TOTAL NUMBER OF
PAGES INCLUDED IN
THIS REPORT IS 36.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of Earliest Event Reported):
APRIL 24, 1995
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
--------------
EXHIBIT INDEX FOUND ON PAGE 2.
1
<PAGE>
Item 5. Other Events.
------------
In response to a request for additional financial information relative to
the Bergen Brunswig Corporation and subsidiaries (the "Company") 1994 fiscal
year, Exhibits 99.1 and 99.2 are attached hereto and are incorporated herein by
reference.
On January 26, 1995, the Company declared a 5% stock dividend on the
Corporation's Class A Common Stock payable March 1, 1995 to shareowners of
record on February 6, 1995. Average shares outstanding and all per share
amounts included in the accompanying "Management's Discussion and Analysis of
Financial Condition and Results of Operations" ("M,D&A") and consolidated
financial statements ("Financial Statements") and notes to consolidated
financial statements ("Notes") are based on the increased numbers of shares
giving retroactive effect to the stock dividend.
With the exception of the first paragraph of Exhibit 99.1 and adjustments
relating to the above-mentioned stock dividend, the text of Exhibit 99.1 is
identical to the text of the Company's M,D&A as set forth in the Company's
Annual Report on Form 10-K for the year ended September 30, 1994 (the "10-K").
The Financial Statements, Notes and Independent Auditors' Report ("Report")
set forth in Exhibit 99.2 are identical to the comparable items in the 10-K,
except that (i) subsequent event Note 14 has been added and Note 5 has been
revised to refer to the above-mentioned stock dividend, (ii) share and per share
data in the Financial Statements and Notes have been revised to reflect the
above-mentioned stock dividend, (iii) the Statements of Consolidated Earnings
and Retained Earnings and the Statements of Consolidated Cash Flows have been
revised to present information for the one month ended September 30, 1993 and
certain conforming changes with respect to such one-month period have been made
in the Notes and Report and (iv) certain date references have been added in the
Report. Results of operations and certain cash flow information for the one
month ended September 30, 1993 were previously disclosed by the Company in Note
1 of Notes to Consolidated Financial Statements set forth in the Form 10-K.
Item 7(c). Exhibits.
--------
Page
----
99.1 Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
2
<PAGE>
Item 7(c). Exhibits(Continued).
--------
Page
----
99.2 Consolidated Financial Statements of the Company
as follows:
(a) Statements of Consolidated Earnings and
Retained Earnings for the Year Ended
September 30, 1994, for the One Month
Ended September 30, 1993 and for the
Years Ended August 31, 1993 and 1992 12
(b) Consolidated Balance Sheets, September
30, 1994 and August 31, 1993 13
(c) Statements of Consolidated Cash Flows for
the Year Ended September 30, 1994, for
the One Month Ended September 30, 1993
and for the Years Ended August 31, 1993
and 1992 15
(d) Notes to Consolidated Financial Statements 16
(e) Independent Auditors' Report 36
3
<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 hereunto duly authorized.
BERGEN BRUNSWIG CORPORATION
By: /s/ Neil F. Dimick
--------------------------------------
Neil F. Dimick
Executive Vice President,
Chief Financial Officer
Date: April 24, 1995
4
Exhibit 99.1
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations 1994 Compared with 1993.
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 discussion which follows compares the results of operations for the
1994 fiscal year (October 1, 1993 to September 30, 1994) to those for the year
ended August 31, 1993.
Net sales and other revenues from continuing operations in fiscal 1994
were 10% higher than 1993 while operating earnings and pre-tax earnings from
continuing operations showed increases of 63% and 103%, respectively. Major
influences which impacted operating and pre-tax earnings from continuing
operations for 1994 were a charge of $1.4 million for the uninsured portion of
an earthquake loss incurred in the second quarter of fiscal 1994, and a gain
recognized from the sale of investment securities of $5.1 million in the third
and fourth quarters of fiscal 1994. See Note 12 of Notes to Consolidated
Financial Statements. Major influences which impacted operating earnings and
pre-tax earnings from continuing operations for 1993 were the unusual provisions
totaling $35.5 million for the restructuring plan announced in September 1993
and the costs associated with the termination of the bid for Office Commercial
Pharmaceutique recorded in the fourth quarter of fiscal 1993.
Of the 10% increase in net sales and other revenues, approximately 1%
in the aggregate is attributable to the acquisitions of Southeastern Hospital
Supply Corporation ("Southeastern") in April 1994, Dr. T.C. Smith Company
("T.C. Smith") in November 1992 and Healthcare Distributors of Indiana, Inc.
("HDI") in January 1993. Approximately 9% of the net sales and other revenues
increase reflects internal growth within the Company's existing pharmaceutical
distribution business.
Primary and fully diluted earnings per share from continuing operations
both increased 93% compared to 1993. The average number of common and common
equivalent shares outstanding increased 1% and decreased 7% for primary and
fully diluted earnings per share computations, respectively. The uninsured
earthquake-related charge and investment gain for 1994 referred to above were
equivalent to $0.06 per fully diluted share from continuing operations. The
unusual charge and costs referred to above for 1993 were equivalent to $0.56 per
fully diluted share from continuing operations. See Note 12 of Notes to
Consolidated Financial Statements. The decrease in the average number of common
and common equivalent shares used for computing fully diluted earnings per share
in 1994 was primarily due to the redemption of the Company's Liquid Yield
OptionTM Notes ("LYONs") in February 1993.
5
<PAGE>
Cost of sales increased 10% compared to 1993 due mainly to the
Company's increased sales levels. The overall gross margin as a percentage of
net sales and other revenues decreased due to continued 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 lack thereof, does influence the profitability of
the Company. The effect of reduction in price increases in the comparison of
fiscal 1994 to 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
fiscal year 1995 because of continued price competition influenced by large
buying groups, reduced opportunities for investment buying and continuing
political pressures on the health care industry. The Company expects that these
pressures on margins may be offset to some extent by continued reductions in
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 in 1994 and the unusual charges in 1993, decreased
9% over 1993, while net sales and other revenues increased 10% over the prior
year. These expenses decreased as a percentage of net sales and other revenues
from 5.3% in fiscal 1993 to 4.4% in fiscal 1994. The decrease in the current
year reflects operating efficiencies achieved 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 divisions into larger regional distribution centers.
Net interest expense, excluding the aforementioned unusual investment
gain, increased from $22.7 million in 1993 to $23.0 million in 1994, primarily
due to a lower cash investment base in 1994, partially offset by decreased
interest on borrowings under the Credit Agreement.
The extraordinary after-tax loss for fiscal 1993 of $2.6 million (net
of the related income tax benefit of $1.8 million) was recorded in connection
with the redemption of the LYONs due 2004 as reported in Note 2 of Notes to
Consolidated Financial Statements.
The effective tax rate for 1994 increased to 42.80% from 40.72% in 1993
reflecting, primarily, higher non-deductible goodwill amortization and lower
non-taxable investment income in fiscal 1994.
6
<PAGE>
In May 1993, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities," which will require the Company to classify its
investments in debt securities into three categories and to account for them as
follows: (1) debt securities that the Company has the intent and ability to hold
to maturity will be classified as "held-to-maturity securities" and reported at
amortized cost; (2) debt securities that are bought and held principally for the
purpose of selling them in the near term will be classified as "trading
securities" and reported at fair value, with unrealized gains and losses
included in earnings; and (3) debt securities not classified as held-to-maturity
securities or trading securities will be classified as "available for sale
securities" and reported at fair value, with unrealized gains and losses
excluded from earnings and reported in a separate component of shareowners'
equity. This Statement became effective for the Company on October 1, 1994. It
is expected that implementation will not result in any material change in the
Company's consolidated financial position or results of operations.
Inflation, while not as significant as in previous years, is a factor
and the Company is continually seeking ways to manage its impact. The Company
uses the LIFO method of accounting for inventory which reduces the effects of
inflation by reporting the cost of products sold at approximate current cost.
Management of the Company has successfully limited the impact of inflation on
operating expense by improving productivity and increasing sales volume.
Results of Operations 1993 Compared with 1992.
Net sales and other revenues from continuing operations in fiscal 1993
were 35% higher than 1992 while operating earnings and pre-tax earnings from
continuing operations showed decreases of 21% and 42%, respectively. Major
influences which impacted operating earnings and pre-tax earnings from
continuing operations for 1993 were the unusual provisions totaling $35.5
million for the restructuring plan announced in September 1993 and the costs
associated with the termination of the bid for Office Commercial Pharmaceutique
recorded in the fourth quarter of fiscal 1993.
Of the 35% increase in net sales and other revenues, approximately 22%
is attributable to the acquisition of Durr-Fillauer Medical, Inc. ("Durr") in
September 1992 and approximately 6% in the aggregate is attributable to the
acquisition of substantially all of the pharmaceutical distribution business of
Owens & Minor, Inc., in February 1992 and the acquisitions of T.C. Smith and HDI
in November 1992 and January 1993, respectively. Approximately 7% of the net
sales and other revenues increase reflects internal growth within the Company's
existing pharmaceutical distribution business.
7
<PAGE>
Primary and fully diluted earnings per share from continuing operations
decreased 44% and 42%, respectively, compared to 1992 on decreases of 4% and
12%, respectively, in the average number of common and common equivalent shares
outstanding. The unusual charge and costs referred to above were equivalent to
$0.56 per fully diluted share from continuing operations. See Note 12 of Notes
to Consolidated Financial Statements. The decrease in the average number of
common and common equivalent shares used for computing fully diluted earnings
per share in 1993 was primarily due to the redemption of the Company's LYONs in
February 1993.
A major influence which impacted operating earnings and pre-tax
earnings from continuing operations for 1992 was a provision of $8.0 million for
probable losses recorded in the first quarter of fiscal 1992 in connection with
credit extended to certain customers. This charge was equivalent to $0.11 per
fully diluted share from continuing operations.
Cost of sales increased 35% compared to 1992 due mainly to the
Company's increased sales levels. The overall gross margin as a percentage of
net sales and other revenues increased as a result of including the higher
margins of Durr's medical supply business, partially offset by a decline in the
Company's pharmaceutical distribution's gross margins. The decline in the
Company's pharmaceutical distribution's gross margins was 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, does influence the profitability of the Company. The effect of
reduction in price increases in the comparison of fiscal 1993 to fiscal 1992 was
partially offset by the use of the LIFO method of accounting for inventory
costs.
Distribution, selling, general and administrative expenses including
the restructuring charge increased 59% over 1992 while net sales and other
revenues increased 35% over the prior year. These expenses increased as a
percentage of net sales and other revenues from 4.5% in 1992 to 5.3% in 1993.
Had the Company not recorded the above-mentioned $35.5 million pre-tax
provisions in the fourth quarter of fiscal 1993, distribution, selling, general
and administrative expenses during the current year would have been 4.8% of net
sales and other revenues. Had the Company not recorded the above-mentioned $8.0
million pre-tax bad debt provision in the first quarter of fiscal 1992,
distribution, selling, general and administrative expenses during the prior year
would have been 4.4% of net sales and other revenues. The comparable figure of
4.8% in fiscal 1993 reflects a higher rate of distribution, selling, general and
administrative expenses associated with Durr's medical supply business and $6.9
million of expenses attributable to the amortization of goodwill resulting from
8
<PAGE>
the Company's acquisition of Durr, partially offset by improvements in operating
efficiencies.
Net interest expense increased from $6.9 million in 1992 to $22.7
million in 1993, primarily due to interest on borrowings under the Credit
Agreement as well as a lower cash investment base and lower short-term
investment rates in 1993.
Earnings from discontinued operations after taxes on income were $3.9
million in fiscal 1992 and relate to the discontinuance of Commtron Corporation
("Commtron"), the Company's former Home Entertainment business segment, as
reported in Note 10 of Notes to Consolidated Financial Statements. The gain on
disposition of Commtron of $4.0 million was recorded in the fourth quarter of
fiscal 1992.
The extraordinary after-tax loss for fiscal 1993 of $2.6 million (net
of the related income tax benefit of $1.8 million) was recorded in connection
with the redemption of the LYONs due 2004 as reported in Note 2 of Notes to
Consolidated Financial Statements.
The effective tax rate for 1993 increased to 40.72% from 36.49% in 1992
reflecting, primarily, higher non-deductible goodwill amortization and lower
non-taxable investment income in fiscal 1993.
During fiscal 1993, the Company adopted Statement of Financial
Accounting Standards No. 107, "Disclosures about Fair Value of Financial
Instruments," which requires disclosure of fair value of financial instruments
recognized or not recognized in the balance sheet. See Note 13 of Notes to
Consolidated Financial Statements.
Financial Condition.
At September 30, 1994, capitalization consisted of 41% debt and 59%
shareowners' equity, the same as at August 31, 1993. On October 7, 1994, the
Credit Agreement was amended to, among other things, increase the maximum
borrowing to $350 million and to extend the maturity date to September 15, 1997.
Borrowings outstanding under the Credit Agreement were $40.0 million at
September 30, 1994. There were no borrowings outstanding under the Credit
Agreement at August 31, 1993. Cash and cash equivalents of $5.3 million at
September 30, 1994 decreased from $55.0 million at August 31, 1993.
On April 29, 1994, the Company acquired Southeastern, a medical supply
distributor. The transaction included issuance of 784,793 shares, previously
held as Treasury shares, of the Company's Class A Common Stock and the
assumption of certain liabilities. See Note 4 of Notes to Consolidated
Financial Statements.
9
<PAGE>
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 $0.23 per share, recorded in September 1993. See
Notes 1 and 7 of Notes to Consolidated Financial Statements.
On September 1, 1993, the Company also 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, amounted to approximately $2.1 million. This obligation is being
recognized over 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 $275,000.
During 1994, the Company incurred costs of approximately $13.1 million
related to the restructuring plan announced in September 1993.
Capital expenditures for 1994 were $24.9 million and related
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. Capital expenditures for
1995 are estimated to be approximately $27 million and will include additional
investments in data processing and automated warehouse equipment as well as
investments related to the consolidation and relocation of existing locations.
On February 24, 1994, 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.
Dividends on Class A and Class B Common Stock amounted to $17.0 million
in 1994 compared to $14.5 million in 1993, and $14.9 million in 1992,
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.
While the Company has no policy with regard to the payment of dividends, during
the three-year period ended September 30, 1994, dividends have averaged 34% of
10
<PAGE>
earnings from continuing operations.
The Company's working capital increased from $186.1 million at August
31, 1993 to $254.3 million at September 30, 1994 and represented 13% of total
assets at September 30, 1994. The Company's current ratio was 1.21 at September
30, 1994, compared to 1.18 at August 31, 1993. Trade receivables outstanding
were 19 days for both 1994 and 1993. The inventory turnover rate on a FIFO
basis was 6.9 times for 1994 and 7.5 times for 1993.
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.
11
<TABLE>
Exhibit 99.2(a)
FINANCIAL STATEMENTS
STATEMENTS OF CONSOLIDATED EARNINGS AND RETAINED EARNINGS
<CAPTION>
===================================================================================================================
Years Ended
Year Ended Month Ended August 31,
September 30, September 30, ------------------------
Dollars in thousands, except for per share amounts 1994 1993 1993 1992
===================================================================================================================
<S> <C> <C> <C> <C>
CONSOLIDATED EARNINGS
Net sales and other revenues $7,483,801 $598,147 $6,823,552 $5,048,309
-----------------------------------------------------
Costs and expenses:
Cost of sales 7,036,249 566,796 6,388,744 4,729,038
Distribution, selling, general and administrative expenses 331,530 27,175 330,825 228,857
Restructuring charge - - 33,000 -
-----------------------------------------------------
Total costs and expenses 7,367,779 593,971 6,752,569 4,957,895
-----------------------------------------------------
Operating earnings from continuing operations 116,022 4,176 70,983 90,414
Net interest expense 17,910 1,541 22,723 6,944
-----------------------------------------------------
Earnings from continuing operations before taxes on income 98,112 2,635 48,260 83,470
Taxes on income from continuing operations 41,992 1,140 19,653 30,458
-----------------------------------------------------
Earnings from continuing operations 56,120 1,495 28,607 53,012
Discontinued operations, net of taxes on income:
Earnings from operations - - - 3,876
Gain on disposition - - - 3,976
-----------------------------------------------------
Earnings before cumulative effect of a change
in accounting principle 56,120 1,495 28,607 60,864
Cumulative effect on prior years (as of September 1, 1993)
of a change in method of accounting for income taxes - (8,713) - -
-----------------------------------------------------
Earnings (loss) before extraordinary loss 56,120 (7,218) 28,607 60,864
Extraordinary loss from early extinguishment of debt,
net of income tax benefit of $1,786 - - (2,570) -
-----------------------------------------------------
Net earnings (loss) $ 56,120 $ (7,218) $ 26,037 $ 60,864
=====================================================
EARNINGS (LOSS) PER COMMON AND
COMMON EQUIVALENT SHARE
Primary:
Continuing operations $ 1.45 $ 0.04 $ 0.75 $ 1.34
Discontinued operations:
Earnings from operations - - - 0.10
Gain on disposition - - - 0.10
-----------------------------------------------------
Earnings before cumulative effect of
accounting change 1.45 0.04 0.75 1.54
Cumulative effect of accounting change - (0.23) - -
-----------------------------------------------------
Earnings (loss) before extraordinary loss 1.45 (0.19) 0.75 1.54
Extraordinary loss - - (0.07) -
-----------------------------------------------------
Net earnings (loss) $ 1.45 $ (0.19) $ 0.68 $ 1.54
=====================================================
Fully diluted:
Continuing operations $ 1.45 $ 0.04 $ 0.75 $ 1.29
Discontinued operations:
Earnings from operations - - - 0.08
Gain on disposition - - - 0.09
-----------------------------------------------------
Earnings before cumulative effect of
accounting change 1.45 0.04 0.75 1.46
Cumulative effect of accounting change - (0.23) - -
-----------------------------------------------------
Earnings (loss) before extraordinary loss 1.45 (0.19) 0.75 1.46
Extraordinary loss - - (0.07) -
-----------------------------------------------------
Net earnings (loss) $ 1.45 $ (0.19) $ 0.68 $ 1.46
=====================================================
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $ 342,166 $ 349,384 $ 337,857 $ 291,865
Net earnings (loss) 56,120 (7,218) 26,037 60,864
Excess cost of Treasury shares issued for an acquisition (2,457) - - -
Cash dividends on Class A Common Stock ($0.438 in 1994,
$0.380 in 1993 and $0.380 in 1992 per share) (16,751) - (14,127) (14,489)
Cash dividends on Class B Common Stock ($1.996 in 1994,
$3.621 in 1993 and $3.621 in 1992 per share) (211) - (383) (383)
-----------------------------------------------------
Balance at end of period $ 378,867 $ 342,166 $ 349,384 $ 337,857
=====================================================
===================================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
12
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.2(b)
CONSOLIDATED BALANCE SHEETS
Dollars in thousands
<CAPTION>
=======================================================================================
September 30, August 31,
1994 1993
=======================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 5,264 $ 54,960
Accounts and notes receivable, less allowance for
doubtful receivables: $18,423 at September 30,
1994; $14,539 at August 31, 1993 523,202 471,248
Inventories 904,809 684,234
Income taxes receivable 1,788 7,925
Deferred income taxes - 6,151
Prepaid expenses 10,305 6,310
---------------------------
Total current assets 1,445,368 1,230,828
---------------------------
Property - at cost:
Land 10,923 11,287
Buildings and leasehold improvements 77,107 71,187
Equipment and fixtures 127,037 110,303
---------------------------
Total property 215,067 192,777
Less accumulated depreciation and amortization 78,725 66,079
---------------------------
Property - net 136,342 126,698
---------------------------
Other assets:
Excess of cost over net assets of acquired companies 322,374 324,409
Other investments 22,063 25,221
Noncurrent receivables 9,384 10,438
Deferred charges and other assets 59,526 54,743
---------------------------
Total other assets 413,347 414,811
---------------------------
Total assets $1,995,057 $1,772,337
===========================
=======================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
13
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.2(b)
CONSOLIDATED BALANCE SHEETS
Dollars in thousands
<CAPTION>
=======================================================================================
September 30, August 31,
1994 1993
=======================================================================================
<S> <C> <C>
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $ 995,030 $ 876,584
Accrued liabilities 111,043 94,051
Customer credit balances 82,787 71,992
Income taxes payable 945 -
Deferred income taxes 1,307 -
Current portion of long-term obligations - 2,129
---------------------------
Total current liabilities 1,191,112 1,044,756
---------------------------
Long-term obligations:
7 3/8% senior notes 149,078 148,958
5 5/8% senior notes 99,926 99,864
Revolving bank loan payable 40,000 -
7% convertible subordinated debentures 20,934 23,146
6 7/8% exchangeable subordinated debentures 10,575 10,905
Deferred income taxes 3,903 12,553
Other 17,678 14,355
---------------------------
Total long-term obligations 342,094 309,781
---------------------------
Shareowners' equity:
Capital stock:
Preferred - Authorized 3,000,000 shares; issued: none - -
Class A Common - Authorized 100,000,000 shares;
issued: 1994, 44,058,659 shares; 1993, 43,026,082 66,088 64,539
Class B Common - Convertible, 1993, Authorized
and issued: 100,492 shares - 151
Paid-in capital 155,079 156,312
Retained earnings 378,867 349,384
---------------------------
Total 600,034 570,386
Less Treasury shares, at cost: 1994, 6,844,057
shares; 1993, 7,553,028 shares 138,183 152,586
---------------------------
Total shareowners' equity 461,851 417,800
---------------------------
Total liabilities and shareowners' equity $1,995,057 $1,772,337
===========================
=======================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
14
</TABLE>
<PAGE>
<TABLE>
Exhibit 99.2(c)
STATEMENTS OF CONSOLIDATED CASH FLOWS
<CAPTION>
========================================================================================================================
Year Ended Month Ended Years Ended August 31,
September 30, September 30, ----------------------
Dollars in thousands 1994 1993 1993 1992
========================================================================================================================
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net earnings (loss) including cumulative effect of accounting
change in the month ended September 30, 1993 and
extraordinary loss in the year ended August 31,1993 $ 56,120 $ (7,218) $ 26,037 $ 60,864
Adjustments to reconcile net earnings (loss) including cumulative
effect of accounting change in the month ended September
30, 1993 and extraordinary loss in the year ended August
31, 1993, to net cash flows from operating activities:
Provision for doubtful accounts 7,060 270 5,213 10,007
Depreciation and amortization of property 19,065 1,589 17,752 11,867
Deferred compensation 949 104 1,350 (4,428)
Amortization of customer lists 1,749 146 1,749 1,654
Amortization of excess of cost over net assets of acquired companies 8,696 692 8,575 1,525
Deferred income taxes (3,545) 40 (15,364) (5,533)
Amortization of original issue discount on senior notes 168 14 102 -
Amortization of deferred financing costs 926 73 846 379
(Gain) loss on dispositions of property (1,229) (7) 85 239
Interest accretion on convertible zero coupon-subordinated notes - - 6,304 13,468
Cumulative effect of a change in accounting principle - 8,713 - -
Discontinued operations - - - 18,328
Effects of changes, net of acquisitions and dispositions:
Receivables (49,625) (16,105) (37,832) (38,034)
Inventories (241,585) 31,060 70,133 (117,302)
Prepaid expenses and other assets (1,234) 4,233 9,363 8,017
Accounts payable 109,890 (735) 72,558 232,415
Accrued liabilities 9,736 5,341 (2,854) 7,462
Customer credit balances 12,542 (1,747) 15,022 18,217
Income taxes payable 5,509 628 (9,407) 1,457
-----------------------------------------------
Net cash flows from operating activities (64,808) 27,091 169,632 220,602
-----------------------------------------------
INVESTING ACTIVITIES
Short-term investments - - - 94,650
Purchase of other investments (1,769) (337) (1,303) (22,918)
Proceeds from sale of notes receivable with recourse 14,831 - 4,097 9,870
Property acquisitions (24,876) (2,149) (33,934) (18,856)
Proceeds from dispositions of property 2,204 43 652 952
Acquisition of businesses, less cash acquired (2,701) - (343,127) (51,776)
Proceeds from sale of business - - 9,034 -
Sale of discontinued operations - - (4,880) (10,390)
-----------------------------------------------
Net cash flows from investing activities (12,311) (2,443) (369,461) 1,532
-----------------------------------------------
FINANCING ACTIVITIES
Proceeds from revolving bank loan 30,000 10,000 - -
Repayment of other obligations (14,370) (201) (24,992) (467)
Redemption of convertible subordinated debentures (2,212) - (45,854) -
Redemption of exchangeable subordinated debentures (330) - - -
Proceeds from issuance of senior notes - - 246,536 -
Early extinguishment of convertible zero coupon-subordinated notes - - (215,952) -
Shareowners' equity transactions:
Exercise of stock options 495 - 1,956 971
Cash dividends on Common Stock (16,962) (3,645) (14,444) (15,429)
Acquisition of Treasury shares - - - (106,935)
-----------------------------------------------
Net cash flows from financing activities (3,379) 6,154 (52,750) (121,860)
-----------------------------------------------
Net (decrease) increase in cash and cash equivalents (80,498) 30,802 (252,579) 100,274
Cash and cash equivalents at beginning of period 85,762 54,960 307,539 207,265
-----------------------------------------------
Cash and cash equivalents at end of period $ 5,264 $ 85,762 $ 54,960 $307,539
===============================================
========================================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
15
</TABLE>
<PAGE>
Exhibit 99.2(d)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended September 30, 1994, August 31, 1993 and 1992
1. Summary of Significant Accounting Policies
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.
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. Other
investments include primarily debt instruments, primarily variable rate demand
notes having maturities of more than one year, and are stated at cost plus
accrued interest.
In May 1993, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in
Debt and Equity Securities," which will require the Company to classify its
investments in debt securities into three categories and to account for them as
follows: (1) debt securities that the Company has the intent and ability to hold
to maturity will be classified as "held-to-maturity securities" and reported at
amortized cost; (2) debt securities that are bought and held principally for the
purpose of selling them in the near term will be classified as "trading
securities" and reported at fair value, with unrealized gains and losses
included in earnings; and (3) debt securities not classified as held-to-maturity
securities or trading securities will be classified as "available for sale
securities" and reported at fair value, with unrealized gains and losses
excluded from earnings and reported as a separate component of shareowners'
equity. This Statement became effective for the Company on October 1, 1994. It
is expected that implementation will not result in any material change in the
Company's consolidated financial position or results of operations.
Inventories are valued at the lower of cost or market, determined on the
last-in, first-out (LIFO) method. If the Company had used the first-in,
first-out (FIFO) method of inventory valuation, which approximates current
replacement cost, inventories would have been higher than reported at September
30, 1994, by $150,361,000 and at August 31, 1993, by $151,504,000.
Depreciation and amortization of property are computed principally on a
straight-line basis over estimated useful lives. Generally, the estimated
useful lives are 15 to 40 years for buildings and leasehold improvements, and 3
to 10 years for equipment and fixtures.
16
<PAGE>
The excess of cost over net assets of acquired companies (net of
amortization of $29,002,000 at September 30, 1994; $19,547,000 at August 31,
1993) is amortized on a straight-line basis principally over 40 years. Customer
lists, included in deferred charges and other assets, ($12,254,000 at September
30, 1994 , net of accumulated amortization of $13,977,000; $14,149,000 at August
31, 1993, net of accumulated amortization of $12,082,000) are amortized on a
straight-line basis over 15 years.
Noncurrent receivables include notes receivable from employees and officers
due at the Company's discretion in the amount of $3,840,000 and $3,471,000 at
September 30, 1994 and August 31, 1993, respectively.
Net sales and other revenues of the Company include service fees of $4.4
million, $2.9 million and $2.6 million for the years ended September 30, 1994,
August 31, 1993 and 1992, respectively, related to bulk shipments of
pharmaceuticals.
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 Retained Earnings and Cash
Flows are presented for the twelve months ended September 30, 1994, for the one
month ended September 30, 1993 and for the twelve-month periods ended August 31,
1993 and 1992.
Certain reclassifications have been made in the consolidated financial
statements and notes to conform to fiscal 1994 presentations.
2. Borrowing Arrangements
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. On
October 7, 1994, the Credit Agreement was amended to, among other things,
increase the maximum borrowing to $350 million and to extend the maturity date
to September 15, 1997. Borrowings outstanding under the Credit Agreement were
$40.0 million at September 30, 1994. The maximum outstanding borrowings under
the Credit Agreement for the year ended September 30, 1994 were $270.0 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
17
<PAGE>
on the Senior Notes is payable semi-annually on January 15 and July 15 of each
year, beginning July 15, 1993. The Senior Notes are not redeemable prior to
maturity and are not entitled to any sinking fund. The carrying value of the
Senior Notes represents gross proceeds plus amortization of the original issue
discount ratably over the life of each issue.
In connection with the acquisition of Durr, 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 $2.5 million aggregate principal amount has
been redeemed. The remaining outstanding 7% Debentures receive interest on
March 1 and September 1 of each year.
On February 10, 1993, the Company redeemed for cash $471,429,000 of the
outstanding principal amount of its Liquid Yield OptionTM Notes ("LYONs") due
2004 at a redemption price of $458.08 per $1,000 principal amount at maturity
(representing the issue price plus accrued original issue discount to February
10, 1993). The balance of $71,000 principal amount was converted into 1,227
shares of the Company's Class A Common Stock. The redemption resulted in an
extraordinary after-tax loss of $2.6 million, net of related income tax benefit
of $1.8 million.
In July 1986, the Company issued $43.0 million of 6 7/8% Exchangeable
Subordinated Debentures due July 2011 (the "Debentures") and during March 1990,
$32.1 million principal amount of the Debentures was tendered and purchased
pursuant to an offer from the Company. Since that date an additional $0.3
million aggregate principal amount has been redeemed. See Note 10 for the
effect of the fiscal 1992 disposition of Commtron Corporation ("Commtron") on
the Debentures.
Scheduled future principal payments of long-term obligations, excluding
deferred income taxes, for the next five years are $1,307,000 in 1995,
$101,006,000 in 1996, $40,933,000 in 1997, $933,000 in 1998 and $909,000 in
1999.
3. Capital Stock, Paid-in Capital and Stock Options
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
18
<PAGE>
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 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% shareowner, 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.
19
<PAGE>
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.
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 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. The Company believes
that it is a Resident Domestic Corporation because it has significant business
operations located in 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% or 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 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.
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
20
<PAGE>
criteria specified in the NJSPA, is paid to holders of shares and certain other
specified conditions are met.
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 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. All Class B Common Stock was
subsequently cancelled.
During fiscal years 1991 and 1992, the Board of Directors authorized total
expenditures of $200,000,000 to purchase shares of the Company's capital stock
on the open market. During fiscal year 1992, 5,515,256 shares of Class A Common
Stock were purchased for Treasury at a cost of approximately $106.9 million.
The Company has discontinued the stock repurchase program.
21
<PAGE>
Changes in Class A and Class B Common Stock, Paid-in capital and Treasury
shares for the years ended September 30, 1994, August 31, 1993 and 1992 were as
follows:
<TABLE>
<CAPTION>
Class A Common Class B Common
---------------- ---------------- Paid-in Treasury
Dollars and shares in thousands Shares Amount Shares Amount Capital Shares
===================================================================================================
<S> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1991 42,187 $63,280 101 $151 $143,455 $(43,517)
Exercise of stock options 90 135 - - 867 (31)
Acquisition of Treasury shares - - - - - (106,935)
----------------------------------------------------------
Balance, August 31, 1992 42,277 63,415 101 151 144,322 (150,483)
Exercise of stock options 277 415 - - 3,235 (1,694)
Conversion of LYONs 1 2 - - 31 -
Acquisition of Healthcare
Distributors of Indiana, Inc. ("HDI") 471 707 - - 8,724 (409)
----------------------------------------------------------
Balance, August 31, 1993
and September 30, 1993 43,026 64,539 101 151 156,312 (152,586)
Exercise of stock options 75 113 - - 733 (351)
Conversion of Class B Common
Stock into Class A Common Stock 958 1,436 (101) (151) (1,286) -
Recapitalization costs - - - - (680) -
Acquisition of Southeastern
Hospital Supply Corporation - - - - - 15,098
Adjustment of HDI acquisition price - - - - - (344)
----------------------------------------------------------
Balance, September 30, 1994 44,059 $66,088 - $ - $155,079 $(138,183)
==========================================================
</TABLE>
The Company has a 1983 stock option plan which authorizes the granting of
options to key employees to purchase, within a period of ten years from date of
grant, up to 1,413,122 shares of Class A Common Stock at prices per share not
less than the fair market value on the dates the options are granted. At
September 30, 1994, there were 31,331 shares available for grant under the 1983
plan.
The Company has a 1989 stock incentive plan which authorizes the granting
of options to key employees, non-employee directors and certain other recipients
to purchase, within a period of ten years from date of grant, up to 1,968,750
shares, of which 196,875 may be utilized for grants to non-employee directors,
of Class A Common Stock at prices per share as may be set by the Company's
Compensation/Stock Option Committee (except for non-employee director options
which may not be less than the fair market value on the date the options are
granted). At September 30, 1994, there were 927,214 shares available for grant
under the 1989 plan.
Stock appreciation rights may be offered to some or all of the employees,
but not non-employee directors, who hold or receive options granted under the
stock option plans. The stock appreciation rights entitle the optionee, in lieu
of exercising stock options, and without payment to the Company, to receive an
amount representing the value in shares of the stock appreciation rights. Such
value is related to the increase in market value of the Company's Class A Common
Stock and may be paid in shares of Class A Common Stock or up to 50% in cash.
Stock appreciation rights become exercisable and expire on the same dates as the
related options. No stock appreciation rights were outstanding as of September
30, 1994, August 31, 1993 or 1992.
22
<PAGE>
Changes in the number of shares represented by outstanding options during
the years ended September 30, 1994, August 31, 1993 and 1992 are summarized as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
================================================================================================
<S> <C> <C> <C>
Outstanding at beginning of year 929,775 995,130 916,717
Options granted (1994, $14.29 to $16.90 per share; 1993,
$18.75 to $20.12 per share; 1992, $16.13 to $21.19 per share) 542,325 272,651 180,652
Options exercised (1994, $7.43 to $12.42 per share; 1993,
$7.43 to $19.00 per share; 1992, $5.85 to $18.10 per share) (78,791) (290,751) (94,354)
Options cancelled (110,326) (47,255) (7,885)
-------------------------------
Outstanding at end of year (1994, $7.43 to $21.29 per share) 1,282,983 929,775 995,130
===============================
</TABLE>
At September 30, 1994, options for 476,829 shares were exercisable. The
remaining options become exercisable in the following fiscal years: 1995,
208,503 shares; 1996, 219,629 shares; 1997, 226,979 shares; 1998, 151,043
shares.
At September 30, 1994, an aggregate of 2,897,778 shares of Class A Common
Stock was reserved for the exercise of stock options and for issuance under the
elective retirement savings plan (see Note 8).
4. Acquisitions
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 784,793 shares,
previously held as Treasury shares, of the Company's Class A Common Stock valued
at approximately $12.6 million, incurred expenses of $0.4 million and assumed
approximately $6.7 million of debt, which was paid by the Company on the
acquisition date. The Company recorded an excess of cost over net assets
acquired of approximately $5.4 million in the transaction.
On August 31, 1994, the Company completed the acquisition of certain net
assets of Professional Medical Supply Co., a privately held medical supply
distributor located in Denver, Colorado, for approximately $2.4 million in cash
including excess of cost over net assets acquired and other intangible assets of
$1.9 million.
On September 18, 1992, the Company completed its $33 per share cash tender
offer for the outstanding shares of common stock of Durr. The total cost of the
acquisition was approximately $395.3 million in cash plus expenses of $16.7
million and the assumption of long-term debt of approximately $72.1 million.
The acquisition, which has been accounted for as a purchase, was financed from
borrowings under the Credit Agreement (as described in Note 2) and from funds
generated internally. Durr is a distributor of pharmaceuticals and medical
supplies based in Montgomery, Alabama.
23
<PAGE>
An excess of cost over net assets acquired of approximately $279.1 million
was recorded based upon the fair value of assets acquired and liabilities
assumed in the transaction. The operating results of Durr have been included in
the Statements of Consolidated Earnings and Retained Earnings from the date of
the acquisition.
If the acquisition of Durr had occurred as of the beginning of the year
ended August 31, 1992, the Company's unaudited pro forma net sales and other
revenues, earnings from continuing operations before taxes on income, earnings
from continuing operations, net earnings and earnings per common and common
equivalent share from continuing operations, primary and fully diluted, would
have been as follows:
<TABLE>
<CAPTION>
Dollars in millions, except for per share amount 1992
=======================================================================
<S> <C>
Net sales and other revenues $6,075
======
Earnings from continuing operations before taxes on income 85
======
Earnings from continuing operations 50
======
Net earnings 58
======
Earnings per common and common equivalent share
from continuing operations, primary and fully diluted $1.24
======
</TABLE>
The pro forma operating results above include Durr's results of operations
for fiscal 1992 with increased depreciation and amortization of property, plant
and equipment and excess of cost over net assets acquired along with other
relevant adjustments to reflect fair value of the acquired assets, and pro forma
interest expense on the assumed acquisition borrowings.
The results of operations reflected in the pro forma information above are
not necessarily indicative of the results which would have been reported if the
Durr acquisition had been effected at the beginning of fiscal 1992.
On March 16, 1993, the Company sold Durr-Fillauer Orthopedic, Inc., an
indirect wholly-owned subsidiary of Durr, and a manufacturer and distributor of
orthotic and prosthetic devices, for approximately $9.0 million in cash.
On November 18, 1992, the Company completed the acquisition of the stock of
Dr. T. C. Smith Company, a privately-held pharmaceutical distributor, located
in Asheville and Raleigh, North Carolina, for approximately $8.2 million in cash
plus expenses of $1.3 million and the assumption of approximately $9.7 million
of bank debt which was paid by the Company on the acquisition date. The Company
recorded an excess of cost over net assets acquired of approximately $1.5
million in the transaction.
24
<PAGE>
On January 29, 1993, the Company completed the acquisition of substantially
all of the assets of Healthcare Distributors of Indiana, Inc.("HDI"), a
privately-held pharmaceutical distributor located in South Bend, Indiana, for
455,655 shares, net of 39,488 shares subsequently reacquired, of the Company's
Class A Common Stock valued at approximately $8.7 million, incurred expenses of
$0.9 million and assumed approximately $7.3 million of debt which was paid by
the Company on the acquisition date. The Company recorded an excess of cost
over net assets acquired of approximately $2.9 million in the transaction.
On February 28, 1992, the Company acquired substantially all of the net
assets and business of the pharmaceutical distribution segment of Owens & Minor,
Inc. for approximately $51.8 million in cash, including excess of cost over net
assets acquired and other intangible assets of $9.9 million.
The inclusion of each of the preceding acquisitions would not materially
affect the foregoing pro forma amounts.
5. Earnings per Common and Common Equivalent Share
Earnings per common and common equivalent share are based on the weighted
average number of shares of Class A Common Stock outstanding during each year,
the assumed conversion of the weighted average number of shares of Class B
Common Stock outstanding during each year through the Conversion Date (see Note
3) 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 year-end market price of the Company's Class A
Common Stock), after giving effect to the 5% stock dividend declared January 26,
1995 (see Note 14). Primary earnings per share are based upon 38,683,775 shares
in 1994, 38,129,108 shares in 1993 and 39,527,091 shares in 1992. Fully diluted
earnings per share are based upon 38,691,009 shares in 1994 and 47,687,844
shares in 1992 and assume conversion of the LYONs in 1992. In 1993, the
computation of fully diluted earnings per share was anti-dilutive. Primary and
fully diluted earnings per share are both based upon 38,320,820 shares in the
month ended September 30, 1993.
6. Leases
The Company conducts certain of its operations from leased warehouse and
office facilities and uses certain data processing, transportation, and other
equipment under lease agreements expiring at various dates during the next 14
years, excluding renewal options. Future minimum rental commitments at
September 30, 1994, under operating leases having noncancelable lease terms in
excess of one year, aggregated $56,571,000, with rental payments during the five
25
<PAGE>
succeeding years of $14,148,000, $10,640,000, $9,123,000, $6,993,000 and
$5,549,000, respectively. Future minimum rentals to be received under
noncancelable subleases at September 30, 1994 totaled $15,000. Net rental
expense for the years ended September 30, 1994, August 31, 1993 and 1992, was
$15,871,000, $15,978,000 and $13,988,000, respectively, after deducting sublease
income of $187,000, $675,000 and $967,000, respectively.
7. Taxes on Income
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 $0.23 per share, recorded in
September 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.
26
<PAGE>
Total Federal and State taxes on income for the years ended September 30,
1994, August 31, 1993 and 1992 are summarized as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
==================================================================
<S> <C> <C> <C>
Continuing operations:
Currently payable
Federal $36,818 $29,342 $30,063
State 6,588 5,675 5,928
Deferred (principally Federal) (1,414) (15,364) (5,533)
-----------------------------
Total $41,992 $19,653 $30,458
=============================
Discontinued operations:
Currently payable
Federal $ - $ - $ 4,939
State - - 854
Deferred (principally Federal) - - (2,743)
-----------------------------
Total $ - $ - $ 3,050
=============================
Extraordinary loss:
Currently payable
Federal $ - $(1,481) $ -
State - (305) -
-----------------------------
Total $ - $(1,786) $ -
=============================
</TABLE>
Discontinued operations include Federal and State taxes on income for both
the net results of operations and the gain on disposition of Commtron.
Deferred taxes result from temporary differences in the recognition of
revenues and expenses for tax and financial reporting purposes. The sources of
these temporary differences and the tax effects from continuing operations are
as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
=================================================================
<S> <C> <C> <C>
Accelerated depreciation $ (476) $ 1,067 $ 1,752
Inventory transactions (2,699) (1,787) (5,875)
Restructuring charge 4,936 (12,735) -
Receivables transactions (2,307) (1,277) (1,934)
Vacation pay transactions (218) (457) (296)
Other differences (650) (175) 820
---------------------------------
Total $ (1,414) $(15,364) $ (5,533)
=================================
</TABLE>
27
<PAGE>
The principal sources of timing differences from discontinued operations
are accelerated depreciation, inventory transactions and receivables
transactions.
Taxes on income from continuing operations vary from the statutory Federal
income tax rate applied to earnings from continuing operations before taxes on
income as the result of the following:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
=====================================================================================
<S> <C> <C> <C>
Statutory Federal income tax rate applied to earnings
from continuing operations before taxes on income $34,340 $16,732 $28,380
Increase (decrease) in taxes resulting from:
Amortization of excess of cost over net
assets of acquired companies 2,912 2,895 465
State income taxes - net of Federal benefits 4,141 1,977 3,856
Governmental investment income (348) (893) (3,007)
Effects of purchase accounting - (1,679) -
Other 947 621 764
---------------------------
Total taxes on income from continuing operations $41,992 $19,653 $30,458
===========================
</TABLE>
The tax effects of significant items comprising the Company's net deferred
tax liability as of September 30, 1994 are as follows (dollars in thousands):
Deferred tax liabilities:
Inventory basis difference due to LIFO
method and uniform capitalization $ 30,713
Accelerated depreciation 7,871
Other 2,709
--------
Total 41,293
--------
Deferred tax assets:
Reserves for doubtful receivables (9,646)
Restructuring charge not currently deductible (7,732)
Vacation pay not currently deductible (2,012)
Accrued liabilities not currently deductible (13,212)
Other (3,843)
--------
Total (36,445)
--------
Net deferred tax liability $ 4,848
========
In the opinion of management of the Company, no valuation reserve related
to recorded deferred tax assets is deemed necessary.
8. Retirement and Savings Plans
The Company provides for retirement benefits through an elective retirement
savings plan and supplemental retirement plans.
28
<PAGE>
The Company has an elective retirement savings plan generally available to
all employees with six months of service. Under the terms of the plan, the
Company guarantees a contribution of $0.50 for each $1.00 invested by the
participant up to the participant's investment of 6% of salary, subject to plan
and regulatory limitations. The Company may also make additional cash or stock
contributions to the plan at its discretion. The Company's contributions are
vested to participants over five years. The Company made contributions of
$4,146,000, $4,219,000 and $2,760,000 to the plan in 1994, 1993 and 1992,
respectively.
The Company terminated its defined benefit contributory retirement plan on
December 31, 1991. The Company's general funding policy with respect to the
defined benefit contributory retirement plan was to contribute amounts which
were sufficient to satisfy legal funding requirements and were deductible for
Federal income tax purposes. No contributions were made in 1992. Upon
termination of the plan, all participants became fully vested and received their
benefits through the purchase of annuity contracts or by cash distribution.
The supplemental retirement plans provide benefits for certain officers and
key employees. Effective January 1991, the Company approved a new Supplemental
Executive Retirement Plan ("SERP") for officers and key employees. SERP is a
"target" benefit plan, with the annual lifetime benefit based upon a percentage
of salary during the final five years of pay at age 62, offset by several other
sources of income including benefits payable under a prior supplemental
retirement plan.
The components of net periodic pension cost for the supplemental retirement
plans for 1994 and the defined benefit contributory and supplemental retirement
plans for 1993 and 1992 are as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993 1992
================================================================
<S> <C> <C> <C>
Service cost $ 131 $ 218 $ 389
Interest cost 1,643 1,544 3,334
Return on plan assets - actual - - (1,786)
- deferred - - (128)
Amortization of prior service cost 397 424 379
Amortization of initial unrecognized
(net asset) net obligation 286 264 (39)
------------------------
Total $2,457 $2,450 $2,149
========================
</TABLE>
29
<PAGE>
Assumptions used to develop the net periodic pension cost for the defined
benefit contributory and supplemental retirement plans were:
<TABLE>
<CAPTION>
1994 1993 1992
================================================================================
<S> <C> <C> <C>
Discount rate 7.25%-8.25% 7.25% 8.00%-8.50%
Rate of increase in salary levels 5.50% 5.25% 6.00%
Expected long-term rate of return on
defined benefit contributory plan assets - - 9.00%
</TABLE>
The funded status of the supplemental retirement plans as of September 30,
1994 and August 31, 1993 is as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1994 1993
=======================================================================================
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $15,506 $17,983
Nonvested benefits 76 403
-----------------
Accumulated benefit obligation 15,582 18,386
Effect of assumed increase in future compensation levels 2,427 2,856
-----------------
Projected benefit obligation 18,009 21,242
Assets of plans at fair value (2,520) (3,170)
-----------------
Excess of projected benefit obligation over assets 15,489 18,072
Unrecognized prior service cost (3,266) (3,657)
Unrecognized net loss (2,962) (3,561)
Unrecognized net obligation remaining
from date of adoption (4,106) (4,369)
-----------------
Pension liability recognized in the consolidated balance sheets $ 5,155 $ 6,485
=================
</TABLE>
At September 30, 1994, the Company owns life insurance in the aggregate
amount of $43 million covering substantially all the participants in a
supplemental retirement plan. The Company intends to keep this life insurance
in force until the demise of the participants.
Contributions are also made to multi-employer defined benefit plans
administered by labor unions for certain union employees. Amounts charged to
pension expense and contributed to these plans were $297,000, $284,000 and
$331,000, in 1994, 1993 and 1992, respectively.
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,
amounted to approximately $2.1 million. This obligation is being recognized
30
<PAGE>
over 20 years. The impact of the Company's adoption of SFAS 106 was to increase
each future year's annual benefits expense (assuming amortization of the
transition obligation over 20 years) by $275,000.
9. Supplemental Cash Flow Disclosures
<TABLE>
<CAPTION>
Dollars in thousands September 30, August 31, August 31,
Years Ended: 1994 1993 1992
================================================================================
<S> <C> <C> <C>
Cash paid during the year for:
Interest, net of amounts capitalized
($466 in 1994 and $264 in 1993) $ 24,097 $ 19,387 $ 2,073
Income taxes 38,960 38,812 26,734
</TABLE>
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 784,793 shares,
previously held as Treasury shares, of the Company's Class A Common Stock valued
at approximately $12.6 million, incurred expenses of $0.4 million and assumed
approximately $6.7 million of debt, which was paid by the Company on the
acquisition date. The Company recorded an excess of cost over net assets
acquired of approximately $5.4 million in the transaction.
On August 31, 1994, the Company completed the acquisition of certain net
assets of Professional Medical Supply Co., a privately held medical supply
distributor located in Denver, Colorado, for approximately $2.4 million in cash,
including excess of cost over net assets acquired, and other intangible assets
of $1.9 million.
During fiscal 1993, the Company paid approximately $412.0 million in cash,
acquired assets at fair value of approximately $370.9 million and assumed
liabilities of approximately $238.0 million in connection with the Durr
acquisition. Also during fiscal 1993, the Company paid approximately $8.2
million in cash plus expenses of $1.3 million, acquired assets at fair value of
approximately $32.4 million and assumed liabilities of approximately $24.4
million in connection with the acquisition of the Dr. T.C. Smith Company.
Additionally, during fiscal 1993, the Company issued 455,655 shares, net of
39,488 shares subsequently reacquired, of the Company's Class A Common Stock
valued at approximately $8.7 million, incurred expenses of $0.9 million,
acquired assets at fair value of approximately $30.1 million and assumed
liabilities of approximately $23.1 million in connection with the acquisition of
HDI.
During the fourth quarter of fiscal 1993, the Company approved a
restructuring plan which resulted in a charge of $33.0 million to earnings from
continuing operations before taxes on income(see Note 12). In the second
quarter of fiscal 1993, the Company redeemed for cash the outstanding LYONs,
which resulted in an extraordinary after-tax loss of $2.6 million, net of
31
<PAGE>
related income tax benefit of $1.8 million (see Note 2).
In fiscal 1992, the Company transferred assets totaling $145.5 million,
excluding intercompany advances, and liabilities of $142.9 million in connection
with the sale of Commtron (see Note 10).
10. Discontinued Operations
On June 19, 1992, the Company sold its 81%-owned subsidiary, Commtron, to
Ingram Industries, Inc. ("Ingram"). On that date, the Company received
aggregate consideration of $7.75 per share for each of the 3,246,000 shares of
Commtron Class A Common Stock and 5,000,000 shares of Class B Common Stock owned
by the Company. Of the approximate $63.9 million of aggregate consideration
received by the Company, approximately $58.2 million was paid outright to the
Company with respect to shares of Commtron's outstanding Common Stock owned by
the Company free of escrow, and approximately $5.7 million was paid in escrow
with respect to 732,863 shares of Commtron Class A Common Stock registered in
the name of the Company but held in escrow for issuance in exchange for the
Company's Debentures (see Note 2). As a result of the sale, each $1,000
principal amount of Debentures which, prior to the sale, was exchangeable for
67.20 shares of Commtron Class A Common Stock, is now exchangeable for
approximately $520.83 cash, less applicable taxes, plus interest accrued on the
net amount ("Escrow Amount Per Debenture"). Unless exchanged for the Escrow
Amount Per Debenture, or otherwise acquired or redeemed by the Company, each
Debenture will remain an outstanding obligation of the Company until maturity.
On the closing date, the Company also repaid net advances made to the Company by
Commtron of approximately $68.6 million. The Company recorded an after-tax gain
of $4.0 million on the transaction.
The net results of operations of Commtron have been reclassified and shown
separately for the year ended August 31, 1992 in the Statements of Consolidated
Earnings and Retained Earnings as earnings from discontinued operations and,
accordingly, have been omitted from the various categories as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1992
=========================================================================
<S> <C>
Net sales and other revenues $438,402
--------
Costs and expenses 433,195
Net interest income (2,877)
--------
Total costs and expenses 430,318
--------
Earnings before taxes on income 8,084
Taxes on income 3,234
--------
Earnings before minority interest in net earnings of subsidiary 4,850
Minority interest in net earnings of subsidiary (974)
--------
Earnings from discontinued operations $ 3,876
========
</TABLE>
32
<PAGE>
11. Contingencies
The Company received proceeds of $14,831,000 and $4,097,000 in 1994 and
1993, respectively, from receivables sold with recourse by the Company to
financial institutions and is contingently liable as guarantor of $29,439,000
and $36,068,000 at September 30, 1994 and August 31, 1993 of such receivables.
In December 1992, a customer of the Company commenced a legal action
against the Company in the Superior Court of the State of California alleging
breach of contract, misrepresentation and violations of certain California
antitrust and unfair practices laws. This customer seeks a variety of damage
claims in substantial amounts including compensatory, treble and punitive
damages, an injunction against collection on a note, and declaratory judgement
as to the customer's rights under an alleged oral joint venture agreement with
the Company. As of October 31, 1994, this customer owed the Company
approximately $6.2 million, of which approximately $1.2 million represents trade
receivables and $5.0 million represents a loan.
On July 29, 1993, this customer filed a voluntary petition for relief under
Chapter 11 of the United States Code and the complaint filed by the Company
against the customer has been stayed. An additional action brought by the
Company against two individuals as guarantors of the customer's obligations has
been transferred to the Superior Court in San Francisco County, with the
California State antitrust actions referenced in the next paragraph.
In addition, the Company has been named as a defendant along with several
pharmaceutical industry-related companies in several State antitrust actions in
California and Alabama and a Federal multidistrict antitrust action. The
California State action purports to be a coordinated class action under
California's Cartwright Act, Unfair Practices Act and Business and Professions
Code. (The State court judge recently struck the class allegations from the
Unfair Practices Act claims). The Alabama State complaint purports to be a
class action under Alabama antitrust law. The Federal class action complaint
alleges that the Company and numerous manufacturers and other wholesalers
violated the Sherman Act. Plaintiffs seek injunctive relief and treble damages
in an amount to be determined at trial.
On October 21, 1994, the Company entered into a sharing agreement with five
other wholesalers and 26 pharmaceutical manufacturers. Among other things, the
agreement provides that: (a) if a judgement is entered into against both the
manufacturer and wholesaler defendants, the total exposure for joint and several
liability of the Company is limited to $1,000,000; (b) if a settlement is
entered into by, between, and among the manufacturer and wholesaler defendants,
the Company has no monetary exposure for such settlement amount; (c) the six
33
<PAGE>
wholesaler defendants will be reimbursed by the 26 pharmaceutical defendants for
related legal fees and expenses up to $9,000,000 total (of which the Company
will receive a proportionate share) and (d) the Company is to release certain
claims which it might have had against the manufacturer defendants for the
claims presented by the plaintiffs in these cases. The agreement covers the
Federal court litigation as well as the cases which have been filed in the
various State courts. After discussions with counsel, management of the Company
believes that the allegations of liability set forth in these lawsuits are
without merit as to the wholesaler defendants and that any attendant liability
of the Company, although unlikely, would not have a material adverse effect on
the Company's financial condition.
On November 2, 1988 and November 14, 1988, two class action and derivative
suits were filed naming the Company and certain Directors and Officers as
defendants and seeking damages and relief as a result of the Recapitalization
Plan approved by the shareowners at the January 31, 1989 Annual Meeting. On
April 5, 1989, the two actions were consolidated. On September 7, 1994, an
Order and Final Judgement was signed approving the settlement of the class and
derivative litigation. Under the order, the Company became obligated to pay the
plaintiff's attorneys the sum of $446,000 for fees, expenses and interest and
Mr. Robert E. Martini and the Estate of Emil P. Martini, Jr. each agreed to
transfer to the Company 15,750 shares of the Company's Class A Common Stock.
The Estate of Emil P. Martini, Jr. was also given the option, in lieu of the
transfer of 15,750 shares of Class A Common Stock, to pay the Company in cash
the sum of $294,000.
The Company is involved in various additional items of litigation.
Although the amount of liability at September 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
financial position or results of operations.
12. Restructuring and Other Unusual Items
During the fourth quarter of fiscal 1993, the Company approved a
restructuring plan which consists of an accelerated consolidation of
pharmaceutical distribution facilities into larger, more efficient regional
distribution centers, the merging of duplicate operating systems, the reduction
of administrative support in areas not affecting valued services to customers,
and the discontinuance of services and programs that do not meet the Company's
strategic and economic return objectives. The estimated pre-tax cost of the
restructuring plan is $33.0 million. The restructuring charge represents the
costs associated with restructure, primarily abandonment and severance. For
those activities or assets where the disposal is expected to result in a gain,
no gain will be recognized until realized. During fiscal 1994, the Company
incurred costs of approximately $13.1 million related to the restructuring plan.
34
<PAGE>
During fiscal 1994, the Company recognized a gain from the sale of
investment securities of $5.1 million before income taxes of $2.2 million.
During the second quarter of fiscal 1994, the Company recorded a pre-tax
charge of $1.4 million ($0.8 million after tax) for the uninsured portion of an
earthquake loss sustained by the Company's Valencia, California Regional
Distribution Center on January 17, 1994.
On June 18, 1993, the Company announced that a joint bid which the Company
had made in April 1993 with the French company, Cooperation Pharmaceutique
Francaise, to acquire the largest French pharmaceutical distribution company,
Office Commercial Pharmaceutique, had been withdrawn. Accordingly, expenses of
$2.5 million, before income tax benefit of $1.0 million associated with the
transaction, were recorded in the fourth quarter of fiscal 1993.
13. Disclosures About Fair Value of Financial Instruments
The recorded amounts of the Company's cash and cash equivalents, the
Debentures and the 7% Debentures at September 30, 1994, approximate fair value.
The fair values of the Company's other investments and the Senior Notes are
estimated as follows, based on the market prices of these instruments at
September 30, 1994:
<TABLE>
<CAPTION>
Dollars in thousands
========================================================
Recorded
Amount Fair Value
--------- ----------
<S> <C> <C>
Other investments $ 22,063 $ 21,694
7 3/8% Senior Notes 149,078 142,557
5 5/8% Senior Notes 99,926 98,937
14. Subsequent Event
On January 26, 1995, the Company declared a 5% stock dividend on the
Corporation's Class A Common Stock payable March 1, 1995 to shareowners of
record on February 6, 1995. The dividend was charged to retained earnings in
the approximate amount of $44,207,000, which is based on the closing price of
$23.375 per share of Class A Common Stock on the declaration date. Average
shares outstanding and all per share amounts included in the accompanying
consolidated financial statements and notes are based on the increased numbers
of shares giving retroactive effect to the stock dividend.
35
<PAGE>
Exhibit 99.2(e)
INDEPENDENT AUDITORS' REPORT
To the Directors and Shareowners of
Bergen Brunswig Corporation:
We have audited the accompanying consolidated balance sheets of Bergen Brunswig
Corporation and subsidiaries as of September 30, 1994 and August 31, 1993, and
the related statements of consolidated earnings and retained earnings and cash
flows for the year ended September 30, 1994, the one month ended September 30,
1993 and the years ended August 31, 1993 and 1992. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Bergen Brunswig
Corporation and subsidiaries at September 30, 1994 and August 31, 1993, and the
results of their operations and their cash flows for the year ended September
30, 1994, the one month ended September 30, 1993 and the years ended August 31,
1993 and 1992, in conformity with generally accepted accounting principles.
As discussed in Note 7 of Notes to Consolidated Financial Statements, the
Company changed its method of accounting for income taxes effective September 1,
1993.
/s/ Deloitte & Touche LLP
- ---------------------------
Costa Mesa, California
October 31, 1994, except
for Note 14, as to which the
date is January 26, 1995.
36
</TABLE>
