AmerisourceBergen Reports Record Quarterly Diluted Earnings Per Share of $0.68.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 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 second quarter ended March 31, 2007. The following results are presented in accordance 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 Second Quarter Highlights * 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 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 $0.68, up 11 percent. * 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 $15.3 billion, up 9 percent. * Pharmaceutical Distribution operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 1.35 percent, up 8 basis points. * 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 $423 million, above expectations. Fiscal First Six Months Highlights * Diluted earnings per share from continuing operations of $1.30, up 20 percent. * Operating revenue of $31.0 billion, up 12 percent. * Pharmaceutical Distribution operating margin of 1.30 percent, up 14 basis points. * Cash flow from operations of $711 million. * Capital deployment: $365 million in share repurchases 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. , more than $405 million in acquisitions closed or under agreement, and dividend doubled. "Our March quarter, historically our strongest, again produced outstanding results, driven by strong performance in our traditional drug and specialty distribution businesses," 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 9 percent operating revenue growth was in line with expectations. Our excellent earnings per share performance is a result of that revenue growth, expanding margins in distribution, and our disciplined use of cash. During the quarter, we committed more than $260 million in capital with the agreements to acquire Bellco Health and Xcenda. In addition, we bought back $35 million of our shares. We retain significant financial flexibility with a strong balance sheet and solid cash position." Discussion of Results AmerisourceBergen's operating revenue was $15.3 billion in the second quarter of fiscal 2007 compared to $14.0 billion for the same period last year, a 9 percent increase. Bulk deliveries in the quarter increased 5 percent to $1.23 billion from $1.17 billion in last fiscal year's second quarter. Consolidated 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 quarter increased 12 percent to $220.9 million, primarily due to increased gross margin in the Pharmaceutical Distribution segment. In addition, a $1.8 million gain from settlements of pharmaceutical manufacturer antitrust 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. cases, less $0.1 million of net charges for facility consolidations, employee severance and other costs, had a net positive $1.6 million impact on consolidated operating income in the fiscal 2007 second quarter. In the previous fiscal year's second quarter, the net positive impact of antitrust litigation settlements and charges for facility consolidations, employee severance and other costs was $5.8 million. Other income of $5.8 million for the second quarter of fiscal 2006 included $6.5 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the sale of a small investment and an eminent domain eminent domain, the right of a government to force the owner of private property sell it if it is needed for a public use. The right is based on the doctrine that a sovereign state has dominion over all lands and buildings within its borders, which has its origins in settlement. The effective tax rate in the second quarter of fiscal 2007 was 38.5 percent up from 34.5 percent in the previous fiscal year's second quarter, which included $5.5 million of favorable tax adjustments. The Company expects the tax rate for the remaining quarters in fiscal 2007 to be between 37 percent and 38 percent. Diluted earnings per share from continuing operations were $0.68 in the second quarter of fiscal 2007, compared to $0.61 in the previous fiscal year's second quarter, an 11 percent increase. Included in the results for the second quarter of fiscal 2007 is a gain from the antitrust litigation settlements as well as a charges for facility consolidations, employee severance and other costs, which resulted in a charge, net of tax, of $0.3 million or zero cents per diluted share. Special items in the second quarter of fiscal 2006, which included gains from antitrust litigation settlements, an investment sale and an eminent domain settlement, and the tax adjustments, less the charges for facility consolidations, employee severance and other costs, resulted in a benefit, net of tax, of $13.6 million or $0.06 per diluted share. Diluted average shares outstanding for the second quarter of fiscal year 2007 were 191.8 million, down 19 million from the previous fiscal year's second quarter due to share repurchases, net of option exercises. For the first six months of fiscal 2007, AmerisourceBergen's operating revenue was $31.0 billion compared to $27.6 billion for the same period last year, a 12 percent increase. Bulk deliveries in the first half of the fiscal year decreased 1 percent to $2.3 billion. Consolidated operating income in the first six months of the fiscal year increased 18 percent to $429.8 million due to operating income growth in the Pharmaceutical Distribution segment. For the first six months of fiscal 2007 diluted earnings per share from continuing operations were $1.30, compared to $1.08 in the previous year's first six months, a 20 percent increase. "For the fiscal 2007 second quarter, excellent operating performance in the Pharmaceutical Distribution segment more than offset the lower than expected performance in the PharMerica segment," said Kurt 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. . "Our Drug Corporation, which provides pharmaceutical distribution and related services to pharmacies, led distribution performance in the quarter with solid margin expansion. Performance under our fee-for-service agreements, continued strong sales of generic pharmaceuticals, and price appreciation were gross margin drivers in the quarter. Benefits from Optimiz([R]), our program to enhance the efficiency of our distribution center network, continued to improve our cost structure. Our pending acquisition of Bellco Health, a pharmaceutical distributor, is expected to enhance our capability in the distribution segment. "With operating revenues up 27 percent, our Specialty Group, which focuses on the distribution of specialty pharmaceuticals to physicians and the services that support that market, continued its strong growth. Its market-leading oncology businesses as well as other distribution businesses to physicians continue to drive growth faster than the overall pharmaceutical market. "Our Packaging Group continued to perform well. In the quarter, Anderson Packaging began packaging five new products for branded manufacturers and American Health American Health Inc. is a company that manufactures health supplements. It is located in Holbrook, New York. One of its products is labeled the "Chewable Original Papaya Enzyme" with the attached registered trademark, "The 'After Meal Supplement'". Packaging launched 11 new proprietary generic product offerings for various customers. We continued to invest in this business during the quarter with the approval of a new 260,000-square-foot facility for Anderson in Rockford, Illinois Rockford is a mid-sized city located on both banks of the Rock River in far northern Illinois. Rockford is often referred to as "The Forest City" and is the county seat of Winnebago County, Illinois, USA. As reported in the 2000 U.S. . "Our PharMerica segment earnings lagged in the second quarter due to lower than expected performance in the PMSI PMSI Purchase-Money Security Interest (generally a lien resulting from a purchase such as a car loan) PMSI Physician Micro Systems, Inc. PMSI Programme de Médicalisation des Systèmes d'Information Hospitaliers PMSI Popular Mortgage Servicing, Inc. 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. business, primarily because of increased competitive pressure on customer pricing. The Long Term Care business grew revenues 5 percent in the quarter, and remains on track to meet our expectations for the fiscal year." Segment Review AmerisourceBergen operates in two segments, Pharmaceutical Distribution and PharMerica. Pharmaceutical Distribution includes the operations of AmerisourceBergen Drug Corporation (ABDC ABDC America's Best Dance Crew (TV series) ABDC Association of Birth Defect Children ABDC after bottom dead center (referring to a piston in a engine) ), Specialty Group (ABSG ABSG Adult Bible Study Guide (Seventh-day Adventist Church) ABSG Advanced Bash-Scripting Guide ABSG Agri-Business Shippers Group ) and Packaging Group (ABPG ABPG alt.binaries.pictures.grotesque (newsgroup) ABPG Advanced Base Proving Ground ), and PharMerica includes the PharMerica Long Term Care (LTC LTC abbr. lieutenant colonel ) institutional pharmacy business and PMSI, the workers' compensation business. Intersegment sales of $231.6 million in the second quarter of fiscal 2007 from AmerisourceBergen Drug Corporation to PharMerica, which are included in the Pharmaceutical Distribution segment's operating revenue, are eliminated for consolidated reporting purposes. Pharmaceutical Distribution Segment Operating revenue of $15.1 billion in the second quarter of fiscal 2007 was up 9 percent compared to the same quarter in the previous fiscal year as above market distribution growth in ABSG drove operating revenues to the high end of overall market growth. Pharmaceutical Distribution customer mix in the second quarter of fiscal 2007 was 62 percent institutional and 38 percent retail. For the segment, gross profit as a percentage of operating revenue in the second quarter of fiscal 2007 was 3.23 percent compared to 3.16 percent in the same period in the prior fiscal year. The increase was driven by margin expansion in ABDC as a result of strong performance under fee-for-service agreements, generic sales growth that was above overall market growth, and price appreciation. This offset a decline in ABSG's gross margin due to its business mix, as its lower margin distribution businesses grew faster than its higher margin service businesses. 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 for the segment in the fiscal 2007 second quarter were 1.87 percent, down from 1.89 percent in the prior year's second quarter, reflecting continuing operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . Segment operating income for the fiscal 2007 second quarter was $203.9 million, a 16 percent increase over the same period in fiscal 2006. Operating income as a percentage of operating revenue in the second quarter of 2007 was 1.35 percent, up eight basis points over the same quarter last fiscal year. PharMerica PharMerica's operating revenue for the second quarter of fiscal 2007 was $431.4 million, compared with $412.7 million in the previous year's second quarter, up 5 percent due to the growth in LTC. In the second quarter of fiscal 2007, LTC operating revenues were $316.8 million and PMSI operating revenues were $114.6 million. Operating income for the second quarter of fiscal 2007 was $15.4 million, down from the same quarter last fiscal year, with LTC contributing $6.8 million and PMSI contributing $8.6 million. Operating income as a percentage of revenue was 3.56 percent in the second quarter of fiscal 2007, down from the 3.92 percent in last year's second quarter due to PMSI's relatively flat revenue growth and competitive pressures. Looking Ahead "In April 2007, we received an antitrust litigation settlement that will provide a gain of $0.06 per diluted share in the third fiscal quarter of 2007, which net of anticipated special charges over the last half of the fiscal year, is expected to provide a benefit of $0.05 per diluted share in the 2007 fiscal year," said Yost. "As a result, we are raising our GAAP diluted earnings per share expectations for fiscal 2007 by $0.05 to a range of $2.50 to $2.65 from a range of $2.45 to $2.60. The PharMerica 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. business, which the Company continues to expect to spin off on a tax-free basis to our shareholders by the end of June 2007, continues to represent $0.09 to $0.11 of our earnings expectations for all of fiscal year 2007. Our diluted earnings per share guidance for fiscal 2007 continues to assume operating revenue growth of 9 percent to 11 percent and reflects operating margin expansion in the high single-digit basis point range for the Pharmaceutical Distribution segment." "With our operating cash generation coming in ahead of expectations at the end of six months, we are raising our expectation for free cash flow in fiscal year 2007 by $150 million to a range of $575 million to $650 million from the previous range of $425 million to $500 million. Capital expenditures, which are included in the free cash flow expectation, remain unchanged in the $100 million to $125 million range," continued Yost. "We also continue to expect to repurchase $450 million to $500 million of our common shares during fiscal 2007." Conference Call The Company will host a conference call to discuss its results at 11:00 a.m. Eastern Daylight Time on April 25, 2007. Participating in the conference call will be: R. David Yost, Chief Executive Officer; Kurt J. Hilzinger, President and Chief Operating Officer; and Michael D. DiCandilo, Executive Vice President and Chief Financial Officer. [TABLE OMITTED] A replay of the telephone call and webcast will be available from 2:30 p.m. April 25, 2007 until 11:59 p.m. May 2, 2007. The Webcast replay will be available for 30 days. [TABLE OMITTED] About AmerisourceBergen AmerisourceBergen (NYSE:ABC) is one of the world's largest pharmaceutical services companies serving 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. , Canada and selected global markets. 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 $64 billion in annual revenue, AmerisourceBergen is headquartered in Valley Forge, PA, and employs more than 13,000 people. AmerisourceBergen is ranked #29 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. Actual results may vary materially from the expectations contained in the forward-looking statements. 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 changes (including increased government regulation of the pharmaceutical supply channel); changes in U.S. government policies (including reimbursement changes arising from federal legislation, including the Medicare Modernization Act and the Deficit Reduction Act of 2005); changes in regulatory or private medical guidelines A medical guideline (also called a clinical guideline, clinical protocol or clinical practice guideline) is a document with the aim of guiding decisions and criteria in specific areas of healthcare, as defined by an authoritative examination of current evidence and/or reimbursement practices for the pharmaceuticals we distribute; price inflation in branded pharmaceuticals and price deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. in generics; declines in the amounts of market share rebates offered by pharmaceutical manufacturers to the PharMerica Long-Term Care business, declines in the amounts of rebates that the PharMerica Long-Term Care business can retain, and/or the inability of the business to offset the rebate reductions that have already occurred or any rebate reductions that may occur in the future; any disruption to or other adverse effects upon the PharMerica Long-Term Care business caused by the announcement of the Company's agreement to combine the PharMerica Long-Term Care business with the institutional pharmacy business of Kindred Healthcare Kindred Healthcare Incorporated (NYSE: KND) is a Fortune 500 healthcare services company located in Louisville, Kentucky. Kindred Healthcare was founded in 1985 as Vencor, Inc. , Inc. into a new public company that will be owned 50% by the Company's shareholders (the "PharMerica LTC Transaction"); the inability of the Company to successfully complete the PharMerica LTC Transaction; fluctuations in market interest rates; operational or control issues arising from the Company's outsourcing of information technology activities; success of integration, restructuring 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 and other foreign exchange rates; economic, business, competitive and/or regulatory developments in Canada, the United Kingdom and elsewhere outside of the United States; acquisition of businesses that do not perform as we expect or that are difficult for us to integrate or control; changes in tax legislation or adverse resolution of challenges to our tax positions; and other economic, business, competitive, legal, tax, regulatory and/or operational factors affecting the business of the Company generally. Certain additional factors that management believes could cause actual outcomes and results to differ materially from those described in forward-looking statements are set forth (i) in Item 1A (Risk Factors) in the Company's 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 the fiscal year ended September 30, 2006 and elsewhere in that report and (ii) in other reports filed by the Company pursuant to the Securities Exchange Act of 1934. [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] [TABLE OMITTED] |
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