- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM 10-K/A
(Amendment No. 1, amending Items 10-13)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 for the fiscal year ended September 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 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 92868-3598
- --------------------------------------------- ----------------------------
(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:
Name of each exchange on
Title of each class which registered
- --------------------------------------------- -------------------------------
Class A Common Stock
Par Value $1.50 per share New York Stock Exchange
6-7/8% Exchangeable Subordinated
Debentures due July 15, 2011 New York Stock Exchange
$150,000,000 7-3/8% Senior Notes due 2003 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
7% Convertible Subordinated Debentures due March 1, 2006 -
Durr-Fillauer Medical, Inc.
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, 1998, 103,269,500 shares of Class A Common Stock were
outstanding. The aggregate market value of the Class A Common Stock held by
nonaffiliates of the registrant on November 30, 1998 was $3,053,887,205.
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: None.
<PAGE>
PART III
ITEM 10. DIRECTORS OF THE REGISTRANT
The Restated Certificate of Incorporation of Bergen Brunswig
Corporation (the "Company" or "Bergen") provides that the Board of Directors
shall consist of not more than 15 directors nor less than 9 directors, the exact
number within such limits to be fixed by the Board as provided in the By-Laws,
which currently provide for 11 directors. The directors are divided into three
approximately equivalent-sized classes, each class to serve for a period of
three years on a staggered term basis.
Information is set forth below concerning the individuals currently
serving as directors of the Company; except where otherwise indicated, such
individuals have held the occupational positions noted for at least the past
five years.
Directors Whose Term Expires at the 1999 Annual Meeting
(Class II Directors)
Jose E. Blanco, Sr. Director since 1992.
Age 72.
Chairman of the Board (since 1987) of J.M. Blanco, Inc. (wholesale
pharmaceutical distribution). Mr. Blanco is Chairman of the Company's
Investment/ Retirement Plan Committee and Vice Chairman of the Company's Audit
Committee.
Charles J. Lee Director since 1972.
Age 73.
Former Managing Director, Smith Barney Inc. (investment banking) (1989
to 1996). Mr. Lee is Chairman of the Company's Audit Committee and a member of
the Executive, Financing and Nominating Committees.
George R. Liddle Director since 1969.
Age 72.
Investment Adviser. Former Vice President, Kidder, Peabody & Co., Inc.
(stockbrokers), retired. Mr. Liddle is a member of the Company's
Investment/Retirement Plan Committee.
George E. Reinhardt, Jr. Director since 1985.
Age 69.
Formerly a consultant (1992 to 1995) to, and Senior Vice President
(1991), Chief Financial Officer (1976 to 1991) and Vice President, Finance (1981
to 1991) of, the Company. Mr. Reinhardt is a member of the Company's Executive,
Financing, Investment/Retirement Plan and Nomination Committees.
<PAGE>
Directors Whose Term Expires at the 2000 Annual Meeting
(Class III Directors)
Rodney H. Brady Director since 1973.
Age 65.
President and Chief Executive Officer, Deseret Management Corporation
(diversified corporate holding company) since April 1996. Former President and
Chief Executive Officer, Bonneville International Corporation (broadcast
communications) (1985-1996). Mr. Brady is a director of Deseret Mutual Insurance
Company and First Security Corporation. Mr. Brady is Vice Chairman of the
Company's Compensation/Stock Option Committee and a member of the Company's
Executive, Financing and Nominating Committees.
Charles C. Edwards, M.D. Director since 1985.
Age 75.
Former President and Chief Executive Officer, Scripps Clinic and
Research Foundation and Scripps Institutions of Medicine and Science (health
care) (1991 to 1993). Dr. Edwards is a director of Molecular Biosystems, Inc.,
Northern Trust Bank and IDEC Pharmaceutical Company. Dr. Edwards is Chairman of
the Company's Compensation/Stock Option Committee and Vice Chairman of the
Company's Investment/Retirement Plan Committee.
James R. Mellor Director since 1979.
Age 68.
Chairman of the Board, USEC, Inc. (an energy company), since July
1998. Former Chairman of the Board and Chief Executive Officer (1993 to 1997),
and former President and Chief Operating Officer (1991 to 1993), of General
Dynamics Corporation (diversified defense and aerospace corporation). Mr. Mellor
is a director of General Dynamics Corporation, Aeromovel USA, Inc., Pinkertons,
Inc., USEC, Inc. and Computer Sciences Corporation. Mr. Mellor is a member of
the Company's Compensation/Stock Option Committee.
Francis G. Rodgers Director since 1982.
Age 72.
Author and Lecturer. Former Vice President, Marketing, IBM
(information processing systems), retired. Mr. Rodgers is a director of Dialogic
Corporation and Milliken and Company. Mr. Rodgers is a member of the Company's
Audit Committee.
Directors Whose Term Expires at the 2001 Annual Meeting
(Class I Directors)
Robert E. Martini Director since 1962.
Age 66.
Chairman of the Board (since 1992) of, and consultant (since June
1997) to, the Company and formerly its Chief Executive Officer (1990 to January
1997) and President (1981 to 1992). Mr. Martini is a director of Mossimo, Inc.
<PAGE>
Mr. Martini is Chairman of the Company's Financing and Nominating Committees and
a member of the Company's Executive Committee. Mr. Martini is the father of
Brent R. Martini, an Executive Vice President of the Company.
Neil F. Dimick Director since 1995.
Age 49.
Executive Vice President and Chief Financial Officer (since 1992) of
the Company and formerly its Vice President, Finance (1991 to 1992). President
of Bergen Brunswig Specialty Company (since 1998), ASD Specialty Healthcare,
Inc. (formerly known as Alternate Site Distributors, Inc.) (since 1996) and
Integrated Commercialization Solutions, Inc. (since 1998), each subsidiaries of
the Company. Mr. Dimick is a member of the Company's Financing and
Investment/Retirement Plan Committees.
Donald R. Roden Director since 1995.
Age 52.
Chief Executive Officer (since January 1997) and President (since
1995) of the Company and formerly the Chief Operating Officer (1995 to 1997) of
the Company. Prior to joining the Company in 1995, Mr. Roden was a healthcare
industry consultant (1993 to 1995) and Chief Executive, North America (1989 to
1993) of Reed Elsevier Medical (publishing). Mr. Roden is Chairman of the
Company's Executive Committee and a member of the Company's Financing and
Nominating Committees.
Director Emeritus
John Calasibetta Director from 1962 to 1998.
Age 93
Former Senior Vice President of the Company.
ITEM 11. EXECUTIVE COMPENSATION
Director Compensation
Employee directors of the Company are not paid any fees, as such, for
service on the Board or on any Board Committee. Each non-employee director
received for fiscal 1998 an annual fee of $36,000 for Board service and an
attendance fee of $2,000 for each Board meeting attended in person or $600 for
each such meeting participated in by telephone. For Committee meetings,
non-employee directors (other than the Chairman of the Committees) received
$1,000 for each Committee meeting attended in person and $600 for each such
meeting participated in by telephone. The Chairman of each Committee who is a
non-employee director received a fee of $1,500 for each Committee meeting
attended in person and $900 for each telephone meeting of the Committee in which
he participated. A non-employee director who serves less than six months in a
fiscal year receives 50% of the annual fee, and if he serves six months or more
in a fiscal year, receives 100% of the prevailing annual fee. The Company's
Deferred Compensation Plan provided that a non-employee director of the Company
could elect to defer up to 100% of these fees or any fixed amount not less than
$2,500 of such fees into said Plan.
The Company has a nonqualified Capital Accumulation Plan for its
non-employee directors. The maximum benefit available to these directors is
$150,000, payable upon retirement in 120 equal consecutive monthly installments.
<PAGE>
If the non-employee director has served for less than ten years, his benefit
upon retirement will be based upon 10% of the maximum benefit for each year of
Board service with a minimum of three years of service required for inclusion in
the plan. If a director dies before the normal retirement age of 70 and his
termination from Board service, his beneficiary will receive an amount equal to
100% of the amount the Company would have paid the director had normal
retirement age been attained.
Under the Company's Amended and Restated 1989 Stock Incentive Plan
each non-employee director was automatically entitled to an option covering
7,875 shares of Common Stock upon his initial election or appointment to the
Board, and was thereafter entitled to an annual grant ("Annual Grant") only if
the Company attained a ten percent or greater return on common equity in the
preceding fiscal year. During fiscal 1998, each non-employee director received
an Annual Grant representing options covering 4,000 shares.
Compensation of Executive Officers
The following table sets forth information for the fiscal years ended
September 30, 1998, 1997 and 1996, respectively, with respect to certain
compensation awarded or paid to the Company's Chief Executive Officer and its
other four most highly compensated executive officers during fiscal 1998
(collectively, the "Named Executive Officers"):
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Compensation
Annual Compensation Awards
---------------------------------------------
Other Securities
Annual Underlying All Other
Name and Principal Compen- Options Compensa-
Position Year Salary($) Bonus($)(1) sation SARs(#)(2) tion($)(3)
- -------- ---- --------- ----------- ------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Roden 1998 568,750 718,400 52,413(4) 300,000 5,000
President and Chief 1997 500,000 465,700 67,694(4) 31,250 1,154
Executive Officer 1996 400,000 359,000 63,601(4) 118,751 --
Neil F. Dimick 1998 366,250 462,900 51,073(5) 180,000 5,000
Executive Vice President, 1997 325,000 309,900 47,290(5) -- 4,750
Chief Financial Officer 1996 275,000 269,300 132,631(5) 50,001 4,571
Brent R. Martini 1998 270,833 327,100 -- 150,000 5,000
Executive Vice 1997 225,000 186,100 22,863(6) -- 2,841
President 1996 171,667 114,600 7,200 32,263 4,571
Charles J. Carpenter 1998 257,083 312,200 -- 150,000 5,000
Executive Vice President, 1997 225,000 200,000 15,605(7) -- 4,750
Chief Procurement Officer 1996 169,167 117,800 7,200 31,250 2,591
William J. Elliott 1998 283,333 217,400 -- 150,000 5,000
Executive Vice 1997 265,000 185,400 51,786(8) 11,000 3,363
President 1996(9) -- -- -- 31,250 --
</TABLE>
- ---------------
(1) Amounts in this column reflect the aggregate annual bonus which was earned
for such fiscal year.
(2) Number of shares granted has been adjusted to reflect the 2 for 1 stock
split effected as of December 1, 1998.
(3) Reflects Company contributions under the Company's Pre-Tax Investment
Retirement Account Employer Contributions Plus Plan.
(4) Includes $16,362, $31,992 and $35,188 of imputed compensation reflecting the
difference between the average market interest rate for the Company and the
interest free loan to Mr. Roden for fiscal years 1996, 1997 and 1998,
respectively, described under "Certain Transactions".
(5) Includes $16,288, $18,281 and $22,872 of imputed compensation reflecting the
difference between the average market interest rate for the Company and the
interest free loan to Mr. Dimick for fiscal years 1996, 1997 and 1998,
respectively, described under "Certain Transactions".
(6) Includes $6,169 of imputed compensation reflecting the difference between
the average market interest rate for the Company and the interest free loan
to Brent R. Martini for fiscal year 1997 described under "Certain
Transactions".
(7) Includes $4,113 of imputed compensation reflecting the difference between
the average market interest rate for the Company and the interest free loan
to Mr. Carpenter for fiscal year 1997 described under "Certain
Transactions".
<PAGE>
(8) Includes $17,763 of imputed compensation reflecting the difference between
the average market interest rate for the Company and the interest free loan
to Mr. Elliott for fiscal year 1997, described under "Certain
Transactions".
(9) Mr. Elliott's employment with the Company commenced during fiscal year
1997; accordingly, no compensation amounts (other than options granted
immediately prior to the commencement of active employment) are reportable
for the fiscal year 1996.
Employment and Severance Agreements
In April 1994, the Board authorized the Company to enter into written
employment agreements (the "Employment Agreements") and severance agreements
(the "Severance Agreements") with certain executive officers of the Company,
including Mr. Dimick. Similar agreements were entered into in October 1995 with
Mr. Roden, in September 1996 with Mr. Carpenter and Brent R. Martini, and in
October 1996 with Mr. Elliott.
Each of the Employment Agreements is for a term of three years. The
Employment Agreements automatically extend on a monthly basis so that the
outstanding term is always three years, subject to the option of either party to
terminate the automatic extension provision at any time. Pursuant to each
Employment Agreement, each Named Executive Officer is to receive his then
effective annual base compensation, a bonus that shall be equal to that paid to
other executive officers at the same level, but, regardless of what may be paid
to other executives, in any event no less than fifty percent of the average of
the Named Executive Officer's previous three annual bonuses, and other benefits
and allowances. In the event of death or disability, each Named Executive
Officer or their beneficiary, as the case may be, will receive the compensation
provided for under his Employment Agreement for the term of the Agreement,
calculated as if notice to terminate had been given 30 days prior to such event.
Pursuant to the Employment Agreements, the Company will indemnify each
Named Executive Officer with respect to any actions, claims or settlements
arising out of the performance of his duties, including the payment of all
reasonable attorneys' fees and necessary costs and expenses. In addition, the
Company will pay as incurred all reasonable attorneys' fees and necessary costs
and disbursements incurred by the Named Executive Officer in connection with any
dispute under the Employment Agreement, whether or not the Named Executive
Officer prevails.
Pursuant to the Employment Agreements, a Named Executive Officer's
employment may be terminated without a claim for damages arising against the
Company (1) upon notice by the Named Executive Officer, except for "good
reason"; (2) by mutual agreement between the Named Executive Officer and the
Company; or (3) by the Company for cause. If the Employment Agreement is
terminated by the Company for any other reason, or if the Named Executive
Officer terminates the Employment Agreement for good reason (including, but not
limited to, an adverse change in such officer's position from his position at
the time he entered into the Employment Agreement), he will be entitled to
damages equal to the present value equivalent of the compensation he would have
been paid under the Employment Agreement for the next three years, less his
earned income from other employment, if any.
The Severance Agreements with the Named Executive Officers, which
provide for benefits additional to the Employment Agreements, require payment of
cash and other benefits in the event of a voluntary or involuntary termination
of employment within three years following a Change in Control (as hereinafter
defined) of the Company. Payment under the Severance Agreements would consist of
2.99 times the average annual W-2 compensation paid by the Company for the most
recent five taxable years of the Named Executive Officer ending before the date
of the Change in Control if, following a Change in Control, such Named Executive
Officer is terminated without cause, such Named Executive Officer terminates for
any reason within 180 days after a Change in Control, or if such Named Executive
Officer terminates for good reason (including, but not limited to, an adverse
change in such officer's position from his position at the time of the Change in
Control). The Severance Agreements continue until three years and one day after
<PAGE>
a Change in Control or until the Named Executive Officer receives the severance
payment under the Severance Agreements.
Under the Severance Agreements, a Change in Control with respect to
the Company is deemed to occur 90 days prior to (i) the acquisition by any
person, entity or group, within the meaning of Section 13(d) and 14(d) of the
Securities Exchange Act of 1934 (the "Exchange Act") (excluding for this purpose
(A) the Company or (B) any employee benefit plan of the Company which acquires
beneficial ownership of voting securities of the Company) of 50% or more of
beneficial ownership (within the meaning of Rule 13(d)-3 promulgated under the
Exchange Act) of the combined voting power of the Company's then outstanding
securities; (ii) any rolling period of two consecutive years in which
individuals who at the beginning of such period constitute the Board of
Directors of the Company (and any new director whose election or nomination for
election was approved by a vote of at least 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, no
director shall be considered to have been so approved if such director initially
assumed office as a result of either an actual or threatened "election contest"
(as described in Rule 14(a)-11 under the Exchange Act) or other actual or
threatened solicitation of proxies or consent by or on behalf of any person
other than the Board of Directors, including as a result of any agreement
intended to avoid or settle any such election contest or proxy contest; (iii)
the approval by the Company's shareowners of a dissolution or liquidation of the
Company; (iv) the sale (or similar transaction) of all or substantially all of
the Company's operating assets; or (v) a merger or consolidation, or a
transaction having a similar effect, where (A) the Company is not the survivor,
(B) the majority of the Common Stock of the Company is no longer held by the
holders of Common Stock of the Company immediately prior to the transaction, or
(C) the Company's Common Stock is converted into cash, securities or other
property.
If any payment or acceleration of any benefits extended from the
Company to any Named Executive Officer upon a Change in Control would be subject
to the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986,
as amended ("Code"), then the Named Executive Officer shall be entitled to
receive an additional "gross up bonus" in an amount necessary to provide the
Named Executive Officer with sufficient after income tax funds to fully pay all
such excise taxes on both the payment and the gross up bonus.
Pursuant to the Severance Agreement, the Company will pay as incurred
all reasonable attorneys' fees and necessary costs and disbursements incurred by
the Named Executive Officer in connection with any dispute under the Severance
Agreement, whether or not the Named Executive Officer prevails.
Consulting Agreement
The Company and Robert E. Martini have entered into a consulting
agreement as of June 1, 1997 (the "Consulting Agreement") pursuant to which Mr.
Martini continues to serve the Company as a consultant in exchange for a fee of
$300,000 per year and certain continued benefits. The Consulting Agreement
currently provides for a three-year evergreen term. The benefits to be provided
to Mr. Martini will consist of continued participation in the Company's Retired
Officers' Medical Plan (the "ROM Plan") and other benefits that are made
available to executive officers of the Company.
Retired Officers' Medical Plan
In addition to the above arrangements, the Company has an unfunded,
non-qualified ROM Plan available to certain named officers of the Company and
their spouses, including executive officers now retired from the Company. The
ROM Plan provides for payment of the participant's medical, dental, vision and
prescription expenses at a level commensurate with the Company's medical benefit
plans that are in effect upon the executive officer's retirement (as defined in
the ROM Plan documents), but limited to the difference between benefits received
or potentially available from other insurance sources (including governmental
programs), if any, and the total expense actually incurred. The duration of the
<PAGE>
benefit is for the lifetime of the executive officer and the executive officer's
spouse if such officer is married at the time of such officer's retirement.
Based upon the various eligibility criteria under the ROM Plan, two of the Named
Executive Officers (Charles J. Carpenter and Brent R. Martini) presently are
eligible to receive benefits upon their retirement from the Company.
Stock Option Grants and Exercises
The following tables provide information with respect to stock options
granted to and exercised by the Named Executive Officers during Fiscal 1998 and
with respect to stock options held by the Named Executive Officers:
<TABLE>
<CAPTION>
OPTION GRANTS IN LAST FISCAL YEAR(1)
Individual Grants
-------------------------------------
% of Total
Options/SARS
Securities Granted to
Underlying Employees in Exercise Grant Date
Optional/SARs Fiscal Year Price Expiration Present
Name Granted 1998 ($/Share) Date Value($)
- ---- ------- ------------ --------- ---- --------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Roden 100,000(3) 3.38 21.0625 11/13/07 875,125(4)
200,000(5) 6.76 24.9063 9/23/08 2,515,000(6)
Neil F. Dimick 60,000(3) 2.03 21.0625 11/13/07 524,325(4)
120,000(5) 4.06 24.9063 9/23/08 1,509,000(6)
Brent R. Martini 50,000(3) 1.69 21.0625 11/13/07 436,625(4)
100,000(5) 3.38 24.9063 9/23/08 1,257,500(6)
Charles J. Carpenter 50,000(3) 1.69 21.0625 11/13/07 436,625(4)
100,000(5) 3.38 24.9063 9/23/08 1,257,500(6)
William J. Elliott 50,000(3) 1.69 21.0625 11/13/07 436,625(4)
100,000(5) 3.38 24.9063 9/23/08 1,257,500(6)
</TABLE>
- -------------
(1) All option information with respect to stock options granted prior to
December 1, 1998 has been adjusted to reflect a 2 for 1 stock split
effected as of that date.
(2) All options were granted as nonstatutory stock options to purchase shares
of the Company's Class A Common Stock (the "Common Stock") at 100% of fair
market value on the date of grant, unless otherwise noted, and vest 25% one
year after the date of grant and then 25% per year thereafter.
(3) Of this amount, options covering 4,746 shares were granted as incentive
stock options, which vest 100% four years after the date of grant.
(4) The grant date present value is based on a Black-Scholes model and assumes
a risk-free rate of return of 6.25%, an option term of ten years, a
dividend yield of 1.72% and a stock volatility of .334.
(5) Shares vest 33 1/3% one year after the date of grant and 33 1/3% per year
thereafter.
(6) The grant date present value is based on a Black-Scholes model and assumes
a risk-free rate of return of 5.50%, an option term of ten years, a
dividend yield of 1.55% and a stock volatility of .467.
<PAGE>
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES (1)
Number of Securities
Shares Underlying Unexercised Value of Unexercised
Acquired on Value Options/SARs at In-the-Money Options/
Exercise Realized FY End (#) SARS at FY End($)
Name (#) ($) Exercisable Unexercisable Exercisable Unexercisable
---- --- --- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Donald R. Roden 0 0 134,372 465,630 2,050,515 2,930,895
Neil F. Dimick 0 0 133,342 233,288 2,278,930 841,249
Brent R. Martini 0 0 96,924 203,288 1,590,513 856,617
Charles J. Carpenter 8,694 72,812 41,316 200,000 601,634 970,378
William J. Elliott 8,694 84,497 29,890 196,916 342,211 762,404
</TABLE>
- --------------------
(1) All share amounts and dollar values have been adjusted to reflect the 2 for
1 stock split effected as of December 1, 1998.
(2) Pursuant to the rules promulgated by the Securities and Exchange
Commission, these values were calculated by determining the difference
between the value of the Company's stock at fiscal year end ($25.28 on
September 30, 1998) and the exercise price of the options.
<PAGE>
Pension Table
The following table shows the estimated annual benefits payable under
the Company's non-qualified Supplemental Executive Retirement Plan ("SERP") at
age 62 to persons in specified compensation and years of service
classifications, based on a joint and 75 percent survivor annuity form of
retirement income. The table also includes benefits payable under the Company's
Capital Accumulation Plan ("CAP") for executives who participate in the CAP,
which was the SERP's predecessor plan and which was frozen to all employee
participants on October 7, 1987.
<TABLE>
<CAPTION>
Average Annual
Compensation Estimated Annual Retirement Benefits For
During Highest Three of Final Years of Credited Service Shown Below
Five Years Before Retirement 10 20 30 40
---------------------------- -- -- -- --
<S> <C> <C> <C> <C> <C>
$200,000 $ 69,600 $122,900 $122,900 $122,900
400,000 172,400 279,100 279,100 279,100
600,000 275,200 435,200 435,200 435,200
800,000 377,800 591,000 591,000 591,000
1,000,000 483,300 749,900 749,900 749,900
</TABLE>
As of September 30, 1998, full years of actual credited service in these plans
are: Mr. Roden - 3 years; Mr. Dimick - 7 years; Brent R. Martini - 11 years; Mr.
Carpenter - 18 years; and Mr. Elliott - 2 years.
Compensation for a particular year as used for the calculation of
retirement benefits under the SERP includes base salary received during the year
(including salary deferred under a salary reduction arrangement) and excludes
all other compensation. Benefits, which are designed to be a certain percentage
of the participant's aggregate compensation over the participant's last three
years of service, are reduced by the following amounts: (1) the participant's
primary insurance amount payable under the Social Security Act at retirement
age; (2) the participant's benefit under the CAP; (3) an annuitized amount based
upon an assumed level of participation in the Company's Pre-Tax Investment
Retirement Account Employer Contributions Plus Plan; and (4) any amounts owed by
a participant to the Company (except to the extent that such amount owed is
under a program that expressly provides that there will not be an offset).
Benefits are payable under the SERP in the form of a joint and survivor annuity,
consisting of monthly payments to each participant for his or her life and, upon
his or her death, a specified percentage of his or her monthly benefit to his or
her surviving beneficiary for the beneficiary's remaining life. In the
alternative, a participant may elect to receive his or her benefit in a lump
sum. The Company may direct that any vested benefit of a participant be paid in
a lump sum upon the death of the participant. A $5,000 funeral benefit is
available to a participant's estate, offset by any funeral benefit paid under
the CAP. Generally, the CAP benefit is a monthly retirement benefit paid over a
specified number of months that, at the election of a participant, may be paid
in a lump sum. Upon a change in control (as defined in the CAP and SERP),
certain senior executive officers' benefits payable under the SERP would be
accelerated such that their credited years of service in these plans would be as
if they had attained the normal retirement age. In addition, a master trust (the
assets of which are subject to the claims of the Company's general creditors)
for certain executive officer deferral plans has been established to preserve
these and certain other executive benefits.
Compensation Committee Interlocks and Insider Participation
The following persons served on the Company's Compensation/Stock
Option Committee during the fiscal year ended September 30, 1998: James R.
Mellor, Charles C. Edwards, M.D. and Rodney H. Brady. None of the persons named
was an officer or employee of the Company or any of its subsidiaries during the
current fiscal year or during the fiscal year ended September 30, 1998. With the
exception of Mr. Brady, none of the persons named is a former officer of the
<PAGE>
Company or any of its subsidiaries; Mr. Brady was an officer of the Company and
its subsidiaries more than ten years ago.
For information regarding indemnification arrangements applicable to
the Company's directors, see "Certain Relationships and Related Transactions -
Certain Transactions".
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following table lists the beneficial ownership of each person or
group who owns, to the Company's knowledge, more than five percent of its
outstanding Common Stock, based on the number of shares of Common Stock
outstanding as of November 1, 1998:
<TABLE>
<CAPTION>
Amount and
Name and Nature of Percent of
Address of Beneficial Outstanding
Beneficial Owner Title of Class Ownership (1) Shares (1)
---------------- -------------- ------------- ----------
<S> <C> <C> <C>
Robert E. Martini Common Stock 5,523,518(2) 5.37
4000 Metropolitan Drive
Orange, California 92868
</TABLE>
- --------------------------
(1) The amounts and percentages set forth below are determined as of November
1, 1998, but are calculated to give effect to the 2 for 1 stock split which
occurred on December 1, 1998.
(2) Except for 94,812 shares, all shares shown beneficially owned are those to
which Mr. Martini has sole voting and dispositive power, including 370,876
shares which, as of November 1, 1998, may be acquired within sixty days
pursuant to the exercise of stock options.
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of November 1, 1998, by: (a) each
director (including Mr. Calasibetta, a director emeritus) and nominee; (b) each
of the Named Executive Officers; and, (c) all directors and executive officers
as a group:
<TABLE>
<CAPTION>
Aggregate Number
of Shares Percent of
Beneficially Outstanding
Owned(1)(2)(3) Shares
<S> <C>
Jose E. Blanco, Sr. 23,380 *
Rodney H. Brady (4) 115,146 *
John Calasibetta (5) 464,774 *
Charles J. Carpenter 83,180 *
Neil F. Dimick 177,500 *
Dr. Charles C. Edwards 34,202 *
William J. Elliott 42,390 *
Charles J. Lee 42,884 *
George R. Liddle (6) 81,604 *
Brent R. Martini (7) 603,824 *
Robert E. Martini(8) 5,523,518 5.37
James R. Mellor 40,004 *
George E. Reinhardt, Jr. 221,344 *
Donald R. Roden 273,748 *
Francis G. Rodgers 39,684 *
All directors and executive
officers as a group
including those above (20 persons) 8,214,334 7.98
- -----------------
</TABLE>
* Denotes ownership of less than 1% of the outstanding shares of Common Stock.
(1) All share information has been adjusted to reflect a 2 for 1 stock split
effected as of December 1, 1998.
(2) Information as to beneficial ownership by the directors and executive
officers named above has been furnished to the Company by such individuals.
Except as indicated otherwise in the footnotes and except for 94,812 shares
beneficially owned by Robert E. Martini, shares shown as beneficially owned
are those to which the individual has sole voting and dispositive power.
Such shares, where applicable, may be subject to community property laws
and related statutes under which a spouse may be entitled to share in the
management of the community property, which may include the right to vote
or dispose of the shares.
(3) Includes the number of shares that could be purchased by exercise of
options exercisable as of November 1, 1998, or within 60 days thereafter
under the Company's stock option or stock incentive plans, as follows:
Jose E. Blanco, Sr.-23,380 shares; Rodney H. Brady-31,260 shares; Charles
J. Carpenter-54,486 shares; Neil F. Dimick-161,000 shares; Dr. Charles C.
Edwards-27,978 shares; William J. Elliott- 33,696 shares; Charles J.
Lee-31,260 shares; George R. Liddle-21,414 shares; Brent R.
Martini-122,082 shares; Robert E. Martini-370,876 shares; James R.
Mellor-31,260 shares; George E. Reinhardt, Jr.-23,380 shares; Donald R.
Roden-218,748 shares; Francis G. Rodgers-31,260 shares, and all directors
and executive officers as a group, including those above (20 persons) -
1,587,502 shares.
(4) Includes 4,626 shares held by two sons living at home and 79,260 shares
held by Mr. Brady and his wife together as tenants in common.
(5) Held in trust by Mr. Calasibetta for his own benefit.
(6) Includes 58,336 shares held by Mr. Liddle as co-trustee for the benefit of
him and his wife.
(7) Includes 456,718 shares held in trust for Brent R. Martini's benefit.
(8) Includes 94,812 shares beneficially owned by Mr. Martini for which he does
not have voting or dispositive power.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act (the "Exchange Act")
requires the Company's directors, officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file reports
of ownership and changes in ownership of such securities with the Securities and
Exchange Commission and the New York Stock Exchange. Directors, officers and
greater than 10 percent beneficial owners are required by applicable regulations
to furnish the Company with copies of all Section 16(a) forms they file.
Based solely upon a review of the copies of the forms or information
furnished to the Company, the Company believes that during the 1998 fiscal year
all filing requirements applicable to its directors and
<PAGE>
officers were satisfied on a timely basis, except that Charles E. Carpenter (an
executive officer of the Company) failed to file on a timely basis a report
disclosing an acquisition of shares pursuant to a stock option exercise, William
J. Elliott (an executive officer of the Company) failed to file on a timely
basis a report disclosing an acquisition of shares pursuant to a stock option
exercise and John P. Naughton (a former executive officer of the Company) failed
to file on a timely basis an acquisition of shares pursuant to a stock option
exercise and a disposition of shares. These failures to file on a timely basis
were inadvertent; the required filings were made promptly after the failures to
file on a timely basis were noted.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Certain Transactions
In April 1990, the Board approved an unfunded deferred compensation
loan program available to the executive officers of the Company (the "Executive
Loan Program") for the purpose of providing them with an incentive to remain
with the Company. Under this program, loans are available to certain executive
officers of the Company, except those who are also members of the Board. Under
the original terms of the program, (A) each outstanding loan matures upon the
officer's termination of employment unless extended by the Board and is
evidenced by a secured promissory note in the principal amount of the loan which
bears no interest, (B) an executive officer may borrow up to 125% of his or her
annual salary in effect upon the date of any request, and (C) the value of
collateral securing the loan must equal at least 125% of the principal loan
amount. Although no interest is charged by the Company to the employee, the
employee is deemed by the Internal Revenue Service to have compensation in the
amount of interest calculated according to a formula prescribed by the Internal
Revenue Service. The employee is also deemed to have paid interest in a like
amount to the Company.
In addition to the above loans, the Board has approved making loans to
other key employees under terms similar to the Executive Loan Program. The
principal amount of these loans outstanding as of December 31, 1998 to Robert E.
Martini (director of the Company) was $1,400,000. The loans to Donald R. Roden
and Neil F. Dimick (executive officers and directors of the Company), at the
time made, and to William J. Elliott, Charles J. Carpenter and Brent R. Martini
(executive officers of the Company) were made pursuant to the Executive Loan
Program and were in the amounts of $625,000, $406,250, $331,250, $281,250 and
$281,250, respectively, as of December 31, 1998. In addition, Mr. Elliott
received a relocation loan in the amount of $100,000 during fiscal 1997. Such
amounts also represent the largest aggregate amount of each executive officer's
indebtedness during the Company's last fiscal year.
In 1998, the Company and the Named Executive Officers and certain
other executive officers entered into separate agreements which have the effect
of amending (without any conditions or further actions required on the part of
such officers) the above-mentioned executive loans made under the Executive Loan
Program, as evidenced by their respective promissory notes and related loan
documentation, such that if either (A) the applicable executive officer remains
in continuous employment with the Company until August 2001, or (B) such
executive officer's employment with the Company is terminated before such date
by the Company without cause or by such executive officer with good reason (as
such term is defined in the Employment Agreements) or as a result of such
executive officer's death or disability, then upon such date or the date of such
termination, as applicable, the entire unpaid principal balance of the loan will
be unconditionally and automatically (meaning no action required on the part of
such officer) forgiven and canceled with no interest due.
The Company entered into a life insurance plan for Robert E. Martini
in 1985. Under this insurance plan, the Company pays the premiums on certain
life insurance policies which provide him (or his assignees) with a death
benefit of $1,400,000 and which may provide certain alternative benefits in the
event of a lifetime surrender of the policy. The Company expects to maintain
this policy in full force until Mr. Martini's seventy-fifth birthday, whether he
is employed by the Company or has retired.
<PAGE>
On November 25, 1998, the Company entered into a Stock Purchase
Agreement with Jose E. Blanco Garrido, Thomas Blanco Garrido and J.M. Blanco,
Inc. ("Blanco"), pursuant to which the Company will acquire all of the
outstanding capital stock of J.M. Blanco, Inc. which is currently owned by Jose
E. Blanco Garrido and Thomas Blanco Garrido (collectively, the "Sellers"). The
estimated net purchase price is $23.9 million, subject to certain adjustments.
The Stock Purchase Agreement also contemplates that prior to the closing, Blanco
may pay to the Sellers an aggregate dividend of up to $14 million. The Sellers
are the sons of Jose E. Blanco, Sr., who has served as Chairman of the Board of
J.M. Blanco, Inc. and also serves on the Board of the Company.
Indemnification of Directors and Officers
Under Article VII of the Company's Restated Certificate of
Incorporation, every person who is or was a director, officer, employee or agent
of the Company and the legal representative of such a person is entitled to
receive indemnification from the Company to the fullest extent permitted by law.
Under New Jersey law, directors and officers may be indemnified in certain
situations, subject to the Company's having taken certain actions and the
directors and officers having met certain specified standards of conduct. In
1986, the Company entered into individual agreements (collectively, the
"Indemnity Agreement") to indemnify each of its directors against liabilities
and defense costs to the extent that such directors would have been insured
under the Company's director and officer liability insurance policies which were
in effect on December 31, 1984 (the "1984 Policy"). The Company believes that
the coverage addresses liabilities arising under ERISA, securities and antitrust
laws. The obligation of the Company to indemnify a director under the Indemnity
Agreement is limited to $30 million maximum from the Company if the director is
otherwise entitled to statutory indemnification. The Indemnity Agreement was
ratified by the Company's shareowners at the December 1986 Annual Meeting.
<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 Amendment No. 1 to its
Annual Report on Form 10-K for the year ended September 30, 1998 to be signed on
its behalf by the undersigned, thereunto duly authorized.
BERGEN BRUNSWIG CORPORATION
By: /s/ Milan A. Sawdei
_____________________
January 27, 1999 Milan A. Sawdei
Executive Vice President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Amendment No. 1 to the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1998 has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates indicated.
<TABLE>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Robert E. Martini* Chairman of the Board and January 27, 1999
- ---------------------- Director
Robert E. Martini
/s/ Donald R. Roden* President and Chief January 27, 1999
- --------------------- Executive Officer
Donald R. Roden and Director (Principal
Executive Officer)
/s/ Neil F. Dimick* Executive Vice President, January 27, 1999
- ------------------- Chief Financial Officer
Neil F. Dimick and Director
(Principal Financial Officer and
Principal Accounting Officer)
/s/ Jose E. Blanco, Sr.* Director January 27, 1999
- ------------------------
Jose E. Blanco
/s/ Rodney H. Brady* Director January 27, 1999
- --------------------
Rodney H. Brady
/s/ Charles C. Edwards, M.D.* Director January 27, 1999
- -----------------------------
Charles c. Edwards
/s/ Charles J. Lee* Director January 27 1999
- -------------------
Charles J. Lee
/s/ George R. Liddle* Director January 27, 1999
- ---------------------
George R. Liddle
/s/ James R. Mellor* Director January 27, 1999
- --------------------
James R. Mellor
<PAGE>
/s/ George E. Reinhardt, Jr.* Director January 27, 1999
- -----------------------------
George E. Reinhardt, Jr.
/s/ Francis G. Rodgers* Director January 27, 1999
- -----------------------
Francis G. Rodgers
*By: /s/ Milan A. Sawdei
--------------------
Milan A. Sawdei
Attorney-in-fact
</TABLE>
