<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
------------------
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.)
8909 Purdue Road
Indianapolis, Indiana 46268
----------------------------
(Address of principal executive offices)
(Zip Code)
(317) 704-4000
--------------
(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 September 30, 1999 was
33,739,142
<PAGE>
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>
<CAPTION>
Nine-month period ended Three-month period ended
September 30, September 30,
------------------------------------------------------------
1999 1998 1999 1998
------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenues:
Net sales from stock $ 3,716,173 $ 3,025,913 $ 1,272,768 $ 1,136,712
Net brokerage sales 2,470,677 2,620,980 873,077 684,882
------------------------------------------------------------
Total net sales 6,186,850 5,646,893 2,145,845 1,821,594
Other income 1,234 1,589 334 508
------------------------------------------------------------
6,188,084 5,648,482 2,146,179 1,822,102
------------------------------------------------------------
Cost and expenses:
Cost of products sold 6,025,905 5,497,936 2,090,363 1,769,697
Selling, general and administrative 89,442 84,696 30,826 29,223
Depreciation and amortization 7,346 6,485 2,639 2,241
Interest 16,466 13,986 5,822 5,283
Special charge 1,914 1,588 1,914 776
------------------------------------------------------------
6,141,073 5,604,691 2,131,564 1,807,220
------------------------------------------------------------
Earnings before income taxes and minority interest 47,011 43,791 14,615 14,882
------------------------------------------------------------
Provision for income taxes 18,966 16,664 6,087 5,626
Minority interest in net income of
consolidated subsidiary 1,287 493
------------------------------------------------------------
Net earnings $ 28,045 $ 25,840 $ 8,528 $ 8,763
============================================================
Earnings per share:
Basic $ 0.84 $ 0.82 $ 0.25 $ 0.28
Diluted $ 0.76 $ 0.78 $ 0.23 $ 0.26
Average shares outstanding:
Basic 33,370,816 31,469,551 33,633,394 31,720,105
Diluted 36,663,425 32,946,055 37,016,272 33,725,115
(See accompanying notes to consolidated financial statements)
</TABLE>
<PAGE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(000's omitted except share data)
<TABLE>
<CAPTION>
(unaudited)
September 30, December 31,
1999 1998
------------------------------
<S> <C> <C>
Assets
Current assets:
Cash $ 23,052 $ 42,982
Accounts receivable, less allowance for doubtful
accounts of $5,143 for 1999 and $3,606 for 1998 655,710 456,994
Finished goods inventory 700,897 660,089
Deferred income taxes 13,761 11,552
Other current assets 10,235 8,659
----------------------------
1,403,655 1,180,276
----------------------------
Other assets 10 90
----------------------------
Fixed assets, at cost 126,713 121,850
Less: accumulated depreciation (32,104) (27,660)
----------------------------
94,609 94,190
----------------------------
Intangibles, net 18,856 19,401
----------------------------
Total assets $ 1,517,130 $ 1,293,957
============================
Liabilities and Shareholders' Equity
Current liabilities:
Short-term borrowings $ 152,500 $ 19,500
Securitized borrowings 237,963 224,163
Private placement debt 30,000 30,000
Accounts payable 681,140 644,461
Note payable to Priority Healthcare Corporation 13,166 16,517
Other current liabilities 26,055 19,869
----------------------------
1,140,824 954,510
----------------------------
Long-term debt 13,824 733
----------------------------
Deferred income taxes 3,087 3,087
----------------------------
Shareholders' equity:
Common stock, $.01 par value authorized 53,333,333 shares;
issued 34,951,374 and 26,345,421 shares, respectively 3,413 3,406
Special shares, $.01 par value-authorized 1,000,000 shares
Additional paid in capital 220,046 215,177
Note receivable from officer (3,390) (3,228)
Retained earnings 156,806 130,953
----------------------------
376,875 346,308
Less: shares in treasury-at cost
1,212,232 and 689,161 shares, respectively (17,480) (10,681)
----------------------------
Total shareholders' equity 359,395 335,627
----------------------------
Commitments and contingencies
----------------------------
Total liabilities and shareholders' equity $ 1,517,130 $ 1,293,957
============================
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(000's omitted except share data)
(unaudited)
<TABLE>
<CAPTION>
Nine-month period ended
September 30,
----------------------------------
1999 1998
----------------------------------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 28,045 $ 25,840
Adjustments to reconcile net income
to net cash provided (used) by operating activities:
Depreciation and amortization 7,346 6,485
Minority interest 1,287
Deferred income taxes (2,210) (1,800)
Amortization of restricted stock 1,589
Gain on sale of fixed assets (138)
Change in assets and liabilities,
net of acquisition:
Accounts receivable (198,716) 84,991
Finished goods inventory (40,808) (121,008)
Accounts payable 36,679 (163,262)
Other current assets and liabilities 4,610 10,138
----------------------------------
Net cash used by operating activities (165,054) (155,878)
----------------------------------
Cash flow from investing activities:
Purchase of fixed assets and other assets (14,710) (24,997)
Proceeds from sale of fixed assets 20,906 89
----------------------------------
Net cash provided (used) by investing activities 6,196 (24,908)
----------------------------------
Cash flow from financing activities:
Proceeds from sale of stock 4,876 6,728
Addition (reduction) in long term debt (244) (353)
Related party note receivable (162) (161)
Payments on note payable Priority Healthcare Corporation (3,350)
Proceeds under line of credit agreement 1,091,500 1,316,500
Payments under line of credit agreement (958,500) (1,153,500)
Proceeds from securitized borrowings 13,800
Purchase of common shares for treasury (6,800) (479)
Dividends (2,192) (1,190)
----------------------------------
Net cash provided by financing activities 138,928 167,545
----------------------------------
Net increase (decrease) in cash (19,930) (13,241)
Cash at beginning of period 42,982 42,895
----------------------------------
Cash at end of period $ 23,052 $ 29,654
==================================
</TABLE>
(See accompanying notes to consolidated financial statements)
<PAGE>
BINDLEY WESTERN INDUSTRIES, INC. AND SUBSIDIARIES
--------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. All of our financial information includes the results of Bindley Western
Industries, Inc. ("BWI") and Central Pharmacy Services, Inc. ("CPSI") for all
periods presented giving retroactive effect to the merger on August 31, 1999
(see note 2). We have prepared the consolidated financial statements in this
report without audit. We condensed or omitted some information and footnote
disclosures, including significant accounting policies, that would normally
be included in financial statements prepared in accordance with generally
accepted accounting principles. We believe that the financial statements for
the three and nine-month periods ended September 30, 1999 and 1998 include
all necessary adjustments which are of a normal recurring nature, for fair
presentation. These financial statements should be read in conjunction with
the financial statements and notes included in our latest annual report.
Results for any interim period may not be indicative of the results of the
entire year.
2. Effective August 31, 1999, BWI completed the merger with CPSI by exchanging
2.9 million shares of BWI Common Stock for all of the Common Stock of CPSI.
Each share of CPSI was exchanged for 26.38 shares of our Common Stock. In
addition, outstanding CPSI employee stock options were converted at the same
exchange factor into options to purchase approximately 300,000 shares of BWI
Common Stock. CPSI operates specialized pharmacies in 27 cities located in 13
states. These pharmacies prepare and deliver unit dose radiopharmaceuticals
for use in nuclear imaging procedures in hospitals and clinics.
The merger constituted a tax-free reorganization and has been accounted for
as a pooling of interests. The accompanying financial statements for the
three and nine months ended September 30, 1999 are based on the assumption
that the companies were combined for the full period, and the financial
statements of prior years have been restated to give effect to the
combination. Net sales and net income for the individual companies for the
three and nine-month periods ended September 30, 1999 and 1998 are as
follows:
<TABLE>
<CAPTION>
Nine-month period ended Three-month period ended
(in thousands) September 30, September 30,
------------------------ ------------------------
1999 1998 1999 1998
----------- ---------- ---------- -----------
<S> <C> <C> <C> <C>
Net Sales
BWI $6,154,669 $5,623,029 $2,134,497 $1,813,210
CPSI 32,181 23,864 11,348 8,384
---------------------------------------------------
Total $6,186,850 $5,646,893 $2,145,845 $1,821,594
Net earnings
BWI $ 26,187 $ 23,654 $ 8,283 $ 7,908
CPSI 1,858 2,186 245 855
---------------------------------------------------
Total $ 28,045 $ 25,840 $ 8,528 $ 8,763
===================================================
</TABLE>
There were no intercompany transactions between the companies and no
adjustments
<PAGE>
or reclassifications were needed to conform CPSI financial statements to BWI
presentation. However, during the third quarter, we expensed merger
transaction costs of $1.9 million as required under the pooling of interests
accounting method.
3. Prescription Drug Price Litigation. We were named a defendant, along with
six other pharmaceutical wholesalers and 24 pharmaceutical manufacturers in
a consolidated class action filed in the United States District Court for
the Northern District of Illinois in 1993. (In re Brand Name Prescription
Drugs Litigation, MDL 997.) The complaint alleged that the defendants
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 complaint sought injunctive relief, unspecified treble damages,
costs, interest and attorneys' fees. Additional complaints were filed in the
federal class action by two chain drug companies naming certain
pharmaceutical manufacturers and wholesalers, including us, as defendants.
These complaints contain allegations and claims for relief that are
substantially similar to those in the earlier class action complaint. In
addition, we are a defendant in additional actions brought by plaintiffs who
"opted out" of the federal class action. The vast majority of the complaints
in these actions contain allegations and claims for relief that are
substantially similar to those in the federal class action. The remaining
complaints add allegations that the defendants' conduct violated state law.
On July 1, 1996, we and several other wholesalers were joined as defendants
in a proceeding filed in the Circuit Court of Greene County, Alabama.
(Durrett v. The Upjohn Company, Civil Action No. 94-029.) The plaintiffs
claimed the prices of prescription drugs purchased in interstate commerce
were artificially high because of alleged illegal activities of the
defendant pharmaceutical manufacturers and wholesalers. The complaint sought
monetary damages, injunctive relief and punitive damages. On June 25, 1999,
the Alabama Supreme Court ruled against the plaintiffs and remanded the case
to the trial court for dismissal.
On June 16, 1998, we were named a defendant in an action filed in the
Circuit Court for Cocke County, Tennessee purportedly on behalf of consumers
of prescription drugs in the following states: Tennessee, Alabama, Arizona,
Florida, Kansas, Maine, Michigan, Minnesota, New Mexico, North Carolina,
North Dakota, South Dakota, West Virginia and Wisconsin. (Graves et al. v.
Abbott Laboratories et al., Civil Action No. 25,109-00.) The complaint
charges that pharmaceutical manufacturers and wholesalers, including us,
engaged in a price-fixing conspiracy in violation of Tennessee's Trade
Practices Act and Consumer Protection Act, and the unfair or deceptive trade
practices statutes of the other jurisdictions named therein.
We have denied any liability to the plaintiffs in the prescription drug
price litigation described above and have been defending ourselves
vigorously. On October 21, 1994, we entered into an agreement with the other
defendants, wholesalers and pharmaceutical manufacturers covering all of the
prescription drug price actions. Under this agreement: (1) the manufacturer
defendants agreed to reimburse us and the other wholesaler defendants for
litigation costs incurred, up to an aggregate amount of $9 million; and (2)
if a judgment is entered against both manufacturers and wholesalers, our
total exposure for joint and several liability would be limited to the
lesser of 1% of such judgment or $1 million. In addition, we have released
any claims which we might have had against the manufacturers for the claims
presented
<PAGE>
by the plaintiffs in these actions. As a result of the settlements discussed
in the next paragraph, we have periodically received reimbursement of our
legal fees and expenses in excess of our proportionate share of the $9
million, and we expect to receive reimbursement of substantially all of such
fees and expenses in the future.
Several of the manufacturer defendants and the class plaintiffs have reached
settlement agreements with regard to the class action. The trial against the
remaining defendants, including us, began on September 14, 1998. On November
30, 1998, the Court granted all remaining defendants' motions for judgments
as a matter of law and dismissed all class claims against us and other
defendants. The class plaintiffs appealed the Court's ruling and, on July
13, 1999, the appeals court dismissed the wholesalers, including us, from
the case. On November 5, 1999, the class plaintiffs filed a petition for
writ of certiorari seeking the United States Supreme Court's review of the
July 13 ruling.
After discussions with counsel, we believe that any allegations of liability
against us in the remaining prescription drug pricing cases described above
are without merit and that any liability that we may have is not likely to
have a material adverse effect on our financial condition or results of
operations.
Other Legal Proceedings. We are also subject to ordinary and routine
lawsuits and governmental inspections, investigations and proceedings
incidental to our business, the outcome of which would not have a material
adverse effect on our financial condition or results of operations.
4. On June 3, 1998, a 4-for-3 stock split of our common stock was paid in the
form of a stock dividend to shareholders of record at the close of business
on May 21, 1998. On June 25, 1999, another 4-for-3 stock split of our common
stock was paid in the form of a stock dividend to shareholders of record at
the close of business on June 11, 1999. We restated all historical weighted
average shares and per share amounts in this report to reflect these stock
splits. Share amounts in the Consolidated Balance Sheets reflect the actual
share amounts outstanding for each period presented.
5. On April 30, 1999, we sold our corporate office building to an unrelated
party for approximately net book value and signed a 15 year lease for the
top two floors of the building. This lease meets the criteria of a capital
lease and resulted in the recording of an asset and liability in the amount
of the present value of minimum lease payments of $13.4 million. The asset
is being amortized over the term of the lease and the depreciation of the
asset is included in depreciation expense.
6. On December 31, 1998, we completed the spin-off of our subsidiary Priority
Healthcare Corporation ("Priority") by distributing to the holders of our
common stock all of the shares of Priority Class A Common Stock that we
owned. The spin-off resulted in the removal of $107.5 million of assets and
$37.2 million of liabilities from our Consolidated Balance Sheet as of
December 31, 1998. The results of operations for Priority, net of minority
interest, for the three and nine-month periods ended September 30, 1998 are
included in our Consolidated Statement of Earnings because Priority remained
a subsidiary through December 31, 1998.
7. Giving effect of the CPSI merger, (see note 2) we had three reportable
segments
<PAGE>
prior to the spin-off of Priority. These segments were BWI, Priority and Nuclear
Pharmacy. All segments conducted substantially all of their business within the
United States. The BWI segment specialized in the distribution of
pharmaceuticals and related health care products to chain drug companies which
operate their own warehouses, individual drug stores, supermarkets and mass
retailers with their own pharmacies, hospitals, clinics, HMOs, state and federal
government agencies and other health care providers. The Priority segment
distributed specialty pharmaceuticals and related medical supplies to the
alternate site healthcare market and was a provider of patient-specific, self-
injectible biopharmaceuticals and disease treatment services to individuals with
chronic diseases. The Nuclear Pharmacy segment prepares and delivers unit dose
radiopharmaceuticals for use in nuclear imaging procedures in hospitals and
clinics. Our segments have separate management teams and infrastructures to meet
the specific needs of our customers and our marketing strategies.
After the spin-off of Priority on December 31, 1998, we have only two reportable
segments, BWI and Nuclear Pharmacy. The assets, liabilities and equity of
Priority are not included in our December 31, 1998 or September 30, 1999
Consolidated Balance Sheets and our Consolidated Statement of Earnings for the
three and nine month periods ended September 30, 1999 do not include the results
of operations for Priority.
Segment information for the three and nine-month periods ended September 30,
1998 and 1999 was as follows:
<TABLE>
<CAPTION>
Nuclear
(in thousands) BWI Priority Pharmacy Total
---------- -------- -------- ----------
<S> <C> <C> <C> <C>
Three-months ended September 30, 1998
Revenues $1,741,487 $ 71,723 $ 8,384 $1,821,594
Segment operating earnings 15,444 4,518 979 20,941
Interest Expense (5,283)
Special Charge (776)
----------
Earnings before income taxes 14,882
==========
Nine-months ended September 30, 1998
Revenues $5,429,253 $193,776 $23,864 $5,646,893
Segment operating earnings 44,847 11,970 2,548 59,365
Interest Expense (13,986)
Special Charge (1,588)
----------
Earnings before income taxes 43,791
==========
Three-months ended September 30, 1999
Revenues $2,134,497 $11,348 $2,145,845
Segment operating earnings 20,762 1,589 22,351
Interest Expense (5,822)
Special Charge (1,914)
----------
Earnings before income taxes 14,615
==========
Nine-months ended September 30, 1999
Revenues $6,154,669 $32,181 $6,186,850
Segment operating earnings 61,087 4,304 65,391
Interest Expense (16,466)
Special Charge (1,914)
----------
Earnings before income taxes 47,011
==========
</TABLE>
<PAGE>
Operating earnings, as opposed to net earnings, has been determined to be a
better indicator of a segment's operating profitability for management
purposes. Total assets of the BWI segment have increased by 17.2% from
December 31, 1998 to September 30, 1999.
8. The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations for the nine and three
month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Nine-month period ended Three-month period ended
September 30 September 30
- --------------------------------------------------------------------------------------
(in thousands, except share data) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Basic:
Net earnings $ 28,045 $ 25,840 $ 8,528 $ 8,763
Weighted shares
outstanding 30,448,761 21,410,622 30,711,339 21,598,537
1999 4 for 3 stock split 7,136,874 7,199,513
Shares issued in CPSI merger 2,922,055 2,922,055 2,922,055 2,922,055
Basic shares
outstanding 33,370,816 31,469,551 33,633,394 31,720,105
Per share amount $ .84 $ .82 $ .25 $ .28
Diluted:
Net earnings $ 28,045 $ 25,840 $ 8,528 $ 8,763
Weighted shares
outstanding 30,448,761 21,410,622 30,711,339 21,598,538
Stock options 3,292,609 1,157,688 3,382,878 1,491,861
Restricted Stock 22,303 85,617
1999 4 for 3 stock split 7,433,387 7,627,044
Shares issued in CPSI merger 2,922,055 2,922,055 2,922,055 2,922,055
Diluted Shares 36,663,425 32,946,055 37,016,272 33,725,115
Per share amount $ .76 $ .78 $ .23 $ .26
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview
On December 31, 1998, we completed the spin-off of our subsidiary Priority
Healthcare Corporation ("Priority") by distributing to the holders of our common
stock all of the shares of Priority Class A Common Stock that we owned. The
spin-off resulted in the removal of $107.5 million of assets and $37.2 million
of liabilities from our Consolidated Balance Sheet as of December 31, 1998. The
results of operations for Priority, net of minority interest, for the three and
nine-month periods ended September 30, 1998 are included in our Consolidated
Statement of Earnings because Priority remained a subsidiary through December
31, 1998.
On August 31, 1999, Bindley Western Industries, Inc. ("BWI") completed the
merger with Central Pharmacy Services, Inc. ("CPSI") of Atlanta, Georgia for
approximately $55 million of BWI Common Stock. CPSI operates specialized
pharmacies in 27 cities located in 13 states. These pharmacies prepare and
deliver unit dose radiopharmaceuticals for use in nuclear imaging procedures in
hospitals and clinics. The transaction was accounted for as a pooling of
interests and the financial statements for the nine months ended September 30,
1999 are based on the assumption that the companies were combined for the full
period. The financial statements of prior years have been restated to give
effect to the combination. CPSI represents the Nuclear Pharmacy segment of our
business.
Results of Operations
Net sales of $6,187 million for the first nine months of 1999 represented a
9.6% increase over the first nine months of 1998. Net sales of $2,146 million
for the third quarter of 1999 represented a 17.8% increase over the third
quarter of 1998. Priority sales accounted for approximately 4% of total sales
for both the first nine months and the third quarter of 1998 and Nuclear
Pharmacy sales accounted for less than 1% of sales for the first nine months and
the third quarter of both 1999 and 1998. Brokerage type sales ("brokerage
sales") in 1999 experienced a 5.7% decrease for the first nine months when
compared to the same period in 1998, while brokerage sales for the third quarter
of 1999 experienced a 27.5% increase when compared to the third quarter of 1998.
These variations are the result of increased sales to existing customers offset
by the loss of a single chain warehouse customer during the second quarter of
1998. Although brokerage sales generate very little gross margin, they provide
increased working capital and support our programs to attract more direct store
delivery business from chain warehouse customers. Sales from inventory ("from
stock sales") increased 23% in the first nine months of 1999 when compared to
the first nine months of 1998 (31% when Priority's sales are excluded from 1998
results) and 12% (20% when Priority's sales are excluded from 1998 results) for
the third quarter of 1999 when compared to the third quarter of 1998. From
stock sales include sales from inventory to chain warehouse customers and direct
store delivery sales. We continued to expand our presence in the direct store
delivery portion of the business through increased sales to existing customers
and the addition of new customers. Direct store delivery sales increased by 28%
for the first nine months of 1999 (38% when Priority's sales are excluded from
1998 results) when compared to the first nine months of 1998 and 20% for the
third quarter of 1999 when compared to the third quarter of 1998. As a
percentage of total sales, direct store delivery sales increased from 50% for
the first nine months of 1998 to 58% for the first nine months of 1999. This
increase is attributed to both the loss of the chain warehouse customer and the
increase in the direct store delivery sales. In both
<PAGE>
the first nine months of 1999 and 1998, the increase related to price increases
was approximately equal to the increase in the Consumer Price Index.
Gross margin of $160.9 million for the first nine months of 1999
represented an increase of 8% over the first nine months of 1998. The gross
margin of $55.5 million in the third quarter of 1999 represented a 7% increase
over the third quarter of 1998. However, when Priority's margins are excluded
from the 1998 results, gross margin increased by 27% for both the first nine
months and the third quarter. In all periods, the pressure on sell side margins
continued to be a significant factor and the purchasing gains associated with
pharmaceutical price inflation remained relatively constant. Gross margin as a
percentage of net sales decreased to 2.60% for the first nine months of 1999
from 2.64% for the first nine months of 1998. However, after the exclusion of
Priority, gross margin increased from 2.33% for the nine months of 1998. This
increase in gross margin was the result of the change in mix away from the lower
margin brokerage sales to the higher margin from stock sales in the BWI segment
and also the increased sales of the higher margin Nuclear Pharmacy segment. The
change in mix resulted from both the loss of the chain warehouse customer and
the increase in direct store delivery business. For the third quarter, gross
margin as a percentage of net sales decreased from 2.85% in 1998 (2.51% after
the exclusion of Priority) to 2.59% in 1999. This decrease was the result of the
inclusion of Priority in the 1998 results, offset by the increased sales of the
higher margin Nuclear Pharmacy segment.
Other income decreased because the 1999 results did not include the
interest income that Priority had earned on the proceeds of its October 1997
initial public offering. Other income for 1999 is attributed to finance charges
on customers' receivables.
Selling, general and administrative ("SGA") expense for the first nine
months of 1999 increased 6% from $84.7 million in 1998 to $89.4 million in 1999.
For the third quarter, SGA increased 6% from $29.2 million in 1998 to $30.8
million in 1999. When Priority is excluded from the 1998 results, the increase
in SGA was 20% for the first nine months and 21% for the third quarter. This
increase is the result of our continued expansion through the opening of new
distribution centers in Milwaukee, Wisconsin, Kansas City, Missouri and Denver,
Colorado and normal inflationary increases and increased variable costs to
support our growing direct store delivery programs in the BWI segment. These
variable costs include, among others, delivery expenses, warehouse expenses and
labor costs. The remainder of the increase is associated with the continued
expansion, and the opening of new specialized pharmacies, in our Nuclear
Pharmacy segment. Our commitment to growth in both our direct store delivery
sales and our Nuclear Pharmacy segment will result in increased SGA in the
future. However, total SGA expense as a percent of from stock sales for the
first nine months decreased from 2.8% in 1998 to 2.4% in 1999. We remain focused
on controlling SGA through improved technology, better asset management and
opportunities to consolidate distribution centers.
Depreciation and amortization expense increased as a result of the building
of new facilities, expansion and automation of existing facilities and
investments in management information systems. Depreciation and amortization
expense increased from $6.5 million ($5.5 million excluding Priority) in the
first nine months of 1998 to $7.3 million in the first nine months of 1999. For
the third quarter, depreciation and amortization expense increased from $2.2
million ($1.9 million excluding Priority) in 1998 to $2.6 million in 1999.
Interest expense for the nine-month period increased from $14.0 million in
1998 to $16.5 million in 1999. For the third quarter, interest expense increased
from $5.3 million in 1998 to $5.8 million in 1999. The average short-term
borrowings outstanding for the nine-month period
<PAGE>
in 1998 were $239 million at an average short-term interest rate of 6.4%, as
compared to $320 million at an average short-term interest rate of 5.1% in 1999.
For the third quarter of 1998, the average short-term borrowings outstanding
were $291 million at an average short-term interest rate of 6.4%, as compared to
$315 million at an average short-term interest rate of 5.4% in 1999.
In 1998 we recorded a non-cash charge of $1.6 million in the first nine
months and $780,000 in the third quarter related to compensation expense
associated with restricted stock grants. In 1999, we incurred approximately
$1.9 million of one-time charges related to the acquisition of CPSI.
The provision for income taxes represented approximately 38% of earnings
before taxes for both the first nine months and the third quarter of 1998. The
provision for income taxes represented approximately 40% of earnings before
taxes for the first nine months of 1999 and 42% for the third quarter of 1999.
The lower rate for 1998 reflects the utilization of NOL carryforwards in the
accounts of CPSI.
Liquidity-Capital Resources
For the nine-month period ended September 30, 1999, our operations consumed
$165 million in cash. The use of funds resulted from an increase in accounts
receivables and inventories. These uses were offset by an increase in accounts
payable. The increase in accounts receivables is a direct result of the overall
increase in direct store sales and increased volume in our brokerage type sales.
The increase in inventories resulted from increased purchases associated with
the start up of our new distribution centers in Milwaukee, Wisconsin and Kansas
City, Missouri, additional volume associated with the inventory and purchasing
management systems with certain customers and buildup related to Year 2000. The
increase in accounts payable is attributed to the timing of payments of invoices
related to inventory purchases. We continue to closely monitor working capital
in relation to economic and competitive conditions. However, our emphasis on
direct store delivery business will continue to require both net working capital
and cash.
Capital expenditures were $14.7 million during the first nine months of
1999. These were predominantly for distribution centers, the expansion and
automation of existing distribution centers and the investment in additional
management information systems.
On April 30, 1999, we sold our corporate office building to an unrelated
party and signed a 15 year lease for the top two floors of the building. This
lease meets the criteria of a capital lease and resulted in the recording of an
asset and liability in the amount of the present value of minimum lease payments
of $13.4 million. The asset is being amortized over the term of the lease and
the depreciation of the asset is included in depreciation expense.
Under our receivables securitization facility, we sell substantially all of
our receivables arising in connection with the sale of goods or the rendering of
services to Bindley Western Funding Corporation ("Funding Corp."), a wholly
owned special purpose corporation subsidiary. The receivables are sold to
Funding Corp. on a continuous basis. The cash generated by sales of interests
in the receivables and from collections on the receivables retained is used by
Funding Corp. to purchase additional receivables. The assets of Funding Corp.
are available first to satisfy any claims of Funding Corp. creditors.
Funding Corp. sells our receivables at specified discount rates to a group
of banks. At
<PAGE>
September 30, 1999, there were $238 million of receivables interests outstanding
that have been sold at an annual average discount rate of 5.1%. We account for
the receivables facility as a financing transaction in our consolidated
financial statements.
Our bank credit facility allows us to borrow up to $174.5 million. The net
increase in borrowings under our bank credit agreement was $133 million during
the nine-month period. At September 30, 1999, we had outstanding borrowings of
$152.5 million and a remaining availability of $22 million.
We believe that our cash on hand, cash equivalents, line of credit and
working capital management efforts are sufficient to meet our future working
capital requirements.
Our principal working capital needs are for inventory and accounts
receivables. We sell inventory to our chain warehouse and other customers on
various payment terms. This requires significant working capital to finance
inventory purchases and entails accounts receivables exposure in the event any
of our chain warehouse or other significant customers encounter financial
difficulties. Although we monitor closely the creditworthiness of our major
customers and, when feasible, obtain security interests in the inventory sold,
we cannot assure you that we will not incur the write off or write down of chain
warehouse customer or other significant accounts receivables in the future.
Year 2000
The year 2000 will pose a unique set of challenges to those industries
reliant on information technology. Because of the methods employed by early
programmers, many software applications and operational programs may be unable
to distinguish the year 2000 from the year 1900. This problem could result in
the production of inaccurate data, or in the worst case, the inability of the
systems to continue to function. We and other companies in the same business
are vulnerable to this problem because we depend on our distribution and
communications systems.
Our Daily Sales System, which controls ordering, pricing, inventory
control, and shipping, accounting for 70% of our total investment in software,
was initially designed and programmed to be Year 2000 compliant. All remaining
systems have been remediated to be Year 2000 compliant and are currently being
tested. Furthermore, all major software purchases that we made within the past
three years have been warranted to be compliant by the vendor. We have upgraded
and replaced our hardware and network systems for reasons other than year 2000
compliance, however, this new hardware and network systems will be fully tested
during 1999 to determine if they are also Year 2000 compliant. We estimate the
total cumulative costs to make our systems compliant for the Year 2000 is
approximately $1 million, of which approximately $850,000 had been incurred as
of September 30, 1999.
We believe that the expenditures required to make our systems Year 2000
compliant will not have a materially adverse effect on our future performance.
However, the Year 2000 problem is pervasive and complex and can potentially
affect any computer process. Accordingly, we cannot assure you that Year 2000
compliance can be achieved without additional unanticipated expenditures and
uncertainties that might affect our future financial results.
Moreover, to operate our business, we rely on governmental agencies,
utility companies, telecommunications companies, shipping companies, suppliers
and other third party service
<PAGE>
providers over which we can assert little control. Our ability to conduct our
business is dependent upon the ability of these third parties to avoid Year 2000
related disruptions. We have not yet received assurance from our third party
service providers about their Year 2000 compliance. If our key third party
service providers do not adequately address their Year 2000 issues, our business
may be materially affected, which could result in a material adverse effect on
our results of operations and financial condition.
We have not to date developed any formal contingency plans, as such plans
will depend in part on the responses from our third party service providers.
However, if required, critical functions could be handled on an alternative
basis until such time that the Year 2000 malfunction was identified and
resolved.
Because the uncertainties surrounding the year 2000, there is a concern
that consumers of pharmaceutical products will begin to stockpile their
prescriptions during late 1999 through early 2000. Even though the industry is
attempting to address these concerns, a significant amount of stockpiling by
consumers could result in temporary disruption of our ability to service our
customers due to shortages of pharmaceutical products from the manufacturers.
As a result, we have increased our inventory of pharmaceutical products.
Forward-Looking Statements
We make forward-looking statements in this report which represent our
expectations or beliefs about future events and financial performance. Forward-
looking statements are subject to known and unknown risks and uncertainties,
including:
. changes in interest rates;
. competitive pressures;
. changes in customer mix;
. financial stability of major customers and key suppliers;
. investment procurement opportunities;
. changes in governmental regulations or the interpretation and enforcement
of these regulations;
. asserted and unasserted claims; and
. our ability and the ability of entities with which we do business to modify
or redesign our and their computer systems to work properly in the year
2000.
In light of these risks, uncertainties and assumptions, the forward-looking
events discussed in this report might not occur. In addition, actual results
could differ materially from those suggested by the forward-looking statements,
and therefore you should not place undue reliance on the forward-looking
statements. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The information set forth in Note 2 to the Notes to Consolidated Financial
Statements set forth elsewhere in this Report is incorporated herein by
reference.
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10-BB (ii) Amendment to 1998 Non-Qualified Stock Option Plan
of Registrant (A copy of this exhibit filed as Exhibit
4.3 (ii) to the Registrant's Registration Statement on Form
S-8 (Registration No. 333-85378) is incorporated herein by
reference.)
10-CC Central Pharmacy Services, Inc. 1993 Stock Option
Plan, as amended to date.
10-Z (ix) Second Amendment to the Profit Sharing Plan of
Registrant effective January 1, 2000.
10-Z (x) Third Amendment to the Profit and Sharing Plan of
Registrant, effective January 1, 2000.
27. Selected Financial Data Schedule
27.1 - 27.11 Restated Financial Data Schedules for years
ended December 31, 1998, 1997 and 1996 and periods ended
March 31, 1999, 1998 and 1997, June 30, 1999, 1998 and 1997,
and September 30, 1998 and 1997.
(b) Reports on Form 8-K
We filed a current report of Form 8-K dated August 23, 1999
with respect to our Board of Directors adoption of an
amendment to the Restated Articles of Incorporation to
increase the number of authorized common shares, $0.01 par
value, from 40,000,000 shares to 53,333,333.
<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.
November 15, 1999 BINDLEY WESTERN INDUSTRIES, INC.
BY /s/ Thomas J. Salentine
------------------------
Thomas J. Salentine
Executive Vice President
(Principal Financial Officer)
<PAGE>
SECOND AMENDMENT TO THE PROFIT SHARING PLAN OF
BINDLEY WESTERN INDUSTRIES, INC., AND ITS SUBSIDIARIES
WHEREAS, Bindley Western Industries, Inc. (the "Company") established the Profit
Sharing Plan of Bindley Western Industries, Inc. and its Subsidiaries originally
effective on January 1, 1979, and amended and restated in the PRISM (R)
Nonstandardized Prototype Adoption Agreement effective January 1, 1996 (the
"Plan"); and
WHEREAS, the Company has completed its acquisition of Central Pharmacy Services,
Inc. and is desirous of allowing the employees of Central Pharmacy Services,
Inc. to enter the Plan as of the next succeeding entry date (January 1, 2000) by
crediting their prior service with their former employer for purposes of
eligibility, but not crediting such prior service for purposes of vesting of
benefits under the Plan; and
WHEREAS, the Company desires that the amendment be effective December 31, 1999.
NOW THEREFORE,
BE IT RESOLVED, that the Company, effective December 31, 1999, amends the
provisions of Item B.4.j.(v.) of the Adoption Agreement to provide as follows:
B. Basic Plan Provisions:
...
4. Definitions:
...
j. Year of Service shall mean:
...
v X For eligibility purposes, Years of Service with the following
Predecessor Employers shall count in fulfilling the eligibility
requirements for this Plan: Kendall Drug Company; Tennessee Wholesale
Drug; and Central Pharmacy Services, Inc.
<PAGE>
AND BE IT FURTHER RESOLVED, that except as amended herein, all other provisions
of the Profit Sharing Plan of Bindley Western Industries, Inc. and its
Subsidiaries shall remain effective as set forth in the Adoption Agreement.
Plan Sponsor: Bindley Western Industries, Inc.
By: ______________________________ Dated: _____________
Trustee: Key Trust Company of Indiana, National Association
By: ______________________________ Dated: _____________
<PAGE>
THIRD AMENDMENT TO THE PROFIT SHARING PLAN OF
BINDLEY WESTERN INDUSTRIES, INC., AND ITS SUBSIDIARIES
WHEREAS, Bindley Western Industries, Inc. (the "Company") established the Profit
Sharing Plan of Bindley Western Industries, Inc. and its Subsidiaries originally
effective on January 1, 1979, and amended and restated in the PRISM (R)
Nonstandardized Prototype Adoption Agreement effective January 1, 1996 (the
"Plan"); and
WHEREAS, the Company has determined that it would adopt the necessary Plan
amendments to comply with the provisions of IRC (S)401(k)(12) to make the Plan a
"safe harbor" Plan commencing January 1, 2000 by electing to make an Employer
Non-Elective Contribution to the Plan; and
WHEREAS, the Company desires that the amendment be effective January 1, 2000.
NOW THEREFORE,
BE IT RESOLVED, that the Company, effective January 1, 2000, amends the
provisions of Item B.7.a of the Adoption Agreement to provide as follows:
B. Basic Plan Provisions:
...
7. Vesting:
a. The percentage of a Participant's Employer Contribution Account
(attributable to Employer Profit Sharing Contributions) to be
vested in him or her upon termination of employment prior to
attainment of the Plan's Normal Retirement Date shall be: The
provisions of this Item B.7.a.(iv) shall apply to all Employer
Discretionary Contributions. The provisions of Item B.7.a.(viii)
shall apply to all Employer Non Elective Contributions made under
Item B.8.a.(ii).
Completed Years of Service
<TABLE>
<CAPTION>
1 2 3 4 5 6 7
-- --- --- -- --- --- ---
<S> <C> <C> <C> <C> <C> <C> <C>
I 0% 100%
Ii 0% 0% 100%
Iii 0% 20% 40% 60% 80% 100%
iv X 0% 0% 20% 40% 60% 80% 100%
V 10% 20% 30% 40% 60% 80% 100%
Vi 0% 0% 0% 0% 100%
Vii 0% 0% 0% 0% 0% 0% 100%
viii X Full and immediate vesting upon entry into the Plan
</TABLE>
<PAGE>
AND BE IT FURTHER RESOLVED, that the Company, effective January 1, 2000, amends
the provisions of Item B.8.a. of the Adoption Agreement to provide as follows:
B. Basic Plan Provisions:
...
8. Employer Profit Sharing Contributions:
a. Contributions:
i X In its discretion, the Employer may contribute Employer
- Profit Sharing Contributions to the Plan.
ii X The Employer shall contribute Employer Profit Sharing
- Contributions to the Plan in the amount of 3% of the
Compensation of all Eligible Participants under the
Plan.
iii X If selected, the Employer may make Employer Profit
- Sharing Contributions without regard to current or
accumulated Net Profits of the Employer for the taxable
year ending with, or within the Plan Year.
iv If selected, the Employer may designate all or any
- part of the Employer Profit Sharing Contributions as
Qualified Nonelective Contributions, provided, however,
that contributions so designated will be subject to the
same vesting, distribution, and withdrawal restrictions
as Before Tax Contributions.
AND BE IT FURTHER RESOLVED, that effective January 1, 2000, the Company amends
the provisions of Item B.18 of the Adoption Agreement to provide as follows:
B. Basic Plan Provisions:
...
18. X Effective Date Addendum:
If selected, the following provisions shall have the specified effective dates
(which are different from the date specified in Item B(1)):
Notwithstanding the provisions of Item B.7.a. or any other provision of the
Adoption Agreement or the Basic Plan Document to the contrary, all Employer
Contributions made under Item B.8.a.(ii) shall:
<PAGE>
(1) Become fully and immediately vested upon being made to the Plan;
(2) There shall be no In-Service withdrawal for a Participant; and
(3) Shall be contributed to the Plan whether or not the Participant is employed
by the Company on the last day of the Plan Year or has completed 1,000
Hours of Service.
AND BE IT FURTHER RESOLVED, that the Company adopts "Addendum A" attached hereto
as a portion of the Adoption Agreement to note the Company's determination to be
considered a "safe harbor" plan for the Plan Year commencing on January 1, 2000;
and
AND BE IT FURTHER RESOLVED, that except as amended herein, all other provisions
of the Profit Sharing Plan of Bindley Western Industries, Inc. and its
Subsidiaries shall remain effective as set forth in the Adoption Agreement.
Plan Sponsor: Bindley Western Industries, Inc.
By: ______________________________ Dated: _____________
Trustee: Key Trust Company of Indiana, National Association
By: ______________________________ Dated: _____________
<PAGE>
Safe Harbor Addendum
It is the intention of the Plan Sponsor to comply with the provisions of Code
(S)401(k) (12) and make contributions as elected below, effective with the Plan
Year beginning on January 1, 2000. It is understood that if these contributions
are made, and the other requirements of (S)401(k)(12) are met, the Plan will
fall within the safe harbor provisions of that section and not be required to
perform ADP and ACP testing.
__X____ The Plan Sponsor shall make a Qualified Nonelective Contribution in an
amount at least equal to 3% of all eligible participant's compensation
allocated pursuant to the terms of the Plan.
_______ The Plan Sponsor shall make a Qualified Matching Contribution in an
amount equal to 100% of the first 3% of a Participant's compensation
deferred pursuant to a Salary Reduction Agreement, plus 50% of the next
2% of a Participant's compensation deferred.
_______ In the following amount and allocation formula, which complies with the
provision of code (S)401(k)(12)(B)(iii):
An amount, equal to 100% of each Participant's Before Tax Contributions
however, no match shall be made on Participant's Before Tax
Contributions in excess of 4% of the Participant's Compensation.
This election shall remain in effect and the Trustee shall be entitled to rely
on this election until changed in writing.
Executed this ___________ day of November, 1999.
Bindley Western Industries, Inc.
--------------------------------
Addendum "A"
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 23,052
<SECURITIES> 0
<RECEIVABLES> 655,710
<ALLOWANCES> 5,143
<INVENTORY> 700,897
<CURRENT-ASSETS> 1,403,655
<PP&E> 126,713
<DEPRECIATION> 32,104
<TOTAL-ASSETS> 1,517,130
<CURRENT-LIABILITIES> 1,140,824
<BONDS> 13,824
0
0
<COMMON> 3,413
<OTHER-SE> 355,982
<TOTAL-LIABILITY-AND-EQUITY> 1,517,130
<SALES> 6,186,850
<TOTAL-REVENUES> 6,188,084
<CGS> 6,025,905
<TOTAL-COSTS> 6,141,073
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,039
<INTEREST-EXPENSE> 16,466
<INCOME-PRETAX> 47,011
<INCOME-TAX> 18,966
<INCOME-CONTINUING> 28,045
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 28,045
<EPS-BASIC> 0.84
<EPS-DILUTED> 0.76
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 11,227
<SECURITIES> 0
<RECEIVABLES> 502,903
<ALLOWANCES> 3,969
<INVENTORY> 810,539
<CURRENT-ASSETS> 1,348,582
<PP&E> 123,382
<DEPRECIATION> 29,982
<TOTAL-ASSETS> 1,460,995
<CURRENT-LIABILITIES> 1,092,475
<BONDS> 13,945
0
0
<COMMON> 3,410
<OTHER-SE> 365,407
<TOTAL-LIABILITY-AND-EQUITY> 1,460,995
<SALES> 4,041,006
<TOTAL-REVENUES> 4,041,905
<CGS> 3,935,541
<TOTAL-COSTS> 4,009,509
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,488
<INTEREST-EXPENSE> 10,645
<INCOME-PRETAX> 32,396
<INCOME-TAX> 12,879
<INCOME-CONTINUING> 19,517
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 19,517
<EPS-BASIC> 0.54
<EPS-DILUTED> 0.49
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 9,507
<SECURITIES> 0
<RECEIVABLES> 518,756
<ALLOWANCES> 4,137
<INVENTORY> 646,224
<CURRENT-ASSETS> 1,200,912
<PP&E> 127,704
<DEPRECIATION> 29,577
<TOTAL-ASSETS> 1,318,268
<CURRENT-LIABILITIES> 973,673
<BONDS> 709
0
0
<COMMON> 3,408
<OTHER-SE> 353,719
<TOTAL-LIABILITY-AND-EQUITY> 1,318,268
<SALES> 1,985,165
<TOTAL-REVENUES> 1,985,648
<CGS> 1,933,425
<TOTAL-COSTS> 1,969,546
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 724
<INTEREST-EXPENSE> 5,549
<INCOME-PRETAX> 16,102
<INCOME-TAX> 6,397
<INCOME-CONTINUING> 9,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,705
<EPS-BASIC> 0.27
<EPS-DILUTED> 0.25
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 42,982
<SECURITIES> 0
<RECEIVABLES> 456,994
<ALLOWANCES> 3,606
<INVENTORY> 660,089
<CURRENT-ASSETS> 1,180,276
<PP&E> 121,850
<DEPRECIATION> 27,660
<TOTAL-ASSETS> 1,293,957
<CURRENT-LIABILITIES> 954,510
<BONDS> 733
0
0
<COMMON> 3,406
<OTHER-SE> 342,902
<TOTAL-LIABILITY-AND-EQUITY> 1,293,957
<SALES> 7,654,221
<TOTAL-REVENUES> 7,656,136
<CGS> 7,448,331
<TOTAL-COSTS> 7,613,046
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 3,376
<INTEREST-EXPENSE> 18,648
<INCOME-PRETAX> 43,090
<INCOME-TAX> 18,989
<INCOME-CONTINUING> 22,236
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,236
<EPS-BASIC> 0.70
<EPS-DILUTED> 0.66
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 29,654
<SECURITIES> 0
<RECEIVABLES> 523,948
<ALLOWANCES> 4,162
<INVENTORY> 642,460
<CURRENT-ASSETS> 1,215,330
<PP&E> 115,983
<DEPRECIATION> 27,303
<TOTAL-ASSETS> 1,341,827
<CURRENT-LIABILITIES> 915,744
<BONDS> 31,974
0
0
<COMMON> 3,859
<OTHER-SE> 378,016
<TOTAL-LIABILITY-AND-EQUITY> 1,341,827
<SALES> 5,646,893
<TOTAL-REVENUES> 5,648,482
<CGS> 5,497,936
<TOTAL-COSTS> 5,604,691
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,492
<INTEREST-EXPENSE> 13,986
<INCOME-PRETAX> 43,791
<INCOME-TAX> 16,664
<INCOME-CONTINUING> 25,840
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 25,840
<EPS-BASIC> 0.82
<EPS-DILUTED> 0.78
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 23,391
<SECURITIES> 0
<RECEIVABLES> 503,185
<ALLOWANCES> 4,001
<INVENTORY> 616,818
<CURRENT-ASSETS> 1,161,604
<PP&E> 109,349
<DEPRECIATION> 24,681
<TOTAL-ASSETS> 1,283,646
<CURRENT-LIABILITIES> 867,946
<BONDS> 31,993
0
0
<COMMON> 3,859
<OTHER-SE> 359,871
<TOTAL-LIABILITY-AND-EQUITY> 1,283,646
<SALES> 3,825,299
<TOTAL-REVENUES> 3,826,380
<CGS> 3,728,240
<TOTAL-COSTS> 3,797,471
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,490
<INTEREST-EXPENSE> 8,702
<INCOME-PRETAX> 28,909
<INCOME-TAX> 11,039
<INCOME-CONTINUING> 17,077
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,077
<EPS-BASIC> 0.54
<EPS-DILUTED> 0.51
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 29,686
<SECURITIES> 0
<RECEIVABLES> 550,855
<ALLOWANCES> 4,373
<INVENTORY> 531,300
<CURRENT-ASSETS> 1,127,277
<PP&E> 101,030
<DEPRECIATION> 23,365
<TOTAL-ASSETS> 1,242,814
<CURRENT-LIABILITIES> 837,656
<BONDS> 32,248
0
0
<COMMON> 3,392
<OTHER-SE> 350,415
<TOTAL-LIABILITY-AND-EQUITY> 1,242,814
<SALES> 1,969,157
<TOTAL-REVENUES> 1,969,775
<CGS> 1,922,939
<TOTAL-COSTS> 1,956,102
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 825
<INTEREST-EXPENSE> 4,043
<INCOME-PRETAX> 13,672
<INCOME-TAX> 5,287
<INCOME-CONTINUING> 8,007
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,007
<EPS-BASIC> 0.26
<EPS-DILUTED> 0.24
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<RESTATED>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 42,895
<SECURITIES> 0
<RECEIVABLES> 456,994
<ALLOWANCES> 4,829
<INVENTORY> 521,451
<CURRENT-ASSETS> 1,188,403
<PP&E> 91,620
<DEPRECIATION> 22,933
<TOTAL-ASSETS> 1,292,944
<CURRENT-LIABILITIES> 903,954
<BONDS> 32,282
0
0
<COMMON> 3,388
<OTHER-SE> 342,083
<TOTAL-LIABILITY-AND-EQUITY> 1,292,944
<SALES> 7,334,137
<TOTAL-REVENUES> 7,336,045
<CGS> 7,181,415
<TOTAL-COSTS> 7,295,521
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