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-5- UVA-F-1206

Exhibit 2
FRANK SPENCE
Income Statement
($ in thousands)

Year ended December 31:

1990 1991 1992 1993 1994

Net Sales $ 3,757 $ 9,934 $ 7.791 $ 12,471 $ 26,932

Cost of Sales/Revenues 2,214 6,474 6,097 10,340 20,614

Gross Profit 1,543 3,460 1,694 2,131 6,318

Operating Expenses

General & Administrative Expense 433 619 459 511 988

Officers’ Compensation 120 340 300 230 340
Total Operating Expenses 553 959 759 741 1,328

EBITDA 996- 2,501 935 1,390 4,990

Depreciation - - - 22 19
Operating Income 990 2,501 935 1.368 4,971

Interest Expense 16 2 4 4 3
Investment Income 14 68 41 12 53
Pension Plan Expense 10 - 25 35 65
Total Other Income (Exp) (12) 66 12 (27) (15)

Pre-Tax Profit 978 2,567 947 1,341 4,956

Cash Distribution (7) (1,472) (2,301) (908) (1,551)

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-6- UVA-F-1206

Exhibit 3
FRANK SPENCE
Common Size Income Statement
($ in thousands)

Year ended December 31:

1990 1991 1992 1993 1994

Net Sales 100.00% 100.00% 100.00% 100.00% 100.00%

Cost of Sales/Revenues 58.93% 65.17% 78.26% 82.91% 76.54%

Gross Profit 41.07% 34.83% 21.74% 17.09% 23.46%

Operating Expenses

General & Administrative Expense 11.53% 6.23% 5.89% 4.10% 3.67%

Officers’ Compensation 3.19% 3.42% 3.85% 1.84% 1.26%

Total Operating Expenses 14.72% 9.65% 9.74% 5.94% 4.93%

EBITDA 26.35% 25.18% 12.00% 11.15% 18.53%

Depreciation 0.00% 0.00% 0.00% 0.18% 0.07%

Operating Income 26.35% 2518% 12.00% 10.97% 18.46%

Interest Expense 0.43% 0.02% 0.05% 0.03% 0.01%

Investment Income 0.37% 0.68% 0.53% 0.10% 0.20%
Pension Plan Expense 0.27% 0.00% 0.32% 0.28% 0.24%
Total Other Income (Exp) -0.32% 0.66% 0.15% -0.22% -0.06%

Pre-Tax Profit 26.03% 25.84% 12.16% 10.75% 18.40%

Cash Distribution 0.19% 14.82% 29.53% 7.28% 5.76%

Page 6 of 12
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-7- UVA-F-1206

Exhibit 4
FRANK SPENCE
Drug Wholesalers, Publicly Traded Company Analysis
($ in millions)

5/30196 Market LTM Enterprise Value Multiple: Market Value Multiple

Stock Value (A) Not Enterprise LTM Operating Forward Operating Net Book
Rank Company State Price of Equity Debt (B) Value (C) Sales Margin (D) PIE Sales EBITDA Income Income Value

1 McKesson Corp. (MCK) (E) CA $43.625 $1,916.4 $485.6 $2.402.0 $13,189.0 1.9% 14.40 0.18 x 7.37 x 9.58 x 14.41 x 1.83 x
2 Bergen Brunswig Corp. (BBC) CA 22.580 882.4 406.2 1,288.6 7,871.0 1.6% 13.80 0.16 9.25 10.47 14.01 1.87
3 Cardinal Health Inc. (CAH) OH 46.000 1,926.0 325.4 2,251.4 5.790.0 2.4% 22.55 0.39 13.68 16.10 55.03 3.85
4 FoxMeyer Health Corp. (FOX) TX 18.125 308.5 320.3 628.8 5,177.0 1.1% 9.80 0.12 5.92 10.68 7.34 0.61
5 AmeriSource Health Corp. (ASH PA 22.250 300.4 620.3 920.7 4.726.0 2.0% NM 0.19 8.71 9.73 NM NM
6 Bindley Western Industries (BIND IN 15.500 167.9 166.2 334.1 4,231.0 0.8% 11.57 0.08 7.95 10.28 11.19 0.93
7 Owens & Minor Inc. HIdg. (OMI)( VA 13.000 399.2 323.3 722.5 2.752.0 2.0% 15.85 0.26 10.47 12.90 10.54 1.59
8 D & K Wholesale Drug Inc. (DKW MO 6.125 16.5 17.3 33.8 320.0 1.2% 12.01 0.11 6.91 8.90 16.54 2.36
9 Moore Medical Corp. (MMD) CT 11.375 32.6 23.7 56.2 277.0 2.7% 9.25 0.20 6.25 7.50 10.84 1.41

High 2.7% 22.55 0.39 13.68 16.10 55.03 3.85

Mean 1.7% 13.65 0.19 8.50 10.68 17.49 1.81
Median 1.9% 12.91 0.18 7.95 10.28 12.60 1.71
Low 0.8% 9.25 0.08 5.92 7.50 7.34 0.61

(A) Market Value of Equity calculated by multiplying May 30, 1995 market price by shares outstanding
(B) Not Debt equals total debt less cash
(C) Enterprise Value equals Not Debt plus Market Value of Equity
(D) L TM Operating Margin equals L TM Operating Income (Sales less Cost of Goods Sold and SG&A Expenses) divided by L TM Sales
(E) Financials exclude extraordinary gain in Q3 95
(F) Annualized six-month financials from 3131195
(G) Financials exclude restructuring charge of $29. 6 million

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-8- UVA-F-1206

Exhibit 5
FRANK SPENCE
Distribution Comparable Acquisitions
($ in millions)

Operating Not Book

Price Sales Cash Flow Income Income Value
Date: Target Buyer: Sales: Paid: Multiple: Multiple: Multiple: Multiple: Multiple:

Jan 1995 Randolph Medical Inc. General Medical Corp. (Kelso) $86.20 25.50 0.30x NA NA 17.00x 2.39x
MI
Wholesale medical and industrial equipment
and supplies

Oct 1994 FoxMeyer Corp. National Intergroup Inc. $5,048.60 79.70 0.08x 5.67x 7.71x 17. 1 Ox 0.90X
TX Acquired remaining 19.5%
Wholesale pharmaceuticals, health and
beauty aids and general merchandise

Feb 1994 Whitmire Distribution Corp. Cardinal Distribution Inc. $2.794.00 $403.00 0.14x . 8.34x NA 45.28x 1.33x
CA
Wholesale pharmaceuticals

Dec 1993 CompuPharm Inc. GranCare Inc. $72.50 $62.20 0.86x 6.35x NA 16.81x NA
NJ
Wholesale pharmaceuticals

Nov 1993 Medco Containment Services Inc. Merck & Co. Inc. $2,624.00 $6,225.70 2.37x 24.26x 27.71x 44.03x 6.28x
NJ
Wholesale pharmaceuticals, medical and
surgical supplies

Mar 1993 Charise Charles Ltd. Inc. Bindley Western Industries Inc. $75.00 $5.00 0.07x NA NA NA 2.00x (A)
Altamonte Springs, FL
Wholesale oncology and dialysis products

Average: 0.64x 11.16x 17.71x 28.04x 2.58x

Median: 0.22x 7.35x 17.71x 17.10x 2.00x

(A) Estimate from Bindley Western 1993 Report

Sources: Securities Data Corp. and Bloomburg

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-9- UVA-F-1206

Exhibit 6
FRANK SPENCE
Free Cash Flow Analysis (Base Case)
($ in thousands)

12/31/94 Projected: Year Ended December 31:

1994 1995 1996 1997 1998 1999 2000

Sales $ 26,932 $ 27,740 $ 28,572 $ 29,429 $ 30,312 $ 31,222 $ 32,158

Cost of Sales/Revenues 20,614 21,360 22,001 22,661 23,340 24.041 24,762
Gross Profit 6,318 6,380 6,572 6,769 6,972 7.181 7,396

SG&A 988 1,017 1,049 1,081 1.114 1,148 1.183

Officers Compensation 340 350 360 371 382 393 405
EBITDA 4,990 5,013 5,163 5,317 5,476 5,640 5.808

Depreciation 19 20 20 20 20 20 20
EBIT (Operating Income) 4,971 4,993 5,143 5,297 5,456 5,620 5,788

Other Income (Exp) (12) - - - - - -

Subtotal 4,959 4,993 5,143 5.297 5,456 5,620- 5,788

Taxes (Assumed rate 40%) - 1.997 2,057 2,119 2,182 2.248 2,315

MAT (A) 4,959 2,996 3,086 3.178 3.274 3.372 3,473

Depreciation 19 20 20 20 20 20 20

Working Capital (3,412) (47) (48) (50) (51) (53) (54)

Fixed Assets (7) (10) (10) (10) (10) (10) (10)

Free Cash Flow $ 1,559 $ 2,959 $ 3,047 $ 3.139 $ 3,232 $ 3,329 $ 3,429

(A) Earnings before Interest and after Taxes

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Exhibit 7
FRANK SPENCE
Free Cash Flow Analysis (Base Case)
Assumptions

Historical Projected

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000

Sales Growth 164.4% -21.6% 60.1% 116.0% 3.0% 3.0% 3.0% 3.0% 3.0% 3.0%

As Percent of Sales

Cost of Sales/Revenues 58.93% 65.17% 78.26% 82.91% 76.54% 77.00% 77.00% 77.00% 77.00% 77.00% 77.00%

Gross Profit 41.07% 34.83% 21.74% 17.09% 23.46% 23.00% 23.00% 23.00% 23.00% 23.00/% 23.00%

Investment/Pension Income (Exp 0.11% 0.68% 0.21% -0.18% -0.04% 0.00% 0.00% 0.00% 0.00% 0.00% 0.008/0

SG&A 3.19% 6.23% 5.89% 4.10% 3.67% 3.67% 3.67% 3.67% 3.67% 3.68% 3.68%

Officers Compensation 3.19% 3.42% 3.85% 1.84% 1.26% 1.26% 1.26% 1.26% 1.26% 1.26% 1.26%

Operating Income 26.35% 25.18% 12.00% 10.97% 18.46% 18.00% 18/00% 18/00% 18.00% 18/00% 18/00%

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-11- UVA-F-1206

Exhibit 8
FRANK SPENCE
DCF Valuation Analysis (Base Case)
($ in millions)

Discount 12%` 15% 18%

Terminal EBITDA Multiple 5.0x 6.0x 7.0x 5.0x 6.0x 7.0x 5.0x 6.-0x 7.0x
2000 EBITDA $5.8 $5.8 $5.8 $29.0 $34.9 $40.7 $29.0 $34.9 $40.7

Terminal Value $29.0 $34.9 $40.7 $29.0 $34.9 $40.7 $29.0 $34.9 $40.7

Present Value of Terminal Residual Value $14.7 $17.7 $20.6 $12.6 $15.1 $17.6 $10.8 $12.9 $15.1
Present Value of Free Cash Flows $11.2 $11.2 $11.2 $10.4 $10.4 $10.4 $9.7 $9.7 $9.7

ENTERISE PRESENT VALUE $26.0 $28.9 $31.8 $23.0 $25.5 $28.0 $20.5 $22.6 $24.8
Less Net Debt $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

EQUITY PRESENT VALUE $23.0 $23.0 $28.0 $23.0 $25.5 $28.0 20.5 $22.6 $24.8

PV of Enterprise as a Multiple of Revenues 1.07x 1.18x 0.85x 0.95x 1.04x 0.96x 0.76x 0l84x 0.92x

PV of Enterprise as a Multiple of EBIDTA 5.79x 6.38x 4.61x 5.11x 5.62x 5.20x 4.11x 4.54x 4.97x

PV of Enterprise as a Multiple of Operating Income 5.81x 6.38x 4.63x 5.13x 5.64x 5.22x 4.12x 4.55x 4.99x

PV of Equity as a Multiple of Book Value 6.35x 7.00x 5.05x 5.60x 6.16x 5.70x 4.50x 4.97x 5.45x

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-12- UVA-F-1206

Exhibit 9
FRANK SPENCE
Financial Market Data
This document is authorized for use only by Prof. D. L. Sunder at Indian Institute of Management - Indore.
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Interest Rates (September 1995)

Corporate Bonds U.S. Government Bonds

AAA 7.10% Long Term 6.69%

AA 7.37% Intermediate 6.11%
A 7.94% Short-Term 5.85%
BBB 8.16%
BB 9.11%
B 11.09%

Source: Standard & Poor’s Bond Guide, October 1995.

Historical Returns (1927-1993)

Series Geometric Mean* Arithmetic Mean** Standard Deviation

Large Company Stocks 10.3% 12.30% 20.50%

Small Company Stocks 12.40% 17.60% 34.80%
Long-Term Corporate Bonds 5.60% 5.90% 8.40%
Long-Term Gov’t Bonds 5.00% 5.40% 8.70%
U.S. Treasury Bills 3.70% 3.70% 3.30%

Source: Ibbotson Year Book, 1994.

*Compound rate of return over the period (capital gains plus dividends).
**Simple average of annual rates of return (capital gains plus dividends).

Selected Financial Data on Health Care Stocks

Company Beta Estimated Dividend Yield

Bergen Brunswig Corp. 1.05 2.3%

Bindley Western Industries .90 .5%
Cardinal Health, Inc. 1.10 .2%
Owens & Minor, Inc. .80 1.3%

______________________________________

Source: Value Line Investment Survey, September 1, 1995.

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