EXHIBIT INDEX TOTAL NUMBER OF
FOUND ON PAGE 54. SECURITIES AND EXCHANGE COMMISSION PAGES INCLUDED
Washington, D.C. 20549 IN THIS ANNUAL
REPORT IS 106.
FORM 10-K
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended September 30, 1995
------------------
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
-------------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange on
Title of each class which registered
----------------------------------- ---------------------------
<S> <C>
Class A Common Stock New York Stock Exchange
Par Value $1.50 per share
6 7/8% Exchangeable Subordinated New York Stock Exchange
Debentures due July 15, 2011
$100,000,000 5 5/8% Senior Notes New York Stock Exchange
due 1996
$150,000,000 7 3/8% Senior Notes New York Stock Exchange
due 2003
</TABLE>
Securities registered pursuant to Section 12(g) of the Act:
7% Convertible Subordinated Debentures due March 1, 2006 - Durr-
Fillauer Medical, Inc.
(Cover page continued)
<PAGE>
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [ ]
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__
At November 30, 1995, 39,863,197 shares of Class A Common Stock were
outstanding. The aggregate market value of the voting Class A Common Stock
held by nonaffiliates of the registrant on November 30, 1995 was $904,687,536.
Documents Incorporated by Reference
-----------------------------------
List hereunder the following documents if incorporated by reference and the part
of the Form 10-K into which the document is incorporated:
Portions of the definitive proxy statement dated December 14, 1995 relating to
the registrant's annual meeting of shareowners to be held January 25, 1996, as
filed with the Securities and Exchange Commission, are incorporated herein by
reference in Part III.
Portions of the definitive proxy statement dated December 22, 1994 relating to
the registrant's annual meeting of shareowners held January 26, 1995, as filed
with the Securities and Exchange Commission, are incorporated herein by
reference in Part IV.
<PAGE>
TABLE OF CONTENTS
PART I
------
ITEM PAGE
- - ---- ----
1. Business I - 1
2. Properties I - 5
3. Legal Proceedings I - 6
4. Submission of Matters to a Vote of Security Holders I - 10
4A. Executive Officers of the Registrant I - 10
PART II
-------
5. Market for the Registrant's Common Equity and II - 1
Related Stockholder Matters
6. Selected Financial Data II - 2
7. Management's Discussion and Analysis of Financial II - 3
Condition and Results of Operations
8. Financial Statements and Supplementary Data II - 9
9. Changes in and Disagreements with Accountants II - 31
on Accounting and Financial Disclosure
PART III
--------
10. Directors and Executive Officers of the Registrant III - 1
11. Executive Compensation III - 1
12. Security Ownership of Certain Beneficial Owners III - 1
and Management
13. Certain Relationships and Related Transactions III - 1
PART IV
-------
14. Exhibits, Financial Statement Schedules and Reports IV - 1
on Form 8-K
Signatures IV - 7
<PAGE>
PART I
ITEM 1. BUSINESS
A. General Development of Business
--------------------------------
Bergen Brunswig Corporation, a New Jersey corporation formed in
1956, and its subsidiaries (collectively, the "Company") are a diversified drug
and health care distribution organization and, as such, the nation's largest
supplier of pharmaceuticals to the managed care market and the second largest
wholesaler to the retail pharmacy market. The Company is the only
pharmaceutical distributor to provide both pharmaceuticals and medical-surgical
supplies on a national basis.
On August 2, 1995, the Company completed the acquisition of
Colonial Healthcare Supply Co. ("Colonial"), a privately-held medical-surgical
supply distributor headquartered in Lake Zurich, Illinois, for approximately
$50.7 million in cash including expenses.
On January 10, 1995 the Company completed the acquisition of
Biddle & Crowther Company ("B&C"), a privately-held medical-surgical supply
distributor headquartered in Seattle, Washington, for 643,604 shares of the
Company's Class A Common Stock, previously held as Treasury shares, valued at
approximately $10.8 million plus expenses.
The Colonial and B&C acquisitions are more fully described in
Note 4 of Notes to Consolidated Financial Statements appearing in Part II, Item
8, "Financial Statements and Supplementary Data" of this Annual Report.
On May 23, 1995, the Company sold $100 million aggregate
principal amount of 7 1/4% Senior Notes due June 1, 2005 (the "7 1/4% Senior
Notes"). On June 1, 1995, the Company received net proceeds of $99.0 million
(after underwriting discount of $0.6 million) from the 7 1/4% Senior Notes.
Interest on the 7 1/4% Senior Notes is payable semi-annually on June 1 and
December 1 of each year, beginning December 1, 1995. The net proceeds were used
to reduce the outstanding balance under the Credit Agreement (as defined below).
The 7 1/4% Senior Notes are more fully described in Note 2 of Notes to
Consolidated Financial Statements appearing in Part II, Item 8, "Financial
Statements and Supplementary Data" of this Annual Report.
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 for payment in
connection with the 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,
I - 1
<PAGE>
increase the maximum borrowing to $350 million and to extend the maturity date
to September 15, 1997. Outstanding borrowings averaged $158.1 million during
the fiscal year ended September 30, 1995. The maximum outstanding borrowings
under the Credit Agreement for the year ended September 30, 1995 were $305.0
million.
On January 26, 1995, the Company declared a 5% stock dividend on
the Company's Class A Common Stock which was paid on March 1, 1995 to
shareowners of record on February 6, 1995. The dividend was charged to retained
earnings in the amount of $44.2 million, which was based on the closing price of
$23.375 per share of Class A Common Stock on the declaration date.
On October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which requires investments in debt and equity securities to
be carried at fair value. The adoption of this Statement is more fully
described in Note 1 of Notes to Financial Statements appearing in Part II, Item
8, "Financial Statements and Supplementary Data" of this Annual Report.
During fiscal 1995 and 1994, ten distribution facilities were
closed and workforce reductions were made in connection with the restructuring
plan approved by the Company in fiscal 1993 for its pharmaceutical distribution
business. Charges to the restructuring reserve have consisted primarily of
asset write-offs, moving and severance costs, facility abandonments and lease
settlements which, through September 30, 1995, have totaled approximately $24.4
million, including approximately $5.4 million of non-cash charges. Management
anticipates that the remaining cash outflow should be substantially completed by
the end of the first quarter of fiscal 1996. This restructuring plan is more
fully described in Note 10 of Notes to Consolidated Financial Statements
appearing in Part II, Item 8, "Financial Statements and Supplementary Data" of
this Annual Report.
B. Narrative Description of Business
---------------------------------
Bergen Brunswig Drug Company (the "Drug Company") is one of the
largest national distributors of products sold by institutional (hospital) and
retail pharmacies. The Drug Company distributes from 32 locations in 23 states
a full line of products, including pharmaceuticals, proprietary medicines,
cosmetics, toiletries, personal health products, sundries, and home healthcare
supplies and equipment. These products are sold to a large number of hospital
pharmacies, managed care facilities, health maintenance organizations ("HMO's"),
independent retail pharmacies, pharmacy chains, supermarkets, food-drug
combination stores and other retailers located in all 50 states, the District of
I - 2
<PAGE>
Columbia, Guam and Mexico. During fiscal 1995, no single customer or affiliated
group of customers of the Company accounted for more than 10% of its net sales
and other revenues. However, purchasing groups are expected to represent
increasing percentages of total sales in the future. The Drug Company is
required to carry significant amounts of inventory to meet the rapid delivery
requirements of its customers.
The Drug Company has been an innovator in the development and
utilization of computer-based retailer order entry systems and of electronic
data interchange ("EDI") systems including computer-to-computer ordering systems
with suppliers. During fiscal 1995, substantially all of Drug Company's orders
received from customers were received via electronic order entry systems. These
systems, combined with daily delivery, improve customers' cash and inventory
management and profitability by freeing them from the burden of maintaining
large inventories. Although these systems require capital expenditures by the
Company, benefits from these systems to the Drug Company are expected to be
realized through increased productivity. The Drug Company is expanding its
electronic interface with its suppliers and now electronically processes a
substantial portion of its purchase orders, invoices and payments. The Drug
Company has opened eight regional distribution centers ("RDCs") since fiscal
1986, replacing 19 older, smaller, less efficient facilities. RDCs help improve
customer service levels because a wider product selection is more readily
available. These facilities serviced 47% of the Drug Company sales volume in
1995. The newest RDC was opened in June 1995 in the Boston, Massachusetts area
and, similar to the Richmond, Virginia facility (opened in November 1994) and
Corona and Valencia, California facilities, exceeds 200,000 square feet.
In July 1994, the Company introduced AccuSourceTM, a multimedia
communication, product information, and electronic ordering system for
pharmacies. AccuSource was developed jointly by the Drug Company and Apple
Computer, Inc. and is the first link of its kind between supplier, wholesaler
and retailer in the pharmaceutical distribution process. AccuSource simplifies
the ordering process and gives retailers detailed information on thousands of
products, services and special purchase opportunities, as well as prescription
substitution alternatives and Medicaid coverage information. AccuSource's
on-line feature provides retailers with a convenient method for ensuring product
availability by giving immediate information on quantity levels at their Drug
Company distribution center.
The Drug Company also provides a wide variety of promotional,
advertising, merchandising, and marketing assistance to independent community
pharmacies. For example, the Good Neighbor PharmacyTM program utilizes circular
and media advertising to strengthen the consumer image of the independent
pharmacy without sacrificing its local individuality. Other programs for the
I - 3
<PAGE>
independent community pharmacy include in-store merchandising programs, private
label products, shelf management systems, pharmacy computers and a fully
integrated point-of-sale system marketed under the Drug Company's trademark of
OmniPhaseTM.
Hospital and other institutional accounts are offered a wide
variety of inventory management and information services by the Drug Company to
better manage inventory investment and contain costs. AccuLineTM, introduced in
June 1995, provides an on-line, real-time, hospital, pharmacy management system
in a WindowsTM (a trademark of Microsoft( Corporation) environment and features
local area network capability.
Alternate Site Distributors ("ASD"), the Company's specialty
wholesale division, supplies pharmaceuticals and oncology products to physician
and clinic accounts. The Company created ASD during fiscal 1994 to respond to
the explosive growth in the alternate site market business. As a major supplier
to the alternate site market, ASD gives its customers quick access to a broad
range of specialty, value-added products and services.
In September 1995, the Company launched IntePlex(TM) Inc.
("IntePlex"), a subsidiary of the Company, to focus exclusively on the evolving
integrated healthcare marketplace. The foundation of IntePlex involves the
development of an electronic catalog for one-stop-shopping and a centralized
database for tracking customers' purchasing information. IntePlex's offerings
are expected to include logistics management, continuous replenishment,
just-in-time delivery, and benefit plan compliance for both medical-surgical
supplies and pharmaceuticals combined with delivery to all points in a network:
hospitals, alternate site, physician offices and retail stores.
Durr Medical Corporation, Southeastern Hospital Supply
Corporation, Professional Medical Supply Co., B&C and Colonial (collectively,
"Medical"), wholly-owned subsidiaries of the Company, distribute a variety of
medical and surgical products to individual hospitals and alternate site health
providers through 27 distribution centers located in 22 states in the
midwestern, southeastern, southwestern and northwestern regions of the United
States.
Medical serves hospital customers and alternate site customers in
44 states and the District of Columbia. Alternate site customers include
outpatient clinics, nursing homes, surgery centers, dialysis and oncology
centers, emergency centers, laboratories and veterinary clinics. Medical's
distribution centers range between 14,000 and 70,000 square feet and average
40,000 square feet. Medical employs approximately 1,300 people.
I - 4
<PAGE>
1. Competition
-----------
The Drug Company, which is the second largest national
pharmaceutical distributor measured by sales, faces intense competition from
other national pharmaceutical distributors, as well as regional and local
full-line and short-line distributors, direct selling manufacturers, rack
jobbers and specialty distributors. The principal competitive factors of the
Drug Company's business are service and price.
2. Employees
---------
As of November 30, 1995, the Company employed approximately 4,770
people. The Company considers its relationship with its employees and the
unions representing certain of its employees to be satisfactory.
3. Other
-----
While the Company's operations may show quarterly fluctuations,
the Company does not consider its business to be seasonal in nature on a
consolidated basis.
Although the Company's computer service operations expend time
and effort on the development and marketing of computer programs relating to the
services for its subsidiaries, which are described in part elsewhere herein, the
Company has not during the past three fiscal years expended any material amounts
on research and development.
ITEM 2. PROPERTIES
Because of the nature of the Company's business, office and
warehousing facilities are operated in widely dispersed locations in the United
States. Some of the facilities are owned by the Company, but most are leased on
a long-term basis. The Company considers its operating properties to be in
satisfactory condition and well utilized with adequate capacity for growth.
For certain financial information regarding the Company's warehouse
and office leases, see Note 6 of Notes to Consolidated Financial Statements
appearing in Part II, Item 8, "Financial Statements and Supplementary Data," of
this Annual Report.
I - 5
<PAGE>
ITEM 3. LEGAL PROCEEDINGS
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 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 AccuNetR 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.
I - 6
<PAGE>
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 October 31, 1995, 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 an alleged oral joint venture agreement with the Company.
On April 20, 1993, the Company filed a complaint in the Orange County
Superior Court (State of California), Case No. 709136 against Drug Barn and
Milton Sloban and Barbara Sloban, as guarantors on the defaulted note and open
trade receivables, alleging breach of contract and guaranty, and requesting
judicial foreclosure of and the possession of collateral.
Drug Barn commenced a Chapter 11 case in U.S. Bankruptcy Court for the
Northern District of California, Case No. 93-3-3437 TC, by filing a voluntary
petition for relief under Chapter 11 of the United States Bankruptcy Code on
July 29, 1993 and remains in possession pursuant to 11 U.S.C. Section 1107. The
effect of this filing is that the Company's action against Drug Barn has been
automatically stayed.
In April 1994, this matter was transferred to the San Francisco County
Superior Court with the California state actions referenced in the next
paragraph. A trial date on principally the contract-related actions is
anticipated during early calendar 1996.
Between August 3, 1993 and February 14, 1994, the Company, along with
various other pharmaceutical industry-related companies, was named as a
defendant in eight separate state antitrust actions in three courts in
California. These lawsuits are more fully detailed in "Item 1 - Legal
Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for the
quarter ended June 30, 1994 as filed with the Securities and Exchange Commission
and is incorporated herein by reference. In April 1994, these California state
actions were all coordinated as Pharmaceutical Cases I, II and III, and assigned
to a single judge in San Francisco Superior Court. On August 22, 1994, a
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<PAGE>
Consolidated Amended Complaint ("California Complaint"), which supersedes and
amends the eight prior complaints, was filed in these actions.
The California Complaint alleges that the Company and 35 other
pharmaceutical industry-related companies violated California's Cartwright Act,
Unfair Practices Act, and the Business and Professions Code unfair competition
statute. The California Complaint alleges that defendants jointly and
separately engaged in secret rebating, price fixing and price discrimination
between plaintiffs and plaintiffs' alleged competitors who sell pharmaceuticals
to patients or retail customers. Plaintiffs seek, on behalf of themselves and a
class of similarly situated California pharmacies, injunctive relief and treble
damages in an amount to be determined at trial. The judge struck the class
allegations from the Unfair Practices Act claims.
Between August 12, 1993 and November 29, 1993, the Company was also
named in 11 separate Federal antitrust actions. All 11 actions were
consolidated into one multidistrict action in the Northern District of Illinois
entitled, In Re Brand-Name Prescription Drugs Antitrust Litigation, No. 94 C.
897 (MDL 997). On March 7, 1994, plaintiffs in these 11 actions filed a
consolidated amended class action complaint ("Federal Complaint") which amended
and superseded all previously Federal complaints against the Company. The
Federal Complaint names the Company and 30 other pharmaceutical industry-related
companies. The Federal Complaint alleges, on behalf of a nationwide class of
retail pharmacies, that the Company conspired with other wholesalers and
manufacturers to discriminatorily fix prices in violation of Section 1 of the
Sherman Act. The Federal Complaint seeks injunctive relief and treble damages.
On November 15, 1994, the Federal court certified the class defined in the
Federal Complaint for the time period October 15, 1989 to the present. These
lawsuits are more fully detailed in "Item 1 - Legal Proceedings" of Part II of
the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994
as filed with the Securities and Exchange Commission and is incorporated herein
by reference. On January 13, 1995, the Company was named along with 30 other
pharmaceutical industry-related companies in a separate complaint filed in the
U.S. District Court, Northern District of Illinois entitled Publix Supermarkets
v. Abbott Laboratories, et al., Case No. 94C0246, alleging similar claims as in
the Federal Complaint. The Company was dropped as a defendant in this matter on
February 23, 1995.
On March 9, 1995, the Company was named along with 30 other
pharmaceutical industry-related companies in a separate complaint filed in the
U.S. District Court, Eastern District of Arkansas entitled Lawrence Adams d/b/a
Mc Spadden Drug Store, et al. v. Abbott Laboratories, et al., Case No.
LR-C-95-153, alleging similar claims as in the Federal complaint. The Company
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<PAGE>
believes that this action will be consolidated into the Federal multidistrict
action.
On May 2, 1994, the Company and Durr Drug Company were named as
defendants, along with 25 other pharmaceutical related-industry companies, in a
state antitrust class action in the Circuit Court of Greene County, Alabama
entitled Durrett v. UpJohn Company, et al., No. 94-029 ("Alabama Complaint").
The Alabama Complaint alleges on behalf of a class of Alabama retail pharmacies
and a class of Alabama consumers that the defendants conspired to
discriminatorily fix prices to plaintiffs at artificially high levels. The
Alabama Complaint seeks injunctive relief and treble damages.
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 judgment 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
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 various
state courts. In December 1994, plaintiffs in the Federal action had moved to
set aside the agreement, but plaintiffs' motion was denied on April 25, 1995.
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
position or results of operations.
The Company is involved in various additional items of litigation.
Although the amount of liability at September 30, 1995 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.
I - 9
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matter was submitted to a vote of shareowners during the three
months ended September 30, 1995.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Executive Officers.
The executive officers of the Company are elected by, and serve at the
pleasure of, the Board of Directors. Each executive officer holds office until
the next annual election of officers held in December, January or February of
each year. The current executive officers of the Company, and their respective
principal occupations and employment during the last five years ended September
30, 1995, are listed alphabetically as follows:
John Calasibetta, 90, Senior Vice President since 1974. Mr.
Calasibetta is also a member of the Board of Directors.
Neil F. Dimick, 46, Executive Vice President (since April 1992), Chief
Financial Officer (since 1991); formerly Vice President, Finance (1991-1992);
formerly Partner, Deloitte & Touche LLP (1984-1991), the Company's independent
auditors. Mr. Dimick is also a member of the Board of Directors.
Robert E. Martini, 63, Chairman of the Board (since April 1992) and
Chief Executive Officer (since 1990); formerly President (1981-1992). Mr.
Martini is also a member of the Board of Directors.
John P. Naughton, 57, Vice President and Controller of Bergen Brunswig
Drug Company since 1981.
Donald R. Roden, 49, President and Chief Operating Officer (since
October 1995); formerly a healthcare industry consultant (1993-1995); formerly
Chief Executive, North America of Reed Elsevier Medical (publishing)
(1989-1993). Mr. Roden is also a member of the Board of Directors.
Milan A. Sawdei, 49, Secretary (since July 1992); Executive Vice
President (since April 1992); Chief Legal Officer (since 1989); formerly Vice
President and Assistant Secretary (1989-1992).
Eric J. Schmitt, 45, Vice President, Finance and Treasurer (since
February 1994); Vice President, Financial Planning (1989-1994).
Denny W. Steele, 52, Executive Vice President, President IntePlex,
Inc. (since September 1995); Executive Vice President, Chief Information Officer
(1992-1995); formerly Vice President, Corporate Information Resources
(1990-1992).
I - 10
<PAGE>
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
For certain information regarding shares of the Company's Class A
Common Stock, including cash dividends per share, market prices per share, stock
market information and number of shareowners, and cash dividend information for
shares of Class B Common Stock, see "Selected Quarterly Results (unaudited)" as
set forth in Part II, Item 8, "Financial Statements and Supplementary Data," of
this Annual Report. Shares of the Company's Class B Common Stock were not
publicly traded but were convertible into shares of the Company's Class A Common
Stock at a conversion rate of 9.5285 shares of Class A Common Stock for each
share of Class B Common Stock.
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 Common 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 shares of Class B Common Stock were
subsequently cancelled.
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.
II - 1
<PAGE>
<TABLE>
Item 6. SELECTED FINANCIAL DATA (unaudited)
<CAPTION>
Dollars in thousands, except for per share amounts
=================================================================================================================
September 30, August 31,
--------------------------- -----------------------------------------
Years Ended: 1995 1994(c) 1993 1992 1991
=================================================================================================================
<S> <C> <C> <C> <C> <C>
Net sales and other revenues $8,447,607 $7,483,801 $6,823,552 $5,048,309 $4,295,397
Earnings from continuing operations 63,942 56,120(d) 28,607(e) 53,012 58,061
Earnings per share from continuing
operations (fully diluted) (a) 1.61 1.45(d) 0.75(e) 1.29 1.25
Cash dividends per share (a):
Class A Common 0.474 0.438 0.381 0.381 0.324
Class B Common - 1.996 3.630 3.630 3.085
Pre-tax margin (b) 1.30% 1.31%(d) 0.71%(e) 1.65% 2.09%
At Years Ended:
=================================================================================================================
Total assets $2,405,530 $1,995,057 $1,772,337 $1,412,177 $1,197,161
Long-term obligations 557,771 342,094 309,781 245,586 240,218
Shareowners' equity 519,349 461,851 417,800 395,262 455,234
Return on average shareowners' equity (b) 13.03% 12.76%(d) 7.04%(e) 12.47% 12.89%
=================================================================================================================
<FN>
(a) Gives effect to the 5% stock dividend declared January 26, 1995.
(b) From continuing operations.
(c) Reflects change in year-end from August 31 to September 30.
(d) Includes gain recognized from sale of investment securities of $2.9 million, net of income tax of $2.2
million and provision for an earthquake-related charge of $0.8 million, net of income tax benefit of $0.6
million.
(e) Includes provision for restructuring charge of $20.8 million, net of income tax benefit of $12.2 million.
II - 2
</TABLE>
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations 1995 Compared with 1994.
Net sales and other revenues in fiscal 1995 were 13% higher than 1994
while operating earnings and pre-tax earnings showed increases of 21% and 12%,
respectively. Major influences which impacted pre-tax earnings 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, equivalent in the aggregate to a net $0.06 per share. See Note 10 of
Notes to Consolidated Financial Statements.
Of the 13% increase in net sales and other revenues, approximately 1%
in the aggregate is attributable to the acquisitions of Colonial Healthcare
Supply Co. ("Colonial") in August 1995 and Southeastern Hospital Supply
Corporation ("Southeastern") in April 1994. Approximately 12% of the net sales
and other revenues increase reflects internal growth within the Company's
existing pharmaceutical distribution business.
Earnings per share before extraordinary loss increased 11% compared to
1994. The average number of common and common equivalent shares outstanding
increased 3% for the earnings per share computation.
Cost of sales increased 13% compared to 1994 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,
partially offset by increased opportunities for investment buying in the
Company's pharmaceutical distribution business, and by a higher mix of sales
from the Company's higher gross margin medical-surgical distribution business.
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.
Management of the Company anticipates further downward pressure on
gross margins in the Company's pharmaceutical distribution business during
fiscal year 1996 because of continued price competition influenced by large
buying groups. The Company expects that these pressures on operating margin may
be offset to some extent by increased sales of more profitable products, such as
generic drugs and medical-surgical supplies, and continued reductions in
distribution, selling, general and administrative expenses ("DSG&A") as a
II - 3
<PAGE>
percentage of net sales and other revenues through improved operating
efficiencies.
DSG&A increased 10% over 1994, while net sales and other revenues
increased 13% over the prior year. These expenses decreased as a percentage of
net sales and other revenues from 4.4% in fiscal 1994 to 4.3% in fiscal 1995.
The decreased DSG&A as a percentage of net sales and other revenues 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, partially
offset by increased DSG&A in the Company's medical-surgical supply distribution
business.
Net interest expense, excluding the aforementioned unusual investment
gain in 1994, increased from $23.0 million in 1994 to $30.5 million in 1995,
primarily due to increased borrowings and higher interest rates under the Credit
Agreement and interest on the new $100 million 7 1/4% Senior Notes due June 1,
2005 ("7 1/4% Senior Notes") which were issued June 1, 1995.
The effective tax rate in 1995 decreased to 41.60% from 42.80% in 1994
reflecting the higher earnings in 1995 and, therefore, minimizing the impact of
non-deductible expenses.
Inflation has not been a significant factor in either year. 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.
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 fiscal
year ended August 31, 1993.
Net sales and other revenues in fiscal 1994 were 10% higher than 1993
while operating earnings and pre-tax earnings showed increases of 63% and 103%,
respectively. Major influences which impacted pre-tax earnings 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 10 of Notes to Consolidated Financial Statements. Major
influences which impacted operating earnings and pre-tax earnings for 1993 were
the unusual provisions totaling $35.5 million for the restructuring plan
II - 4
<PAGE>
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 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.
Earnings per share before extraordinary loss increased 93% compared to
1993. The average number of common and common equivalent shares outstanding
increased 1% for the earnings per share computation. The uninsured
earthquake-related charge and investment gain for 1994 referred to above were
equivalent in the aggregate to a net $0.06 per share. The unusual charge and
costs referred to above for 1993 were equivalent to $0.56 per share. See Note
10 of Notes to Consolidated Financial Statements.
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. 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.
DSG&A, 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 1994 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 Liquid Yield OptionTM Notes due 2004 as reported in
Note 2 of Notes to Consolidated Financial Statements.
II - 5
<PAGE>
The effective tax rate in 1994 increased to 42.80% from 40.72% in
fiscal 1993 reflecting, primarily, higher non-deductible goodwill amortization
and lower non-taxable investment income in fiscal 1994.
Liquidity and Capital Resources
At September 30, 1995, capitalization consisted of 51% debt and 49%
equity, as compared to 41% and 59%, respectively, at September 30, 1994. The
increased debt percentage primarily reflects the new 7 1/4% Senior Notes and
additional borrowings under the Credit Agreement, due primarily to increased
investment in inventory. 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 under the Credit
Agreement were $159.0 million and $40.0 million at September 30, 1995 and 1994,
respectively. Cash and cash equivalents of $64.4 million at September 30, 1995
increased from $5.3 million at September 30, 1994, principally reflecting the 7
1/4% Senior Notes and additional borrowings under the Credit Agreement,
partially offset by inventory purchases, property acquisitions and other
factors.
On May 23, 1995, the Company sold $100 million aggregate principal
amount of 7 1/4% Senior Notes due June 1, 2005. The 7 1/4% Senior Notes were
issued pursuant to the $400 million shelf registration filed by the Company on
December 1, 1992. On June 1, 1995, the net proceeds of $99.0 million from the
sale of the 7 1/4% Senior Notes were used to reduce the outstanding balance
under the Credit Agreement. See Note 2 of Notes to Consolidated Financial
Statements.
On January 10, 1995, the Company acquired Biddle & Crowther Company, a
privately-held medical-surgical supply distributor for 643,604 shares of the
Company's Class A Common Stock, previously held as Treasury shares, valued at
approximately $10.8 million and the assumption of certain liabilities. See Note
4 of Notes to Consolidated Financial Statements.
On August 2, 1995, the Company acquired Colonial, a privately-held
medical-surgical supply distributor for approximately $50.7 million in cash and
the assumption of certain liabilities. This acquisition was financed from
borrowings under the Credit Agreement. See Note 4 of Notes to Consolidated
Financial Statements.
On January 26, 1995, the Company declared a 5% stock dividend on the
Company's Class A Common Stock which was paid on March 1, 1995 to shareowners of
record on February 6, 1995. The dividend was charged to retained earnings in
the amount of $44.2 million, which was based on the closing price of $23.375 per
II - 6
<PAGE>
share of Class A Common Stock on the declaration date.
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 $18.8
million in 1995 compared to $17.0 million in 1994, and $14.5 million in 1993,
reflecting, primarily, a 20% increase in the quarterly dividend rate on both the
Class A and Class B Common Stock during the second quarter of fiscal 1994.
While the Company has no policy with regard to the payment of dividends, during
the three-year period ended September 30, 1995, dividends have averaged 34% of
earnings before extraordinary loss.
Capital expenditures for 1995 were $41.1 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.
On October 1, 1994, the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities," which requires investments in debt and equity securities to
be carried at fair value. See Note 1 of Notes to Consolidated Financial
Statements.
In October 1995, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which requires adoption of the disclosure provisions no later
than the fiscal years beginning after December 15, 1995 and adoption of the
recognition and measurement provisions for nonemployee transactions entered into
after December 15, 1995. The new standard defines a fair value method of
accounting for stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period.
Pursuant to the new standard, companies are encouraged but are not
required, to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," but would be required to disclose in a note to the
financial statements pro forma net earnings and, if presented, earnings per
II - 7
<PAGE>
share as if the Company had applied the new method of accounting.
The accounting requirements of the new method are effective for all
employee awards granted after the beginning of the fiscal year of adoption. The
Company has not yet determined if it will elect to change to the fair value
method, nor has it determined the effect the new standard will have on net
earnings and earnings per share should it elect to make such a change. Adoption
of the new standard will have no effect on the Company's consolidated cash
flows.
During the fourth quarter of fiscal 1993, the Company approved a
restructuring plan for its pharmaceutical distribution business which resulted
in a pre-tax charge of $33.0 million in fiscal 1993. The restructuring plan
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 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 1995 and 1994, ten distribution facilities were closed
and workforce reductions were made to existing operations. Charges to the
restructuring reserve have consisted primarily of asset write-offs, moving and
severance costs, facility abandonments and lease settlements which, through
September 30, 1995, have totaled approximately $24.4 million, including
approximately $5.4 million of non-cash charges. Management anticipates that the
remaining cash outflow should be substantially completed by the end of the first
quarter of fiscal 1996.
The Company's working capital increased from $254.3 million at
September 30, 1994 to $515.5 million at September 30, 1995 and represented 21%
of total assets at September 30, 1995. The Company's current ratio was 1.39 at
September 30, 1995, compared to 1.21 at September 30, 1994. Trade receivables
outstanding were 18 days for 1995 and 19 days for 1994. The inventory turnover
rate on a FIFO basis was 6.9 times for both 1995 and 1994.
The Company believes that internally generated funds, funds available
under the existing Credit Agreement and funds potentially available under the
exiting shelf registration will be sufficient to meet anticipated cash and
capital needs.
II - 8
<PAGE>
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
a. Supplementary Data
<TABLE>
<CAPTION>
SELECTED QUARTERLY RESULTS (unaudited)
Dollars in thousands, except for per share amounts
==================================================================================================================================
First Second Third Fourth Fiscal
Year Ended September 30, 1995 Quarter Quarter Quarter Quarter Year
==================================================================================================================================
<S> <C> <C> <C> <C> <C>
Net sales and other revenues $1,983,863 $2,084,216 $2,157,361 $2,222,167 $8,447,607
Gross margin 115,943 127,548 124,050 135,670 503,211
Net earnings 13,549 17,864 16,875 15,654 63,942
Earnings per share (a) 0.35 0.45 0.42 0.39 1.61
Cash dividends per Class A Common share (a) 0.114 0.120 0.120 0.120 0.474
Market prices per Class A Common share (a) $19 7/8-13 5/8 $29 1/8-19 1/8 $27 3/4-21 $24 3/8-19 1/4 $29 1/8-13 5/8
Year Ended September 30, 1994
==================================================================================================================================
Net sales and other revenues $1,834,936 $1,845,449 $1,878,548 $1,924,868 $7,483,801
Gross margin 104,419 113,584 111,372 118,177 447,552
Net earnings 10,331 14,529(b) 15,027(c) 16,233(c) 56,120
Earnings per share (a) 0.27 0.38(b) 0.39(c) 0.41(c) 1.45
Cash dividends per share (a):
Class A Common 0.096 0.114 0.114 0.114 0.438
Class B Common 0.907 1.089 - - 1.996
Market prices per Class A Common share (a) $17 3/4-13 5/8 $18 7/8-15 1/8 $17 3/8-13 7/8 $16 -13 1/8 $18 7/8-13 1/8
==================================================================================================================================
<FN>
(a) Gives effect to the 5% stock dividend declared January 26, 1995.
(b) Includes provision for an earthquake-related charge of $0.8 million, net of income tax benefit of $0.6 million, or
$.02 per share.
(c) Includes gain recognized from sale of investment securities of $0.5 million (net of income tax of $0.5 million), or $.02
per share, and $2.4 million (net of income tax of $1.7 million), or $.06 per share for the third quarter and fourth
quarter, respectively.
Bergen Brunswig Corporation Class A Common Stock is listed on the New York Stock Exchange. There were approximately
2,800 Class A Common Stock shareowners of record on September 30, 1995.
</TABLE>
II - 9
<PAGE>
<TABLE>
<CAPTION>
b. Financial Statements
STATEMENTS OF CONSOLIDATED EARNINGS AND RETAINED EARNINGS
=================================================================================================================
Years Ended
September 30, Month Ended Year Ended
----------------------- September 30, August 31,
Dollars in thousands, except for per share amounts 1995 1994 1993 1993
=================================================================================================================
<S> <C> <C> <C> <C>
CONSOLIDATED EARNINGS
Net sales and other revenues $8,447,607 $7,483,801 $598,147 $6,823,552
--------------------------------------------------
Costs and expenses:
Cost of sales 7,944,396 7,036,249 566,796 6,388,744
Distribution, selling, general and administrative expenses 363,179 331,530 27,175 330,825
Restructuring charge - - - 33,000
--------------------------------------------------
Total costs and expenses 8,307,575 7,367,779 593,971 6,752,569
--------------------------------------------------
Operating earnings 140,032 116,022 4,176 70,983
Net interest expense 30,542 17,910 1,541 22,723
--------------------------------------------------
Earnings before taxes on income 109,490 98,112 2,635 48,260
Taxes on income 45,548 41,992 1,140 19,653
--------------------------------------------------
Earnings before cumulative effect of a change
in accounting principle 63,942 56,120 1,495 28,607
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 63,942 56,120 (7,218) 28,607
Extraordinary loss from early extinguishment of debt,
net of income tax benefit of $1,786 - - - (2,570)
--------------------------------------------------
Net earnings (loss) $ 63,942 $ 56,120 $ (7,218) $ 26,037
==================================================
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT SHARE
Earnings before cummulative effect of accounting change $ 1.61 $ 1.45 $ 0.04 $ 0.75
Cumulative effect of accounting change - - (0.23) -
--------------------------------------------------
Earnings (loss) before extraordinary loss 1.61 1.45 (0.19) 0.75
Extraordinary loss - - - (0.07)
--------------------------------------------------
Net earnings (loss) $ 1.61 $ 1.45 $ (0.19) $ 0.68
==================================================
CONSOLIDATED RETAINED EARNINGS
Balance at beginning of period $ 378,867 $ 342,166 $349,384 $ 337,857
Net earnings (loss) 63,942 56,120 (7,218) 26,037
5% stock dividend on Class A Common Stock (44,207) - - -
Excess cost of Treasury shares issued for acquisitions (1,579) (2,457) - -
Cash dividends on Class A Common Stock ($0.474 in 1995,
$0.438 in 1994 and $0.381 in 1993 per share) (18,794) (16,751) - (14,127)
Cash dividends on Class B Common Stock ($1.996 in 1994
and $3.630 in 1993 per share) - (211) - (383)
--------------------------------------------------
Balance at end of period $ 378,229 $ 378,867 $342,166 $ 349,384
==================================================
=================================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
II - 10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CONSOLIDATED BALANCE SHEETS
Dollars in thousands
==========================================================================================
September 30, 1995 1994
==========================================================================================
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 64,400 $ 5,264
Accounts and notes receivable, less allowance for
doubtful receivables: 1995, $21,364 ; 1994, $18,423 603,830 523,202
Inventories 1,158,465 904,809
Income taxes receivable 4,801 1,788
Prepaid expenses 12,389 10,305
-------------------------
Total current assets 1,843,885 1,445,368
-------------------------
Property - at cost:
Land 12,443 10,923
Buildings and leasehold improvements 81,729 77,107
Equipment and fixtures 144,562 127,037
-------------------------
Total property 238,734 215,067
Less accumulated depreciation and amortization 85,675 78,725
-------------------------
Property - net 153,059 136,342
-------------------------
Other assets:
Excess of cost over net assets of acquired companies 341,125 322,374
Other investments 3,799 22,063
Noncurrent receivables 7,706 9,384
Deferred charges and other assets 55,956 59,526
-------------------------
Total other assets 408,586 413,347
-------------------------
Total assets $2,405,530 $1,995,057
=========================
==========================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
II - 11
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
Dollars in thousands
==========================================================================================
September 30, 1995 1994
==========================================================================================
<S> <C> <C>
LIABILITIES AND SHAREOWNERS' EQUITY
Current liabilities:
Accounts payable $1,140,466 $ 995,030
Accrued liabilities 84,500 111,043
Customer credit balances 94,766 82,787
Deferred income taxes 7,353 945
Current portion of long-term obligations 1,325 1,307
-------------------------
Total current liabilities 1,328,410 1,191,112
-------------------------
Long-term obligations:
7 3/8% senior notes 149,189 149,078
5 5/8% senior notes 99,983 99,926
7 1/4% senior notes 99,662 -
Revolving bank loan payable 159,000 40,000
7% convertible subordinated debentures 20,914 20,934
6 7/8% Exchangeable subordinated debentures 10,575 10,575
Deferred income taxes 2,719 3,903
Other 15,729 17,678
-------------------------
Total long-term obligations 557,771 342,094
-------------------------
Shareowners' equity:
Capital stock:
Preferred - Authorized 3,000,000 shares; issued: none - -
Class A Common - Authorized 100,000,000 shares;
issued: 1995, 44,183,074 shares; 1994, 44,058,659 shares 66,275 66,088
Paid-in capital 163,075 155,079
Net unrealized loss on investments, net of income tax of $121 (319) -
Retained earnings 378,229 378,867
-------------------------
Total 607,260 600,034
Less Treasury shares, at cost: 1995, 4,354,558 shares;
1994, 6,844,057 shares 87,911 138,183
-------------------------
Total shareowners' equity 519,349 461,851
-------------------------
Total liabilities and shareowners' equity $2,405,530 $1,995,057
=========================
==========================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
II - 12
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
STATEMENTS OF CONSOLIDATED CASH FLOWS
==============================================================================================================================
Years Ended
September 30, Month Ended Year Ended
---------------------- September 30, August 31,
Dollars in thousands 1995 1994 1993 1993
==============================================================================================================================
<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 $ 63,942 $ 56,120 $ (7,218) $ 26,037
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 5,810 7,060 270 5,213
Depreciation and amortization of property 21,474 19,065 1,589 17,752
Deferred compensation 1,394 949 104 1,350
Amortization of customer lists 1,749 1,749 146 1,749
Amortization of excess of cost over net assets of acquired companies 9,003 8,696 692 8,575
Deferred income taxes 3,178 (3,545) 40 (15,364)
Amortization of original issue discount on senior notes 180 168 14 102
Amortization of deferred financing costs 915 926 73 846
Loss (gain) on dispositions of property 1,570 (1,229) (7) 85
Interest accretion on convertible zero coupon-subordinated notes - - - 6,304
Cumulative effect of a change in accounting principle - - 8,713 -
Effects of changes, net of acquisitions:
Receivables (74,683) (49,625) (16,105) (37,832)
Inventories (225,555) (241,585) 31,060 70,133
Prepaid expenses and other assets 410 (1,234) 4,233 9,363
Accounts payable 129,553 109,890 (735) 72,558
Accrued liabilities (31,223) 9,736 5,341 (2,854)
Customer credit balances 11,979 12,542 (1,747) 15,022
Income taxes payable (2,514) 5,509 628 (9,407)
-------------------------------------------------
Net cash flows from operating activities (82,818) (64,808) 27,091 169,632
-------------------------------------------------
INVESTING ACTIVITIES
- - --------------------
Sale (purchase) of other investments 17,824 (1,769) (337) (1,303)
Proceeds from sale of notes receivable with recourse 13,791 14,831 - 4,097
Property acquisitions (41,078) (24,876) (2,149) (33,934)
Proceeds from dispositions of property 7,228 2,204 43 652
Acquisition of businesses, less cash acquired (50,983) (2,701) - (343,127)
Proceeds from sale of business - - - 9,034
Sale of discontinued operations - - - (4,880)
-------------------------------------------------
Net cash flows from investing activities (53,218) (12,311) (2,443) (369,461)
-------------------------------------------------
FINANCING ACTIVITIES
- - --------------------
Proceeds from revolving bank loan 119,000 30,000 10,000 -
Proceeds from issuance of senior notes 99,650 - - 246,536
Repayment of other obligations (6,556) (14,370) (201) (24,992)
Redemption of convertible subordinated debentures (20) (2,212) - (45,854)
Redemption of exchangeable subordinated debentures - (330) - -
Early extinguishment of convertible zero coupon-subordinated notes - - - (215,952)
Shareowners' equity transactions:
Exercise of stock options 1,892 495 - 1,956
Cash dividends on Common Stock (18,794) (16,962) (3,645) (14,444)
-------------------------------------------------
Net cash flows from financing activities 195,172 (3,379) 6,154 (52,750)
-------------------------------------------------
Net increase (decrease) in cash and cash equivalents 59,136 (80,498) 30,802 (252,579)
Cash and cash equivalents at beginning of period 5,264 85,762 54,960 307,539
-------------------------------------------------
Cash and cash equivalents at end of period $ 64,400 $ 5,264 $ 85,762 $ 54,960
=================================================
==============================================================================================================================
<FN>
See accompanying Notes to Consolidated Financial Statements.
II - 13
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Years Ended September 30, 1995 and 1994 and August 31, 1993
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 records revenues when product is shipped or services are
provided to its customers. Net sales and other revenues include service fees of
$5.4 million, $4.4 million and $2.9 million for the years ended September 30,
1995 and 1994 and August 31, 1993, respectively, related to bulk shipments of
pharmaceuticals.
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.
On October 1, 1994, the Company adopted Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities," which requires investments in debt and equity securities to be
carried at fair value. Accordingly, the Company has classified its investments
as "available for sale" securities and has reported such investments at fair
value, with unrealized gains and losses excluded from earnings, and reported as
a separate component of shareowners' equity. Realized gains and losses on
investments are determined by the specific identification method and are
included in earnings. Such unrealized gains and losses at September 30, 1995
and realized gains and losses for the year then ended were not material.
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, 1995, by $147.0 million and at September 30, 1994, by $150.4 million.
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.
The excess of cost over net assets of acquired companies (net of
accumulated amortization of $38.0 million at September 30, 1995; $29.0 million
II - 14
<PAGE>
at September 30, 1994) is amortized on a straight-line basis principally over 40
years. Customer lists, included in deferred charges and other assets, ($10.5
million at September 30, 1995, net of accumulated amortization of $15.7 million;
$12.3 million at September 30, 1994, net of accumulated amortization of $14.0
million) are amortized on a straight-line basis over 15 years. At each balance
sheet date, management reviews tangible and intangible assets for possible
impairment based on several criteria, including, but not limited to sales
trends, undiscounted operating cash flows and other operating factors.
Noncurrent receivables include notes receivable from employees and officers
due at the Company's discretion in the amount of $3.2 million and $3.8 million
at September 30, 1995 and 1994, respectively.
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, 1995 and 1994, for
the one month ended September 30, 1993 and for the twelve-month period ended
August 31, 1993.
Certain other reclassifications have been made in the consolidated
financial statements and notes to conform to 1995 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
$159.0 million at September 30, 1995. The maximum outstanding borrowings under
the Credit Agreement for the year ended September 30, 1995 were $305.0 million.
On May 23, 1995, the Company sold $100 million aggregate principal amount
of 7 1/4% Senior Notes due June 1, 2005 (the "7 1/4% Senior Notes"). On June 1,
1995, the Company received net proceeds of $99.0 million (after underwriting
discount of $0.6 million) from the 7 1/4% Senior Notes. Interest on the 7 1/4%
Senior Notes is payable semi-annually on June 1 and December 1 of each year,
beginning December 1, 1995. The net proceeds were used to reduce the
II - 15
<PAGE>
outstanding balance under the Credit Agreement. On January 14, 1993, the
Company 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 Company has
the ability and intent to refinance the 5 5/8% Senior Notes under the existing
Credit Agreement and with funds potentially available under the existing shelf
registration. Interest on the Senior Notes is payable semi-annually on January
15 and July 15 of each year, beginning July 15, 1993. The 7 1/4% Senior Notes
and Senior Notes were issued pursuant to the $400 million shelf registration
filed by the Company in December 1992 and are not redeemable prior to maturity
and are not entitled to any sinking fund. The carrying value of the 7 1/4%
Senior Notes and 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 in September 1992, 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 22, 1992, all or any portion of such holder's 7% Debentures
for cash equal to the principal amount plus all 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 unredeemed 7% Debentures
receive interest on March 1 and September 1 of each year.
On February 10, 1993, the Company redeemed for cash $471.4 million 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 $0.1 million principal amount was converted into
1,169 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.
Cash paid for interest, net of amounts capitalized ($0.5 million in 1994
and $0.3 million in 1993), was $28.4 million, $24.1 million and $19.4 million in
1995, 1994, and 1993, respectively.
II - 16
<PAGE>
Scheduled future principal payments of long-term obligations, excluding
deferred income taxes, for the next five fiscal years are $1.3 million in 1996,
$260.2 million in 1997, $1.2 million in 1998, $1.1 million in 1999 and $1.0
million in 2000.
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 Stock, par value $1.50 per share (the "Common Stock"); and
3,000,000 shares of Preferred Stock without nominal or par value (the "Preferred
Stock").
The Board of Directors (the "Board") is authorized to divide the Preferred
Stock into one or more series, to determine the relative rights, preferences and
limitations of the shares of any class or of any such series. In addition, the
Board may give the Preferred Stock (or any series), special, limited, multiple
or no voting rights.
Subject to the preferences and other rights of the Preferred Stock, the
Common Stock may receive stock or cash dividends as declared by the Board and
each share of Common Stock is entitled to one vote per share at every meeting of
shareowners. In the event of any liquidation, dissolution or winding up of the
affairs of the Company, after payment to the owners of 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.
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.
II - 17
<PAGE>
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 shares of Class B Common
Stock were subsequently cancelled.
On January 26, 1995, the Company declared a 5% stock dividend on the
Company's Class A Common Stock which was paid on March 1, 1995 to shareowners of
record on February 6, 1995. The dividend was charged to retained earnings in
the amount of $44.2 million, which was 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.
Changes in Class A and Class B Common Stock, Paid-in capital and Treasury
shares for the fiscal years ended September 30, 1995, 1994 and August 31, 1993
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, 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)
5% Class A Common Stock
dividend - - - - 5,996 38,185
Exercise of stock options 124 187 - - 2,000 (295)
Acquisition of Biddle &
Crowther Company - - - - - 12,382
---------------------------------------------------------
Balance, September 30, 1995 44,183 $66,275 - $ - $163,075 $ (87,911)
=========================================================
</TABLE>
At September 30, 1995, there were outstanding options to purchase shares of
Class A Common Stock, under a 1983 stock option plan, at prices per share not
less than the fair market value on the dates the options were granted. No
additional options may be granted under this plan.
II - 18
<PAGE>
The Company has an Amended and Restated 1989 stock incentive plan which
authorizes the granting of stock options to officers, key employees and other
recipients to purchase shares of Class A Common Stock within a ten-year period
from date of grant at a price per share as may be set by the Company's
Compensation/Stock Option Committee. The number of shares available for grant
under the plan is formula-based, providing that, upon certain conditions, no
more than 1% of the number of issued shares at the immediately preceding fiscal
year end may be granted in any fiscal year to this class of optionees. Stock
option grants are also available to non-employee directors and only at a price
per share equal to the market value on the grant date. At September 30, 1995,
there were 671,508 shares available for grant under the plan, with 196,875
specifically reserved for non-employee directors.
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. No stock appreciation rights were outstanding as of
September 30, 1995, 1994 or August 31, 1993.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which requires adoption of the disclosure provisions no later
than fiscal years beginning after December 15, 1995 and adoption of the
recognition and measurement provisions for nonemployee transactions entered into
after December 15, 1995. The new standard defines a fair value method of
accounting for stock options and other equity instruments. Under the fair value
method, compensation cost is measured at the grant date based on the fair value
of the award and is recognized over the service period, which is usually the
vesting period.
Pursuant to the new standard, companies are encouraged, but not required,
to adopt the fair value method of accounting for employee stock-based
transactions. Companies are also permitted to continue to account for such
transactions under Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees," but would be required to disclose in a note to the
financial statements pro forma net earnings and, if presented, earnings per
share as if the Company had applied the new method of accounting.
The accounting requirements of the new method are effective for all
employee awards granted after the beginning of the fiscal year of adoption. The
Company has not yet determined if it will elect to change to the fair value
method, nor has it determined the effect the new standard will have on net
earnings and earnings per share should it elect to make such a change. Adoption
of the new standard will have no effect on the Company's consolidated cash
flows.
II - 19
<PAGE>
Changes in the number of shares represented by outstanding options during
the years ended September 30, 1995, 1994 and August 31, 1993 are summarized as
follows:
<TABLE>
<CAPTION>
1995 1994 1993
====================================================================================================
<S> <C> <C> <C>
Outstanding at beginning of year 1,282,983 929,775 995,130
Options granted (1995, $15.00 to $22.63 per share; 1994,
$14.29 to $16.90 per share; 1993, $18.75 to $20.12 per share) 319,500 542,325 272,651
Options exercised (1995, $7.42 to $21.29 per share; 1994,
$7.42 to $12.42 per share; 1993, $7.42 to $19.00 per share) (126,432) (78,791) (290,751)
Options cancelled (66,957) (110,326) (47,255)
-----------------------------------
Outstanding at end of year (1995, $7.42 to $22.63 per share) 1,409,094 1,282,983 929,775
===================================
</TABLE>
At September 30, 1995, options for 569,460 shares were exercisable. The
remaining options become exercisable in the following fiscal years: 1996,
275,700 shares; 1997, 283,169 shares; 1998, 211,125 shares; 1999, 69,640 shares.
At September 30, 1995, an aggregate of 2,771,465 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 August 2, 1995, the Company completed the acquisition of Colonial
Healthcare Supply Co. ("Colonial"), a privately-held medical-surgical supply
distributor headquartered in Lake Zurich, Illinois, for approximately $50.7
million in cash, acquired assets at fair value of approximately $47.3 million
and assumed liabilities of approximately $19.7 million, including approximately
$2.7 million of long-term debt which was paid by the Company on the acquisition
date. This acquisition was financed from borrowings under the Credit Agreement.
The Company recorded an excess of cost over net assets acquired of approximately
$23.1 million in the transaction.
On January 10, 1995 the Company completed the acquisition of Biddle &
Crowther Company ("B&C"), a privately-held medical-surgical supply distributor
headquartered in Seattle, Washington for 643,604 shares of the Company's Class A
Common Stock, previously held as Treasury shares, valued at approximately $10.8
million, plus expenses, acquired assets at fair value of approximately $12.0
million and assumed liabilities of approximately $5.2 million. The Company
recorded an excess of cost over net assets acquired of approximately $4.4
million in the transaction.
II - 20
<PAGE>
On August 31, 1994, the Company completed the acquisition of certain net
assets of Professional Medical Supply Co., a privately-held medical-surgical
supply distributor located in Denver, Colorado, for approximately $2.4 million
in cash, plus expenses, acquired assets at fair value of approximately $0.5
million, including excess of cost over net assets acquired and other intangible
assets of $1.9 million.
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 of the
Company's Class A Common Stock, previously held as Treasury shares, valued at
approximately $12.6 million, plus expenses, acquired assets at fair value of
approximately $23.9 million and assumed liabilities of approximately $16.3
million including 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 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 January 29, 1993, the Company acquired substantially all of the assets
of 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, plus
expenses, acquired assets at fair value of approximately $29.8 million and
assumed liabilities of approximately $23.1 million, including 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 November 18, 1992, the Company acquired the stock of Dr. T. C. Smith
Company ("T.C. Smith"), a privately-held pharmaceutical distributor, located in
Asheville and Raleigh, North Carolina, for approximately $8.2 million in cash,
plus expenses, acquired assets at fair value of approximately $32.4 million and
assumed liabilities of approximately $24.4 million, including 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.
On September 18, 1992, the Company completed its $33 per share cash tender
offer for the outstanding shares of common stock of Durr, a distributor of
pharmaceuticals and medical-surgical supplies based in Montgomery, Alabama. The
Company paid approximately $412.0 million in cash, including expenses of $16.7
million, acquired assets at fair value of approximately $370.9 million and
II - 21
<PAGE>
assumed liabilities of approximately $238.0 million, including long-term debt of
approximately $72.1 million. The acquisition was financed from borrowings under
the Credit Agreement (as described in Note 2) and from funds generated
internally. 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.
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 of the Company's Class A Common Stock). Earnings per share
are based upon 39,800,954 shares in 1995; 38,683,775 shares in 1994; and
38,129,108 shares in 1993. In 1993, the computation of fully diluted earnings
per share was anti-dilutive. Earnings per share are 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 through 2008,
excluding renewal options. Future minimum rental commitments at September 30,
1995, under operating leases having noncancelable lease terms in excess of one
year, aggregated $54.3 million, with rental payments during the five succeeding
years of $14.9 million, $12.9 million, $9.1 million, $6.8 million and $5.7
million, respectively. Future minimum rentals to be received under
noncancelable subleases at September 30, 1995 were not material. Net rental
expense for the years ended September 30, 1995, 1994 and August 31, 1993, was
$17.0 million, $15.9 million and $16.0 million, respectively, after deducting
sublease income of $0.1 million, $0.2 million and $0.7 million, 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
II - 22
<PAGE>
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.
Total Federal and state taxes on income for the fiscal years ended
September 30, 1995, 1994 and August 31, 1993 are summarized as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1995 1994 1993
===================================================================
<S> <C> <C> <C>
Currently payable
Federal $35,865 $36,818 $29,342
State 6,505 6,588 5,675
Deferred (principally Federal) 3,178 (1,414) (15,364)
-----------------------------
Total $45,548 $41,992 $19,653
=============================
Extraordinary loss:
Currently payable
Federal $ - $ - $(1,481)
State - - (305)
-----------------------------
Total $ - $ - $(1,786)
=============================
</TABLE>
Taxes on income vary from the statutory Federal income tax rate applied to
earnings before taxes on income as the result of the following:
<TABLE>
<CAPTION>
Dollars in thousands 1995 1994 1993
============================================================================
<S> <C> <C> <C>
Statutory Federal income tax rate applied
to earnings before taxes on income $38,322 $34,340 $16,732
Increase (decrease) in taxes resulting from:
Amortization of excess of cost over net
assets of acquired companies 3,055 2,912 2,895
State income taxes - net of Federal benefits 4,610 4,141 1,977
Governmental investment income (366) (348) (893)
Effects of purchase accounting - - (1,679)
Other (73) 947 621
---------------------------
Total taxes on income $45,548 $41,992 $19,653
===========================
</TABLE>
II - 23
<PAGE>
The tax effects of significant items comprising the Company's net deferred
tax liability as of September 30, 1995 and 1994 are as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1995 1994
========================================================================
<S> <C> <C>
Deferred tax liabilities:
Inventory basis difference due to LIFO
method and uniform capitalization $31,947 $30,713
Accelerated depreciation 7,967 7,871
Other 3,307 2,709
-------------------
Total 43,221 41,293
-------------------
Deferred tax assets:
Reserves for doubtful receivables 12,217 9,646
Restructuring charge not currently deductible 3,777 7,732
Vacation pay not currently deductible 1,566 2,012
Accrued liabilities not currently deductible 12,554 13,212
Other 3,035 3,843
-------------------
Total 33,149 36,445
-------------------
Net deferred tax liability $10,072 $ 4,848
===================
</TABLE>
Deferred taxes result from temporary differences in the recognition of
revenues and expenses for tax and financial reporting purposes. During 1995,
deferred taxes were increased to reflect purchase accounting on acquisitions.
Cash paid for income taxes was $41.0 million, $39.0 million and $38.8
million in 1995, 1994 and 1993, respectively.
8. Retirement and Savings Plans
The Company provides for retirement benefits through an elective retirement
savings plan and supplemental retirement plans.
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 $3.9
million, $4.1 million and $4.2 million to the plan in 1995, 1994 and 1993,
respectively.
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
II - 24
<PAGE>
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 1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1995 1994 1993
===================================================================
<S> <C> <C> <C>
Service cost $ 221 $ 131 $ 218
Interest cost 1,261 1,643 1,544
Amortization of prior service cost 378 397 424
Amortization of initial unrecognized
net obligation 264 286 264
--------------------------
Total $2,124 $2,457 $2,450
==========================
</TABLE>
Assumptions used to develop the net periodic pension cost for supplemental
retirement plans were:
<TABLE>
<CAPTION>
1995 1994 1993
======================================================================
<S> <C> <C> <C>
Discount rate 7.25%-8.25% 7.25%-8.25% 7.25%
Rate of increase in salary levels 5.25% 5.50% 5.25%
</TABLE>
The funded status of the supplemental retirement plans at September 30,
1995 and 1994 is as follows:
<TABLE>
<CAPTION>
Dollars in thousands 1995 1994
====================================================================================
<S> <C> <C>
Actuarial present value of benefit obligations:
Vested benefits $14,346 $15,506
Nonvested benefits 7 76
-------------------
Accumulated benefit obligation 14,353 15,582
Effect of assumed increase in future compensation levels 3,555 2,427
-------------------
Projected benefit obligation 17,908 18,009
Assets of plans at fair value (2,898) (2,520)
-------------------
Excess of projected benefit obligation over assets 15,010 15,489
Unrecognized prior service cost (2,888) (3,266)
Unrecognized net loss (4,386) (2,962)
Unrecognized net obligation remaining from date of adoption (3,842) (4,106)
-------------------
Pension liability recognized in the consolidated balance sheets $3,894 $ 5,155
===================
</TABLE>
At September 30, 1995, the Company owns life insurance in the aggregate
amount of $45 million covering substantially all the participants in the
supplemental retirement plans. The Company intends to keep this life insurance
in force until the demise of the participants.
II - 25
<PAGE>
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 $0.4 million, $0.3 million
and $0.3 million in 1995, 1994 and 1993, 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
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 approximately $0.3 million.
9. Contingencies
The Company received proceeds of $13.8 million and $14.8 million in 1995
and 1994, respectively, from receivables sold with recourse by the Company to
financial institutions and is contingently liable as guarantor of $23.0 million
and $29.4 million at September 30, 1995 and 1994 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, 1995, 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.
In July 1993, this customer filed a voluntary petition for relief under
Chapter 11 of the United States Bankruptcy 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 Superior Court in San Francisco County, with the
California State antitrust actions referenced in the next paragraph.
II - 26
<PAGE>
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 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. In
November 1994, the Federal court certified the class defined in the Federal
class action complaint for the time period October 15, 1989 to the present.
Plaintiffs seek injunctive relief and treble damages in an amount to be
determined at trial.
In October 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 judgment is entered into against both the
manufacturer and wholesaler defendants, the total exposure for joint and several
liability of the Company is limited to $1.0 million; (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
wholesaler defendants will be reimbursed by the 26 pharmaceutical defendants for
related legal fees and expenses up to $9.0 million 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.
The Company is involved in various additional items of litigation.
Although the amount of liability at September 30, 1995 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.
II - 27
<PAGE>
10. Restructuring and Other Unusual Items
During the fourth quarter of fiscal 1993, the Company approved a
restructuring plan for its pharmaceutical distribution business which resulted
in a pre-tax charge of $33.0 million in fiscal 1993. The restructuring plan
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 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 1995 and 1994, ten distribution facilities were closed and
workforce reductions were made to existing operations. Charges to the
restructuring reserve have consisted primarily of asset write-offs, moving and
severance costs, facility abandonments and lease settlements which, through
September 30, 1995, have totaled approximately $24.4 million, including
approximately $5.4 million of non-cash charges. Management anticipates that the
remaining cash outflow should be substantially completed by the end of the first
quarter of fiscal 1996.
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.
II - 28
<PAGE>
11. 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, 1995 approximate fair value.
The fair values of the Company's 7 1/4% Senior Notes and the Senior Notes are
estimated as follows, based on the market prices of these instruments as of
September 30, 1995:
<TABLE>
<CAPTION>
Recorded
Dollars in thousands Amount Fair Value
============================================================
<S> <C> <C>
7 3/8% Senior Notes $149,189 $156,120
5 5/8% Senior Notes 99,983 99,900
7 1/4% Senior Notes 99,662 103,700
</TABLE>
II - 29
<PAGE>
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, 1995 and 1994 and the
related statements of consolidated earnings and retained earnings and cash flows
for the years ended September 30, 1995 and 1994, the one month ended September
30, 1993 and the year ended August 31, 1993. 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, 1995 and 1994, and the
results of their operations and their cash flows for the years ended September
30, 1995 and 1994, the one month ended September 30, 1993 and the year ended
August 31, 1993, 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 in September 1993.
/s/ Deloitte & Touche LLP
- - -------------------------
Costa Mesa, California
November 1, 1995
II - 30
<PAGE>
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None.
II - 31
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Identification of Directors.
Information required by this item is set forth under the captions
"Election of Directors" and "Compliance with Section 16(a)" on pages 2 through 5
and page 10 of the registrant's definitive proxy statement dated December 14,
1995 for its January 25, 1996 Annual Meeting of Shareowners, as filed with the
Securities and Exchange Commission, and is incorporated herein by reference.
Identification of Executive Officers.
Information required by this item is contained in Item 4A captioned
"Executive Officers of Registrant" and is included in Part I of this Annual
Report.
ITEM 11. EXECUTIVE COMPENSATION
Information required by this item is set forth under the captions
"Director Compensation," "Compensation of Executive Officers," "Employment and
Severance Agreements," "Stock Option Grants and Exercises," "Retirement
Benefits" and "Certain Transactions" on page 7, pages 10 through 15 and page 20,
respectively, of the registrant's definitive proxy statement dated December 14,
1995 for its January 25, 1996 Annual Meeting of Shareowners, as filed with the
Securities and Exchange Commission, and is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
Information required by this item is set forth under the caption
"Beneficial Ownership of Securities" on pages 8 and page 9 of the registrant's
definitive proxy statement dated December 14, 1995 for its January 25, 1996
Annual Meeting of Shareowners, as filed with the Securities and Exchange
Commission, and is incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information required by this item is set forth as to certain
transactions with management and others under the caption "Director
Compensation" and as to management indebtedness under the caption "Certain
Transactions," and certain arrangements with respect to the indemnification of
Directors and Officers under the caption "Indemnification of Directors and
Officers" on pages 7, 20 and 25, respectively, of the registrant's definitive
proxy statement dated December 14, 1995 for its January 25, 1996 Annual Meeting
of Shareowners, as filed with the Securities and Exchange Commission, and is
incorporated herein by reference.
III - 1
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
(a) Documents filed as part of this report:
1. Financial Statements
--------------------
The following Consolidated Financial
Statements of Bergen Brunswig Corporation
and Subsidiaries are included in Part II,
Item 8:
Statements of Consolidated Earnings and
Retained Earnings for the Years Ended
September 30, 1995 and 1994, One Month
Ended September 30, 1993 and the Year
Ended August 31, 1993
Consolidated Balance Sheets, September 30,
1995 and 1994
Statements of Consolidated Cash Flows for
the Years Ended September 30, 1995 and
1994, One Month Ended September 30,
1993 and the Year Ended August 31, 1993
Notes to Consolidated Financial Statements
Independent Auditors' Report
Financial statements and schedules not listed are omitted because of the
absence of the conditions under which they are required or because all
material information is included in the consolidated financial statements
or notes thereto.
IV - 1
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
3. Exhibits
3(a) The By-Laws as amended and restated and dated October 16,
1995.
*3(b) The Restated Certificate of Incorporation dated May 23, 1994
is set forth as Exhibit 3 to the Company's Current Report on
Form 8-K dated May 23, 1995.
*4(a) 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 Securities and Exchange
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 on a consolidated basis.
*4(b) 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 the
Company's Registration Statement on Form 8-A dated February
14, 1994.
**10(a) Bergen Brunswig Corporation Deferred Compensa-tion Plan.
**10(b) Director Indemnification Agreement and Amend-ment to
Director Indemnification Agreement.
*10(c) Bergen Brunswig Corporation Bonus Plan as adopted September
1, 1977, amended October 19, 1990, is set forth as Exhibit
10(i) in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1991.
**10(d) Bergen Brunswig Corporation Stock Option Plans, other than
the 1989 Stock Incentive Plan.
IV - 2
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
3. Exhibits (Continued)
*10(e) 1989 Stock Incentive Plan of Bergen Brunswig Corporation is
set forth as Exhibit 10(j) in the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1989.
*10(f) Amendments to the Amended and Restated 1989 Stock Incentive
Plan of Bergen Brunswig Corporation dated October 20, 1994
are set forth as Appendix A on pages 28 and 29 of the
Registrant's definitive Proxy Statement dated December 22,
1994 for its January 26, 1995 Annual Meeting of Shareowners.
*10(g) Executive Loan Program is set forth as Exhibit 10(k) in the
Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1990.
10(h) Amended and Restated Executive Loan Program dated March
3, 1995.
*10(i) Non-Solicitation Agreement dated as of September 4, 1992
among W.A. Williamson, Jr., Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(2)
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(j) Non-Solicitation Agreement dated as of September 4, 1992
among Charles E. Adair, Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(3)
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(k) Non-Solicitation Agreement dated as of September 4, 1992
among Winfield Cotton, Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(4)
to Amendment No. 16 to Bergen Brunswig Corporation's and BBC
Acquisition Corp.'s Tender Offer Statement pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934.
IV - 3
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
3. Exhibits (Continued)
*10(l) 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 Company's
Annual Report on Form 10-K for the fiscal year ended August
31, 1992.
*10(m) Employment Agreement and Schedule.
*10(n) Severance Agreement and Schedule.
Exhibit 10(m) and (n) above are set forth as Exhibit 10(q)
and (r) in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994.
11 Computation of primary earnings per share and computation of
earnings per share assuming full dilution for the two years
ended September 30, 1995 and 1994, one month ended September
30, 1993 and three years ended August 31, 1993.
21 List of subsidiaries of Bergen Brunswig Corporation.
23 Independent Auditors' Consent.
24 Power of Attorney is set forth on the Signature pages in
Part IV of this Annual Report.
27 Financial Data Schedule for the year ended September 30,
1995.
*99(a) Split Dollar Life Insurance Plan with Emil P. Martini, Jr.
and Robert E. Martini.
*99(b) Capital Accumulation Plan and Amendment No. 1 thereto.
Exhibits 99(a) and (b) above are set forth as Exhibits 19(a)
and (b) in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989.
IV - 4
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
3. Exhibits (Continued)
*99(c) Credit Agreement dated as of September 15, 1992 by and among
Bergen Brunswig Drug Company, Bergen Brunswig Corporation
and Continental Bank N.A. (the "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(d) First Amendment to Credit Agreement dated December 23, 1992
is set forth as Exhibit 28(b) in the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1993.
*99(e) Second Amendment to Credit Agreement dated May 18, 1993 is
set forth as Exhibit 28(c) in the Company's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1993.
*99(f) Third Amendment to Credit Agreement dated August 27, 1993 is
set forth as Exhibit 99(f) in the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1993.
*99(g) Fourth Amendment to Credit Agreement dated as of September
1, 1993 is set forth as Exhibit 99(e) in the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1993.
*99(h) Amended and Restated Credit Agreement dated as of September
30, 1994 among Bergen Brunswig Drug Company, Bergen Brunswig
Corporation and Bank of America National Trust and Savings
Association is set forth as Exhibit 99(h) in the Company's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994.
*99(i) Item 1 - Legal Proceedings of Part II of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 as filed with the Securities and Exchange Commission,
are incorporated herein by reference in Part I, Item 3 of
this Annual Report.
IV - 5
<PAGE>
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K (Continued)
3. Exhibits (Continued)
*99(j) 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.
* Document has heretofore been filed with the Securities and Exchange
Commission and is incorporated herein by reference and made a part hereof.
** Incorporated herein by reference to the exhibits filed as part of the
Company's Registration Statement on Form S-3 (Registration No. 33-5530) and
Amendment Nos. 1 and 2 thereto relating to an offering of $43,000,000
principal amount of 6-7/8% Exchangeable Subordinated Debentures due 2011,
filed with the Securities and Exchange Commission on May 8, July 1, and
July 8, 1986, respectively.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K during the three months ended
September 30, 1995.
IV - 6
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
December 27, 1995 By /s/ Robert E. Martini
---------------------------------
Robert E. Martini
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS that each person whose signature appears
below, hereby constitutes and appoints Robert E. Martini, Dwight A. Steffensen
and Milan A. Sawdei and each of them singly, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including pre-effective amendments and post-effective
amendments) to this Annual Report on Form 10-K, and to file the same with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent may lawfully do or cause to
be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C> <C>
/s/ Robert E. Martini Chairman of the Board December 27, 1995
- - ---------------------- and Chief Executive
Robert E. Martini Officer and Director
(Principal Executive
Officer)
/s/ Donald R. Roden President and Chief December 27, 1995
- - -------------------- Operating Officer
Donald R. Roden and Director
/s/ Neil F. Dimick Executive Vice President, December 27, 1995
- - ------------------- Chief Financial Officer
Neil F. Dimick and Director
(Principal Financial
Officer and Principal
Accounting Officer)
</TABLE>
IV - 7
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- - --------- ----- ----
<S> <C> <C>
/s/ John Calasibetta Senior Vice President December 27, 1995
- - --------------------- and Director
John Calasibetta
/s/ Jose E. Blanco, Sr. Director December 27, 1995
- - ------------------------
Jose E. Blanco, Sr.
/s/ Rodney H. Brady Director December 27, 1995
- - --------------------
Rodney H. Brady
/s/ Charles C. Edwards, M.D. Director December 27, 1995
- - -----------------------------
Charles C. Edwards, M.D.
/s/ Charles J. Lee Director December 27, 1995
- - --------------------
Charles J. Lee
/s/ George R. Liddle Director December 27, 1995
- - ---------------------
George R. Liddle
/s/ James R. Mellor Director December 27, 1995
- - --------------------
James R. Mellor
/s/ George E. Reinhardt, Jr. Director December 27, 1995
- - -----------------------------
George E. Reinhardt, Jr.
/s/ Dwight A. Steffensen Director December 27, 1995
- - -------------------------
Dwight A. Steffensen
/s/ Francis G. Rodgers Director December 27, 1995
- - -----------------------
Francis G. Rodgers
</TABLE>
IV - 8
<PAGE>
INDEX TO EXHIBITS
EXHIBIT NO. PAGE NO.
- - ---------- -------
3(a) The By-Laws as amended and restated and dated 58
October 16, 1995.
*3(b) The Restated Certificate of Incorporation dated May 23, 1994
is set forth as Exhibit 3 to the Company's Current Report on
Form 8-K dated May 23, 1995.
*4(a) 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 Securities and Exchange
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 on a consolidated basis.
*4(b) 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 the
Company's Registration Statement on Form 8-A dated February
14, 1994.
**10(a) Bergen Brunswig Corporation Deferred Compensation Plan.
**10(b) Director Indemnification Agreement and Amendment to Director
Indemnification Agreement.
*10(c) Bergen Brunswig Corporation Bonus Plan as adopted September
1, 1977, amended October 19, 1990, is set forth as Exhibit
10(i) in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1991.
**10(d) Bergen Brunswig Corporation Stock Option Plans, other than
the 1989 Stock Incentive Plan.
<PAGE>
NDEX TO EXHIBITS (CONTINUED)
EXHIBIT NO. PAGE NO.
- - ---------- -------
*10(e) 1989 Stock Incentive Plan of Bergen Brunswig Corporation is
set forth as Exhibit 10(j) in the Company's Annual Report on
Form 10-K for the fiscal year ended August 31, 1989.
*10(f) Amendments to the Amended and Restated 1989 Stock Incentive
Plan of Bergen Brunswig Corporation dated October 20, 1994
are set forth as Appendix A on pages 28 and 29 of the
Registrant's definitive Proxy Statement dated December 22,
1994 for its January 26, 1995 Annual Meeting of Shareowners.
*10(g) Executive Loan Program is set forth as Exhibit 10(k) in the
Company's Annual Report on Form 10-K for the fiscal year
ended August 31, 1990.
10(h) Amended and Restated Executive Loan Program dated March 3, 89
1995.
*10(i) Non-Solicitation Agreement dated as of September 4, 1992
among W.A. Williamson, Jr., Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(2)
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(j) Non-Solicitation Agreement dated as of September 4, 1992
among Charles E. Adair, Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(3)
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(k) Non-Solicitation Agreement dated as of September 4, 1992
among Winfield Cotton, Durr-Fillauer Medical, Inc. and
Bergen Brunswig Corporation is set forth as Exhibit (c)(4)
to Amendment No. 16 to Bergen Brunswig Corporation's and BBC
Acquisition Corp.'s Tender Offer Statement pursuant to
Section 14(d)(1) of the Securities Exchange Act of 1934.
<PAGE>
NDEX TO EXHIBITS (CONTINUED)
EXHIBIT NO. PAGE NO.
- - ---------- -------
*10(l) 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 Company's
Annual Report on Form 10-K for the fiscal year ended August
31, 1992.
*10(m) Employment Agreement and Schedule.
*10(n) Severance Agreement and Schedule.
Exhibit 10(m) and (n) above are set forth as Exhibits 10(q)
and (r) in the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1994.
11 Computation of primary earnings per share and 100
computation of earnings per share assuming full dilution for
the two years ended September 30, 1995 and 1994 and the
three years ended August 31, 1993.
21 List of subsidiaries of Bergen Brunswig 104
Corporation.
23 Independent Auditors' Consent. 105
24 Power of Attorney is set forth on the Signature pages in
Part IV of this Annual Report.
27 Financial Data Schedule for the year ended 106
September 30, 1995.
*99(a) Split Dollar Life Insurance Plan with Emil P. Martini, Jr.
and Robert E. Martini.
*99(b) Capital Accumulation Plan and Amendment No. 1 thereto.
Exhibits 99(a) and (b) above are set forth as Exhibits 19(a)
and (b) in the Company's Annual Report on Form 10-K for the
fiscal year ended August 31, 1989.
<PAGE>
NDEX TO EXHIBITS (CONTINUED)
EXHIBIT NO. PAGE NO.
- - ---------- -------
*99(c) Credit Agreement dated as of September 15, 1992 by and among
Bergen Brunswig Drug Company, Bergen Brunswig Corporation
and Continental Bank N.A. (the "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(d) First Amendment to Credit Agreement dated December 23, 1992
is set forth as Exhibit 28(b) in the Company's Quarterly
Report on Form 10-Q for the quarter ended February 28, 1993.
*99(e) Second Amendment to Credit Agreement dated May 18, 1993 is
set forth as Exhibit 28(c) in the Company's Quarterly Report
on Form 10-Q for the quarter ended May 31, 1993.
*99(f) Third Amendment to Credit Agreement dated August 7, 1993 is
set forth as Exhibits 99(f) in the Company's Annual Report
on Form 10-K for the fiscal year ended August 31, 1993.
*99(g) Fourth Amendment to Credit Agreement dated as of September
1, 1993 is set forth as Exhibit 99(e) in the Company's
Quarterly Report on Form 10-Q for the quarter ended December
31, 1993.
*99(h) Amended and Restated Credit Agreement dated as of September
30, 1994 among Bergen Brunswig Drug Company, Bergen Brunswig
Corporation and Bank of America National Trust and Savings
Association is set forth as Exhibit 99(h) in the Company's
Annual Report on Form 10-K for the fiscal year ended
September 30, 1994.
*99(i) Item 1 - Legal Proceedings of Part II of the Company's
Quarterly Report on Form 10-Q for the quarter ended June 30,
1994 as filed with the Securities and Exchange Commission,
are incorporated herein by reference in Part I, Item 3 of
this Annual Report.
<PAGE>
NDEX TO EXHIBITS (CONTINUED)
EXHIBIT NO. PAGE NO.
- - ---------- -------
*99(j) 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.
* Document has heretofore been filed with the Securities and Exchange
Commission and is incorporated herein by reference and made a part hereof.
** Incorporated herein by reference to the exhibits filed as part of the
Company's Registration Statement on Form S-3 (Registration No. 33-5530) and
Amendment Nos. 1 and 2 thereto relating to an offering of $43,000,000
principal amount of 6-7/8% Exchangeable Subordinated Debentures due 2011,
filed with the Securities and Exchange Commission on May 8, July 1, and
July 8, 1986, respectively.
EXHIBIT 3(a)
AMENDED AND RESTATED BY-LAWS
BERGEN BRUNSWIG CORPORATION
AS OF OCTOBER 16, 1995
__________________________________
ARTICLE I
Office
------
Section 1. Principal Office. The principal office of the corporation is
----------------
hereby fixed and located at 4000 Metropolitan Drive, in the City of Orange,
County of Orange, and State of California. The board of directors is hereby
granted full power and authority to change said principal office to another
office within or without the State of California.
Section 2. Other Offices. Branch or subordinate offices may at any time
-------------
be established by the board of directors at any place or places where the
corporation is qualified to do business.
ARTICLE II
Meeting of Shareholders
-----------------------
Section 1. Place of Meetings. All meetings of shareholders shall be
-----------------
held at the principal office of the corporation or at such other place in the
States of New Jersey, California or New York as may be designated by the board
of directors or its executive committee and stated in the notice of the meeting.
Section 2. Annual Meetings. An annual meeting of the shareholders of
---------------
the corporation shall be held on such day during the months of December, January
<PAGE>
or February of each year, and at such hour, as shall be fixed by the board of
directors and designated in the notice of the meeting.
Section 3. Special Meetings. Special meetings of the shareholders may
----------------
be called for any purpose and at any time by the chairman of the board, the
president or by the board of directors or as provided in the certificate of
incorporation.
Section 4. Notice of Meetings. Written notice of the time, place and
------------------
purposes of annual and special meetings of shareholders shall be given to each
shareholder entitled to vote at such meeting at least ten (10) days and not more
than sixty (60) days before the date of such meeting, either personally or by
mail, charges prepaid, addressed to such shareholder at his address appearing on
the books of the corporation.
Section 5. Record Date. The board of directors shall fix the record
-----------
date for determination of shareholders entitled to notice of and to vote at any
annual or special meeting of shareholders. Such record date shall not be more
than sixty (60) days nor less than ten (10) days before the date of such
meeting.
Section 6. Nominations of Directors and Proposals of Business To Be
--------------------------------------------------------
Considered. (a) Nominations of persons for election to the board of directors
- - ----------
of the corporation and the proposal of business to be considered by the
shareholders may be made at an annual meeting of shareholders (i) pursuant to
the corporation's notice of such annual meeting, (ii) by or at the direction of
the board of directors or (iii) by any shareholder of the corporation who was a
shareholder of record at the time of giving of the notice provided for in this
Article II, Section 6 and who is entitled to vote at the meeting, provided that
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<PAGE>
such shareholder has complied with the notice procedures set forth in this
Article II, Section 6.
(b) For nominations or other business to be properly brought before an
annual meeting by a shareholder pursuant to clause (iii) of paragraph (a) of
this Article II, Section 6, the shareholder must have given timely notice
thereof in writing to the secretary of the corporation. To be timely, a
shareholder's notice shall be delivered to the secretary at the principal
executive offices of the corporation not less than sixty (60) days nor more than
ninety (90) days prior to the first anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than thirty (30) days or delayed by more than sixty
(60) days from such anniversary date, notice by the shareholder to be timely
must be so delivered not earlier than the ninetieth (90th) day prior to such
annual meeting and not later than the close of business on the later of the
sixtieth (60th) day prior to such annual meeting or the tenth (10th) day
following the day on which public announcement of the date of such meeting is
first made. Such shareholder's notice shall set forth (i) as to each person
whom the shareholder proposes to nominate for election or reelection as a
director, all information relating to such person that is required to be
disclosed in solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities Exchange
Act of 1934, as amended (the "Exchange Act") (including, without limitation,
such person's name, address and principal occupation and such person's written
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<PAGE>
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); (ii) as to any other business that the shareholder
proposes to bring before the meeting, a brief description of the business
desired to be brought before the meeting, the reasons for conducting such
business at the meeting and any financial or other interest in such business of
such shareholder and the beneficial owner, if any, on whose behalf the proposal
is made; and (iii) as to the shareholder giving the notice and the beneficial
owner, if any, on whose behalf the nomination or proposal is made (1) the name
and address of such shareholder, as they appear on the corporation's books, and
of such beneficial owner and (2) the class and number of shares of the
corporation which are owned beneficially and of record by such shareholder and
such beneficial owner.
(c) Notwithstanding anything in the second sentence of paragraph (b)
of this Article II, Section 6 to the contrary, in the event that the number of
directors to be elected to the board of directors of the corporation is
increased and there is no public announcement naming all of the nominees for
director or specifying the size of the increased board of directors made by the
corporation at least seventy (70) days prior to the first anniversary of the
preceding year's annual meeting, a shareholder's notice required by this Article
II, Section 6 shall also be considered timely, but only with respect to nominees
for any new positions created by such increase, if it shall be delivered to the
secretary at the principal executive offices of the corporation not later than
the close of business on the tenth (10th) day following the day on which such
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<PAGE>
public announcement is first made by the corporation.
(d) Only such persons who are nominated in accordance with the
procedures set forth in this Article II, Section 6 shall be eligible to serve as
directors and only such business shall be conducted at an annual meeting of
shareholders as shall have been brought before the meeting in accordance with
the procedures set forth in this Article II, Section 6; provided, however, that
the presiding officer of the meeting may elect, for good cause shown, to waive
one or more of the procedures of this Article II, Section 6. The presiding
officer of the meeting shall have the power and duty to determine whether a
nomination or any business proposed to be brought before the meeting was made in
accordance with the procedures set forth in this Article II, Section 6 and, if
any proposed nomination or business is not in compliance with this Article II,
Section 6 and the presiding officer elects not to waive such non-compliance, to
declare that such defective proposed business or nomination shall be
disregarded.
(e) For purposes of this Article II, Section 6, "public announcement"
shall mean disclosure in a press release reported by the Dow Jones News Service,
Associated Press or a comparable national news service or in a document publicly
filed by the corporation with the Securities and Exchange Commission pursuant to
Section 13, 14 or 15(d) of the Exchange Act.
(f) Notwithstanding the foregoing provisions of this Article II,
Section 6, a shareholder shall also comply with all applicable requirements of
the Exchange Act and the rules and regulations thereunder with respect to the
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<PAGE>
matters set forth in this Article II, Section 6. Nothing in this Article II,
Section 6 shall be deemed to affect any rights of shareholders to request
inclusion of proposals in the corporation's proxy statement pursuant to Rule
14a-8 under the Exchange Act.
Section 7. Quorum. Except as otherwise provided in the certificate of
------
incorporation, the presence in person or by proxy of the holders of a majority
of any class or series voting separately at a meeting and a majority of any two
or more classes voting together as a class at such meeting shall constitute a
quorum for the transaction of business; if any matter to come before the meeting
requires a vote of less than all the outstanding classes, then the presence in
person or by proxy of the holders of a majority of the class or classes or
series having the right to vote on such matter or matters shall constitute a
quorum for the transaction of such business. The shareholders present at a duly
called or held meeting at which a quorum is present may continue to do business
until adjournment notwithstanding the withdrawal of enough shareholders to leave
less than a quorum.
Section 8. Adjourned Meetings and Notice Thereof.
-------------------------------------
Any shareholders' meeting, annual or special, whether or not a quorum is
present, may be adjourned from time to time by the vote of a majority of the
shares the holders of which are either present in person or represented by proxy
at such meeting, but in the absence of a quorum no other business may be
transacted at such meeting; provided, however, that if a quorum of any class or
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<PAGE>
series is present and objects to such adjournment, the meeting shall not be
adjourned.
When any shareholders' meeting, either annual or special, is adjourned
for more than thirty days, notice of the adjourned meeting shall be given as in
the case of an original meeting. If any such meeting is adjourned for thirty
days or less, however, and the time and place of the adjourned meeting is
announced at the meeting at which the adjournment is taken, and the only
business transacted at the adjourned meeting is such as might have been
transacted at the original meeting, no further notice of the adjourned meeting
need be given to shareholders. If after the adjournment, the board of directors
fixes a new record date for the adjourned meeting, however, a notice of the
adjourned meeting shall be given to each shareholder of record on the new record
date.
Section 9. Voting. Shareholders shall vote their stock in the manner
------
provided in the certificate of incorporation as amended from time to time.
Shares held by the corporation shall not be voted at any meeting of shareholders
for any purpose.
Section 10. Proxies. Every shareholder entitled to vote at a meeting of
-------
shareholders may authorize another person or persons to act for him by proxy.
Every proxy shall be executed in writing by the shareholder or his agent, except
that a proxy may be given by a shareholder or his agent by telegram or cable or
by any means of electronic communication which results in a writing. No proxy
shall be valid after eleven months from the date of its execution unless a
longer time is expressly provided therein. Unless it states that it is
irrevocable and is coupled with an interest either in the stock itself or in the
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<PAGE>
corporation, a proxy shall be revocable at will. A proxy shall not be revoked
by the death or incapacity of the shareholder but the proxy shall continue to be
in force until revoked by the personal representative or guardian of the
shareholder. The presence at a meeting of any shareholder who has given a proxy
does not revoke the proxy unless the shareholder files written notice of the
revocation with the secretary of the meeting prior to the voting of the proxy or
votes the shares subject to the proxy by written ballot. A person named in a
proxy as the attorney or agent of a shareholder may, if the proxy so provides,
substitute another person to act in his place, including any other person named
as an attorney or agent in the same proxy. The substitution shall not be
effective until an instrument effecting it is filed with the secretary of the
corporation.
Section 11. Officers of Meetings. The chairman of the board, if present,
--------------------
shall preside at all meetings of shareholders. In his absence, the president,
if present, shall preside. In his absence, the vice president of the
corporation who has held that office for the longest period of those present at
the meeting shall preside. The secretary of the corporation shall, if present,
act as secretary of all meetings of shareholders. In his absence, any assistant
secretary of the corporation who is present shall act as secretary of the
meeting. If no assistant secretary is present, a temporary secretary for that
particular meeting shall be elected.
Section 12. Order of Business. The order of business at all meetings of
-----------------
the shareholders, unless changed by a majority vote of the shares entitled to
vote at such meeting, shall be as follows: (i) call to order; (ii) proof of
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<PAGE>
mailing of notice of meeting, proxy and proxy statement; (iii) report on
presence of a quorum; (iv) reading or waiver of minutes of preceding meeting;
(v) election of directors; (vi) vote on other proposals; (vii) report of
officers; and (viii) other business and adjournment.
Section 13. Voting List. The secretary or any assistant secretary shall
-----------
produce at each shareholders' meeting a list of shareholders entitled to vote at
the meeting or any adjournment thereof. Such list shall (a) be arranged
alphabetically within each class and series, with the address of, and the number
of shares held by, each shareholder, (b) be subject to the inspection of any
shareholder for reasonable periods during the meeting, and (c) be prima facie
evidence as to persons who are the shareholders entitled to examine such list or
to vote at the meeting.
Section 14. Action by Shareholders Without a Meeting. In order that the
----------------------------------------
corporation may determine the shareholders entitled to consent to corporate
action in writing without a meeting pursuant to Section 14A:5-6 of the New
Jersey Business Corporation Act, any shareholder of record seeking to have the
shareholders authorize or take corporate action by written consent shall, by
written notice to the secretary, request that the board of directors set a
record date. Upon receipt of such written notice, or in the absence of such
written notice at any time at its election, the board of directors may, as it
deems appropriate and in the best interests of the corporation, adopt a
resolution setting a record date for purposes of determining the shareholders
entitled to consent to corporate action in writing without a meeting. Any
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<PAGE>
record date set by the board of directors pursuant to this Section 14 shall not
precede, and shall not be more than ten (10) days after, the date on which the
resolution setting the record date is adopted by the board of directors.
ARTICLE III
Board of Directors
------------------
Section 1. Number of Directors. The board of directors of the
-------------------
corporation shall be composed of not less than nine (9) nor more than fifteen
(15) until changed by an amendment of the certificate of incorporation duly
adopted by the shareholders of the corporation.
The board of directors, following the adoption of these amended
by-laws, shall consist of thirteen (13) members. The number of
directors may be increased or decreased within the foregoing limitations by an
amendment to this Section 1 of Article III duly adopted by the board of
directors.
Section 2. Term of Office; Classification of Directors. The board shall
-------------------------------------------
be divided into three classes, which shall be denominated Classes I, II and III,
respectively. The number of directors in each class shall be as nearly equal as
possible. All persons who are now Class A directors shall continue in office
until the expiration of the terms for which they were elected and thereafter
until their successors shall have been elected and qualified. All other
directors shall continue in office until the first meeting of shareholders
following the conversion of all Class B Common Stock into Class A Common Stock
- 10 -
<PAGE>
pursuant to the certificate of incorporation (the "First Meeting"), and
thereafter until their successors shall have been elected and qualified.
At the First Meeting, Class I directors shall be elected for a term
ending at the third annual meeting of shareholders thereafter; Class II
directors shall be elected for a term ending at the first annual meeting of
shareholders thereafter; and Class III directors shall be elected for a term
ending at the second annual meeting of shareholders thereafter. Management
shall recommend, and the board of directors shall determine, which directors
shall be nominated for each such Class.
At each meeting of shareholders after the First Meeting, directors
shall be elected to fill the directorships of the Class of directors whose terms
have expired. Those directors shall hold office until the third successive
annual meeting of shareholders after their election and until their successors
shall have been elected and qualified, so that directors elected at annual
meetings of shareholders subsequent to the First Meeting shall each be elected
for a three year term, and that the term of one class of directors shall expire
at each annual meeting.
Section 3. Resignation and Removal. Any director may resign at any
-----------------------
time. Any director may be removed with or without cause as provided in the
certificate of incorporation. A special meeting for the purpose of removing a
director may be called for by the chairman of the board, the president or the
board of directors. Notice of such meeting shall be given to all the
shareholders of Class A Common Stock in the manner provided by these by-laws for
any annual or special meeting. A new director may be elected at the special
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<PAGE>
meeting called for the purpose of removing such director or at any subsequent
annual or special meeting of shareholders. If such director is elected at a
special meeting of shareholders, he shall serve until the term of the removed
director would have expired and thereafter until his successor shall have been
elected and qualified.
Section 4. Vacancies. If any vacancy should occur in the board of
---------
directors for any reason whatsoever, such vacancy may be filled by a majority of
the remaining directors. Each director so elected shall hold office until the
next succeeding annual or special meeting of the shareholders and thereafter
until his successor shall have been elected and qualified.
A vacancy or vacancies in the board of directors shall be deemed to
exist in the case of the death, resignation or removal of any director, or if
the authorized number of directors be increased, or if the shareholders fail at
any special meeting of the shareholders at which any director or directors are
elected to elect the authorized number of directors to be voted for at that
meeting. No reduction of the authorized number of directors shall have the
effect of removing any director prior to the expiration of his term of office.
Subject to the provisions of the certificate of incorporation, the
shareholders may elect a director or directors at any time to fill any vacancy
or vacancies not filled by the directors. If the board of directors accepts the
resignation of a director tendered to take effect at a future time, the board or
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<PAGE>
the shareholders shall have the power to elect a successor to take office when
the resignation is to become effective.
If the chairman of the board, the president or the board of directors
shall so direct, the secretary shall promptly call a special meeting of
shareholders to elect a director to fill such vacancy. Any director so elected
shall hold office for a term which is not inconsistent with Section 2 of Article
III of these by-laws, and thereafter until his successor shall have been elected
and qualified.
If a vacancy of all directors shall occur, the president or secretary
shall promptly call a special meeting of the shareholders to elect directors to
fill such vacancies. The persons so elected shall hold office until the next
annual meeting of shareholders and thereafter until their respective successors
shall have been elected and qualified.
Section 5. Place of Meeting. The board of directors may hold its
----------------
meetings at such place or places within or without the State of New Jersey as
the board may from time to time determine.
Section 6. Regular Meetings. Regular meetings of the board of directors
----------------
shall be held on such day in March or April, June or July and September or
October as shall be determined from time to time by the board, at 10:00 a.m. or
at such other time designated by the board on such day; provided, however, that
should said day fall upon a legal holiday, then any such meeting shall be held
at the same hour and place on the next succeeding day which is not a legal
holiday. A fourth regular meeting of the board of directors shall take place
immediately following the conclusion of the annual meeting of shareholders. At
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<PAGE>
the regular meeting of the board held immediately following the annual meeting
of shareholders, the board of directors shall organize and elect officers.
Section 7. Special Meetings. Special meetings of the board of directors
----------------
for any purpose or purposes may be called at any time by the chairman of the
board, the president, or by any three (3) directors.
Section 8. Notice of Meetings. Notice of the place of each regular
------------------
meeting of the board, and notice of the time and place of each special meeting
of the board, shall be given in writing to each director either by hand
delivery, facsimile transmission or mail, to the address or facsimile number, as
the case may be, of such director as shown upon the records of the corporation.
If such notice is delivered by hand or by facsimile transmission, it shall be
delivered or transmitted, as the case may be, at least twenty-four (24) hours
prior to the time of the holding of the meeting. If such notice is mailed, it
shall be sent either by overnight mail, in which case it shall be deposited with
the overnight mail service at least two days prior to the time of the holding of
the meeting, or by airmail, in which case it shall be deposited in the United
States Mails at least one week prior to the time of the holding of the meeting.
Such hand delivery, facsimile transmission or mailing as above provided shall be
due, legal and personal notice to such director.
Section 9. Waiver of Notice and Consent. The transactions of any
----------------------------
meeting of the board, however called and noticed or wherever held, shall be as
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valid as though such meeting had been duly held after a regular call and notice,
if a quorum be present and if, before or after the meeting, each of the
directors not present signs a written waiver of notice or a consent to the
holding of such meeting or an approval of the minutes thereof. All such
waivers, consents or approvals shall be filed with the corporate records or made
a part of the minutes of the meeting.
Section 10. Action without Meeting. Any action required or permitted to
----------------------
be taken by the board of directors by law or these by-laws may be taken without
a meeting, if, prior or subsequent to such action, all members of the board
shall individually or collectively consent in writing to such action. Each such
written consent or consents shall be filed with the minutes of the proceedings
of the board. Such action by written consent shall have the same force and
effect as a unanimous vote of such directors, for all purposes. Any certificate
or other document which relates to action so taken shall state that the action
was taken by unanimous written consent of the board of directors without a
meeting, and that the by-laws authorize the directors so to act.
Section 11. Quorum. A majority of the entire board of directors shall
------
constitute a quorum for the transaction of business.
Section 12. Voting. Every act or decision done or made by a majority of
------
the directors present at a meeting duly held at which a quorum is present shall
be regarded as the act of the board of directors. In determining the presence
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<PAGE>
of a quorum and the result of a vote taken by the board, no distinction shall be
made among the directors with respect to the class or classes or series of
shareholders which elected them.
Section 13. Presiding Officer. The chairman of the board shall preside
-----------------
at all meetings of the board at which he is present. In the absence of the
chairman of the board, the president shall preside. If the secretary of the
corporation or any assistant secretary is present, he shall record the minutes
of the meeting, and if neither of them is present the board shall designate a
secretary to record the minutes of the meeting.
Section 14. Adjournment. A quorum of the directors may adjourn any
-----------
directors' meeting to meet again at a time and place fixed in the resolutions
adjourning such meeting, and no notice of the time and place of the adjourned
meeting need be given if the period of adjournment does not exceed ten days in
any one adjournment. A meeting of directors at which less than a quorum is
present may also be adjourned until the next regular meeting of the board.
Section 15. Directors Emeritus. The title of director emeritus may be
------------------
conferred by the board of directors upon any former director of the corporation
or of a corporation acquired by the corporation who, in the judgment of the
board, has brought credit and distinction to this corporation, or such acquired
corporation, through long and faithful service. The title hereby created is
honorary only and does not carry with it the powers, duties or obligations of a
director of this corporation or any other power, duty or obligation. The title
may be conferred upon as many persons as the board deems appropriate. A
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<PAGE>
director emeritus shall not be deemed a director or member of the board of
directors but may attend meetings of the board and, upon invitation of the
chairman, may take part in the deliberative proceedings of the board, but may
not vote.
Section 16. Fees and Compensation. Directors shall receive for
---------------------
attendance at each regular or special meeting of the board a fixed sum and
expenses of attendance, if any, and an annual fee for service as a director,
such as may be allowed by resolution of the board. The board of directors may,
if it so desires, fix one fee for directors who are officers or employees of the
corporation (or who are receiving retirement benefits from it or a subsidiary or
under a pension trust of a subsidiary) and a higher fee for other directors.
Nothing herein contained shall be construed to preclude any director from
serving the corporation in any other capacity and receiving compensation
therefor.
ARTICLE IV
Committees
----------
Section 1. Establishment of Committees. The board of directors may, by
---------------------------
resolution adopted by a majority of the entire board, designate an executive
committee, consisting of the chairman of the board, the president and two (2) or
more other directors, and may at any time designate additional committees, each
of which shall consist of two (2) or more directors. Subject to the limitations
contained in Section 8 of this Article IV, the executive committee shall have
the maximum authority permitted by law in effect at the time of the exercise of
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<PAGE>
such authority and each other committee shall have such authority, not exceeding
the authority of the executive committee, as is provided by the board of
directors in the resolutions creating such committee.
Section 2. Presiding Officer and Secretary. The chairman of the board
-------------------------------
shall be chairman of the executive committee. In the absence of the chairman of
the board, the president shall reside. Each other committee shall choose one of
its members to act as chairman. Each committee shall from time to time
designate a secretary of the committee who shall keep a record of its
proceedings.
Section 3. Vacancies. Vacancies occurring from time to time in the
---------
membership of any committee may be filled by a majority of the entire board for
the unexpired term of the member whose death, resignation, removal or disability
causes such vacancy, and shall be so filled, if, as the result of such vacancy,
there shall be less than three (3) directors on the executive committee or less
than two (2) directors on any other committee, or, in the case of the executive
committee, if the chairman of the board should be the one whose death,
resignation, removal or disability causes such vacancy.
Section 4. Meetings. Each committee shall adopt its own rules of
--------
procedure and shall meet at such stated time as it may, by resolution, appoint,
and shall also meet whenever called together by the chairman of the board or the
president.
Section 5. Notice of Meetings. If the committee established regular
------------------
meeting dates, it shall not be necessary to give notice of any such regular
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<PAGE>
meeting. Notice of every special meeting shall be given in the manner and
within the time periods specified in Section 8 of Article III with respect to
notices of special meetings of the board of directors. Notice of any special
meeting may be waived in writing by all of the absent members of the committee
either before or after the meeting.
Section 6. Quorum. A quorum at any meeting of any committee shall be
------
not less than one-half (1/2) of the entire committee. In the case of the
executive committee, however, a quorum shall be not less than three (3) members.
Every act or decision done or made by a majority of the directors present at a
committee meeting duly held at which a quorum is present shall be regarded as
the act of the committee.
Section 7. Reports. Actions taken at a meeting of any committee shall
-------
be reported to the board at its next meeting following such committee meeting,
except that when the meeting of the board is held within two (2) days after the
committee meeting, such report shall, if not made at the first meeting, be made
to the board at the second meeting following such committee meeting.
Section 8. Limitation of Powers. No committee of the board of directors
--------------------
shall have authority to do any of the following:
(a) make, alter or repeal any by-law of the corporation;
(b) elect or appoint any director, or remove any officer or director;
(c) submit to shareholders any action that requires shareholders' approval;
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<PAGE>
(d) amend or repeal any resolution theretofore adopted by the board which
by its terms is amendable or repealable only by the board;
(e) fix the compensation of any officer who is a member of the committee
for serving as an officer of the corporation.
Section 9. Additional Powers of the Board. The board shall have the
------------------------------
power, with respect to existing committees, to
(a) fill any vacancy in any such committee;
(b) appoint one or more directors to serve as alternative members of any
such committee to act in the absence or disability of members of any such
committee with all the powers of such absent or disabled members;
(c) abolish any such committee at its pleasure; and
(d) remove any director from membership on such committee at any time, with
or without cause.
ARTICLE V
Officers
--------
Section 1. Officers Enumerated. The board of directors shall designate
-------------------
and elect the officers of the corporation which shall include but shall not be
limited to a chairman of the board, a president, one or more vice presidents, a
treasurer, one or more assistant treasurers, a secretary, and one or more
assistant secretaries. Any two or more offices may be held by the same person,
except that no one person may hold the offices of president and secretary. The
chairman of the board and the president shall be directors.
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<PAGE>
Section 2. Additional Officers. The board of directors may from time to
-------------------
time elect such other officers as it shall deem necessary, who shall hold their
offices for such terms and have such powers and perform such duties as shall be
prescribed from time to time by the board.
Section 3. Election and Term of Office. Each officer shall hold office
---------------------------
until the next annual election of officers, and until his successor has been
elected and qualified, unless he is earlier removed. All officers of the
corporation shall hold office at the pleasure of the board of directors, except
as otherwise provided by contract between the corporation and any such officer.
Section 4. Vacancies. Any vacancy in an enumerated office or in any
---------
other office may be filled by the board of directors.
Section 5. Removal and Resignation. Except as provided by contract
-----------------------
between the corporation and any officer, any officer may be removed, either with
or without cause, by a majority of the directors at any regular or special
meeting of the board or by any officer upon whom such power of removal may be
conferred by the board. Any officer may resign at any time by giving written
notice to the board or to the president. Any such resignation shall take effect
at the date of the receipt of such notice or at any later time specified therein
and, unless otherwise specified therein, the acceptance of such resignation
shall not be necessary to make it effective.
Section 6. Powers and Duties. The officers shall each have such
-----------------
authority and perform such duties in the management of the corporation as from
time to time may be prescribed by the board of directors or the executive
- 21 -
<PAGE>
committee and as may be delegated by the chairman of the board or president.
Without limiting the foregoing,
(a) Chairman of the Board. The chairman of the board shall be the
---------------------
chief executive officer of the corporation. He shall preside at all meetings of
the shareholders and at all meetings of the directors. He shall, subject only
to the direction and control of the board of directors, have general charge of,
supervision over and responsibility for the business and affairs of the
corporation. He shall generally possess such powers and perform such duties as
usually pertain to his office or to the office of the president.
(b) President. The president shall generally possess such powers and
---------
perform such duties as usually are incident to the office of the president,
including power to supervise the business and activities of the corporation and
to instruct, direct and control its other officers, agents and employees, and
shall perform such other duties as the chairman of the board shall direct. In
the absence of the chairman of the board, he shall preside at all meetings of
shareholders and of the board of directors.
(c) Vice President. The corporation shall have one or more vice
--------------
presidents as determined by the board of directors. The board of directors may
designate one or more of such vice presidents as executive vice president or
senior vice president. All vice presidents shall have such authority and shall
perform such duties as may be delegated from time to time by the chairman of the
- 22 -
<PAGE>
board, the president or the board of directors. Unless otherwise ordered by the
board of directors, any vice president may sign contracts or other instruments
authorized either generally or specifically by the board of directors.
(d) Secretary. The secretary or any assistant secretary shall cause
---------
notices of all meetings to be served as prescribed in these by-laws and shall
keep the minutes of all meetings of the shareholders, board of directors and all
committees of the board of directors or shareholders, and shall have charge of
the seal of the corporation. He shall perform such other duties and possess
such other powers as are incident to his office or as are assigned to him by the
chairman of the board, the president or the board of directors.
(e) Treasurer. The treasurer shall have the custody of the funds and
---------
securities of the corporation and shall keep or cause to be kept regular books
of account for the corporation. He shall account to the chairman of the board,
the president or the board of directors whenever they may require concerning all
his transactions as treasurer and concerning the financial condition of the
corporation. The treasurer shall perform such other duties and possess such
other powers as are incident to his office or as shall be assigned to him by the
chairman of the board, the president or the board of directors.
(f) Controller. The Controller shall have the immediate
----------
responsibility for the corporation's accounting practices, maintenance of its
- 23 -
<PAGE>
fiscal records, preparation of its financial reports and the responsibility for
general accounting, cost accounting, budgetary controls and insurance functions
of the corporation. He shall be under the broad administrative direction of the
Vice President, Financial and Chief Financial Officer, and shall perform such
other duties and possess such other powers as are incident to his office or as
shall be assigned to him by the chairman of the board, the president or the
board of directors.
ARTICLE VI
Capital Stock and Other Securities
----------------------------------
Section 1. Issuance of Stock and Other Securities. Certificates of any
--------------------------------------
class of capital stock of the corporation and certificates representing any
other securities of the corporation shall be signed by the president or any vice
president and may be countersigned by the secretary or the treasurer or the
assistant secretary. Any or all signatures upon a certificate may be a
facsimile. Such certificates shall be sealed with the seal of the corporation,
or shall bear a facsimile of such seal; and such certificates shall be
registered in such manner as the board of directors may by resolution prescribe.
Section 2. Lost, Stolen and Destroyed Certificates. In case of lost,
---------------------------------------
stolen or destroyed certificates, new certificates may be issued to take their
place upon receipt by the corporation of such bond of indemnity and under such
regulations as shall be prescribed by the board of directors, but the giving of
- 24 -
<PAGE>
a bond of indemnity may be waived by the board.
Section 3. Transfer of Securities. Shares of capital stock or any other
----------------------
registered securities of the corporation shall be transferable on the books of
the corporation by the holder thereof in person or by his authorized attorney
upon surrender for cancellation to the transfer agent for such security of an
outstanding certificate or certificates for the same number of shares or other
security with an assignment and authorization to transfer endorsed thereon or
attached thereto, duly executed, together with such proof of the authenticity of
the signature and of the power of assignor to transfer such securities as the
corporation or its agents may require.
Section 4. Record Date for Dividends or Rights. The board of directors
-----------------------------------
may fix a record date in advance as of which shares of stock shall be held of
record to entitle a shareholder to the payment of any dividend, to the allotment
of rights, or to exercise rights in respect to any change, conversion or
exchange of capital stock of the corporation. Such record date shall not
precede by more than sixty (60) days the date of such dividend payment, or such
allotment of rights, or the date when such change, conversion or exchange of
capital stock shall take effect. Only shareholders of record on such record
date shall be entitled to receive or exercise such rights or benefits when they
shall accrue, notwithstanding any transfer of any stock on the books of the
corporation subsequent to the record date which is fixed.
- 25 -
<PAGE>
Section 5. Issue of New Shares or Sale of Treasury Stock. Shares of the
---------------------------------------------
capital stock of the corporation which have been authorized but not issued and
treasury shares may be issued or sold from time to time and for such
consideration as may be determined by the board of directors. This amendment
shall be effective as of December 1, 1988.
ARTICLE VII
Corporate Seal
--------------
Section 1. Form and Use. The corporate seal shall have inscribed
------------
thereon the name of the corporation, the year of its incorporation, and the
words "Corporate Seal, New Jersey". The seal may be used by causing it or a
facsimile thereof to be impressed or reproduced on a document or instrument, or
affixed thereto.
ARTICLE VIII
Fiscal Year
-----------
Section 1. Time. The fiscal year of the corporation shall commence on
----
October 1 of each calendar year.
ARTICLE IX
Amendments
----------
Section 1. Amendments by Shareholders. These by-laws may be altered,
--------------------------
amended or repealed and new by-laws may be added by the shareholders.
- 26 -
<PAGE>
Section 2. Amendments by the Board of Directors. Subject to the right
------------------------------------
of the shareholders provided in Section 1 of this Article IX to adopt, amend or
repeal the by-laws, the board of directors may adopt, amend or repeal these
by-laws; provided, however, that a by-law or amendment thereto changing the
number of directors may be adopted, amended or repealed by the board of
directors only for the purpose of fixing the exact number of directors within
the limits specified in Article III, Section 1, hereof.
ARTICLE X
Miscellaneous
-------------
Section 1. Inspection of Corporate Records. The share register, or
-------------------------------
duplicate share register, the books of accounts and minutes of proceedings of
the shareholders, directors and of the executive committee may be examined for
any proper purpose upon the written demand of any person who shall have been a
shareholder of record or holder of a voting trust certificate for at least six
(6) months immediately preceding his demand, or any person holding, or so
authorized in writing by the holders of, at least five percent (5%) of the
outstanding shares of any class. Such inspection shall be made at any
reasonable time not less than five (5) days after such person shall have given
written notice of his demand to the corporation. Such inspection may be made in
person or by an agent or attorney and shall include the right to make extracts.
Demand for inspection other than at a shareholders' meeting shall be made in
writing upon the president or secretary of the corporation.
- 27 -
<PAGE>
Section 2. Checks, Drafts, Etc. All checks, drafts or other orders for
-------------------
the payment of money, notes or other evidences of indebtedness, issued in the
name of or payable to the corporation, shall be signed or endorsed by such
person or persons and in such manner, manually or by facsimile signature, as
shall be determined from time to time by the board of directors.
Section 3. Execution of Contracts. The board of directors may authorize
----------------------
any officer or officers, agent or agents, to enter into any contract or execute
any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances and, unless so
authorized by the board of directors, no officer, agent or employee shall have
any power or authority to bind the corporation by any contract or engagement or
to pledge its credit or to render it liable for any purpose or for any amount.
Section 4. Voting Shares of Other Corporations. The chairman of the
-----------------------------------
board, the president or any vice president is hereby authorized to vote,
represent and exercise on behalf of this corporation all rights incident to any
and all shares of stock of any other corporation or corporations standing in the
name of this corporation. The authority herein granted may be exercised by such
officers either in person or by proxy or by power of attorney duly executed by
said officer.
Section 5. Employee Benefit Plans. The corporation, by resolution of
----------------------
the board of directors, may adopt any one or more of the following plans for the
benefit of some or all employees, as hereinafter defined, and their families,
- 28 -
<PAGE>
dependents or beneficiaries:
(a) plans providing for the sale or distribution of its shares of any
class or series, held by it or issued or purchased by it for the purpose,
including stock option, stock purchase, stock bonus, profit-sharing, savings,
pension, retirement, deferred compensation and other plans of similar nature,
whether or not such plans also provide for the distribution of cash or property
other than its shares;
(b) plans providing for payments solely in cash or property other than
shares of the corporation, including profit-sharing, bonus, savings, pension,
retirement, deferred compensation and other plans of similar nature; and
(c) plans for the furnishing of medical service, life, sickness,
accident, disability or unemployment insurance or benefits; education; housing,
social and recreational service; and other similar aids and services.
The term "employees" as used in this Section means employees, officers,
directors, and agents of the corporation or any subsidiary thereof, or other
persons who are or have been actively engaged in the conduct of the business of
the corporation or any subsidiary thereof, including any who have retired,
become disabled or died prior to the establishment of any plan heretofore or
hereafter adopted.
Section 6. Director Loans. The corporation may lend money to or
--------------
guarantee any obligation of, or otherwise assist any director of the corporation
or of any subsidiary, whenever, in the judgment of the board of directors, such
- 29 -
<PAGE>
loan, guarantee or assistance may reasonably be expected to benefit the
corporation. Any such loan, guarantee or other assistance may be made only when
authorized by a majority of the entire board of directors and may be made with
or without interest and whether unsecured or secured in such manner as the board
shall approve, including, without limitation, by a pledge of shares of the
corporation, and may be made upon such other terms and conditions as the board
may determine. A director shall be disqualified from voting on any loan,
guarantee or other assistance proposed to be made to him or her pursuant to this
section. The statutory power of the board of directors to make such loans and
guarantees and to provide other assistance to employees of the corporation other
than directors shall not in any way be limited to this section.
- 30 -
EXHIBIT 10(h)
BERGEN BRUNSWIG CORPORATION
AMENDED AND RESTATED
EXECUTIVE LOAN PROGRAM
<PAGE>
BERGEN BRUNSWIG CORPORATION
AMENDED AND RESTATED
EXECUTIVE LOAN PROGRAM
This Amended and Restated Executive Loan Program (the "Program") of Bergen
Brunswig Corporation (the "Company"), effective this 3rd day of March, 1995,
supersedes and replaces the Company's original Executive Loan Program effective
as of April 19, 1990 (the "Original Plan") and governs all loans made under the
Original Plan and all loans made hereunder after the date hereof.
ARTICLE I
---------
PURPOSE
The purpose of the Program is to provide interest-free loans to corporate
officers of the Company.
ARTICLE II
----------
ELIGIBILITY
Except those officers who are also members of the Board of Directors, all
corporate officers of the Company are eligible to participate in the Program.
ARTICLE III
-----------
INITIAL LOAN
A corporate officer of the Company may borrow from the Company up to one
hundred twenty-five percent of the borrower's annual rate of base salary in
effect on the date the loan is requested. The loan shall be interest-free.
(Interest may, nevertheless, be imputed for tax purposes.) The loan shall
mature upon the borrower's termination of employment, unless the loan is earlier
- 1 -
<PAGE>
forgiven and cancelled in accordance with Article VI or Section 7.4 hereof. For
purposes of the Program, a borrower's employment shall terminate on account of
resignation, discharge, retirement, death or the indefinite suspension of
employment duties on account of disability. Upon maturity, the loan shall be
repaid to the Company upon the Company's demand, unless the loan is earlier
forgiven and cancelled in accordance with Article VI or Section 7.4 hereof.
ARTICLE IV
----------
LOAN CONDITIONS
4.1 In order to obtain a loan under the Program, a borrower must execute
all loan documents the Company requires (e.g., promissory notes and security
agreements). Collateral must be pledged to secure each loan. Any real or
personal property acceptable to the Company, as determined by the Company in its
sole and absolute discretion, may be used as collateral. The value of the
collateral at all times must be at least one hundred twenty-five percent of the
amount of the loan, as the Company shall, in good faith, determine. The Company
has the right to require additional collateral if the value of the collateral
falls below this required level. In such a case, if additional collateral is
not provided, the loan shall become due and payable and the Company may demand
repayment in full.
4.2 All pledges of collateral shall be made in accordance with applicable
law.
- 2 -
<PAGE>
4.3 The one hundred twenty-five percent collateral requirements shall be
reduced to one hundred percent to the extent the loan proceeds are pledged as
collateral and invested in a Company-approved investment.
4.4 Any earnings on collateral shall belong to the borrower who pledged
the collateral and shall not become part of the collateral.
4.5 A borrower shall, with approval of the Company, be entitled to
substitute assets as collateral.
ARTICLE V
---------
ADDITIONAL LOANS
5.1 No earlier than three years after the date this Program is funded, and
at the end of every three-year period thereafter, each borrower may request
additional loans. The maximum amount of any additional loan shall be the
difference between the amount the borrower previously borrowed and one hundred
twenty-five percent of the individual's annual rate of base salary on the date
the additional loan is requested.
5.2 To receive any additional loans, the individual must meet the same
conditions required for initial loans, including the collateral requirement. In
addition, the individual shall sign any required loan documents, including
documents which consolidate the additional loans with any prior loan.
- 3 -
<PAGE>
ARTICLE VI
----------
CHANGE IN CONTROL PROVISIONS
6.1 Any promissory note evidencing a loan issued pursuant to the Program
may, at the Company's option, provide that such loan shall be automatically
forgiven and cancelled upon the occurrence of a Change in Control (as defined
below) without any further action required on the part of the Company or its
Board of Directors and that the Company shall in such event take such steps as
the borrower under such loan may reasonably request in order to evidence such
forgiveness and cancellation of such loan and the immediate release of the
collateral securing such loan.
6.2 In the event any loan issued hereunder is forgiven and cancelled in
accordance with this Article VI, the Company shall be further obligated to pay
to the borrower under such loan, by certified or bank cashier's check within
three (3) days of demand therefor by such borrower, a lump sum payment equal to
(a) the amount of excise tax (if any) for which such borrower is or may become
liable under Internal Revenue Code Section 4999 (or any successor provision),
taking into account all compensation includable in the computation under
Internal Revenue Code Section 280G (or any successor provision), including,
without limitation, payments under this Section 6.2, plus (b) the amount of such
borrower's income tax liability arising from the Company's payment of the excise
tax liability referred to in the preceding clause (a), such that the payments
under clauses (a) and (b) taken together shall provide such borrower with
- 4 -
<PAGE>
sufficient after-income tax dollars to pay such borrower's liability for
Internal Revenue Code Section 4999 excise taxes. The maximum combined marginal
federal and applicable state(s) income tax rate in effect for the year in which
the payments under this Section 6.2 are to be made shall be used in computing
the amount of such payments. In the event that the Company and the borrower are
unable to agree upon the amount of the payment required under this Section 6.2,
such amount shall be determined by Tax Counsel (as defined below). The decision
of such Tax Counsel shall be final and binding upon both the Company and the
borrower. All fees and expenses of such Tax Counsel shall be paid by the
Company.
6.3 As used in this Article VI, the term "Change in Control" shall mean:
a. any "person" (as defined in Sections 13(d) and 14(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), shall become
the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing 50% or more of
the combined voting power of the Company's then outstanding securities, provided
however that for purposes of this calculation, purchases by employee benefit
plans of the Company and purchases by the Company itself shall be disregarded;
or
- 5 -
<PAGE>
b. there shall be consummated:
I) any consolidation, merger or transaction in the nature of a
Section 351 transaction under the Internal Revenue Code of 1986, as amended from
time to time (the "Code") (whether or not it meets the requirements for
nonrecognition of gain under Section 351 of the Code) of the Company in which
either the Company is not the continuing or surviving corporation, the majority
of the common stock of the Company is no longer held by holders of the Company's
common stock immediately prior to the transaction or pursuant to which shares of
the Company's common stock would be converted into cash, securities or other
property; provided, however, that a consolidation, merger or transaction in the
nature of a Section 351 transaction under the Code in which the holders of the
Company's common stock immediately prior to the merger own, on a proportionate
basis, at least 80% of the common stock of the surviving corporation immediately
after the transaction shall not be considered a change in control; or
ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially all,
of the operating assets of the Company; or
c. the stockholders of the Company approve a plan or proposal for
the liquidation or dissolution of the Company; or
d. during any rolling period of two consecutive years ending on any
date after the date hereof, the individuals who at the beginning of such period
constituted the Board of Directors of the Company and any new director whose
- 6 -
<PAGE>
election or nomination for election was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute a majority of the
Board of Directors; provided, however, that no director shall be considered to
have been so approved if such individual initially assumed office as a result of
either an actual or threatened "Election Contest" (as described in Rule 14a-11
promulgated under the Exchange Act) or other actual or threatened solicitation
of proxies or consents by or on behalf of a "person" (as defined in Sections
13(d) and 14(d) of the Exchange Act) other than the Board of Directors (a "Proxy
Contest"), including by reason of any agreement intended to avoid or settle any
Election Contest or Proxy Contest.
6.4 As used in this Article VI, the term "Tax Counsel" shall mean an
attorney at law or certified public accountant who is a partner at a law firm of
at least 25 attorneys or a partner at a "Big 6" accounting firm, respectively,
provided that such firm has not provided services to the Company or the
respective borrower or any affiliate of the Company or such borrower within the
last year.
6.5 This Article VI shall be deemed a part of and incorporated by
reference into each promissory note that includes a Change in Control provision
pursuant hereto, and the borrower under each such promissory note shall be
provided a copy of this Program and shall be entitled to enforce the provisions
of this Article VI (including but not limited to the obligations of the Company
- 7 -
<PAGE>
to pay certain of such borrower's tax liabilities as set forth above in Section
6.2) against the Company.
ARTICLE VII
-----------
MISCELLANEOUS PROVISIONS
7.1 The Program shall be administered by the plan administrator, which
shall be the Company acting through its Chief Executive Officer or such
officer's delegate. The plan administrator shall have the power to make all
determinations needed in connection with the Program, to adopt forms of loan
documents, to exercise all rights and powers allocated to the Company under this
Program and to do anything else which is helpful or necessary to the proper
operation of the Program.
7.2 The Company reserves the right, at any time, to require an individual
to sign substitute loan documents, provided the substitute documents do not
require additional collateral, accelerate the loan's maturity date, or impose an
interest charge, except as may be required to comply with applicable law.
7.3 The Company reserves the right at any time to amend, modify or
terminate the Program; provided that no such amendment, modification or
termination shall in any manner require additional collateral, accelerate the
maturity date, impose an interest charge or otherwise alter the terms of any
outstanding loans in a manner adverse to the borrowers under such loans, except
as may be required to comply with applicable law.
- 8 -
<PAGE>
7.4 The Company reserves the right at any time to discontinue making new
loans or to cancel any outstanding loan by forgiving it.
7.5 The Program is an unfunded deferred compensation plan which is subject
to the Employee Retirement Income Security Act of 1974 ("ERISA"). Accordingly,
federal law shall govern this Program. To the extent federal law is
inapplicable, New Jersey law shall apply.
7.6 The Program is strictly a voluntary undertaking on the part of the
Company and shall not constitute a contract between the Company and any
individual, or consideration for, or an inducement or condition of, the
employment of an individual. Nothing contained in the Program shall give any
individual the right to be retained in the service of the Company or to
interfere with or restrict the right of the Company, which is hereby expressly
reserved, to discharge or retire any individual at any time for any reason not
prohibited by statute, without the Company being required to show cause for the
termination.
- 9 -
<PAGE>
Executed at Orange, California, on the date first set forth above.
BERGEN BRUNSWIG CORPORATION,
a New Jersey corporation
By:
Title:
- 10 -
<TABLE>
<CAPTION>
EXHIBIT 11
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE TWO YEARS ENDED SEPTEMBER 30, 1995,
ONE MONTH ENDED SEPTEMBER 30, 1993
AND THREE YEARS ENDED AUGUST 31, 1993
(in thousands except for share and per share amounts)
====================================================================================================================================
Years Ended Years Ended
September 30, Month Ended August 31,
----------------------- September 30, -------------------------------------
1995 1994 1993 1993 1992 1991
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
DATA AS TO EARNINGS (LOSS)
Earnings from continuing operations $ 63,942 $ 56,120 $ 1,495 $ 28,607 $ 53,012 $ 58,061
Discontinued operations, net of taxes on income:
Earnings from operations - - - - 3,876 6,076
Gain on disposition - - - - 3,976 -
---------------------------------------------------------------------------
Earnings before cumulative effect of a
change in accounting principle 63,942 56,120 1,495 28,607 60,864 64,137
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 63,942 56,120 (7,218) 28,607 60,864 64,137
Extraordinary loss from early extinguishment
of debt, net of income tax benefit - - - (2,570) - -
---------------------------------------------------------------------------
Net earnings (loss) applicable to common
and common equivalent shares $ 63,942 $ 56,120 $ (7,218) $ 26,037 $ 60,864 $ 64,137
===========================================================================
DATA AS TO NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES:
Weighted average number of shares outstanding:
Class A Common Stock 39,588,670 38,215,314 37,294,584 37,054,365 38,346,477 43,558,303
Class B Common Stock - 40,675 100,492 100,492 100,492 109,992
Shares of Class A Common Stock to be issued from
assumed conversion of remainder of Class B
Common Stock - 346,900 857,046 857,046 857,046 925,362
Common equivalent shares assuming issuance of shares
represented by outstanding employees' stock options:
Additional shares assumed to be issued 1,314,239 506,751 244,916 460,881 764,365 1,024,326
Reduction of such additional shares assuming
proceeds invested in treasury stock (at
average market prices during each year) (1,101,955) (425,865) (176,218) (343,676) (541,289) (827,756)
---------------------------------------------------------------------------
Average number of common and common
equivalent shares outstanding 39,800,954 38,683,775 38,320,820 38,129,108 39,527,091 44,790,227
===========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF PRIMARY EARNINGS PER SHARE
FOR THE TWO YEARS ENDED SEPTEMBER 30, 1995,
ONE MONTH ENDED SEPTEMBER 30, 1993
AND THREE YEARS ENDED AUGUST 31, 1993
(in thousands except for share and per share amounts)
====================================================================================================================================
Years Ended Years Ended
September 30, Month Ended August 31,
----------------------- September 30, -------------------------------------
1995 1994 1993 1993 1992 1991
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
EARNINGS (LOSS) PER COMMON AND COMMON
EQUIVALENT SHARE OUTSTANDING:
Continuing operations $ 1.61 $ 1.45 $ .04 $ .75 $ 1.34 $ 1.30
Discontinued operations:
Earnings from operations - - - - .10 .13
Gain on disposition - - - - .10 -
---------------------------------------------------------------------------
Earnings before cumulative effect of
accounting change 1.61 1.45 .04 .75 1.54 1.43
Cumulative effect of accounting change - - (.23) - - -
---------------------------------------------------------------------------
Earnings (loss) before extraordinary loss 1.61 1.45 (.19) .75 1.54 1.43
Extraordinary loss - - - (.07) - -
---------------------------------------------------------------------------
Net earnings (loss) $ 1.61 $ 1.45 $ (.19) $ .68 $ 1.54 $ 1.43
===========================================================================
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11.1
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION
FOR THE TWO YEARS ENDED SEPTEMBER 30, 1995,
ONE MONTH ENDED SEPTEMBER 30, 1993
AND THREE YEARS ENDED AUGUST 31, 1993
(in thousands except for share and per share amounts)
====================================================================================================================================
Years Ended Years Ended
September 30, Month Ended August 31,
----------------------- September 30, ------------------------------------
1995 1994 1993 1993 1992 1991
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
NET EARNINGS (LOSS) APPLICABLE TO COMMON AND
COMMON EQUIVALENT SHARES (see Exhibit 11) $ 63,942 $ 56,120 $ (7,218) $ 26,037 $ 60,864 $ 64,137
Interest on Convertible Zero Coupon-Subordinated
Notes (6 3/4% yield to maturity), net of tax effect - - - 3,812 8,735 8,324
---------------------------------------------------------------------------
Net earnings (loss) applicable to common and common
equivalent shares assuming full dilution $ 63,942 $ 56,120 $ (7,218) $ 29,849 $ 69,599 $ 72,461
===========================================================================
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) 39,800,954 38,683,775 38,320,820 38,129,108 39,527,091 44,790,227
Additional shares of Class A Common Stock resulting
from assumed conversion of Convertible Zero
Coupon-Subordinated Notes (6 3/4% yield to maturity) - - - 3,642,272 8,156,007 8,156,007
Excess of incremental shares assumed to be issued
under stock options (using market prices at the end
of each year) over shares used in computing primary
earnings per share (using average market prices
during each year) - 7,234 - 638 4,746 9,666
---------------------------------------------------------------------------
Average number of common and common equivalent
shares outstanding assuming full dilution 39,800,954 38,691,009 38,320,820 41,772,018 47,687,844 52,955,900
===========================================================================
EARNINGS PER COMMON AND COMMON EQUIVALENT
SHARE OUTSTANDING ASSUMING FULL DILUTION:
Continuing operations $ .78
Discontinued operations:
Earnings from operations -
Gain on disposition -
----------
Earnings before extraordinary loss .78
Extraordinary loss (.06)
----------
Net earnings as computed $ .72 (2)
==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT 11.1
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF EARNINGS PER SHARE ASSUMING FULL DILUTION
FOR THE TWO YEARS ENDED SEPTEMBER 30, 1995,
ONE MONTH ENDED SEPTEMBER 30, 1993
AND THREE YEARS ENDED AUGUST 31, 1993
(in thousands except for share and per share amounts)
====================================================================================================================================
Years Ended Years Ended
September 30, Month Ended August 31,
----------------------- September 30, ------------------------------------
1995 1994 1993 1993 1992 1991
====================================================================================================================================
<S> <C> <C> <C> <C> <C> <C>
EARNINGS (LOSS) PER COMMON AND COMMON EQUIVALENT
SHARE OUTSTANDING ASSUMING FULL DILUTION:
Continuing operations $ 1.61 $ 1.45 $ .04 $ .75 $ 1.29 $ 1.25
Discontinued operations:
Earnings from operations - - - - .08 .12
Gain on disposition - - - - .09 -
---------------------------------------------------------------------------
Earnings before cumulative effect of accounting change 1.61 1.45 .04 .75 1.46 1.37
Cumulative effect of accounting change - - (.23)
---------------------------------------------------------------------------
Earnings (loss) before extraordinary loss 1.61 1.45 (.19) .75 1.46 1.37
Extraordinary loss - - - (.07) - -
---------------------------------------------------------------------------
Net earnings (loss) for Statements of
Consolidated Earnings (1) $ 1.61 $ 1.45 $ (.19) $ .68 $ 1.46 $ 1.37
===========================================================================
<FN>
(1) For the years ended August 31, 1992 and 1991, the Company assumed conversion of the Convertible Zero Coupon-Subordinated Notes
(6 3/4% yield to maturity) (which are not "common stock equivalents") because the effect of such assumed conversion is dilutive
in computing earnings per share assuming full dilution. In 1993, the computation of earnings per share assuming full dilution
does not assume conversion of the Convertible Zero Coupon-Subordinated Notes because the effect would be anti-dilutive.
(2) This computation is submitted in accordance with Regulation S-K, Item 601(b)(11) although it is contrary to paragraph 40 of
Accounting Principles Board Opinion No. 15 because it produces an anti-dilutive result.
</TABLE>
EXHIBIT 21
BERGEN BRUNSWIG CORPORATION AND SUBSIDIARIES
============================================
SUBSIDIARIES OF REGISTRANT
The following is a list of the significant subsidiaries of registrant as of
November 30, 1995:
<TABLE>
<CATION>
PERCENTAGE
OF VOTING
SECURITIES
STATE OF OWNED BY
NAME INCORPORATION REGISTRANT
- - ------------------------------ ------------- ----------
<S> <C> <C>
Durr-Fillauer Medical, Inc. Delaware 100%
Bergen Brunswig Drug Company California (1)
Durr Medical Corporation Alabama (1)
<FN>
(1) 100% owned by Durr-Fillauer Medical, Inc.
</TABLE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement Nos.
2-54345, 2-63803, 2-75715, 2-88474, 2-96491, 33-32465 and 33-57537 on Form S-8
and in Registration Statement Nos. 33-55136, 33-53817, 33-57325 and 33-59784 on
Form S-3 of our report dated November 1, 1995, appearing in and incorporated by
reference in this Annual Report on Form 10-K of Bergen Brunswig Corporation for
the fiscal year ended September 30, 1995.
/s/ Deloitte & Touche LLP
- - -------------------------
Costa Mesa, California
December 27, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> SEP-30-1995
<EXCHANGE-RATE> 1
<CASH> 64,400
<SECURITIES> 0
<RECEIVABLES> 603,830
<ALLOWANCES> 21,364
<INVENTORY> 1,158,465
<CURRENT-ASSETS> 1,843,885
<PP&E> 238,734
<DEPRECIATION> 85,675
<TOTAL-ASSETS> 2,405,530
<CURRENT-LIABILITIES> 1,328,410
<BONDS> 557,771
<COMMON> 66,275
0
0
<OTHER-SE> 453,074
<TOTAL-LIABILITY-AND-EQUITY> 2,405,530
<SALES> 0
<TOTAL-REVENUES> 8,447,607
<CGS> 7,944,396
<TOTAL-COSTS> 8,307,575
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 5,810
<INTEREST-EXPENSE> 30,542
<INCOME-PRETAX> 109,490
<INCOME-TAX> 45,548
<INCOME-CONTINUING> 63,942
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 63,942
<EPS-PRIMARY> 1.61
<EPS-DILUTED> 1.61
</TABLE>
