SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934(NO FEE REQUIRED)
For the fiscal quarter ended JUNE 30, 1996
----------------------
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 92868-3510
- ------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (714) 385-4000
----------------
NO CHANGE
- --------------------------------------------------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Title Of Each Class Of Number Of Shares Outstanding
Common Stock July 31, 1996
------------------------------------ ----------------------------
Class A Common Stock -
par value $1.50 per share 40,045,014
INDEX TO EXHIBITS FOUND ON PAGE 15.
1
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX
-----
PAGE NO.
--------
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets, June
30, 1996 and September 30, 1995 3
Statements of Consolidated Earnings
for the third quarter and nine
months ended June 30, 1996 and 1995 4
Statements of Consolidated Cash Flows
for the nine months ended
June 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 11
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Index to Exhibits 15
2
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BERGEN BRUNSWIG CORPORATION
---------------------------
CONSOLIDATED BALANCE SHEETS
JUNE 30, 1996 AND SEPTEMBER 30, 1995
(dollars in thousands)
(Unaudited)
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
June 30, September 30, LIABILITIES AND June 30, September 30,
- - ASSETS - - 1996 1995 - - SHAREOWNERS' EQUITY - - 1996 1995
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
CURRENT ASSETS: CURRENT LIABILITIES:
Cash and cash equivalents .......... $ 32,241 $ 64,400 Accounts payable ....................... $1,178,603 $1,140,466
Accounts and notes receivable, Accrued liabilities .................... 77,092 84,500
less allowance for doubtful Customer credit balances ............... 124,352 94,766
receivables: $26,338 at June 30, Income taxes payable ................... 842 --
1996 and $21,364 at September Deferred income taxes .................. 3,728 7,353
30, 1995 ......................... 589,923 603,830 Current portion of
Inventories ........................ 1,172,197 1,158,465 long-term obligations ............... 2,956 1,325
Income taxes receivable ............ -- 4,801 ---------- ----------
Prepaid expenses ................... 6,983 12,389 Total current liabilities ..... 1,387,573 1,328,410
---------- ---------- ---------- ----------
Total current assets ...... 1,801,344 1,843,885
---------- ---------- LONG-TERM OBLIGATIONS:
7 3/8% senior notes .................... 149,272 149,189
5 5/8% senior notes .................... -- 99,983
7 1/4% senior notes .................... 99,688 99,662
Revolving bank loan payable ............ 109,000 159,000
PROPERTY - at cost: 7% convertible subordinated
Land ............................... 12,978 12,443 debentures .......................... 20,609 20,914
Building and leasehold improvements 82,537 81,729 6 7/8% exchangeable subordinated
Equipment and fixtures ............. 155,161 144,562 debentures .......................... 8,425 10,575
---------- ---------- Deferred income taxes .................. 2,577 2,719
Total property ............ 250,676 238,734 Other .................................. 17,625 15,729
Less accumulated depreciation ---------- ----------
and amortization................. 103,406 85,675 Total long-term obligations ... 407,196 557,771
---------- ---------- ---------- ----------
Property - net ............ 147,270 153,059
---------- ---------- SHAREOWNERS' EQUITY:
Capital Stock:
Preferred - authorized 3,000,000
shares; issued: none ............. -- --
Class A Common - authorized
OTHER ASSETS: 100,000,000 shares; issued:
Excess of cost over net assets 44,392,328 shares at June 30,
of acquired companies ........... 334,342 341,125 1996 and 44,183,074 shares at
Investments ........................ 5,497 3,799 September 30, 1995................ 66,588 66,275
Noncurrent receivables ............. 10,678 7,706 Paid-in capital ........................ 166,080 163,075
Deferred charges and other assets .. 60,018 55,956 Net unrealized gain (loss) on
---------- ---------- investments, net of income tax
Total other assets ........ 410,535 408,586 of $356 at June 30, 1996 and $(121)
---------- ---------- at September 30, 1995 ............... 559 (319)
Retained earnings ...................... 419,064 378,229
---------- ----------
Total ............................... 652,291 607,260
Less Treasury shares at cost:
4,354,558 shares at June 30,
1996 and September 30, 1995 ......... 87,911 87,911
---------- ----------
Total shareowners' equity ..... 564,380 519,349
---------- ----------
TOTAL ASSETS ......................... $2,359,149 $2,405,530 TOTAL LIABILITIES AND
========== ========== SHAREOWNERS' EQUITY .................. $2,359,149 $2,405,530
========== ==========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
3
</TABLE>
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<TABLE>
BERGEN BRUNSWIG CORPORATION
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STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(in thousands except per share amounts)
(Unaudited)
<CAPTION>
THIRD QUARTER NINE MONTHS
------------------------ -----------------------
1996 1995 1996 1995
------------------------ -----------------------
<S> <C> <C> <C> <C>
Net sales and other revenues ......... $2,492,194 $2,157,361 $7,323,916 $6,225,440
---------- ---------- ---------- ----------
Costs and expenses:
Cost of sales ...................... 2,347,302 2,033,311 6,896,914 5,857,899
Distribution, selling, general and
administrative expenses .......... 104,244 88,268 308,179 263,204
---------- ---------- ---------- ----------
Total costs and expenses ....... 2,451,546 2,121,579 7,205,093 6,121,103
---------- ---------- ---------- ----------
Operating earnings ................... 40,648 35,782 118,823 104,337
Net interest expense ................. 7,553 6,688 23,631 21,082
---------- ---------- ---------- ----------
Earnings before taxes on income ...... 33,095 29,094 95,192 83,255
Taxes on income ...................... 13,900 12,219 39,981 34,967
---------- ---------- ---------- ----------
Net earnings ......................... $ 19,195 $ 16,875 $ 55,211 $ 48,288
========== ========== ========== ==========
Earnings per common and
common equivalent share ............ $ .48 $ .42 $ 1.37 $ 1.22
========== ========== ========== ==========
Cash dividends per share of
Class A Common Stock .............. $ .120 $ .120 $ .360 $ .354
========== ========== ========== ==========
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
4
</TABLE>
<PAGE>
<TABLE>
BERGEN BRUNSWIG CORPORATION
---------------------------
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(in thousands)
<CAPTION>
-------------------------
1996 1995
-------------------------
(Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net earnings ............................................................. $ 55,211 $ 48,288
Adjustments to reconcile net earnings to net cash flows
from operating activities:
Provision for doubtful accounts ........................................ 6,975 4,383
Depreciation and amortization of property .............................. 18,423 14,800
Deferred compensation .................................................. 1,408 853
Amortization of customer lists ......................................... 1,312 1,312
Amortization of excess of cost over net assets of acquired companies ... 7,182 6,673
Amortization of original issue discount on senior notes ................ 126 128
Amortization of deferred financing costs and other intangible assets ... 1,294 1,316
Deferred income taxes .................................................. (4,245) 417
Loss (gain) on dispositions of property ................................ 24 (154)
Effects of changes on:
Receivables .......................................................... 3,960 (14,137)
Inventories .......................................................... (13,732) (154,445)
Prepaid expenses and other assets .................................... (1,588) 551
Accounts payable ..................................................... 38,137 83,088
Accrued liabilities .................................................. (7,408) (32,939)
Customer credit balances ............................................. 29,586 1,802
Income taxes receivable .............................................. 5,643 798
--------- ---------
Net cash flows from operating activities .......................... 142,308 (37,266)
--------- ---------
INVESTING ACTIVITIES
Property acquisitions .................................................... (12,693) (35,931)
Proceeds from dispositions of property ................................... 35 1,446
(Purchase) sale of other investments ..................................... (343) 13,951
--------- ---------
Net cash flows from investing activities .......................... (13,001) (20,534)
--------- ---------
FINANCING ACTIVITIES
Repayment of senior notes ................................................ (100,000) --
Repayment of revolving bank loan ......................................... (50,000) --
Redemption of convertible subordinated debentures ........................ (305) (20)
Repayment of other obligations ........................................... (1,152) (3,455)
Increase in other obligations ............................................ 1,048 --
Proceeds from issuance of senior notes ................................... -- 99,650
Proceeds from revolving bank loan ........................................ -- 20,000
Shareowners' equity transactions:
Exercise of stock options .............................................. 3,319 1,315
Cash dividends on Common Stock ......................................... (14,376) (14,017)
--------- ---------
Net cash flows from financing activities .......................... (161,466) 103,473
--------- ---------
Net (decrease) increase in cash and cash equivalents ..................... (32,159) 45,673
Cash and cash equivalents at beginning of period ......................... 64,400 5,264
--------- ---------
Cash and cash equivalents at end of period ............................... $ 32,241 $ 50,937
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest ............................................................... $ 23,216 $ 16,486
Income taxes ........................................................... 39,006 33,805
<FN>
See accompanying Notes to Consolidated Financial Statements.
</FN>
5
</TABLE>
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
A. 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.
The consolidated financial statements include the accounts of the Company,
after elimination of the effect of intercompany transactions and balances.
The Company's consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and related
notes contained in the Company's Annual Report on Form 10-K for the fiscal
year ended September 30, 1995. Certain reclassifications have been made in
the consolidated financial statements and notes to conform to fiscal 1996
presentations.
The preparation of the Company's consolidated financial statements in
conformity with generally accepted accounting principles necessarily
require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the balance sheet dates and the reported amounts
of revenue and expense during the reporting periods. Actual results could
differ from these estimates and assumptions.
B. On March 15, 1996, the Company's credit agreement (the "Credit Agreement")
with a group of banks was amended to, among other things, increase the
maximum borrowing to $400 million and to extend the maturity date to March
15, 2001. Borrowings outstanding under the Credit Agreement were $109
million at June 30, 1996. Outstanding borrowings under the Credit
Agreement averaged $165 million during the three months ended June 30,
1996.
On January 15, 1996, the Company repaid the $100 million aggregate
principal amount of its 5 5/8% Senior Notes (the "5 5/8% Notes") plus
accrued interest. These notes were issued in January 1993 pursuant to the
$400 million shelf registration filed by the Company in December 1992.
6
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BERGEN BRUNSWIG CORPORATION
---------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(UNAUDITED)
The Company filed a shelf registration statement with the Securities and
Exchange Commission which became effective on March 27, 1996. The
registration statement allows the Company to sell senior and subordinated
debt or equity securities to the public from time to time up to an
aggregate maximum principal amount of $400 million. The Company intends to
use the net proceeds from the sale of such securities for general
corporate purposes, which may include, without limitations, the repayment
of indebtedness of the Company or of any of its subsidiaries, possible
acquisitions, capital expenditures and working capital needs. Pending such
application, the net proceeds may be temporarily invested in short term
securities. Any offering of such securities shall be made only by means of
a prospectus.
On July 15, 1996, the Company elected to redeem approximately $2.2 million
of principal amount of its 6 7/8% Exchangeable Subordinated Debentures
plus accrued interest.
C. 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.
D. Earnings per common and common equivalent share are based on the weighted
average number of shares of Class A Common Stock outstanding during each
period and the assumed 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),
after giving effect each period to the 5% stock dividend declared January
26, 1995. Earnings per share are based upon 40,323,620 shares and
40,049,920 shares for the third quarter ended June 30, 1996 and 1995,
respectively, and 40,223,503 shares and 39,728,822 shares for the
respective nine-month year-to-date periods.
E. In the opinion of management of the Company, the foregoing consolidated
financial statements reflect all adjustments necessary for a fair
statement of the results of the Company and its subsidiaries for the
periods shown and such adjustments are of a normal recurring nature.
Results of operations for the third quarter and first nine months of
fiscal 1996 are not necessarily indicative of results to be expected for
the full year.
7
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BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
- ---------------------
For the quarter ended June 30, 1996, net sales and other revenues increased 16%,
while operating earnings and pre-tax earnings both increased 14% from the
quarter ended June 30, 1995. For the nine months ended June 30, 1996, net sales
and other revenues increased 18%, while operating earnings and pre-tax earnings
both increased 14% compared to the nine-month period ended June 30, 1995.
Of the 16% increase in net sales and other revenues for the quarter,
approximately 2% is attributable to the acquisition of Colonial Healthcare
Supply Co. ("Colonial"), a privately-held medical-surgical supply distributor,
in August 1995. Of the 18% increase in net sales and other revenues for the
nine-month period, approximately 2% is attributable to Colonial. Approximately
14% of the net sales and other revenues increase for the quarter and
approximately 16% of the increase for the nine-month period reflects internal
growth within both the Company's existing pharmaceutical and medical-surgical
supply distribution businesses.
Earnings per share for the third quarter and first nine months of fiscal 1996
increased 14% and 12%, respectively, on an increase of 1% in the average number
of common and common equivalent shares outstanding.
Cost of sales increased 15% and 18% from the third quarter and nine-month period
of fiscal 1995, respectively, due mainly to the Company's increased sales
levels. The overall gross profit as a percent of net sales and other revenues
for the third quarter of fiscal 1996 increased as a result of an increase in
gross margins due to a higher mix of sales from the Company's higher gross
margin medical-surgical supply distribution business and increased opportunities
for investment buying, partially offset by continued price competition and a
change in customer mix in the Company's pharmaceutical distribution business.
The overall gross profit as a percent of net sales and other revenues for the
first nine months decreased as a result of a decrease in gross margins due to
continued price competition and a change in customer mix in the Company's
pharmaceutical distribution business, partially offset by sales from the
Company's higher gross margin medical-surgical supply 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 the lack
thereof, does influence the profitability of the Company.
8
<PAGE>
BERGEN BRUNSWIG CORPORATION
---------------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Management of the Company anticipates further downward pressure on gross margins
in the Company's pharmaceutical distribution business during the fiscal year
ending September 30, 1996 because of continued price competition influenced by
large customers. 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 reduction of
distribution, selling, general and administrative expenses ("DSG&A") as a
percentage of net sales and other revenues through improved operating
efficiencies.
DSG&A increased 18% and 17% over the prior year quarter and nine-month period,
respectively, while net sales and other revenues increased 16% and 18% over the
prior year quarter and nine-month period, respectively. These expenses as a
percent of net sales and other revenues were 4.2% and 4.1% in the third quarter
of fiscal 1996 and 1995, respectively, and were 4.2% of net sales and other
revenues in both the current and prior year nine-month periods, respectively.
The increased DSG&A as a percentage of net sales and other revenues in the
current year quarter and the "flat" DSG&A percentage in the nine-month period
are both primarily attributable to increased DSG&A in the Company's
medical-surgical supply business, principally due to the acquisition of
Colonial. These expense ratios were offset by decreased DSG&A as a percentage of
net sales and other revenues in both the current year quarter and nine-month
periods reflecting continued operating efficiencies, including the positive
effects of the continuing consolidation of distribution divisions into larger
regional distribution centers.
Net interest expense increased from $6.7 million to $7.6 million for the third
quarter of fiscal 1996, primarily due to interest on the $100 million 7 1/4%
Senior Notes issued June 1, 1995 (the "7 1/4% Notes") and increased borrowings
under the Credit Agreement, partially offset by decreased interest due to the
repayment of the 5 5/8% Notes on January 15, 1996. Net interest expense
increased from $21.1 million to $23.6 million for nine-month period primarily
due to interest on the 7 1/4% Notes, partially offset by decreased interest on
the 5 5/8% Notes and decreased borrowings under the Credit Agreement.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
At June 30, 1996, capitalization consisted of 41% debt and 59% equity, compared
to 51% and 49%, respectively, at September 30, 1995. The decreased debt
percentage primarily reflects decreased borrowings under the Credit Agreement.
Borrowings under the Credit Agreement were $109.0 million and $159.0 million at
June 30, 1996 and September 30, 1995, respectively. Cash and cash equivalents of
9
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BERGEN BRUNSWIG CORPORATION
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
$32.2 million at June 30, 1996 decreased from $64.4 million at September 30,
1995, primarily as a result of decreased borrowings under the Credit Agreement,
partially offset by an increase in net cash flows from operating activities
(principally due to a decrease in investment in inventories, net of trade
accounts payable).
Capital expenditures for the nine months ended June 30, 1996 were $12.7 million
and relate principally to additional investment in existing locations, including
the acquisition of automated warehouse equipment and additional investments in
data processing equipment.
Cash dividends on Class A Common Stock amounted to $14.4 million for the nine
months ended June 30, 1996 and $14.0 million for the same period in the prior
year, reflecting the increased number of shares of Class A Common Stock
outstanding.
The Company believes that internally generated funds, funds available under the
existing Credit Agreement and funds available under the existing shelf
registration will be sufficient to meet anticipated cash and capital needs.
10
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BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Drug Barn, Inc. ("Drug Barn"), a former retail pharmacy chain in the
San Francisco Bay Area, currently with two operating stores, owed the Company
approximately $6.2 million in principal obligations as of June 30, 1996, of
which approximately $1.2 million represents trade receivables and $5.0 million
represents a note which matured on March 25, 1993, neither of which has 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. The Company and Drug Barn have entered into litigation
relating to these obligations which is more fully detailed in "Item 3 - Legal
Proceedings" of Part I of the Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1995 as filed with the Securities and Exchange
Commission and is incorporated herein by reference. Drug Barn commenced a
Chapter 11 case in U.S. Bankruptcy Court for the Northern District of California
by filing a voluntary petition for relief under Chapter 11 of the United States
Bankruptcy Code in July 1993 and remains in possession pursuant to 11 U.S.C.
Section 1107. In April 1994, this consolidated matter (excluding the bankruptcy
court matters) was transferred to the San Francisco County Superior Court along
with the California state actions referenced in the next paragraph. A trial date
on principally the contract-related actions may occur during calendar 1996, if
the bankruptcy reorganization plan referred to below is not confirmed. In April
1996, the Company filed a plan of reorganization with the Bankruptcy Court to
resolve all of its claims with Drug Barn and its guarantors. The plan of
reorganization provides for, among other things, a sale of all Drug Barn's
assets, a distribution of the asset sale proceeds to creditors and a settlement
of all claims of any nature between the Company and Drug Barn (but not its
guarantors, Milton and Barbara Sloban). The Company's plan was confirmed by the
Bankruptcy Court on June 14, 1996. The actions brought by Milton and Barbara
Sloban and the Company's collection suit are scheduled to commence trial on
August 14, 1996 in San Francisco County Superior Court.
Between August 1993 and February 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.
Between August 1993 and November 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
11
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BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION
BRAND-NAME PRESCRIPTION DRUGS ANTITRUST LITIGATION, No. 94 C. 897 (MDL 997). On
April 4, 1996, and upon motion brought by the Company and each of the wholesale
defendants, the District Court granted summary judgment in favor of all
wholesalers which has the effect of dismissing these defendants from this suit.
Plaintiffs have indicated that they plan to appeal this decision. These lawsuits
are more fully detailed in "Item 3 - Legal Proceedings" of Part I of the
Company's Annual Report on Form 10-K for the fiscal year ended September 30,
1995 as filed with the Securities and Exchange Commission and is incorporated
herein by reference.
In March 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., alleging similar
claims as in the Federal complaint. This action has been consolidated into the
Federal multidistrict action.
In May 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. This lawsuit is more fully detailed
in "Item 3 - Legal Proceedings" of Part I of the Company's Annual Report on Form
10-K for the fiscal year ended September 30, 1995 as filed with the Securities
and Exchange Commission and is incorporated herein by reference.
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 $1,000,000; (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. A second motion was filed by the class plaintiffs for preliminary
approval of a settlement with 12 of the manufacturer defendants, which would
result in dismissal of claims against those manufacturers and a reduction of the
potential claims against the remaining defendants, including those against the
Company. The Court granted preliminary approval for the settlement. The Company
12
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BERGEN BRUNSWIG CORPORATION
---------------------------
PART II. OTHER INFORMATION
is not a party to this proposed settlement but retains protection afforded by
the sharing agreement referenced above. 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 June 30, 1996 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.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
--------
11 Computation of earnings per share for the third quarter and nine
months ended June 30, 1996 and 1995.
27 Financial Data Schedule for the nine months ended June 30, 1996.
(b) REPORTS ON FORM 8-K:
-------------------
There were no reports filed on Form 8-K during the three months ended June
30, 1996.
13
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BERGEN BRUNSWIG CORPORATION
By /S/ ROBERT E. MARTINI
-----------------------------------------
Robert E. Martini
Chairman of the Board and
Chief Executive Officer
(Principal Executive Officer)
By /S/ NEIL F. DIMICK
-----------------------------------------
Neil F. Dimick
Executive Vice President,
Chief Financial Officer
(Principal Financial Officer)
August 12, 1996
14
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BERGEN BRUNSWIG CORPORATION
---------------------------
INDEX TO EXHIBITS
-----------------
EXHIBIT NO. PAGE NO.
- ----------- --------
11 Computation of earnings per share for the third 16
quarter and nine months ended June 30, 1996 and 1995.
27 Financial Data Schedule for the nine months ended 17
June 30, 1996.
15
<TABLE>
EXHIBIT 11
BERGEN BRUNSWIG CORPORATION
---------------------------
COMPUTATION OF EARNINGS PER SHARE
FOR THE THIRD QUARTER AND NINE MONTHS ENDED
JUNE 30, 1996 AND 1995
(in thousands except share and per share amounts)
(UNAUDITED)
<CAPTION>
THIRD QUARTER NINE MONTHS
---------------------------- ----------------------------
1996 1995 1996 1995
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
DATA AS TO EARNINGS - Net Earnings ........................ $ 19,195 $ 16,875 $ 55,211 $ 48,288
============ ============ ============ ============
DATA AS TO NUMBER OF COMMON AND
COMMON EQUIVALENT SHARES:
Weighted average number of shares oustanding:
Class A Common Stock .............................. 40,023,978 39,783,491 39,954,625 39,511,093
Common equivalent shares assuming issuance
of shares represented by outstanding
employees' stock options:
Additional shares assumed to be issued ............ 1,746,218 1,455,659 1,655,247 1,290,659
Reduction of such additional shares assuming
proceeds invested in treasury stock (at
average market prices during each period) ..... (1,446,576) (1,189,230) (1,386,369) (1,072,930)
------------ ------------ ------------ ------------
Average number of common and common
equivalent shares outstanding ..... 40,323,620 40,049,920 40,223,503 39,728,822
============ ============ ============ ============
EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING ........................... $ .48 $ .42 $ 1.37 $ 1.22
============ ============ ============ ============
<FN>
Reference is made to Notes C and D in the accompanying Notes to Consolidated Financial Statements
</FN>
16
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 32,241
<SECURITIES> 0
<RECEIVABLES> 616,261
<ALLOWANCES> 26,338
<INVENTORY> 1,172,197
<CURRENT-ASSETS> 1,801,344
<PP&E> 250,676
<DEPRECIATION> 103,406
<TOTAL-ASSETS> 2,359,149
<CURRENT-LIABILITIES> 1,387,573
<BONDS> 407,196
<COMMON> 66,588
0
0
<OTHER-SE> 497,792
<TOTAL-LIABILITY-AND-EQUITY> 2,359,149
<SALES> 0
<TOTAL-REVENUES> 7,323,916
<CGS> 6,896,914
<TOTAL-COSTS> 7,205,093
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 23,631
<INCOME-PRETAX> 95,192
<INCOME-TAX> 39,981
<INCOME-CONTINUING> 55,211
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 55,211
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.37
</TABLE>
