<PAGE> 1
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. NEITHER THIS
PROSPECTUS SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS SHALL CONSTITUTE AN OFFER
TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BY ANY SALE OF
THESE SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY
SUCH STATE.
Filed Pursuant To Rule 424(B)(5)
Registration No. 333-24483
SUBJECT TO COMPLETION, DATED JUNE 30, 1998
PROSPECTUS SUPPLEMENT
(To Prospectus dated April 21, 1997)
$150,000,000
CARDINAL HEALTH LOGO
% NOTES DUE 200__
The Notes will bear interest from , 1998, at the rate of %
per annum, payable semiannually, on and ,
commencing , 1999. The Notes will mature on ,
200 _ . The Notes will be redeemable, in whole or, from time to time, in part,
at the option of the Company at any time at a redemption price equal to the
greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii)
as determined by a Quotation Agent (as defined herein), the sum of the present
values of the remaining scheduled payments of principal and interest thereon
(exclusive of interest accrued to the date of redemption) discounted to the date
of redemption on a semiannual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined herein) plus
basis points, plus, in each case, accrued and unpaid interest on the
principal amount being redeemed to the date of redemption. The Notes will be
represented by a global note registered in the name of the Depository Trust
Company or its nominee (the "Depositary"). Interests in such global note will be
shown on, and transfer thereof will be effected only through, records maintained
by the Depositary and its participants. Except as described herein, Notes in
definitive form will not be issued. See "Certain Terms of Notes."
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
==============================================================================================================
PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT(2) COMPANY(1)(3)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Note.............................. % % %
- --------------------------------------------------------------------------------------------------------------
Total................................. $ $ $
==============================================================================================================
</TABLE>
(1) Plus accrued interest, if any, from , 1998.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(3) Before deducting expenses payable by the Company estimated at $ .
------------------------
The Notes are offered, subject to prior sale, when, as and if accepted by
the Underwriters, and subject to approval of certain legal matters by Davis Polk
& Wardwell, counsel for the Underwriters, and to certain other conditions. It is
expected that delivery of the Notes will be made on or about July , 1998.
------------------------
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
SALOMON SMITH BARNEY
JULY , 1998
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE NOTES, INCLUDING
OVERALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS AND THE IMPOSITION OF
PENALTY BIDS. SEE "UNDERWRITING."
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
In addition to the documents filed with the Securities and Exchange
Commission (the "Commission") by the Company and incorporated by reference in
the Prospectus and this Prospectus Supplement (see "Incorporation of Certain
Documents by Reference" in the accompanying Prospectus), the following documents
which Bergen Brunswig Corporation ("Bergen") (Commission File No. 1-5110) has
filed with the Commission pursuant to the Exchange Act are incorporated by
reference in this Prospectus Supplement:
1. Historical financial statements of Bergen contained in Bergen's
Annual Report on Form 10-K for the fiscal year ended September 30, 1997,
filed with the Commission on December 24, 1997 (the "Bergen 1997 10-K");
2. Historical financial statements of Bergen contained in Bergen's
Quarterly Report on Form 10-Q for the fiscal quarter ended December 31,
1997, filed with the Commission on February 11, 1998; and
3. Historical financial statements of Bergen contained in Bergen's
Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 1998,
filed with the Commission on May 15, 1998.
In addition, the Unaudited Pro Forma Condensed Combined Financial
Information contained in Amendment No. 1 to the Company's Registration Statement
on Form S-4 (Registration No. 333-56655), filed with the Commission on June 23,
1998 (the "Scherer S-4"), is incorporated by reference in this Prospectus
Supplement.
FORWARD-LOOKING STATEMENTS
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for "forward-looking statements" (as defined in the Act). This
Prospectus Supplement and the accompanying Prospectus include and incorporate by
reference forward-looking statements which reflect the Company's current view
(as of the date such forward-looking statement is made) with respect to future
events, prospects, projections or financial performance. These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from those made, implied or projected
in such statements. These uncertainties and other factors include, but are not
limited to, uncertainties relating to general economic conditions; the loss of
one or more key customer or supplier relationships, including pharmaceutical
manufacturers for which alternative supplies may not be available; the
malfunction or failure of the Company's information systems; the costs and/or
difficulties related to the integration of acquired businesses; changes to the
presentation of financial results and position resulting from adoption of new
accounting principles or upon the advice of the Company's independent auditors,
or the staff of the Commission; changes in the distribution or outsourcing
pattern for pharmaceutical products and/or services; changes in, or failure to
comply with, government regulations; the costs and other effects of legal and
administrative proceedings, including those with respect to the Company's
proposed merger transactions with Bergen and, if any, R.P. Scherer Corporation;
injury to person or property resulting from the Company's packaging, repackaging
or pharmacy management services; competitive factors in the Company's healthcare
service businesses, including pricing pressures; the continued financial
viability and success of the Company's customers, suppliers, and franchisees;
technological developments and products offered by competitors; failure to
retain or continue to attract senior management or key personnel; risks
associated with international operations, including fluctuations in currency and
changes in law regarding patents, copyrights and/or trademarks; difficulties or
delays in the development, production and marketing of new products and
services; strikes or other labor disruptions; labor and employee benefit costs;
pharmaceutical manufacturers' pricing policies and overall drug price inflation;
changes in hospital buying groups or hospital buying practices; and other
factors referenced in this Prospectus Supplement, the accompanying Prospectus or
the documents incorporated by reference herein or therein. The words "believe,"
"expect," "anticipate," "project," and similar expressions identify
"forward-looking statements," which speak only as of the date the statement was
made. The Company undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
S-2
<PAGE> 3
RECENT DEVELOPMENTS
On August 23, 1997, the Company signed a definitive merger agreement, which
was amended on March 16, 1998, with Bergen, a distributor of pharmaceuticals and
medical-surgical supplies, pursuant to which Bergen will become a wholly owned
subsidiary of the Company in a merger (the "Bergen Merger") expected to be
accounted for as a pooling-of-interests for financial reporting purposes. Under
the terms of the Bergen Merger, shareholders of Bergen will receive 0.775 of a
common share of the Company in exchange for each outstanding common share of
Bergen. The Company expects to issue approximately 42 million of its common
shares in the transaction (taking into account outstanding Bergen stock options
and related option exercise prices) and also expects to assume approximately
$603 million in long-term debt. Shareholders of both the Company and Bergen
approved the transaction on February 20, 1998. On March 9, 1998, the Federal
Trade Commission (the "FTC") filed a complaint in the United States District
Court for the District of Columbia seeking a preliminary injunction to halt the
Bergen Merger. On March 17, 1998, Bergen and the Company announced that they
would contest the FTC's attempt to challenge the transaction. A court hearing
began on June 9, 1998 and is currently ongoing. The Company and Bergen have
agreed not to consummate the Bergen Merger pending a decision on the preliminary
injunction, which is expected during the summer of 1998. Certain historical
financial information regarding Bergen is incorporated by reference in this
Prospectus Supplement (see "Incorporation of Certain Documents By Reference").
On May 17, 1998, the Company signed a definitive agreement with R.P.
Scherer Corporation ("Scherer"), an international developer and manufacturer of
drug delivery systems, pursuant to which Scherer will become a wholly owned
subsidiary of the Company in a merger (the "Scherer Merger") expected to be
accounted for as a pooling-of-interests for financial reporting purposes. Under
the terms of the Scherer Merger, shareholders of Scherer will receive 0.95 of a
common share of the Company in exchange for each outstanding common share of
Scherer. The Company expects to issue approximately 23 million of its common
shares in the transaction (taking into account outstanding Scherer stock options
and related option exercise prices) and also expects to assume approximately
$169 million in long-term debt. The Company's shareholders (if their vote is
required) and the Scherer stockholders are scheduled to vote on the Scherer
Merger at special meetings to be held on July 28, 1998 and August 6, 1998,
respectively. The Scherer Merger is expected to be completed by the end of
August 1998, subject to shareholder and regulatory approvals.
Certain unaudited pro forma condensed combined financial information
regarding the Company and giving effect to the Bergen Merger and the Scherer
Merger is incorporated by reference in this Prospectus Supplement from the
Scherer S-4. There can be no assurance that the Bergen Merger or the Scherer
Merger will be completed. If either the Bergen Merger or the Scherer Merger is
not consummated, the opportunities to realize synergies from the Bergen Merger
or the Scherer Merger will not be available to the Company and will not offset
the costs incurred by the Company in connection with the proposed Bergen Merger
or the proposed Scherer Merger.
USE OF PROCEEDS
The net proceeds from the sale of the Notes offered hereby are estimated to
be approximately $ . The net proceeds will be used for general
corporate purposes, which may include repayment of bank lines of credit and
other maturing debt, working capital growth, capital expenditures, and
acquisitions. The Company continually evaluates possible candidates for
acquisition and intends to continue to seek opportunities to expand its
healthcare operations and services.
S-3
<PAGE> 4
CAPITALIZATION
The following table sets forth the short-term obligations and
capitalization of the Company at March 31, 1998 and as adjusted to reflect the
issuance and sale of the Notes offered hereby. This information does not give
effect to the Bergen Merger or the Scherer Merger. Certain pro forma financial
information regarding the Company and giving effect to the Bergen Merger and the
Scherer Merger is incorporated by reference in this Prospectus Supplement from
the Scherer S-4.
<TABLE>
<CAPTION>
MARCH 31, 1998
-------------------------
ACTUAL AS ADJUSTED
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
Short-term Obligations:
Notes payable -- banks.................................... $ 85,941 $ 85,941
Current portion of long-term obligations.................. 6,847 6,847
---------- ----------
Total Short-term Obligations...................... $ 92,788 $ 92,788
========== ==========
Long-term Obligations:
Other long-term obligations including capital leases...... $ 23,267 $ 23,267
% Notes due 200_ offered hereby(l)................... -- 150,000
6% Notes due 2006......................................... 150,000 150,000
6 1/2% Notes due 2004..................................... 100,000 100,000
---------- ----------
Total Long-term Obligations....................... $ 273,267 $ 423,267
---------- ----------
Shareholders' Equity:
Common Shares, without par value, authorized 300,000,000
shares; issued and outstanding 110,415,745 shares...... $ 700,603 $ 700,603
Retained earnings......................................... 861,454 861,454
Common shares in treasury, at cost -- 267,887 shares...... (8,626) (8,626)
Other..................................................... (6,029) (6,029)
---------- ----------
Total Shareholders' Equity........................ $1,547,402 $1,547,402
---------- ----------
Total Capitalization.............................. $1,820,669 $1,970,669
========== ==========
</TABLE>
- ---------------
(1) As of May 31, 1998, the Company had outstanding approximately $248 million
of indebtedness for borrowed money with which the Notes would rank pari
passu. In addition, as of such date, the Company's subsidiaries had
outstanding approximately $54 million of indebtedness for borrowed money and
approximately $1.49 billion of trade payables to which the Notes would be
effectively subordinated.
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
NINE
FISCAL YEAR ENDED (1) MONTHS
--------------------------------------------------------- ENDED
MARCH 31, JUNE 30, JUNE 30, JUNE 30, JUNE 30, MARCH 31,
1993 1994 1995 1996 1997 1998
--------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges....................... 3.8 6.3 9.3 6.6 9.6 13.7
</TABLE>
- ---------------
(1) On March 1, 1994, the Company changed its fiscal year from March 31 to June
30.
The ratio of earnings to fixed charges is computed by dividing fixed
charges of the Company and entities 50% or more owned by the Company into
earnings before income taxes plus fixed charges. Fixed charges include interest
expense, amortization of debt offering costs, preferred stock dividend
requirements of subsidiaries, and the portion of rental expense which is deemed
to be representative of the interest factor. On a pro forma basis, giving effect
to the consummation of the Bergen Merger, the ratio of earnings to fixed charges
would be 7.0 and 8.1 for the fiscal year ended June 30, 1997 and the nine months
ended March 31, 1998, respectively. These ratios do not give effect to the
Scherer Merger. See "Recent Developments."
S-4
<PAGE> 5
CERTAIN TERMS OF NOTES
The following summary of the terms of the Notes offered hereby (included in
the defined term "Debt Securities" in the Prospectus) supplements, and to the
extent inconsistent therewith replaces, the description of the general terms and
provisions of Debt Securities set forth in the Prospectus, to which description
reference is hereby made.
GENERAL
The % Notes due 200_ (the "Notes") offered hereby are an issue of the
Debt Securities described in the Prospectus and will be issued as a separate
series of Debt Securities under the Indenture dated as of April 18, 1997 (the
"Indenture"), between the Company and Bank One, NA (formerly known as Bank One,
Columbus, NA), as Trustee (the "Trustee"). The Company may issue from time to
time other series of Debt Securities under the Indenture consisting of notes or
other unsecured evidences of indebtedness, but such other series will be
separate from and independent of the Notes. The Indenture does not limit the
amount of Debt Securities or any other debt which may be incurred by the
Company. In addition, the provisions of the Indenture do not afford holders of
the Notes protection in the event of a highly leveraged transaction,
reorganization, restructuring, acquisition, merger or similar transaction
involving the Company that could adversely affect holders of the Notes.
Reference is made to the Prospectus for a description of other general terms of
the Debt Securities.
The Notes will mature on , 200_. Interest on the Notes will
accrue from , 1998, and will be payable semiannually on
and , commencing , 1999, to the
persons in whose names the Notes are registered at the close of business on the
or prior to the payment date at the annual rate
set forth on the cover page of this Prospectus Supplement.
The Notes will not be listed on a securities exchange.
OPTIONAL REDEMPTION
The Notes will be redeemable, in whole or, from time to time, in part, at
the option of the Company at any time, at a redemption price equal to the
greater of (i) 100% of the principal amount of the Notes to be redeemed or (ii)
as determined by a Quotation Agent, the sum of the present values of the
remaining scheduled payments of principal and interest thereon (exclusive of
interest accrued to the date of redemption) discounted to the date of redemption
on a semiannual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Adjusted Treasury Rate plus basis points, plus, in
each case, accrued and unpaid interest on the amount being redeemed to the date
of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date, the
rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by a Quotation Agent as having a maturity comparable to the remaining
term of the Notes to be redeemed that would be utilized, at the time of
selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining
terms of such Notes.
"Comparable Treasury Price" means, with respect to any redemption date, (i)
the average of the Reference Treasury Dealer Quotations for such redemption
date, after excluding the highest and lowest such Reference Treasury Dealer
Quotations, or (ii) if the Trustee obtains fewer than three such Reference
Treasury Dealer Quotations, the average of all such Quotations.
"Quotation Agent" means the Reference Treasury Dealer appointed by the
Company.
"Reference Treasury Dealer" means (i) Bear, Stearns & Co. Inc. and its
respective successors: provided, however, that if the foregoing shall cease to
be a primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the
Company.
S-5
<PAGE> 6
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m. on the
third Business Day preceding such redemption date.
Notice to holders of Notes to be redeemed will be delivered by first-class
mail at least 30 and not more than 60 days prior to the date fixed for
redemption. Unless the Company defaults in payment of the redemption price, on
and after the redemption date interest will cease to accrue on the Notes or
portions thereof called for redemption.
BOOK-ENTRY, DELIVERY AND FORM
The Notes will be represented by one or more fully registered Global Notes
which will be deposited with, or on behalf of, the Depositary and registered in
the name of the Depositary's nominee. Unless and until it is exchanged in whole
or in part for Notes in certificated form, no Global Note may be transferred
except as a whole by the Depositary to a nominee of such Depositary or by a
nominee of such Depositary to such Depositary.
The Depositary has advised the Company as follows: It is a limited-purpose
trust company organized under the New York Banking law, a "banking organization"
within the meaning of the New York Banking law, a member of the Federal Reserve
System, a "clearing corporation" within the meaning of the New York Uniform
Commercial Code and a "clearing agency" registered pursuant to the provisions of
Section 17A of the Securities Exchange Act of 1934 (the "Exchange Act"). The
Depositary was created to hold securities for its participating organizations
(the "Participants") and to facilitate the clearance and settlement of
securities transactions between Participants in such securities through
electronic book-entry changes in accounts of its Participants. Participants
include securities brokers and dealers (including the Underwriters), banks,
trust companies, clearing corporations and certain other organizations, some of
which or representatives of which own the Depositary. Access to the Depositary's
system is also available to others such as banks, brokers, dealers and trust
companies that clear through or maintain a custodial relationship with a
Participant, either directly or indirectly ("indirect participants"). Persons
who are not Participants may beneficially own securities held by the Depositary
only through Participants or indirect participants.
The Depositary has advised the Company that upon the issuance of the Global
Notes, the Depositary will credit on its book-entry system the respective
principal amounts of the individual Notes represented by such Global Notes to
the accounts of the appropriate Participants. The accounts to be credited shall
be designated by the Underwriters. Ownership of beneficial interests in the
Global Notes will be limited to Participants or persons that own beneficial
interests through Participants. Ownership of beneficial interests in the Global
Notes will be shown on, and the transfer of that ownership will be effected only
through, records maintained by the Depositary's Participants or persons that
hold through Participants. The laws of some states require that certain
purchasers of securities take physical delivery of such securities. Such laws
may limit the market for beneficial interests in the Global Notes.
So long as the Depositary, or its nominee, is the registered owner of the
Global Notes, the Depositary or its nominee, as the case may be, will be
considered the sole owner or holder of the Global Notes for all purposes under
the Indenture. Except as provided below, owners of beneficial interests in the
Global Notes will not be entitled to have Notes registered in their names, will
not receive or be entitled to receive physical delivery of Notes in certificated
form and will not be considered the owners or holders thereof under the
Indenture. Accordingly, each person owning a beneficial interest in the Global
Notes must rely on the procedures of the Depositary and, if such person is not a
Participant, on the procedures of the Participant through which such person owns
its interest, to exercise any rights of a holder under the Indenture. The
Company understands that under existing industry practices, in the event that
the Company requests any consent or action of holders or if an owner of a
beneficial interest in the Global Notes desires to give a consent or take any
action which a holder is entitled to give or take under the Indenture, the
Depositary would authorize the Participants holding the relevant beneficial
interests to give such consent or take such action, and such Participants would
authorize beneficial owners holding through such Participants to give such
consent or take such action or would otherwise act upon the instructions of
beneficial owners holding through them.
S-6
<PAGE> 7
Principal, premium, if any, and interest payments on the Global Notes
registered in the name of the Depositary or its nominee will be made by the
Trustee to the Depositary or such nominee as the registered owner of the Global
Notes. Under the terms of the Indenture, the Company and the Trustee will treat
the persons in whose names the Global Notes are registered as the sole owner or
holder of the Global Notes for the purpose of receiving payment of principal,
premium, if any, and interest on the Global Notes and for all other purposes
whatsoever. Therefore, neither the Company, the Trustee nor any paying agent
will have any responsibility or liability for the payment of principal, premium,
if any, or interest on the Global Notes to owners of beneficial interests in the
Global Notes. Neither the Company, the Trustee nor any paying agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Notes, or for
maintaining, supervising or reviewing any records relating to such beneficial
ownership interests or for any action or inaction of the Depositary or its
nominee or any Participant.
If (x) the Depositary is at any time unwilling or unable to continue as the
Depositary or the Depositary ceases to be a clearing agency registered under the
Exchange Act, (y) the Company executes and delivers to the Trustee an order to
the effect that the Global Notes shall be transferable and exchangeable for
Notes in definitive form, or (z) an Event of Default has occurred and is
continuing with respect to the Notes, the Global Notes will be transferable or
exchangeable for Notes in definitive form of like tenor in an equal aggregate
principal amount. Such definitive Notes shall be registered in such name or
names as the Depositary shall instruct the Trustee.
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting
Agreement, the Company has agreed to sell to Bear, Stearns & Co. Inc., J.P.
Morgan Securities Inc., and Salomon Brothers Inc (the "Underwriters"), and each
of the Underwriters has severally agreed to purchase, the principal amount of
Notes set forth opposite its name below.
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
NAME OF NOTES
---- ----------------
<S> <C>
Bear, Stearns & Co. Inc..................................... $
J.P. Morgan Securities Inc..................................
Salomon Brothers Inc........................................
Total............................................. $150,000,000
============
</TABLE>
Under the terms and conditions of the Underwriting Agreement, the
Underwriters are committed to purchase all of the Notes offered hereby if any
are purchased.
The Underwriters initially propose to offer the Notes directly to the
public at the public offering price set forth on the cover page of this
Prospectus Supplement and to certain dealers at such price less a concession not
in excess of % of the principal amount of the Notes. The Underwriters may
allow, and such dealers may reallow, a concession not in excess of % of the
principal amount of the Notes to certain other dealers. After the Notes are
released for sale to the public, the public offering price and such concessions
may be changed by the Underwriters.
The Company does not intend to apply for listing of the Notes on a
securities exchange, but has been advised by the Underwriters that the
Underwriters intend to make a market in the Notes. Such Underwriters are not
obligated, however, to make a market in the Notes and may discontinue market
making at any time without notice. No assurance can be given as to the liquidity
of the trading markets for the Notes.
The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
In the ordinary course of their respective businesses, each of the
Underwriters has engaged, and may in the future engage, in investment banking
and commercial banking transactions with the Company and its affiliates.
In order to facilitate the offering of the Notes, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the Notes during and after such offering. Specifically, the
S-7
<PAGE> 8
Underwriters may overallot or otherwise create a short position in the Notes by
selling more Notes than have been sold to them by the Company. The Underwriters
may elect to cover any such short position by purchasing Notes in the open
market. In addition, the Underwriters may stabilize or maintain the price of the
Notes by bidding for or purchasing Notes in the open market and may impose
penalty bids, under which selling concessions allowed to syndicate members or
other broker-dealers participating in the offering are reclaimed if Notes
previously distributed in the offering are repurchased in connection with
stabilization transactions or otherwise. The effect of these transactions may be
to stabilize or maintain the market price of the Notes at a level above that
which might otherwise prevail in the open market. The imposition of a penalty
bid may also affect the price of the Notes to the extent that it discourages
resales thereof. No representation is made as to the magnitude or effect of any
such stabilization or other transactions. Such transactions, if commenced, may
be discontinued at any time.
EXPERTS
The consolidated financial statements and the related financial statement
schedule of the Company and its consolidated subsidiaries as of June 30, 1997
and 1996, and for each of the three years in the period ended June 30, 1997,
have been incorporated by reference herein from the Company's Annual Report on
Form 10-K for the fiscal year ended June 30, 1997, as amended by Form 10-K/A
dated January 7, 1998 (the "1997 Form 10-K"). Such consolidated financial
statements and schedule of the Company and its subsidiaries, except financial
statements of Pyxis Corporation ("Pyxis") and Owen Healthcare, Inc. ("Owen"),
consolidated with the Company's financial statements for the years ended June
30, 1996 and 1995, have been audited by Deloitte & Touche LLP as stated in their
report (which report expresses an unqualified opinion and includes an
explanatory paragraph referring to the restatement of the financial statements)
which is incorporated herein by reference from the 1997 Form 10-K. The financial
statements of Pyxis and Owen (consolidated with those of the Company in the
consolidated financial statements for the years ended June 30, 1996 and 1995)
have been audited by Ernst & Young LLP and Price Waterhouse LLP, respectively,
as stated in their reports which are incorporated herein by reference from the
1997 Form 10-K.
The consolidated financial statements of Bergen and its consolidated
subsidiaries as of September 30, 1997 and 1996, and for each of the three years
in the period ended September 30, 1997, which have been incorporated in this
Prospectus Supplement by reference from the Bergen 1997 10-K, have been audited
by Deloitte & Touche LLP, as stated in their report which is incorporated herein
by reference.
Such consolidated financial statements of the Company and its consolidated
subsidiaries and of Bergen and its consolidated subsidiaries are incorporated by
reference herein in reliance upon the respective reports of such firms given
upon their authority as experts in accounting and auditing. All of the foregoing
firms are independent auditors.
S-8
<PAGE> 9
PROSPECTUS
CARDINAL HEALTH, INC. LOGO
$400,000,000
DEBT SECURITIES
Cardinal Health, Inc. (the "Company" or "Cardinal") may offer and issue
from time to time unsecured debt securities in one or more series (the "Debt
Securities") up to an aggregate initial offering price not to exceed
$400,000,000 (or the equivalent in foreign-denominated currency or currency
units based on or relating to foreign currencies, including European Currency
Units). The Debt Securities will rank equally with all other current and future
unsecured indebtedness of the Company and prior to subordinated indebtedness, if
any. The Debt Securities may be sold for U.S. dollars, foreign-denominated
currency or currency units; principal of and interest on the Debt Securities may
likewise be payable in U.S. dollars, foreign-denominated currency or currency
units, in each case as the Company specifically designates. The Company does not
currently intend to issue Debt Securities based on or relating to foreign
currencies or foreign currency units.
The Debt Securities will be offered in amounts, at prices, with maturities
and on terms to be determined in light of market conditions at the time of the
offering and set forth in one or more accompanying prospectus supplements (the
"Prospectus Supplement"). The Prospectus Supplement will set forth the specific
designation, aggregate principal amount, authorized denominations and currency
or currency unit in which the Debt Securities may be purchased and in which the
principal and any interest is payable; purchase price, maturity, rate of or
manner of calculating interest, if any; time of payment of interest, if any;
terms, if any, for redemption at the option of the Company or the holder; terms
for sinking fund payments, if any; terms for any mandatory redemption; listing
on any securities exchange or over-the-counter market system; whether the Debt
Securities will be issuable as global securities and the identity of the
depositary for any global securities; and any other specific terms relating to
any series of the Debt Securities.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The Debt Securities may be offered through dealers, underwriters or agents
designated from time to time, as set forth in the Prospectus Supplement. Net
proceeds to the Company will be the purchase price in the case of a dealer, the
public offering price less discount in the case of an underwriter or the
purchase price less commission in the case of an agent; in each case, less other
attributable expenses of issuance and distribution. The Company may also sell
Debt Securities directly to investors on its own behalf. In the case of sales
made directly by the Company, no commission will be payable. See "Plan of
Distribution" for possible indemnification arrangements for dealers,
underwriters and agents.
The date of this Prospectus is April 21, 1997
<PAGE> 10
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THIS OFFERING OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR AN APPLICABLE PROSPECTUS
SUPPLEMENT AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER,
DEALER OR AGENT. THIS PROSPECTUS AND ANY APPLICABLE PROSPECTUS SUPPLEMENT DO NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS
PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT NOR ANY SALE MADE HEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THEREOF.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports and other information with the Securities and Exchange
Commission (the "Commission"). These reports and other information (including
proxy and information statements) filed by the Company can be inspected and
copied at the public reference facilities maintained by the Commission at its
principal office at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at the following Regional Offices of the Commission: New York Regional
Office, 7 World Trade Center, New York, New York 10048 and Chicago Regional
Office, 500 West Madison, 14th Floor, Chicago, Illinois 60661-2511. Copies of
such material can be obtained at prescribed rates from the Public Reference
Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. The
Commission also maintains a web site at http://www.sec.gov containing reports,
proxy and information statements and other information regarding registrants,
including the Company, that file electronically with the Commission. These
reports and other information (including proxy and information statements) can
also be inspected at the New York Stock Exchange, 20 Broad Street, New York, New
York 10005.
This Prospectus constitutes a part of two Registration Statements filed by
the Company with the Commission under the Securities Act of 1933, as amended
(the "Securities Act"). This Prospectus does not contain all of the information
set forth in the Registration Statements, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. Reference is hereby
made to the Registration Statements and related exhibits for further information
with respect to the Company and the Debt Securities offered hereby. Statements
contained herein concerning the provisions of any document are not necessarily
complete and, in each instance, reference is made to the copy of such document
filed as an exhibit to the Registration Statements or otherwise filed with the
Commission. Each such statement is qualified in its entirety by such reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission pursuant
to the Exchange Act are hereby incorporated by reference in this Prospectus: (1)
Annual Report on Form 10-K for the fiscal year ended June 30, 1996 (the "1996
Cardinal Form 10-K"), (2) Quarterly Reports on Form 10-Q for the quarters ended
September 30, 1996, and December 31, 1996, and (3) Current Reports on Form 8-K
dated October 11, 1996, March 3, 1997, and March 18, 1997.
All reports and other documents filed by the Company pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of this offering shall be deemed to be incorporated
by reference herein and to be a part hereof from the respective dates of filing
of said reports and other documents. Any statement contained herein or in a
document incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for all purposes to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
2
<PAGE> 11
The Company hereby undertakes to provide without charge to each person to
whom this Prospectus has been delivered, upon the written or oral request of
such person, a copy of any and all documents incorporated herein by reference
(other than exhibits to such documents unless such exhibits are specifically
incorporated by reference in such documents). Requests for such copies should be
submitted in writing to Cardinal Health, Inc., Attn.: David Bearman, Executive
Vice President and Chief Financial Officer, 5555 Glendon Court, Dublin, Ohio
(614) 717-5000.
STATEMENT REGARDING FORWARD-LOOKING INFORMATION
The Private Securities Litigation Reform Act of 1995 (the "Act") provides a
"safe harbor" for "forward-looking statements" (as defined in the Act). This
Prospectus, any Prospectus Supplement, any documents incorporated by reference
herein, or any other written or oral statements made by or on behalf of the
Company may include forward-looking statements which reflect the Company's
current view (as of the date such forward-looking statement is made) with
respect to future events and financial performance. These forward-looking
statements are subject to certain uncertainties and other factors that could
cause actual results to differ materially from those made in such statements.
These uncertainties and other factors include, but are not limited to,
uncertainties relating to general economic conditions; the loss of one or more
key customer or supplier relationships, including pharmaceutical manufacturers
for which alternative supplies may not be available; the malfunction or failure
of the Company's information systems; the costs and difficulties related to the
integration of recently acquired businesses; changes in the distribution or
outsourcing pattern for pharmaceutical products, including any increase in
direct distribution or decrease in contract packaging by pharmaceutical
manufacturers; changes in, or failure to comply with, government regulations;
the costs and other effects of legal and administrative proceedings; injury to
person or property resulting from the Company's repackaging or pharmacy
management services; competitive factors in the Company's health care service
businesses, including pricing pressures; the continued financial viability and
success of the Company's customers, suppliers, and franchisees; technological
developments and products offered by competitors; failure to retain or continue
to attract senior management or key personnel; risks associated with
international operations, including fluctuations in currency exchange ratios;
successful challenges to the validity of the Company's patents, copyrights
and/or trademarks; difficulties or delays in the development, production and
marketing of new products and services; strikes or other labor disruptions;
labor and employee benefit costs; pharmaceutical manufacturers' pricing policies
and overall drug price inflation; changes in hospital buying groups or hospital
buying practices; and other factors referenced in this Prospectus, the
Prospectus Supplement or documents incorporated by reference herein or other
filings or written or oral statements made by or on behalf of the Company. The
words "believe", "expect", "anticipate", "project", and similar expressions
identify "forward-looking statements", which speak only as of the date the
statement was made. The Company undertakes no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
3
<PAGE> 12
THE COMPANY
Cardinal, a holding company operating through a number of separate
operating subsidiaries, is a leading health care service provider, offering an
array of value-added pharmaceutical distribution services to a broad base of
customers. It is one of the nation's largest wholesale distributors of
pharmaceutical and related health care products to independent and chain drug
stores, hospitals, alternate care centers and the pharmacy departments of
supermarkets and mass merchandisers located throughout the continental United
States. Through its subsidiary, Pyxis Corporation ("Pyxis"), Cardinal develops
and manufactures unique point-of-use systems which automate the distribution,
management and control of medications and supplies in hospitals and alternate
care facilities. Cardinal is the largest franchisor of independent retail
pharmacies in the United States through its subsidiary, Medicine Shoppe
International, Inc. ("Medicine Shoppe"). In addition, through its subsidiary,
Owen Healthcare, Inc. ("Owen"), Cardinal provides pharmacy management services
to hospitals. PCI Services, Inc. ("PCI"), another one of Cardinal's
subsidiaries, is a leading international provider of integrated packaging
services to pharmaceutical manufacturers.
As a full-service wholesale distributor, Cardinal complements its
distribution activities by offering a broad range of value-added support
services to assist Cardinal's customers and suppliers in maintaining and
improving their market positions and to strengthen Cardinal's role in the
channel of distribution. These support services include computerized order entry
and order confirmation systems, customized invoicing, generic sourcing programs,
product movement and management reports, consultation on store operation and
merchandising, and customer training. Cardinal's proprietary software systems
feature customized databases specially designed to help its customers order more
efficiently, contain costs, and monitor their purchases which are covered by
group contract purchasing arrangements.
Cardinal operates several specialty health care businesses which offer
value-added services to Cardinal's customers and suppliers while providing
Cardinal with additional opportunities for growth and profitability. For
example, Cardinal operates a pharmaceutical repackaging program for both
independent and chain drugstore customers and serves as a distributor of
therapeutic plasma products and other specialty pharmaceuticals to hospitals,
clinics and other managed care facilities on a nationwide basis through the
utilization of telemarketing and direct mail programs. These specialty
distribution activities are part of Cardinal's overall strategy of developing
diversified products and services to enhance the profitability of its business
and that of its customers and suppliers.
In February 1994, Cardinal merged with Whitmire Distribution Corporation
("Whitmire"), a Folsom, California-based pharmaceutical wholesaler. The majority
of Whitmire's sales were concentrated in the western and central United States,
complementing the Company's former concentration of sales in the eastern United
States and positioning the combined company to service both customers and
suppliers on a national basis. As a result of the Whitmire merger, the Company
now maintains a network of distribution centers enabling it to routinely serve
the entire population of the continental U.S. on a next-day basis.
Cardinal has completed several additional business combinations since the
Whitmire merger. On July 1, 1994, Cardinal acquired Humiston-Keeling, Inc., a
Calumet City, Illinois-based drug wholesaler serving customers located primarily
in the upper midwest region of the United States. On July 18, 1994, Cardinal
merged with Behrens Inc., a Waco, Texas-based drug wholesaler serving customers
located primarily in Texas and adjoining states. On November 13, 1995, Cardinal
merged with Medicine Shoppe, a St. Louis, Missouri-based franchisor of
independent apothecary-style pharmacies in the United States and abroad. On May
7, 1996, Cardinal merged with Pyxis, a San Diego, California-based designer,
manufacturer, marketer and servicer of unique point-of-use systems which
automate the distribution, management and control of medications and supplies in
hospitals and other health care facilities. On October 11, 1996, Cardinal
completed a merger with PCI, a Philadelphia, Pennsylvania-based provider of
integrated packaging services to pharmaceutical manufacturers. Finally, on March
18, 1997, Cardinal completed a merger with Owen, a Houston, Texas-based provider
of fully integrated pharmacy management and information services to hospitals.
Cardinal's principal executive offices are located at 5555 Glendon Court,
Dublin, Ohio 43016, and its telephone number is (614) 717-5000.
4
<PAGE> 13
RATIO OF EARNINGS TO FIXED CHARGES
<TABLE>
<CAPTION>
SIX
MONTHS
FISCAL YEAR ENDED(1) ENDED
---------------------------------------------------------- --------
MARCH 31, MARCH 31, JUNE 30, JUNE 30, JUNE 30, DEC. 31,
1992 1993 1994 1995 1996 1996
--------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings to fixed
charges........................ 2.8 4.0 6.8 10.5 7.2 8.5
</TABLE>
- ---------------
(1) On March 1, 1994, the Company changed its fiscal year from March 31 to June
30.
The ratio of earnings to fixed charges is computed by dividing fixed
charges of the Company and entities 50% or more owned by the Company into
earnings before income taxes plus fixed charges. Fixed charges include interest
expense, amortization of debt offering costs, preferred stock dividend
requirements of subsidiaries, and the portion of rental expense which is deemed
to be representative of the interest factor.
USE OF PROCEEDS
The Company does not currently have any specific plans for the net proceeds
from the sale of Debt Securities. Except as otherwise specified in the
Prospectus Supplement, the net proceeds from the sale of the Debt Securities
will be used by the Company for general corporate purposes, which may include
working capital, capital expenditures, repayment or refinancing of indebtedness,
acquisitions, and investments.
DESCRIPTION OF DEBT SECURITIES
The Debt Securities will be issued under an Indenture dated as of April 18,
1997 (hereinafter referred to as the "Indenture"), between the Company and Bank
One, Columbus, N.A., as Trustee (hereinafter referred to as the "Trustee"). The
Indenture does not limit the amount of Debt Securities or any other debt which
may be incurred by the Company or its subsidiaries, except as provided below
under "Limitations on Subsidiary Debt." Unless otherwise specified in a
Prospectus Supplement, a default in the Company's obligations with respect to
any other indebtedness will not constitute a default or an Event of Default (as
defined in the Indenture) with respect to the Debt Securities. The Indenture
does not contain any covenants or provisions that afford holders of Debt
Securities protection in the event of a highly leveraged transaction. The Debt
Securities will be unsecured and will rank on a parity with all other unsecured
and unsubordinated indebtedness of the Company. Currently, the Company conducts
nearly all of its operations through subsidiaries and expects that it will
continue to do so. As a result, the right of the Company to participate as a
shareholder in any distribution of assets of any subsidiary upon its liquidation
or reorganization or otherwise and the ability of holders of Debt Securities to
benefit as creditors of the Company from any such distribution are subject to
the prior claims of creditors of such subsidiary. As of February 28, 1997, the
Company had outstanding approximately $436 million of indebtedness for borrowed
money with which the Debt Securities would rank equally. In addition, as of such
date, the Company's subsidiaries had outstanding approximately $60 million of
indebtedness for borrowed money and approximately $1.042 billion of trade
payables to which the Debt Securities would be effectively subordinated.
The following statements are subject to the detailed provisions of the
Indenture, which is incorporated by reference as an exhibit to the Registration
Statements of which this Prospectus is a part and which is also available for
inspection at the office of the Trustee. Section references are to the
Indenture. Wherever particular provisions of the Indenture are referred to, such
provisions are incorporated by reference as a part of the statements made and
the statements are qualified in their entirety by such reference.
GENERAL
The Indenture provides that the Debt Securities may be issued from time to
time in one or more series. The Prospectus Supplement which accompanies this
Prospectus will set forth the following terms of and information relating to the
Debt Securities offered thereby: (i) the designation, aggregate principal amount
5
<PAGE> 14
and purchase price of the Debt Securities; (ii) the date or dates on which
principal of the Debt Securities is payable; (iii) the rate or rates per annum
at which the Debt Securities will bear interest, if any, or the method by which
such rate or rates will be determined; (iv) the dates on which interest will be
payable and the related record dates; (v) any redemption, repayment or sinking
fund provisions; and (vi) any other specific terms of the Debt Securities.
Unless otherwise specified in the accompanying Prospectus Supplement,
principal and premium, if any, will be payable, and the Debt Securities will be
transferable and exchangeable without service charge, at the office of the
Trustee set forth in the Indenture. Interest on any series of Debt Securities
will be payable on the interest payment dates set forth in the accompanying
Prospectus Supplement to the persons in whose names the Debt Securities are
registered at the close of business on the related record dates, and, unless
other arrangements are made, will be paid by checks mailed to such persons.
(Sections 2.7 and 3.1.)
Debt Securities may be issued as discounted debt securities (bearing no
interest or interest at a rate which at the time of issuance is below market
rates) and sold at a discount (which may be substantial) below their stated
principal amount ("Original Issue Discount Securities"). Federal income tax
consequences and other special considerations applicable to any such Original
Issue Discount Securities will be described in the Prospectus Supplement
relating thereto.
CERTAIN COVENANTS
Definitions. The term "Attributable Debt" means in connection with a sale
and lease-back transaction the lesser of (a) the fair value of the assets
subject to such transaction or (b) the aggregate of present values (discounted
at a rate per annum equal to the weighted average Yield to Maturity of the Debt
Securities of all series then outstanding and compounded semiannually) of the
obligations of the Company and its Consolidated Subsidiaries for rental payments
during the remaining term of all leases.
The term "Consolidated Net Tangible Assets" means the aggregate amount of
assets after deducting therefrom (a) all current liabilities (excluding any
thereof constituting Funded Indebtedness by reason of being renewable or
extendable) and (b) all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, all as set forth on the
most recent balance sheet of the Company and its Consolidated Subsidiaries and
computed in accordance with generally accepted accounting principles.
The term "Consolidated Subsidiary" means any Subsidiary substantially all
the property of which is located, and substantially all the operations of which
are conducted, in the United States of America whose financial statements are
consolidated with those of the Company in accordance with generally accepted
accounting principles.
The term "Exempted Debt" means the sum of the following as of the date of
determination: (a) indebtedness of the Company and its Consolidated Subsidiaries
incurred after the date of the Indenture and secured by liens not permitted by
the limitation on liens provisions of the Indenture (Section 3.9), and (b)
Attributable Debt of the Company and its Consolidated Subsidiaries in respect of
every sale and lease-back transaction entered into after the date of the
Indenture, other than leases permitted by the limitation on sale and lease-back
provisions of the Indenture. (Section 3.10)
The term "Financing Subsidiary" means any Subsidiary, including its
Subsidiaries, engaged in one or more of the following activities: (a) the
business of making loans or advances, extending credit or providing financial
accommodations (including leasing new or used products) to others; (b) the
business of purchasing notes, accounts receivable (whether or not payable in
installments), conditional sale contracts or other obligations of others
originating in sales at wholesale or retail; or (c) any other business as may be
reasonably incidental to those described in (a) and (b) above, including the
ownership and use of property in connection therewith.
The term "Funded Indebtedness" means all Indebtedness having a maturity of
more than 12 months from the date as of which the amount thereof is to be
determined or having a maturity of less than 12 months
6
<PAGE> 15
but by its terms being renewable or extendable beyond 12 months from such date
at the option of the borrower.
The term "Indebtedness" means all items classified as indebtedness on the
most recently available balance sheet of the Company and its Consolidated
Subsidiaries, in accordance with generally accepted accounting principles.
The term "Original Issue Discount Security" means any Debt Security that
provides for an amount less than the principal amount thereof to be due and
payable upon a declaration of acceleration thereof following an Event of Default
(as defined in the Indenture).
The term "Rate Hedging Obligations" means any and all obligations of anyone
arising under: (a) any and all agreements, devices or arrangements designed to
protect at least one of the parties thereto from the fluctuations of interest
rates, exchange rates or forward rates applicable to such party's assets,
liabilities or exchange transactions; and (b) any and all cancellations,
buybacks, reversals, terminations or assignments of any of the items in (a)
above.
The term "Restricted Subsidiary" means a "significant subsidiary" as
defined in Article 1, Rule 1-02 of Regulation S-X, promulgated under the
Securities Act and as amended from time to time.
The term "Senior Funded Indebtedness" means any Funded Indebtedness of the
Company that is not subordinated in right of payment to any other Indebtedness
of the Company.
The term "Subsidiary" means any corporation of which at least a majority of
the outstanding stock having voting power (under ordinary circumstances) to
elect a majority of the board of directors of said corporation is at the time
owned by the Company or by the Company and one or more Subsidiaries or by one or
more Subsidiaries.
The term "Yield to Maturity" means the yield to maturity on a series of
Debt Securities, calculated at the time of issuance of such series, or, if
applicable, at the most recent redetermination of interest on such series, and
calculated in accordance with accepted financial practice.
Limitation on Liens. The Indenture provides that, so long as any of the
Debt Securities remain outstanding, the Company will not, nor will it permit any
Consolidated Subsidiary to, create or assume any Indebtedness for borrowed money
which is secured by a mortgage, pledge, security interest or lien ("liens") of
or upon any assets, whether now owned or hereafter acquired, of the Company or
any such Consolidated Subsidiary without equally and ratably securing the Debt
Securities by a lien ranking ratably with and equal to such secured
Indebtedness, except that the foregoing restriction does not apply to (a) liens
existing on the date of the Indenture; (b) liens on assets of any corporation
existing at the time such corporation becomes a Consolidated Subsidiary; (c)
liens on assets existing at the time of acquisition thereof, or to secure the
payment of the purchase price of such assets, or to secure Indebtedness incurred
or guaranteed by the Company or a Consolidated Subsidiary for the purpose of
financing the purchase price of such assets or improvements or construction
thereof, which Indebtedness is incurred or guaranteed prior to, at the time of,
or within 360 days after such acquisition (or in the case of real property,
completion of such improvement or construction or commencement of full operation
of such property, whichever is later); (d) liens securing Indebtedness owing by
any Consolidated Subsidiary to the Company or another wholly owned domestic
Subsidiary; (e) liens on any assets of a corporation existing at the time such
corporation is merged into or consolidated with the Company or a Subsidiary or
at the time of a purchase, lease or other acquisition of the assets of a
corporation or firm as an entirety or substantially as an entirety by the
Company or a Subsidiary; (f) liens on any assets of the Company or a
Consolidated Subsidiary in favor of the United States of America or any State
thereof, or in favor of any other country, or political subdivision thereof, to
secure certain payments pursuant to any contract or statute or to secure any
Indebtedness incurred or guaranteed for the purpose of financing all or any part
of the purchase price (or, in the case of real property, the cost of
construction) of the assets subject to such liens (including, but not limited
to, liens incurred in connection with pollution control, industrial revenue or
similar financings); (g) any extension, renewal or replacements (or successive
extensions, renewals or replacements) in whole or in part, of any lien referred
to in the
7
<PAGE> 16
foregoing clauses (a) to (f), inclusive; (h) certain statutory liens or other
similar liens arising in the ordinary course of business by the Company or a
Consolidated Subsidiary, or certain liens arising out of governmental contracts;
(i) certain pledges, deposits or liens made or arising under workers'
compensation or similar legislation or in certain other circumstances; (j) liens
created by or resulting from certain legal proceedings, including certain liens
arising out of judgments or awards; (k) liens for certain taxes or assessments,
landlord's liens and liens and charges incidental to the conduct of the
business, or the ownership of the assets of the Company or of a Consolidated
Subsidiary, which were not incurred in connection with the borrowing of money
and which do not, in the opinion of the Company, materially impair the use of
such assets in the operation of the business of the Company or such Consolidated
Subsidiary or the value of such assets for the purposes thereof; or (l) liens on
any assets of a Financing Subsidiary. Notwithstanding the foregoing
restrictions, the Company or any Consolidated Subsidiary may create or assume
any Indebtedness which is secured by a lien, without securing the Debt
Securities, provided that at the time of such creation or assumption, and
immediately after giving effect thereto, the Exempted Debt then outstanding at
such time does not exceed 20% of Consolidated Net Tangible Assets. (Section 3.9)
Limitations on Subsidiary Debt. The Indenture provides that the Company
will not permit any Restricted Subsidiary directly or indirectly to incur any
Indebtedness for money borrowed, except that the foregoing restrictions will not
apply to the incurrence of (a) Indebtedness outstanding on the date of the
Indenture; (b) Indebtedness of a Restricted Subsidiary that represents its
assumption of Indebtedness of another Subsidiary, and Indebtedness owed by any
Restricted Subsidiary to the Company or to another Subsidiary, provided that
such Indebtedness will be at all times held by either the Company or a
Subsidiary, and provided further that upon the transfer or disposition of such
Indebtedness to someone other than the Company or another Subsidiary, the
incurrence of such Indebtedness will be deemed to be an incurrence that is not
permitted; (c) Indebtedness arising from (i) the endorsement of negotiable
instruments for deposit or collection or similar transactions in the ordinary
course of business; or (ii) the honoring by a bank or other financial
institution of a check, draft or similar instrument inadvertently (except in the
case of daylight overdrafts) drawn against insufficient funds in the ordinary
course of business, provided that such overdraft is extinguished within five
Business Days (as defined in the Indenture) of incurrence; (d) Indebtedness
arising from guarantees of loans and advances by third parties to employees and
officers of a Restricted Subsidiary in the ordinary course of business for bona
fide business purposes, provided that the aggregate amount of such guarantees by
all Restricted Subsidiaries does not exceed $1,000,000; (e) Indebtedness
incurred by a foreign Restricted Subsidiary in the ordinary course of business;
(f) Indebtedness of any corporation existing at the time such corporation
becomes a Restricted Subsidiary or is merged into a Restricted Subsidiary or at
the time of a purchase, lease or other acquisition by a Restricted Subsidiary of
all or substantially all of the assets of such corporation; (g) Indebtedness of
a Restricted Subsidiary arising from agreements or guarantees providing for or
creating any obligations of the Company or any of its Subsidiaries incurred in
connection with the disposition of any business, property or Subsidiary,
excluding guarantees or similar credit support by a Restricted Subsidiary of
Indebtedness incurred by the acquirer of such business, property or Subsidiary
for the purpose of financing such acquisition; (h) Indebtedness of a Restricted
Subsidiary with respect to bonds, bankers' acceptances or letters of credit
provided by such Subsidiary in the ordinary course of business; (i) Indebtedness
secured by a lien permitted by the provisions regarding limitations on liens
(Section 3.9) or arising in respect of a sale and lease-back transaction
permitted by the provisions regarding such transactions (Section 3.10) or any
Indebtedness incurred to finance the purchase price or cost of construction of
improvements with respect to property or assets acquired after the date of the
Indenture; (j) Indebtedness that is issued, assumed or guaranteed in connection
with compliance by a Restricted Subsidiary with the requirements of any program,
applicable to such Restricted Subsidiary, adopted by any governmental authority
that provides for financial or tax benefits which are not available directly to
the Company; (k) Indebtedness arising from Rate Hedging Obligations incurred to
limit risks of currency or interest rate fluctuations to which a Subsidiary is
otherwise subject by virtue of the operations of its business, and not for
speculative purposes; (l) Indebtedness incurred by any Financing Subsidiary; and
(m) Indebtedness incurred in connection with refinancing of any Indebtedness
described in (a), (b), (f), (g) and (i) above ("Refinancing Indebtedness"),
provided that (i) the principal amount of such Refinancing Indebtedness does not
exceed the principal amount of the Indebtedness so refinanced (plus the premiums
paid and expenses
8
<PAGE> 17
incurred in connection therewith), (ii) the Refinancing Indebtedness has a
weighted average life to maturity equal to or greater than the weighted average
life to maturity of the Indebtedness being refinanced, and (iii) the Refinancing
Indebtedness ranks no more senior, and is at least as subordinated, as the
Indebtedness being refinanced. Notwithstanding the foregoing restrictions,
Restricted Subsidiaries may incur any Indebtedness for money borrowed that would
otherwise be subject to the foregoing restrictions in an aggregate principal
amount which, together with the aggregate principal amount of other Indebtedness
(not including the Indebtedness permitted above), does not, at the time such
Indebtedness is incurred, exceed 20% of Consolidated Net Tangible Assets.
(Section 3.11)
Limitation on Sale and Lease-Back Transactions. Sale and lease-back
transactions (except such transactions involving leases for less than three
years) by the Company or any Consolidated Subsidiary of any assets are
prohibited unless (a) the Company or such Consolidated Subsidiary would be
entitled to incur Indebtedness secured by a lien on the assets to be leased in
an amount at least equal to the Attributable Debt in respect to such transaction
without equally and ratably securing the Debt Securities, or (b) the proceeds of
the sale of the assets to be leased are at least equal to their fair value as
determined by the Board of Directors of the Company and the proceeds are applied
to the purchase or acquisition (or, in the case of real property, the
construction) of assets or to the retirement of Senior Funded Indebtedness. The
foregoing limitation will not apply, if at the time the Company or any
Consolidated Subsidiary enters into such sale and lease-back transaction and,
immediately after giving effect thereto, Exempted Debt does not exceed 20% of
the Consolidated Net Tangible Assets. (Section 3.10)
Merger, Consolidation, Sale, Lease or Conveyance. The Indenture provides
that the Company will not merge or consolidate with any other corporation and
will not sell, lease or convey all or substantially all its assets to any
person, unless the Company shall be the continuing corporation, or the successor
corporation or person that acquires all or substantially all the assets of the
Company shall be a corporation organized under the laws of the United States or
a State thereof or the District of Columbia and shall expressly assume all
obligations of the Company under the Indenture and the Debt Securities issued
thereunder, and immediately after such merger, consolidation, sale, lease or
conveyance, the Company, such person or such successor corporation shall not be
in default in the performance of the covenants and conditions of the Indenture
to be performed or observed by the Company. (Section 8.1)
BOOK-ENTRY DEBT SECURITIES
The Debt Securities of a series may be issued in whole or in part in the
form of one or more global securities (each a "Global Security") that will be
deposited with, or on behalf of, a depositary ("Global Security Depositary") or
its nominee identified in the applicable Prospectus Supplement. In such a case,
one or more Global Securities will be issued in a denomination or aggregate
denominations equal to the portion of the aggregate principal amount of
outstanding Debt Securities of the series to be represented by such Global
Security or Securities. Unless and until it is exchanged in whole or in part for
Debt Securities in registered form, a Global Security may not be registered for
transfer or exchange except as a whole by the Global Security Depositary for
such Global Security to a nominee of such Depositary or by a nominee of such
Depositary to such Depositary or another nominee of such Depositary or by such
Depositary or any nominee to a successor Depositary or a nominee of such
successor Depositary and except in the circumstances described in the applicable
Prospectus Supplement.
The specific terms of the depositary arrangement with respect to any
portion of a series of Debt Securities to be represented by a Global Security
will be described in the applicable Prospectus Supplement. However, the Company
expects that the following provisions will apply to depositary arrangements.
Unless otherwise specified in the applicable Prospectus Supplement, Debt
Securities which are to be represented by a Global Security to be deposited with
or on behalf of a Global Security Depositary will be represented by a Global
Security registered in the name of the Global Security Depositary or its
nominee. Upon the issuance of such Global Security, and the deposit of such
Global Security with or on behalf of the Global Security Depositary for such
Global Security, such Depositary will credit on its book-entry registration and
transfer system the respective principal amounts of the Debt Securities
represented by such Global
9
<PAGE> 18
Security to the accounts of institutions that have accounts with such Depositary
or its nominee ("participants"). The accounts to be credited will be designated
by the underwriters or agents of such Debt Securities or by the Company, if such
Debt Securities are offered and sold directly by the Company. Ownership of
beneficial interests in such Global Security will be limited to participants or
persons that may hold interests through participants. Ownership of beneficial
interests by participants in such Global Security will be shown on, and the
transfer of that ownership interest will be effected only through, records
maintained by the Global Security Depositary or its nominee for such Global
Security. Ownership of beneficial interests in such Global Security by persons
that hold through participants will be shown on, and the transfer of that
ownership interest within such participant will be effected only through,
records maintained by such participant. The laws of some jurisdictions require
that certain purchasers of securities take physical delivery of such securities
in certificated form. The foregoing limitations and such laws may impair the
ability to transfer beneficial interests in such Global Securities.
So long as the Global Security Depositary for a Global Security, or its
nominee, is the registered owner of such Global Security, such Depositary or
such nominee, as the case may be, will be considered the sole owner or holder of
the Debt Securities represented by such Global Security for all purposes under
the Indenture. Unless otherwise specified in the applicable Prospectus
Supplement, owners of beneficial interests in such Global Security will not be
entitled to have Debt Securities of the series represented by such Global
Security registered in their names, will not receive or be entitled to receive
physical delivery of Debt Securities of such series in certificated form, and
will not be considered the holders thereof for any purposes under the Indenture.
Accordingly, each person owning a beneficial interest in such Global Security
must rely on the procedures of the Global Security Depositary and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, if
the Company requests any action of holders or an owner of a beneficial interest
in such Global Security desires to give any notice or take any action a holder
is entitled to give or take under the Indenture, the Global Security Depositary
would authorize the participants to give such notice or take such action, and
participants would authorize beneficial owners owning through such participants
to give such notice or take such action or would otherwise act upon the
instructions of beneficial owners owning through them.
Principal of and any premium and interest on a Global Security will be
payable in the manner described in the applicable Prospectus Supplement.
MODIFICATION OF THE INDENTURE
The Indenture contains provisions permitting the Company and the Trustee,
with the consent of the holders of not less than 66 2/3% in principal amount of
the Debt Securities at the time outstanding of all series affected (voting as
one class), to modify the Indenture or any supplemental indenture or the rights
of the holders of the Debt Securities except that no such modification may (i)
extend the final maturity of any of the Debt Securities or reduce the principal
amount thereof, or reduce the rate or extend the time of payment of interest
thereon, or reduce any amount payable on redemption thereof, or reduce the
amount of the principal of an Original Issue Discount Security that would be due
and payable upon an acceleration of the maturity thereof pursuant to Section 4.1
of the Indenture or the amount thereof provable in bankruptcy pursuant to
Section 4.2 of the Indenture, or impair or affect the right of any holder of the
Debt Securities to institute suit for the payment thereof without the consent of
the holder of each of the Debt Securities so affected, or (ii) reduce the
aforesaid percentage of Debt Securities, the consent of the holders of which is
required for any such modification, without the consent of the holders of all
Debt Securities then outstanding. (Section 7.2)
The Indenture also provides that the Company and the Trustee may, without
the consent of the holders of the Debt Securities, modify the Indenture or enter
into supplemental indentures (a) to convey, transfer, assign, mortgage or pledge
to the Trustee as security for the Debt Securities of one or more series any
property or assets, (b) to evidence the succession of another corporation to the
Company and the assumption by the successor corporation of the covenants,
agreements and obligations of the Company, (c) to add to the covenants of the
Company such further covenants, restrictions, conditions or provisions as the
Board of Directors of the Company and the Trustee shall consider to be for the
protection of the holders of the Debt
10
<PAGE> 19
Securities and to make the occurrence or the occurrence and continuance of a
default in any such additional covenants, restrictions, conditions or provisions
an Event of Default; provided, however, that in respect of any such additional
covenant, restriction, condition or provision, such supplemental indenture may
provide for a particular period of grace after default or may provide for an
immediate enforcement upon such Event of Default or may limit the remedies
available to the Trustee upon such an Event of Default or may limit the right of
the holders of a majority in aggregate principal amount of the Debt Securities
of such series to waive such an Event of Default, (d) to cure any ambiguity or
to correct or supplement any provision contained in the Indenture which may be
defective or inconsistent with any other provision contained in the Indenture or
to make such other provisions in regard to matters or questions arising under
the Indenture as the Board of Directors of the Company may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
the Debt Securities in any material respect, (e) to establish the form or terms
of Debt Securities, and (f) to evidence or provide for the acceptance of
appointment by a successor trustee and to add to or change any of the provisions
of the Indenture as may be necessary to provide for or facilitate the
administration of the trusts created thereunder by more than one trustee.
(Section 7.1)
EVENTS OF DEFAULT
An Event of Default with respect to Debt Securities of any series issued
under the Indenture is defined in the Indenture as being: default for 30 days in
payment of any interest upon any Debt Securities of such series; default in any
payment of principal or premium, if any, upon any Debt Securities of such
series; default in the payment of any sinking fund installment payable by the
terms of the Debt Securities of such series; default by the Company in
performance of any other of the covenants or agreements in respect of the Debt
Securities of such series or the Indenture which shall not have been remedied
for a period of 90 days after written notice specifying that such notice is a
"Notice of Default" under the Indenture; certain events involving bankruptcy,
insolvency or reorganization of the Company; and any other event of default
provided in the supplemental indenture or resolution of the Company's Board of
Directors under which the series of Debt Securities are issued or in the form of
the Debt Security for such series. (Section 4.1) Unless otherwise specified in a
Prospectus Supplement, a default by the Company with respect to any Indebtedness
other than the Debt Securities will not constitute an Event of Default with
respect to the Debt Securities. The Indenture will provide that the Trustee may
withhold notice to the holders of any series of the Debt Securities of any
default (except in payment of principal of, or interest on, such series of Debt
Securities or in the payment of any sinking or purchase fund installment with
respect to such series of Debt Securities) if the Trustee considers it in the
interest of the holders of such series of Debt Securities to do so. (Section
4.11)
The Indenture provides that (a) if an Event of Default due to the default
in payment of principal or, premium, if any, or interest on, or any sinking fund
installment with respect to, any series of Debt Securities issued under such
Indenture or due to the default in the performance or breach of any other
covenant or warranty of the Company applicable to the Debt Securities of such
series but not applicable to all outstanding Debt Securities issued under such
Indenture shall have occurred and be continuing, either the Trustee or the
holders of not less than 25% in principal amount of the Debt Securities of each
affected series issued under such Indenture and then outstanding (each such
series voting as a separate class) may then declare the principal of all Debt
Securities of such affected series and interest accrued thereon to be due and
payable immediately; and (b) if an Event of Default due to a default in the
performance of any other of the covenants or agreements in such Indenture
applicable to all outstanding Debt Securities issued thereunder and then
outstanding or due to certain events of bankruptcy, insolvency and
reorganization of the Company shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all Debt
Securities issued under such Indenture and then outstanding (treated as one
class) may declare the principal of all such Debt Securities and interest
accrued thereon to be due and payable immediately, but upon certain conditions
(which include the deposit by the Company with the Trustee of a sum sufficient
to pay all matured installments of interest and principal and certain expenses
of the Trustee and the curing, waiving or remedying of all Events of Default
other than nonpayment or principal) such declarations may be annulled and past
defaults may be waived (except a continuing default in payment of principal of
(or premium, if any) or interest on such Debt Securities) by the holders of a
majority in principal amount of the Debt Securities of all such affected series
then outstanding. (Sections 4.1 and 4.10)
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<PAGE> 20
The holders of a majority in principal amount of the Debt Securities of
each series then outstanding and affected (with each series voting as a separate
class) shall have the right to direct the time, method and place of conducting
any proceeding for any remedy available to the Trustee with respect to the Debt
Securities of such series under the Indenture, subject to certain limitations
specified in the Indenture, provided that the holders of such Debt Securities
shall have offered to the Trustee reasonable indemnity against expenses and
liabilities. (Sections 4.9 and 4.2(d))
The Indenture provides that no holder of Debt Securities may institute any
action against the Company under the Indenture (except actions for payment of
overdue principal or interest) unless such holder previously shall have given to
the Trustee written notice of default and continuance thereof and unless the
holders of not less than 25% in principal amount of the Debt Securities of each
affected series (with each series voting as a separate class) issued under the
Indenture and then outstanding shall have requested the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity, the Trustee
shall not have instituted such action within 60 days of such request and the
Trustee shall not have received direction inconsistent with such written request
by the holders of a majority in principal amount of the Debt Securities of each
affected series (with each series voting as a separate class) issued under such
Indenture and then outstanding. (Sections 4.6, 4.7 and 4.9) At any time prior to
the evidencing to the Trustee of the taking of any action by the holders of the
percentage in aggregate principal amount of the Debt Securities of any or all
series specified in the Indenture in connection with such action, any holder of
a Debt Security may, by filing written notice with the Trustee, revoke such
action so far as concerns such security. (Section 6.5)
The Indenture will require the annual filing by the Company with the
Trustee of a written statement as to compliance with the principal covenants
contained in the Indenture. (Section 3.5)
SATISFACTION AND DISCHARGE
The Indenture will cease to be of further effect and the Trustee, on demand
of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of the Indenture upon compliance with
certain enumerated conditions, including the Company having paid all sums
payable by the Company under the Indenture, when either (a) the Company shall
have delivered to the Trustee for cancellation all Debt Securities theretofore
authenticated or (b) all Debt Securities not theretofore delivered to the
Trustee for cancellation shall have become due and payable or are by their terms
to become due and payable within one year. (Section 9.1)
THE TRUSTEE
The Trustee under the Indenture is Bank One, Columbus, N.A. The Trustee is
an affiliate of Bank One, Indianapolis, N.A., the trustee under a separate
indenture for the Company's 6 1/2% Notes due 2004 and the Company's 6% Notes due
2006.
PLAN OF DISTRIBUTION
The Company may sell the Debt Securities being offered hereby in any of
four ways: (i) through underwriters, (ii) through dealers, (iii) through agents,
or (iv) directly to purchasers. The Prospectus Supplement will set forth the
terms of any offering of a particular series of Debt Securities and will
include, without limitation, (i) the name or names of any underwriters, dealers
or agents with which the Company has entered into arrangements with respect to
the sale of such Debt Securities; (ii) the initial public offering or purchase
price of such Debt Securities; (iii) the principal amounts of the Debt
Securities to be purchased by any such underwriters, dealers or agents; (iv) any
underwriting discounts, commissions and other items constituting underwriters'
compensation and any other discounts, concessions or commissions allowed or
reallowed or paid by any underwriters to other dealers; (v) any commissions paid
to any agents; (vi) the net proceeds to the Company from the sale of such Debt
Securities; and (vii) the securities exchanges, if any, on which such Debt
Securities will be listed.
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<PAGE> 21
If underwriters are used in the offering of Debt Securities, the Debt
Securities being sold will be acquired by the underwriters for their own account
and may be resold from time to time in one or more transactions, including
negotiated transactions, at a fixed public offering price or at varying prices
determined at the time of such resale. Unless otherwise set forth in an
applicable Prospectus Supplement, the obligations of the underwriters to
purchase such Debt Securities will be subject to certain conditions precedent
and each of the underwriters with respect to such Debt Securities will be
obligated to purchase all of the Debt Securities allocated to it if any such
Debt Securities are purchased. Any initial public offering price and any
discounts or concessions allowed or reallowed or paid to dealers may be changed
from time to time.
If dealers are utilized in the sale of the Debt Securities in respect of
which this Prospectus is delivered, the Company will sell such Debt Securities
to such dealers, as principals. The dealers may then resell such Debt Securities
to the public at varying prices to be determined by such dealers at the time of
resale.
Offers to purchase Debt Securities may be solicited by agents designated by
the Company from time to time. Any such agent, who may be deemed to be an
underwriter as that term is defined in the Securities Act, involved in the offer
or sale of the Debt Securities in respect to which this Prospectus is delivered
will be named, and any commission payable by the Company to such agent set
forth, in the Prospectus Supplement. Unless otherwise indicated in the
Prospectus Supplement, any such agent will be acting on a best-efforts basis for
the period of its appointment.
Offers to purchase Debt Securities may be solicited, and sales thereof may
be made directly by the Company to institutional investors or others, who may be
deemed to be underwriters within the meaning of the Securities Act with respect
to resales thereof.
Underwriters, dealers and agents participating in the distribution of Debt
Securities may be deemed to be "underwriters," as that term is defined under the
Securities Act, and any discounts and commissions received by them and any
profit realized by them on the resale thereof may be deemed to be underwriting
discounts and commissions, under the Securities Act. Underwriters, dealers and
agents participating in the distribution of Debt Securities may be entitled
under agreements entered into with the Company to indemnification by the Company
against certain civil liabilities, including liabilities under the Securities
Act. Such underwriters, dealers and agents may be customers of, engage in
transactions with, or perform services for the Company in the ordinary course of
business.
LEGAL MATTERS
Unless otherwise indicated in the Prospectus Supplement relating to the
Debt Securities, certain legal matters in connection with the Debt Securities
will be passed upon for the Company by Baker & Hostetler LLP, Cleveland, Ohio,
and for the underwriters, if any, by Davis Polk & Wardwell, New York, New York.
EXPERTS
The consolidated financial statements of Cardinal and its consolidated
subsidiaries as of June 30, 1996 and 1995, and for each of the three years in
the period ended June 30, 1996, have been incorporated in this Prospectus by
reference from the 1996 Cardinal Form 10-K. Such consolidated financial
statements of Cardinal and its subsidiaries, except Pyxis, have been audited by
Deloitte & Touche LLP as stated in their report which is incorporated herein by
reference from the 1996 Cardinal Form 10-K. The financial statements of Pyxis
(consolidated with those of Cardinal in the consolidated financial statements)
have been audited by Ernst & Young LLP, as stated in their report which is
incorporated herein by reference from the 1996 Cardinal Form 10-K.
Such consolidated financial statements of Cardinal and its consolidated
subsidiaries are incorporated by reference in reliance upon the respective
reports of such firms given upon their authority as experts in accounting and
auditing. Both of the foregoing firms are independent auditors.
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<PAGE> 22
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NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR ANY UNDERWRITER. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
ACCOMPANYING PROSPECTUS CONSTITUTES AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE
HEREOF OR THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH
DATE.
------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
Incorporation of Certain Documents By
Reference............................. S-2
Forward-Looking Statements.............. S-2
Recent Developments..................... S-3
Use of Proceeds......................... S-3
Capitalization.......................... S-4
Ratio of Earnings to Fixed Charges...... S-4
Certain Terms of Notes.................. S-5
Underwriting............................ S-7
Experts................................. S-8
PROSPECTUS
Available Information................... 2
Incorporation of Certain Documents by
Reference............................. 2
Statement Regarding Forward-Looking
Information........................... 3
The Company............................. 4
Ratio of Earnings to Fixed Charges...... 5
Use of Proceeds......................... 5
Description of Debt Securities.......... 5
Plan of Distribution.................... 12
Legal Matters........................... 13
Experts................................. 13
</TABLE>
======================================================
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$150,000,000
[CARDINAL HEALTH LOGO]
% NOTES DUE 200 _
------------------------
PROSPECTUS
SUPPLEMENT
------------------------
BEAR, STEARNS & CO. INC.
J.P. MORGAN & CO.
SALOMON SMITH BARNEY
July , 1998
======================================================
