VALLEY FORGE, Pa.--(BUSINESS WIRE)--Jan. 26, 2004--
Record Operating Revenue Exceeds $12 Billion Driven By an 11
Percent Increase in Pharmaceutical Distribution
AmerisourceBergen Corporation (NYSE:ABC) today reported record
results for its fiscal first quarter ended December 31, 2003. The
following results are presented in accordance with generally accepted
accounting principles (GAAP).
Fiscal First Quarter Highlights
-- Record diluted earnings per share of $0.94, including special
charges of $0.01, up 12 percent.
-- Record net income of $108.5 million, up 17 percent.
-- Operating margin expansion of 3 basis points.
-- Record operating revenue of $12.3 billion, up 10 percent.
"Our discipline delivered another outstanding quarter at
AmerisourceBergen," said R. David Yost, AmerisourceBergen's Chief
Executive Officer. "Operating revenue grew at a double-digit rate and
was over $12 billion for the first time in any quarter. Our
disciplined approach to growth drove total operating expenses as a
percentage of operating revenue to a historic low, and strong working
capital management and operating margin expansion combined to produce
excellent earnings per share growth."
Discussion of Results
Diluted earnings per share for the first quarter of fiscal 2004
were $0.94, a 12 percent increase over the $0.84 in the prior year's
first quarter. Included in these results are special charges, net of
tax, in the first quarter of fiscal 2004 of $1.0 million, and a $0.8
million credit, net of tax, in the same period of the previous fiscal
year. Both the charge and the credit are for facility consolidations
and employee severance. The earnings per share impact of these items
was a decrease of $0.01 in the first quarter of fiscal 2004 and an
increase of $0.01 in the first quarter of last fiscal year.
AmerisourceBergen's operating revenue was $12.3 billion in the
first quarter of fiscal 2004 compared to $11.1 billion for the same
period last year, a 10 percent increase. Bulk deliveries in the
quarter decreased 18 percent to $1.1 billion in the quarter,
reflecting the conversion of bulk business into operating revenue in
fiscal 2003.
"Our excellent operational performance in the December quarter
reflected on-going, disciplined expense management, solid working
capital management, and continued strong performance by our Specialty
Group," said Kurt J. Hilzinger, AmerisourceBergen's President and
Chief Operating Officer. "During the quarter, we continued to benefit
from our merger integration cost savings and remain confident of
delivering by the end of this fiscal year the $150 million in annual
synergy cost savings we announced at the time of the merger. The
building of our new distribution center network continues on schedule
and on budget, with our new Sacramento, California, facility set to
open this summer and our new Columbus, Ohio, distribution center to
open in the fall. Completion of these and the other four new
distribution centers will facilitate additional consolidation and cost
savings in the years ahead."
"In our PharMerica segment, operational discipline and expense
reduction drove operating margins to a first quarter record, despite
no revenue growth," said Hilzinger.
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes the AmerisourceBergen Drug Corporation
and AmerisourceBergen Specialty Group operations) and PharMerica
(which includes the institutional pharmacy and workers' compensation
fulfillment businesses). Intersegment sales of $227.3 million in the
first quarter of fiscal 2004 from AmerisourceBergen Drug Corporation
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 first quarter of fiscal 2004 increased to
$12.1 billion compared with $10.9 billion in the first quarter of
fiscal year 2003, an 11 percent increase.
Pharmaceutical Distribution customer mix in the first quarter of
fiscal 2004 was 60 percent institutional and 40 percent retail.
Operating revenue from institutional customers, which includes mail
order and alternate site facilities, hospitals and specialty
pharmaceutical customers, continued to grow significantly faster than
operating revenue from retail customers.
AmerisourceBergen Specialty Group, with annualized revenue of more
than $4 billion, continued its strong performance. The Group continues
to build leadership positions in the distribution of products and
services to physicians in numerous disease states, including its
industry leading position in oncology, as well as to grow its
manufacturer services businesses such as reimbursement consulting.
For the segment, gross profit as a percentage of operating revenue
in the first quarter of fiscal 2004 was 3.33 percent, compared to 3.59
percent in the same period in the prior fiscal year, down 26 basis
points. Gross margins were positively impacted by recent acquisitions,
which offset in part the negative effects of customer mix and the
strong competitive environment.
Total operating expenses as a percentage of operating revenue in
the first quarter of fiscal 2004 were 1.81 percent, a record low and a
29 basis point improvement over the same quarter last year. The
improvement was driven by customer mix, merger integration cost
savings and the recovery of a previously reserved bad debt, offset in
part by higher expense ratios within recent acquisitions.
Operating income was $183.5 million in the first quarter of fiscal
2004, up 13 percent from $162.9 million for the same quarter last
year. For the first quarter of fiscal 2004, operating income as a
percentage of operating revenue was 1.52 percent, a 3 basis point
improvement from the first quarter of fiscal 2003, as reductions in
operating expense margins offset lower gross margins.
PharMerica
PharMerica's operating revenue for the first quarter of fiscal
2004 was $402.4 million, compared with $402.8 million in the previous
year's first quarter.
However, operating income for the first quarter of fiscal 2004 was
$28.5 million, up 21 percent from $23.5 million for the same quarter
last year due to continued expense reduction. Operating income as a
percentage of operating revenue increased 124 basis points in the
quarter ended December 31, 2003 to 7.08 percent from 5.84 percent in
the prior year.
Looking Ahead
"Our recently revised earnings expectations for fiscal year 2004,
which reflects the loss of a major customer, remain unchanged," said
Yost. "We expect fiscal 2004 diluted earnings per share, excluding
special items, to be in the range of $4.10 per share to $4.20 per
share. Following the anniversary of our customer loss in fiscal 2005,
we would expect to return to our long-term financial goals, which
include growing diluted earnings per share at 15 percent or more
annually."
Conference Call
The Company will host a conference call to discuss its results at
11:00 a.m. Eastern Standard Time on January 26, 2004. 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: 888-428-4479 from inside the U.S., no access code
required or 651-291-5254 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
3:00 p.m. January 26, 2004 until 11:59 p.m. February 2, 2004. The
Webcast replay should be available for 30 days.
To access the replay via telephone:
Dial in: 800-475-6701 from within the U.S., access code: 716110
or 320-365-3844 from outside the U.S., access code: 716110
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 2003.
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
December 31, Operating December 31, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $12,265,679 100.00% $11,106,905 100.00% 10%
Bulk
deliveries to
customer
warehouses 1,089,434 1,327,628 -18%
---------- ----------
Total revenue 13,355,113 12,434,533
Cost of goods
sold 12,827,939 11,913,108 8%
---------- ----------
Gross profit 527,174 4.30% 521,425 4.69% 1%
Operating
expenses:
Distribution,
selling and
administrative 298,327 2.43% 317,682 2.86% -6%
Depreciation
and amortization 16,818 0.14% 17,269 0.16% -3%
Facility
consolidations
and employee
severance 1,553 0.01% (1,381) -0.01% N/A
--------- ---------
Operating income 210,476 1.72% 187,855 1.69% 12%
Equity in losses
of affiliates
and other 2,587 0.02% 183 0.00% N/A
Interest expense 31,507 0.26% 34,385 0.31% -8%
--------- ---------
Income before
taxes 176,382 1.44% 153,287 1.38% 15%
Income taxes 67,908 0.55% 60,548 0.55% 12%
--------- ---------
Net income $108,474 0.88% $92,739 0.83% 17%
========= =========
Earnings per share:
Basic $0.97 $0.87
Diluted $0.94 $0.84
Weighted average
common shares
outstanding:
Basic 111,709 106,790
Diluted 118,029 113,402
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
December 31, September 30, $
2003 2003 Change
------------ ------------ ----------
Current assets:
Cash and cash equivalents $283,225 $800,036 $(516,811)
Accounts receivable, net 2,623,384 2,295,437 327,947
Merchandise inventories 5,658,862 5,733,837 (74,975)
Prepaid expenses and other 30,890 29,208 1,682
------------ ------------ ----------
Total current assets 8,596,361 8,858,518 (262,157)
Long-term assets 3,213,617 3,181,607 32,010
------------ ------------ ----------
Total assets $11,809,978 $12,040,125 $(230,147)
============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,024,801 $5,393,769 $(368,968)
Current portion of long-term debt 61,392 61,430 (38)
Other current liabilities 832,261 800,903 31,358
------------ ------------ ----------
Total current liabilities 5,918,454 6,256,102 (337,648)
Long-term debt, less current
portion 1,708,403 1,722,724 (14,321)
Other liabilities 62,257 55,982 6,275
Stockholders' equity 4,120,864 4,005,317 115,547
------------ ------------ ----------
Total liabilities and
stockholders' equity $11,809,978 $12,040,125 $(230,147)
============ ============ ==========
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Three
Months Months
Ended Ended
December December
31, 31,
2003 2002
--------- ---------
Operating Activities:
Net income $108,474 $92,739
Non-cash items 29,811 46,518
Changes in operating assets and liabilities (592,683) (805,606)
--------- ---------
Net cash used in operating activities (454,398) (666,349)
--------- ---------
Investing Activities:
Capital expenditures (51,516) (16,487)
Cost of acquired companies (219) (1,427)
Other 96 75
--------- ---------
Net cash used in investing activities (51,639) (17,839)
--------- ---------
Financing Activities:
Net borrowings under revolving credit and
receivables securitization facilities - 100,000
Net (repayments) borrowings of long-term debt (15,000) 285,000
Exercise of stock options 6,577 9,823
Cash dividends on common stock (2,802) (2,674)
Other 451 (4,525)
--------- ---------
Net cash (used in) provided by financing
activities (10,774) 387,624
--------- ---------
Decrease in cash and cash equivalents (516,811) (296,564)
Cash and cash equivalents at beginning of period 800,036 663,340
--------- ---------
Cash and cash equivalents at end of period $283,225 $366,776
========= =========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended December 31,
-----------------------------------
Operating Revenue 2003 2002 % Change
---------------------------------- ------------ ------------ ---------
Pharmaceutical Distribution $12,090,524 $10,899,570 11%
PharMerica 402,440 402,842 0%
Intersegment eliminations (227,285) (195,507) -16%
------------ ------------
Operating revenue $12,265,679 $11,106,905 10%
============ ============
Three Months Ended December 31,
-----------------------------------
Operating Income 2003 2002 % Change
---------------------------------- ------------ ------------ ---------
Pharmaceutical Distribution $183,536 $162,935 13%
PharMerica 28,493 23,539 21%
Facility consolidations and
employee severance (1,553) 1,381 N/A
------------ ------------
Operating income $210,476 $187,855 12%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.33% 3.59%
Operating expenses 1.81% 2.10%
Operating income 1.52% 1.49%
PharMerica
Gross profit 30.96% 32.18%
Operating expenses 23.88% 26.33%
Operating income 7.08% 5.84%
AmerisourceBergen Corporation
Gross profit 4.30% 4.69%
Operating expenses 2.58% 3.00%
Operating income 1.72% 1.69%
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
December 31,
2003 2002
--------- --------
Net income $108,474 $92,739
Interest expense - convertible subordinated notes,
net of income taxes 2,530 2,489
--------- --------
Income available to common stockholders $111,004 $95,228
========= ========
Weighted average common shares outstanding - basic 111,709 106,790
Effect of dilutive securities:
Options to purchase common stock 656 948
Convertible subordinated notes 5,664 5,664
--------- --------
Weighted average common shares outstanding -
diluted 118,029 113,402
========= ========
Earnings per share:
Basic $0.97 $0.87
Diluted $0.94 $0.84
CONTACT: AmerisourceBergen
Michael N. Kilpatric, 610-727-7118
mkilpatric@amerisourcebergen.com
SOURCE: AmerisourceBergen