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AmeriSource Reports Record Revenue and Earnings for Fiscal Fourth Quarter and Year 2000

11/02/00
For the Quarter, Operating Revenue Increased 18 percent, EPS Up 18 Percent to $.53

VALLEY FORGE, Pa.--(BW HealthWire)--Nov. 2, 2000--AmeriSource Health Corporation (NYSE:AAS) today reported record results for its fiscal fourth quarter and year, ended September 30, 2000. In the quarter, income before special charges and extraordinary items was a record $28.0 million, a 21 percent increase over the $23.0 million in the prior year's quarter. Earnings per diluted share in the fiscal 2000 fourth quarter were $0.53, 18 percent ahead of the comparable quarter's earnings per diluted share of $0.45, excluding special charges and extraordinary items in 1999. Operating revenue in the fiscal 2000 fourth quarter increased 18 percent, or $0.46 billion, to a record $3.03 billion compared with $2.57 billion for the same period last year.

For fiscal 2000, operating revenue reached a record $11.6 billion, a 19 percent increase over the $9.8 billion last fiscal year. Excluding special charges and extraordinary items in both years, fiscal 2000 income increased 19 percent over the previous fiscal year to a record $98.3 million and earnings per diluted share were up 17 percent to $1.89 per diluted share. Special charges in fiscal 2000 reflected a net positive impact of $0.7 million for the reversal of restructuring reserves in the third quarter, and in the previous fiscal year, they resulted in a net $12.0 million negative impact from merger and restructuring costs in the fourth quarter. Also in the fourth quarter of fiscal 1999, the Company recorded an extraordinary charge, after tax, of $3.4 million related to the extinguishment of debt linked to the acquisition of C.D. Smith. Net income in fiscal 2000 was $99.0 million, a 47 percent increase from the $67.5 million in the previous fiscal year, and earnings per diluted share were up 45 percent to $1.90 from $1.31 in the comparable year.

R. David Yost, AmeriSource President and Chief Executive Officer, said, "This record quarterly and yearly performance again demonstrates our ability to deliver solid, consistent growth as we continue to focus on pharmaceutical distribution and the related healthcare solutions needed by our customers and suppliers. Our annual return on committed capital, our key financial measurement of success, was a record 25.2 percent, again exceeding our goal. Equally impressive was our robust cash flow (from operations net of capital expenditures) of almost $200 million for fiscal 2000. We are especially pleased with the results of the quarter because we are comparing against a strong 1999 fourth quarter, which was favorably impacted by the timing of manufacturers' pricing decisions relating to Y2K.

"Revenue growth continued strong and profitable across our four customer groups and across all regions. At the same time, we continue to lower our expenses as a percent of revenue, firm in the belief that success requires lean, highly efficient, focused operations.

"All four of our customer groups recorded double-digit increases in revenue during the year. Health Systems, our market-leading acute-care business, continued to build sales momentum through buying group alliances such as Novation and Premier. Novation members have nearly completed their every-third-year distributor selection process. AmeriSource expects to increase its Novation business by more than $500 million in annual revenue from new business which will begin to ramp up during the first quarter of fiscal 2001. Key to these wins was our reputation for exceptional customer service. In two independent surveys of hospital executives, one by Novation members and the other by a major investment company, AmeriSource was voted the best distributor in customer service.

"Our Alternate Site business accelerated its growth by winning major three-year contracts from Anthem Prescription Management and Option Care. Our new five-year agreement with Medi-Cap Pharmacies leads our efforts with the non-warehousing Chain Retailers, and Independent Retail Pharmacies, where AmeriSource is a major player, continued to grow same store sales in double digits."

Kurt J. Hilzinger, AmeriSource Chief Operating Officer, continued, "Fiscal 2000 also saw the completion of our centralization initiative begun about two years ago, the successful integration of our C.D. Smith acquisition, and the introduction of numerous new value-added offerings for our customers.

"The centralization initiative was focused on improving costs and productivity by standardizing those activities which did not directly touch the customer. The effort was anchored in the conversion of our 21 distribution facilities to a common information technology platform. It also included centralizing procurement, which has improved our supply-side margin contribution, reduced replenishment inventory days on hand, and positioned us to provide value-added solutions to our customers and suppliers.

"The C.D. Smith integration, which included upgrading two facilities, closing another and converting to the AmeriSource IT platform, was completed on plan, and the resulting business performance exceeded our expectations for both the quarter and the year.

"To boost our value-added offerings we acquired Pharmacy Healthcare Solutions, a consulting company with a turn-key solution for helping hospitals recover the pharmaceutical costs for indigent patients. In the year ahead, we will continue to seek to add other value-adding solutions.

"Most new offerings this year were dominated by technology as we launched iEcho, our Internet-based ordering system built on our market-leading Echo electronic ordering system, and VIP, our Virtual Internet Pharmacy. VIP lets consumers shop online to our retail customer's website using our large inventory of products and next-day delivery capability. Our technology efforts were recently recognized by Information Week Magazine, which named us as one of the 200 most innovative companies in the use of technology among 24 different industry groups."

Gross margin for the fourth quarter of fiscal 2000 as a percentage of operating revenue was 4.58 percent versus 4.90 percent in the comparable quarter. For the year, gross margin was 4.48 percent versus 4.85 percent in fiscal 1999. This expected year-to-year decline in gross margin primarily reflects a shift in customer mix to a higher level of institutional business and larger institutional accounts. The Company's customer mix for fiscal 2000 consists of 51 percent institutional, which includes Health Systems and Alternate Site, and 49 percent retail, including independent and chain pharmacies. Last year the percentages were reversed with institutional contributing 48 percent and retail 52 percent.

Operating expenses as a percentage of operating revenue continued its downward trend to 2.73 percent in the fourth quarter of fiscal 2000 from 3.10 percent in last year's fourth quarter. For the year, the Company established a new annual low of 2.75 percent for operating expenses as a percentage of revenue, down 32 basis points from last year's 3.07 percent.

AmeriSource operating margin before special charges, as a percentage of operating revenue for the quarter, improved to 1.84 percent versus 1.80 percent in last year's fourth quarter. For the 2000 fiscal year, operating margin before special charges was 1.73 percent versus 1.78 percent last year.

For the quarter, interest expense increased 12 percent to $10.7 million from $9.5 million in the previous year's fourth quarter, reflecting higher interest rates, lower borrowing spreads and lower average levels of debt. For fiscal 2000, interest expense was $41.9 million up 6 percent from last year's $39.4 million.

Looking ahead, Yost said, "We continue to be well-positioned for further growth. We are in an industry with strong fundamentals and we have sales and marketing programs designed to expand our business in both the institutional and retail marketplaces. We are investing in the future with a new warehouse management system, expansion of our packaging subsidiary, on-going technology investments, and other activities to continue to improve productivity, lower our operating costs and better meet customer needs.

"These and other initiatives make me confident that for fiscal year 2001 we will deliver strong revenue and earnings growth while we continue to display the discipline in running our business that will achieve a return on committed capital of well over 20 percent. This solid performance is anchored in our commitment to being recognized by our customers as the highest quality service provider, to delivering strong and consistent financial performance, and to building value for our shareholders."

AmeriSource will host a conference call to discuss the fourth quarter and fiscal year 2000 results at 11:00 a.m. Eastern Standard Time today, November 2, 2000. In order to ensure the widest distribution possible, the company will be broadcasting the conference call over the Internet. The call will be accessible through Street Events, www.streetevents.com, and also through AmeriSource's web site, www.amerisource.com. Users are encouraged to log on to the call approximately 15 minutes in advance. The call may not be recorded without permission from AmeriSource. Replays of the webcast will be posted on www.amerisource.com approximately two hours after the completion of the call and will remain available until December 2, 2000.

About AmeriSource

AmeriSource Health Corporation, with nearly $12 billion in operating revenue, is a leading distributor of pharmaceutical and related healthcare services and the industry's largest provider of pharmaceuticals to the acute care/health systems market. Headquartered in Valley Forge, PA, the Company serves its base of about 15,000 customer accounts through a national network of more than 20 strategically located distribution facilities. For news and additional information about the company, visit its web site 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 or systems initiatives, market interest rates, regulatory changes, continued industry consolidation, changes in customer mix, changes in pharmaceutical manufacturers' pricing and distribution policies, changes in U.S. government policies, customer insolvencies, the loss of one or more key customer or supplier relationships and other matters contained in the Company's 10-K for fiscal year 1999 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.

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


                    Three                 Three
                    Months                Months
                    Ended      % of       Ended       % of
                  Sept. 30,  Operating   Sept. 30,  Operating    %
                    2000      Revenue      1999      Revenue   Change
                  ---------  ---------  ---------  ---------  --------

Revenue:
 Operating
  revenue         $3,027,776   100.00%   $2,568,766   100.00%     18%
 Bulk
  deliveries
  to customer
  warehouses           3,954                 10,154
                  ----------             ----------
Total revenue      3,031,730              2,578,920
Cost of goods
 sold:
  Operating
   cost of
   goods sold      2,889,158    95.42%    2,442,838    95.10%     18%
  Cost of
   goods sold
   - bulk
   deliveries          3,954                 10,154
                  ----------             ----------
Total cost of
 goods sold        2,893,112              2,452,992
                  ----------             ----------
Gross profit         138,618     4.58%      125,928     4.90%     10%
Operating
 expenses:
 Selling and
  administrative      78,526     2.59%       75,057     2.92%      5%
 Depreciation
  and
  amortization         4,283     0.14%        4,588     0.18%     -7%
 Facility
  consolidations
  and employee
  severance               -      0.00%       11,730     0.46%   -100%
 Merger Costs             -      0.00%        3,162     0.12%   -100%
                  ----------             ----------
Operating
 income               55,809     1.84%       31,391     1.22%     78%
Interest
 expense              10,654     0.35%        9,472     0.37%     12%
                  ----------             ----------
Income before
 taxes and
 extraordinary
 items                45,155     1.49%       21,919     0.85%    106%
Taxes on
 income               17,159     0.57%       10,878     0.42%     58%
                  ----------             ----------
Income before
 extraordinary
 items                27,996     0.92%       11,041     0.43%    154%
Extraordinary
 items-early
 retirement of
 debt, net of
 income tax
 benefit                  -      0.00%        3,449     0.13%   -100%
                  ----------             ----------
Net income           $27,996     0.92%       $7,592     0.30%    269%
                  ==========             ==========
Earnings per
 share:
 Income before
  extraordinary
  items                $0.54                  $0.22
 Extraordinary
  items                   -                   (0.07)
                  ----------             ----------
 Net income            $0.54                  $0.15
                  ==========             ==========
 Earnings per
  share -
  assuming
  dilution:
  Income before
   extraordinary
   items               $0.53                  $0.21
  Extraordinary
   items                  -                   (0.07)
                  ----------             ----------
  Net income           $0.53                  $0.15 (a)
                  ==========             ==========
Weighted
 average common
 shares
 outstanding:
 Basic                51,967                 51,173
 Assuming
  dilution            52,770                 51,647

--------------------------------------------------------------------

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


Operating income     $55,809                $46,283
Income before
 extraordinary
 items               $27,996                $23,048
Net income           $27,996                $19,599
Earnings per
 share:
 Income before
  extraordinary
  items                $0.54                  $0.45
 Net income            $0.54                  $0.38
Earnings per
 share -
 assuming
 dilution:
 Income before
  extraordinary
  items                $0.53                  $0.45
 Net income            $0.53                  $0.38

(a) Does not equal sum of amounts due to rounding



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


                  Twelve                Twelve
                  Months                Months    
                  Ended       % of      Ended      % of
                Sept. 30,   Operating  Sept. 30, Operating      %
                   2000      Revenue     1999     Revenue     Change
               ------------  -------  ----------  -------    --------

Revenue:
 Operating
  revenue      $ 11,609,995  100.00%  $9,760,083  100.00%       19%
 Bulk
  deliveries
  to
  customer
  warehouses         35,026               47,280
               ------------           ----------
Total
 revenue         11,645,021            9,807,363

Cost of
 goods sold:
 Operating
  cost of
  goods sold     11,090,414   95.52%   9,287,018   95.15%       19%
 Cost of
  goods sold
  - bulk
  deliveries         35,026               47,280
               ------------           ----------
Total cost
 of goods
 sold            11,125,440            9,334,298
               ------------           ----------

Gross profit        519,581    4.48%     473,065    4.85%       10%

Operating
 expenses:
 Selling and
  admini-
  strative          303,038    2.61%     281,798    2.89%        8%
 Deprecia-
  tion and
  amortiza-
  tion               16,109    0.14%      17,373    0.18%      -7%
 Facility
  consolida-
  tions and
  employee
  severance          (1,123)  -0.01%      11,730    0.12%    -110%
 Merger
  Costs                --      0.00%       3,162    0.03%    -100%
               ------------           ----------

Operating
 income             201,557    1.74%     159,002    1.63%       27%

Interest
 expense             41,857    0.36%      39,356    0.40%        6%
Interest
 expense -
 adjustment
 of common
 stock put
 warrant to
 fair value            --      0.00%         334    0.00%    -100%
               ------------           ----------

Income
 before
 taxes and
 extra-
 ordinary
 items              159,700    1.38%     119,312    1.22%       34%

Taxes on
 income              60,686    0.52%      48,397    0.50%       25%
               ------------           ----------

Income
 before
 extra-
 ordinary
 items               99,014    0.85%      70,915    0.73%       40%

Extra-
 ordinary
 items-early
 retirement
 of debt,
 net of
 income tax
 benefit               --      0.00%       3,449    0.04%    -100%
               ------------           ----------

Net income     $     99,014    0.85%  $   67,466    0.69%       47%
               ============           ==========


Earnings
 per share:
 Income
  before
  extra-
  ordinary
  items               $1.92                $1.40
 Extra-
  ordinary
  items                   -                (0.07)
               ------------           ----------
 Net income           $1.92                $1.33
               ============           ==========

Earnings per
 share -
 assuming 
 dilution:
 Income
  before
  extra-
  ordinary
  items               $1.90                $1.38
 Extra-
  ordinary
  items                   -                (0.07)
               ------------           ----------
 Net income           $1.90                $1.31
               ============           ==========

Weighted
 average
 common
 shares
 outstand-
 ing:
 Basic               51,552               50,698
 Assuming
  dilution           52,020               51,683

--------------------------------------------------------------------

    Pro forma results excluding ($1,123) and $14,892 of merger costs
and costs related to facility consolidations and employee severance
included in the years ended September 30, 2000 and 1999, respectively:


Operating
 income            $200,434             $173,894
Income before
 extra-
 ordinary
 items              $98,318              $82,922
Net income          $98,318              $79,473

Earnings per
 share:
 Income
  before
  extra-
  ordinary
  items               $1.91                $1.64
 Net income           $1.91                $1.57

Earnings per
 share -
 assuming
 dilution:
 Income before
  extra-
  ordinary
  items               $1.89                $1.61
 Net income           $1.89                $1.54



                    AMERISOURCE HEALTH CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)



     ASSETS  
                                Sept. 30,     Sept. 30,     Increase
                                  2000          1999       (Decrease)
                              -----------   ------------  ------------
Current assets:
 Cash and cash
   equivalents                $  120,818    $    59,497   $   61,321
 Accounts
  receivable,
  less allowance
  for doubtful
  accounts                        623,961       612,520       11,441
 Merchandise
  inventories                   1,570,504     1,243,153      327,351
 Prepaid expenses
  and other                         5,336         4,836          500
                              -----------   -----------   -----------
     Total
      current
      assets                    2,320,619     1,920,006      400,613

Property and
 equipment, net                    64,962        64,384          578

Other assets,
 less accumulated
 amortization                      72,986        76,209       (3,223)
                              -----------   -----------   -----------

     Total assets             $ 2,458,567   $ 2,060,599   $  397,968
                              ===========   ===========   ===========


     LIABILITIES
      AND STOCKHOLDERS'
      EQUITY

Current liabilities:
 Accounts payable             $ 1,584,133   $ 1,175,619   $  408,514
 Accrued expenses
  and other                        49,398        50,329         (931)
 Accrued income
  taxes                            12,284        10,854        1,430
 Deferred income
  taxes                           105,654        90,481       15,173
                              -----------   -----------   ----------
     Total
      current
      liabilities               1,751,469     1,327,283       424,186

Long-term debt:
 Revolving credit
  facility                         20,000       225,227     (205,227)
 Receivables
  securitization
  financing                       385,000       325,000       60,000
 Other debt                         8,217         8,478         (261)

Other
 liabilities                       11,587         8,334        3,253

Stockholders'
 equity:
 Common stock and
  capital in
  excess of par
  value                           284,132       267,315       16,817
 Retained
  earnings
  (accumulated
   deficit)                         4,382       (94,632)      99,014
 Cost of common
  stock in
  treasury                         (6,220)       (6,220)           0
 Note receivable
 from ESOP                              0          (186)         186
                              -----------   -----------   ----------
     Total
      stockholders'
      equity                      282,294       166,277      116,017
                              -----------   -----------   ----------

     Total
      liabilities
      and
      stockholders'
      equity                  $ 2,458,567   $ 2,060,599   $  397,968
                              ===========   ===========   ==========

CONTACT: AmeriSource Health Corporation
Michael N. Kilpatric, 610/727-7118
mkilpatric@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..

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