-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JsT7wnsNAXhWpNwuuemxejGza/2vzYN+tPTZ5EnXYPDYa3u5WBsmg+CZmxjgOMO0 0GV05nbyqhCN1MpDW0rPDA== 0000011454-96-000013.txt : 19960514 0000011454-96-000013.hdr.sgml : 19960514 ACCESSION NUMBER: 0000011454-96-000013 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960513 SROS: NASD SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BERGEN BRUNSWIG CORP CENTRAL INDEX KEY: 0000011454 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 221444512 STATE OF INCORPORATION: NJ FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-05110 FILM NUMBER: 96561247 BUSINESS ADDRESS: STREET 1: 4000 METROPOLITAN DR CITY: ORANGE STATE: CA ZIP: 92668 BUSINESS PHONE: 7143854000 MAIL ADDRESS: STREET 1: 4000 METROPOLITAN DRIVE CITY: ORANGE STATE: CA ZIP: 92668 FORMER COMPANY: FORMER CONFORMED NAME: BERGEN DRUG CO INC DATE OF NAME CHANGE: 19690409 10-Q 1 BERGEN BRUNSWIG CORPORATION QUARTERLY FORM 10-Q FILING FOR MARCH 31, 1996 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934(NO FEE REQUIRED) For the fiscal quarter ended MARCH 31, 1996 --------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from ____________________ to ________________ Commission file number 1-5110 BERGEN BRUNSWIG CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) NEW JERSEY 22-1444512 - ------------------------------- --------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 4000 METROPOLITAN DRIVE, ORANGE, CALIFORNIA 92668-3510 - --------------------------------------------- --------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (714) 385-4000 --------------------- NO CHANGE - ------------------------------------------------------------------------------- (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date:
Title of each class of Number of Shares Outstanding Common Stock April 30, 1996 ------------------------------- ---------------------------- Class A Common Stock - par value $1.50 per share 40,006,291
INDEX TO EXHIBITS FOUND ON PAGE 16. 1 BERGEN BRUNSWIG CORPORATION INDEX PAGE NO. -------- Part I. Financial Information Item 1. Financial Statements Consolidated Balance Sheets, March 31, 1996 and September 30, 1995 3 Statements of Consolidated Earnings for the second quarter and six months ended March 31, 1996 and 1995 4 Statements of Consolidated Cash Flows for the six months ended March 31, 1996 and 1995 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8 Part II. Other Information Item 1. Legal Proceedings 11 Item 4. Submission of Matters to a Vote of Security Holders 14 Item 5. Other Information 15 Item 6. Exhibits and Reports on Form 8-K 15 Signatures 16 Index to Exhibits 17 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS
BERGEN BRUNSWIG CORPORATION --------------------------- CONSOLIDATED BALANCE SHEETS MARCH 31, 1996 AND SEPTEMBER 30, 1995 (dollars in thousands) (Unaudited) ================================================================================================================================== March 31, September 30, LIABILITIES AND March 31, September 30, - - ASSETS - - 1996 1995 - - SHAREOWNERS' EQUITY - - 1996 1995 ================================================================================================================================== CURRENT ASSETS: CURRENT LIABILITIES: Cash and cash equivalents............ $ 41,648 $ 64,400 Accounts payable.................... $1,359,652 $1,140,466 Accounts and notes receivable, Accrued liabilities................. 76,970 84,500 less allowance for doubtful Customer credit balances............ 118,424 94,766 receivables: $24,308 at March 31, Income taxes payable................ 1,110 - 1996 and $21,364 at September Deferred income taxes............... 6,335 7,353 30, 1995........................... 592,304 603,830 Current portion of Inventories.......................... 1,278,386 1,158,465 long-term obligations............. 928 1,325 Income taxes receivable.............. - 4,801 ---------- ---------- Prepaid expenses..................... 11,494 12,389 Total current liabilities......... 1,563,419 1,328,410 ---------- ---------- ---------- ---------- Total current assets............... 1,923,832 1,843,885 ---------- ---------- LONG-TERM OBLIGATIONS: 7 3/8% senior notes................. 149,245 149,189 5 5/8% senior notes................. - 99,983 7 1/4% senior notes................. 99,679 99,662 Revolving bank loan payable......... 70,000 159,000 PROPERTY - at cost: 7% convertible subordinated Land................................. 12,443 12,443 debentures........................ 20,609 20,914 Building and leasehold improvements.. 82,501 81,729 6 7/8% exchangeable subordinated Equipment and fixtures............... 153,731 144,562 debentures........................ 10,575 10,575 ---------- ---------- Deferred income taxes............... 2,303 2,719 Total property..................... 248,675 238,734 Other............................... 16,183 15,729 Less accumulated depreciation ---------- ---------- and amortization................... 97,639 85,675 Total long-term obligations....... 368,594 557,771 ---------- ---------- ---------- ---------- Property - net..................... 151,036 153,059 ---------- ---------- SHAREOWNERS' EQUITY: Capital Stock: Preferred - authorized 3,000,000 shares; issued: none............ - - Class A Common - authorized 100,000,000 shares; issued: OTHER ASSETS: 44,357,528 shares at March 31, Excess of cost over net assets of 1996 and 44,183,074 shares at acquired companies................. 336,648 341,125 September 30, 1995.............. 66,536 66,275 Investments.......................... 3,826 3,799 Paid-in capital..................... 165,570 163,075 Noncurrent receivables............... 10,676 7,706 Net unrealized loss on investments, Deferred charges and other assets.... 54,702 55,956 net of income tax of $100 at ---------- ---------- March 31, 1996 and $121 at Total other assets................. 405,852 408,586 September 30, 1995................ (157) (319) ---------- ---------- Retained earnings................... 404,669 378,229 ---------- ---------- Total............................. 636,618 607,260 Less Treasury shares at cost: 4,354,558 shares at March 31, 1996 and September 30, 1995....... 87,911 87,911 ---------- ---------- Total shareowners' equity......... 548,707 519,349 ---------- ---------- TOTAL LIABILITIES AND TOTAL ASSETS........................... $2,480,720 $2,405,530 SHAREOWNERS' EQUITY................ $2,480,720 $2,405,530 ========== ========== ========== ========== See accompanying Notes to Consolidated Financial Statements. 3
BERGEN BRUNSWIG CORPORATION --------------------------- STATEMENTS OF CONSOLIDATED EARNINGS FOR THE SECOND QUARTER AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995 (in thousands except per share amounts) (Unaudited)
SECOND QUARTER SIX MONTHS ------------------------------ ------------------------------ 1996 1995 1996 1995 ------------------------------ ------------------------------ Net sales and other revenues $2,454,360 $2,084,216 $4,831,722 $4,068,079 -------------- -------------- -------------- -------------- Costs and expenses: Cost of sales 2,306,477 1,956,668 4,549,612 3,824,588 Distribution, selling, general and administrative expenses 104,681 89,144 203,935 174,936 -------------- -------------- -------------- -------------- Total costs and expenses 2,411,158 2,045,812 4,753,547 3,999,524 -------------- -------------- -------------- -------------- Operating earnings 43,202 38,404 78,175 68,555 Net interest expense 8,048 7,603 16,078 14,394 -------------- -------------- -------------- -------------- Earnings before taxes on income 35,154 30,801 62,097 54,161 Taxes on income 14,765 12,937 26,081 22,748 -------------- -------------- -------------- -------------- Net earnings $ 20,389 $ 17,864 $ 36,016 $ 31,413 ============== ============== ============== ============== Earnings per common and common equivalent share $ .51 $ .45 $ .90 $ .79 ============== =============== ============== ============== Cash dividends per share of Class A Common Stock $ .120 $ .120 $ .240 $ .234 ============== =============== ============== ============== See accompanying Notes to Consolidated Financial Statements. 4
BERGEN BRUNSWIG CORPORATION --------------------------- STATEMENTS OF CONSOLIDATED CASH FLOWS FOR THE SIX MONTHS ENDED MARCH 31, 1996 AND 1995 (in thousands)
------------------------------------- 1996 1995 ------------------------------------- (Unaudited) OPERATING ACTIVITIES Net earnings $ 36,016 $ 31,413 Adjustments to reconcile net earnings to net cash flows from operating activities: Provision for doubtful accounts 4,111 2,998 Depreciation and amortization of property 12,128 9,584 Deferred compensation 953 973 Amortization of customer lists 874 874 Amortization of excess of cost over net assets of acquired companies 4,797 4,425 Deferred income taxes (1,456) (40) Amortization of original issue discount on senior notes 90 83 Amortization of deferred financing costs 235 445 Gain on dispositions of property (11) (351) Effects of changes on: Receivables 4,445 (5,977) Inventories (119,921) (42,022) Prepaid expenses and other assets 769 3,150 Accounts payable 219,186 (5,912) Accrued liabilities (7,530) (27,970) Customer credit balances 23,658 (7,439) Income taxes payable 5,911 187 ----------------- ---------------- Net cash flows from operating activities 184,255 (35,579) ----------------- ---------------- INVESTING ACTIVITIES Sale of other investments 156 2,516 Property acquisitions (10,129) (27,039) Proceeds from dispositions of property 35 414 ----------------- ---------------- Net cash flows from investing activities (9,938) (24,109) ----------------- ---------------- FINANCING ACTIVITIES Repayment of senior notes (100,000) - Repayment of revolving bank loan (89,000) - Proceeds from revolving bank loan - 105,000 Repayment of other obligations (945) (2,148) Redemption of convertible subordinated debentures (305) (20) Shareowners' equity transactions: Exercise of stock options 2,757 877 Cash dividends on Common Stock (9,576) (9,243) ----------------- ---------------- Net cash flows from financing activities (197,069) 94,466 ----------------- ---------------- Net (decrease) increase in cash and cash equivalents (22,752) 34,778 Cash and cash equivalents at beginning of period 64,400 5,264 ----------------- ---------------- Cash and cash equivalents at end of period $ 41,648 $ 40,042 ================= ================ SUPPLEMENTAL CASH FLOW DISCLOSURES Cash paid during the period for: Interest $ 17,308 $ 14,549 Income taxes 22,288 22,602 See accompanying Notes to Consolidated Financial Statements.
5 BERGEN BRUNSWIG CORPORATION --------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) A. Bergen Brunswig Corporation, a New Jersey corporation formed in 1956, and its subsidiaries (collectively, the "Company") are a diversified drug and health care distribution organization and, as such, the nation's largest supplier of pharmaceuticals to the managed care market and the second largest wholesaler to the retail pharmacy market. The Company is the only pharmaceutical distributor to provide both pharmaceuticals and medical-surgical supplies on a national basis. The consolidated financial statements include the accounts of the Company, after elimination of the effect of intercompany transactions and balances. The Company's consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes contained in the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995. Certain reclassifications have been made in the consolidated financial statements and notes to conform to fiscal 1996 presentations. The preparation of the Company's consolidated financial statements in conformity with generally accepted accounting principles necessarily require management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenue and expense during the reporting periods. Actual results could differ from these estimates and assumptions. B. On March 15, 1996, the Company's credit agreement (the "Credit Agreement") with a group of banks was amended to, among other things, increase the maximum borrowing to $400 million and to extend the maturity date to March 15, 2001. Borrowings outstanding under the Credit Agreement were $70 million at March 31, 1996. Outstanding borrowings under the Credit Agreement averaged $149 million during the three months ended March 31, 1996. On January 15, 1996, the Company repaid the $100 million aggregate principal amount of its 5 5/8% Senior Notes (the "Notes") plus accrued interest. These Notes were issued in January 1993 pursuant to the $400 million shelf registration filed by the Company in December 1992. 6 BERGEN BRUNSWIG CORPORATION --------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued) (UNAUDITED) The Company filed a shelf registration statement with the Securities and Exchange Commission which became effective on March 27, 1996. The registration statement allows the Company to sell senior and subordinated debt or equity securities to the public from time to time up to an aggregate maximum principal amount of $400 million. The Company intends to use the net proceeds from the sale of such securities for general corporate purposes, which may include, without limitations, the repayment of indebtedness of the Company or of any of its subsidiaries, possible acquisitions, capital expenditures and working capital needs. Pending such application, the net proceeds may be temporarily invested in short term securities. Any offering of such securities shall be made only by means of a prospectus. C. On January 26, 1995, the Company declared a 5% stock dividend on the Company's Class A Common Stock which was paid on March 1, 1995 to shareowners of record on February 6, 1995. The dividend was charged to retained earnings in the amount of $44.2 million, which was based on the closing price of $23.375 per share of Class A Common Stock on the declaration date. Average shares outstanding and all per share amounts included in the accompanying consolidated financial statements and notes are based on the increased numbers of shares giving retroactive effect to the stock dividend. D. Earnings per common and common equivalent share are based on the weighted average number of shares of Class A Common Stock outstanding during each period and the assumed exercise of dilutive employees' stock options (less the number of Treasury shares assumed to be purchased from the proceeds using the average market price of the Company's Class A Common Stock), after giving effect each period to the 5% stock dividend declared January 26, 1995. Earnings per share are based upon 40,259,894 shares and 39,969,328 shares for the second quarter ended March 31, 1996 and 1995, respectively, and 40,173,445 shares and 39,568,272 shares for the respective six-month year-to-date periods. E. In the opinion of management of the Company, the foregoing consolidated financial statements reflect all adjustments necessary for a fair statement of the results of the Company and its subsidiaries for the periods shown and such adjustments are of a normal recurring nature. Results of operations for the second quarter and first six months of fiscal 1996 are not necessarily indicative of results to be expected for the full year. 7 BERGEN BRUNSWIG CORPORATION --------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS - --------------------- For the quarter ended March 31, 1996, net sales and other revenues increased 18%, while operating earnings and pre-tax earnings increased 12% and 14%, respectively, from the quarter ended March 31, 1995. For the six months ended March 31, 1996, net sales and other revenues increased 19%, while operating earnings and pre-tax earnings increased 14% and 15%, respectively, compared to the six-month period ended March 31, 1995. Of the 18% increase in net sales and other revenues for the quarter, approximately 2% is attributable to the acquisition of Colonial Healthcare Supply Co. ("Colonial") in August 1995. Of the 19% increase in net sales and other revenues for the six-month period, approximately 3% in the aggregate is attributable to the acquisitions of Colonial and Biddle & Crowther Company in January 1995, both privately-held medical-surgical supply distributors. Approximately 16% of the net sales and other revenues increase for both the quarter and six-month period reflects internal growth within the Company's existing pharmaceutical business. Earnings per share for the second quarter and first six months of fiscal 1996 increased 13% and 14%, respectively, on increases of 1% and 2%, respectively, in the average number of common and common equivalent shares outstanding. Cost of sales increased 18% and 19% from the second quarter and six-month period of fiscal 1995, respectively, due mainly to the Company's increased sales levels. The overall gross profit as a percent of net sales and other revenues for the second quarter and first six months decreased as a result of a decrease in gross margins due to continued price competition and customer mix in the Company's pharmaceutical distribution business, partially offset by sales from the Company's higher gross margin medical-surgical supply distribution business. In the pharmaceutical distribution industry, it has been customary to pass on to customers price increases from manufacturers. Investment buying enables distributors such as the Company to benefit from anticipated price increases. The rate or frequency of future price increases by manufacturers, or the lack thereof, does influence the profitability of the Company. Management of the Company anticipates further downward pressure on gross margins in the Company's pharmaceutical distribution business during the fiscal year ending September 30, 1996 because of continued price competition influenced by large customers. The Company 8 BERGEN BRUNSWIG CORPORATION --------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) expects that these pressures on operating margin may be offset to some extent by increased sales of more profitable products, such as generic drugs and medical-surgical supplies, and continued reduction of distribution, selling, general and administrative expenses ("DSG&A") as a percentage of net sales and other revenues through improved operating efficiencies. DSG&A increased 17% over both the prior year quarter and six-month period while net sales and other revenues increased 18% and 19% over the prior year quarter and six-month period, respectively. These expenses as a percent of net sales and other revenues were 4.3% in both the second quarter of fiscal 1996 and 1995 and were 4.2% and 4.3% of net sales and other revenues in the current and prior year six-month periods, respectively. The decreased DSG&A as a percentage of net sales and other revenues in the current year six-month period reflects continued operating efficiencies, including the positive effects of the continuing consolidation of distribution divisions into larger regional distribution centers, partially offset by increased DSG&A in the Company's medical-surgical supply business. Net interest expense increased from $7.6 million to $8.1 million for the second quarter and increased from $14.4 million to $16.1 million for six-month period of fiscal 1996 primarily due to interest on the $100 million 7 1/4% Senior Notes issued June 1, 1995, partially offset by decreased borrowings under the Credit Agreement. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- At March 31, 1996, capitalization consisted of 39% debt and 61% equity, compared to 51% and 49%, respectively, at September 30, 1995. The decreased debt percentage primarily reflects decreased borrowings under the Credit Agreement. Borrowings under the Credit Agreement were $70.0 million and $159.0 million at March 31, 1996 and September 30, 1995, respectively. Cash and cash equivalents of $41.6 million at March 31, 1996 decreased from $64.4 million at September 30, 1995, primarily as a result of decreased borrowings under the Credit Agreement, partially offset by an increase in net cash flows from operating activities (principally due to a decrease in investment in inventories, net of trade accounts payable). Capital expenditures for the six months ended March 31, 1996 were $10.1 million and relate principally to additional investment in existing locations, including the acquisition of automated warehouse equipment and additional investments in data processing equipment. 9 BERGEN BRUNSWIG CORPORATION --------------------------- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Cash dividends on Class A Common Stock amounted to $9.6 million for the six months ended March 31, 1996 and $9.2 million for the same period in the prior year, reflecting the increased number of shares of Class A Common Stock outstanding. The Company believes that internally generated funds, funds available under the existing Credit Agreement and funds available under the existing shelf registration will be sufficient to meet anticipated cash and capital needs. 10 BERGEN BRUNSWIG CORPORATION --------------------------- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Drug Barn, Inc. ("Drug Barn"), a former retail pharmacy chain in the San Francisco Bay Area, currently with two operating stores, owed the Company approximately $6.2 million in principal obligations as of March 31, 1996, of which approximately $1.2 million represents trade receivables and $5.0 million represents a note which matured on March 25, 1993, neither of which has been paid to date. The Company has a security interest in virtually all of Drug Barn's assets, as well as personal guaranties, which collaterize the note and trade receivables. The Company and Drug Barn have entered into litigation relating to these obligations which is more fully detailed in "Item 3 - Legal Proceedings" of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995 as filed with the Securities and Exchange Commission and is incorporated herein by reference. Drug Barn commenced a Chapter 11 case in U.S. Bankruptcy Court for the Northern District of California by filing a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code in July 1993 and remains in possession pursuant to 11 U.S.C. Section 1107. In April 1994, this consolidated matter (excluding the bankruptcy court matters) was transferred to the San Francisco County Superior Court along with the California state actions referenced in the next paragraph. A trial date on principally the contract-related actions may occur during calendar 1996, if the bankruptcy reorganization plan referred to below is not confirmed. In April 1996, the Company filed a second plan of reorganization with the Bankruptcy Court to resolve all of its claims with Drug Barn and its guarantors. The plan of reorganization provides for, among other things, a sale of all Drug Barn's assets, a distribution of the asset sale proceeds to creditors and a settlement of all claims of any nature between the Company and Drug Barn (but not its guarantors). This plan is subject to confirmation by the Bankruptcy Court and, if approved, will not have a material impact on the Company. Between August 1993 and February 1994, the Company, along with various other pharmaceutical industry-related companies, was named as a defendant in eight separate state antitrust actions in three courts in California. These lawsuits are more fully detailed in "Item 1 - Legal Proceedings" of Part II of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994 as filed with the Securities and Exchange Commission and is incorporated herein by reference. Between August 1993 and November 1993, the Company was also named in 11 separate Federal antitrust actions. All 11 actions were consolidated into one multidistrict action in the Northern District of Illinois entitled, IN RE BRAND-NAME PRESCRIPTION DRUGS ANTITRUST LITIGATION, No. 94 C. 897 (MDL 997). On April 4, 1996, and upon motion brought by the Company and each of the 11 BERGEN BRUNSWIG CORPORATION --------------------------- PART II. OTHER INFORMATION wholesale defendants, the District Court granted summary judgment in favor of all wholesalers which has the effect of dismissing these defendants from this suit. Plaintiffs have indicated that they plan to appeal this decision. These lawsuits are more fully detailed in "Item 3 - Legal Proceedings" of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995 as filed with the Securities and Exchange Commission and is incorporated herein by reference. In March 1995, the Company was named along with 30 other pharmaceutical industry-related companies in a separate complaint filed in the U.S. District Court, Eastern District of Arkansas entitled LAWRENCE ADAMS D/B/A MC SPADDEN DRUG STORE, ET AL. V. ABBOTT LABORATORIES, ET AL., alleging similar claims as in the Federal complaint. This action has been consolidated into the Federal multidistrict action. In May 1994, the Company and Durr Drug Company were named as defendants, along with 25 other pharmaceutical related-industry companies, in a state antitrust class action in the Circuit Court of Greene County, Alabama entitled DURRETT V. UPJOHN COMPANY, ET AL. This lawsuit is more fully detailed in "Item 3 - Legal Proceedings" of Part I of the Company's Annual Report on Form 10-K for the fiscal year ended September 30, 1995 as filed with the Securities and Exchange Commission and is incorporated herein by reference. In October 1994, the Company entered into a sharing agreement with five other wholesalers and 26 pharmaceutical manufacturers. Among other things, the agreement provides that: (a) if a judgment is entered into against both the manufacturer and wholesaler defendants, the total exposure for joint and several liability of the Company is limited to $1,000,000; (b) if a settlement is entered into by, between, and among the manufacturer and wholesaler defendants, the Company has no monetary exposure for such settlement amount; (c) the six wholesaler defendants will be reimbursed by the 26 pharmaceutical defendants for related legal fees and expenses up to $9,000,000 total (of which the Company will receive a proportionate share); and (d) the Company is to release certain claims which it might have had against the manufacturer defendants for the claims presented by the plaintiffs in these cases. The agreement covers the Federal court litigation, as well as the cases which have been filed in various state courts. On February 9, 1996, the class plaintiffs filed a motion for preliminary approval of a settlement with 15 of the manufacturer defendants, which would result in dismissal of claims against those manufacturers and a reduction of the potential claims against the remaining defendants, including those against the Company. The Court did not grant approval for the settlement and the plaintiffs have indicated that this decision will be appealed. The Company is not a party to this proposed settlement but retains protection afforded by the sharing agreement referenced 12 BERGEN BRUNSWIG CORPORATION --------------------------- PART II. OTHER INFORMATION above. After discussions with counsel, management of the Company believes that the allegations of liability set forth in these lawsuits are without merit as to the wholesaler defendants and that any attendant liability of the Company, although unlikely, would not have a material adverse effect on the Company's financial position or results of operations. The Company is involved in various additional items of litigation. Although the amount of liability at March 31, 1996 with respect to these items of litigation cannot be ascertained, in the opinion of management, any resulting future liability will not have a material adverse effect on its financial position or results of operations. 13 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Shareowners of the Company was held on January 25, 1996 in Orange, California and the following matters, as listed in the Proxy Statement dated December 14, 1995, were voted upon: (a) All of management's nominees for the Company's Board of Directors were elected (for a term ending in the year so indicated) with the following vote:
NOMINEE FOR WITHHELD ------- --- -------- Jose E. Blanco, Sr. (1999) 35,060,574 187,447 Neil F. Dimick (1998) 35,068,795 187,447 Charles J. Lee (1999) 35,046,656 201,365 George R. Liddle (1999) 35,068,099 179,922 Donald R. Roden (1998) 35,069,264 178,757 George E. Reinhardt, Jr. (1999) 35,068,864 179,157
Directors whose term of office continued after the Annual Meeting were: Rodney H. Brady, John Calasibetta, Charles C. Edwards, M.D., Robert E. Martini, James R. Mellor, Francis G. Rodgers and Dwight A. Steffensen (see Item 5. below). (b) Shareowner proposal relating to the declassification of the Company's Board of Directors was not approved and votes were as follows:
Broker FOR AGAINST ABSTAINED NON-VOTES --- ------- --------- --------- 13,690,869 15,563,618 375,408 5,618,126
(c) Shareowner proposal relating to compensation of non-employee members of the Company's Board of Directors was not approved and votes were as follows:
Broker FOR AGAINST ABSTAINED NON-VOTES --- ------- --------- --------- 5,101,496 24,112,510 415,889 5,618,126
14 ITEM 5. OTHER INFORMATION On February 2, 1996, the Company accepted the resignation of Dwight A. Steffensen from its Board of Directors. Mr. Steffensen, a Director since 1985, had resigned his position as the Company's President and Chief Operating Officer in October of 1995 to pursue other interests. Mr. Steffensen has agreed to provide consulting services to the Company. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) EXHIBITS 11 Computation of earnings per share for the second quarter and six months ended March 31, 1996 and 1995. 27 Financial Data Schedule for the six months ended March 31, 1996. 99(a) First Amendment to Amended and Restated Credit Agreement dated as of February 27, 1995. 99(b) Second Amendment to Amended and Restated Credit Agreement dated as of March 16, 1996. (b) REPORTS ON FORM 8-K: There were no reports filed on Form 8-K during the three months ended March 31, 1996. 15 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BERGEN BRUNSWIG CORPORATION By /S/ ROBERT E. MARTINI -------------------------------------- Robert E. Martini Chairman of the Board and Chief Executive Officer (Principal Executive Officer) By /S/ NEIL F. DIMICK -------------------------------------- Neil F. Dimick Executive Vice President, Chief Financial Officer (Principal Financial Officer) May 8, 1996 16 BERGEN BRUNSWIG CORPORATION --------------------------- INDEX TO EXHIBITS ----------------- EXHIBIT NO. PAGE NO. - ----------- -------- 11 Computation of earnings per share for the second 18 quarter and six months ended March 31, 1996 and 1995. 27 Financial Data Schedule for the six months ended 19 March 31, 1996. 99(a) First Amendment to Amended and Restated Credit 20 Agreement dated as of February 27, 1995. 99(b) Second Amendment to Amended and Restated Credit 26 Agreement dated as of March 16, 1996. 17 EX-11 2 COMPUTATION OF EARNINGS PER SHARE EXHIBIT 11 BERGEN BRUNSWIG CORPORATION --------------------------- COMPUTATION OF EARNINGS PER SHARE FOR THE SECOND QUARTER AND SIX MONTHS ENDED MARCH 31, 1996 AND 1995 (in thousands except share and per share amounts) (Unaudited)
SECOND QUARTER SIX MONTHS ---------------------------- ---------------------------- 1996 1995 1996 1995 ------------- ------------- ------------- ------------- DATA AS TO EARNINGS - Net Earnings $ 20,389 $ 17,864 $ 36,016 $ 31,413 ============= ============= ============= ============= DATA AS TO NUMBER OF COMMON AND COMMON EQUIVALENT SHARES: Weighted average number of shares oustanding: Class A Common Stock 39,987,123 39,673,555 39,919,949 39,374,894 Common equivalent shares assuming issuance of shares represented by outstanding employees' stock options: Additional shares assumed to be issued 1,798,989 1,524,559 1,609,761 1,208,158 Reduction of such additional shares assuming proceeds invested in treasury stock (at average market prices during each period) (1,526,218) (1,228,786) (1,356,265) (1,014,780) ------------- ------------- ------------- ------------- Average number of common and common equivalent shares outstanding 40,259,894 39,969,328 40,173,445 39,568,272 ============= ============= ============= ============= EARNINGS PER COMMON AND COMMON EQUIVALENT SHARES OUTSTANDING $ .51 $ .45 $ .90 $ .79 ============= ============= ============= ============= Reference is made to Notes C and D in the accompanying Notes to Consolidated Financial Statements. 18
EX-27 3 ARTICLE 5 FDS FOR QUARTERLY REPORT FORM 10-Q
5 1000 U.S. DOLLARS 6-MOS SEP-30-1996 MAR-31-1996 1 41,648 0 616,612 24,308 1,278,386 1,923,832 248,675 97,639 2,480,720 1,563,419 368,594 66,536 0 0 482,171 2,480,720 0 4,831,722 4,549,612 4,753,547 0 0 16,078 62,097 26,081 36,016 0 0 0 36,016 0.90 0.90
EX-99.A 4 FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEEMENT FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is made and dated as of February 27, 1995 (the "AMENDMENT") among BERGEN BRUNSWIG DRUG COMPANY, a California corporation (the "Borrower"), BERGEN BRUNSWIG CORPORATION, a New Jersey Corporation (the "PARENT"), the Lenders party to the Amended and Restated Credit Agreement referred to below, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as Agent (the "AGENT"), and amends that creation Amended and Restated Credit Agreement dated as of September 30, 1994 (as so amended or modified from time to time, the "CREDIT AGREEMENT"). RECITALS WHEREAS, the Borrower and the Parent have requested the Agent and the Lenders to amend certain provisions of the Credit Agreement, and the Agent and the Lenders are willing to do so, on the terms and conditions specified herein: NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows: 1. TERMS. All terms used herein shall have the same meanings as in the Credit Agreement unless otherwise defined herein. All references to the Credit Agreement shall mean the Credit Agreement as hereby amended. 2. AMENDMENTS. The Borrower, the Parent, the Agent and the Lenders hereby agree to amend the Credit Agreement as follows: 2.1 The definition of "Business Day" in Schedule I, Defined Terms, of the Credit Agreement shall be amended by deleting it in its entirety and inserting the following in lieu thereof: "`BUSINESS DAY' means: (a) any day which is neither Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in Chicago, Illinois or New York; and (b) relative to the making, continuing, prepaying or repaying of any Eurodollar Rate Loans, any day on which dealings in Dollars are carried on in the London interbank market." 2.2 The definition of "Eurodollar Rate" in Schedule I, Defined Terms, of the Credit Agreement shall be amended by deleting it in its entirety and inserting the following in lieu thereof: (4036890.01) - 1 - "EURODOLLAR RATE' means, relative to any Contract Loan to be made, continued or maintained as, or converted into, a Eurodollar Rate Loan for any Interest Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the average of the rates PER ANNUM at which Dollar deposits in immediately available funds are offered to each Reference Lender's Eurodollar office in the London interbank market as at or about 11:00 a.m., London time, two Business Days prior to the beginning of such Interest Period for delivery on the first day of such Interest Period, and in an amount approximately equal to the amount of such Reference Lender's Eurodollar Rate Loan and for a period approximately equal to such Interest Period." 2.3 The definition of "Quarterly Payment Date" in Schedule I, Defined Terms, of the Credit Agreement shall be amended by deleting it in its entirety and inserting the following in lieu thereof: "`QUARTERLY PAYMENT DATE' means the last day of each March, June, September and December or, if any such day is not a Business Day, the next succeeding Business Day." 2.3 The last sentence of Section 2.7.2 of the Credit Agreement is hereby amended by deleting "9:00 a.m." and inserting "9:45 a.m." in lieu thereof. 2.4 The first sentence of Section 2.7.3 of the Credit Agreement is hereby amended by deleting "9:30 a.m." and inserting "9:45 a.m." in lieu thereof. 2.5 Section 2.7.4(a) of the Credit Agreement is hereby amended by deleting "10:00 a.m." and inserting "10:15 a.m." in lieu thereof. 2.6 Section 2.7.4(b) of the Credit Agreement is hereby amended by deleting "9:30 a.m." and inserting "10:00 a.m." in lieu thereof. 2.7 Section 7.2.1(k) of the Credit Agreement is hereby amended by deleting "$5,000,000" and inserting "$100,000,000" in lieu thereof. 3. CONSENT OF GUARANTOR. The Parent hereby acknowledges that it has received and reviewed this First Amendment, and ratifies and confirms that the Guaranty dated as of September 30, 1994 remains in full force and effect on and as of the date hereof, after giving effect to this First Amendment, and is hereby incorporated by reference herein, with the same effect as if set forth in full herein. 4. REPRESENTATIONS AND WARRANTIES. The Borrower and the Parent each represent and warrant to the Agent and the Lenders that, on and as of the date hereof, and after giving effect to this First Amendment: 4.1 AUTHORIZATION. The execution, delivery and performance by each of the Parent and the Borrower of this First Amendment have been duly authorized by all necessary corporate action by each of them, and this First Amendment has been duly executed and delivered by the Borrower and the Parent. - 2 - 4.2 BINDING OBLIGATION. This First Amendment constitutes the legal, valid and Binding obligations of the Borrower and the Parent, enforceable against each of them respectively in accordance with its terms. 4.3 NO LEGAL OBSTACLE TO AMENDMENT. The execution, delivery and Performance of this First Amendment will not (a) contravene the Organic Documents of the Borrower or the Parent; (b) constitute a breach or default under any contractual restriction or violate or contravene any law or governmental regulation or court decree or order binding on or affecting the Borrower or the Parent which individually or in the aggregate does or could reasonably be expected to have Materially Adverse Effect; or (c) result in, or require the creation or imposition of, any Lien on any of the Borrower's properties. No approval or authorization of any governmental authority is required to permit the execution, delivery or performance by the Borrower of this First Amendment, or the transactions contemplated hereby. 4.4 INCORPORATION OF CERTAIN REPRESENTATIONS. The representations and warranties of the Borrower and the Parent set forth in Article VI of the Credit Agreement are true and correct in all respects on and as of the date hereof as though made on and as of the date hereof, except as to such representations made as of an earlier specified date. 4.5 DEFAULT. No Default or Event of Default under the Credit Agreement has occurred and is continuing. 5. CONDITIONS, EFFECTIVENESS. The effectiveness of this First Amendment shall be subject tot he compliance by the Borrower and the Parent with its agreements herein contained, and to the delivery of the following to the Agent in form and substance satisfactory to the Agent and Lenders; 6. MISCELLANEOUS. 6.1 EFFECTIVENESS OF THE CREDIT AGREEMENT AND THE NOTES. Except as hereby expressly amended, the Credit Agreement and the Notes shall each remain in full force and effect, and are hereby ratified and confirmed in all respects on and as of the date hereof. 6.2 WAIVERS. This First Amendment is limited solely to the matters expressly set forth herein and is specific in time and in intent and does not constitutes, nor should it be construed as, a waiver or amendment of any other term or condition, right, power or privilege under the Credit Agreement or under any agreement, contract, indenture, document or instrument mentioned therein; nor does it preclude or prejudice any rights of the Agent or the Lenders thereunder, or nay exercise thereof or the exercise of any other right, power or privilege, nor shall it require the Required Lenders to agree to an amendment, waiver or consent for a similar transaction or on a future occasion, nor shall any future waiver of any right, power, privilege or default hereunder, or under any agreement, contract, indenture, document or instrument mentioned in the Credit Agreement, constitute a waiver of any other right, power, privilege or default of the same or of any other term or provision. - 3 - 6.3 COUNTERPARTS. This First Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. This First Amendment shall not become effective until the Borrower, the Parent, the Agent and the Lenders shall have signed a copy hereof and the same shall have been delivered to the Agent. 6.4 GOVERNING LAW. This First Amendment shall be governed by and construed in accordance with the laws of the State of New York. IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered as of the date first written above. BERGEN BRUNSWIG DRUG CORPORATION By: /S/ ERIC J. SCHMITT ---------------------------------- Name: ERIC J. SCHMITT Title: V.P., FINANCE & TREASURER BERGEN BRUNSWIG CORPORATION By: /S/ ERIC J. SCHMITT ---------------------------------- Name: ERIC J. SCHMITT Title: V.P., FINANCE & TREASURER BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /S/ JAMES D. HINSON ---------------------------------- Name: JAMES D. HINSON Title: VICE PRESIDENT BANK OF AMERICA ILLINOIS By: /S/ RUTH EDWARDS ---------------------------------- Name: RUTH EDWARDS Title: VICE PRESIDENT - 4 - THE BANK OF NEW YORK By: /S/ REBECCA KYMAN LEVINE ---------------------------------- Name: REBECCA KYMAN LEVINE Title: ASSISTANT VICE PRESIDENT CHEMICAL BANK By: /S/ NEIL R. BOYLAN ---------------------------------- Name: NEIL R. BOYLAN Title: VICE PRESIDENT CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /S/ THIERY F. VINCENT ---------------------------------- Name: THIERY F. VINCENT Title: AUTHORIZED SIGNATORY CREDIT LYONNAIS LOS ANGELES BRANCH By: /S/ THIERY F. VINCENT ---------------------------------- Name: THIERY F. VINCENT Title: VICE PRESIDENT CREDIT SUISSE By: /S/ MARILOU PALENZUELA ---------------------------------- Name: MARILOU PALENZUELA Title: MEMBER OF SENIOR MANAGEMENT /S/ DEBORAH A. SHEA ---------------------------------- DEBORAH A. SHEA ASSOCIATE FIRST INTERSTATE BANK OF CALIFORNIA By: /S/ DANIEL HOM ---------------------------------- Name: DANIEL HOM Title: VICE PRESIDENT - 5 - PNC BANK, NATIONAL ASSOCIATION By: /S/ ANTHONY L. TRUNZO ---------------------------------- Name: ANTHONY L. TRUNZO Title: VICE PRESIDENT SOCIETE GENERALE, LOS ANGELES BRANCH By: /S/ J. STALEY STEWART ---------------------------------- Name: J. STALEY STEWART Title: VICE PRESIDENT TORONTO DOMINION (TEXAS), INC. By: /S/ FREDERIC HAWLEY ---------------------------------- Name: FREDERIC HAWLEY Title: VICE PRESIDENT TRUST COMPANY BANK By: /S/ FRANK O. BENNETT ---------------------------------- Name: FRANK O. BENNETT Title: VICE PRESIDENT WACHOVIA BANK OF GEORGIA, N.A. By: /S/ TERRY L. AKINS ---------------------------------- Name: TERRY L. AKINS Title: SENIOR VICE PRESIDENT WELLS FARGO BANK, N.A. By: /S/ DAVID NEUMANN ---------------------------------- Name: DAVID NEUMANN Title: VICE PRESIDENT - 6 - EX-99.B 5 SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT THIS SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT is made and dated as of March 15, 1996 (the "SECOND AMENDMENT") among BERGEN BRUNSWIG DRUG COMPANY, a California corporation (the BORROWER"), BERGEN BRUNSWIG CORPORATION, a New Jersey corporation (the "PARENT"), the Lenders party to the Amended and Restated Credit Agreement referred to below, and BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, a national banking association, as Agent (the "AGENT"), and amends that certain Amended and Restated Credit Agreement dated as of September 30, 1994, as amended by that certain First Amendment to Amended and Restated Credit Agreement dated as of February 27, 1995 (as so amended or modified from time to time, the "CREDIT AGREEMENT"). RECITALS -------- WHEREAS, the Borrower and the Parent have requested the Agent and the Lenders to amend certain provisions of the Credit Agreement, and the Agent and the Lenders are willing to do so, on the terms and conditions specified herein; NOW, THEREFORE, for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereby agree as follows: 1. TERMS. All terms used herein shall have the same meanings as in the Credit Agreement unless otherwise defined herein. All references to the Credit Agreement shall mean the Credit Agreement as hereby amended. 2. AMENDMENTS. The Borrower, the Parent, the Agent and the Lenders hereby agree to amend the Credit Agreement as follows: 2.1. The cover page of the Credit Agreement is hereby amended by deleting the figure "$350,000,000" and replacing it with the figure "$400,000,000." 2.2. The preamble to the Credit Agreement is hereby amended by inserting the phrase "and which are listed on Schedule III hereof or which may hereafter become a party hereto" in the sixth line thereof after the word "hereto" and before the parenthetical phrase in such line. - 1 - 39108177.7 032296 1109P 92028133 2.3. The second recital of the Credit Agreement is hereby amended by deleting the figure "$350,000,000" and replacing it with the figure "$400,000,000." 2.4. There shall be added to the Credit Agreement a new Section 2.8 reading in its entirety as follows: "2.8 EXTENSION OF COMMITMENT TERMINATION DATE. Not less than 30 days nor more than 60 days before each anniversary of the Amendment Effective Date, the Company may, by written request delivered to the Agent, request that the Commitment Termination Date be extended by all of the Lenders for a period of one year from the then-current Commitment Termination Date; PROVIDED, HOWEVER, that in no event shall the Commitment Termination Date extend beyond the seventh anniversary of the Amendment Effective Date. The Agent shall promptly notify the Lenders of any such request. Such extension shall only be effective upon approval thereof in writing by each of the Agent and all of the Lenders and the execution and delivery of such amendments to the Credit Documents as the Agent may require in connection with such extension. The Agent and each Lender may accept or reject any request for an extension in its sole and absolute discretion. The Agent and each Lender shall use best efforts to accept or reject any such request within 30 days after receiving notice thereof, PROVIDED that any failure by the Agent or a Lender to respond to such a request shall be deemed to be a rejection thereof." 2.5. Section 6.5 of the Credit Agreement is hereby amended (i) by deleting the date "September 30, 1993" in clause (a) thereof and replacing it with the date "September 30, 1995" and (ii) by deleting the date "June 30, 1994" in clause (b) thereof and replacing it with the date "December 31, 1995". 2.6. Section 6.6 of the Credit Agreement is hereby amended to read in its entirety as follows: "SECTION 6.6. NO MATERIAL ADVERSE CHANGE. Since September 30, 1995, there has been no material adverse change in the consolidated condition (financial or otherwise), operations, business, properties, performance or prospects of the Parent and its Subsidiaries taken a whole." 2.7. Section 7.2.1(k) of the Credit Agreement is hereby amended to read in its entirety as follows: "(k) unsecured Indebtedness under one or more uncommitted lines of credit in an aggregate principal amount at any time not exceeding the then Total Commitment Amount." - 2 - 2.8. Section 7.2.1(o) of the Credit Agreement is hereby amended to read in its entirety as follows: "(o) other unsecured Indebtedness in the ordinary course of business (including unsecured Indebtedness incurred in the ordinary course by any Person acquired under SECTION 7.2.4 (other than any such Indebtedness incurred in anticipation of such acquisition)) in an aggregate principal amount at any time if, after giving PRO FORMA effect to such Indebtedness as if such Indebtedness and all other Indebtedness incurred since the first day of the most recently ended 12-month period for which the Agent has received financial statements under SECTION 7.1.1 had been incurred, and proceeds thereof had been applied, on such first day, there would not be a Default as a result of noncompliance with SECTION 7.2.3;" 2.9. The proviso at the end of Section 7.2.1 of the Credit Agreement is hereby amended by deleting the figure "$30,000,000" and replacing it with the figure "$40,000,000" and by adding the following proviso immediately prior to the end thereof: "; and PROVIDED, FURTHER that aggregate Indebtedness permitted under clauses (k) and (n) of this SECTION 7.2.1 shall not exceed 125% of the then Total Commitment Amount at any time outstanding." 2.10. There shall be added to the Credit Agreement a new Section 7.2.7 reading in its entirety as follows: "SECTION 7.2.7 MARGIN STOCK. The Borrower will not, and will not permit any of its Subsidiaries to, acquire any Margin Stock except to the extent that the aggregate value of all Margin Stock held by the Borrower or any such Subsidiary does not exceed fifteen percent of the value of all assets of the Borrower or such Subsidiary that are subject to the restrictions set forth in Section 7.2.2. For purposes of this SECTION 7.2.7, the term "Margin Stock" shall have the meaning ascribed to such term in F.R.S. Board Regulation U, as from time to time in effect. 2.11. Section 2.7.4 of the Credit Agreement is hereby amended by (A) deleting the time "10:15 a.m." from subsection (a) thereof and replacing it with the time "10:00 a.m." and (B) deleting the time "10:00 a.m." from subsection (b) thereof and replacing it with the time "10:15 a.m.". - 3 - 2.12. The definition of the term "Applicable Margin" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "APPLICABLE MARGIN" means, relative to any Base Rate Loan or Eurodollar Rate Loan, the applicable margin percentage PER ANNUM set forth in the table below based on the Parent's then Senior Debt Rating:
Base Rate Eurodollar SENIOR DEBT RATING LOAN % RATE LOAN % ------------------ ------ ----------- MOODY'S S&P ------- --- A2 or higher A or higher 0.0 0.175 A3 A- 0.0 0.185 Baa1 BBB+ 0.0 0.200 Baa2 BBB 0.0 0.225 Baa3 BBB- 0.0 0.300 Below Baa3 Below BBB- 0.5 0.425
; PROVIDED that, for purposes of determining such applicable margin, if Moody's and S&P have split Senior Debt Ratings with a difference of only one rating tier, the higher Senior Debt Rating will be determinative and the lower Senior Debt Rating will be disregarded; and PROVIDED, FURTHER, that if Moody's and S&P have split Senior Debt Ratings with a difference of more than one rating tier, one rating tier below the higher Senior Debt Rating will be determinative and both Senior Debt Ratings will be disregarded. 2.13. Clause (a) of the definition of the term "Commitment Termination Date" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "March 15, 2001, as such date may be extended pursuant to SECTION 2.8;" 2.14. The definition of the term "Facility Rate" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "FACILITY RATE" means, at any time, the percentage rate set forth in the table below based on the Parent's then Senior Debt Rating: - 4 -
SENIOR DEBT RATING PERCENTAGE RATE ------------------ --------------- MOODY'S S&P ------- --- A2 or higher A or higher 0.075 A3 A- 0.090 Baa1 BBB+ 0.100 Baa2 BBB 0.125 Baa3 BBB- 0.150 Below Baa3 Below BBB- 0.200
; PROVIDED that, for purposes of determining such percentage rate, if Moody's and S&P have split Senior Debt Ratings with a difference of only one rating tier, the higher Senior Debt Rating shall be determinative and the lower Senior Debt Rating shall be disregarded; and PROVIDED, FURTHER, if Moody's and S&P have split Senior Debt Ratings with a difference of more than one rating tier, one rating tier below the higher Senior Debt Rating will be determinative and both Senior Debt Ratings will be disregarded. 2.15. The term "Impermissible Change in Control" in Schedule I to the Credit Agreement is hereby amended to read as "Impermissible Change of Control." 2.16. The definition of the term "Percentage" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "PERCENTAGE" means, relative to any Lender at any time, the portion (expressed as a percentage) of the then Total Commitment Amount representing such Lender's then Commitment, being initially the percentage set forth opposite its signature hereto and, from and after the Second Amendment Effective Date, the percentage set opposite its name on Schedule III hereto, or, if such Lender has executed an Assignment Agreement, as indicated on the most recent Assignment Agreement executed by such Lender. 2.17. The definition of the term "Permitted Asset Sale" in Schedule I to the Credit Agreement is hereby amended (i) by deleting the phrase "after the date hereof" in clauses (a) and (b) of such definition and replacing it with "after September 30, 1995", (ii) by deleting the phrase "on the Amendment Effective Date" in clause (a) and (b) of such definition and replacing it with "on September 30, 1995" and (iii) by amending clause (c) of such definition to read in its entirety as follows: "(c) any sale or other disposition of inventory in the ordinary course of business, including any new distribution arrangements developed in the future to provide goods and services to customers, - 5 - including without limitation, start-up payments, selling concessions, sale or return or consignment arrangements, pharmacy management and outsourcing services, stockless inventory systems and deferred billing or delayed payment terms; and" 2.18. The definition of the term "Required Lenders" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "REQUIRED LENDERS" means, at any time when the Commitments shall remain in effect, Lenders holding more than 50% of the then aggregate outstanding principal amount of the Contract Note, or, if no such principal amount is then outstanding, Lenders having Commitments constituting more than 50% of the Total Commitment Amount or, at any time when the Commitments of the Lenders shall have terminated pursuant to SECTION 8.2 or 8.3, Lenders holding more than 50% of the aggregate principal amount of the Loans then outstanding. 2.19. The definition of the term "Senior Debt Rating" in Schedule I to the Credit Agreement is hereby amended to read in its entirety as follows: "SENIOR DEBT RATING" means, on any date, (a) the senior debt rating actually or implicitly assigned to the Parent by Moody's and Standard & Poor's or (b) if no senior debt rating has been so assigned, it shall be presumed that Moody's has assigned a rating below Baa3 and that Standard & Poor's has assigned a rating below BBB-. 2.20. The definition of the term "Total Commitment Amount" in Schedule I to the Credit Agreement is hereby amended by deleting the figure "$350,000,000" and replacing it with the figure "$400,000,000." 2.21. There shall be added to Schedule I of the Credit Agreement, in appropriate alphabetical sequence, a new definition of the term "Second Amendment Effective Date" reading in its entirety as follows: "SECOND AMENDMENT EFFECTIVE DATE" means the date upon which the conditions precedent set forth in Section 5 of that certain Second Amendment to Amended and Restated Credit Agreement dated as of March 15, 1996 among the Borrower, the Parent, the Lenders and the Agent shall have been satisfied. 2.22. There shall be added to the Credit Agreement a new Schedule III in the form of Schedule III attached hereto. - 6 - 2.23. Exhibits A-1 and A-2 to the Credit Agreement are hereby amended and restated in their entirety to read as set forth in Exhibits A-1 and A-2 attached hereto. 3. CONSENT OF GUARANTOR. The Parent hereby acknowledges that it has received and reviewed this Second Amendment, and ratifies and confirms that the Guaranty dated as of September 30, 1994 remains in full force and effect on and as of the date hereof, after giving effect to this Second Amendment, and is hereby incorporated by reference herein, with the same effect as if set forth in full herein. 4. REPRESENTATIONS AND WARRANTIES. The Borrower and the Parent each represent and warrant to the Agent and the Lenders that, on and as of the date hereof, and after giving effect to this Second Amendment: 4.1. AUTHORIZATION. The execution, delivery and performance by each of the Parent and the Borrower of this Second Amendment have been duly authorized by all necessary corporate action by each of them, and this Second Amendment has been duly executed and delivered by the Borrower and the Parent. 4.2. BINDING OBLIGATION. This Second Amendment constitutes the legal, valid and binding obligations of the Borrower and the Parent, enforceable against each of them respectively in accordance with its terms. 4.3. NO LEGAL OBSTACLE TO SECOND AMENDMENT. The execution, delivery and performance of this Second Amendment will not (a) contravene the Organic Documents of the Borrower or the Parent; (b) constitute a breach or default under any contractual restriction or violate or contravene any law or governmental regulation or court decree or order binding on or affecting the Borrower or the Parent which individually or in the aggregate does or could reasonably be expected to have a Materially Adverse Effect; or (c) result in, or require the creation or imposition of, any Lien on any of the Borrower's properties. No approval or authorization of any governmental authority or regulatory body or other Person is required to permit the execution, delivery or performance by the Borrower of this Second Amendment, or the transactions contemplated hereby. 4.4. INCORPORATION OF CERTAIN REPRESENTATIONS. The representations and warranties of the Borrower and the Parent set forth in Article VI of the Credit Agreement are true and correct in all respects on and as of the date hereof as though made on and as of the date hereof, except as to such representations made as of an earlier specified date. - 7 - 4.5. DEFAULT. No Default or Event of Default has occurred and is continuing. 5. CONDITIONS, EFFECTIVENESS. The effectiveness of this Second Amendment shall be subject to the compliance by the Borrower and the Parent with its agreements herein contained, and the following: 5.1. COUNTERPARTS. The delivery to the Agent of counterparts of this Second Amendment executed by the Borrower, the Parent, the Lenders and the Agent. 5.2. NEW NOTES. The delivery to the Agent of a new Contract Note and Bid Note, in substantially the form of Exhibits A-1 and A-2 hereto. 5.3. REALLOCATION. The effective date shall occur on the last day of an Interest Period in effect with respect to all outstanding Loans, and on the effective date the Borrower shall (i) make such repayments and borrowings as shall be required to cause the outstanding principal amount of Contract Loans held by each Lender to be proportionate to the relevant Commitments of such Lender after giving effect to the amendments effected by this Second Amendment, (ii) pay to the Agent, for the account of each Exiting Lender (as hereinafter defined), all principal, interest, fees and other amounts accrued to the effective date for the account of such Exiting Lender, and (iii) pay to the Agent, for the account of each continuing Lender, all interest and fees accrued to the effective date for the account of such Lenders. 5.4. OTHER EVIDENCE. The delivery to the Agent of such other evidence with respect to the Borrower or any other person as the Agent or any Lender may reasonably request in connection with this Second Amendment and the compliance with the conditions set forth herein. 6. MISCELLANEOUS. 6.1. EFFECTIVENESS OF THE CREDIT AGREEMENT AND THE NOTES. Except as hereby expressly amended, the Credit Agreement, the Notes and the other Credit Documents shall each remain in full force and effect, and are hereby ratified and confirmed in all respects on and as of the date hereof. 6.2. WAIVERS. This Second Amendment is limited solely to the matters expressly set forth herein and is specific in time and in intent and does not constitute, nor should it be construed as, a waiver or amendment of any other term or condition, right, power or privilege under the Credit Agreement or under any agreement, contract, indenture, document or instrument mentioned - 8 - therein; nor does it preclude or prejudice any rights of the Agent or the Lenders thereunder, or any exercise thereof or the exercise of any other right, power or privilege, nor shall it require any of the Lenders to agree to an amendment, waiver or consent for a similar transaction on a future occasion, nor shall any future waiver of any right, power, privilege or default hereunder, or under any agreement, contract, indenture, document or instrument mentioned in the Credit Agreement, constitute a waiver of any other right, power, privilege or default of the same or of any other term or provision. 6.3. COUNTERPARTS. This Second Amendment may be executed in any number of counterparts and all of such counterparts taken together shall be deemed to constitute one and the same instrument. This Second Amendment shall not become effective until the Borrower, the Parent, the Agent and the Lenders shall have signed a copy hereof and the same shall have been delivered to the Agent. 6.4. EXITING LENDERS. Each Lender which after the Second Amendment Effective Date no longer holds a Commitment (an "EXITING LENDER") is executing this Second Amendment solely for the purpose of acknowledging that its Commitments will terminate on the Second Amendment Effective Date upon repayment in full of all amounts owing to it under the Credit Agreement and the Notes on the Effective Date. The amendments effected by this Second Amendment are being approved by Lenders holding 100% of the Commitments after giving effect to termination of the Commitments of the Exiting Lenders on the Second Amendment Effective Date. 6.5. GOVERNING LAW. This Second Amendment shall be governed by and construed in accordance with the laws of the State of New York. - 9 - IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment to be duly executed and delivered as of the date first written above. BERGEN BRUNSWIG DRUG COMPANY By: /S/ ERIC SCHMITT ------------------------------- Name: ERIC SCHMITT Title: V.P. FINANCE & TREASURER BERGEN BRUNSWIG CORPORATION By: /S/ ERIC SCHMITT ------------------------------- Name: ERIC SCHMITT Title: V.P. FINANCE & TREASURER BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as Agent By: /S/ LEANDRO BALIDOY ------------------------------- Name: LEANDRO BALIDOY Title: VICE PRESIDENT BANK OF AMERICA ILLINOIS By: /S/ RUTH Z. EDWARDS ------------------------------- Name: RUTH Z. EDWARDS Title: VICE PRESIDENT PNC BANK, NATIONAL ASSOCIATION By: /S/ ANTHONY L. TRUNZO ------------------------------- Name: ANTHONY L. TRUNZO Title: VICE PRESIDENT AND MANAGER - 10 - TORONTO DOMINION (TEXAS), INC. By: /S/ MARTHA L. GARIEPY ------------------------------- Name: MARTHA L. GARIEPY Title: VICE PRESIDENT WACHOVIA BANK OF GEORGIA, N.A. By: /S/ DAVID K. ALEXANDER ------------------------------- Name: DAVID K. ALEXANDER Title: SENIOR VICE PRESIDENT THE BANK OF NEW YORK By: /S/ REBECCA K. LEVINE ------------------------------- Name: REBECCA K. LEVINE Title: ASSISTANT VICE PRESIDENT CHEMICAL BANK By: /S/ MARY E. CAMERON ------------------------------- Name: MARY E. CAMERON Title: VICE PRESIDENT FIRST INTERSTATE BANK OF CALIFORNIA By: /S/DANIEL H. HOM ------------------------------- Name: DANIEL H. HOM Title: VICE PRESIDENT By: /S/JUDY A. MAAHS ------------------------------- Name: JUDY A. MAAHS Title: ASSITANT VICE PRESIDENT - 11 - SOCIETE GENERALE, LOS ANGELES BRANCH By: /S/ J. STALEY STEWART ------------------------------- Name: J. STALEY STEWART Title: VICE PRESIDENT WELLS FARGO BANK, N.A. By: /S/ DANIEL S. SILMORE ------------------------------- Name: DANIEL S. SILMORE Title: ASSISTANT VICE PRESIDENT ABN-AMRO BANK, N.V., LOS ANGELES BRANCH By: ABN AMRO North America, Inc. , as agent By: /S/ PAUL K. STIMPFL ------------------------------- Name: PAUL K. STIMPFL Title: VICE PRESIDENT By: /S/ MATHEW S. THOMSON ------------------------------- Name: MATHEW S. THOMSON Title: GROUP VICE PRESIDENT/DIRECTOR THE FIRST NATIONAL BANK OF CHICAGO By: /S/ L. GENE BEUBE ------------------------------- Name: L. GENE BEUBE Title: SENIOR VICE PRESIDENT THE NORTHERN TRUST COMPANY By: /S/ JAMES F.T. NEWHART ------------------------------- Name: JAMES F.T. NEWHART Title: VICE PRESIDENT - 12 - SUNTRUST BANK, ATLANTA By: /S/ KRISTINA L. ANDERSON ------------------------------- Name: KRISTINA L. ANDERON Title: ASST. VICE PRESIDENT By: /S/ CHARLES J. JOHNSON ------------------------------- Name: CHARLES J. JOHNSON Title: VICE PRESIDENT CREDIT LYONNAIS CAYMAN ISLAND BRANCH By: /S/ THIERRY F. VINCENT ------------------------------- Name: THIERRY F. VINCENT Title: AUTHORIZED SIGNATORY CREDIT LYONNAIS LOS ANGELES BRANCH By: /S/ THIERRY F. VINCENT ------------------------------- Name: THIERRY F. VINCENT Title: VICE PRESIDENT EXITING LENDER (executing this Amendment solely for purposes of Section 6.4 hereof) CREDIT SUISSE By:/S/MARILOU PALENZUELA ------------------------------- Name: MARILOU PALENZUELA By:/S/DEBORAH A. SHEA ------------------------------- Name: DEBORAH A. SHEA Title:MEMBER OF SENIOR MANAGEMENT - 13 - SCHEDULE III LENDERS, COMMITMENTS AND PERCENTAGES ------------------------------------
LENDER COMMITMENT PERCENTAGE - ------ ---------- ---------- Bank of America Illinois ..................... $50,000,000 12.50% PNC Bank, National ........................... 40,000,000 10.00% Association Toronto Dominion (Texas), .................... 40,000,000 10.00% Inc. Wachovia Bank of Georgia, .................... 40,000,000 10.00% N.A. The Bank of New York ......................... 25,000,000 6.25% Chemical Bank ................................ 25,000,000 6.25% First Interstate Bank of ..................... 25,000,000 6.25% California Societe Generale, ............................ 25,000,000 6.25% Los Angeles Branch Wells Fargo Bank, N.A ........................ 25,000,000 6.25% ABN-AMRO Bank, N.V., Los Angeles ............. 25,000,000 6.25% First National Bank of Chicago ............... 25,000,000 6.25% The Northern Trust Company ................... 20,000,000 5.00% SunTrust Bank, Atlanta ....................... 20,000,000 5.00% Credit Lyonnais, Los Angeles Branch .......... 15,000,000 3.75% Credit Lyonnais, Cayman Island Branch
- 14 - EXHIBIT A-1 CONTRACT NOTE $400,000,000 March 15, 1996 FOR VALUE RECEIVED, the undersigned, BERGEN BRUNSWIG DRUG COMPANY, a California corporation (the "BORROWER"), promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent (the "AGENT") for the financial institutions as are or may become parties to the Credit Agreement hereinafter referred to (collectively, the "LENDERS"), the principal sum of FOUR HUNDRED MILLION DOLLARS ($400,000,000) or, if less, the aggregate unpaid principal amount of all Contract Loans made by the Lenders pursuant to that certain Amended and Restated Credit Agreement, dated as of September 30, 1994, as amended (together with all further amendments and other modifications, if any, from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among the Borrower, Bergen Brunswig Corporation, the Lenders, and the Agent, payable in full on the Final Maturity Date. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates PER ANNUM and on the dates specified in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Agent pursuant to the Credit Agreement. This Note is the Contract Note referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Contract Loans evidenced by this Note and on which such Loans may be declared to be or may become immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. This Note evidences continuing Indebtedness evidenced by the Borrower's Contract Note dated October 7, 1994 (the "PRIOR NOTE") and nothing contained or implied in this Note shall be deemed or construed to have paid or satisfied the Prior Note or any Indebtedness evidenced thereby. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. BERGEN BRUNSWIG DRUG COMPANY By_________________________________ Title: - 2 - EXHIBIT A-1 CONTRACT LOANS AND PRINCIPAL PAYMENTS - ------------------------------------------------------------------------------------------------------------------
Amount of Unpaid Amount of Principal Principal Contract Loan Made Repaid Balance __________________ Interest __________________ __________________ Base Eurodollar Period (if Base Eurodollar Base Eurodollar Notation DATE RATE RATE APPLICABLE) RATE RATE RATE RATE TOTAL MADE BY - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - 3 -
EXHIBIT A-2 BID NOTE $400,000,000 March 15, 1996 FOR VALUE RECEIVED, the undersigned, BERGEN BRUNSWIG DRUG COMPANY, a California corporation (the "BORROWER"), promises to pay to the order of BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent (the "AGENT") for the financial institutions as are or may become parties to the Credit Agreement hereinafter referred to (collectively, the "LENDERS"), the principal sum of FOUR HUNDRED MILLION DOLLARS ($400,000,000) or, if less, the aggregate unpaid principal amount of all Bid Loans made by the Lenders pursuant to that certain Amended and Restated Credit Agreement, dated as of September 30, 1994, as amended (together with all further amendments and other modifications, if any, from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among the Borrower, Bergen Brunswig Corporation, the Lenders, and the Agent, payable in full on the Final Maturity Date. The Borrower also promises to pay interest on the unpaid principal amount hereof from time to time outstanding from the date hereof until maturity (whether by acceleration or otherwise) and, after maturity, until paid, at the rates PER ANNUM and on the dates specified or otherwise provided in the Credit Agreement. Payments of both principal and interest are to be made in lawful money of the United States of America in same day or immediately available funds to the account designated by the Agent pursuant to the Credit Agreement. This Note is the Bid Note referred to in, and evidences Indebtedness incurred under, the Credit Agreement, to which reference is made for a statement of the terms and conditions on which the Borrower is permitted and required to make prepayments and repayments of principal of the Bid Loans evidenced by this Note and on which such Loans may be declared to be or may become immediately due and payable. Unless otherwise defined, terms used herein have the meanings provided in the Credit Agreement. - 1 - This Note evidences continuing Indebtedness evidenced by the Borrower's Bid Note dated October 7, 1994 (the "PRIOR NOTE") and nothing contained or implied in this Note shall be deemed or construed to have paid or satisfied the Prior Note or any Indebtedness evidenced thereby. All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment for payment, demand, protest and notice of dishonor. THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. BERGEN BRUNSWIG DRUG COMPANY By________________________________ Title: - 2 - EXHIBIT A-2 BID LOANS AND PRINCIPAL PAYMENTS - ------------------------------------------------------------------------------------------------------------------
Stated Amount of Unpaid Amount of Maturity Principal Principal Notation DATE BID LOAN MADE DATE REPAID BALANCE TOTAL MADE BY - ---- ------------- -------- --------- --------- ----- ------- - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------
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