TOTAL NUMBER OF
SECURITIES AND EXCHANGE COMMISSION PAGES INCLUDED IN
Washington, D. C. 20549 THIS QUARTERLY
REPORT IS 31.
FORM 10-Q
[ 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 December 31, 1993
-------------------------
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
--------------------
Former Fiscal Year - August 31, 1993
- --------------------------------------------------------------------------------
(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 January 31, 1994
------------------------------------ ----------------------------
<S> <C>
Class A Common Stock -
par value $1.50 per share 35,483,671
Class B Common Stock - Convertible,
par value $1.50 per share 100,492
</TABLE>
INDEX TO EXHIBITS FOUND ON PAGE 21
1
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX
-----
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets, December
31, 1993 and August 31, 1993 3
Statements of Consolidated Earnings
for the three months months ended
December 31, 1993 and November 30,
1992 4
Statements of Consolidated Cash Flows
for the three months ended December
31, 1993 and November 30, 1992 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 11
Part II. Other Information
Item 1. Legal Proceedings 14
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 18
Signatures 20
Index to Exhibits 21
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BERGEN BRUNSWIG CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1993 AND AUGUST 31, 1993
(dollars in thousands)
(Unaudited)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
December 31, August 31, LIABILITIES AND December 31, August 31,
- - ASSETS - - 1993 1993 - - SHAREOWNERS' EQUITY - - 1993 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents............ $ 22,616 $ 54,960 Accounts payable....................... $1,040,940 $ 876,584
Accounts and notes receivable, Accrued liabilities.................... 97,917 94,051
less allowance for doubtful Customer credit balances............... 96,949 71,992
receivables: $14,698 at Income taxes payable................... 960 -
December 31, 1993 and $14,539 Deferred income taxes.................. 5,282 -
at August 31, 1993................. 547,632 471,248 Current portion of long-term
Inventories, less allowance to obligations.......................... 2,026 2,129
reduce inventories to cost on ---------- ----------
the LIFO method: $153,170 at Total current liabilities.......... 1,244,074 1,044,756
December 31, 1993 and $151,504 ---------- ----------
at August 31, 1993................. 896,331 684,234 LONG-TERM OBLIGATIONS:
Income taxes receivable.............. - 7,925 7 3/8% senior notes.................... 148,995 148,958
Deferred income taxes................ - 6,151 5 5/8% senior notes.................... 99,879 99,864
Prepaid expenses..................... 7,678 6,310 Revolving bank loan payable............ 55,000 -
---------- ---------- 7% convertible subordinated
Total current assets............... 1,474,257 1,230,828 debentures........................... 22,736 23,146
---------- ---------- Exchangeable subordinated
debentures........................... 10,905 10,905
Deferred income taxes.................. 2,278 12,553
Other.................................. 12,172 14,355
PROPERTY - At cost: ---------- ----------
Land................................. 11,193 11,287 Total long-term obligations........ 351,965 309,781
Building and leasehold improvements.. 72,661 71,187 ---------- ----------
Equipment and fixtures............... 114,282 110,303 COMMITMENTS AND CONTINGENT LIABILITIESS
---------- ---------- SHAREOWNERS' EQUITY:
Total property..................... 198,136 192,777 Capital Stock:
Less accumulated depreciation Preferred - authorized 3,000,000
and amortization................... 69,813 66,079 shares; issued, none............... - -
---------- ---------- Class A Common - authorized
Property - net..................... 128,323 126,698 100,000,000 shares; issued:
---------- ---------- 43,029,328 shares at December
31, 1993 and 43,026,082
shares at August 31, 1993.......... 64,544 64,539
Class B Common - Convertible,
authorized 100,492 shares; issued,
OTHER ASSETS: 100,492 shares at December 31,
Excess of cost over net assets of 1993 and August 31, 1993........... 151 151
acquired companies................. 321,483 324,409 Paid-in capital........................ 156,332 156,312
Other investments.................... 25,558 25,221 Retained earnings...................... 348,852 349,384
Noncurrent receivables............... 10,476 10,438 ---------- ----------
Deferred charges and other assets.... 53,235 54,743 Total................................ 569,879 570,386
---------- ---------- Less Treasury shares, at cost:
Total other assets................. 410,752 414,811 7,553,028 shares at December 31,
---------- ---------- 1993 and August 31, 1993............. 152,586 152,586
---------- ----------
Total shareowners' equity.......... 417,293 417,800
---------- ----------
TOTAL LIABILITIES AND
TOTAL ASSETS........................... $2,013,332 $1,772,337 SHAREOWNERS' EQUITY...................... $2,013,332 $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 THREE MONTHS ENDED
DECEMBER 31, 1993 AND NOVEMBER 30, 1992
(in thousands except per share amounts)
<CAPTION>
--------------------------
December 31, November 30,
1993 1992
--------------------------
(Unaudited)
<S> <C> <C>
Net sales and other revenues $1,834,936 $1,600,257
---------- ----------
Costs and expenses:
Cost of sales 1,730,517 1,496,643
Distribution, selling, general and administrative expenses 81,343 78,376
---------- ----------
Total costs and expenses 1,811,860 1,575,019
---------- ----------
Operating earnings 23,076 25,238
Net interest expense 4,871 5,021
---------- ----------
Earnings before taxes on income 18,205 20,217
Taxes on income 7,874 8,289
---------- ----------
Net earnings $ 10,331 $ 11,928
========== ==========
Earnings per common and common equivalent share:
Primary $ .28 $ .33
========== ==========
Fully diluted $ .28 $ .32
========== ==========
Cash dividends per share:
Class A Common Stock $ .100 $ .100
========== ==========
Class B Common Stock $ .953 $ .953
========== ==========
<FN>
See accompanying Notes to Consolidated Financial Statements.
4
</TABLE>
<PAGE>
<TABLE>
BERGEN BRUNSWIG CORPORATION
---------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND NOVEMBER 30, 1992
(in thousands)
<CAPTION>
--------------------------
December 31, November 30,
1993 1992
--------------------------
(Unaudited)
<S> <C> <C>
Operating Activities
====================
Net earnings $ 10,331 $ 11,928
Adjustments to reconcile net earnings to net cash flows from operating activities:
Provision for doubtful accounts 961 999
Depreciation and amortization of property 4,710 3,204
Deferred compensation 312 259
Amortization of customer lists 437 438
Amortization of excess of cost over net assets of acquired companies 2,234 2,129
Deferred income taxes (833) (6,532)
Interest accretion on convertible zero coupon-subordinated notes - 3,489
Amortization of original issue discount on senior notes 38 -
Amortization of deferred financing costs 219 164
Loss on dispositions of property 28 14
Effects of changes on:
Receivables (65,117) (61,158)
Inventories (243,601) 93,835
Prepaid expenses and other assets (5,864) 1,785
Accounts payable, accrued liabilities and customer credit balances 190,386 (22,903)
Income taxes payable 8,257 14,064
--------- ---------
Net cash flows from operating activities (97,502) 41,715
--------- ---------
Investing Activities
====================
Short-term investments - (410)
Property acquisitions (5,536) (8,008)
Proceeds from dispositions of property 1,423 -
Acquisition of businesses, less cash acquired - (357,257)
Sale of discontinued operations - (4,880)
--------- ---------
Net cash flows from investing activities (4,113) (370,555)
--------- ---------
Financing Activities
====================
Proceeds from revolving bank loan 45,000 175,000
Repayment of other obligations (2,501) (5,608)
Redemption of convertible subordinated debentures (410) (45,564)
Shareowners' equity transactions:
Exercise of stock options 25 66
Cash dividends on Common Stock (3,645) (3,578)
--------- ---------
Net cash flows from financing activities 38,469 120,316
--------- ---------
Net decrease in cash and cash equivalents (63,146) (208,524)
Cash and cash equivalents at beginning of period 85,762 307,539
--------- ---------
Cash and cash equivalents at end of period $ 22,616 $ 99,015
========= =========
Supplemental Cash Flows Disclosures
===================================
Cash paid during the period for:
Interest $ 708 $ 3,534
Income taxes 588 2,073
<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 and Cash Flows are
presented for the three months ended December 31, 1993, exclusive of
September 1993 results, and for the three months ended November 30, 1992.
The Statement of Consolidated Earnings for the month of September 1993 is
as follows:
<TABLE>
<CAPTION>
One Month Ended
September 30, 1993
(in thousands
except share and
Statement of Consolidated Earnings (Unaudited) per share amount)
-----------------------------------------------------------------------------------
<S> <C>
Net sales and other revenues $598,147
--------
Costs and expenses:
Cost of sales 566,796
Distribution, selling, general and administrative expenses 27,175
--------
Total costs and expenses 593,971
--------
Operating earnings 4,176
Net interest expense 1,541
--------
Earnings before taxes on income 2,635
Taxes on income 1,140
--------
Earnings before cumulative effect of a change in accounting principle 1,495
Cumulative effect on prior years (as of September 1, 1993)
of a change in method of accounting for income taxes (8,713)
--------
Net loss $ (7,218)
========
Earnings (loss) per common and common equivalent share:
Earnings before cumulative effect of a change
in accounting principle $ .04
Cumulative effect on prior years (as of September 1, 1993)
of a change in method of accounting for income taxes (.24)
--------
Net loss $ (.20)
========
Weighted average number of common and common equivalent shares 36,496,019
==========
</TABLE>
6
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
During the month of September 1993, net cash and cash equivalents of $27.1
million and $6.2 million was provided by operations and financing
activities, respectively, and net cash and cash equivalents of $2.5 million
was used for investing activities. The resulting $30.8 million net
increase in cash and cash equivalents during the period increased the $55.0
million of cash and cash equivalents at September 1, 1993 to $85.8 million
at September 30, 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.
The tax effects of significant items comprising the Company's net deferred
tax liability as of September 1, 1993 are as follows ($000s):
<TABLE>
<CAPTION>
<S> <C>
Deferred tax liabilities:
Inventory basis difference due to LIFO
method and uniform capitalization $ 32,282
Accelerated depreciation 8,618
Other 3,160
--------
44,060
--------
Deferred tax assets:
Reserves for doubtful receivables (7,188)
Restructure charge not currently deductible (12,837)
Vacation pay not currently deductible (1,790)
Accrued liabilities not currently deductible (11,052)
Other (3,316)
--------
(36,183)
--------
Net deferred tax liability $ 7,877
========
</TABLE>
7
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
In the opinion of management of the Company, no valuation reserve related
to recorded deferred tax assets is deemed necessary.
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-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 $55.0 million at December 31, 1993. The maximum
outstanding borrowing under the Credit Agreement during the first quarter
ended December 31, 1993 was $167.0 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, an additional
$0.7 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 consisting of 103,100,492
shares consists of 3,000,000 shares of Preferred Stock, no par value,
issuable in series; 100,000,000 shares of Class A Common Stock, par value
$1.50 per share; and 100,492 shares of Class B Common Stock, par value
$1.50 per share, each share being currently convertible into 9.5285 shares
of Class A Common Stock.
On January 31, 1989, the shareowners of the Company approved a
recapitalization plan (the "Recapitalization Plan") which will eliminate
8
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
the Class B Common Stock and make the Company a "one share-one vote"
company not later than February 24, 1994. The Class B Common Stock will be
automatically converted upon the demise of Robert E. Martini, at February
24, 1994, or if the total number of shares of Class B Common Stock
outstanding falls below 100,000 shares, whichever event occurs first (the
"Conversion Date").
Robert E. Martini, Chairman of the Board and Chief Executive Officer of the
Company, is the majority owner of the Class B Common Stock and as such
majority owner, is entitled to elect the smallest number of Directors
constituting an absolute majority of the Board. The remaining Directors
are elected by the owners of Class A Common Stock. Owners of Class B
Common Stock and owners of Class A Common Stock vote as separate classes on
all other matters requiring shareowner approval. Upon the Conversion Date,
the Directors will be divided into three classes, each class to be nearly
equal to the other in number as possible in accordance with the Company's
By-Laws.
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 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 36,511,281 shares and
35,957,574 shares for the first quarter ended December 31, 1993 and
November 30, 1992, respectively. Fully diluted earnings per share are
based upon 36,525,644 shares for the first quarter ended December 31, 1993.
Fully diluted earnings per share are based upon 43,725,065 shares for the
quarter ended November 30, 1992 and assume conversion of the LYONs from the
issue date of November 16, 1989.
F. On September 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" ("SFAS 106") which requires the cost of postretirement
benefits other than pensions to be recognized on an accrual basis as
employees perform services to earn such benefits. The Company had
previously expensed postretirement benefits as paid. The estimated
transition obligation of the Company, which is the accumulated
postretirement benefit obligation at the date of adoption, amounts to
approximately $2.1 million. This obligation is being recognized over the
9
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
future service periods of employees, or 20 years. The impact of the
Company's adoption of SFAS 106 is to increase each future year's annual
benefits expense (assuming amortization of the transition obligation over
20 years) by an estimated $275,000.
G. 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 first quarter of fiscal 1994 are not necessarily
indicative of results to be expected for the full year.
H. The Company's Valencia, California division was damaged by the earthquake
of January 17, 1994. Although, as of February 14, 1994, the Company has
not fully assessed the amount of damage, it is expected that such amount
will not have a material effect on the Company's consolidated financial
position.
10
<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 December 31, 1993, net sales and other revenues increased
15%, while operating earnings and pre-tax earnings decreased 9% and 10%,
respectively, from the quarter ended November 30, 1992.
Of the 15% increase in net sales and other revenues for the quarter,
approximately 2% 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 13% of the net sales and other revenues increase
reflects internal growth within the Company's existing pharmaceutical business.
Primary earnings per share for the first quarter of fiscal 1994 decreased 15%
compared to the first quarter of the prior year, on an increase of 2% in the
average number of common and common equivalent shares outstanding. Fully
diluted earnings per share decreased 13% from the first quarter of the prior
year on a decrease of 16% in the average number of common and common equivalent
shares outstanding primarily due to the redemption of the LYONs in February
1993.
Cost of sales increased 16% from the first quarter a year ago, due mainly to the
Company's increased sales levels. The overall gross margin as a percent of net
sales and other revenues for the first quarter decreased as a result of a
decrease in the gross margins due to accelerated price competition and reduced
opportunities for investment buying. In the pharmaceutical distribution
industry, 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 the lack thereof, may influence the profitability
of the Company. The effect of reduction in price increases in the comparison of
the first quarter of fiscal 1994 and 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.
11
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
Distribution, selling, general and administrative expenses increased 4% over the
prior year quarter, while net sales and other revenues increased 15% over the
prior year period. These expenses decreased as a percent of net sales and other
revenues from 4.9% in the first quarter of fiscal 1993 to 4.4% in the first
quarter of fiscal 1994.
Net interest expense decreased from $5.0 million to $4.9 million for the first
quarter of fiscal 1994 primarily due to reduced borrowings under the Credit
Agreement and fewer outstanding 7% Debentures, partially offset by a reduced
lower cash investment base.
Financial Condition
- -------------------
At December 31, 1993, capitalization, (long-term obligations, excluding deferred
taxes and including the current portion, and shareowners' equity) consisted of
46% debt and 54% 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 primarily to greater opportunities for
investment buying of inventory. Borrowings under Credit Agreement were $55.0
million at December 31, 1993. There were no borrowings under the Credit
Agreement at August 31, 1993. Cash and cash equivalents of $22.6 million at
December 31, 1993 decreased from $55.0 million at August 31, 1993.
Effective September 1, 1993 the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"). This
Statement changed the Company's method of accounting for income taxes from the
deferred method to an asset and liability method. 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. See Note B of Notes to Consolidated Financial Statements.
On September 1, 1993, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" ("SFAS 106") which requires the cost of postretirement benefits other
than pensions to be recognized on an accrual basis as employees perform services
to earn such benefits. The Company had previously expensed postretirement
benefits as paid. The estimated transition obligation of the Company, which is
the accumulated postretirement benefit obligation at the date of adoption,
amounts to approximately $2.1 million. This obligation is being recognized over
12
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (Continued)
the future service periods of employees, or 20 years. The impact of the
Company's adoption of SFAS 106 is to increase each future year's annual benefits
expense (assuming amortization of the transition obligation over 20 years) by an
estimated $275,000.
Capital expenditures for the three months ended December 31, 1993 were $5.5
million and relate principally to the expansion of the Company into new
locations and 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 $3.6 million for both
the three months ended December 31, 1993 and three months ended November 30,
1992.
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.
13
<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. 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"). 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
14
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II - OTHER INFORMATION (Continued)
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 December 31, 1993, 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 collaterize 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. The 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.
15
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II - OTHER INFORMATION (Continued)
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 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 seven state antitrust
actions and one federal antitrust action (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 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 Court entitled Boynoff v. Medco, et. al.,
Case No. 953907. On August 12, 1993, the Company was named as a defendant along
with the same six defendants in the Boynoff action in a federal class action
filed in the United States District Court for the Northern District of
California entitled Bacon-Normandi Corporation v. Medco, et. al., Case No.
C-93-2938SBA. On August 24, 1993, the Company was named as a defendant along
with the same six defendants in the Boynoff and Bacon-Normandi actions in a
state lawsuit filed in San Francisco Superior Court entitled Chang v. Medco,
Case No. 954389. On January 4, 1994, the Company was named as a defendant along
with the same defendants in the Boynoff, Bacon-Normandi and Chang actions in a
state lawsuit filed in San Francisco Superior Court entitled Michael Goldstein
v. Medco, et.al., Case No. 953866. On January 20, 1994, The Company was named
as a defendant along with seven manufacturers of pharmaceuticals in a state
lawsuit file in Monterey Superior Court entitled Donald J. Bartolo v. American
Home Products Corporation, et.al., Case No. 98845. On January 28, 1994, the
Company was named as a defendant along with the same defendants in the Bartolo
actions in a state lawsuit filed in Riverside Superior Court entitled Charles
Leiter, Morton Roy Leiter and Lionel Leiter v. American Home Products Corp., et.
al., Case No. CV737815. On May 20, 1994, the Company was named as a defendant,
along with five other defendants, 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.
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 defendant
jointly and separately engaged in secret rebating, kickbacks, and price
discrimination between plaintiffs and plaintiffs' alleged competitors who sell
pharmaceuticals to patients or retail customers. Plaintiffs in all actions seek
injunctive relief and treble damages.
16
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
PART II - OTHER INFORMATION (Continued)
The federal complaint alleges that the Company and six other defendants violated
the Robinson-Patman Act and similarly alleges that the defendants have engaged
in secret rebates, kickbacks and price discrimination between the plaintiff and
its competitors. Plaintiff seeks injunctive relief and treble damages in an
amount to be determined at trial.
The Company believes that the California Complaints against it are without merit
and intends to defend them vigorously.
In November 1993, the Company, along with 24 manufacturers and six other drug
wholesalers, was named as a defendant in eight federal class action lawsuits
("New York Complaints") filed in the Southern District of New York. The
plaintiffs in all eight New York Complaints are independent retail pharmacies.
These lawsuits all allege claims under Section 1 of the Sherman Act on behalf of
a class of all drug stores in the United States which purchased pharmaceuticals
from any of the defendants in the last four years. The New York Complaints
assert that these manufacturers conspired with the wholesalers to maintain
supracompetitive prices for the sale of pharmaceuticals to independent drug
stores and to offer discounted prices to hospitals, mail orders and other
favored buyers. These lawsuits seek injunctive relief as well as treble
damages. No motion, practice or discovery has commenced in these lawsuits. The
Company believes that the New York Complaints against it are without merit and
intends to defend them vigorously.
The Company is involved in various additional items of litigation. Although the
amount of liability at December 31, 1993 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.
ITEM 5. OTHER INFORMATION
On February 8, 1994, the Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of Class A Common Stock,
par value $1.50 per share, of the Company and 9.5285 Rights for each outstanding
share of Class B Common Stock, par value $1.50 per share, of the Company, to
stockholders of record at the close of business on February 18, 1994. Each
Right entitles the registered holder to purchase from the Company a unit
consisting of one one-hundredth of a share of Series A Junior Participating
Preferred Stock, without par value, at a Purchase Price of $80.00 per Unit,
subject to adjustment. The description and terms of the Rights are set forth in
a Rights Agreement, dated as of February 8, 1994, between the Company and
Chemical Trust Company of California, as Rights Agents, a copy of which is
attached hereto as Exhibit 99(f) and is incorporated herein by reference.
17
<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 and 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.
*10(c) Agreement among Emil P. Martini, Jr., Robert E. Martini and Bergen
Brunswig Corporation (the "Martini Agreement") dated February 24, 1989
is set forth as Exhibit 28.2 in the Company's Current Report on Form
8-K dated February 24, 1989.
*10(d) Amendment to Martini Agreement dated April 18, 1991 is set forth as
Exhibit 2(b) in the Company's Quarterly Report on Form 10-Q for the
quarter ended May 31, 1991.
11 Computation of primary earnings per share and computation of earnings
per share assuming full dilution for the first quarter ended December
31, 1993 and November 30, 1992.
18
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS (Continued)
*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.
*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.
*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:
On November 12, 1993, a report on Form 8-K, dated November 5, 1993 was
filed reporting under Item 8, the change in the Company's fiscal year
effective October 1, 1993, to include the twelve-month period from October
1, 1993 through September 30, 1994 and each twelve-month period thereafter.
19
<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)
February 10, 1994
20
<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 and
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.
*10(c) Agreement among Emil P. Martini, Jr., Robert E. Martini and
Bergen Brunswig Corporation (the "Martini Agreement") dated
February 24, 1989 is set forth as Exhibit 28.2 in the
Company's Current Report on Form 8-K dated February 24,
1989.
*10(d) Amendment to Martini Agreement dated April 18, 1991 is set
forth as Exhibit 2(b) in the Company's Quarterly Report on
Form 10-Q for the quarter ended May 31, 1991.
21
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX TO EXHIBITS (Continued)
-----------------
EXHIBIT NO. PAGE NO.
- ----------- --------
11 Computation of primary earnings per share and 23
computation of earnings per share assuming full dilution for
the first quarter ended December 31, 1993 and November 30,
1992.
*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.
*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 25
September 1, 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.
22
<TABLE>
EXHIBIT 11
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND NOVEMBER 30, 1992
(in thousands except share and per share amounts)
<CAPTION>
---------------------------
December 31, November 30,
1993 1992
---------------------------
(Unaudited)
<S> <C> <C>
DATA AS TO EARNINGS - NET EARNINGS $ 10,331 $ 11,928
=========== ===========
DATA AS TO NUMBER OF COMMON AND COMMON
EQUIVALENT SHARES:
Weighted average number of shares oustanding:
Class A Common Stock 35,475,062 34,830,913
Class B Common Stock 100,492 100,492
Shares of Class A Common Stock to be issued from
assumed conversion of remainder of Class B Stock 857,046 857,046
Common equivalent shares assuming issuance of shares
represented by outstanding employees' stock options:
Additional shares assumed to be issued 505,999 505,065
Reduction of such additional shares assuming proceeds invested
in treasury stock (at average market prices during each period) (427,318) (335,942)
----------- -----------
Average number of common and common
equivalent shares outstanding 36,511,281 35,957,574
=========== ===========
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARES OUTSTANDING $ .28 $ .33
=========== ===========
<FN>
Reference is made to Notes D and E in the accompanying Notes to Consolidated Financial Statements.
23
</TABLE>
<PAGE>
<TABLE>
EXHIBIT 11.1
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1993 AND NOVEMBER 30, 1992
(in thousands except share and per share amounts)
<CAPTION>
----------------------------
December 31, November 30,
1993 1992
----------------------------
(Unaudited)
<S> <C> <C>
NET EARNINGS APPLICABLE TO COMMON AND COMMON
EQUIVALENT SHARES (see Exhibit 11) $ 10,331 $ 11,928
Interest on Convertible Zero Coupon-Subordinated Notes
(6-3/4% yield to maturity), net of tax effect - 2,110
----------- -----------
Net earnings applicable to common and common
equivalent shares assuming full dilution $ 10,331 $ 14,038
=========== ===========
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) 36,511,281 35,957,574
Additional shares of Class A Common Stock resulting from
assumed conversion of Convertible Zero Coupon-Subordinated
Notes (6 3/4% yield to maturity) - 7,767,491
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) 14,363 -
----------- -----------
Average number of common and common equivalent
shares outstanding assuming full dilution 36,525,644 43,725,065
=========== ===========
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE OUTSTANDING ASSUMING FULL DILUTION $ .28 $ .32
=========== ===========
<FN>
Reference is made to Notes D and E in the accompanying Notes to Consolidated Financial Statements.
24
</TABLE>
Exhibit 99(e)
Composite Copy
AMENDMENT NO. 4
---------------
THIS AMENDMENT NO. 4 (this "Amendment"), dated as of September 1, 1993 (the
"Amendment Effective Date"), by and among BERGEN BRUNSWIG CORPORATION, a New
Jersey corporation (the "Parent"), BERGEN BRUNSWIG DRUG COMPANY, a California
corporation (the "Borrower"), the undersigned Lenders, and CONTINENTAL BANK
N.A., as Agent for the Lenders,
W I T N E S S E S:
WHEREAS, the parties to this Amendment are parties to that certain Credit
Agreement, dated as of September 15, 1992 (as in effect immediately prior to the
Amendment Effective Date, the "Existing Credit Agreement" and, as amended by
this Amendment, the "Credit Agreement"); and
WHEREAS, the Parent and the Borrower have requested that the Lenders amend
the Existing Credit Agreement in the manner set forth herein; and
WHEREAS, pursuant to Section 10.1 of the Credit Agreement, such amendments
require the consent of the Required Lenders; and
WHEREAS, the undersigned Lenders have consented to such amendments on the
terms and conditions set forth herein,
NOW, THEREFORE, in consideration of the premises and the mutual agreements
contained herein, the parties hereto, intending legally to be bound hereby,
agree as follows:
SECTION 1. Defined Terms; Interpretation. This Amendment is a Credit
Document and, accordingly, Article I of the Credit Agreement applies hereto.
SECTION 2. Amendments.
The Existing Credit Agreement is hereby amended:
(a) on and from the Amendment Effective Date, by amending the table
contained in Section 7.2.3(b) of the Existing Credit Agreement to read in
its entirety as follows:
15109069.5 - 92028133
25
<PAGE>
<TABLE>
<CAPTION>
Period
------
From To Percentage
---- -- ----------
<S> <C> <C>
Effective Date September 1, 1993 60%
September 1, 1993 September 30, 1994
and thereafter 55%
</TABLE>
and by amending Section 7.2.3(c) of the Existing Credit Agreement to read
in its entirety as follows:
(c) its Interest Coverage Ratio on the last day of (i) any Fiscal
Quarter ending on or before September 30, 1994 for the four (4) Fiscal
Quarters then ended to be less than 2.75:1.00 and (ii) any Fiscal Quarter
ending after September 30, 1994 for any four(4) Fiscal Quarters then ended
to be less than 3.0:1.0;
(b) on and from the Amendment Effective Date for purposes of determining
the Interest Coverage Ratio under Section 7.2.3(c) of the Credit Agreement, by
adding to EBIT for any period including the Fiscal Quarter ended August 31, 1993
an amount equal to the aggregate non-cash restructuring charges in an aggregate
amount not to exceed $22,000,000 deducted in determining the consolidated
earnings of the Parent and its Subsidiaries in such Fiscal Quarter;
(c) on and from the Amendment Effective Date, by amending the definition
of "Fiscal Year" contained in Schedule I to the Existing Credit Agreement to
read in its entirety as follows:
"Fiscal Year" means any period of twelve consecutive calendar months
ending on September 30; references to a Fiscal Year with a number
corresponding to any calendar year (e.g. the "1992 Fiscal Year") refer to
the Fiscal Year ending on the September 30 occurring during such calendar
year; and
(d) on and from the Amendment Effective Date, for purposes of the Fiscal
Quarter and Fiscal Year beginning with September 1, 1993, such Fiscal Quarter or
Fiscal Year shall be deemed to consist of four (4) months and thirteen (13)
months, respectively.
15109069.5 - 92028133
26
<PAGE>
SECTION 3. Representations and Warranties.
To induce the Lenders to enter into this Amendment, the Parent and the
Borrower represent and warrant to the Agent and the Lenders as follows:
(a) the representations and warranties of the Parent and the Borrower
contained in Article VI of the Credit Agreement (except those solely
relating to an earlier date) are true and correct on the date hereof and on
the Amendment Effective Date; and
(b) no Default has occurred and is continuing on the date hereof.
SECTION 4. Effectiveness.
This Amendment shall be and become effective on and from the date hereof if
this Amendment has been dully executed and delivered by the Parent and the
Borrower to the Agent and the Agent has received evidence satisfactory to it of
the due execution and delivery hereof by the Required Lenders.
SECTION 5. Miscellaneous.
(a) Except as amended hereby, the Existing Credit Agreement and each
other Credit Document remains in full force and effect and, except as
otherwise set forth herein, the Parent and the Borrower hereby ratify and
confirm their respective representations, warranties, covenants and
agreements contained in, and liabilities under, the Credit Agreement and
the other Credit Documents.
(b) On and from the Amendment Effective Date, reference to the
Existing Credit Agreement in any Credit Document shall be deemed to include
a reference to the Credit Agreement, whether or not reference is made to
this Amendment.
(c) This Amendment may be executed in counterparts, each of which
shall be deemed an original but all of which when taken together shall
constitute a single agreement.
15109069.5 - 92028133
27
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Amendment to be duly
executed and delivered by their respective representatives thereunto duly
authorized as of the date first hereinbefore appearing.
BERGEN BRUNSWIG CORPORATION
By /s/ Michael W. Fipps
-------------------------------------
Its V.P., Treasurer
---------------------------------
BERGEN BRUNSWIG DRUG COMPANY
By /s/ Michael W. Fipps
-------------------------------------
Its V.P., Treasurer
---------------------------------
CONTINENTAL BANK N.A., individually
and as Agent
By /s/ Wyatt Ritchie
-------------------------------------
Its Vice President
---------------------------------
CHEMICAL BANK
By /s/ Robert Parker
-------------------------------------
Its Vice President
---------------------------------
CREDIT SUISSE
By /s/ Sarah U. Johnston
-------------------------------------
Its Associate
---------------------------------
By /s/ Andre G Germann
-------------------------------------
Its Associate
---------------------------------
15109069.5 - 92028133
28
<PAGE>
THE TORONTO-DOMINION BANK
By /s/ Jano Mott
-------------------------------------
Its Manager Credit Admin
---------------------------------
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION
By /s/ Yvonne C. Dennis
-------------------------------------
Its Vice President
---------------------------------
BANK OF HAWAII
By /s/ Cynthia L. Davis
-------------------------------------
Its Vice President
---------------------------------
THE BANK OF NEW YORK
By /s/ Lisa Brown
-------------------------------------
Its Vice President
---------------------------------
THE BANK OF NOVA SCOTIA
By /s/ James S. York
-------------------------------------
Its Vice President
---------------------------------
15109069.5 - 92028133
29
<PAGE>
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY
By /s/ Yasuji Ikawa
-------------------------------------
Its
---------------------------------
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., LOS ANGELES AGENCY
By /s/ Motokazu Yematzu
-------------------------------------
Its Deputy General Manager
---------------------------------
TRUST COMPANY BANK
By /s/ Frank O. Bennett
-------------------------------------
Its Vice President
---------------------------------
By /s/ Kim Coleman
-------------------------------------
Its Banking Officer
---------------------------------
WACHOVIA BANK OF GEORGIA, N.A.
By /s/ Jerry Katon
-------------------------------------
Its Assistant Vice President
---------------------------------
15109069.5 - 92028133
30
<PAGE>
CREDIT LYONNAIS CAYMAN ISLAND BRANCH
By /s/ Francois Coussot
-------------------------------------
Its Authorized Signatory
---------------------------------
CREDIT LYONNAIS LOS ANGELES BRANCH
By /s/ Francois Coussot
-------------------------------------
Its Vice President
---------------------------------
PITTSBURGH NATIONAL BANK
By /s/ Patrick Drum
-------------------------------------
Its Commercial Banking Officer
---------------------------------
SOCIETE GENERALE
By /s/ George Chen
-------------------------------------
Its Vice President
---------------------------------
WESTDEUTSCHE LANDESBANK
GIROZENTRALE
By /s/ Jeffrey Hilsgen
-------------------------------------
Its Vice President
---------------------------------
By /s/ Robert J. Nolan
-------------------------------------
Its Associate
---------------------------------
15109069.5 - 92028133
31
