News Release

 

Back
 

Amerisource Reports Consolidated Fourth Quarter and Fiscal 1999 Financial Results

11/03/99

Fourth Quarter Earnings and Sales at Record Levels

MALVERN, Pa.--(BUSINESS WIRE)--Nov. 3, 1999--AmeriSource Health Corporation (NYSE - AAS - news) today reported record earnings for its fiscal 1999 fourth quarter and year ended September 30, 1999, before the impact of special charges and extraordinary items described below.

All results for fiscal 1999 and 1998 discussed below have been restated to reflect the pooling-of-interests accounting treatment applied with respect to the July 1999 C. D. Smith Healthcare merger and the March 1999 two-for-one stock split. All comparisons exclude special charges and extraordinary items in both 1999 and 1998, unless otherwise indicated.

For the quarter, income increased to a record $23.0 million, up 28% from $18.0 million for the same period last year. Diluted earnings per share set another record, up 29% to $.45 when compared to $.35 for the fourth quarter of fiscal 1998. On a pre-merger basis, the fourth quarter of fiscal 1999 was $.45, an increase of 13% over the $.40 for the fourth quarter of fiscal 1998.

For the year, income increased to $82.9 million, up 33% from the previous year. Diluted earnings per share set another record at $1.61, up 31% from $1.23 in fiscal 1998.

R. David Yost, AmeriSource President and CEO said, ``This was another outstanding year for AmeriSource. For the year, we grew our revenue over $1.1 billion excluding three large account losses and C.D. Smith, while maintaining a high return on committed capital. Earnings for the year were strong. In addition, we completed one of the best acquisitions in the Company's history. We made solid investments during the year in technology and infrastructure and significantly expanded our management talent base, all of which positions us very well for the future.''

Operating revenue for the fourth quarter of fiscal 1999 increased 15% to $2.57 billion from the $2.23 billion for the same quarter of the previous year. For the fiscal year ended September 30, 1999, operating revenue increased by 4% to $9.76 billion from $9.37 billion in fiscal 1998. Revenue growth for fiscal 1999 was adversely affected by the previously discussed termination of contracts with three large customers in fiscal 1998.

Without these customer losses, operating revenue increased 12% for the fiscal year ended September 30, 1999. C. D. Smith contributed approximately $200 million to sales in the fourth fiscal quarter and $800 million for the fiscal year. Traditional AmeriSource, excluding C.D. Smith, grew 16% in the quarter.

The combined customer mix for the year consists of 48% institutions/hospitals, 39% independent pharmacies, and 13% retail chains.

As a result of the C. D. Smith merger, the Company recorded special charges of $14.9 million (pre-tax) for merger and restructuring costs in the fourth fiscal quarter. Also during the quarter, the Company recorded an extraordinary charge of $3.4 million (after-tax) for costs associated with the extinguishment of debt.

These two charges represent approximately $.30 per share on a diluted after-tax basis.

For the fourth quarter and full year of fiscal 1999, the Company's gross margin, as a percentage of operating revenue, decreased modestly to 4.90% and 4.85%, respectively. The comparable 1998 margins were 5.07% for the quarter and 4.93% for the full year.

AmeriSource recognized a LIFO credit in the fourth quarter of $1.0 million versus a credit of $7.8 million in the same quarter of fiscal 1998. For the fiscal year ended September 30, 1999, the Company had a LIFO charge of $2.8 million versus a $4.6 million credit reported in the prior year.

Continued focus on cost reduction and productivity improvements contributed to reduced total operating expenses as a percentage of operating revenue to 3.10% in the fourth quarter of fiscal 1999 from 3.14% in the fourth quarter of fiscal 1998. For the full year, cost controls and productivity improvements established new lows of operating expense for the Company.

Total operating expense as a percentage of operating revenue was reduced by 9 basis points to 3.07% in fiscal 1999 versus 3.16% in fiscal 1998. Operating expenses reflect the merger of C.D. Smith, which had a higher ratio of expense to operating revenue than AmeriSource.

On October 12, 1999, AmeriSource was advised by one of its retail chain customers, Jitney Jungle Stores of America, Inc., that it had announced reorganization under Chapter 11 of the U.S. Bankruptcy Code. AmeriSource recorded an additional bad debt expense of $2.2 million in the fourth quarter relating to the outstanding receivables of this customer.

The Company's operating margin, as a percent of operating revenue for the fiscal year ended September 30, 1999, remained relatively stable at 1.78% vs. 1.77% for the prior year and was 1.80% for the fourth fiscal quarter, down from 1.93% in the prior year fourth quarter.

Interest expense declined by 22% to $9.5 million in the fourth quarter of fiscal 1999 primarily due to lower average borrowing costs and the elimination of expense associated with the put warrants at C. D. Smith. These factors were partially offset by a higher average level of debt.

For the year, interest expense declined by 32% to $39.7 million from $58.2 million in fiscal 1998. $7.5 million of the decline was explained by the reduction of the expense related to the C. D. Smith put warrants.

For the full year, on a pre-merger basis, AmeriSource's return on committed capital improved to 24.6% from the previous year's 24.2%, with both years well above the stated target of 20%.

R. David Yost also said, ``We continue to see strong opportunities in the distribution business, supported by several trends that are currently driving the rapid growth of the pharmaceutical market. An aging population is now utilizing more pharmaceuticals, the FDA has accelerated the rate at which new drugs are approved for market, and, pharmaceutical therapy is recognized as extremely cost efficient. Combined, these factors are driving higher drug utilization in all avenues of health care. AmeriSource, with its national distribution network, value added programs, high service levels, and its ability to capture the growing economies of scale, is poised to benefit from these trends that should continue to fuel our growth.''

AmeriSource Health Corporation is a Fortune 200 company with revenue of $9.8 billion for fiscal year 1999. The Company is one of the nation's leading wholesale pharmaceutical distributors and serves the healthcare industry from a nationwide network of 25 strategically located distribution centers. News and additional information about the company are available at www.amerisource.com.

Certain information contained in this press release includes forward-looking statements (as defined in Section 27A of the Securities Act and Section 21E of the Exchange Act) that reflect the Company's current views with respect to future events and financial performance.

Certain factors such as competitive pressures, success of restructuring initiatives, continued industry consolidation, changes in customer mix, changes in pharmaceutical manufacturers' pricing and distribution policy, the loss of one or more key customer or supplier relationships and other matters contained in the Company's Form 10-K for fiscal year 1998 and other public documents could cause actual results to differ materially from those in the forward-looking statements.

The Company assumes no obligation to update the matters discussed in this press release.

-0-

                    AMERISOURCE HEALTH CORPORATION
                           FINANCIAL SUMMARY
                 (In thousands, except per share data)

                 Fiscal                   Fiscal
               Year Ended     % of      Year Ended     % of
              September 30  Operating  September 30  Operating    %
                  1999       Revenue      1998 (a)    Revenue   Change
              ------------  ---------  ------------  ---------  ------

Revenue:
Operating
 revenue        $9,760,083   100.00%     $9,373,482   100.00%      4%
Bulk
 deliveries
 to customer
 warehouses         47,280                  129,555
               -----------             ------------
Total revenue    9,807,363                9,503,037

Cost of goods
 sold:
Operating cost
 of goods sold   9,287,018    95.15%      8,911,585    95.07%      4%
Cost of goods
 sold - bulk
 deliveries         47,280                  129,555
               -----------             ------------
Total cost of
 goods sold      9,334,298                9,041,140
               -----------             ------------
Gross profit       473,065     4.85%        461,897     4.93%      2%

Operating
 expenses:
Selling and
 administrative    281,798     2.89%        279,392     2.98%      1%
Depreciation
 and
 amortization       17,373     0.18%         16,885     0.18%      3%
Facility
 consolidations
 and employee
 severance          11,730     0.12%          8,283     0.09%     42%
Merger costs         3,162     0.03%         18,406     0.20%    -83%
               -----------             ------------
Operating
 income            159,002     1.63%        138,931     1.48%     14%

Interest
 expense            39,356     0.40%         50,363     0.54%    -22%
Interest
 expense -
 adjustment of
 common stock
 put warrants
 to fair value         334     0.00%          7,816     0.08%    -96%
               -----------             ------------
Income before
 taxes and
 extraordinary
 items             119,312     1.22%         80,752     0.86%     48%

Taxes on
 income             48,397     0.50%         34,722     0.37%     39%
               -----------             ------------
Income before
 extraordinary
 items              70,915     0.73%         46,030     0.49%     54%

Extraordinary
 charge - early
 retirement of
 debt, net of
 income tax
 benefit             3,449                        -
               -----------             ------------
Net income         $67,466     0.69%        $46,030     0.49%     47%
               ===========             ============

Earnings per
 share (a):
Income before
 extraordinary
 item                $1.40                    $0.92
Extraordinary
 charge              (0.07)                       -
               -----------             ------------
Net income           $1.33                    $0.92
               ===========             ============

Earnings per
 share -
 assuming
 dilution (a):
Income before
 extraordinary
 item                $1.38                    $0.91
Extraordinary
 charge              (0.07)                       -
               -----------             ------------
Net income           $1.31                    $0.91
               ===========             ============

Weighted average
 common shares
 outstanding (a):
Basic               50,698                   49,877
Assuming
 dilution           51,683                   50,713

======================================================================
     Pro forma results excluding $14,892 and $26,689 of merger costs
and costs related to facility consolidations and employee severance
included in the years ended September 30, 1999 and 1998, respectively:

Operating income                         $173,894             $165,620
Income before extraordinary item          $82,922              $62,310
Net income                                $79,473              $62,310

Earnings per share (a):
    Income before extraordinary item        $1.64                $1.25
    Net income                              $1.57                $1.25

Earnings per share - assuming dilution (a):
    Income before extraordinary item        $1.61                $1.23
    Net income                              $1.54                $1.23

(a) Prior year restated for March 1999 two-for-one stock split and
    July 1999 C. D. Smith merger accounted for as a pooling of
    interests.

                    AMERISOURCE HEALTH CORPORATION
                           FINANCIAL SUMMARY
                 (In thousands, except per share data)

                 Three                    Three
              Months Ended    % of     Months Ended    % of
              September 30  Operating  September 30  Operating    %
                  1999       Revenue      1998 (a)    Revenue   Change
              ------------  ---------  ------------  ---------  ------

Revenue:
Operating
 revenue        $2,568,766   100.00%     $2,228,379   100.00%     15%
Bulk
 deliveries to
 customer
 warehouses         10,154                   22,767
               -----------             ------------
Total revenue    2,578,920                2,251,146

Cost of goods
 sold:
Operating cost
 of goods sold   2,442,838    95.10%      2,115,354    94.93%     15%
Cost of goods
 sold - bulk
 deliveries         10,154                   22,767
               -----------             ------------
Total cost of
 goods sold      2,452,992                2,138,121
               -----------             ------------
Gross profit       125,928     4.90%        113,025     5.07%     11%

Operating
 expenses:
Selling and
 administrative     75,057     2.92%         65,717     2.95%     14%
Depreciation
 and
 amortization        4,588     0.18%          4,291     0.19%      7%
Facility
 consolidations
 and employees
 severance          11,730     0.46%          8,283     0.37%     42%
Merger costs         3,162     0.12%         18,406     0.83%    -83%
               -----------             ------------
Operating
 income             31,391     1.22%         16,328     0.73%     92%

Interest
 expense             9,472     0.37%          9,936     0.45%     -5%
Interest
 expense -
 adjustment of
 common stock
 put warrants
 to fair value           -                    2,138     0.10%   -100%
               -----------             ------------
Income before
 taxes and
 extraordinary
 items              21,919     0.85%          4,254     0.19%    415%

Taxes on
 income             10,878     0.42%          2,527     0.11%    330%
               -----------             ------------
Income before
 extraordinary
 items              11,041     0.43%          1,727     0.08%    539%

Extraordinary
 charge - early
 retirement of
 debt, net of
 income tax
 benefit             3,449                        -
               -----------             ------------
Net income          $7,592     0.30%         $1,727     0.08%    340%
               ===========             ============

Earnings per
 share (a):
Income before
 extraordinary
 item                $0.22                    $0.03
Extraordinary
 charge              (0.07)                       -
               -----------             ------------
Net income           $0.15                    $0.03
               ===========             ============

Earnings per
 share -
 assuming
 dilution (a):
Income before
 extraordinary
 item                $0.21                    $0.03
Extraordinary
 charge              (0.07)                       -
               -----------             ------------
Net income           $0.15 (b)                $0.03
               ===========             ============
Weighted average
 common shares
 outstanding (a):
Basic               51,173                   50,124
Assuming
 dilution           51,647                   50,861

======================================================================
     Pro forma results excluding $14,892 and $26,689 of merger costs
and costs related to facility consolidations and employee severance
included in the three months ended September 30, 1999 and 1998,
respectively:

Operating income                           $46,283             $43,017
Income before extraordinary item           $23,048             $18,007
Net income                                 $19,599             $18,007

Earnings per share (a):
 Income before extraordinary item            $0.45               $0.36
 Net income                                  $0.38               $0.36

Earnings per share - assuming dilution (a):
 Income before extraordinary item            $0.45               $0.35
 Net income                                  $0.38               $0.35


(a) Prior year restated for March 1999 two-for-one stock split and
    July 1999 C. D. Smith merger accounted for as a pooling of
    interests.
(b) Does not equal sum of amounts due to rounding.


                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)

                                          ASSETS

                                    Sept. 30,  Sept. 30,   Increase
                                      1999      1998(a)   (Decrease)
                                   ---------- ----------- -----------
Current assets:
       Cash  and cash equivalents    $59,497    $48,511    $10,986
       Restricted cash                   -       41,833    (41,833)
       Accounts  receivable, less
        allowance for doubtful
        accounts                     612,520    509,130    103,390
       Merchandise inventories     1,243,153    954,010    289,143
       Prepaid expenses and other      4,836      5,042       (206)
                                  ---------- ---------- -----------
             Total current assets  1,920,006  1,558,526    361,480

Property  and  equipment, net         64,384     67,955     (3,571)

Other assets, less accumulated
 amortization                         76,209     99,791    (23,582)
                                  ---------- ---------- -----------

             Total assets         $2,060,599 $1,726,272   $334,327
                                  ========== ========== ===========


          LIABILITIES AND
          STOCKHOLDERS' EQUITY

Current liabilities:
       Accounts payable           $1,175,619   $947,016   $228,603
       Accrued  expenses and
        other                         50,329     52,188     (1,859)
       Accrued  income taxes          10,854        466     10,388
       Deferred  income taxes         90,481     93,362     (2,881)
                                  ---------- ---------- -----------
             Total  current
              liabilities          1,327,283  1,093,032    234,251

Long-term debt:
       Revolving credit facility     225,227    218,590      6,637
       Receivables securitization
        financing                    325,000    299,948     25,052
       Other debt                      8,478     20,926    (12,448)

Other  liabilities                     8,334      8,036        298
Common stock put warrants                 -      10,385    (10,385)

Stockholders' equity:
       Common stock and capital in
        excess of par value          268,364    245,138     23,226
       Retained earnings (deficit)   (94,632)  (162,098)    67,466
       Cost of common stock in
        treasury                      (7,269)    (7,353)        84
       Note receivable from ESOP        (186)      (332)       146
                                  ---------- ---------- -----------
             Total  stockholders'
              equity                 166,277     75,355     90,922
                                  ---------- ---------- -----------
             Total liabilities
              and stockholders'
              equity              $2,060,599 $1,726,272   $334,327
                                  ========== ========== ===========

(a)   Prior year restated for March 1999 two-for-one stock split and
      July 1999 C. D. Smith merger accounted for as a pooling of
      interests.


Contact:
     AmeriSource Health Corp.
     MaryBeth M. Alvin, Director, Investor Relations
     610/993-3411
     malvin@amerisource.com

Corporate Overview

AmerisourceBergen is one of the largest global pharmaceutical sourcing and distribution services companies, helping both healthcare providers and pharmaceutical and biotech manufacturers improve patient access to products and enhance patient care. With services ranging from drug distribution and niche premium logistics to reimbursement and pharmaceutical consulting services, AmerisourceBergen delivers innovative programs and solutions across the pharmaceutical supply channel..

Learn More