMMON EQUIVALENT SHARES (see Exhibit 11) $ 15,027 $ 14,451 $ 39,887 $ 39,165
Interest on Convertible Zero Coupon-Subordinated
Notes (6-3/4% yield to maturity), net of tax effect - - - 3,812
---------- ---------- ---------- ----------
Net earnings applicable to common and common
equivalent shares assuming full dilution $ 15,027 $ 14,451 $ 39,887 $ 42,977
========== ========== ========== ==========
DATA AS TO NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES ASSUMING FULL DILUTION:
Average number of common and common equivalent
shares outstanding (see Exhibit 11) 37,062,902 36,527,108 36,705,795 36,245,136
Additional shares of Class A Common Stock resulting
from assumed conversion of Convertible Zero
Coupon-Subordinated Notes (6-3/4% yield to maturity) - - - 4,637,733
Excess of incremental shares assumed to be issued
under stock options (using market prices at end of each
period) over shares used in computing primary earnings
per share (using average market prices during each period) - 2,074 4,788 691
---------- ---------- ---------- ----------
Average number of common and common equivalent
shares outstanding assuming full dilution 37,062,902 36,529,182 36,710,583 40,883,560
========== ========== ========== ==========
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE OUTSTANDING ASSUMING FULL DILUTION:
Before extraordinary loss $ .41 $ .40 $ 1.09 $ 1.11
Extraordinary loss - - - (.06)
---------- ---------- ---------- ----------
Net earnings $ .41 $ .40 $ 1.09 $ 1.05
========== ========== ========== ==========
<FN>
Reference is made to Notes D, E and F in the accompanying Notes to Consolidated Financial Statements.
27
</TABLE>
