Operating Revenue Increased 20% Over Pro Forma Prior Year
AmerisourceBergen Corporation today reported record
results for its fiscal first quarter ended December 31, 2001.
VALLEY FORGE, Pa.--(BUSINESS WIRE)--Jan. 24, 2002--
AmeriSource Health Corporation and Bergen Brunswig Corporation
merged on August 29, 2001 to form AmerisourceBergen Corporation (NYSE:ABC) . Under
purchase accounting rules, AmerisourceBergen's fiscal 2002 first
quarter results are compared with the fiscal 2001 first quarter of
AmeriSource only.
Pro forma data included in this discussion reflects comparisons to
the combined companies operating results in the previous year's first
quarter, adjusted to eliminate amortization of goodwill. Both former
companies had the same fiscal year ending September 30.
AmerisourceBergen's operating revenue, which excludes bulk
deliveries to customer warehouses, was a record $9.7 billion in the
first quarter compared to $3.3 billion for the same period last year.
First quarter operating revenue increased 20 percent over fiscal 2001
first quarter pro forma operating revenue of $8.1 billion.
Diluted earnings per share before the special item for the quarter
were $0.67, a 37 percent increase over the previous year's first
quarter. Income before the special item for the first quarter
increased to $72.4 million from $26.2 million in the same period last
year. The special item, consisting of merger integration costs, was a
$4.5 million charge, net of tax, in the quarter.
Net income and diluted earnings per share for the quarter were
$67.9 million and $0.63, respectively. AmerisourceBergen had
approximately 111.2 million weighted average diluted common shares
outstanding for the first quarter of fiscal 2002.
The following discussion of the first quarter results, including
segment data, does not include the impact of the special item in first
quarter of fiscal 2002.
R. David Yost, AmerisourceBergen President and Chief Executive
Officer, said, "This was an exceptional performance by
AmerisourceBergen in its first full quarter as a combined company. The
Company delivered strong revenue growth, record earnings per share,
and a very strong return on committed capital (ROCC) of 25.4 percent.
"This solid revenue and earnings performance is a clear indication
of the strength of this new company. Our diverse customer base, our
focus on the pharmaceutical supply chain, and our developing scale,
all contributed to our success in the quarter.
"Our cost savings from merger synergies are gaining traction. In
120 days, we have established our management organization, completed
our planning activities for capturing merger synergies, and begun to
operate as one company, while remaining focused on customer service."
Segment Discussion
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes AmerisourceBergen Drug Company and
AmerisourceBergen Specialty Group) and PharMerica, its institutional
pharmacy and worker's compensation fulfillment businesses.
Intersegment sales of $191.2 million in the first quarter of
fiscal 2002 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 first quarter of fiscal 2002 increased to
$9.5 billion compared with $3.3 billion, in the previous year's first
quarter. Operating revenue increased 20 percent over fiscal 2001 first
quarter pro forma revenues of $7.9 billion.
Pharmaceutical distribution customer mix in the first quarter of
fiscal 2002 was 52 percent institutional and 48 percent retail.
Operating income was $139.5 million in the first quarter of fiscal
year 2002, up from $53.9 million for the same quarter last year, and
improved 20 percent compared to pro forma operating income of $116.1
million in the same period last year.
For the fiscal 2002 first quarter, operating income, as a
percentage of operating revenue, was 1.46 percent, unchanged compared
to the prior year's first quarter results on a pro forma basis.
Consistent with prior experience, lower gross margins were offset by
lower total operating expenses as a percentage of operating revenue.
"This quarter's strong revenue growth in pharmaceutical
distribution was driven primarily by new accounts added in previous
quarters, new business opportunities with existing customers, and
above market growth rates in our larger retail and institutional
customers," said Kurt Hilzinger, AmerisourceBergen Executive Vice
President and Chief Operating Officer. "These growth dynamics in
combination with solid expense control drove excellent earnings growth
in the quarter."
"With annualized revenue now over $2 billion, AmerisourceBergen
Specialty Group continues its rapid development 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 make significant progress in all facets of our integration
activities, remaining on or ahead of our established timetables.
During the quarter we closed two distribution centers, consolidated
our pharmaceutical repackaging operations and began capturing
procurement and administrative savings.
"Our information technology integration work remains on track
allowing for five more distribution centers to be consolidated before
the end of the fiscal year, and we continue our planning activities
for the six new distribution centers we expect to build."
PharMerica
PharMerica's operating revenue for the first quarter of fiscal
2002 was $355.4 million, representing a 6 percent increase over pro
forma operating revenue of $335.2 million in the same period last
year.
Operating income for the first quarter was $19.3 million, a 13
percent increase over the previous year's pro forma first quarter
operating income of $17.1 million.
Operating income as a percentage of operating revenue increased 33
basis points in the quarter to 5.43 percent from 5.10 percent on a pro
forma basis. As anticipated, lower gross margins were more than offset
by lower total operating expenses as a percentage of operating
revenue.
"PharMerica's disciplined growth and expense control continued to
drive its improved performance in the quarter," said Hilzinger. "Asset
management has improved as illustrated by reductions in gross
days-sales-outstanding (DSO), which were 63 in the quarter, down from
82 in the same quarter last year. Net DSOs dropped from 55 in the
prior year's first quarter to 44 in the current first quarter."
Looking Ahead
"For the balance of fiscal 2002, we expect continued strong
performance for AmerisourceBergen with revenue growth in the range of
15 percent to 17 percent and ROCC in excess of 20 percent," said Yost.
"We are increasing our diluted earnings per share estimate for fiscal
year 2002, excluding the impact of merger-related special items, from
$2.90 to $3.00. The increase in earnings expectations for the year
reflects the strong performance of our businesses in the first
quarter, continued low interest rates, and our ongoing focus on cost
improvement.
We remain confident in our ability to achieve annual cost saving
synergies of $150 million by the end of fiscal year 2004."
Conference Call
The Company will host a conference call to discuss the results at
11:00 am Eastern Standard Time on January 24, 2002. Participating in
the conference call will be: R. David Yost, President & Chief
Executive Officer; Kurt J. Hilzinger, Executive Vice President & Chief
Operating Officer; and Neil F. Dimick, Executive Vice President &
Chief Financial Officer.
To access the live conference call via telephone:
Dial in: 800/553-0318 from inside the U.S. no access code required
or 612/288-0340 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 January 24, 2002 until 11:59 pm January 31, 2002.
To access the replay via telephone:
Dial in: 800/475-6701 from within the U.S., access code: 620238
320/365-3844 from outside the U.S., access code: 620238
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 more than $36 billion in annualized operating
revenue, 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
between Amerisource Health Corporation and Bergen Brunswig
Corporation.
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
AmerisourceBergen's filings with the Securities and Exchange
Commission, including its Annual Report on Form 10-K for fiscal 2001
and AmeriSource's and Bergen's 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
Dec. 31, Operating Dec. 31, Operating %
2001 Revenue 2000 Revenue Change
---------- ------ ---------- ------ ----
Revenue:
Operating
revenue $9,686,276 100.00% $3,306,751 100.00% 193%
Bulk
deliveries
to customer
warehouses 1,382,504 444 --
---------- ----------
Total revenue 11,068,780 3,307,195 235%
Cost of goods
sold 10,597,347 3,169,762 234%
---------- ----------
Gross profit 471,433 4.87% 137,433 4.16% 243%
Operating
expenses:
Distribution,
selling and
administrative 297,592 3.07% 79,645 2.41% 274%
Depreciation
and
amortization 15,047 0.16% 3,894 0.12% 286%
Merger costs 7,497 0.08% -- 0.00% --
---------- ----------
Operating income 151,297 1.56% 53,894 1.63% 181%
Equity in losses
of affiliates
and other 1,731 0.02% 774 0.02% 124%
Interest expense 30,975 0.32% 10,876 0.33% 185%
---------- ----------
Income before
taxes and
distributions
on preferred
securities of
subsidiary trust 118,591 1.22% 42,244 1.28% 181%
Income taxes 47,078 0.49% 16,053 0.49% 193%
---------- ----------
Income before
distributions on
preferred
securities of
subsidiary trust 71,513 0.74% 26,191 0.79% 173%
Distributions on
preferred
securities of
subsidiary
trust, net of
income tax
benefit of $2,388 3,630 0.04% -- 0.00% --
---------- ----------
Net income $ 67,883 0.70% $ 26,191 0.79% 159%
========== ==========
Earnings per
share:
Basic $ 0.65 $ 0.50
Diluted $ 0.63 $ 0.49
Weighted average
common shares
outstanding:
Basic 103,736 52,354
Diluted 111,182 54,578
Pro forma results excluding merger costs included in the three months
ended December 31, 2001:
Operating income $ 158,794 $ 53,894
Net income $ 72,402 $ 26,191
Earnings per
share:
Basic $ 0.70 $ 0.50
Diluted $ 0.67 $ 0.49
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS (Unaudited)
Dec. 31, Sept. 30, $
2001 2001 Change
------------ ------------ -----------
Current assets:
Cash and cash
equivalents $ 256,689 $ 297,626 ($ 40,937)
Accounts receivable,
net 2,106,068 2,142,663 (36,595)
Merchandise
inventories 5,778,905 5,056,257 722,648
Prepaid expenses
and other 17,088 15,956 1,132
----------- ----------- -----------
Total current
assets 8,158,750 7,512,502 646,248
Long-term assets 2,774,570 2,778,743 (4,173)
----------- ----------- -----------
Total assets $10,933,320 $10,291,245 $ 642,075
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 5,122,086 $ 4,991,884 $ 130,202
Other current
liabilities 585,114 540,569 44,545
----------- ----------- -----------
Total current
liabilities 5,707,200 5,532,453 174,747
Long-term debt,
less current portion 1,989,357 1,597,295 392,062
Other liabilities 43,926 48,317 (4,391)
Company-obligated
mandatorily redeemable
preferred securities
of subsidiary trust 274,784 274,616 168
Stockholders' equity 2,918,053 2,838,564 79,489
----------- ----------- -----------
Total liabilities and
stockholders' equity $10,933,320 $10,291,245 $ 642,075
=========== =========== ===========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
Three Months Ended December 31,
--------------------------------------------------
Pro Pro
Actual Actual forma Actual % forma %
Operating Revenue 2001 2000 2000 (1) Change Change
----------------------------------------------------------------------
Pharmaceutical
Distribution $9,522,076 $3,306,751 $7,929,966 188 20
PharMerica 355,415 - 335,166 - 6
Intersegment
Eliminations (191,215) - (181,597) - 5
----------- ----------- ----------- --------------
Operating
revenue $9,686,276 $3,306,751 $8,083,535 193 20
=========== =========== =========== ==============
Three Months Ended December 31,
--------------------------------------------------
Pro Pro
Operating Actual Actual forma Actual % forma %
Income (2) 2001 2000 2000 (1) Change Change
----------------------------------------------------------------------
Pharmaceutical
Distribution $139,484 $53,894 $116,090 159 20
PharMerica 19,310 - 17,107 - 13
----------- ----------- ----------- --------------
Operating
income $158,794 $53,894 $133,197 195 19
=========== =========== =========== ==============
Percentages of operating revenue (2):
Pharmaceutical
Distribution
Gross profit 3.70% 4.16% 4.06%
Operating
expenses 2.23% 2.53% 2.60%
Operating
income 1.46% 1.63% 1.46%
PharMerica
Gross profit 33.62% - 35.85%
Operating
expenses 28.18% - 30.74%
Operating
income 5.43% - 5.10%
AmerisourceBergen
Corporation
Gross profit 4.87% 4.16% 5.47%
Operating
expenses 3.23% 2.53% 3.82%
Operating
income 1.64% 1.63% 1.65%
(1) Represents the combination of AmeriSource Health Corporation's
and Bergen Brunswig Corporation's previously reported
financial information. (See discussion under Pro Forma
Information Appendix - A(1)).
(2) Excludes merger costs.
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 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
December 31,
-------------------
2001 2000
-------- --------
Net income $67,883 $26,191
Interest expense - convertible
subordinated notes, net of
income taxes 2,481 559
-------- --------
Income available to common
stockholders $70,364 $26,750
======== ========
Weighted average common
shares outstanding 103,736 52,354
Effect of dilutive securities:
Options to purchase
common stock 1,782 993
Convertible
subordinated notes 5,664 1,231
-------- --------
Weighted average common
shares outstanding - diluted 111,182 54,578
======== ========
Earnings per share:
Basic $0.65 $0.50
Diluted $0.63 $0.49
Appendix - A(1)
Pro Forma Information
The historical consolidated financial summary and summary segment
information for the three months ended December 31, 2000, included in
this press release, reflect only the results of AmeriSource Health
Corporation, as predecessor to the Company. In order to enhance
comparability, the following schedules as well as the summary segment
information include fiscal 2001 financial data on a pro forma basis.
Within these schedules, pro forma refers to the combined results of
AmeriSource Health Corporation and Bergen Brunswig Corporation and are
not intended to be consolidated financial statements of
AmerisourceBergen prepared in accordance with generally accepted
accounting principles and do not represent consolidated results as if
the merger had occurred at the beginning of the periods presented. In
addition, they are not necessarily indicative of the actual results
which might have occurred had the operations and management of
AmeriSource Health Corporation and Bergen Brunswig Corporation been
combined at the beginning of fiscal 2001.
In addition, to enhance comparability of financial information
between fiscal years, the pro forma information for fiscal 2001
excludes the amortization of goodwill and special items related to the
merger and environmental remediation and reflects the full allocation
of Bergen Brunswig Corporation's former Corporate segment to the
Pharmaceutical Distribution and PharMerica segments.
Appendix - A(2)
AmerisourceBergen
Pro forma combined condensed financial information (1)
(dollars in thousands)
Fiscal Year Ended September 30, 2001
----------------------------------------------
First Quarter Second Quarter Third Quarter
----------------------------------------------
Operating
revenue $ 8,083,535 $ 8,467,976 $ 8,995,115
==============================================
Gross
profit $ 442,249 $ 480,035 $ 475,810
Distribution,
selling and
admini-
strative (2) 293,608 303,730 295,462
Depreciation 13,891 14,337 14,296
Amortization (3) 1,553 1,140 1,270
----------------------------------------------
Operating
income $ 133,197 $ 160,828 $ 164,782
==============================================
Gross
profit to
operating
revenue 5.47% 5.67% 5.29%
Operating
expenses
to
operating
revenue 3.82% 3.77% 3.46%
Operating
income to
operating
revenue 1.65% 1.90% 1.83%
Fiscal Year Ended September 30, 2001
----------------------------------------------
Fourth Quarter Fiscal Year
----------------------------------------------
Operating
revenue $ 9,052,684 $34,599,310
==============================================
Gross
profit $ 482,647 $ 1,880,741
Distribution,
selling and
admini-
strative (2) 304,703 1,197,503
Depreciation 14,641 57,165
Amortization (3) 1,427 5,390
----------------------------------------------
Operating
income $ 161,876 $ 620,683
==============================================
Gross
profit to
operating
revenue 5.33% 5.44%
Operating
expenses
to
operating
revenue 3.54% 3.64%
Operating
income to
operating
revenue 1.79% 1.79%
(1) Represents the combination of AmeriSource Health Corporation's
and Bergen Brunswig Corporation's previously reported
financial information. (See discussion under Pro Forma
Information Appendix - A(1)).
(2) Excludes special items in the third and fourth quarters
related to the merger and enviromental remediation.
(3) Excludes amortization of goodwill.
Appendix - A(3)
AmerisourceBergen - Pharmaceutical Distribution
Pro forma combined condensed financial information (1)
(dollars in thousands)
----------------------------------------------------------------------
Fiscal Year Ended September 30, 2001
--------------------------------------------
First Quarter Second Quarter Third Quarter
--------------------------------------------
Operating
revenue $7,929,966 $8,335,337 $8,835,163
============================================
Gross profit $322,096 $358,294 $358,619
Distribution,
selling and
administrative
(2), (3) 195,464 202,915 200,042
Depreciation 9,426 9,962 9,916
Amortization (4) 1,116 703 835
--------------------------------------------
Operating income $116,090 $144,714 $147,826
============================================
Gross profit to
operating revenue 4.06% 4.30% 4.06%
Operating expenses
to operating
revenue 2.60% 2.56% 2.39%
Operating income
to operating
revenue 1.46% 1.74% 1.67%
----------------------------------------------------------------------
Fiscal Year Ended September 30, 2001
------------------------------------
Fourth Quarter Fiscal Year
------------------------------------
Operating
revenue $8,885,145 $33,985,611
====================================
Gross profit $365,948 $1,404,957
Distribution,
selling and
administrative
(2), (3) 211,501 809,922
Depreciation 10,278 39,582
Amortization (4) 972 3,626
------------------------------------
Operating income $143,197 $551,827
====================================
Gross profit to
operating revenue 4.12% 4.13%
Operating expenses
to operating
revenue 2.51% 2.51%
Operating income
to operating
revenue 1.61% 1.62%
(1) Represents the combination of AmeriSource Health Corporation's and
Bergen Brunswig Corporation's previously reported financial
information. (See discussion under Pro Forma Information Appendix
- A(1)).
(2) Excludes special items in the fourth quarter related to the merger
and enviromental remediation.
(3) Expenses previously reported in the Corporate segment for Bergen
Brunswig Corporation have been fully allocated to the
Pharmaceutical Distribution and PharMerica segments for
comparative purposes within this schedule.
(4) Excludes amortization of goodwill.
Appendix - A(4)
AmerisourceBergen - PharMerica
Pro forma combined condensed financial information (1)
(dollars in thousands)
----------------------------------------------------------------------
Fiscal Year Ended September 30, 2001
----------------------------------------------
First Second Third
Quarter Quarter Quarter
----------------------------------------------------------------------
Operating
revenue $ 335,166 $ 339,924 $ 336,783
========================================
Gross profit $ 120,153 $ 121,741 $ 117,191
Distribution,
selling and
administrative
(2), (3) 98,144 100,815 95,420
Depreciation 4,465 4,375 4,380
Amortization
(4) 437 437 435
----------------------------------------
Operating
income $ 17,107 $ 16,114 $ 16,956
========================================
Gross profit to
operating
revenue 35.85% 35.81% 34.80%
Operating
expenses to
operating
revenue 30.74% 31.07% 29.76%
Operating
income to
operating
revenue 5.10% 4.74% 5.03%
----------------------------------------------------------------------
Fiscal Year Ended September 30, 2001
------------------------------------
Fourth Fiscal
Quarter Year
----------------------------------------------------------------------
Operating
revenue $ 338,135 $1,350,008
==============================
Gross profit $ 116,699 $ 475,784
Distribution,
selling and
administrative
(2), (3) 93,202 387,581
Depreciation 4,363 17,583
Amortization
(4) 455 1,764
------------------------------
Operating
income $ 18,679 $ 68,856
==============================
Gross profit to
operating
revenue 34.51% 35.24%
Operating
expenses to
operating
revenue 28.99% 30.14%
Operating
income to
operating
revenue 5.52% 5.10%
(1) Represents the combination of AmeriSource Health Corporation's and
Bergen Brunswig Corporation's previously reported financial
information. (See discussion under Pro Forma Information Appendix
- A(1)).
(2) Excludes special items in the fourth quarter related to the merger
and enviromental remediation.
(3) Expenses previously reported in the Corporate segment for Bergen
Brunswig Corporation have been fully allocated to the
Pharmaceutical Distribution and PharMerica segments for
comparative purposes within this schedule.
(4) Excludes amortization of goodwill.
Appendix - A(5)
AmerisourceBergen - Intersegment Eliminations
Pro forma combined condensed financial information (1)
(dollars in thousands)
----------------------------------------------------------------------
Fiscal Year Ended September 30, 2001
--------------------------------------------------------
First Second Third Fourth Fiscal
Quarter Quarter Quarter Quarter Year
----------------------------------------------------------------------
Operating
revenue ($181,597) ($207,285) ($176,831) ($170,596) ($736,309)
========================================================
Gross
profit $ 0 $ 0 $ 0 $ 0 $ 0
Distri-
bution,
selling and
admini-
strative - - - - -
Depreciation - - - - -
Amortization - - - - -
--------------------------------------------------------
Operating
income $ 0 $ 0 $ 0 $ 0 $ 0
========================================================
(1) Represents the combination of AmeriSource Health Corporation's and
Bergen Brunswig Corporation's previously reported financial
information. (See discussion under Pro Forma Information Appendix
- A(1)).
| CONTACT: |
AmerisourceBergen |
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| |
Michael N. Kilpatric, 610/727-7118 |
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mkilpatric@amerisource.com |
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