AmerisourceBergen Reports Record Operating Revenue and Cash Flow in Year-End Results; Company Expects Diluted Earnings Per Share of $3.95 to $4.25 for Fiscal 2006.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. -- 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 results for its fiscal fourth quarter and year ended September September: see month. 30, 2005. 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 U.S. 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 Fourth Quarter Highlights --Diluted earnings per share from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the of $0.20, including special charges of $0.75 related primarily to early debt retirement. --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. of $13.0 billion, up 7 percent. --Record low interest expense of $9.4 million. --Low total debt to total capital ratio of 18.2 percent. Fiscal Year Highlights --Diluted earnings per share from continuing operations of $2.73 before the cumulative effect of an accounting change, including net special charges of $0.60. --Record operating revenue of $50.0 billion, up 2 percent. --Record cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses of $1.53 billion. "In the fiscal fourth quarter, excluding special charges, we delivered strong operating performance that represents positive momentum as we exit a challenging year and begin a promising fiscal 2006," 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. "Our disciplined working capital management and timely refinancing Refinancing An extension and/or increase in amount of existing debt. has produced the strongest balance sheet in our history. The transition to a fee-for-service fee-for-ser·vice adj. Charging a fee for each service performed. model with our branded pharmaceutical manufacturers is largely complete. We are enthusiastic about our future with increasing business opportunities including our recent entry into the Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. market, completion of our new distribution network, continued expansion of generic Generic Describes the characteristics and/or experience of the total universe of a coupon of MBS sector type; that is, in contrast to a specific pool or collateral group, as in a specific CMO issue. usage, continuation continuation - continuation passing style of 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. business's strong growth and our ability to leverage over time the added pharmaceutical 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 of the Medicare Medicare, national health insurance program in the United States for persons aged 65 and over and the disabled. It was established in 1965 with passage of the Social Security Amendments and is now run by the Centers for Medicare and Medicaid Services. Modernization modernization Transformation of a society from a rural and agrarian condition to a secular, urban, and industrial one. It is closely linked with industrialization. As societies modernize, the individual becomes increasingly important, gradually replacing the family, Act which begins in January January: see month. 2006." Discussion of Results AmerisourceBergen's operating revenue was a record $13.0 billion in the fourth quarter of fiscal 2005 compared to $12.1 billion for the same period last year, a 7 percent increase. Bulk deliveries in the quarter decreased 23 percent to $953.5 million. 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: 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. in the September quarter declined 11 percent to $155.0 million compared to the prior year's fourth quarter. A $12.0 million charge for facility consolidation 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 , most of which was for the outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. of information technology activities, negatively impacted operating income. An anticipated gain from an antitrust Antitrust The antitrust laws apply to virtually all industries and to every level of business, including manufacturing, transportation, distribution, and marketing. They prohibit a variety of practices that restrain trade. settlement was not received until October October: see month. and will benefit operating income by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $15 million in the first quarter of fiscal 2006, although the gain is expected to be offset by facility consolidation and employee severance costs. In the September quarter of 2004, the facility consolidation and employee severance charge was $2.2 million. During the fourth fiscal quarter, the Company successfully tendered for and retired its $500 million, 8.125 percent bonds due 2008 and its $300 million, 7.25 percent bonds due 2012, replacing them with two new bonds, a $400 million, seven-year bond with an effective rate of 5.71 percent and a 10-year, $500 million bond with an effective rate of 5.94 percent. Interest expense in the fourth quarter of fiscal 2005 was a record low $9.4 million compared to $23.5 million in the prior year's fourth quarter, a 60 percent decrease driven by net debt reduction. The effective tax rate for the fourth quarter of fiscal 2005 was 38.3 percent compared to 38.0 percent in the same quarter of the previous year. The tax rate applied to the early retirement of debt in fiscal 2005's fourth quarter was 36.1 percent as its costs are not deductible That which may be taken away or subtracted. In taxation, an item that may be subtracted from gross income or adjusted gross income in determining taxable income (e.g., interest expenses, charitable contributions, certain taxes). in certain states. 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 from continuing operations for the fourth quarter of fiscal 2005 were $0.20 compared to $0.82 in the prior year's fourth quarter. Included in the fiscal 2005 fourth quarter results is a charge of $0.68 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, net of tax, related to the retirement of debt and a $0.07 per diluted share, net of tax, charge for facility consolidation and employee severance costs. The previous fiscal year's fourth quarter included a facility consolidation and employee severance charge of $0.01 per diluted share, net of tax. Weighted average diluted shares outstanding for the fourth quarter of fiscal year 2005 were 104.8 million, a reduction from 117.0 million in the same period last year primarily due to the Company's share repurchase Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. programs during the year. Operating revenue in fiscal year 2005 increased 2 percent to a record $50.0 billion from $48.8 billion in the previous fiscal year. Bulk deliveries to customer warehouses were up 6 percent to $4.6 billion. Consolidated operating income for fiscal 2005 decreased 29 percent to $636.9 million as gross profit declined and 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. increased for the fiscal year. For the fiscal year ended September 30, 2005, diluted earnings per share from continuing operations were $2.73 before the cumulative effect of a change in accounting and included a net charge of $0.60, net of tax, for special items, which were primarily the costs related to the early retirement of debt, facility consolidations and employee severance and the gains from litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. settlements. Diluted earnings per share from continuing operations in fiscal 2004 were $4.12, which included a net benefit of $0.04 related to gains from litigation settlements, net the costs related to the early retirement of debt, facility consolidations and employee severance. Cash generated from operations in fiscal 2005 was $1.53 billion compared to $825 million last fiscal year. The Company's total debt to total capital ratio was a low 18.2 percent. "In the fourth quarter of fiscal 2005, the strong operating performance in pharmaceutical distribution overcame performance in 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. that was below our expectations," 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. . "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 . continued to be a growth driver with annual operating revenue of more than $7 billion. Led by its market-leading 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. business, with strong performances in the plasma and reimbursement Reimbursement Payment made to someone for out-of-pocket expenses has incurred. consulting businesses, the Group delivered outstanding growth in the quarter. "In the Drug Corporation, our customer-focused Transform program continued to gain momentum in the quarter, and our generics program also was a significant contributor. Our Optimiz(R) program, which is designed to lower our operating costs operating costs npl → gastos mpl operacionales , continued on schedule and on budget. In fiscal 2005, we opened new state-of-the-art facilities in Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. , Dallas Dallas, city (1990 pop. 1,006,877), seat of Dallas co., N Tex., on the Trinity River near the junction of its three forks; inc. 1871. The second largest Texas city, after Houston, and the eighth largest U.S. , and Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. , and we consolidated six distribution centers for a total of 32 in the U.S. at the end of the fiscal year. In fiscal 2006, we opened our new Kansas City Kansas City, two adjacent cities of the same name, one (1990 pop. 149,767), seat of Wyandotte co., NE Kansas (inc. 1859), the other (1990 pop. 435,146), Clay, Jackson, and Platte counties, NW Mo. (inc. 1850). distribution center in October, 2005 and expect to open the final of our six new facilities in Bethlehem, Pennsylvania Bethlehem is a city in Lehigh and Northampton Counties in the Lehigh Valley region of eastern Pennsylvania, in the United States. As of the 2000 census, the city had a total population of 71,329, making it the eighth largest municipality in Pennsylvania. , in the spring. We expect to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. six facilities in fiscal 2006, bringing the number of distribution centers in our U.S. network to 28, and expect the total number of U.S. distribution centers to be in the mid-twenties by the end of fiscal 2007." "In the fourth quarter, our PharMerica segment continued to face a difficult and competitive long-term care long-term care (LTC), n the provision of medical, social, and personal care services on a recurring or continuing basis to persons with chronic physical or mental disorders. environment, especially around market pricing and government reimbursement. Although the market is beginning to present some opportunities with completion of the merger between the two other national long-term care 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. companies, the challenges remaining in the move to Medicare Part D will make 2006 a transition year for PharMerica. Our expectation in fiscal 2006 is for mid single-digit revenue growth and slightly lower operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: ," 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 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 $219.5 million in the fourth quarter of fiscal 2005 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 fourth quarter of fiscal 2005 increased to a record $12.8 billion compared with $12.0 billion in the fourth quarter of fiscal year 2004, a 7 percent increase. Pharmaceutical Distribution customer mix in the fourth quarter of fiscal 2005 was 59 percent institutional and 41 percent retail, reflecting strong growth in the Specialty Group. For the segment, gross profit as a percentage of operating revenue in the fourth quarter of fiscal 2005 was 3.20 percent, compared to 3.12 percent in the same period in the prior fiscal year. Operating income as a percentage of operating revenue was 1.18 percent in the September quarter of fiscal 2005 compared with 1.20 percent in the prior fiscal year's September quarter. The Company recorded 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 of $15.0 million in the quarter, compared to a $27.4 million credit in the same quarter of the prior year, due to the significant reduction in inventory during the year. The positive impact of the credit was offset by losses from hurricanes Katrina KATRINA Keeping All the Resources in New Orleans Alive KATRINA Krewe Aiding Trash Removal In the New Orleans Area and Rita as well as higher than average bad debt expense. PharMerica PharMerica's operating revenue for the fourth quarter of fiscal 2005 was $401.6 million, a 3 percent increase over the previous year's fourth quarter. Operating income for the same period was $15.9 million, compared to $33.8 million for the same quarter last year, which was favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by a $12 million reduction in sales and use tax Sales and use tax refers to:
Looking To Fiscal 2006 "For fiscal 2006, we expect diluted earnings per share to be between $3.95 and $4.25 and operating revenue growth to be in the range of 6 percent to 8 percent," said Yost. "Our earnings per share expectations include the impact of a $0.09 charge for equity compensation expense and the anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, that litigation recovery gains will be offset by facility consolidation and employee severance expense. In the pharmaceutical distribution segment, we expect operating margins for fiscal 2006 to be in the range of 115 to 125 basis points. Cash flow from operations in fiscal 2006 is expected to be in the range of $500 million to $600 million." Conference Call The Company will host a conference call to discuss its results at 11:00 a.m. Eastern Standard Time on November November: see month. 3, 2005. 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, Executive Vice President and Chief Financial Officer.
To access the live conference call via telephone:
Dial in: (612) 326-1011, 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. November 4, 2005 until 11:59 p.m. November 10, 2005. 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: 799257
(320) 365-3844 from outside the U.S., access code: 799257
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 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. . 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 and pharmaceutical packaging to pharmacy services for skilled nursing and assisted living as·sist·ed living n. A living arrangement in which people with special needs, especially older people with disabilities, reside in a facility that provides help with everyday tasks such as bathing, dressing, and taking medication. facilities, reimbursement and pharmaceutical consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , and physician education. With more than $54 billion in annual revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 14,000 people. AmerisourceBergen is ranked #23 on the Fortune 500 list. 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 AmerisourceBergen's future financial and operating results and the benefits, efficiencies and savings to be derived de·rive v. de·rived, de·riv·ing, de·rives v.tr. 1. To obtain or receive from a source. 2. from the Company's integration plans to consolidate its distribution network. 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 or supplier relationships; customer defaults or insolvencies; changes in customer mix; supplier defaults or insolvencies; changes in pharmaceutical manufacturers' pricing and distribution policies or practices; adverse resolution of any contract or other disputes with customers (including departments and agencies of the U.S. Government) or suppliers; 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 (including reimbursement changes arising from the Medicare Modernization Act); market interest rates; operational or control issues arising from AmerisourceBergen's outsourcing of information technology activities; success of the Pharmaceutical Distribution segment's ability to transition its business model to fee-for-service; success of integration, 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). or systems initiatives; fluctuations in the U.S. dollar - Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents exchange rate; economic, business, competitive 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. regulatory developments in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of ; acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; and other economic, business, competitive, legal, regulatory and/or operational factors affecting the business of AmerisourceBergen generally. More detailed information about these and other risk 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 2004. 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
September Operating September Operating %
30, 2005 Revenue 30, 2004 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $12,964,857 100.00% $12,130,843 100.00% 7%
Bulk deliveries
to customer
warehouses 953,496 1,243,388 -23%
------------ ------------
Total revenue 13,918,353 13,374,231 4%
Cost of goods
sold 13,396,579 12,883,536 4%
------------ ------------
Gross profit 521,774 4.02% 490,695 4.05% 6%
Operating
expenses:
Distribution,
selling and
administrative 333,874 2.58% 294,046 2.42% 14%
Depreciation
and
amortization 20,896 0.16% 19,812 0.16% 5%
Facility
consolidations,
employee
severance, and
other 12,006 0.09% 2,198 0.02% 446%
------------ ------------
Operating income 154,998 1.20% 174,639 1.44% -11%
Other loss
(income) 160 0.00% (251) 0.00% N/A
Interest expense,
net 9,355 0.07% 23,482 0.19% -60%
Loss on early
retirement of
debt 110,873 0.86% - 0.00% N/A
------------ ------------
Income from
continuing
operations
before taxes 34,610 0.27% 151,408 1.25% -77%
Income taxes 13,268 0.10% 57,521 0.47% -77%
------------ ------------
Income from
continuing
operations 21,342 0.16% 93,887 0.77% -77%
Loss from
discontinued
operations, net
of taxes 1,842 1,898
------------ ------------
Net income $19,500 0.15% $91,989 0.76% -79%
============ ============
Earnings per
share:
Basic
Continuing
operations $0.21 $0.85 -75%
Discontinued
operations (0.02) (0.02)
------------ ------------
Net income $0.19 $0.83 -77%
============ ============
Diluted
Continuing
operations $0.20 $0.82 -76%
Discontinued
operations (0.02) (0.02)
Rounding 0.01 0.01
------------ ------------
Net income $0.19 $0.81 -77%
============ ============
Weighted average
common shares
outstanding:
Basic 103,753 110,962
Diluted 104,848 116,991
AMERISOURCEBERGEN CORPORATION
FINANCIAL SUMMARY
(In thousands, except per share data)
(unaudited)
Fiscal Fiscal
Year Ended % of Year Ended % of
September Operating September Operating %
30, 2005 Revenue 30, 2004 Revenue Change
------------ --------- ------------ --------- ------
Revenue:
Operating
revenue $50,012,598 100.00% $48,812,452 100.00% 2%
Bulk deliveries
to customer
warehouses 4,564,723 4,308,339 6%
------------ ------------
Total revenue 54,577,321 53,120,791 3%
Cost of goods
sold 52,597,137 50,954,361 3%
------------ ------------
Gross profit 1,980,184 3.96% 2,166,430 4.44% -9%
Operating
expenses:
Distribution,
selling and
administrative 1,234,057 2.47% 1,184,529 2.43% 4%
Depreciation
and
amortization 81,199 0.16% 73,425 0.15% 11%
Facility
consolidations,
employee
severance, and
other 22,723 0.05% 7,517 0.02% 202%
Impairment
charge 5,259 0.01% - 0.00% N/A
------------ ------------
Operating income 636,946 1.27% 900,959 1.85% -29%
Other income (990) 0.00% (6,236) -0.01% N/A
Interest expense,
net 57,223 0.11% 112,704 0.23% -49%
Loss on early
retirement of
debt 111,888 0.22% 23,592 0.05% N/A
------------ ------------
Income before
taxes,
discontinued
operations, and
cumulative
effect of change
in accounting 468,825 0.94% 770,899 1.58% -39%
Income taxes 176,903 0.35% 296,025 0.61% -40%
------------ ------------
Income from
continuing
operations
before
cumulative
effect of change
in accounting 291,922 0.58% 474,874 0.97% -39%
Loss from
discontinued
operations, net
of taxes 17,105 6,484
Cumulative effect
of change in
accounting, net
of taxes 10,172 -
------------ ------------
Net income $264,645 0.53% $468,390 0.96% -43%
============ ============
Earnings per
share:
Basic
Continuing
operations $2.76 $4.25 -35%
Discontinued
operations (0.16) (0.06)
Cumulative
effect of
change in
accounting (0.10) -
Rounding - 0.01
------------ ------------
Net income $2.50 $4.20 -40%
============ ============
Diluted
Continuing
operations $2.73 $4.12 -34%
Discontinued
operations (0.16) (0.06)
Cumulative
effect of
change in
accounting (0.09) -
------------ ------------
Net income $2.48 $4.06 -39%
============ ============
Weighted average
common shares
outstanding:
Basic 105,667 111,617
Diluted 107,770 117,779
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
ASSETS
September 30, September 30,
2005 2004
------------- -------------
Current assets:
Cash and cash equivalents $1,315,683 $871,343
Accounts receivable, net 2,640,646 2,260,973
Merchandise inventories 4,003,690 5,135,830
Prepaid expenses and other 27,673 27,243
------------- -------------
Total current assets 7,987,692 8,295,389
Long-term assets 3,393,482 3,358,614
------------- -------------
Total assets $11,381,174 $11,654,003
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $5,292,253 $4,947,037
Current portion of long-term debt 1,232 281,360
Other current liabilities 758,611 875,511
------------- -------------
Total current liabilities 6,052,096 6,103,908
Long-term debt, less current portion 951,479 1,157,111
Other liabilities 97,242 53,939
Stockholders' equity 4,280,357 4,339,045
------------- -------------
Total liabilities and stockholders'
equity $11,381,174 $11,654,003
============= =============
AMERISOURCEBERGEN CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Fiscal Fiscal
Year Ended Year Ended
September 30, September 30,
2005 2004
------------- -------------
Operating Activities:
Net income $264,645 $468,390
Changes in operating assets and
liabilities 976,688 205,231
Adjustments to reconcile net income to
net cash provided by operating
activities 285,305 151,460
------------- -------------
Net cash provided by operating activities 1,526,638 825,081
------------- -------------
Investing Activities:
Capital expenditures (203,376) (189,278)
Cost of acquired companies, net of cash
acquired and other (4,404) (68,882)
Proceeds from sale-leaseback
transactions 36,696 15,602
Proceeds from sales of discontinued
operations 14,560 -
Proceeds from sales of property and
equipment 4,219 336
------------- -------------
Net cash used in investing activities (152,305) (242,222)
------------- -------------
Financing Activities:
Long-term debt borrowings 895,500 -
Long-term debt repayments (1,182,339) (368,425)
Exercise of stock options 174,063 15,151
Cash dividends on common stock (10,598) (11,197)
Purchases of common stock (786,192) (144,756)
Deferred financing costs and other (20,427) (2,325)
------------- -------------
Net cash used in financing activities (929,993) (511,552)
------------- -------------
Increase in cash and cash equivalents 444,340 71,307
Cash and cash equivalents at beginning of
period 871,343 800,036
------------- -------------
Cash and cash equivalents at end of
period $1,315,683 $871,343
============= =============
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Three Months Ended September 30,
-----------------------------------
Operating Revenue 2005 2004 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $12,782,748 $11,966,119 7%
PharMerica 401,627 390,405 3%
Intersegment eliminations (219,518) (225,681) 3%
------------ ------------
Operating revenue $12,964,857 $12,130,843 7%
============ ============
Three Months Ended September 30,
-----------------------------------
Operating Income 2005 2004 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $151,151 $143,071 6%
PharMerica 15,853 33,766 -53%
Facility consolidations, employee
severance, and other (12,006) (2,198) -446%
------------ ------------
Operating income $154,998 $174,639 -11%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.20% 3.12%
Operating expenses 2.02% 1.93%
Operating income 1.18% 1.20%
PharMerica
Gross profit 27.98% 30.02%
Operating expenses 24.03% 21.37%
Operating income 3.95% 8.65%
AmerisourceBergen Corporation
Gross profit 4.02% 4.05%
Operating expenses 2.83% 2.61%
Operating income 1.20% 1.44%
AMERISOURCEBERGEN CORPORATION
SUMMARY SEGMENT INFORMATION
(dollars in thousands)
(unaudited)
Fiscal Year Ended September 30,
-----------------------------------
Operating Revenue 2005 2004 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $49,319,371 $48,113,015 3%
PharMerica 1,571,369 1,575,255 0%
Intersegment eliminations (878,142) (875,818) 0%
------------ ------------
Operating revenue $50,012,598 $48,812,452 2%
============ ============
Fiscal Year Ended September 30,
-----------------------------------
Operating Income 2005 2004 % Change
---------------------------------- -----------------------------------
Pharmaceutical Distribution $532,887 $748,625 -29%
PharMerica 91,947 121,846 -25%
Facility consolidations, employee
severance, and other (22,723) (7,517) -202%
Gain on litigation settlements 40,094 38,005 5%
Impairment charge (5,259) - N/A
------------ ------------
Operating income $636,946 $900,959 -29%
============ ============
Percentages of operating revenue:
Pharmaceutical Distribution
Gross profit 3.03% 3.43%
Operating expenses 1.95% 1.87%
Operating income 1.08% 1.56%
PharMerica
Gross profit 28.40% 30.45%
Operating expenses 22.54% 22.72%
Operating income 5.85% 7.74%
AmerisourceBergen Corporation
Gross profit 3.96% 4.44%
Operating expenses 2.69% 2.59%
Operating income 1.27% 1.85%
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 from continuing operations available to
common stockholders.
Three Months Ended Fiscal Year Ended
September 30, September 30,
2005 2004 2005 2004
--------- --------- --------- ---------
Income from continuing
operations, before cumulative
effect of change in
accounting $21,342 $93,887 $291,922 $474,874
Interest expense - convertible
subordinated notes, net of
income taxes - 2,551 2,539 10,141
--------- --------- --------- ---------
Income from continuing
operations available to
common stockholders $21,342 $96,438 $294,461 $485,015
========= ========= ========= =========
Weighted average common shares
outstanding - basic 103,753 110,962 105,667 111,617
Effect of dilutive securities:
Options to purchase common
stock 1,095 365 658 498
Convertible subordinated
notes - 5,664 1,445 5,664
--------- --------- --------- ---------
Weighted average common shares
outstanding - diluted 104,848 116,991 107,770 117,779
========= ========= ========= =========
Earnings per share:
Basic
Continuing operations $0.21 $0.85 $2.76 $4.25
Discontinued operations (0.02) (0.02) (0.16) (0.06)
Cumulative effect of
change in accounting - - (0.10) -
Rounding - - - 0.01
--------- --------- --------- ---------
Net income $0.19 $0.83 $2.50 $4.20
========= ========= ========= =========
Diluted
Continuing operations $0.20 $0.82 $2.73 $4.12
Discontinued operations (0.02) (0.02) (0.16) (0.06)
Cumulative effect of
change in accounting - - (0.09) -
Rounding 0.01 0.01 - -
--------- --------- --------- ---------
Net income $0.19 $0.81 $2.48 $4.06
========= ========= ========= =========
AMERISOURCEBERGEN CORPORATION
CHANGE IN ACCOUNTING
(UNAUDITED)
Effective October 1, 2004, the Company changed its method of
recognizing cash discounts and other related manufacturer incentives.
The Company previously recognized cash discounts as a reduction of
cost of goods sold when earned, which was primarily upon payment of
vendor invoices. The Company now records cash discounts as a component
of inventory cost and recognizes such discounts as a reduction to cost
of goods sold upon the sale of the inventory. In connection with the
Company's transition to a fee-for-service model, the Company believes
the change in accounting method provides a more objectively
determinable method of recognizing cash discounts and a better
matching of inventory cost to revenue, as inventory turnover rates are
expected to continue to improve.
The Company recorded a $10.2 million cumulative effect of change in
accounting (net of tax of $6.3 million) in the consolidated statement
of operations for the fiscal year ended September 30, 2005. This $10.2
million cumulative effect adjustment reduced diluted earnings per
share by $0.09 for the fiscal year ended September 30, 2005. The
accounting change is incorporated in the Company's results for the
three months ended September 30, 2005, and the change decreased
earnings from continuing operations in the September quarter by
approximately $0.5 million, net of tax, and had no impact on diluted
earnings per share from continuing operations. The accounting change
improved earnings from continuing operations in the fiscal year ended
September 30, 2005 by approximately $11.5 million, net of tax, or
$0.11 per diluted share from continuing operations.
The pro forma effect of this accounting change on prior periods is as
follows:
Three Months Fiscal Year
Ended Ended
(in thousands, except per share data) September 30, September 30,
2004 2004
----------------------------------------- ------------- -------------
Income from continuing operations before
cumulative effect of change in accounting:
As Reported $93,887 $474,874
Pro Forma $91,879 $472,653
Net income:
As Reported $91,989 $468,390
Pro Forma $89,981 $466,169
Basic earnings per share from continuing
operations:
As Reported $0.85 $4.25
Pro Forma $0.83 $4.23
Diluted earnings per share from
continuing operations:
As Reported $0.82 $4.12
Pro Forma $0.81 $4.10
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