VALLEY FORGE, Pa.--(BUSINESS WIRE)--July 25, 2001--AmeriSource
Health Corporation (NYSE:AAS) today reported record results for its
fiscal third quarter and nine months ended June 30, 2001.
Operating revenue increased more than 20 percent in the third
quarter to a record $3.5 billion compared to $2.9 billion for the same
period last year. Net income for the quarter was up 25 percent to
$31.5 million, also a third-quarter record. Net income for same
quarter last year was $25.1 million, which included the positive after
tax impact of $0.7 million for the reversal of restructuring reserves.
Fiscal third quarter 2001 earnings per diluted share were $.57
compared to $.48 per diluted share in the prior year. Without the
restructuring reversal last year, earnings per diluted share for the
third quarter of fiscal 2001 increased 21 percent over the previous
year's $.47 per diluted share.
For the first nine months of fiscal 2001, operating revenue
increased 20 percent to a record $10.3 billion compared to $8.6
billion in the prior year period.
In the nine-month period, net income increased 26 percent to $89.2
million from $71.0 million for the same period last year, and earnings
per diluted share were $1.64, 20 percent ahead of the $1.37 per
diluted share earned in the first nine months of the prior year.
Excluding the restructuring reversal in the third quarter of last
year, net income and earnings per diluted share for the fiscal 2001
nine-month period increased 27 percent and 21 percent, respectively.
The following discussions of the third quarter and nine months results
do not include the impact of the reversal of the restructuring reserve
in fiscal year 2000.
R. David Yost, AmeriSource Chairman and Chief Executive Officer,
said, "This was another terrific, record-setting quarter and
year-to-date performance for AmeriSource, with superb revenue growth,
notably lower expenses, outstanding return on committed capital, and
record earnings per share for a June quarter. Each region and customer
group contributed to revenue growth that was well ahead of our 15
percent long-range goal, reflecting the dedication and strong efforts
of our associates at all levels. Total operating expenses as a
percentage of operating revenue were again below our 2.50 percent goal
for the year, and ROCC increased to 26.4 percent. Earnings per share
continued to show strong year-over-year growth in line with our
long-term goal of 20 percent.
"Our continuing solid performance is anchored in our ability to
grow our current account base and capture new business, while
achieving our profitability goals. It also reflects the strength of
the pharmaceuticals marketplace, where the favorable demographics of
an aging U.S. population continue to drive growth more than general
economic conditions. Overall pharmaceutical sales are projected to
increase at a compound annual growth rate of 13.8 percent over the
next five years, according to IMS Health, a leading healthcare data
service.
"As we have mentioned before, our exceptional customer service,
executed at the distribution center level, is the key to our strong
revenue growth. We also continued to deliver on productivity
improvement, both through the implementation of cost reduction
programs and by holding down costs while growing revenue."
Commenting on specifics of the quarter, Kurt J. Hilzinger,
AmeriSource President and Chief Operating Officer, said, "Our Health
Systems group, which leads the acute-care market, continued to build
revenue momentum this quarter, as we experienced the full impact of
the $500 million in annualized, incremental business from Novation, a
major hospital group purchasing organization. The fast-growing
Alternate Site group added new accounts, large and small, to our
growing base.
"Our Chain Drugstore and Independent Community Pharmacy customer
groups continued to contribute to our revenue growth for the quarter.
The strong performance of new accounts, such as the recently signed
Familymeds Group, Inc., a multi-channel pharmacy retailer which will
deliver more than $200 million in annualized revenue, continues to
expand our chain drugstore business. Our independent community
pharmacy customers are driving same store growth at a double-digit
rate, and continue to be an integral part of our business.
"Our ongoing financial discipline and the centralization
initiatives completed last year continued to contribute to high levels
of procurement performance, expense control and capital productivity."
For the third quarter of fiscal 2001, the Company's gross margin
as a percentage of operating revenue was 4.12 percent versus 4.44
percent in the prior year. This expected year-to-year decline in gross
margin primarily reflects a shift in customer mix and a competitive
marketplace.
The Company's customer mix in the current quarter was 54 percent
institutional, which encompasses Health Systems and Alternate Site
customer groups, and 46 percent retail, including Independent
Community Pharmacies and Chain Drugstores. In the same period last
year, the customer mix was 51 percent institutional and 49 percent
retail.
Total operating expenses as a percentage of operating revenue
declined 39 basis points to a record low 2.41 percent in the third
quarter of fiscal 2001 from 2.80 percent a year ago. For the
comparable nine-month periods, the ratio declined 28 basis points to a
record 2.47 percent in fiscal 2001 from 2.75 percent last year.
This reduction, which was accomplished despite $0.9 million in
merger integration costs, was driven by the shift in customer mix,
efficiencies of scale, and cost reductions aided by the centralization
efforts.
The Company's operating income advanced 26 percent to $60.2
million in the third quarter of fiscal year 2001 from $47.8 million
for the same quarter last year. For the fiscal third quarter,
operating margin as a percentage of operating revenue, improved to
1.71 percent compared to 1.64 percent for the prior year period.
Interest expense was down 12 percent to $7.4 million, reflecting
the net impact of higher average levels of debt, more than offset by
lower borrowing spreads and rates, as well as the effect of the
Company's $300 million of fixed-rate convertible notes issued in
mid-December of last year.
Merger Update
AmeriSource continues to move forward under its agreement,
announced March 19, 2001, to combine with Bergen Brunswig Corporation
to create a new company, called AmerisourceBergen Corporation. It
expects to complete the merger by the end of August 2001, following
shareholder votes and Federal Trade Commission review.
In connection with the Federal Trade Commission's review of the
merger, AmeriSource expects to certify compliance with the
Commission's request for additional information shortly. While the
Company has filed all documents and information for this "second
request," it has delayed certification at the request of the FTC
staff.
Certification starts the FTC's 30-day review period under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976. After the
review, the merger may proceed if there is no objection from the
Commission.
"We are continuing our integration planning activities, even as
each company remains focused on its business," said Mr. Yost. "This
combination of two strong, service-oriented companies boosts our
confidence that we can achieve a long-term earnings per share growth
objective of 20 percent for our shareholders."
About AmeriSource
AmeriSource Health Corporation, with approximately $14 billion in
annualized operating revenue, is a leading distributor of
pharmaceutical and related healthcare products and 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
22 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 and system initiatives, market interest rates,
regulatory changes, continued industry consolidation, changes in
customer mix, changes in pharmaceutical manufacturers' pricing and
distribution policies, the loss of one or more key customer or
supplier relationships and other matters contained in the Company's
10-K for fiscal year 2000 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.
Additional Information About The Merger
In connection with their proposed merger, AmerisourceBergen,
together with AmeriSource and Bergen Brunswig, filed a joint proxy
statement/prospectus with the Securities and Exchange Commission.
INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE JOINT PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION.
Investors and security holders may obtain a free copy of the joint
proxy statement/prospectus (when available) and other documents filed
by AmerisourceBergen (as well as by AmeriSource and Bergen Brunswig)
at the SEC's web site at www.sec.gov.
The joint proxy statement/prospectus and such other documents may
also be obtained for free from AmeriSource or from Bergen Brunswig by
directing such request to AmeriSource Health Corporation, General
Counsel, 1300 Morris Drive, Suite 100, Chesterbrook, Pennsylvania
19087-5594, telephone: (610) 727-7000; or to Bergen Brunswig
Corporation, Attention: Corporate Secretary, 4000 Metropolitan Drive,
Orange, California 92868-3510, Telephone: (714) 385-4000.
AmeriSource and Bergen Brunswig and their respective directors,
executive officers and other members of their management and employees
may be deemed to be participants in the solicitation of proxies from
their respective stockholders in connection with the proposed merger.
Information concerning AmeriSource's participants in the
solicitation is set forth in AmeriSource's Current Report on Form 8-K
filed with the Securities and Exchange Commission on March 19, 2001,
and information concerning Bergen Brunswig's participants in the
solicitation is set forth in Bergen Brunswig's Current Report on Form
8-K filed with the Securities and Exchange Commission on March 19,
2001.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Three Three
Months Ended % of Months Ended % of
June 30 Operating June 30 Operating %
2001 Revenue 2000 Revenue Change
------- ------- ------- ------- ------
Revenue:
Operating revenue $3,518,852 100.00% $2,921,424 100.00% 20%
Bulk deliveries to
customer
warehouses 77 10,282
---------- ----------
Total revenue 3,518,929 2,931,706
Cost of goods sold:
Operating cost of
goods sold 3,373,913 95.88% 2,791,794 95.56% 21%
Cost of goods sold
- bulk deliveries 77 10,282
---------- ----------
Total cost of goods
sold 3,373,990 2,802,076
---------- ----------
Gross profit 144,939 4.12% 129,630 4.44% 12%
Operating expenses:
Selling and
administrative 79,638 2.26% 77,944 2.67% 2%
Depreciation and
amortization 4,205 0.12% 3,910 0.13% 8%
Facility
consolidations
and employee
severance 0 0.00% (1,123) -0.04% -100%
Merger costs 903 0.03% 0 0.00% N/A
---------- ----------
Operating income 60,193 1.71% 48,899 1.67% 23%
Equity in net loss
of unconsolidated
affiliate 2,006 0.06% 0 0.00% N/A
Interest expense 7,361 0.21% 8,383 0.29% -12%
---------- ----------
Income before taxes 50,826 1.44% 40,516 1.39% 25%
Taxes on income 19,320 0.55% 15,396 0.53% 25%
---------- ----------
Net income $ 31,506 0.90% $ 25,120 0.86% 25%
========== ==========
Earnings per share:
Basic $ 0.60 $ 0.49
Assuming dilution $ 0.57 $ 0.48
Weighted average
common shares
outstanding:
Basic 52,912 51,583
Assuming dilution 59,578 52,086
(a) Note - earnings per share assuming dilution before the special
item was $0.47 for the three months ended June 30, 2000.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Nine Nine
Months Ended % of Months Ended % of
June 30 Operating June 30 Operating %
2001 Revenue 2000 Revenue Change
------- ------- ------- ------- ------
Revenue:
Operating revenue $10,306,288 100.00% $ 8,582,219 100.00% 20%
Bulk deliveries to
customer
warehouses 834 31,072
----------- -----------
Total revenue 10,307,122 8,613,291
Cost of goods sold:
Operating cost of
goods sold 9,872,747 95.79% 8,201,256 95.56% 20%
Cost of goods sold
- bulk deliveries 834 31,072
----------- -----------
Total cost of goods
sold 9,873,581 8,232,328
----------- -----------
Gross profit 433,541 4.21% 380,963 4.44% 14%
Operating expenses:
Selling and
administrative 241,745 2.35% 224,512 2.62% 8%
Depreciation and
amortization 12,380 0.12% 11,826 0.14% 5%
Facility
consolidations
and employee
severance 0 0.00% (1,123) -0.01% -100%
Merger costs 903 0.01% 0 0.00% N/A
----------- -----------
Operating income 178,513 1.73% 145,748 1.70% 22%
Equity in net loss
of unconsolidated
affiliate 4,581 0.04% 0 0.00% N/A
Interest expense 30,030 0.29% 31,203 0.36% -4%
----------- -----------
Income before taxes 143,902 1.40% 114,545 1.33% 26%
Taxes on income 54,689 0.53% 43,527 0.51% 26%
----------- -----------
Net income $ 89,213 0.87% $ 71,018 0.83% 26%
=========== ===========
Earnings per share:
Basic $ 1.69 $ 1.38
Assuming dilution $ 1.64 $ 1.37
Weighted average
common shares
outstanding:
Basic 52,656 51,414
Assuming dilution 57,819 51,770
(a) Note - earnings per share assuming dilution before the special
item was $1.36 for the nine months ended June 30, 2000.
AMERISOURCE HEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS (unaudited)
June 30 September 30, Increase
2001 2000 (Decrease)
---------- ----------- -----------
Current assets:
Cash and cash
equivalents $94,298 $120,818 ($26,520)
Accounts
receivable, less
allowance for
doubtful
accounts 677,180 623,961 53,219
Merchandise
inventories 1,955,385 1,570,504 384,881
Prepaid expenses
and other 4,266 5,336 (1,070)
---------- ----------- -----------
Total current
assets 2,731,129 2,320,619 410,510
Property and
equipment, net 71,009 64,962 6,047
Other assets, less
accumulated
amortization 85,806 72,986 12,820
---------- ----------- -----------
Total assets $2,887,944 $2,458,567 $429,377
========== =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current
liabilities:
Accounts payable $1,639,876 $1,584,133 $55,743
Accrued expenses
and other 56,704 49,398 7,306
Accrued income
taxes 20,163 12,284 7,879
Deferred income
taxes 117,092 105,654 11,438
---------- ----------- -----------
Total current
liabilities 1,833,835 1,751,469 82,366
Long-term debt:
Revolving credit
facility 80,890 20,000 60,890
Receivables
securitization
financing 260,000 385,000 (125,000)
Convertible
subordinated
notes 300,000 0 300,000
Other debt 44 8,217 (8,173)
Other liabilities 10,250 11,587 (1,337)
Stockholders'
equity:
Common stock and
capital in
excess of par
value 315,550 284,132 31,418
Retained earnings 93,595 4,382 89,213
Cost of common
stock in
treasury (6,220) (6,220) 0
---------- ----------- -----------
Total
stockholders'
equity 402,925 282,294 120,631
---------- ----------- -----------
Total
liabilities
and
stockholders'
equity $2,887,944 $2,458,567 $429,377
========== =========== ===========
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 Nine months ended
June 30, June 30,
----------------- -----------------
2001 2000 2001 2000
------- ------- ------- -------
Net income $31,506 $25,120 $89,213 $71,018
Interest expense -
convertible
subordinated
notes, net of
income taxes 2,513 -- 5,599 --
------- ------- ------- -------
Income available to
common stockholders $34,019 $25,120 $94,812 $71,018
======= ======= ======= =======
Weighted average
number of shares
of common stock
outstanding 52,912 51,583 52,656 51,414
Effect of dilutive
securities:
Stock options 1,002 503 993 356
Convertible
subordinated
notes 5,664 -- 4,170 --
------- ------- ------- -------
Weighted average
number of shares
of common stock
and dilutive
potential common
stock 59,578 52,086 57,819 51,770
======= ======= ======= =======
Earnings per share
Basic $ 0.60 $ 0.49 $ 1.69 $ 1.38
Assuming dilution
(a) $ 0.57 $ 0.48 $ 1.64 $ 1.37
(a) Note - earnings per share assuming dilution before the special
item was $0.47 and $1.36 for the three and nine months ended June 30,
2000.
| CONTACT: |
AmeriSource Health Corporation, Valley Forge |
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Michael N. Kilpatric, 610/727-7118 |
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mkilpatric@amerisource.com |
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