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Previous: FIDELITY ADVISOR SERIES IV, PRE 14A, 1994-08-12 |
Next: BALCOR EQUITY PENSION INVESTORS I, 10-Q, 1994-08-12 |
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1994
OR
[ ] Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
Commission file number: 0-11355
BINDLEY WESTERN INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
Indiana 84-0601662
(State or other jurisdiction of ( I.R.S. Employer
incorporation or organization) Identification No.)
10333 North Meridian Street, Suite 300
Indianapolis, Indiana 46290
(Address of principal executive offices)
(317)298-9900
(Registrant's telephone number,
including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 12 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
The number of shares of Common Stock outstanding as of June 30, 1994 was
10,783,543.
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
BINDLEY WESTERN INDUSTRIES, INC. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(000's omitted except share data)
(unaudited)
<CAPTION>
Six-month period ended Six-month period ended
June 30, June 30,
1994 1993 1994 1993
<S> <C> <C> <C> <C>
Revenues:
Net sales $ 1,903,804 $ 1,607,556 $ 986,965 $ 809,103
Other income 1,321 1,076 668 735
1,905,125 1,608,632 987,633 809,838
Cost and expenses:
Cost of products sold 1,862,150 1,570,121 966,130 790,553
Selling, general and administrative 23,435 20,880 11,902 10,742
Depreciation and amortization 2,833 2,680 1,427 1,367
Interest 4,238 4,307 1,841 1,865
1,892,656 1,597,988 981,301 804,527
Earnings before income taxes 12,469 10,644 6,332 5,311
Provision for income taxes:
Current 6,312 5,323 3,196 2,657
Deferred (1,200) (1,172) (600) (586)
5,112 4,151 2,596 2,071
Net earnings $ 7,357 $ 6,493 $ 3,736 $ 3,240
Earnings per share:
Primary 0.67 0.60 0.34 0.30
Fully diluted 0.61 0.55 0.31 0.28
Average shares outstanding:
Primary 10,958,536 10,896,245 10,962,363 10,901,837
Fully diluted 14,355,761 14,296,604 14,359,588 14,302,196
<FN>
(See accompanying notes to consolidated financial statments)
</TABLE>
<PAGE>
<TABLE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(000's omitted except share data)
(unaudited)
<CAPTION>
June 30, December 31,
1994 1993
<S> <C> <C>
Assets
Current assets:
Cash $ 16,928 $ 33,653
Short-term investments 2,456 4,629
Accounts receivable, less
allowance for doubtful
accounts of $2,628 for 1994
and $2,416 for 1993 328,572 313,243
Finished goods inventory 262,529 310,758
Other current assets 4,607 3,129
615,092 665,412
Other assets 1,517 1,604
Fixed assets, at cost 53,668 52,347
Less: accumulated depreciation (16,037) (14,065)
37,631 38,282
Intangibles 26,679 26,906
Total Assets $ 680,919 $ 732,204
</TABLE>
<TABLE>
<CAPTION>
Liabilites and Shareholders' Equity
<S> <C> <C>
Current Liabilities:
Short-term borrowings $ 130,000 $ 108,000
Accounts payable 297,996 377,730
Deferred income taxes (2,227) (2,227)
Other current liabilities 7,176 6,401
432,945 489,904
Long-term debt 69,554 69,733
Deferred income taxes 5,649 6,849
Shareholders' equity:
Common stock, $.01 par value
authorized 30,000,000 shares;
issued 11,130,834 and 11,120,934
shares, respectively 3,309 3,309
Special shares, $.01 par value
authorized 1,000,000 shares -
Additional paid in capital 82,093 81,936
Retained earnings 90,519 83,623
175,921 168,868
Less: 348,291 shares in treasury
at cost (3,150) (3,150)
Total shareholders' equity 172,771 165,718
Commitments and contingencies -
Total liabilities and
shareholders' equity $ 680,919 $ 732,204
<FN>
(See accompanying notes to consolidated financial statements)
</TABLE>
<PAGE>
<TABLE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted except share data)
(unaudited)
<CAPTION>
Six-month period ended
June 30,
1994 1993
<S> <C> <C>
Cash flow from operating activities:
Net income $ 7,357 $ 6,493
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation and amortization 2,833 2,680
Deferred income taxes (1,200) (1,172)
Loss (gain) on sale of fixed assets (8) 12
Change in assets and liabilities,
net of acquisition:
Accounts receivable (15,329) (51,322)
Finished goods inventory 48,229 83,374
Accounts payable (79,734) (91,069)
Other current assets and liabilities (703) (3,526)
Net cash provided (used) by
operating activities (38,555) (54,530)
Cash flow from investing activities:
Purchase of fixed assets and
other assets (1,448) (3,612)
Proceeds from sale of fixed assets 40 95
Proceeds from sale of investment
securities 2,173 12,195
Acquisition of business (452) (5,696)
Net cash provided (used) by
investing activities 313 2,982
Cash flow from financing activities:
Proceeds from sale of stock 157 232
Reduction in long term debt (179) (154)
Proceeds under line of credit
agreement 632,500 472,500
Payments under line of credit (610,500) (433,000)
agreement
Dividends (461) (356)
Net cash provided (used) by
financing activities 21,517 39,222
Net increase (decrease) in cash (16,725) (12,326)
Cash at beginning of period 33,653 32,716
Cash at end of period $ 16,928 $ 20,390
<FN>
(See accompanying notes to
consolidated financial statements)
</TABLE>
<PAGE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements have been prepared by
the Company without audit. Certain information and footnote disclosures,
including significant accounting policies, normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. The Company believes that the
financial statements for the three and six month periods ended June 30,
1994 and 1993 include all necessary adjustments for fair presentation.
Results for any interim period may not be indicative of the results of the
entire year.
2. On February 28, 1993 and October 6, 1993, the Company acquired Charise
Charles Ltd., Inc., a wholesale oncology and dialysis products distributor
based in Altamonte Springs, Florida and PRN Medical, Inc., a wholesale
distributor of renal and dialysis supplies and equipment based in Orlando,
Florida, respectively.
These acquisitions were accounted for as purchases and, accordingly, the
1993 financial statements include Charise Charles and PRN's results of
operations from the date of acquisition. The consideration exchanged by
the Company for Charise Charles and PRN approximated $8 million.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The Company acquired Charise Charles LTD., Inc. (Charise Charles), a wholesale
distributor of oncology and dialysis products on February 28, 1993 and PRN
Medical Inc. (PRN), a wholesale distributor of renal care and dialysis supplies
and equipment on October 6, 1993. The Charise Charles and PRN results of
operations are included in the Company's financial statements from the
respective dates of acquisition. The second quarter ended June 30, 1993
included $18 million of Charise Charles sales as compared to $25 million of
Charise Charles and PRN sales for the second quarter ended June 30, 1994.
Net sales for the second quarter increased by 22% from $809 million in 1993 to
$987 million, principally as a result of volume increases, although overall
price changes in the industry accounted for approximately 3%. The increase
reflected the aforementioned inclusion of Charise Charles and PRN and strength
in all of the Company's operating units, especially the direct store delivery
segments of Bindley Western Drug Company. For the 1994 quarter, direct store
delivery sales were 28% of total net sales and represented an increase of 20%
over the 1993 quarter.
Gross margin of $20.8 million in the second quarter of 1994 increased by 12%
over 1993, primarily because of the increase in net sales. Gross margin as a
percentage of net sales decreased from 2.29% in 1993 to 2.11% in 1994. The
reduction resulted from competitive pressures in the market place and a
reduction in the level of pharmaceutical price increases which resulted in fewer
opportunities for forward purchases. In response to these trends, the Company
is continuing to look for ways to lower operating expenses and capitalize on its
direct store delivery marketing efforts.
The decrease in other income from $735,000 in the second quarter of 1993 to
$668,000 in the second quarter of 1994 is due to a reduction in service fee
income on certain customer receivable balances.
Selling, general and administrative expenses increased from $10.7 million in the
second quarter of 1993 to $11.9 million in the second quarter of 1994. The
increase in 1994 included approximately $320,000 related to Charise Charles and
PRN. The remainder of the increase is divided approximately equally between
normal inflationary increases in all divisions and costs to support the growing
direct store delivery program of Bindley Western Drug Company. The cost
increases related to the direct store delivery program include among others,
delivery expenses, warehouse supplies and labor costs, all of which are variable
with the level of sales volume. Although sales and marketing costs are also
variable with the level of sales volume, they are relatively insignificant and
represent less than .2% of net sales. Continuing increases in direct store
delivery sales will result in continuing increases in selling, general and
administrative expenses.
Depreciation and amortization increased from $1.3 million in the second quarter
of 1993 to $1.4 million in the second quarter of 1994. The increase resulted
from the inclusion of Charise Charles and PRN and depreciation and amortization
on new facilities and equipment.
Interest expense was $1.8 million in both the second quarter of 1993 and 1994.
The average short-term interest rate increased from 4.9% in 1993 to 5.3% in
1994. However, the average short-term borrowings outstanding decreased from
$106 million in the second quarter of 1993 to $104 million in the second quarter
of 1994. Funds received in respect of working capital carrying costs are
treated as a reduction of interest expense and decreased in the second quarter
of 1994 as compared to the second quarter of 1993.
The provision for income taxes represented 41.0% and 39.0% of earnings before
taxes in the second quarter of 1994 and 1993, respectively.
The aforementioned comments regarding Charise Charles and PRN should be
considered when comparing the six months ended June 30, 1994 with the six months
ended June 30, 1993.
Net sales for the six months ended June 30, 1994 increased by 18% to $1.904
billion reflecting increases in all of the Company's operating units and the
increase of $24 million attributable to Charise Charles and PRN sales. Gross
margin for the six months of 1994 was 2.19% of net sales compared to 2.32%
in 1993. The decrease was the result of a reduction in the level of
pharmaceutical manufacturer price increases and competitive pressures in the
market place.
Selling, general and administrative expenses for the first six months increased
to $23.4 million from $20.9 million because of the incremental increase of
approximately $1.08 million related to Charise Charles and PRN, normal
inflationary increases and costs to support the full-line, full-service program
of Bindley Western Drug Company.
Interest expense decreased from $4.3 million in 1993 to $4.2 million in 1994.
The average short-term interest rate increased from 4.9% to 5.1% for 1993 and
1994, respectively. The average borrowings outstanding increased from $100
million in 1993 to $117 million in 1994. These increases were more than offset
by increases in funds received from customers in respect of working capital
carrying costs which are treated as a reduction of interest expense.
Liquidity-Capital Resources.
For the six month period ended June 30, 1994, the Company's operations consumed
$38.5 million in cash. Operational cash was provided by the reduction of
inventory by $48.2 million. However, operational cash was used by the reduction
of accounts payable and the increase in accounts receivable by $79.7 million and
$15.3 million, respectively. The continuing emphasis on the direct-store
delivery business has required an increase in both net working capital and cash.
Capital expenditures, predominantly for the purchase of data processing
equipment, were $1.4 million during the period. Proceeds from the sale of
marketable securities during the period were $2.2 million.
Net proceeds under the bank line of credit agreement were $22 million during the
period. At June 30, 1994 the Company had borrowed $130 million under the bank
credit agreement and had a remaining availability of $70 million.
The Company believes that its cash on hand, cash equivalents, line of credit and
working capital management efforts are sufficient to meet future capital
requirements.
<PAGE>
PART II - OTHER INFORMATION
Item 4. Submission of matters to a Vote of Security Holders
a) The Annual Meeting of the Shareholders of Bindley
Western Industries, Inc. was held on May 19, 1994.
b) The following directors were elected at the meeting:
Votes For Votes Against
William E. Bindley 9,183,985 390,797
K. Clay Smith 9,187,300 387,482
Robert L. Koch, II 9,187,900 386,882
James K. Risk, III 9,187,500 387,282
J. Timothy McGinley 9,187,900 386,882
Michael D. McCormick 9,187,900 386,882
William F. Bindley, II 9,187,600 387,182
Thomas J. Salentine 9,187,900 386,882
Keith W. Burks 9,187,900 386,882
Seth B. Harris 9,186,400 388,382
c) Other matters voted upon and the results of the voting
were as follows:
1) The shareholders voted 7,710,752 shares in the
affirmative and 1,800,296 shares in the negative,
with 37,134 abstentions and 26,600 broker non-
votes, to approve the adoption of amendments to
the Company's stock option plans including an
amendment to the Company's 1993 Stock Option and
Incentive Plan increasing from 1,000,000 to
1,500,000 the number of shares of the Company's
common stock subject to issuance under the plan.
2) The shareholders voted 8,813,198 shares in the
affirmative and 22,222 shares in the negative,
with 739,362 broker non-votes, to appoint Price
Waterhouse as auditors for the Corporation.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
August 12, 1994 BINDLEY WESTERN INDUSTRIES, INC.
BY /s/ Thomas J. Salentine
Thomas J. Salentine
Executive Vice President
(Principal Financial Officer)
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