Amerisource Reports Consolidated Fourth Quarter and Fiscal 1999 Financial Results; Fourth Quarter Earnings and Sales at Record Levels.MALVERN Malvern, England: see Great Malvern. , Pa.--(BUSINESS WIRE)--Nov. 3, 1999-- AmeriSource Health Corporation (NYSE NYSE See: New York Stock Exchange :AAS) today reported record earnings for its fiscal 1999 fourth quarter and year ended September September: see month. 30, 1999, before the impact of special charges and extraordinary items described below. All results for fiscal 1999 and 1998 discussed below have been restated to reflect the pooling-of-interests accounting treatment applied with respect to the July July: see month. 1999 C. D. Smith Healthcare merger and the March 1999 two-for-one stock split. All comparisons exclude special charges and extraordinary items in both 1999 and 1998, unless otherwise indicated. For the quarter, income increased to a record $23.0 million, up 28% from $18.0 million for the same period last year. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of set another record, up 29% to $.45 when compared to $.35 for the fourth quarter of fiscal 1998. On a pre-merger basis, the fourth quarter of fiscal 1999 was $.45, an increase of 13% over the $.40 for the fourth quarter of fiscal 1998. For the year, income increased to $82.9 million, up 33% from the previous year. Diluted earnings per share set another record at $1.61, up 31% from $1.23 in fiscal 1998. 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 CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said, "This was another outstanding year for AmeriSource. For the year, we grew our revenue over $1.1 billion excluding three large account losses and C.D. Smith, while maintaining a high return on committed capital. Earnings for the year were strong. In addition, we completed one of the best acquisitions in the Company's history. We made solid investments during the year in technology and infrastructure and significantly expanded our management talent base, all of which positions us very well for the future." 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. for the fourth quarter of fiscal 1999 increased 15% to $2.57 billion from the $2.23 billion for the same quarter of the previous year. For the fiscal year ended September 30, 1999, operating revenue increased by 4% to $9.76 billion from $9.37 billion in fiscal 1998. Revenue growth for fiscal 1999 was adversely affected by the previously discussed termination The point where a line, channel or circuit ends. See SCSI termination and hybrid. of contracts with three large customers in fiscal 1998. Without these customer losses, operating revenue increased 12% for the fiscal year ended September 30, 1999. C. D. Smith contributed approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $200 million to sales in the fourth fiscal quarter and $800 million for the fiscal year. Traditional AmeriSource, excluding C.D. Smith, grew 16% in the quarter. The combined customer mix for the year consists of 48% institutions/hospitals, 39% 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 13% retail chains. As a result of the C. D. Smith merger, the Company recorded special charges of $14.9 million (pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta ) for merger and 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). costs in the fourth fiscal quarter. Also during the quarter, the Company recorded an extraordinary charge of $3.4 million (after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ) for costs associated with the extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. These two charges represent approximately $.30 per share on a 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. after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. . For the fourth quarter and full year of fiscal 1999, the Company's gross margin, as a percentage of operating revenue, decreased modestly to 4.90% and 4.85%, respectively. The comparable 1998 margins were 5.07% for the quarter and 4.93% for the full year. AmeriSource recognized a LIFO (Last In-First Out) A queueing method in which the next item to be retrieved is the item most recently placed in the queue. Contrast with FIFO. LIFO - stack credit in the fourth quarter of $1.0 million versus a credit of $7.8 million in the same quarter of fiscal 1998. For the fiscal year ended September 30, 1999, the Company had a LIFO charge of $2.8 million versus a $4.6 million credit reported in the prior year. Continued focus on cost reduction and productivity improvements contributed to reduced 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 to 3.10% in the fourth quarter of fiscal 1999 from 3.14% in the fourth quarter of fiscal 1998. For the full year, cost controls and productivity improvements established new lows of operating expense Operating Expense The essential things that a company must purchase in order to maintain business. Notes: For example, the payment of employees wages are an operating expense. Also known as OPEX. for the Company. Total operating expense as a percentage of operating revenue was reduced by 9 basis points to 3.07% in fiscal 1999 versus 3.16% in fiscal 1998. Operating expenses reflect the merger of C.D. Smith, which had a higher ratio of expense to operating revenue than AmeriSource. On October October: see month. 12, 1999, AmeriSource was advised by one of its retail chain customers, Jitney Jungle Jitney Jungle was a chain of supermarkets that got its start in Jackson, Mississippi, in 1919. Origins Originally, two brothers named Judson McCarty Holman and William Henry Holman and their cousin, William Bonner McCarty, founded a charge-and-carry grocery store in Stores of America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. , Inc., that it had announced reorganization The process of carrying out, through agreements and legal proceedings, a business plan for winding up the affairs of, or foreclosing a mortgage upon, the property of a corporation that has become insolvent. under Chapter 11 of the U.S. Bankruptcy Code Bankruptcy Code may refer to:
relating to relate prep → bezüglich +gen, mit Bezug auf +acc the outstanding receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed of this customer. The Company's operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: , as a percent of operating revenue for the fiscal year ended September 30, 1999, remained relatively stable at 1.78% vs. 1.77% for the prior year and was 1.80% for the fourth fiscal quarter, down from 1.93% in the prior year fourth quarter. Interest expense declined by 22% to $9.5 million in the fourth quarter of fiscal 1999 primarily due to lower average borrowing costs and the elimination of expense associated with the put warrants at C. D. Smith. These factors were partially offset by a higher average level of debt. For the year, interest expense declined by 32% to $39.7 million from $58.2 million in fiscal 1998. $7.5 million of the decline was explained by the reduction of the expense related to the C. D. Smith put warrants. For the full year, on a pre-merger basis, AmeriSource's return on committed capital improved to 24.6% from the previous year's 24.2%, with both years well above the stated target of 20%. R. David Yost also said, "We continue to see strong opportunities in the distribution business, supported by several trends that are currently driving the rapid growth of the pharmaceutical market. An aging population is now utilizing more pharmaceuticals, the FDA FDA abbr. Food and Drug Administration FDA, n.pr See Food and Drug Administration. FDA, n.pr the abbreviation for the Food and Drug Administration. has accelerated the rate at which new drugs are approved for market, and, pharmaceutical therapy is recognized as extremely cost efficient. Combined, these factors are driving higher drug utilization utilization, n 1. the extent to which a given group uses a particular service in a specified period. Although usually expressed as the number of services used per year per 100 or per 1000 persons eligible for the service, utilization rates may be in all avenues of health care. AmeriSource, with its national distribution network, value added Value Added The enhancement a company gives its product or service before offering the product to customers. Notes: This can either increase the products price or value. programs, high service levels, and its ability to capture the growing economies of scale, is poised to benefit from these trends that should continue to fuel our growth." AmeriSource Health Corporation is a Fortune 200 company with revenue of $9.8 billion for fiscal year 1999. The Company is one of the nation's leading wholesale pharmaceutical distributors and serves the healthcare industry from a nationwide network of 25 strategically located distribution centers. News and additional information about the company are available 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 initiatives, continued industry consolidation, changes in customer mix, changes in pharmaceutical manufacturers' pricing and distribution policy, the loss of one or more key customer or supplier relationships and other matters contained in the Company's Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for fiscal year 1998 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. -0-
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
Fiscal Fiscal
Year Ended % of Year Ended % of
September 30 Operating September 30 Operating %
1999 Revenue 1998 (a) Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $9,760,083 100.00% $9,373,482 100.00% 4%
Bulk
deliveries
to customer
warehouses 47,280 129,555
----------- ------------
Total revenue 9,807,363 9,503,037
Cost of goods
sold:
Operating cost
of goods sold 9,287,018 95.15% 8,911,585 95.07% 4%
Cost of goods
sold - bulk
deliveries 47,280 129,555
----------- ------------
Total cost of
goods sold 9,334,298 9,041,140
----------- ------------
Gross profit 473,065 4.85% 461,897 4.93% 2%
Operating
expenses:
Selling and
administrative 281,798 2.89% 279,392 2.98% 1%
Depreciation
and
amortization 17,373 0.18% 16,885 0.18% 3%
Facility
consolidations
and employee
severance 11,730 0.12% 8,283 0.09% 42%
Merger costs 3,162 0.03% 18,406 0.20% -83%
----------- ------------
Operating
income 159,002 1.63% 138,931 1.48% 14%
Interest
expense 39,356 0.40% 50,363 0.54% -22%
Interest
expense -
adjustment of
common stock
put warrants
to fair value 334 0.00% 7,816 0.08% -96%
----------- ------------
Income before
taxes and
extraordinary
items 119,312 1.22% 80,752 0.86% 48%
Taxes on
income 48,397 0.50% 34,722 0.37% 39%
----------- ------------
Income before
extraordinary
items 70,915 0.73% 46,030 0.49% 54%
Extraordinary
charge - early
retirement of
debt, net of
income tax
benefit 3,449 -
----------- ------------
Net income $67,466 0.69% $46,030 0.49% 47%
=========== ============
Earnings per
share (a):
Income before
extraordinary
item $1.40 $0.92
Extraordinary
charge (0.07) -
----------- ------------
Net income $1.33 $0.92
=========== ============
Earnings per
share -
assuming
dilution (a):
Income before
extraordinary
item $1.38 $0.91
Extraordinary
charge (0.07) -
----------- ------------
Net income $1.31 $0.91
=========== ============
Weighted average
common shares
outstanding (a):
Basic 50,698 49,877
Assuming
dilution 51,683 50,713
======================================================================
Pro forma results excluding $14,892 and $26,689 of merger costs
and costs related to facility consolidations and employee severance
included in the years ended September 30, 1999 and 1998, respectively:
Operating income $173,894 $165,620
Income before extraordinary item $82,922 $62,310
Net income $79,473 $62,310
Earnings per share (a):
Income before extraordinary item $1.64 $1.25
Net income $1.57 $1.25
Earnings per share - assuming dilution (a):
Income before extraordinary item $1.61 $1.23
Net income $1.54 $1.23
(a) Prior year restated for March 1999 two-for-one stock split and
July 1999 C. D. Smith merger accounted for as a pooling of
interests.
AMERISOURCE HEALTH CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
Three Three
Months Ended % of Months Ended % of
September 30 Operating September 30 Operating %
1999 Revenue 1998 (a) Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $2,568,766 100.00% $2,228,379 100.00% 15%
Bulk
deliveries to
customer
warehouses 10,154 22,767
----------- ------------
Total revenue 2,578,920 2,251,146
Cost of goods
sold:
Operating cost
of goods sold 2,442,838 95.10% 2,115,354 94.93% 15%
Cost of goods
sold - bulk
deliveries 10,154 22,767
----------- ------------
Total cost of
goods sold 2,452,992 2,138,121
----------- ------------
Gross profit 125,928 4.90% 113,025 5.07% 11%
Operating
expenses:
Selling and
administrative 75,057 2.92% 65,717 2.95% 14%
Depreciation
and
amortization 4,588 0.18% 4,291 0.19% 7%
Facility
consolidations
and employees
severance 11,730 0.46% 8,283 0.37% 42%
Merger costs 3,162 0.12% 18,406 0.83% -83%
----------- ------------
Operating
income 31,391 1.22% 16,328 0.73% 92%
Interest
expense 9,472 0.37% 9,936 0.45% -5%
Interest
expense -
adjustment of
common stock
put warrants
to fair value - 2,138 0.10% -100%
----------- ------------
Income before
taxes and
extraordinary
items 21,919 0.85% 4,254 0.19% 415%
Taxes on
income 10,878 0.42% 2,527 0.11% 330%
----------- ------------
Income before
extraordinary
items 11,041 0.43% 1,727 0.08% 539%
Extraordinary
charge - early
retirement of
debt, net of
income tax
benefit 3,449 -
----------- ------------
Net income $7,592 0.30% $1,727 0.08% 340%
=========== ============
Earnings per
share (a):
Income before
extraordinary
item $0.22 $0.03
Extraordinary
charge (0.07) -
----------- ------------
Net income $0.15 $0.03
=========== ============
Earnings per
share -
assuming
dilution (a):
Income before
extraordinary
item $0.21 $0.03
Extraordinary
charge (0.07) -
----------- ------------
Net income $0.15 (b) $0.03
=========== ============
Weighted average
common shares
outstanding (a):
Basic 51,173 50,124
Assuming
dilution 51,647 50,861
======================================================================
Pro forma results excluding $14,892 and $26,689 of merger costs
and costs related to facility consolidations and employee severance
included in the three months ended September 30, 1999 and 1998,
respectively:
Operating income $46,283 $43,017
Income before extraordinary item $23,048 $18,007
Net income $19,599 $18,007
Earnings per share (a):
Income before extraordinary item $0.45 $0.36
Net income $0.38 $0.36
Earnings per share - assuming dilution (a):
Income before extraordinary item $0.45 $0.35
Net income $0.38 $0.35
(a) Prior year restated for March 1999 two-for-one stock split and
July 1999 C. D. Smith merger accounted for as a pooling of
interests.
(b) Does not equal sum of amounts due to rounding.
AMERISOURCE HEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
ASSETS
Sept. 30, Sept. 30, Increase
1999 1998(a) (Decrease)
---------- ----------- -----------
Current assets:
Cash and cash equivalents $59,497 $48,511 $10,986
Restricted cash - 41,833 (41,833)
Accounts receivable, less
allowance for doubtful
accounts 612,520 509,130 103,390
Merchandise inventories 1,243,153 954,010 289,143
Prepaid expenses and other 4,836 5,042 (206)
---------- ---------- -----------
Total current assets 1,920,006 1,558,526 361,480
Property and equipment, net 64,384 67,955 (3,571)
Other assets, less accumulated
amortization 76,209 99,791 (23,582)
---------- ---------- -----------
Total assets $2,060,599 $1,726,272 $334,327
========== ========== ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $1,175,619 $947,016 $228,603
Accrued expenses and
other 50,329 52,188 (1,859)
Accrued income taxes 10,854 466 10,388
Deferred income taxes 90,481 93,362 (2,881)
---------- ---------- -----------
Total current
liabilities 1,327,283 1,093,032 234,251
Long-term debt:
Revolving credit facility 225,227 218,590 6,637
Receivables securitization
financing 325,000 299,948 25,052
Other debt 8,478 20,926 (12,448)
Other liabilities 8,334 8,036 298
Common stock put warrants - 10,385 (10,385)
Stockholders' equity:
Common stock and capital in
excess of par value 268,364 245,138 23,226
Retained earnings (deficit) (94,632) (162,098) 67,466
Cost of common stock in
treasury (7,269) (7,353) 84
Note receivable from ESOP (186) (332) 146
---------- ---------- -----------
Total stockholders'
equity 166,277 75,355 90,922
---------- ---------- -----------
Total liabilities
and stockholders'
equity $2,060,599 $1,726,272 $334,327
========== ========== ===========
(a) Prior year restated for March 1999 two-for-one stock split and
July 1999 C. D. Smith merger accounted for as a pooling of
interests.
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