VALLEY FORGE, Pa.--(BUSINESS WIRE)--April 26,
2004--AmerisourceBergen Corporation (NYSE:ABC) today reported record
results for its fiscal second quarter ended March 31, 2004. The
following results are presented in accordance with generally accepted
accounting principles (GAAP).
Fiscal Second Quarter Highlights
-- Record diluted earnings per share of $1.23, including special
charges of $0.01, up 19 percent.
-- Record net income of $142.2 million, up 22 percent.
-- Record operating revenue of $12.3 billion, up 10 percent.
Fiscal First Six Months Highlights
-- Record diluted earnings per share of $2.17, including special
charges of $0.02, up 16 percent
-- Record net income of $250.6 million, up 20 percent
-- Record operating revenue of $24.6 billion, up 10 percent
"Solid growth and operational focus resulted in another
outstanding quarter," said R. David Yost, AmerisourceBergen's Chief
Executive Officer. "Operating revenue growth continued at a
double-digit rate, while, as expected, inventory was lower in the
quarter. Our disciplined approach to our business also drove our total
operating expenses as a percentage of operating revenue down 43 basis
points, and strong working capital management contributed to
significantly lower interest expense to deliver excellent earnings per
share growth."
Discussion of Results
Diluted earnings per share for the second quarter of fiscal 2004
were $1.23, a 19 percent increase over the $1.03 in the prior year's
second quarter. Included in these results is a $1.4 million special
charge, net of tax, in the second quarter of fiscal 2004 and a $2.4
million special charge, net of tax, in the same period of the previous
fiscal year. Both the charges are for facility consolidations and
employee severance. The earnings per share impact of these items was a
decrease of $0.01 in the second quarter of fiscal 2004 and a decrease
of $0.02 in the last fiscal year's second quarter.
AmerisourceBergen's operating revenue was $12.3 billion in the
second quarter of fiscal 2004 compared to $11.2 billion for the same
period last year, a 10 percent increase. Bulk deliveries in the
quarter increased 7 percent to $1.0 billion.
For the first six months of fiscal 2004, diluted earnings per
share were $2.17, a 16 percent increase over the $1.87 in the same
six-month period last year. Special charges related to facility
consolidations and employee severance in the first six months of
fiscal 2004 and in the same period of fiscal 2003 resulted in a
decrease in earnings per share of $0.02 and $0.01, respectively.
Operating revenue in the first six months of fiscal 2004 increased
10 percent to $24.6 billion from $22.3 billion in the same period of
the previous fiscal year. Bulk deliveries to customer warehouses were
down 7 percent, reflecting the impact of the conversion of bulk
business to operating revenue in fiscal 2003.
"All of our business units continued to build momentum in the
quarter with an especially strong performance by our Specialty Group
as it reached $5 billion in annualized revenue," said Kurt J.
Hilzinger, AmerisourceBergen's President and Chief Operating Officer.
"During the quarter, we again benefited 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. We have announced the final two new
distribution centers in Chicago, Illinois, and Bethlehem,
Pennsylvania. Our new Sacramento, California, facility is set to open
this summer followed by the new Columbus, Ohio, distribution center in
the fall. Completion of the six 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 income to a 17% increase and operating
margins to a second quarter record," said Hilzinger.
Segment Review
AmerisourceBergen operates in two segments: Pharmaceutical
Distribution (which includes the operations of AmerisourceBergen Drug
Corporation and the AmerisourceBergen Specialty, Packaging and
Technology groups) and PharMerica (which includes the long term care
pharmacy and workers' compensation fulfillment businesses).
Intersegment sales of $210.8 million in the second 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 second quarter of fiscal 2004 increased
to $12.2 billion compared with $11.0 billion in the second quarter of
fiscal year 2003, a 10 percent increase.
Pharmaceutical Distribution customer mix in the second 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 continued its excellent
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.
The Group also continues to grow its manufacturer services businesses,
including reimbursement consulting and physician education.
AmerisourceBergen Packaging Group, which includes product
packaging for manufacturers and repackaging for healthcare providers,
continued to add capacity and new customers in the quarter. The
Company's Technology Group, which provides patient safety and pharmacy
automation solutions to healthcare providers, gained added traction as
orders continued to build in the quarter.
For the segment, gross profit as a percentage of operating revenue
in the second quarter of fiscal 2004 was 3.80 percent, compared to
4.11 percent in the same period in the prior fiscal year, down 31
basis points. Customer mix, a strong competitive environment, and a
reduction in deal and other buying opportunities impacted gross
margins.
Total operating expenses as a percentage of operating revenue in
the second quarter of fiscal 2004 were 1.89 percent, a 26 basis point
improvement over the same quarter last year. The improvement was
driven by customer mix, merger integration cost savings and a net
reduction in expense accruals primarily from lower employee benefit
costs.
Operating income was $232.4 million in the second quarter of
fiscal 2004, up 7 percent from $216.5 million for the same quarter
last year. For the second quarter of fiscal 2004, operating income as
a percentage of operating revenue was 1.91 percent, a 6 basis point
decrease from the second quarter of fiscal 2003.
PharMerica
PharMerica's operating revenue for the second quarter of fiscal
2004 was $392.1 million, compared with $397.1 million in the previous
year's second quarter.
Operating income for the second quarter of fiscal 2004 was $28.2
million, up 17 percent from $24.1 million for the same quarter last
year due to continued expense reduction. Operating income as a
percentage of operating revenue increased 112 basis points in the
quarter ended March 31, 2004 to 7.19 percent from 6.07 percent in the
prior year.
Looking Ahead
"Our earnings expectations for fiscal year 2004, which reflect the
loss of a major customer next month, 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."
In response to the major customer loss, Yost indicated that
AmerisourceBergen has revised its distribution network rebuilding plan
and will consolidate five instead of three distribution centers by
October 2004. The Company will continue to build six
300,000-square-foot distribution centers. The highly automated new
network is on schedule to be completed in fiscal 2007.
About fiscal 2005, Yost said, "Following the anniversary of our
customer loss in May 2005, we expect to return to our long-term
financial performance goals, which include growing revenues with the
market at a double-digit rate and growing diluted earnings per share
at 15 percent or more annually, excluding special items."
Conference Call
The Company will host a conference call to discuss its results at
11:00 a.m. Eastern Standard Time on April 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) 428-4480 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. April 26, 2004 until 11:59 p.m. May 3, 2004. The Webcast
replay will be available for 30 days.
To access the replay via telephone:
Dial in:
(800) 475-6701 from within the U.S., access code: 722054
(320) 365-3844 from outside the U.S., access code: 722054
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 one of the largest pharmaceutical
services companies in the United States. Servicing both pharmaceutical
manufacturers and healthcare providers in the pharmaceutical supply
channel, the Company provides drug distribution and related services
designed to reduce costs and improve patient outcomes.
AmerisourceBergen's service solutions range from pharmacy automation,
bedside medication safety systems, and pharmaceutical packaging to
pharmacy services for skilled nursing and assisted living facilities,
reimbursement and pharmaceutical consulting services, and physician
education. With more than $47 billion in annualized operating revenue,
AmerisourceBergen is headquartered in Valley Forge, PA, and employs
more than 14,000 people. AmerisourceBergen is ranked #22 on the
Fortune 500 list. 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
March 31, Operating March 31, Operating %
2004 Revenue 2003 Revenue Change
----------- ------- ----------- ------- ------
Revenue:
Operating
revenue $12,344,654 100.00% $11,213,959 100.00% 10%
Bulk
deliveries to
customer
warehouses 1,018,919 948,582 7%
----------- -----------
Total revenue 13,363,573 12,162,541
Cost of goods sold 12,781,125 11,581,352 10%
----------- -----------
Gross profit 582,448 4.72% 581,189 5.18% 0%
Operating expenses:
Distribution,
selling and
administrative 303,266 2.46% 323,563 2.89% -6%
Depreciation
and
amortization 18,618 0.15% 17,069 0.15% 9%
Facility
consolidations
and employee
severance 2,216 0.02% 4,005 0.04% -45%
----------- -----------
Operating income 258,348 2.09% 236,552 2.11% 9%
Equity in
(income)/losses
of affiliates and
other (3,663) -0.03% 5,733 0.05% N/A
Interest expense 30,871 0.25% 38,399 0.34% -20%
----------- -----------
Income before taxes 231,140 1.87% 192,420 1.72% 20%
Income taxes 88,988 0.72% 76,006 0.68% 17%
----------- -----------
Net income $142,152 1.15% $116,414 1.04% 22%
=========== ===========
Earnings per share:
Basic $1.27 $1.06 20%
Diluted $1.23 $1.03 19%
Weighted average
common shares
outstanding:
Basic 111,847 109,438
Diluted 117,946 115,756
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Six Six
Months Ended % of Months Ended % of
March 31, Operating March 31, Operating %
2004 Revenue 2003 Revenue Change
----------- ------- ----------- ------- ------
Revenue:
Operating
revenue $24,610,333 100.00% $22,320,864 100.00% 10%
Bulk deliveries
to customer
warehouses 2,108,353 2,276,210 -7%
----------- -----------
Total revenue 26,718,686 24,597,074
Cost of goods sold 25,609,064 23,494,460 9%
----------- -----------
Gross profit 1,109,622 4.51% 1,102,614 4.94% 1%
Operating expenses:
Distribution,
selling and
administrative 601,593 2.44% 641,245 2.87% -6%
Depreciation
and
amortization 35,436 0.14% 34,338 0.15% 3%
Facility
consolidations
and employee
severance 3,769 0.02% 2,624 0.01% 44%
----------- -----------
Operating income 468,824 1.90% 424,407 1.90% 10%
Equity in
(income)/losses
of affiliates and
other (1,076) 0.00% 5,916 0.03% N/A
Interest expense 62,378 0.25% 72,784 0.33% -14%
----------- -----------
Income before taxes 407,522 1.66% 345,707 1.55% 18%
Income taxes 156,896 0.64% 136,554 0.61% 15%
----------- -----------
Net income $250,626 1.02% $209,153 0.94% 20%
=========== ===========
Earnings per share:
Basic $2.24 $1.93 16%
Diluted $2.17 $1.87 16%
Weighted average
common shares
outstanding:
Basic 111,738 108,101
Diluted 117,948 114,566
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
March 31, September 30, March 31,
2004 2003 2003
------------ ------------ ------------
Current assets:
Cash and cash equivalents $663,764 $800,036 $225,956
Accounts receivable, net 2,848,634 2,295,437 2,163,665
Merchandise inventories 5,606,439 5,733,837 6,898,825
Prepaid expenses and
other 29,403 29,208 16,211
------------ ------------ ------------
Total current
assets 9,148,240 8,858,518 9,304,657
Long-term assets 3,278,818 3,181,607 3,018,982
------------ ------------ ------------
Total assets $12,427,058 $12,040,125 $12,323,639
============ ============ ============
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable $5,499,671 $5,393,769 $5,782,858
Current portion of
long-term debt 71,405 61,430 60,948
Other current liabilities 845,336 800,903 744,518
------------ ------------ ------------
Total current
liabilities 6,416,412 6,256,102 6,588,324
Long-term debt, less current
portion 1,683,269 1,722,724 2,000,790
Other liabilities 64,422 55,982 42,571
Stockholders' equity 4,262,955 4,005,317 3,691,954
------------ ------------ ------------
Total liabilities
and stockholders'
equity $12,427,058 $12,040,125 $12,323,639
============ ============ ============
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Six Months
Ended Ended
March 31, March 31,
2004 2003
--------- ---------
Operating Activities:
Net income $250,626 $209,153
Non-cash items 72,796 83,272
Changes in operating assets and liabilities (301,404) (907,696)
--------- ---------
Net cash provided by (used in) operating
activities 22,018 (615,271)
--------- ---------
Investing Activities:
Capital expenditures (85,335) (35,162)
Cost of acquired companies, net of cash
acquired, and other (45,710) (32,631)
--------- ---------
Net cash used in investing activities (131,045) (67,793)
--------- ---------
Financing Activities:
Net borrowings under revolving credit and
receivables securitization facilities - 124,000
Net (repayments) borrowings of long-term debt (30,000) 119,934
Exercise of stock options 8,542 12,666
Cash dividends on common stock (5,607) (5,432)
Other (180) (5,488)
--------- ---------
Net cash (used in) provided by financing
activities (27,245) 245,680
--------- ---------
Decrease in cash and cash equivalents (136,272) (437,384)
Cash and cash equivalents at beginning of
period 800,036 663,340
--------- ---------
Cash and cash equivalents at end of period $663,764 $225,956
========= =========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended March 31,
-----------------------------------
Operating Revenue 2004 2003 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $12,163,350 $11,009,646 10%
PharMerica 392,078 397,095 -1%
Intersegment eliminations (210,774) (192,782) -9%
------------ ------------
Operating revenue $12,344,654 $11,213,959 10%
============ ============
Three Months Ended March 31,
-----------------------------------
Operating Income 2004 2003 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $232,383 $216,456 7%
PharMerica 28,181 24,101 17%
Facility consolidations and
employee severance (2,216) (4,005) 45%
------------ ------------
Operating income $258,348 $236,552 9%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.80% 4.11%
Operating expenses 1.89% 2.15%
Operating income 1.91% 1.97%
PharMerica
Gross profit 30.58% 32.35%
Operating expenses 23.40% 26.28%
Operating income 7.19% 6.07%
AmerisourceBergen Corporation
Gross profit 4.72% 5.18%
Operating expenses 2.63% 3.07%
Operating income 2.09% 2.11%
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Six Months Ended March 31,
-----------------------------------
Operating Revenue 2004 2003 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $24,253,874 $21,909,216 11%
PharMerica 794,518 799,937 -1%
Intersegment eliminations (438,059) (388,289) -13%
------------ ------------
Operating revenue $24,610,333 $22,320,864 10%
============ ============
Six Months Ended March 31,
-----------------------------------
Operating Income 2004 2003 % Change
--------------------------------- -----------------------------------
Pharmaceutical Distribution $415,919 $379,391 10%
PharMerica 56,674 47,640 19%
Facility consolidations and
employee severance (3,769) (2,624) -44%
------------ ------------
Operating income $468,824 $424,407 10%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.57% 3.85%
Operating expenses 1.85% 2.12%
Operating income 1.71% 1.73%
PharMerica
Gross profit 30.77% 32.26%
Operating expenses 23.64% 26.31%
Operating income 7.13% 5.96%
AmerisourceBergen Corporation
Gross profit 4.51% 4.94%
Operating expenses 2.60% 3.04%
Operating income 1.90% 1.90%
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 Six Months Ended
March 31, March 31,
2004 2003 2004 2003
--------- --------- --------- ---------
Net income $142,152 $116,414 $250,626 $209,153
Interest expense - convertible
subordinated notes, net of
income taxes 2,530 2,489 5,060 4,978
--------- --------- --------- ---------
Income available to common
stockholders $144,682 $118,903 $255,686 $214,131
========= ========= ========= =========
Weighted average common shares
outstanding - basic 111,847 109,438 111,738 108,101
Effect of dilutive securities:
Options to purchase
common stock 435 654 546 801
Convertible subordinated
notes 5,664 5,664 5,664 5,664
--------- --------- --------- ---------
Weighted average common shares
outstanding - diluted 117,946 115,756 117,948 114,566
========= ========= ========= =========
Earnings per share:
Basic $1.27 $1.06 $2.24 $1.93
Diluted $1.23 $1.03 $2.17 $1.87
CONTACT: AmerisourceBergen Corporation, Valley Forge
Michael N. Kilpatric, 610-727-7118
mkilpatric@amerisourcebergen.com
SOURCE: AmerisourceBergen Corporation