<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-K
(x) Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934.
For the fiscal year ended December 31, 1996
-----------------
( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
For the transition period from
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Commission file Number 0-14139
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VWR Scientific Products Corporation
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(Exact name of registrant as specified in its charter)
Pennsylvania 91-1319190
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(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1310 Goshen Parkway, West Chester, PA 19380
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 431-1700
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Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange on Which
Registered
None N/A
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Securities registered pursuant to Section 12(g) of the Act:
Common Stock $1.00 Par Value
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(Title of Class)
<PAGE> 2
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 twelve (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 XX NO
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K (229.405 of this chapter) is not contained herein, and will
not be contained, to the best of registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.
As of March 13,1997, the aggregate market value of the voting stock held by
non-affiliates was approximately $153 million. In calculating this value, the
Registrant has treated as voting stock held by affiliates only the voting
stock held by EM Laboratories, Inc. and its affiliates, and by the Companys
directors and executive officers. This calculation does not reflect a
determination by the Company that any or all such holders are in fact
affiliates.
As of March 13, 1997, there were 22,343,998 shares of common stock issued and
outstanding.
<PAGE> 3
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the Company's definitive Proxy Statement to be mailed to
shareholders on or about April 10,1997 are incorporated by reference into Part
III of this Form 10-K.
<PAGE> 4
PART I.
ITEM I. - BUSINESS
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VWR Scientific Products Corporation ("VWR," "the Corporation," or "the
Company") is one of the nation's largest suppliers of laboratory equipment,
chemicals, and general laboratory supplies to the scientific marketplace with
sales of $1.12 billion, $719 million, and $535 million in 1996, 1995 and 1994,
respectively. VWR was incorporated in Delaware (as VWR Corporation) on
January 3, 1986, in order to complete the Distribution Plan of Univar
Corporation. In 1994, the Company changed its State of Incorporation to
Pennsylvania. In 1995, the Company changed its name from VWR Corporation to
VWR Scientific Products Corporation.
Acquisition of the Baxter Industrial Distribution Business
- ------------------------------------------------------------
On September 15, 1995, VWR completed the acquisition of the industrial
distribution business of the Industrial and Life Sciences Division of Baxter
Healthcare Corporation, a Delaware corporation (Baxter Healthcare) and the
industrial distribution business conducted by certain Baxter affiliates
(collectively, Baxter Industrial). In the acquisition, VWR purchased
certain assets of Baxter Industrial, including, but not limited to, all of the
domestic trade accounts receivable, certain tangible personal property, rights
and benefits under certain contracts and certain rights in specified
trademarks for a purchase price of approximately $432 million.
During 1996, the Baxter Industrial business was substantially transitioned
into VWRs infrastructure on a regional basis. This transition was completed
in February 1997. Prior to the transition of any region into VWRs
infrastructure, Baxter Industrial customers were serviced by Baxter Healthcare
under the terms of a Services Agreement to enable the uninterrupted
continuation of the Baxter Industrial business after the Closing of the
acquisition described above, as well as an orderly transfer of the Baxter
Industrial business to the Company. In September 1996, Baxter International
spun off a portion of businesses as Allegiance Corporation (Allegiance).
Allegiance assumed Baxter Healthcares responsibilities under the Services
Agreement. Services performed by Baxter Healthcare and Allegiance included
order entry, shipping, invoicing, credit and collection, and inventory
stocking and replenishment. No service fees were payable for services under
the Services Agreement from September 15, 1995 to December 15, 1995. The
Company has been required to make payments at the rate of 5.5% of the sales to
customers of the Baxter Industrial business which are serviced by Baxter
Healthcare or Allegiance; provided, however, the Company is obligated to pay a
minimum of $18,645,000 during the remaining term of the Services Agreement.
Upon the cessation of services by Baxter Healthcare or Allegiance at each
particular facility, the Company has been required to purchase from Baxter
Healthcare the inventory of laboratory supplies and equipment held for sale to
customers of the Baxter Industrial business.
<PAGE> 5
Subordinated Debenture
- ----------------------
On September 15, 1995, pursuant to an agreement with EM Industries,
Incorporated (EMI), the direct parent corporation of EM Laboratories,
Incorporated (EML), the Company issued and sold to EML a $135,000,000
subordinated debenture (the Debenture)in order to partially fund the Baxter
Industrial acquisition. The Debenture matures in a single installment on
September 15, 2005. The indebtedness evidenced by the Debenture is
subordinated to the Companys obligations to its primary bank lending
institutions. Interest is payable on the unpaid principal of the Debenture
quarterly at 13% per annum, but until such time as EML and its affiliates
owned 49.89% of the aggregate number of issued and outstanding common shares,
interest was payable solely in common shares valued at $12.44 per share.
During 1996, the Company issued 1,230,315 shares as payment of interest,
increasing EMLs beneficial ownership to 49.89%. Subsequent to EMLs
attainment of the 49.89% ownership and until September 15, 1997, the payment
of any interest otherwise accruing will be deferred until maturity of the
Debenture. After September 15, 1997, interest will be payable in cash. The
Debenture has been assigned to an affiliate of EML.
Principal Customers
- -------------------
VWR and its subsidiaries are not dependent on a single customer
or a few customers, the loss of any one or more of which would have a material
adverse effect on its operations.
Competition
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The Company competes in the industrial, governmental, biomedical, electronics,
and educational market for laboratory equipment, chemicals, and supplies with
manufacturers who sell their product lines directly and with numerous national
and regional distributors. In addition, there are numerous distributors of
specialty lines of products. In the opinion of management, the Corporation is
the nation's second largest independent distributor of laboratory equipment
and supplies.
In all of VWR's markets, a combination of quality, price, and service are the
major determining competitive factors. All activities are considered highly
competitive.
Environmental Regulation
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VWR has been designated by the EPA as a potentially responsible party in
connection with several sites. Management believes that the Company's alleged
contribution to each of these sites is de minimis and that the potential
financial impact of these matters is not material to the Company's
consolidated financial statements.
<PAGE> 6
Employees
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There were 2,097 persons employed by VWR as of February 28, 1997.
Approximately 12% of the Company's employees are represented by unions. The
Company believes its relations with employees are excellent.
Methods of Distribution
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Approximately 43% of the Company's employees are full-time outside and inside
sales personnel who provide product information and technical support to our
customers. With continuous reference to the "VWR Catalog," customers also
place individual orders by telephone with an inside sales representative,
directly with an outside sales representative or by computer. Orders are
shipped from local or central warehouses, depending on the nature of the
product ordered. As noted under Acquisition of the Baxter Industrial
Business, former Baxter Industrial customers were serviced by Baxter
Healthcare during 1996 as VWR transitioned this business into its facilities
and systems on a regional basis. The transfer of the servicing of this
business to VWR facilities and systems was completed in February 1997.
Foreign Operations and Export Sales
- -----------------------------------
The Company has operations in Canada which serve the country's industrial,
educational, governmental and biomedical markets. Canadian operations
represent less than 10 percent of consolidated assets and revenues as of and
for the year ended December 31, 1996.
The Company also exports scientific equipment to 79 countries worldwide, with
primary markets in the Middle East, Central and South America, and the Pacific
Rim. The export business represents less than 10 percent of consolidated
assets and revenues as of and for the year ended December 31, 1996.
Availability of Products
- ------------------------
The Company does not manufacture any of the products distributed by it.
Numerous sources of supply generally exist for all products essential to the
business of the Company.
<PAGE> 7
EXECUTIVE OFFICERS OF THE REGISTRANT
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NAME AGE BUSINESS EXPERIENCE POSITION HELD
LAST FIVE YEARS SINCE
- ----------------- --- ------------------- -------------
Jerrold B. Harris 54 President and Chief March 1990
Executive Officer to Present
David M. Bronson 43 Senior Vice President November 1995
Finance, Chief to Present
Financial Officer and
Corporate Secretary
Vice President Finance and May 1992 to
Business Development November 1995
Scientific Products Division
Baxter Healthcare Corp.
Vice President, Controller 1988 to May 1992
Baxter Dade Division
Baxter Healthcare Corp.
Paul J. Nowak 42 Senior Vice President November 1992
to Present
Vice President and General 1989 - 1992
Manager of Sargent-Welch
David S. Barth 44 Senior Vice President September 1995
to Present
Area Vice President, July 1992 to
Industrial and Life September 1995
Sciences Division,
Baxter Healthcare Corp.
Field Director, Baxter April 1991 to
Diagnostics, Inc. July 1992
Partnership Program
John G. Griffith 53 Senior Vice President August 1995 to
International Present
Director of Finance, December 1990 to
Merck Ltd, England August 1995
Hal G. Nichter 50 Senior Vice President October 1995
Customer Fulfillment to Present
Vice President Marketing October 1992 to
October 1995
Vice President and 1991 to
General Manager, Henry October 1992
Troemner Corp.
<PAGE> 8
ITEM 2 - PROPERTIES
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VWR owns and leases office and warehouse space throughout the United States
and Canada for distribution of the products supplied by it as follows:
Batavia, Illinois Owned
Bridgeport, New Jersey Owned
Brisbane, California Leased
San Dimas, California Leased
Houston, Texas Leased
Marietta, Georgia Leased
Suwanee, Georgia Leased
Bridgeport, New Jersey Leased
Tualatin, Oregon Leased
Catano, Puerto Rico Leased
Mississauga, Ontario, Canada Leased
The Company leases office space in West Chester, Pennsylvania, for executive,
financial, information systems, marketing, and other administrative
activities.
The Company also leases 27 smaller facilities throughout the United States and
three smaller facilities in Canada which support the sales and warehouse
functions. All facilities have been designed to serve the Company's purposes
(warehouse functions and generic office). The facilities are sufficient for
current operations.
ITEM 3. - LEGAL PROCEEDINGS
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The Corporation is involved in various environmental, contractual, warranty,
and public liability cases and claims, which are considered normal to the
Corporation's business.
ITEM 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------ ---------------------------------------------------
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1996.
<PAGE> 9
PART II.
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ITEM 5 - MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
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VWR common shares, $1.00 par value, are traded on the NASDAQ Stock Market
under the VWRX symbol. On March 13, 1997, there were approximately 6,600
shareholders represented by 1,553 holders of record.
The quarterly ranges of high and low sale prices of the Corporation's common
shares during the years ended December 31, 1996 and 1995 as reported by NASDAQ
are set forth below.
VWR Common Stock 1996 1995
- ---------------------------- ----------------- ----------------
Quarter High Low High Low
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First $15.75 $11.94 $10.25 $ 7.75
Second 17.00 13.25 12.50 9.00
Third 19.50 14.75 15.00 9.25
Fourth 17.75 12.50 15.00 10.50
The Corporation declared dividends of $0.04 per share in April and August
during the year ended December 31, 1995. The Corporation's Credit Facility
entered into on September 14, 1995, as amended, prohibits the Corporation from
paying dividends during the term of the Credit Facility.
Refer to the caption Subordinated Debenture in Part I, Item I for
information concerning common shares issued by the Company in 1996 which were
not registered under the Securities Act of 1933.
<PAGE> 10
ITEM 6. - SELECTED FINANCIAL DATA
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The following table of selected financial data should be read in conjunction
with the Consolidated Financial Statements and Notes thereto included
elsewhere herein.
For the Years Ended December 31,
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1996 1995 1994 1993* 1992
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Operations
(Thousand of dollars,
except per share data)
Sales $1,117,286 $718,684 $535,179 $509,235 $490,168
Gross margin 246,907 159,119 113,198 116,274 114,431
Income before
cumulative effect
of accounting change,
net of tax 7,023 1,935 2,053 3,890 9,430
Cumulative effect of
accounting change (1,400)
Net income $ 7,023 $ 1,935 $ 2,053 $ 2,490 $ 9,430
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Per Share Data**
Dividends $ -- $ .08 $ .34 $ .40 $ .40
Book value 8.21 7.60 3.63 3.73 3.86
Income before
cumulative effect
of accounting change $ .32 $ .13 $ .18 $ .35 $ .85
Cumulative effect
of accounting change (.13)
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Net income per share $ .32 $ .13 $ .18 $ .22 $ .85
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For the Years Ended December 31,
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1996 1995 1994 1993* 1992
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Financial Position
(Thousands of dollars,
except statistical data)
Working capital $143,975 $ 87,940 $ 75,120 $ 65,197 $ 57,881
Property and equipment-net 48,184 37,648 38,259 41,562 33,608
Total assets 705,302 621,472 173,375 148,777 136,093
Short-term debt 22,500 20,000 2,250 150 218
Long-term debt 367,965 334,327 79,170 61,757 47,553
Shareholders' equity 183,437 160,089 40,168 41,057 42,257
Total invested capital 573,902 514,416 121,588 102,964 90,028
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Operating and Financial Statistics
Gross margin to sales 22.10% 22.14% 21.15% 22.83% 23.35%
Income before cumulative
effect of accounting
change to sales .63% .27% .38% .76% 1.92%
Current ratio 2.02 1.75 2.67 2.80 2.46
Return on average
shareholders' equity 4.07% 2.29% 5.05% 5.68% 23.73%
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All data presented for continuing operations only.
* Results are presented before cumulative effect of accounting change and
include restructuring and other charges of $3.3 million pretax ($1.9
million net of tax).
** All share and per share data reflect a two-for-one stock split effective
May 9, 1992.
<PAGE> 12
ITEM 7 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
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The following commentary should be read in conjunction with the Consolidated
Financial Statements, Notes to Consolidated Financial Statements (Notes),
and Selected Financial Data included elsewhere herein. Capitalized terms have
the same meanings as defined in the Consolidated Financial Statements and the
Notes.
RESULTS OF OPERATIONS
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The gross margin percentage over the last three years is as follows:
1996 1995 1994
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22.1% 22.1% 21.2%
Total operating expenses, excluding acquisition-related charges, as a
percentage of sales over the last three years is as follows:
1996 1995 1994
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17.3% 19.1% 19.5%
1996 versus 1995
- ----------------
The results of operations reflect the acquisition of the Industrial
Distribution Business (Baxter Industrial) of Baxter Healthcare Corporation
(Baxter Healthcare), a subsidiary of Baxter International, on September 15,
1995. In September 1996, Baxter International spun off a portion of its
businesses as Allegiance Corporation (Allegiance).
Sales increased by 55.5% to $1.12 billion over 1995 sales of $719 million
primarily due to the Baxter Industrial acquisition. VWR also experienced
growth in its existing business.
The gross margin percentage remained constant at 22.1% for both 1996 and 1995.
Through the third quarter of 1996, gross margins had been favorably impacted
by internal programs in VWRs Domestic and Canadian businesses. In the fourth
quarter, VWRs gross margins decreased as the Company experienced certain
issues related to the final transitions of the Baxter Industrial business.
Total operating expenses, excluding acquisition-related charges, decreased as
a percentage of sales from 19.1% in 1995 to 17.3% in 1996. The Baxter
Industrial acquisition increased the volume of business without a
proportionate increase in operating expenses. Depreciation and amortization
expense increased primarily as a result of amortization of the excess of cost
over net assets of businesses acquired and depreciation expense for facilities
expansion, both related to the Baxter Industrial acquisition. Acquisition-
related expenses consist primarily of relocation, transition, severance and
<PAGE> 13
lease termination expenses directly attributable to the Baxter Industrial
acquisition. As the transfer of the Baxter Industrial business into VWR was
substantially complete as of December 31, 1996, future acquisition-related
expenses are not expected to be material.
Interest expense and other increased for 1996 due to the full-year effect of
the debt incurred for the Baxter Industrial acquisition and working capital
requirements for the transition of the Baxter Industrial business into the VWR
infrastructure. At the time of the Baxter Industrial acquisition, the Company
issued a $135 million Subordinated Debenture (Debenture) to EM Laboratories,
Incorporated (EML), an affiliate of Merck KGaA, Germany, and incurred
incremental borrowings under a new Credit Facility of approximately $170
million.
Note 8 of the Notes describes the difference between the statutory and
effective income tax rates. In 1996, the effective tax rate increased from
36.1% to 40.5% due to increases in state taxes and the improved profitability
of the Canadian subsidiary.
Earnings per share in 1996 reflect the full-year effect of the shares issued
to EML and its affiliates in 1995, as well as shares issued in 1996 in lieu of
interest payments on the Debenture. Under the terms of the Debenture,
additional shares were issued to EML affiliates, in lieu of interest payments,
until EML and its affiliates obtained a 49.89% ownership in the Company.
1995 versus 1994
- ----------------
1995 results were impacted by the acquisitions of Baxter Industrial on
September 15, 1995 and Canlab, the Toronto-based distribution division of
Baxter International, on October 31, 1994.
Sales increased by 34.3% in 1995 to $719 million. The Baxter Industrial
acquisition accounted for 74% of the increase in sales. The full-year effect
of the Canlab acquisition accounted for 19% of the increase. The remainder of
the sales growth occurred in the existing VWR business.
Gross margins increased from 21.2% in 1994 to 22.1% in 1995. The increase was
the result of the implementation of internal programs to improve margins of
VWRs Domestic and Canadian businesses.
Total operating expenses remained relatively constant as a percentage of
sales. Approximately 62% of the increase in expenses was due to the Baxter
Industrial acquisition and 13% was due to the full-year effect of the Canlab
acquisition in the fourth quarter of 1994. Depreciation and amortization
expense increased primarily as a result of amortization of the Baxter
Industrial excess of cost over net assets of business acquired. Acquisition-
related expenses consisted of lease termination, severance, relocation,
training, and transition expenses directly attributable to the acquisitions of
Baxter Industrial and Canlab in 1995 and 1994, respectively.
<PAGE> 14
In December 1994, the Company made the decision to consolidate certain sales
offices and functions. As a result, the Company incurred approximately $1.2
million in charges which were primarily for severance and other personnel-
related costs. The costs were recognized prior to the Baxter Industrial
acquisition in September 1995. Due to the effects of the Baxter Industrial
acquisition, the Company was not able to measure the benefits related to these
costs and has classified these costs as operating expenses.
Interest expense and other increased in 1995 primarily due to the effect of
the debt incurred for the Baxter Industrial acquisition. In order to partially
fund the acquisition, the Company issued a $135 million Debenture and incurred
incremental borrowings under a new Credit Facility of approximately $170
million. The interest on the Debenture and the incremental borrowings on the
Credit Facility account for 94% of the increase in interest expense. In
addition, average borrowings under the former credit facility had increased
due to the Canlab acquisition in the fourth quarter of 1994.
In 1995, the effective tax rate increased from 32.0% to 36.1% because in 1994,
the Company recognized a tax benefit on prior-year losses from the Canadian
operations. In 1995, due primarily to programs to improve gross margin and the
effect of the Canlab acquisition, the Canadian operations recognized a profit.
Earnings per share in 1995 reflect the weighted average shares issued to EML
and its affiliates.
Financial Condition and Liquidity
- ---------------------------------
The ratio of debt to equity at December 31 of each of the past three years is
as follows:
1996 1995 1994
---- ---- ----
2.1 2.2 2.0
The ratio of operating income, plus depreciation and amortization, to interest
paid over the past three years is as follows:
1996 1995 1994
---- ---- ----
3.7 3.5 3.9
In 1996, operations used $28.1 million of cash flow. Under the Services
Agreement (as described in Note 14), the Company paid Baxter Industrial for
goods delivered on its behalf after the items were shipped. During 1996, the
Company was required to purchase inventory to support the Baxter Industrial
business as it was substantially transferred to VWR on a regional basis.
<PAGE> 15
VWRs current ratio was 2.0 at December 31, 1996 compared to 1.8 at December
31, 1995. The Company has increased its inventory in order to service the
Baxter Industrial business. The increase in accounts payable is due to
increases in inventory partially offset by a decrease in the amounts payable
for goods shipped under the Services Agreement at December 31, 1995. The
increase in accounts receivable is due to increased sales and the integration
of the Baxter Industrial business. Debt has increased due to the expansion of
distribution facilities and in order to fund working capital requirements for
the Baxter Industrial acquisition. Equity increases reflect the issuance of
1.2 million shares to Merck KGaA as payment for interest on the Debenture.
Sufficient credit availability existed at December 31, 1996 to provide for the
amount of bank checks outstanding less cash in bank of $10.3 million.
As discussed in Note 14, the Company is party to a Distribution Agreement with
Baxter Healthcare and Allegiance. The Distribution Agreement, which has a term
ending on September 30, 2000, provides, among other things, that the Company
is obligated during each year to either purchase a minimum dollar amount of
products for sale in each of the United States and internationally, or, if
such minimum requirements have not been met during such year, purchase
products or pay to Baxter Healthcare and Allegiance an amount, in each case,
equal to any such deficiency. The minimum aggregate domestic and international
requirements, which are subject to annual adjustment, for each of the
remaining four fiscal years of the Distribution Agreement are $71 million, $82
million, $89 million, and $96 million. During the 1996 contract year, the
minimum requirement under this agreement of $63 million was satisfied. The
Company expects that such minimums will be met in 1997.
As discussed in Note 7, the Company and certain of its subsidiaries are
parties to a Credit Facility. Pursuant to the Credit Facility, the Banks have
extended the Company a five-year amortizing term loan in the original
principal amount of $135 million (Term Loan) and a revolving line of credit
(Revolver) in an amount up to $150 million which expires on September 13,
2000. In 1996, the Company increased the amount available under the Revolver
to $175 million. At December 31, 1997, the Revolvers limit will revert to
$150 million. Approximately $142.3 million was outstanding at December 31,
1996 under the Revolver. In addition to scheduled maturities, the Term Loan
contains mandatory prepayment amounts based on earnings before income taxes,
depreciation, and amortization, net of capital expenditures and other
adjustments. This provision requires the Company to pay down the Term Loan by
$5.7 million in 1997 which is expected to be funded by the Revolver. The Term
Loan and Revolver are secured by liens in favor of the banks on substantially
all of the Companys tangible and intangible property, excluding real estate.
The Credit Facility includes financial covenants with respect to: minimum
earnings before taxes, depreciation and amortization; maximum senior leverage
ratio; minimum interest coverage; minimum net worth; and minimum fixed
coverage ratio. The Companys financial performance has met or exceeded these
covenants throughout 1996. The Credit Facility prohibits the Company from
paying dividends and making other distributions (except for the issuance of
shares as required by the Debenture) and has change-of-control provisions.
<PAGE> 16
As discussed in Note 7, the Company incurred indebtedness of $135 million
evidenced by the Debenture. The Debenture matures in a single installment on
September 15, 2005. The Debenture is subordinated to the Companys obligations
to its primary bank lending institutions. The Debenture bears interest at 13%
per annum, due quarterly. Until such time as EML and its affiliates obtained
an ownership of 49.89% of the aggregate number of issued and outstanding
common shares, interest was payable solely in common shares at a price of
$12.44 per share. Thereafter and until September 15, 1997, the payment of any
cash interest otherwise accruing is deferred until the maturity of the
Debenture.
The Company has entered into various interest rate swap agreements with
financial institutions which effectively change the Companys interest-rate
exposure on a notional amount of debt from variable rates to fixed rates. The
notional amounts of the interest rate swaps are based upon expected actual
debt levels during a four-year period. The Company provides protection to meet
actual exposures and does not speculate in derivatives. At December 31, 1996,
the Company had a notional amount of $160 million of swaps in effect. These
swaps expire between 1997 and 2000. The amount of floating rate debt protected
by the swaps ranges from $160 million to $25 million during the period
outstanding with fixed rates ranging from 5.3% to 6.4%. The fair market value
of the swap agreements is based on the present value of the future cash flows
determined by the interest rate difference between the contracts fixed rate
and the then-current replacement rate. At December 31, 1996, the fair market
value of the swap agreements, which is not recorded in the consolidated
financial statements, is a receivable of approximately $0.5 million. The
Company is exposed to credit loss in the event of nonperformance by the other
parties to the interest rate swap agreements. The Company does not anticipate
nonperformance by the counterparties.
The Companys use of swaps and collars for interest rate protection increased
interest expense by $.7 million, $.3 million, and $1.2 million in 1996, 1995,
and 1994, respectively. Pursuant to the Credit Facility, the Company is
obligated to provide interest rate protection on at least 25% of the Credit
Facility.
VWR has been designated by the EPA as a potentially responsible party for
various sites. Management believes that any required expenditures would be
immaterial to the Companys Consolidated Financial Statements.
The Company expects that estimated working capital requirements and estimated
capital expenditures will be funded by cash from operations and availability
under the Credit Facility.
<PAGE> 17
ITEM 8. - FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
- ------ -------------------------------------------
VWR SCIENTIFIC PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
1996 1995 1994
- -------------------------------------------------------------------------------
(Thousands of dollars, except per share data)
Sales $1,117,286 $718,684 $535,179
Cost of sales 870,379 559,565 421,981
---------- -------- --------
Gross margin 246,907 159,119 113,198
Operating expenses 172,407 124,317 94,333
Depreciation and amortization 20,740 13,212 9,791
Acquisition-related expenses 5,128 3,761 916
---------- -------- --------
Total operating expenses 198,275 141,290 105,040
---------- -------- --------
Operating income 48,632 17,829 8,158
Interest expense and other 36,827 14,803 5,137
---------- ------- --------
Income before income taxes 11,805 3,026 3,021
Income taxes 4,782 1,091 968
---------- ------- --------
Net income $ 7,023 $ 1,935 $ 2,053
========== ======== ========
Earnings per share $ 0.32 $ 0.13 $ 0.18
========== ======== ========
Weighted average number of
common shares outstanding
(thousands) 22,209 14,831 11,128
See Notes to Consolidated Financial Statements.
<PAGE> 18
VWR SCIENTIFIC PRODUCTS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Thousands of dollars,
except per share data)
December 31,
ASSETS 1996 1995
- -------------------------------------------------------------------------------
Current assets:
Receivables--
Trade receivables,
less reserves of $1,505 and $739 $161,235 $134,917
Other receivables 7,159 4,879
Inventories 108,009 53,247
Other 8,691 11,390
-------- --------
Total current assets 285,094 204,433
Property and equipment--net 48,184 37,648
Excess of cost over net assets of
businesses acquired -- net 361,329 369,930
Other assets -- net 10,695 9,461
-------- --------
$705,302 $621,472
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- -------------------------------------------------------------------------------
Current liabilities:
Bank checks outstanding, less cash in bank $10,274 $ 1,748
Accounts payable 92,999 73,238
Accrued liabilities 15,346 21,507
Current portion of long-term debt 22,500 20,000
------- -------
Total current liabilities 141,119 116,493
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Long-term debt:
Revolving credit facilities 142,256 84,327
Term loans 86,900 115,000
Subordinated debenture 138,809 135,000
-------- --------
Total long-term debt 367,965 334,327
-------- --------
Deferred income taxes and other 12,781 10,563
<PAGE> 19
(Thousands of dollars, December 31,
except share data) 1996 1995
---- ----
Shareholders' equity:
Preferred stock, $1 par value, 1,000,000
shares authorized, none issued $ - $ -
Common stock, $1 par value, 30,000,000
shares authorized, 22,346,909 and 22,347 21,068
21,068,381 shares issued
Additional paid-in capital 152,157 137,753
Retained earnings 11,471 4,457
Treasury stock at cost, 2,911
and 569 shares (45) (9)
Unamortized ESOP contribution (1,464) (1,757)
Unamortized restricted stock awards (357) (711)
Cumulative translation adjustment (672) (712)
-------- --------
Total shareholders' equity 183,437 160,089
-------- --------
$705,302 $621,472
======== ========
See Notes to Consolidated Financial Statements.
<PAGE> 20
VWR SCIENTIFIC PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
1996 1995 1994
- ------------------------------------------------------------------------------
(Thousands of dollars)
OPERATING ACTIVITIES
Net income $7,023 $ 1,935 $ 2,053
Adjustments to reconcile
net income to cash (used in)
provided by operating
activities:
Depreciation and amortization,
including deferred debt
issuance costs 22,051 13,532 9,791
Stock and debentures issued in
lieu of payment of interest 19,114 3,702
Change in assets and
liabilities, net of effect
of businesses acquired:
Receivables (31,574) 6,130 (7,359)
Inventories (55,262) (13,256) (4,459)
Other current assets (2,367) (3,322) (1,625)
Accounts payable 19,761 37,455 9,040
Accrued liabilities (8,971) 11,056 (2,013)
Acquisition-related expenses (772) 2,420
Deferred income taxes
and other 2,865 (179) (330)
------- ------- -------
Cash (used in) provided by
operating activities (28,132) 59,473 5,098
------- ------- -------
INVESTING ACTIVITIES
Acquisition of businesses 1,683 (434,184) (13,939)
Sale of joint venture
investment 2,881
Investment in joint venture (2,881)
Additions to property and
equipment (23,417) (6,342) (2,922)
Proceeds from sale of property
and equipment 5,664
Other (165) (699) (909)
-------- -------- --------
Cash used in
investing activities $(13,354) $(441,225) $(20,651)
-------- --------- --------
<PAGE> 21
Year Ended December 31,
(Thousands of dollars) 1996 1995 1994
- ------------------------------------------------------------------------------
FINANCING ACTIVITIES
Proceeds from long-term debt $206,788 $115,408 $169,243
Repayment of long-term debt (174,459) (153,595) (149,730)
Repayment of existing credit
facility upon refinancing (73,700)
Proceeds from new credit
facility 249,600
Proceeds from long-term
subordinated debenture 135,000
Proceeds from exercise
of warrant 10,637
Net proceeds from common
stock issuance 104,171
Debt issuance costs (4,971)
Net change in bank checks
outstanding 8,526 350 336
Cash dividends (1,474) (4,419)
Proceeds from exercise of
stock options 308 371 135
Other 323 (45) (12)
------- ------- -------
Cash provided by
financing activities 41,486 381,752 15,553
------- ------- -------
Net change in cash 0 0 0
Cash at beginning of year 0 0 0
------- ------- -------
Cash at end of year $ 0 $ 0 $ 0
======= ======= =======
Supplemental disclosures of
cash flow information:
Cash paid (received) during the year for:
Interest $18,584 $ 8,989 $ 4,568
Income taxes 1,175 321 (254)
Baxter
Industrial Canlab
------------------------
Acquisition of businesses:
Working capital $ 65,683 $ 8,798
Property and equipment 862 75
Other, principally excess of cost over
net assets of businesses acquired 365,956 5,066
-------- -------
Net cash used to acquire businesses $432,501 $13,939
======== =======
See Notes to Consolidated Financial Statements.
<PAGE> 22
VWR SCIENTIFIC PRODUCTS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Thousands of dollars,
except per share data) Unamortized
ESOP
Common Contribution,
Stock Additional Restricted
$1 Par Paid-in Retained Treasury Stock,
Value Capital Earnings Stock and Other
- ----------------------------------------------------------------------------
Balance at
December 31, 1993 $11,316 $29,137 $6,651 $(2,882) $(3,165)
Net income 2,053
Cash dividends
($.34 per share) (3,763)
Allocation of shares to
ESOP participants 271
Restricted stock awards -
21,816 shares 28 211 (239)
Amortization of restricted
stock 295
Exercise of stock options (79) 208
Tax benefit on ESOP divi-
dends and restricted stock 183
Foreign currency transla-
tion adjustment (57)
Balance at ------- ------- ------ -------- --------
December 31, 1994 $11,316 $29,269 $4,941 $(2,463) $(2,895)
------- ------- ------ -------- --------
<PAGE> 23
(Thousands of dollars,
except per share data) Unamortized
ESOP
Common Contribution,
Stock Additional Restricted
$1 Par Paid-in Retained Treasury Stock,
Value Capital Earnings Stock and Other
- ------------------------------------------------------------------------------
Net income $1,935
Issuance of 8,650,978
shares of common stock,
net of issuance
costs of $829 $8,651 $95,520
Exercise of warrants
for 967,015 shares
of common stock 967 9,670
Issuance of 297,615 shares
of common stock
as payment for
debenture interest 298 3,404
Cash dividends
($.08 per share) (1,033)
Allocation of shares to
ESOP participants $ 29
Restricted stock awards -
52,589 shares 43 456 $ 97 (596)
Amortization of restricted
stock 337
Acquisition of treasury
stock - 11,160 shares (149)
Retirement of treasury
stock - 253,551 shares (254) (899) (1,386) 2,539
Exercise of stock options 47 324
Foreign currency
translation adjustment (88)
Other 9 (33) 33
Balance at ------- -------- ------ -------- --------
December 31, 1995 $21,068 $137,753 $4,457 $ (9) $(3,180)
------- -------- ------ -------- --------
<PAGE> 24
(Thousands of dollars,
except per share data) Unamortized
ESOP
Common Contribution,
Stock Additional Restricted
$1 Par Paid-in Retained Treasury Stock,
Value Capital Earnings Stock and Other
- ------------------------------------------------------------------------------
Net income $ 7,023
Issuance of 1,230,315
shares of common stock
as payment for
debenture interest $ 1,230 $14,075
Allocation of shares to
ESOP participants $ 293
Restricted stock awards -
4,230 shares 4 52 (56)
Amortization of
restricted stock 398
Exercise of stock options 44 264
Foreign currency
translation adjustment 40
Other 1 13 (9) $ (36) 12
Balance at ------- -------- ------- -------- -------
December 31, 1996 $22,347 $152,157 $11,471 $ (45) $(2,493)
======= ======== ======= ======== ========
See Notes to Consolidated Financial Statements.
<PAGE> 25
VWR SCIENTIFIC PRODUCTS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
------------------------------------------
Principles of Consolidation
- ---------------------------
The accompanying consolidated financial statements include the accounts of VWR
Scientific Products Corporation and all of its subsidiaries (the Company or
VWR). All significant intercompany accounts and transactions have been
eliminated.
Capitalization, Depreciation and Amortization
- ---------------------------------------------
Land, buildings, and equipment are recorded at cost. Depreciation is computed
using the straight-line method for financial reporting purposes and,
generally, accelerated methods for income tax purposes. Acquisition and
development costs for significant business systems and related software for
internal use are capitalized and amortized over their estimated useful lives
of seven years. The Company capitalizes the costs of developing and producing
catalogs, which are used by customers for ordering products. Such costs are
amortized over the period of use, generally two to three years. Effective
January 1, 1996, the Company adopted Statement of Financial Accounting
Standards No. 121, Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of, which establishes accounting standards
for the impairment of long-lived assets, certain identifiable intangibles and
goodwill related to those assets. The adoption of this standard had no effect
on the Companys financial position, operations, or liquidity.
Excess of Cost Over Net Assets of Businesses Acquired
- -----------------------------------------------------
Excess of cost over net assets of businesses acquired is primarily the result
of the acquisitions of the Industrial Distribution Business of Baxter
Healthcare in 1995 and Canlab in 1994 and is being amortized over 40 years.
Accumulated amortization at December 31, 1996 and 1995 was $13.0 million and
$3.6 million, respectively. The carrying value of excess of cost over net
assets of businesses acquired is evaluated periodically in relation to the
operating performance and expected future undiscounted cash flows of the
underlying businesses.
Earnings Per Share
- ------------------
Earnings per share are based on the weighted average number of shares and
dilutive common share equivalents outstanding during the period. Shares issued
in payment of Debenture interest are included in the share calculation as
interest expense is recognized (see Note 7).
<PAGE> 26
Segment and Customer Information
- --------------------------------
The Company is engaged in one line of business, industrial distribution. No
single customer accounts for more than 10% of sales. The majority of the
Companys business activity pertains to, and accounts receivable result from,
sales of laboratory equipment and supplies to businesses across a wide
geographical area in various industries, mainly industrial, governmental,
biomedical, and educational. At December 31, 1996, the Company had no
significant concentrations of credit risk.
Revenue Recognition
- -------------------
The Company recognizes revenue when products are shipped.
Stock-Based Compensation
- ------------------------
The Company follows Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees, and related interpretations in
accounting for its employee stock-based compensation (see Note 10).
Use of Estimates
- ----------------
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
2. ACQUISITIONS
------------
Baxter Industrial
- -----------------
On September 15, 1995, VWR purchased certain assets and assumed certain
liabilities of the Industrial Distribution Business (Baxter Industrial) of
Baxter Healthcare Corporation (Baxter Healthcare), a subsidiary of Baxter
International, including, but not limited to, all of the domestic trade
accounts receivable, certain tangible personal property, rights and benefits
under certain contracts and certain rights in specified trademarks for
approximately $432 million, as adjusted. In addition to the $400 million paid
at closing, $28.6 million was paid over a 52-day period for accounts
receivable in the same amount and approximately $5 million of additional
liabilities were assumed. During 1996, the purchase price and purchase
accounting estimates were finalized resulting in a $1.7 million reduction in
amounts paid, an additional $1.1 million of cost in excess of net assets
acquired, and a $2.8 million reduction of working capital. During 1996, the
transition of the Baxter Industrial business was substantially completed which
required the Company to increase its inventory levels which included purchases
of laboratory supplies held for sale to customers of Baxter Industrial at
Baxter Healthcares facilities.
<PAGE> 27
The acquisition has been accounted for under the purchase method of accounting
and, accordingly, the results of Baxter Industrial have been included in the
consolidated operating results since the date of acquisition. Cost in excess
of net assets acquired amounted to $366 million which is being amortized on a
straight-line basis over 40 years for financial reporting purposes and 15
years for tax purposes.
The purchase price was financed by the proceeds received by the Company from:
(i) the sale of 6,832,797 common shares of the Company (the Purchase Shares)
at a price of $12.44 per share to EM Laboratories, Incorporated, (EML), an
affiliate of Merck KGaA, Germany; (ii) the issuance of a $135 million
subordinated debenture (the Debenture) of the Company to EML; (iii) the
exercise by EML of a warrant to purchase 967,015 common shares of the Company
for approximately $10.6 million; and (iv) borrowings under the Companys
credit agreement entered into on September 14, 1995.
Canlab
- ------
Effective October 31, 1994, the Company, through its wholly-owned Canadian
subsidiary, acquired certain assets related to the laboratory supply business
of Canlab, a division of Baxter International, for approximately $13.9
million. The acquisition was accounted for under the purchase method of
accounting and was funded through the Companys then-outstanding secured term
loan. Canlabs results of operations have been included in the consolidated
results of operations since the date of acquisition. The acquisition resulted
in $5.1 million of excess of cost over net assets acquired which is being
amortized over 40 years. In the fourth quarter of 1994, as a result of the
acquisition, VWR terminated certain of its employees and closed certain
facilities. The total cost of these actions, which was expensed in 1994, was
$.9 million.
The following unaudited pro forma information has been prepared assuming that
the Baxter Industrial acquisition and the Canlab acquisition and related
financings had occurred at the beginning of the year prior to the year of
acquisition. Pro forma adjustments include: increased amortization for the
cost over net assets acquired; increased interest expense from the acquisition
debt; and related income tax effects. Cost savings from combining the
operations are not reflected because it is not practical to do so. Also,
Baxter Industrials inventory, as reflected in cost of sales, is valued at the
lower of cost (determined on a first-in, first-out basis) or market in the
pro forma information below. Cost of sales for 1995 and 1994 has not been
adjusted to give the pro forma effect of adopting VWRs accounting policy of
valuing inventory on the last-in, first-out method because it is not
possible to calculate the pro forma adjustments.
<PAGE> 28
Year Ended December 31,
(In thousands, except per share data) 1995 1994
- ---------------------------------------------------------------------
Sales $ 1,072,789 $ 1,036,493
Net income $ 1,219 $ 3,455
Earnings Per Share $ 0.05 $ 0.16
Weighted average number
of shares outstanding 22,220 21,394
The unaudited pro forma information is provided for information purposes only
and does not purport to be indicative of VWRs results of operations that
would actually have been achieved had the Baxter Industrial and Canlab
acquisitions and related financing transactions been completed for the periods
presented, or results that may be obtained in the future.
In connection with the combination of the Baxter Industrial business with VWR,
the Company made organizational and facility location decisions involving the
Companys selling and distribution activities. Certain costs related to
activities of the Baxter Industrial business have been considered in the
allocation of the purchase price of the acquired business, and the additional
costs related to VWRs existing operations were expensed. Acquisition-related
expenses consist of lease termination costs related to the decision to upgrade
the Companys computer hardware; severance and relocation of VWR employees;
training of the combined sales force regarding the transition; consulting
services; inventory relocation and other incremental costs related to the
acquisition. The Company allocated $3.6 million to the purchase price and
expensed $5.1 million and $3.8 million as acquisition-related expenses in 1996
and 1995, respectively, which have been substantially funded as of December
31, 1996. As these efforts are substantially complete, future acquisition-
related expenses are not expected to be material.
3. INVENTORIES
-----------
Inventories consist of purchased goods for sale and are valued at the lower of
cost or market. Cost determined using the last-in, first-out (LIFO) method
comprised 89% and 81% of inventory carrying value at December 31, 1996 and
1995, respectively. Cost of the remaining inventories is determined using the
first-in, first-out (FIFO) method.
LIFO cost at December 31, 1996 and 1995, was approximately $30.8 million and
$28.8 million, respectively, less than current cost.
<PAGE> 29
4. FIXED ASSETS
------------
Net property and equipment at December 31, 1996 and 1995, is:
(Thousands of dollars) 1996 1995
- ---------------------------------------------------------------------
Land $ 738 $ 2,130
Buildings 15,504 10,249
Equipment and computer software 72,182 56,437
Construction in progress 177 2,687
-------------------------
88,601 71,503
Less accumulated depreciation (40,417) (33,855)
-------------------------
Net property and equipment $48,184 $37,648
=========================
Depreciation expense for the years ended December 31, 1996, 1995, and 1994,
was $7.2 million, $6.6 million, and $6.3 million, respectively.
5. ACCRUED LIABILITIES
-------------------
Included in accrued liabilities is accrued compensation of approximately $7.7
million and $9.0 million at December 31, 1996 and 1995, respectively. Accrued
service costs under the Baxter Industrial Services Agreement (see Note 14)
were $1.9 million and $6.6 million at December 31, 1996 and 1995,
respectively.
6. FOREIGN CURRENCY TRANSACTIONS
-----------------------------
The Company supplies product to its Canadian subsidiary for sale to the
subsidiarys Canadian customers. The Company has entered into forward exchange
contracts to fix the rate of exchange on the Canadian dollar payments made to
the Company upon settlement of the intercompany accounts related to those
shipments to its subsidiary. As of December 31, 1996, the Company had
approximately $1.0 million of forward exchange contracts outstanding. Net
transaction gains and losses under the contracts are not material and are
included in interest expense and other.
7. LONG-TERM DEBT AND REVOLVING CREDIT FACILITIES
----------------------------------------------
On September 14, 1995, the Company entered into a five-year Credit Facility
consisting of a five-year $135 million amortizing term loan (the Term Loan)
and a $150 million revolving line of credit (the Revolver). During 1996, the
Company made $25.6 million in mandatory principal payments on the Term Loan
and increased the Revolvers limit to $175 million to fund working capital
requirements through December 31, 1997, at which time the Revolver limit will
revert to $150 million. The Revolver provides for the ability to borrow the
equivalent in Canadian dollars up to $17 million U.S. dollars. The Term Loan
and Revolver are secured by liens on substantially all of the Companys
tangible and intangible property, excluding real estate. Borrowings under the
<PAGE> 30
Revolver are limited to 85% of eligible accounts receivable and 50% of
eligible inventory. Both the Term Loan and the Revolver bear interest rates
based on the London Interbank Offered Rate (LIBOR) or the prime rate, plus
the applicable margin. The Company is required to pay commitment fees on the
unused portion of the Revolver of between .20% and .50%. The margin on
interest and the commitment fees will vary depending on the relationship
between the Companys earnings before interest, taxes, depreciation and
amortization (EBITDA) and aggregate borrowings under the Credit Facility.
The Credit Facility includes various financial covenants of the Company, with
respect to minimum EBITDA, maximum senior leverage ratio, minimum interest
coverage, minimum net worth, and minimum fixed-charge coverage ratio.
The Credit Facility prohibits the Company from paying dividends and making
other distributions (except for the issuance of common shares as required by
the Debenture) and has change-of-control provisions.
On September 15, 1995, in conjunction with the Baxter Industrial acquisition,
the Company issued the Debenture to EML in the principal amount of $135
million. The Debenture was subsequently assigned to another affiliate of EML.
The Debenture matures in a single installment on September 15, 2005 and is
subordinated to the Companys obligations under the Credit Facility. Interest
is payable on the unpaid principal of the Debenture quarterly at 13% per annum
by: common shares of the Company issued up to an amount that enabled EML to
obtain an ownership percentage of 49.89% in the Company based on a fixed price
of $12.44 per share; deferral until September 15, 1997 to be paid with
accumulated interest thereon at maturity; and cash beginning thereafter.
At December 31, 1996 and 1995, the approximate weighted average interest rate
on borrowings under the outstanding Credit Facility was 7.4% and 7.8%,
respectively. Interest expense under the credit facilities for the years ended
December 31, 1996, 1995, and 1994, was $17.6 million, $9.6 million, and $4.8
million, respectively, resulting in a weighted average interest rate of 7.4%,
8.2%, and 7.0%, respectively.
The carrying values of the Revolver and Term Loan approximate their fair
values. The fair value of the Debenture is not readily determinable.
In connection with the Credit Facility and Debenture, the Company incurred
approximately $5.0 million of debt issuance cost. Such amounts are included in
other assets and are being amortized to interest expense using the effective
interest rate method related to the Term Loan and Debenture, and the straight-
line method related to the Revolver. Total amortization of debt issuance costs
(included in interest expense and other) for the years ended December 31, 1996
and 1995 was $1.3 million and $.3 million, respectively.
<PAGE> 31
Aggregate maturities of long-term debt are as follows: 1997-$22.5 million;
1998-$30.0 million; 1999-$32.5 million; 2000-$166.7 million; and $138.8
million in 2005. The Term Loan contains a mandatory prepayment provision based
on the Companys EBITDA, net of capital expenditures and other adjustments,
which requires the Company to pay down the Term Loan by an additional $5.7
million in 1997. Such paydown can be funded from the Revolver and accordingly
is classified as long-term at December 31, 1996.
The Company has entered into various interest rate swap agreements with
financial institutions which effectively change the Companys interest rate
exposure on a notional amount of debt from variable rates to fixed rates. The
notional amounts of the swaps are based upon obligations under the Credit
Facility and expected actual debt levels during a four-year period. The
Company provides protection to meet actual exposures and does not speculate in
derivatives. At December 31, 1996, the Company had a notional amount of $160
million of swaps in effect. These swaps expire between 1997 and 2000. The
amount of floating rate debt protected by the swaps ranges from $160 million
to $25 million during the period outstanding with fixed rates ranging from
5.3% to 6.4%. Net receipts or payments under the agreements are recognized as
an adjustment to interest expense. At December 31, 1996, the fair market value
of the swap agreements, which is not recorded in the consolidated financial
statements, is a receivable of approximately $.5 million. The fair market
value of the swap agreements is based on the present value of the future cash
flows determined by the interest rate difference between the contracts fixed
rate and the then-current replacement rate. The Company is exposed to credit
loss in the event of nonperformance by the other parties to the interest rate
swap agreements. The Company does not anticipate nonperformance by the
counterparties.
8. INCOME TAXES
------------
Taxes on income are based on income (loss) before income taxes as follows:
(Thousands of dollars) 1996 1995 1994
- -----------------------------------------------------------------------
Domestic $10,187 $2,351 $3,470
Canada 1,618 675 (449)
------------------------------------
$11,805 $3,026 $3,021
====================================
<PAGE> 32
The provision for income taxes consists of:
(Thousands of dollars) 1996 1995 1994
- -----------------------------------------------------------------------
Current:
Federal $ 70 $ 487 $1,652
State 44 170
Foreign 428
------------------------------------
498 531 1,822
------------------------------------
Deferred:
Federal 3,460 481 (276)
State 603 (183) (213)
Foreign 221 262 (365)
------------------------------------
4,284 560 (854)
------------------------------------
Total tax provision $ 4,782 $1,091 $ 968
====================================
The reconciliation of tax computed at the federal statutory tax rate of 35% of
income before income taxes to the actual income tax provision is as follows:
(Thousands of dollars) 1996 1995 1994
- -----------------------------------------------------------------------
Statutory tax $ 4,132 $1,059 $1,058
State income taxes net
of federal tax benefit 392 (93) (29)
Foreign rate differential 151
Other net 107 125 (61)
------------------------------------
Total tax provision $ 4,782 $1,091 $ 968
====================================
<PAGE> 33
Deferred tax liabilities (assets) as of December 31, 1996 and 1995 are
comprised of the following:
(Thousands of dollars) 1996 1995
- -----------------------------------------------------------------------
Depreciation $4,861 $5,297
Pension 3,077 2,250
Goodwill amortization 8,385 1,673
-----------------------
Deferred tax liabilities 16,323 9,220
-----------------------
Postretirement benefits (788) (763)
Other compensation benefits (1,759) (1,366)
Net operating loss carryforwards (1,021) (504)
Inventory capitalization (1,175) (427)
Other net (2,505) (573)
-----------------------
Deferred tax assets (7,248) (3,633)
-----------------------
Net deferred tax liability $9,075 $5,587
=======================
During 1996, the Company utilized $.8 million of Canadian net operating loss
carryforwards which reduced goodwill by $.4 million. Net current deferred tax
assets are $2.3 million and $1.6 million at December 31, 1996 and 1995,
respectively. The Company has state net operating loss carryforwards which
expire at various times through 2003.
9. SHAREHOLDERS EQUITY
--------------------
In April 1995, EML purchased from the Company 1,818,181 common shares (at a
price per share of $11) and a warrant (the Warrant) to purchase an
additional 967,015 shares (at a price per share of $11). In connection with
the Baxter Industrial acquisition on September 15, 1995, EML purchased
6,832,797 common shares at a price of $12.44 and exercised the Warrant,
raising its beneficial ownership of the Company to 46%. In connection with the
agreement to purchase such securities, EML entered into a Standstill Agreement
with the Company, pursuant to which EML agreed that it and its affiliates
would not, subject to certain specified exceptions, for a period of four
years, increase its beneficial ownership of the Companys common shares above
49.89% without the prior consent of the Company. Under the terms of the
Debenture, interest was payable in common shares, at an issue price per share
of $12.44, until EMLs beneficial ownership reached 49.89%. EML owns 49.89% of
the issued and outstanding common shares as of December 31, 1996.
During 1995, the Company retired 253,551 shares of treasury stock resulting in
a $.9 million and $1.4 million reduction of additional paid-in capital and
retained earnings, respectively.
<PAGE> 34
Shareholder Rights Agreement
- ----------------------------
On May 20, 1988, the Company established a Shareholder Rights Agreement. The
Agreement is designed to deter coercive or unfair takeover tactics that could
deprive shareholders of an opportunity to realize the full value of their
shares. On February 23, 1995, the Company amended the Agreement to change the
definition of Acquiring Person to exclude any purchaser who has an agreement
with the Company, executed prior to the date of acquiring 20% or more of the
Companys common stock, which imposes one or more thresholds on the amount of
the purchasers ownership of the Companys common stock. The Amendment also
provides that the Agreement be governed by the laws of the Commonwealth of
Pennsylvania instead of the laws of the State of Delaware.
Under the Agreement, the Company has distributed a dividend of one Right for
each outstanding share of the Companys stock. When exercisable, each Right
will entitle its holder to buy two shares of the Companys common stock at
$45.00 per share. The Rights will become exercisable if an Acquiring Person,
as defined, acquires or makes an offer to acquire 20 percent of the Companys
common stock. In the event that a purchaser acquires 20 percent of the common
stock, each Right shall entitle the holder, other than the Acquiring Person,
to purchase, at the Rights then-current full exercise price, shares of the
Companys common stock having a market value of twice the then-current full
exercise price of the Right. In the event that, under certain circumstances,
the Company is acquired in a merger or transfers 50 percent or more of its
assets or earnings to any one entity, each Right entitles the holder to
purchase common stock of the surviving or purchasing company having a market
value of twice the full exercise price of the Right. The Rights, which expire
on May 31, 1998, may be redeemed by the Company at a price of $.005 per Right.
10. STOCK AND INCENTIVE PROGRAMS
----------------------------
Effective January 1, 1996, the Company adopted the disclosure-only option
under SFAS No. 123, Accounting for Stock-Based Compensation. The Company
continues to use the accounting method under APB Opinion No. 25 (APB 25) and
related interpretations for its employee stock options. Under APB 25, when the
exercise price of the Companys employee stock options equals the market price
of the underlying stock on the date of grant, no compensation expense is
recognized.
The Company has two stock incentive plans, the 1986 Stock Incentive Plan
(1986 Plan), under which the ability to grant options expired in 1996, and
the 1995 Stock Incentive Plan (1995 Plan). Shares of the Company granted
under these two plans are in non-qualified and incentive stock options or
restricted stock awards. In addition to outstanding options under both the
1986 Plan and 1995 Plan, 931,000 shares were available for issuance under the
1995 Plan at December 31, 1996.
<PAGE> 35
Restricted Stock Awards
- -----------------------
The Companys restricted stock awards provide for grants of common stock to
certain directors, officers, and managers. The vesting periods range from one
to five years. The fair market value of the stock at the date of grant
establishes the compensation amount, which is amortized to operations over the
vesting period. During the years ended December 31, 1996, 1995, and 1994, the
Company granted 4,230, 52,589, and 21,816 shares, respectively, at fair market
values of approximately $.1 million, $.6 million, and $.2 million,
respectively.
Stock Options
- -------------
Under the 1986 Plan, options, which vest over 3 to 10 years, have been granted
to certain officers and managers to purchase common stock of the Company at
its fair market value at the date of grant. The options granted under the 1995
Plan become exercisable at the earlier of nine years following issuance or 50%
when the market value (as defined) of the Companys common stock reaches 150%
of the market value at the date of grant for 20 consecutive days and the
remaining 50% when the market value (as defined) reaches 175% of the market
value at the date of grant for 20 consecutive days.
Changes in options outstanding were:
Average
Shares Price
- -------------------------------------------------------------------
Outstanding at December 31, 1993 405,819 $ 8.61
Exercised (22,007) 6.14
Granted 5,000 10.00
Cancelled (32,845) 7.75
--------------------------------
Outstanding at December 31, 1994 355,967 8.86
Exercised (47,166) 7.87
Granted 1,020,000 12.00
Cancelled (87,200) 11.67
--------------------------------
Outstanding at December 31, 1995 1,241,601 11.28
Exercised (43,983) 7.03
Granted 189,000 13.25
Cancelled (60,000) 12.00
--------------------------------
Outstanding at December 31, 1996 1,326,618 $11.67
================================
At December 31, 1996, there were 168,178 options exercisable at an average
price of $8.85. The exercise price of outstanding options at December 31, 1996
ranged from $7.79 to $16.00 and have a weighted average remaining life of 8
years.
<PAGE> 36
Pro forma disclosure, as required by SFAS No. 123, regarding net income and
earnings per share has been determined as if the Company had accounted for its
employee stock options under the fair value method.
Option valuation models use highly subjective assumptions to determine the
fair value of traded options with no vesting or trading restrictions. Because
options granted under the Companys Stock Option Plans have vesting
requirements and cannot be traded, and because changes in the assumptions can
materially affect the fair value estimate, in managements opinion, the
existing valuation models do not necessarily provide a reliable measure of the
fair value of its employee stock options.
The fair value for these options was estimated at the date of grant using a
Black-Scholes option pricing model with the following weighted-average
assumptions for 1996 and 1995: risk-free interest rate of 5.6%; no dividends;
a volatility factor of the expected market price of the Companys common stock
of .416 and a weighted-average expected life of the options of 7 years.
For purposes of pro forma disclosures, the estimated fair value of the options
($6.99 for the 1996 grants and $6.31 for the 1995 grants) is amortized to
expense over the options assumed vesting period. SFAS No. 123 requires only
that the income effects of options granted during 1995 and 1996 be included in
the pro forma disclosures. Since a portion of the Companys stock options vest
over several years and additional options may be granted each year, the pro
forma effect on net income reported, below, is not representative of the
effect of fair value stock option expense on future years pro forma net
income. The Companys pro forma information follows:
For the year ended December 31, 1996 1995
- ---------------------------------------------------------------------
Pro forma net income $6,152 $1,717
Pro forma earnings per share $ .28 $ .12
Savings Investment Plan
- -----------------------
The Company has a savings investment plan whereby it matches 50% of the
employees contribution up to 3% of the employees pay. For employee
contributions between 3% and 7.5% of their pay, the Company will match 50% of
the contribution within prescribed limits based on the Companys profitability
for the year. All Company contributions are used to buy common shares of the
Company. Expenses under this plan for the years ended December 31, 1996, 1995,
and 1994, were $.9 million, $.7 million, and $.6 million, respectively.
Employee Stock Ownership Plan
- -----------------------------
In September 1990, the Company established an employee stock ownership plan
(ESOP) by, in effect, contributing 400,000 treasury shares ($2.9 million fair
value) to the ESOP of which 198,040 shares are allocated to participants at
December 31, 1996. All full-time and part-time employees, except certain union
employees, are eligible to participate in the plan.
<PAGE> 37
The ESOP shares will be allocated equally to individual participants accounts
over a period up to ten years. Vesting occurs equally over an employment
period of five years at which time the employee is 100% vested in the plan.
The total number of shares to be allocated in a year is the higher of an
amount based on the Companys profitability or the minimum allocation required
per the ESOP agreement. Expenses are recognized based on shares allocated for
the year and are reduced for dividends paid, if any, on unallocated shares.
11. POSTRETIREMENT BENEFITS
-----------------------
Pension Plans
- -------------
The Company has two defined benefit pension plans covering substantially all
of its domestic employees, except for employees covered by independently
operated collective bargaining plans. Pension benefits are based on years of
credited service and the highest five consecutive years average compensation.
Contributions to the Company plans are based on funding standards established
by the Employee Retirement Income Security Act of 1974 (ERISA). The total VWR
plans funding status and the amounts recognized in the Companys Consolidated
Balance Sheets at December 31, 1996 and 1995, are:
(Thousands of dollars) 1996 1995
- ---------------------------------------------------------------------
Actuarial present value of plan
benefit obligations:
Vested benefit obligation $37,777 $38,237
Nonvested benefit obligation 1,541 1,209
-----------------------------
Accumulated benefit obligation $39,318 $39,446
=============================
Projected benefit obligation $44,927 $45,232
Plan assets at fair value (50,044) (43,172)
-----------------------------
Plan assets (in excess of) less than
projected benefit obligation (5,117) 2,060
Prior service costs not yet recognized
in net periodic pension cost 464 594
Unrecognized net transition obligation (267) (269)
Unrecognized actuarial loss (788) (7,351)
-----------------------------
Prepaid pension expense included in
consolidated balance sheets $(5,708) $(4,966)
=============================
The assets of the Company plans consist primarily of undivided interests in
several funds structured to duplicate the performance of various stock and
bond indexes.
<PAGE> 38
Net pension expense under the Company plans includes the following components:
(Thousands of dollars) 1996 1995 1994
- ----------------------------------------------------------------------
Service cost (benefits earned
during the year) $2,234 $1,353 $1,516
Interest cost on projected
benefit obligation 3,289 3,051 2,922
Actual return on plan assets (6,828) (9,501) (116)
Net amortization and deferral 2,706 6,342 (2,714)
------------------------------------
Net pension expense $1,401 $1,245 $1,608
====================================
The assumptions used were:
Discount rate 8.00% 7.50% 8.75%
Rate of increase in
compensation levels 4% 4% 4%
Expected long-term rate of
return on plan assets 10% 10% 10%
The Company maintains a supplemental pension plan for certain senior officers.
Expenses incurred under this plan in 1996, 1995, and 1994 were approximately
$.2 million, $.1 million, and $.2 million, respectively.
Certain employees are covered under union-sponsored, collectively bargained
plans. Expenses under these plans for each of the years ended December 31,
1996, 1995, and 1994, were $.5 million, $.3 million, and $.2 million,
respectively, as determined in accordance with negotiated labor contracts.
Retiree Medical Benefits Program
- --------------------------------
Employees retired as of December 31, 1992 and active employees who reached age
55 by December 31, 1992 are eligible to participate in the Companys retiree
health plan (the Plan). There are also certain provisions for participation
by spouses. The Plan is contributory, with retiree contributions based on
years of service, and includes other co-payment and co-insurance provisions.
The Company does not fund the Plan. The actuarially determined liability of
the Plan at December 31, 1996 and 1995 is as follows:
(Thousands of dollars) 1996 1995
- -------------------------------------------------------------------
Accumulated postretirement benefit obligation:
Retirees $1,772 $1,994
Eligible active participants 62 65
Other active participants 47 70
Unrecognized net loss (48) (206)
--------------------------
Accrued postretirement benefit obligation $1,833 $1,923
==========================
<PAGE> 39
The net periodic postretirement benefit cost includes the following
components:
1996 1995 1994
- -------------------------------------------------------------------
Service cost $ 3 $ 4 $ 6
Interest cost 141 162 139
Net amortization and deferral (3)
---------------------------------
$ 144 $ 166 $ 142
=================================
The assumed health care cost trend rate used in measuring the accumulated
postretirement benefit obligation is 10% for 1996 declining 1% per year to a
level of 5.4% in 2001 and thereafter. The effect of a 1% annual increase in
the assumed cost trend rate would increase the accumulated postretirement
benefit obligation by approximately 9%; the annual service and interest cost
components in the aggregate would not be materially affected. An 8.0% discount
rate was used in determining the accumulated postretirement benefit obligation
at December 31, 1996 and 7.50% was used at December 31, 1995.
12. LEASES
------
The Company leases office and warehouse space, computer equipment, and
automobiles under operating leases, certain of which extend up to 18 years,
subject to renewal options.
Rental expense was $9.8 million, $5.4 million, and $5.2 million for the years
ended December 31, 1996, 1995, and 1994, respectively.
Future minimum lease payments as of December 31, 1996, under noncancelable
operating leases having initial lease terms of more than one year are:
Years Ending December 31
(Thousands of dollars)
- ------------------------------------------------------------------
1997 $ 6,682
1998 6,085
1999 5,117
2000 4,551
2001 3,702
Thereafter 28,528
-------
Total minimum payments $54,665
=======
<PAGE> 40
13. CONTINGENCIES AND COMMITMENTS
-----------------------------
The Company is involved in various environmental, contractual, and product
liability cases and claims, which are considered routine to the Companys
business. In the opinion of management, the potential financial impact of
these matters is not material to the consolidated financial statements.
14. MATERIAL AGREEMENTS
-------------------
Services Agreement
- ------------------
The Company entered into a Services Agreement with Baxter Healthcare to
provide for an orderly transfer of the Baxter Industrial business to the
Company. Under the Services Agreement, Baxter Healthcare was required to
continue to provide the same type of services to the customers of the Baxter
Industrial business as it had provided prior to VWRs completion of the Baxter
Industrial acquisition. Such services include order entry, shipping,
invoicing, credit and collection, and inventory stocking and replenishment. On
September 30, 1996, Baxter International spun off its United States healthcare
distribution, surgical and respiratory therapy products and healthcare cost
management businesses as Allegiance Corporation (Allegiance). Allegiance has
assumed Baxter Healthcares responsibilities under the Services Agreement and
has assumed certain rights under the Distribution Agreement.
While the term of the Services Agreement is for two years, upon prior notice,
the Company has directed Baxter Healthcare and Allegiance to discontinue the
provision of services on a regional basis as the Baxter Industrial business
was transitioned to VWR facilities. No service fees were payable for services
under the Services Agreement during the first three months of the term of the
agreement. The Company has been required to make payments during the remaining
term of the Services Agreement at the rate of 5.5% of the sales to customers
of the Baxter Industrial business which are serviced by Baxter Healthcare or
Allegiance; provided, however, the Company was obligated to pay a minimum of
$18.6 million to Baxter Healthcare and Allegiance.
The Company expensed $11.3 million and $6.6 million in 1996 and 1995,
respectively, under the Services Agreement using an effective-rate method.
Upon the cessation of services by Baxter Healthcare or Allegiance at a
particular facility, the Company has been required to purchase the inventory
of laboratory supplies and equipment held for sale to customers of the Baxter
Industrial business. At December 31, 1996, the Baxter Industrial inventory
held by Allegiance was approximately $8.8 million.
<PAGE> 41
Distribution Agreement
- ----------------------
In connection with the Baxter Industrial Acquisition, the Company entered into
a Distribution Agreement with Baxter Healthcare pursuant to which Baxter
Healthcare has granted to the Company the right to sell and distribute for
nonpatient use (anywhere except in Canada and Japan) certain products and
accessories manufactured by Baxter Healthcare and its affiliates. On September
30, 1996, Allegiance assumed certain rights under the Distribution Agreement.
The Distribution Agreement, which has a term ending on September 30, 2000,
provides, among other things, that the Company is obligated during each fiscal
year to either purchase a minimum dollar amount of products for sale in each
of the United States and internationally, or, if such minimum requirements
have not been met during such year, purchase products or pay to Baxter
Healthcare and Allegiance an amount, in each case, equal to their share of any
such deficiency. The Company satisfied the minimum aggregate requirement of
$63 million for the contract year ended September 30, 1996. The minimum
aggregate requirements for each of the remaining years, which are subject to
annual adjustment, are $71 million, $82 million, $89 million, and $96 million.
15. TRANSACTIONS WITH AFFILIATES
----------------------------
On January 1, 1994, the Company formed a joint venture with Merck KGaA of
Germany and acquired an interest in Bender & Hobein GmbH, a distributor of
laboratory supplies and equipment in Germany for $2.9 million. In 1996, VWR
exercised its right under the agreement to sell its interest to Merck KGaA at
no gain or loss to the Company.
In the ordinary course of business, the Company purchases inventory from
affiliates of Merck KGaA. Such purchases represent less than 5% of total
purchases.
16. RESTRUCTURING AND OTHER CHARGES
-------------------------------
In December 1994, the Company made the decision to consolidate certain sales
offices and functions. As a result, the Company incurred in 1995 approximately
$1.2 million in charges which were primarily for severance and other
personnel-related costs. Due to the effects of the Baxter Industrial
acquisition, the Company was not able to measure the benefits related to these
costs which are classified as operating expenses.
<PAGE> 42
17. QUARTERLY FINANCIAL DATA (Unaudited)
- ------------------------------------------------------------------------------
(Thousands of dollars, Gross Operating Net Earnings
except per share data) Sales Margin Income Income (Loss)Per
(Loss) Share
- ------------------------------------------------------------------------------
Year Ended - December 31, 1996
First Quarter $ 276,458 $ 62,106 $12,298 $2,110 $ .10
Second Quarter 278,961 63,149 14,265 3,073 .14
Third Quarter 289,280 63,962 15,910 3,960 .18
Fourth Quarter 272,587 57,690 6,159 (2,120) (.09)
---------- -------- ------- ------ -----
Total $1,117,286 $246,907 $48,632 $7,023 $ .32
========== ======== ======= ====== ======
Year Ended - December 31, 1995
First Quarter $146,376 $ 30,932 $ 2,405 $ 560 $ .05
Second Quarter 144,810 32,050 2,513 719 .06
Third Quarter 170,979 38,943 5,076 1,312 .09
Fourth Quarter 256,519 57,194 7,835 (656) (.03)
-------- -------- ------- ------ -----
Total $718,684 $159,119 $17,829 $1,935 $ .13*
======== ======== ======= ====== ======
Note: The quarterly results of operations are impacted by the Baxter
Industrial acquisition in September 1995. The 1996 amounts include Baxter
Industrial acquisition-related expenses of $1,188, $1,845, $1,093 and $1,002
for the first, second, third and fourth quarters, respectively. Third and
fourth quarter 1995 amounts include Baxter Industrial acquisition-related
expenses of $2,067 and $1,694, respectively.
* The sum of the quarterly earnings (loss) per share does not equal the total
earnings per share due to different weighted average share amounts outstanding
for quarterly and annual reporting purposes.
<PAGE> 43
REPORT OF INDEPENDENT AUDITORS
- ------------------------------
To the Shareholders of VWR Scientific Products Corporation:
We have audited the consolidated balance sheets of VWR Scientific Products
Corporation as of December 31, 1996 and 1995, and the related consolidated
statements of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. Our audits also included
the financial statement schedule listed in the index at Item 14(a). These
financial statements and schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements and schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of VWR Scientific Products Corporation at December 31, 1996 and 1995, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended December 31, 1996, in conformity with
generally accepted accounting principles. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic
financial statements taken as a whole, presents fairly in all material
respects the information set forth therein.
BY (SIGNATURE)
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 27, 1997
<PAGE> 44
ITEM 9. - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
- ------ --------------------------------------------------------------
None
PART III.
- --------
ITEM 10. - DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
- -------- ---------------------------------------------------
The information required by this item is incorporated by reference from the
section captioned Election of Directors and the section captioned Ownership
of VWR Scientific Products Corporation Common Shares - Section 16(a)
Beneficial Ownership Reporting Compliance contained in the Companys
definitive Proxy Statement, which the Company will have filed with the
Commission pursuant to Regulation 14A on or about April 10, 1997.
Information regarding executive officers of the Company is included in Part I
of this Form 10-K.
ITEM 11. - EXECUTIVE COMPENSATION
- ------- ----------------------
The information required by this item is incorporated by reference from the
sections captioned Fees to Directors and Committees of the Board and
Executive Compensation contained in the Companys definitive Proxy
Statement, which the Company will have filed with the Commission pursuant to
Regulation 14A on or about April 10, 1997.
ITEM 12. - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
- ---------- ----------------------------------------------------------
The information required by this item is incorporated by reference from the
section captioned Ownership of VWR Scientific Products Corporation Common
Shares contained in the Companys definitive Proxy Statement, which the
Company will have filed with the Commission pursuant to Regulation 14A on or
about April 10, 1997.
ITEM 13. - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
- ------- ----------------------------------------------
The information required by this item is incorporated by reference from the
section captioned Election of Directors contained in the Companys
definitive Proxy Statement, which the Company will have filed with the
Commission pursuant to Regulation 14A on or about April 10, 1997.
<PAGE> 45
PART IV.
- -------
ITEM 14. - EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
- -------- ------------------------------------------------------------
(a)(1) Financial Statements
The following financial statements have been included as part of this report:
Form 10-K
Page
---------
Consolidated Statements of Operations 17
Consolidated Balance Sheets 18
Consolidated Statements of Cash Flows 20
Consolidated Statements of Shareholders' Equity 22
Notes to Consolidated Financial Statements 25
Report of Independent Auditors 43
(2) Financial Statement Schedules
(a) The following financial statement schedule is submitted herewith:
-Schedule II - Valuation and Qualifying Accounts
All other schedules for which provision is made in the
applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and have therefore been
omitted.
<PAGE> 46
(3) Exhibits
Exhibit Number and Description
------------------------------
2(a) Asset Purchase Agreement dated as of May 24, 1995 by and among VWR
Corporation, Baxter Healthcare Corporation and EM Laboratories,
Incorporated; incorporated by reference to Exhibit VI of Registrants
definitive proxy statement filed with the Commission on
August 11, 1995.
2(b) Amendment to Asset Purchase Agreement dated as of September 15, 1995
by and among VWR Corporation, Baxter Healthcare Corporation and
EM Laboratories, Incorporated; incorporated by reference to Exhibit 2(b)
of the Registrants Form 8-K dated September 15, 1995.
2(c) Agreement and Plan of Merger between VWR Corporation and
VWR New Corporation; incorporated by reference to Exhibit 2 of the
Registrants Form 10-K for the year ended December 31, 1994.
3(a) Amended and Restated Articles of Incorporation; incorporated by
reference to Exhibit 3 of the Registrants Form 10-K for the year
ended December 31, 1994.
3(b) Amendment to Articles of Incorporation dated September 15, 1995;
incorporated by reference to Exhibit 1 of the Registrants Form
8-K dated September 15, 1995.
3(c) Amended and Restated Bylaws; incorporated by reference to Exhibit 3.1
of the Registrants Form 10-K for the year ended December 31, 1994.
4(a) Rights Agreement dated as of May 20, 1988 between VWR Corporation
and The First Jersey National Bank (filed as an exhibit to the
Registrants Form 8-A dated May 23, 1988,
and incorporated herein by reference).
4(b) Amendment No. 1, dated as of February 23, 1995, to Rights Agreement,
dated as of May 20, 1988, between VWR Corporation and First
Interstate Bank of Washington, N.A., successor to The First
Jersey National Bank; incorporated by reference to Exhibit 4 of the
Registrants Form 8-K dated February 23. 1995.
4(c) Standstill Agreement between VWR Corporation and EM Industries,
Incorporated dated February 27, 1995; incorporated by reference to
Exhibit 4(a) of Registrants Form 8-K dated April 13, 1995.
4(d) Amendment Number One to the Standstill Agreement dated September
15, 1995 by and among VWR Corporation, EM Industries, Incorporated
and EM Laboratories, Incorporated; incorporated by reference to
Exhibit 4(b) of the Registrants Form 8-K dated September 15, 1995.
4(e) Subordinated Debenture dated as of September 15, 1995 in the
principal amount of $135,000,000 payable to the order of
<PAGE> 47
EM Laboratories, Incorporated; incorporated by reference to
Exhibit 4(c) of the Registrants Form 8-K dated September 15, 1995.
4(f) Credit Agreement dated as of September 14, 1995 by and among
the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
incorporated by reference to Exhibit 4(d) of the Registrants
Form 8-K dated September 15, 1995.
4(g) Term Note dated September 15, 1995 in the principal sum of
$135,000,000; incorporated by reference to Exhibit 4(e) of the
Registrants Form 8-K dated September 15, 1995.
4(h) Revolving Credit Note dated September 15, 1995 in the principal sum
of $150,000,000; incorporated by reference to Exhibit 4(f) of
the Registrants Form 8-K dated September 15, 1995.
4(i) Warrant to Purchase Common Shares of VWR Corporation dated April
13, 1995; incorporated by reference to Exhibit 4 of the Registrants
Form 8-K dated April 13, 1995.
4(j) Amended and Restated Credit Agreement by and among VWR
Corporation and its Subsidiaries and CoreStates Bank, N.A.
for itself and as agent, Seattle-First National Bank,
Bank of America Canada, and PNC Bank, National Association
dated October 27, 1994; incorporated by reference to Exhibit 4
of the Registrants Form 10-K for the year ended December 31, 1994.
4(k) Amendment No. 1 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein.
4(l) Amendment No. 2 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein.
4(m) Amendment No. 3 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein.
10(a) Common Share and Debenture Purchase Agreement dated as of May 24,
1995 between VWR Corporation and EM Industries, Incorporated;
incorporated by reference to Exhibit II of Registrants definitive
proxy statement filed with the Commission on August 11, 1995.
10(b) Distribution Agreement between VWR Corporation and Baxter
Healthcare Corporation dated as of September 15, 1995;
incorporated by reference to Exhibit 10(b) of the Registrants
Form 8-K dated September 15, 1995.
<PAGE> 48
10(c) Services Agreement between VWR Corporation and Baxter Healthcare
Corporation dated as of September 15, 1995; incorporated by reference
to Exhibit 10(c) of the Registrants Form 8-K dated September 15, 1995.
10(d) Employment Agreement between Jerrold B. Harris and VWR Corporation
dated as of September 15, 1995; incorporated by reference to
Exhibit 10(e) of the Registrants Form 8-K dated September 15, 1995. (1)
10(e) Change of Control agreement between VWR Corporation and
Paul J. Nowak; incorporated by reference to Exhibit 10 of
the Registrants Form 10-K Report for the year ended
December 31, 1992. (1)
10(f) VWR Corporation Executive Bonus Plan dated January 1, 1990;
incorporated by reference to Exhibit 10 of the Registrants Form
10-K for the year ended December 31, 1991. (1)
10(g) VWR Corporation Supplemental Benefits Plan dated November 1,
1990; incorporated by reference to Exhibit 10 of the Registrants
Form 10-K for the year ended December 31, 1991. (1)
11 Computation of Per Share Earnings
21 Subsidiaries of the Company
23 Consent of Independent Auditors
24 Power of Attorney
27 Financial Data Schedule for year ended December 31, 1996 (submitted
only in electronic format pursuant to Item 601(c)(1)(v) of
Regulation S-K).
(1) May be deemed a management contract or compensatory plan or arrangement.
(b) Reports on Form 8-K
None
<PAGE> 49
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
VWR SCIENTIFIC PRODUCTS CORPORATION
Date BY (SIGNATURE)
Jerrold B. Harris,
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on the behalf of the
registrant in the capacities and on the dates indicated.
Date BY (SIGNATURE)
David M. Bronson
Senior Vice President Finance
(Principal Financial and
Accounting Officer)
DIRECTORS
James W. Bernard
Richard E. Engebrecht
Jerrold B. Harris
Wolfgang Honn BY (SIGNATURE)
Dieter Janssen
Stephen J. Kunst
Edward A. McGrath, Jr.
Donald P. Nielsen
N. Stewart Rogers Jerrold B. Harris
Harald Schroder
Walter W. Zywottek Attorney-in-fact
Power of Attorney
dated March 26, 1997
Date: March 26, 1997
<PAGE> 50
VWR SCIENTIFIC PRODUCTS CORPORATION
------------------------------------
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
-----------------------------------------------
(Thousands of dollars)
Balance at Charged to Balance
Beginning Costs and at End
Description of Year Expenses Deductions (1) Other of Year
- ----------- --------- ---------- -------------- ----- ---------
Allowances for losses
(deducted from trade
receivables) for:
Year Ended
December 31, 1996 $739 $909 $939 $800 (2) $1,505
==== ==== ==== ==== ======
Year Ended
December 31, 1995 $619 $876 $756 $ 739
==== ==== ==== ======
Year Ended
December 31, 1994 $259 $656 $554 $258 (3) $ 619
==== ==== ==== ==== ======
(1) Uncollectible accounts written off, net of recoveries.
(2) Reserves established in connection with the Baxter Industrial
acquisition.
(3) Reserves established in connection with the Canlab acquisition
<PAGE> 51
Exhibit Index
Exhibit Number and Description
------------------------------
2(a) Asset Purchase Agreement dated as of May 24, 1995 by and among VWR
Corporation, Baxter Healthcare Corporation and EM Laboratories,
Incorporated; incorporated by reference to Exhibit VI of Registrants
definitive proxy statement filed with the Commission on
August 11, 1995.
2(b) Amendment to Asset Purchase Agreement dated as of September 15, 1995
by and among VWR Corporation, Baxter Healthcare Corporation and
EM Laboratories, Incorporated; incorporated by reference to Exhibit 2(b)
of the Registrants Form 8-K dated September 15, 1995.
2(c) Agreement and Plan of Merger between VWR Corporation and
VWR New Corporation; incorporated by reference to Exhibit 2 of the
Registrants Form 10-K for the year ended December 31, 1994.
3(a) Amended and Restated Articles of Incorporation; incorporated by
reference to Exhibit 3 of the Registrants Form 10-K for the year
ended December 31, 1994.
3(b) Amendment to Articles of Incorporation dated September 15, 1995;
incorporated by reference to Exhibit 1 of the Registrants Form
8-K dated September 15, 1995.
3(c) Amended and Restated Bylaws; incorporated by reference to Exhibit 3.1
of the Registrants Form 10-K for the year ended December 31, 1994.
4(a) Rights Agreement dated as of May 20, 1988 between VWR Corporation
and The First Jersey National Bank (filed as an exhibit to the
Registrants Form 8-A dated May 23, 1988,
and incorporated herein by reference).
4(b) Amendment No. 1, dated as of February 23, 1995, to Rights Agreement,
dated as of May 20, 1988, between VWR Corporation and First
Interstate Bank of Washington, N.A., successor to The First
Jersey National Bank; incorporated by reference to Exhibit 4 of the
Registrants Form 8-K dated February 23. 1995.
4(c) Standstill Agreement between VWR Corporation and EM Industries,
Incorporated dated February 27, 1995; incorporated by reference to
Exhibit 4(a) of Registrants Form 8-K dated April 13, 1995.
4(d) Amendment Number One to the Standstill Agreement dated September
15, 1995 by and among VWR Corporation, EM Industries, Incorporated
and EM Laboratories, Incorporated; incorporated by reference to
Exhibit 4(b) of the Registrants Form 8-K dated September 15, 1995.
4(e) Subordinated Debenture dated as of September 15, 1995 in the
principal amount of $135,000,000 payable to the order of
<PAGE> 52
EM Laboratories, Incorporated; incorporated by reference to
Exhibit 4(c) of the Registrants Form 8-K dated September 15, 1995.
4(f) Credit Agreement dated as of September 14, 1995 by and among
the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
incorporated by reference to Exhibit 4(d) of the Registrants
Form 8-K dated September 15, 1995.
4(g) Term Note dated September 15, 1995 in the principal sum of
$135,000,000; incorporated by reference to Exhibit 4(e) of the
Registrants Form 8-K dated September 15, 1995.
4(h) Revolving Credit Note dated September 15, 1995 in the principal sum
of $150,000,000; incorporated by reference to Exhibit 4(f) of
the Registrants Form 8-K dated September 15, 1995.
4(i) Warrant to Purchase Common Shares of VWR Corporation dated April
13, 1995; incorporated by reference to Exhibit 4 of the Registrants
Form 8-K dated April 13, 1995.
4(j) Amended and Restated Credit Agreement by and among VWR
Corporation and its Subsidiaries and CoreStates Bank, N.A.
for itself and as agent, Seattle-First National Bank,
Bank of America Canada, and PNC Bank, National Association
dated October 27, 1994; incorporated by reference to Exhibit 4
of the Registrants Form 10-K for the year ended December 31, 1994.
4(k) Amendment No. 1 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein on page 54.
4(l) Amendment No. 2 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein on page 65.
4(m) Amendment No. 3 to the Credit Agreement dated as of September 14, 1995
by and among the Registrant, Bank of America National Trust and Savings
Association, PNC Bank, N.A., CoreStates Bank, N.A., et al;
included herein on page 76.
10(a) Common Share and Debenture Purchase Agreement dated as of May 24,
1995 between VWR Corporation and EM Industries, Incorporated;
incorporated by reference to Exhibit II of Registrants definitive
proxy statement filed with the Commission on August 11, 1995.
10(b) Distribution Agreement between VWR Corporation and Baxter
Healthcare Corporation dated as of September 15, 1995;
incorporated by reference to Exhibit 10(b) of the Registrants
Form 8-K dated September 15, 1995.
<PAGE> 53
10(c) Services Agreement between VWR Corporation and Baxter Healthcare
Corporation dated as of September 15, 1995; incorporated by reference
to Exhibit 10(c) of the Registrants Form 8-K dated September 15, 1995.
10(d) Employment Agreement between Jerrold B. Harris and VWR Corporation
dated as of September 15, 1995; incorporated by reference to
Exhibit 10(e) of the Registrants Form 8-K dated September 15, 1995.
10(e) Change of Control agreement between VWR Corporation and
Paul J. Nowak; incorporated by reference to Exhibit 10 of
the Registrants Form 10-K Report for the year
ended December 31, 1992.
10(f) VWR Corporation Executive Bonus Plan dated January 1, 1990;
incorporated by reference to Exhibit 10 of the Registrants Form
10-K for the year ended December 31, 1991.
10(g) VWR Corporation Supplemental Benefits Plan dated November 1,
1990; incorporated by reference to Exhibit 10 of the Registrants
Form 10-K for the year ended December 31, 1991.
11 Computation of Per Share Earnings, page 87.
21 Subsidiaries of the Company, page 88.
23 Consent of Independent Auditors, page 89
24 Power of Attorney, page 90.
27 Financial Data Schedule for year ended December 31, 1996 (submitted
only in electronic format pursuant to Item 601(c)(1)(v) of
Regulation S-K).
<PAGE> 54
EXHIBIT 4(k)
FIRST AMENDMENT
FIRST AMENDMENT, dated as of January 16, 1996, among VWR SCIENTIFIC PRODUCTS
CORPORATION (formerly known as VWR Corporation) ("VWR"), VWR SCIENTIFIC OF
CANADA LTD. ("VWR Canada"), SCIENTIFIC HOLDINGS CORP. ("Scientific Holdings"),
VWR SCIENTIFIC INTERNATIONAL CORPORATION, ("VWR International"), the several
banks and other financial institutions parties to the Credit Agreement (as
hereinafter defined) (individually a "Bank"; collectively, the "Banks"),
CORESTATES BANK, N.A., as administrative agent (in such capacity, the
"Administrative Agent"), and PNC BANK, NATIONAL ASSOCIATION, as documentation
agent.
W I T N E S S E T H:
WHEREAS, VWR, VWR Canada, Scientific Holdings, VWR International
(individually, a "Borrower"; collectively, the "Borrowers"), the Banks, the
Administrative Agent and the Documentation Agent are parties to a Credit
Agreement, dated as of September, 14, 1995 (the "Credit Agreement");
WHEREAS, the Borrowers have requested that the Banks amend (a) the borrowing
base provisions of the Credit Agreement and (b) Schedule VII to the Credit
Agreement with respect to certain take-or-pay agreements; and
WHEREAS, the Required Banks have agreed to so amend the Credit Agreement on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
2. Amendments to Borrowing Base Provisions.
(a) Amendment to Subsection 2.1(a). Subsection 2.1(a) of the Credit
Agreement is hereby amended by deleting in its entirety clause (x) of such
subsection from the words "the U.S. Dollar Borrowing Base" through the words
"the Administrative Agent" and inserting in lieu thereof the following:
"(x) the U.S. Dollar Borrowing Base as of the date of the most recent
U.S. Dollar Borrowing Base Certificate furnished to the Administrative Agent
minus the amount, if any, by which (A) the aggregate amount of the Canadian
Dollar Exposure at such time exceeds (B) the Canadian Dollar Borrowing Base as
of the date of the most recent Canadian Dollar Borrowing Base Certificate
furnished to the Administrative Agent"
<PAGE> 55
(b) Amendment to Subsection 2.4(a). Subsection 2.4(a) of the Credit
Agreement is hereby amended by deleting in its entirety clause (B) of such
subsection from the words "the U.S. Dollar Borrowing Base" through the words
"the Administrative Agent" and inserting in lieu thereof the following:
"(B) the U.S. Dollar Borrowing Base as of the date of the most recent
U.S. Dollar Borrowing Base Certificate furnished to the Administrative Agent
minus the amount, if any, by which (I) the aggregate amount of the Canadian
Dollar Exposure at such time exceeds (II) the Canadian Dollar Borrowing Base
as of the date of the most recent Canadian Dollar Borrowing Base Certificate
furnished to the Administrative Agent"
(c) Amendment to Subsection 2.13(a). Subsection 2.13(a) of the Credit
Agreement is hereby amended by deleting in its entirety clause (x) of such
subsection from the words "the U.S. Dollar Borrowing Base" through the words
"the Administrative Agent" and inserting in lieu thereof the following:
"(x) the U.S. Dollar Borrowing Base as of the date of the most
recent U.S. Dollar Borrowing Base Certificate furnished to the Administrative
Agent minus the amount, if any, by which (I) the aggregate amount of the
Canadian Dollar Exposure at such time exceeds (II) the Canadian Dollar
Borrowing Base as of the date of the most recent Canadian Dollar Borrowing
Base Certificate furnished to the Administrative Agent"
(d) Amendment to Subsection 4.1(a). Subsection 4.1(a) of the Credit
Agreement is hereby amended by deleting in its entirety the proviso at the end
of the first sentence in said subsection from the words "; provided that,"
through the words "Administrative Agent" and inserting in lieu thereof the
following:
"; provided that, no Canadian Dollar Loan shall be made if, after
giving effect to the making of such Loan and the simultaneous application of
the proceeds thereof, the sum of (i) the aggregate amount of the Canadian
Dollar Exposure at such time, (ii) the aggregate amount of the Revolving
Credit Exposure at such time and (iii) the aggregate principal amount of the
Swing Line Loans outstanding at such time would exceed the sum of (x) the
Canadian Dollar Borrowing Base as of the date of the most recent Canadian
Dollar Borrowing Base Certificate furnished to the Administrative Agent and
(y) the U.S. Dollar Borrowing Base as of the date of the most recent U.S.
Dollar Borrowing Base Certificate furnished to the Administrative Agent."
(e) Amendment to Subsection 4.3(a). Subsection 4.3(a) of the Credit
Agreement is hereby amended by inserting at the end of the first sentence of
the second paragraph in subsection 4.3(a) immediately after the words
"Administrative Agent" the following:
"and the U.S. Dollar Borrowing Base as of the date of the
most recent U.S. Dollar Borrowing Base Certificate furnished to
the Administrative Agent"
<PAGE> 56
(f) Amendment to Subsection 5.7(c). Subsection 5.7(c) of the Credit
Agreement is hereby amended by deleting in its entirety the last sentence of
such subsection starting with the words "If any" and ending with the words
"amount of such excess" and inserting in lieu thereof the following:
"If, at the time of delivery of a U.S. Dollar Borrowing Base
Certificate or a Canadian Dollar Borrowing Base Certificate, the sum of (i)
the aggregate amount of the Canadian Dollar Exposure at such time, (ii) the
aggregate amount of the Revolving Credit Exposure at such time and (iii) the
aggregate principal amount of the Swing Line Loans outstanding at such time
shall exceed the sum of (x) the U.S. Dollar Borrowing Base as of the date of
the most recent U.S. Dollar Borrowing Base Certificate furnished to the
Administrative Agent and (y) the Canadian Borrowing Base as of the date of the
most recent Canadian Dollar Borrowing Base Certificate furnished to the
Administrative Agent, the applicable Borrower(s) shall prepay the Revolving
Credit Loans, the Swing Line Loans and/or the Canadian Dollar Loans on the
date such Certificate is delivered to the Administrative Agent in an aggregate
amount equal to the amount of such excess. At the time of any such
prepayment, the Borrowers shall specify in writing to the Administrative Agent
whether such prepayment is of Revolving Credit Loans, Swing Line Loans,
Canadian Dollar Loans or, if a combination thereof, the amount of each being
prepaid."
3. Amendments to Credit Agreement Regarding Take-Or-Pay Agreements.
(a) Amendment to Subsection 9.10. Subsection 9.10 of the Credit
Agreement is hereby amended by (I) inserting immediately before the phrase
"Contingent Obligations" in clause (c) thereof the word "other"; (ii)
renumbering clause (c) of that subsection as clause (e); and (iii) renumbering
clause (e) of that subsection as clause (c).
(b) Amendment to Schedule VII. Schedule VII of the Credit Agreement is
hereby amended by deleting such Schedule in its entirety and inserting in lieu
thereof a new Schedule VII a copy of which is attached to this First Amendment
as Exhibit A hereto.
4. Representations and Warranties. Each of the Borrowers hereby represents
and warrants to the Banks and the Agents that:
(a) There exists no Default or Event of Default under the Credit
Agreement as amended hereby;
(b) The representations and warranties made in the Credit Agreement are
true and correct in all material respects on and as of the date hereof as if
made on and as of the date hereof; and
(c) The execution and delivery of this First Amendment by and on behalf
of each Borrower has been duly authorized by all requisite action on behalf of
the Borrowers and this First Amendment constitutes the legal, valid and
binding obligation of each Borrower, enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
<PAGE> 57
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity
or at law).
5. Effectiveness. This First Amendment shall become effective upon the
Administrative Agent receiving counterparts hereof duly executed by each
Borrower and the Required Banks. If and when this First Amendment becomes
effective, the amendments to the Credit Agreement set forth in Paragraph 3
hereof shall be deemed to have been effective on and as of the Closing Date.
6. Limited Effect. Except as expressly amended by this First Amendment, the
Credit Agreement shall continue to be, and shall remain, unaltered and in full
force and effect in accordance with its terms.
7. Release and Indemnity. Recognizing and in consideration of the Banks' and
the Administrative Agent's agreement to the amendments set forth herein, each
Borrower hereby waives and releases the Banks and the Agents and their
officers, attorneys, agents, and employees from any liability, suit, damage,
claim, loss or expense of any kind or nature whatsoever and howsoever arising
that such Borrower ever had or now has against any of them arising out of or
relating to any Bank's or any Agent's acts or omissions with respect to this
First Amendment, the Credit Agreement, the other Loan Documents or any other
matters described or referred to herein or therein. Each Borrower further
hereby agrees to indemnify and hold the Agents and the Banks and their
officers, attorneys, agents and employees harmless from any loss, damage,
judgment, liability or expense (including counsel fees) suffered by or
rendered against the Banks or the Agents or any of them on account of anything
arising out of this First Amendment, the Credit Agreement, the other Loan
Documents or any other document delivered pursuant thereto up to and including
the date hereof; provided that, no Borrower shall have any obligation
hereunder to any Bank or Agent with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of such Bank or Agent.
8. Miscellaneous.
(a) Expenses. Each Borrower agrees to pay all of the Administrative
Agent's reasonable out-of-pocket expenses incurred in connection with the
preparation, negotiation and execution of this First Amendment including,
without limitation, the reasonable fees and expenses of Ballard Spahr Andrews
& Ingersoll.
(b) Governing Law. This First Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(c) Successor and Assigns. The terms and provisions of this First
Amendment shall be binding upon and shall inure to the benefit of the
Borrowers, the Agents and the Banks and their respective successors and
assigns.
(d) Counterparts. This First Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which shall constitute one and the same instrument.
<PAGE> 58
(e) Headings. The headings of any paragraph of this First Amendment are
for convenience only and shall not be used to interpret any provision hereof.
(f) Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought.
IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ATTEST: VWR SCIENTIFIC PRODUCTS CORPORATION
By: By:
----------------------------- ------------------------------
Name: Name:
Title: Title:
ATTEST: VWR SCIENTIFIC OF CANADA LTD.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
SCIENTIFIC HOLDINGS CORP.
By:
----------------------------
Name:
Title:
ATTEST: VWR SCIENTIFIC INTERNATIONAL
CORPORATION
By: By:
---------------------------- ----------------------------
Name: Name:
Title: Title:
CORESTATES BANK, N.A.
as a Bank and as
Administrative Agent
<PAGE> 59
By:
----------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Bank and as
Documentation Agent
By:
---------------------------
Name:
Title:
SEATTLE-FIRST NATIONAL BANK
By:
---------------------------
Name:
Title:
BANK OF AMERICA CANADA
By:
---------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By:
----------------------------
<PAGE> 60
Name:
Title:
BAYERISCHE LANDESBANK
GIROZENTRALE,
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title
COMMERZBANK, A.G.
By:
--------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DEUTSCHE BANK AG, New York
Branch and/or Cayman Islands
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK,
New York Branch and/or
<PAGE> 61
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DRESDNER BANK AG, New York
Branch and Grand Cayman
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
THE FUJI BANK, LIMITED
By:
----------------------------
Name:
Title:
<PAGE> 62
LTCB TRUST COMPANY
By:
----------------------------
Name:
Title:
THE NIPPON CREDIT BANK, LTD.
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
-----------------------------
Name:
Title:
By:
-----------------------------
<PAGE> 63
Name:
Title:
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By:
-----------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-----------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
NATIONAL CITY BANK
By:
-----------------------------
Name:
Title:
THE ROYAL BANK OF SCOTLAND plc
By:
-----------------------------
Name:
Title:
<PAGE> 64
SOCIETE GENERALE
By:
-----------------------------
Name:
Title:
(..continued)
<PAGE> 65
EXHIBIT 4(l)
SECOND AMENDMENT
SECOND AMENDMENT, dated as of August 30, 1996, among VWR SCIENTIFIC PRODUCTS
CORPORATION (formerly known as VWR Corporation) ("VWR"), VWR SCIENTIFIC OF
CANADA LTD. ("VWR Canada"), SCIENTIFIC HOLDINGS CORP. ("Scientific Holdings"),
VWR SCIENTIFIC INTERNATIONAL CORPORATION, ("VWR International"), the several
banks and other financial institutions parties to the Credit Agreement (as
hereinafter defined) (individually a "Bank"; collectively, the "Banks"),
CORESTATES BANK, N.A., as administrative agent (in such capacity, the
"Administrative Agent"), and PNC BANK, NATIONAL ASSOCIATION, as documentation
agent (in such capacity, the "Documentation Agent").
W I T N E S S E T H:
WHEREAS, VWR, VWR Canada, Scientific Holdings, VWR International
(individually, a "Borrower"; collectively, the "Borrowers"), the Banks, the
Administrative Agent and the Documentation Agent are parties to a Credit
Agreement, dated as of September 14, 1995 (as heretofore amended, supplemented
or otherwise modified, the "Credit Agreement");
WHEREAS, the Borrowers have requested that the Banks (a) amend the definition
of Applicable Margin so as to reduce the interest rate applicable to Loans,
(b) increase the Swing Line Commitment and (c) delete the requirement that
there be certain time periods in which the available commitments are at least
$30,000,000; and
WHEREAS, the Required Banks have agreed to so amend the Credit Agreement on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and for other consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
2. Amendment to Definition of Applicable Margin. Section 1.1 of the Credit
Agreement is hereby amended by deleting the chart appearing in the definition
of the term Applicable Margin and inserting in lieu thereof the following new
chart:
Senior Debt/EBITDA Eurodollar Canadian Canadian
Ratio Base Rate Rate Base Rate COF RATE
------------------ --------- ---------- --------- --------
Less than 1.50 to 1 0 .50% 0 .5%
<PAGE> 66
Less than 2.00 to 1
but greater than or
equal to 1.50 to 1 0 .75% 0 .75%
Less than 2.50 to 1
but greater than or
equal to 2.00 to 1 0 1.00% 0 1.00%
Less than 3.00 to 1
but greater than or
equal to 2.50 to 1 0 1.25% 0 1.25%
Less than 3.50 to 1
but greater than or
equal to 3.00 to 1 0 1.50% 0 1.50%
Equal to or greater
than 3.50 to 1 .75% 2.25% .75% 2.25%
3. Increase on Swing Line Commitment. Section 2.13(a) of the Credit
Agreement is hereby amended by deleting the number "$5,000,000" the one time
it appears therein and inserting in lieu thereof the number "$10,000,000".
4. Deletion of Clean-Up Provision. (a) Section 5.7 of the Credit Agreement
is hereby amended by deleting in its entirety clause (d) thereof from the
phrase "The applicable Borrower(s)" to and including the words "each being
prepaid" and inserting in lieu thereof the phrase "[INTENTIONALLY DELETED]"
and (b) Section 10.1 of the Credit Agreement is hereby amended by deleting in
its entirety clause (i) thereof from the phrase "Either (i) in" through and
including the phrase "at least $30,000,000" and inserting in lieu thereof the
phrase "[INTENTIONALLY DELETED]".
5. Representations and Warranties. Each of the Borrowers hereby represents
and warrants to the Banks and the Agents that:
There exists no Default or Event of Default under the Credit Agreement as
amended hereby;
The representations and warranties made in the Credit Agreement are true and
correct in all material respects on and as of the date hereof as if made on
and as of the date hereof; and
The execution and delivery of this Second Amendment by and on behalf of each
Borrower has been duly authorized by all requisite action on behalf of the
Borrowers and this Second Amendment constitutes the legal, valid and binding
obligation of each Borrower, enforceable against it in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity
or at law).
<PAGE> 67
6. Effectiveness. This Second Amendment shall become effective upon the
Administrative Agent receiving (a) counterparts hereof duly executed by each
Borrower and each Bank and (b) a Swing Line Note in the amount of $10,000,000
executed by the U.S. Dollar Borrowers in favor of CoreStates Bank, N.A. If
and when this Second Amendment becomes effective, the amendment to the
definition of the term "Applicable Margin" set forth in Paragraph 2 hereof
shall be deemed to be effective on and as of September 15, 1996..
7. Limited Effect. Except as expressly amended by this Second Amendment, the
Credit Agreement shall continue to be, and shall remain, unaltered and in full
force and effect in accordance with its terms.
8. Release and Indemnity. Recognizing and in consideration of the Banks' and
the Administrative Agent's agreement to the amendments set forth herein, each
Borrower hereby waives and releases the Banks and the Agents and their
officers, attorneys, agents, and employees from any liability, suit, damage,
claim, loss or expense of any kind or nature whatsoever and howsoever arising
that such Borrower ever had or now has against any of them arising out of or
relating to any Bank's or any Agent's acts or omissions with respect to this
Second Amendment, the Credit Agreement, the other Loan Documents or any other
matters described or referred to herein or therein. Each Borrower further
hereby agrees to indemnify and hold the Agents and the Banks and their
officers, attorneys, agents and employees harmless from any loss, damage,
judgment, liability or expense (including counsel fees) suffered by or
rendered against the Banks or the Agents or any of them on account of anything
arising out of this Second Amendment, the Credit Agreement, the other Loan
Documents or any other document delivered pursuant thereto up to and including
the date hereof; provided that, no Borrower shall have any obligation
hereunder to any Bank or Agent with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of such Bank or Agent.
9. Miscellaneous.
(a) Expenses. Each Borrower agrees to pay all of the Administrative
Agent's reasonable out-of-pocket expenses incurred in connection with the
preparation, negotiation and execution of this Second Amendment including,
without limitation, the reasonable fees and expenses of Ballard Spahr Andrews
& Ingersoll.
(b) Governing Law. This Second Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(c) Successor and Assigns. The terms and provisions of this Second
Amendment shall be binding upon and shall inure to the benefit of the
Borrowers, the Agents and the Banks and their respective successors and
assigns.
(d) Counterparts. This Second Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which shall constitute one and the same instrument.
<PAGE> 68
(e) Headings. The headings of any paragraph of this Second Amendment are
for convenience only and shall not be used to interpret any provision hereof.
(f) Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ATTEST: VWR SCIENTIFIC PRODUCTS CORPORATION
By: By:
----------------------------- ------------------------------
Name: Name:
Title: Title:
ATTEST: VWR SCIENTIFIC OF CANADA LTD.
By: By:
----------------------------- -----------------------------
Name: Name:
Title: Title:
SCIENTIFIC HOLDINGS CORP.
By:
----------------------------
Name:
Title:
ATTEST: VWR SCIENTIFIC INTERNATIONAL
CORPORATION
By: By:
---------------------------- ----------------------------
Name: Name:
Title: Title:
CORESTATES BANK, N.A.
as a Bank and as
<PAGE> 69
Administrative Agent
By:
----------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Bank and as
Documentation Agent
By:
---------------------------
Name:
Title:
SEATTLE-FIRST NATIONAL BANK
By:
---------------------------
Name:
Title:
<PAGE> 70
BANK OF AMERICA CANADA
By:
---------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By:
----------------------------
Name:
Title:
BAYERISCHE LANDESBANK
GIROZENTRALE,
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title
COMMERZBANK, A.G.
By:
--------------------------
Name:
Title:
<PAGE> 71
By:
----------------------------
Name:
Title:
DEUTSCHE BANK AG, New York
Branch and/or Cayman Islands
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK,
New York Branch and/or
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DRESDNER BANK AG, New York
Branch and Grand Cayman
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
<PAGE> 72
Title:
THE FUJI BANK, LIMITED
By:
----------------------------
Name:
Title:
<PAGE> 73
LTCB TRUST COMPANY
By:
----------------------------
Name:
Title:
THE NIPPON CREDIT BANK, LTD.
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
By:
-----------------------------
Name:
Title:
By:
-----------------------------
<PAGE> 74
Name:
Title:
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By:
-----------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-----------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
NATIONAL CITY BANK
By:
-----------------------------
Name:
Title:
THE ROYAL BANK OF SCOTLAND plc
By:
-----------------------------
Name:
Title:
<PAGE> 75
SOCIETE GENERALE
By:
-----------------------------
Name:
Title:
(..continued)
<PAGE> 76
EXHIBIT 4(m)
THIRD AMENDMENT
THIRD AMENDMENT, dated as of November 22, 1996, among VWR SCIENTIFIC PRODUCTS
CORPORATION (formerly known as VWR Corporation) ("VWR"), VWR SCIENTIFIC OF
CANADA LTD. ("VWR Canada"), SCIENTIFIC HOLDINGS CORP. ("Scientific Holdings"),
VWR SCIENTIFIC INTERNATIONAL CORPORATION, ("VWR International"), the several
banks and other financial institutions parties to the Credit Agreement (as
hereinafter defined) (individually a "Bank"; collectively, the "Banks"),
CORESTATES BANK, N.A., as administrative agent (in such capacity, the
"Administrative Agent"), and PNC BANK, NATIONAL ASSOCIATION, as documentation
agent (in such capacity, the "Documentation Agent").
W I T N E S E T H:
WHEREAS, VWR, VWR Canada, Scientific Holdings, VWR International
(individually, a "Borrower"; collectively, the "Borrowers"), the Banks, the
Administrative Agent and the Documentation Agent are parties to a Credit
Agreement, dated as of September 14, 1995 (as heretofore amended, supplemented
or otherwise modified, the "Credit Agreement");
WHEREAS, the Borrowers have requested (a) a temporary increase in the amount
of the Revolving Credit Commitments from $133,000,000 to $158,000,000
effective December 15, 1996 reducing back to $133,000,000 at December 31, 1997
and (b) the addition of a new pricing tier to the Credit Agreement; and
WHEREAS, the Banks have agreed to so amend the Credit Agreement on the terms
and conditions set forth herein, including a reduction in the minimum amount
of assignments from $10,000,000 to $5,000,000.
NOW, THEREFORE, in consideration of the foregoing and for other consideration,
the receipt and sufficiency of which is hereby acknowledged, the parties
hereto, intending to be legally bound, hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, terms defined in the
Credit Agreement are used herein as therein defined.
2. Increase in Revolving Credit Commitments.
(a) The first two columns of Schedule I to the Credit Agreement entitled
"Revolving Credit Commitment" and "Revolving Credit Commitment Percentage",
respectively, are hereby deleted in their entirety and there shall be inserted
in lieu thereof two new columns which shall read as set forth in Schedule I to
this Third Amendment.
<PAGE> 77
(b) Section 5.5 of the Credit Agreement is hereby amended by adding at
the end thereof a new clause (e) which shall read as follows:
(e) On December 31, 1997, the Revolving Credit Commitments of all of
the U.S. Dollar Banks shall be reduced to an aggregate amount equal to
$133,000,000; provided that, no such reduction on that date shall be necessary
to the extent that, as of such date, the aggregate Revolving Credit
Commitments of all of the U.S. Dollar Banks shall equal or be less than
$133,000,000. The provisions of clause (c) of this Section 5.5 and clause (e)
of Section 5.7 shall apply to the foregoing reduction to $133,000,000 so that
(i) such reduction shall be made ratably among the U.S. Dollar Banks in
accordance with their respective Revolving Credit Commitment Percentages, (ii)
the U.S. Dollar Borrowers shall pay to the Administrative Agent for the
account of the U.S. Dollar Banks on the date of such reduction, accrued
Commitment Fees on the amount of such reduction and (iii) any prepayment
required in connection with such reduction shall be made in accordance with
Section 5.7(e).
3. Amendment to Definition of Applicable Margin.
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting the
chart appearing in the definition of the term Applicable Margin and inserting
in lieu thereof the following new chart:
Senior Debt/EBITDA Eurodollar Canadian Canadian
Ratio Base Rate Rate Base Rate COF RATE
------------------ --------- ---------- --------- --------
Less than 1.50 to 1 0 .50% 0 .5%
Less than 2.00 to 1
but greater than or
equal to 1.50 to 1 0 .75% 0 .75%
Less than 2.50 to 1
but greater than or
equal to 2.00 to 1 0 1.00% 0 1.00%
Less than 3.00 to 1
but greater than or
equal to 2.50 to 1 0 1.25% 0 1.25%
Less than 3.50 to 1
but greater than or
equal to 3.00 to 1 0 1.50% 0 1.50%
Less than 4.00 to 1
but greater than or
equal to 3.50 to 1 .25% 1.75% .25% 1.75%
Equal to or greater
than 4.00 to 1 .75% 2.25% .75% 2.25%
<PAGE> 78
(b) Section 1.1 of the Credit Agreement is hereby amended by deleting in
clause (a) of the proviso to the definition of the term of Applicable Margin
the number "3.50" the one time it appears therein and inserting in lieu
thereof the number "4.00".
4. Amendment to Definition of Commitment Fee Rate.
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting the
chart appearing in the definition of the term Commitment Fee Rate and
inserting in lieu thereof the following new chart:
Senior Debt/EBITDA Commitment
Ratio Fee Rate
------------------ ----------
Less than 1.50 to 1 .20%
Less than 2.00 to 1
but greater than or
equal to 1.50 to 1 .25%
Less than 2.50 to 1
but greater than or
equal to 2.00 to 1 .30%
Less than 3.00 to 1
but greater than or
equal to 2.50 to 1 .375%
Less than 3.50 to 1
but greater than or
equal to 3.00 to 1 .375%
Less than 4.00 to 1
but greater than or
equal to 3.50 to 1 .375%
Equal to or greater
than 4.00 to 1 .50%
(b) Section 1.1 of the Credit Agreement is hereby amended by deleting in
clause (a) of the proviso to the definition of the term Commitment Fee Rate
the number "3.50" the one time it appears therein and inserting in lieu
thereof the number "4.00".
5. Reduction in Minimum Amount of Assignments. Clause (b) of Section 12.6 of
the Credit Agreement is hereby amended by deleting the number "10,000,000" the
one time it appears therein and inserting in lieu thereof the number
"5,000,000".
<PAGE> 79
6. Representations and Warranties. Each of the Borrowers hereby represents
and warrants to the Banks and the Agents that:
(a) There exists no Default or Event of Default under the Credit
Agreement as amended hereby;
(b) The representations and warranties made in the Credit Agreement are
true and correct in all material respects on and as of the date hereof as if
made on and as of the date hereof; and
(c) The execution and delivery of this Third Amendment by and on behalf
of each Borrower has been duly authorized by all requisite action on behalf of
the Borrowers and this Third Amendment constitutes the legal, valid and
binding obligation of each Borrower, enforceable against it in accordance with
its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (whether enforcement is sought by proceedings in equity
or at law).
7. Effectiveness. This Third Amendment shall become effective upon the
Administrative Agent receiving (a) counterparts hereof duly executed by each
Borrower and each Bank; (b) a new Revolving Credit Note executed by each of
the U.S. Dollar Borrowers in favor of each U.S. Dollar Bank that is increasing
its Revolving Credit Commitment pursuant to this Third Amendment, each such
new note to be dated the Closing Date and to be in an amount equal to the new
Revolving Credit Commitment of such Bank; and (c) the fees previously agreed
to be paid by the Borrowers in connection with this Third Amendment.
Notwithstanding the preceding sentence, the amendments contained in
Paragraph 2 hereof relating to the increase in the Revolving Credit
Commitments shall in no event become effective prior to December 15, 1996.
8. Limited Effect. Except as expressly amended by this Third Amendment, the
Credit Agreement shall continue to be, and shall remain, unaltered and in full
force and effect in accordance with its terms.
9. Release and Indemnity. Recognizing and in consideration of the Banks' and
the Administrative Agent's agreement to the amendments set forth herein, each
Borrower hereby waives and releases the Banks and the Agents and their
officers, attorneys, agents, and employees from any liability, suit, damage,
claim, loss or expense of any kind or nature whatsoever and howsoever arising
that such Borrower ever had or now has against any of them arising out of or
relating to any Bank's or any Agent's acts or omissions with respect to this
Third Amendment, the Credit Agreement, the other Loan Documents or any other
matters described or referred to herein or therein. Each Borrower further
hereby agrees to indemnify and hold the Agents and the Banks and their
officers, attorneys, agents and employees harmless from any loss, damage,
judgment, liability or expense (including counsel fees) suffered by or
rendered against the Banks or the Agents or any of them on account of anything
arising out of this Third Amendment, the Credit Agreement, the other Loan
Documents or any other document delivered pursuant thereto up to and including
the date hereof; provided that, no Borrower shall have any obligation
<PAGE> 80
hereunder to any Bank or Agent with respect to indemnified liabilities arising
from the gross negligence or willful misconduct of such Bank or Agent.
10. Miscellaneous.
(a) Expenses. Each Borrower agrees to pay all of the Administrative
Agent's reasonable out-of-pocket expenses incurred in connection with the
preparation, negotiation and execution of this Third Amendment including,
without limitation, the reasonable fees and expenses of Ballard Spahr Andrews
& Ingersoll.
(b) Governing Law. This Third Amendment shall be governed by and
construed in accordance with the laws of the Commonwealth of Pennsylvania.
(c) Successor and Assigns. The terms and provisions of this Third
Amendment shall be binding upon and shall inure to the benefit of the
Borrowers, the Agents and the Banks and their respective successors and
assigns.
(d) Counterparts. This Third Amendment may be executed in one or more
counterparts, each of which shall be deemed to be an original, and all of
which shall constitute one and the same instrument.
(e) Headings. The headings of any paragraph of this Third Amendment are
for convenience only and shall not be used to interpret any provision hereof.
(f) Modifications. No modification hereof or any agreement referred to
herein shall be binding or enforceable unless in writing and signed on behalf
of the party against whom enforcement is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Third Amendment to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ATTEST: VWR SCIENTIFIC PRODUCTS CORPORATION
By: By:
----------------------------- ------------------------------
Name: Name:
Title: Title:
VWR SCIENTIFIC OF CANADA LTD.
By:
-----------------------------
Name:
Title:
<PAGE> 81
SCIENTIFIC HOLDINGS CORP.
By:
----------------------------
Name:
Title:
VWR SCIENTIFIC INTERNATIONAL
CORPORATION
By:
----------------------------
Name:
Title:
CORESTATES BANK, N.A.
as a Bank and as
Administrative Agent
By:
----------------------------
Name:
Title:
PNC BANK, NATIONAL ASSOCIATION
as a Bank and as
Documentation Agent
By:
---------------------------
Name:
Title:
SEATTLE-FIRST NATIONAL BANK
By:
---------------------------
Name:
Title:
BANK OF AMERICA CANADA
<PAGE> 82
By:
---------------------------
Name:
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By:
----------------------------
Name:
Title:
THE FIRST NATIONAL BANK OF
BOSTON
By:
----------------------------
Name:
Title:
BAYERISCHE LANDESBANK
GIROZENTRALE,
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title
COMMERZBANK, A.G.
By:
--------------------------
Name:
Title:
By:
----------------------------
<PAGE> 83
Name:
Title:
DEUTSCHE BANK AG, New York
Branch and/or Cayman Islands
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DG BANK DEUTSCHE
GENOSSENSCHAFTSBANK,
New York Branch and/or
Cayman Islands Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
DRESDNER BANK AG, New York
Branch and Grand Cayman
Branch
By:
----------------------------
Name:
Title:
By:
----------------------------
Name:
Title:
<PAGE> 84
THE FUJI BANK, LIMITED
By:
----------------------------
Name:
Title:
LTCB TRUST COMPANY
By:
----------------------------
Name:
Title:
THE NIPPON CREDIT BANK, LTD.
By:
----------------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-----------------------------
Name:
Title:
THE BANK OF NOVA SCOTIA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
BANQUE FRANCAISE DU COMMERCE
EXTERIEUR
<PAGE> 85
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
CREDIT LYONNAIS
CAYMAN ISLAND BRANCH
By:
-----------------------------
Name:
Title:
MELLON BANK, N.A.
By:
-----------------------------
Name:
Title:
NATIONAL BANK OF CANADA
By:
-----------------------------
Name:
Title:
By:
-----------------------------
Name:
Title:
NATIONAL CITY BANK
By:
-----------------------------
Name:
Title:
<PAGE> 86
THE ROYAL BANK OF SCOTLAND plc
By:
-----------------------------
Name:
Title:
SOCIETE GENERALE
By:
-----------------------------
Name:
Title:
(..continued)
<PAGE> 87
EXHIBIT 11
----------
COMPUTATION OF PER SHARE EARNINGS
Year Ended December 31,
1996 1995 1994
- ------------------------------------------------------------------------
(Amounts in thousands, except per share data)
PRIMARY
Average shares
outstanding 21,892 14,738 11,050
Net effect of
dilutive stock
options-based on
the treasury stock
method using average
market price 317 93 78
------ ------ ------
TOTAL 22,209 14,831 11,128
====== ====== ======
Net income $7,023 $1,935 $2,053
====== ====== =======
Per share amount $ 0.32 $ 0.13 $ 0.18
====== ====== =======
FULLY DILUTED*
Average shares
outstanding 21,892 14,738 11,050
Net effect of
dilutive stock
options-based on
the treasury stock
method using period-
end market price,
if greater than
average market price 398 199 84
------ ------ ------
TOTAL 22,290 14,937 11,134
====== ====== ======
Net income $ 7,023 $ 1,935 $ 2,053
======= ======= =======
Per share amount $ 0.32 $ 0.13 $ 0.18
======= ======= =======
* This information is presented for informational purposes.
<PAGE> 88
EXHIBIT 21
----------
SUBSIDIARIES
DECEMBER 31, 1996
Wholly-owned subsidiaries are:
VWR Scientific International Corporation - a Delaware
corporation
Scientific Holdings Corporation - a Delaware corporation
VWR Scientific of Canada Ltd. - a Canadian corporation, is a
wholly owned subsidiary of Scientific Holdings
Corporation.
<PAGE> 89
EXHIBIT 23
----------
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statements No. 333-12343, 33-49807, 33-35684, 33-03991, 33-34262, 33-
05816, and 33-07590 on Forms S-8 and No. 33-32002 on Form S-3 of our
report dated February 27, 1997, with respect to the consolidated
financial statements and schedule of VWR Scientific Products Corporation
included in the Annual Report (Form 10-K) for the year ended December
31, 1996.
BY (SIGNATURE)
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
March 27, 1997
<PAGE> 90
EXHIBIT 24
----------
POWER OF ATTORNEY
- -----------------
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Jerrold B. Harris and David M. Bronson,
or either of them, their attorneys-in-fact, for them in any and all
capacities, to sign the Annual Report on Form 10-K of VWR Scientific
Products Corporation for the twelve months ended December 31, 1996, and
to file same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, hereby ratifying
and confirming all that said attorneys-in-fact, or their substitute or
substitutes, may do or cause to be done by virtue hereof.
Signature Title Date
--------- ----- ----
BY (SIGNATURE)
James W. Bernard
Director March 26, 1997
BY (SIGNATURE)
Richard E. Engebrecht
Director March 26, 1997
BY (SIGNATURE)
Jerrold B. Harris
Director March 26, 1997
BY (SIGNATURE)
Wolfgang Honn
Director March 26, 1997
BY (SIGNATURE)
Dieter Janssen
Director March 26, 1997
BY (SIGNATURE)
Stephen J. Kunst
Director March 26, 1997
BY (SIGNATURE)
Edward A. McGrath, Jr.
Director March 26, 1997
<PAGE> 91
BY (SIGNATURE)
Donald P. Nielsen
Director March 26, 1997
BY (SIGNATURE)
N. Stewart Rogers
Director March 26, 1997
BY (SIGNATURE)
Harald J. Schroder
Director March 26, 1997
BY (SIGNATURE)
Walter W. Zywottek
Director March 26, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000788043
<NAME> VWR SCIENTIFIC PRODUCTS CORPORATION
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 162,740
<ALLOWANCES> 1,505
<INVENTORY> 108,009
<CURRENT-ASSETS> 285,094
<PP&E> 88,601
<DEPRECIATION> 40,417
<TOTAL-ASSETS> 705,302
<CURRENT-LIABILITIES> 141,119
<BONDS> 367,965
0
0
<COMMON> 22,347
<OTHER-SE> 161,090
<TOTAL-LIABILITY-AND-EQUITY> 705,302
<SALES> 1,117,286
<TOTAL-REVENUES> 1,117,286
<CGS> 870,379
<TOTAL-COSTS> 870,379
<OTHER-EXPENSES> 198,275
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 36,827
<INCOME-PRETAX> 11,805
<INCOME-TAX> 4,782
<INCOME-CONTINUING> 7,023
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,023
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
