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)
Three-month period ended March 31,
1994 1993
Revenues:
Net sales $ 916,839 $ 798,454
Other income 652 340
917,491 798,794
Cost and expenses:
Cost of products sold 896,020 779,568
Selling, general and
administrative 11,534 10,138
Depreciation and
amortization 1,405 1,312
Interest 2,396 2,442
911,355 793,460
Earnings before income
taxes 6,136 5,334
Provision for income taxes:
Current 3,116 2,666
Deferred (600) (586)
2,516 2,080
Net earnings $ 3,620 $ 3,254
Earnings per share:
Primary $ 0.33 $ 0.30
Fully diluted $ 0.30 $ 0.28
Average shares outstanding:
Primary 11,056,603 10,931,154
Fully diluted 14,453,828 14,328,379
(See accompanying notes to consolidated financial statements)
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BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(000's omitted except share data)
(unaudited)
March 31, December 31,
1994 1993
Assets
Current assets:
Cash $ 19,849 $ 33,653
Short-term investments 2,483 4,629
Accounts receivable, less
allowance for doubtful
accounts of $2,361 for
1994 and $2,416 for 1993 306,239 313,243
Finished goods inventory 223,060 310,758
Other current assets 3,064 3,129
554,695 665,412
Other assets 1,560 1,604
Fixed assets, at cost 53,083 52,347
Less: accumulated
depreciation (15,018) (14,065)
38,065 38,282
Intangibles 26,566 26,906
Total Assets $620,886 $732,204
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $106,500 $108,000
Accounts payable 262,330 377,730
Deferred income taxes (2,227) (2,227)
Other current liabilities 9,141 6,401
375,744 489,904
Long-term debt 69,640 69,733
Deferred income taxes 6,249 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 82,082 81,936
Retained earnings 87,012 83,623
172,403 168,868
Less: 348,291shares in
treasury-at cost (3,150) (3,150)
Total shareholders' equity 169,253 165,718
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Commitments and
contingencies
Total liabilities and
shareholders' equity $620,886 $732,204
(See accompanying notes to consolidated financial statements)
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BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted except share data)
(unaudited)
Three-month period ended March 31,
1994 1993
Cash flow from operating
activities:
Net income $ 3,620 $ 3,254
Adjustments to reconcile net
income to net cash provided
(used) by operating activities:
Depreciation and amortization 1,405 1,312
Deferred income taxes (600) (586)
Loss (gain) on sale of fixed assets(6)
Change in assets and liabilities,
net of acquisition:
Accounts receivable 7,004 (21,764)
Finished goods inventory 87,699 28,963
Accounts payable (114,800) (86,665)
Other current assets
and liabilities 2,205 246
Net cash provided
(used)
by operating activities (13,473) (75,240)
Cash flow from investing activities:
Purchase of fixed assets
and other assets (820) (2,787)
Proceeds from sale of fixed assets 21 49
Proceeds from sale of
investment securities 2,147 6,301
Acquisition of business (5,604)
Net cash provided
(used) by investing
activities 1,348 (2,041)
Cash flow from financing activities:
Proceeds from sale of stock 146 113
Reduction in long term debt (93) (76)
Proceeds under line of
credit agreement 310,500 272,000
Payments under line of
credit agreement (312,000) (218,500)
Dividends (231) (139)
Net cash provided
(used) by financing
activities (1,678) 53,398
Net increase (decrease) in cash (13,803) (23,883)
Cash at beginning of period 33,652 32,716
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Cash at end of period $ 19,849 $ 8,833
(See accompanying notes to consolidated financial statements)
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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 month periods ended March 31, 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.
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Item 2. Management 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
wholesaler 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 first
quarter ended March 31, 1993 included $7 million of Charise
Charles sales as compared to $24 million of Charise Charles and
PRN sales for the first quarter ended March 31, 1994.
Net sales for the first quarter increased by 15% from $798
million in 1993 to $917 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 24% over the 1993 quarter.
Gross margin of $20.8 million in the first quarter of 1994
increased by 10% over 1993, primarily because of the increase
in net sales. Gross margin as a percentage of net sales
decreased from 2.37% in 1993 to 2.27% 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 increase in other income from $340,000 in the first quarter
of 1993 to $652,000 in the first quarter of 1994 is due to
service fee income on certain customer receivable balances.
Selling, general and administrative expenses increased from
$10.1 million in the first quarter of 1993 to $11.5 million in
the first quarter of 1994. The increase in 1994 included
approximately $762,000 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
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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 first quarter of 1993 to $1.4 million in the first 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 remained relatively constant at approximately
$2.4 million for the first quarter of 1993 and 1994. The
average short-term borrowings outstanding increased from $95
million in the first quarter of 1993 to $129 million in the
first quarter of 1994. However, the average short-term
interest rate remained constant at 4.9% in 1993 and 1994.
Funds received in respect of working capital carrying costs are
treated as a reduction of interest expense and increased in
1994.
The provision for income taxes represented 41.0% and 39.0% of
earnings before taxes in the first quarter of 1994 and 1993,
respectively.
Liquidity-Capital Resources.
For the three month period ended March 31, 1994, the Company's
operations consumed $13.5 million in cash. Operational cash was
provided by the reduction of inventory and accounts receivable
by $87.7 million and $7 million, respectively. However,
operational cash was used by the reduction of accounts payable
by $114.8 million. 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 $800,000 during the period.
Proceeds from the sale of marketable securities during the
period were $2.1 million.
Net payments under the bank line of credit agreement were $1.5
million during the period. At March 31, 1994 the Company had
borrowed $106.5 million under the bank credit agreement and had
a remaining availability of $93.5 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.
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PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
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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.
May 12, 1994 BINDLEY WESTERN INDUSTRIES,
INC.
BY /s/ Thomas J. Salentine
Thomas J. Salentine
Executive Vice President
(Principal Financial Officer)
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