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Executive Summary

Ketchum's continued investment in electronic order entry and computerization programs is helping the firm maintain strong volume increases, the whslr.'s Chairman Harold Altschul told the company's annual meeting Sept. 12. At the meeting the firm reported a 15% increase in sales, to $66.7 mil., for the first quarter ended July 31. The investment program, however, has continued to reduce the whslr.'s profitability. Net income for the quarter from operations was off 66.2% to $73,000. The firm also realized a tax benefit of $67,000. Earnings in the period declined "primarily because of the continuation of our previously announced, on-going non-capitalized investment spending program, the results to date of which have not only produced record first quarter sales, but permitted our distribution subsidiary to maintain equal first quarter profits, before such investment spending, despite marketwide price cutting competition, as compared with the yar-ago," Altschul said. Discussing the firm's investment program, Altschul noted that 90% of the whslr.'s customers were using Ketchum's electronic order entry system v. 40% in the first quarter of the previous year. The increased use of order entry has permitted the firm to "reduce telephone order entry costs and increase rapid quality service to customers, he said. In addition, "Ketchum continued to spend on upgrading computerization and modernization of facilities," he reported. The whslr.'s chairman also commented that the company's Bio-Products unit, which markets Q-Vel, "is showing good progress and continues to expand its sales base." Ketchum is "testing other products in the same distribution channels and monitoring their progress," he said. S-P Drug attributed a 24% increase in net income to $1.1 mil. for the first quarter ended July 31, to expanded use by customers of electronic order entry and "continued favorable trends in the health care distribution industry." Volume for the quarter was up 18% to $38.0 mil. Chart omitted.

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