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Bindley Western Industries, Inc.

Bindley Western Industries, Inc.

Indianapolis-headquartered Bindley Western Industries, Inc., with 1989 revenues of $1.56 billion, is the fifth-largest drug wholesaler in the United States. Chief competitors are companies such as Bergen Brunswig Drug Co. of Orange, Calif., and McKesson Corp. of San Francisco. Bindley Western, which trades over the counter under the symbol BIND, is unique in that 83 percent of revenues reflects sales to large drug chains, which carry much lower margins. This is not necessarily a negative, as some analysts have alleged, due to the continuing consolidation in the drugstore industry.

Prewrite-off earnings in 1989 were $.77. The Twinsburg, Ohio-based Revco D.S., Inc.'s bankruptcy, which was filed on July 23, 1988, is grinding through the courts at a snail's pace. Bindley Western has received one reclamation payment. The final payment of $1 million for goods shipped just prior to the Revco filing should have been received by Mar. 31, 1990. Bindley took a $2.98 million charge in the fourth quarter to write down the $13.4 million of remaining Revco receivables. We view this positively.

We look for BIND to show solid growth in 1990 with earnings in the $.90 range. Gross margins are expected to be approximately 2.75 percent on a FIFO (first in, first out) basis and 2.35 percent on a LIFO (last in, first out) basis. As do other firms in this industry, BIND keeps its records on FIFO inventory accounting. A LIFO adjustment is made at year-end.

Prescription drug volume represents the lion's share of revenue (about $1.4 billion). Bindley has been adept at "forward buying" of key hot-selling drugs in advance of price increases.

Bindley stock is selling at 11 times projected 1990 earnings per share. We think the stock is attractive at these levels.

Table : FINANCIAL DATA
12 MO. PRICE 1988 LAST 12 MOS.
 RANGE E.P.S. E.P.S. P/E
 $11-$7 $0.58 $0.77 11.1
5 YEAR ($MM)
AVG. P/E DIV. YIELD MKT. CAP
 18.5 $0.00 0.00% $62.5


Table : ANNUAL TRENDS
FISCAL PER SHARE DATA
YEAR REVENUES EARNINGS DIVIDENDS
1983 $ 480.9 $0.56 $0.00
1984 566.7 0.73 0.00
1985 626.9 0.76 0.00
1986 711.0 0.77 0.00
1987 1,055.2 0.30 0.00
1988 1,275.0 0.58 0.00
1989 1,561.1 0.41(*) 0.00


LAST 12 MONTHS PRICE CHANGE: 42.11%

AVG. DAILY VOLUME: 18,116 SHARES (*) 0.77 excluding write-offs
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Article Details
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Title Annotation:Profile; drug wholesaler
Author:Diggle, Raymond H., Jr.
Publication:Indiana Business Magazine
Article Type:company profile
Date:Apr 1, 1990
Words:424
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