AmerisourceBergen Reports Operating Margin Expansion and Record Diluted Earnings Per Share for the December Quarter.Business Editors 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)--Jan. 26, 2004 Record 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. Exceeds $12 Billion Driven By an 11 Percent Increase in Pharmaceutical Distribution 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 (NYSE NYSE See: New York Stock Exchange :ABC ABC in full American Broadcasting Co. Major U.S. television network. It began when the expanding national radio network NBC split into the separate Red and Blue networks in 1928. ) today reported record results for its fiscal first quarter ended December December: see month. 31, 2003. The following results are presented in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ). Fiscal First Quarter Highlights -- Record 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 of $0.94, including special charges of $0.01, up 12 percent. -- Record net income of $108.5 million, up 17 percent. -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: expansion of 3 basis points. -- Record operating revenue of $12.3 billion, up 10 percent. "Our discipline delivered another outstanding quarter at AmerisourceBergen," said 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 , AmerisourceBergen's Chief Executive Officer. "Operating revenue grew at a double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. rate and was over $12 billion for the first time in any quarter. Our disciplined approach to growth drove 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 a historic low, and strong working capital management and operating margin expansion combined to produce excellent earnings per share growth." Discussion of Results Diluted earnings per share for the first quarter of fiscal 2004 were $0.94, a 12 percent increase over the $0.84 in the prior year's first quarter. Included in these results are special charges, net of tax, in the first quarter of fiscal 2004 of $1.0 million, and a $0.8 million credit, net of tax, in the same period of the previous fiscal year. Both the charge and the credit are for facility consolidations and employee severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when . The earnings per share impact of these items was a decrease of $0.01 in the first quarter of fiscal 2004 and an increase of $0.01 in the first quarter of last fiscal year. AmerisourceBergen's operating revenue was $12.3 billion in the first quarter of fiscal 2004 compared to $11.1 billion for the same period last year, a 10 percent increase. Bulk deliveries in the quarter decreased 18 percent to $1.1 billion in the quarter, reflecting the conversion of bulk business into operating revenue in fiscal 2003. "Our excellent operational performance in the December quarter reflected on-going Adj. 1. on-going - currently happening; "an ongoing economic crisis" ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" , disciplined expense management, solid working capital management, and continued strong performance by our Specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. Group," said 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, AmerisourceBergen's 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. . "During the quarter, we continued to benefit from our merger integration cost savings and remain confident of delivering by the end of this fiscal year the $150 million in annual synergy The enhanced result of two or more people, groups or organizations working together. In other words, one and one equals three! It comes from the Greek "synergia," which means joint work and cooperative action. cost savings we announced at the time of the merger. The building of our new distribution center network continues on schedule and on budget, with our new Sacramento, California “Sacramento” redirects here. For other uses, see Sacramento (disambiguation). Sacramento is the capital of the State of California and the county seat of Sacramento County. , facility set to open this summer and our new Columbus, Ohio Columbus is the capital and the largest city of the American state of Ohio. Named for explorer Christopher Columbus, the city was founded in 1812 at the confluence of the Scioto and Olentangy rivers, and assumed the functions of state capital in 1816. , distribution center to open in the fall. Completion of these and the other four new distribution centers will facilitate additional consolidation and cost savings in the years ahead." "In our PharMerica PharMerica is a publicly-traded Fortune 1000 company formed in January 2007 from the merger of Kindred Healthcare's pharmacy business with a subsidiary of AmerisourceBergen. segment, operational discipline and expense reduction drove operating margins to a first quarter record, despite no revenue growth," said Hilzinger. Segment Review AmerisourceBergen operates in two segments: Pharmaceutical Distribution (which includes the AmerisourceBergen Drug Corporation and AmerisourceBergen Specialty Group  This article or section is written like an .Please help [ rewrite this article] from a neutral point of view. Mark blatant advertising for , using . operations) and PharMerica (which includes the institutional 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. and workers' compensation workers' compensation, payment by employers for some part of the cost of injuries, or in some cases of occupational diseases, received by employees in the course of their work. fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. businesses). Intersegment sales of $227.3 million in the first quarter of fiscal 2004 from AmerisourceBergen Drug Corporation to PharMerica, which are included in the Pharmaceutical Distribution segment operating revenue, are eliminated for consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: reporting purposes. Pharmaceutical Distribution Segment Operating revenue in the first quarter of fiscal 2004 increased to $12.1 billion compared with $10.9 billion in the first quarter of fiscal year 2003, an 11 percent increase. Pharmaceutical Distribution customer mix in the first quarter of fiscal 2004 was 60 percent institutional and 40 percent retail. Operating revenue from institutional customers, which includes mail order and alternate alternate /al·ter·nate/ (awl´ter-nit) 1. following in turns. 2. pertaining to every other one in a series. 3. occurring in place of another; acting as a substitute. site facilities, hospitals and specialty pharmaceutical customers, continued to grow significantly faster than operating revenue from retail customers. AmerisourceBergen Specialty Group, with 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. revenue of more than $4 billion, continued its strong 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 oncology /on·col·o·gy/ (ong-kol´ah-je) the sum of knowledge regarding tumors; the study of tumors. on·col·o·gy n. , as well as to grow its manufacturer services businesses such as reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. consulting. For the segment, gross profit as a percentage of operating revenue in the first quarter of fiscal 2004 was 3.33 percent, compared to 3.59 percent in the same period in the prior fiscal year, down 26 basis points. Gross margins were positively impacted by recent acquisitions, which offset in part the negative effects of customer mix and the strong competitive environment. Total operating expenses as a percentage of operating revenue in the first quarter of fiscal 2004 were 1.81 percent, a record low and a 29 basis point improvement over the same quarter last year. The improvement was driven by customer mix, merger integration cost savings and the recovery of a previously reserved bad debt, offset in part by higher expense ratios within recent acquisitions. 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. was $183.5 million in the first quarter of fiscal 2004, up 13 percent from $162.9 million for the same quarter last year. For the first quarter of fiscal 2004, operating income as a percentage of operating revenue was 1.52 percent, a 3 basis point improvement from the first quarter of fiscal 2003, as reductions in 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. margins offset lower gross margins. PharMerica PharMerica's operating revenue for the first quarter of fiscal 2004 was $402.4 million, compared with $402.8 million in the previous year's first quarter. However, operating income for the first quarter of fiscal 2004 was $28.5 million, up 21 percent from $23.5 million for the same quarter last year due to continued expense reduction. Operating income as a percentage of operating revenue increased 124 basis points in the quarter ended December 31, 2003 to 7.08 percent from 5.84 percent in the prior year. Looking Ahead "Our recently revised earnings expectations for fiscal year 2004, which reflects the loss of a major customer, 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. Following the anniversary of our customer loss in fiscal 2005, we would expect to return to 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. financial goals, which include growing diluted earnings per share at 15 percent or more annually." Conference Call The Company will host a conference call to discuss its results at 11:00 a.m. Eastern Standard Time on January January: see month. 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 Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. D. DiCandilo, Senior Vice President and Chief Financial Officer. To access the live conference call via telephone: Dial in: 888-428-4479 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 Investor relations The process by which the corporation communicates with its investors. page at http://www.amerisourcebergen.com. A replay of the telephone call and webcast will be available from 3:00 p.m. January 26, 2004 until 11:59 p.m. February February: see month. 2, 2004. The Webcast replay should be available for 30 days. To access the replay via telephone: Dial in: 800-475-6701 from within the U.S., access code: 716110 or 320-365-3844 from outside the U.S., access code: 716110 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 the largest pharmaceutical services company in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. dedicated solely to the pharmaceutical supply chain. It is the leading distributor of pharmaceutical products and services to the hospital market, physician's offices, alternate care and mail order facilities, and independent and chain 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 . The Company is also a leader in the long term care pharmacy marketplace, the workers' compensation fulfillment business and contract packaging for manufacturers. With more than $45 billion in annualized operating revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 14,000 people. AmerisourceBergen is ranked #24 on the Fortune 500 list and was ranked #6 in the 2003 Business Week 50, a list of the 50 best performing companies in the S & P 500. For more information, go to www.amerisourcebergen.com. 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. 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 CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or . 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 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. 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 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; 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 and/or conj. Used to indicate that either or both of the items connected by it are involved. Usage Note: And/or is widely used in legal and business writing. 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 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 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
December 31, Operating December 31, Operating %
2003 Revenue 2002 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $12,265,679 100.00% $11,106,905 100.00% 10%
Bulk
deliveries to
customer
warehouses 1,089,434 1,327,628 -18%
---------- ----------
Total revenue 13,355,113 12,434,533
Cost of goods
sold 12,827,939 11,913,108 8%
---------- ----------
Gross profit 527,174 4.30% 521,425 4.69% 1%
Operating
expenses:
Distribution,
selling and
administrative 298,327 2.43% 317,682 2.86% -6%
Depreciation
and amortization 16,818 0.14% 17,269 0.16% -3%
Facility
consolidations
and employee
severance 1,553 0.01% (1,381) -0.01% N/A
--------- ---------
Operating income 210,476 1.72% 187,855 1.69% 12%
Equity in losses
of affiliates
and other 2,587 0.02% 183 0.00% N/A
Interest expense 31,507 0.26% 34,385 0.31% -8%
--------- ---------
Income before
taxes 176,382 1.44% 153,287 1.38% 15%
Income taxes 67,908 0.55% 60,548 0.55% 12%
--------- ---------
Net income $108,474 0.88% $92,739 0.83% 17%
========= =========
Earnings per share:
Basic $0.97 $0.87
Diluted $0.94 $0.84
Weighted average
common shares
outstanding:
Basic 111,709 106,790
Diluted 118,029 113,402
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
December 31, September 30, $
2003 2003 Change
------------ ------------ ----------
Current assets:
Cash and cash equivalents $283,225 $800,036 $(516,811)
Accounts receivable, net 2,623,384 2,295,437 327,947
Merchandise inventories 5,658,862 5,733,837 (74,975)
Prepaid expenses and other 30,890 29,208 1,682
------------ ------------ ----------
Total current assets 8,596,361 8,858,518 (262,157)
Long-term assets 3,213,617 3,181,607 32,010
------------ ------------ ----------
Total assets $11,809,978 $12,040,125 $(230,147)
============ ============ ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,024,801 $5,393,769 $(368,968)
Current portion of long-term debt 61,392 61,430 (38)
Other current liabilities 832,261 800,903 31,358
------------ ------------ ----------
Total current liabilities 5,918,454 6,256,102 (337,648)
Long-term debt, less current
portion 1,708,403 1,722,724 (14,321)
Other liabilities 62,257 55,982 6,275
Stockholders' equity 4,120,864 4,005,317 115,547
------------ ------------ ----------
Total liabilities and
stockholders' equity $11,809,978 $12,040,125 $(230,147)
============ ============ ==========
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Three Three
Months Months
Ended Ended
December December
31, 31,
2003 2002
--------- ---------
Operating Activities:
Net income $108,474 $92,739
Non-cash items 29,811 46,518
Changes in operating assets and liabilities (592,683) (805,606)
--------- ---------
Net cash used in operating activities (454,398) (666,349)
--------- ---------
Investing Activities:
Capital expenditures (51,516) (16,487)
Cost of acquired companies (219) (1,427)
Other 96 75
--------- ---------
Net cash used in investing activities (51,639) (17,839)
--------- ---------
Financing Activities:
Net borrowings under revolving credit and
receivables securitization facilities - 100,000
Net (repayments) borrowings of long-term debt (15,000) 285,000
Exercise of stock options 6,577 9,823
Cash dividends on common stock (2,802) (2,674)
Other 451 (4,525)
--------- ---------
Net cash (used in) provided by financing
activities (10,774) 387,624
--------- ---------
Decrease in cash and cash equivalents (516,811) (296,564)
Cash and cash equivalents at beginning of period 800,036 663,340
--------- ---------
Cash and cash equivalents at end of period $283,225 $366,776
========= =========
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended December 31,
-----------------------------------
Operating Revenue 2003 2002 % Change
---------------------------------- ------------ ------------ ---------
Pharmaceutical Distribution $12,090,524 $10,899,570 11%
PharMerica 402,440 402,842 0%
Intersegment eliminations (227,285) (195,507) -16%
------------ ------------
Operating revenue $12,265,679 $11,106,905 10%
============ ============
Three Months Ended December 31,
-----------------------------------
Operating Income 2003 2002 % Change
---------------------------------- ------------ ------------ ---------
Pharmaceutical Distribution $183,536 $162,935 13%
PharMerica 28,493 23,539 21%
Facility consolidations and
employee severance (1,553) 1,381 N/A
------------ ------------
Operating income $210,476 $187,855 12%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.33% 3.59%
Operating expenses 1.81% 2.10%
Operating income 1.52% 1.49%
PharMerica
Gross profit 30.96% 32.18%
Operating expenses 23.88% 26.33%
Operating income 7.08% 5.84%
AmerisourceBergen Corporation
Gross profit 4.30% 4.69%
Operating expenses 2.58% 3.00%
Operating income 1.72% 1.69%
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
December 31,
2003 2002
--------- --------
Net income $108,474 $92,739
Interest expense - convertible subordinated notes,
net of income taxes 2,530 2,489
--------- --------
Income available to common stockholders $111,004 $95,228
========= ========
Weighted average common shares outstanding - basic 111,709 106,790
Effect of dilutive securities:
Options to purchase common stock 656 948
Convertible subordinated notes 5,664 5,664
--------- --------
Weighted average common shares outstanding -
diluted 118,029 113,402
========= ========
Earnings per share:
Basic $0.97 $0.87
Diluted $0.94 $0.84
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