AmeriSource Reports Record Fiscal Second Quarter Revenues and Earnings; Operating Revenue Up 19 Percent, EPS Increased 21 Percent.Business Editors MALVERN Malvern, England: see Great Malvern. , Pa.--(BUSINESS WIRE)--April 27, 2000 AmeriSource Health Corporation (NYSE NYSE See: New York Stock Exchange :AAS) today reported record results for its second fiscal quarter and six months ended March 31, 2000. Operating revenue operating revenue Revenue from any regular source. Revenue from sales is adjusted for discounts and returns when calculating operating revenue. Compare other revenue. increased 19 percent, or $459.2 million, to $2.8 billion in the quarter compared to $2.4 billion for the same period last year. Net income for the quarter was up 20 percent to $24.3 million from $20.2 million, and earnings per share increased 21 percent to $.47 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share from $.39 per diluted share in the prior year. For the first six months of fiscal 2000, operating revenue increased 20 percent to $5.7 billion compared to $4.7 billion in the prior year. Net income for the first six months of fiscal 2000 increased by 20 percent to $45.9 million or $.89 per diluted share from $38.1 million or $.74 per diluted share for the same period one year ago. R. David Yost David Harold Yost (born January 7, 1969) is an American actor known for his role on the television series Mighty Morphin Power Rangers. Biography Early life , AmeriSource President and Chief Executive Officer, said, "This was an outstanding quarter for AmeriSource. We demonstrated strong revenue momentum with nearly all of our key performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. meeting or exceeding our internal expectations. We continue to add new business with solid returns across our geography geography, the science of place, i.e., the study of the surface of the earth, the location and distribution of its physical and cultural features, the areal patterns or places that they form, and the interrelation of these features as they affect humans. and customer segments, and our centralization cen·tral·ize v. cen·tral·ized, cen·tral·iz·ing, cen·tral·iz·es v.tr. 1. To draw into or toward a center; consolidate. 2. initiatives are nearly finished. "In addition, two significant activities occurred following the end of the quarter. First, we agreed, with four other companies, to form the New Health Exchange, an internet initiative that will focus on efficiency and connectivity A generic term for connecting devices to each other in order to transfer data back and forth. It often refers to network connections, which embraces bridges, routers, switches and gateways as well as backbone networks. across the healthcare supply chain, enabling the participants to collectively achieve what no single company acting on its own could accomplish. The Exchange will move to streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. the chargeback Chargeback The charge a credit card merchant pays to a customer after the customer successfully disputes an item on his or her credit card statement. Notes: Customers dispute charges to their credit card usually when goods or services are not delivered within the and rebate rebate, partial refund of the total price paid for goods or services. In the United States, rebates were historically given by railroads to favored shippers as a return on transportation charges. process, standardize stan·dard·ize v. 1. To cause to conform to a standard. 2. To evaluate by comparing with a standard. product information and product content descriptions, and augment aug·ment v. aug·ment·ed, aug·ment·ing, aug·ments v.tr. 1. To make (something already developed or well under way) greater, as in size, extent, or quantity: each company's existing Internet strategy. "Second, our acute-care hospital business, where we are the U.S. leader, is growing ever stronger as we expand our buying group alliances. Novation The substitution of a new contract for an old one. The new agreement extinguishes the rights and obligations that were in effect under the old agreement. A novation ordinarily arises when a new individual assumes an obligation to pay that was incurred by the original party , the supply company of VHA VHA Veterans Health Administration VHA Variable Housing Allowance VHA Villages Homeowners Association VHA Voluntary Hospitals Association VHA Virtual Home Agent VHA Very High Altitude VHA Vapor Hazard Area VHA Vermont Holstein-Friesian Association Inc. and the University Health System Consortium, again selected us as one of its primary suppliers, and the members of VHA and UHC UHC UnitedHealthcare UHC United Health Care UHC University Hospitals of Cleveland UHC United Hitech Corporation UHC Udvar-Hazy Center (National Air and Space Museum) UHC University Health/System Consortium UHC Unburned Hydrocarbons , in a customer service satisfaction survey, voted us the top pharmaceutical distributor. We also strengthened our already powerful relationship with Premier. These new initiatives will add to our momentum going forward." For the second quarter of fiscal 2000, the Company's gross margin as a percentage of operating revenue was 4.64 percent versus 5.18 percent in the prior year. This expected year-to-year decline in gross margin primarily reflects a shift in customer mix to a higher level of institutional/hospital business and was partly offset by a decrease in operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. . The Company's customer mix in the current quarter consists of 51 percent institutions/hospitals, 37 percent independent pharmacies An independent pharmacy is a retail pharmacy that is not directly affiliated with any chain pharmacy, such as CVS/pharmacy, Walgreens or Eckerd. However, owners of independent pharmacies will often form alliances with other independents and use their power in numbers to bargain for , and 12 percent retail chains. Operating expenses as a percentage of operating revenue declined by 38 basis points to 2.84 percent in the second quarter of fiscal 2000 from 3.22 percent a year ago. This significant reduction was driven by cost reductions related to centralization efforts, increasingly more efficient warehouse operations and the shift in customer mix. The Company's operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. advanced 10 percent to $51.1 million in the second quarter of fiscal year 2000 from $46.5 million for the same quarter last year. For the first six months of fiscal year 2000 operating income increased 12 percent over the same period last year. For the second quarter, operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , as a percentage of operating revenue, was 1.80 percent compared to 1.96 percent for the prior year period. Interest expense, excluding the adjustment of a common stock put warrant to fair value in fiscal 1999, increased by 3 percent to $11.9 million, reflecting the net impact of higher interest rates, lower borrowing spreads and lower average levels of debt. Cash flow for the quarter was strong, reflecting the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of Y2K See Y2K problem and Y2K compliant. Y2K - Year 2000 inventories as well as normal seasonal patterns. Debt was reduced by $251 million from $720 million at December December: see month. 31,1999 to $469 million at March 31,2000. The Company's return on committed capital--ROCC-- for the quarter continued strong at a 24.2 percent. In looking ahead, Mr. Yost said, "The best metric of our success continues to be our return on committed capital, which measures the effectiveness of our asset management. At 24.2 percent, our ROCC ROCC Range Operations Control Center ROCC Regional Operations Control Center ROCC Rail Operations Control Center ROCC Residents of Color Council ROCC Royal Oak Community Coalition (Michigan) exceeded our goals as we continue to make the right business decisions. We operate in a solid industry with good fundamentals, and AmeriSource is exceptionally well-positioned in the healthcare supply channel. We remain committed to our long-term goals Long-term goals Financial goals expected to be accomplished in five years or longer. of being recognized by our customers as the highest quality service provider, delivering strong and consistent financial performance, and building value for our shareholders." AmeriSource, with over $10 billion in operating revenue, is one of the nation's leading, full-service full-ser·vice adj. Associated with or offering complete service: full-service gasoline pumps; full-service banks. wholesale distributors of pharmaceutical products and related healthcare services. Headquartered in Malvern, PA, the Company serves its base of 21,000 customers accounts through a national network of 24 strategically located distribution facilities. AmeriSource is the industry's largest provider of pharmaceuticals to the acute care/institutional market. For more information about AmeriSource, visit our website at www.amerisource.com. Certain information contained in this press release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. (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 restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). initiatives, 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 1999 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.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Three Three
Months Months
Ended % of Ended % of
March 31, Operating March 31, Operating %
2000 Revenue 1999(a) Revenue Change
----------- --------- ---------- ---------- ------
Revenue:
Operating
revenue $2,832,041 100.00% $2,372,872 100.00% 19%
Bulk deliveries
to customer
warehouses 10,162 12,299
----------- -----------
Total revenue 2,842,203 2,385,171
----------- -----------
Cost of goods sold:
Operating cost of
goods sold 2,700,635 95.36% 2,249,886 94.82% 20%
Cost of goods
sold - bulk
deliveries 10,162 12,299
----------- -----------
Total cost of goods
sold 2,710,797 2,262,185
----------- -----------
Gross profit 131,406 4.64% 122,986 5.18% 7%
Operating expenses:
Selling and
administrative 76,323 2.69% 72,238 3.04% 6%
Depreciation and
amortization 3,969 0.14% 4,268 0.18% -7%
----------- -----------
Operating income 51,114 1.80% 46,480 1.96% 10%
Interest expense 11,922 0.42% 11,582 0.49% 3%
Interest expense -
adjustment of common
stock put warrant to
fair value - 1,223 0.05% -100%
----------- -----------
Income before taxes 39,192 1.38% 33,675 1.42% 16%
Taxes on income 14,893 0.53% 13,456 0.57% 11%
----------- -----------
Net income $24,299 0.86% $20,219 0.85% 20%
=========== ===========
Earnings per
share (a):
Basic $0.47 $0.40
Assuming dilution $0.47 $0.39
Weighted average
common shares
outstanding (a):
Basic 51,370 50,555
Assuming dilution 51,732 51,574
(a) Prior year restated for July 1999 C. D. Smith merger accounted
for as a pooling of interests.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(Unaudited)
Six Six
Months Months
Ended % of Ended % of
March 31, Operating March 31, Operating %
2000 Revenue 1999(a) Revenue Change
----------- --------- ---------- ---------- ------
Revenue:
Operating
revenue $5,660,795 100.00% $4,735,520 100.00% 20%
Bulk deliveries
to customer
warehouses 20,790 24,386
----------- -----------
Total revenue 5,681,585 4,759,906
Cost of goods
sold:
Operating
cost of goods
sold 5,409,462 95.56% 4,501,408 95.06% 20%
Cost of goods
sold - bulk
deliveries 20,790 24,386
----------- -----------
Total cost of
goods sold 5,430,252 4,525,794
----------- -----------
Gross profit 251,333 4.44% 234,112 4.94% 7%
Operating
expenses:
Selling and
administrative 146,568 2.59% 139,411 2.94% 5%
Depreciation
and amortization 7,916 0.14% 8,557 0.18% -7%
----------- -----------
Operating
income 96,849 1.71% 86,144 1.82% 12%
Interest expense 22,820 0.40% 21,666 0.46% 5%
Interest expense -
adjustment of
common stock put
warrant to fair
value - 1,833 0.04% -100%
----------- -----------
Income before
taxes 74,029 1.31% 62,645 1.32% 18%
Taxes on income 28,131 0.50% 24,531 0.52% 15%
----------- -----------
Net income $45,898 0.81% $38,114 0.80% 20%
=========== ===========
Earnings per
share (a):
Basic $0.89 $0.76
Assuming dilution $0.89 $0.74
Weighted average
common shares
outstanding (a):
Basic 51,329 50,444
Assuming dilution 51,612 51,295
(a) Prior year restated for July 1999 C. D. Smith merger accounted
for as a pooling of interests.
AMERISOURCE HEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS (unaudited)
March 31, Sept. 30, Increase
2000 1999 (Decrease)
------------ ------------ ------------
Current assets:
Cash and cash
equivalents $ 49,240 $ 59,497 ($ 10,257)
Accounts receivable,
less allowance for
doubtful accounts 642,485 612,520 29,965
Merchandise
inventories 1,272,795 1,243,153 29,642
Prepaid expenses
and other 4,550 4,836 (286)
----------- ----------- -----------
Total current
assets 1,969,070 1,920,006 49,064
Property and
equipment, net 63,400 64,384 (984)
Other assets, less
accumulated
amortization 69,226 76,209 (6,983)
----------- ----------- -----------
Total assets $ 2,101,696 $ 2,060,599 $ 41,097
=========== =========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 1,254,829 $ 1,175,619 $ 79,210
Accrued expenses and
other 46,247 50,329 (4,082)
Accrued income taxes 8,628 10,854 (2,226)
Deferred income taxes 99,822 90,481 9,341
----------- ----------- -----------
Total current
liabilities 1,409,526 1,327,283 82,243
Long-term debt:
Revolving credit
facility 136,046 225,227 (89,181)
Receivables
securitization
financing 325,000 325,000 0
Other debt 8,352 8,478 (126)
Other liabilities 8,980 8,334 646
Stockholders' equity:
Common stock and
capital in excess
of par value 268,746 267,315 1,431
Accumulated deficit (48,734) (94,632) 45,898
Cost of common stock
in treasury (6,220) (6,220) 0
Note receivable
from ESOP -- (186) 186
----------- ----------- -----------
Total stockholders'
equity 213,792 166,277 47,515
----------- ----------- -----------
Total liabilities
and stockholders'
equity $ 2,101,696 $ 2,060,599 $ 41,097
=========== =========== ===========
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