UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-K/A

(Mark One)
  [X]  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
       ACT OF 1934

                   For the fiscal year ended December 31, 1999

                                       OR

  [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
       EXCHANGE ACT OF 1934


                        For the transition period from to


                        Commission file number: 001-11519

                        BINDLEY WESTERN INDUSTRIES, INC.
             (Exact name of registrant as specified in its charter)

                INDIANA                                 84-0601662
   (State or other jurisdiction of                    (I.R.S. Employer
    incorporation or organization)                    Identification No.)

    8909 Purdue Road, Indianapolis, Indiana               46268
    (Address of principal executive offices)            (Zip Code)


Registrant's telephone number, including area code: (317) 704-4000

           Securities registered pursuant to Section 12(b) of the Act:

  Common Stock ($.01 par value)                New York Stock Exchange
      (Title of class)                  (Name of exchange on which registered)

           Securities registered pursuant to section 12(g) of the Act:

                                      NONE

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 by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. []

                                  $425,537,218

Aggregate  market  value  of the  voting  stock  held  by  nonaffiliates  of the
registrant  based on the  last  sale  price  for such  stock on March  xx,  2000
(assuming  solely for the purposes of this  calculation  that all  Directors and
Officers of the Registrant are "affiliates")

                                   34,157,479

        Number of shares of Common Stock outstanding as of March 17, 2000

                       DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following document have been incorporated by reference into this
annual report on Form 10-K:

IDENTITY OF DOCUMENT                           PARTS OF FORM 10-K INTO WHICH
                                                  DOCUMENT IS INCORPORATED

                                                          PART III
Proxy Statement to be filed for the
2000Annual Meeting of Common
Shareholders of Registrant


<PAGE>






                        BINDLEY WESTERN INDUSTRIES, INC.
                              Indianapolis, Indiana

               Annual Report to Securities and Exchange Commission
                                December 31, 1999


                                     Part I

Item 1.     Business.

General

         Bindley Western Industries,  Inc., an Indiana corporation, is the fifth
largest  distributor  of  pharmaceuticals  and  related  products  in the United
States. We sell ethical (prescription)  pharmaceuticals,  health and beauty care
products,  and homecare  merchandise  to chain drug companies that operate their
own warehouses as well as independent drug stores, hospitals,  clinics, HMOs and
other  managed care  providers.  We operate from 18  distribution  centers in 14
states,  serving  customers  located  throughout  the United  States and in U.S.
military   facilities   in  Europe.   By  using  us  as  a  primary   source  of
pharmaceuticals,  our customers can centralize  purchasing  functions,  exercise
better inventory control, maintain better security and reduce handling costs.

         We sell to chain warehouses and direct store delivery customers. During
1999,  we serviced  three of the 10 largest  chain  warehouse  customers  in the
United States. We believe that technological innovation and emphasis on customer
service is critical to our ability to serve  chain  warehouse  customers.  Since
1987, we have focused significant  resources on increasing sales to direct store
delivery  customers.  Direct store delivery sales increased from $171 million in
1987 to $4.9 billion in 1999. To complement  our internal  growth and strengthen
our position in the northeastern and  southeastern  United States,  we purchased
J.E. Goold in 1992, Kendall Drug in 1994,  Tennessee  Wholesale Drug in 1997 and
Central Pharmacy Services in 1999.

         Bindley  Western's sales of $8.5 billion for 1999  represented the 31st
consecutive  year  of  record  sales,  equating  to a  compound  growth  rate of
approximately  20% since our  inception in 1968.  Our growth has  resulted  from
acquisitions, expansion into new geographic areas and increased market share.

Spin-off of Priority Healthcare Corporation

         On December 31, 1998, we distributed to our  shareholders the remaining
82%  interest  that  we  then  owned  in  our  subsidiary,  Priority  Healthcare
Corporation  ("Priority").  We formed  Priority in 1994 to focus on distributing
products and providing  services to the growing  alternate site component of the
healthcare industry. The net cost of the acquisitions which created Priority was
approximately $7 million. The total market capitalization of the Priority shares
distributed to our shareholders exceeded $500 million.

         The  spin-off  resulted in the removal of $107.5  million of assets and
$37.2 million of liabilities from our consolidated  balance sheet as of December
31, 1998. The results of operations for Priority,  net of minority interest, for
1998 and earlier periods are included in our

                                       1
<PAGE>
consolidated  statement of earnings  because  Priority was a subsidiary  through
December 31, 1998.


Acquisition of Central Pharmacy

         On August 31, 1999,  we acquired  Central  Pharmacy  Services,  Inc., a
Georgia corporation,  through the merger of one of our wholly owned subsidiaries
with and into Central Pharmacy,  resulting in Central Pharmacy becoming a wholly
owned subsidiary of ours.  Headquartered in Atlanta,  Georgia,  Central Pharmacy
operates    centralized    nuclear   pharmacies   that   prepare   and   deliver
radiopharmaceuticals  for use in nuclear  imaging  procedures  in hospitals  and
clinics.  Central  Pharmacy  operates 29  specialized  pharmacies  located in 13
states. Central Pharmacy's revenues increased from $4.4 million in 1993 to $43.9
million in 1999, an average annual compound growth rate of 47%.

         Central Pharmacy operates  centralized  nuclear pharmacies that prepare
and deliver unit dose radiopharmaceuticals for use in nuclear imaging procedures
in hospitals and clinics.  Nuclear  medicine  uses small amounts of  radioactive
material for the safe diagnosis, treatment and monitoring of disease. In nuclear
imaging procedures, a special camera scans a patient who has swallowed,  inhaled
or  been  injected  with  a  diluted  radiopharmaceutical  compound  that  emits
radiotracers.  The special  camera is able to detect the  radiotracer  emissions
from the compound.  The compounds are usually  specific to a particular organ in
which they concentrate and help the reader of the scan detect  irregularities in
organ tissue for the identification of cancer or other diseases. Common types of
scans include heart, bone, liver,  renal, lung and brain scans.  Nuclear imaging
is a way to gather medical  information that may otherwise be unavailable,  that
may otherwise require invasive surgery or that otherwise would have necessitated
more expensive diagnostic tests.

         Hospitals and clinics that perform  diagnostic  imaging procedures have
two means of acquiring  the  radiopharmaceuticals:  they can buy  directly  from
manufacturers in bulk and perform the compounding and unit dosing themselves, or
they can purchase from centralized  nuclear pharmacies  principally in unit dose
form.

         In addition to its core radiopharmaceutical compounding, dispensing and
distribution  services,  Central  Pharmacy  has  recently  expanded  its service
offerings with its NuScan Services  division.  NuScan provides  nuclear medicine
imaging  department  outsourcing  services to  hospital  clients.  The  hospital
provides the space for the imaging department,  while the  radiopharmaceuticals,
equipment,  personnel,  scheduling  and management are all controlled by NuScan.
NuScan charges the hospital on a fee-per-scan basis, which effectively  switches
the department from a fixed to a variable cost.

         The  descriptions  of the  businesses  of Bindley  Western  and Central
Pharmacy are discussed separately in this report because of the recent nature of
this acquisition.

Segments

         The core  operations of Bindley Western are included in the BWI segment
while the operations of Central Pharmacy  comprise the Nuclear Pharmacy segment.
Prior to the  spin-off,  the  operations  of  Priority  comprised  the  Priority
segment.

                                       2
<PAGE>

         These segments have different  management teams and  infrastructures to
facilitate  their  specific  customer  needs  and  marketing  strategies.  These
segments  are  discussed  separately  in this  report.  See  also  Note 4 to the
Consolidated Financial Statements.

Suppliers

BWI

         In every year for the last five years, sales of ethical  (prescription)
pharmaceutical  products  accounted  for  approximately  85% of our total  sales
volume.  Our  800  plus  suppliers  are  comprised  of  branded   pharmaceutical
manufacturers, generic pharmaceutical manufacturers, private label manufacturers
of pharmaceutical and over-the-counter  products, various health and beauty care
and home health care vendors,  and other wholesale  distributors  which purchase
products  directly from the manufacturer or sources other than the manufacturer.
Of the  approximately  54,000 products in our inventory,  a comparatively  small
number account for a  disproportionately  large share of the total dollar volume
of products sold. Our five largest suppliers in 1999 were Pfizer,  Bristol-Myers
Squibb  Company,  Astra  Pharmaceutical,  Eli Lilly and Company  and  SmithKline
Beecham.  While none of these  vendors  account for over 10% of net sales,  as a
group,  they are significant.  We maintain many competing  products in inventory
and are not  dependent  upon any single  supplier.  Nevertheless,  the loss of a
major  supplier  could  adversely  affect  our  business  if we could not locate
alternate sources of supply.  Our arrangements  with suppliers  typically may be
canceled by either party,  without cause, on one month's  notice.  Many of these
arrangements are not governed by formal agreements. We believe our relationships
with our suppliers are generally good.

Nuclear Pharmacy

         Although  supplier  contracts  are  negotiated  centrally,  each of our
pharmacy  managers has the  discretion  to order from  suppliers  based on local
market demand for products and delivery availability from suppliers. However, in
the aggregate,  the largest  suppliers to Nuclear Pharmacy are Nycomed Amersham,
Mallinckrodt Medical, Inc. and DuPont  Pharmaceuticals  Company. These top three
suppliers  accounted for 86% of total  purchases in 1999, 79% of total purchases
in 1998 and 74% of total purchases in 1997.

Customers and Markets

BWI

         We  categorize  our sales as either  "brokerage  sales" or "from  stock
sales".  Brokerage sales are made to the chain  warehouse  market and from stock
sales are made  directly  from our  inventory  to both the chain  warehouse  and
direct  store  delivery  markets.  See  Item 6 --  Selected  Financial  Data for
revenues from brokerage sales and from stock sales.

                                       3
<PAGE>
         Direct Store Delivery Market.  We provide direct store delivery service
to chain drug stores (both  warehousing and  non-warehousing),  independent drug
stores,  hospitals,  clinics,  HMOs, state and federal agencies and other health
care providers. These customers generally purchase less than full-case lots on a
daily basis when they need a particular item.  While smaller in quantity,  these
sales  typically  generate  higher  margins than sales to  warehouse  customers.
Shipments  to direct  store  customers  are  delivered  on a daily  basis by our
vehicles or by carriers.

         Our direct store delivery business has experienced  significant growth.
Since 1987,  direct store  delivery  sales  increased  from $171 million to $4.9
billion in 1999, a compound  annual  growth rate of 32%.  Direct store  delivery
sales  as a  percentage  of  net  sales  increased  from  approximately  16%  to
approximately  58% during that  period.  During  1999,  no single  direct  store
delivery customer accounted for 10% or more of our total net sales.

         We compete with other drug  wholesalers for direct store delivery sales
by  offering  value added  services  that our  customers  would not be likely to
develop on their own.  These value added  services  are  designed to enhance the
competitiveness  of independent,  small chain and managed care  pharmacies.  Two
examples are our "Profit  Partners" and "1st Choice for Value"  programs.  These
are both PC-based,  marketing support and merchandising programs which include a
generic  pharmaceutical  source program,  a home health care program,  a private
label over the counter  program and the Rx Vector and Global  Vector  purchasing
and inventory management systems.

         We believe  that  there are  opportunities  for growth in direct  store
delivery  sales by expanding  into new  geographical  areas and  increasing  our
market  share in  existing  markets.  We are focused on the  development  of new
services and programs  through  interaction and cooperation  with both customers
and suppliers, all of which are designed to enhance profitability, provide added
value to the customer and strengthen our role in the distribution channel. These
programs include computerized  ordering systems,  inventory management programs,
generic pharmaceutical source programs, repack programs,  innovative advertising
and marketing  campaigns and  merchandising  programs,  including  private label
product lines and e-commerce business solutions.

         Chain Warehouse Market. Chain warehouse customers purchase in full-case
lots for  redistribution to individual retail outlets.  Approximately 42% of our
net sales in 1999 were to chain drug warehouse customers.  At December 31, 1999,
our largest  chain drug  customers and the  approximate  period of time they had
done business with us were:  Eckerd  Corporation  (27 years) and CVS (30 years).
The following chain drug warehouse  customers each accounted for over 10% of net
sales during the years shown:  Eckerd  Corporation  (16%) and CVS (21%) in 1999;
Eckerd  Corporation  (18%)  and CVS  (17%)  in  1998;  and CVS  (22%),  Rite Aid
Corporation  (18%)  and  Eckerd  Corporation  (16%) in 1997.  Net sales to these
customers  aggregated  37% of net sales for 1999,  35% of net sales for 1998 and
56% of net sales for 1997.

         By  using us as a  primary  source  of  pharmaceuticals,  a chain  drug
customer can centralize  its purchasing  functions,  exercise  better  inventory
control,  maintain better security and reduce handling costs.  Inventory control
and  security  are  particularly  important  to these  customers  because of the
relatively  high dollar value of  pharmaceuticals  in relation to their physical
size. In addition,  we offer chain drug customers systems and procedures that we
have  developed  to  facilitate  their  compliance  with the  recordkeeping  and
physical security

                                       4
<PAGE>
requirements of the Controlled  Substances Act of 1970 and the Prescription Drug
Marketing Act of 1987. Additionally,  we offer software to these customers which
permits direct communication between our computers and theirs.

         We have, from time to time,  entered into written  understandings  with
some chain  warehouse  customers  setting forth various terms and  conditions of
sale.  Generally,  we have few long-term  contracts with our major customers and
the  relationship is terminable at will by either party.  The loss of any one of
our major chain warehouse  customers could have a material adverse effect on our
operations.  During the second quarter of 1998, Rite Aid informed us that it had
signed a supply  agreement with another  wholesaler that became effective in May
1998. In 1997,  Rite Aid  accounted for 18% of our net sales.  Sales to Rite Aid
were predominantly to their warehouses.  The loss of this customer has not had a
material adverse impact on our operations.  See also, Note 15 -- Major Customers
in our financial statements.

Nuclear Pharmacy

         We actively  serve two types of  customers:  hospitals  and  outpatient
clinics.  Each type of customer  receives  product  deliveries  through the same
network,  but there are  differences  in the frequency  and types of doses,  the
number and timing of deliveries and the method of purchasing.  Approximately 475
hospital  customers  generate  nearly  two-thirds of our revenue.  Over the past
several years, the hospital  industry has undergone  significant  consolidation.
The  hospitals  that  have  not  participated  in  this  trend  have  aggregated
purchasing  clout through group  purchasing  associations.  We have been able to
participate  in bidding on these  accounts  in  partnership  with other  nuclear
pharmacy  providers,  due to the mismatch between the broad national coverage of
the group purchasing  organizations and hospital  consolidators and the focused,
regional coverage of our Nuclear Pharmacy segment.  The Nuclear Pharmacy segment
also services  approximately 115 clinic customers.  Clinic customers differ from
hospitals in their price  sensitivity,  product focus and timing of  deliveries.
While clinic customers are very price sensitive due to  reimbursement  concerns,
they tend to order  exclusively  the  higher  margin  cardiology  products  on a
regular  basis,  which  produces  attractive  margins.  However,  due  to  their
outpatient  population,  clinics  do not  require  emergency  deliveries,  which
produce lower margins due to the small quantity of orders.

         Central   Pharmacy   has   partnered   with   two   radiopharmaceutical
manufacturers  to advance  its  position  with group  purchasing  organizations.
Mallinckrodt  Medical,  Inc.  has a contract  that lasts  through June 2004 with
Premier  Purchasing  Partners,  L.P.,  the  largest  hospital  group  purchasing
organization in the United States  representing  approximately 30% of hospitals,
in which Mallinckrodt is the exclusive  distributor of nuclear medicine products
to  Premier  members.  Mallinckrodt  established  a  similar  relationship  with
Consorta  Catholic  Resource  Partners  ("Consorta") in December 1999. We have a
parallel  agreement  with  Mallinckrodt  in which we are the  exclusive  service
representative  for these Premier and Consorta  accounts in specific  geographic
areas.  Our ability to sign new  contracts  with Premier and Consorta  customers
under this  arrangement  is strong,  but not  automatic.  Each  contract must be
enrolled   individually  at  the  time  the  contract  is  up  for  renewal  and
renegotiation,  and therefore  requires  significant  joint sales efforts by our
local pharmacy managers and the local Mallinckrodt and Premier representatives.

         Similarly, Nycomed Amersham has a contract that lasts through 2001 with
Novation LLC, a group purchasing organization that represents  approximately 30%
of all United  States

                                       5
<PAGE>

hospitals,  in which  Nycomed/Amersham  is the exclusive  distributor of nuclear
medicine  products  to  Novation  members.  We have a  parallel  agreement  with
Nycomed/Amersham  to be the exclusive service  representative for these Novation
accounts in specific  geographic areas. The Novation contract is very similar to
the Premier contract in the manner of obtaining customers.

Internal Systems Development

BWI

         We have  developed  and  continue to improve our  specialized  internal
operating and management systems. We control inventories and accounts receivable
through the use of data processing and management  information  systems which we
developed.  These assets are monitored by distribution  center  management using
real time connections to the Company's centralized data center. At present, many
operational   functions,   including  accounting,   cash  management,   accounts
receivable  and  inventory   control  are  conducted   through  data  processing
operations at our  Indianapolis,  Indiana  facility.  Data is transmitted to and
from on-site data processing equipment at the distribution centers.

Nuclear Pharmacy

         We have developed programs to enhance internal operating and management
systems. We control accounts  receivable,  accounts payable and group purchasing
organization  billing through the use of internally developed software programs.
The majority of operational  functions,  including accounting,  cash management,
and accounts receivable are conducted through data processing  operations in the
Atlanta,  Georgia  facility.  Accounts  receivable and accounts payable data are
transmitted electronically to and from on-site data processing equipment at each
of the pharmacies.

Expansion/Acquisitions

         We have made  several  acquisitions  since  1992.  We  continue to seek
opportunities  to expand  operations  through our  acquisition of wholesale drug
distributors and other businesses in the healthcare industry.

         Within the past two years, we have established six distribution centers
in new operational areas and replaced three older distribution  centers with new
centers.

         Presented  below  is a brief  discussion  of  acquisitions  by  Bindley
Western since 1992.  All of the  acquisitions  have been accounted for under the
purchase  method and,  accordingly,  the results of  operations  of the acquired
companies have been included in our financial statements from the effective date
of  acquisition.  The purchase price has been allocated based on a determination
of the fair value of the assets acquired and liabilities  assumed.  The goodwill
associated  with these  acquisitions is being amortized on a straight line basis
over periods not  exceeding  40 years.  See,  also,  Note 16 - Statement of Cash
Flows in our financial statements.

         J.E.  Goold. On March 25, 1992, we effected a merger with J.E. Goold, a
full-line,  full-service  distributor of pharmaceutical,  health and beauty care
and home health care products based in Portland, Maine.

                                       6
<PAGE>
         Kendall  Drug  Company.  Effective  July 1, 1994,  we acquired  the net
assets of Kendall  Drug  Company,  a  wholesale  distributor  of  pharmaceutical
products and health and beauty care products based in Shelby, North Carolina.

         Priority  Healthcare  Services  Corporation.  On February  7, 1996,  we
acquired  all of the assets of the  infusion  services  division  of  Infectious
Disease of Indiana,  P.S.C. Through February 7, 1997, this business was operated
as National  Infusion  Services,  Inc., a physician managed provider of infusion
services  programs  to patients in a variety of  settings,  including  the home,
extended care facilities and its outpatient center in Indianapolis,  Indiana. On
that date,  the  corporate  name was  changed to  Priority  Healthcare  Services
Corporation.  We expended  approximately  $9.0  million and incurred a long-term
obligation  of  approximately  $1.5  million,  resulting in  approximately  $9.8
million in intangible  assets.  See Note 7 - Intangibles and Note 10 - Long Term
Debt in our consolidated financial statements.

         Tennessee Wholesale Drug Company. Effective July 31, 1997, we purchased
substantially  all of the operating  assets and assumed most of the  liabilities
and contractual obligations of Tennessee Wholesale Drug Company, Inc. ("TWD"), a
full-line,  full-service  wholesale drug company with a distribution facility in
Nashville,  Tennessee.  We expended approximately $27 million which approximated
the net book value of the assets and liabilities acquired. While the acquisition
was not material to us as a whole, it provided further  opportunities  for us to
expand our presence in the direct store delivery and managed care markets.

         Priority  Healthcare  Corporation.  In August 1994, we formed  Priority
Healthcare as our  subsidiary by combining  the  businesses of two  acquisitions
that we had made in 1993.  From  1994 to 1997,  Priority  acquired  three  other
businesses  in California  and Florida.  In October  1997,  Priority  Healthcare
completed an initial public offering in which 18% of its stock was issued to the
public.  On December 31, 1998, we distributed to our  shareholders the remaining
82% interest that we then owned in Priority Healthcare.

         Central  Pharmacy.  Effective  August 31, 1999, we completed the merger
with Central  Pharmacy  Services,  Inc ("Central  Pharmacy")  by exchanging  2.9
million  shares of our  common  stock  for all of the  common  stock of  Central
Pharmacy.  Each share of Central  Pharmacy was exchanged for 26.38 shares of our
common stock. In addition,  outstanding  Central Pharmacy employee stock options
were   converted  at  the  same   exchange   factor  into  options  to  purchase
approximately 300,000 shares of our common stock.

         The merger with Central  Pharmacy  was  originally  accounted  for as a
pooling of  interests  and was  reflected  for all  periods  presented,  and the
financial  statements of BWI have  included the combined  operations of both BWI
and Central  Pharmacy.  However,  the Company  subsequently  determined that the
pooling of interests method was unavailable for the Central Pharmacy acquisition
because  of a  dividend  paid to  preferred  shareholders  of  Central  Pharmacy
immediately prior to the acquisition.  Accordingly, the Company has restated its
financial  statements  and applied the  purchase  method of  accounting  for the
Central Pharmacy acquisition. The total purchase price of $56,700,000, including
acquisition costs, has been allocated based on estimated fair values at the date
of  acquisition   including  net  tangible  assets  of  $4,000,000;   identified
intangible  assets of workforce in place of  $1,400,000  amortized on a straight
line basis over 12 years,  customer  relationships of $28,000,000 amortized on a
straight  line basis over 40 years and  goodwill of  $34,800,000  amortized on a
straight  line  basis  over 20 years;  offset by  $11,500,000  in  deferred  tax
liabilities. The results of operations of Central Pharmacy are included from the
date of acquisition.

                                       7
<PAGE>
Employees

BWI

         At February 29, 2000, we had  approximately  1,435  employees,  of whom
approximately 4% were covered by a single collective  bargaining  agreement.  We
believe that our relationship with our employees is good.

Nuclear Pharmacy

         At February 29, 2000, we had a total of  approximately  360  employees,
none of whom were covered by a collective bargaining agreement.

Competition

BWI

         We  compete  with  national  full-line,   full-service  wholesale  drug
distributors,  some of which are larger and have substantially greater financial
resources than we do. We also compete with local and regional drug distributors,
direct selling  manufacturers and specialty  distributors.  While competition is
primarily  price  oriented,  it can also be affected  by delivery  requirements,
credit  terms,  technology  services,  depth of product line and other  customer
service requirements.  We cannot assure you that we will not encounter increased
competition in the future that could  adversely  affect our business.  In recent
years  there  has  been a  trend  toward  consolidation  in the  wholesale  drug
industry,  as shown by the  purchase  of a number of  distributors  by  national
wholesalers.  We estimate that there are currently  approximately  35 full-line,
full-service wholesale drug distributors in the United States.

Nuclear Pharmacy

         We have  only  one  significant  competitor,  Syncor  International,  a
publicly-traded  national chain. Syncor is primarily a nuclear pharmacy services
company engaged in compounding,  dispensing and distributing radiopharmaceutical
products  and  services  to  hospitals  and  clinics  in the  United  States and
overseas.   We  also   compete  with  the   distribution   arms  of  some  major
manufacturers, such as Mallinckrodt and Nycomed/Amersham, but to a lesser extent
since they operate mostly in the largest metropolitan markets.

Government Regulation

BWI

         We are subject to  regulation  by federal,  state and local  government
agencies and must obtain licenses or permits from, and comply with operating and
security  standards of, the United States Drug Enforcement  Administration,  the
Food and Drug  Administration  ("FDA") and numerous state agencies.  Each of our
distribution centers is licensed to distribute ethical  pharmaceutical  products
and certain  controlled  substances in accordance  with the  requirements of the
Prescription  Drug  Marketing Act of 1987 and the  Controlled  Substances Act of
1970.

                                       8
<PAGE>
         If we fail to  comply  with  these  laws and  regulations,  we could be
subject to both  criminal  and civil  sanctions.  We have  full-time  regulatory
compliance  managers  and outside  advisors  conduct  compliance  reviews at our
locations.  We  have  also  implemented  a  company-wide  ethics  and  corporate
compliance  program.  We  believe  that our  operations  comply in all  material
respects with applicable laws and regulations.  However, because the health care
industry  will  continue  to be subject to  substantial  regulations,  we cannot
assure  you that  our  activities  will not be  reviewed  or  challenged  by the
government in the future.

         Since Congress enacted the Prescription  Drug Marketing Act ("PDMA") in
1987, we have  conducted our alternate  source  purchasing  and state  licensing
activities in accordance  with this  legislation.  On December 3, 1999,  the FDA
published final  regulations,  to become effective  December 4, 2000, that will,
among other things,  require (a) alternate source vendors to provide  purchasers
of  pharmaceutical  drugs with either (i) written proof that they are authorized
to  distribute  a  manufacturer's  pharmaceutical  drugs  or  (ii)  a  statement
identifying   each  prior   sale,   purchase,   or  trade  of  that   particular
pharmaceutical  drug starting in the chain of distribution with the manufacturer
and (b) at least 44 states to  change  the  record  retention  requirements  for
wholesale distributors of prescription drugs from the current two years to three
years. Although the final regulations will require us to make some modifications
with  respect to our current  business  practices  related to  alternate  source
purchases and record retention,  we do not anticipate that the final regulations
will have a material adverse effect on our business or results of operations.

Nuclear Pharmacy

         We operate in a highly  regulated  industry which requires  licenses or
permits from the Federal Nuclear  Regulatory  Commission,  the Radiologic Health
Agency of each state in which we operate, the applicable State Board of Pharmacy
and  the  Department  of   Transportation   which  regulates  the  transport  of
potentially  hazardous  material.  We devote  substantial  human  and  financial
resources to complying with these applicable regulations.

Industry Overview

         The  wholesale  drug  industry  in  the  United  States   continues  to
experience  significant growth. As reported by the National Wholesale Druggists'
Association,  industry sales grew from $30 billion in 1990 to approximately  $83
billion in 1998, a compound annual growth rate of 14%. Today,  industry analysts
estimate over 80% of pharmaceutical  sales are distributed  through  wholesalers
compared to less than 47% in 1970. Order  processing,  inventory  management and
product  delivery  by  wholesale  distributors  allow  manufacturers  to  better
allocate  their  resources  to  research  and  development,   manufacturing  and
marketing their products.  Wholesale distribution provides customers access to a
single supply source for a full line of pharmaceutical  and health care products
that are manufactured by hundreds of other companies. Wholesale distribution can
lower  customers'  inventory,   reduce  costs  and  delivery  time  and  improve
purchasing and inventory  information.  Wholesale distribution also offers value
added programs that can reduce  customers'  costs and increase  their  operating
efficiencies.

         We believe the pharmaceutical industry,  including drug wholesalers and
related  health care  distributors  and  providers,  will  continue to grow as a
result of the following trends:

                                       9
<PAGE>
         Aging  Population.  The  number of  individuals  over 65 in the  United
States  is  expected  to grow  25%  from  approximately  28  million  in 1985 to
approximately 35 million by the year 2000. This age group suffers from a greater
incidence of chronic  illnesses and disabilities than the rest of the population
and is estimated to account for  approximately  two-thirds  of total health care
expenditures by the end of the decade.

         Introduction   of  New   Pharmaceuticals.   Traditional   research  and
development as well as the advent of new research and production  methods,  such
as biotechnology,  continue to generate new compounds that are more effective in
treating diseases. We believe that ongoing research and development expenditures
by the leading  pharmaceutical  manufacturers  will  contribute to the continued
growth of the industry.  Drug therapy has had a beneficial impact on the overall
increase in aggregate  health care costs,  by reducing  expensive  surgeries and
prolonged  hospital stays.  The Health Care Financing  Administration  estimates
that expenditures in the United States for pharmaceuticals will more than triple
by 2008 from current levels.

         Managed Care. To remain competitive,  pharmaceutical  manufacturers are
required to sell their  products to the managed care market,  wherein  employers
negotiate  discounts  from health care  providers  by  committing  to  long-term
contracts  involving  thousands of  patients.  Health care costs are linked more
tightly to the  provision  of managed  health  care  services,  especially  with
hospitals and doctors,  than under traditional medical insurance plans.  Managed
care  organizations  generally  provide full coverage for prescription  drugs to
lower health care costs by  improving  access to medical  treatment  rather than
delaying  treatment  until  more  expensive  services  are  required.  The costs
associated with the prescription  drug benefit are monitored by the managed care
organization   primarily  through  the   establishment  of  tightly   controlled
formularies of approved prescription drugs,  including generic substitutes,  and
by drug utilization review procedures wherein physicians'  prescribing practices
and patients' usage are closely scrutinized. Even though there has been a recent
trend to increase co-payments, implement tighter drug formularies and cap annual
pharmaceutical  costs per patient,  analysts have  determined that these efforts
have done little thus far to decrease demand for pharmaceutical drugs as part of
a general healthcare delivery strategy.

         Increased Use of Generic Drugs.  The growth of managed care's influence
on pharmacy along with the introduction of generic equivalent  products for many
top  selling   brand  name  drugs  has  caused  the   generic   market  to  grow
substantially.  Branded drugs with annual sales of approximately $24 billion are
expected to come off patent in the next three years,  thus expanding the generic
marketing opportunity.  Analysts estimate that the size of the generic market is
expected to nearly double from $8.8 billion in 1998 to $16.6 billion in 2003.

         Pharmaceutical   Price   Increases.   As  a   result   of   competitive
market-driven  cost  containment  measures  implemented  by both the private and
public sectors since 1993, pharmaceutical price increases are less than in prior
years.   Nevertheless,   we  believe  that  price  increases  by  pharmaceutical
manufacturers will continue to equal or exceed the overall Consumer Price Index,
which is due in large part to relatively  inelastic demand in the face of higher
prices  charged for patented  drugs as  manufacturers  have  attempted to recoup
costs  associated with the research and  development,  clinical  testing and FDA
approval of new products.

         Continued   Industry   Consolidation.   Largely  in  response  to  cost
containment  pressure  from  private  and  governmental  payers and the focus on
health  care  reform in the United  States

                                       10
<PAGE>
during  the  1990's,  the  health  care  industry  is  experiencing  significant
consolidation   at   the   manufacturer,   wholesaler   and   customer   levels.
Pharmaceutical  manufacturers  consolidate to reduce  operating  expenses,  gain
access to new drugs in the pipeline and enhance  marketing  efforts in a managed
care  environment.  Chain drug stores  consolidate  through combining with other
drug chains,  as well as acquiring  independent  drug stores.  Independent  drug
stores are also consolidating  through regional and national  affiliations.  The
number of pharmaceutical wholesalers in the United States has decreased from 139
in 1980 to  approximately 35 full-line,  full-service  wholesalers at the end of
1999.

         Medicare  Prescription Drug Benefit.  An emerging debate centers around
proposed   legislation  to  offer  an  outpatient   drug  benefit  for  Medicare
beneficiaries.  Although this proposed federal  legislation  could slow down the
recent growth of the  pharmaceutical  industry  because of  politically  imposed
price controls, some analysts believe that drug wholesalers will benefit because
of increased volume and generic drug participation.

         e-Commerce. Because wholesale drug distributors perform the fulfillment
function for on-line pharmacies,  the recent advent of e-commerce companies that
distribute  pharmaceuticals via the Internet should not threaten -- and may even
benefit -- drug  distributors.  Most industry  observers  have  determined  that
successful  e-commerce companies will need to partner with retail drug chains or
pharmacy benefits management companies to provide for the orderly administration
of related claims.

                                       11
<PAGE>


Item 6.                       Selected Financial Data

<TABLE>
<CAPTION>




             Five Year Financial Review and Selected Financial Data
                        Bindley Western Industries, Inc.

(in thousands, except share data)
-------------------------------------------------------------------------------------------------------------------------------
                                                       1999           1998 (1)        1997           1996            1995
-------------------------------------------------------------------------------------------------------------------------------
                                                      (Restated)      (Restated)      (Restated)     (Restated)      (Restated)

<S>                                                 <C>             <C>             <C>            <C>             <C>
Net sales from stock                                $ 5,010,913     $ 4,123,930     $ 2,760,235    $ 2,127,307     $ 1,928,738
Net brokerage sales                                   3,468,425       3,497,422       4,549,687      3,190,219       2,741,415
Other income                                              1,937           1,702           1,882          1,407           2,322
Cost of products sold                                 8,272,576       7,429,793       7,167,274      5,197,008       4,565,750
Selling, general and administrative                     112,619         107,852          81,078         70,531          62,555
Other expenses                                           34,417          45,711          23,688         20,523          16,406

Earnings before income taxes                             61,663          39,698          39,764         30,871          27,764
Provision for income taxes                               24,946          18,694          15,806         12,865          11,383
Minority interest in net income
   of consolidated subsidiary                               -             1,865             212              -               -
Net earnings                                             36,717          19,139          23,746         18,006          16,381

Earnings per share: (2)(3)
  Basic                                             $      1.16     $      0.67     $      1.04    $      0.89     $      0.84
  Diluted                                           $      1.07     $      0.63     $      0.89    $      0.76     $      0.72


Cash dividends declared per Common share                $ 0.065          $ 0.08          $ 0.08         $ 0.08          $ 0.08

Other financial data:
Current assets                                     $  1,582,854     $ 1,175,806     $ 1,185,025    $   850,965     $   777,366
Total assets                                          1,766,216       1,286,575       1,287,779        941,206         848,708
Current liabilities                                   1,285,191         949,404         897,916        616,322         573,369
Long-term debt                                           38,698             628          32,142         99,766          69,473
Total liabilities                                     1,340,017         953,234         934,401        719,119         647,948
Minority interest                                           -               -            11,010              -               -
Shareholders equity                                     426,199         333,341          42,368        222,087         200,760
Book value per share (2)(3)                               12.53           14.66           21.73          19.27           17.90
</TABLE>

(1) On December 31, 1998, BWI distributed to the holders of BWI Common Stock all
of the  10,214,286  shares of Priority  Class A Common Stock owned by BWI in the
form of a dividend.  As a result of the  distribution,  Priority  ceased to be a
subsidiary of BWI as of December 31, 1998 and as such,  its assets,  liabilities
and equity are not included in the December 31, 1998 Consolidated Balance Sheet.
However,  Priority's results of operations,  net of minority  interest,  for the
year ended December 31, 1998 are included in the BWI  Consolidated  Statement of
Earnings as Priority was a subsidiary of the Company for the full year of 1998.

(2) On June 3, 1998, a 4-for-3 split of the Company's  Common Stock was effected
in the form of a dividend to all shareholders of record at the close of business
on May 21, 1998.  Accordingly,  all  historical  weighted  average and per share
amounts  have been  restated to reflect the stock  split.  Share  amounts in the
Consolidated  Balance  Sheets reflect the actual share amounts  outstanding  for
each period presented.

(3) On June 25, 1999, a 4-for-3 split of the Company's Common Stock was effected
in the form of a dividend to all shareholders of record at the close of business
on June 11, 1999.  Accordingly,  all historical  weighted  average and per share
amounts  have been  restated to reflect the stock  split.  Share  amounts in the
Consolidated  Balance  Sheets reflect the actual share amounts  outstanding  for
each period presented.

                                       12
<PAGE>

Item 7.      Management's Discussion and Analysis of Financial
             Condition and Results of Operations.

The discussion and analysis that follows should be read in conjunction  with the
Consolidated  Financial  Statements and related notes included elsewhere in this
report.

We have made the  following  acquisitions  and  dispositions  which  affect  the
comparison  of  the  results  of  operations  on  a  year  to  year  basis.  All
acquisitions have been accounted for under the purchase method and, accordingly,
the results of operations of the acquired entities are included in the Company's
financial statements from the respective dates of acquisition.

Tennessee  Wholesale  Drug  Company  -  Effective  July 31,  1997,  we  acquired
substantially all of the operating assets and assumed most of the liabilities of
Tennessee  Wholesale  Drug Company  ("TWD").  TWD is a  full-line,  full-service
wholesale drug company with a distribution facility in Nashville, Tennessee.

Grove Way  Pharmacy  -  Effective  August 6,  1997,  we,  through  our  Priority
Healthcare Corporation  ("Priority")  subsidiary,  acquired substantially all of
the assets of Grove Way Pharmacy, Inc. ("Grove Way"), a specialty distributor of
vaccines located in Castro Valley, California.

Central Pharmacy Services, Inc. - Effective August 31, 1999 the Company acquired
all of the common stock of Central Pharmacy Services, Inc. ("Central Pharmacy").
Central Pharmacy operates  specialized  pharmacies that prepare and deliver unit
dose radiopharmaceuticals for use in nuclear imaging procedures in hospitals and
clinics.  Each share of Central  Pharmacy was  exchanged for 26.38 shares of BWI
common stock. BWI exchanged an aggregate of approximately  2.9 million shares of
its  common  stock  valued at $17.03  per share for all of the  common  stock of
Central  Pharmacy.  In addition,  outstanding  Central  Pharmacy  employee stock
options  were  converted  at the same  exchange  factor into options to purchase
approximately 300,000 shares of BWI common stock.

         The merger with Central  Pharmacy  was  originally  accounted  for as a
pooling of  interests  and was  reflected  for all  periods  presented,  and the
financial  statements of BWI have  included the combined  operations of both BWI
and Central  Pharmacy.  However,  the Company  subsequently  determined that the
pooling of interests method was unavailable for the Central Pharmacy acquisition
because  of a  dividend  paid to  preferred  shareholders  of  Central  Pharmacy
immediately prior to the acquisition.  Accordingly, the Company has restated its
financial  statements  and applied the  purchase  method of  accounting  for the
Central Pharmacy acquisition. The total purchase price of $56,700,000, including
acquisition costs, has been allocated based on estimated fair values at the date
of  acquisition   including  net  tangible  assets  of  $4,000,000;   identified
intangible  assets of workforce in place of  $1,400,000  amortized on a straight
line basis over 12 years,  customer  relationships of $28,000,000 amortized on a
straight  line basis over 40 years and  goodwill of  $34,800,000  amortized on a
straight  line  basis  over 20 years;  offset by  $11,500,000  in  deferred  tax
liabilities. The results of operations of Central Pharmacy are included from the
date of acquisition.

                                       13
<PAGE>


         The following  table shows certain  income  statement and balance sheet
line items that have been restated:
<TABLE>
<CAPTION>

                                                Restated        As Previously Reported
                                                 (000's)                       (000's)
                                              --------------------------------------------------
<S>                                           <C>                           <C>
Total net sales:
   1999                                       $8,479,338                    $8,507,605
   1998                                        7,621,352                     7,654,221
   1997                                        7,309,922                     7,334,137

Net earnings:
   1999                                           36,717                        38,296
   1998                                           19,139                        22,236
   1997                                           23,746                        24,506

Basic earnings per share:
   1999                                             1.16                          1.14
   1998                                              .67                           .70
   1997                                             1.04                           .95

Diluted earnings per share:
   1999                                             1.07                          1.05
   1998                                              .63                           .66
   1997                                              .89                           .83

Balance sheet line items at December 31, 1999:
   Intangibles                                    81,976                        18,582
   Deferred tax liability                         16,128                         4,703
   Additional paid in capital                    278,344                       225,459
   Retained earnings                             165,149                       166,550
</TABLE>

         The following  unaudited pro forma information  presents the results of
operations of BWI as if the  acquisition  had taken place on January 1, 1999 and
1998 (in thousands except for per share data):

                                Unaudited                  Unaudited
                                     1999                     1998
                            ----------------------- ------------------------
Revenues                       $8,507,605               $7,654,221
Net Earnings                       37,669                   19,997
Earnings per share:
    Basic                            1.13                      .63
    Diluted                          1.03                      .60
Weighted Average Outstanding
  Common shares:
    Basic                      33,478,470               31,651,034
    Diluted                    36,467,639               33,508,668

         These  unaudited  pro forma  results  have been  prepared  for analysis

                                       14
<PAGE>
purposes only and include certain  adjustments  such as additional  amortization
expenses  related to intangible  assets and goodwill.  They do not purport to be
indicative  of the results of operations  that actually  would have resulted had
the acquisition  occurred on either January 1, 1999 or 1998 or of future results
of operations.

              On December 31, 1998, we  distributed to the holders of our common
stock all of the 10,214,286  shares of Priority Class A common stock owned by us
on the basis of .448 shares of Priority  Class A common  stock for each share of
our common  stock  outstanding  on the record date,  December 15, 1998.  The two
classes  of  Priority  common  stock  entitle  holders  to the same  rights  and
privileges,  except that holders of shares of Priority  Class A common stock are
entitled to three votes per share on all matters  submitted to a vote of holders
of Priority  common stock and holders of shares of Priority Class B common stock
are  entitled  to one  vote  per  share  on such  matters.  As a  result  of the
distribution,  Priority ceased to be our subsidiary as of December 31, 1998 and,
therefore,  its assets,  liabilities and equity are not included in our December
31, 1998 Consolidated Balance Sheet. However,  Priority's results of operations,
net of minority  interest,  for the year ended December 31, 1998 are included in
our  Consolidated  Statement of Earnings as Priority was our  subsidiary for the
full year of 1998.

Results of Operations.

Net sales for 1999,  1998 and 1997 were  $8,479  million,  $7,621  million,  and
$7,310 million, respectively. This represents an 11% increase for 1999 over 1998
(15% when Priority's  sales are excluded from 1998 results) and a 4% increase in
1998 over 1997. In 1999,  Central  Pharmacy sales  accounted for less than 1% of
total  sales.  The  1999  brokerage  type  sales  ("brokerage  sales")  remained
relatively  constant when compared to 1998. We  experienced  increased  sales to
existing  customers  that  offset  the  impact  of the  loss of a  single  chain
warehouse  customer during the second quarter of 1998. The loss of this customer
resulted  in a 23%  decrease  in 1998  brokerage  sales when  compared  to 1997.
Brokerage  sales  generate very little gross margin,  however,  they provide for
increased  working capital and support our programs to attract more direct store
delivery  business from chain  customers.  Sales from our inventory ("from stock
sales")  increased 22% in 1999 (30% when Priority's sales are excluded from 1998
results).  From stock sales include sales from our inventory to chain  customers
and direct store delivery  business.  We continued to expand our presence in the
direct  store  delivery  portion  of the  business  through  increased  sales to
existing  customers  and the addition of new  customers.  Direct store  delivery
sales increased by 26% from 1998 to 1999 (35% when Priority's sales are excluded
from 1998  results) and 50% from 1997 to 1998.  As a percentage  of total sales,
direct store  delivery  sales  represented  57% in 1999,  51% in 1998 and 35% in
1997. In both periods,  the increase related to pricing was approximately  equal
to the increase in the Consumer  Price Index.  Net sales for Priority  were $276
million in 1998 and $231 million in 1997.  This growth was generated  internally
and reflected primarily the addition of new customers, new product introductions
(including  the new Rebetron  treatment for  Hepatitis-C),  additional  sales to
existing  customers  and,  to a lesser  extent,  the  acquisition  of Grove  Way
Pharmacy and inflationary price increases.

Gross margins for 1999,  1998 and 1997 were $207 million,  $192 million and $143
million,  respectively.  These increases in gross margin resulted primarily from
internal growth. Gross margins as a percent of net sales increased from 1.95% in
1997 to 2.51% in 1998 and then  decreased to 2.44% in 1999.  However,  after the
exclusion of Priority,  gross  margins as a percent of sales were 1.69% for 1997
and 2.19% in 1998.  These increases in gross margins resulted from the change in
mix away from the lower margin  brokerage  sales to the higher

                                       15
<PAGE>
margin from stock sales in the BWI segment and also the  increased  sales of the
higher margin Nuclear Pharmacy segment from the date of acquisition.  The change
in mix in the BWI segment resulted from both the increased direct store delivery
business  and the  loss of the  chain  warehouse  customer.  In all  years,  the
pressure on sell side margins continued and the purchasing gains associated with
pharmaceutical price inflation remained relatively  constant.  Gross margins for
Priority were $31.1  million for 1998 and $23.2 million for 1997.  Gross margins
as a percent of sales for  Priority  for 1998 and 1997 were  11.30% and  10.01%,
respectively.  The  increase in 1998  margins  over 1997  margins was  primarily
attributed to the change in sales mix resulting from significantly  higher sales
by Priority  Healthcare Pharmacy which generated higher gross margins than those
of Priority Healthcare Distribution.

Other  income in 1999,  1998 and 1997  represented  finance  charges  on certain
customers'  receivables  and  gains  on the  sale of  assets.  The 1999 and 1998
balances  also include  approximately  $200,000 of interest  related to the note
from the CEO of the Company.

Selling, general and administrative ("SGA") expenses were $112.6 million, $107.9
million and $81.1 million in 1999, 1998 and 1997, respectively. When Priority is
excluded,  SGA was $93.9  million  for 1998 and  $70.5  million  for  1997.  The
increase  in SGA in the BWI  segment  resulted  from costs  associated  with our
continued expansion,  normal inflationary increases and increased variable costs
to support the growing  direct store  delivery  business.  In 1999,  we incurred
startup  costs  associated  with the  opening  of new  distribution  centers  in
Milwaukee,  Wisconsin,  Kansas City, Missouri and Denver,  Colorado. In 1998, we
incurred startup costs  associated with the opening of new distribution  centers
in Woodland,  California and Portland, Oregon. The variable costs related to the
direct  store  delivery  business  include,  among  others,   delivery  expense,
warehouse expense,  and labor costs. The remainder of the increase is associated
with the continued expansion, and the opening of new specialized pharmacies,  in
our Nuclear Pharmacy segment.  Our commitment to growth in both our direct store
delivery sales and our Nuclear  Pharmacy segment will result in increased SGA in
the future.  However,  management  remains  focused on  controlling  SGA through
improved  technology,  better asset management and  opportunities to consolidate
distribution  centers. This focus has resulted in a decrease in SGA expense as a
percent  of from  stock  sales  to  2.25% in 1999  from  2.62%  in 1998  (2.46%,
excluding  Priority)  and 2.94% in 1997  (2.77%,  excluding  Priority).  SGA for
Priority was $14.0  million in 1998 and $10.6  million in 1997.  As a percent of
sales,  SGA for  Priority  for 1998 was 5.1% as compared  to 4.6% in 1997.  This
increase  was the result of  expenses  associated  with the opening of the Grove
City, Ohio facility,  which opened in November 1997,  training and payroll costs
from hiring  additional  sales  personnel  at Priority  Healthcare  Pharmacy and
increased overall costs of being a publicly traded company.

Depreciation and  amortization was $11.0 million,  $8.4 million and $7.4 million
in 1999, 1998 and 1997,  respectively.  When Priority is excluded,  depreciation
and  amortization  was $7.2  million  in 1998 and $6.2  million  in 1997.  These
increases  were the result of the  building  of new  facilities,  expansion  and
automation of existing  facilities  and  investments  in management  information
systems.  Depreciation  and  amortization for Priority was $1.2 million for both
1998 and 1997.

Interest  expense for 1999,  1998 and 1997 was $23.4 million,  $18.5 million and
$15.9 million,  respectively.  The inclusion of interest expense for Priority in
1998 and 1997 was not material.  The average short-term  borrowings  outstanding
were $338  million,  $249  million,  and $152  million at an average  short-term
interest rate of 5.5%, 6.3% and 6.4% for 1999, 1998 and 1997,  respectively.  We
also had in place a private  placement of $30 million  Senior Notes due December
27, 1999 at an interest rate of 7.25%.  Interest  expense  associated with these
Notes was  approximately  $2.2 million in 1999,  1998 and 1997.  On December 27,

                                       16
<PAGE>
1999, we repaid this private placement and negotiated a new private placement of
$25 million Senior Notes due December 27, 2004 at an interest rate of 7.93%.

In the fourth  quarter of 1998,  we  recorded as an unusual  item the  one-time,
pre-tax charge of approximately $19.0 million,  which approximated $14.0 million
on an after-tax basis. Of the $19.0 million charge,  $11.0 million represented a
non-cash charge for the acceleration of the amortization of compensation related
to  restricted  stock  grants in  connection  with the Priority  spin-off,  $7.0
million  represented the non-cash write-off of goodwill that had been carried on
the  books  from an  acquisition  dating  back to early  1996  and $1.0  million
represented the settlement of litigation  associated with that acquisition.  See
also,  Note 7 - Intangibles,  Note 10 - Long-term  Debt, Note 13 - Capital Stock
and Note 17 - Legal  Proceedings,  of the  Company's  financial  statements  for
further discussion.

The provision for income taxes  represented  40.5%,  47.1% and 39.8% of earnings
before  taxes in 1999,  1998 and 1997,  respectively.  The  increase in the 1998
effective rate was attributable to the nondeductible element of restricted stock
grants expensed in 1998.

On October 7, 1996 we and our subsidiary,  National Infusion Services (now known
as Priority Healthcare Services Corporation) ("PHSC"),  were named as defendants
in an action filed by Thomas G. Slama,  M.D. in the  Superior  Court of Hamilton
County,  Indiana. Dr. Slama is a former director of the company and formerly was
Chief Executive  Officer and President of PHSC. The complaint  alleged breach of
contract and defamation  arising from the termination of Dr. Slama's  employment
with PHSC in October 1996. On October 26, 1998, Dr. Slama filed a Second Amended
Complaint  which added  Priority and William E. Bindley as defendants and stated
additional  claims for breach of contract,  breach of oral  contract,  breach of
fiduciary duty, securities fraud and conversion.  Pursuant to an Indemnification
and Hold Harmless  Agreement we indemnified  and held harmless  Priority and its
subsidiaries from and against any and all costs,  damages,  charges and expenses
(including  without limitation legal and other professional fees) which Priority
might  incur or which may be charged  against  Priority  in any way based  upon,
connected with or arising out of the lawsuit filed by Dr. Slama.  All defendants
answered the complaint,  denied the merits of Dr. Slama's claims, and also filed
a counterclaim against Dr. Slama which sought,  among other things,  declaratory
relief,  compensatory and (in some instances) treble damages,  punitive damages,
attorneys'  fees,  interest  and costs.  On  December  31,  1998,  a  Settlement
Agreement  was executed by and among the parties  named above  pursuant to which
mutual  releases were  obtained  and, on January 4, 1999, a one-time  payment of
$875,000  was  made  by  the  Company  to Dr.  Slama.  The  corresponding  Joint
Stipulation of Dismissal was approved by the Court on January 11, 1999.

Liquidity-Capital Resources.

              On October  29,  1997,  Priority  consummated  an  initial  public
offering ("IPO").  Priority registered 2,300,000 shares of Class B common stock,
all of  which  were  sold  in a firm  commitment  underwriting  at an  aggregate
offering price of $33.35 million.  After underwriters' discount of $2.32 million
and expenses  incurred by Priority in conjunction with the IPO of $1.05 million,
the net offering proceeds to Priority were approximately $29.98 million.

              On December 31, 1998, we  distributed to the holders of our common
stock all of the 10,214,286  shares of Priority Class A common stock owned by us
on the basis of .448 shares of Priority  Class A common  stock for each share of
our common  stock  outstanding  on the record date,  December 15, 1998.  The two
classes  of  Priority  common  stock  entitle  holders  to

                                       17
<PAGE>

the same rights and privileges,  except that holders of shares of Priority Class
A common stock are entitled to three votes per share on all matters submitted to
a vote of holders of  Priority  common  stock and  holders of shares of Priority
Class B common  stock are entitled to one vote per share on such  matters.  As a
result of the distribution,  Priority ceased to be our subsidiary. From the date
of the IPO until the December 31, 1998 distribution to the holders of our common
stock, we owned 81.6% of the outstanding common stock of Priority.  In 1998, the
amount of net earnings associated with the minority interest was $1.9 million as
compared to $212,000 in 1997.

Our operations  consumed  $134.2 million in cash for the year ended December 31,
1999.  The use of funds  resulted from an increase in accounts  receivables  and
inventories.  These uses were offset by an increase  in  accounts  payable.  The
increase in accounts  receivables is a direct result of the overall  increase in
direct  store  sales.  The  increase  in  inventories  resulted  from  increased
purchases  associated  with the  start  up of our new  distribution  centers  in
Milwaukee,  Wisconsin and Kansas City,  Missouri,  additional  volume associated
with the inventory and purchasing  management systems with certain customers and
buildup related to Year 2000. The increase in accounts  payable is attributed to
the timing of payments of invoices related to inventory  purchases.  We continue
to closely  monitor  working  capital in relation to  economic  and  competitive
conditions.  However,  our  emphasis  on direct  store  delivery  business  will
continue to require both net working capital and cash.

Capital  expenditures for 1999 were $23.3 million.  These were predominantly for
distribution  centers,  the  expansion and  automation of existing  distribution
centers and the investment in additional management information systems.

On April 30, 1999, we sold our corporate  office  building to an unrelated party
and signed a 15 year lease for the top two  floors of the  building.  This lease
meets the criteria of a capital  lease and resulted in the recording of an asset
and liability in the amount of the present  value of minimum  lease  payments of
$13.4 million. The asset is being amortized over the term of the lease.

Effective July 31, 1997, we purchased  substantially all of the operating assets
and assumed  most of the  liabilities  and  contractual  obligations  of TWD. We
expended   approximately   $27  million  for  the   acquisition  of  TWD,  which
approximated the fair value of the net assets acquired.

Effective August 6, 1997,  Priority acquired  substantially all of the operating
assets and  assumed  most of the  liabilities  of Grove Way  Pharmacy,  Inc.,  a
specialty  distributor  of vaccines and  injectables  located in Castro  Valley,
California.  The amount expended  approximated  the fair value of the net assets
acquired.

On August 27, 1997,  we called for  redemption  on September 12, 1997 all of our
outstanding 6 1/2% Convertible  Subordinated Debentures Due 2002 at a redemption
price of $1,039 per $1,000  principal amount of Debentures plus accrued interest
through the  redemption  date.  Debenture  holders  could elect to convert their
debentures into shares of our common stock through September 12, 1997, which was
the  redemption  date.  Holders  of all but  $119,000  principal  amount  of the
$67,350,000  outstanding  Debentures  elected to convert their  Debentures  into
common  stock  at the rate of 50.4  shares  of  common  stock  for  each  $1,000
principal  amount of Debentures.  The  redemption  reduced our long-term debt by
$67,350,000  and  increased  by 3.4 million  the number of issued  shares of our
common stock.

                                       18
<PAGE>
We hold a note receivable with a principal  balance of $3.2 million from the CEO
of the  Company.  The  proceeds of this note,  which bears  interest at 6.5% per
annum and matures on December 16, 2000,  were used by the CEO to exercise  stock
options.  The note provides for annual  interest only payments with  outstanding
interest and principal to be repaid at maturity.

In December  1998, we  established a  receivables  securitization  facility (the
"Receivables  Facility")  pursuant  to  which we sell  substantially  all of our
receivables  arising in  connection  with the sale of goods or the  rendering of
services  ("Receivables")  to  Bindley  Western  Funding  Corporation  ("Funding
Corp."), a wholly owned special purpose corporation subsidiary.  The Receivables
are sold to Funding Corp. on a continuous basis, and the cash generated by sales
of interests in the Receivables or by collections on the Receivables retained is
used by Funding Corp. to, among other things,  purchase  additional  Receivables
originated by the Company.  The assets of Funding Corp.  will be available first
and foremost to satisfy claims of Funding Corp. creditors.

In  connection  with the  Receivables  Facility,  Funding  Corp.  entered into a
Receivables Purchase Agreement, dated as of December 28, 1998, with Falcon Asset
Securitization  Corporation  ("Falcon"),  an  affiliate  of Bank One,  NA ("Bank
One"),  certain other  financial  institutions  (collectively  with Falcon,  the
"Purchasers"),  and Bank One,  as Agent.  Pursuant to the  Receivables  Purchase
Agreement,  Funding  Corp.  may,  from  time  to  time,  sell  interests  in the
Receivables  ("Receivables  Interests")  to the  Agent  for the  benefit  of the
Purchasers.  Each  Receivables  Interest  has an  associated  Discount  Rate and
Tranche Period  applicable to it, as selected by Funding Corp. The Discount Rate
may, at Funding Corp.'s election,  be the Base Rate (the corporate prime or base
rate  announced  from  time to  time  by  Bank  One)  or,  with  respect  to the
Receivables Interests purchased by Falcon, the CP Rate (generally,  a commercial
paper  related rate based on Falcon's  funding  charges) or, with respect to the
Receivables  Interests purchased by other Purchasers,  the LIBO Rate (generally,
LIBOR for the applicable Tranche Period,  plus 1/25% per annum). The Receivables
Facility terminates on December 12, 2001, and is subject to final termination on
December 28, 2003, subject to earlier termination in certain events. At December
31, 1999, there were $350 million of Receivables Interests outstanding, which is
the maximum amount that could be drawn on this facility, bearing a Discount Rate
of 6.1% per annum.  We  account  for the  Receivables  Facility  as a  financing
transaction in our consolidated financial statements.

In  connection  with  the  implementation  of  the  Receivables   Facility,   we
renegotiated  our bank  line of credit on  December  28,  1999 and now have $150
million of available credit.  For 1999, the net increase in borrowings under the
bank credit  agreement was $25.5 million.  At December 31, 1999, we had borrowed
$45 million under the bank credit agreement and had a remaining  availability of
$105 million.

On December 27, 1999,  we repaid our $30 million  Senior  Notes.  In addition on
December  27, 1999 we completed a new private  placement  of $25 million  Senior
Notes due December 27, 2004 at an interest rate of 7.93%.

We believe that our cash on hand, bank line of credit,  Receivables Facility and
working capital management efforts are sufficient to meet future working capital
requirements.  However, see Note 17 to our Consolidated Financial Statements for
a description of certain contingencies.

Our primary  exposure to market  risk  consists of changes in interest  rates on
borrowings.  An increase in interest rates would adversely  affect our operating
results and the cash flow available to fund  operations and expansion.  Based on
the  average  variable  borrowings  for 1999,  an increase of 10% in our average
variable  borrowing  rate would  result in a $2.2  million  annual  increase  in
interest expense.  Conversely,  a 10% decrease in the average variable

                                       19
<PAGE>
borrowing  rate would  result in a $2.2  million  annual  decrease  in  interest
expense.  We continually  monitor this risk and review the potential benefits of
entering into hedging transactions, such as interest rate swaps, to mitigate the
exposure to interest  rate  fluctuations.  At December 31,  1999,  we were not a
party to any hedging transactions.

Our principal  working capital needs are for inventory and accounts  receivable.
We sell  inventory to our chain drug  warehouse  and other  customers on various
payment terms.  This requires  significant  working capital to finance inventory
purchases and entails accounts receivable exposure in the event any of our chain
warehouse or other major customers encounter financial difficulties. Although we
monitor closely the  creditworthiness of our major customers and, when feasible,
obtain security  interests in the inventory sold, there can be no assurance that
we will not incur some  collection  loss on chain drug or other  major  customer
accounts receivable in the future.

Year 2000.

Currently,  we have not experienced any significant Year 2000 related  problems,
nor do we anticipate  any Year 2000 related  problems in the future.  There have
been no instances where  mission-critical  and/or  non-mission-critical  systems
have failed to perform  correctly.  In  addition,  we have not  experienced  any
repercussions  of  Year  2000  related  issues  with  either  our  suppliers  or
customers. The total cumulative costs to make our systems compliant for the Year
2000 were approximately $1 million.

Inflation.

Our financial  statements are prepared on the basis of historical  costs and are
not intended to reflect changes in the relative  purchasing power of the dollar.
Because of our ability to take  advantage of forward  purchasing  opportunities,
the Company  believes that our gross profits  generally  increase as a result of
manufacturers' price increases in the products we distribute.  Gross profits may
decline if the rate of price increases by manufacturers declines.

Generally,  price increases are passed through to customers as they are received
by the Company and  therefore  reduce the negative  effect of  inflation.  Other
non-inventory cost increases,  such as payroll, supplies and services, have been
partially   offset  during  the  past  three  years  by  increased   volume  and
productivity.

Forward Looking Statements.

Certain statements included in this annual report which are not historical facts
are  forward  looking  statements.  Such  forward  looking  statements  are made
pursuant to the safe harbor  provisions  of the  Private  Securities  Litigation
Reform Act of 1995. These forward looking  statements  involve certain risks and
uncertainties  including,  but  not  limited  to,  changes  in  interest  rates,
competitive  pressures,  changes in customer mix,  financial  stability of major
customers, investment procurement opportunities,  asserted and unasserted claims
and changes in government regulations or the interpretation thereof, which could
cause actual results to differ from those in the forward looking statements.

Item 7A.    Quantitative and Qualitative Disclosures About Market Risk.

See discussion in Item 7.

                                       20
<PAGE>





                                     PART IV

Item 14.     Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

The  documents  listed  below  are  filed  as a part of this  report  except  as
otherwise indicated:

              (a) 1. Financial  Statements.  The following  described  financial
statements, required to be filed by Item 8 and incorporated therein by reference
are set forth on pages F-1 through F-31.


  Report of Independent Accountants                                  F-1
  Consolidated Statements of Earnings for each of the three years
  in the period ended December 31, 1999                              F-2
  Consolidated Balance Sheets as of December 31, 1999
    and 1998                                                         F-3
  Consolidated Statements of Cash Flows for each of the
    three years  in the period ended December 31, 1999               F-4
  Consolidated Statements of Shareholders' Equity for each
    of the  three years in the period ended December 31, 1999        F-5
  Notes to Consolidated Financial Statements                         F-6 TO F-31

              2. Financial Statement Schedules. No financial statement schedules
are included as the information  required by Rule 5-04 is not applicable,  or is
not material.

              3. Exhibits.  The list of exhibits filed as part of this report is
incorporated herein by reference to the Index to Exhibits beginning at Page [ ].

         (b)  Reports on Form 8-K.  On  November  17,  1999,  we filed a current
report on Form 8-K, which described our merger with Central  Pharmacy  Services,
Inc., and which included the following historical financial statements, restated
to  reflect  the  pooling  of  interest  from  Central  Pharmacy:   Consolidated
Statements of Earnings for each of the three years in the period ended  December
31,  1998,  Consolidated  Balance  Sheets  as of  December  31,  1998 and  1997,
Consolidated  Statements of Cash Flows for each of the three years in the period
ended December 31, 1998, and Consolidated Statements of Shareholders' Equity for
each of the three years in the period ended December 31, 1998.



                                       21
<PAGE>




                        Report of Independent Accountants

To the Board of Directors and Shareholders
of Bindley Western Industries, Inc.:


In our  opinion,  the  consolidated  financial  statements  listed  in the index
appearing under Item 14(a)1 on page 21 present fairly, in all material respects,
the financial position of Bindley Western Industries,  Inc. and its subsidiaries
at December  31, 1999 and 1998,  and the results of their  operations  and their
cash flows for each of the thee years in the period  ended  December 31, 1999 in
conformity with accounting principles generally accepted in the United States of
America.  These  financial  statements are the  responsibility  of the Company's
management;  our  responsibility  is to express  an  opinion on these  financial
statements  based on our audits.  We conducted our audits of these statements in
accordance with auditing  standards  generally  accepted in the United States of
America,  which require that we plan and perform the audit to obtain  reasonable
assurance   about  whether  the  financial   statements  are  free  of  material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the  amounts  and  disclosures  in  the  financial  statements,   assessing  the
accounting  principles  used and significant  estimates made by management,  and
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.

As discussed in the consolidated  financial statements,  the Company has revised
the aforementioned consolidated financial statements to account for the business
combination  with Central  Pharmacy  Services,  Inc. as a purchase rather than a
pooling of interests.



PricewaterhouseCoopers LLP
March 21, 2000, except as to
Note 5, which is as of December 13, 2000 and
Note 3 and Note 20, which are as of December 15, 2000



                                      F-1
<PAGE>

<TABLE>
<CAPTION>


                          Consolidated Statements of Earnings
                Bindley Western Industries, Inc. and Subsidiaries

For the years ended December 31,                1999             1998            1997
(In thousands, except share data)          (Restated)       (Restated)      (Restated)

<S>                                        <C>             <C>             <C>
Revenues:
  Net sales from stock                     $5,010,913      $4,123,930      $2,760,235
  Net brokerage sales                       3,468,425       3,497,422       4,549,687
                                       -------------------------------------------------------------

  Total net sales                           8,479,338       7,621,352       7,309,922
  Other income                                  1,937           1,702           1,882
                                       -------------------------------------------------------------
                                            8,481,275       7,623,054       7,311,804

Cost and expenses:
  Cost of products sold                     8,272,576       7,429,793       7,167,274
  Selling, general and administrative         112,619         107,852          81,078
  Depreciation and amortization                11,016           8,413           7,431
  Interest                                     23,401          18,465          15,907
  Unusual items                                                18,833             350
                                       -------------------------------------------------------------

                                            8,419,612       7,583,356       7,272,040

Earnings before income taxes
  and minority interest                        61,663          39,698          39,764
                                       -------------------------------------------------------------


Provision for income taxes:
  Current                                      25,053           22,180         19,640
  Deferred                                      (107)           (3,486)        (3,834)
                                       -------------------------------------------------------------

                                               24,946          18,694          15,806

Minority interest in net income of
  consolidated subsidiary                                       1,865             212
                                       -------------------------------------------------------------

Net earnings                                 $ 36,717        $ 19,139        $ 23,746
                                       =============================================================


Earnings per share:
  Basic                                        $ 1.16          $ 0.67          $ 1.04
  Diluted                                      $ 1.07          $ 0.63          $ 0.89

Average shares outstanding:
  Basic                                    31,541,107      28,728,979      22,912,237
  Diluted                                  34,384,628      30,296,160      28,677,528
</TABLE>

          (See accompanying notes to consolidated financial statements)

                                      F-2
<PAGE>
<TABLE>
<CAPTION>

                           Consolidated Balance Sheets
                Bindley Western Industries, Inc. and Subsidiaries


<S>                                                                     <C>            <C>
December 31,                                                                   1999           1998
(In thousands, except share data)                                         (Restated)     (Restated)

Assets
Current assets:
  Cash                                                                     $ 34,910       $ 42,982
  Accounts receivable, less allowance for doubtful
    accounts of $9,547 for 1999 and $7,550 for 1998                         721,829        453,552
  Finished goods inventory                                                  803,021        659,484
  Deferred income taxes                                                      13,168         11,506
  Other current assets                                                        9,926          8,282
                                                                       -------------  -------------
                                                                          1,582,854      1,175,806
                                                                       -------------  -------------
    Other assets                                                                 18             38
                                                                       -------------  -------------
    Fixed assets, at cost                                                   127,655        119,243
   Less: accumulated depreciation                                           (26,287)       (26,491)
                                                                       -------------  -------------
                                                                            101,368         92,752
                                                                       -------------  -------------
     Intangibles, net                                                        81,976         17,979
                                                                       -------------  -------------
      Total assets                                                      $ 1,766,216    $ 1,286,575
                                                                       =============  =============

Liabilities and Shareholders' Equity
Current liabilities:
  Short-term borrowings                                                    $ 45,000       $ 19,500
  Securitized borrowings                                                    349,963        224,163
  Private placement debt                                                                    30,000
  Accounts payable                                                          864,271        640,540
  Note payable to Priority Healthcare Corporation                                           16,517
  Other current liabilities                                                  25,957         18,684
                                                                       -------------  -------------
                                                                          1,285,191        949,404
                                                                       -------------  -------------
  Long-term debt                                                             38,698            628
                                                                       -------------  -------------
 Deferred income taxes                                                       16,128          3,202
                                                                       -------------  -------------

Shareholders' equity:
  Common stock. $.01 par value-authorized 53,333,333 shares;
    issued 35,213,201 and 23,433,919 shares, respectively                     3,415          3,376
  Special shares, $.01 par value-authorized 1,000,000 shares
  Additional paid in capital                                                278,344        213,462
  Note receivable from officer                                               (3,228)        (3,228)
  Retained earnings                                                         165,149        130,412
                                                                       -------------  -------------
                                                                            443,680        344,022
                                                                       -------------  -------------
   Less: shares in treasury-at cost 1,212,232 and 689,161, respectively     (17,481)       (10,681)
                                                                       -------------  -------------
     Total shareholders' equity                                             426,199        333,341
                                                                       -------------  -------------
  Commitments and contingencies
                                                                       -------------  -------------
     Total liabilities and shareholders' equity                          $ 1,766,216    $ 1,286,575
                                                                       =============  =============


</TABLE>
          (See accompanying notes to consolidated financial statements)

                                      F-3
<PAGE>
<TABLE>
<CAPTION>

                      Consolidated Statements of Cash Flows
                Bindley Western Industries, Inc. and Subsidiaries


<S>                                                      <C>                 <C>               <C>                           <C>
For the years ended December 31,                               1999                1998              1997
(In thousands)                                            (Restated)          (Restated)        (Restated)
Cash flow from operating activities:
   Net income                                              $ 36,717            $ 19,139          $ 23,746

  Adjustments to reconcile  net income to
   net cash provided  (used) by operating activities:
    Depreciation and amortization                            11,016               8,413             7,431
    Deferred income taxes                                      (107)             (3,486)           (3,834)
    Minority interest                                                             1,865               212
    Compensation expense on stock option grant                                                        350
    Compensation expense on restricted stock                                      1,589
    Interest capitalized on conversion of debt                                                      1,970
    Gain on sale of fixed assets                               (183)               (102)             (103)
    Unusual items                                                                18,833

 Change in assets and liabilities, net of acquisitions:
    Accounts receivable                                    (263,980)             95,417          (229,518)
    Finished goods inventory                               (142,929)           (163,102)          (63,401)
    Accounts payable                                        220,575             (60,203)          151,302
    Other current assets and liabilities                      4,684                 401             4,724
                                                        ------------      --------------      ------------

     Net cash provided (used) by operating
       activities                                          (134,207)            (81,236)         (107,121)
                                                        ------------      --------------      ------------


Cash flow from investing activities:
     Purchase of fixed assets and other assets              (23,266)            (33,541)          (22,643)
     Proceeds from sale of fixed assets                      20,600                  89             2,082
     Acquisition of businesses                               (2,096)                              (27,295)
     Distribution of Priority Healthcare Corporation                                 (2)
                                                        ------------      --------------      ------------

      Net cash used by investing activities                  (4,762)            (33,454)          (47,856)
                                                        ------------      --------------      ------------


Cash flow from financing activities:
     Proceeds from sale of stock                             10,285              26,783            14,594
     Proceeds from IPO of subsidiary                                                               29,982
     Related party note receivable                                                                 (3,228)
     Addition (reduction) of other debt, net                (21,908)               (282)             (274)
     Proceeds under line of credit agreement              1,540,500           1,600,000         1,496,000
     Payments under line of credit agreement             (1,515,000)         (1,727,500)       (1,401,000)
     Proceeds from securitized borrowings                   125,800             224,163
     Payments to acquire treasury shares                     (6,800)             (6,754)             (777)
     Dividends                                               (1,980)             (1,633)           (1,083)
                                                        ------------      --------------      ------------

      Net cash provided by financing activities             130,897             114,777           134,214
                                                        ------------      --------------      ------------


Net increase (decrease) in cash                              (8,072)                 87           (20,763)
Cash at beginning of year                                    42,982              42,895            63,658
                                                        ------------      --------------      ------------


Cash at end of year                                        $ 34,910            $ 42,982          $ 42,895
                                                        ============      ==============      ============


</TABLE>
          (See accompanying notes to consolidated financial statements)

                                      F-4
<PAGE>
<TABLE>
<CAPTION>

                 Consolidated Statements of Shareholders' Equity
                Bindley Western Industries, Inc. and Subsidiaries

                                        Common Stock          Treasury Stock
                                    ----------------------- --------------------

                                                                                  Additional          Note
                                         Shares                Shares                Paid in    Receivable  Retained   Shareholders'
                                    Outstanding    Amount   Outstanding   Amount     Capital  From Officer  Earnings         Equity
------------------------------------------------------------------------------------------------------------------------------------

(In thousands, except share data)
 All years have been restated.

<S>                                  <C>          <C>      <C>           <C>        <C>           <C>       <C>           <C>
Balances at December 31, 1996        11,871,042   $ 3,316    348,291     $(3,150)    $91,964                $129,958      $ 222,088

Net earnings                                                                                                  23,746         23,746
Dividends at $.08 per share                                                                                   (1,083)        (1,083)
Shares issued upon exercise of
   stock options                        870,130         9                             14,585                                 14,594
Shares issued upon conversion of
   debt                               3,394,147        34                             67,460                                 67,494
IPO of subsidiary                                                                     24,405                  (5,221)        19,184
IPO option grant                                                                         350                                    350
Note receivable from officer                                                                        (3,228)                  (3,228)
Purchase of treasury shares                                   32,651        (777)                                              (777)
                                    ------------ --------- ----------   --------------------- ------------- ---------  -------------

Balances at December 31, 1997        16,135,319     3,359    380,942      (3,927)    198,764        (3,228)  147,400        342,368

Net earnings                                                                                                  19,139         19,139
Dividends at $.08 per share                                                                                   (1,633)        (1,633)
Shares issued upon exercise of
   stock options                      1,324,943        13                             26,770                                 26,783
Shares issued upon issuance of
    restricted stock                    350,000         4                             12,334                                 12,338
Shares issued upon stock split        5,623,657              131,351
Distribution of Priority Healthcare                                                  (24,406)                (34,494)       (58,900)
Purchase of treasury shares                                  176,868      (6,754)                                            (6,754)
                                    ------------ --------- ----------   --------------------- ------------- ---------  -------------

Balances at December 31, 1998        23,433,919     3,376    689,161     (10,681)    213,462        (3,228)  130,412        333,341

Net earnings                                                                                                  36,717         36,717
Dividends at $.065 per share                                                                                  (1,980)        (1,980)
Shares issued upon exercise of
   stock options                        916,595         9                             10,276                                 10,285
Shares issued upon acquisition of
Central Pharmacy Services, Inc.       2,922,055        30                             54,606                                 54,636
Shares issued upon stock split        7,940,632              301,466
Purchase of treasury shares                                  221,605      (6,800)                                            (6,800)
                                    ------------ --------- ----------   --------------------- ------------- ---------  -------------

Balances at December 31, 1999        35,213,201   $ 3,415  1,212,232    ($17,481)   $278,344      $ (3,228) $165,149      $ 426,199

                                    ============ ========= ==========   ========= =========== ============= =========  =============

</TABLE>

          (See accompanying notes to consolidated financial statements)

                                      F-5
<PAGE>


                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES

         Principles of  consolidation.  The  consolidated  financial  statements
include the accounts of Bindley Western  Industries,  Inc. and its  subsidiaries
("BWI" or the "Company"). All significant intercompany accounts and transactions
have been eliminated.

         Merger with Central Pharmacy Services,  Inc. Effective August 31, 1999,
BWI  completed  the  merger  with  Central  Pharmacy  Services,   Inc  ("Central
Pharmacy") by exchanging  2.9 million  shares of BWI common stock for all of the
common stock of Central  Pharmacy.  Each share of Central Pharmacy was exchanged
for 26.38 shares of BWI common stock. In addition,  outstanding Central Pharmacy
employee stock options were  converted at the same exchange  factor into options
to purchase  approximately  300,000  shares of BWI common stock.  See Note 3 for
further discussion.

           Revenue  recognition.  The  Company  differentiates  sales as  either
brokerage type sales ("brokerage  sales") or sales from the Company's  inventory
("from stock sales").  Brokerage sales are made to the chain  warehouse  market,
whereas from stock sales are made to both the chain  warehouse  and direct store
delivery markets. Revenues are recorded at the time of shipment.

         Inventories.  Inventories  are  stated on the basis of lower of cost or
market using the first-in, first-out (FIFO) method.

         Fixed assets.  Depreciation is computed on the straight-line method for
financial reporting purposes.  Accelerated methods are primarily used for income
tax purposes. Assets, valued at cost, are generally being depreciated over their
estimated useful lives as follows:

                                               Estimated useful life (years)
Buildings and furnishings                                       5-35
Leasehold improvements                                          3-20
Transportation and other equipment                              3-20
Data equipment and software                                     3-5

         In 1999,  the  Company  implemented  the  Statement  of  Position  98-1
"Accounting  for the  Costs of  Computer  Software  Developed  or  Obtained  for
Internal  Use". As a result,  costs  incurred for the coding,  installation  and
testing of internal-use software were capitalized beginning in 1999. These costs
are recorded as capitalized software and generally amortized over three years.

         In the  event  facts  and  circumstances  indicate  an  asset  could be
impaired,  an  evaluation  of the  undiscounted  estimated  future cash flows is
compared  to the  asset's  carrying  amount  to  determine  if a  write-down  is
required.

         Debt issue costs.  Debt issue costs are  amortized  on a  straight-line
basis over the life of the Convertible  Subordinated Debentures  ("Debentures"),
which were redeemed on September 12, 1997, and the private placement debt.

         Intangibles. The Company continually monitors its cost in excess of net
assets acquired ("goodwill") and its other intangibles (customer  relationships,
workforce  in place and

                                      F-6
<PAGE>

covenants  not to compete) to determine  whether any  impairment of these assets
has  occurred.   In  making  such  determination,   the  Company  evaluates  the
performance,  on an undiscounted basis, of the underlying  businesses which gave
rise to such amounts.  Goodwill is being amortized on the  straight-line  method
over periods of 20 to 40 years.  Customer  relationships  are being amortized on
the straight-line  method over periods of 12 to 20 years.  Other intangibles are
being amortized on the straight-line method over five to 40 years.

         Earnings per share.  Basic  earnings per share is based on the weighted
average  number of common  shares  outstanding  during each period.  The diluted
earnings per share is based on the weighted  average number of common shares and
dilutive potential common shares outstanding during each period. See Note 18 for
a reconciliation of earnings per share.

         Income  taxes.  In  accordance  with the  provisions  of  Statement  of
Financial  Accounting  Standards  No. 109  "Accounting  for Income  Taxes,"  the
Company  accounts for income  taxes using the asset and  liability  method.  The
asset and liability  method  requires the recognition of deferred tax assets and
liabilities for expected future tax  consequences of temporary  differences that
currently  exist  between  the tax bases and  financial  reporting  bases of the
Company's assets and liabilities.

         Use of estimates. The preparation of financial statements in accordance
with generally accepted accounting principles requires the use of estimates made
by management. Actual results could differ from those estimates.

         Fair  value of  financial  instruments.  The  carrying  values of cash,
accounts  receivable,  other current  assets,  short-term  borrowings,  accounts
payable and other current  liabilities  approximate their fair market values due
to the short-term  maturity of these instruments.  The fair market value of long
term debt was  determined  based on market quoted rates or was  estimated  using
rates  currently  available  to the  Company  for debt  with  similar  terms and
maturities.

         Other income.  Other income for 1999,  1998 and 1997 was  substantially
all interest income and gains on the sale of assets.

         Prior  year  reclassifications.  Certain  amounts  in  the  prior  year
financial  statements  have been  reclassified  to conform to the  current  year
presentation.

NOTE 2 - DISTRIBUTION OF PRIORITY HEALTHCARE CORPORATION

         On December 31,  1998,  the Company  distributed  to the holders of the
Company's  common  stock all of the  10,214,286  shares of  Priority  Healthcare
Corporation  ("Priority") Class A common stock owned by the Company on the basis
of .448 shares  Priority Class A common stock for each share of BWI common stock
outstanding  on  the  record  date,  December  15,  1998.  As a  result  of  the
distribution,  Priority  ceased to be a subsidiary of the Company as of December
31, 1998. The dividend  distribution  of $58.9 million  represents the Company's
ownership  interest in the net assets of Priority.  The spin-off resulted in the
removal of $107.5  million of assets and $37.2 million of  liabilities  from the
Company's Consolidated Balance Sheet as of December 31, 1998.

         The results of operations for Priority,  net of minority interest,  for
the year ended  December  31, 1998 are  included in the  Company's  Consolidated
Statement of Earnings as Priority  was a  subsidiary  for the full year of 1998.
Summary Statement of Earnings data for Priority is presented in Note 4 below.

                                      F-7
<PAGE>

NOTE 3 - RESTATEMENT

As discussed in Note 1, effective August 31, 1999, BWI completed the merger with
Central Pharmacy.  The merger with Central Pharmacy was originally accounted for
as a pooling of interests and was reflected for all periods  presented,  and the
financial  statements of BWI have  included the combined  operations of both BWI
and Central  Pharmacy.  However,  the Company  subsequently  determined that the
pooling of interests method was unavailable for the Central Pharmacy acquisition
because  of a  dividend  paid to  preferred  shareholders  of  Central  Pharmacy
immediately prior to the acquisition.  Accordingly, the Company has restated its
financial  statements  and applied the  purchase  method of  accounting  for the
Central Pharmacy acquisition. The total purchase price of $56,700,000, including
acquisition costs, has been allocated based on estimated fair values at the date
of  acquisition   including  net  tangible  assets  of  $4,000,000;   identified
intangible  assets of workforce in place of  $1,400,000  amortized on a straight
line basis over 12 years,  customer  relationships of $28,000,000 amortized on a
straight  line basis over 40 years and  goodwill of  $34,800,000  amortized on a
straight  line  basis  over 20 years;  offset by  $11,500,000  in  deferred  tax
liabilities. The results of operations of Central Pharmacy are included from the
date of acquisition.

         In all years, Central Pharmacy sales and total assets had accounted for
less than one percent of total sales and total assets, on a consolidated basis.

         The following  table shows certain  income  statement and balance sheet
line items that have been restated:

                                      F-8
<PAGE>
<TABLE>
<CAPTION>

                                                Restated    As Previously Reported
                                                 (000's)                   (000's)
                                              ----------------------------------------------
<S>                                           <C>                       <C>
Total net sales:
   1999                                       $8,479,338                $8,507,605
   1998                                        7,621,352                 7,654,221
   1997                                        7,309,922                 7,334,137

Net earnings:
   1999                                           36,717                    38,296
   1998                                           19,139                    22,236
   1997                                           23,746                    24,506

Basic earnings per share:
   1999                                             1.16                      1.14
   1998                                              .67                       .70
   1997                                             1.04                       .95

Diluted earnings per share:
   1999                                             1.07                      1.05
   1998                                              .63                       .66
   1997                                              .89                       .83

Balance sheet line items at December 31, 1999:
   Intangibles                                    81,976                    18,582
   Deferred tax liability                         16,128                     4,703
   Additional paid in capital                    278,344                   225,459
   Retained earnings                             165,149                   166,550
</TABLE>

         The following  unaudited pro forma information  presents the results of
operations of BWI as if the  acquisition  had taken place on January 1, 1999 and
1998 (in thousands except for per share data):

                                        Unaudited              Unaudited
                                             1999                 1998
                                  --------------------- -----------------------
Revenues                               $8,507,605           $7,654,221
Net Earnings                               37,669               19,997
Earnings per share:
    Basic                                    1.13                  .63
    Diluted                                  1.03                  .60
Weighted Average Outstanding
  Common shares:
    Basic                              33,478,470           31,651,034
    Diluted                            36,467,639           33,508,668

         These  unaudited  pro forma  results  have been  prepared  for analysis
purposes only and include certain  adjustments  such as additional  amortization
expenses  related to intangible  assets and goodwill.  They do not purport to be
indicative  of the results of operations  that actually  would have resulted had
the acquisition  occurred on either January 1, 1999 or 1998 or of future results
of operations.

                                      F-9
<PAGE>

NOTE 4 - OPERATING SEGMENTS

         In June 1997, SFAS No. 131, "Disclosure about Segments of an Enterprise
and Related  Information",  was issued  effective  for fiscal  years ended after
December  15,  1998.   The   Statement   designates   the  internal   management
accountability structure as the source of the Company's reportable segments. The
statement  also requires  disclosures  about  products and services,  geographic
areas and major customers.  The adoption of this standard did not affect results
of  operations  or financial  position but did affect the  disclosure of segment
information.

         Prior to 1998, the Company operated as one industry  segment.  The 1997
information presented below has been restated in order to conform to the current
year presentation.

         Giving  effect to the Central  Pharmacy  merger,  the Company has three
reportable  segments,   BWI,  Priority  and  Nuclear  Pharmacy,   which  conduct
substantially  all of their business  within the United States.  The BWI segment
specializes  in the  distribution  of  pharmaceuticals  and related  health care
products to chain drug companies which operate their own warehouses,  individual
drug  stores,  supermarkets  and  mass  retailers  with  their  own  pharmacies,
hospitals, clinics, HMOs, state and federal government agencies and other health
care providers.  The Priority segment distributed specialty  pharmaceuticals and
related  medical  supplies to the  alternate  site  healthcare  market and was a
provider of  patient-specific,  self-injectable  biopharmaceuticals  and disease
treatment  programs to individuals with chronic  diseases.  The Nuclear Pharmacy
segment prepares and delivers unit dose  radiopharmaceuticals for use in nuclear
imaging  procedures in hospitals and clinics.  During 1999  approximately 86% of
this segment's  purchases of pharmaceuticals  were from three vendors accounting
for 44%,  26% and 16% of this  segment's  cost of sales for the year ended 1999.
The  significant  customers  reported  in Note 15 are all sold  through  the BWI
segment.

         These segments have separate  management teams and  infrastructures  to
facilitate  their  specific  customer  needs  and  marketing   strategies.   The
accounting  policies of the reportable  segments are the same as those described
in the summary of significant  accounting  policies.  The intersegment sales and
transfers are not  significant.  As discussed in Note 2, Priority ceased to be a
subsidiary  of the Company as of December 31, 1998 and,  therefore,  its assets,
liabilities  and equity are not included in the Company's  Consolidated  Balance
Sheets at December 31, 1999 and 1998.

                                      F-10
<PAGE>


         Segment  information  for the  years  ended  1999,  1998  and 1997 on a
restated basis was as follows:
<TABLE>
<CAPTION>


                                         BWI           Priority    Nuclear Pharmacy               Total

1999
<S>                              <C>                  <C>                   <C>             <C>
Revenues                         $ 8,463,700                                $15,638         $ 8,479,338
Interest expense                      23,390                                     11              23,401
Depreciation and amortization          9,945                                  1,071              11,016
Unusual items
Segment net earnings                  36,437                                    280              36,717
Total assets                       1,692,646                                 73,570           1,766,216
Capital expenditures                  22,931                                    335              23,266

1998
Revenues                         $ 7,345,726          $ 275,626                             $ 7,621,352
Interest expense                      18,310                155                                  18,465
Depreciation and amortization          7,179              1,234                                   8,413
Unusual items                         18,833                                                     18,833
Segment net earnings                   8,996             10,143                                  19,139
Total assets                       1,286,575                                                  1,286,575
Capital expenditures                  32,636                905                                  33,541

1997
Revenues                         $ 7,078,940          $ 230,982                             $ 7,309,922
Interest expense                      15,907                                                     15,907
Depreciation and amortization          6,270              1,161                                   7,431
Segment net earnings                  17,595              6,151                                  23,746
Total assets                       1,196,051             91,728                               1,287,779
Capital expenditures                  21,916                727                                  22,643
</TABLE>

NOTE 5- SHORT-TERM BORROWINGS

         The Company's unsecured short-term bank line of credit was $150,000,000
as of December 31,  1999.  The line was  available,  as  necessary,  for general
corporate  purposes  at rates  based upon  prevailing  money  market  rates.  At
December 31,  1999,  1998 and 1997,  the Company had borrowed on its  short-term
line of credit $45,000,000 at a rate of 5.7%,  $19,500,000 at a rate of 5.4% and
$147,000,000 at a rate of 6.6%, respectively.

         No  compensating  balance is required on the line.  Certain  conditions
relating  to the  maintenance  of net worth,  total debt and  interest  coverage
ratios have been imposed by the lenders.

         A summary of 1999, 1998 and 1997 borrowings under the line of credit is
as follows:

                 Maximum short-term            Average              Average
Year                     borrowings         borrowings        Interest rate
----------------------------------------------------------------------------
(in thousands)
1999                       $174,000            $96,000                 6.2%
1998                       $338,000           $249,000                 6.3%
1997                       $270,000           $152,000                 6.4%

                                      F-11
<PAGE>

         On December 27, 1996, the Company  completed a private placement of $30
million  Senior  Notes due December  27, 1999 at an interest  rate of 7.25%.  On
December 27, 1999,  the Company repaid these Senior Notes with the proceeds from
the newly issued private placement Senior Notes discussed in Note10.

         In December 1998, the Company established a receivables  securitization
facility  (the  "Receivables  Facility")  pursuant  to which the  Company  sells
substantially  all of its  receivables  arising in  connection  with the sale of
goods or the rendering of services  ("Receivables")  to Bindley  Western Funding
Corporation  ("Funding  Corp."),  a wholly  owned  special  purpose  corporation
subsidiary. The Receivables are sold to Funding Corp. on a continuous basis, and
the cash generated by sales of interests in the Receivables or by collections on
the  Receivables  retained is used by Funding  Corp.  to,  among  other  things,
purchase additional Receivables originated by the Company. The assets of Funding
Corp.  will be available  first and foremost to satisfy  claims of Funding Corp.
creditors.

         In connection with the Receivables Facility, Funding Corp. entered into
a Receivables  Purchase  Agreement,  dated as of December 28, 1998,  with Falcon
Asset Securitization  Corporation  ("Falcon"),  an affiliate of The Bank One, NA
("Bank One"),  certain other financial  institutions  (collectively with Falcon,
the "Purchasers"),  and Bank One, as Agent. Pursuant to the Receivables Purchase
Agreement,  Funding  Corp.  may,  from  time  to  time,  sell  interests  in the
Receivables  ("Receivables  Interests")  to the  Agent  for the  benefit  of the
Purchasers.  Each  Receivables  Interest  has an  associated  Discount  Rate and
Tranche Period  applicable to it, as selected by Funding Corp. The Discount Rate
may, at Funding Corp.'s election,  be the Base Rate (the corporate prime or base
rate  announced  from  time to  time  by  Bank  One)  or,  with  respect  to the
Receivables Interests purchased by Falcon, the CP Rate (generally,  a commercial
paper  related rate based on Falcon's  funding  charges) or, with respect to the
Receivables  Interests purchased by other Purchasers,  the LIBO Rate (generally,
LIBOR for the applicable  Tranche Period,  plus 1/25% per annum).  For 1999, the
average  Receivables  interests  outstanding  was  $242  million  at an  average
interest  rate of 5.4%.  At  December  31,  1999,  there  were $350  million  of
Receivables  Interests  outstanding,  which is the maximum  amount that could be
drawn  on this  facility,  bearing  a  Discount  Rate of 6.1% per  annum  and at
December 31, 1998, there were $224 million of Receivables Interests outstanding,
bearing a Discount Rate of 5.5% per annum. The Receivables  Facility  terminates
on December 12, 2001, and is subject to final  termination on December 28, 2003,
subject to earlier  termination in certain events.  The Company accounts for the
Receivables  Facility as a financing  transaction in its consolidated  financial
statements.  This facility and the private placement of $25 million Senior Notes
discussed in Note 10, contain certain  conditions  related to the maintenance of
net worth, total debt and interest coverage ratios.

         Central  Pharmacy's  working  capital line of credit  agreement  with a
bank,  as amended  on April 8, 1999,  allows  Central  Pharmacy  to borrow up to
$3,500,000.  Amounts  borrowed  under this agreement bear interest at the bank's
prime rate (8.5% at December 31, 1999) and are due on April 7, 2000. The line of
credit agreement  contains various covenants which place restrictions on Central
Pharmacy's  current  ratio,  indebtedness  and  operating  cash  flows.  Amounts
borrowed under this agreement are secured by Central  Pharmacy's  assets.  As of
December 31, 1999, there was no outstanding balance on this line of credit.

                                      F-12
<PAGE>

NOTE 6- FIXED ASSETS

December 31,                             1999                  1998
--------------------------------------------------------------------
(in thousands)                       Restated              Restated

Land                                  $ 4,450              $  6,749
Buildings and furnishings              37,118                52,633
Leasehold improvements                  3,527                 2,849
Transportation and
   Other equipment                     46,738                35,911
Data equipment and software            22,388                21,101
Capitalized leases                     13,434
                            ----------------------------------------
                                      127,655               119,243
Less: Accumulated
   Depreciation                      (26,287)              (26,491)
                            ----------------------------------------
                                    $ 101,368              $ 92,752
                            ========================================


NOTE 7- INTANGIBLES

December 31,                                1999           1998
----------------------------------------------------------------
(in thousands)                          Restated       Restated

Goodwill                                $ 58,390       $ 22,091
Accumulated amortization                 (6,652)        (5,342)
                             -----------------------------------
Goodwill, net                             51,738         16,749

Customer relationships                    31,074          3,074
Accumulated amortization                 (2,230)        (1,844)
                             -----------------------------------
Customer relationships, net               28,844          1,230

Other                                      1,505
Accumulated amortization                   (111)
                             -----------------------------------
Other, net                                 1,394
                             -----------------------------------
Intangibles, net                        $ 81,976       $ 17,979
                             ===================================

         In  performing  the  review for  impairment  on the  intangible  assets
related to Priority Healthcare Services, the Company determined that the loss of
key  personnel  as part of the  distribution  of  Priority  and the  recent  and
projected  operating  results  and cash flows were not  adequate  to support the
recorded  amount.  In  the  fourth  quarter  of  1998,  the  Company  wrote  off
approximately $6 million in goodwill and $2 million in other intangibles,  which
is  presented in the  Consolidated  Statement of Earnings as part of the unusual
items caption. Priority Healthcare Services is a component of the BWI segment.


NOTE 8 - RELATED PARTY TRANSACTIONS

         At December 31, 1999 and 1998, the Company held a note  receivable with
a principal  balance of $3.2  million  from the Chief  Executive  Officer of the
Company in connection  with his exercise of stock  options  granted to him under
the 1993 Stock Option and Incentive Plan. This

                                      F-13
<PAGE>
note,  which bears interest at 6.5% per annum,  matures on December 16, 2000 and
provides for annual interest only payments,  beginning in 1998, with outstanding
interest and  principal to be repaid at maturity.  In both 1999 and 1998,  other
income includes $200,000 of interest income related to this note.

         At December 31, 1998,  the Company owed Priority  $16.5  million.  This
amount  was due on demand  and  represented  loans of excess  cash  balances  of
Priority to the Company on a short-term basis, bearing interest at the Company's
average  incremental  borrowing  rate.  At December  31, 1998,  the  incremental
borrowing rate was 6.3%. This balance was repaid in 1999.

NOTE 9 - INCOME TAXES

         The  provision  for  income  taxes   includes  state  income  taxes  of
$4,148,000, $3,110,000 and $2,657,000 in 1999, 1998 and 1997, respectively.
         The following table indicates the significant elements  contributing to
the difference between the U.S. federal statutory tax rate and the effective tax
rate:

Year ended December 31,                      1999          1998          1997
--------------------------------------- ----------- ------------- -------------
Percentage of earnings before taxes:      Restated      Restated      Restated

U.S. federal statutory rate                 35.0%         35.0%         35.0%
State and local taxes on income, net of
   Federal income tax benefit                4.4%          5.1%          4.4%
Nondeductible element of restricted
   stock grants                                            6.2%
Other                                        1.1%           .8%
                                                                          .6%
                                        ----------- ------------- -------------
Effective rate                              40.5%         47.1%         40.0%
                                        =========== ============= =============


                                      F-14
<PAGE>



         Presented  below are the  significant  elements of the net deferred tax
balance sheet accounts at December 31, 1999 and 1998:

Deferred tax assets:                                    1999              1998
                                                        ----              ----
                                                    Restated          Restated
  Current:
     Accounts receivable                              $8,051            $6,635
     Inventories                                       1,049             1,371
     Deferred compensation                             3,458             2,354
     Other, net                                          610             1,146
                                           ------------------ -----------------
Subtotal                                              13,168            11,506

  Long-term:
     Acquired net operating loss benefits                311               368
     Intangibles                                                         2,327
                                           ------------------ -----------------
Subtotal                                                 311             2,695
                                           ------------------ -----------------

Total deferred tax assets                            $13,479           $14,201
                                           ================== =================

Deferred tax liabilities:
  Current                                           $                 $

  Long-term:
   Fixed assets                                        7,425             5,897
   Intangibles                                         9,014
                                           ------------------ -----------------
Subtotal                                              16,439             5,897
                                           ------------------ -----------------

Total deferred tax liabilities                       $16,439            $5,897
                                           ================== =================

         In  connection  with a prior year  acquisition,  the  Company  acquired
federal net operating loss carryforwards of $2.3 million. Due to certain tax law
limitations,  annual utilization of the carryforward is limited to $163,000. The
remaining  tax loss  carryforward  at  December  31, 1999 is $1.1  million.  The
carryover period expires in 2006.

 NOTE 10 - LONG-TERM DEBT

         On December 27, 1999, the Company  completed a private placement of $25
million  Senior Notes due December  27, 2004 at an interest  rate of 7.93%.  The
Company  estimates the fair market value at December 27, 1999  approximates  the
principal  amount based on the proximity of the issuance date to the fiscal year
end.

         On April 30, 1999, the Company sold its corporate office building to an
unrelated party for  approximately net book value and signed a 15 year lease for
the  top  two  floors  of the  building.  The  lease  meets  the  criteria  of a
capitalized lease and resulted in the recording of an asset and liability in the
amount of the present  value of minimum  lease  payments of $13.4  million.  The
asset is being amortized over the term of the lease and the  depreciation of the
asset is included in depreciation expense.

         The remaining 1999 balance,  and substantially all of the 1998 balance,
was comprised of a mortgage obligation.

                                      F-15
<PAGE>

           In 1998, a $1.2 million obligation,  which related to the purchase of
Priority Healthcare Services,  was included as a reduction of the fourth quarter
unusual  items charge  resulting  from the  litigation  settlement  agreement on
December 31, 1998.

NOTE 11- PROFIT SHARING PLAN

         The Company and its  subsidiaries  maintain a qualified  Profit Sharing
Plan ("Profit Sharing Plan") for eligible employees. All employees are generally
eligible to  participate  in the Profit  Sharing Plan as of the first January 1,
April 1, July 1 or October 1 after having completed at least one year of service
(as defined in the Profit Sharing Plan) and having reached age 21.

         The annual  contribution  of the  Company and its  subsidiaries  to the
Profit Sharing Plan is at the discretion of the Board and is generally 8% of the
Participant's compensation for the year. The employer contribution for a year is
allocated  among  the  Participants  employed  on the  last  day of the  year in
proportion  to  their  relative   compensation   for  the  year.  The  Company's
Contributions  to the plan for the years ended December 31, 1999,  1998 and 1997
were $2,077,000, $1,785,000 and $1,576,000, respectively.

         The Profit  Sharing  Plan has been  amended to adopt,  effective  as of
January 1, 2000,  one of the  permissible  safe harbor methods of satisfying the
nondiscrimination  test for elective  deferrals  under the 401(k) feature of the
Profit  Sharing  Plan.  Under  this safe  harbor  method,  the  Company  and its
subsidiaries  will make a  contribution  each year, on behalf of their  eligible
employees,  equal to 3% of the employee's  eligible  compensation  for the year.
These  contributions,  and  attributable  earnings,  will be 100%  vested at all
times,  rather than subject to the graded  vesting  schedule that applies to the
discretionary  contributions  by the  Company and its  subsidiaries.  The annual
contribution  of the Company and its  subsidiaries  to the Profit  Sharing  Plan
beyond the 3% safe harbor  contribution  is at the discretion of the Board,  and
the Company  expects that the combination of the safe harbor  contributions  and
discretionary  contributions by the Company and its subsidiaries  will generally
total 8% of a participant's compensation for the year. The employer contribution
for a year is allocated among participants  employed on the last day of the year
in proportion to their relative compensation for the year.

         Subject to  limitations  imposed by the Code,  a  participant  may,  in
addition to receiving a share of the employer contribution, have a percentage of
his or her compensation  withheld from pay and contributed to the Profit Sharing
Plan.  Subject to applicable  Code  requirements,  employees may make "rollover"
contributions to the Profit Sharing Plan of qualifying  distributions from other
employers' qualified plans.

         A  Participant's  interest in amounts  withheld from his or her pay and
contributed to the Profit Sharing Plan or in rollover  contributions  and in the
earnings  on those  amounts  are fully  vested  at all  times.  A  Participant's
interest in discretionary  employer  contributions made on his or her behalf and
the  earnings  on those  contributions  become 20% vested  after  three years of
service and an  additional  20% vested  during  each of the next four  years.  A
Participant's  interest in discretionary  employer  contributions made on his or
her behalf and the earnings on those contributions will also become fully vested
when the employee retires at age 65 or older, dies or becomes totally disabled.

         All  contributions  to the  Profit  Sharing  Plan are paid in cash to a
trustee bank, as trustee,  and are invested by the trustee until  distributed to
Participants or their  beneficiaries.  Participants  are permitted to direct the
trustee  as to the  investment  of their  accounts  by  choosing  among  several
investment  funds that are offered under the Profit Sharing Plan,

                                      F-16
<PAGE>

including one fund consisting of common stock of the Company.  Participants  may
elect to invest in one fund or a combination of the available funds according to
their investment  goals. If a Participant does not make an investment  election,
his or her Profit Sharing Plan accounts will be invested in a fund designated by
the Company.

         Effective July 1, 1993,  Central  Pharmacy adopted the Central Pharmacy
Services,  Inc.  401(k) Plan (the  "Plan"),  a defined  contribution  plan which
intended to qualify under Section 401(k) of the Internal  Revenue Code. The Plan
also includes a cash or defined  arrangement  to qualify under Section 401(k) of
the code.  All employees of Central  Pharmacy are eligible to participate in the
Plan after one year of service.  Participants  may contribute up to 20% of their
base  salaries  to the  Plan,  and  Central  Pharmacy  will  match  100%  of the
participants' contributions up to 2% of their base salaries. Contibutions to the
Plan were  approximately  $118,000 for the period ended  December 31, 1999.  The
plan was frozen  effective as of the close of business on December 31, 1999, and
the Plan will be merged into the Profit  Sharing  Plan in the second  quarter of
2000.

NOTE 12 - MINORITY INTEREST

             On October 29,  1997,  the Company  consummated  an initial  public
offering ("IPO") of its Priority Healthcare Corporation ("Priority") subsidiary.
Priority registered  2,300,000 shares of Class B common stock, all of which were
sold in a firm commitment  underwriting at an aggregate offering price of $33.35
million.  After underwriters' discount of $2.32 million and expenses incurred in
conjunction with the IPO of $1.05 million, the net offering proceeds to Priority
were approximately $29.98 million.

         The Priority IPO resulted in the  establishment of minority interest of
$11  million,   which  represented  the  minority   shareholders'   interest  in
shareholders'  equity of  Priority,  and an  increase  of $19.2  million  in the
Company's   additional  paid  in  capital,   which   represented  the  Company's
incremental share of Priority's shareholders' equity, both at October 29, 1997.

         See Note 2 for discussion of the Company's distribution of Priority.

NOTE 13 - CAPITAL STOCK

         The Company's  capitalization  consists of 53,333,333 authorized shares
of common  stock and  1,000,000  authorized  shares of Special  Stock.  Both the
common  stock and  Special  Stock have a $.01 par value per  share.  On June 25,
1999,  a 4-for-3  stock split was  effected  in the form of a stock  dividend to
shareholders  of record at the close of  business on June 11,  1999.  On June 3,
1998,  a 4-for-3  stock split was  effected  in the form of a stock  dividend to
shareholders of record at the close of business on May 21, 1998.

         Prior to May 20, 1993,  the Company had a 1983  Incentive  Stock Option
Plan, a 1983  Nonqualified  Option Plan,  and a 1987 Stock Option and  Incentive
Plan.  The  number of shares  available  for  issuance  pursuant  to such  plans
aggregated  2,500,000 shares.  Incentive stock options,  granted at a minimum of
100% of fair market value, and nonqualified stock options,  granted at a minimum
of 85% of fair market value,  both  exercisable for up to 10 years from the date
of grant, were authorized under such plans.

         On May 20, 1993,  the  Company's  shareholders  approved the 1993 Stock
Option and Incentive Plan (the "1993 Plan") authorizing  1,000,000 shares of the
Company's  common  stock  for  sale or  award  to  officers  and  key  employees
(including  any such officer or employee who holds at least 10% of the Company's
common stock) as stock options or restricted  stock.

                                      F-17
<PAGE>

Options  generally  become  exercisable over a one to four year period following
date of grant and expire 10 years  following  date of grant.  No further  awards
will be made from the shares of common stock that remained  available for grants
under the prior stock option plans.

         On May 19, 1994, the Company's  shareholders approved amendments to the
Company's 1983 Incentive Stock Option Plan, the 1983  Nonqualified  Stock Option
Plan,  the 1987 Stock Option and Incentive  Plan and the 1993 Plan to permit the
Company's  Compensation  and Stock  Option  Committee  of the Board of Directors
("Committee") to allow participants under these plans,  including the holders of
outstanding  options,  to exercise an option during its term following cessation
of employment by reason of death, disability or retirement. Such amendments also
permitted  the  Committee,  in its sole  discretion,  to change the exercise and
termination  terms of options  granted if such changes are otherwise  consistent
with applicable  federal and state laws. In addition,  the 1993 Plan was amended
to (i) increase from 1,000,000 to 1,500,000 the number of shares  authorized for
issuance  pursuant  to awards  made under the 1993  Plan;  (ii) limit to 100,000
shares the number of shares that any one  participant may receive under the 1993
Plan during any calendar year; and (iii) provide that the Board of Directors may
amend the 1993 Plan in any respect  without  shareholder  approval,  unless such
approval is required to comply with Rule 16b-3 under the Securities Exchange Act
of 1934 or Section 422 of the Internal  Revenue  Code of 1986.  On May 16, 1996,
the Company's shareholders approved an amendment to the 1993 Plan to increase to
3,000,000 the number of shares  authorized for issuance  pursuant to awards made
under the 1993  Plan.  At the May 21,  1998  annual  shareholders  meeting,  the
Company's shareholders approved an amendment to the 1993 Plan to (i) increase to
4,000,000 (restated to 5,333,332 as a result of the June 3, 1998 stock split, to
7,821,973 as a result of the spin-off of Priority, and to 10,271,118 as a result
of the  June  25,  1999  stock  split,  each  restatement  made  pursuant  to an
anti-dilution  provision  contained  in the 1993  Plan)  the  number  of  shares
authorized  for  issuance  pursuant  to awards made under the 1993 Plan and (ii)
increase to 300,000 the number of shares  that any one  participant  may receive
under the 1993 Plan during any calendar year.

         On May 14,  1991,  the  Company's  shareholders  approved  the  Outside
Directors Stock Option Plan (the "Directors  Plan").  Each eligible  director is
automatically granted an option to purchase 1,000 shares of the Company's common
stock on June 1 of each year  beginning in 1991.  The option  exercise price per
share is 85% of the fair market  value of one share of common  stock on the date
of grant. Each option becomes exercisable six months following the date of grant
and expires 10 years following the date of grant.

         On December 11, 1998, the Company's Board of Directors adopted the 1998
Non-Qualified Stock Option Plan (the "1998 Non-Qualified  Plan"), which reserves
for issuance 600,000 shares of the Company's common stock held by the Company as
treasury shares. On July 22, 1999, the Company's Board of Directors  approved an
amendment to the 1998  Non-Qualified  Plan to increase the reserves for issuance
to  1,200,000  shares of the  Company's  common  stock  held by the  Company  as
treasury  shares.  The  1998  Non-Qualified  Plan  provides  for  the  grant  of
nonqualified stock options to employees who are not officers or directors of the
Company or its  affiliates.  Under the 1998  Non-Qualified  Plan,  no individual
participant may receive awards for more than 50,000 shares in any calendar year.
Options  generally  become  exercisable over a one to four year period following
date of grant and expire 10 years following date of grant.

         The Central  Pharmacy  1993 Stock  Option Plan (the  "Central  Pharmacy
Option  Plan")  provided  for the  issuance of options to  employees  of Central
Pharmacy for the purchase of shares of Central Pharmacy's common stock.  Options
were issued with exercise  prices equal to or in excess of the fair market value
of Central Pharmacy's common stock, as determined by

                                      F-18
<PAGE>

Central Pharmacy's Board of Directors,  on the date of grant.  Vesting and terms
of all options were determined by Central  Pharmacy's Board of Directors and may
vary by optionee; however, the term may be no longer than 10 years from the date
of grant.

         In accordance  with the terms of the Central  Pharmacy  Option Plan and
 merger  between BWI and Central  Pharmacy,  all options  outstanding  under the
 Central Pharmacy option plan vested at the date of the merger. Furthermore, all
 such  outstanding  Central  Pharmacy  options  were  converted  to BWI  options
 pursuant  to the terms of the merger  which,  in  essence,  provided  that such
 options would be converted based on the calculated  "in-the-money"  amounts and
 exercise  price  to  fair  market  value  ratios  at the  time  of the  merger.
 Additionally,  in accordance  with the terms of the merger,  no further options
 can be issued from the Central Pharmacy Option Plan subsequent to the merger.

         In accordance with the provisions of Financial Accounting Standards No.
123,  "Accounting for Stock-Based  Compensation"  ("SFAS 123"),  the Company has
elected to  continue  following  Accounting  Principles  Board  Opinion  No. 25,
"Accounting   for  Stock   Issued  to   Employees"   ("APB   25")  and   related
interpretations  in  accounting  for its stock option  plans,  and  accordingly,
generally does not recognize  compensation  expense related to these options. If
the Company  had elected to  recognize  compensation  expense  based on the fair
value of the options at the grant date as  prescribed by SFAS 123, pro forma net
income and earnings would have been:

For the years ended December 31,            1999          1998        1997
---------------------------------- -------------- ------------- --------------
(In thousands, except share data)       Restated      Restated       Restated

Net earnings - as reported               $36,717       $19,139        $23,746
Net earnings - pro forma                 $33,640      $ 15,849        $21,211
Earnings per share
 Basic - as reported                        1.16           .67           1.04
 Basic - pro forma                          1.07           .55            .93
 Diluted - as                               1.07           .63            .89
reported
 Diluted - pro forma                         .98           .52            .81


                                      F-19
<PAGE>



         The fair value of each option  grant is  estimated on the date of grant
 using  the  Black-   Scholes   option   pricing   model   with  the   following
 weighted-average assumptions for the following years ended December 31:

                                     1999             1998            1997
                           ------------------- ---------------- ---------------
                                     Restated         Restated        Restated
Company Options
  Risk free interest rates              4.96%            5.31%           5.71%
  Expected dividend yields               .53%             .16%            .26%
  Expected life of options               4.98             4.34            4.66
  Volatility of stock price            32.94%           28.85%          27.23%
  Weighted average fair
      value of options                  $6.91           $9.34         $ 10.16

Priority Options
  Risk free interest rates                               5.02%           5.90%
  Expected dividend yields                                .00%            .00%
  Expected life of options                               4.71            4.60
  Volatility of stock price                             55.94           54.79%
  Weighted average fair
      value of options                                  $9.65           $7.52



         Compensation  expense based on the fair value of options  granted prior
 to January 1, 1995 was not included in the  preceding  pro forma  calculations.
 Therefore,  the resulting pro forma compensation cost may not be representative
 of that to be expected in future years.

                                      F-20
<PAGE>



         Changes in stock  options  under the  Company's  plans are shown below,
 (all historical  shares and per share amounts have been restated to reflect the
 two aforementioned 4-for-3 stock splits):

                                                          Weighted
                                  Number                  average
                                  of Shares               option price
------------------------------------------------ -------- -----------------
                                       Restated                   Restated
Options outstanding
   at December 31, 1996               5,822,797                      $8.32

Forfeited during 1997                  (69,623)                      $9.89
Granted during 1997                   1,451,725                     $17.25
Exercised during 1997               (1,546,909)                      $7.25
                             -------------------

Options outstanding
   at December 31, 1997               5,657,990                     $10.88

Forfeited during 1998                 (195,497)                     $11.36
Granted during 1998                      36,375                     $19.10
Exercised during 1998               (1,927,873)                      $8.80
                             -------------------

Options outstanding
   at December 31, 1998               3,570,995                     $12.06

Effect of Spin-off of
    Priority Healthcare (1)           3,193,251
                             -------------------

Converted options outstanding
    at December 31, 1998              6,764,246                      $6.37
                             ===================

Forfeited during 1999                  (70,217)                     $14.51
Granted during 1999                   1,283,218                     $19.25
Exercised during 1999               (1,045,862)                      $5.52
Conversion of
    Central Pharmacy options            326,595                      $2.28
                             ==============================================

Options outstanding
    at December 31, 1999              7,257,980                      $8.51
                             ==============================================

Exercisable
   at December 31, 1999               4,868,072                      $5.82
                             ==============================================

Available for grant
   at December 31, 1999                 961,058
                             ===================

(1) As a result of the spin-off of  Priority,  in order to preserve the economic
value of the outstanding stock options, effective after the close of business on
December 31, 1998,  all such  outstanding  options  were  converted  pursuant to
anti-dilution  provisions  contained in the various stock option plans. As these
options were converted in accordance  with accounting  principles

                                      F-21
<PAGE>

issued by the Financial  Accounting Standards Board, no compensation expense was
recorded as a result of such conversion.

         In certain  cases,  the exercise of stock options  results in state and
federal  income tax  deductions  to the  Company on the  difference  between the
market  price at the date of exercise  and the option  price.  The tax  benefits
obtained from these  deductions of  $4,476,000,  $9,593,000  and  $3,305,000 are
included in additional paid in capital in 1999, 1998 and 1997, respectively.

         Additional  information  regarding the Company's options outstanding at
December 31, 1999 is shown below:
<TABLE>
<CAPTION>


                                                     Exercise Price Range
----------------------- ------------ --------------- ----------------- ------------------------------------

                               $.59   $2.93 - $5.68    $7.48 - $12.88   $16.75 - $23.95              Total
----------------------- ------------ --------------- ----------------- ----------------- ------------------
<S>                         <C>       <C>              <C>              <C>                      <C>
Number of options           192,329       3,666,198         2,157,335         1,242,118          7,257,980
 Outstanding

Weighted average
 exercise price                $.59           $4.80             $9.31            $19.26              $8.51

Weighted average
remaining
contractual life               6.03            5.63              8.01              9.10               6.94

Number of shares
 exercisable                192,329       3,369,938         1,296,474             9,331          4,868,072

Weighted average
 exercisable price             $.59           $4.75             $9.29            $20.36              $5.82

</TABLE>

         During 1998, the Company issued 350,000 (restated to 466,667 to reflect
the 1998 stock split)  restricted  stock grants to certain key executives with a
grant date fair value of $35.25 per share.  Pending the lapse of the  forfeiture
and  transfer  restrictions  established  by the  Compensation  and Stock Option
Committee, the grantee generally had all the rights of a shareholder,  including
the right to vote the  shares and the right to receive  all  dividends  thereon.
Upon issuance of the restricted stock grants,  unearned compensation  equivalent
to the market  value at the date of grant was recorded as  unamortized  value of
restricted  stock and was charged to earnings  over the period  during which the
restrictions  lapsed.  Compensation  expense related to these  restricted  stock
grants of $1.6  million  was  recorded  in the first  nine  months of 1998.  The
remaining  $11.1  million was recorded in the fourth  quarter of 1998 as part of
the unusual items when the lapse of the forfeiture and transfer  restrictions on
the  restricted  stock was  accelerated  by the  Compensation  and Stock  Option
Committee.

         Priority's   stock  option  plans.   Presented   below  is  information
concerning  Priority's  stock option plans for the years ended December 31, 1998
and 1997. The information  has not been updated to reflect events  subsequent to
December 31, 1998.

         On August 25, 1997,  Priority's  Board of  Directors  and the then sole
shareholder  (the Company)  adopted  Priority's  1997 Stock Option and Incentive
Plan (the "1997 Stock Option  Plan").  The 1997 Stock  Option Plan  reserved for
issuance  1,250,000  shares  of  Priority  Class  B  common  stock,  subject  to
adjustment in certain events.  The 1997 Stock Option Plan provided for the grant
of options to purchase  shares of Class B common stock and restricted  shares of
Class B common stock to officers,  key  employees and  consultants  of Priority.
Stock  options  granted  under the 1997 Stock  Option Plan were  either  options
intended to qualify for federal

                                      F-22
<PAGE>

income tax purposes as "incentive  stock  options" or options not qualifying for
favorable  tax  treatment   ("nonqualified   stock   options").   No  individual
participant  could receive  awards for more than 300,000  shares in any calendar
year.

         Also on August 25, 1997,  Priority's  Board of  Directors  and the then
 sole  shareholder  (the Company)  adopted  Priority's  Outside  Directors Stock
 Option Plan ("the Priority Directors Plan"). The number of shares of Priority's
 Class B common stock authorized for issuance pursuant to the Priority Directors
 Plan was 25,000. Each eligible director was granted an option to purchase 1,000
 shares  of  Priority's  Class B  common  stock on June 1 of  1998.  The  option
 exercise  price per share  was equal to the fair  market  value of one share of
 Class B common stock on the date of grant.  Each option became  exercisable six
 months  following the date of grant and will expire 10 years following the date
 of grant.

           On September  15,  1998,  Priority's  Board of Directors  adopted the
 Broad Based Stock Option Plan,  which  reserved for issuance  400,000 shares of
 Priority  Class B common stock.  The Broad Based Stock Option Plan provided for
 the grant of nonqualified  stock options to key employees who were not officers
 or directors of Priority or its affiliates. The number of shares which could be
 granted  under the Broad Based Plan during any  calendar  year could not exceed
 40,000 shares to any one person.

         Changes in stock options under all of Priority's plans through December
31, 1998 are shown below:

                                    Number               Option price
                                    of shares            per share
--------------------------------- ---------------- -------------------------

Options outstanding
   at December 31, 1996
Forfeited during 1997                 (13,800)      $  14.50 to $14.50
Granted during 1997                   473,050       $  14.50 to $15.00
Exercised during 1997
                                  ----------------

Options outstanding
   at December 31, 1997               459,250       $  14.50 to $15.00
                                  ================

Forfeited during 1998                 (29,120)      $  14.50 to $20.00
Granted during 1998                   601,953       $  12.24 to $20.00
Exercised during 1998
                                  ----------------

Options outstanding
   at December 31, 1998             1,032,083      $   12.24 to $20.00
                                  ================


NOTE 14 - COMMITMENTS

         The Company  leases  warehouse  and office  space  under  noncancelable
operating  leases  expiring at various dates through 2005, with options to renew
for various periods.

         On April 30, 1999, the Company sold its corporate office building to an
unrelated party for  approximately net book value and signed a 15 year lease for
the  top  two  floors  of the  building.  The  lease  meets  the  criteria  of a
capitalized lease and resulted in the recording of an asset and liability in the
amount of the present  value of minimum  lease  payments of $13.4  million.  The
asset is being amortized over the term of the lease.

                                      F-23
<PAGE>

         The  following  is a summary of the future  minimum  lease  commitments
under capitalized leases and under operating leases as of December 31, 1999:

Year ended December 31,                 Capitalized Leases  Operating  Leases
------------------------------------------------------------------------------
(in thousands)

2000                                               $ 1,221            $ 2,956
2001                                                 1,221              2,625
2002                                                 1,221              1,963
2003                                                 1,221              1,568
2004                                                 1,322                982
Later years                                         13,916                264
                                     -----------------------------------------
Total minimum lease payments                        20,122            $10,358
                                     ----------------------===================
Imputed interest                                     6,998
                                     ----------------------
Present value of minimum capitalized
  lease obligations                                $13,124
                                     ======================

         The  consolidated  rent expense for the years ended  December 31, 1999,
1998 and 1997 was $2,414,000, $2,272,000 and $2,107,000, respectively.

         Prior to the sale of the corporate  office  building on April 30, 1999,
the Company  received rental income of $313,000 from operating lease  agreements
for the bottom three floors of the building.

NOTE 15 -  MAJOR CUSTOMERS

           The BWI segment services  customers in 48 states and Puerto Rico from
its 18 distribution  centers located in 14 states.  The Nuclear Pharmacy segment
operates specialized pharmacies in 13 states. The principal customers of the BWI
segment  are chain drug  companies  that  operate  their own  warehouses.  Other
customers include independent drug stores,  chain drug stores,  supermarkets and
mass merchandisers with their own pharmacies,  hospitals,  clinics,  HMOs, state
and federal government  agencies and other health care providers.  The following
chain drug warehouse  customers each accounted for over 10% of the Company's net
sales during the years shown:  Eckerd  Corporation  (16%) and CVS (21%) in 1999;
Eckerd  Corporation  (18%)  and CVS  (17%)  in  1998;  and CVS  (22%),  Rite Aid
Corporation (18%) and Eckerd Corporation (16%) in 1997. Sales to these customers
aggregated 37%, 35% and 56% of net sales in 1999,  1998 and 1997,  respectively.
The Company sells  inventory to its chain drug warehouse and other  customers on
various payment terms. This entails accounts receivable exposure,  especially if
any of its chain warehouse customers encounter financial difficulties.  Although
the Company  monitors closely the  creditworthiness  of its major customers and,
when feasible, obtains security interests in the inventory sold, there can be no
assurance  that the Company  will not incur the  write-off or writedown of chain
drug accounts receivable in the future.

         During the second  quarter of 1998,  Rite Aid informed the Company that
Rite Aid signed a supply  agreement  with another  wholesaler  that began in May
1998. In 1997, Rite Aid comprised 18% of the Company's sales.  Sales to Rite Aid
were predominantly to their warehouses. The loss of this customer did not have a
material adverse impact on the Company's results of operations.

                                      F-24
<PAGE>

NOTE 16 - STATEMENT OF CASH FLOWS

         Cash paid for interest expense and income taxes on a restated basis was
as follows:

December 31,                   1999               1998              1997
(in thousands)
Interest                    $20,273           $ 19,632           $14,129
Income taxes                $19,142           $ 14,941           $16,935

         Presented  below is a brief  discussion of recent  acquisitions  by the
Company.  This discussion  does not include the acquisition of Central  Pharmacy
which is discussed in Note 1 and Note 3. The purchase price of the  acquisitions
discussed has been allocated based on a  determination  of the fair value of the
assets  acquired and  liabilities  assumed.  The goodwill  associated with these
acquisitions is being amortized on a straight line basis not exceeding 40 years.
All acquisitions were treated as purchases and the financial  statements include
the results of operations  from the respective  effective  date of  acquisition.
Results of  operations of the acquired  companies  from January 1 of the year of
acquisition to the effective dates of the  transactions  are not material to the
consolidated results of operations of the Company for the respective years.

         In January 1996, the Company formed a new subsidiary, National Infusion
Services, Inc. ("NIS").  Effective February 8, 1996, the Company through its NIS
subsidiary  purchased the assets of the infusion services division of Infectious
Disease of Indiana P.S.C.  NIS provided quality care to patients in a variety of
settings.  In February 1997, the corporate name was changed from NIS to Priority
Healthcare  Services  Corporation.  The Company  acquired  the assets of NIS for
approximately  $9  million  in cash  and  incurred  a  long-term  obligation  of
approximately   $1.5  million,   resulting  in  approximately  $9.8  million  in
intangible  assets.  As  discussed  in Note 7 and Note 10 above,  the  remaining
balance of the intangible  assets and the long-term  obligation were written off
as part of the unusual items caption in the fourth quarter of 1998.

         Effective July 31, 1997, the Company purchased substantially all of the
operating assets and assumed most of the liabilities and contractual obligations
of Tennessee Wholesale Drug Company ("TWD"). The Company expended  approximately
$27 million for the acquisition of TWD, which approximated the fair value of the
net assets acquired.  During 1998, the Company closed the TWD divisions  located
in Baltimore,  Maryland and Tampa, Florida. The customers of these divisions are
serviced from existing facilities. The Company recognized a liability related to
the closure of the  facilities of $413,000 as of December 31, 1997.  The Company
offered all employees an opportunity to interview for openings  elsewhere in the
Company and agreed to pay a lump sum  relocation  cost to those that  relocated.
Employees who did not relocate and worked up to the  designated  date of his/her
separation of employment  received a benefits and compensation  package based on
his or her tenure with the Company.  The plan also included operational and data
processing  costs  associated  with the closure.  Both facilities were closed in
1998 and the costs associated with those closures were paid and approximated the
liability established.

         Effective August 6, 1997,  Priority  acquired  substantially all of the
operating  assets and assumed  most of the  liabilities  of Grove Way  Pharmacy,
Inc.,  a specialty  distributor  of vaccines and  injectables  located in Castro
Valley,  California.  The amount expended approximated the fair value of the net
assets acquired.

                                      F-25
<PAGE>

NOTE 17 - LEGAL PROCEEDINGS

         In a  consolidated  class  action filed in the United  States  District
Court  for the  Northern  District  of  Illinois  in 1993,  the  Company,  other
pharmaceutical  wholesalers  and  pharmaceutical  manufacturers  were  named  as
defendants, In re Brand Name Prescription Drugs Litigation,  MDL 997. Plaintiffs
alleged  that  pharmaceutical  manufacturers  and  wholesalers  conspired to fix
prices  of  brand-name   prescription   drugs  sold  to  retail   pharmacies  at
artificially  high  levels in  violation  of the  federal  antitrust  laws.  The
plaintiffs sought injunctive relief, unspecified treble damages, costs, interest
and attorneys' fees. The Company denied the complaint allegations.

         Several of the  manufacturer  defendants and the class  plaintiffs have
reached settlement agreements. Under these agreements, the settling manufacturer
defendants  retain  certain  contingent  liabilities  under the October 21, 1994
agreement discussed below. The trial against the remaining defendants, including
the Company,  began on  September  14,  1998.  On November  30, 1998,  the Court
granted all  remaining  defendants'  motions for  judgments  as a matter of law,
dismissing  all In re Brand Name  Prescription  Drugs class  claims  against the
Company and other defendants.  The class plaintiffs  appealed the Court's ruling
and, on July 13, 1999, the appeals court  dismissed the  wholesalers,  including
the Company,  from the case.  On February 22, 2000,  the United  States  Supreme
Court denied the plaintiffs' petition for certiorari,  thus concluding the In re
Brand Name Prescription Drugs class action litigation.

         At this  time,  the  Company is a  defendant  in 115  additional  cases
brought by  plaintiffs  who "opted out" of the federal  class  action  described
above. One hundred eleven of these complaints contain allegations and claims for
relief that are substantially  similar to those in the federal class action. The
four remaining  complaints add allegations that the defendants' conduct violated
state law. The damages period in these cases begins in October 1993. The Company
has denied the allegations in all of these complaints.  Discovery in the opt out
cases is currently ongoing and no trial dates have yet been scheduled.

         On November 20, 1997, two additional  complaints  were filed in the MDL
997  proceeding by Eckerd  Corporation  and American Drug Stores naming  certain
pharmaceutical   manufacturers  and  wholesalers,   including  the  Company,  as
defendants.  These complaints contain allegations and claims for relief that are
substantially  similar to those in the  federal  class  action.  The Company has
denied the allegations in these complaints.  No trial date has been set in these
cases.

On July 1, 1996,  the Company and several other  wholesalers  were joined as the
defendants  in a seventh  amended and  restated  complaint  filed in the Circuit
Court of Greene County, Alabama, Durrett v. The Upjohn Company, Civil Action No.
94-029.  An order  dismissing the action and taxing costs against the plaintiffs
was entered by the Circuit Court on November 29, 1999.

         On June 16,  1998,  a suit was  filed in the  Circuit  Court  for Cocke
County,  Tennessee  purportedly on behalf of consumers of prescription  drugs in
the following states:  Tennessee,  Alabama,  Arizona,  Florida,  Kansas,  Maine,
Michigan,  Minnesota,  New Mexico,  North Carolina,  North Dakota, South Dakota,
West Virginia and Wisconsin.  Graves et al. v. Abbott Laboratories et al., Civil
Action No. 25,109-II.  The complaint charges that  pharmaceutical  manufacturers
and wholesalers,  including the Company, engaged in a price-fixing conspiracy in
violation of Tennessee's  Trade  Practices Act and Consumer  Protection Act, and
the unfair or  deceptive  trade  practices  statutes of the other  jurisdictions
named therein.  The Company has denied the  allegations of the complaint and all
proceedings  in this suit have been stayed  until  further  order of the Circuit
Court.

                                      F-26
<PAGE>

         On October 21, 1994,  the Company  entered  into an agreement  with the
other  wholesalers and  pharmaceutical  manufacturers  covering all of the cases
listed above.  Among other things, the agreement provides that for all judgments
that might be entered against both the manufacturer  and wholesaler  defendants,
the Company's  total  exposure for joint and several  liability is limited to $1
million and the wholesaler  defendants are indemnified for $9 million in related
legal fees and expenses.  As a result of the previously  noted  settlements,  we
have  periodically  received  reimbursement  of our legal fees and  expenses  in
excess of our  proportionate  share of the $9 million,  and we expect to receive
reimbursement of substantially all of such fees and expenses in the future.

         The  Company  is  unable  to  form  a  reasonably  reliable  conclusion
regarding the likelihood of a favorable or  unfavorable  outcome of these cases,
each of which is being defended vigorously. The Company believes the allegations
of liability are without merit with regard to the wholesaler defendants and that
the  attendant  liability  of the  Company,  if any,  would not have a  material
adverse  effect on the  Company's  financial  condition  or  liquidity.  Adverse
decisions, although not anticipated, could have a material adverse effect on the
Company's results of operations.

         On October 7, 1996, the Company and its subsidiary,  National  Infusion
Services (now known as Priority Healthcare Services Corporation) ("PHSC"),  were
named as defendants in an action filed by Thomas G. Slama,  M.D. in the Superior
Court of Hamilton County, Indiana. Dr. Slama is a former director of the Company
and formerly was Chief  Executive  Officer and President of PHSC.  The complaint
alleged  breach of contract and defamation  arising from the  termination of Dr.
Slama's  employment  with PHSC in October 1996.  On October 26, 1998,  Dr. Slama
filed a Second Amended  Complaint which added Priority and William E. Bindley as
defendants and stated additional  claims for breach of contract,  breach of oral
contract, breach of fiduciary duty, securities fraud and conversion. Pursuant to
an Indemnification  and Hold Harmless Agreement the Company indemnified and held
harmless  Priority  and its  subsidiaries  from and  against  any and all costs,
damages,  charges and expenses  (including  without  limitation  legal and other
professional  fees) which Priority  might incur or which may be charged  against
Priority  in any way based  upon,  connected  with or arising out of the lawsuit
filed by Dr. Slama.  The Company,  PHSC,  Priority and Mr. Bindley  answered the
complaint,   denied  the  merits  of  Dr.  Slama's  claims,  and  also  filed  a
counterclaim  against Dr. Slama which sought,  among other  things,  declaratory
relief,  compensatory and (in some instances) treble damages,  punitive damages,
attorneys'  fees,  interest  and costs.  On  December  31,  1998,  a  Settlement
Agreement  was executed by and among the parties  named above  pursuant to which
mutual  releases were  obtained,  and on January 4, 1999, a one-time  payment of
$875,000  was  made  by  the  Company  to Dr.  Slama.  The  corresponding  Joint
Stipulation of Dismissal was approved by the Court on January 11, 1999. This one
time payment,  and  approximately  $150,000 of legal costs, were included in the
unusual item charge recorded in the fourth quarter of 1998.

        The Company has been  advised  that it is a  potential  defendant  in an
ongoing grand jury investigation  being conducted by the U.S.  Attorney's Office
in Las Vegas, NV. The  investigation  concerns  transactions  between  wholesale
pharmaceutical  distributors  and  licensed  institutional  pharmacies  known as
closed-door pharmacies.  Closed-door or institutional pharmacies are entitled to
purchase pharmaceuticals at a discount from wholesale prices, but typically have
an agreement  with the  manufacturers  to service only their own long-term  care
patients.  Wholesalers seek chargeback  credits from the manufacturers for sales
to closed-door pharmacies.

                                      F-27
<PAGE>

         The  Company   understands  that  the   government's   inquiry  focuses
principally  on whether  pharmaceutical  manufacturers  have been  defrauded  by
institutional or closed-door pharmacies,  which allegedly resold discount-priced
pharmaceutical  drugs at a profit in violation of agreements with pharmaceutical
manufacturers  to purchase the product  solely for their own use. The government
is examining whether the Company, through any of its employees,  participated in
these  transactions  by  selling   discount-priced   pharmaceutical  drugs  with
knowledge  of the  pharmacies'  plans to resell the  product at a profit.  These
sales of excess  pharmaceutical  drugs were allegedly  made to alternate  source
vendors  that,  in turn,  sold the product in the  secondary  market to numerous
wholesale distributors and other customers.

         To date, the government's  investigation has been substantially focused
on sales that the Company made at the San Dimas,  California division of Bindley
Western Drug Company to certain  institutional  pharmacies located in California
and Nevada, principally between 1995 and 1997. The Company no longer employs the
two  managers  who were  primarily  involved in the  questioned  sales.  One was
terminated  by the  Company  approximately  two years ago for  violation  of the
Company's  ethics code, and the other  abruptly  resigned in October 1999 during
the  investigation  of this  matter.  The Company has  determined  that sales to
institutional  pharmacies  served by the San Dimas  division of Bindley  Western
Drug Company  represented  less than 1% of total Company sales during the period
in question.  The Company has further  determined  that no related  business has
been conducted with these accounts for an extended period.

         The Company  believes  that its two former  managers  have  admitted to
certain  wrongdoing in connection  with their  activities  while employed by the
Company.  The Company is cooperating  with the government and has undertaken its
own investigation. At this stage of the government's investigation,  the Company
does not believe it is possible to predict or determine the outcome,  resolution
or timing of the final  resolution  of this  matter.  The  Company is  currently
unable to estimate the range of any  potential  loss,  the amount of which could
have a material adverse effect on the Company's financial condition,  results of
operations and/or cash flows.

         We are also subject to ordinary and routine  lawsuits and  governmental
inspections,  investigations  and  proceedings  incidental to our business,  the
outcome  of which  should not have a material  adverse  effect on our  financial
condition, results of operations, or cash flows.

                                      F-28
<PAGE>


NOTE 18 - EARNINGS PER SHARE

The following is a  reconciliation  of the  numerators and  denominators  of the
basic and diluted earnings per share computations for 1999, 1998 and 1997.

                                            1999         1998           1997
                            --------------------- ------------ --------------
(in thousands, except per share data)
                                         Restated      Restated      Restated
Basic:
Net earnings                             $ 36,717      $ 19,139      $ 23,746
Basic shares
 Outstanding                           31,541,107    28,728,979    22,912,237

Per share amount                         $   1.16       $   .67      $   1.04

Diluted:
Net earnings                             $ 36,717      $ 19,139      $ 23,746
6 1/2% convertible
  debentures                                                            1,889
Diluted earnings                         $ 36,717      $ 19,139      $ 25,635
Weighted shares
 Outstanding                           31,541,107    28,728,979    22,912,237
Debentures                                                          4,193,297
Stock Options                           2,843,521     1,418,537     1,571,994
Restricted Stock                                        148,644
Diluted Shares                         34,384,628    30,296,160    28,677,528
Per share amount                         $   1.07       $   .63       $   .89

The earnings  per share for 1998 and 1997 have been  restated to give effect for
the 4-for-3 stock split on June 25, 1999 and the earnings per share for 1997 has
been restated to give effect for the 4-for-3 stock split on June 3, 1998.

See Note 13 regarding changes to outstanding options at the close of business on
December 31, 1998.

                                      F-29
<PAGE>


NOTE 19 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

         As  discussed  in  Note 3,  the  Company  has  restated  its  financial
statements  to apply  purchase  accounting to the Central  Pharmacy  acquisition
which was  originally  accounted  for as a pooling of  interests.  The following
table  presents the quarterly  financial  data for 1999 and 1998 as restated and
previously reported:

<TABLE>
<CAPTION>

                                            First                Second            Third              Fourth
                                          Quarter               Quarter          Quarter             Quarter
------------------------------ ------------------- --------------------- ---------------- -------------------
(in thousands, except per share data)

1999 Restated
<S>                                    <C>                   <C>             <C>                 <C>
   Net sales                           $1,974,957            $2,045,216      $ 2,138,410         $ 2,320,755
   Gross margin                            47,176                48,762           52,005              58,819
   Net earnings                             8,933                 8,970            8,945               9,869
   Earnings per share:
     Basic (1)                           $   0.30              $   0.29         $   0.28            $   0.29
     Diluted (1)                             0.27                  0.27             0.25                0.28

1999 as Previously Reported
   Net sales                           $1,985,165            $2,055,841      $ 2,145,845         $ 2,320,754
   Gross margin                            51,740                53,724           55,481              58,816
   Net earnings                             9,704                 9,810            8,528              10,251
   Earnings per share:
     Basic (1)                           $   0.29              $   0.29         $   0.25            $   0.30
     Diluted (1)                             0.27                  0.27             0.23                0.29

1998 Restated
   Net sales                           $1,961,771            $1,848,048      $ 1,813,210         $ 1,998,323
   Gross margin                            43,124                47,241           48,222              52,971
   Net earnings                             7,574                 8,172            7,908             (4,515)
   Earnings per share:
     Basic (1)                           $   0.27              $   0.28         $   0.27          $   (0.15)
     Diluted (1)                             0.25                  0.27             0.26              (0.15)

1998 as Previously Reported
   Net sales                           $1,969,157            $1,856,142      $ 1,821,594         $ 2,007,328
   Gross margin                            46,217                50,842           51,896              56,933
   Net earnings                             8,007                 9,069            8,763             (3,603)
   Earnings per share:
     Basic (1)                           $   0.26              $   0.29         $   0.28          $   (0.11)
     Diluted (1)                             0.24                  0.27             0.26              (0.11)
</TABLE>


(1) The earnings per share for first  quarter of 1998 have been restated to give
effect for the 4-for-3 stock split effected in the form of a dividend on June 3,
1998 to  shareholders of record on May 21, 1998. The earnings per share for 1998
and the first  quarter of 1999 have been restated to give effect for the 4-for-3
stock split effected in the form of a dividend on June 25, 1999 to  shareholders
of record on June 11, 1999.

                                      F-30
<PAGE>

NOTE 20 - SUBSEQUENT EVENTS

         On December 4, 2000, it was announced  that the Company agreed to merge
with  Cardinal  Health,  Inc.  The terms of the  definitive  agreement  call for
Bindley  Western  shareholders  to receive a fixed  exchange of 0.4275  Cardinal
Health,  Inc. common shares for each outstanding  share of Bindley Western.  The
transaction  will  include  the  assumption  of  Bindley  Western's  debt and is
intended to be accounted for as a pooling of interests  for financial  reporting
purposes and to be tax-free to the holders of Bindley Western common shares.  In
connection  with the  transaction,  the Company has issued to Cardinal  Health a
stock option  exercisable  under certain  circumstances  for newly issued shares
equal to 19.9 percent of Bindley Western's currently outstanding common shares.

         With  respect to the grand  jury  investigation  conducted  by the U.S.
Attorney's  Office in Las Vegas,  NV,  discussed in Note 17, on August 29, 2000,
the Company agreed to accept vicarious liability for the acts of two former vice
presidents  of Bindley  Western Drug  Company,  a division of the Company.  Both
former employees have entered into plea agreements with the government regarding
their  conduct,  which  occurred  between  1995 and 1997.  Under the doctrine of
vicarious liability,  an employer may be held liable for the criminal conduct of
its officers even when that conduct is  detrimental to the employer and contrary
to its internal  policies and procedures.  The government has agreed that all of
the alleged  criminal  conduct was  attributable  to these two former  employees
located  in the  San  Dimas,  CA  division  and  that  the  employees'  improper
activities  occurred  without the  knowledge  of  corporate  officers in Bindley
Western's  Indianapolis  headquarters.  One of these employees was terminated in
January 1998 and the other resigned in October 1999.

         The  settlement  required  the Company to plead guilty to one charge of
conspiracy to commit  interstate  transportation  of property obtained by fraud,
and to pay a fine of $20 million.  The  agreement  imposes no probation  and the
government  agreed that no further  criminal charges will be brought against the
Company,  including its  subsidiaries  or  affiliates,  or any current or former
director,  officer,  or employee arising out of any matters  associated with the
government's investigation. The agreement specifies that the alleged conduct did
not involve harm to public health or safety;  that there were no  allegations of
fraud against the United  States or federal or state  healthcare  systems;  and,
that the offense  occurred  despite the Company's  effective  program to prevent
violations of the law. The government also confirmed that the Company  committed
no violations of the Prescription  Drug Marketing Act, a federal law applying to
sales and purchases of pharmaceutical products. The $20 million fine was paid on
August 29, 2000.

          In conformance  with generally  accepted  accounting  principles,  the
Company recorded the amount of the tentative  settlement plus the estimated fees
and expenses associated with its internal  investigation and recorded an unusual
charge of $26.3  million  ($25.8  million  net of tax) for the  March  31,  2000
quarter.  As a result of this fine  being  less  than the  tentative  settlement
recorded in the first quarter of 2000, a $5 million unusual benefit was recorded
in the third quarter of 2000.


         On December 13, 2000,  the Company  increased our unsecured  short-term
bank line of credit to $269 million.  The line is available,  as necessary,  for
general corporate purposes at rates based upon prevailing money market rates. No
compensating balance is required on the line. Certain conditions relating to the
maintenance  of net worth,  total debt and  interest  coverage  ratios have been
imposed by the lenders.


                                      F-31
<PAGE>





                           Signatures

              Pursuant  to  the  requirements  of  Section  13 or  15(d)  of the
Securities  Exchange Act of 1934,  the  Registrant  has duly caused this amended
report to be signed on its behalf by the undersigned, thereunto duly authorized.

December 21, 2000                     BINDLEY WESTERN INDUSTRIES, INC.

                                      By /s/ William E. Bindley
                                        ---------------------------
                                             William E. Bindley
                                             Chairman, President
                                         and Chief Executive Officer

              Pursuant to the  requirements  of the  Securities  Exchange Act of
1934, this amended report has been signed by the following  persons on behalf of
the Registrant and in the capacities and on the dates indicated.

<PAGE>

                       INDEX TO EXHIBITS (12/31/99 10-K)


<TABLE>
<CAPTION>


<S>         <C>  <C>                                                                        <C>
                                                                                            Page No.
 Exhibit                                                                                      This
   No.                                      Description                                      Filing
- ----------       ---------------------------------------------------------------          ---------

  3-A       1    (i)Amended and Restated Articles of Incorporation of
                 Registrant....................................................

            2    (ii)Amendment to Restated Articles of Incorporation
                 increasing number of authorized shares........................

            3    (iii)Amendment to Restated Articles of Incorporation
                 establishing terms of Class A Preferred Stock.................

            17   (iv)Amendment to Restated Articles of Incorporation
                 increasing number of authorized shares........................

            15   (v)Amendment to Restated Articles of Incorporation increasing
                 number of authorized shares...................................

  3-B       18   Restated By-Laws of Registrant, as amended to date............

  4-A       16   (i)Third Amended and Restated Credit Agreement, dated as of
                 December 28, 1998, by and among Registrant, NationsBank,
                 N.A., The Bank of Tokyo-Mitsubishi, Ltd., KeyBank National
                 Association, Suntrust Bank, Central Florida, N.A., National
                 City Bank of Indiana, Fifth Third Bank, Indiana, (f/k/a The
                 Fifth Third Bank of Central Indiana), The Northern Trust
                 Company, NBD Bank, N.A., and Bank One, Indiana, NA, as Agent..

                 (ii)First Amendment to Third Amended and Restated Credit
                 Agreement, dated as of December 16, 1999, by and among
                 Registrant, Bank One, Indiana, NA, KeyBank National
                 Association, Suntrust Bank, Central Florida, N.A., National
                 City Bank of Indiana, Fifth Third Bank, Indiana, The Northern
                 Trust Company, The Huntington National Bank and Comerica
                 Bank..........................................................

  4-B       16   (i)Receivables Purchase Agreement, dated as of December 28,
                 1998, among Bindley Western Funding Corporation, Falcon Asset
                 Securitization Corporation, NBD Bank, N.A., KeyBank National
                 Association, Comerica Bank, NationsBank, N.A., Fifth Third
                 Bank, Indiana, National City Bank of Indiana, and The First
                 National Bank of Chicago, as Agent............................

</TABLE>

                                       E-1


<PAGE>



<TABLE>
<CAPTION>



<S>         <C>  <C>                                                                        <C>
                                                                                            Page No.
 Exhibit                                                                                      This
   No.                                      Description                                      Filing
- ----------       ---------------------------------------------------------------          ---------

                 (ii)Amendment No. 1 to Receivables Purchase Agreement, dated
                 as of December 15, 1999, among Bindley Western Funding
                 Corporation, Falcon Asset Securitization Corporation, and Bank
                 One, NA..................................................................

  4-C            Note Purchase Agreement, dated as of December 15, 1999,
                 between Registrant and Nationwide Life Insurance Company,
                 relating to 7.93% Senior Notes due December 27, 2004 of
                 Registrant...............................................................

                 Registrant  agrees to furnish to the  Securities  and  Exchange
                 Commission,  upon  request,  a copy  of  each  instrument  with
                 respect to other issues of  Registrant's  long-term  debt,  the
                 authorized   principal   amount   of  which   exceeds   10%  of
                 Registrant's     total     assets     on     a     consolidated
                 basis.....................................

  10-A*     6    (iii)Employee Benefit Trust Agreement of Registrant dated
                 November 30, 1990........................................................

            5    (v)Split Dollar Insurance Agreement dated December 11, 1992
                 between Registrant and William F. Bindley, II and K. Clay
                 Smith as trustees of the William E. Bindley Irrevocable Trust............

            5    (vi)The William E. Bindley Trust Agreement dated December 11,
                 1992 between William E. Bindley, grantor, and William F. Bindley,
                 II and K. Clay Smith, trustees...........................................

  10-B*     7    (i)Nonqualified Stock Option Plan of Registrant..........................

           10    (ii)Amendment to the Nonqualified Stock Option Plan of Registrant........

  10-C*    7     (i)Incentive Stock Option Plan of Registrant.............................

           10    (ii)Amendment to the Incentive Stock Option Plan of Registrant...........

  10-D*    8     (i)1987 Stock Option and Incentive Plan of Registrant....................

           9   (ii)Amendment to 1987 Stock Option and Incentive Plan......................

</TABLE>

                                       E-2


<PAGE>


<TABLE>
<CAPTION>




<S>         <C>  <C>                                                                        <C>
                                                                                            Page No.
 Exhibit                                                                                      This
   No.                                      Description                                      Filing
- ----------       ---------------------------------------------------------------            ---------

             9   (iii)Outside Directors Stock Option Plan of Registrant............

             10  (iv)Amendment to the 1987 Stock Option and Incentive Plan of
                 Registrant........................................................

             24  (v)First Amendment to Outside Directors Stock Option Plan of
                 Registrant........................................................

  10-E*      5   (i)1993 Stock Option and Incentive Plan of Registrant.............

             10  (ii) First Amendment to the 1993 Stock Option and Incentive Plan
                 of Registrant.....................................................

             14  (iii) Second Amendment to the 1993 Stock Option and Incentive
                 Plan of Registrant................................................

             20  (iv)Third Amendment to the 1993 Stock Option and Incentive Plan
                 of Registrant.....................................................

             21  (v)Fourth Amendment to the 1993 Stock Option and Incentive Plan
                 of Registrant.....................................................

  10-H           4 Distribution Agreement, dated as of October 23, 1998, between
                 Registrant and Priority Healthcare Corporation.

  10-I       23  Revolving Credit Promissory Note between Registrant (Maker) and
                 Priority Healthcare Corporation (Holder)..........................

  10-J*      13  Form of Termination Benefits Agreement, dated April 1, 1996,
                 between Registrant and each of William E. Bindley, Keith W.
                 Burks, Michael D. McCormick, and Thomas J. Salentine..............

  10-K           Agreement of Purchase and Sale and Joint Escrow Instructions
                 ("Purchase Agreement"), dated March 30, 1999, between College
                 Park Plaza Associates, Inc. and College Park Plaza, Inc.,
                 relating to the sale of Registrant's headquarters building
                 located at 8909 Purdue Road, Indianapolis, Indiana; First
                 Amendment to Purchase Agreement, dated April 12, 1999, Second
                 Amendment to Purchase Agreement, dated April 22, 1999, and Third
                 Amendment to Purchase Agreement, dated April 30, 1999.............

</TABLE>

                                       E-3


<PAGE>

<TABLE>
<CAPTION>





<S>         <C>  <C>                                                                        <C>
                                                                                            Page No.
 Exhibit                                                                                      This
   No.                                      Description                                      Filing
- ----------       ---------------------------------------------------------------            ---------

  10-L           Lease Agreement, dated April 30, 1999, between Registrant and
                 College Park Plaza, LLC, relating to the lease of Registrant's
                 headquarters located at 8909 Purdue Road, Indianapolis,
                 Indiana...........................................................

  10-Y      12   Collective Bargaining Agreement dated October 21, 1994 between
                 J.E. Goold & Co. and Truck Drivers, Warehousemen and Helpers
                 Union Local No. 340...............................................

  10-Z*     10   (i)401(k) Profit Sharing Plan (Nonstandardized) Adoption
                 Agreement of Registrant, effective January 1, 1994................

            11   (ii)Amendment to page 4 of the 401(k) Profit Sharing Plan
                 (Nonstandardized) Adoption Agreement of Registrant, effective
                 January 1, 1994...................................................

            12   (iii)401(k) Profit Sharing Plan (Nonstandardized) Adoption
                 Agreement of Registrant, effective January 1, 1996................

            12   (iv)Amendment to page 6 of the 401(k) Profit Sharing Plan
                 (Nonstandardized) Adoption Agreement of Registrant, effective
                 January 1, 1996...................................................

            19   (v)Amendment to Item B.3 of the 401(k) Profit Sharing Plan
                 (Nonstandardized) Adoption Agreement of Registrant, effective
                 October 1, 1997...................................................

            19   (vi)401(k) Profit Sharing Plan (Nonstandardized) Participation
                 Agreement of Registrant, effective July 31,1997...................

            19   (vii)401(k)  Profit Sharing Plan (Nonstandardized) Participation
                 Agreement of Registrant, effective August 8, 1997.................


            22   (viii)Profit Sharing Plan of Bindley Western Industries, Inc. &
                 Subsidiaries (PRISM(R) Prototype Retirement Plan and Trust).......


            25   (ix)Spin-off Amendment to the Profit Sharing Plan of Registrant
                 effective December 11, 1998.......................................
</TABLE>


                                       E-4


<PAGE>

<TABLE>
<CAPTION>





<S>         <C>  <C>                                                                        <C>
                                                                                               Page No.
Exhibit                                                                                          This
No.                                              Description                                    Filing
- ----------         --------------------------------------------------------------------       ----------

             /25/  (x)Second Amendment to the Profit Sharing Plan of Registrant
                   effective December 31, 1999.........................................

             /25/  (xi)Third Amendment to the Profit Sharing Plan of Registrant
                   effective January 1, 2000...........................................

  10-AA*     /11/  (i)Form of Profit Sharing Excess Plan and related Trust between
                   Registrant and each of William E. Bindley, Keith W. Burks,
                   Michael D. McCormick, and Thomas J. Salentine.......................

             /11/  (ii)Form of 401(k) Excess Plan and Related Trust between Registrant
                   and each of William E. Bindley, Keith W. Burks, Michael D.
                   McCormick, and Thomas J. Salentine..................................

             /12/  (iii)First Amendment to 401(k) Excess Plan..........................

             /19/  (iv)Form of Profit Sharing Excess Plan, restated as of January
                   1,1996, between Registrant and each of William E. Bindley, Keith W.
                   Burks, Michael D. McCormick, Robert L. Myers, and Thomas J.
                   Salentine...........................................................

             /19/  (v)Form of 401(k) Excess Plan, restated as of January 1, 1996,
                   between Registrant and each of William E. Bindley, Keith W. Burks,
                   Michael D. McCormick, Robert L. Myers, and Thomas J. Salentine......

  10-BB*     /16/  (i) 1998 Non-Qualified Stock Option Plan of Registrant, as
                   amended.............................................................

             /26/  (ii) Amendment to 1998 Non-Qualified Stock Option Plan of
                   Registrant..........................................................

  10-CC*     /25/  Central Pharmacy Services, Inc. 1993 Stock Option Plan, as
                   amended.............................................................

    21             List of subsidiaries of Registrant..................................

    23             Written Consent of PricewaterhouseCoopers LLP.......................

    27             Financial Data Schedule.............................................
</TABLE>

- -----------------------
*The  indicated  exhibit  is  a  management  contract,   compensatory  plan,  or
arrangement required to be filed by Item 601 of Regulation S-K.


                                       E-5


<PAGE>




/1/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Quarterly  Report on Form 10-Q for the quarter ended June 30,
     1987 is incorporated herein by reference.

/2/  The copy of this exhibit filed as Exhibit 4(a)(ii) to the Registrant's
     Registration Statement on Form S-3 (Registration No. 33-45965) is
     incorporated herein by reference.

/3/  The copy of this exhibit filed as Exhibit 1 to the  Registrant's  Quarterly
     Report on Form 10-Q for the  quarter  ended June 30,  1992 is  incorporated
     herein by reference.

/4/  The copy of this exhibit  filed as Exhibit 10 to the  Registrant's  Current
     Report on Form 8-K,  as filed with the  Commission  on January 4, 1999,  is
     incorporated herein by reference.

/5/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1992 is incorporated herein by reference.

/6/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1990 is incorporated herein by reference.

/7/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Registration Statement on Form S-1 (Registration No. 2-84862)
     is incorporated herein by reference.

/8/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1986 is incorporated herein by reference.

/9/  The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1991 is incorporated herein by reference.

/10/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1993 is incorporated herein by reference.

/11/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1994 is incorporated herein by reference.

/12/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1995 is incorporated herein by reference.

/13/ The  copy of this  exhibit  filed  as  Exhibit  10-CC  to the  Registrant's
     Quarterly  Report  on Form 10-Q for the  quarter  ended  March 31,  1996 is
     incorporated herein by reference.

                                       E-6


<PAGE>




/14/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1996 is incorporated herein by reference.

/15/ The copy of this  exhibit  filed as Exhibit 4 to the  Registrant's  Current
     Report on Form 8-K, as filed with the  Commission  on August 23,  1999,  is
     incorporated herein by reference.

/16/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1998 is incorporated herein by reference.

/17/ The copy of this  exhibit  filed as  Exhibit  4.1 (iv) to the  Registrant's
     Registration   Statement  on  Form  S-8  (Registration  No.  333-57975)  is
     incorporated herein by reference.

/18/ The copy of this exhibit filed as Exhibit 4.2 to the Registrant's
     Registration Statement on Form S-8 (Registration No. 333-57975) is
     incorporated herein by reference.

/19/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Annual  Report on Form 10-K for the year ended  December  31,
     1997 is incorporated herein by reference.

/20/ The copy of this  exhibit  filed as  Exhibit  4.3 (iv) to the  Registrant's
     Registration   Statement  on  Form  S-8  (Registration  No.  333-60279)  is
     incorporated herein by reference.

/21/ The copy of this exhibit filed as Exhibit 4.3 (v) to the Registrant's
     Registration Statement on Form S-8 (Registration No. 333-60279) is
     incorporated herein by reference.

/22/ The copy of this exhibit filed as Exhibit 4.3 to the Registrant's
     Registration Statement on Form S-8 (Registration No. 333-57975) is
     incorporated herein by reference.

/23/ The copy of this  exhibit  filed as Exhibit  10-G (ii) to the  Registrant's
     Quarterly  Report  on Form  10-Q for the  quarter  ended  June 30,  1998 is
     incorporated herein by reference.

/24/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Quarterly  Report on Form 10-Q for the quarter ended June 30,
     1999 is incorporated herein by reference.

/25/ The  copy  of  this  exhibit  filed  as  the  same  exhibit  number  to the
     Registrant's  Quarterly Report on Form 10-Q for the quarter ended September
     30, 1999 is incorporated herein by reference.

/26/ The copy of this exhibit filed as Exhibit 4.3(ii) to the Registrant's
     Registration Statement on Form S-8 (Registration No. 333-85379) is
     incorporated herein by reference.

                                       E-7

<PAGE>


We  hereby  consent  to the  incorporation  by  reference  in  the  Registration
Statement  on  Form  S-8  (No's.  333-39038,  333-91153,  333-75577,  333-85379,
333-60279,  333-04517,  33-64828, 33-58947, 333-57975, 33-15471 and 33-37781) of
Bindley Western  Industries,  Inc. of our report dated March 21, 2000, except as
to Note 5, which is as of December 13, 2000, and Notes 3 and 20, which are as of
December 15, 2000, relating to the financial  statements,  which appears in this
Amendment No. 1 to Form 10-K.




PricewaterhouseCoopers LLP

Indianapolis, Indiana
December 21, 2000