VALLEY FORGE, Pa.--(BUSINESS WIRE)--July 24,
2003--AmerisourceBergen Corporation (NYSE:ABC) today reported record
results for its fiscal third quarter ended June 30, 2003. The
following results are presented in accordance with generally accepted
accounting principles (GAAP).
Fiscal Third Quarter Highlights
-- Record diluted earnings per share of $0.99, including special
charges of $0.04, up 21 percent.
-- Record net income of $112.5 million, up 25 percent.
-- Record operating revenue of $11.5 billion, up 12 percent.
-- Return On Committed Capital (ROCC) of 25.1 percent.
Fiscal First Nine Months Highlights
-- Record diluted earnings per share of $2.85, including special
charges of $0.06, up 24 percent.
-- Record net income of $321.7 million, up 29 percent.
-- Record operating revenue of $33.8 billion, up 13 percent.
"AmerisourceBergen again delivered exceptional performance," said
R. David Yost, AmerisourceBergen's Chief Executive Officer. "We had
solid results across all of our businesses. Strong operating revenue
combined with a good contribution from our recent acquisitions and
record operating expense efficiency drove significant operating margin
expansion. This performance resulted in a great return on committed
capital and excellent earnings per share."
Discussion of Results
Diluted earnings per share for the third quarter of fiscal 2003
were $0.99, a 21 percent increase over the $0.82 in the prior year's
third quarter. Included in these results were special charges, net of
tax, in the third quarter of fiscal 2003 of $2.4 million for facility
consolidations and employee severance and $2.6 million related to the
early retirement of debt, as well as a $4.9 million special charge,
net of tax, in the same period of the previous fiscal year for merger
integration activities. The earnings per share impact of the special
charges was a decrease of $0.04 in the third quarter of fiscal 2003
and a decrease of $0.04 in the third quarter of fiscal 2002.
AmerisourceBergen's operating revenue, which excludes bulk
deliveries to customer warehouses, rose 12 percent to $11.5 billion in
the third quarter of fiscal 2003 compared to $10.3 billion for the
same period last year. Bulk deliveries in the quarter decreased to
$0.9 billion from $1.3 billion in the prior fiscal year's third
quarter, as the Company successfully converted bulk business into
operating revenue.
For the first nine months of fiscal 2003, diluted earnings per
share were $2.85, a 24 percent increase over the $2.30 in the same
nine-month period last year. Special charges related to facility
consolidations and employee severance and the retirement of debt in
the first nine months of fiscal 2003 and merger costs in the first
nine months of fiscal 2002 resulted in a net decrease in earnings per
share of $0.06 and $0.11, respectively.
Operating revenue in the first nine months of fiscal 2003
increased 13 percent to $33.8 billion from $29.9 billion in the same
period of the previous fiscal year. Bulk deliveries to customer
warehouses were down reflecting the impact of the conversion of bulk
business to operating revenue in fiscal 2003.
"Our superior operating performance in the quarter was driven
primarily by continued strong merger integration cost savings,
excellent growth in our specialty pharmaceuticals business, and
contributions from recent acquisitions," said Kurt J. Hilzinger,
AmerisourceBergen's President and Chief Operating Officer.
"We continue to capture integration cost savings significantly
ahead of schedule, and the creation of our new pharmaceutical
distribution network remains on time and on budget," he continued.
"During the quarter we broke ground on our third new distribution
center located near Dallas, Texas, and consolidated our eleventh
distribution center. We are on schedule to consolidate two more
distribution centers by the end of the fiscal year."
"In our PharMerica segment, continued focus on cost controls and
operating practices drove operating margins to nearly 7 percent," said
Hilzinger. "Operating revenue grew 7 percent, reflecting a moderation
in the historically rapid growth rate of the workers' compensation
fulfillment business."
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes the AmerisourceBergen Drug Company and
AmerisourceBergen Specialty Group) and PharMerica (which includes the
long term care pharmacy and workers' compensation fulfillment
businesses). Intersegment operating revenue of $203.2 million in the
third quarter of fiscal 2003 from AmerisourceBergen Drug Company to
PharMerica, which are included in the Pharmaceutical Distribution
segment operating revenue, are eliminated for consolidated reporting
purposes.
Pharmaceutical Distribution Segment
Operating revenue in the third quarter of fiscal 2003 increased to
$11.3 billion compared with $10.1 billion in the third quarter of
fiscal year 2002, a 12 percent increase.
Pharmaceutical Distribution customer mix in the third quarter of
fiscal 2003 was 57 percent institutional and 43 percent retail.
Operating revenue from institutional customers, which include mail
order facilities, hospitals and specialty pharmaceutical customers,
continued to grow significantly faster than operating revenue from
retail customers.
Gross profit as a percentage of operating revenue in the third
quarter of fiscal 2003 was 3.82 percent, essentially flat compared to
the same period in the prior fiscal year. Gross margins were
positively impacted by recent acquisitions, which offset the negative
impacts of customer mix and the competitive environment.
Total operating expenses as a percentage of operating revenue in
the third quarter of fiscal 2003 were a record low 2.01 percent, a 14
basis point improvement over the same quarter last year, driven by
customer mix, merger integration cost savings and operating
efficiencies, offset in part by higher expense ratios within recent
acquisitions.
Operating income as a percentage of operating revenue in the third
quarter of fiscal 2003 expanded 13 basis points to 1.81 percent
compared to the third quarter of fiscal 2002.
AmerisourceBergen Specialty Group, with annualized revenue of more
than $3.5 billion, continued its strong performance, building
leadership positions in the distribution of products and services to
physicians in oncology and other disease states, as well as growing
its manufacturer services businesses.
PharMerica
PharMerica's operating revenue for the third quarter of fiscal
2003 increased 7 percent to $399.9 million from $373.8 million in the
previous year's third quarter.
Gross profit as a percentage of operating revenue was 32.3 percent
in the third quarter of fiscal 2003, an 84 basis point decline over
the same period in the prior fiscal year due primarily to the
comparatively faster growth in the lower-margin workers' compensation
business. The decline in gross margin was more than offset by a 185
basis point improvement in total operating expenses as a percentage of
operating revenue due mainly to cost control and improved operating
practices. Operating income as a percentage of operating revenue
expanded 101 basis points in the quarter ended June 30, 2003 to a
record 6.83 percent from 5.82 percent in the same period of the prior
year.
Looking Ahead
"For the fiscal year ending September 30, 2003, we continue to
expect to grow operating revenue approximately 13 percent, and
earnings per share 20 percent, excluding the impact of special charges
which included the cost of retiring the PharMerica bonds in the third
quarter," said Yost. "ROCC for fiscal year 2003 is expected to remain
well above our 20 percent long-term target. We are confident in our
ability to achieve annual merger integration cost savings of
approximately $150 million well ahead of the end of fiscal year 2004,
followed by additional cost savings as we complete the build-out of
our distribution network over the next three to four years."
Conference Call
The Company will host a conference call to discuss the results at
11:00 a.m. Eastern Daylight Time on July 24, 2003. Participating in
the conference call will be: R. David Yost, Chief Executive Officer;
Kurt J. Hilzinger, President and Chief Operating Officer; and Michael
D. DiCandilo, Senior Vice President and Chief Financial Officer.
To access the live conference call via telephone:
Dial in: 888-276-0009 from inside the U.S., no access code
required or 651-291-0618 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.com.
A replay of the telephone call and webcast will be available from
4:15 p.m. July 24, 2003 until 11:59 p.m. July 31, 2003.
To access the replay via telephone:
Dial in: 800-475-6701 from within the U.S., access code: 689743
320-365-3844 from outside the U.S., access code: 689743
To access the archived webcast:
Go to the Quarterly Webcasts section on the Investor Relations
page at http://www.amerisourcebergen.com.
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 market,
physician's offices, alternate care and mail order facilities, and
independent and chain pharmacies. The Company is also a leader in the
long term care pharmacy marketplace, the workers' compensation
fulfillment business and contract packaging for manufacturers. With
more than $45 billion in annualized operating revenue,
AmerisourceBergen is headquartered in Valley Forge, PA, and employs
more than 14,000 people. AmerisourceBergen is ranked #24 on the
Fortune 500 list and was ranked #6 in the 2003 Business Week 50, a
list of the 50 best performing companies in the S & P 500. For more
information, go to www.amerisourcebergen.com.
Forward-Looking Statements
This news 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. Forward-looking statements may include statements
addressing future financial and operating results of AmerisourceBergen
and the benefits and other aspects of the 2001 merger between
AmeriSource Health Corporation and Bergen Brunswig Corporation.
The following factors, among others, could cause actual results to
differ materially from those described in any forward-looking
statements: competitive pressures; the loss of one or more key
customer relationships; customer insolvencies; changes in customer
mix; changes in pharmaceutical manufacturers' pricing and distribution
policies; regulatory changes; changes in U.S. government policies;
failure to integrate the businesses of AmeriSource and Bergen Brunswig
successfully; failure to obtain and retain expected synergies from the
merger of AmeriSource and Bergen Brunswig; and other economic,
business, competitive, regulatory and/or operational factors affecting
the business of AmerisourceBergen generally.
More detailed information about these factors is set forth in
AmerisourceBergen's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for fiscal 2002.
AmerisourceBergen is under no obligation to (and expressly
disclaims any such obligation to) update or alter any 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
June 30, Operating June 30, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $11,482,571 100.00% $10,278,327 100.00% 12%
Bulk
deliveries to
customer
warehouses 938,100 1,342,500 -30%
------------ ------------
Total revenue 12,420,671 11,620,827
Cost of goods
sold 11,860,292 11,110,898 7%
------------ ------------
Gross profit 560,379 4.88% 509,929 4.96% 10%
Operating
expenses:
Distribution,
selling and
administrative 311,953 2.72% 304,299 2.96% 3%
Depreciation
and
amortization 16,340 0.14% 14,740 0.14% 11%
Facility
consolidations
and employee
severance 3,880 0.03% - 0.00% N/A
Merger costs - 0.00% 8,147 0.08% N/A
------------ ------------
Operating income 228,206 1.99% 182,743 1.78% 25%
Equity in losses
(income) of
affiliates and
other 1,642 0.01% (190) 0.00% N/A
Interest expense 37,234 0.32% 33,326 0.32% 12%
Loss on early
retirement of
debt 4,220 0.04% - 0.00% N/A
------------ ------------
Income before
taxes 185,110 1.61% 149,607 1.46% 24%
Income taxes 72,564 0.63% 59,383 0.58% 22%
------------ ------------
Net income $112,546 0.98% $90,224 0.88% 25%
============ ============
Earnings per
share:
Basic $1.02 $0.86
Diluted $0.99 $0.82
Weighted average
common shares
outstanding:
Basic 110,332 105,374
Diluted 116,774 112,891
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Nine Nine
Months Ended % of Months Ended % of
June 30, Operating June 30, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $33,803,435 100.00% $29,883,212 100.00% 13%
Bulk
deliveries to
customer
warehouses 3,214,310 3,750,662 -14%
------------ ------------
Total revenue 37,017,745 33,633,874
Cost of goods
sold 35,354,752 32,138,019 10%
------------ ------------
Gross profit 1,662,993 4.92% 1,495,855 5.01% 11%
Operating
expenses:
Distribution,
selling and
administrative 953,198 2.82% 906,467 3.03% 5%
Depreciation
and
amortization 50,678 0.15% 44,189 0.15% 15%
Facility
consolidations
and employee
severance 6,504 0.02% - 0.00% N/A
Merger costs - 0.00% 20,385 0.07% N/A
------------ ------------
Operating income 652,613 1.93% 524,814 1.76% 24%
Equity in losses
of affiliates
and other 7,558 0.02% 1,187 0.00% 537%
Interest expense 110,018 0.33% 109,071 0.36% 1%
Loss on early
retirement of
debt 4,220 0.01% - 0.00% N/A
------------ ------------
Income before
taxes 530,817 1.57% 414,556 1.39% 28%
Income taxes 209,118 0.62% 164,575 0.55% 27%
------------ ------------
Net income $321,699 0.95% $249,981 0.84% 29%
============ ============
Earnings per
share:
Basic $2.96 $2.39
Diluted $2.85 $2.30
Weighted average
common shares
outstanding:
Basic 108,845 104,505
Diluted 115,302 111,926
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
June September
30, 30, $
2003 2002 Change
------------ ------------ -----------
Current assets:
Cash and cash equivalents $224,823 $663,340 ($438,517)
Accounts receivable, net 2,500,776 2,222,156 278,620
Merchandise inventories 6,729,477 5,437,878 1,291,599
Prepaid expenses and other 15,161 26,263 (11,102)
------------ ------------ -----------
Total current assets 9,470,237 8,349,637 1,120,600
Long-term assets 3,139,535 2,863,375 276,160
------------ ------------ -----------
Total assets $12,609,772 $11,213,012 $1,396,760
============ ============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,588,138 $5,367,837 $220,301
Current portion of long-term
debt 60,907 60,819 88
Other current liabilities 789,499 670,861 118,638
------------ ------------ -----------
Total current
liabilities 6,438,544 6,099,517 339,027
Long-term debt, less current
portion 2,238,790 1,756,494 482,296
Other liabilities 45,258 40,663 4,595
Stockholders' equity 3,887,180 3,316,338 570,842
------------ ------------ -----------
Total liabilities
and stockholders'
equity $12,609,772 $11,213,012 $1,396,760
============ ============ ===========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended June 30,
-----------------------------------
Operating Revenue 2003 2002 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $11,285,932 $10,094,205 12%
PharMerica 399,886 373,791 7%
Intersegment Eliminations (203,247) (189,669) -7%
------------ ------------
Operating revenue $11,482,571 $10,278,327 12%
============ ============
Three Months Ended June 30,
-----------------------------------
Operating Income 2003 2002 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $204,777 $169,134 21%
PharMerica 27,309 21,756 26%
Merger costs, facility
consolidations and employee
severance (3,880) (8,147) 52%
------------ ------------
Operating income $228,206 $182,743 25%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.82% 3.83%
Operating expenses 2.01% 2.15%
Operating income 1.81% 1.68%
PharMerica
Gross profit 32.27% 33.11%
Operating expenses 25.44% 27.29%
Operating income 6.83% 5.82%
AmerisourceBergen Corporation
Gross profit 4.88% 4.96%
Operating expenses 2.89% 3.18%
Operating income 1.99% 1.78%
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Nine Months Ended June 30,
-----------------------------------
Operating Revenue 2003 2002 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $33,195,148 $29,367,184 13%
PharMerica 1,199,823 1,088,967 10%
Intersegment Eliminations (591,536) (572,939) -3%
------------ ------------
Operating revenue $33,803,435 $29,883,212 13%
============ ============
Nine Months Ended June 30,
-----------------------------------
Operating Income 2003 2002 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $584,168 $484,586 21%
PharMerica 74,949 60,613 24%
Merger costs, facility
consolidations and employee
severance (6,504) (20,385) 68%
------------ ------------
Operating income $652,613 $524,814 24%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.84% 3.85%
Operating expenses 2.08% 2.20%
Operating income 1.76% 1.65%
PharMerica
Gross profit 32.27% 33.41%
Operating expenses 26.02% 27.85%
Operating income 6.25% 5.57%
AmerisourceBergen Corporation
Gross profit 4.92% 5.01%
Operating expenses 2.99% 3.25%
Operating income 1.93% 1.76%
AMERISOURCEBERGEN CORPORATION
EARNINGS PER SHARE
(In thousands, except per share data)
(unaudited)
Basic earnings per share is computed on the basis of the weighted
average number of shares of common stock outstanding during the
periods presented. Diluted earnings per share 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 diluted earnings per share calculation considers 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 Nine months ended
June 30, June 30,
2003 2002 2003 2002
--------- -------- --------- ---------
Net income $112,546 $90,224 $321,699 $249,981
Interest expense - convertible
subordinated notes, net of
income taxes 2,501 2,481 7,479 7,442
--------- -------- --------- ---------
Income available to common
stockholders $115,047 $92,705 $329,178 $257,423
========= ======== ========= =========
Weighted average common shares
outstanding - basic 110,332 105,374 108,845 104,505
Effect of dilutive securities:
Options to purchase common
stock 778 1,853 793 1,757
Convertible subordinated
notes 5,664 5,664 5,664 5,664
--------- -------- --------- ---------
Weighted average common shares
outstanding - diluted 116,774 112,891 115,302 111,926
========= ======== ========= =========
Earnings per share:
Basic $1.02 $0.86 $2.96 $2.39
Diluted $0.99 $0.82 $2.85 $2.30 CONTACT: AmerisourceBergen Corporation, Valley Forge
Michael N. Kilpatric, 610-727-7118
mkilpatric@amerisourcebergen.com
SOURCE: AmerisourceBergen Corporation