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AmerisourceBergen Reports Record Revenues and Earnings for Fiscal Fourth Quarter and Fiscal Year 2001; Fourth Quarter EPS Up 21 percent to $0.64 Before Special Items

11/08/01
VALLEY FORGE, Pa., Nov 8, 2001 (BUSINESS WIRE) -- AmerisourceBergen Corporation (NYSE:ABC) today reported record results for its fiscal fourth quarter and fiscal year ended September 30, 2001.

With AmeriSource Health Corporation and Bergen Brunswig Corporation merging on August 29, 2001 to form the new company, AmerisourceBergen's results, under purchase accounting rules, include the full fourth quarter and 2001 fiscal year of AmeriSource and approximately one month of Bergen Brunswig.

AmerisourceBergen's operating revenue, which excludes bulk shipments, was a record $5.5 billion in the fourth quarter compared to $3.0 billion for the same period last year, an 82 percent increase. Excluding the revenue impact from the merger, operating revenue in the quarter increased 20 percent compared to the prior year.

Income before special items for the fiscal fourth quarter increased 69 percent to $47.2 million from $28.0 million in the previous year's fourth quarter. Diluted earnings per share before special items for the quarter were $0.64, a 21 percent increase.

Special items, which include merger costs, facility consolidations and employee severance related to the merger, and the positive impact of a reduction in an environmental liability, were a net charge of $12.6 million in the quarter after tax. Net income and diluted earnings per share for the quarter, including special items, were $34.6 million and $0.48, respectively.

AmerisourceBergen had 77.6 million weighted average diluted shares outstanding for the fiscal fourth quarter.

For fiscal year 2001, operating revenue was a record $15.8 billion, a 36 percent increase over the prior year's $11.6 billion. Excluding the revenue impact from the merger, operating revenue was up 20 percent for the full fiscal year.

Income before special items for 2001 fiscal year was up 39 percent to $137.0 million from $98.3 million in the prior year. Diluted earnings per share before special items for fiscal 2001 increased 22 percent to $2.31. For fiscal year 2001, special items were a net $13.2 million charge after tax.

Net income and diluted earnings per share for fiscal 2001 including special items were $123.8 million and $2.10, respectively. AmerisourceBergen had 62.8 million weighted average diluted shares outstanding in fiscal 2001.

The following discussion of the fourth quarter and full year results, including segment data, does not include the impact of the special items in 2001 or the reversal of restructuring reserves in fiscal year 2000.

R. David Yost, AmerisourceBergen President and Chief Executive Officer, said, "This was an outstanding performance by AmerisourceBergen in both the quarter and the year. In its first report as a new company, AmerisourceBergen delivered strong revenue growth, record earnings per share, and a very strong return on committed capital (ROCC) of 26.7 percent.

"Quarterly revenue on a pro forma basis for AmeriSource and Bergen was up strongly over fourth quarter last year, reflecting the continuing momentum of both former companies.

"In the last two months we have moved quickly to integrate the two companies. We have announced our seven operating regions, named the key executives in the organization, established an integration office to coordinate our synergy capture efforts, and have begun to operate as one company in the marketplace."

    Segment Discussion
AmerisourceBergen operates in two segments: Pharmaceutical Distribution (which includes AmerisourceBergen Drug Company and AmerisourceBergen Specialty Group) and PharMerica, its institutional pharmacy.

    Pharmaceutical Distribution Segment
Operating revenue in the fourth quarter of fiscal 2001 increased 80 percent to $5.5 billion compared with $3.0 billion, in the previous year's fourth quarter. For fiscal year 2001, operating revenue was $15.8 billion, a 36 percent increase over last year.

On a pro forma basis operating revenue in the fourth quarter for AmeriSource and Bergen increased 20 percent and 13 percent, respectively. For fiscal 2001, pro forma operating revenue was up 20 percent for AmeriSource and 11 percent for Bergen compared to the previous fiscal year. Pharmaceutical distribution customer mix on a prospective pro forma basis is 52 percent institutional and 48 percent retail.

For the fourth quarter of fiscal 2001, gross margin as a percentage of operating revenue was 4.15 percent versus 4.58 percent in the prior year's last quarter. The gross margin decrease was due to customer mix, a competitive environment, and the inventory write-downs in the quarter of $5.6 million or 10 basis points, primarily related to the cosmetic distribution subsidiary.

For the fiscal year, gross margin was 4.19 percent versus 4.48 percent in the prior year.

Total operating expenses as a percentage of operating revenue declined 30 basis points to 2.42 percent in the fourth quarter of fiscal 2001 from 2.72 percent a year ago. For the full fiscal year, the ratio declined 29 basis points to 2.45 percent compared to 2.74 percent last year.

Operating income advanced 68 percent to $94.8 million in the fourth quarter of fiscal year 2001 from $56.4 million for the same quarter last year. For the fiscal fourth quarter, operating income, as a percentage of operating revenue was 1.73 percent compared to 1.86 percent for the prior year period.

Operating margin was down 13 basis points, due primarily to the inclusion of the corporate and administrative costs of Bergen in the quarter.

"As the leader in the Health Systems, Alternate Site, Community Pharmacy, and Regional Drugstore Chain customer groups, AmerisourceBergen Drug Company has a broad, diversified customer base that continues to provide the opportunity to grow our drug company revenue," said Kurt Hilzinger, AmerisourceBergen Executive Vice President and Chief Operating Officer. "The Drug Company continued to show strong forward momentum as it expands current accounts and adds new business.

"Growth also continues to be strong in the Specialty Group as it builds on its strong positions in oncology, blood plasma and vaccine distribution," he said.

Commenting on integration activities, Hilzinger said, "We continue to move forward in an aggressive, but measured manner. Our integration plans reflect our commitment to consolidate seven facilities in fiscal year 2002, beginning with two smaller distribution centers next month.

"We are developing the information systems to effectively implement the other distribution center consolidations, and we are consolidating our procurement activities to improve our inventory productivity and vendor margin contribution."

    PharMerica
PharMerica's revenue and operating income for the reported fourth quarter and the fiscal year 2001 represents the month of September. Revenues and operating income for each of the quarter and fiscal year were $116.7 million and $6.5 million, respectively.

On a pro forma basis, fiscal 2001 fourth quarter revenue increased 5 percent to $338.1 million from $323.5 million in the same period last year. Revenues for the year increased 6 percent to $1.35 billion.

"PharMerica continues to improve its performance through a combination of disciplined growth and expense control," said Hilzinger. "Asset management has improved as illustrated by reductions in gross days-sales-outstanding (DSO), which were 65 in the quarter, down from 83 in the same quarter last year. Net DSOs dropped from 55 in the prior year's fourth quarter to 47 in the current fourth quarter."

    Looking Ahead
"In fiscal 2002, we expect continued strong performance for AmerisourceBergen with revenue growth of 15 percent to 17 percent, ROCC in excess of 20 percent, and earnings per share growth of 20 percent, excluding the impact of merger-related special items and elimination of goodwill amortization," said Yost. "The merger is complete, the integration is well under way, and we feel confident in our ability to drive shareholder value over the long term."

    Conference Call
The Company will host a conference call to discuss the results at 11:00 am Eastern Standard Time on November 8, 2001. Participating in the conference call will be: R. David Yost, President & Chief Executive Officer; Kurt J. Hilzinger, Executive Vice President & Chief Operating Officer; Neil F. Dimick, Executive Vice President & Chief Financial Officer.

    To access the live conference call via telephone:
Dial in:   800/230-1092 from inside the U.S. no access code required
           or 612/332-0107 from outside the U.S. no access code
           required.
    To access the live webcast:
Go to the Quarterly Webcasts section on the Investor Relations page at http://www.amerisourcebergen.net.

A replay of the telephone call and webcast will be available from 2:30 pm November 8, 2001 until 11:59 pm November 15, 2001.

    To access the replay via telephone:
Dial in:   800/475-6701 from within the U.S., access code: 607336
           320/365-3844 from outside the U.S., access code: 607336
    To access the archived webcast:
Go to the Quarterly Webcasts section on the Investor Relations page at http://www.amerisourcebergen.net.

    About AmerisourceBergen
AmerisourceBergen (NYSE:ABC) is the largest pharmaceutical services company in the United States dedicated solely to the pharmaceutical supply chain. It is the leading distributor of pharmaceutical products and services to the hospital systems/acute care market, alternative care facilities, independent community pharmacies, and regional chains.

The Company is also a leader in the institutional pharmacy marketplace. With approximately $35 billion in annualized operating revenues, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 13,000 people serving over 25,000 customers.

    Forward-Looking Statements
This press release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances.

Actual results may vary materially from the expectations contained in the forward-looking statements. The forward-looking statements herein include statements addressing future financial and operating results of AmerisourceBergen and the benefits and other aspects of the merger.

The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: the risk that the businesses of AmeriSource and Bergen Brunswig will not be integrated successfully; failure to obtain and retain expected synergies; and other economic, business, competitive and/or regulatory factors affecting the business of AmerisourceBergen generally.

More detailed information about these factors is set forth in AmeriSource's and Bergen Brunswig's filings with the Securities and Exchange Commission, including each of their Annual Reports on Form 10-K for fiscal 2000, their most recent quarterly reports on Form 10-Q, and their joint proxy statement-prospectus dated August 1, 2001.

AmerisourceBergen, AmeriSource and Bergen Brunswig are under no obligation to (and expressly disclaim any such obligation to) update or alter their forward-looking statements whether as a result of new information, future events or otherwise.

                     AMERISOURCEBERGEN CORPORATION
                           FINANCIAL SUMMARY
                 (In thousands, except per share data)
                              (unaudited)
                   Three                   Three
               Months Ended    % of    Months Ended    % of
               September 30, Operating September 30,  Operating   %
                   2001       Revenue     2000         Revenue  Change
               ------------- --------- ------------  ---------- ------
Revenue:
 Operating
  revenue        $5,516,347   100.00%   $3,027,776    100.00%     82%
 Bulk
 deliveries to
 customer
 warehouses         367,884                  3,954
                 ----------             ----------
Total revenue     5,884,231              3,031,730
Cost of
 goods sold       5,617,654              2,893,112                94%
                 ----------             ----------
Gross profit        266,577     4.83%      138,618      4.58%     92%
Operating
 expenses:
 Distribution,
  selling and
  administrative    156,103     2.83%       77,958      2.57%    100%
 Depreciation
  and
  amortization        9,209     0.17%        4,283      0.14%    115%
 Facility
  consolidations
  and employee
  severance          10,912     0.20%            -      0.00%       -
 Merger costs        12,206     0.22%            -      0.00%       -
 Environmental
  remediation        (2,716)   -0.05%            -      0.00%       -
                 ----------             ----------
Operating income     80,863     1.47%       56,377      1.86%     43%
Equity in losses
 of affiliates
 and other            6,285     0.11%          568      0.02%     N/A
Interest expense     15,647     0.28%       10,654      0.35%     47%
                 ----------             ----------
Income before
 taxes and
 distributions
 on preferred
 securities of
 subsidiary
 trust               58,931     1.07%       45,155      1.49%     31%
Taxes on income      23,042     0.42%       17,159      0.57%     34%
                 ----------             ----------
Income before
 distributions
 on preferred
 securities
 of subsidiary
 trust               35,889     0.65%       27,996      0.92%     28%
Distributions
 on preferred
 securities of
 subsidiary
 trust, net of
 income tax
 benefit of $871      1,306     0.02%            -      0.00%     N/A
                 ----------             ----------
Net income          $34,583     0.63%      $27,996      0.92%     24%
                 ----------             ----------
Earnings
 per share:
 Basic                $0.49                  $0.54
 Assuming
  dilution            $0.48                  $0.53
Weighted
 average
 common
 shares
 outstanding:
  Basic              70,628                 51,967
  Assuming
   dilution          77,613                 52,770
======================================================================
Pro forma results excluding merger costs, costs related to facility
consolidations and employee severance and environmental remediation
included in the three months ended September 30, 2001:
Operating
 income            $101,265                $56,377
Net income          $47,230                $27,996
Earnings per
 share:
   Basic              $0.67                  $0.54
   Assuming
    dilution          $0.64                  $0.53
                     AMERISOURCEBERGEN CORPORATION
                           FINANCIAL SUMMARY
                 (In thousands, except per share data)
                    Year Ended    % of     Year Ended   % of
                     Sept, 30,  Operating   Sept. 30, Operating    %
                      2001       Revenue     2000      Revenue  Change
                    ----------- --------- ------------ -------- ------
Revenue:
  Operating
   revenue           15,822,635  100.00%   $11,609,995   100.00%   36%
  Bulk deliveries
   to customer
   warehouses           368,718                 35,026
                    -----------            -----------
Total revenue        16,191,353             11,645,021
Cost of goods
 sold                15,491,235             11,125,440             39%
                    -----------            -----------
Gross profit            700,118    4.42%       519,581     4.48%   35%
Operating
 expenses:
  Distribution,
   selling and
   administrative       397,848    2.51%       302,470     2.61%   32%
  Depreciation
   and
   amortization          21,589    0.14%        16,109     0.14%   34%
  Facility
   consolidations
   and employee
   severance             10,912    0.07%        (1,123)   -0.01%   N/A
  Merger costs           13,109    0.08%             -     0.00%     -
  Environmental
   remediation           (2,716)  -0.02%             -     0.00%     -
                    -----------            -----------
Operating income        259,376    1.64%       202,125     1.74%   28%
Equity in losses
 of affiliates
 and other               10,866    0.07%           568     0.00%   N/A
Interest expense         45,677    0.29%        41,857     0.36%    9%
                    -----------            -----------
Income before
 taxes and
 distributions
 on preferred
 securities of
 subsidiary
 trust                  202,833    1.28%       159,700     1.38%   27%
Taxes on income         77,731     0.49%        60,686     0.52%   28%
                    -----------            -----------
Income before
 distributions
 on preferred
 securities of
 subsidiary
 trust                  125,102    0.79%        99,014     0.85%   26%
Distributions on
 preferred
 securities of
 subsidiary
 trust, net of
 income tax
 benefit of $871          1,306   0.01%              -     0.00%     -
                    -----------            -----------
Net income             $123,796    0.78%       $99,014     0.85%   25%
                    -----------            -----------
Earnings per
 share:
  Basic                   $2.16                  $1.92
  Assuming
   dilution               $2.10                  $1.90
Weighted average
 common shares
 outstanding:
  Basic                  57,185                 51,552
  Assuming dilution      62,807                 52,020
======================================================================
Pro forma results excluding merger costs, costs related to facility
consolidations and employee severance and environmental remediation
included in the years ended September 30, 2001 and 2000, respectively:
Operating income       $280,681               $201,002
Net income             $137,003                $98,318
Earnings per share:
  Basic                   $2.40                  $1.91
  Assuming dilution       $2.31                  $1.89
                     AMERISOURCEBERGEN CORPORATION
                 CONDENSED CONSOLIDATED BALANCE SHEETS
                        (dollars in thousands)
ASSETS
                         September 30,   September 30,      $
                             2001           2000          Change
                         ------------   ------------  -----------
Current assets:
 Cash  and
  cash equivalents        $   297,626   $   120,818   $   176,808
 Accounts
  receivable, net           2,127,663       623,961     1,503,702
 Merchandise
  inventories               5,056,257     1,570,504     3,485,753
 Prepaid expenses
  and other                    15,956         5,336        10,620
                          -----------   -----------   -----------
  Total current
   assets                   7,497,502     2,320,619     5,176,883
Long-term assets            2,752,178       137,948     2,614,230
                          -----------   -----------   -----------
  Total assets            $10,249,680   $ 2,458,567   $ 7,791,113
                          ===========   ===========   ===========
LIABILITIES AND
 STOCKHOLDERS' EQUITY
Current liabilities:
 Accounts payable         $ 4,991,884   $ 1,584,133   $ 3,407,751
 Other current
  liabilities                 532,739       167,336       365,403
                          -----------   -----------   -----------
  Total current
   liabilities              5,524,623     1,751,469     3,773,154
Long-term debt,
 less current
 portion                    1,582,295       413,217     1,169,078
Other  liabilities             29,582        11,587        17,995
Company-obligated
 manditorily redeemable
 preferred securities
 of subsidiary trust          274,616          --         274,616
Stockholders' equity        2,838,564       282,294     2,556,270
                          -----------   -----------   -----------
Total liabilities and
 stockholders' equity     $10,249,680   $ 2,458,567   $ 7,791,113
                          ===========   ===========   ===========
                    AMERISOURCE HEALTH CORPORATION
                          EARNINGS PER SHARE
                 (In thousands, except per share data)
                              (unaudited)
	   Earnings per share is computed on the basis of the weighted
average number of shares of common stock outstanding during the
periods presented. Earnings per share-assuming dilution is computed on
the basis of the weighted average number of shares of common stock
outstanding during the period plus the dilutive effect of stock
options. Additionally, the fiscal 2001 calculations consider the
convertible subordinated notes as if converted and, therefore, the
effect of interest expense related to those notes is added back to net
income in determining income available to common stockholders.
                           Three months ended       Year ended
                             September 30,         September 30,
                         --------------------   -------------------
                            2001       2000       2001       2000
                         ---------  ---------   --------  ---------
Net income                $ 34,583   $ 27,996   $123,796   $ 99,014
Interest expense -
 convertible
 subordinated notes,
 net of income tax           2,513       --        8,112       --
                          --------   --------   --------   --------
Income available to
 common stockholders      $ 37,096   $ 27,996   $131,908   $ 99,014
                          ========   ========   ========   ========
Weighted average
 number of shares
 of common stock
 outstanding                70,628     51,967     57,185     51,552
Effect of dilutive
 securities:
 Stock options               1,321        803      1,076        468
 Convertible
  subordinated notes         5,664       --        4,546       --
                          --------   --------   --------   --------
Weighted average number
 of shares of common
 stock and dilutive
 potential common stock     77,613     52,770     62,807     52,020
                          ========   ========   ========   ========
Earnings per share
 Basic                    $   0.49   $   0.54   $   2.16   $   1.92
 Assuming dilution        $   0.48   $   0.53   $   2.10   $   1.90
                     AMERISOURCEBERGEN CORPORATION
                      SUMMARY SEGMENT INFORMATION
                        (dollars in thousands)
                     Three Months Ended
                        September 30,
                 -------------------------------
                                                           %
Operating Revenue    2001            2000               Change
----------------------------------------------------------------------
Pharmaceutical
 Distribution    $  5,463,754    $  3,027,776             80%
PharMerica            116,719            --              N/M
Intersegment
 Eliminations         (64,126)           --              N/M
                 ------------    ------------            ---
 Operating
 revenue         $  5,516,347    $  3,027,776             82%
                 ============    ============            ===
                         Year Ended
                        September 30,
                 -------------------------------
                                                          %
Operating Revenue    2001           2000              Change
------------------------------------------------------------
Pharmaceutical
 Distribution    $ 15,770,042    $ 11,609,995             36%
PharMerica            116,719            --              N/M
Intersegment
 Eliminations         (64,126)           --              N/M
                 ------------    ------------   ------------
 Operating       $ 15,822,635    $ 11,609,995             36%
 revenue         ============    ============   ============
                         Three Months Ended
                            September 30,
                    -------------------------------
                                                          %
Operating Income(a)    2001            2000             Change
----------------------------------------------------------------------
Pharmaceutical
 Distribution    $     94,793    $     56,377             68%
PharMerica              6,472            --              N/M
                 ------------    ------------   ------------
 Operating
 income          $    101,265    $     56,377             80%
                 ============    ============   =============
Percentages of operating revenue(a):
Pharmaceutical
 Distribution
 Gross profit            4.15%          4.58%
 Operating expenses      2.42%          2.72%
 Operating income        1.73%          1.86%
PharMerica
 Gross profit           34.06%            --
 Operating expenses     28.51%            --
 Operating income        5.55%            --
AmerisourceBergen
 Corporation
 Gross profit            4.83%          4.58%
 Operating expenses      3.00%          2.72%
 Operating income        1.84%          1.86%
(a) Before special items
                            Year Ended
                           September 30,
                    -------------------------------
                                                          %
Operating Income(a)    2001          2000               Change
----------------------------------------------------------------
Pharmaceutical
 Distribution $    274,209    $    201,002             36%
PharMerica           6,472            --              N/M
               -----------    -------------  -------------
 Operating
 income       $    280,681    $    201,002             40%
              ============    ============   =============
Percentages of operating revenue(a):
Pharmaceutical
 Distribution
 Gross profit           4.19%           4.48%
 Operating expenses     2.45%           2.74%
 Operating income       1.74%           1.73%
PharMerica
 Gross profit          34.06%            --
 Operating expenses    28.51%            --
 Operating income       5.55%            --
AmerisourceBergen
 Corporation
 Gross profit           4.42%           4.48%
 Operating expenses     2.65%           2.74%
 Operating income       1.77%           1.73%
(a) Before special items
CONTACT:          AmerisourceBergen, Valley Forge
                  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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