UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q/A
Amendment No. 1
(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, 1997
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)
(Zip Code)
(317) 298-9900
(Registrant's telephone number,
including area code)
No Change
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No _________
The number of shares of Common Stock outstanding as of June 30, 1997 was
11,799,487.
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)
<TABLE>
Six-month period ended Three-month period ended
June 30, June 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues:
Net sales from stock $ 1,273,501 $ 979,599 $ 643,445 $ 500,360
Net brokerage sales 2,172,189 1,427,284 1,167,583 717,536
Total net sales 3,445,690 2,406,883 1,811,028 1,217,896
Other income 626 639 229 274
3,446,316 2,407,522 1,811,257 1,218,170
Cost and expenses:
Cost of products sold 3,378,863 2,347,450 1,777,031 1,187,888
Selling, general and administrative 37,291 34,517 18,657 17,436
Depreciation and amortization 3,723 3,339 1,909 1,705
Interest 7,762 6,497 4,294 3,226
Settlement of 1994 DEA inspection matter 812 812
3,427,639 2,392,615 1,801,891 1,211,067
Earnings before income taxes 18,677 14,907 9,366 7,103
Provision for income taxes 7,602 6,243 3,812 3,043
Net earnings $ 11,075 $ 8,664 $5,554 $4,060
Earnings per share:
Primary $ 0.88 $ 0.74 $ 0.44 $ 0.34
Fully diluted $ 0.77 $ 0.65 $ 0.39 $ 0.31
Average shares outstanding:
Primary 12,523,093 11,776,398 12,595,215 11,802,754
Fully diluted 16,068,242 15,277,426 16,140,364 15,303,782
(See accompanying notes to consolidated financial
statements)
</TABLE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(000's omitted except share data)
(unaudited)
<TABLE>
June 30, December 31,
1997 1996
<S> <C> <C>
ASSETS
Current assets:
Cash $ 48,519 $ 63,658
Accounts receivable, less allowance for doubtful
accounts of $4,010 for 1997 and $2,664 for 1996 522,074 346,802
Finished goods inventory 350,961 431,816
Deferred income taxes 4,560 4,560
Other current assets 5,842 4,129
931,956 850,965
Other assets 1,054 1,160
Fixed assets, at cost 76,037 71,915
Less: accumulated depreciation (21,511) (19,935)
54,526 51,980
Intangibles 36,096 37,101
TOTAL ASSETS $1,023,632 $ 941,206
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term borrowings $ 118,500 $ 52,000
Accounts payable 559,037 555,034
Other current liabilities 8,560 9,288
686,097 616,322
Long-term debt 99,580 99,766
Deferred income taxes 1,830 3,030
Shareholders' equity:
Common stock, $.01 par value authorized 30,000,000 shares;
issued 12,160,729 and 11,871,042 shares, respectively 3,319 3,316
Special shares, $.01 par value-authorized 1,000,000 shares
Additional paid in capital 95,652 91,964
Retained earnings 140,564 129,958
239,535 225,238
Less: shares in treasury-at cost
361,242 and 348,291, respectively (3,410) (3,150)
Total shareholders' equity 236,125 222,088
Commitments and contingencies
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,023,632 $ 941,206
(See accompanying notes to consolidated financial statements)
</TABLE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted except share data)
(unaudited)
<TABLE>
Six-month period ended
June 30,
1997 1996
<S> <C> <C>
Cash flow from operating activities:
Net income $ 11,075 $ 8,664
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 3,723 3,339
Deferred income taxes (1,200) (1,200)
Gain on sale of fixed assets (49) (18)
Change in assets and liabilities,
net of acquisition:
Accounts receivable (175,272) 63,787
Finished goods inventory 80,855 (16,871)
Accounts payable 4,003 (114,246)
Other current assets and liabilities (2,441) (2,172)
Net cash used by operating activities (79,306) (58,717)
Cash flow from investing activities:
Purchase of fixed assets and other assets (5,188) (13,325)
Proceeds from sale of fixed assets 79 16
Acquisition of business (9,064)
Net cash used by investing activities (5,109) (22,373)
Cash flow from financing activities:
Proceeds from sale of stock 3,691 1,835
Reduction in long term debt (186) (285)
Proceeds under line of credit agreement 671,500 556,500
Payments under line of credit agreement (605,000) (483,000)
Purchase of shares for treasury (260)
Dividends (469) (477)
Net cash provided by financing activities 69,276 74,573
Net increase (decrease) in cash (15,139) (6,517)
Cash at beginning of period 63,658 34,819
Cash at end of period $ 48,520 $ 28,302
(See accompanying notes to consolidated financial statements)
</TABLE>
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, 1997 and 1996 include all necessary adjustments for fair
presentation. Results for any interim period may not be indicative of
the results of the entire year.
2. The Company is a defendant in a consolidated class action filed in the
United States District Court for the Northern District of Illinois in
1993 which names the Company, five other pharmaceutical wholesalers
and twenty-six pharmaceutical manufacturers as defendants, In re Brand
Name Prescription Drugs Litigation, MDL 997. Plaintiffs allege that
pharmaceutical manufacturers and wholesalers conspired to fix prices
of brand-name prescription drugs sold to retail pharmacies at
artificially high levels in violation of the federal antitrust laws.
The plaintiffs seek injunctive relief, unspecified treble damages,
costs, interest and attorneys' fees. The Company has denied the
complaint allegations.
In April 1996, the Court granted the wholesalers' motion for summary
judgment and dismissed the wholesaler defendants, including the
Company, from the action finding that there was no evidence in the
record that the wholesaler defendants had conspired with the
pharmaceutical manufacturer defendants. The class action plaintiffs
appealed this decision to the U.S. Court of Appeals for the Seventh
Circuit. The Court of Appeals heard oral argument on June 25, 1997.
It has not yet issued a decision.
The trial court, on January 30, 1997, denied the plaintiffs' motion
under Fed. R. Civ. P. 60(b) to reopen the summary judgment issues
involving the wholesaler defendants.
A majority of the manufacturer defendants and the class plaintiffs
have reached a settlement agreement, which was approved by the Court.
The approval was affirmed by the Seventh Circuit. In addition, on May
30, 1997, the Court of Appeals dismissed the individual plaintiffs'
appeals of the summary judgment in favor of the wholesaler defendants,
holding that these plaintiffs had no standing to prosecute the appeal.
On July 1, 1996, the Company and several other wholesalers were joined
as the defendants in a seventh amended and restated complaint filed in
the Circuit Court of Greene County, Alabama, Durrett v. The Upjohn
Company, Civil Action No. 94-029. The case was first filed in 1994.
The plaintiffs claim the prices of prescription drugs they purchase in
interstate commerce are artificially high because of alleged illegal
activities of the defendant pharmaceutical manufacturers and
wholesalers. The plaintiffs seek monetary damages, injunctive relief
and punitive damages. The Company has denied the allegations of the
complaint.
The manufacturer defendants filed motions to dismiss and for judgment
on the pleadings arguing that the Alabama Antitrust Statute applies
only to intrastate commerce. The trial court denied defendants'
motions and defendants have appealed the issue to the Alabama Supreme
Court, which accepted the appeal on February 7, 1997. The defendants
submitted their appeal briefs on May 12, 1997. In addition,
plaintiffs' motion for class certification is pending before trial
court.
On March 7, 1997, the manufacturer defendants filed a motion for a
continuance of the trial in the Alabama action pending the Alabama
Supreme Court's decision and pending a decision by the Seventh Circuit
Court of Appeals in the federal multidistrict litigation. The
plaintiffs moved for a complete stay of discovery for the same
reasons. The trial court granted the manufacturer defendants' motion
to continue the trial from October 1997 to Spring 1998. The case has
not otherwise been stayed pending the appeal.
On October 21, 1994, the Company entered into an agreement in these
cases with five other wholesalers and twenty-six pharmaceutical
manufacturers. Among other things, the agreement provides: (a) if a
judgment is entered into against both the manufacturer and wholesaler
defendants, the total exposure for joint and several liability of the
Company is limited to $1,000,000; (b) if a settlement is entered into
by, between and among the manufacturer and wholesaler defendants, the
Company has no monetary exposure for such settlement amount; (c) the
six wholesaler defendants will be reimbursed by the twenty-six
manufacturer defendants for related legal fees and expenses up to
$9,000,000 total (the Company's initial portion of this amount is
$1,000,000); and (d) the Company is to release certain claims which it
might have had against the manufacturer defendants for the claims
presented by the plaintiffs in these cases. The agreement covers the
federal court litigation as well as cases which have been filed in
various state courts.
The Company is unable to form a reasonably reliable conclusion
regarding the likelihood of a favorable or unfavorable outcome of
these cases. As confirmed by the federal district court's decision,
the Company believes the allegations of liability are without merit
with regard to the wholesaler defendants and that the attendant
liability of the Company, if any, would not have a material adverse
effect on the Company's financial condition or liquidity. Adverse
decisions, although not anticipated, could have an adverse material
effect on the Company's results of operations.
3. On October 7, 1996, the Company and its subsidiary, National Infusion
Services, ("NIS"), were named as defendants in an action filed by
Thomas G. Slama, M.D. in the Superior Court of Hamilton County,
Indiana which is now pending in that Court as Cause No. 29D03-9702-CP-
81. Dr. Slama was formerly a director of the Company and Chief
Executive Officer and President of NIS. The complaint alleges breach
of contract and defamation arising from the termination of Dr. Slama's
employment with NIS in October 1996, and seeks damages in excess of
$3.4 million, punitive damages, attorneys fees and costs. The Company
and NIS believe Dr. Slama terminated his employment without "cause"
(as defined in his employment agreement), and alternatively, that NIS
had grounds to terminate Dr. Slama for "cause" under his employment
agreement. The Company and NIS have answered the complaint, denying
the merits of Dr. Slama's claims, and have also filed a counterclaim
against Dr. Slama seeking, among other things, declaratory relief,
compensatory and (in some instances) treble damages, punitive damages,
attorneys' fees, interest and costs. Dr. Slama moved to dismiss
portions of the counterclaim; which motion, after briefing and oral
argument was denied by the court on July 14, 1997. The Company and
NIS are contesting Dr. Slama's complaint and pursuing their
counterclaim vigorously. Although the outcome of any litigation is
uncertain, the Company believes after consultation with its counsel
that the attendant liability of the Company, if any, should not have a
material adverse effect on the Company's financial condition or
liquidity. An adverse decision, although not anticipated, could have
a material effect on the Company's results of operations.
4. In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 (SFAS 128)
"Earnings per share". SFAS 128 requires the dual presentation of
basic earnings per share and diluted earnings per share. The Company
will adopt the provisions of SFAS 128 in the last quarter of 1997.
Pro forma basic earnings per share, which was calculated by dividing
income available to common stockholders by the weighted average number
of common shares outstanding, would have been $.95 and $.47 per share
for the six month and three month periods ended June 30, 1997,
respectively.
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 22, 1997 BINDLEY WESTERN INDUSTRIES, INC.
BY /s/ Thomas J. Salentine
Thomas J. Salentine
Executive Vice President
(Principal Financial Officer)
