AmeriSource Reports Record Revenues and Earnings for Fiscal Third Quarter; Operating Revenue Up Over 20 Percent, Net Income Up 25 Percent, EPS Hits $.57.Business Editors/Health & Medical Writers VALLEY FORGE Valley Forge, on the Schuylkill River, SE Pa., NW of Philadelphia. There, during the American Revolution, the main camp of the Continental Army was established (Dec., 1777–June, 1778) under the command of Gen. George Washington. , Pa.--(BUSINESS WIRE)--July 25, 2001 AmeriSource Health Corporation (NYSE NYSE See: New York Stock Exchange :AAS) today reported record results for its fiscal third quarter and nine months ended June June: see month. 30, 2001. 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 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 reversal n. the decision of a court of appeal ruling that the judgment of a lower court was incorrect and is reversed. The result is that the lower court which tried the case is instructed to dismiss the original action, retry the case, or is ordered to change its 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). reserves. Fiscal third quarter 2001 earnings 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 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 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 Chairman and Chief Executive Officer, said, "This was another terrific, record-setting quarter and year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current 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 long-range adj. 1. Of, suitable for, or reaching long distances: long-range missiles. 2. Requiring or involving an extended span of time: long-range planning. goal, reflecting the dedication and strong efforts of our associates at all levels. Total 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. as a percentage of operating revenue were again below our 2.50 percent goal for the year, and 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) increased to 26.4 percent. Earnings per share continued to show strong year-over-year growth in line with our long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-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 fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. demographics The attributes of people in a particular geographic area. Used for marketing purposes, population, ethnic origins, religion, spoken language, income and age range are examples of demographic data. 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 according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. IMS Health IMS Health (NYSE: RX) is an international consulting and data services company that supplies the pharmaceutical industry with sales data and consulting services. IMS Health was founded in 1954 by Bill Frohlich and David Dubow. , 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 Kurt is a given name. Its principal English variant is Curt, while others include Cord, Curd, and Kort. It originated as a short form of Curtis, Konrad (Conrad), and Kunibert. J. Hilzinger, AmeriSource President and Chief Operating Officer Chief Operating Officer (COO) The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. , 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 annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. , incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. business from 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 , a major hospital group purchasing organization A group purchasing organization is an entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors based on the collective buying power of the GPO members. Many GPOs are funded by administrative fees that are actually paid by the vendors. . The fast-growing adj. 1. tending to spread quickly; - used mostly of plants. Adj. 1. fast-growing - tending to spread quickly; "an aggressive tumor" strong-growing, aggressive Alternate Site group added new accounts, large and small, to our growing base. "Our Chain Drugstore and Independent Community Pharmacy pharmacy, art of compounding and dispensing drugs and medication. The term is also applied to an establishment used for such purposes. Until modern times medication was prepared and dispensed by the physician himself. In the 18th cent. 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 See multichannel. 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 dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rate, and continue to be an integral part of our business. "Our ongoing financial discipline and the 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 completed last year continued to contribute to high levels of procurement The fancy word for "purchasing." The procurement department within an organization manages all the major purchases. 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 This article is a list of major pharmacies (also known as chemists and drugstores) by country. Australia Pharmacies in Australia are mostly independently-owned by pharmacists, often operated as franchises of retail brands offered by the three major 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 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 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 Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: 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 Noun 1. mid-December - the middle part of December period, period of time, time period - an amount of time; "a time period of 30 years"; "hastened the period of time of his recovery"; "Picasso's blue period" Dec, December - the last (12th) month of the year of last year. Merger Update AmeriSource continues to move forward under its agreement, announced March 19, 2001, to combine with Bergen Bergen, city, Norway Bergen (bĕr`gən), city (1995 pop. 221,645), capital of Hordaland co., SW Norway, situated on inlets of the North Sea. It is Norway's second largest city and a major shipping center. Brunswig Corporation to create a new company, called AmerisourceBergen AmerisourceBergen NYSE: ABC is a Chesterbrook, PA based Drug Wholesale company that was formed by the merger of Bergen Brunswig and AmeriSource in 2001. They provide drug distribution and related services designed to reduce costs and improve patient outcomes, distribute a line 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 cer·ti·fy v. cer·ti·fied, cer·ti·fy·ing, cer·ti·fies v.tr. 1. a. To confirm formally as true, accurate, or genuine. b. 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 FTC See Federal Trade Commission (FTC). staff. Certification starts the FTC's 30-day review period under the Hart-Scott-Rodino Antitrust Improvements Act The Hart-Scott-Rodino Antitrust Improvements Act of 1976 (Public Law 94-435, known commonly as the HSR Act) is a set of amendments to the antitrust laws of the United States, principally the Clayton Antitrust Act. The HSR Act was signed into law by President Gerald R. of 1976. After the review, the merger may proceed if there is no objection A formal attestation or declaration of disapproval concerning a specific point of law or procedure during the course of a trial; a statement indicating disagreement with a judge's ruling. 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 Different ideas of service-orientation are found in different domains.
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 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 and system initiatives, market interest rates, regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. 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 See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. . 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 Chesterbrook is a census-designated place (CDP) in Chester County, Pennsylvania, United States. The population was 4,625 at the 2000 census. Geography Chesterbrook is located at (40.074378, -75.455018). 19087-5594, telephone: (610) 727-7000; or to Bergen Brunswig Corporation, Attention: Corporate Secretary, 4000 Metropolitan Drive, Orange, California The City of Orange is located in Orange County, California, United States. It is approximately 3 miles (6 kilometers) north of the county seat, Santa Ana, and approximately 32 miles (52 kilometers) southeast of Los Angeles. 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 solicitation In criminal law, the act of asking, inducing, or directing someone to commit a crime. The person soliciting another becomes an accomplice to the crime. The term also refers to the act of obtaining bribes, as well as to the crime of a prostitute who offers sexual 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 Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 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.
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