-----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, IuCJdgIeaIH0MRet3YE0DKAshTeFDID0PQ1ZTDQ4H+pbCz1TO3CQaugWVan7FXP1 qF2XB6+VgQI64jyoY0HgUA== 0000950152-96-000412.txt : 19960213 0000950152-96-000412.hdr.sgml : 19960213 ACCESSION NUMBER: 0000950152-96-000412 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19951231 FILED AS OF DATE: 19960212 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CARDINAL HEALTH INC CENTRAL INDEX KEY: 0000721371 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-DRUGS PROPRIETARIES & DRUGGISTS' SUNDRIES [5122] IRS NUMBER: 310958666 STATE OF INCORPORATION: OH FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11373 FILM NUMBER: 96515923 BUSINESS ADDRESS: STREET 1: 5555 GLENDON COURT CITY: DUBLIN STATE: OH ZIP: 43016 BUSINESS PHONE: 6147618700 MAIL ADDRESS: STREET 1: 655 METRO PLACE SOUTH STREET 2: SUITE 925 CITY: DUBLIN STATE: OH ZIP: 43017 FORMER COMPANY: FORMER CONFORMED NAME: CARDINAL DISTRIBUTION INC DATE OF NAME CHANGE: 19920703 10-Q 1 CARDINAL HEALTH, INC. 10-Q 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 Form 10-Q QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1995 Commission File Number 0-12591 Cardinal Health, Inc. --------------------- (Exact name of registrant as specified in its charter) Ohio 31-0958666 ----- ---------- (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 5555 GLENDON COURT, DUBLIN, OHIO 43016 (Address of principal executive offices and zip code) Registrant's telephone number, including area code (614) 717-5000 655 Metro Place South, Suite 925, Dublin, Ohio 43017 (Former name, former address and former fiscal year, if changed since last report) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----------- ----------- The number of Registrant's Common Shares outstanding at January 25, 1996 was as follows: Common Shares, without par value: 48,652,104 --------- 2
CARDINAL HEALTH, INC. AND SUBSIDIARIES Index * Page No. Part I. Financial Information: --------------------- Item 1. Financial Statements Consolidated Statements of Earnings for the Fiscal Quarter and Six Months Ended December 31, 1995 and December 31, 1994 . . . . . . . . . . . . . 3 Consolidated Balance Sheets at December 31, 1995 and June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Consolidated Statements of Cash Flows for the Six Months Ended December 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . 5 Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . 6-8 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-10 Part II. Other Information: ----------------- Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Item 4. Submission of Matters to a Vote of Security Holders . . . . . . . . . . . . . 11-12 Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . 12 * Items deleted are inapplicable. Page 2
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PART I. FINANCIAL INFORMATION CARDINAL HEALTH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Fiscal Quarter Ended Six Months Ended ----------------------------- ----------------------------- December 31, December 31, December 31, December 31, 1995 1994 1995 1994 ------------- -------------- ------------ -------------- Net revenues $ 2,131,627 $ 1,999,267 $ 4,178,765 $ 3,831,395 Cost of products sold 1,995,133 1,875,640 3,912,259 3,593,686 ------------- ------------- ------------- -------------- Gross margin 136,494 123,627 266,506 237,709 Selling, general and administrative expenses 83,125 78,824 170,342 156,182 Unusual item, merger costs (16,374) (16,374) -------------- -------------- ------------- -------------- Operating earnings 36,995 44,803 79,790 81,527 Other income (expense): Interest expense (4,101) (4,390) (8,241) (8,246) Other, net -- primarily interest income 2,174 2,014 3,542 2,613 -------------- -------------- ------------- -------------- Earnings before income taxes 35,068 42,427 75,091 75,894 Provision for income taxes 16,354 17,485 32,885 31,242 -------------- -------------- ------------- -------------- Net earnings $ 18,714 $ 24,942 $ 42,206 $ 44,652 ============== ============== ============= ============== Net earnings per Common Share: Primary $ 0.38 $ 0.51 $ 0.86 $ 0.93 Fully diluted $ 0.38 $ 0.51 $ 0.86 $ 0.93 Weighted average number of Common Shares outstanding: Primary 49,349 49,149 49,275 48,132 Fully diluted 49,353 49,194 49,317 48,194 See notes to consolidated financial statements. Page 3
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CARDINAL HEALTH, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (IN THOUSANDS) December 31, June 30, 1995 1995 --------------- -------------- ASSETS Current assets: Cash and equivalents $ 27,057 $ 42,525 Marketable securities available for sale 7,852 40,695 Trade receivables 609,353 529,672 Merchandise inventories 1,198,340 1,071,811 Prepaid expenses and other 30,935 25,472 --------------- -------------- Total current assets 1,873,537 1,710,175 --------------- -------------- Property and equipment, at cost 213,828 183,287 Accumulated depreciation and amortization (95,162) (86,205) --------------- -------------- Property and equipment, net 118,666 97,082 Other assets: Marketable securities available for sale 7,118 Finance notes and accrued interest receivable, net 28,293 27,278 Other 81,088 78,023 --------------- -------------- Total $ 2,101,584 $ 1,919,676 =============== ============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Notes payable, banks $ 25,000 $ 3,000 Current portion of long-term obligations 1,995 2,083 Accounts payable 1,072,081 952,206 Other accrued liabilities 113,825 116,789 --------------- -------------- Total current liabilities 1,212,901 1,074,078 --------------- -------------- Long-term obligations, less current portion 208,690 209,202 Other liabilities 13,176 12,710 Shareholders' equity: Common Shares, without par value 366,200 360,468 Retained earnings 307,854 270,363 Common Shares in treasury, at cost (4,291) (4,011) Unamortized restricted stock awards (2,946) (3,134) --------------- -------------- Total shareholders' equity 666,817 623,686 --------------- -------------- Total $ 2,101,584 $ 1,919,676 =============== ============== See notes to consolidated financial statements. Page 4
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CARDINAL HEALTH, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS) Six Months Ended ------------------------------- December 31, December 31, 1995 1994 -------------- --------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net earnings $ 42,206 $ 44,652 Adjustments to reconcile net earnings to net cash from operations: Depreciation and amortization 12,352 10,599 Provision for bad debts 5,125 5,647 Change in operating assets and liabilities, net of effects from acquisitions: Increase in trade and finance notes receivables (85,821) (122,105) Increase in merchandise inventories (126,529) (204,813) Increase in accounts payable 119,875 212,035 Other operating items, net (12,172) 2,439 -------------- --------------- Net cash used in operating activities (44,964) (51,546) -------------- --------------- CASH FLOWS FROM INVESTING ACTIVITIES: Acquisition of subsidiary, net of cash acquired (15,784) Proceeds from sale of property and equipment 613 Additions to property and equipment (32,316) (13,655) Purchase of marketable securities available for sale (38,434) (152,951) Proceeds from sale of marketable securities available for sale 78,395 103,778 -------------- --------------- Net cash provided by (used in) investing activities 8,258 (78,612) -------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES: Net short-term borrowing activity 22,000 52,800 Reduction of long-term obligations (1,358) (2,724) Proceeds from issuance of Common Shares 1,575 71,535 Tax benefit of stock options 3,900 16,362 Dividends paid on Common Shares (4,715) (4,425) Purchase of treasury shares (164) (2,726) -------------- --------------- Net cash provided by financing activities 21,238 130,822 -------------- --------------- NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS (15,468) 664 CASH AND EQUIVALENTS AT BEGINNING OF PERIOD 42,525 58,053 -------------- --------------- CASH AND EQUIVALENTS AT END OF PERIOD $ 27,057 $ 58,717 ============== =============== See notes to consolidated financial statements. Page 5
6 CARDINAL HEALTH, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) Note 1. The consolidated financial statements of the Company include the accounts of all majority-owned subsidiaries and all significant intercompany amounts have been eliminated. The consolidated financial statements contained herein have been restated to give retroactive effect to the merger of a wholly-owned subsidiary of the Company with and into Medicine Shoppe International, Inc. ("Medicine Shoppe"), on November 13, 1995, which business combination was accounted for under the pooling-of-interests method (see Note 3). These consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and include all of the information and disclosures required by generally accepted accounting principles for interim reporting. In the opinion of management, all adjustments necessary for a fair presentation have been included. All such adjustments are of a normal and recurring nature. The consolidated financial statements included herein should be read in conjunction with the audited consolidated financial statements and related notes for the fiscal years ended June 30, 1995, 1994 and March 31, 1993 contained in the Company's report on Form 8-K, dated January 10, 1996. The financial statements contained in the Form 8-K were restated for the business combination with Medicine Shoppe (see Note 3). Note 2. Net earnings per Common Share are based on the weighted average number of Common Shares outstanding during each period and the dilutive effect of stock options from the date of grant, computed using the treasury stock method. Note 3. Effective November 13, 1995, a wholly owned subsidiary of the Company was merged with and into Medicine Shoppe. The Medicine Shoppe merger was accounted for as a pooling-of-interests business combination. The Company issued 6,425,717 Common Shares to Medicine Shoppe shareholders. In addition, Medicine Shoppe's outstanding stock options were converted into options to purchase approximately 121,000 Common Shares. During the three month period ended December 31, 1995, the Company recorded a nonrecurring charge to reflect estimated Medicine Shoppe merger costs of approximately $16.4 million ($11.8 million net of tax), which includes approximately $6.2 million for anticipated investment advisor, banking, legal, accounting, and other related transaction fees and costs associated with the Medicine Shoppe merger and $10.2 million related to revaluation of certain operating assets, integrating operations and implementing efficiencies with regard to information systems, customer systems, marketing programs and administrative functions. Certain Medicine Shoppe merger cost amounts are based upon estimates of costs to be incurred and actual costs may differ from these estimates. As of December 31, 1995, the Company has incurred gross Medicine Shoppe merger costs of approximately $5.8 million. Page 6 7 The following pro forma results for the three and six months ended December 31, 1995 are presented excluding the Medicine Shoppe merger costs of approximately $16.4 million ($11.8 million net of tax). This information is presented to facilitate meaningful comparisons to ongoing operations and to other companies in the drug distribution industry (in thousands, except per share amounts).
Fiscal Quarter Ended -------------------------------------------------------------- December 31, Percentage December 31, Percentage 1995 of Net Sales 1994 of Net Sales ---------- ------------ ----------- ------------- Operating earnings $ 53,369 2.50% $ 44,803 2.24% Net earnings $ 30,514 1.43% $ 24,942 1.25% Net earnings per Common Share: Primary $ 0.62 $ 0.51 Fully diluted $ 0.62 $ 0.51 ========================================================================================================
Six Months Ended -------------------------------------------------------------- December 31, Percentage December 31, Percentage 1995 of Net Sales 1994 of Net Sales ---------- ------------ ------------ ------------- Operating earnings $ 96,164 2.30% $ 81,527 2.13% Net earnings $ 54,006 1.29% $ 44,652 1.17% Net earnings per Common Share: Primary $ 1.10 $ 0.93 Fully diluted $ 1.10 $ 0.93
The differences between the above results and those reported in the Consolidated Statements of Earnings are due solely to the assumed elimination of the Medicine Shoppe merger costs of approximately $16.4 million ($11.8 million net of tax). Note 4. During the six months ended December 31, 1995, the Company incurred costs associated with the Company's February 7, 1994 merger with Whitmire Distribution Corporation ("Whitmire") of approximately $5.6 million and as of December 31, 1995 had incurred aggregate costs of approximately $32.5 million. The estimated remaining Whitmire merger costs to be incurred are approximately $3.4 million at December 31, 1995, and the Company's current estimates of the Whitmire merger costs ultimately to be incurred are not materially different than the amounts originally recorded. The Company anticipates that the remainder of these costs will be expended during fiscal 1996. Note 5. On July 1, 1994, the Company acquired all of the outstanding stock of Humiston-Keeling, Inc., a drug wholesaler based in Calumet City, Illinois, for cash of $33,334,000 in a transaction accounted for by the purchase method. Had the purchase occurred at the beginning of fiscal 1994, operating results on a pro forma basis would not have been significantly different. Note 6. On July 18, 1994, the Company issued approximately 944,000 Common Shares in a merger transaction for all of the common shares of Behrens, Inc. ("Behrens"), a drug wholesaler based in Waco, Texas. The transaction was accounted for as a pooling-of-interests business combination. The impact of the Behrens merger, on both an historical and pro forma basis, is not significant. Accordingly, prior periods have not been restated for the Behrens merger. Page 7 8 Note 7. On September 26, 1994, 8,050,000 of the Company's Common Shares were sold pursuant to a public offering. Approximately 1,867,000 Common Shares (the "Issued Shares") were sold by the Company, and approximately 6,183,000 Common Shares (the "Existing Shares") were sold by certain shareholders of the Company. Net proceeds received by the Company from the sale of the Issued Shares of approximately $70 million were used to finance working capital growth and for other general corporate purposes. The Company did not receive any of the proceeds from the sale of the Existing Shares. Note 8. On January 23, 1996, the Company sold $150 million of 6% Notes due 2006 (the "6% Notes") in a public offering. The 6% Notes represent unsecured obligations of the Company, are not redeemable prior to maturity and are not subject to a sinking fund. Estimated issuance costs of approximately $1.25 million incurred in connection with the offering will be amortized on a straight-line basis over the period the 6% Notes will be outstanding. The Company plans to use the proceeds of this sale for general corporate purposes, which may include repayment of bank lines of credit and other maturing debt, working capital growth, capital expenditures, and acquisitions. Note 9. On February 7, 1996, the Company announced that it had entered into a definitive agreement with Pyxis Corporation ("Pyxis") pursuant to which Pyxis will become a wholly-owned subsidiary of the Company in a stock-for-stock merger intended to be tax-free and accounted for as a pooling-of-interests for financial reporting purposes. In connection with the merger the Company estimates that it will issue approximately 15.5 million Company Common Shares. Under the terms of the agreement, shareholders of Pyxis will receive 0.406557 Company Common Shares for each share of Pyxis they own at the time the transaction is consummated, subject to adjustment under specified circumstances. In addition, options for Pyxis common stock will be converted into equivalent options for Company Common Shares, based upon the exchange ratio. In connection with the transaction, Pyxis has granted the Company an option to purchase a number of shares of Pyxis common stock equal to 19.9% of the number of shares currently outstanding, exercisable upon the occurrence of certain events. The merger is expected to be completed by early summer, subject to approval by shareholders of both Pyxis and the Company, and the receipt of requisite regulatory approvals. Page 8 9 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION Management's discussion and analysis presented below has been prepared to give retroactive effect to the pooling-of-interest business combination with Medicine Shoppe on November 13, 1995 (see Note 3 of "Notes to Consolidated Financial Statements"). This discussion and analysis is concerned with material changes in financial condition and results of operations for the Company's consolidated balance sheets as of December 31, 1995 and June 30, 1995, and for the consolidated statements of earnings for the three and six month periods ended December 31, 1995 and December 31, 1994. RESULTS OF OPERATIONS Net Revenues. Net revenues increased 7% for the second quarter of fiscal 1996 and 9% for the six-month period ended December 31, 1995. The increase in the second quarter and the six-month period is primarily due to internal revenue growth from wholesaling activities, resulting from increased sales to existing customers, as well as the addition of new customers primarily in the managed care and chain sectors. The revenue growth rate is lower than historical averages due in large part to unusually high revenue growth rates in the same periods of the prior year (42% in the second quarter and 41% for the six-month period of fiscal 1995). Gross Margin. As a percentage of net revenues, gross margin for the second quarter increased to 6.40% from 6.18% in the prior year. For the six-month period, gross margin increased to 6.38% from 6.20% in the prior year. The increases for both periods reflect increases in the Company's merchandising and marketing revenues through expanded programs with customers and suppliers. These increases were partially offset by lower selling margin rates, reflecting a highly competitive market and a greater mix of high volume customers, where a lower cost of distribution and better asset management enable the Company to offer lower selling margins. Selling, General and Administration Expenses. Selling, general and administrative expenses as a percentage of net revenues remained relatively stable for the six month period ended December 31, 1995 compared to the prior year and improved to 3.90% in the second quarter of fiscal 1996 compared to 3.94% in the prior year. The improvement in the second quarter reflects the economies associated with the Company's revenue growth, particularly with major customers where support costs are generally lower, and lower operating costs at Medicine Shoppe. Unusual Item - Merger Costs. In the second quarter of fiscal 1996, the Company recorded a nonrecurring charge to reflect the estimated Medicine Shoppe merger costs of approximately $16.4 million ($11.8 million, net of tax). See further discussion in Note 3 of "Notes to Consolidated Financial Statements." Provision for Income Taxes. The Company's provision for income taxes relative to pretax earnings increased in both the second quarter and six-month periods of fiscal 1996 compared to the prior year due to certain nondeductible Medicine Shoppe merger costs recorded in the second quarter of fiscal 1996. LIQUIDITY AND CAPITAL RESOURCES Working capital increased to $660.6 million at December 31, 1995 from $636.0 million at June 30, 1995. This increase included additional investments in merchandise inventories and trade receivables of $126.5 million and $79.7 million, respectively. Offsetting the increase in working capital were a decrease in marketable securities available for sale of $32.8 million, and increases in accounts payable of $120.0 million and notes payable, banks of $22.0 million. The increases in merchandise inventories, accounts payable, and notes payable, banks as well as the decrease in marketable securities available for sale reflect the timing of seasonal inventory purchases and the related payments. The increase in trade receivables primarily reflects the growth of the Company's net revenues (see "Net Revenues" above) and the increase in direct deliveries to customer warehouses relative to cash receipts for these deliveries. Property and equipment, at cost increased by $30.5 million from June 30, 1995. The property acquired included increased investment in management information systems and customer support systems, as well as the construction and automation of distribution facilities. Page 9 10 Shareholders' equity increased to $666.8 million at December 31, 1995 from $623.7 million at June 30, 1995 due primarily to net earnings of $42.2 million during the six month period ending December 31, 1995. On January 23, 1996, the Company sold $150 million of 6% Notes, due 2006 in a public offering. See further discussion in Note 8 of "Notes to Consolidated Financial Statements." The Company believes that it has adequate capital resources at its disposal to meet currently anticipated capital expenditures, routine business growth and expansion, and current and projected debt service. OTHER On February 7, 1996, the Company announced that it had entered into a definitive agreement with Pyxis Corporation ("Pyxis") pursuant to which Pyxis will become a wholly-owned subsidiary of the Company in a stock-for-stock merger intended to be tax-free and accounted for as a pooling-of-interests for financial reporting purposes. In connection with the merger the Company estimates that it will issue approximately 15.5 million Company Common Shares. Under the terms of the agreement, shareholders of Pyxis will receive 0.406557 Company Common Shares for each share of Pyxis they own at the time the transaction is consummated, subject to adjustment under specified circumstances. In addition, options for Pyxis common stock will be converted into equivalent options for Company Common Shares, based upon the exchange ratio. In connection with the transaction, Pyxis has granted the Company an option to purchase a number of shares of Pyxis common stock equal to 19.9% of the number of shares currently outstanding, exercisable upon the occurrence of certain events. The merger is expected to be completed by early summer, subject to approval by shareholders of both Pyxis and the Company, and the receipt of requisite regulatory approvals. Page 10 11 PART II. OTHER INFORMATION Item 1: Legal Proceedings In November 1993, Cardinal and Whitmire were each named as defendants in a series of purported class action antitrust lawsuits which were later consolidated and transferred by the Judicial Panel for Multi-District Litigation to the United States District Court for the Northern District of Illinois (the "Brand Name Prescription Drug Litigation"). Subsequent to the consolidation, a new consolidated complaint ("amended complaint") was filed which included allegations that the wholesaler defendants, including Cardinal and Whitmire, conspired with manufacturers to inflate prices by using a chargeback pricing system. Cardinal and Whitmire have filed an answer denying the allegations in the amended complaint. In addition to the federal court case described above, Whitmire has been named as a defendant in a series of state court cases alleging similar claims under various state laws regarding the sale of brand name prescription drugs. Effective October 26, 1994, the Company entered into a Judgment Sharing Agreement in the Brand Name Prescription Drug Litigation with other wholesaler and pharmaceutical manufacturer defendants. Under the Judgment Sharing Agreement: (a) the manufacturer defendants agreed to reimburse the wholesaler defendants for litigation costs incurred, up to an aggregate of $9 million; and (b) if a judgment is entered against both manufacturers and wholesalers, the total exposure for joint and several liability of the Company is limited to the lesser of 1% of such judgment or one million dollars. In addition, the Company has released any claims which it might have had against the manufacturers for the claims presented by the plaintiffs in the Brand Name Prescription Drug Litigation. The Judgment Sharing Agreement covers the federal court litigation as well as the cases which have been filed in various state courts. On December 15, 1994, the plaintiffs filed a motion to declare the Judgment Sharing Agreement unenforceable. On April 10, 1995, the court denied that motion and ruled that the Judgment Sharing Agreement is valid and enforceable. The plaintiffs filed a motion for reconsideration of the court's April 10, 1995 ruling, and the court denied that motion and reaffirmed its earlier decision on April 24, 1995. On November 9, 1995, the Company along with the other wholesaler defendants filed a motion for summary judgment. The motion is currently being briefed and is scheduled for oral argument on February 22, 1996. If necessary, trial in the federal court case is scheduled for April 11, 1996. The Company believes that both federal and state allegations against Cardinal and Whitmire are without merit, and it intends to contest such allegations vigorously. The Company does not believe that the outcome of these lawsuits will have a material adverse effect on the Company's financial condition or results of operations. The Company also becomes involved from time to time in ordinary routine litigation incidental to its business, none of which is expected to have any material adverse effect on the Company's financial condition or results of operations. Item 2: Changes in Securities. On November 14, 1995 the shareholders of the Company adopted an amendment to Article FOURTH of the Company's Amended and Restated Articles of Incorporation, as amended, which increased the number of authorized common shares, without par value, from 60 million to 100 million. Item 4: Submission of Matters to a Vote of Security Holders. (a) Registrant's 1995 Annual Meeting of Shareholders was held on November 14, 1995. (b) Proxies were solicited by Registrant's management pursuant to Regulation 14 under the Securities Exchange Act of 1934; there was no solicitation in opposition to management's nominees as listed in the proxy statement; and all director nominees were elected to the class indicated in the proxy statement pursuant to the vote of the Registrant's shareholders. (c) Matters voted upon at the Annual Meeting were as follows: (1) Election of Robert L. Gerbig, George R. Manser, Jerry E. Robertson and Melburn G. Whitmire as directors of the Company. The results of the shareholder vote were as follows: Mr. Gerbig, 36,130,080 for, 0 against, 667,278 withheld, and 0 broker non-votes; Mr. Manser, 36,664,752 for, 0 against, 132,606 withheld, and 0 broker non-votes; Dr. Robertson, 36,659,019 for, 0 against, 138,339 withheld, and 0 broker non-votes; Mr. Whitmire, 36,130,399 for, 0 against, 666,959 withheld, and 0 broker non-votes. Page 11 12 (2) Amendment to the Registrant's Articles of Incorporation to increase the common shares, without par value, authorized (see Item 2). The results of the shareholder vote were as follows: 35,453,328 for, 1,239,072 against, 104,958 withheld, and 0 broker non-votes. (3) Adoption of the Cardinal Health, Inc. Equity Incentive Plan. The results of the shareholder vote were as follows: 30,548,259 for, 5,989,458 against, 259,053 withheld, and 488 broker non-votes. Item 6: Exhibits and Reports on Form 8-K: (a) Listing of Exhibits: Exhibit 3.01 Amended and Restated Articles of Incorporation of the Registrant, as amended. Exhibit 4.01 Specimen Certificate for the Registrant's Class A Common Shares. Exhibit 10.01 Equity Incentive Plan of the Registrant. (1)* Exhibit 10.02 Amendment dated November 14, 1995, to Employment Agreement dated October 11, 1993, among Whitmire Distribution Corporation, Melburn G. Whitmire and the Registrant, as amended. * Exhibit 11.01 Computation of Per Share Earnings. Exhibit 12.01 Computation of Ratio of Earnings to Fixed Charges (filed in connection with the prospectus supplement which was filed on January 22, 1996 to Form S-3, file No. 33-57223 and No. 33-62198). Exhibit 27.01 Financial Data Schedule. ____________________ (1) Included as an exhibit to the Registrant's Registration Statement on Form S-8 (No. 33-64337) and incorporated herein by reference. * Management contract or compensation plan or arrangement. (b) Reports on Form 8-K: On October 24, 1995 the Company filed a Report on Form 8-K under Item 5 which set forth the results for the fiscal quarter ended September 30, 1995 as contained in the Company's press release dated October 23, 1995 which announced these results. On November 16, 1995 the Company filed a Report on Form 8-K (which was subsequently amended by Form 8-K/A, Amendment No. 1, filed on January 18, 1996) under Item 2 which reported that it had completed its merger of a wholly-owned subsidiary with and into Medicine Shoppe International, Inc. ("Medicine Shoppe") on November 13, 1995. Pursuant to Item 7, the Form 8-K contained the required audited financial statements of Medicine Shoppe and the required combined unaudited pro forma financial information of the Company and Medicine Shoppe. Page 12 13 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. CARDINAL HEALTH, INC. Date: February 8, 1996 By: /s/ Robert D. Walter --------------------- Robert D. Walter Chairman and Chief Executive Officer By: /s/ David Bearman ----------------- David Bearman Executive Vice President and Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) Page 13 EX-3.01 2 EXHIBIT 3.01 1 Exhibit 3.01 AMENDED AND RESTATED ARTICLES OF INCORPORATION OF CARDINAL DISTRIBUTION, INC. These constitute the amended and restated articles of incorporation of Cardinal Distribution, Inc., a corporation for profit formed under the Ohio General Corporation Law, which amended and restated articles of incorporation supersede the previously existing articles of incorporation of the corporation, as heretofore amended: FIRST: The name of the corporation shall be "Cardinal Dis- tribution, Inc." SECOND: The place in Ohio where the principal office of the corporation is to be located is the City of Columbus, Franklin County. THIRD: The purpose or purposes for which the corporation is formed are to engage in any lawful act or activity for which corpora- tions may be formed under Sections 1701.01 to 1701.98, inclusive, of the Ohio Revised Code and any amendments heretofore or hereafter made thereto. FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate number of shares which the corporation is authorized to have outstanding is 10,500,000, consisting of 10,000,000 common shares without par value and 500,000 nonvoting preferred shares without par value. Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors is authorized at any time, and from time to time, to provide for the issuance of nonvoting preferred shares in one or more series, and to determine to the extent permitted by law the designations, preferences, limitations, and relative or other rights of the nonvoting preferred shares or any series thereof. For each series, the board of directors shall determine, by resolution or resolutions adopted prior to issuance of any shares thereof, the designations, preferences, limitations, and relative or other rights thereof, including but not limited to the following relative rights and preferences, as to which there may be variations among different series: (a) the division of such shares into series and the designation and authorized number of shares of each series, (b) the dividend rate, -1- 2 (c) the dates of payment of dividends and the dates from which they are cumulative, (d) liquidation price, (e) redemption rights and price, (f) sinking fund requirements, (g) conversion rights, and (h) restrictions on the issuance of such shares. Prior to the issuance of any shares of a series, but after adoption by the board of directors of the resolution establishing such series, the appropriate officers of the corporation shall file such documents with the State of Ohio as may be required by law including, without limitation, an amendment to these Articles of Incorporation. Section 3. COMMON SHARES. Each common share shall entitle the holder thereof to one vote, in person or by proxy, at any and all meetings of the shareholders of the corporation, on all propositions before such meetings. Subject to the preferences of any outstanding preferred shares, each common share shall be entitled to participate equally in such dividends as may be declared by the board of directors out of funds legally available therefor, and to participate equally in all distributions of assets upon liquidation. FIFTH: The amount of stated capital with which the corporation will begin business shall be not less than five hundred dollars ($500). SIXTH: The board of directors may fix and determine, and vary, the amount of working capital of the corporation; determine whether any (and, if any, what part) of the surplus, however created or arising, shall be used or disposed of or declared in dividends or paid to share- holders; and, without action by the shareholders, use and apply such surplus, or any part thereof, or such part of the stated capital of the corporation as is permitted under the laws of the State of Ohio, at any time or from time to time, in the purchase or acquisition of shares of any class, voting-trust certificates for shares, bonds, deben- tures, notes, scrip, warrants, obligations, evidence of indebtedness of the corporation, or other securities of the corporation, to such extent or amount and in such manner and upon such terms as the board of directors shall deem expedient and without regard to any provisions which may hereafter be contained in the corporation's articles of incor- poration with respect to the redemption of shares of any class at the option of the corporation. SEVENTH: Every statute of the State of Ohio hereafter enacted, whereby rights or privileges of the shareholders of a corporation organ- -2- 3 ized under the Ohio General Corporation Law are increased, diminished, or in any way affected, or whereby effect is given to any action author- ized, ratified, or approved by less than all the shareholders of any such corporation, shall apply to the corporation and shall bind every shareholder to the same extent as if such statute had been in force at the date of the filing of these articles of incorporation. EIGHTH: A director or officer of the corporation shall not be disqualified by his office from dealing or contracting with the corporation as a vendor, purchaser, employee, agent, or otherwise. No transaction or contract or act of the corporation shall be void or voidable or in any way affected or invalidated by reason of the fact that any director or officer, or any firm of which any director or officer is a shareholder, director, or trustee, or any trust of which any director or officer is a trustee or beneficiary, is in any way interested in such transaction or contract or act. No director or officer shall be accountable or responsible to the corporation for or in respect to any transaction or contract or act of the corporation or for any gains or profits directly or indirectly realized by him by reason of the fact that he or any firm of which he is a member or any corporation of which he is a shareholder, director, or trustee, or any trust of which he is a trustee or beneficiary, is interested in such transaction or contract or act; provided the fact that such director or officer or such firm or corporation or such trust is so interested shall have been disclosed or shall have been known to the board of directors or such members thereof as shall be present at any meeting of the board of directors at which action upon such contract or transaction or act shall have been taken. Any director may be counted in determining the existence of a quorum at any meeting of the board of directors which shall authorize or take action in respect to any such contract or transaction or act, and may vote thereat to authorize, ratify, or approve any such contract or transaction or act, and any officer of the corporation may take any action within the scope of his authority respecting such contract or transaction or act with like force and effect as if he or any firm of which he is a member, or any corporation of which he is a shareholder, director, or trustee, or any trust of which he is a trustee or beneficiary, were not interested in such transaction or contract or act. Without limiting or qualifying the foregoing, if in any judicial or other inquiry, suit, cause, or proceeding, the question of whether a director or officer of the corpora- tion has acted in good faith is material, then notwithstanding any statute or rule of law or of equity to the contrary (if any there be), his good faith shall be presumed, in the absence of proof to the contrary by clear and convincing evidence. NINTH: No holder of shares of any class of the corporation shall be entitled as such, as a matter of right, to subscribe for or purchase shares of any class, now or hereafter authorized, or to purchase or to subscribe for securities convertible into or exchangeable for shares of the corporation, or to which shall appertain or be attached -3- 4 any warrants or rights entitling the holder thereto to subscribe for or purchase shares, except such rights of subscription or purchase, if any, at such price or prices, and upon such terms and conditions as the board of directors in its discretion may from time to time deter- mine. TENTH: Except as otherwise provided in these Articles of Incorporation or the Code of Regulations of the corporation, notwithstand- ing any provision of any statute of the State of Ohio, now or hereafter in force, requiring for any purpose the vote, consent, waiver, or release of the holders of shares entitling them to exercise two-thirds or any other proportion of the voting power of the corporation or of any class or classes of shares thereof, any action may be taken by the vote of the holders of shares entitling them to exercise a majority of the voting power of the corporation, or of such class or classes, unless the proportion designated by such statute cannot be altered by these articles. -4- 5 CERTIFICATE OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF CARDINAL DISTRIBUTION, INC. Robert D. Walter and Michael E. Moritz hereby certify that they are the duly elected and acting chairman and secretary, respectively, of Cardinal Distribution, Inc., an Ohio corporation (the "Company"), and further certify that the following is a true copy of a resolution amending the Company's Amended and Restated Articles of Incorporation duly adopted by the affirmative vote of the holders of shares of the Company entitling them to exercise a majority of the voting power of the Company at the annual meeting of shareholders duly held on August 30, 1989: RESOLVED, That the Amended and Restated Articles of Incorporation of the Company be amended by deleting ARTICLE FOURTH thereof in its entirety and by substituting in lieu thereof the following ARTICLE FOURTH: FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate number of shares which the corporation is authorized to have outstanding is 20,500,000, consisting of 20,000,000 common shares without par value and 500,000 nonvoting preferred shares without par value. Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors is authorized at any time, and from time to time, to provide for the issuance of nonvoting preferred shares in one or more series, and to determine to the extent permitted by law the designations, preferences, limitations, and relative or other rights of the nonvoting preferred shares or any series thereof. For each series, the board of directors shall determine, by resolution or resolutions adopted prior to the issuance of any shares thereof, the designations, preferences, limitations, and relative or other rights thereof, including but not limited to the following relative rights and preferences, as to which there may be variations among different series: (a) the division of such shares into series and the designation and authorized number of shares of each series, (b) the dividend rate, (c) the dates of payment of dividends and the dates from which they are cumulative, (d) liquidation price, -5- 6 (e) redemption rights and price, (f) sinking fund requirements, (g) conversion rights, and (h) restrictions on the issuance of such shares. Prior to the issuance of any shares of a series, but after adoption by the board of directors of the resolution establishing such series, the appropriate officers of the corporation shall file such documents with the State of Ohio as may be required by law including, without limitation, an amendment to these Articles of Incorporation. Section 3. COMMON SHARES. Each common share shall entitle the holder thereof to one vote, in person or by proxy, at any and all meetings of the shareholders of the corporation, on all propositions before such meetings. Subject to the preferences of any outstanding preferred shares, each common share shall be entitled to participate equally in such dividends as may be declared by the board of directors out of funds legally available therefor, and to participate equally in all distributions of assets upon liquidation. August 30, 1989 CARDINAL DISTRIBUTION, INC. By /s/ Robert D. Walter ------------------------------ Robert D. Walter, Chairman By /s/ Michael E. Moritz ------------------------------ Michael E. Moritz, Secretary -6- 7 CERTIFICATE OF AMENDMENT TO THE AMENDED AND RESTATED ARTICLES OF INCORPORATION OF CARDINAL DISTRIBUTION, INC. Robert D. Walter and George H. Bennett, Jr. hereby certify that they are the duly elected and acting chairman and assistant secretary, respectively, of Cardinal Distribution, Inc., an Ohio corporation (the "Company"), and further certify that the following is a true copy of a resolution amending the Company's Amended and Restated Articles of Incorporation duly adopted by the affirmative vote of the holders of shares of the Company entitling them to exercise a majority of the voting power of the Company at the annual meeting of shareholders duly held on August 15, 1991: REVOLVED, that Article FOURTH of the Company's Amended and Restated Articles of Incorporation be, and the same hereby is, deleted in its entirety and there is substituting the following: FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate number of shares which the corporation is authorized to have outstanding is 40,500,000 consisting of 40,000,000 common shares without par value and 500,000 nonvoting preferred shares without par value. Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors is authorized at any time, and from time to time, to provide for the issuance of nonvoting preferred shares in one or more series, and to determine to the extent permitted by law the designations, preferences, limitations, and relative or other rights of the nonvoting preferred shares or any other series thereof. For each series, the board of directors shall determine, by resolution or resolutions adopted prior to the issuance of any shares thereof, the designations, preferences, limitations, and relative or other rights thereof, including but not limited to the following relative rights and preferences, as to which there may be variations among different series: (a) the division of such shares into series and the designation and authorized number of shares of each series, (b) the divided rate, (c) the dates of payment of dividends and the dates from which they are cumulative, -7- 8 (d) liquidation price, (e) redemption rights and price, (f) sinking fund requirements, (g) conversion rights, and (h) restrictions on the issuance of such shares. Prior to the issuance of any shares of a series, but after adoption by the board of directors of the resolution establishing such series, the appropriate officers of the corporation shall file such documents with the State of Ohio as may be required by law including, without limitation, an amendment to these Articles of Incorporation. Section 3. COMMON SHARES. Each common share shall entitle the holder thereof to one vote, in person or by proxy, at any and all meetings of the shareholders of the corporation, on all propositions before such meetings. Subject to the preferences of any outstanding preferred shares, each common share shall be entitled to participate equally in such dividends as may be declared by the board of directors out of funds legally available therefor, and to participate equally in all distributions of assets upon liquidation. August 15, 1991 CARDINAL DISTRIBUTION, INC. By /s/ Robert D. Walter --------------------------- Robert D. Walter, Chairman By /s/ George H. Bennett, Jr. --------------------------- George H. Bennett, Jr., Assistant Secretary -8- 9 EXHIBIT A TO CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED OF CARDINAL DISTRIBUTION, INC. Resolved, that Article FIRST, of the Amended and Restated Articles of Incorporation, as amended, of Cardinal Distribution, Inc. be, and the same hereby is, deleted in its entirety and there is substituted therefor the following: FIRST: The name of the corporation shall be "Cardinal Health, Inc." Resolved, that Article FOURTH of the Amended and Restated Articles of Incorporation, as amended, of Cardinal Distribution, Inc. be, and the same hereby is, deleted in its entirety and there is substituted therefor the following: FOURTH: Section 1. AUTHORIZED SHARES. The maximum aggregate number of shares which the corporation is authorized to have outstanding is 65,500,000, consisting of 60,000,000 common shares, without par value ("Class A Common Shares"), 5,000,000 Class B common shares, without par value ("Class B Common Shares") (the Class A Common Shares and the Class B Common Shares are sometimes referred to herein collectively as the "Common Shares"), and 500,000 nonvoting preferred shares, without par value. Section 2. ISSUANCE OF PREFERRED SHARES. The board of directors is authorized at any time, and from time to time, to provide for the issuance of nonvoting preferred shares in one or more series, and to determine to the extent permitted by law the designations, preferences, limitations, and relative or other rights of the nonvoting preferred shares or any series thereof. For each series, the board of directors shall determine, by resolution or resolutions adopted prior to the issuance of any shares thereof, the designations, preferences, limitations, and relative or other rights thereof, including but not limited to the following relative rights and preferences, as to which there may be variations among different series: (a) the division of such shares into series and the designation and authorized number of shares of each series, (b) the dividend rate, (c) the dates of payment of dividends and the dates from which they are cumulative, (d) liquidation price, (e) redemption rights and price, (f) sinking fund requirements, (g) conversion rights, and (h) restrictions on the issuance of such shares. Prior to the issuance of any shares of a series, but after adoption by the board of directors of the resolution establishing such series, the appropriate officers of the corporation shall file such documents with the State of Ohio as may be required by law including, without limitation, an amendment to these Articles of Incorporation. Section 3. COMMON SHARES. All common shares shall be identical and will entitle the holders thereof to the same rights and privileges, except as otherwise provided herein. A. VOTING RIGHTS. 1. CLASS A COMMON SHARES. Except as set forth herein or as otherwise required by law, each outstanding Class A Common Share shall entitle the holder thereof to one vote, in person or by -9- 10 proxy, at any and all meetings of the shareholders of the corporation, on all propositions before such meetings. 2. CLASS B COMMON STOCK. Except as set forth herein or as otherwise required by law, each outstanding Class B Common Share shall entitle the holder thereof to one-fifth (1/5) of one vote, in person or by proxy, at any and all meetings of shareholders of the corporation, on all propositions before such meetings. Notwithstanding the foregoing, holders of the Class B Common Shares shall be entitled to vote as a separate class on any amendment to this paragraph 2 of this Section A, on the issuance in the aggregate by the corporation of additional Class B Common Shares in excess of the number of Class B Common Shares held by Chemical Equity Associates and its Affiliates or issuable pursuant to Section 3(c) hereof and on any amendment, repeal or modification of any provision of these Articles that adversely affects the powers, preferences or special rights of the holders of the Class B Common Shares. B. DIVIDENDS; LIQUIDATION. Subject to the preferences of any preferred shares, each Common Share shall be entitled to participate equally in such dividends as may be declared by its board of directors out of funds legally available therefor or to participate equally in all distributions of assets upon liquidation; provided, that in the case of dividends payable in Common Shares of the Corporation, or options, warrants or rights to acquire such Common Shares, or securities convertible into or exchangeable for such Common Shares, the shares, options, warrants, rights or securities so payable shall be payable in shares of, or options, warrants or rights to acquire, or securities convertible into or exchangeable for, Common Shares of the same class upon which the dividend or distribution is being paid. C. CONVERSION. 1. CONVERSION OF CLASS A COMMON SHARES. Any Regulated Shareholder (defined below) shall be entitled to convert, at any time and from time to time, any or all of the Class A Common Shares held by such shareholder into the same number of Class B Common Shares. 2. CONVERSION OF CLASS B COMMON SHARES. Each holder of Class B Common Shares may convert such shares into Class A Common Shares if such holder reasonably believes that such converted shares will be transferred within fifteen (15) days pursuant to a Conversion Event (defined below) and such holder agrees not to vote any such Class A Common Shares prior to such Conversion Event and undertakes to promptly convert such shares back into Class B Common Shares if such shares are not transferred pursuant to a Conversion Event. Each Regulated Shareholder may provide for further restrictions or limitations upon the conversion of any Class B Common Shares by providing the corporation with signed, written instructions specifying such additional restrictions and legending such shares as to the existence of such restrictions. 3. CONVERSION PROCEDURE. Each conversion of Copmmon Shares of the corporation into shares of another class of Common Shares of the Corporation shall be effected by the surrender of the certificate or certificates representing the shares to be converted (the "Converting Shares") at the principal office of the corporation (or such other office or agency of the corporation as the corporation may designate by written notice to the holders of common shares) at any time during its usual business hours, together with written notice by the holder of such Converting Shares, stating that such holder desires to convert the Converting Shares, or a stated number of the shares represented by such certificate or certificates, into an equal number of shares of the class into which such shares may be converted (the "Converted Shares"). Such notice shall also state the name or names (with addresses) and denominations in which the certificate or certificates for Converted Shares are to be issued and shall include instructions for the delivery thereof. Promptly after such surrender and the receipt of such written notice, the corporation will issue and deliver in accordance with the surrendering holder's intructions the certificate or certificates evidencing the Converted Shares issuable upon such conversion, and the corporation will deliver to the converting holder a certificate representing any shares which were represented by the certificate or certificates that were delivered to the coropration with such conversion, but which were not converted. -10- 11 Such conversion shall be deemed to have been effected as of the close of business on the date on which such certificate or certificates shall have been surrendered and such notice shall have been received by the corporation, and at such time the rights of the holder of the Converting Shares as such holder shall cease and the person or persons in whose name or names the certificate or certificates for the Converted Shares are to be issued upon such conversion shall be deemed to have become the holder or holders of record of the Converted Shares. Upon issuance of shares in accordance with this Section C, such Converted Shares shall be deemed to be duly authorized, validly issued, fully paid and non-assessable. Each holder of Class B Common Shares shall be entitled to convert Class B Common Shares in connection with any Conversion Event if such holder reasonably believes that such Conversion Event will be consummated, and a written request for conversion from any holder of Class B Common Shares to the corporation stating such holder's reasonable belief that a Conversion Event shall occur shall be conclusive and shall obligate the corporation to effect such conversion in a timely manner so as to enable each such holder to participate in such Conversion Event. The corporation will not cancel the Class B Common Shares so converted before the 15th day following such Conversion Event and will reserve such shares until such 15th day for reissuance in compliance with the next sentence. If any Class B Common Shares are converted into Class A Common Shares in connection with a Conversion Event and such Class A Common Shares are not actually distributed, disposed of or sold pursuant to such Conversion Event, such Class A Common Shares shall be promptly converted back into the same number of Class B Common Shares. 4. STOCK SPLITS; ADJUSTMENTS. If the Corporation shall in any manner subdivide (by stock split, stock dividend or otherwise) or combine (by reverse stock split or otherwise) the outstanding Class A Common Shares or the Class B Common Shares, then the outstanding shares of each other class of common shares shall be subdivided or combined, as the case may be, to the same extent, share and share alike, and effective provision shall be made for the protection of the conversion rights hereunder. In the case of any reorganization, reclassification or change of shares of the Class A Common Shares or Class B Common Shares (other than a change in par value or from par to no par value as a result of a subdivision or combination), or in case of any consolidation of the corporation with one or more corporations or a merger of the corporation with another corporation (other than a consolidation or merger in which the corporation is the resulting or surviving corporation and which does not result in any reclassification or change of outstanding Class A Common Shares or Class B Common Shares), each holder of Class A Common Shares or Class B Common Shares shall have the right at any time thereafter, so long as the conversion right hereunder with respect to such share would exist had such event not occurred, to convert such share into the kind and amount of shares of stock and other securities and properties (including cash) receivable upon such reorganization, reclassification, change, consolidation or merger by a holder of the number of Class A Common Shares or Class B Common Shares into which such Class A Common Shares or Class B Common Shares, as the case may be, might have been converted immediately prior to such reorganization, reclassification, change, consolidation or merger. In the event of any such reorganization, reclassification, change, consolidation or merger which will have the effect of causing any Regulated Shareholder's direct or indirect ownership of shares of capital stock of the resulting or surviving corporation immediately following such transaction to equal or exceed 5% of the voting power thereof (calculated as if all such Regulated Shareholder's Class B Common Shares were converted to Class A Common Shares immediately prior to consummation of such transaction) then provision shall be made in the certificate of incorporation of the resulting or surviving corporation for the protection of the conversion rights of Class A Common Shares and Class B Common Shares that shall be applicable, as nearly as reasonably may be, to any such other shares of stock and other securities and property deliverable upon conversion of such Class A Common Shares or Class B Common Shares ionto which such Class A Common Shares or Class B Common Shares might have been converted prior to such event. -11- 12 5. RESERVATION OF SHARES. The Corporation shall at all times reserve and keep available out of its authorized but unissued Class A Common Shares and Class B Common Shares or its treasury shares, for the purpose of issuance upon the conversion of Class A Common Shares and Class B Common Shares, such number of shares of such class as are then issuable upon the conversion of all outstanding shares of Class A Common Shares and Class B Common Shares which may be converted. 6. NO CHARGE. The issuance of certificates for shares of any class of common shares upon conversion of shares of any other class of common shares shall be made without charge to the holders of such shares for any issuance tax in respect thereof or other cost incurred by the Corporation in connection with such conversion and the related issuance of common shares; provided, however, that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issuance and delivery of any certificate in a name other than that of the holder of the common shares converted. D. As used herein, the following terms shall have the meanings shown below: 1. "AFFILIATES" shall mean with respect to any Person, any other person, directly or indirectly controlling, controlled by or under common control with such Person. For the purpose of the above definition, the term "control" (including with correlative meaning, the terms "controlling", "controlled by" and "under common control with"), as used with respect to any Person, shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities or by contract or otherwise. 2. "CONVERSION EVENT" shall mean (a) any public offering or public sale of securities of the Corporation (including a public offering registered under the Securities Act of 1933 and a public sale pursuant to Rule 144 of the Securities and Exchange Commission or any similar rule then in force), (b) any sale of securities of the corporation to a person or group of persons (withing the meaning of the Securities Exchange Act of 1934, as amended (the "1934 Act")) if, after such sale, such person or group of persons in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the corporation's directors (provided that such sale has been approved by the corporation's Board of Directors or a committee thereof), (c) any sale of securities of the corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons in the aggregate would own or control securities of the corporation (excluding any Class B Common Shares being converted and disposed of in connection with such Conversion Event) which possess in the aggregate the ordinary voting power to elect a majority of the corporation's directors, (d) any sale of securities of the corporation to a person or group of persons (within the meaning of the 1934 Act) if, after such sale, such person or group of persons would not, in the aggregate, own, control or have the right to acquire more than two percent (2%) of the outstanding securities or any class of voting securities of the corporation (for purposes of this clause, treating Class A Common Stock and Class B Common Stock as a single class), and (e) a merger, consolidation or similar transaction involving the corporation if, after such transaction, a person or group of persons (within the meaning of the 1934 Act) in the aggregate would own or control securities which possess in the aggregate the ordinary voting power to elect a majority of the surviving corporation's directors (provided that the transaction has been approved by the corporation's Board of Directors or a committee thereof). 3. "PERSON" or "PERSON" shall mean an individual, a partnership, a corporation, a trust, a joint venture, an unincorporated organization or a government or any department or agency thereof. 4. "REGULATED SHAREHOLDER" shall mean Chemical Equity Associates and its Affiliates. -12- 13 CERTIFICATE OF AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION, AS AMENDED, OF CARDINAL HEALTH, INC. Robert D. Walter, Chairman, and George H. Bennett, Jr., Secretary, of Cardinal Health, Inc., an Ohio corporation (the "Company"), do hereby certify that a meeting of the shareholders of the Company was duly called and held on November 14, 1995, at which meeting a quorum of the shareholders was present in person or by proxy, and by the affirmative vote of holders of shares entitling them to exercise a majority of the voting power of the Company on a proposal to amend the Company's Amended and Restated Articles of Incorporation, as amended, the following resolution was duly adopted: Resolved, that Section 1 of Article FOURTH of the Amended and Restated Articles of Incorporation, as amended, of Cardinal Health, Inc. be, and the same hereby is, deleted in its entirety and there is substituted therefor the following: FOURTH: Section 1. Authorized Shares. The maximum aggregate number of shares which the corporation is authorized to have outstanding is 105,500,000, consisting of 100,000,000 common shares, without par value ("Class A Common Shares"), 5,000,000 Class B common shares, without par value ("Class B Common Shares") (the Class A Common Shares and the Class B Common Shares are sometimes referred to herein collectively as the "Common Shares"), and 500,000 nonvoting preferred shares, without par value. IN WITNESS WHEREOF, Robert D. Walter, Chairman, and George H. Bennett, Jr., Secretary, of Cardinal Health, Inc., acting for and on its behalf, do hereunto subscribe their names this 14th day of November, 1995. /s/ Robert D. Walter ------------------------------ Robert D. Walter, Chairman /s/ George H. Bennett, Jr. ------------------------------ George H. Bennett, Jr. -13- EX-4.01 3 EXHIBIT 4.01 1 Exhibit 4.01 COMMON STOCK INCORPORATED UNDER THE LAWS OF THE [CARDINAL LOGO] STATE OF OHIO CARDINAL ------------------- ------------------ HEALTH, INC. SHARES | | ------------------- | | SEE REVERSE FOR | | CERTAIN DEFINITIONS | --------- | ----------------------------------- | NUMBER | THIS CERTIFICATE IS TRANSFERABLE CUSIP 14149Y 10 8 | --------- | IN ST. LOUIS, MISSOURI | | AND NEW YORK, NEW YORK | | ----------------------------------- | | -------------------------------------------------------------------------------------------------------- | | THIS CERTIFIES THAT | | | | | | | | SPECIMEN | | | | is the owner of | | -------------------------------------------------------------------------------------------------------- | | | | fully paid and non-assessable Common Shares, without par value, of | | Cardinal Health, Inc., transferable only on the books of the corporation by the holder of this certificate | | in person or by duly authorized attorney upon surrender of this certificate properly endorsed. This | | certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. ------------------- Dated: /s/ Robert D. Walter COUNTERSIGNED AND REGISTERED CHAIRMAN OF THE BOARD BOATMEN'S TRUST COMPANY /s/ George H. Bennett, Jr. [GRAPHIC OF THE GLOBE BY TRANSFER AGENT SECRETARY AND THE STATUE OF LIBERTY] AND REGISTRAR AUTHORIZED SIGNATURE
2 Cardinal Health, Inc. will mail to each shareholder without charge within five days of receipt of written request therefor a copy of the express terms, if any, of the shares represented by this certificate and of the other class or classes and series of shares, if any, which the corporation is authorized to issue. The following abbreviations, when used in the inscription on the face of this certificate, shall be construed as though they were written out in full according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT -___________________Custodian ______________ TEN ENT - as tenants by the entireties (Cust) (Minor) JT TEN - as joint tenants with right of under Uniform Gifts to Minors survivorship and not as tenants Act________________________________________ in common (State) Additional abbreviations may also be used though not in the above list.
For value received, the undersigned hereby sell(s), assign(s) and transfer(s) unto PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE --------------------------------- / / --------------------------------- ________________________________________________________________________________ (PLEASE PRINT OR TYPE ASSIGNEE'S NAME AND ADDRESS, INCLUDING ZIP CODE) ________________________________________________________________________________ ________________________________________________________________________________ ________________________________________________________________________________ of the shares represented by this certificate, and hereby irrevocably constitute(s) and appoints(s) ________________________________________________________________________________ attorney, with full power of substitution, to transfer the shares on the books of the corporation. Dated_______________________ ___________________________________________ ___________________________________________ NOTICE: THE SIGNATURE TO THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME AS WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR ANY CHANGE WHATEVER. EX-10.02 4 EXHIBIT 10.02 1 EXHIBIT 10.02 AMENDMENT TO EMPLOYMENT AGREEMENT --------------------------------- This is an amendment made November 14, 1995, to the Employment Agreement dated as of October 11, 1993 (the "Agreement") by and among Whitmire Distribution Corporation (the "Company"), Melburn G. Whitmire (the "Executive"), and Cardinal Health, Inc. (fka Cardinal Distribution, Inc., "Cardinal"). Background Information ---------------------- A. The Company, Cardinal, and the Executive originally entered into the Agreement in connection with the consummation of Cardinal's acquisition of all of the outstanding common stock of the Company on February 7, 1994 (the "Effective Time"). B. The Parties now mutually desire to modify certain of the terms and conditions of the Executive's continued employment with the Company, which modifications will become effective as of February 7, 1996 (the "Trigger Date"). Statement of Agreement ---------------------- The Parties hereby acknowledge the accuracy of the above Background Information and agree as follows: Section 1. DEFINITIONS. All capitalized terms used but not otherwise defined or revised in this amendment shall have the respective meanings given those terms in the Agreement. Section 2. EMPLOYMENT PERIOD. The Employment Period shall be extended for a period of three years following the Trigger Date (i.e., continuing through February 6, 1999) on the terms and conditions set forth in this amendment. Section 3. DUTIES. From and after the Trigger Date and for the balance of the Employment Period, the requirement that Executive devote his full business attention and time to the business and affairs of the Company shall be modified to instead require the performance of those duties (of an executive nature) as may be reasonably determined by the mutual agreement of Executive and the Company. Section 4. ACCELERATION OF NON-COMPETE PAYMENTS. The Company shall accelerate the $1.2 million in non-compete payments owed to the Executive under paragraph 8(f) of the Agreement, such that the first installment of $600,000 shall be made on or before March 7, 1996, and the final installment of $600,000 shall be made on or before March 7, 1997. 2 These accelerated payments shall be made in lieu and in full satisfaction of the Company's existing obligations under paragraph 8(f) of the Agreement. Section 5. ANNUAL BASE SALARY AND BONUS. From and after the Trigger Date and for the balance of the Employment Period, the Executive's Annual Base Salary shall be reduced to $25,000 per annum, payable in accordance with the Company's payroll practices for executives as in effect from time to time. For the Company's fiscal year ending June 30, 1996, the Executive shall be eligible to receive an Annual Bonus (payable at such time as other bonuses are paid under the Cardinal Bonus Plan) in an amount equal to the product obtained when $177,072 is multiplied by the same MIP payout percentage awarded to Robert D. Walter, Cardinal's Chairman and Chief Executive Officer for such fiscal year (i.e., actual MIP payment awarded to Mr. Walter divided by his maximum MIP potential for the fiscal year). The Executive shall not be eligible to receive an Annual Bonus for any fiscal year (or portion thereof) after the fiscal year ending June 30, 1996. Section 6. STOCK INCENTIVES. In connection with the annual grant of stock options anticipated to be made to Cardinal managers in March of 1996, the Executive shall receive a grant of 13,350 option shares on the same terms and conditions contained in grants to other Cardinal managers; provided, however, that these option shares shall vest not later than the last day of the Employment Period. The Executive shall not be eligible to receive option grants following the March 1996 grant. Section 7. OTHER BENEFITS. During the Employment Period, the Executive (and/or the Executive's family to the extent so provided under the applicable terms of such benefit plans) shall continue to be eligible to participate in and receive benefits under: (a) Cardinal's group health, life, and disability plan; and (b) Cardinal's profit sharing and retirement savings plan, in accordance with the standard terms and conditions of such plans as in effect from time to time; provided, however, that Executive understands and agrees that the non-compete payments described in Section 4, above, shall not be counted as "credited compensation" for purposes of calculating benefits under Cardinal's profit sharing or other benefit plans. At or prior to the Trigger Date, the Executive shall also be permitted to purchase his Company car at its then book value. Except as specifically set forth above in this amendment and notwithstanding anything to the contrary contained elsewhere in the Agreement or any plan document, the Executive (and/or the Executive's family to the extent so provided under the applicable terms of such benefit plans) shall cease to receive or be eligible for any other benefits from and after the Trigger Date, including those fringe benefits listed in Schedule B of the Agreement. It is currently anticipated that the Whitmire Selective Deferred Compensation Plan will be terminated prior to the Trigger Date and, upon such termination, Executive acknowledges and agrees that his net vested account balance in such plan shall be calculated and distributed in accordance with the termination provisions permitted under such plan. 3 Section 8. CONFIDENTIAL INFORMATION; NONCOMPETITION. The provisions contained in paragraph 8 of the Agreement are hereby acknowledged and reconfirmed by the Parties and shall continue in full force and effect; provided, however, that: (a) the "Noncompetition Period" shall not be extended by the amendment to the Employment Period contained in Section 1 of this amendment, but shall instead be modified to mean the period ending on February 6, 1999, in all events, which period includes all applicable Extension Periods on an automatic basis, without the requirement of notice being given to or by the Executive; and (b) the payments provided for in paragraph 8(f) of the Agreement shall be accelerated as provided in Section 4 of this amendment. Section 9. REGISTRATION RIGHTS AGREEMENT. The Executive shall, simultaneously with his execution of this amendment, deliver to the Company and Cardinal his written confirmation of the termination of the Registration Rights Agreement dated October 11, 1993, which termination will be effective as of November 14, 1995. Section 10. CONSTRUCTION. In the event of any inconsistency between the provisions of this amendment and the Agreement, the provisions of this amendment shall control. The headings of the various sections of this amendment are not part of the context of this amendment and shall be ignored in construing this amendment. If any court of competent jurisdiction determines that any provision of this amendment is invalid or unenforceable, such court shall have jurisdiction to reform this amendment to the extent necessary to make such provision valid and enforceable, and, as reformed, such provision shall be binding on the parties to this amendment. Section 11. NO OTHER CHANGES. Except as set forth in this amendment, the terms and conditions of the Agreement shall continue in full force and effect without change. /s/ Melburn G. Whitmire -------------------------------- Melburn G. Whitmire Whitmire Distribution Corporation By: /s/ George H. Bennett, Jr. ------------------------------ Cardinal Health, Inc. By: /s/ George H. Bennett, Jr. ------------------------------ EX-11.01 5 EXHIBIT 11.01 1
Exhibit 11.01 CARDINAL HEALTH, INC. COMPUTATION OF PER SHARE EARNINGS (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS) Fiscal Quarter Ended Six Months Ended ------------------------------ ------------------------------ December 31, December 31, December 31, December 31, 1995 1994 1995 1994 -------------- -------------- ------------- -------------- PRIMARY: Net earnings $ 18,714 $ 24,942 $ 42,206 $ 44,652 ============== ============== ============= ============== Average shares outstanding 48,627 48,157 48,521 46,838 Dilutive effect of stock options 722 992 754 1,294 ------------- ------------- ------------- ------------- Weighted average number of Common Shares outstanding 49,349 49,149 49,275 48,132 ============== ============== ============= ============== Primary earnings per Common Share $ 0.38 $ 0.51 $ 0.86 $ 0.93 ============== ============== ============= ============== FULLY DILUTED: Net earnings $ 18,714 $ 24,942 $ 42,206 $ 44,652 ============= ============== ============= ============== Average shares outstanding 48,627 48,157 48,521 46,838 Dilutive effect of stock options 726 1,037 796 1,356 ------------- ------------- ------------- ------------- Weighted average number of Common Shares outstanding 49,353 49,194 49,317 48,194 ============== ============== ============= ============== Fully diluted earnings per Common Share $ 0.38 $ 0.51 $ 0.86 $ 0.93 ============== ============== ============= ==============
EX-12.01 6 EXHIBIT 12.01 1
Exhibit 12.01 CARDINAL HEALTH, INC. COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES Three Months Ended March 31, March 31, March 31, June 30, June 30, September 30, 1991 1992 1993 1994 1995 1995 ------------ ------------ ------------- ------------- ------------- -------------- Earnings from continuing operations before income taxes $ 45,393,000 $ 64,514,000 $ 85,257,000 $ 92,659,000 $ 171,570,000 $ 40,023,000 Add-Fixed Charges: Interest Expense 26,623,000 25,881,000 26,623,000 18,140,000 19,341,000 4,140,000 Interest Capitalized 271,000 163,000 Amortization of Debt Offering Costs 500,000 2,272,000 267,000 220,000 302,000 74,000 Interest Portion of Rent Expense 3,815,000 4,212,000 4,874,000 5,307,000 5,522,000 1,447,000 Preferred Stock Dividend Requirement 3,130,000 3,360,000 3,327,000 2,429,000 ------------ ------------ ------------- ------------- ------------- ------------ Total Fixed Charges 34,339,000 35,888,000 35,091,000 26,096,000 25,165,000 5,661,000 Less: Interest Capitalized (271,000) (163,000) Preferred Stock Dividend Requirement (3,130,000) (3,360,000) (3,327,000) (2,429,000) ----------- ----------- ------------- ------------- ------------- --------------- Earnings as Adjusted $ 76,331,000 $ 96,879,000 $ 117,021,000 $ 116,326,000 $ 196,735,000 $ 45,684,000 ============ ============ ============= ============= ============= ============ Ratio of Earnings to Fixed Charges 2.2 2.7 3.3 4.5 7.8 8.1
EX-27 7 EXHIBIT 27
5 1,000 6-MOS JUN-30-1996 JUL-01-1995 DEC-31-1995 27,057 7,852 641,515 (39,850) 1,198,340 1,873,537 213,828 (95,162) 2,101,584 1,212,901 208,690 366,200 0 0 300,617 2,101,584 4,178,765 4,178,765 3,912,259 3,912,259 170,342 0 8,241 75,091 32,885 42,206 0 0 0 42,206 .86 .86
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