<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended December 31, 1996 Commission File Number 0-12591
Cardinal Health, Inc.
(Exact name of registrant as specified in its charter)
OHIO 31-0958666
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5555 GLENDON COURT, DUBLIN, OHIO 43016
(Address of principal executive offices and zip code)
(614) 717-5000
Registrant's telephone number, including area code
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
------- -------
The number of Registrant's Common Shares outstanding at the close of
business on January 31, 1997 was as follows:
Common Shares, without par value: 100,446,324.
<PAGE> 2
CARDINAL HEALTH, INC. AND SUBSIDIARIES
Index *
<TABLE>
<CAPTION>
<S> <C> <C>
Page No.
Part I. Financial Information: --------
---------------------
Item 1. Financial Statements:
Consolidated Statements of Earnings for the Fiscal Quarter and Six
Months Ended December 31, 1996 and 1995............................................ 3
Consolidated Balance Sheets at December 31, 1996 and
June 30, 1996...................................................................... 4
Consolidated Statements of Cash Flows for the Six Months Ended
December 31, 1996 and 1995......................................................... 5
Notes to Consolidated Financial Statements......................................... 6
Item 2. Management's Discussion and Analysis of Results of Operations
and Financial Condition............................................................ 8
Part II. Other Information:
------------------
Item 1. Legal Proceedings.................................................................. 10
Item 2. Change in Securities............................................................... 10
Item 4. Submission of Matters to a Vote of Security Holders................................ 10
Item 6. Exhibits and Reports on Form 8-K................................................... 11
* Items deleted are inapplicable.
</TABLE>
Page 2
<PAGE> 3
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share amounts)
Fiscal Quarter Ended Six Months Ended
--------------------------- ----------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
------------ ------------ ----------- ------------
<S> <C> <C> <C> <C>
Net revenues $ 2,688,771 $ 2,188,619 $ 5,116,996 $ 4,285,464
Cost of products sold 2,483,533 2,013,952 4,729,495 3,946,751
----------- ----------- ----------- -----------
Gross margin 205,238 174,667 387,501 338,713
Selling, general and administrative expenses 114,158 107,103 225,802 214,461
Unusual items, merger costs (17,359) (17,552) (17,359) (17,552)
----------- ----------- ----------- -----------
Operating earnings 73,721 50,012 144,340 106,700
Other income (expense):
Interest expense (7,374) (4,801) (13,933) (9,424)
Other, net-- primarily interest income 1,475 3,101 4,062 5,521
----------- ----------- ----------- -----------
Earnings before income taxes 67,822 48,312 134,469 102,797
Provision for income taxes 29,368 21,770 56,218 44,339
----------- ----------- ----------- -----------
Net earnings $ 38,454 $ 26,542 $ 78,251 $ 58,458
=========== =========== =========== ===========
Net earnings per Common Share:
Primary $ 0.38 $ 0.27 $ 0.79 $ 0.60
Fully diluted $ 0.38 $ 0.27 $ 0.79 $ 0.60
Weighted average number of Common
Shares outstanding:
Primary 101,285 96,913 99,570 96,876
Fully diluted 101,346 96,923 99,682 96,942
See notes to consolidated financial statements.
</TABLE>
Page 3
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<TABLE>
<CAPTION>
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands)
December 31, June 30,
1996 1996
----------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 73,332 $ 287,802
Marketable securities available-for-sale 37,185 54,335
Trade receivables 679,317 564,881
Current portion of net investment in sales-type leases 38,096 37,953
Merchandise inventories 1,691,209 1,238,238
Prepaid expenses and other 76,936 56,568
----------- -----------
Total current assets 2,596,075 2,239,777
----------- -----------
Property and equipment, at cost 413,821 265,584
Accumulated depreciation and amortization (163,915) (112,122)
----------- -----------
Property and equipment, net 249,906 153,462
Other assets:
Net investment in sales-type leases, less current portion 110,472 111,604
Goodwill and other intangibles 109,976 92,428
Other 84,408 83,824
----------- -----------
Total $ 3,150,837 $ 2,681,095
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Notes payable, banks $ 3,138 $ --
Current portion of long-term obligations 109,422 106,007
Accounts payable 1,367,998 1,126,065
Other accrued liabilities 153,690 153,585
----------- -----------
Total current liabilities 1,634,248 1,385,657
----------- -----------
Long-term obligations, less current portion 297,909 265,144
Deferred income taxes and other liabilities 121,091 99,584
Shareholders' equity:
Common Shares, without par value 549,186 484,446
Retained earnings 559,192 455,690
Common Shares in treasury, at cost (5,846) (5,426)
Other (4,943) (4,000)
----------- -----------
Total shareholders' equity 1,097,589 930,710
----------- -----------
Total $ 3,150,837 $ 2,681,095
=========== ===========
See notes to consolidated financial statements.
</TABLE>
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<TABLE>
<CAPTION>
CARDINAL HEALTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
Six Months Ended
----------------------------
December 31, December 31,
1996 1995
------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 78,251 $ 58,458
Adjustments to reconcile net earnings to net cash from operations:
Depreciation and amortization 20,566 14,830
Provision for bad debts 4,023 4,145
Change in operating assets and liabilities, net of effects from acquisitions:
Increase in trade receivables (98,870) (91,282)
Increase in merchandise inventories (441,875) (125,305)
Decrease (increase) in net investment in sales-type leases 989 (18,038)
Increase in accounts payable 233,572 119,485
Other operating items, net (802) 21,098
--------- ---------
Net cash used in operating activities (204,146) (16,609)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Acquisition of subsidiary, net of cash acquired -- (26,982)
Proceeds from sale of property and equipment 1,740 613
Additions to property and equipment (30,974) (36,452)
Purchase of marketable securities available-for-sale (3,400) (38,434)
Proceeds from sale of marketable securities available-for-sale 20,550 78,405
--------- ---------
Net cash used in investing activities (12,084) (22,850)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net short-term borrowing activity 2,272 22,000
Reduction of long-term obligations (27,732) (2,179)
Proceeds from long-term obligations -- 237
Proceeds from issuance of Common Shares 24,872 3,511
Tax benefit of stock options 6,650 6,855
Dividends paid on Common Shares and cash paid in lieu
of fractional shares (3,882) (4,715)
Purchase of treasury shares (420) (164)
--------- ---------
Net cash provided by financing activities 1,760 25,545
--------- ---------
NET DECREASE IN CASH AND EQUIVALENTS (214,470) (13,914)
CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 287,802 64,589
--------- ---------
CASH AND EQUIVALENTS AT END OF PERIOD $ 73,332 $ 50,675
========= =========
See notes to consolidated financial statements.
</TABLE>
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<PAGE> 6
CARDINAL HEALTH, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
Note 1. The consolidated financial statements of the Company include the
accounts of all majority-owned subsidiaries and all significant
intercompany amounts have been eliminated. The consolidated
financial statements contained herein have been restated to give
retroactive effect to the mergers with Medicine Shoppe
International, Inc. ("Medicine Shoppe") on November 13, 1995 and
Pyxis Corporation ("Pyxis") on May 7, 1996. Such business
combinations were accounted for under the pooling-of-interests
method (see Note 3).
These consolidated financial statements have been prepared in
accordance with the instructions to Form 10-Q and include all of
the information and disclosures required by generally accepted
accounting principles for interim reporting. In the opinion of
management, all adjustments necessary for a fair presentation
have been included. All such adjustments are of a normal and
recurring nature.
The consolidated financial statements included herein 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 June 30, 1996.
Note 2. Net earnings per Common Share are based on the weighted average
number of Common Shares outstanding during each period and the
dilutive effect of stock options from the date of grant, computed
using the treasury stock method.
Note 3. On October 11, 1996, the Company completed a merger with PCI
Services, Inc. ("PCI"). The merger was accounted for as
a pooling-of-interests. In the merger, the Company issued
approximately 3,138,000 Common Shares to PCI shareholders and
PCI's outstanding stock options were converted into options to
purchase approximately 230,000 Common Shares. The historical cost
of PCI assets combined was approximately $148.4 million and the
total liabilities assumed (including total debt of approximately
$62.0 million) were approximately $87.8 million. The impact of
the PCI merger, on a historical basis, is not significant.
Accordingly, prior period financial statements have not been
restated for the PCI merger.
During the three month period ended December 31, 1996, the
Company recorded costs totaling approximately $17.4 million
($12.7 million, net of tax) related to the merger with PCI. These
costs included approximately $5.3 million for investment advisor,
legal, accounting, and other transaction fees associated with the
merger; $5.8 million related to employee retention, employee
severance, and other personnel costs; and $1.6 million for other
cost associated with the merger. Certain of these amounts are
based upon estimates, and actual amounts paid may ultimately
differ from these estimates. As of December 31, 1996, the Company
had paid approximately $4.5 million related to these charges. If
additional costs are incurred, such items will be expensed in
subsequent periods.
As a result of the mergers with Medicine Shoppe and Pyxis in
fiscal 1996, the Company recorded costs totaling approximately
$67.3 million ($47.8 million, net of tax). During the six months
ended December 31, 1996, the Company paid approximately $11.8
million related to these costs. The Company's current estimates
of the merger costs ultimately to be incurred are not materially
different from the amounts originally recorded.
Page 6
<PAGE> 7
The following supplemental information, which is presented for
purposes of facilitating meaningful comparisons to ongoing operations
and to other companies, summarizes the results of operations of the
Company, adjusted on a pro forma basis to reflect the elimination of
the effect of the merger costs discussed above.
<TABLE>
<CAPTION>
Fiscal Quarter Ended
-------------------------------------------------------------------
December 31, Percentage December 31, Percentage
1996 of Net Sales 1995 of Net Sales
------------------ -------------- ------------------ --------------
<S> <C> <C> <C> <C>
Operating earnings $ 91,080 3.39% $ 67,564 3.09%
Net earnings $ 51,109 1.90% $ 39,037 1.78%
Net earnings per Common Share:
Primary $ 0.50 $ 0.40
Fully diluted $ 0.50 $ 0.40
======================================================================================================================
<CAPTION>
Six Months Ended
-------------------------------------------------------------------
December 31, Percentage December 31, Percentage
1996 of Net Sales 1995 of Net Sales
------------------ -------------- ------------------ --------------
<S> <C> <C> <C> <C>
Operating earnings $ 161,699 3.16% $ 124,252 2.90%
Net earnings $ 90,906 1.78% $ 70,953 1.66%
Net earnings per Common Share:
Primary $ 0.91 $ 0.73
Fully diluted $ 0.91 $ 0.73
</TABLE>
The differences between the above results and those reported in
the Consolidated Statements of Earnings are due solely to the
assumed elimination of the one-time expenses of approximately
$17.4 million ($12.7 million, net of tax) in the period ended
December 31, 1996 and approximately $17.6 million ($12.5 million,
net of tax) in the period ended December 31, 1995 incurred
primarily in connection with the merger with PCI and Medicine
Shoppe, respectively.
Note 4. On October 29, 1996, the Board of Directors of the Company
declared a three-for-two stock split which was effected as a
stock dividend and distributed on December 16, 1996 to
shareholders of record on December 2, 1996. All share and per
share information has been retroactively restated for the stock
split.
Note 5. On November 27, 1996, the Company announced that it had entered
into a definitive merger agreement with Owen Healthcare, Inc.
("Owen") pursuant to which Owen will become a wholly-owned
subsidiary of the Company in a stock-for-stock merger intended to
be tax-free and accounted for as a pooling-of-interests for
financial reporting purposes. In connection with the Owen merger,
the Company estimates that it will issue between 8.25 million and
9.1 million Cardinal Common Shares. Under the terms of the
agreement, shareholders of Owen will receive $27.25 in the form
of Cardinal Common Shares for each share of Owen they own,
subject to adjustment under specified circumstances. In addition,
options for Owen common stock will be converted into equivalent
options for Cardinal Common Shares, based upon the exchange
ratio. In connection with the merger, Owen has granted Cardinal
an option to purchase approximately 3.4 million shares of Owen
common stock, exercisable upon the occurrence of certain events.
The merger is expected to be completed during fiscal 1997,
subject to approval by Owen shareholders and the receipt of
requisite regulatory approvals.
Page 7
<PAGE> 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
Management's discussion and analysis presented below has been prepared to give
retroactive effect to the pooling-of-interests business combinations with
Medicine Shoppe on November 13, 1995 and Pyxis on May 7, 1996 (see Notes 1 and
3 of "Notes to Consolidated Financial Statements"). On October 11, 1996, the
Company completed a merger with PCI, which was also accounted for as a
pooling-of-interests. The impact of the PCI merger, on a historical basis, is
not significant. Accordingly, prior period financial statements have not been
restated for the PCI merger (see Note 3 of "Notes to Consolidated Financial
Statements"). This discussion and analysis is concerned with material changes
in financial condition and results of operations for the Company's consolidated
balance sheets as of December 31, 1996 and June 30, 1996, and for the
consolidated statements of earnings for the three and six month periods ended
December 31, 1996 and 1995.
Portions of management's discussion and analysis presented below include
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements are subject to
risks, uncertainties and other factors which could cause actual results to
materially differ from those projected or implied. The most significant of such
risks, uncertainties and other factors are described in Exhibit 99.01 to this
Form 10-Q, which is incorporated herein by reference.
RESULTS OF OPERATIONS
Net Revenues. Net revenues increased 23% for the second quarter of fiscal
1996 and 19% for the six month period ended December 31, 1996, as compared to
the prior year. The increase in the second quarter and the six month period is
primarily due to internal revenue growth from pharmaceutical distribution
activities, including the addition of new customers, increased sales to existing
customers and price increases. Additional revenues were also provided in the
second quarter by the PCI operations. Continued development of the Company's
relationship with Kmart Corporation ("Kmart") and additional opportunities
created by the deterioration of the financial condition of a major competitor
also contributed to the increases during the second quarter and six months
ended December 31, 1996.
Gross Margin. As a percentage of net revenues, gross margin for the second
quarter decreased to 7.63% from 7.98% in the prior year. For the six month
period, gross margin decreased to 7.57% from 7.90% in the prior year. The
decrease in gross margin is primarily due to the shift in net revenue mix caused
by significant increases in the relatively lower margin pharmaceutical
distribution activities (see "Net Revenues" above). The impact of this shift was
partially offset by the impact of increased merchandising and marketing programs
with customers and suppliers and the additional gross margin contributed in the
second quarter by the PCI operations. The gross margin continues to be affected
by the combination of a highly competitive environment and a greater mix of high
volume customers, where a lower cost of distribution and better asset management
enable the Company to offer lower selling margins and still achieve higher
operating margins.
Selling, General and Administration Expenses. Selling, general and
administrative expenses as a percentage of net revenues improved to 4.25% in the
second quarter of fiscal 1997 compared to 4.89% in the prior year and 4.41% for
the six month period ended December 31, 1996 compared to 5.00% in the prior
year. The improvements in the second quarter and the six month period reflect
the economies associated with the Company's revenue growth from pharmaceutical
distribution activities, as well as significant productivity gains resulting
from continued cost control efforts and the consolidation and selective
automation of distribution facilities.
Unusual Items - Merger Costs. The Company recorded certain nonrecurring
charges to reflect the estimated PCI and Medicine Shoppe merger costs in the
second quarter of fiscal 1997 and 1996, respectively. See further discussion in
Note 3 of "Notes to Consolidated Financial Statements."
Interest Expense. The increase in interest expense of $2.6 million in the
second quarter of fiscal 1997 compared to the prior year and $4.5 million for
the six month period ended December 31, 1996 compared to the prior year is
primarily due to the Company's issuance of $150 million, 6% Notes due 2006, in a
public offering in January 1996.
Provision for Income Taxes. The Company's provision for income taxes
relative to pretax earnings remained consistent in both the second quarter and
first six month period of fiscal 1997 compared to the prior year.
Page 8
<PAGE> 9
LIQUIDITY AND CAPITAL RESOURCES
Working capital increased to $961.8 million at December 31, 1996 from
$854.1 million at June 30, 1996. This increase included additional investments
in merchandise inventories and trade receivables of $453.0 million and $114.4
million, respectively. Offsetting the increases in working capital were
decreases in cash and equivalents, and marketable securities available-for-sale
of $214.5 million and $17.2 million, respectively, and an increase in accounts
payable of $241.9 million. Increases in merchandise inventories and accounts
payable reflect the seasonal increase of inventories and higher level of
business volume in pharmaceutical distribution activities, including higher
inventories required by the new pharmaceutical services agreement with Kmart.
The increase in trade receivables is consistent with the Company's revenue
growth (see "Net Revenues" above). The change in cash and equivalents, and
marketable securities available-for-sale is due to the timing of inventory
purchases and related payments.
Property and equipment, at cost, increased by $148.2 million from June 30,
1996. Of this amount, $111.5 million was attributable to the merger with PCI.
The additional increase in property and equipment acquired included increased
investments in management information systems and customer support systems, as
well as upgrades to distribution facilities.
Shareholders' equity increased to $1,097.6 million at December 31, 1996
from $930.7 million at June 30, 1996, primarily due to net earnings of $78.3
million, equity of PCI on the merger date of $60.6 million and issuances of
Common Shares resulting from stock option exercises and related tax benefits in
the amount of $31.5 million.
OTHER
On November 27, 1996, the Company announced that it had entered into a
definitive agreement with Owen Healthcare, Inc. ("Owen") pursuant to which Owen
will become a wholly-owned subsidiary of the Company in a stock-for-stock merger
intended to be tax-free and accounted for as a pooling-of-interests for
financial reporting purposes. In connection with the Owen merger, the Company
estimates that it will issue between 8.25 million and 9.1 million Cardinal
Common Shares. Under the terms of the agreement, shareholders of Owen will
receive $27.25 in the form of Cardinal Common Shares for each share of Owen they
own, subject to adjustment under specified circumstances. In addition, options
for Owen common stock will be converted into equivalent options for Cardinal
Common Shares, based upon the exchange ratio. In connection with the merger,
Owen has granted Cardinal an option to purchase approximately 3.4 million shares
of Owen common stock, exercisable upon the occurrence of certain events. The
merger is expected to be completed by the end of fiscal 1997, subject to
approval by Owen shareholders and the receipt of requisite regulatory approvals.
The Company expects to record a one-time charge to reflect transaction and other
costs incurred as a result of the Owen merger in the quarter in which the merger
is consummated (see Note 5 of "Notes to Consolidated Financial Statements").
Page 9
<PAGE> 10
PART II. OTHER INFORMATION
Item 1: Legal Proceedings
In November 1993, the Company and Whitmire Distribution Corporation
("Whitmire"), as well as other pharmaceutical wholesalers, were each named as
defendants in a series of purported class action antitrust lawsuits which were
later consolidated and transferred by the Judicial Panel for Multi-District
Litigation to the United States District Court for the Northern District of
Illinois (the "Brand Name Prescription Drug Litigation"). Subsequent to the
consolidation, a new consolidated complaint was filed which included allegations
that the wholesaler defendants, including the Company and Whitmire, conspired
with manufacturers to inflate prices by using a chargeback pricing system. In
addition to the Federal court cases described above, the Company and Whitmire
have also been named as defendants in a series of state court cases alleging
similar claims under various state laws regarding the sale of brand name
prescription drugs. These lawsuits are described in "Item 1 - Legal Proceedings"
of Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1996, which was filed with the Securities and Exchange Commission and
is incorporated herein by reference. On November 9, 1995, the Company, along
with the other wholesaler defendants, filed a motion for summary judgment in the
Brand Name Prescription Drug Litigation. On April 4, 1996, summary judgment was
granted in favor of the Company and the other wholesaler defendants. The
plaintiffs have appealed this decision. The Company believes that the
allegations against the Company and Whitmire in such litigation are without
merit, and it intends to contest such allegations vigorously. The Company does
not believe that the outcome of these lawsuits will have a material adverse
effect on the Company's financial condition or results of operations.
The Company becomes involved from time to time in litigation incidental to
its business, none of which is expected to have a material adverse effect on the
Company's financial condition or results of operations.
Item 2: Change in Securities
On October 29, 1996, the shareholders of the Company adopted an amendment
to Article FOURTH of the Company's Amended and Restated Articles of
Incorporation, as amended, which increased the number of authorized Common
Shares, without par value, from 100 million to 150 million.
Item 4: Submission of Matters to a Vote of Security Holders
(a) Registrant's 1996 Annual Meeting of Shareholders was held on
October 29, 1996.
(b) Proxies were solicited by Registrant's management pursuant to
Regulation 14 under the Securities Exchange Act of 1934; there was no
solicitation in opposition to management's nominees as listed in the
proxy statement; and all director nominees were elected to the class
indicated in the proxy statement pursuant to the vote of the
Registrant's shareholders.
(c) Matters voted upon at the Annual Meeting were as follows:
(1) Election of Regina E. Herzlinger, J. Michael Losh, John C.
Kane, and John B. McCoy as directors of the Company. The results
of the shareholder vote were as follows: Mrs. Herzlinger
54,996,669 for, 0 against, 1,000,599 withheld, and 0 broker
non-votes; Mr. Losh 54,996,877 for, 0 against, 1,000,391
withheld, and 0 broker non-votes; Mr. Kane 54,725,313 for, 0
against, 1,271,954 withheld, and 0 broker non-votes; Mr. McCoy
55,013,666 for, 0 against, 983,601 withheld, and 0 broker
non-votes.
(2) Amendment to the Registrant's Amended and Restated Articles of
Incorporation to increase the common shares, without par value,
authorized (see Item 2). The results of the shareholder vote were
as follows: 53,313,661 for, 2,595,381 against, 88,225 withheld,
and 0 broker non-votes.
(3) Approval of the material terms of the performance goals under the
Cardinal Health, Inc. Performance-Based Incentive Compensation
Plan. The results of the shareholder vote were as follows:
55,455,400 for, 429,659 against, 112,208 withheld, and 0 broker
non-votes.
Page 10
<PAGE> 11
Item 6: Exhibits and Reports on Form 8-K:
(a) Listing of Exhibits:
Exhibit 2.01 Agreement and Plan of Merger dated as of November
27, 1996, by and among Owen Healthcare, Inc., Owl
Merger Corp., and Registrant. (1)
Exhibit 3.01 Amended and Restated Articles of Incorporation of the
Registrant, as amended.
Exhibit 11.01 Computation of Per Share Earnings.
Exhibit 27.01 Financial Data Schedule.
Exhibit 99.01 Statement Regarding Forward-Looking Information. (2)
--------------------
(1) Filed as Exhibit 2.1 to the Current Report on Form 8-K of Owen
Healthcare Inc. dated November 27, 1996, and incorporated herein
by reference.
(2) Filed as Exhibit 99.01 to the Quarterly Report on Form 10-Q of the
Registrant for the quarter ended September 30, 1996, and incorporated
herein by reference.
(b) Reports on Form 8-K:
On October 18, 1996, the Company filed a Current Report on Form 8-K
under Item 5 which reported that it had completed its merger of a
wholly-owned subsidiary with and into PCI Services, Inc. on October 11,
1996.
Page 11
<PAGE> 12
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.
CARDINAL HEALTH, INC.
Date: February 6, 1997 By: /s/ Robert D. Walter
----------------------------------------
Robert D. Walter
Chairman and Chief Executive Officer
By: /s/ David Bearman
----------------------------------------
David Bearman
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
Page 12
<PAGE> 1
Exhibit 3.01
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
CARDINAL DISTRIBUTION, INC.
These constitute the amended and restated articles of incorporation
of Cardinal Distribution, Inc., a corporation for profit formed under
the Ohio General Corporation Law, which amended and restated articles
of incorporation supersede the previously existing articles of incorporation
of the corporation, as heretofore amended:
FIRST: The name of the corporation shall be "Cardinal Dis-
tribution, Inc."
SECOND: The place in Ohio where the principal office of the
corporation is to be located is the City of Columbus, Franklin County.
THIRD: The purpose or purposes for which the corporation
is formed are to engage in any lawful act or activity for which corpora-
tions may be formed under Sections 1701.01 to 1701.98, inclusive, of
the Ohio Revised Code and any amendments heretofore or hereafter made
thereto.
FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate
number of shares which the corporation is authorized to have outstanding
is 10,500,000, consisting of 10,000,000 common shares without par value
and 500,000 nonvoting preferred shares without par value.
Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors
is authorized at any time, and from time to time, to provide for the
issuance of nonvoting preferred shares in one or more series, and to
determine to the extent permitted by law the designations, preferences,
limitations, and relative or other rights of the nonvoting preferred
shares or any series thereof. For each series, the board of directors
shall determine, by resolution or resolutions adopted prior to
issuance of any shares thereof, the designations, preferences, limitations,
and relative or other rights thereof, including but not limited to
the following relative rights and preferences, as to which there may
be variations among different series:
(a) the division of such shares into series and the designation
and authorized number of shares of each series,
(b) the dividend rate,
-1-
<PAGE> 2
(c) the dates of payment of dividends and the dates from which
they are cumulative,
(d) liquidation price,
(e) redemption rights and price,
(f) sinking fund requirements,
(g) conversion rights, and
(h) restrictions on the issuance of such shares.
Prior to the issuance of any shares of a series, but after
adoption by the board of directors of the resolution establishing such
series, the appropriate officers of the corporation shall file such
documents with the State of Ohio as may be required by law including,
without limitation, an amendment to these Articles of Incorporation.
Section 3. COMMON SHARES. Each common share shall entitle
the holder thereof to one vote, in person or by proxy, at any and all
meetings of the shareholders of the corporation, on all propositions
before such meetings. Subject to the preferences of any outstanding
preferred shares, each common share shall be entitled to participate
equally in such dividends as may be declared by the board of directors
out of funds legally available therefor, and to participate equally
in all distributions of assets upon liquidation.
FIFTH: The amount of stated capital with which the corporation
will begin business shall be not less than five hundred dollars ($500).
SIXTH: The board of directors may fix and determine, and
vary, the amount of working capital of the corporation; determine whether
any (and, if any, what part) of the surplus, however created or arising,
shall be used or disposed of or declared in dividends or paid to share-
holders; and, without action by the shareholders, use and apply such
surplus, or any part thereof, or such part of the stated capital of
the corporation as is permitted under the laws of the State of Ohio,
at any time or from time to time, in the purchase or acquisition of
shares of any class, voting-trust certificates for shares, bonds, deben-
tures, notes, scrip, warrants, obligations, evidence of indebtedness
of the corporation, or other securities of the corporation, to such
extent or amount and in such manner and upon such terms as the board
of directors shall deem expedient and without regard to any provisions
which may hereafter be contained in the corporation's articles of incor-
poration with respect to the redemption of shares of any class at the
option of the corporation.
SEVENTH: Every statute of the State of Ohio hereafter enacted,
whereby rights or privileges of the shareholders of a corporation organ-
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<PAGE> 3
ized under the Ohio General Corporation Law are increased, diminished,
or in any way affected, or whereby effect is given to any action author-
ized, ratified, or approved by less than all the shareholders of any
such corporation, shall apply to the corporation and shall bind every
shareholder to the same extent as if such statute had been in force
at the date of the filing of these articles of incorporation.
EIGHTH: A director or officer of the corporation shall not
be disqualified by his office from dealing or contracting with the
corporation as a vendor, purchaser, employee, agent, or otherwise.
No transaction or contract or act of the corporation shall be void
or voidable or in any way affected or invalidated by reason of the
fact that any director or officer, or any firm of which any director
or officer is a shareholder, director, or trustee, or any trust of
which any director or officer is a trustee or beneficiary, is in any
way interested in such transaction or contract or act. No director
or officer shall be accountable or responsible to the corporation for
or in respect to any transaction or contract or act of the corporation
or for any gains or profits directly or indirectly realized by him
by reason of the fact that he or any firm of which he is a member or
any corporation of which he is a shareholder, director, or trustee,
or any trust of which he is a trustee or beneficiary, is interested
in such transaction or contract or act; provided the fact that such
director or officer or such firm or corporation or such trust is so
interested shall have been disclosed or shall have been known to the
board of directors or such members thereof as shall be present at any
meeting of the board of directors at which action upon such contract
or transaction or act shall have been taken. Any director may be counted
in determining the existence of a quorum at any meeting of the board
of directors which shall authorize or take action in respect to any
such contract or transaction or act, and may vote thereat to authorize,
ratify, or approve any such contract or transaction or act, and any
officer of the corporation may take any action within the scope of
his authority respecting such contract or transaction or act with like
force and effect as if he or any firm of which he is a member, or any
corporation of which he is a shareholder, director, or trustee, or
any trust of which he is a trustee or beneficiary, were not interested
in such transaction or contract or act. Without limiting or qualifying
the foregoing, if in any judicial or other inquiry, suit, cause, or
proceeding, the question of whether a director or officer of the corpora-
tion has acted in good faith is material, then notwithstanding any
statute or rule of law or of equity to the contrary (if any there be),
his good faith shall be presumed, in the absence of proof to the contrary
by clear and convincing evidence.
NINTH: No holder of shares of any class of the corporation
shall be entitled as such, as a matter of right, to subscribe for or
purchase shares of any class, now or hereafter authorized, or to purchase
or to subscribe for securities convertible into or exchangeable for
shares of the corporation, or to which shall appertain or be attached
-3-
<PAGE> 4
any warrants or rights entitling the holder thereto to subscribe for
or purchase shares, except such rights of subscription or purchase,
if any, at such price or prices, and upon such terms and conditions
as the board of directors in its discretion may from time to time deter-
mine.
TENTH: Except as otherwise provided in these Articles of
Incorporation or the Code of Regulations of the corporation, notwithstand-
ing any provision of any statute of the State of Ohio, now or hereafter
in force, requiring for any purpose the vote, consent, waiver, or release
of the holders of shares entitling them to exercise two-thirds or any
other proportion of the voting power of the corporation or of any class
or classes of shares thereof, any action may be taken by the vote of
the holders of shares entitling them to exercise a majority of the
voting power of the corporation, or of such class or classes, unless
the proportion designated by such statute cannot be altered by these
articles.
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<PAGE> 5
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
CARDINAL DISTRIBUTION, INC.
Robert D. Walter and Michael E. Moritz hereby certify that they are the
duly elected and acting chairman and secretary, respectively, of Cardinal
Distribution, Inc., an Ohio corporation (the "Company"), and further certify
that the following is a true copy of a resolution amending the Company's
Amended and Restated Articles of Incorporation duly adopted by the affirmative
vote of the holders of shares of the Company entitling them to exercise a
majority of the voting power of the Company at the annual meeting of
shareholders duly held on August 30, 1989:
RESOLVED, That the Amended and Restated Articles of
Incorporation of the Company be amended by deleting ARTICLE
FOURTH thereof in its entirety and by substituting in lieu
thereof the following ARTICLE FOURTH:
FOURTH: Section 1. AUTHORIZED SHARES. The
maximum aggregate number of shares which the
corporation is authorized to have outstanding is
20,500,000, consisting of 20,000,000 common shares
without par value and 500,000 nonvoting preferred
shares without par value.
Section 2. ISSUANCE OF PREFERRED SHARES.
The board of directors is authorized at any time,
and from time to time, to provide for the issuance
of nonvoting preferred shares in one or more
series, and to determine to the extent permitted
by law the designations, preferences, limitations,
and relative or other rights of the nonvoting
preferred shares or any series thereof. For each
series, the board of directors shall determine, by
resolution or resolutions adopted prior to the
issuance of any shares thereof, the designations,
preferences, limitations, and relative or other
rights thereof, including but not limited to the
following relative rights and preferences, as to
which there may be variations among different
series:
(a) the division of such shares into series
and the designation and authorized
number of shares of each series,
(b) the dividend rate,
(c) the dates of payment of dividends and
the dates from which they are
cumulative,
(d) liquidation price,
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<PAGE> 6
(e) redemption rights and price,
(f) sinking fund requirements,
(g) conversion rights, and
(h) restrictions on the issuance
of such shares.
Prior to the issuance of any shares of a series,
but after adoption by the board of directors of
the resolution establishing such series, the
appropriate officers of the corporation shall file
such documents with the State of Ohio as may be
required by law including, without limitation, an
amendment to these Articles of Incorporation.
Section 3. COMMON SHARES. Each common share
shall entitle the holder thereof to one vote, in
person or by proxy, at any and all meetings of the
shareholders of the corporation, on all
propositions before such meetings. Subject to the
preferences of any outstanding preferred shares,
each common share shall be entitled to participate
equally in such dividends as may be declared by
the board of directors out of funds legally
available therefor, and to participate equally in
all distributions of assets upon liquidation.
August 30, 1989 CARDINAL DISTRIBUTION, INC.
By /s/ Robert D. Walter
------------------------------
Robert D. Walter, Chairman
By /s/ Michael E. Moritz
------------------------------
Michael E. Moritz, Secretary
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<PAGE> 7
CERTIFICATE OF AMENDMENT
TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF
CARDINAL DISTRIBUTION, INC.
Robert D. Walter and George H. Bennett, Jr. hereby certify that they
are the duly elected and acting chairman and assistant secretary,
respectively, of Cardinal Distribution, Inc., an Ohio corporation (the
"Company"), and further certify that the following is a true copy of a
resolution amending the Company's Amended and Restated Articles of
Incorporation duly adopted by the affirmative vote of the holders of shares of
the Company entitling them to exercise a majority of the voting power of the
Company at the annual meeting of shareholders duly held on August 15, 1991:
REVOLVED, that Article FOURTH of the Company's Amended and
Restated Articles of Incorporation be, and the same hereby is,
deleted in its entirety and there is substituting the following:
FOURTH: Section 1. AUTHORIZED SHARES. The
maximum aggregate number of shares which the
corporation is authorized to have outstanding
is 40,500,000 consisting of 40,000,000 common
shares without par value and 500,000 nonvoting
preferred shares without par value.
Section 2. ISSUANCE OF PREFERRED SHARES. The
board of directors is authorized at any time,
and from time to time, to provide for the
issuance of nonvoting preferred shares in one
or more series, and to determine to the extent
permitted by law the designations, preferences,
limitations, and relative or other rights of
the nonvoting preferred shares or any other
series thereof. For each series, the board of
directors shall determine, by resolution or
resolutions adopted prior to the issuance of any
shares thereof, the designations, preferences,
limitations, and relative or other rights thereof,
including but not limited to the following
relative rights and preferences, as to which
there may be variations among different series:
(a) the division of such shares into
series and the designation and
authorized number of shares of
each series,
(b) the divided rate,
(c) the dates of payment of dividends and
the dates from which they are cumulative,
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<PAGE> 8
(d) liquidation price,
(e) redemption rights and price,
(f) sinking fund requirements,
(g) conversion rights, and
(h) restrictions on the issuance of such shares.
Prior to the issuance of any shares of a series, but after
adoption by the board of directors of the resolution
establishing such series, the appropriate officers of the
corporation shall file such documents with the State of Ohio
as may be required by law including, without limitation, an
amendment to these Articles of Incorporation.
Section 3. COMMON SHARES. Each common share shall
entitle the holder thereof to one vote, in person or by proxy,
at any and all meetings of the shareholders of the corporation,
on all propositions before such meetings. Subject to the
preferences of any outstanding preferred shares, each common
share shall be entitled to participate equally in such dividends
as may be declared by the board of directors out of funds
legally available therefor, and to participate equally in all
distributions of assets upon liquidation.
August 15, 1991 CARDINAL DISTRIBUTION, INC.
By /s/ Robert D. Walter
---------------------------
Robert D. Walter, Chairman
By /s/ George H. Bennett, Jr.
---------------------------
George H. Bennett, Jr., Assistant
Secretary
-8-
<PAGE> 9
EXHIBIT A
TO
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED
OF
CARDINAL DISTRIBUTION, INC.
Resolved, that Article FIRST, of the Amended and Restated Articles of
Incorporation, as amended, of Cardinal Distribution, Inc. be, and the same
hereby is, deleted in its entirety and there is substituted therefor the
following:
FIRST: The name of the corporation shall be "Cardinal Health, Inc."
Resolved, that Article FOURTH of the Amended and Restated Articles of
Incorporation, as amended, of Cardinal Distribution, Inc. be, and the same
hereby is, deleted in its entirety and there is substituted therefor the
following:
FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate
number of shares which the corporation is authorized to have
outstanding is 65,500,000, consisting of 60,000,000 common shares,
without par value ("Class A Common Shares"), 5,000,000 Class B common
shares, without par value ("Class B Common Shares") (the Class A Common
Shares and the Class B Common Shares are sometimes referred to herein
collectively as the "Common Shares"), and 500,000 nonvoting preferred
shares, without par value.
Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors
is authorized at any time, and from time to time, to provide for the
issuance of nonvoting preferred shares in one or more series, and to
determine to the extent permitted by law the designations, preferences,
limitations, and relative or other rights of the nonvoting preferred
shares or any series thereof. For each series, the board of directors
shall determine, by resolution or resolutions adopted prior to the
issuance of any shares thereof, the designations, preferences,
limitations, and relative or other rights thereof, including but not
limited to the following relative rights and preferences, as to which
there may be variations among different series:
(a) the division of such shares into series and the
designation and authorized number of shares of each series,
(b) the dividend rate,
(c) the dates of payment of dividends and the dates from which
they are cumulative,
(d) liquidation price,
(e) redemption rights and price,
(f) sinking fund requirements,
(g) conversion rights, and
(h) restrictions on the issuance of such shares.
Prior to the issuance of any shares of a series, but after adoption by
the board of directors of the resolution establishing such series, the
appropriate officers of the corporation shall file such documents with
the State of Ohio as may be required by law including, without
limitation, an amendment to these Articles of Incorporation.
Section 3. COMMON SHARES.
All common shares shall be identical and will entitle the holders
thereof to the same rights and privileges, except as otherwise provided
herein.
A. VOTING RIGHTS.
1. CLASS A COMMON SHARES. Except as set forth herein or as
otherwise required by law, each outstanding Class A Common Share shall
entitle the holder thereof to one vote, in person or by
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<PAGE> 10
proxy, at any and all meetings of the shareholders of the corporation,
on all propositions before such meetings.
2. CLASS B COMMON STOCK. Except as set forth herein or as
otherwise required by law, each outstanding Class B Common Share shall
entitle the holder thereof to one-fifth (1/5) of one vote, in person
or by proxy, at any and all meetings of shareholders of the corporation,
on all propositions before such meetings. Notwithstanding the
foregoing, holders of the Class B Common Shares shall be entitled to
vote as a separate class on any amendment to this paragraph 2 of this
Section A, on the issuance in the aggregate by the corporation of
additional Class B Common Shares in excess of the number of Class B
Common Shares held by Chemical Equity Associates and its Affiliates or
issuable pursuant to Section 3(c) hereof and on any amendment, repeal
or modification of any provision of these Articles that adversely
affects the powers, preferences or special rights of the holders of the
Class B Common Shares.
B. DIVIDENDS; LIQUIDATION. Subject to the preferences of any
preferred shares, each Common Share shall be entitled to participate equally in
such dividends as may be declared by its board of directors out of funds
legally available therefor or to participate equally in all distributions of
assets upon liquidation; provided, that in the case of dividends payable in
Common Shares of the Corporation, or options, warrants or rights to acquire
such Common Shares, or securities convertible into or exchangeable for such
Common Shares, the shares, options, warrants, rights or securities so payable
shall be payable in shares of, or options, warrants or rights to acquire, or
securities convertible into or exchangeable for, Common Shares of the same
class upon which the dividend or distribution is being paid.
C. CONVERSION.
1. CONVERSION OF CLASS A COMMON SHARES. Any Regulated Shareholder
(defined below) shall be entitled to convert, at any time and from time
to time, any or all of the Class A Common Shares held by such
shareholder into the same number of Class B Common Shares.
2. CONVERSION OF CLASS B COMMON SHARES. Each holder of Class B
Common Shares may convert such shares into Class A Common Shares if
such holder reasonably believes that such converted shares will be
transferred within fifteen (15) days pursuant to a Conversion Event
(defined below) and such holder agrees not to vote any such Class A
Common Shares prior to such Conversion Event and undertakes to
promptly convert such shares back into Class B Common Shares if such
shares are not transferred pursuant to a Conversion Event. Each
Regulated Shareholder may provide for further restrictions or
limitations upon the conversion of any Class B Common Shares by
providing the corporation with signed, written instructions specifying
such additional restrictions and legending such shares as to the
existence of such restrictions.
3. CONVERSION PROCEDURE. Each conversion of Common Shares of the
corporation into shares of another class of Common Shares of the
Corporation shall be effected by the surrender of the certificate or
certificates representing the shares to be converted (the "Converting
Shares") at the principal office of the corporation (or such other
office or agency of the corporation as the corporation may designate
by written notice to the holders of common shares) at any time during
its usual business hours, together with written notice by the holder
of such Converting Shares, stating that such holder desires to convert
the Converting Shares, or a stated number of the shares represented by
such certificate or certificates, into an equal number of shares of the
class into which such shares may be converted (the "Converted Shares").
Such notice shall also state the name or names (with addresses) and
denominations in which the certificate or certificates for Converted
Shares are to be issued and shall include instructions for the delivery
thereof. Promptly after such surrender and the receipt of such written
notice, the corporation will issue and deliver in accordance with the
surrendering holder's intructions the certificate or certificates
evidencing the Converted Shares issuable upon such conversion, and the
corporation will deliver to the converting holder a certificate
representing any shares which were represented by the certificate or
certificates that were delivered to the corporation with such
conversion, but which were not converted.
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<PAGE> 11
Such conversion shall be deemed to have been effected as of the
close of business on the date on which such certificate or certificates
shall have been surrendered and such notice shall have been received by
the corporation, and at such time the rights of the holder of the
Converting Shares as such holder shall cease and the person or persons
in whose name or names the certificate or certificates for the
Converted Shares are to be issued upon such conversion shall be deemed
to have become the holder or holders of record of the Converted Shares.
Upon issuance of shares in accordance with this Section C, such
Converted Shares shall be deemed to be duly authorized, validly issued,
fully paid and non-assessable.
Each holder of Class B Common Shares shall be entitled to convert
Class B Common Shares in connection with any Conversion Event if such
holder reasonably believes that such Conversion Event will be
consummated, and a written request for conversion from any holder of
Class B Common Shares to the corporation stating such holder's
reasonable belief that a Conversion Event shall occur shall be
conclusive and shall obligate the corporation to effect such
conversion in a timely manner so as to enable each such holder to
participate in such Conversion Event. The corporation will not cancel
the Class B Common Shares so converted before the 15th day following
such Conversion Event and will reserve such shares until such 15th day
for reissuance in compliance with the next sentence. If any Class B
Common Shares are converted into Class A Common Shares in connection
with a Conversion Event and such Class A Common Shares are not
actually distributed, disposed of or sold pursuant to such Conversion
Event, such Class A Common Shares shall be promptly converted back
into the same number of Class B Common Shares.
4. STOCK SPLITS; ADJUSTMENTS. If the Corporation shall in any
manner subdivide (by stock split, stock dividend or otherwise) or
combine (by reverse stock split or otherwise) the outstanding Class A
Common Shares or the Class B Common Shares, then the outstanding
shares of each other class of common shares shall be subdivided or
combined, as the case may be, to the same extent, share and share
alike, and effective provision shall be made for the protection of the
conversion rights hereunder.
In the case of any reorganization, reclassification or change of
shares of the Class A Common Shares or Class B Common Shares (other
than a change in par value or from par to no par value as a result of
a subdivision or combination), or in case of any consolidation of the
corporation with one or more corporations or a merger of the
corporation with another corporation (other than a consolidation or
merger in which the corporation is the resulting or surviving
corporation and which does not result in any reclassification or
change of outstanding Class A Common Shares or Class B Common Shares),
each holder of Class A Common Shares or Class B Common Shares shall
have the right at any time thereafter, so long as the conversion right
hereunder with respect to such share would exist had such event not
occurred, to convert such share into the kind and amount of shares of
stock and other securities and properties (including cash) receivable
upon such reorganization, reclassification, change, consolidation or
merger by a holder of the number of Class A Common Shares or Class B
Common Shares into which such Class A Common Shares or Class B Common
Shares, as the case may be, might have been converted immediately
prior to such reorganization, reclassification, change, consolidation
or merger. In the event of any such reorganization, reclassification,
change, consolidation or merger which will have the effect of causing
any Regulated Shareholder's direct or indirect ownership of shares of
capital stock of the resulting or surviving corporation immediately
following such transaction to equal or exceed 5% of the voting power
thereof (calculated as if all such Regulated Shareholder's Class B
Common Shares were converted to Class A Common Shares immediately prior
to consummation of such transaction) then provision shall be made in
the certificate of incorporation of the resulting or surviving
corporation for the protection of the conversion rights of Class A
Common Shares and Class B Common Shares that shall be applicable, as
nearly as reasonably may be, to any such other shares of stock and
other securities and property deliverable upon conversion of such
Class A Common Shares or Class B Common Shares into which such Class
A Common Shares or Class B Common Shares might have been converted
prior to such event.
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<PAGE> 12
5. RESERVATION OF SHARES. The Corporation shall at all times
reserve and keep available out of its authorized but unissued Class A
Common Shares and Class B Common Shares or its treasury shares, for
the purpose of issuance upon the conversion of Class A Common Shares
and Class B Common Shares, such number of shares of such class as are
then issuable upon the conversion of all outstanding shares of Class A
Common Shares and Class B Common Shares which may be converted.
6. NO CHARGE. The issuance of certificates for shares of any class
of common shares upon conversion of shares of any other class of common
shares shall be made without charge to the holders of such shares for
any issuance tax in respect thereof or other cost incurred by the
Corporation in connection with such conversion and the related
issuance of common shares; provided, however, that the Corporation
shall not be required to pay any tax which may be payable in respect
of any transfer involved in the issuance and delivery of any
certificate in a name other than that of the holder of the common
shares converted.
D. As used herein, the following terms shall have the meanings shown
below:
1. "AFFILIATES" shall mean with respect to any Person, any other
person, directly or indirectly controlling, controlled by or under
common control with such Person. For the purpose of the above
definition, the term "control" (including with correlative meaning,
the terms "controlling", "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession,
directly or indirectly, of the power to direct or cause the direction
of the management and policies of such Person, whether through the
ownership of voting securities or by contract or otherwise.
2. "CONVERSION EVENT" shall mean (a) any public offering or public
sale of securities of the Corporation (including a public offering
registered under the Securities Act of 1933 and a public sale pursuant
to Rule 144 of the Securities and Exchange Commission or any similar
rule then in force), (b) any sale of securities of the corporation to
a person or group of persons (withing the meaning of the Securities
Exchange Act of 1934, as amended (the "1934 Act")) if, after such sale,
such person or group of persons in the aggregate would own or control
securities which possess in the aggregate the ordinary voting power to
elect a majority of the corporation's directors (provided that such
sale has been approved by the corporation's Board of Directors or a
committee thereof), (c) any sale of securities of the corporation to a
person or group of persons (within the meaning of the 1934 Act) if,
after such sale, such person or group of persons in the aggregate would
own or control securities of the corporation (excluding any Class B
Common Shares being converted and disposed of in connection with such
Conversion Event) which possess in the aggregate the ordinary voting
power to elect a majority of the corporation's directors, (d) any sale
of securities of the corporation to a person or group of persons
(within the meaning of the 1934 Act) if, after such sale, such person
or group of persons would not, in the aggregate, own, control or have
the right to acquire more than two percent (2%) of the outstanding
securities or any class of voting securities of the corporation (for
purposes of this clause, treating Class A Common Stock and Class B
Common Stock as a single class), and (e) a merger, consolidation or
similar transaction involving the corporation if, after such
transaction, a person or group of persons (within the meaning of the
1934 Act) in the aggregate would own or control securities which
possess in the aggregate the ordinary voting power to elect a majority
of the surviving corporation's directors (provided that the
transaction has been approved by the corporation's Board of Directors
or a committee thereof).
3. "PERSON" or "PERSON" shall mean an individual, a partnership, a
corporation, a trust, a joint venture, an unincorporated organization
or a government or any department or agency thereof.
4. "REGULATED SHAREHOLDER" shall mean Chemical Equity Associates
and its Affiliates.
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<PAGE> 13
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED,
OF
CARDINAL HEALTH, INC.
Robert D. Walter, Chairman, and George H. Bennett, Jr., Secretary, of
Cardinal Health, Inc., an Ohio corporation (the "Company"), do hereby certify
that a meeting of the shareholders of the Company was duly called and held on
November 14, 1995, at which meeting a quorum of the shareholders was present in
person or by proxy, and by the affirmative vote of holders of shares entitling
them to exercise a majority of the voting power of the Company on a proposal to
amend the Company's Amended and Restated Articles of Incorporation, as amended,
the following resolution was duly adopted:
Resolved, that Section 1 of Article FOURTH of the Amended and Restated
Articles of Incorporation, as amended, of Cardinal Health, Inc. be,
and the same hereby is, deleted in its entirety and there is
substituted therefor the following:
FOURTH: Section 1. Authorized Shares. The maximum aggregate number
of shares which the corporation is authorized to have outstanding is
105,500,000, consisting of 100,000,000 common shares, without par
value ("Class A Common Shares"), 5,000,000 Class B common shares,
without par value ("Class B Common Shares") (the Class A Common Shares
and the Class B Common Shares are sometimes referred to herein
collectively as the "Common Shares"), and 500,000 nonvoting preferred
shares, without par value.
IN WITNESS WHEREOF, Robert D. Walter, Chairman, and George H. Bennett,
Jr., Secretary, of Cardinal Health, Inc., acting for and on its behalf, do
hereunto subscribe their names this 14th day of November, 1995.
/s/ Robert D. Walter
------------------------------
Robert D. Walter, Chairman
/s/ George H. Bennett, Jr.
------------------------------
George H. Bennett, Jr.
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<PAGE> 14
CERTIFICATE OF AMENDMENT
TO
AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED,
OF
CARDINAL HEALTH, INC.
Robert D. Walter, Chairman, and George H. Bennett, Jr., Secretary, of
Cardinal Health, Inc., an Ohio corporation (the "Company"), do hereby certify
that a meeting of the shareholders of the Company was duly called and held on
October 29, 1996, at which meeting a quorum of the shareholders was present in
person or by proxy, and by the affirmative vote of holders of shares entitling
them to exercise a majority of the voting power of the Company on a proposal to
amend the Company's Amended and Restated Articles of Incorporation, as
amended, the following resolution was duly adopted;
Resolved, that Section 1 of Article FOURTH of the Amended and Restated
Articles of Incorporation, as amended, of Cardinal Health, Inc. be,
and the same hereby is, deleted in its entirety and there is
substituted therefor the following:
FOURTH: Section 1. Authorized Shares. The maximum aggregate number
of shares which the corporation is authorized to have outstanding is
155,500,000, consisting of 150,000,000 common shares, without par
value ("Class A Common Shares"), 5,000,000 Class B common shares,
without par value ("Class B Common Shares") (the Class A Common Shares
and the Class B Common Shares are sometimes referred to herein
collectively as the "Common Shares"), and 500,000 nonvoting preferred
shares, without par value.
IN WITNESS WHEREOF, Robert D. Walter, Chairman, and George H. Bennett,
Jr., Secretary, of Cardinal Health, Inc., acting for and on its behalf, do
hereunto subscribe their names this 29th day of October, 1996.
/s/ Robert D. Walter
-----------------------------------
Robert D. Walter, Chairman
/s/ George H. Bennett, Jr.
-------------------------------------
George H. Bennett, Jr., Secretary
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<PAGE> 1
<TABLE>
<CAPTION>
Exhibit 11.01
CARDINAL HEALTH, INC.
COMPUTATION OF PER SHARE EARNINGS
(In thousands, except per share amounts)
Fiscal Quarter Ended Six Months Ended
------------------------------- --------------------------------
December 31, December 31, December 31, December 31,
1996 1995 1996 1995
--------------- --------------- --------------- ---------------
PRIMARY:
<S> <C> <C> <C> <C>
Net earnings $ 38,454 $ 26,542 $ 78,251 $ 58,458
=============== =============== =============== ===============
Average shares outstanding 99,860 95,171 98,214 94,911
Dilutive effect of stock options 1,425 1,742 1,356 1,965
--------------- --------------- --------------- ---------------
Weighted average number of Common
Shares outstanding 101,285 96,913 99,570 96,876
=============== =============== =============== ===============
Primary earnings per Common Share $ 0.38 $ 0.27 $ 0.79 $ 0.60
=============== =============== =============== ===============
FULLY DILUTED:
Net earnings $ 38,454 $ 26,542 $ 78,251 $ 58,458
=============== =============== =============== ===============
Average shares outstanding 99,860 95,171 98,214 94,911
Dilutive effect of stock options 1,486 1,752 1,468 2,031
--------------- --------------- --------------- ---------------
Weighted average number of Common
Shares outstanding 101,346 96,923 99,682 96,942
=============== =============== =============== ===============
Fully diluted earnings per Common Share $ 0.38 $ 0.27 $ 0.79 $ 0.60
=============== =============== =============== ===============
</TABLE>
Page 13
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1996
<PERIOD-END> DEC-31-1996
<CASH> 73,332
<SECURITIES> 37,185
<RECEIVABLES> 713,649
<ALLOWANCES> (34,332)
<INVENTORY> 1,691,209
<CURRENT-ASSETS> 2,596,075
<PP&E> 413,821
<DEPRECIATION> (163,915)
<TOTAL-ASSETS> 3,150,837
<CURRENT-LIABILITIES> 1,634,248
<BONDS> 297,909
<COMMON> 549,186
0
0
<OTHER-SE> 548,403
<TOTAL-LIABILITY-AND-EQUITY> 3,150,837
<SALES> 5,116,996
<TOTAL-REVENUES> 5,116,996
<CGS> 4,729,495
<TOTAL-COSTS> 4,729,495
<OTHER-EXPENSES> 225,802
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (13,933)
<INCOME-PRETAX> 134,469
<INCOME-TAX> 56,218
<INCOME-CONTINUING> 78,251
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78,251
<EPS-PRIMARY> .79
<EPS-DILUTED> .79
</TABLE>
